Comment by ChuckMcM | Hacker News Reader

Comment by ChuckMcM | Hacker News Reader

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There are some very common ones;

* Building a one more generation of product than the market supports (so you build a new version when the market has moved on to something new).

* Rewarding productivity over quality.

* Managing to a second order effect. For example when Nestle' bought Dryers they managed to 'most profit per gallon' which rewarded people who substituted inferior (and cheaper) components, that lead to lower overall sales and that leads to lower overall revenue. Had they managed to overall revenue they might have caught the decline sooner.

* Creating environments where nobody trusts anyone else and so no one is honest. Leads to people not understanding the reality of a situation until the situation forces the disconnect into the mainstream.

* Rewarding popular popular employees differently than rank and file. Or generally unevenly enforcing or applying standards.

* Tolerating misbehavior out of fear of losing an employee. If I could fire anyone in management who said, "Yeah but if we call them on it they will quit! See what a bind that puts us in?" I believe the world would be a better place.

There are lots of things, that is why there are so many management books :-)

> Tolerating misbehavior out of fear of losing an employee.

What if said employee pulls in 10x, 100x more revenue/value than average worker for the company? Would you fire him because the rule book say so? That said I trust in effective communication as soon as possible to manage difficult situations or misbehaviour. Often the reasons can be deeply personal or family related and people are preoccupied with stuff outside work. We are human and human relations are variable, not absolute.

In my experience only (all disclaimers apply) I have never seen an employee whose productivity outweighed the damage they did to the rest of the team if their misbehavior was tolerated by management. I understand how scary it can be to have to let someone like that go, but the dozen or so cases that I had good visibility into over my career the ones where the employee was accommodated all had worse outcomes than those where the employee was let go.

Way late on this, but this thread has been referenced in things like Oren Ellenbogen's Software Lead Weekly, so maybe the reference will help someone...

Bob Sutton's "The No Asshole Rule" calls this TCA - total cost of assholes. TCA incorporates the cost to replace people who leave because of the asshole, time spent by manager calming people down and cleanup, customer relastionship issues, etc.

10x, 100x revenue is only one piece of the story.

Before leaping to firing that person, you'd want to talk to them and explain that the misbehaviour has to stop. There may be personal reasons, and the person may need support to change. But if the behaviour doesn't shift then yes, dismissal is absolutely appropriate. The demoralisation stemming from a misbehaver who is protected from on high can be huge.

Great performance does not require being an asshat. It's (nearly?) always possible to find an equivalent performer who's pleasant to be around and a constructive team member.

> What if said employee pulls in 10x, 100x more revenue/value than average worker for the company?

Unless you're pulling in that revenue directly, because you're in sales or negotiating deals with other companies, it's impossible to make the claim that someone is 10x more valuable to the company.

Of the most highly productive devs I've ever known, most of them are not 10x more valuable, they are just more productive. The very few real super-programmers I've ever seen (maybe 3 of them in 20 years) have skyrocketed into the stratosphere, make lots of money and lead large teams. So, I don't think anyone super valuable would get fired, but my experience is that they get moved (up).

Most highly productive devs I've known are productive people that are prolific and also do a proportional amount of damage. I've known several people in different companies that were smart, prolific and very opinionated, and they would inflict their ideas on everyone and get support from management and not enough pushback from other devs. They implemented processes that were needlessly complex and caused measurable drain on the productivity of everyone else. You can lose your 10x productivity benefit really fast if you suck 10% from everyone else.

One guy I knew was a 10x performer and lead a team, but had a nasty attitude and took down the morale of everyone he talked to regularly. Even though he performed, he was causing everyone around him to go slower and work less. To the parent comment's point, this guy's productivity kept him from getting fired despite his misbehavior.

Unless you're giving everyone that benefit of the doubt, then you're just reinforcing the idea that the rules don't apply to everyone. But even then, there's only so much that a personal/family problem can excuse.

On the Nestle example:

One of the biggest constraints in a business is employee focus. Theoretically, you want to maximize future free cash flow. Unfortunately, there are many inputs: rev growth, solid roi on capex, lowering non-essential costs, employee retention, unit costs, brand etc.

Management teams have to distill the message about what they want in a way that many employees can get behind. Nestle was too focused on unit costs, and should have likely added one more constraint like rev growth, but if they added too many, employees as a group would lose focus.

Most businesses have 2-3 essential business drivers. 1 is never enough, 4+ is likely too many to focus on.

I think Alibaba has a nice priority list:

Customers, employees, shareholders.

That looks on the face of it nice and worthy but it's rather be meaningless because those are not actual goals. Those words are way too loose for that. The other thing about it is it smells like a marketing phrase rather than anything truthful

Why would they be meaningless?

You can use this list in any way. For example when you want to increase your product price. This is fine when it is good for the customer (because they will get a better product). But it is not fine when you do it for the shareholders alone.

They are also goals because the ultimate goal is to please the customer, then the employee and than the shareholder.

I think they are great guidelines.

Does that also mean it is always a great idea to decrease your product price?

In the consulting company where I work at employees come before customers. Employees are the single most important asset and much harder to replace than customers.

Why not make everything free? That would benefit the customer dramatically. The reality is that 'customer first' is a good idea, but not actionable.

Google uses a hierarchical system for quarterly and annual goals called OKRs (Objectives and Key Results) that tries to align goals for the company, orgs, teams, and individuals.

http://www.businessinsider.com/googles-ranking-system-okr-20...

Anyone else using that? We use it at my company with very varying levels of success.

Almost all big companies. It was done when I worked at Intel 2010sh

Interesting. How did you like it? Does every person at Intel have their own quarterly OKR list, or do they stop propagating down at some level? Were they always on time? How did lower levels give input with regard to what they thought were important goals? Or did really everything come top-down?

A lot of places. It dates back to (IIRC) Intel in the late 70s. Doerr brought the idea to Google.

Oh, I hadn't heard it was that old. Fascinating, so far I've always thought it was something that came directly out of Google itself.

Google has a good PR department? ;)

* Rewarding productivity over quality.

Most succinct expression of the basic problem yet - nice one

Why is overall revenue a better metric than unit profit? Wouldn't overall profit be the first-order effect?

If you're selling non-commodity goods your brand is an important reason why consumers purchase from you. If they realize product quality is going down they'll churn. You might have a short run of good profits, but eventually consumers will start purchasing something better, thus hurting your your total numbers.

Brand is more important for commodity goods than for non-commodities. It's the only distinguishing feature.

In this example, it states that because of this enployees were rewarded for reducing the unit cost of the product, which meant cutting in to quality. This led to sales declining because custoners were less interested in ab inferior product.

If management had looked less at the "how much profit can we squeeze out of 1 gallon" angle, and more "how much profit can we make overall", they might have made different decisions, such as preserving the quality of the product, they may have done better overall.

Unit profit is one factor in overall profit / revenue, but # of units solds is equally as important...it's a balancing act.

Having 100M revenue with 10% profit is better than 10M revenue with 20% profit.

Yes, as you can tell by the fact that your overall profit in the first scenario is $10M while in the second it is $2M. How is that an argument against overall profit?

I think it is an argument for overall profit which might come from focusing not on margin but on margin and volume.

You and also ChuckMcM were talking about unit profit.

My comment was only 18 words, but hey, here it is again:

> Why is overall revenue a better metric than unit profit? Wouldn't overall profit be the first-order effect?

If your product sucks, you'll sell fewer units (potentially).

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