Category Archives: Michigan

Former HR Lady Makes It Big!

Posted on by
2

Don’t know how many of you saw the press release yesterday, but General Motors announced their new CEO would be former GM HR Lady, Mary Barra. Let’s not forget, she will also be the first women to run a major automotive company in history!  From the article CNN/Money:

“Since August, Barra has served as executive vice president of global product development and global purchasing and supply chain, according to her company bio.

For more than two years before that, she was an executive VP focusing on international design, engineering, program management and quality. Earlier, she was vice president of global human resources. Barra started at GM when she was 18 as part of a cooperative education program.

She was paid $4.9 million in total compensation last year, according to corporate documents. That includes a salary of $750,000.”

Bam! It pays to be in HR!

“Women represent a minority presence in the auto industry, comprising 21% of the total workforce. According to federal data, 39,000 of the industry’s 185,200 employees were women. And women hold about 3.3 million of 12 million jobs in the broader manufacturing sector, or about 27%.

Jared Rowe, president of auto product researcher Kelley Blue Book, said that it’s smart for an automaker to put a woman in charge with a background in product development, considering that “the bulk of the buying decisions are actually made by women, when it comes to purchasing vehicles.”

He also said that Barra’s long history with GM is vital to the company’s leadership.”

I would say GM is smart in deed to hire a women to run the company, but in reality Wall Street will ultimately be the judge on her performance.  That’s the way it goes with large publicly traded companies.  I do feel, growing up in Michigan, currently working and living in Michigan, and my company being a supplier to GM, this is not your parent’s and grandparent’s GM!  The auto industry is an ‘old boys’ network for sure, and GM making the courageous decision to hire a female as CEO, definitely speaks to a broader change in our society.

When people think of Michigan, they think of a broken Detroit and of a broken auto industry.  For those of us who live in Michigan, we are seeing something very different.  The auto industry is strong, and so many companies are hiring in all sectors.  The recession hit us hard.  It taught us a ton.  GM’s failure was a huge part of that.  If you don’t think GM learned anything from it, this hiring should at least be symbolic to show the world it is a different company. One that, while not perfect, is striving to be better.

Program Kids – Hiring for your Culture

Posted on by
3

If you didn’t catch it last week, Michigan State Basketball, rated #2 in the country, knocked off the University of Kentucky, rated #1 in the country.  An early season match-up in college basketball which ultimately has little impact on the bigger picture of this basketball season, but it as fun to watch!

What the game really ended up being about was two different sets of kids, not based on their uniform, but based on their path.  Kentucky, under current coach John Calipari, has become a NBA basketball factory of first round draft picks.  Coach Cal has basically made the decision to use the NBA draft rules, that a kid must be one year out of high school and over 19 before being draft eligible, to build his winning program.  He basically sells to the best high school basketball kids in the country, who could probably jump immediately to the NBA, that you come to UK for 1 year, then leave and go to the NBA.  This system is working really well for him!  These kids come and take classes for one semester, and then basically leave as soon as basketball is over in March.  Doesn’t really seem to fit the goal of intercollegiate athletics, but what the hell, he’s winning…

On the other side you had Michigan State and coach Tom Izzo (to be fair, I’m a big fan of the program and Tom, I think Coach Cal is a cheater and a liar) whose has built one of the best programs in the country over the past 19 seasons, by taking almost the opposite way to success.  Tom goes out and recruits ‘Program’ kids.  Tom grew up in Northern Michigan, he was raised with a blue collar work ethic.  He is everything that Calipari isn’t.  He isn’t flash.  He’s loyal.  He wants his kids to leave MSU better men, not better basketball players.  While Tom would take a top player, he’s only ever taken a kid who was ‘one and done’, and even that kid didn’t think that would be the case when he came to MSU.  The kids who get recruited to MSU know they’ll be broken down, taught how to play defense first, team basketball, it’s about the program, not about you.  As you can imagine, a kid wanting to jump right to the NBA, doesn’t find this attractive.  Coach K at Duke is very similar, although, he tends to get a few one-and-dones based on his past success!

The game was close at the end, but not really as close as the final score.  MSU had juniors and seniors on the floor – grown mature men.  Kentucky had kids on the floor, very, very talented kids, but kids all the same.

Both programs successful.  Both programs win.  I like one way more than another, but I can’t argue the successful business model that Coach Cal has produced.

It brings up a great question for HR/Talent Pros and leaders of organizations.  We all say we want the ‘best’ talent. We want ‘rock stars’. But I wonder, do we?  Do you want ‘Program kids’, hires that fit your culture?  Or do you want ‘One-and-dones’, hires that have extreme talent, but might not want a long-term career with you?

You might say it’s a hard comparison because we are talking about amateur (Program Kids) versus professional (One-and-done) level talent. Of course in business we would always want professional level talent.  But I’ll argue that Program hires, those who fit what and where you want your organization to go will always be better in the long run.  What happens when the next big school or pros come calling for Coach Cal?  What happens to Kentucky?  It would left in shambles.  The strategy doesn’t have legs because you must rebuild every year. What happens if another big time school with a flasher coach starts getting all the one-and-dones?  Program kids don’t want to go to Kentucky.

Hiring for cultural fit has huge impact to long term organizational success.

How many hours of work are too many?

Posted on by
4

An article out last week on NFL.com spoke to the Detroit Lions head coach’s, Jim Schwartz, work schedule which averages 100 hours per week!  That’s break that down:

– 7 days * 24 hours = 168 total hours in a week

– 100 work week / 7 days = 14.2 hours per day

What does a 14 hour day look like?  You get into the office at 6 or 7am and you don’t get home until 8, 9, 10pm.  Every day, every week.  I know what you’re thinking.  Well they only play 20 games.  He gets half a year off!  Plus, he makes millions of dollars.  First, NFL never stops working.  Off season might be busier than the actual season.

Why do so many of these coaches work 100 hour weeks? From the article:

“The mentality of most coaches borders on the paranoid-obsessive end of the spectrum. Good coaches care about the littlest details. It takes time to wade through film, meet with coaches and players, script practices, design game plans and perform the oodles of other responsibilities that need to be perfect…

“We’re here a ton, but then I go up and I talk to a coach about anything and I’m sitting in his office and I peek down and glance underneath his desk, and there’s a pillow and a blanket,” Lions wide receiver Nate Burleson said. “For a brief moment, I laugh and I’m like, ‘Holy smokes, this guy sleeps in his office.’ But then when you really think about it, it’s like, ‘This guy really sleeps in his office.'”

It begs the question, should the NFL or any employer put a limit on the amount of hours that a person can work?  Airlines do it for their pilots and flight crew.  Safety is paramount and the last thing you want is a pilot that has not slept for 18-24 hours.  Many other occupations do it for similar reasons.  Safety always seems to be the one factor in limiting work hours.  Is the NFL not concerned about the safety and health of their coaches?  They limit the amount of practice time for their players.

How many  of us wish we had employees who loved what they did so much they wanted to work 100 hours per week!?

BambooHR’s founders limit their entire staff to 40 hours per week.  They kick them out if they try to work more.  That seems a bit radical.  I’m sure my staff would love me doing that to them, but 40 hours in most workplace environments seems to be the minimum, not the maximum.

I’m not even focusing on whether the hours in the ‘office’ or at home.  Just total work hours.  How many hours are too many?  Hit me in the comments.  My feeling is there are times in every occupation when more or less hours are needed to do a great job at whatever it is you’re doing.  One week I can be a rock star 40 hours.  The next week I might look like a total slack for working 60 hours.  I’m a big proponent of work when you need to.  The old farmers saying of ‘there are times to make hay’, runs true in every organization.  If you have someone who is consistently, over long periods of time, working 60+ hours, you’ve got a staffing problem.

 

The Life Cycle of a Hot Job Market

Posted on by
1

In any market, even during really bad recessionary economic times, there are certain categories of jobs and skills that remain extremely hard to come by.  In one market it might be a certain kind of engineer, another time and place it might be nurses, or it might even be seemingly something as simple as truck drivers.  Many of us are now facing this market with various kinds of IT professionals (Developers, Analyst, etc.).   Through all of these gaps in inventory of skills something remains very common and predictable — the cycle that takes place.

Here’s what the cycle of a Hot Job market looks like for a certain ‘specialized’ need: (let’s use Bakers for our example, no one really ever would feel we would lack for Bakers, right!?)

1. Companies begin by hiring up to ‘full employment’ with in the market category.  Usually 3% unemployed Bakers would mean ‘full employment’, those last 3% no one really wants there the folks who don’t really want to work, have other problems (like substance abuse, harassers, etc.).

2. Companies begin taking ‘fliers’ at the bottom 3% that are on the market.  “Come guys, Billy is a good Baker and he says he won’t put Crack in the Cupcakes anymore!”

3. Companies begin to feel pain of not enough Bakers. Their overtime is going up, positions are taking longer to fill, product quality goes down a bit, etc.

4. Companies begin brainstorming on how to get more Bakers.  They add a Baker apprenticeship (we can build our own Bakers!), they add retention bonuses to ensure they keep their Bakers (Free cookies!) and they start coddling to all the Bakers needs (you need a new baking hat!? You got it!).

5. Bakers start to get calls about jobs.  Those jobs are paying much more than they ever imagined they would make, plus you get free cookies and cakes!

6. People start to hear stories about Bakers making six figures! Wait, I want some of that baking cake money!  I would love to bake cakes for a living!  How do I get me some of that baking cake money!?

7. Bakers start demanding things they never thought they could.  4am is too early for me to make the cupcakes, I only want to bake cupcakes after 6am. I don’t bake cupcakes on Sunday. I only work on wedding cakes, not birthday cakes, I’m a professional!

8.  More and more people start coming into the market to become bakers.  It’s the ‘hot’ field, the best and brightest want to be bakers. There are TV shows about Bakers. Bakers are cool.  Baking is ‘the’ profession to get into.  USA Today has Baking as the growth profession to be in the next 10 years. (USA Today announcing anything as ‘hot’ is the key that it’s probably on the backside of being hot)

9. Good and bad Bakers, alike, start to become arrogant.  This is the tipping point of a Hot Job Market — Arrogance.

10. Companies don’t like to be held ‘hostage’ by any certain skill set, so they ensure the market will get flooded with candidates.  The pain of not having enough talent has gotten bad enough to ensure companies will fund whatever it takes to get them out of this pain.

The Wall Street Journal announced recently that Silicon Valley has an arrogance problem.  Those IT professionals that all of us need and can’t do with out, are beginning to feel their market power.  Some of you might say, well this has been going on for 10 years, and you would be correct.  It has been a hot job market going on a decade and continues to be hot.  The arrogance isn’t even new for many.  But it is now becoming common place.

I have quick story.  In 2001 automotive designers in Detroit could have a different job every day if they wanted and they named the price they wanted to make. The market was on fire. Thousands of people start to flood the market.  Designing wasn’t easy, but you could get educated and start at the bottom and learn the skills it took to become a good designer.  It was ‘system’ based, meaning you had to learn certain computer systems to learn how to design, plus some other skills.  Today, designers are still making less than what they were 15 years ago.

Basic economics will tell us these ‘hot’ markets will eventually work themselves out.  The cycle is always the same.  The ending is always the same.  In the history of civilization there has never been a ‘hot’ job category that hasn’t, eventually, been figured out.

$43/hr Fast Food Worker!

Posted on by
4

There is this new, hip burger joint in Detroit metro called Moo Cluck Moo (alright, it’s a SmashBurger knock-off) which is becoming famous for paying it’s workers a minimum of $15/hr.  Okay, it’s not $43/hr, but the title was to prove a point and ask a question.  If you haven’t eaten at one of these new burger joints – they’re great! I mean great if you love a great burger, fries and shake and a ‘fast food’ meal bill of $50 for a family of four!  BTW – the sweet potato fries at SmashBurger will be on my death row menu.

How much should a fast food worker be paid?

Is $15/hr really a living wage?

$15/hr equates to about $30,000 before taxes.  Take out taxes,  health insurance co-pays, etc., and for arguments sake, let’s say that $30,000 is now $22,000.  $22,000 is fairly realistic, right?

So, $22,000 is about $1800 per month.  Let’s break down the expenses:

Crappy Apartment – $600/month

Crappy car payment – $250/month

Crappy car gas – $200/month

Crappy car insurance – $100/month

iPhone 5 – $100/month (you know this is true!)

Crappy Apartment utilities (electric, gas, cable) – $150/month

Food (other then your fast food meals you get while working) – $300/month

That’s $1700.  Let’s say we’ll leave the extra $100 for emergencies.

Is this living?

Now, let’s look at it from McDowell’s standpoint.  Unlike their ‘fast food’ friends at Moo Cluck Moo – which average check for a family of four is north of $40.  The average check for a family of four to eat at McDowell’s is probably closer to $25.  That extra $15 per check – does a lot.  It definitely makes it easier to pay $15/hr.

My point isn’t that we should be paying fast food workers more.  Someone choosing a career in the Fast food arts shouldn’t expect to make a ‘living wage’, they should expect to make a wage you can’t live on.  I love that Moo Cluck Moo is pushing the envelop in paying service workers and showing others that it can be done, on a small scale.  Can McDowell’s do it?  They could.  Are you willing to pay $15-20 more per meal for your family to eat at McDowell’s?  No, you’re not.  You will at Moo Cluck Moo – because it’s cool and hip and good.  But you can’t do that all the time.  It’s not sustainable on your living wage as a teacher, or accountant.  So, you sometimes have to go the cheaper route and eat at McDowell’s.

Simple economics will tell us that selling $.99 Double Cheeseburgers does not allow you to pay your hourly staff $15/hr and stay in business.  Charge $5 for that Double Cheeseburger and you can now pay $15/hr wages.  You will also have a drastic decrease in customers, so you’ll have to layoff most of your staff.  But those who remain will certainly be happy making $15/hr!

You can’t have it Fast — Good — and Cheap.  You must give up something.  Want McDowell’s to pay their workers a ‘living wage’?  Show them you won’t go away in droves when they double their prices.  You won’t do that.  If you won’t change — why should they change?

 

 

There Are 2 Kinds of Leaders

Posted on by
2

College football season is upon us and one of things I enjoy most is reading all the leadership articles written about college football coaches.  These types of articles come out in two ways during the year: 1. preseason when everyone is still in love with their coaches; 2. post-season when certain teams and coaches overachieved.   GQ came out with one recently on one of the most polarizing coaches, and most successful coaches, in college football, Nick Saban.  People assume I hate Nick because I’m a Michigan State fan and he left us to go to another college football team, LSU, that was in a better ‘football’ conference and had more tradition.  I don’t hate Nick.  I was disappointed he left, because he was good!

Nick Saban is probably the most hated coach in college football because his teams kick everyone’s butt!  3 out of the last 4 national championships and favored to win another this year.  He doesn’t joke around with the media and he never looks pleased.  Here are some tidbits from the GQ article:

“A few days after Alabama beat LSU to win the 2012 national championship, Rumsey and Saban were on the phone together…The two men almost never discuss football—Rumsey is the rare Tuscaloosan who doesn’t know or care much about the game, which, he suspects, has something to do with why he and Saban have become friends. But given that his golf buddy had just won the national championship, Rumsey figured he ought to say a few words of congratulations. So he did, telling Saban his team had pulled off an impressive win.

“That damn game cost me a week of recruiting,” Saban grumbled into the phone.”

Being upset over missing a week’s worth of recruiting because you had to play, and win, the national championship.  HR folks should love that.  It’s about the process.  Have the right process and the results will happen, but please don’t change or stop my process!

“Saban’s guiding vision is something he calls “the process,” a philosophy that emphasizes preparation and hard work over consideration of outcomes or results. Barrett Jones, an offensive lineman on all three of Saban’s national championship teams at Alabama and now a rookie with the St. Louis Rams, explains the process this way: “It’s not what you do, it’s how you do it.”

Taken to an extreme—which is where Saban takes it—the process has evolved into an exhausting quest to improve, to attain the ideal of “right is never wrong.” At Alabama, Saban obsesses over every aspect of preparation, from how the players dress at practice—no hats, earrings, or tank tops are allowed in the football facility—to how they hold their upper bodies when they run sprints. “When you’re running and you’re exhausted you really want to bend over,” Jones says. “They won’t let you. ‘You must resist the human need to bend over!'”…

Jones says that while all the talk of “the process” can sometimes seem mysterious—the cultic manifesto of that demonic head coach—it’s actually quite straightforward.

“He pretty much tells everybody what our philosophy is, but not everyone has the discipline to actually live out that philosophy,” Jones says. “The secret of Nick Saban is, there is no secret.”

I think there are two kinds of leaders in the world:

1. Charismatic Leader — This is the leader you love and will follow over the edge of a cliff.  You feel connected to this leader.  Your organization might be very good results with this type of leader, but that isn’t necessarily a guarantee.  99% of folks think they want this kind of leader. It’s Steve Jobs, Tony Hsieh and Barack Obama. They capture your heart and mind.

2. Directed Leader — This leader seems more aloof when you meet them one-on-one, but they have laser like focus of your organization’s vision and mission, and they will not let anyone or anything take your off course.  In the long term, if you buy-in to the vision and get to know this leader, you’ll do more than follow them over a cliff, you’ll throw others over the cliff for them!  Saban falls into this camp. So would Abraham Lincoln.

I don’t see these two leaders being at polar ends of leadership. They are actually running parallel, like two behavioral traits, because the best leaders have some of each. Steve Jobs could hold the stage, but he also had great vision.  Some leaders just have more of one bucket than the others.  To be a directed leader, to be so focused in on a singular vision, you have to be a little odd, a little different from what people perceive  you have to be a little odd, a little different from what people perceive as normal. The fact is, most people don’t have the capacity to have the kind of focus it takes to be as successful as Nick Saban. One last thing from the GQ article:

“Saban is a fit 61, owing in part to regular pickup basketball games with staff, a frenetic pace on and off the field, and a peculiarly regimented diet. He doesn’t drink. For breakfast, he eats two Little Debbie Oatmeal Creme Pies; for lunch, a salad of iceberg lettuce, turkey, and tomatoes. The regular menu, he says, saves him the time of deciding what to eat each day, and speaks to a broader tendency to habituate his behaviors.”

Same meal every day, so you spend no extra time or energy even thinking about what to eat.  Focus. Laser focus.  Does your leader have this?

 

The Crack of the Bat

Posted on by
Reply

I’ve been around baseball my entire life.  Started out playing little league, moved to high school and my sons all started playing when they were 4 and 5 years old.  I was never good enough to play past high school, but I love the game.  As Labor Day is upon us I recall sitting out at the campfire with my folks listening to the great Ernie Harwell call the Tiger’s games on AM radio.

Great announcers make the game come alive in your head.  You can actually see your Tiger rounding third, hear the crack of the bat and imagine the play at the play as if you were sitting right there watching the game.  The announcer made the game larger than life, and when you finally arrived at the stadium to watch a game in person the experience was just like you imagined it.  No letdown, no hype, you walk through the tunnel and arrive in heaven.  The grass is greener and uniforms are as white as clouds.  You can smell the hot dogs and the cotton candy.

I know most folks today love football, I’m also a huge fan.  But going to a baseball game takes me back to my childhood.  It’s my religion.

Enjoy your holiday weekend.  Go take your family to a ball park.  Teach your kids how to keep score with paper score sheet and pencil.  Walk around the stadium so you can see the entire thing.

I miss listening to Ernie. Check out Macklemore’s tribute to his childhood announcer, Dave Niehaus, and go to iTunes and buy the song, the proceeds all go towards the boys and girls club:

HR You’re the GM of your Company!

Posted on by
Reply

I’m a huge baseball fan – specifically a Detroit Tiger fan – and I was reminded last week by the Tigers how important talent is to your organization and how HR could be at the center of it all.  In professional sports, like Major League Baseball, they call the main person in charge a General Manager (GM).  He’s the person behind the scenes (kind of like HR) making deals to keep their club competitive during the season or looking into the future.  It’s a very strategic role.  While they are not managing or coaching players on a daily basis, or playing the game – ultimately they are making decisions that have huge impact to the team you watch play the game.  Doesn’t that sound like a role you would love to have in HR?

The Tigers made some major moves last week to a team that is already one of the best in the majors.  Why would a GM do such a thing?  It would be like you going into your sales department, who is having record breaking sales, and moving on of your top sales people out and bring in someone new.  Doesn’t seem like it makes sense – if it’s not broke, why break it! The Tigers were facing a couple of things – 1. the pending suspension of their starting shortstop; 2. the need to bolster their pitching staff for a run at the world series.  They also have some long term needs – an aging short stop, so they need someone for the future.  I know, I know – boring sports stuff – but it shows how HR should be thinking in a similar matter.  How do we keep our organization running smoothly, and how do we make it better in the future – those two things don’t necessarily go together.

It’s HR’s job to figure all of this out.  It’s actually easier as an HR Pro to come into a broken company.  At that point you know what has to be done, and you start doing it.  If you come into a great company the question is how do you make it better, and potentially any change you make might make it worse.  Harder yet, is how do you make that organization better, when it’s already doing great?  Your the GM what do you do?  Sit on your hands and ride out the run?  Look to the future and start getting the next generation ready?  It’s the heart of people strategy and the single coolest thing we get to do in HR!

The Tigers are one of the top teams in the MLB for a simple reason – they have one of the best GM’s, Dave Dombrowski.  He constantly is looking for ways to make his team better, but also not mortgaging the future away be giving away their developing talent. It’s a difficult balance.  It’s the same in your role in HR.  Your organization needs you to find ways to make them better right now, and keep them great in the future – sometimes that means making unpopular changes.  Sometimes that means you’ll be helping influence your leaders to make courageous decisions.  Decisions you not only have to support, but champion.  A good GM helps the fans of their organization see the bigger picture – half marketing person, half prophet. HR needs to do the same.  Our employees look to leadership and HR during major decisions and changes to see the reactions.  They analyze every word, every facial expression and read into everything. Great GM’s/HR Pros know how to paint a bright future and a realistic positive outlook presence.  Are you ready to be the GM of your organization?

Why Shrinking College Enrollment Is A Bad Sign For HR

Posted on by
6

Colleges and Universities will have fewer students this fall as enrollments across the board are falling.  The reasons?  It’s a number of factors – decline in college-aged kids, rising tuition costs and continued soft job market for new college grads, is making it a perfect storm for students to decide to forgo college and try and get into the job market in any job they can.  The idea being  – why go to college and come out in debt, when those who have are getting the same job I’ll get – service oriented, lower end jobs, sales positions that don’t require a degree, etc.

Here’s the big issue for employers – we need those kids in school to fill future jobs!

While the government and analyst continue to say the U.S. has a soft job market – those HR/Talent Pros in the trenches are seeing something very different!  Not enough ‘qualified’ workers for the jobs we have.  Not enough skills and training, increasing numbers of retirees and 5 plus years of not funding our own corporate training programs, have left many employers short on talent.  Having fewer college graduates in the future will only add to the shortage of a trained, technical workforce.   The current lack of STEM talent in all areas of the country is startling – and this only gets fixed by having more students in those programs, not less.

In the last year alone Microsoft released a report showing that the unemployment rate for STEM related jobs is at 3.4% – where ‘full employment’ of a field, by government standards, is considered to be between 4-5%.  These figures are during the recession!  In Michigan alone the automotive industry is searching for thousands of engineers and IT professionals – with graduates of STEM programs coming out to multiple offers and compressing salaries in many organizations.  Many other parts of the country are showing positive signs of coming out of the recession as well.  This adds to the issue of lower college enrollment as employers will soon be taking more STEM kids before graduation with the lure of money and instant employment.  We are already hearing stories about this during this summer’s internship season where engineering and IT interns are being asked to stay on full time and salaries very close to those who have already graduated.  Many students will drop out, figuring there is no need to finish, or that they’ll finish later in non-traditional formats.  Most never will.

All of these factors adds to that giant tsunami of retirements that will continue to hit over the next 5-10 years as baby boomers continue to leave the workforce.  How will companies cope?  Many will do what they have been doing for years – moving technical and engineering centers overseas where other countries have far surpassed the U.S. in STEM graduation rates.  It’s a complex time to be in HR in America – on one hand we still have relatively high unemployment as a country, but on the other we have a severe shortage of skilled workers.  The President and Congress believe ‘training’ unskilled workers to be skilled workers is the answer.  It’s not.  That is like telling a Doctor that they will be trained as a Dancer!  It takes more than desire to want to be a talented Engineer or IT Professional – it takes more than being an expert on Xbox.  It takes some real analytical ability – which most unskilled workers don’t have.

What can HR do?  Keep your workers.  Find ways to ensure those who want to retire can continue to work but add flexibility and part-time arrangements where you didn’t have them before. Continue to invest in technology – because you will have to do more with less.  Get ready to pay – because STEM workers will hold the negotiating power – more than they hold it now!  What else?  Don’t let your babies grow up to be Cowboys. Don’t let them pick guitars and drive them old trucks….Get it?  When your kid says they want to go to college and study something that they struggle to get a job – do what parents do – help direct them down another path – an easier life path of being employed.

 

What Detroit’s Bankruptcy and Your Company Have In Common

Posted on by
Reply

Big news last week was that the City of Detroit filed for bankruptcy.  Made national headlines as being the largest municipality in the history of America to do so – yet, I think most people, nationally, are really not surprised.  For decades Detroit has had a horrible reputation as being the murder capital of the world, corrupt politicians, GM going under and the government rescuing it, and everything that is wrong with unions.  Besides a few shining moments from local professional sports teams, there are really never any positive national stories coming out of Detroit.   Fast Company believed Detroit was so far beyond repair, and they were probably right, that Detroit should be bulldozed and turned into farm land.  Basically, hit the reset button.

As you know, I’m a core problem kind of person.  I believe at the heart of most issues, there is a core problem that has created all the issues your are facing.  Most organizations, like Detroit and your own companies, don’t like solving the core problem – you like solving all the little symptoms that the core problem is/has created.  People catch the common cold and take cold medicine – yet study after study show that washing your hands is really the only thing that is going to keep you getting the cold, and those same studies show most people still don’t wash their hands often enough or long enough to not catch the cold.  We like solving symptoms!  It gives us little wins and makes us feel successful. Solving core problems takes a lot of work, usually takes unpopular difficult decisions and many times the success isn’t immediately seen.

So what is Detroit’s core problem?  That is really up for debate – but it’s core Detroit is a victim of its own success. The great Automotive Industry that gave so much to the City of Detroit ended up being its downfall.  Relying solely and completely on one industry bankrupted Detroit.  Everything else is a symptom of time and function.  Rely on one product, service, etc. long enough and eventually the life cycle of that product or service will catch up with you.  The city is just a victim of that life cycle. Here’s some facts from Morgan Housel at  The Motley Fool:

“But the largest driver of Detroit’s demise is a simple, startling fact: the city’s population declined 65% in the last six decades. No city can survive such an exodus; it’s actually amazing Detroit’s finances lasted this long.

The Motor City was home to 1.9 million people in 1950, at the time nearly identical in size to Los Angeles. Today, 700,000 inhabit Detroit, or less than a fifth the size of L.A. That works out to 2.2 people leaving Detroit every hour, 24 hours a day, for the last 63 years.

If the number of people who left Detroit in the last sixty years formed their own city, it would be the nation’s ninth largest, ahead of Dallas, Texas…

Detroit shows how organizations that can’t adapt eventually crumble. Before it was a technology hub, San Francisco relied on shipping, and before that, gold mining. Before New York was the financial capital of the world, it was the garment capital of the world…Detroit was overwhelmingly reliant on the auto industry. When the fate of three companies — General Motors (NYSE: GM), Ford (NYSE: F), and Chrysler — turned, so went the entire city’s fate. Evan Soltas of Bloomberg wrote, “Detroit’s dependence on cars wasn’t exactly the problem. It was dependence itself. Cities should never go all in on any industry, cars or otherwise. It didn’t realize that until it was too late.”

Detroit can easily be your company.  Don’t kid yourself into thinking it can’t be – that is another major mistake generations of Detroit’s leaders made.  “We are different” “Everyone will always need cars.”  “Everyone will always need Facebook.” “Everyone will always need $125 running shoes.” Everyone will always need…you fill in the blank.  Diversification is the only thing that can truly mitigate your risk – and it’s one of those ‘core’ problems at almost every company.  It’s tough because we are told to ‘be the best at what you do’ and it’s hard being the best at many things and be diversified.  We can’t save Detroit – it needs to be reborn – but you can save your company – focus on core problems and stop solving symptoms.