The Peril Of Executive Optimism In 2010

The Peril Of Executive Optimism In 2010
Andrew Ward, 01.25.10, 04:41 PM EST

It is likely to cost some CEOs their jobs.

In the past year the markets and confidence gyrated. Twelve months ago we all believed we were staring into the financial abyss. Since then consumer sentiment has come a long way. Even housing looks to have hit bottom and started heading toward recovery. Are the good times here again, or at least around the corner?

There are indeed green shoots poking their heads above the dirt, but anyone occupying a corner office should be aware of the dangers that lie ahead for someone in their position. When green shoots appear, especially after a barren spell like the one we've been through, expectations for recovery grow much faster than the recovery itself.

The mismatch between racing expectations and slower recovery can sow greater discontent than during the depths of the recession. People expect things to get back to their best quickly. But especially in terms of job and wage growth, a recovery can take many months longer to be felt on Main Street than on an already improving Wall Street.

As a result people start to feel very frustrated with those who are supposed to be leading the recovery, from government figures to the corporate heads. We are already seeing the end of President Obama's honeymoon, with his approval rating dropping from around 70% on inauguration day to below 50% a year later, according to the Gallup daily poll. Moreover, Obama's disapproval rating has risen from just over 10% at the inauguration to 44% today. Don't expect employers to avoid their share of that kind of mismatch-induced discontent.

In my research on the largest U.S. companies during and after the last major recession, in 1990 and '91, I found that more chief executives were fired in the nine months following the recession than during the nine-month recession itself. Another study, by Sheila Puffer of Northeastern University and Joseph Weintrop of Baruch College, found that CEO dismissals then were driven less by absolute performance than by performance relative to board expectations. What does that suggest about the months ahead? When times are tough and the economy is a deep trough, expectations stay low. Workers accept furloughs, pay cuts and hiring freezes, taking them in stride. As a recession bottoms out expectations remain low, and so when many companies this quarter reported earnings way down from last year, they were still better than analyst expectations. However, that sent the message that maybe things aren't as bad as we fear, that maybe the worst is over. Expectations can now rise--and they're beginning to rise quickly.

As expectations rise boards will quickly begin to expect profits to rise, too, not just to decline less than feared. Employees will expect the tide to turn over the next few quarters from laying off to hiring, from pay cuts to raises. Yet companies are unlikely to rebound as quickly as their boards and employees anticipate. Those green shoots are still tender and yet to bloom. Boards and employees will begin to grow disappointed and will hold to account whoever they consider responsible for their organization's performance. They will ratchet up the pressure for faster recovery. This is likely to lead to the dismissal of CEOs who are unable to temper rising expectations and hammer home a message of more cautious optimism.

Good times will be here again, but leaders need to set expectations, both for the speed of the recovery and also for its tone. They need to draw appropriate lessons from the boom and bust, that to some degree euphoria was built on an unsustainable model of debt-fueled consumption and expectations of never-ending growth. If consumers learn to temper their own behavior as incomes start to rise again, the good times won't feel quite as good as they did before, but the recovery should be more sustainable. That's to be hoped for--but expectations have to be managed or heads at the top will roll, in both business and politics.

Andrew Ward is a member of the faculty of the Management Department at Lehigh University. His most recent book is Firing Back: How Great Leaders Rebound After Career Disasters, co-authored with Jeffrey Sonnenfeld of Yale University.

See also: "Expect Heavy CEO Turnover Very Soon," by Nat Stoddard.

Analysts predict bold growth for Google Android

Analysts predict bold growth for Google Android
by Marguerite Reardon

Google's Android is expected to take the smartphone market by storm in the next few years, growing faster than all its competitors, according to an IDC report published Monday.

Android is expected to be the fastest growing wireless operating system from now until 2013, when the software will be the second most used smartphone operating system throughout the world, the report said.

Today, the Symbian operating system, used mostly on Nokia phones, dominates the smartphone operating system market worldwide. BlackBerry maker Research In Motion holds the No.2 spot currently, with Apple in the No.3 spot globally.

The numbers differ in the U.S. market where Symbian has very little market share. In the U.S., RIM is currently the top smartphone operating system provider, and Apple is in the No. 2 spot. Microsoft is in the third position with its Windows Mobile operating system.

But by 2013, Android is expected to grow much faster than all its competitors, IDC says. And it will knock out RIM as the No. 2 operating system provider globally and bump Apple from its second place position in the U.S.

The shift in market share comes as more device makers release phones using the Android operating system. A handful of new phones using Android from Motorola, HTC, and Samsung were announced in 2009, but in 2010 manufacturers are expected to increase the number of Android devices and ramp up sales. Motorola has said it's planning at least 10 new Android devices in the first half of 2010.

IDC analyst Stephen Drake said the sheer volume of devices that are expected to come out using the Android OS will catapult its growth. One of the big advantages Android has over other operating systems, such as RIM's or Apple's Mac OS, is that it can be used on hardware from a wide base of manufacturers. RIM and Apple only use their operating system on devices they make.

"While there are a lot of operating systems on the market, there are not a lot of opportunities for device manufacturers that don't own their own software," Drake said.

Microsoft's Windows Mobile also caters to this market. But Drake believes that Android's growth will outpace growth of Windows Mobile, because Android is free, open-source software, whereas Windows Mobile requires a licensing fee. For this reason, Drake believes that handset makers will focus more on Android.

Windows Mobile is still a popular mobile operating system, and it already has a large installed base. But growth is stalling as manufacturers and consumers wait for the next version of the operating system, Windows Mobile 7.0. That said, Drake doesn't believe that manufacturers will abandon Windows Mobile. But they will be adding more Android devices to their device mix. As an example, Drake said that HTC, the biggest handset maker using Windows Mobile, is looking more at Android, as is Motorola, LG, and Samsung.

"The story isn't great for Windows Mobile," he said. "If you look at news cycle for smartphones over the past year, where was Microsoft? They need a splash with Windows Mobile 7. And they need to produce a device with a 'wow factor,' something in the superphone range."

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.

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Top 10 ways to get rid of Gen Yers in your office

GENERATION Y – a perpetual hot topic. How to attract them, retain them, put up with them? Or that one solution that tempts many but no one wants to say out loud: Get rid of them altogether, and save yourself a lot of headaches.

Much research has been done on Gen Yers and what makes them tick. Using those findings as a basis, let’s look at how to get rid of them.

1. Ban Facebook, Twitter and all other social media websites. While not a panacea for clearing your office of Gen Yers, this is a good place to start. A survey done by Deloitte shows that some teens consider lack of social networking at work a significant detriment in choosing a workplace.

2. Don’t let them work from home. Or anywhere that’s not the office. Gen Ys value and almost expect flexible schedules. Not letting them work from home – or anywhere other than the office – is a sure way to frustrate them.

3. Don’t tell them why their work matters, or how it will be used. Everyone appreciates knowing the value his work adds, especially Gen Y. One Gen Y in a focus group pointed out that they are constantly “looking for a sense of the bigger picture”.

4. Give them as much mundane and repetitive work as possible. Gen Yers believe they can learn quickly, take on significant responsibility and make major contributions far sooner than older generations think they can. Personal development is usually a high priority for them. Assigning them mundane work is therefore an irritant in both the short and long term, especially if you can combine it with No. 3 above.

5. Tell them off for not working 100% of the time in the office. Technological advances have broken down the disconnection between working hours and non-working hours. With round-the-clock email and demands for answers, many Gen Y knowledge workers feel they are effectively on call 24/7.

Consequently, they believe that they need to take more breaks throughout the day, often through video games, iPods or YouTube. Tell them that they’re not paid to play around during company time whenever you see them goofing off in the office – even if they worked till midnight last night.

6. Evaluate them on the number of hours they stay in the office a day, rather than the quality or quantity of work they produce. Combine this with No. 2 and No. 5 for extra impact.

7. Never praise them or thank them for putting in the extra effort. Gen Ys are willing to work hard but within reason. Asking them to put in time and/or effort they see as unreasonable and/or unnecessary is guaranteed to irritate them. Don’t forget you can rub some salt into the wound by giving them no praise or recognition whatsoever, or acting as if their extra effort was run of the mill.

8. Give them anything but transparency. Gen Y came of age in a world of layoffs and corporate scandals, fostering a belief that businesses in general value their own financial gains above everything else, and that business talk about the importance of people is largely insincere.

One Gen Y in a focus group commented: “We are looking to be loyal to an employer if that employer will be loyal to us, but we don‘t think business operates that way today.”

Utilise this scepticism by making promises you never deliver on or even address again. If they can even tell you made any, under the layers of fluff.

9. Tell them work-life balance is a fantasy only held by the ambitionless. One survey found that almost 90% of Gen Yers have either a primary focus on family, or they divide their focus between work and family. They favour family and personal time over the rewards that usually accompany increased job responsibility.

Now, this is a golden opportunity; pile on the hours, while telling them that eventually they’ll grow up and realise that they’ll have to prioritise their career just to make a living.

10. Use these phrases as often as possible: “Do it because I said so.” “That’s the way we’ve always done it around here.” “You have to pay your dues.” “You young people don’t understand working life.”

Gen Yers hate being disrespected. They have been raised to feel valuable and very positive about themselves…and to question authority. Send them the message that you expect them to respect you due to your higher rank alone.

Once you’ve successfully cleared all Gen Ys out of your office, and hopefully deterred any other potentials from applying, sit back and relax. You’ve managed to save yourself a lot of time, trouble and headaches, in the short term. In the long term, as the workforce ages and older generations retire, you may experience a problem.

The truth of the matter is that Gen Y is simply too large to ignore, both as workers and consumers. Companies that don’t figure out how to harness this growing resource are likely to find themselves at a distinct disadvantage, not only in the talent market, but in the broader market as well.

Effectively attracting, managing and retaining Gen Y certainly poses a challenge, especially while taking care to cater to the rest of your workforce. However, research has shown that all generations basically want and value the same things.

The difference is that priorities, expectations and behaviours may differ noticeably. With a little creative thinking, and an open mind from all employees, organisations can find solutions that appeal to all generations.

For instance, coaching and/or mentoring arrangements support Gen Yers’ desire to learn and develop, while giving older generations an opportunity to contribute and feel valued. Other programmes such as flexible work arrangements appeal to not just Gen Y, but also baby-boomers considering sabbaticals and Gen Xers who value flexitime and telecommuting.

The most important question to ask yourself is not “how should I manage Generation Y?” but rather, “how can I make my company a great place for all generations to work?”

BY Deloitte Insight - By LIM PHUI CHENG  - The writer is a consultant with Deloitte Malaysia’s human capital consulting practice.