# data[].attributes.attachment_link.readable_text
The Idea in Brief

What drives growth and profitability in a service business? Highly satisfied customers. And to keep those customers profitable, you need to manage all the aspects of your operation that affect customer satisfaction-what the authors call the service-profit chain.

Here's how the service-profit chain works: Employee satisfaction soars when you enhance internal service quality (equipping employees with the skills and power to serve customers). Employee satisfaction in turn fuels employee loyalty, which raises employee productivity. Higher productivity means greater external service value for customers-which enhances customer satisfaction and loyalty. A mere 5% jump in customer loyalty can boost profits 25%-85%.

To maximize your profits, strengthen all the links in your service-profit chain. For example, fast-food giant Taco Bell found that its stores with low workforce turnover (a key marker of employee loyalty) enjoyed double the sales and 55% higher profits than stores with high turnover. To boost profitability across stores, it enhanced internal service quality-for instance, by giving employees more latitude for on-the-job decision making.

The Idea in Practice

To optimize your profitability, the authors recommend these practices:

Understand the Links in the Service-Profit Chain

Starting with internal service quality, each link in the service-profit chain can directly strengthen-or weaken-the next:

Measure-and Manage-the Relationships in Your Service-Profit Chain

To enhance profitability, measure the relationships between links in your company's service-profit chain. Then fashion strategies for strengthening them. Example:

To assess the relationship between internal service quality and employee satisfaction, Taco Bell: 1) Monitors internal service quality through a network of 800 numbers created to answer employees' questions, field their complaints, remedy situations, and alert top-level management to potential trouble spots. 2) Conducts periodic employee roundtable meetings, interviews, and companywide surveys to measure employee satisfaction. The results of this work prompted Taco Bell to design an employee satisfaction program that features a new selection process, improved skill building, and automation of unpleasant "back room" labor.

Editor's Note: This article sets out a simple, elegant, and ultimately tough-minded way to build profitability in a service business. Originally published in 1994, it offers as much today as it did then and is a perennial best seller.
♦ UPDATE: Learn about companies that are applying this timeless advice today.
Top-level executives of outstanding service organizations spend little time setting profit goals or focusing on market share, the management mantra of the 1970s and 1980s. Instead, they understand that in the new economics of service, frontline workers and customers need to be the center of management concern. Successful service managers pay attention to the factors that drive profitability in this new service paradigm: investment in people, technology that supports frontline workers, revamped recruiting and training practices, and compensation linked to performance for employees at every level. And they express a vision of leadership in terms rarely heard in corporate America: an organization's "patina of spirituality," the "importance of the mundane."

A growing number of companies that includes Banc One, Intuit, Southwest Airlines, ServiceMaster, USAA, Taco Bell, and MCI know that when they make employees and customers paramount, a radical shift occurs in the way they manage and measure success. The new economics of service requires innovative measurement techniques. These techniques calibrate the impact of employee satisfaction, loyalty, and productivity on the value of products and services delivered so that managers can build customer satisfaction and loyalty and assess the corresponding impact on profitability and growth. In fact, the lifetime value of a loyal customer can be astronomical, especially when referrals are added to the economics of customer retention and repeat purchases of related products. For example, the lifetime revenue stream from a loyal pizza eater can be $8,000, a Cadillac owner $332,000, and a corporate purchaser of commercial aircraft literally billions of dollars.

The service-profit chain, developed from analyses of successful service organizations, puts "hard" values on "soft" measures. It helps managers target new investments to develop service and satisfaction levels for maximum competitive impact, widening the gap between service leaders and their merely good competitors.

The Service-Profit Chain

The service-profit chain establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The links in the chain (which should be regarded as propositions) are as follows: Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction, in turn, results primarily from high-quality support services and policies that enable employees to deliver results to customers. (See the exhibit "The Links in the Service-Profit Chain.")

The Links in the Service-Profit Chain

The service-profit chain is also defined by a special kind of leadership. CEOs of exemplary service companies emphasize the importance of each employee and customer. For these CEOs, the focus on customers and employees is no empty slogan tailored to an annual management meeting. For example, Herbert Kelleher, CEO of Southwest Airlines, can be found aboard airplanes, on tarmacs, and in terminals, interacting with employees and customers. Kelleher believes that hiring employees who have the right attitude is so important that the hiring process takes on a "patina of spirituality." In addition, he believes that "anyone who looks at things solely in terms of factors that can easily be quantified is missing the heart of business, which is people." William Pollard, the chairman of ServiceMaster, continually underscores the importance of "teacher-learner" managers, who have what he calls "a servant's heart." And John McCoy, CEO of Banc One, stresses the "uncommon partnership," a system of support that provides maximum latitude to individual bank presidents while supplying information systems and common measurements of customer satisfaction and financial measures.

A closer look at each link reveals how the service-profit chain functions as a whole.

Customer Loyalty Drives Profitability and Growth

To maximize profit, managers have pursued the Holy Grail of becoming number one or two in their industries for nearly two decades. Recently, however, new measures of service industries like software and banking suggest that customer loyalty is a more important determinant of profit. (See Frederick F. Reichheld and W. Earl Sasser, Jr., "Zero Defections: Quality Comes to Services," HBR September-October 1990.) Reichheld and Sasser estimate that a 5% increase in customer loyalty can produce profit increases from 25% to 85%. They conclude that quality of market share, measured in terms of customer loyalty, deserves as much attention as quantity of share.

Banc One, based in Columbus, Ohio, has developed a sophisticated system to track several factors involved in customer loyalty and satisfaction. Once driven strictly by financial measures, Banc One now conducts quarterly measures of customer retention; the number of services used by each customer, or depth of relationship; and the level of customer satisfaction. The strategies derived from this information help explain why Banc One has achieved a return on assets more than double that of its competitors in recent years.

Customer Satisfaction Drives Customer Loyalty

Leading service companies are currently trying to quantify customer satisfaction. For example, for several years, Xerox has polled 480,000 customers per year regarding product and service satisfaction using a five-point scale from 5 (high) to 1 (low). Until two years ago, Xerox's goal was to achieve 100% 4s (satisfied) and 5s (very satisfied) by the end of 1993. But in 1991, an analysis of customers who gave Xerox 4s and 5s on satisfaction found that the relationships between the scores and actual loyalty differed greatly depending on whether the customers were very satisfied or satisfied. Customers giving Xerox 5s were six times more likely to repurchase Xerox equipment than those giving 4s.

This analysis led Xerox to extend its efforts to create apostles-a term coined by Scott D. Cook, CEO of software producer and distributor Intuit, describing customers so satisfied that they convert the uninitiated to a product or service. Xerox's management currently wants to achieve 100% apostles, or 5s, by the end of 1996 by upgrading service levels and guaranteeing customer satisfaction. But just as important for Xerox's profitability is to avoid creating terrorists: customers so unhappy that they speak out against a poorly delivered service at every opportunity. Terrorists can reach hundreds of potential customers. In some instances, they can even discourage acquaintances from trying a service or product. (See the exhibit "A Satisfied Customer Is Loyal.")

A Satisfied Customer Is Loyal

Value Drives Customer Satisfaction

Customers today are strongly value oriented. But just what does that mean? Customers tell us that value means the results they receive in relation to the total costs (both the price and other costs to customers incurred in acquiring the service). The insurance company Progressive is creating just this kind of value for its customers by processing and paying claims quickly and with little policyholder effort. Members of the company's CAT (catastrophe) team fly to the scene of major accidents, providing support services like transportation and housing and handling claims rapidly. By reducing legal costs and actually placing more money in the hands of the injured parties, the CAT team more than makes up for the added expenses the organization incurs by maintaining the team. In addition, the CAT team delivers value to customers, which helps explain why Progressive has one of the highest margins in the property-and-casualty insurance industry.

Employee Productivity Drives Value

At Southwest Airlines, the seventh-largest U.S. domestic carrier, an astonishing story of employee productivity occurs daily. Eighty-six percent of the company's 14,000 employees are unionized. Positions are designed so that employees can perform several jobs if necessary. Schedules, routes, and company practices-such as open seating and the use of simple, color-coded, reusable boarding passes-enable the boarding of three and four times more passengers per day than competing airlines. In fact, Southwest deplanes and reloads two-thirds of its flights in 15 minutes or less. Because of aircraft availability and short-haul routes that don't require long layovers for flight crews, Southwest has roughly 40% more pilot and aircraft utilization than its major competitors: Its pilots fly on average 70 hours per month versus 50 hours at other airlines. These factors explain how the company can charge fares from 60% to 70% lower than existing fares in markets it enters.

At Southwest, customer perceptions of value are very high, even though the airline does not assign seats, offer meals, or integrate its reservation system with other airlines. Customers place high value on Southwest's frequent departures, on-time service, friendly employees, and very low fares. Southwest's management knows this because its major marketing research unit-its 14,000 employees-is in daily contact with customers and reports its findings back to management. In addition, the Federal Aviation Administration's performance measures show that Southwest, of all the major airlines, regularly achieves the highest level of on-time arrivals, the lowest number of complaints, and the fewest lost-baggage claims per 1,000 passengers. When combined with Southwest's low fares per seat-mile, these indicators show the higher value delivered by Southwest's employees compared with most domestic competitors. Southwest has been profitable for 21 consecutive years and was the only major airline to realize a profit in 1992. (See the exhibit "How Southwest Compares with Its Competitors.")

How Southwest Compares with Its Competitors

Employee Loyalty Drives Productivity

Traditional measures of the losses incurred by employee turnover concentrate only on the cost of recruiting, hiring, and training replacements. In most service jobs, the real cost of turnover is the loss of productivity and decreased customer satisfaction. One recent study of an automobile dealer's sales personnel by Abt Associates concluded that the average monthly cost of replacing a sales representative who had five to eight years of experience with an employee who had less than one year of experience was as much as $36,000 in sales. And the costs of losing a valued broker at a securities firm can be still more dire. Conservatively estimated, it takes nearly five years for a broker to rebuild relationships with customers that can return $1 million per year in commissions to the brokerage house-a cumulative loss of at least $2.5 million in commissions.

Employee Satisfaction Drives Loyalty

In one 1991 proprietary study of a property-and-casualty insurance company's employees, 30% of all dissatisfied employees registered an intention to leave the company, a potential turnover rate three times higher than that for satisfied employees. In this same case, low employee turnover was found to be linked closely to high customer satisfaction. In contrast, Southwest Airlines, recently named one of the country's 10 best places to work, experiences the highest rate of employee retention in the airline industry. Satisfaction levels are so high that at some of its operating locations, employee turnover rates are less than 5% per year. USAA, a major provider of insurance and other financial services by direct mail and phone, also achieves low levels of employee turnover by ensuring that its employees are highly satisfied. But what drives employee satisfaction? Is it compensation, perks, or plush workplaces?

Internal Quality Drives Employee Satisfaction

What we call the internal quality of a working environment contributes most to employee satisfaction. Internal quality is measured by the feelings that employees have toward their jobs, colleagues, and companies. What do service employees value most on the job? Although our data are preliminary at best, they point increasingly to the ability and authority of service workers to achieve results for customers. At USAA, for example, telephone sales and service representatives are backed by a sophisticated information system that puts complete customer information files at their fingertips the instant they receive a customer's call. In addition, state-of-the-art, job-related training is made available to USAA employees. And the curriculum goes still further, with 200 courses in 75 classrooms on a wide range of subjects.

Internal quality is also characterized by the attitudes that people have toward one another and the way people serve each other inside the organization. For example, ServiceMaster, a provider of a range of cleaning and maintenance services, aims to maximize the dignity of the individual service worker. Each year, it analyzes in depth a part of the maintenance process, such as cleaning a floor, in order to reduce the time and effort needed to complete the task. The "importance of the mundane" is stressed repeatedly in ServiceMaster's management training-for example, in the seven-step process devised for cleaning a hospital room: from the first step, greeting the patient, to the last step, asking patients whether or not they need anything else done. Using this process, service workers develop communication skills and learn to interact with patients in ways that add depth and dimension to their jobs.

Leadership Underlies the Chain's Success

Leaders who understand the service-profit chain develop and maintain a corporate culture centered on service to customers and fellow employees. They display a willingness and ability to listen. Successful CEOs like John Martin of Taco Bell, John McCoy of Banc One, Herb Kelleher of Southwest, and Bill Pollard of ServiceMaster spend a great deal of time with customers and employees, experiencing their companies' service processes while listening to employees for suggestions for improvement. They care about their employees and spend a great deal of time selecting, tracking, and recognizing them.

For example, Brigadier General Robert McDermott, until recently chairman and CEO of USAA, reflected, "Public recognition of outstanding employees flows naturally from our corporate culture. That culture is talked about all the time, and we live it." According to Scott Cook at Intuit, "Most people take culture as a given. It is around you, the thinking goes, and you can't do anything about it. However, when you run a company, you have the opportunity to determine the culture. I find that when you champion the most noble values-including service, analysis, and database decision making-employees rise to the challenge, and you forever change their lives."

Relating Links in the Chain for Management Action

While many organizations are beginning to measure relationships between individual links in the service-profit chain, only a few have related the links in meaningful ways-ways that can lead to comprehensive strategies for achieving lasting competitive advantage.

The 1991 proprietary study of a property-and-casualty insurance company, cited earlier, not only identified the links between employee satisfaction and loyalty but also established that a primary source of job satisfaction was the service workers' perceptions of their ability to meet customer needs. Those who felt they did meet customer needs registered job satisfaction levels more than twice as high as those who felt they didn't. But even more important, the same study found that when a service worker left the company, customer satisfaction levels dropped sharply, from 75% to 55%. As a result of this analysis, management is trying to reduce turnover among customer-contact employees and to enhance their job skills.

Similarly, in a study of its seven telephone customer service centers, MCI found clear relationships between employees' perceptions of the quality of MCI service and employee satisfaction. The study also linked employee satisfaction directly to customer satisfaction and intentions to continue to use MCI services. Identifying these relationships motivated MCI's management to probe deeper and determine what affected job satisfaction at the service centers. The factors they uncovered, in order of importance, were satisfaction with the job itself, training, pay, advancement fairness, treatment with respect and dignity, teamwork, and the company's interest in employees' well-being. Armed with this information, MCI's management began examining its policies concerning those items valued most by employees at its service centers. MCI has incorporated information about its service capabilities into training and communications efforts and television advertising.

No organization has made a more comprehensive effort to measure relationships in the service-profit chain and fashion a strategy around them than the fast-food company Taco Bell, a subsidiary of PepsiCo. Taco Bell's management tracks profits daily by unit, market manager, zone, and country. By integrating this information with the results of exit interviews that Taco Bell conducts with 800,000 customers annually, management has found that stores in the top quadrant of customer satisfaction ratings outperform the others by all measures. As a result, it has linked no less than 20% of all operations managers' compensation in company-owned stores to customer satisfaction ratings, realizing a subsequent increase in both customer satisfaction ratings and profits.

However, Taco Bell's efforts don't stop there. By examining employee turnover records for individual stores, Taco Bell has discovered that the 20% of stores with the lowest turnover rates enjoy double the sales and 55% higher profits than the 20% of stores with the highest employee turnover rates. As a result of this self-examination, Taco Bell has instituted financial and other incentives in order to reverse the cycle of failure that is associated with poor employee selection, subpar training, low pay, and high turnover.

In addition, Taco Bell monitors internal quality through a network of 800 numbers created to answer employees' questions, field their complaints, remedy situations, and alert top-level management to potential trouble spots. It also conducts periodic employee roundtable meetings, interviews, and a comprehensive companywide survey every two or three years in order to measure satisfaction. As a result of all this work, Taco Bell's employee satisfaction program features a new selection process, improved skill building, increased latitude for decision making on the job, further automation of unpleasant backroom labor, and, finally, greater opportunities for employee promotion into management positions.

Relating all the links in the service-profit chain may seem to be a tall order. But profitability depends not only on placing hard values on soft measures but also on linking those individual measures together into a comprehensive service picture. Service organizations need to quantify their investments in people-both customers and employees. The service-profit chain provides the framework for this critical task.

Service-Profit Chain Audit

A service-profit chain audit helps companies determine what drives their profit and suggests actions that can lead to long-term profitability. As they review the audit, managers should ask themselves what efforts are under way to obtain answers to the following questions and what those answers reveal about their companies.

Profit and Growth

How do we define loyal customers? Customers often become more profitable over time. And loyal customers account for an unusually high proportion of the sales and profit growth of successful service providers. In some organizations, loyalty is measured in terms of whether or not a customer is on the company rolls. But several companies have found that their most loyal customers-the top 20% of total customers-not only provide all the profit but also cover losses incurred in dealing with less loyal customers.

Because of the link between loyal customers and profit, Banc One measures depth of relationship-the number of available related financial services, such as checking, lending, and safe deposit, actually used by customers. Recognizing the same relationship, Taco Bell measures "share of stomach" to assess the company's sales against all other food purchases a customer can potentially make. As a result, the fast-food chain is trying to reach consumers through kiosks, carts, trucks, and the shelves of supermarkets.

Do measurements of customer profitability include profits from referrals? Companies that measure the stream of revenue and profits from loyal customers (retention) and repeat sales often overlook what can be the most important of the three Rs of loyalty: referrals. For example, Intuit provides high-quality, free lifetime service for a personal finance software package that sells for as little as $30. The strategy makes sense when the value of a loyal customer is considered-a revenue stream of several thousands of dollars from software updates, supplies, and new customer referrals. With this strategy in place, Intuit increased its sales to more than $30 million with just two U.S. field sales representatives.

What proportion of business development expenditures and incentives are directed to the retention of existing customers? Too many companies concentrate nearly all their efforts on attracting new customers. But in businesses like life insurance, a new policyholder doesn't become profitable for at least three years. In the credit-card finance business, the break-even point for a new customer is often six or more years because of high marketing and bad-debt costs in the first year of a relationship with cardholders. These costs must be defrayed by profits from loyal customers, suggesting the need for a careful division of organizational effort between customer retention and development.

Why do our customers defect? It's important to find out not only where defectors go but also why they defect. Was it because of poor service, price, or value? Answers to these questions provide information about whether or not existing strategies are working. In addition, exit interviews of customers can have real sales impact. For example, at one credit-card service organization, a phone call to question cardholders who had stopped using their cards led to the immediate reinstatement of one-third of the defectors.

Customer Satisfaction

Are customer satisfaction data gathered in an objective, consistent, and periodic fashion? Currently, the weakest measurements being used by the companies we have studied concern customer satisfaction. At some companies, high levels of reported customer satisfaction are contradicted by continuing declines in sales and profits. Upon closer observation, we discovered that the service providers were gaming the data, using manipulative methods for collecting customer satisfaction data. In one extreme case, an automobile dealer sent a questionnaire to recent buyers with the highest marks already filled in, requiring owners to alter the marks only if they disagreed. Companies can, however, obtain more objective results using third-party interviews; "mystery shopping" by unidentified, paid observers; or technologies like touch-screen television.

Consistency is at least as important as the actual questions asked of customers. Some of Banc One's operating units formerly conducted their own customer satisfaction surveys. Today the surveys have been centralized, made mandatory, and are administered by mail on a quarterly basis to around 125,000 customers. When combined with periodic measurement, the surveys provide highly relevant trend information that informs the managerial decision-making process. Similarly, Xerox's measures of satisfaction obtained from 10,000 customers per month-a product of an unchanging set of survey questions and very large samples-make possible period-to-period comparisons that are important in measuring and rewarding performance.

Where are the listening posts for obtaining customer feedback in your organization? Listening posts are tools for collecting data from customers and systematically translating those data into information in order to improve service and products. Common examples are letters of complaint. Still more important listening posts are reports from field sales and service personnel or the logs of telephone service representatives. Intuit's content analysis of customer service inquiries fielded by service representatives produced over 50 software improvements and 100 software documentation improvements in a single year. USAA has gone one step further by automating the feedback process to enter data online, enabling its analysis and plans departments to develop corrective actions.

How is information concerning customer satisfaction used to solve customer problems? In order to handle customer problems, service providers must have the latitude to resolve any situation promptly. In addition, information regarding a customer concern must be transmitted to the service provider quickly. Customers and employees must be encouraged to report rather than suppress concerns. For example, one Boston-area Lexus dealer notified its customers, "If you are experiencing a problem with your car or our service department and you can't answer '100% satisfied' when you receive your survey directly from Lexus, please give us the opportunity to correct the problem before you fill out the survey. Lexus takes its customer surveys very seriously."

External Service Value

How do you measure service value? Value is a function not only of costs to the customer but also of the results achieved for the customer. Value is always relative because it is based both on perceptions of the way a service is delivered and on initial customer expectations. Typically, a company measures value using the reasons expressed by customers for high or low satisfaction. Because value varies with individual expectations, efforts to improve value inevitably require service organizations to move all levels of management closer to the customer and give frontline service employees the latitude to customize a standard service to individual needs.

How is information concerning customers' perceptions of value shared with those responsible for designing a product or service? Relaying information concerning customer expectations to those responsible for design often requires the formation of teams of people responsible for sales, operations, and service or product design, as well as the frequent assignment of service designers to tasks requiring field contact with customers. Intuit has created this kind of capability in product development teams. And all Intuit employees, including the CEO, must periodically work on the customer service phones. Similarly, at Southwest Airlines, those responsible for flight scheduling periodically work shifts in the company's terminals to get a feel for the impact of schedules on customer and employee satisfaction.

To what extent are measures taken of differences between customers' perceptions of quality delivered and their expectations before delivery? Ultimately, service quality is a function of the gap between perceptions of the actual service experienced and what a customer expected before receiving that service. Actual service includes both final results and the process through which those results were obtained. Differences between experiences and expectations can be measured in generic dimensions such as the reliability and timeliness of service, the empathy and authority with which the service was delivered, and the extent to which the customer is left with tangible evidence (like a calling card) that the service has been performed.

Do our organization's efforts to improve external service quality emphasize effective recovery from service errors in addition to providing a service right the first time? A popular concept of quality in manufacturing is the importance of "doing things right the first time." But customers of service organizations often allow one mistake. Some organizations are very good at delivering service as long as nothing goes wrong. Others organize for and thrive on service emergencies. Outstanding service organizations do both by giving frontline employees the latitude to effect recovery. Southwest Airlines maintains a policy of allowing frontline employees to do whatever they feel comfortable doing in order to satisfy customers. Xerox authorizes frontline service employees to replace up to $250,000 worth of equipment if customers are not getting results.

Employee Productivity

How do you measure employee productivity? To what extent do measures of productivity identify changes in the quality as well as the quantity of service produced per unit of input? In many services, the ultimate measure of quality may be customer satisfaction. That measure should be combined with measures of quantity to determine the total output of the service organization. At ServiceMaster, for example, measures of output in the schools and hospitals cleaned under the company's supervision include both numbers of work orders performed per employee hour and the quality of the work done, as determined by periodic inspections performed by ServiceMaster and client personnel. Similarly, Southwest Airlines delivers relatively high levels of productivity in terms of both quality and quantity. In fact, outstanding service competitors are replacing the typical "either/or" trade-off between quality and quantity with an "and/also" imperative.

Employee Loyalty

How do you create employee loyalty? Employee loyalty goes hand in hand with productivity, contradicting the conventional wisdom that successful service providers should be promoted to larger supervisory responsibilities or moved to a similar job in a larger business unit. ServiceMaster and Taco Bell have expanded jobs without promoting good service workers away from their customers. At ServiceMaster, effective single-unit managers are given supervisory responsibilities for custodial, maintenance, or other workers at more than one hospital or school. Taco Bell gives restaurant general managers a "hunting license" to develop new sales sites in the neighborhoods served by their restaurants and rewards them for doing it.

Have we made an effort to determine the right level of employee retention? Rarely is the right level of retention 100%. Dynamic service organizations require a certain level of turnover. However, in calibrating desired turnover levels, it is important to take into account the full cost of the loss of key service providers, including those of lost sales and productivity and added recruiting, selection, and training.

Employee Satisfaction

Is employee satisfaction measured in ways that can be linked to similar measures of customer satisfaction with sufficient frequency and consistency to establish trends for management use? Taco Bell studies employee satisfaction through surveys, frequent interviews, and roundtable meetings. Customer satisfaction is measured by interviews with customers conducted biannually and includes questions about satisfaction with employee friendliness and hustle. Both the employee and the customer satisfaction rankings are comprehensive, store-specific, and conducted frequently. With these data, the company can better understand overall trends and the links between employee and customer satisfaction.

Are employee selection criteria and methods geared to what customers, as well as managers, believe are important? At Southwest Airlines, for example, frequent fliers are regularly invited to participate in the auditioning and selection of cabin attendants. And many take time off from work to join Southwest's employee selection team as it carries out its work. As one customer commented, "Why not do it? It's my airline."

To what extent are measures of customer satisfaction, customer loyalty, or the quality and quantity of service output used in recognizing and rewarding employees? Employee recognition may often involve little more than informing individual employees or employees as a group about service improvements and individual successes. Banc One goes one step further, including customer satisfaction measures for each banking unit in its periodic report of other performance measures, mostly financial, to all units.

Internal Service Quality

Do employees know who their customers are? It is particularly difficult for employees to identify their customers when those customers are internal to the company. These employees often do not know what impact their work has on other departments. Identifying internal customers requires mapping and communicating characteristics of work flow, organizing periodic cross-departmental meetings between "customers" and "servers," and recognizing good internal service performance.

In 1990, USAA organized a PRIDE (Professionalism Results in Dedication to Excellence) team of 100 employees and managers to examine and improve on a function-by-function basis all processes associated with property-and-casualty insurance administration, which included analyzing customer needs and expectations. The PRIDE effort was so successful that it led to a cross-functional review of USAA's service processing. Service processing time has been reduced, as have handoffs of customers from one server to another.

Are employees satisfied with the technological and personal support they receive on the job? The cornerstone of success at Taco Bell is the provision of the latest in information technology, food service equipment, simple work-scheduling techniques, and effective team training. This practice led to the establishment of self-managing teams of service providers. Also, the quality of work life involves selecting the right workers. Winners like to be associated with winners. Better employees tend to refer people they like and people like themselves. Internal service quality can also be thought of as the quality of work life. It is a visible expression of an organization's culture, one influenced in important ways by leadership.

Leadership
To what extent is the company's leadership:

energetic, creative versus stately, conservative?

participatory, caring versus removed, elitist?

listening, coaching, and teaching versus supervising and managing?

motivating by mission versus motivating by fear?

leading by means of personally demonstrated values versus institutionalized policies? How much time is spent by the organization's leadership personally developing and maintaining a corporate culture centered on service to customers and fellow employees?

Leaders naturally have individual traits and styles. But the CEOs of companies that are successfully using the service-profit chain possess all or most of a set of traits that separate them from their merely good competitors. Of course, different styles of leadership are appropriate for various stages in an organization's development. But the messages sent by the successful leaders we have observed stress the importance of careful attention to the needs of customers and employees. These leaders create a culture capable of adapting to the needs of both.

Relating the Measures

What are the most important relationships in your company's service-profit chain? To what extent does each measure correlate with profit and growth at the frontline level? Is the importance of these relationships reflected in rewards and incentives offered to employees? Measures drive action when they are related in ways that provide managers with direction. To enjoy the kind of success that service organizations like Southwest Airlines, ServiceMaster, and Taco Bell have enjoyed, looking at individual measures is not enough. Only if the individual measures are tied together into a comprehensive picture will the service-profit chain provide a foundation for unprecedented profit and growth.

A version of this article appeared in the July-August 2008 issue of Harvard Business Review.

# data[].attributes.attachment_link.title
Putting the Service-Profit Chain to Work

# data[].attributes.attachment_link.description
Editor's Note: This article sets out a simple, elegant, and ultimately tough-minded way to build profitability in a service business. Originally published in 1994, it offers as much today as it did then and is a perennial best seller. ♦ UPDATE: Learn about companies that are applying this timeless advice today.

# data[].attributes.attachment_link.readable_text
One evening in the mid-1960s, Arjay Miller was driving home from his office in Dearborn, Michigan, in the four-door Lincoln Continental that went with his job as president of the Ford Motor Company. On a crowded highway, another car struck his from the rear. The Continental spun around and burst into flames. Because he was wearing a shoulder-strap seat belt, Miller was unharmed by the crash, and because his doors didn't jam he escaped the gasoline-drenched, flaming wreck. But the accident made a vivid impression on him. Several months later, on July 15, 1965, he recounted it to a U.S. Senate subcommittee that was hearing testimony on auto safety legislation. "I still have burning in my mind the image of that gas tank on fire," Miller said. He went on to express an almost passionate interest in controlling fuel-fed fires in cars that crash or roll over. He spoke with excitement about the fabric gas tank Ford was testing at that very moment. "If it proves out," he promised the senators, it will be a feature you will see in our standard cars."

Almost seven years after Miller's testimony, a woman, whom for legal reasons we will call Sandra Gillespie, pulled onto a Minneapolis highway in her new Ford Pinto. Riding with her was a young boy, whom we'll call Robbie Carlton. As she entered a merge lane, Sandra Gillespie's car stalled. Another car rear-ended hers at an impact speed of 28 miles per hour. The Pinto's gas tank ruptured. Vapors from it mixed quickly with the air in the passenger compartment. A spark ignited the mixture and the car exploded in a ball of fire. Sandra died in agony a few hours later in an emergency hospital. Her passenger, 13-year-old Robbie Carlton, is still alive; he has just come home from another futile operation aimed at grafting a new ear and nose from skin on the few unscarred portions of his badly burned body. (This accident is real; the details are from police reports.)

Why did Sandra Gillespie's Ford Pinto catch fire so easily, seven years after Ford's Arjay Miller made his apparently sincere pronouncements-the same seven years that brought more safety improvements to cars than any other period in automotive history? An extensive investigation by Mother Jones over the past six months has found these answers:

Fighting strong competition from Volkswagen for the lucrative small-car market, the Ford Motor Company rushed the Pinto into production in much less than the usual time.

Ford engineers discovered in pre-production crash tests that rear-end collisions would rupture the Pinto's fuel system extremely easily.

Because assembly-line machinery was already tooled when engineers found this defect, top Ford officials decided to manufacture the car anyway-exploding gas tank and all-even though Ford owned the patent on a much safer gas tank.

For more than eight years afterwards, Ford successfully lobbied, with extraordinary vigor and some blatant lies, against a key government safety standard that would have forced the company to change the Pinto's fire-prone gas tank.
By conservative estimates Pinto crashes have caused 500 burn deaths to people who would not have been seriously injured if the car had not burst into flames. The figure could be as high as 900. Burning Pintos have become such an embarrassment to Ford that its advertising agency, J. Walter Thompson, dropped a line from the end of a radio spot that read "Pinto leaves you with that warm feeling."

Ford knows the Pinto is a firetrap, yet it has paid out millions to settle damage suits out of court, and it is prepared to spend millions more lobbying against safety standards. With a half million cars rolling off the assembly lines each year, Pinto is the biggest-selling subcompact in America, and the company's operating profit on the car is fantastic. Finally, in 1977, new Pinto models have incorporated a few minor alterations necessary to meet that federal standard Ford managed to hold off for eight years. Why did the company delay so long in making these minimal, inexpensive improvements?

Ford waited eight years because its internal "cost-benefit analysis," which places a dollar value on human life, said it wasn't profitable to make the changes sooner.
Before we get to the question of how much Ford thinks your life is worth, let's trace the history of the death trap itself. Although this particular story is about the Pinto, the way in which Ford made its decision is typical of the U.S. auto industry generally. There are plenty of similar stories about other cars made by other companies. But this case is the worst of them all.

The next time you drive behind a Pinto (with over two million of them on the road, you shouldn't have much trouble finding one), take a look at the rear end. That long silvery object hanging down under the bumper is the gas tank. The tank begins about six inches forward of the bumper. In late models the bumper is designed to withstand a collision of only about five miles per hour. Earlier bumpers may as well not have been on the car for all the protection they offered the gas tank.

Mother Jones has studied hundreds of reports and documents on rear-end collisions involving Pintos. These reports conclusively reveal that if you ran into that Pinto you were following at over 30 miles per hour, the rear end of the car would buckle like an accordion, right up to the back seat. The tube leading to the gas-tank cap would be ripped away from the tank itself, and gas would immediately begin sloshing onto the road around the car. The buckled gas tank would be jammed up against the differential housing (that big bulge in the middle of your rear axle), which contains four sharp, protruding bolts likely to gash holes in the tank and spill still more gas. Now all you need is a spark from a cigarette, ignition, or scraping metal, and both cars would be engulfed in flames. If you gave that Pinto a really good whack-say, at 40 mph-chances are excellent that its doors would jam and you would have to stand by and watch its trapped passengers burn to death.

This scenario is no news to Ford. Internal company documents in our possession show that Ford has crash-tested the Pinto at a top-secret site more than 40 times and that every test made at over 25 mph without special structural alteration of the car has resulted in a ruptured fuel tank. Despite this, Ford officials denied under oath having crash-tested the Pinto.

Eleven of these tests, averaging a 31-mph impact speed, came before Pintos started rolling out of the factories. Only three cars passed the test with unbroken fuel tanks. In one of them an inexpensive light-weight plastic baffle was placed between the front of the gas tank and the differential housing, so those four bolts would not perforate the tank. (Don't forget about that little piece of plastic, which costs one dollar and weighs one pound. It plays an important role in our story later on.) In another successful test, a piece of steel was placed between the tank and the bumper. In the third test car the gas tank was lined with a rubber bladder. But none of these protective alterations was used in the mass-produced Pinto.

In pre-production planning, engineers seriously considered using in the Pinto the same kind of gas tank Ford uses in the Capri. The Capri tank rides over the rear axle and differential housing. It has been so successful in over 50 crash tests that Ford used it in its Experimental Safety Vehicle, which withstood rear-end impacts of 60 mph. So why wasn't the Capri tank used in the Pinto? Or, why wasn't that plastic baffle placed between the tank and the axle-something that would have saved the life of Sandra Gillespie and hundreds like her? Why was a car known to be a serious fire hazard deliberately released to production in August of 1970?

Whether Ford should manufacture subcompacts at all was the subject of a bitter two-year debate at the company's Dearborn headquarters. The principals in this corporate struggle were the then-president Semon "Bunky" Knudsen, whom Henry Ford II had hired away from General Motors, and Lee Iacocca, a spunky Young Turk who had risen fast within the company on the enormous success of the Mustang. Iacocca argued forcefully that Volkswagen and the Japanese were going to capture the entire American subcompact market unless Ford put out its own alternative to the VW Beetle. Bunky Knudsen said, in effect: let them have the small-car market; Ford makes good money on medium and large models. But he lost the battle and later resigned. Iacocca became president and almost immediately began a rush program to produce the Pinto.

Like the Mustang, the Pinto became known in the company as "Lee's car." Lee Iococca wanted that little car in the showrooms of America with the 1971 models. So he ordered his engineering vice president, Bob Alexander, to oversee what was probably the shortest production planning period in modern automotive history. The normal time span from conception to production of a new car model is about 43 months. The Pinto schedule was set at just under 25.

A quick glance at the bar chart below will show you what that speed-up meant. Design, styling, product planning,advance engineering and quality assurance all have flexible time frames, and engineers can pretty much carry these on simultaneously. Tooling, on the other hand, has a fixed time frame of about 18 months. Normally, an auto company doesn't begin tooling until the other processes are almost over: you don't want to make the machines that stamp and press and grind metal into the shape of car parts until you know all those parts will work well together. But Iacocca's speed-up meant Pinto tooling went on at the same time as product development. So when crash tests revealed a serious defect in the gas tank, it was too late. The tooling was well under way.

When it was discovered the gas tank was unsafe, did anyone go to Iacocca and tell him? "Hell no," replied an engineer who worked on the Pinto, a high company official for many years, who, unlike several others at Ford, maintains a necessarily clandestine concern for safety. "That person would have been fired. Safety wasn't a popular subject around Ford in those days. With Lee it was taboo. Whenever a problem was raised that meant a delay on the Pinto, Lee would chomp on his cigar, look out the window and say 'Read the product objectives and get back to work.'"

The product objectives are clearly stated in the Pinto "green book." This is a thick, top-secret manual in green covers containing a step-by-step production plan for the model, detailing the metallurgy, weight, strength and quality of every part in the car. The product objectives for the Pinto are repeated in an article by Ford executive F.G. Olsen published by the Society of Automotive Engineers. He lists these product objectives as follows:

1. TRUE SUBCOMPACT

Size

Weight
2. LOW COST OF OWNERSHIP

Initial price

Fuel consumption

Reliability

Serviceability
3. CLEAR PRODUCT SUPERIORITY

Appearance

Comfort

Features

Ride and Handling

Performance
Safety, you will notice, is not there. It is not mentioned in the entire article. As Lee Iacocca was fond of saying, "Safety doesn't sell."

Heightening the anti-safety pressure on Pinto engineers was an important goal set by Iacocca known as "the limits of 2,000." The Pinto was not to weigh an ounce over 2,000 pounds and not to cost a cent over $2,000. "Iacocca enforced these limits with an iron hand," recalls the engineer quoted earlier. So, even when a crash test showed that that one-pound, one-dollar piece of plastic stopped the puncture of the gas tank, it was thrown out as extra cost and extra weight.

People shopping for subcompacts are watching every dollar. "You have to keep in mind," the engineer explained, "that the price elasticity on these subcompacts is extremely tight. You can price yourself right out of the market by adding $25 to the production cost of the model. And nobody understands that better than Iacocca."

Dr. Leslie Ball, the retired safety chief for the NASA manned space program and a founder of the International Society of Reliability Engineers, recently made a careful study of the Pinto. "The release to production of the Pinto was the most reprehensible decision in the history of American engineering," he said. Ball can name more than 40 European and Japanese models in the Pinto price and weight range wit h safer gas-tank positioning. Ironically, many of them, like the Ford Capri, contain a "saddle-type" gas tank riding over the back axle. The patent on the saddle-type tank is owned by the Ford Motor Co.

Los Angeles auto safety expert Byron Bloch has made an in-depth study of the Pinto fuel system. "It's a catastrophic blunder," he says. "Ford made an extremely irresponsible decision when they placed such a weak tank in such a ridiculous location in such a soft rear end. It's almost designed to blow up-premeditated."

A Ford engineer, who doesn't want his name used, comments: "This company is run by salesmen, not engineers; so the priority is styling, not safety." He goes on to tell a story about gas-tank safety at Ford:

Lou Tubben is one of the most popular engineers at Ford. He's a friendly, outgoing guy with a genuine concern for safety. By 1971 he had grown so concerned about gas-tank integrity that he asked his boss if he could prepare a presentation on safer tank design. Tubben and his boss had both worked on the Pinto and shared a concern for its safety. His boss gave him the go-ahead, scheduled a date for the presentation and invited all company engineers and key production planning personnel. When time came for the meeting, a grand total of two people showed up-Lou Tubben and his boss.

"So you see," continued the anonymous Ford engineer ironically, "there are a few of us here at Ford who are concerned about fire safety." He adds: "They are mostly engineers who have to study a lot of accident reports and look at pictures of burned people. But we don't talk about it much. It isn't a popular subject. I've never seen safety on the agenda of a product meeting and, except for a brief period in 1956, I can't remember seeing the word safety in an advertisement. I really don't think the company wants American consumers to start thinking too much about safety-for fear they might demand it, I suppose."

Asked about the Pinto gas tank, another Ford engineer admitted: "That's all true. But you miss the point entirely. You see, safety isn't the issue, trunk space is. You have no idea how stiff the competition is over trunk space. Do you realize that if we put a Capri-type tank in the Pinto you could only get one set of golf clubs in the trunk?"

Blame for Sandra Gillespie's death, Robbie Carlton's unrecognizable face and all the other injuries and deaths in Pintos since 1970 does not rest on the shoulders of Lee Iacocca alone. For, while he and his associates fought their battle against a safer Pinto in Dearborn, a larger war against safer cars raged in Washington. One skirmish in that war involved Ford's successful eight-year lobbying effort against Federal Motor Vehicle Safety Standard 301, the rear-end provisions of which would have forced Ford to redesign the Pinto.

But first some background:

During the early '60s, auto safety legislation became the bête-noire of American big business. The auto industry was the last great unregulated business, and if it couldn't reverse the tide of government regulation, the reasoning went, no one could.

People who know him cannot remember Henry Ford II taking a stronger stand than the one he took against the regulation of safety design. He spent weeks in Washington calling on members of Congress, holding press conferences and recruiting business cronies like W.B. Murphy of Campbell's Soup to join the anti-regulation battle. Displaying the sophistication for which today's American corporate leaders will be remembered, Murphy publicly called auto safety "a hula hoop, a fad that will pass." He was speaking to a special luncheon of the Business Council, an organization of 100 chief executives who gather periodically in Washington to provide "advice" and "counsel" to government. The target of their wrath in this instance was the Motor Vehicle Safety Bills introduced in both houses of Congress, largely in response to Ralph Nader's Unsafe at Any Speed.

By 1965, most pundits and lobbyists saw the handwriting on the wall and prepared to accept government "meddling" in the last bastion of free enterprise. Not Henry. With bulldog tenacity, he held out for defeat of the legislation to the very end, loyal to his grandfather's invention and to the company that makes it. But the Safety Act passed the House and Senate unanimously, and was signed into law by Lyndon Johnson in 1966.

While lobbying for and against legislation is pretty much a process of high-level back-slapping, press-conferencing and speech-making, fighting a regulatory agency is a much subtler matter. Henry headed home to lick his wounds in Grosse Pointe, Michigan, and a planeload of the Ford Motor Company's best brains flew to Washington to start the "education" of the new federal auto safety bureaucrats.

Their job was to implant the official industry ideology in the minds of the new officials regulating auto safety. Briefly summarized, that ideology states that auto accidents are caused not by cars, but by 1) people and 2) highway conditions.

This philosophy is rather like blaming a robbery on the victim. Well, what did you expect? You were carrying money, weren't you? It is an extraordinary experience to hear automotive "safety engineers" talk for hours without ever mentioning cars. They will advocate spending billions educating youngsters, punishing drunks and redesigning street signs. Listening to them, you can momentarily begin to think that it is easier to control 100 million drivers than a handful of manufacturers. They show movies about guardrail design and advocate the clear-cutting of trees 100 feet back from every highway in the nation. If a car is unsafe, they argue, it is because its owner doesn't properly drive it. Or, perhaps, maintain it.

In light of an annual death rate approaching 50,000, they are forced to admit that driving is hazardous. But the car is, in the words of Arjay Miller, "the safest link in the safety chain."

Before the Ford experts left Washington to return to drafting tables in Dearborn they did one other thing. They managed to informally reach an agreement with the major public servants who would be making auto safety decisions. This agreement was that "cost-benefit" would be an acceptable mode of analysis by Detroit and its new regulators. And, as we shall see, cost-benefit analysis quickly became the basis of Ford's argument against safer car design.

Cost-benefit analysis was used only occasionally in government until President Kennedy appointed Ford Motor Company president Robert McNamara to be Secretary of Defense. McNamara, originally an accountant, preached cost-benefit with all the force of a Biblical zealot. Stated in its simplest terms, cost-benefit analysis says that if the cost is greater than the benefit, the project is not worth it-no matter what the benefit. Examine the cost of every action, decision, contract part or change, the doctrine says, then carefully evaluate the benefits (in dollars) to be certain that they exceed the cost before you begin a program or-and this is the crucial part for our story-pass a regulation.

As a management tool in a business in which profits matter over everything else, cost-benefit analysis makes a certain amount of sense. Serious problems come, however, when public officials who ought to have more than corporate profits at heart apply cost-benefit analysis to every conceivable decision. The inevitable result is that they must place a dollar value on human life.

Ever wonder what your life is worth in dollars? Perhaps $10 million? Ford has a better idea: $200,000.

Remember, Ford had gotten the federal regulators to agree to talk auto safety in terms of cost-benefit analysis. But in order to be able to argue that various safety costs were greater than their benefits, Ford needed to have a dollar value figure for the "benefit." Rather than be so uncouth as to come up with such a price tag itself, the auto industry pressured the National Highway Traffic Safety Administration to do so. And in a 1972 report the agency decided a human life was worth $200,725. Inflationary forces have recently pushed the figure up to $278,000.

Furnished with this useful tool, Ford immediately went to work using it to prove why various safety improvements were too expensive to make.

Nowhere did the company argue harder that it should make no changes than in the area of rupture-prone fuel tanks. Not long after the government arrived at the $200,725-per-life figure, it surfaced, rounded off to a cleaner $200,000, in an internal Ford memorandum. This cost-benefit analysis argued that Ford should not make an $11-per-car improvement that would prevent 180 fiery deaths a year. (This minor change would have prevented gas tanks from breaking so easily both in rear-end collisions, like Sandra Gillespie's, and in rollover accidents, where the same thing tends to happen.)

Ford's cost-benefit table is buried in a seven-page company memorandum entitled "Fatalities Associated with Crash-Induced Fuel Leakage and Fires." The memo argues that there is no financial benefit in complying with proposed safety standards that would admittedly result in fewer auto fires, fewer burn deaths and fewer burn injuries. Naturally, memoranda that speak so casually of "burn deaths" and "burn injuries" are not released to the public. They are very effective, however, with Department of Transportation officials indoctrinated in McNamarian cost-benefit analysis.

All Ford had to do was convince men like John Volpe, Claude Brinegar and William Coleman (successive Secretaries of Transportation during the Nixon-Ford years) that certain safety standards would add so much to the price of cars that fewer people would buy them. This could damage the auto industry, which was still believed to be the bulwark of the American economy. "Compliance to these standards," Henry Ford II prophesied at more than one press conference, "will shut down the industry."

The Nixon Transportation Secretaries were the kind of regulatory officials big business dreams of. They understood and loved capitalism and thought like businessmen. Yet, best of all, they came into office uninformed on technical automotive matters. And you could talk "burn injuries" and "burn deaths" with these guys, and they didn't seem to envision children crying at funerals and people hiding in their homes with melted faces. Their minds appeared to have leapt right to the bottom line-more safety meant higher prices, higher prices meant lower sales and lower sales meant lower profits.

So when J. C. Echold, Director of Automotive Safety (which means chief anti-safety lobbyist) for Ford, wrote to the Department of Transportation-which he still does frequently, at great length-he felt secure attaching a memorandum that in effect says it is acceptable to kill 180 people and burn another 180 every year, even though we have the technology that could save their lives for $11 a car.

Furthermore, Echold attached this memo, confident, evidently, that the Secretary would question neither his low death/injury statistics nor his high cost estimates. But it turns out, on closer examination, that both these findings were misleading.

First, note that Ford's table shows an equal number of burn deaths and burn injuries. This is false. All independent experts estimate that for each person who dies by an auto fire, many more are left with charred hands, faces and limbs. Andrew McGuire of the Northern California Burn Center estimates the ratio of burn injuries to deaths at ten to one instead of the one to one Ford shows here. Even though Ford values a burn at only a piddling $67,000 instead of the $200,000 price of a life, the true ratio obviously throws the company's calculations way off.

The other side of the equation, the alleged $11 cost of a fire-prevention device, is also a misleading estimation. One document that was not sent to Washington by Ford was a "Confidential" cost analysis Mother Jones has managed to obtain, showing that crash fires could be largely prevented for considerably less than $11 a car. The cheapest method involves placing a heavy rubber bladder inside the gas tank to keep the fuel from spilling if the tank ruptures. Goodyear had developed the bladder and had demonstrated it to the automotive industry. We have in our possession crash-test reports showing that the Goodyear bladder worked well. On December 2, 1970 ( two years before Echold sent his cost-benefit memo to Washington), Ford Motor Company ran a rear-end crash test on a car with the rubber bladder in the gas tank. The tank ruptured, but no fuel leaked. On January 15, 1971, Ford again tested the bladder and again it worked. The total purchase and installation cost of the bladder would have been $5.08 per car. That $5.08 could have saved the lives of Sandra Gillespie and several hundred others.

When a federal regulatory agency like the National Highway Traffic Safety Administration (NHTSA) decides to issue a new standard, the law usually requires it to invite all interested parties to respond before the standard is enforced-a reasonable enough custom on the surface. However, the auto industry has taken advantage of this process and has used it to delay lifesaving emission and safety standards for years. In the case of the standard that would have corrected that fragile Pinto fuel tank, the delay was for an incredible eight years.

The particular regulation involved here was Federal Motor Vehicle Safety Standard 301. Ford picked portions of Standard 301 for strong opposition way back in 1968 when the Pinto was still in the blueprint stage. The intent of 301, and the 300 series that followed it, was to protect drivers and passengers after a crash occurs. Without question the worst post-crash hazard is fire. So Standard 301 originally proposed that all cars should be able to withstand a fixed barrier impact of 20 mph (that is, running into a wall at that speed) without losing fuel.

When the standard was proposed, Ford engineers pulled their crash-test results out of their files. The front ends of most cars were no problem-with minor alterations they could stand the impact without losing fuel. "We were already working on the front end," Ford engineer Dick Kimble admitted. "We knew we could meet the test on the front end." But with the Pinto particularly, a 20-mph rear-end standard meant redesigning the entire rear end of the car. With the Pinto scheduled for production in August of 1970, and with $200 million worth of tools in place, adoption of this standard would have created a minor financial disaster. So Standard 301 was targeted for delay, and, with some assistance from its industry associates, Ford succeeded beyond its wildest expectations: the standard was not adopted until the 1977 model year. Here is how it happened:

There are several main techniques in the art of combating a government safety standard: a) make your arguments in succession, so the feds can be working on disproving only one at a time; b) claim that the real problem is not X but Y (we already saw one instance of this in "the problem is not cars but people"); c) no matter how ridiculous each argument is, accompany it with thousands of pages of highly technical assertions it will take the government months or, preferably, years to test. Ford's large and active Washington office brought these techniques to new heights and became the envy of the lobbyists' trade.

The Ford people started arguing against Standard 301 way back in 1968 with a strong attack of technique b). Fire, they said, was not the real problem. Sure, cars catch fire and people burn occasionally. But statistically auto fires are such a minor problem that NHTSA should really concern itself with other matters.

Strange as it may seem, the Department of Transportation (NHTSA's parent agency) didn't know whether or not this was true. So it contracted with several independent research groups to study auto fires. The studies took months, which was just what Ford wanted.

The completed studies, however, showed auto fires to be more of a problem than Transportation officials ever dreamed of. Robert Nathan and Associates, a Washington research firm, found that 400,000 cars were burning up every year, burning more than 3,000 people to death. Furthermore, auto fires were increasing five times as fast as building fires. Another study showed that 35 per cent of all fire deaths in the U.S. occurred in automobiles. Forty per cent of all fire department calls in the 1960s were to vehicle fires-a public cost of $350 million a year, a figure that, incidentally, never shows up in cost-benefit analyses.

Another study was done by the Highway Traffic Research Institute in Ann Arbor, Michigan, a safety think-tank funded primarily by the auto industry (the giveaway there is the words "highway traffic" rather than "automobile" in the group's name). It concluded that 40 per cent of the lives lost in fuel-fed fires could be saved if the manufacturers complied with proposed Standard 301. Finally, a third report was prepared for NHTSA by consultant Eugene Trisko entitled "A National Survey of Motor Vehicle Fires." His report indicates that the Ford Motor Company makes 24 per cent of the cars on the American road, yet these cars account for 42 per cent of the collision-ruptured fuel tanks.

Ford lobbyists then used technique a)-bringing up a new argument. Their line then became: yes, perhaps burn accidents do happen, but rear-end collisions are relatively rare (note the echo of technique b) here as well). Thus Standard 301 was not needed. This set the NHTSA off on a new round of analyzing accident reports. The government's findings finally were that rear-end collisions were seven and a half times more likely to result in fuel spills than were front-end collisions. So much for that argument. By now it was 1972; NHTSA had been researching and analyzing for four years to answer Ford's objections. During that time, nearly 9,000 people burned to death in flaming wrecks. Tens of thousands more were badly burned and scarred for life. And the four-year delay meant that well over 10 million new unsafe vehicles went on the road, vehicles that will be crashing, leaking fuel and incinerating people well into the 1980s.

Ford now had to enter its third round of battling the new regulations. On the "the problem is not X but Y" principle, the company had to look around for something new to get itself off the hook. One might have thought that, faced with all the latest statistics on the horrifying number of deaths in flaming accidents, Ford would find the task difficult. But the company's rhetoric was brilliant. The problem was not burns, but...impact! Most of the people killed in these fiery accidents, claimed Ford, would have died whether the car burned or not. They were killed by the kinetic force of the impact, not the fire.

And so once again, as in some giant underwater tennis game, the ball bounced into the government's court and the absurdly pro-industry NHTSA began another slow-motion response. Once again it began a time-consuming round of test crashes and embarked on a study of accidents. The latter, however, revealed that a large and growing number of corpses taken from burned cars involved in rear-end crashes contained no cuts, bruises or broken bones. They clearly would have survived the accident unharmed if the cars had not caught fire. This pattern was confirmed in careful rear-end crash tests performed by the Insurance Institute for Highway Safety. A University of Miami study found an inordinate number of Pintos burning on rear-end impact and concluded that this demonstrated "a clear and present hazard to all Pinto owners."

Pressure on NHTSA from Ralph Nader and consumer groups began mounting. The industry-agency collusion was so obvious that Senator Joseph Montoya (D-N.M.) introduced legislation about Standard 301. NHTSA waffled some more and again announced its intentions to promulgate a rear-end collision standard.

Waiting, as it normally does, until the last day allowed for response, Ford filed with NHTSA a gargantuan batch of letters, studies and charts now arguing that the federal testing criteria were unfair. Ford also argued that design changes required to meet the standard would take 43 months, which seemed like a rather long time in light of the fact that the entire Pinto was designed in about two years. Specifically, new complaints about the standard involved the weight of the test vehicle, whether or not the brakes should be engaged at the moment of impact and the claim that the standard should only apply to cars, not trucks or buses. Perhaps the most amusing argument was that the engine should not be idling during crash tests, the rationale being that an idling engine meant that the gas tank had to contain gasoline and that the hot lights needed to film the crash might ignite the gasoline and cause a fire.

Some of these complaints were accepted, others rejected. But they all required examination and testing by a weak-kneed NHTSA, meaning more of those 18-month studies the industry loves so much. So the complaints served their real purpose-delay; all told, an eight-year delay, while Ford manufactured more than three million profitable, dangerously incendiary Pintos. To justify this delay, Henry Ford II called more press conferences to predict the demise of American civilization. "If we can't meet the standards when they are published," he warned, "we will have to close down. And if we have to close down some production because we don't meet standards we're in for real trouble in this country."

While government bureaucrats dragged their feet on lifesaving Standard 301, a different kind of expert was taking a close look at the Pinto-the "recon man." "Recon" stands for reconstruction; recon men reconstruct accidents for police departments, insurance companies and lawyers who want to know exactly who or what caused an accident. It didn't take many rear-end Pinto accidents to demonstrate the weakness of the car. Recon men began encouraging lawyers to look beyond one driver or another to the manufacturer in their search for fault, particularly in the growing number of accidents where passengers were uninjured by collision but were badly burned by fire.

Pinto lawsuits began mounting fast against Ford. Says John Versace, executive safety engineer at Ford's Safety Research Center, "Ulcers are running pretty high among the engineers who worked on the Pinto. Every lawyer in the country seems to want to take their depositions." (The Safety Research Center is an impressive glass and concrete building standing by itself about a mile from Ford World Headquarters in Dearborn. Looking at it, one imagines its large staff protects consumers from burned and broken limbs. Not so. The Center is the technical support arm of Jack Echold's 14-person anti-regulatory lobbying team in World Headquarters.)

When the Pinto liability suits began, Ford strategy was to go to a jury. Confident it could hide the Pinto crash tests, Ford thought that juries of solid American registered voters would buy the industry doctrine that drivers, not cars, cause accidents. It didn't work. It seems that juries are much quicker to see the truth than bureaucracies, a fact that gives one confidence in democracy. Juries began ruling against the company, granting million-dollar awards to plaintiffs.

"We'll never go to a jury again," says Al Stechter in Ford's Washington office. "Not in a fire case. Juries are just too sentimental. They see those charred remains and forget the evidence. No sir, we'll settle."

Settlement involves less cash, smaller legal fees and less publicity, but it is an indication of the weakness of their case. Nevertheless, Ford has been settling when it is clear that the company can't pin the blame on the driver of the other car. But, since the company carries $2 million deductible product-liability insurance, these settlements have a direct impact on the bottom line. They must therefore be considered a factor in determining the net operating profit on the Pinto. It's impossible to get a straight answer from Ford on the profitability of the Pinto and the impact of lawsuit settlements on it-even when you have a curious and mildly irate shareholder call to inquire, as we did. However, financial officer Charles Matthews did admit that the company establishes a reserve for large dollar settlements. He would not divulge the amount of the reserve and had no explanation for its absence from the annual report.

Until recently, it was clear that, whatever the cost of these settlements, it was not enough to seriously cut into the Pinto's enormous profits. The cost of retooling Pinto assembly lines and of equipping each car with a safety gadget like that $5.08 Goodyear bladder was, company accountants calculated, greater than that of paying out millions to survivors like Robbie Carlton or to widows and widowers of victims like Sandra Gillespie. The bottom line ruled, and inflammable Pintos kept rolling out of the factories.

In 1977, however, an incredibly sluggish government has at last instituted Standard 301. Now Pintos will have to have rupture-proof gas tanks. Or will they?

To everyone's surprise, the 1977 Pinto recently passed a rear-end crash test in Phoenix, Arizona, for NHTSA. The agency was so convinced the Pinto would fail that it was the first car tested. Amazingly, it did not burst into flame.

"We have had so many Ford failures in the past," explained agency engineer Tom Grubbs, "I felt sure the Pinto would fail."

How did it pass?

Remember that one-dollar, one-pound plastic baffle that was on one of the three modified Pintos that passed the pre-production crash tests nearly ten years ago? Well, it is a standard feature on the 1977 Pinto. In the Phoenix test it protected the gas tank from being perforated by those four bolts on the differential housing.

We asked Grubbs if he noticed any other substantial alterations in the rear-end structure of the car. "No," he replied, "the [plastic baffle] seems to be the only noticeable change over the 1976 model."

But was it? What Tom Grubbs and the Department of Transportation didn't know when they tested the car was that it was manufactured in St. Thomas, Ontario. Ontario? The significance of that becomes clear when you learn that Canada has for years had extremely strict rear-end collision standards.

Tom Irwin is the business manager of Charlie Rossi Ford, the Scottsdale, Arizona, dealership that sold the Pinto to Tom Grubbs. He refused to explain why he was selling Fords made in Canada when there is a huge Pinto assembly plant much closer by in California. "I know why you're asking that question, and I'm not going to answer it," he blurted out. "You'll have to ask the company."

But Ford's regional office in Phoenix has "no explanation" for the presence of Canadian cars in their local dealerships. Farther up the line in Dearborn, Ford people claim there is absolutely no difference between American and Canadian Pintos. They say cars are shipped back and forth across the border as a matter of course. But they were hard pressed to explain why some Canadian Pintos were shipped all the way to Scottsdale, Arizona. Significantly, one engineer at the St. Thomas plant did admit that the existence of strict rear-end collision standards in Canada "might encourage us to pay a little more attention to quality control on that part of the car."

The Department of Transportation is considering buying an American Pinto and running the test again. For now, it will only say that the situation is under investigation.

Whether the new American Pinto fails or passes the test, Standard 301 will never force the company to test or recall the more than two million pre-1977 Pintos still on the highway. Seventy or more people will burn to death in those cars every year for many years to come. If the past is any indication, Ford will continue to accept the deaths.

According to safety expert Byron Bloch, the older cars could quite easily be retrofitted with gas tanks containing fuel cells. "These improved tanks would add at least 10 mph improved safety performance to the rear end," he estimated, "but it would cost Ford $20 to $30 a car, so they won't do it unless they are forced to." Dr. Kenneth Saczalski, safety engineer with the Office of Naval Research in Washington, agrees. "The Defense Department has developed virtually fail-safe fuel systems and retrofitted them into existing vehicles. We have shown them to the auto industry and they have ignored them."

Unfortunately, the Pinto is not an isolated case of corporate malpractice in the auto industry. Neither is Ford a lone sinner. There probably isn't a car on the road without a safety hazard known to its manufacturer. And though Ford may have the best auto lobbyists in Washington, it is not alone. The anti-emission control lobby and the anti-safety lobby usually work in chorus form, presenting a well-harmonized message from the country's richest industry, spoken through the voices of individual companies-the Motor Vehicle Manufacturers Association, the Business Council and the U.S. Chamber of Commerce.

Furthermore, cost-valuing human life is not used by Ford alone. Ford was just the only company careless enough to let such an embarrassing calculation slip into public records. The process of willfully trading lives for profits is built into corporate capitalism. Commodore Vanderbilt publicly scorned George Westinghouse and his "foolish" air brakes while people died by the hundreds in accidents on Vanderbilt's railroads.

The original draft of the Motor Vehicle Safety Act provided for criminal sanction against a manufacturer who willfully placed an unsafe car on the market. Early in the proceedings the auto industry lobbied the provision out of the bill. Since then, there have been those damage settlements, of course, but the only government punishment meted out to auto companies for noncompliance to standards has been a minuscule fine, usually $5,000 to $10,000. One wonders how long the Ford Motor Company would continue to market lethal cars were Henry Ford II and Lee Iacocca serving 20-year terms in Leavenworth for consumer homicide.

# data[].attributes.attachment_link.description
One evening in the mid-1960s, Arjay Miller was driving home from his office in Dearborn, Michigan, in the four-door Lincoln Continental that went with his job as president of the Ford Motor Company. On a crowded highway, another car struck his from the rear. The Continental spun around and burst into flames.

# data[].attributes.headline
How to tell if you're a leader or manager.

# data[].attributes.subject
How to tell if you're a leader or manager.

# data[].attributes.body
Three things to consider if you're wondering if you're a leader or manager. Very beneficial if you're trying to make the shift to one side or the other.

# data[].attributes.attachment_link.readable_text
A young manager accosted me the other day. "I've been reading all about leadership, have implemented several ideas, and think I'm doing a good job at leading my team. How will I know when I've crossed over from being a manager to a leader?" he wanted to know.

I didn't have a ready answer and it's a complicated issue, so we decided to talk the next day. I thought long and hard, and came up with three tests that will help you decide if you've made the shift from managing people to leading them.

Counting value vs Creating value. You're probably counting value, not adding it, if you're managing people. Only managers count value; some even reduce value by disabling those who add value. If a diamond cutter is asked to report every 15 minutes how many stones he has cut, by distracting him, his boss is subtracting value.

By contrast, leaders focuses on creating value, saying: "I'd like you to handle A while I deal with B." He or she generates value over and above that which the team creates, and is as much a value-creator as his or her followers are. Leading by example and leading by enabling people are the hallmarks of action-based leadership.

Circles of influence vs Circles of power. Just as managers have subordinates and leaders have followers, managers create circles of power while leaders create circles of influence.

The quickest way to figure out which of the two you're doing is to count the number of people outside your reporting hierarchy who come to you for advice. The more that do, the more likely it is that you are perceived to be a leader.

Leading people vs Managing work. Management consists of controlling a group or a set of entities to accomplish a goal. Leadership refers to an individual's ability to influence, motivate, and enable others to contribute toward organizational success. Influence and inspiration separate leaders from managers, not power and control.

In India, M.K. Gandhi inspired millions of people to fight for their rights, and he walked shoulder to shoulder with them so India could achieve independence in 1947. His vision became everyone's dream and ensured that the country's push for independence was unstoppable. The world needs leaders like him who can think beyond problems, have a vision, and inspire people to convert challenges into opportunities, a step at a time.

I encouraged my colleague to put this theory to the test by inviting his team-mates for chats. When they stop discussing the tasks at hand - and talk about vision, purpose, and aspirations instead, that's when you will know you have become a leader.

Agree?

# data[].attributes.attachment_link.title
Three Differences Between Managers and Leaders

# data[].attributes.attachment_link.description
A young manager accosted me the other day. "I've been reading all about leadership, have implemented several ideas, and think I'm doing a good job at leading my team. How will I know when I've crossed over from being a manager to a leader?" he wanted to know.

# data[].attributes.body
For all the wannabe leaders that feel they weren't born with it, this article puts a good perspective on the capability of people to lead.

# data[].attributes.attachment_link.readable_text
One of the cool things about writing books is that you get to do interviews. It's oddly fun to have strangers ask you questions that you have to then respond to off the top of your head. Kind of like business improv.

What makes it easier is that people tend to ask me a few questions over and over. By far the most common (in fact, I have yet to do an interview where this question wasn't asked) is "Are leaders born or made?" Interestingly, I've noticed that most interviewers think they already know the correct answer: they believe leaders are born. That is, they assume that some people come into this world with a natural capacity to lead, and everybody else doesn't, and there's not much you can do about it.

What I've learned by observing thousands of people in business over the past 30 years, though, is that - like most things - leadership capability falls along a bell curve. Some people are, indeed, born leaders. These folks at the top of the leadership bell curve start out very good, and tend to get even better as they go along. Then there are the folks at the bottom of the curve: that bottom 10-15% of people who, no matter how hard they try, simply aren't ever going to be very good leaders. They just don't have the innate wiring.

Then there's the big middle of the curve, where the vast majority of us live. And that's where the real potential for "made" leaders lies. It's what most of my interviewers assume isn't true - when, in fact, it is: most folks who start out with a modicum of innate leadership capability can actually become very good, even great leaders.

So, what does it take? If I'm an OK leader, and I want to become a great leader, what do I do?

The single most powerful way to grow as a leader: Become truly self-aware.

This is, hands down, your biggest secret weapon in making yourself a great leader. Before I go on, please understand: I don't mean self-involved. There are lots of "leaders" who are way, way too focused on themselves, their evolution, their drama, etc. etc. Becoming truly self-aware means to cultivate, on a daily basis, an accurate sense of how you show up in the world and what motivates you. For instance: What are your actual strengths and weaknesses as a leader and as a person? What impact do you have on others? What do you care most about? What's your moral compass, and do you use it as a guidance system? How closely do your actions line up with your promises?

Of the executives I've coached over the past two decades, I'd say that only about 25% of them are genuinely self-aware. The rest do not see themselves accurately - sometimes to an astonishing degree. Without exception, the more self-aware someone is, the easier he or she is to coach; the more improvable and better able to accept what they need in order to improve. When people who have low self-awareness want to grow, it's like someone who wants to travel to New York and he thinks he's starting in Philadelphia - but he's actually in Botswana. The steps he would take to get to New York, thinking that he's in Philly, will definitely not work for him (that pesky ocean is going to be a big shock).

To translate this into leadership development: let's say that I think I have great relationship-building skills, when the truth of the matter is that people find me overbearing and insensitive. When someone suggests that I need to make real changes in this area in order to be a more effective leader, I'm unlikely to be open to that counsel.

I know of three simple (not easy, but simple) ways to dramatically improve your self-awareness:

1) Become a fair witness. I've talked about this often in past posts. To be a fair witness means to report your experience as accurately and neutrally as possible. The more emotional attachment you have to something, the more challenging it is to be a fair witness of that thing; most of us are very emotionally attached to ourselves and our own success. "Fair witnessing" yourself is easiest if you take a mental step back and imagine that you are another person observing you: someone who sees you very clearly. Reflect on your actions, your strengths and weaknesses, your mistakes and successes, as though you are this impartial third party. What would he or she say about how you show up?

2) Invite feedback. People who want to be fully self-aware know that none of us can see ourselves entirely clearly without the aid of others. It's like trying to know what you look like without having a mirror. If you want to have a more accurate sense of how you are operating in the world, build a small group of people who know you well, see you clearly, want the best for you -- and are willing to be drop-dead honest with you in the service of that. I'd also suggest that you take a look at some of the 360 leadership assessments available to you. I'm partial to our Accepted Leader Assessment, based on Leading So People Will Follow, but there are certainly other good ones out there, as well.

3) Listen. I am a huge fan of the power of listening. I believe it's foundational to success as a manager, as a leader, as a parent, spouse, colleague, human being. And it's essential to true self-awareness. If you can learn to listen fully, without filtering what you hear through your pre-existing notions, you will find that everyone around you is continually giving you clues - both subtle and overt - about how you're showing up, what they think of you, and how you're impacting them.

As you become more self-aware, you'll start to be able to to hone in on both your strengths as a leader (so you can make best use of them) and those areas where you can improve....and move yourself up the bell curve to great.

______________

Erika's new book, Leading So People Will Follow, is available everywhere books are sold. It's on Amazon's "hot new releases" list, and Booklist called it "a book to read more than once and to consult many times."

Are you a followable leader? Take the Accepted Leader Assessment and find out.

Follow Erika on Twitter @erikaandersen.

# data[].attributes.attachment_link.description
One of the cool things about writing books is that you get to do interviews. It's oddly fun to have strangers ask you questions that you have to then respond to off the top of your head. Kind of like business improv.

# data[].attributes.body
Knowing the difference between the two is the first step to knowing when to use which one.

# data[].attributes.attachment_link.readable_text
For years we were taught that management has to do with forecasting, budgeting, planning and controlling. Managers were taught to manage, not to lead.

New supervisors and grizzled management veterans were taught how to assign work to subordinates, how to evaluate their teammates' work, how to counsel people on performance problems and how to hire and fire staff members. Everything we were taught about management assumed that the manager would know what to do and was calling the shots.

These days we understand that the old-fashioned view of a manager's duties is wholly insufficient for the new-millennium workplace.

Responsibility for a team of people and its success -- not to mention each team members' well-being and professional development -- is a big assignment to take on. Leadership has very little to do with controlling, budgeting and so on. It has little overlap with assigning work and evaluating it.

Our traditional view of management is task-based and mechanical. In that worldview, we don't think about topics like "How are my teammates holding up? Are they stressed out? Are they feeling good about the future and about the energy on the team?"

For years we pretended that human energy isn't a factor in a team's success, even though anybody who has ever been on any kind of team knows that the team energy, also known as trust level, is the whole ballgame!

We can use the carrot and the stick to get people to perform for a while but eventually, if they don't care about the mission, about their leader and/or about one another, the team will fracture and lose steam. It's inevitable! Today we know that empathetic, trust-based human leadership is not only the most effective way to lead a team but also the most profitable way to run a company.

Here are five enormous differences between managers and leaders. If you hold a leadership role now or aspire to do so in the future, think about steps you can take in each of these areas.
Mission
The traditional view of management assumes that a manager's job is to run an apparatus -- perhaps a corporate Credit Department or a team of programmers. There are clear inputs and outputs and expected results from the engine each manager is responsible for. The manager's job is to keep the machine running smoothly.

In that worldview, the people on the manager's team are essentially machine parts. They are interchangeable. Once they are hired into a role, their job is to perform that role (to run their piece of the machine) according to goals and standards that preceded them and that will outlast their tenure in the job. The presumption is that the machine is more important and more powerful than anyone who helps to run it.

Leadership takes just the opposite view! The energy on your team powers everything you will accomplish.

The machine can change whenever it makes sense to change it, even many times a day. Maybe your machine should change, or maybe it's time to junk the machine and invent something totally new. People are creative. Machines in general are not.

Leaders allow people to design their own jobs as much as possible and to put their own stamp on their jobs.

A leader is not working to achieve machine-like process perfection to be repeated over and over until the end of time.

A leader and his or her team have a mission. They all know what the mission is and they know their piece in it. Maybe at one point your mission is to replace your outdated Credit Department procedures with new procedures that are faster and simpler. Apart from the fact that they have a job and need the paycheck, your teammates know what the Credit Department modernization means for customers, for themselves and for the company.

A mission has a beginning, a middle and an end, no matter what the mission is. When you complete the mission, you'll start a new one.

Maybe your mission is to produce an off-Broadway play or to invent a better mousetrap. Leadership is inextricable from a specific mission that people are excited about. Without a mission, there is no place to lead your team toward! Without a mission, where are you headed?

Who can get excited about doing the same things day after day, year after year, to no visible end except to make a few executives rich? There has to be more to the mission than that, and part of a leader's job is to explore and exalt the connections between his or her team's mission and each team member's personal mission.

This is why I write about plugging into your power source at work, whether that means using a different part of your brain or getting to teach what you know or another element that important to you. We all need that power jolt at work. We all deserve it, too!
Self-Awareness
The old-fashioned, command-and-control view of management did not require that a manager look in the mirror, but leadership requires that activity of a leader every day.

A leader is someone who get outside his or her busy brain to see him- or herself rather than being controlled by his or her emotions, especially fear.

Fear is the emotion that makes managers freak out and bring the hammer down. It makes some of them yell at subordinates or put the fear of termination into them so that people skulk around in terror that they'll make a mistake.

# data[].attributes.attachment_link.title
Management Vs. Leadership: Five Ways They Are Different

# data[].attributes.attachment_link.description
For years we were taught that management has to do with forecasting, budgeting, planning and controlling. Managers were taught to manage, not to lead. New supervisors and grizzled management veterans were taught how to assign work to subordinates, how to evaluate their teammates' work, how to counsel people on performance problems and how to hire and fire staff members.

# data[].attributes.body
Knowing how to manage uncertainty is much more beneficial than eliminating uncertainty.

# data[].attributes.attachment_link.readable_text
If only we could manage away uncertainty. If we could do that there would be no risk. If we could do that there would be no stress. And there would be no progress. There's the rub.

John Sands has been a human resource leader at Unilever, Barclays and Littlewoods among others. He took me through the effects of the changing employer-employee contract. As he explained it, companies give workers job descriptions laying out what they should and should not do. Then companies provide steady salaries every week or month as long as their employees do those jobs. In this companies "manage uncertainty out."

No worries.

Until things go wrong.

Then employers hit employees with "massive uncertainty," announcing impending lay offs to boost profitability. On the one hand, this is part of the natural evolution of businesses as they move from a growth phase in which they need everyone to a more competitive phase in which they have to choose where to be best in class, world class, strong or just good enough. Average employees no longer fit into most of the areas in this scheme.

Employees tend to get upset when this happens, wondering what they did wrong or what changed. Sands tells people "Do not park your brains with your car." His point is that employees should not get seduced into thinking they don't have to think. Everyone should pay attention to what's going on in the world around them so they can anticipate their own risks.
In Praise Of Uncertainty
Even if we could manage away uncertainty (which we can not do over time), we would not want to. As the Animal School Fable informs us, we need to let the rabbits run, the fish swim and the eagles fly. We don't want a school of average ducks. Progress requires people to push the edges, challenge the status quo, break the boundaries into the realm of uncertainty.
Flipping The Conversation
Dan Gregory and Kieran Flanagan lay out a prescription in their book Selfish, Scared & Stupid. They suggest:

"Thinking Selfish is really a matter of coming from a position of WIIFT? (What's in it for them?) But of course, we're all selfish, so our default position is to focus on what's in it for us. This goes far beyond command and control, or even an inspiring WHY, it's about developing a capacity for human insight that allows you to frame your arguments in terms of their WHY.

Thinking Scared is simply understanding that fear drives all of our decision-making - it might be the fear of taking action or the fear of not taking action. These twin forces govern us, but they can also be marshaled and used as tools of positive motivation - the fear of missing out is perhaps the most potent sales tool ever developed, "Hurry... last days!!!"

Thinking Stupid is isn't really an oxymoron; rather it speaks to our bias for a simple, easy solution. However, it is also important to understand that just as we make preferred behavior more obvious (like the big red "STOP" buttons on heavy machinery), we also need to consider how to make less preferred behaviors more difficult.

In the end, it is human nature to resist change, but this same nature can be used as a tool to drive the results we want if they are well understood."

Implications
Make choices around which areas are ripe for breakthroughs and which areas require steady, reliable delivery.

Do help the people that need to be steady and reliable manage uncertainty. Give them the stability and relative safety they seek so they don't have to worry and you don't have to worry about them as they implement simple, cost-effective processes.

But prompt uncertainty where you seek competitive advantage. Alter the balance of consequences here so that the upside for these selfish individuals outweighs the risks they might fear and their bias to a simple, easy solution.
Click here for an overall summary of and links to my articles on Forbes, The New Leader's 100-Day Action Plan book, and the 100-Day Plan for Interviews tool.

# data[].attributes.attachment_link.title
Why Managing Away Uncertainty Is Seductively Counterproductive

# data[].attributes.attachment_link.description
If only we could manage away uncertainty. If we could do that there would be no risk. If we could do that there would be no stress. And there would be no progress. There's the rub. John Sands has been a human resource leader at Unilever, Barclays and Littlewoods among others.

# data[].attributes.body
This type of motivation only fulfills certain needs for most.

# data[].attributes.body
An easy-to-follow guide and extremely valuable tutorial on how to manage human resources within a business.

# data[].attributes.attachment_link.readable_text
We developed the Guide to Managing Human Resources because supervisors and managers asked for a comprehensive yet easy-to-use manual that would provide guidelines for the personnel management decisions you make every day. We hope the Guide will support you in those decisions by providing the information you need to manage your human resources tasks.

# data[].attributes.attachment_link.description
We developed the Guide to Managing Human Resources because supervisors and managers asked for a comprehensive yet easy-to-use manual that would provide guidelines for the personnel management decisions you make every day. We hope the Guide will support you in those decisions by providing the information you need to manage your human resources tasks.

# data[].attributes.body
The bane of my existence, this section of SBA helped me understand more about small business finances.

# data[].attributes.attachment_link.description
We support America's small businesses. The SBA connects entrepreneurs with lenders and funding to help them plan, start and grow their business.

# data[].attributes.body
Main sections to create a business plan. Most small businesses fail within the first 10 years, and most of these do not have a business plan.
Provide vision and stay on track, develop a business plan.

# data[].attributes.attachment_link.description
Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template.

# data[].attributes.body
US is the only major developed country to not have mandatory paid vacation holidays.

# data[].attributes.attachment_link.readable_text
The future of currency could very well be in the form of cryptocurrency, and because of that, the cryptosphere is heating up. Many recognize this, which means there's competition in the industry. Specifically, competition between ...

# data[].attributes.attachment_link.title
Cryptocurrency News | CCN offers Breaking Crypto News, Prices & Charts!

# data[].attributes.attachment_link.description
Cryptocurrency News (CCN) offers breaking news, analysis, price charts & more on the most popular cryptocurrencies such as Bitcoin, Litecoin, Ethereum & Ripple & emerging cryptocurrencies such as Monero, Stellar, Dash & EOS. Cryptocurrency News offers something for everyone. Get the latest CCN headlines!

# data[].attributes.body
A decade of instability, nobody trusts H-P to prove valuable.

# data[].attributes.body
Preferred Stock Bennefits

# data[].attributes.attachment_link.readable_text
Not yet familiar with preferred shares? With "common" shares paying so little, it's time to get acquainted.

You can double your yields, and actually reduce your risk, by trading in your common shares for preferreds. I'll explain how - and will also warn you about an overlooked pitfall you should avoid.

Most investors only consider "common" shares of stock when they look for income. These are the shares in a company you receive when you place an order with your broker.

Problem is, most dividend darlings don't pay much on their common shares today. You'll be hard pressed to find a dividend aristocrat with a yield above 3% or a P/E ratio below 20 - evaporating business models or not!
A Bear Market in Common Yields
A company will issue preferred shares to raise capital. In return it will pay regular dividends on these shares - and as their name suggests, preferreds do receive their payouts before common shares. They typically get paid more, and even have a priority claim on the company's earnings and assets in case something bad happens, like bankruptcy.

So far so good. The tradeoff? Less upside. But in today's expensive stock market, it may not be a bad trade to make. Let's walk through a couple transactions that would roughly double your current dividends with a simple trade-in.

Wells Fargo's (WFC) common shares pay a respectable 3% today. But it recently issued shares of preferred stock paying 5.5% - almost double. If you're looking for income, and you like Wells Fargo too, then the preferreds are a compelling play.

A million bucks in WFC common shares will only net you $30,000 today annually. That's not even $15 an hour - there are coffee baristas down the block who make more! But the preferred option will land you a more respectable $55,000 per year passive gig.

Similarly common shares of JPMorgan (JPM) - which I like and own warrants on - pay 2.9%. Not bad, but you could more than double your yield by buying JPM's "Series Y" preferred stock offering for 6.1% annually.

Series what? That's a big problem with preferred shares - they are often complicated to purchase without the help of a human broker.

Which tempts many investors to streamline their online buys and simply purchase ETFs like the PowerShares Preferred Portfolio (PGX) and the iShares S&P U.S. Preferred Stock Index Fund (PFF). After all these funds pay 5.6% each and, in theory, they diversify your credit risk.

Be careful - because they actually expose you to unnecessary credit risk. The only way you lose with this vehicle is by giving your money to a driver who crashes your car. But the S&P 500 and NASDAQ are large enough that there's usually a company financially crashing into a brick wall at any moment in time.

And if we include the brick wall the financial world ran into ten years ago, these funds haven't even performed to their current yields:
The Problem With Financial Brick Walls
Brick walls aside, if your investment time horizon expands beyond the next couple of years, you're going to need dividend growth in addition to any high current yields you find.

Back to JPM as an example - five years ago, its common shares paid a measly two percent. But if you thumbed your nose at them in favor of higher current yields at the time, you probably made a big mistake. JPM nearly doubled its dividend since then, driving total returns of 152%!
Dividend Growth is Always King
The share price growth that accompanies payout growth is the important nuance that most "first-level" income investors miss. JPM usually yields between 2% and 3% as its "going yield", which means its share price gets bid up as the firm increases its dividend.

Buying dividend growth is simply the safest way to achieve triple-digit returns from stocks. And while I like JPM today, I'm even higher on seven "under the radar" dividend growers.

These companies are positioned to growth their payouts significantly over the next three to five years. Which means their share prices should see accompanying 50% to 100% gains or more. Click here and I'll send you my full analysis on these payout powerhouses, including company names, tickers and buy prices.

Disclosure: none

# data[].attributes.attachment_link.title
The Best, And Worst, Preferred Stock Funds

# data[].attributes.attachment_link.description
Not yet familiar with preferred shares? With "common" shares paying so little, it's time to get acquainted. You can double your yields, and actually reduce your risk, by trading in your common shares for preferreds. I'll explain how - and will also warn you about an overlooked pitfall you should avoid.

# data[].attributes.body
A way to gain insight into employees thoughts.

# data[].attributes.attachment_link.description
Web survey powered by SurveyMonkey.com. Create your own online survey now with SurveyMonkey's expert certified FREE templates.

# data[].attributes.body
Some good questions to ask if considering to acquire or partner with a company.

# data[].attributes.attachment_link.readable_text
Instagram and Facebook. Microsoft and Yammer. Is an acquisition or partnership a possibility in your future?

If your company is growing, first things first: CONGRATS! It's a tough economy and you're lucky to be on the upswing, no matter how big or small it might be.

One way companies try to grow quickly is to either partner with another company or acquire it. If you're thinking about forming a partnership or acquiring another business, you're in for quite the ride. I've been on both sides in the past 11 years of running my marketing technology company. It was unnerving, stressful, expensive, time consuming, amazing and exhilarating...just to name a few emotions.

So I thought to myself, there's got to be something to make it a little easier to decide what path is best. Here are three questions you should ask yourself:

1. Is your goal to acquire more customers, to own intellectual property I might not have, or both?

Partnerships come out of the need to grow a business. A marketing partnership might be as simple as a restaurant owner who advertises a neighboring wine bar in his email marketing campaigns, and the wine bar owner does the same for the restaurant. This could drive traffic into the local area where both businesses benefit from increased sales.

Another good example: a contact management software company that finds they get more business customers when they have email marketing companies integrated tightly into their software, so that their business customers can easily interact with their customers.

In both of these cases, either an acquisition or a partnership would be appropriate. In the former, the restaurant owner could benefit from the wine bar's customers. But taking it a step further, he could also get some major cost benefits from scaling when ordering food, wine and beer since he's already sourcing them for his current restaurant. He could also benefit from an administrative perspective, such as managing, menu planning and scheduling. In the latter example, the contact management company might hurt itself if it chose just one and could really benefit from the email marketing companies driving customers to use its software.

So you have to decide: Do you want to form a partnership to drive more customers cost-effectively, or do you need that business for more than just access to its customer base?

2. Is it core to what you do or where your business needs to go?

Here's a real-life example. My company, VerticalResponse, was known for our email marketing services, even though we've got pretty incredible online surveys and event marketing services, too. Why? Mostly because we just launched our event tool, and our online surveys have been around for just four of our 11 years in business. Recently, we started to talk to companies in the social media space, because many of our small business customers were using social media in their marketing.

We started having discussions with a company called Roost, a social media marketing technology platform for small businesses. At first, we approached the relationship as a partnership because we thought both companies could really benefit. As the conversations furthered, both sides realized that an acquisition of Roost could really give us, VerticalResponse, a competitive edge in our industry from a product, customer, people and valuation perspective. What could be a better acquisition candidate? It was clear to us that diving into social media wasn't really a "nice to have," it had turned into a requirement. So we welcomed the Roost team aboard, launched a very nice email-and-social integration and it's working--quite nicely, I might add.

If the company you're thinking of working with has a product or service that's a "nice to have" for your own business, you may want to start out with a partnership first, and prove it successful before you jump in.

3. Will it make you more valuable?

What makes a company valuable? Many years ago, a company was looking to acquire us because of our domain expertise in delivering email to inboxes. But we had so much more than that. We had tens of thousands of customers, pretty cool technology, great people and revenue that was climbing. They were only interested in the fact that we could send email. They wanted a "feature," not a company, and in the end it wouldn't have really added value to their bottom line.

So I walked away. Why? Because I wouldn't have gotten the value for everything we worked so hard for, and our investors wouldn't have been rewarded the way they deserved to be.

The lesson here? If you're thinking of an acquisition, make sure you want to acquire a company for all the right reasons, and that all of those reasons add value to what you've already got.

When I was faced with whether to partner or acquire, these three questions led to many conversations and pretty tough company-changing decisions, hopefully for the best. I'd love to hear any questions you think I'm leaving out!
Did you enjoy this post? If so, sign up for the free VR Buzz weekly newsletter and check out the VerticalResponse Marketing Blog.

# data[].attributes.attachment_link.title
Acquisition or Partnership? How to Decide

# data[].attributes.attachment_link.description
Instagram and Facebook. Microsoft and Yammer. Is an acquisition or partnership a possibility in your future? If your company is growing, first things first: CONGRATS! It's a tough economy and you're lucky to be on the upswing, no matter how big or small it might be.

# data[].attributes.body
Example of ways big and small companies can partner to mutually benefit.

# data[].attributes.attachment_link.readable_text
Every automaker seems to be partnering up for car sharing, and Hyundai is no exception. The carmaker is teaming up with WaiveCar, a startup offering ad-supported car sharing with a pilot program currently operating in Santa Monica. The team-up will see Hyundai's first EV, the IONIQ, incorporated into WaiveCar's fleet, beginning in LA.

Hyundai is offering the IONIQ to WaiveCar users for up to two hours per trip on-demand for free, with ads displayed on the car's body and on a roof-mounted display as a way to recoup the costs of driving for WaiveCar. WaiveCar's top-taunted displays have their own built-in 4G data connection, and change the advertising they show to onlookers based on where the car is traveling and the time of day. After the initial two-hour period, the car can be kept for an additional $5.99 per hour, or returned to a designated WaiveCar drop-off point.

For Hyundai, it's a double-dip marketing campaign: the cars display IONIQ advertising, and they also offer drivers a chance to take one for a spin totally free of charge, with fewer restrictions and more real-world use opportunity than if they'd come into a dealership for a test drive. To start, Hyundai is deploying 150 cars for use with WaiveCar, with availability beginning in early 2017.

It's a smart partnership for Hyundai and WaiveCar both, as it gives the former a car-sharing partner with a unique model that's a great fit for promoting its EV strategy, and the latter a steady inventory supply with vehicles that are less expensive to maintain than fuel-based cars. Show-rooming vehicles (giving users a chance to see what ownership would be like) is part of every automaker's strategy with car-sharing services and partnerships, but this one, given the market and the EV angle, seems particularly apt.

# data[].attributes.attachment_link.title
Hyundai partners with WaiveCar for free, ad-supported EV car sharing

# data[].attributes.attachment_link.description
Every automaker seems to be partnering up for car sharing, and Hyundai is no exception. The carmaker is teaming up with WaiveCar, a startup offering ad-supported car sharing with a pilot program currently operating in Santa Monica. The team-up will see Hyundai's first EV, the IONIQ, incorporated into WaiveCar's fleet, beginning in LA.

# data[].attributes.body
in-sourcing

# data[].attributes.attachment_link.readable_text
Heidrick & Struggles Chief Executive Officer Kevin Kelly made his name raiding corporate America's ranks on behalf of his clients. These days a lot of them are turning the tables and hiring his employees to do the work themselves. Companies such as General Electric, Coca-Cola, Pfizer, Microsoft, and Nike are increasingly using their own executives-many lured from outfits like Heidrick-to recruit talent and avoid fees that can run as high as 40 percent of a new hire's first-year compensation. Heidrick is "seeing a trend of individuals going to work at clients" to do in-house recruiting, Kelly told analysts on a July 31 conference call. "That's something new that we've seen over the last 12 to 18 months." Three months later he told the same analysts that the talent drain to clients was continuing.

Heidrick, Korn/Ferry International, Spencer Stuart, and other executive search firms still dominate the work of replacing CEOs and board members. Yet they face increasing competition for searches in the lower senior- and middle-management ranks, where candidates are plentiful and technology and social networking sites make it easier to find talent. "Clients are looking at executive search, just like legal and other services, and saying they want it faster, cheaper, and better," says Bob Benson, a former Spencer Stuart partner who now heads RL Benson & Associates, a New Canaan (Conn.)-based consultant to search firms. "There's a dramatic shift in who's doing the work, with a lot of recruiting moving in-house, especially at levels below top C-suite jobs. That's the work that keeps the lights and heat on."

New searches undertaken by the $9 billion search industry fell 7.6 percent in last year's third quarter, according to the Association of Executive Search Consultants, which tracks 1,430 senior executive recruiters in 46 countries. Third-quarter revenue in the industry fell 9.7 percent, following declines of 6 percent and 7 percent in the second and first quarters, respectively, the AESC found.

GE has built an internal recruiting staff of about 500 in the last six years. In 2012 the team, helped by LinkedIn and BranchOut, filled most of GE's 25,000 openings, about 10 percent of which were executive and senior professional positions. They completed most searches in about 73 days, compared with the average 170 days it takes outside firms. "We still use outside recruiters but only when they're absolutely required-for confidential searches or very specialized jobs," says Steven Knox, who heads recruiting at GE for markets outside the U.S. and Europe.

The company's cost savings have been substantial-close to $100 million last year in search firm fees alone, according to a person familiar with the matter who wasn't authorized to discuss it publicly. Even more important, Knox says, GE is able to keep attractive candidates on its radar for future searches and find hires who better fit its culture. Explains Knox: "Our recruiters know what it takes to work here."

Coca-Cola does about 95 percent of its global executive recruiting in-house, with recent placements including the company's chief technology officer, the CEO of its Indian bottling operations, and a senior vice president of finance in Japan, says John Goldberg, the company's executive recruiting director. As recently as 2004, recruiting at the world's largest soft-drink maker was virtually all done by outside firms, says Goldberg, whose team includes former search executives from Russell Reynolds Associates, Korn/Ferry, and Heidrick.

Executives hired at Coca-Cola by outside recruiters are twice as likely to leave, and the diversity of candidates is about twice as high for candidates hired by the inside team, the company says. The searches are also completed in about a third less time.

The trend has intensified competition among search firms and triggered pricing wars. Instead of charging the traditional one-third of a candidate's first-year salary, some outside recruiters are taking 25 percent or less, dropping extra administrative charges they once commanded, or accepting fixed payments. "Fees are being negotiated all over the place," says Caroline McClure, who runs ScoutRock, a Baltimore consulting firm for in-house recruiters. She started her career at Korn/Ferry and later was head of executive recruiting at Lockheed Martin, where search firm fees averaged 40 percent of new hires' salaries, spurring her to build an internal recruiting team.

"The executive recruiting industry is going to get smaller," and costs to companies that use headhunters will go down, says McClure, whose seminars for companies considering in-house recruiting also attract search-firm employees who want jobs at those companies. "Search firms will see fewer and only the most difficult searches, and they'll require more partner involvement-which means thinner margins for each assignment," she says.

That's one reason big firms are diversifying beyond executive recruiting. Spencer Stuart, which conducts more than half of all searches for directors at U.S. companies, advises boards on succession planning. Korn/Ferry since 2006 has acquired four consulting businesses, including PDI Ninth House, a talent assessment and coaching firm it agreed to buy in 2012 for $80 million. Now Korn/Ferry gets more than 35 percent of its revenue from leadership consulting. "The search business enables us to forge relationships with CEOs, and that gives us permission to talk about how we can help companies in a much broader way," says Robert Damon, Korn/Ferry's president North America.

Heidrick, which posted an 18 percent drop in third-quarter revenue and a 19 percent decline in the second quarter, earlier this month announced its $53.5 million acquisition of Senn-Delaney Leadership Consulting Group, a "culture shaping" and executive assessment consultant. Now Heidrick will get 15 percent of its revenue from nonrecruiting services. None of this may be enough to offset the shift to in-house talent hunting or to diminish recruiters' angst. As Heidrick's chief financial officer, Richard Pehlke, told analysts in July: The changes under way across the industry "are driving some people that are trying to be in this business a little crazy, frankly."

# data[].attributes.attachment_link.title
Executive Headhunters Squeezed by In-House Recruiters

# data[].attributes.attachment_link.description
Heidrick & Struggles Chief Executive Officer Kevin Kelly made his name raiding corporate America's ranks on behalf of his clients. These days a lot of them are turning the tables and hiring his employees to do the work themselves.

# data[].attributes.body
Glorified Salesperson

# data[].attributes.attachment_link.title
Military & Veteran Staffing Agencies | Bradley Morris

# data[].attributes.attachment_link.description
Bradley Morris, one of the leading military and veteran staffing agencies, specializes in placing qualified talent into rewarding career opportunities.

# data[].attributes.body
Strong Competition

# data[].attributes.attachment_link.description
The Investor Relations website contains information about Sonic Corp. business for stockholders, potential investors, and financial analysts.

# data[].attributes.body
Quick, easy, effective way of determining whether or not potential exists, and if it should be executed.

# data[].attributes.attachment_link.readable_text
Abstract word cloud for swot analysis with related tags and terms.

Definition

Swot analysis

involves the collection and portrayal of information about internal and external factors which have, or may have, an impact on business.
[2]

SWOT

is a framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weaknesses with those from an analysis of external opportunities and threats.
[3]

Understanding the tool

What is SWOT analysis? The answer to the question is simple: it's a tool used for situation (business or personal) analysis! SWOT is an acronym which stands for:

Strengths: factors that give an edge for the company over its competitors.
Weaknesses: factors that can be harmful if used against the firm by its competitors.
Opportunities: favorable situations which can bring a competitive advantage.
T hreats: unfavorable situations which can negatively affect the business.

Strengths and weaknesses are internal to the company and can be directly managed by it, while the opportunities and threats are external and the company can only anticipate and react to them. Often, swot is presented in a form of a matrix as in the illustration below:

Swot is widely accepted tool due to its simplicity and value of focusing on the key issues which affect the firm. The aim of swot is to identify the strengths and weaknesses that are relevant in meeting opportunities and threats in particular situation. [4]

Benefits

Swot tool has 5 key benefits:

Simple to do and practical to use;

Clear to understand;

Focuses on the key internal and external factors affecting the company;

Helps to identify future goals;

Initiates further analysis.

Limitations

Although there are clear benefits of doing the analysis, many managers and academics heavily criticize or don't even recognize it as a serious tool.[2] According to many, it is a 'low-grade' analysis. Here are the main flaws identified by a research:[2][5]

Excessive lists of strengths, weaknesses, opportunities and threats;

No prioritization of factors;

Factors are described too broadly;

Factors are often opinions not facts;

No recognized method to distinguish between strengths and weaknesses, opportunities and threats.

How to perform the analysis?

Swot can be done by one person or a group of members that are directly responsible for the situation assessment in the company. Basic swot analysis is done fairly easily and comprises of only few steps:

Step 1. Listing the firm's key strengths and weaknesses
Step 2. Identifying opportunities and threats

Strengths and Weaknesses

Strengths and weaknesses are the factors of the firm's internal environment. When looking for strengths, ask what do you do better or have more valuable than your competitors have? In case of the weaknesses, ask what could you improve and at least catch up with your competitors?

Where to look for them?

Some strengths or weaknesses can be recognized instantly without deeper studying of the organization. But usually the process is harder and managers have to look into the firm's:

Resources: land, equipment, knowledge, brand equity, intellectual property, etc.

Core competencies

Capabilities

Functional areas: management, operations, marketing, finances, human resources and R&D

Organizational culture

Value chain activities

Strength or a weakness?

Often, company's internal factors are seen as both, strengths and weaknesses, at the same time. It is also hard to tell if a characteristic is a strength (weakness) or not. For example, firm's organizational structure can be a strength, a weakness or neither! In such cases, you should rely on:

Clear definition. Very often factors which are described too broadly may fit both strengths and weaknesses. For example, "brand image" might be a weakness if the company has poor brand image. However, it can also be a strength if the company has the most valuable brand in the market, valued at $100 billion. Therefore, it is easier to identify if a factor is a strength or a weakness when it's defined precisely.

Benchmarking. The key emphasize in doing swot is to identify the factors that are the strengths or weaknesses in comparison to the competitors. For example, 17% profit margin would be an excellent margin for many firms in most industries and it would be considered as a strength. But what if the average profit margin of your competitors is 20%? Then company's 17% profit margin would be considered as a weakness.

VRIO framework. A resource can be seen as a strength if it exhibits VRIO (valuable, rare and cannot be imitated) framework characteristics. Otherwise, it doesn't provide any strategic advantage for the company.

Opportunities and threats

Opportunities and threats are the external uncontrollable factors that usually appear or arise due to the changes in the macro environment, industry or competitors' actions. Opportunities represent the external situations that bring a competitive advantage if seized upon. Threats may damage your company so you would better avoid or defend against them.

Where to look for them?

PESTEL. PEST or PESTEL analysis represents all the major external forces (political, economic, social, technological, environmental and legal) affecting the company so it's the best place to look for the existing or new opportunities and threats.

Competition. Competitor's react to your moves and external changes. They also change their existing strategies or introduce new ones. Therefore, the company must always follow the actions of its competitors as new opportunities and threats may open at any time.

Market changes. The most visible opportunities and threats appear during the market changes. Markets converge, starting to satisfy other market segment needs with the same product. New geographical markets open up allowing the firm to increase its export volumes or start operations in a new country. Often niche markets become profitable due to technological changes. As a result, changes in the market create new opportunities and threats that must be seized upon or dealt with if the company wants to gain and sustain competitive advantage.

Opportunity or threat?

Most external changes can represent both opportunities and threats. For example, exchange rates may increase or reduce the profits gained from exports. This depends on the exchange rate, which may rise (opportunity) or fall (threat) against the home country currency. The organization can only guess the outcome of the change and count on analysts' forecasts. In such cases, when organization cannot identify if the external factor will affect it positively or negatively, it should gather unbiased and reliable information from the external sources and make the best possible judgement.

Guidelines for successful SWOT

The following guidelines are very important in writing a successful swot analysis. They eliminate most of swot limitations and improve it's results significantly:

Factors have to be identified relative to the competitors. It allows specifying whether the factor is a strength or a weakness.

List between 3 - 5 items for each category. Prevents creating too short or endless lists.

Items must be clearly defined and as specific as possible. For example, firm's strength is: brand image (vague); strong brand image (more precise); brand image valued at $10 billion, which is the most valued brand in the market (very good).

Rely on facts not opinions. Find some external information or involve someone who could provide an unbiased opinion.

Factors should be action orientated. For example, "slow introduction of new products" is action orientated weakness.

SWOT analysis example A

This is a basic example of the analysis:

Strengths

Weaknesses

Weaknesses

Opportunities

Threats

Threats

You can find an extensive list of strengths, weaknesses, opportunities and threats by looking at our examples of swot analyses, which include Alphabet (Google) swot, Amazon.com swot, Apple Inc. swot, The Coca Cola Company swot, Ford Motor Company swot, McDonald's Corporation swot, PepsiCo Inc. swot, Samsung Electronics swot, Starbucks Corporation swot, Wal-Mart Stores, Inc. swot and many more swot analyses.

Advanced SWOT

At the most, swot is considered to be only a reference to further analysis as it has too many limitations and cannot be used alone in the situation analysis. The previous guidelines identified in this article meet the most of swot limitations except one: "prioritization of factors". An advanced swot goes a step further and eliminates this important drawback.

In a simple swot, strengths and weaknesses or opportunities and threats are equal to each other, therefore a minor weakness can balance a major strength. Without prioritization, some factors might be given too much or too little emphasis and the most relevant factors might simply be overlooked.

The aim of advanced swot is to identify the most significant factors of the analysis from all the items listed on it. How to perform it?

Step 1. Identify strengths, weakness, opportunities and threats.
Step 2. Prioritize them.

(The first step was discussed earlier so please refer to it when doing advanced swot analysis. See example B when reading further instructions.)

Prioritization

Strengths and weaknesses are evaluated on 3 categories:

Importance. Importance shows how important a strength or a weakness is for the organization in its industry as some strengths (weaknesses) might be more important than others. A number from 0.01 (not important) to 1.0 (very important) should be assigned to each strength and weakness. The sum of all weights should equal 1.0 (including strengths and weaknesses).

Rating. A score from 1 to 3 is given to each factor to indicate whether it is a major (3) or a minor (1) strength for the company. The same rating should be assigned to the weaknesses where 1 would mean a minor weakness and 3 a major weakness.

Score. Score is a result of importance multiplied by rating. It allows prioritizing the strengths and weaknesses. You should rely on your most important strengths and try to convert or defend your weakest parts of the organization.

Opportunities and threats are prioritized slightly differently than strengths and weaknesses. Their evaluation includes:

Importance. It shows to what extent the external factor might impact the business. Again, the numbers from 0.01 (no impact) to 1.0 (very high impact) should be assigned to each item. The sum of all weights should equal 1.0 (including opportunities and threats).

Probability. Probability of occurrence is showing how likely the opportunity or threat will have any impact on business. It should be rated from 1 (low probability) to 3 (high probability).

Score. Importance multiplied by probability will give a score by which you'll be able to prioritize opportunities and threats. Pay attention to the factors having the highest score and ignore the factors that will not likely affect your business.

SWOT analysis example B

This swot example is adopted from the previous example and additionally includes prioritization. Highlighted cells point to the most significant factors affecting the organization.

# data[].attributes.attachment_link.title
The Structure of a Good SWOT - How to do it Right

# data[].attributes.attachment_link.description
Swot analysis involves the collection and portrayal of information about internal and external factors which have, or may have, an impact on business. [2] SWOT is a framework that allows managers to synthesize insights obtained from an internal analysis of the company's strengths and weaknesses with those from an analysis of external opportunities and threats.

# data[].attributes.body
However, it is hard to do financial analysis on a company that is privately traded!

# data[].attributes.body
Thinking about design to market product. Innovation isn't just about the "next big thing."

# data[].attributes.attachment_link.readable_text
Just a few years ago, it wasn't clear whether Indra Nooyi would survive as PepsiCo's CEO. Many investors saw Pepsi as a bloated giant whose top brands were losing market share. And they were critical of Nooyi's shift toward a more health-oriented overall product line. Prominent activist investor Nelson Peltz fought hard to split the company in two.

These days Nooyi, 59, exudes confidence. The company has enjoyed steady revenue growth during her nine years in the top job, and Pepsi's stock price is rising again after several flat years. Peltz even agreed to a truce in return for a board seat for one of his allies.

All of this frees Nooyi to focus on what she says is now driving innovation in the company: design thinking. In 2012 she brought in Mauro Porcini as Pepsi's first-ever chief design officer. Now, Nooyi says, "design" has a voice in nearly every important decision that the company makes. (See the interview with Porcini in this issue.)

To understand Pepsi's transformation, I spoke with Nooyi at the company's temporary headquarters in White Plains, New York (the real one, in Purchase, is being renovated). She talked about what design means to her, the challenges in changing a culture, and her proudest achievement.
-Adi Ignatius

HBR: What problem were you trying to solve by making PepsiCo more design-driven?

Nooyi: As CEO, I visit a market every week to see what we look like on the shelves. I always ask myself-not as a CEO but as a mom-"What products really speak to me?" The shelves just seem more and more cluttered, so I thought we had to rethink our innovation process and design experiences for our consumers-from conception to what's on the shelf.

How did you begin to drive that change?

First, I gave each of my direct reports an empty photo album and a camera. I asked them to take pictures of anything they thought represented good design.

What did you get back from them?

After six weeks, only a few people returned the albums. Some had their wives take pictures. Many did nothing at all. They didn't know what design was. Every time I tried to talk about design within the company, people would refer to packaging: "Should we go to a different blue?" It was like putting lipstick on a pig, as opposed to redesigning the pig itself. I realized we needed to bring a designer into the company.

How easy was it to find Mauro Porcini?

We did a search, and we saw that he'd achieved this kind of success at 3M. So we brought him in to talk about our vision. He said he wanted resources, a design studio, and a seat at the table. We gave him all of that. Now our teams are pushing design through the entire system, from product creation, to packaging and labeling, to how a product looks on the shelf, to how consumers interact with it.

What's your definition of good design?

For me, a well-designed product is one you fall in love with. Or you hate. It may be polarizing, but it has to provoke a real reaction. Ideally, it's a product you want to engage with in the future, rather than just "Yeah, I bought it, and I ate it."

You say it's not just about packaging, but a lot of what you're talking about seems to be that.

It's much more than packaging. We had to rethink the entire experience, from conception to what's on the shelf to the postproduct experience. Let's take Pepsi Spire, our new touchscreen fountain machine. Other companies with dispensing machines have focused on adding a few more buttons and combinations of flavors. Our design guys essentially said that we're talking about a fundamentally different interaction between consumer and machine. We basically have a gigantic iPad on a futuristic machine that talks to you and invites you to interact with it. It tracks what you buy so that in the future, when you swipe your ID, it reminds you of the flavor combinations you tried last time and suggests new ones. It displays beautiful shots of the product, so when you add lime or cranberry, it actually shows those flavors being added-you experience the infusion of the flavor, as opposed to merely hitting a button and out comes the finished product.

Have you developed other notable design-led innovations?

We're working on new products for women. Our old approach was "shrink it or pink it." We'd put Doritos, say, in a pink Susan G. Komen bag and say it's for women. That's fine, but there's more to how women like to snack.

When men finish a snack bag, they pour what's left into their mouths. Women don't do that. And they worry about how much the product may stain-they won't rub it on a chair, which a lot of guys do. In China, we've introduced a stacked chip that comes in a plastic tray inside a canister. When a woman wants to snack, she can open her drawer and eat from the tray. When she's done, she can push it back in. The chip is also less noisy to eat: Women don't want people to hear them crunching away.

Basically, you're paying a lot more attention to user experience.

Definitely. In the past, user experience wasn't part of our lexicon. Focusing on crunch, taste, and everything else now pushes us to rethink shape, packaging, form, and function. All of that has consequences for what machinery we put in place-to produce, say, a plastic tray instead of a flex bag. We're forcing the design thinking way back in the supply chain.

To what extent do you listen to consumers? Do they even know what they want?

I don't know if consumers know what they want. But we can learn from them. Let's take SunChips. The original size was one inch by one inch. When you'd bite into a chip, it would break into pieces. In focus groups consumers told us they went to another product because it was bite-size. We had to conclude that SunChips were too damn big. I don't care if our mold can only cut one inch by one inch. We don't sell products based on the manufacturing we have, but on how our target consumers can fall in love with them.

Launch and Failure

When I picture design thinking, I think about rapid prototyping and testing. Is that part of what you're trying to do?

Not so much in the U.S., but China and Japan are lead horses for that process-test, prove, launch. If you launch quickly, you have more failures, but that's OK because the cost of failure in those markets is low. In the U.S., we tend to follow very organized processes and then launch. The China-Japan model may have to come to the U.S. at some point.

Isn't this model already established in the U.S., or at least in Silicon Valley?

Lots of small companies take this approach, and for them the cost of failure is acceptable. We're more cautious, especially when playing with big brands. Line extensions are fine: If you launch a flavor of Doritos that doesn't work, you just pull it. But if you launch a new product, you want to make sure you've tested it enough. In Japan, we launch a new version of Pepsi every three months-green, pink, blue. We just launched cucumber-flavored Pepsi. In three months it either works or we pull it and go to the next product.

Is your design approach giving Pepsi competitive advantage?

We have to do two things as a company: Keep our top line growing in the mid single digits, and grow our bottom line faster than the top. Line extensions keep the base growing. And then we're always looking for hero products-the two or three big products that will drive the top line significantly in a particular country or segment. Mountain Dew Kickstart is one of those. It's a completely different product: higher juice content, fewer calories, new flavors. We thought about this innovation differently. In the past we just would have created new flavors of Mountain Dew. But Kickstart comes in a slim can and doesn't look or taste like the old Mountain Dew. It's bringing new users into the franchise: women who say, "Hey, this is an 80 calorie product with juice in a package I can walk around with." It has generated more than $200 million in two years, which in our business is hard to do.

Is this an example of design thinking, or just part of the innovation process?

There's a fine line between innovation and design. Ideally, design leads to innovation and innovation demands design. We're just getting started. Innovation accounted for 9% of our net revenue last year. I'd like to raise that to the mid teens, because I think the marketplace is getting more creative. To get there, we'll have to be willing to tolerate more failure and shorter cycles of adaptation.

Do you feel that companies have to reinvent themselves every few years, that competitive advantage is fleeting?

No question about it. It's been a long time since you could talk about sustainable competitive advantage. The cycles are shortened. The rule used to be that you'd reinvent yourself once every seven to 10 years. Now it's every two to three years. There's constant reinvention: how you do business, how you deal with the customer.

Managing Change

How do you bring everyone in the company along with what sounds like a dramatic change in approach?

The most important thing was finding the right person in Mauro. Our beverage people immediately embraced how he could help us think about product design and development. Then retailers fell in love with him and started inviting him to their shops to talk about how to reset their shelves. Mauro's team grew from about 10 people to almost 50, and we set him up in Soho in New York City. Now our products look like they're tailored to the right cohort groups, and our packaging looks pretty damn good, too.

How do you push the culture change throughout the company?

In the past, being decentralized was our strength, but also our weakness. It's a fine approach when the whole world is growing and life is peachy. But it doesn't work when things are volatile globally and you need coordination. We've given our people 24 to 36 months to adapt. I told everyone that if they don't change, I'd be happy to attend their retirement parties.

How do you measure whether or not people are making it?

We watch how they act in our global meetings and whether they include design early in the process. We see how much innovation, influenced by design, is being put into the market. We maintain an aggressive productivity program to take costs out and free up resources. You have to squeeze as much as you can out of every dollar, and we watch how many costs are coming out.

Purpose and the Portfolio

You often use the term "purpose" in talking about your business. What does that mean to you?

When I became CEO in 2006, I did a series of town hall meetings with employees. Few said they came to work for a paycheck. Most wanted to build a life, not simply gain a livelihood. And they were well aware that consumers cared about health and wellness. We realized we needed to engage our people's heads, hearts, and hands. We had to produce more products that are good for you. We had to embrace sustainability. Purpose is not about giving money away for social responsibility. It's about fundamentally changing how to make money in order to deliver performance-to help ensure that PepsiCo is a "good" company where young people want to work.

Would you be willing to accept lower profit margins to "do the right thing"? Surely, there have to be trade-offs.

Purpose doesn't hurt margins. Purpose is how you drive transformation. If you don't transform the portfolio, you're going to stop top-line growth, and margins will decline anyway. So we don't really invest in "purpose," but in a strategy to keep the company successful in the future. If we hadn't tackled certain environmental issues, especially with water, we would have lost our licenses in some countries. Now, sometimes when you're changing the culture radically, you run into problems. Transformations sometimes hit your margins or top line because things don't always go in a straight line. But if you think in terms of the life span of the company, these are just small blips.

But aren't you still selling a lot of unhealthy products?

We make a portfolio of products, some of which are "fun for you" and some of which are "good for you." We sell sugary beverages and chips, but we also have Quaker Oats, Tropicana, Naked Juice, and Izze. We're reducing the salt, sugar, and fat in the core products. And we've dialed up the good-for-you offerings because societal needs have changed.

Would you consider stopping a popular product line because it doesn't meet the good-for-you standard?

That wouldn't make sense, because none of our products is bad or unsafe. We give consumers choices that reflect their lifestyles. If you want to consume Pepsi, we'll give you Pepsi in every size possible so that on one occasion you can consume 12 ounces and on another only seven and a half. We want to make sure that both the good-for-you and the fun-for-you products are readily available, affordably priced, and great tasting. And we make sure that good-for-you tastes as good as fun-for-you. We want you to love our Quaker Oats Real Medleys as much as you love Doritos Loaded.

Do you try to push sales of the healthier products?

Yes, but we also want to preserve choice. We've taken lessons from Richard Thaler and Cass Sunstein's book Nudge. We try to put portion-control packages out front on the shelves. We make sure our diet products are merchandised as aspirationally as our full-sugar products are. We advertise Gatorade only with athletes in mind because it's not intended to be a recreational beverage.

Consumers seem very demanding these days. How do you keep up with that?

We have to make sure we're engineering our portfolio for the consumer of the future. There's nothing wrong, for example, with aspartame. But if consumers say they don't like it, we have to give them a choice. We'll offer a diet product that's aspartame-free. Similarly, there's nothing wrong with high-fructose corn syrup, but if consumers say they like real sugar, we have to offer that, too.

What's your proudest accomplishment since becoming CEO?

I took over PepsiCo just after it had a string of successful years. Then everything changed. We faced new regulatory pressures on our fun-for-you categories, and our good-for-you business wasn't fully developed. The North American market slowed down, and we weren't big enough internationally. Sales through some major U.S. customers slowed down massively. Our key beverage competitor had done a big reset of its own, and it bounced back. We looked at ourselves and saw a decentralized, far-flung company that had to be knitted together. The culture needed to change. We had to eliminate redundancies. We had to slim down to reinvest in R&D, advertising and marketing, and new capabilities. I had a choice. I could have gone pedal to the metal, stripped out costs, delivered strong profit for a few years, and then said adios. But that wouldn't have yielded long-term success. So I articulated a strategy to the board focusing on the portfolio we needed to build, the muscles we needed to strengthen, the capabilities to develop. The board said, "We know there will be hiccups along the way, but you have our support, so go make it happen." We started to implement that strategy, and we've delivered great shareholder value while strengthening the company for the long term.

Growing up in Madras, you seem to have broken every possible stereotypical expectation of a young girl in India. Are you still that person?

To a certain extent. When you're a CEO, you can't break too many stereotypical expectations. I wish you could, but you can't. In those days, there was a well-defined conservative stereotype, so everything I did was breaking the framework. I played in a rock band. I climbed trees. I did stuff that made my parents wonder, "What the hell is she doing?" But I also was a good student and a good daughter, so I never brought shame on the family. And I was lucky that the men in my family thought the women should have an equal shot at everything. I'm still a bit of a rebel, always saying that we cannot sit still. Every morning you've got to wake up with a healthy fear that the world is changing, and a conviction that, to win, you have to change faster and be more agile than anyone else.

A version of this article appeared in the September 2015 issue (pp.80-85) of Harvard Business Review.

# data[].attributes.attachment_link.title
How Indra Nooyi Turned Design Thinking Into Strategy: An Interview with PepsiCo's CEO

# data[].attributes.attachment_link.description
Just a few years ago, it wasn't clear whether Indra Nooyi would survive as PepsiCo's CEO. Many investors saw Pepsi as a bloated giant whose top brands were losing market share. And they were critical of Nooyi's shift toward a more health-oriented overall product line.

# data[].attributes.body
Success starts at an early age.

# data[].attributes.attachment_link.readable_text
In 2006, Indra Nooyi became PepsiCo's first female CEO, as well as its first CEO not born in the US.

At a "Women in Leadership Panel" at 92Y in New York on Tuesday, Nooyi said she's always pushed back against adversity and her confidence is built upon an unusual daily habit her mother made her and her older sister, Chandrika, practice when they were just 8 to 11 years old.

Nooyi grew up in the socially conservative city of Madras (now Chennai), India. Her mother adhered to some traditional beliefs - she stressed the importance of seeking a good husband early - but she also instilled in her two daughters the belief that they could grow up to become whoever they wanted.

"Every night at the dinner table, my mother would ask us to write a speech about what we would do if we were president, chief minister, or prime minister - every day would be a different world leader she'd ask us to play," Nooyi said to the 92Y audience. "At the end of dinner, we had to give the speech, and she had to decide who she was going to vote for."

The winner of the debate then signed a piece of paper that stated they had become whatever the world leader of the day was. The girls and their mom would laugh and have fun with it, but Nooyi said she and her sister came to appreciate it, even after they became too cool for the ritual when they hit adolescence.

"Even though my mother didn't work and didn't go to college, she lived a life vicariously through her daughters," Nooyi said. "So she gave us that confidence to be whatever we wanted to be. That was an incredibly formative experience in my youth."

Advertisement

That confidence was reinforced by her paternal grandfather, a charismatic judge. If he asked her to do a job as a child and she later told him that she was unable to do it the way he wanted, he would make her write "I will not make excuses" 200 times on a piece of paper. She became grateful for this punishment when she grew older.

Nooyi's confidence and work ethic helped her achieve an MBA from the Yale School of Management in 1980 and to start building a successful career. Early on, she said men wouldn't make eye contact with her in meetings and would consistently check her answers with one of her male colleagues. But rather than wilt under the pressure, she began to call men out on their actions, and it wouldn't take long for them to realize she was highly adept at her job.

"In my heart I said, 'I can do this better than anyone else can, and if everything else fails, they're going to come to me and say, 'Fix it,' because I know I'm that good," she said. "Remember, I could be president of India!"

# data[].attributes.attachment_link.title
Pepsi CEO Indra Nooyi explains how an unusual daily ritual her mom made her practice as a child changed her life

# data[].attributes.attachment_link.description
In 2006, Indra Nooyi became PepsiCo's first female CEO, as well as its first CEO not born in the US. At a "Women in Leadership Panel" at 92Y in New York on Tuesday, Nooyi said she's always pushed back against adversity and her confidence is built upon an unusual daily habit her mother made her and her older sister, Chandrika, practice when they were just 8 to 11 years old.

# data[].attributes.attachment_link.readable_text
Research shows that one of the best ways to help employees thrive is to give them feedback. It's one of the primary levers leaders have to increase a sense of learning and vitality. Giving your direct reports regular updates on personal performance, as well as on how the business is doing, helps them feel valued. Negative or directive feedback provides guidance, leading people to become, over time, more certain about their behavior and more confident in their competence.

Highlighting an employee's strengths can help generate a sense of accomplishment and motivation. A Gallup survey found that 67% of employees whose managers focused on their strengths were fully engaged in their work, as compared to only 31% of employees whose managers focused on their weaknesses. IBM's WorkTrends survey of over 19,000 workers in 26 countries, across industries and thousands of organizations, revealed that the engagement level of employees who receive recognition is almost three times higher than the engagement level of those who do not. The same survey showed that employees who receive recognition are also far less likely to quit. Recognition has been shown to increase happiness at work in general and is tied to cultural and business results, such as job satisfaction and retention.

Offering positive feedback can generate wins for managers, too. High performers offer more positive feedback to peers; in fact, high-performing teams share nearly six times more positive feedback than average teams. Meanwhile, low-performing teams share nearly twice as much negative feedback than average teams.

You and Your Team Series

Giving and Receiving Feedback

Consider which of your team members' positive contributions you currently take for granted. Make a list, and start calling out team members for their strengths when you see them in action - and try to catch people at it in the moment. The more specific you are, the better. The more you notice what's meaningful to a person, the greater your potential impact will be. Some people prefer a pat on the back in private; others want to bask in the glory of a crowd. If you don't tend to give much feedback, start scheduling one-on-one meetings. Tell each individual what you want them to start, stop, and continue doing. See if you can list a few straightforward actions for each of these prompts. You may ask one employee to start speaking up and sharing their ideas in a meeting, and stop being critical if they don't voice their concerns during the production process. You might compliment them on their creative design ideas and their efforts mentoring employees. Let your employee know that you appreciate these efforts - and that you'd love for them to continue doing these specifics.

There are several things you can do to make your feedback even more powerful and productive. Try to identify with the recipient of feedback and understand the emotions he or she may be feeling. In a straightforward and honest way, explain the reason for the feedback. Imagine that you're giving yourself the feedback: How would you want to hear it? Make sure to focus on the future: What can your employee do to move forward?

Pay attention to your facial expressions when you deliver feedback. How you say things is just as important as what you're saying. Researcher Marie Dasborough studied the effects of delivery on feedback when she observed two groups, one whose members received negative feedback accompanied by positive emotional signals, such as nods and smiles, and one whose members received positive feedback delivered with frowns and narrowed eyes. People who received positive feedback accompanied by negative emotional signals reported feeling worse about their performance than participants who received good-natured negative feedback. The delivery of feedback can often be more important than the message itself.

How do you know whether your delivery is having a positive effect or you're provoking resentment, defensiveness, and ill will? Most of us have blind spots. Tone of voice, for example, is particularly difficult for us to detect accurately. Our facial expressions are another source of blind spots. We may feel ourselves smile, but we often don't sense other facial movements, such as our eyebrows shooting up in shock, fear, or disgust. As you feel judgment, anger, or frustration racing in, are you really able to hide it?

Another blind spot stems from the gap that exists between the intent and impact of our actions. Let's say that you gave your direct report some critical developmental feedback because you thought it was exactly what she needed to improve. You want to groom her for a promotion and career success. Yet she felt like you belittled her - in front of the whole team. As Douglas Stone and Sheila Heen point out in Thanks for the Feedback, we judge ourselves by our intentions, while others judge us by the effects of our actions. Trying doesn't count for much. If we fare poorly in how we execute delivering feedback, others count it against us.

How deeply do you understand your ability to give feedback well? To gain self-awareness, solicit others' help using the following strategies:

Ask for focused feedback. Ask 10 or more people - including coworkers, friends, and family - how good you are at giving feedback. Ask for specific details and examples. What was the context, what happened, and what did you do to make others respond positively to your (negative or positive) feedback? Look closely for recurring commonalities. Ideally, you'll home in on a couple of specific areas for improvement. Then use leadership coach Marshall Goldsmith's "feed forward" process, which involves five steps:

1. Describe your goal clearly. Explain that you want to provide critical feedback better. You don't want to offend people or have them become defensive. You have heard repeatedly that you are abrasive and your feedback stings.

2. Ask for suggestions. Encourage creativity. How can you connect better with employees generally, such that they feel that you care about them and their development? Employees may be less defensive when you give them critical feedback. Ask if they notice anything in particular that is responsible for you being perceived as abrasive. What specifically do they recommend that you do differently?

3. Listen carefully.

4. Thank the person. Tell the person that you appreciate them taking the time to help you and to offer specific suggestions. You might mention that you are going to check in to see how you're progressing. Don't make excuses or get defensive.

5. Repeat this process with additional people.

If you use this approach, you'll wind up with concrete suggestions from a number of people invested in your success. Check in periodically with these people, because they can help you gauge your improvement over time.

Work with a coach. Coaches can uncover weaknesses by independently surveying and interviewing your colleagues and by shadowing you at meetings and events. A great coach can detect subtleties in your behavior of which you might not be aware and can identify underlying assumptions, experiences, and personal qualities that make you prone to being uncivil or delivering feedback poorly. What are you doing that shuts people down, closes them off to your feedback, or creates resentment?

Use colleagues or friends as coaches. Not everyone has access to coaches, but you can also reach out to colleagues and peers for help. I have personally had MBAs and executives coach one another, which has been a very effective and cost-efficient way to improve giving and receiving feedback.

While you're working to improve your own feedback (and interpersonal) skills, encourage your team members to do the same. Have an open discussion with your team about what you and your teammates do or say that conveys respect and is effective when providing feedback. What could you do or say better? Discuss what the team will gain by providing greater feedback and by delivering it with greater respect and tact. When I've done this group exercise in the past, I've found that colleagues will often spontaneously coach one another and offer candid feedback, such as: "You need to share the credit more often" or "You'd be more effective if you were more direct." It's one of the best ways to get honest, direct feedback that can move your entire team forward.

Providing effective feedback is a crucial managerial skill. Highlight the progress your team is making. Researchers Teresa Amabile and Steven Kramer have shown that a sense of progress is the most powerful motivator in the workplace, even stronger than personal recognition or pay. Encourage people's strengths by providing your employees with specific feedback on how they are helping your team or organization. Focus on how you deliver the feedback. Home in on potential blind spots that could be limiting the power of your feedback - or, worse, having a detrimental effect on employees. Gather feedback from others. By providing effective feedback well, you can ignite your employees, helping them and your organization thrive.

# data[].attributes.attachment_link.title
Give Your Team More-Effective Positive Feedback

# data[].attributes.attachment_link.description
Research shows that one of the best ways to help employees thrive is to give them feedback. It's one of the primary levers leaders have to increase a sense of learning and vitality. Giving your direct reports regular updates on personal performance, as well as on how the business is doing, helps them feel valued.

# data[].attributes.body
You're always thinking outside the box if there is no box.

# data[].attributes.attachment_link.readable_text
Diversity has become a watchword in the business world. Businesses often advertise diversity, but when you look under the hood, there may not be much truth in the hype. Through globalization , we see a more encompassing and diverse customer profile and today's digital disruption alters the way we connect with them.

Diversity simply means variety. In life, and in the workforce, diversity means incorporating a myriad of viewpoints, backgrounds, skills and life experiences. The opportunity lies in unlocking and assembling the unique perspectives across multiple talented and skilled individuals. The more diverse the workforce, the more creative and innovative ideas will be considered to solve problems and drive growth. According to a 85% of enterprises agree that diversity results in the most innovative ideas.

The importance of diversity isn't a new concept. HBR identified and highlighted companies with diversity initiatives in its article already in 2How Diversity Can Drive Innovation 013 . In this report, it states, "New research provides compelling evidence that diversity unlocks innovation and drives market growth - a finding that should intensify efforts to ensure that executive ranks both embody and embrace the power of differences."

What has changed now is the rapid pace at which technology and globalization is driving the market towards greater diversity, as well as an expectation for companies to respond faster.
Love diversity, love your company
When I started in my career many years ago, we targeted a handful of market segments and led focus groups to understand how products addressed needs. The process of making sense of the data would take months - and that was acceptable back in the day. In today's digital world, we have the opportunity to interact directly with our customers through social media, and they are quick to provide immediate feedback. Social media provides us the ability to share ideas and collaborate in near real time - it's the modern focus group!

The innovation, agility, and productivity needed to address customer demand in real time gets a leap forward when our workforce is composed of unique individuals. People from different backgrounds bring particular viewpoints and drive immediate which translate into many areas, including:

When an issue arises, getting employees together with diverse backgrounds often leads to unique and creative solutions. In the May 2016 issue of the Diversity Journal CEO in Action Awards, Lorna Donatone, CEO of Sodexo, states, "Tapping into the full potential of our employees' diversity makes us a stronger and more innovative company, better able to serve our clients and 75 million consumers around the world."

With the economy moving toward globalization, it pays to have a workforce that understands and communicates across national boundaries. According to Diversity Journal, "One of the realities of today's workplace is the need for cross-cultural understanding in an increasingly global workplace." Lorna Donatone shares her perspective, "Understanding how workforce demographics and workplace needs are changing provides [companies like] Sodexo with an opportunity to support and leverage multicultural workforce for professional development while meeting business objectives."

Greater variety translates into employees with language skills and knowledge of cultural practices that can help us build relationships and market share anywhere in the world. And with such talent, we are given the opportunity to expand our thinking.

Creativity and innovation

When everyone you hire has a similar ethnic and cultural background, creativity often falls flat. Bringing in people from diverse backgrounds yields unique insights and the ability to blend cultural norms for a creative approach to development, marketing, deployment, operations and　more. Managing partner C. Lash Harrison's mentioned, during the CEO in Action Awards presentation, that he envisions "that better and more creative solutions come from a group of individuals who are different."

By understanding and appreciating different cultural backgrounds, you help build a culture of engagement that results in more collaboration and higher productivity.John Wilson, CEO of Wilson HCG noted during the awards presentation, "Collaboration is the key to success and different perspectives, backgrounds, and experiences are critical to having a productive and innovative workforce."

Wilson's observations can be easily seen in my team too. Because we are structured as a global organization, we can capture ideas from across the globe. We use design thinking as a framework for ideation where we include a variety of roles from inside and outside our partners' organizations, with the objective of creating meaningful ideas based on a variety of different viewpoints. Our partners appreciate our approach as an inherent way to incorporate diversity into the creation process.
Disruption drives diversity
Diversity goes hand in hand with our goals of co-innovation and digital transformation. The same benefits you reap from better business intelligence and big data also come from building a community of people with diverse and unique backgrounds.

The more diverse the employee pool, the more agile and innovative companies will be. It is critical that companies are representative of all people, regardless of race, gender, age or other human differences as we engage with our customers. Building a corporate culture that enables and encourages diversity helps organizations connect to a broader market, more quickly. And as diversity continues to be addressed at all levels, it becomes easier to identify, attract, and develop top talent.

This post also appeared on SAP Business Trends.

# data[].attributes.attachment_link.title
SAPVoice: What Diversity Can Do For Your Business

# data[].attributes.attachment_link.description
By Camilla Dahlen, Head of ISV, SAP Diversity has become a watchword in the business world. Businesses often advertise diversity, but when you look under the hood, there may not be much truth in the hype. Through globalization, we see a more encompassing and diverse customer profile and today's digital disruption alters the way we [...]

# data[].attributes.body
HBR ... Women are on the rise

# data[].attributes.attachment_link.readable_text
Many CEOs who make gender diversity a priority-by setting aspirational goals for the proportion of women in leadership roles, insisting on diverse slates of candidates for senior positions, and developing mentoring and training programs-are frustrated. They and their companies spend time, money, and good intentions on efforts to build a more robust pipeline of upwardly mobile women, and then not much happens.

The problem with these leaders' approaches is that they don't address the often fragile process of coming to see oneself, and to be seen by others, as a leader. Becoming a leader involves much more than being put in a leadership role, acquiring new skills, and adapting one's style to the requirements of that role. It involves a fundamental identity shift. Organizations inadvertently undermine this process when they advise women to proactively seek leadership roles without also addressing policies and practices that communicate a mismatch between how women are seen and the qualities and experiences people tend to associate with leaders.

A significant body of research (see "Further Reading") shows that for women, the subtle gender bias that persists in organizations and in society disrupts the learning cycle at the heart of becoming a leader. This research also points to some steps that companies can take in order to rectify the situation. It's not enough to identify and instill the "right" skills and competencies as if in a social vacuum. The context must support a woman's motivation to lead and also increase the likelihood that others will recognize and encourage her efforts-even when she doesn't look or behave like the current generation of senior executives.

"Who Will Lead and Who Will Follow? A Social Process of Leadership Identity Construction in Organizations," by D. Scott DeRue and Susan J. Ashford (Academy of Management Review, October 2010)

"Women and Leadership: Defining the Challenges," by Robin J. Ely and Deborah L. Rhode ( Handbook of Leadership Theory and Practice, Harvard Business Press, 2010)

"Impossible Selves: Image Strategies and Identity Threat in Professional Women's Career Transitions," by Herminia Ibarra and Jenifer Petriglieri (Insead working paper, 2007)

"Negotiating in the Shadows of Organizations: Gender, Negotiation, and Change," by Deborah M. Kolb (Ohio State Journal on Dispute Resolution, 2013)

"Taking Gender into Account: Theory and Design for Women's Leadership Development Programs," by Robin J. Ely, Herminia Ibarra, and Deborah Kolb (Academy of Management Learning & Education, September 2011)

The solutions to the pipeline problem are very different from what companies currently employ. Traditional high-potential, mentoring, and leadership education programs are necessary but not sufficient. Our research, teaching, and consulting reveal three additional actions companies can take to improve the chances that women will gain a sense of themselves as leaders, be recognized as such, and ultimately succeed. (This article expands on our paper "Taking Gender into Account: Theory and Design for Women's Leadership Development Programs," Academy of Management Learning & Education, September 2011.)

Becoming a Leader

People become leaders by internalizing a leadership identity and developing a sense of purpose. Internalizing a sense of oneself as a leader is an iterative process. A person asserts leadership by taking purposeful action-such as convening a meeting to revive a dormant project. Others affirm or resist the action, thus encouraging or discouraging subsequent assertions. These interactions inform the person's sense of self as a leader and communicate how others view his or her fitness for the role.

As a person's leadership capabilities grow and opportunities to demonstrate them expand, high-profile, challenging assignments and other organizational endorsements become more likely. Such affirmation gives the person the fortitude to step outside a comfort zone and experiment with unfamiliar behaviors and new ways of exercising leadership. An absence of affirmation, however, diminishes self-confidence and discourages him or her from seeking developmental opportunities or experimenting. Leadership identity, which begins as a tentative, peripheral aspect of the self, eventually withers away, along with opportunities to grow through new assignments and real achievements. Over time, an aspiring leader acquires a reputation as having-or not having-high potential.

The story of an investment banker we'll call Amanda is illustrative. Amanda's career stalled when she was in her thirties. Her problem, she was told, was that she lacked "presence" with clients (who were mostly older men) and was not sufficiently outspoken in meetings. Her career prospects looked bleak. But both her reputation and her confidence grew when she was assigned to work with two clients whose CFOs happened to be women. These women appreciated Amanda's smarts and the skillful way she handled their needs and concerns. Each in her own way started taking the initiative to raise Amanda's profile. One demanded that she be present at all key meetings, and the other refused to speak to anyone but Amanda when she called-actions that enhanced Amanda's credibility within her firm. "In our industry," Amanda explains, "having the key client relationship is everything." Her peers and supervisors began to see her not just as a competent project manager but as a trusted client adviser-an important prerequisite for promotion. These relationships, both internal and external, gave Amanda the confidence boost she needed to generate ideas and express them forthrightly, whether to colleagues or to clients. Her supervisors happily concluded that Amanda had finally shed her "meek and mild-mannered" former self and "stepped up" to leadership.

Effective leaders develop a sense of purpose by pursuing goals that align with their personal values and advance the collective good. This allows them to look beyond the status quo to what is possible and gives them a compelling reason to take action despite personal fears and insecurities. Such leaders are seen as authentic and trustworthy because they are willing to take risks in the service of shared goals. By connecting others to a larger purpose, they inspire commitment, boost resolve, and help colleagues find deeper meaning in their work.

Integrating leadership into one's core identity is particularly challenging for women, who must establish credibility in a culture that is deeply conflicted about whether, when, and how they should exercise authority. Practices that equate leadership with behaviors considered more common in men suggest that women are simply not cut out to be leaders. Furthermore, the human tendency to gravitate to people like oneself leads powerful men to sponsor and advocate for other men when leadership opportunities arise. As Amanda's story illustrates, women's leadership potential sometimes shows in less conventional ways-being responsive to clients' needs, for example, rather than boldly asserting a point of view-and sometimes it takes powerful women to recognize that potential. But powerful women are scarce.

Despite a lack of discriminatory intent, subtle, "second-generation" forms of workplace gender bias can obstruct the leadership identity development of a company's entire population of women. (See the sidebar "What Is Second-Generation Gender Bias?") The resulting underrepresentation of women in top positions reinforces entrenched beliefs, prompts and supports men's bids for leadership, and thus maintains the status quo.

Research has moved away from a focus on the deliberate exclusion of women and toward investigating "second-generation" forms of gender bias as the primary cause of women's persistent underrepresentation in leadership roles. This bias erects powerful but subtle and often invisible barriers for women that arise from cultural assumptions and organizational structures, practices, and patterns of interaction that inadvertently benefit men while putting women at a disadvantage. Among them are:

A paucity of role models for women.

Aspiring leaders need role models whose styles and behaviors they can experiment with and evaluate according to their own standards and others' reactions. Fewer female leaders means fewer role models and can suggest to young would-be leaders that being a woman is a liability-thus discouraging them from viewing senior women as credible sources of advice and support.

Gendered career paths and gendered work.

Many entrenched organizational structures and work practices were designed to fit men's lives and situations at a time when women made up only a very small portion of the workforce. For one example, formal rotations in sales or operations have traditionally been a key step on the path to senior leadership, and men are more likely than women to have held such jobs. Yet requirements like these may be outdated when it comes to the kinds of experience that best prepare a person to lead. For another, career- enhancing international posts often assume a "trailing spouse" who has no career and can easily move-a family situation much more common for men than for women. How work is valued may similarly give men an advantage: Research indicates that organizations tend to ignore or undervalue behind-the-scenes work (building a team, avoiding a crisis), which women are more likely to do, while rewarding heroic work, which is most often done by men. These practices were not designed to be discriminatory, but their cumulative effect disadvantages women. A vicious cycle ensues: Men appear to be best suited to leadership roles, and this perception propels more of them to seek and attain such positions, thus reinforcing the notion that they are simply better leaders.

Women's lack of access to networks and sponsors.

Informal networks are a precious resource for would-be leaders, yet differences in men's and women's organizational roles and career prospects, along with their proclivity to interact with others of the same gender, result in weaker networks for women. They cite as a major barrier to advancement their lack of access to influential colleagues. Moreover, the connections women do have tend to be less efficacious: Men's networks provide more informal help than women's do, and men are more likely to have mentors who help them get promoted. Meanwhile, men in positions of power tend to direct developmental opportunities to junior men, whom they view as more likely than women to succeed.

Double binds.

In most cultures masculinity and leadership are closely linked: The ideal leader, like the ideal man, is decisive, assertive, and independent. In contrast, women are expected to be nice, caretaking, and unselfish. The mismatch between conventionally feminine qualities and the qualities thought necessary for leadership puts female leaders in a double bind. Numerous studies have shown that women who excel in traditionally male domains are viewed as competent but less likable than their male counterparts. Behaviors that suggest self-confidence or assertiveness in men often appear arrogant or abrasive in women. Meanwhile, women in positions of authority who enact a conventionally feminine style may be liked but are not respected. They are deemed too emotional to make tough decisions and too soft to be strong leaders.

The three actions we suggest to support women's access to leadership positions are (1) educate women and men about second-generation gender bias, (2) create safe "identity workspaces" to support transitions to bigger roles, and (3) anchor women's development efforts in a sense of leadership purpose rather than in how women are perceived. These actions will give women insight into themselves and their organizations, enabling them to more effectively chart a course to leadership.

Educate Everyone About Second-Generation Gender Bias

For women.

More than 25 years ago the social psychologist Faye Crosby stumbled on a surprising phenomenon: Most women are unaware of having personally been victims of gender discrimination and deny it even when it is objectively true and they see that women in general experience it.

Many women have worked hard to take gender out of the equation-to simply be recognized for their skills and talents. Moreover, the existence of gender bias in organizational policies and practices may suggest that they have no power to determine their own success. When asked what might be holding women back in their organizations, they say:

"It's nothing overt. I just feel less of a connection, either positive or negative, with the guys I work with. So sometimes I seem to have difficulty getting traction for my ideas."

"I look around and see that my male colleagues have P&L responsibility and most of us are in staff roles. I was advised to make the move to a staff role after the birth of my second child. It would be easier, I was told. But now I recognize that there is no path back to the line."

"My firm has the very best intentions when it comes to women. But it seems every time a leadership role opens up, women are not on the slate. The claim is made that they just can't find women with the right skill set and experience."

These statements belie the notion that gender bias is absent from these women's work lives. Second-generation bias does not require an intent to exclude; nor does it necessarily produce direct, immediate harm to any individual. Rather, it creates a context-akin to "something in the water"-in which women fail to thrive or reach their full potential. Feeling less connected to one's male colleagues, being advised to take a staff role to accommodate family, finding oneself excluded from consideration for key positions-all these situations reflect work structures and practices that put women at a disadvantage.

In Practice

Leadership Interview

An interview with Facebook's Sheryl Sandberg.

Without an understanding of second-generation bias, people are left with stereotypes to explain why women as a group have failed to achieve parity with men: If they can't reach the top, it is because they "don't ask," are "too nice," or simply "opt out." These messages tell women who have managed to succeed that they are exceptions and women who have experienced setbacks that it is their own fault for failing to be sufficiently aggressive or committed to the job.

We find that when women recognize the subtle and pervasive effects of second-generation bias, they feel empowered, not victimized, because they can take action to counter those effects. They can put themselves forward for leadership roles when they are qualified but have been overlooked. They can seek out sponsors and others to support and develop them in those roles. They can negotiate for work arrangements that fit both their lives and their organizations' performance requirements. Such understanding makes it easier for women to "lean in."

For women and men.

Second-generation bias is embedded in stereotypes and organizational practices that can be hard to detect, but when people are made aware of it, they see possibilities for change. In our work with leadership development programs, we focus on a "small wins" approach to change. In one manufacturing company, a task force learned that leaders tended to hire and promote people, mainly men, whose backgrounds and careers resembled their own. They had good reasons for this behavior: Experienced engineers were hard to find, and time constraints pressured leaders to fill roles quickly. But after recognizing some of the hidden costs of this practice-high turnover, difficulty attracting women to the company, and a lack of diversity to match that of customers-the company began to experiment with small wins. For example, some executives made a commitment to review the job criteria for leadership roles. One male leader said, "We write the job descriptions-the list of capabilities-for our ideal candidates. We know that the men will nominate themselves even if they don't meet all the requirements; the women would hold back. Now we look for the capabilities that are needed in the role, not some unrealistic ideal. We have hired more women in these roles, and our quality has not suffered in the least."

In another case, participants in a leadership development program noticed that men seemed to be given more strategic roles, whereas women were assigned more operational ones, signaling that they had lower potential. The participants proposed that the company provide clear criteria for developmental assignments, be transparent about how high potential was evaluated, and give direction as to what experiences best increased a person's potential. Those actions put more women in leadership roles.

Create Safe "Identity Workspaces"

In the upper tiers of organizations, women become increasingly scarce, which heightens the visibility and scrutiny of those near the top, who may become risk-averse and overly focused on details and lose their sense of purpose. (In general, people are less apt to try out unfamiliar behaviors or roles if they feel threatened.) Thus a safe space for learning, experimentation, and community is critical in leadership development programs for women.

Consider performance feedback, which is necessary for growth and advancement but full of trip wires for women. In many organizations 360-degree feedback is a basic tool for deepening self-knowledge and increasing awareness of one's impact on others-skills that are part and parcel of leadership development. But gender stereotypes may color evaluators' perceptions, subjecting women to double binds and double standards. Research has amply demonstrated that accomplished, high-potential women who are evaluated as competent managers often fail the likability test, whereas competence and likability tend to go hand in hand for similarly accomplished men. We see this phenomenon in our own research and practice. Supervisors routinely give high-performing women some version of the message "You need to trim your sharp elbows." Likewise, we find that participants in women's leadership development programs often receive high ratings on task-related dimensions, such as "exceeds goals," "acts decisively in the face of uncertainty," and "is not afraid to make decisions that may be unpopular," but low ratings on relational ones, such as "takes others' viewpoints into account" and "uses feedback to learn from her mistakes." We also frequently encounter women whose performance feedback seems contradictory: Some are told they need to "be tougher and hold people accountable" but also to "not set expectations so high," to "say no more often" but also to "be more visible," to "be more decisive" but also to "be more collaborative."

Creating a safe setting-a coaching relationship, a women's leadership program, a support group of peers-in which women can interpret these messages is critical to their leadership identity development. Companies should encourage them to build communities in which similarly positioned women can discuss their feedback, compare notes, and emotionally support one another's learning. Identifying common experiences increases women's willingness to talk openly, take risks, and be vulnerable without fearing that others will misunderstand or judge them. These connections are especially important when women are discussing sensitive topics such as gender bias or reflecting on their personal leadership challenges, which can easily threaten identity and prompt them to resist any critical feedback they may receive. When they are grounded in candid assessments of the cultural, organizational, and individual factors shaping them, women can construct coherent narratives about who they are and who they want to become.

The Importance of Leadership Purpose

In a recent interview with members of Hillary Clinton's press corps, a veteran reporter noted, "The story is never what she says, as much as we want it to be. The story is always how she looked when she said it." Clinton says she doesn't fight it anymore; she just focuses on getting the job done.

How women are perceived-how they dress, how they talk, their "executive presence," their capacity to "fill a room," and their leadership style-has been the focus of many efforts to get more of them to the top. Voice coaches, image consultants, public-speaking instructors, and branding experts find the demand for their services growing. The premise is that women have not been socialized to compete successfully in the world of men, so they must be taught the skills and styles their male counterparts acquire as a matter of course.

To manage the competence-likability trade-off-the seeming choice between being respected and being liked-women are taught to downplay femininity, or to soften a hard-charging style, or to try to strike a perfect balance between the two. But the time and energy spent on managing these perceptions can ultimately be self-defeating. Overinvestment in one's image diminishes the emotional and motivational resources available for larger purposes. People who focus on how others perceive them are less clear about their goals, less open to learning from failure, and less capable of self-regulation.

Anchoring in purpose enables women to redirect their attention toward shared goals and to consider who they need to be and what they need to learn in order to achieve those goals. Instead of defining themselves in relation to gender stereotypes-whether rejecting stereotypically masculine approaches because they feel inauthentic or rejecting stereotypically feminine ones for fear that they convey incompetence-female leaders can focus on behaving in ways that advance the purposes for which they stand.

Focusing on purpose can also lead women to take up activities that are critical to their success, such as networking. Connections rarely come to them as a matter of course, so they have to be proactive in developing ties; but we also find that many women avoid networking because they see it as inauthentic-as developing relationships that are merely transactional and feel too instrumental-or because it brings to mind activities (the proverbial golf game, for example) in which they have no interest or for which they have no time, given their responsibilities beyond work. Yet when they see it as a means to a larger purpose, such as developing new business to advance their vision for the company, they are more comfortable engaging in it. Learning how to be an effective leader is like learning any complex skill: It rarely comes naturally and usually takes a lot of practice. Successful transitions into senior management roles involve shedding previously effective professional identities and developing new, more fitting ones. Yet people often feel ambivalent about leaving the comfort of roles in which they have excelled, because doing so means moving toward an uncertain outcome.

Second-generation gender bias can make these transitions more challenging for women, and focusing exclusively on acquiring new skills isn't sufficient; the learning must be accompanied by a growing sense of identity as a leader. That's why greater understanding of second-generation bias, safe spaces for leadership identity development, and encouraging women to anchor in their leadership purpose will get better results than the paths most organizations currently pursue.

A version of this article appeared in the September 2013 issue of Harvard Business Review.

# data[].attributes.attachment_link.description
Reprint: R1309C Even when CEOs make gender diversity a priority-by setting aspirational goals for the proportion of women in leadership roles, insisting on diverse slates of candidates for senior positions, and developing mentoring and training programs-they are often frustrated by a lack of results.

# data[].attributes.body
The number of female CEOs in major corporations is on the rise!

# data[].attributes.attachment_link.readable_text
*The S&P 500, published by Dow Jones, is not a static list. Catalyst accesses the list annually in conjunction with this CEO list and its Census and Pyramid products. Whenever possible, we update the women on our list throughout the year. Women are counted in our list starting on the date they officially take their positions. We strive to keep this CEO list accurate and timely; if you have found that we have missed something, or have any questions, please submit that information here: http://www.catalyst.org/what-we-do/services/ask-catalyst.

You can learn more about our methodology and the information used to create this List and our Pyramids here.

Catalyst also maintains an historical list of women CEOs that have appeared on the Fortune list from 1972-2017. If you would like a copy of the list, please submit a request here: http://www.catalyst.org/what-we-do/services/ask-catalyst.

How to cite this product: Catalyst. Women CEOs of the S&P 500. New York: Catalyst, May 17, 2018.

# data[].attributes.attachment_link.keywords[]
this list names all the women who currently hold ceo positions at s&p 500 companies.

# data[].attributes.attachment_link.description
The S&P 500, published by Dow Jones, is not a static list. Catalyst accesses the list annually in conjunction with this CEO list and its Census and Pyramid products. Whenever possible, we update the women on our list throughout the year. Women are counted in our list starting on the date they officially take their positions.

# data[].attributes.attachment_link.readable_text
unity in diversity image by weim from Fotolia.com

Companies with a diverse workforce often outperform companies where the staff seem cloned from a single template. Diversity brings different perspectives, experience and skills, which can encourage innovative, creative approaches. Unfortunately, a diverse team can also make people uncomfortable as they rub against co-workers with different attitudes, worldviews and outlooks. With good management, you can gain the benefits of diversity and minimize any disadvantages.

Spot Problems and Overcome Them

If your entire staff is culturally and ethnically just like you, figuring them out may be easy. If you have a variety of religious and cultural perspectives, it takes work. You may find that your Muslim or Orthodox Jewish employee can't eat anything in the cafeteria, or that your new hire comes from a culture where showing up a half-hour late is normal. Disabled employees may have physical challenges you didn't expect. Identify potential issues and then work to resolve them.

Treat People as Individuals

Never treat your staff as representatives of their culture, nation or religion. Making stereotypical assumptions about what a Jewish, Mexican or Taiwanese employee thinks or wants, for example, can alienate them. Take the time to know your employees individually - what they want from you, what their skills and interests are, and how they work best in teams. Find ways for your staff to get to know one another, too. Incorporate team-building exercises, for example.

Set Objective Standards

One drawback to a diverse workplace is that it's easy for workers to wonder if you're discriminating against them. To give them confidence in your decisions, make your criteria objective. If all employment decisions and discipline follow standardized rules, employees can trust that you're treating them fairly. Provide them with your company policies in writing so they know what's expected of them.

Communicate Clearly

Having standardized policies is good, but they also have to be clear. Make sure your written guidelines are unambiguous and easy to understand. That helps employees see why one worker gets a plum project but another gets the door. Talk to your staff regularly to confirm that you're being as clear about your decisions and policies as you think you are.

Accept Feedback

If working with a diverse crew is a new experience for you, it's quite possible you'll make mistakes. If an employee tells you that you've crossed a cultural taboo, listen to those concerns. Beyond that, it helps to be open to suggestions. If your company holds a variety of cultural perspectives and experiences, it's a shame not to take advantage of them.

About the Author

A Durham, NC resident, Fraser has written about law, starting a business, balancing your budget and fighting evictions, among other legal and financial topics.

# data[].attributes.attachment_link.description
Companies with a diverse workforce often outperform companies where the staff seem cloned from a single template. Diversity brings different perspectives, experience and skills, which can encourage innovative, creative approaches. Unfortunately, a diverse team can also make people uncomfortable as they rub against co-workers with different attitudes, worldviews and outlooks.

# data[].attributes.body
Diversity isn't just a check in the box. It encompasses thought, experience, and emotion. It greatly benefits companies, but can also be a challenge to manage.

# data[].attributes.attachment_link.readable_text
People from certain generations tend to use different communication methods.

If the ages of your employees vary widely, it might seem difficult to reach each person.

There are a variety of ways to reach your generationally diverse workforce, such as mixing generations and modifying your communication style.

Managing a workforce that is becoming increasingly diverse in age is no small task for employers. A 2017 study from Robert Half Management Resources revealed that communication is the most difficult aspect of managing a workplace comprising as many as four generations of employees.

Specifically, 30% of the executives surveyed said communication skills represent the greatest difference among employees from different generations.

The research found that baby boomers tend to be more reserved, while Gen Xers prefer a control-and-command style. Gen Y (millennial) employees prefer a more collaborative approach to communication, and the youngest workers, those in Gen Z, like in-person interactions best.

The other big differences the study identified were how employees adapt to change, their technical skills and how they work with other departments.

Gen X and Gen Y employees tend to see change as a vehicle for new opportunities, while Gen Z is used to change and expects it in the workplace. [See related story: How to Manage a Multigenerational Workforce]

"Each generation brings unique characteristics to the workforce, which should be embraced," Tim Hird, executive director of Robert Half Management Resources, said in a statement. "Too often, managers see these differences as negatives, but building a team with diverse perspectives, insights and strengths can only be a positive, leading to improved products and service levels."

Managing a multigenerational workforce doesn't have to be hard, Hird said. "For example, for years, employers complained about how the work styles of millennials were disrupting the workplace," he said. "We know now, however, they simply have different outlooks, and the resulting changes from employers, such as new communication methods and enhanced work-life balance offerings, have benefited companies and employees alike."

The study was based on surveys of more than 2,200 chief financial officers from companies in more than 20 of the largest U.S. metropolitan areas.

What are generational differences?

Think about how you go about your day. Do you wake up in the morning and go for a jog? Do you have coffee every day? When do you go to work? Do you talk to your boss differently than you talk to your co-workers? Do you wear a tie every day even though you are not necessarily required to?

Now, think about what your parents would do. If you have kids and they're old enough to work, think about what they would do. Chances are, there are some differences.

The ways people from different generations do things are examples of generational differences. From ironing all of their clothes to reading the newspaper every morning, there are some things older generations tend to do more than younger ones, and vice versa.

Why is it important to understand generational differences?

It's important to understand generational differences for a variety of reasons. First, different generations have different needs. For example, younger employees have different ways of learning than older employees do. Some of your younger employees might want to watch a video tutorial, while your older employees might prefer a hands-on approach to learning.

Different generations also have different experiences. Many of your older employees have more years of experience at your company than your younger hires. Your younger employees might be able to use their recently earned degree to help with a project in the office, but your older employees have years of stories and knowledge that will benefit your organization.

Another generational difference is in incentives. Your younger employees might want to be recognized differently than your older employees.

Because of these differences, you cannot approach all of your employees the same way and expect each of them to react the same way. With these differences in mind, you must recognize that all of your employees are different.

Tips for managing employees from different generations

To help employers, Robert Half Management Resources offered several tips for managing employees from different generations:

1. Don't overthink it. Start from the perspective that all employees want to do well and help the company. That type of viewpoint will lay a strong foundation when building relationships.

2. Modify your style. While your employees have many of the same attributes, they also have individual needs. Work at customizing your management style, tailoring it to each person's strengths, personality and aspirations.

3. Get out of the office. To get your employees of different generations to know one another better, consider hosting off-site team-building events. Being in a setting outside the office is a good way for employees to learn more about their colleagues.

4. Let younger employees be heard. It is important to make sure employees from younger generations feel comfortable sharing their opinions with their older co-workers. Regardless of their age, employees who have expertise in a specific area should be able to share their perspectives with everyone in the office.

5. Mix generations. When assembling teams to work on certain projects, mix and match employees of different ages who have different skill sets. This can spur innovation and new ways of solving problems.

# data[].attributes.attachment_link.title
Communicating with a Multigenerational Workforce - businessnewsdaily.com

# data[].attributes.attachment_link.description
People from certain generations tend to use different communication methods. If the ages of your employees vary widely, it might seem difficult to reach each person. There are a variety of ways to reach your generationally diverse workforce, such as mixing generations and modifying your communication style.

# data[].attributes.body
Sometimes analysis is more than numbers

# data[].attributes.body
Rodney Adkins held many different positions in the company prior to holding a top position.

# data[].attributes.attachment_link.readable_text
PHOENIX--(BUSINESS WIRE)-- . (NYSE: AVT), a leading global technology distributor, announced today that Rodney C. Adkins, president of 3RAM Group LLC, a privately held company specializing in capital investments, business consulting services and property management, has been appointed to the company's board of directors. He will serve on both the audit and corporate governance committees.

This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20150615006433/en/

Mr. Rodney C. Adkins Appointed to Avnet, Inc. Board of Directors (Photo: Business Wire)

Prior to 3RAM Group LLC, Mr. Adkins was the senior vice president of corporate strategy for IBM, with responsibility for leading continuous transformation across IBM and developing strategies linked to execution plans for a new era of computing, new markets and new clients. He held a number of development and management roles during his more than 30-year career with IBM, which included serving as the senior vice president of IBM's Systems and Technology Group. As a part of this, he led all aspects of IBM's semiconductor, server, storage and system software businesses, as well as the company's Integrated Supply Chain and Global Business Partners organizations.

"Rod is a respected executive who understands the need for companies to continuously evolve to keep pace with the accelerated rate of change in the technology industry," said William H. Schumann III, chairman of the board of Avnet, Inc. "With his history working for IBM, Rod will strengthen Avnet's position as an innovative, world-leading technology distributor."

In addition to Avnet, Mr. Adkins currently serves on the board of directors for W.W. Grainger, Inc., PPL Corporation and United Parcel Service, Inc.

Mr. Adkins has received multiple leadership awards throughout his career. He was inducted into the National Academy of Engineering, and holds honorary doctorate degrees from the Georgia Institute of Technology and University of Maryland, Baltimore County. He also was selected as Black Enterprise magazine's Corporate Executive of the Year in 2011.

Follow Avnet on Twitter:
Connect with Avnet on LinkedIn or Facebook: http://www.linkedin.com/company/2572 or facebook.com/avnetinc
Read more about Avnet on its blogs: http://blogging.avnet.com/

About Avnet, Inc.

Avnet, Inc. (NYSE: AVT), a Fortune 500 company, is one of the largest distributors of electronic components, computer products and embedded technology serving customers globally. Avnet accelerates its partners' success by connecting the world's leading technology suppliers with a broad base of customers by providing cost-effective, value-added services and solutions. For the fiscal year ended June 28, 2014, Avnet generated revenue of $27.5 billion. For more information, visit www.avnet.com. (AVT_IR)

All company and product names may be trademarks of the respective companies with which they are associated.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150615006433/en/

Avnet Investor Relations
Vincent Keenan, 480-643-7053
Vice President, Investor Relations
vincent.keenan@avnet.com

Source: Avnet, Inc.

News Provided by Acquire Media

# data[].attributes.attachment_link.title
Avnet, Inc. Names Rodney C. Adkins to Its Board of Directors | Avnet, Inc.

# data[].attributes.attachment_link.description
PHOENIX--(BUSINESS WIRE)-- . (NYSE: AVT), a leading global technology distributor, announced today that Rodney C. Adkins, president of 3RAM Group LLC, a privately held company specializing in capital investments, business consulting services and property management, has been appointed to the company's board of directors. He will serve on both the audit and corporate governance committees.

# data[].attributes.body
Finally found it.

# data[].attributes.attachment_link.title
Steve Jobs Stanford Commencement Speech 2005

# data[].attributes.body
http://abcnews.go.com/Technology/steve-jobs-fire-company/story?id=14683754

# data[].attributes.attachment_link.readable_text
Steve Jobs was just 30 years old, wildly successful, fabulously wealthy and a global celebrity. And then it all came crashing down.

He had revolutionized personal computing and created an iconic brand - only to be forced out of the company he had built into a billion-dollar colossus.

"I was out -- and very publicly out," he recalled in a commencement speech at Stanford University. "What had been the focus of my entire adult life was gone, and it was devastating." He added, "I was a very public failure."

History is filled with trailblazers who stumbled before finding success. But Steve Jobs' career followed a different arc: a meteoric rise, a humbling fall, and then one amazing comeback, perhaps the most spectacular second act of all time.

PHOTOS: Steve Jobs Through The Years

"He co-founds Apple Computer when he is 21, and by the time he is 23 he's a millionaire. He becomes legendary. And then, at 30, he has this humiliating defeat," said Alan Deutschman, author of "Change or Die, The Second Coming of Steve Jobs."

"But he persists, he has this incredible tenacity. He holds on and he comes back with triumph after triumph, driving this company to new heights, creating the greatest corporate success of our time. It's a unique story."

Steve Jobs 'Devastated' When Fired By Apple

The founding of Apple Computer is by now legendary. After dropping out of Reed College, Jobs and his buddy Steve Wozniak launched the company from his family's suburban California garage in 1976.

In 1981, Apple Computer went public. Just two years later, Apple cracked the Fortune 500 and Jobs recruited John Sculley, the head of Pepsi-Cola, to be its new chief executive.

"Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?" Jobs famously said.

Jobs was Apple's chief visionary, a role that put him in charge of the team developing Apple's next revolutionary product, the Macintosh computer. The Mac debuted in 1984 to rave reviews but disappointing sales, putting a financial strain on the company -- and fraying Jobs' relationship with Sculley.

"Jobs basically created his own team to create his own product, the Macintosh. His team actually had its own building. He even flew the pirate flag there. He said, 'It is better to be a pirate, than to be in the navy.' He had this company-within-a-company that became pitted against other parts of the company that actually made money," Deutschman said.

The Jobs-Sculley relationship was further strained by complaints from workers on the Mac team about their demanding boss, according to William Simon, co-author of "iCon: Steve Jobs, the Greatest Second Act in the History of Business."

Jobs "demanded so much from the people who worked for him. That was part of his greatness," Simon said. "But he drove people too hard. ... being gentle and polite was not part of his demeanor."

A power struggle erupted between Sculley and Jobs. In the spring of 1985 Apple's board sided with the CEO, removing Jobs from his command of the Macintosh group.

READ MORE: Steve Jobs' 20 Best Quotes

"They basically stripped Jobs of responsibilities and gave him an office that he referred to as 'Siberia.' Well, someone like Steve Jobs could not sit in Siberia," Deutschman said. "Jobs told his closest friends and colleagues that it was a betrayal."

Jobs left Apple and spent the summer of 1985 in a "midlife crisis, deciding what he wanted to do with his life and flirting with all kinds of possibilities" from entering politics to becoming an astronaut, Deutschman said.

Steve Jobs Firing Was Best Thing That Happened to Him

In his famous 2005 Stanford speech, Jobs admitted he "really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down, that I had dropped the baton as it was being passed to me."

He added, "I even thought about running away from (Silicon) Valley. But something slowly began to dawn on me. I still loved what I did. The turn of events at Apple had not changed that one bit. And so I decided to start over."

The day after Labor Day, 1985, Jobs dialed up a former colleague and together they launched a new computer company, NeXT. Jobs also launched Pixar Animation Studios.

"I think he wanted to prove his early success at Apple wasn't a fluke, that he wasn't a kid who got lucky and was in the right place at the right time," Deutschman said. "He still had a lot to prove. He still had a chip on his shoulder."

In 1996, Apple Computer, by now struggling, acquired NeXT, returning Jobs to the company he helped to create. And the following year Jobs became Apple's CEO, driving the company to its greatest successes, from the iPod to the iPhone to the iPad.

"The conventional wisdom was that Steve Jobs was a great visionary but not a good businessman," Deutschman said. "But in his second time at Apple he wasn't just a visionary. He made a point of learning how to be a great businessman."

Jobs put it this way in his speech to Stanford graduates:

"I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter into one of the most creative periods of my life," he said.

"I'm pretty sure none of this would have happened if I hadn't been fired from Apple. It was awful tasting medicine, but I guess the patient needed it. Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced the only thing that kept me going was that I loved what I did. You've got to find what you love."

# data[].attributes.attachment_link.description
Steve Jobs was just 30 years old, wildly successful, fabulously wealthy and a global celebrity. And then it all came crashing down. He had revolutionized personal computing and created an iconic brand - only to be forced out of the company he had built into a billion-dollar colossus.