January 17, 2005

Excerpts: Contagious Success - Part II

By: 800-CEO-READ @ 3:34 PM – Filed under: Management & Workplace Culture

1. Short-Term Thinking Kills Performance
The emphasis on quarterly results has never been greater. Ironically, our research shows that the number one inhibitor of high performance is short-term thinkingliving for today at the expense of tomorrow. To meet quarterly financial goals, companies are cutting staff and budgets, resulting in overworked, frustrated employees.
On the day they announced their IPO, the founders of Google vowed to concentrate on the long term. In our opinion, outside pressures too often tempt companies to sacrifice long-term opportunities to meet quarterly market expectations. ...If opportunities arise that might cause us to sacrifice short-term results but are in the best long-term interest of our shareholders, we will take those opportunities. We will have the fortitude to do this. We would request that our shareholders take the long-term view, wrote Larry Page and Sergey Brin. To spawn the creativity that leads to opportunities, Google encourages employees to spend 20 percent of their time working on whatever they think will most benefit the company in the long run.
Balancing the short and long term is perhaps the single biggest challenge facing companies today. Not all senior leaders have the fortitude to sacrifice short-term results. However, all do have the opportunity to collaborate with their workgroups to attain an intelligent balance. Yet too often senior leaders try to accomplish this difficult task on their own. They make across-the-board cuts without looking at how these decisions affect the individual workgroup. Far too little input comes from outside the executive boardroom.
Senior leaders need to engage members of high-performing workgroups in discussions about the challenges facing the company and the financial targets the company proposes for the workgroup. Are the goals achievable? How will meeting the targets affect future as well as current performance? Once senior management and the workgroup leader agree on realistic targets, the group should decide how to achieve them. There are different ways to get to the same place. Across-the-board cuts may not be the answer.