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Tuesday, March 27, 2020

Management today is becoming a fantasy game

He (or she) that expecteth too much often receiveth nothing at all.

When it comes to key decisions in the business world, expectations seem to outweigh reality on just about every occasion. The results include endless gyrations in financial markets, increasing levels of stress and anxiety, and the needless loss of excellent staff. It’s time to get our feet back on the ground.
Have you noticed how much the world we live in today is driven by expectation, especially the world of work? Expectation trumps reality on just about every occasion, from the stockmarket to the boardroom and the office cubicle.

Let’s suppose that Acme Corporation reports a profit of $200 million for the quarter. That’s a tidy amount of money. Last quarter, they made $195 million, so they are consistently in the black by a substantial margin. Yet their share price falls on the news, perhaps by a significant amount. Why?

Expectations. The gurus of the stockmarket expected a higher profit, so Acme Corporation’s performance is judged to be below standard. But while this seems logical at first, it takes no account of whether those expectations were reasonable—or even had any rational or objective basis at all.

Reality is immediately trumped by expectations—even if those expectations are based on nothing more than hot air.

A great many expectations in the financial markets and the media have neither factual basis or logical support. They are created from rumors, hopes, fears, and fantasy. In our imaginary example, Acme Corporation is returning a steady and substantial profit. But that reality is immediately trumped by expectations—even if those expectations are based on nothing more than hot air.

We can see the same process working at the individual level in many organizations. Sara Smith has a good performance record. She works hard, has good skills and a sharp mind, and maintains a clear focus on what needs to be done. Her boss has high hopes for her. Suddenly, things seem to go awry for Sara. She gets a performance rating of “adequate” and a long lecture from the boss on “letting the team down.” She’s urged to work harder. Hints are even dropped that her career prospects are on the line. Whatever happened?

Nothing. Sara has been doing what she has been praised for doing in the past. But her boss’s expectations have soared into the stratosphere. Without any reference to Sara, he has created a dream of constantly-accelerating results, all based on his imagined view of Sara as a whizz-kid. As her manager, he is already enjoying (in his head only, alas) the praise and rewards showered on him from the top brass. All it needs is for Sara to comply.

But Sara has a life outside of work. She is a good employee and well aware of the need to give a fair day’s work in return for her salary. But, when that is done, it’s time to go home and enjoy the rest of her world. She is not aware of her boss’s glorious dreams for her, and would not go along with them if she was. So she keeps right on doing what she has always done—only suddenly it’s no longer enough.

In this tragi-comedy of errors and misunderstandings, the boss feels fully justified in re-classifying Sara’s performance downwards, based on his expectations of what (in his mind alone) it ought to be. Not surprisingly, Sara is hurt and confused. She cannot see where she has failed. In her bewilderment, she starts to lose confidence in herself and the others around her. Her performance really does falter.

When the boss once again expresses disappointment and anger, Sara decides enough is enough. She looks for another job. When she leaves, her boss sees a team member who never really had the “right stuff.” Sara sees a boss, and an organization, that has no clear standards and arbitrary ideas about what is required.

It is the perfect lose:lose scenario, played out in hundreds of workplaces every day.

The reality is that they are both wrong. The organization has lost an excellent employee, and must now incur extra cost to replace her. The boss allowed unsupported expectations to become his reality, ignoring what was really going on. He has failed as a leader and cost the business a great deal of money as a result. Sara has lost a job that she enjoyed—and probably taken away a severely lowered sense of self-confidence that may indeed impact her subsequent career. It is the perfect lose:lose scenario, played out in hundreds of workplaces every day.

Reality is what counts. Expectations are insubstantial thoughts—mere dreams and hopes—often based on little or nothing at all. To allow expectations to guide actions is like driving along with your eyes shut, following an imaginary road map inside your head. Is it any wonder if disaster lurks at every corner?

In a world driven by the media, expectations create headlines whereas facts produce only dull text.

We have lost sight of the difference between legitimate hopes and goals and the reality that follows. There is nothing wrong in setting goals for yourself—or others—so long as everyone is able to probe and question how reasonable those goals are before accepting them. The notion that, merely by setting a “big, hairy, audacious goal,” you will galvanize peak performance is total fantasy. I can set myself the goal of earning $10 million next year, but such a goal has not the slightest contact with reality—nor can I justify it by enthusiastic wishing. So why do we do it? Mostly, expectations are more exciting than reality. And in a world driven by the media, expectations create headlines where facts produce only dull text.

Leaders and managers need to have the best possible grip on reality, however disappointing that reality may be. Nothing is to be gained by indulging in fantasies, even if they are well meant. Leave exaggerated expectations and imaginary scenarios to media hacks and political lobbyists. To succeed in life and work, every decision and choice has to be made on reality as it stands—never allowing your dreams for something very different to be confused with what is happening in the real world.



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Comments:
Very interesting post. Your Acme Corp. example reminds me of the criticism that Costco has received by the “gurus of the stock market” because they offer above-market salary and benefits for their employees. Sure, they could see a short-term increase in profit if they cut benefits and dropped pay to the minimum wage, but the long-term impact would not be good.

This brings me to your last point about “big, hairy, audacious goals.” At least as Jim Collins defines them, these goals are meant to span 10 to 30 years. Taking this long view with big impacting goals is supposed to help companies avoid the very issues you point out with Acme and Sara. By focusing and committing to a long-term vision, they can measure themselves on real progress instead of the quarterly performance evaluation or a stock analyst’s rating.
 
Excellent comment, as usual, Aaron.

The parallel with Costco speaks exactly to what I am getting at.

Your remarks about "BHAGs" are also very useful. Sadly, when I hear that phrase used, as I did very recently again, people focus on the words and not the original intent. They take it to mean that setting some crazy, almost certainly short-term goal is what's required—not a long-term vision that will take decades to achieve.

Keep reading, my friend.

 
This was a wonderful post. We need short, medium, and long term goals in business and in personal life.

Amanda

http://thetimemastery.com
 
Thanks, Amanda. Glad you liked it.

Keep reading, my friend.

 
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