The Stories We Tell: Corporate Culture, Large and Small (Nike and Pocock)


On a recent trip to the Pacific Northwest, I was privileged to tour two corporate headquarters—Nike near Beaverton, Oregon, and Pocock Racing Shells in Everett, Washington. I love touring company facilities, so I looked forward to both tours. I like to see things being made, and I hoped to see these companies’ products and processes.

Although both Nike and Pocock make premier products in their fields, the company cultures I saw on these tours could not have been more different. I saw again—as I have seen at so many other companies—that corporate culture is created by the stories businesses tell.

The strongest cultures and brands develop when leaders send the same messages to employees, suppliers, customers, and the public. Consistency in message brings the right people together, both inside and outside the company, to deliver on the brand’s promise. Inconsistency in message sows confusion and strategic incoherence.

Nike
Nike 20150731_102922Nike’s headquarters is huge. It encompasses blocks of office buildings and includes soccer fields, a football field, indoor gymnasiums, and two child care centers. We were told that Nike has around 60,000 employees worldwide. I think about 6,000 of them are in the Portland, Oregon, area.

Nike doesn’t manufacture in the U.S., so we could not observe product lines. We were kept far away from any product design and development areas. We didn’t even see any employee offices. We were shown displays of old products, as well as as the state-of-the-art employee amenities. An employee soccer match was underway as we walked through at noon.

The headquarters complex is a paean to the company’s products and history, as well as to the champions who have endorsed Nike’s products. Most prominently, of course, is Michael Jordan, and some of his Air Jordans were under glass. Statues and plaques of famous athletes from all sports line every hallway and outside walk. (Some people on our tour became starstruck when Serena Williams rode past us in a golf cart.)

Nike was founded in 1964, and adopted the Nike name and swoosh trademark in 1971. It has, as we all know, grown into a worldwide conglomerate. Our guide told us about the early days of Nike, when Bill Bowerman developed the waffle bottom for the original shoes (allegedly after being inspired by his wife’s waffle maker).

Thus, despite its current size, the stories Nike tells still revolve around its humble beginnings. However, the tour guide also stressed Nike’s commitment to health, environmentalism, and charitable giving, in addition to improving sports equipment and apparel.

Nike also emphasized its relationship with the University of Oregon athletic program. One person on our tour had been to Eugene to see its athletic facilities and came away impressed with Nike’s contributions to the physical complex as well as with the products Nike provided the Ducks.

Pocock

pocock logoIn contrast to Nike, the headquarters facility of Pocock Rowing Shells is a large metal shed, not far from the large complex in Everett, Washington, where Boeing manufactures airplanes. Although Pocock has been in operation in the United States since 1911, today it boasts only about twenty employees total. The company runs just one day shift of craftsmen making its synthetic rowing shells. Each boat is made one at a time from mold to finished product in that shed—no assembly line production for Pocock.

The small administrative area is on the second floor of the building, where there are a few offices holding dated furniture. Its inventory management system consists of a single whiteboard that shows the delivery schedule for each boat on order.

Knowing the reputation of the Pocock boats for quality, I was underwhelmed by what I saw. I had expected a much bigger facility, with far more boats being manufactured. Our guide indicated that Pocock intended to keep its small size and hand-crafted products.

Like Nike, Pocock’s public spaces feature athletes using its products. The difference is that there is only a single hallway, instead of a multi-acre property. Like Nike, Pocock maintains a close relationship with a college athletic program—in this case the University of Washington crew team.

At Pocock, too, the mythology around founder George Pocock and his son Stan (who died last year) were part of the story. Our guide pointed out George Pocock’s involvement with the University of Washington crew team that won the 1936 Olympics, as described in the current bestselling book, Boys in the Boat, by Daniel James Brown.

Unlike Nike, Pocock let us watch its products being made. We observed a rowing shell under construction for about half an hour. (I wasn’t allowed to take pictures.). We weren’t allowed on the manufacturing floor, but we could see several layers of material laid down during the space of those thirty minutes. Our guide was fairly open about the materials and processes used on the shell, though it is a proprietary process. This was the type of experience I wanted out of both tours, but only received at Pocock.

* * * * *

Both Nike and Pocock operate in the world of sports. There are similarities in their stories—both talk about excellence, from the foundation of their companies to the present. But Nike’s stories also emphasize its worldwide reach and size, while Pocock emphasizes family and craft. Each is successful in its arena, but their cultures are different.

Another Pacific Northwest company’s culture has been in the news recently—Amazon. Amazon’s culture is said to be hard-charging and performance-driven. I’m sure if I toured Amazon’s headquarters, I’d see something quite different than I saw at either Nike or Pocock.

I wonder if the stories Amazon tells about itself match the stories that have been reported.

What company culture has impressed you? How do the stories told foster that company’s success?

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Are the Benefits of the SEC’s Pay Ratio Disclosure Rule Worth the Costs?


SEC emblemI don’t typically comment on Securities and Exchange Commission matters, because I don’t know much about the agency or its areas of regulation. But I do know something about managing compensation. So the August 5, 2015, SEC announcement of its final rule requiring public companies to disclose the ratio of their CEO’s compensation to the median compensation of its employees caught my eye.

Pay ratio disclosure sounds like a really bad idea to me. It is likely to cause consternation within the company, while not addressing the underlying concern over the growing pay disparity between CEOs and rank-and-file employees. The cost of this rule—both financial and in terms of morale—is not likely to be justified by any true benefit.Cost/Benefit Impact and Administrative Burden:

The SEC staff estimates the initial cost of complying with the pay ratio disclosure rule will be about $1.3 billion. Then there are ongoing costs of continuing to update the ratio as required by the regulation. These costs mean that citizens should require the SEC to articulate significant benefits, before the rule seems rational.

1.  Cost/Benefit Impact and Administrative Burden

I am not qualified to discuss the details of the new rule. For detailed descriptions, see SEC Finalizes “Flexible” Pay Ratio Disclosure Rules Under The Dodd-Frank Act: Companies Have Choices To Make, by Elizabeth Razzano, Mark Poerio, Gislar Donnenberg & Amelia Xu (Paul Hastings, Aug. 10, 2015), and SEC Adopts CEO Pay Ratio Disclosure Rule, by Holly J. Gregory, Sidley Austin LLP, (Aug. 14, 2015).

For an article arguing that the the calculation is skewed, see The big flaw in the SEC’s CEO pay-ratio rule, by S. Kumar (Fortune, Aug. 6, 2015).

2.  Employee Morale Concerns

Supposedly, the pay ratio disclosure rule will empower shareholders to challenge executive pay practices. However, shareholders of public companies have already had access to top executives’ pay in other public filings. The new comparison with rank-and-file employee pay is likely to upset the general employee population without providing much new data to shareholders.

As the Sidley Austin article rather blandly points out:

“Companies should be aware that, depending on the magnitude of pay ratios, these new disclosures may exacerbate existing concerns among investors, labor groups and others around executive compensation.”

More directly, in SEC Approval of Pay-Gap Rule Sparks Concerns, by Victoria McGrane & Joann S. Lublin (Aug. 5, 2015), The Wall Street Journal quoted Steven Seelig, a senior regulatory adviser for Towers Watson, as follows:

“This is going to raise all sorts of questions as to whether [an employee] believes they’re paid fairly both internally…and [compared] to competitors.”

From this same article:

“Affected businesses will spend more time explaining ‘to employees at all levels how they set pay,’ said Charlie Tharp, head of the Center on Executive Compensation, a Washington advocacy group for large employers.”

dollar-clip-art-1194985891178996774670a029.svg.medI do think I’m qualified to discuss the impact on morale of a pay disclosure rule. At one point in my career, I managed the Compensation Department of a large U.S. company. The Compensation Analysts who worked for me were competent and professional, yet even they had difficulty dealing with the emotions of pay comparisons. Although salaries within the company were generally kept confidential, these employees had access to all employees’ compensation, including each other’s.

  • The best analyst in the department was paid less than another with less experience. She understood that the new analyst was paid more because he came from a higher paid position within the company. Nevertheless, the conversation I had with my best analyst about why that pay differential was likely to continue for the foreseeable future was one of the more difficult conversations I have ever had as a manager.
  • Another analyst was a solid performer, but not as strong as two others. She knew full well that her salary increase was less than theirs one year. I could explain how I had arrived at my decisions, yet I could not prevent the demoralizing aspect of the policies that led to my decision.

While I do not mean to suggest that employers’ pay practices should be shrouded in secrecy, setting pay is a complicated process. Unless employees are on a strict seniority step system, every employee’s situation is unique. Even HR professionals do not fully understand all the factors, unless they are involved in a particular situation.

Moreover, because pay is seen as a measure of worth in the corporate world, emotion immediately steps in whenever we compare our pay with anyone else’s.

3.  Political Impact

Because the SEC members adopted this regulation along party lines—the three Democrat appointees SEC approved it, while the two Republicans opposed it—Congress and such organizations as the U.S. Chamber of Commerce will continue to attack its implementation. There is no consensus regarding the need for pay ratio disclosures.

The good news is that this regulation does not go into effect until corporate fiscal years starting in 2017, with disclosure first required in 2018. Nevertheless, law firms are recommending that public companies start collecting the information needed for compliance sooner rather than later.

Am I missing some of the benefits of the SEC pay ratio disclosure rule? Am I overstating the morale impact?

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Making Dramatic Career Changes


toughdecisionsI read an article recently entitled “Thinking about making a dramatic (and scary) career change? Here’s what to consider,” by Sylvia Lafair, (July 6, 2015), on The Business Journals website.

The article got me thinking about the three dramatic career changes I’ve made in my life:

  • taking my first job as an attorney in a corporate legal department in a strange city rather than starting at a law firm (as everyone expected)
  • leaving the legal practice to move into a series of Human Resources assignments
  • leaving the corporate world completely to turn to mediating, consulting and writing

Each of these moves set off the emotions similar to those that Ms. Lafair described. Specifically, for me, the emotions were

     1.  Fear of the unknown and leaving what seemed safe

I knew I could do well if I followed the expected path. That even seemed true of the expected path right out of law school. I didn’t really doubt that I could do what others in my law school class were intending to do—work at major law firms near our school. But setting out halfway across country, and working in a corporate law department? Would I get adequate experience to move into other legal assignments in the future? Would I have the same respect from other attorneys and judges? These were my unknowns.

When I decided to leave the legal department for a Human Resources assignment, I knew the learning curve would be steep. I was jumping into a senior HR position with no HR experience. I thought I knew about half of what I would need to know, and that turned out to be correct.

Then, when I left corporate work altogether, I left a good salary and benefits, not knowing for sure if I could earn what I needed to as a consultant and mediator. It turns out my family has done fine financially, but the worry was there for the first couple of years.

     2.  Excitement at the possibilities a move could bring

The strong camaraderie I felt with the people in the corporate legal department ultimately outweighed the doubts about the work. I made my decision based on who I wanted to work with, and that was the right decision for me. One of the law firms I could have joined right out of law school folded within five years, so it would not have been more secure than the job I took.

And I moved into HR largely because I was bored at the repetitiveness of the law practice I had. I needed something new to interest me, and I knew I needed to move to another job to find it. The choice was to leave the law or leave the company, and I chose to leave the law, because a new field of expertise would give me more opportunities to learn.

And finally, I knew I wanted to spend my time doing many things that a demanding full-time job would not permit. That’s why I switched to consulting, mediating, and writing, which has let me set my own schedule.

   3.  Indecisiveness, while I wrestled with the decision

It took weeks for me to make the first decision, months to make the second, and years to make the third.

   4.  Guilt in leaving expectations of family and friends behind and choosing my own path

Choosing the path less seldom taken is always stressful. Why should I move halfway across the country to take a risky job? Why should I leave a field where I was successful? Why should I leave a financially rewarding career?

I got many questions from family members and friends, who essentially wanted to know why I was “dropping out” as they saw it. However, over the years, I’ve seen many friends and colleagues make similar decisions. I guess I was just an early adopter.

* * * * *

In the end, at each of these periods of indecisiveness, the pain I felt at following the expected path became greater than the fear of the unknown. For others (perhaps those with a healthier mindset), excitement about the future may come to outweigh the fear.

If you are faced with a difficult career decision, take a look at Ms. Lafair’s article and see if her suggestions help.

When have you made a change in your career, and what emotions did you experience?

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A Strategic Role for Human Resources in 2015 and Beyond


conference clipartBack in August 2012, I wrote that Human Resources can only claim to be a strategic partner if it brings a specialized expertise to the table with the heads of other divisions. Three years later, that point is still true.

Moreover, today it is even more critical to emphasize that Human Resources needs to change along with the changing workplace. It seems that every year, employees need to work faster and handle more information to succeed. Human Resources must increase its pace and capability commensurately.

Here are some questions to ask your Human Resources Department:

1. How should our business measure employee productivity? Can our employees achieve the standards of productivity needed to increase our bottom line? If not, what should we do about it?

2. How are we selecting candidates for the future? Do we even know what skills we will need in five years? What are we doing to make our workplace attractive to these people?

3. What are we doing to develop and retain our current employees? Can they be successful in the future? If not, how are we preparing to replace them?

4. What are you (Human Resources) doing to minimize the risk of expensive legal claims while not placing an inordinate administrative burden on the company? In other words, how do you make the business case for the policies and practices you want to impose?

5. Where should the company focus its investment—on technology or on people? Why? (The correct answer is probably on both, so how do we balance these investments?)

These are essential questions for every leadership group to answer. The answers will not come from HR alone. But HR should drive the discussion and decision-making process. If your Vice-President of HR is not, then maybe you need another head of HR.

Leaders, what other questions for HR would you add to this list?

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Recent NLRB Activity: Another Agency Running Amok


I have always believed elections were important mostly because the winners get to pick judges and the heads of regulatory agencies. The courts and the bureaucrats rule our day-to-day lives much more than our elected officials, but the elected officials choose who will set the rules by which we live.

And sometimes courts and agencies run amok.

In the last year, we have seen agency regulations promulgated by the Obama Administration overturned because they were overreaching—the Environmental Protection Agency over its failure to consider the cost implications of regulations under the Clean Air Act (see Michigan v. Environmental Protection Agency (U.S., June 29, 2015)), and the Department of Homeland Security over its attempt to issue regulations to limit deportation of many illegal immigrants without public comment (see Texas v. United States, (S.D. Tex., Feb. 16, 2015)) are two examples.

The Obama Administration has also used the National Labor Relations Board (NLRB) to set a progressive agenda. Issue by issue, the NLRB has pushed labor policy to the left. The NLRB has changed several past precedents through both regulations and agency adjudications. Although Congress can overrule the agency with new legislation, President Obama is likely to veto any changes this Congress passes. Therefore, these changes are likely to survive at least until 2017—and beyond, if another Democrat is elected President.

Here are some major recent revisions to NLRB policy:

1.  Quickie Elections

On April 14, 2015, the NLRB’s new regulations on union representation elections became effective. The so-called “quickie election” rules permit the electronic filing of election petitions and other documents, mandatory postings (including electronic postings in many cases) by employers, disclosure of employee names to the union (including electronic lists of employees), and fewer automatic stays on representational issues.

These rules will force employers to be much more proactive during union organizing campaigns and elections. Most employers already jumped into crisis mode at the sign of an organizing campaign. Now they will feel even more pressure to respond quickly.

2.  Confidentiality in Employee Investigations

Since its 2012 decision in Piedmont Gardens, 359 NLRB No. 46 (2012), the NLRB has pushed to require employers to disclose employee witness statements when a union requests them. Piedmont Gardens reversed a 1978 precedent, Anheuser-Busch, Inc., 237 NLRB 982 (1978), which unanimously held that such statements were exempt from disclosure. Although the Supreme Court’s decision in NLRB v. Noel Canning (2014)  invalidated Piedmont Gardens (along with hundreds of other cases), the NLRB continues to demand disclosure of employee witness statements.

In a new ruling in Piedmont Gardens, 362 NLRB No. 139 (June 26, 2015), a divided NLRB held that it would balance the union’s need for the witness statement against “any legitimate and substantial confidentiality interests established by the employer.” This test is subjective and difficult to meet. The NLRB will weigh the employer’s interest against the union’s purported need for the information. Even then, the employer will still have to seek an accommodation with the union, such as a confidentiality agreement.

Needless to say, this will not be easy. The issue of disclosure is likely to result in litigation in many cases, because the employer and union will not be able to agree on the terms of confidentiality.

3.  Temporary Employees:

The NLRB currently does not include temporary employees in a bargaining unit without consent. This long-established rule was changed briefly during the Clinton Administration, then changed back. Now, however, the NLRB seems to want to reverse this precedent again in the case of Miller & Anderson, Inc. (05-RC-079249, July 6, 2015).

4.  Social Media Rules:

Since April 2013, the NLRB has held that social media activity can constitute protected and concerted activity. In Bettie Page Clothing, 20-CA-035511, the Board found that three employees were unlawfully terminated for criticizing their manager on Facebook. The case is now on appeal to the U.S. Court of Appeals for the District of Columbia, and the Obama Administration is vigorously defending the NLRB’s position. See Bettie Page Clothing v. NLRB, briefs available on the NLRB website.

If the NLRB position in the Bettie Page Clothing case is upheld, then employers can expect the Board to let employees say about anything they want on social media sites.

* * * * *

In summary, employers can expect continued aggressiveness from the NLRB as long as the Democratic majority on the Board continues. It will take a new President to appoint members to the NLRB that are less pro-employee than the current Democratic members.

What is your view of the current NLRB position on these issues?

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Favorite Firing: State Trooper Fired For Losing His Hat


NC Highway PatrolSo many of my Favorite Firing stories seem to deal with law enforcement personnel. Perhaps they encounter strange situations on their jobs, so are more likely to get fired for odd reasons. In this case, a North Carolina highway patrolman was discharged for lying about how he lost his hat.

The Facts: Thomas Wetherington was a state trooper with the North Carolina Department of Highway Patrol (the Department). On a windy spring day in 2009, he lost his hat during a traffic stop. He didn’t want to be reprimanded for failing to wear his hat, so he told his supervisor his hat blew off of his head and he could not find it. He later stated he had placed the hat on his patrol car’s light bar, and it must have blown off there. Trooper Wetherington repeated these explanations, or variations of them, for several weeks.

But his explanations were not true. Their falsity was discovered when a person in the car he had stopped returned his hat to the Department in good condition. When confronted, Trooper Wetherington admitted he hadn’t told the truth. At that point, he said he simply hadn’t known how he lost his hat.

He was fired for violating the Department’s Truthfulness policy. The Department’s policy stated:

“Members shall be truthful and complete in all written and oral communications, -15- reports, and testimony. No member shall willfully report any inaccurate, false, improper, or misleading information.”

It took until December 2012 for Trooper Wetherington to get a court ruling on this matter. The Wake County Superior Court in North Carolina found that Trooper Wetherington’s statements were willful and were “unacceptable personal conduct” under the Department’s administrative code. Nevertheless, the court held that Trooper Wetherington should not have been fired. The court found that the trooper’s “untruth” lay only in the hat’s location when he misplaced it.

The Department argued that its officers’ truthfulness in all things is mandatory, because in the future, Trooper Wetherington’s lack of truthfulness in this instance must be disclosed in any criminal case in which he is involved. The court disagreed with that position.

The Superior Court ruled in Trooper Wetherington’s favor, finding that his conduct “did not rise to the level to constitute just cause for dismissal as a matter of law” and the Department’s decision to fire him was arbitrary and capricious.

The Department appealed, but in December 2013, the North Carolina Court of Appeals agreed with the lower court. The parties are currently waiting for a decision from the North Carolina Supreme Court.

The Moral: Tell the truth. In every employment situation, both employees and employer representatives should tell the truth. The truth would avoid many (if not most) of the employment claims that get brought.

Beyond that, however, there are two big issues I see raised by this case. The first is whether any lie by an employee should be grounds for termination, or if there are some lies that are so minor that they should no discipline or only minor consequences.

The problem is that once an employer starts to draw lines, it is difficult to justify where the line is drawn. Employers are taken to task by governmental agencies and courts for inconsistencies in many, many cases. Why should the court hold itself as more able to draw these lines than the Department that employed Trooper Wetherington?

One of my favorite quotes in an employment case is from Elrod v. Sears, Roebuck and Co.939 F.2d 1466, 1470 (11th Cir.1991), in which the Eleventh Circuit said that courts

“do not sit as a super-personnel department that reexamines an entity’s business decisions . . . Rather, our inquiry is limited to whether the employer gave an honest explanation of its behavior.”

So let’s let the real personnel departments make these difficult calls.

In this situation, CBS News reported that

“Wetherington’s firing came at a time when several troopers had faced misconduct accusations, in particular those of a sexual nature. In 2010, then-Gov. Beverly Perdue said she would make every state trooper sign a code of conduct and those that break the rules would be fired.”

Perhaps the Department had good reason in 2009 to hold its officers to a very high standard of conduct.

The other issue I see in this case is that we are now in the middle of 2015, still discussing a relatively minor case that arose over six years ago in the spring of 2009. This certainly isn’t a record in terms of employment litigation. I once handled an employment claim that took over ten years to wend its way through the EEOC to a “no cause” determination, then went into litigation, and was finally settled before there was even a trial setting. There has got to be a better way to resolve employment disputes than to let them fester so long.

What do you think the North Carolina Supreme Court should do in this case?

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How To Recognize and Avoid Toxic Mentors


MP900302921A regular reader suggested recently that I write about toxic mentoring. I’ve been interested in mentoring programs for over twenty years now. Throughout my career I’ve had good mentors and not so good mentors (meaning they weren’t really mentors at all, but thought they were). But I’m not sure I’ve ever had a “toxic” mentor, so I had to give this topic some thought before writing.

What Is a Toxic Mentor?

In my view, a toxic mentor is one who makes you feel worse about yourself and your career, rather than better. It isn’t just that this person doesn’t help you, it’s that he or she actively makes things worse. Confusing or bad advice. More interested in themselves than in you. More like a parent than a coach—they control rather than teach.

Here are a couple of articles with good descriptions of toxic mentors:

What Is a Good Mentor?

MP900341467You may not be able to recognize toxicity in mentoring relationships in advance, just like you can’t always recognize it in a friendship or romantic relationship. So it is best to tiptoe into finding a mentor. And get recommendations from other people of who has helped them.

I think the best thing to look for in a mentoring relationship is mutuality—mutual respect, mutual honesty, mutual desire to get something out of the relationship. If you don’t have this type of reciprocity, you cannot build a good relationship.

My favorite article about finding a good mentor was published in Forbes. What I like about it is the emphasis on someone who is self-reflective, curious, and generous. Most articles don’t focus on these traits. But if a mentor does not know himself or herself through self-reflection, he or she is not going to be very good at helping you assess yourself. And curiosity and generosity are two excellent traits to look for in any coach or friend.

Here are some good articles on what to look for in a mentoring relationship.

How Can You Avoid Toxic Mentors?

Maybe the reason I haven’t personally been zapped by a toxic mentor is that I’ve never relied on one person to mentor me in all things. There were senior attorneys who taught me how to practice law. There were older women who’d successfully raised children while working in demanding jobs many years before I did, whether they were more senior to me in the organization or junior. There were women I admired as people who could be effective without aping how male executives operated. I needed them all to develop my career the way I wanted to.

And there were some things for which I had no mentor, just good bosses and trusted colleagues to help me muddle through.

Still, there are a few suggestions I can offer about how to avoid negative mentoring relationships:

1. Enter the relationship slowly. So many times, mentors are assigned, or the mentor’s role in the organization makes the relationship seem necessary, yet the personalities of mentor and protege simply don’t mesh. If your mentor isn’t helping you, then build other relationships that can get you what is missing in the first mentoring relationship.

2. Have goals for both the mentor and the protege. Ideally, the mentor can learn from the protege as well. That way, the relationship is not as needy.

3. Don’t expect one person to “fix” you or your career. In fact, don’t expect a multitude of mentors to be your savior. Recognize that your work and your personality are what will get you ahead. Mentors can only help you avoid the minefields.

What has been the best help or advice you ever received from a mentor?

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