by Adam Hartung | Jul 1, 2014 | Current Affairs, Defend & Extend, Leadership, Religion
Yesterday the U.S. Supreme Court ruled in favor of Hobby Lobby and against the U.S. government in a case revolving around health care for employees. I’m a business person, not a lawyer, so to me it was key to understand from a business viewpoint exactly what Hobby Lobby “won.”
It appears Hobby Lobby’s leaders “won” the right to refuse to provide certain kinds of health care to their employees as had been mandated by the Affordable Care Act. The justification primarily being that such health care (all associated with female birth control) violated religious beliefs of the company owners.
As a business person I wondered what the outcome would be if the next case is brought to the court by a business owner who happens to be a Christian Scientist. Would this next company be allowed to eliminate offering vaccines – or maybe health care altogether – because the owners don’t believe in modern medical treatments?
This may sound extreme, and missing the point revolving around the controversy over birth control. But not really. Because the point of business is to legally create solutions for customer needs at a profit. Doing this requires doing a lot of things right in order to attract and retain the right employees, the right suppliers and customers by making all of them extremely happy. I don’t recall Adam Smith, Milton Friedman, Peter Drucker, Edward Demming, John Galbraith or any other historically noted business writer saying the point of business to set the moral compass of its customers, suppliers or employees.
I’m not sure where enforcing the historical religious beliefs of founders or owners plays a role in business. At all. Even if they have the legal right to do so, is it smart business leadership?
Hobby Lobby Store
Hobby Lobby competes in the extraordinarily tough retail market. The ground is littered with failures, and formerly great companies which are struggling such as Sears, KMart, JCPenney, Best Buy, etc. And recently the industry has been rocked with security breaches, reducing customer faith in stalwarts like Target. And profits are being challenged across all brick-and-mortar traditional retailers by on-line companies led by Amazon, who have much lower cost structures.
All the trends in retail bode poorly for Hobby Lobby. Hobby Lobby does almost no business on-line, and even closes its stores on Sunday. Given consumer desires to have what they want, when they want it, unfettered by time or location, a traditional retailer like Hobby Lobby already has its hands full just figuring out how to keep competitors at bay. Customers don’t need much encouragement to skip any particular store in search of easily available products and instant price information across retailers.
Social trends are also very clear in the USA. The great majority of Americans support health care for everyone. Including offering birth control, and all other forms of women’s health needs. This has nothing to do with the Affordable Care Act. Health care, and women’s rights to manage their individual reproductiveness, is something that is clearly a majority viewpoint – and most people think it should be covered by health insurance.
So, given the customer options available, is it smart for any retailer to brag that they are unwilling to offer employees health care? Although not tied to any specific social issues, Wal-Mart has long dealt with customer and employee defections due to policies which reduce employee benefits, such as health care. Is this an issue which is likely to help Hobby Lobby grow?
Is it smart, as Hobby Lobby competes for merchandise from suppliers, negotiates on leases with landlords, seeks new store permits from local governments, recruits employees as buyers, merchandisers, store managers and clerks, and seeks customers who can shop on-line or at competitors to brandish the sword of intolerance on a specific issue which upsets the company owner? And one where this owner is on the opposite side of public opinion?
Long ago a group of retired U.S. military Generals told me that in Vietnam America won every battle, but lost the war. Through overwhelming firepower and manpower, there was no way we would not win any combat mission. But that missed the point. As a result of focusing on the combat, America’s leaders missed the opportunity win “the hearts and minds” of most Vietnamese. In the end America left Vietnam in a rushed abandonment of Saigon, and the North Vietnamese took over all of South Vietnam. Although we did what leaders believed was “right,” and fought each battle to a win, in the end America lost the objective of maintaining a free, independent and democratic Vietnam.
The leaders of Hobby Lobby won this battle. But is this good for the customers, suppliers, communities where stores are located, and employees of Hobby Lobby? Will these constituents continue to support Hobby Lobby, or will they possibly choose alternatives? If in its actions, including legal arguing at the Supreme Court, Hobby Lobby may have preserved what its leaders think is an important legal precedent. But, have their strengthened their business competitiveness so they will be a long-term success?
Perhaps Hobby Lobby might want to listen to the CEO of Chick-fil-A, which suffered a serious media firestorm when it became public their owners donated money to anti-gay organizations. CEO Cathy decided it was best to “just shut up and go sell chicken.” Business is tough enough, loaded with plenty of battles, without looking for fights that are against trends.
by Adam Hartung | May 22, 2014 | Current Affairs, Leadership
It is ironic that on this Memorial Day weekend (a remembrance of our fallen soldiers) America is learning that its military veterans have been ineffectively served by the Veterans Administration (VA) hospital system. Hundreds, if not thousands, have gone months without care – and some have even died while waiting.
No veteran should die while waiting for care. But we now know at least 40 have died. This is especially heinous because we now know those who provide care weren’t admitting to the fact that veterans were being denied care. And instead of tracking the waiting time these veterans underwent, the actual information was being tracked on hidden lists while factually inaccurate information was being disseminated.
At the top of all this is simply really bad leadership. That veterans were undergoing long waits is not a new story. In March, 2013 (14 months ago) Frontline ran a story that waits were inexcusably long (averaging 318 days,) and that the VA was doing little to solve the problem. Then, the day after Christmas, 2013, Military News ran a story quoting Secretary Shinseki providing several statistics indicating the backlog was down, wait times were down and this whole problem would disappear by 2015. Unfortunately, the American Legion – which has championed this issue – made it clear they thought the Secretary’s datapoints were inaccurate.
Now we are learning via CNN that the wait lists were being fudged in several hospitals, and that both hospital and VA leaders were well aware of this fudging. There were the reported facts, and then there were secret lists of people waiting for care.
How could this happen?
Chalk it up to lazy leadership, and an over-reliance on numbers and record-keeping. Instead of managing patients, Secretary Shinseki’s administration was managing numbers. And in this case, it caused people to die.
When long wait times were reported the President publicly admitted to being appalled, and he told Secretary Shinseki to do something. What the Secretary did was declare a standard of no more than 125 days from incident to care had to be met. And he told people to meet that goal, or they would risk losing their jobs.
As a leader, he didn’t offer a solution. He didn’t challenge his staff to find out the root cause of the problem and understand why these waits were so long. He didn’t hire outside consultants to evaluate the problem and propose solutions. He didn’t ask for “best practices” from industry. Instead, he pushed out a metric and a tracking system and threatened his team with pay cuts (or at least no bonuses,) demotions, career ending reviews and potentially termination. “Solve the problem, or else.” Then he was back to his office, and waiting for the “right” statistics to show up so he could say “all is well.”
This simply becomes a breeding ground for collusion, corruption and malfeasance as people try to save their income, careers and their jobs. If the order is to “make that number” then a way will be found to “make that number.” The command wasn’t to save lives, or improve care. The order was to reach a certain metric. So out comes all the creativity imaginable to give the boss what he wants. And in this case, it involved deception in record keeping, dual bookkeeping, hiding information, falsifying reports and even letting people die in order to give the Secretary the numbers he ordered them to report.
Meanwhile, the Secretary is so involved in managing his own career – and that of his boss – that he simply turned a blind eye to all other data. The American Legion was offering compelling statistics that things weren’t as the Secretary said. And there were multiple stories coming up in the press, and through the veteran networks, of patient experiences which did not match what the Secretary reported. But instead of listening to external information the Secretary ignored all of it and kept pushing his own organization to give him the numbers he wanted.
Leaders like to “manage by the numbers.” The study of business management was born around 1900 by Frederick Taylor and his theory of Scientific Management. Taylor believed all work could be broken down into inputs and outputs, everything could be measured, and if you set metrics for everyone then you could simply manage better. It was an engineering problem, and humans were just machines that needed to know the right metrics and produce to those metrics. Ah, the simplicity of Taylorism.
That management approach was greatly loved by business schools, and business leaders. Famously some Harvard Business School graduates and former Army officers (termed the “Whiz Kids”) in the 1940s went to a nearly failed Ford Motor company and turned it around. One of them, Robert McNamara, became the youngest President of Ford. They claimed their success was “statistical control.”
But McNamara left Ford to become Secretary of Defense for Lyndon Johnson and run the Vietnam War. He applied his same “statistical control” approach to the war that he used at Ford. Famous amongst these tracked, reported and closely watched statistics was the “body count.” Simply put, how many did you kill today? McNamara was sure if he could reach a “kill ratio” of 10 enemy dead to every 1 American dead the Vietnamese would give up.
How did that work out? Well, McNamara resigned in disgrace. Johnson was forced to step down after one term, realizing his failure in Vietnam made him unelectable. It turned out body counts included dogs, cats and cows as officers from Lieutenants to Generals were fudging the numbers. It encouraged burning down entire villages, and then simply deciding everyone – including Vietnamese civilians – would be included in the “body count.”
Needless to say, not America’s finest hour. And a mess that took another several years from which to extricate. There is a lot more to understanding international relations, and fighting a war, than simply tracking statistics. But unfortunately then Lieutenant Shinseki apparently learned the wrong message while he was in Vietnam. His penchant for using statistics to lead appears to have remained unwavered.
Unfortunately, far too many leaders like the lazy approach of using statistics. In the 1980s and 1990s a quality improvement program called Six Sigma caught on in America. But in many companies, Six Sigma became a management dogma rather than simply quality control. “You have to measure everything, or else it is simply not important” was a common part of Six Sigma. People suddenly had metrics given to them, even for jobs (like “Creative Director” or “Investor Relations”) where this made no sense. And they had charts on their doors tracking the data. If that chart didn’t point in an obviously northeasterly direction then it was clear the occupant was going to have pay, and longevity, problems.
Motorola was a leader in Six Sigma. The same Motorola that today is a shell of its former self. Although in the 1990s Motorola was heralded as a leader in modern management, today it has lost all relevance as its old businesses in radios and mobile phones have been made obsolete by new technologies, or taken over by companies like Google.
Far too often leaders think they can turn leadership into an engineering exercise. “Run business by the numbers” is a common refrain. Especially amongst leaders who come up via finance. “Everything can be turned into numbers, and spreadsheets, and if we manage the numbers the business will take care of itself.” We’ve all heard this.
But it simply isn’t true. We now know that even the famous Taylor falsified data in order to keep his guru status and promote Taylorism to client companies. Leadership involves going far, far beyond the numbers. It means understanding situations that defy simple measurement. It means knowing how to identify and solve problems – changing processes, procedures, directions, instructions, strategy and tactics. It means listening to external inputs to understand the greater marketplace, not just your own internal views. And it means understanding how to lead and manage people toward superior performance – not merely tracking performance statistics and slapping those who don’t return “the right numbers.”
Secretary Shinseki has a long and storied career. But as head of the VA, he truly blew it. And people died. This kind of lazy leadership cannot be tolerated in a field like health care, and hospital management.
Can your business tolerate it?
