The 7 Hidden Reasons Employees Leave [Book Summary]

Employee engagement and retention of top talent is a holy grail of people management—and nearly as hard to pin down.

Employees expect managers to be fair, pay fairly, listen, value opinions, relate, develop, challenge, demonstrate care, advance, and so on. But many employees don’t know when and how to voice their concerns, or negotiate for what they want.

All managers know that engaged employees are happier and more productive. Yet, managers and HR managers cannot simply make employee engagement “happen.”

'The 7 Hidden Reasons Employees Leave' by Leigh Branham (ISBN 0814408516) In The 7 Hidden Reasons Employees Leave, employee-retention expert Leigh Branham discusses how companies can tackle employee disengagement and retain their best and brightest people.

Using a copious amount of facts and figures from interviews and surveys, Branham explores seven reasons for employee disengagement. For each reason, Branham lists signs that managers need to keep their eyes open for, and shows how employers and employees could communicate and understand their mutual needs and desires.

“Some Quit and Leave … Others Quit and Stay”

According to Branham, employee disengagement—and eventual resignation—is not an event; rather, it is a plodding process of bitterness, discontent, and eventual withdrawal that can take weeks, months, or even years until the definite choice to resign happens. He lists the ten most common stimuli that trigger employee disengagement:

  1. Poor management
  2. Lack of career growth and advancement opportunity
  3. Poor communications
  4. Issues with pay and remuneration
  5. Lack of recognition
  6. Poor senior leadership
  7. Lack of training
  8. Excessive workload
  9. Lack of tools and resources
  10. Lack of teamwork

Branham claims to have synthesized some 20,700 employee-exit surveys and has identified four fundamental human needs (compare to Maslow’s hierarchy of needs) that must be met by employers:

  • Employees need to feel proficient. They want to be matched to a job that aligns with their talents and their desire for a challenge.
  • Employees need to feel a sense of worth. They want to feel confident that their commitment and their efforts translate into meaningful contributions to their company’s mission. They desire to be recognized and rewarded appropriately.
  • Employees need to be trusted. They expect their employers to pay attention, and be honest and open in their communications.
  • Employees need to have hope. They want to be treated fairly, and given opportunities to grow their skills and advance their careers.

Why Employees Start Feeling Disconnected from Their Work

Why employees start feeling disconnected from their work The core of The 7 Hidden Reasons Employees Leave is a “how to” guide to address each of the seven reasons to enable a company to pursue the path to become an “employer of choice.”

Reason #1: The Job or Workplace Was Not as Expected. Many new hires join their companies with a wide range of misconceptions and unrealistic expectations. Some stay and adapt, others disengage and stay, and some others disengage and ultimately leave. Branham advocates creating realistic job descriptions, and open communications between managers and employees on achieving their mutual goals and expectations.

Reason #2: The Mismatch between Job and Person. Companies with strong reputations for selecting the right talent and keeping employees well matched with their jobs have a strong commitment to the continuous upgrading of talent. Managers can assign tasks so that employees can be more engaged through the use of their “motivated abilities.” Managers must keep an eye open opportunities to augment employees’ jobs by delegating tasks they might not have considered before.

Reason #3: Too Little Coaching and Feedback. Branham affirms that most managers do coaching and feedback merely as annual or biannual HR-required discussions that bind ambiguous targets to performance-ranking and pay scale. Managers must lead frequent, informal, on-the-job feedback conversations with employees. Branham identifies four principal themes that managers must address to make their performance management practice seem less controlling and more of a partnership:

  1. “Where are we going as a company?”
  2. “How are we going to get there?”
  3. “How does the manager expect the employee to contribute?”
  4. “How is the employee doing? What is going well? What are the key suggestions for improvement?”

Reason #4: Too Few Growth and Advancement Opportunities. Branham observes that most talented employees cannot pinpoint and articulate, and often underuse their greatest strengths. He encourages companies to provide self-assessment tools and career management training for all employees, enabling them to be the best they possibly can be. Most “employers of choice” have a strong mentoring culture. They communicate that employees must take the initiative in their own career development.

Reason #5: Feeling Devalued and Unrecognized. To Branham, many companies do not have a formal and informal culture of recognition because their managers are themselves too busy with their nominal responsibilities to pay adequate attention to employees’ performance. Or, they can’t discern between average and superior performance. He lists recommendations for competitive base- and variable-pay linked to achieving business goals. He reminds managers that employees are hungry to be listened to, and want their ideas sought and implemented.

How companies can tackle employee disengagement and retain their best and brightest people Reason #6: Stress from Overwork and Work-life Imbalance. Branham observes that the relationships employees form with other employees is a glue that binds people to their workplaces. He encourages fostering social connectedness by assigning cross-functional team projects and organizing group outings.

Reason #7: Loss of Trust and Confidence in Senior Leaders. When senior leaders don’t back up pronouncements such as “people are our most important asset” with their actions, even mid-level managers begin to question the decisions and the actions of senior leaders. The result is a manifest lack of enthusiasm in the workplace, and in the rising complaints and questions about policies and practices. Leaders must set the tone for workplace culture and must back up their words with actions to discourage employee cynicism and disengagement.

Becoming an Engaged Leader is the Embodiment of What Leadership Means

Recommendation: Fast read Leigh Branham’s The 7 Hidden Reasons Employees Leave. This book makes a great reading for managers and leaders who will need to scratch beneath the surface to recognize unhappy employees before it’s too late, and then engage their employees better and retain their top talent.

While many of the book’s themes may appear familiar, The 7 Hidden Reasons discuses many ideas and “engagement practices” in great specificity to help managers and leaders keep their antennae up for signs of bitterness and discontent, and correct before they lose their best and brightest people. This practical tome can also help employees discuss and resolve their needs and desires.

Developing a deep understanding of what causes employees to lose motivation, disengage, and leave cannot be ignored or overlooked. Managers and leaders who can resolve the divergence that employees feel between their personal values and the best interests of their businesses will gain immeasurably by having a highly engaged and productive workforce.

Our Vision of What Our Parents Achieved Influences Our Life Goals: The Psychic Contract

Understanding Others’ Motivations is a Key to Building Better Relationships

Psychic Contract Theory: Children are Programmed to Want to Do as Well as or Better Than Their Parents Understanding others’ deep-held motivations involves recognizing what drives them, why and how they want to work, work styles they may adopt in various circumstances, and what levers you have to motivate them.

Take for example Abraham Maslow’s Hierarchy of Needs, a motivation hypothesis used widely for several decades now. Represented as a pyramid, this hypothesis proposes that people are motivated to fulfill basic subconscious desires such as food and shelter before trying to fulfill higher-level needs such as affection and prestige. Even though academics have extensively debated its specifics, Maslow’s Hierarchy of Needs has provided a handy framework to value the multifaceted composition of human motivation and to understand how to engage others.

The Relationship between Your Own Vision of Success and Your Parental Influence

'The Anatomy of a Great Executive' by John Wareham (ISBN 0887305059) One less-known framework for understanding the provenance of people’s life goals—their deep-seated aspirations for want to achieve in life—is the “Psychic Contract” hypothesis, a concept that dominates The Anatomy of a Great Executive (1991) by John Wareham, a leadership psychologist from New Zealand.

According to Wareham, a psychic contract is a set of “deals” we subconsciously strike with our parents early in life. Our life-goals are defined primarily by our own vision of what our parents achieved—and what they failed to achieve:

As we grow we absorb the values of our parents, and are conditioned to improve (albeit marginally) upon their achievements. We strike a psychic contract with them whereby “success” in life is defined by the attainment of a similar social positioning, which we later embark upon attaining, sometimes very consciously, but often entirely unconsciously.

Throughout our lives, we unintentionally adhere to our psychic contracts, despite the limitations they place on us. We use our psychic contracts to not only define and approach our life goals but also think about how we measure success.

We consciously measure success in terms of milestones and standards instilled by our parents.

As a rule of thumb, about three quarters or more of people in westernized culture seek first to equal, then marginally to improve upon the lifestyle or status level perceived to exist in the childhood home.

Psychic Contract Theory: Children are Programmed to Want to Do as Well as or Better Than Their Parents

Our Vision of What Our Parents Achieved Influences Our Life Goals: The Psychic Contract In The Anatomy of a Great Executive, Wareham goes into depth explaining how we can know our own psychic contracts and how we can reset our goals to give ourselves permission to succeed. Here are some other prominent learning points:

  • Our psychic contract is based on our birth order, our parents’ birth order, and roles we play relative to our parents in our families.
  • The so-called “prime parental injunction” sits at the heart of our conscious. We go through our lives trying to become the people our parents wanted us to be. Even people who spend their lives trying to become exactly the opposite of what their parents wished are still influenced by this injunction.
  • Every person has a pre-programmed financial comfort level. Most of us strive to reach this level; but once there, we slow down—not because we are lazy, but because we have fulfilled our inner desires and don’t need more. Wareham cites the example of commission-based sales people who, after earning adequate commission to reach their financial comfort level, tend to be less aggressive in selling cars to customers for the rest of the month.

Idea for Impact: “Psychic Contract” is a handy and thought provoking—if unsubstantiated—hypothesis to understand how your and other people’s deep-seated life goals are established. It can give you one more data point in trying to figure people out.

20 Reasons People Don’t Change

They Don't Want to Change

If you have trouble getting people to change, perhaps one—or more—of the following reasons are to blame:

  1. They don’t want to change … they find reassurance in the status quo
  2. Their environment is holding them back
  3. They’ve tried to change in the past, failed, and have given up
  4. Your coaching / feedback is garbled … the benefits of change are unclear
  5. They don’t react well to criticism
  6. They’re suspicious of your motives (i.e. fear of manipulation)
  7. They see little incentive to change
  8. They don’t know how to change
  9. They have no role models
  10. There’s no support (or resources) for change
  11. Change threatens their self-image
  12. They can’t tell what’s really important
  13. They don’t feel courageous enough … i.e. they fear failure
  14. They don’t feel enough pain yet
  15. They’re overconfident or arrogant
  16. They fear their weaknesses will be exposed
  17. They’re too lazy and undisciplined
  18. Change requires giving up something they presently value
  19. They resist change that’s imposed from outside … i.e. they’re not intrinsically motivated for change
  20. Change undermines their self-confidence

Idea for Impact: Temper your expectations of others. Old habits die hard. Even Einstein’s doctor couldn’t get the great physicist to quit smoking despite his deteriorating health.

Be realistic about changing others’ hearts and minds. If you can learn to accept them for who they are and let go of your conceptions of their perfection, your relationships become more richer.

Never Criticize Little, Trivial Faults

Lessons from the Renowned People Skills of Steel Tycoons Charles M Schwab and Andrew Carnegie

The American steel magnate Charles M Schwab (1862–1939,) was a protege of the steel baron-turned-philanthropist Andrew Carnegie (1835–1919.) During the course of a long and successful career, Schwab built his Bethlehem Steel Corporation into America’s second largest steel producer and one of the world’s most prominent businesses.

'Be hearty in approbation and lavish in your praise' - Lessons from the Renowned People Skills of Steel Tycoon Charles M Schwab

Don’t be “bothered with the finicky little things that trouble so many people.”

Charles M Schwab started his career as a laborer in Andrew Carnegie’s Edgar Thomson Steel Works. Thanks to his exceptional ability to cozy up to people and facilitate congenial working relationships, Schwab rapidly rose up the ranks of the Carnegie steel empire.

By the age of 19, Schwab was assistant manager of the steel factory. When an accident killed the factory superintendent in 1887, Andrew Carnegie appointed the 25-year-old Schwab as the manager of the Thomson Works. At 35, Schwab became president of the Carnegie Steel Company at an annual compensation exceeding $1 million (worth $30 million today.)

In an essay titled “My 20,000 Partners” in the 19-Dec-1916 issue of The American Magazine, Schwab shared a management lesson he learned from his mentor Andrew Carnegie:

Mr. Carnegie’s personality would enthuse anybody who worked for him. He had the broad views of a really big man. He was not bothered with the finicky little things that trouble so many people. When he made me manager, Mr. Carnegie said, “Now, boy, you will see a good many things which you mustn’t notice. Don’t blame your men for little, trivial faults. If you do you will dishearten them.

When I want to find fault with my men I say nothing when I go through their departments. If I were satisfied I would praise them. My silence hurts them more than anything else in the world, and it doesn’t give offense. It makes them think and work harder. Many men fail because they do not see the importance of being kind and courteous to the men under them. Kindness to everybody always pays for itself. And, besides, it is a pleasure to be kind. I have seen men lose important positions, or their reputations—which are more important than any position—by little careless discourtesies to men whom they did not think it was worthwhile to be kind to.

'Don't blame your men for little, trivial faults' - Lessons from the Renowned People Skills of Steel Tycoon Andrew Carnegie

“Be hearty in approbation and lavish in your praise”

Schwab’s excellent people skills and management methods are extolled in How to Win Friends & Influence People, Dale Carnegie‘s masterful guidebook on people skills. Dale Carnegie quotes Schwab:

I consider my ability to arouse enthusiasm among my people, the greatest asset I possess, and the way to develop the best that is in a person is by appreciation and encouragement.

There is nothing else that so kills the ambitions of a person as criticisms from superiors. I never criticize any-one. I believe in giving a person incentive to work. So I am anxious to praise but loath to find fault. If I like anything, I am hearty in my approbation and lavish in my praise.

I have yet to find the person, however great or exalted his station, who did not do better work and put forth greater effort under a spirit of approval than he would ever do under a spirit of criticism.

Idea for Impact: People who cannot tolerate others’ shortcomings are at a marked disadvantage in life.

'How to Win Friends & Influence People' by Dale Carnegie (ISBN 0671027034) The older you’ll get, the more you’ll appreciate the wisdom of enduring the negative emotions— skepticism, disapproval, anger, contempt, and hostility—that stem from others’ behaviors.

One of the keys to effective interpersonal skills is to know when and how to give feedback. Commend whenever you can, criticize when you absolutely must.

Remember, criticism can swiftly erode away positive feelings. Don’t nit-pick. Don’t get caught up in trivial peculiarities.

Seven Real Reasons Employees Disengage and Leave

Root Causes for Employee Disengagement

Engaged employees not only contribute more and enhance bottom-line results but also are more loyal and therefore less likely to leave their organizations voluntarily.

Here are seven widespread root causes for employees’ lack of enthusiasm and commitment to a workplace.

  1. Employees find the job or workplace to be different from what they had expected when hired.
  2. Employees are not well matched or challenged in the jobs to which they have been assigned or promoted.
  3. Employees receive insufficient coaching and feedback from their boss.
  4. Employees recognize few prospects for professional growth and advancement. Alternatively, employees are obliged to log two or three years of unexciting assignments to “pay their dues” before being considered for promotion.
  5. Employee feel undervalued, underpaid, or under-recognized. They don’t get enough informal acknowledgement for their contributions or feel constantly “out of loop.” Their managers don’t seek opinions or supply the right tools to excel at work.
  6. Employees feel stressed or burned-out due to overwork or work-life imbalance.
  7. Employees have lost trust and confidence in their management and leadership.

Idea for Impact: Disengaged employees are more likely to leave their organizations.

How to Conquer Cynicism at Your Workplace

How to Conquer Cynicism at Your Workplace

Enthusiasm rubs off on others

A few weeks ago, I met a friend at Chick-fil-A. When it was my turn to order, I told the woman taking our orders that I am vegetarian and couldn’t eat much of the offerings on her menu. The woman asked me, “How about a milkshake? I make the best strawberry milkshake!” I could not misjudge her sincerity and pride. It’s not often that one is asked anything like that at any service-business, let alone at a fast food chain restaurant.

In a world of work that’s so rampant with cynicism, there’s nothing more refreshing than encountering employees who are engaged, cheerful, and take pride in what they do.

In the same vein, in The HP Way (see my summary & review), author David Packard and co-founder recalls an engaged worker at Hewlett-Packard:

I recall the time, many years ago, when I was walking around a machine shop, accompanied by the shop’s manager. We stopped briefly to watch a machinist making a polished plastic mold die. He had spent a long time polishing it and was taking a final cut at it. Without thinking, I reached down and wiped it with my finger. The machinist said, “Get your finger off my die!” The manager quickly asked him, “Do you know who this is?” To which the machinist replied, “I don’t care!” He was right and I told him so. He had an important job and was proud of his work.

Conquer Cynicism and Negativity in a Workplace

How to conquer cynicism and negativity in a workplace

Cynicism is an upshot of distrust in the workplace. Cynics have misgivings about their managers’ and leaders’ motives. Cynics are further aggravated by the comparatively lofty salaries commanded by corporate leaders. The once-presumed social contract between employers and employees has dissolved, and cynics believe that given the chance, their employers will exploit their contributions.

The damage of cynicism is evident in lower levels of commitment, distrust, blame, criticism, politicking, divisiveness, pessimism, negativity, and sarcasm. Moreover, cynicism worsens with employees’ age and tenure.

Here’s how to conquer cynicism:

  • Firstly, don’t be cynical yourself. If you display even a hint of pessimism, you’re likely to feed into your team’s cynicism, especially if you’re a manager.
  • Try to love—at least show some passion—what you do and whom you work with. Passion for your work brings a remarkable sense of meaning and attracts opportunities for growth.
  • Recognize that people bring their entire selves to their jobs; they don’t turn off their hearts and souls when they come to work. Today’s demanding and competitive workplace requires of employees not only stamina to work exceptionally hard but also their hearts-and-minds’ commitment to bring creativity and insight to their efforts.
  • Care for people and understand what drives them. Money is not as powerful a motivator for most people than when they truly don’t have enough of it. Beyond a threshold, people are more motivated at work by the opportunity to learn, grow in responsibilities, contribute to a cause, and get recognition for their achievements.
  • Encourage two-way flow of information, identify and change stress-provoking work patterns, clarify their roles, convey clear and concise objectives, coach and give regular feedback.

Idea for Impact: Employees who are engaged are more productive. Determine what makes your employees most engaged in their work. Ask what parts of their jobs they like the best and what you could do to decrease their job pressures. Engage them by tapping into their natural talents and strengths.

David Ogilvy on Russian Nesting Dolls and Building a Company of Giants

In the Company of Giants

Ogilvy & Mather founder and creative genius David Ogilvy (1911–1999) designed some of the world’s most successful and iconic marketing campaigns, including the legendary Man in the Hathaway Shirt advertisement.

Ogilvy left a rich legacy of ideas in his books. Confessions of an Advertising Man and Ogilvy on Advertising describe how he approached his creative life and aimed for greatness rather than settling for second best.

David Ogilvy on Hiring Smart

'Ogilvy on Advertising' by David Ogilvy (ISBN 039472903X) In the preface of an Ogilvy & Mather recruiting brochure, Ogilvy explained the high creative standards and attitudes he expected of his employees:

We are looking for gentlemen with ideas in their heads and fire in their bellies. If you join Ogilvy & Mather, we shall teach you everything we know about advertising. We shall pay you well, and do our damnedest to make you succeed. If you show promise, we shall load responsibility on you—fast. Life in our agency can be very exciting. You will never be bored. It’s tough, but it’s fun.

Ogilvy directed his recruiters to seek out highflyers, “Hot creative people don’t come around looking for jobs; they have to be rooted out like truffles by trained pigs. Do our trained pigs do any rooting? I don’t think so.”

Recruiting brilliant people is a kind of brilliance in itself

David Ogilvy on Russian Nesting Dolls and Building a Company of Giants In his bestselling Ogilvy on Advertising, Ogilvy described how recruiting smart people was the key to transforming his advertising agency into a global advertising, marketing and public relations giant. He wrote,

When someone is made the head of an office in the Ogilvy & Mather chain, I send him a Matrioshka doll from Gorky. If he has the curiosity to open it, and keep opening it until he comes to the inside of the smallest doll, he finds this message:

“If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.”

Entrepreneurship guru Guy Kawasaki echoed the importance of hiring smarter people and recalled in Reality Check that, when he worked at Apple in 1984, “In the Macintosh Division, we had a saying, ‘A players hire A players; B players hire C players’—meaning that great people hire great people. On the other hand, mediocre people hire candidates who are not as good as they are, so they can feel superior to them. If you start down this slippery slope, you’ll soon end up with Z players; this is called the Bozo Explosion.”

The best managers hire employees with superior intellect—and revel in it

Managers are typically judged not on their personal output but on how well they’ve hired, coached, and motivated their people—individually and collectively.

A wise manager hires employees who are smarter, more creative, and more talented than the manager is. The new employees’ talents will improve the entire team’s performance and reputation—even the manager’s.

In contrast, a mediocre manager feels threatened by underlings who seem more intelligent than the manager is. Mediocre managers tend to hire down—they fear that a superior employee could make the manager look inferior and perhaps hold back their career progress.

Idea for Impact: People make or break businesses; so hire people who are smarter than you are.

Management by Walking Around the Frontlines [Lessons from ‘The HP Way’]

President Abraham Lincoln visiting the Union Army troops during American Civil War In the early part of the American Civil War, President Abraham Lincoln regularly met the Union Army troops and made informal inquiries of their preparedness.

Decades later, on the eve of the Allied invasion of Normandy in June 1944, Dwight Eisenhower paid a visit to American and British paratroopers who were preparing to go into battle. As I described in two previous articles (here and here,) the Normandy invasion’s success was wholly dependent on the weather across the English Channel, something Eisenhower could not control. Eisenhower famously told his driver “I hope to God I’m right” about his wager with the weather in launching the Allied attack.

These two leaders were carrying out what is now called Management by Walking Around (MBWA.)

Without MBWA, managers rarely emerge from their offices-turned-fortresses

General Eisenhower addressing American paratroopers on 5-June-1944 before the Battle of Normandy MBWA is a widespread management technique in which managers make frequent, unscheduled, learning-oriented visits to their organization’s frontlines. Managers interact directly with frontline employees, observe their work, solicit their opinions, seek ideas for improvement, and work directly with the frontline to identify and resolve problems.

Hewlett-Packard (HP) was the first company to adopt MBWA as a formal management technique. In The HP Way (1995,) co-founder David Packard attributes much of the success of his company’s remarkably employee-oriented culture to managers’ good listening skills, employees’ enthusiastic participation, and an environment where employees feel comfortable raising concerns—all cultural attributes directly engendered by MBWA.

Fostering open two-way communication

The American quality management pioneer Edwards Deming (1900–1993) once wrote of MBWA, “If you wait for people to come to you, you’ll only get small problems. You must go and find them. The big problems are where people don’t realize they have one in the first place.”

Acclaimed leadership guru Tom Peters popularized MBWA in his bestsellers In Search of Excellence and A Passion for Excellence. Even today, Peters advocates that leaders and managers use MBWA to not only personally spread the company’s values to the frontline but also to accelerate decision-making by helping employees on the spot.

Sam Walton with Walmart's Frontline Employees » Management by Walking Around

Learning about problems and concerns at firsthand

'The HP Way' by David Packard (ISBN 0060845791) MBWA is comparable to the Toyota Production System‘s concept of gemba walks” where managers go to the location where work is performed, observe the process, and talk to the employees. By enabling managers to see problems in context, organizations can better understand a problem, its causes, and its negative impact. Gemba (Japanese for “the real place”) thus facilitates active problem solving.

Because of MBWA, managers’ presence on the frontlines sends a visible signal that a company’s management connects with the realities of the frontline and that leadership is serious about listening to employees’ opinions and resolving problems. MBWA thus complements an organization’s open-door management policy.

Idea for Impact: Practice MBWA

Employees will appreciate that their managers and leaders are open-minded and will sincerely listen to what employees have to say.

Don’t use MBWA to spy on employees or interfere unnecessarily with their work.

Advice for the First-Time Manager: Whom Should You Invest Your Time With?

Advice for the First-Time Manager: Whom Should You Invest Your Time With?

Before you were a manager, success was all about your individual performance. When you become a manager, success is all about growing your employees. It is about bringing out the best in people who work for you—making them smarter, pushing them to perform better, and advancing their professional development.

As a manager and a team-leader, your performance as an individual matters in the sense of how you cultivate your team’s efficacy and foster their self-confidence through coaching and feedback. Your success will be measured less by what you do and more from the reflected glory of your team.

Given a team to manage,

  • Don’t invest the same amount of time for each employee. Treat employees differently, based on their responsibilities, strengths, and their developmental needs. Do spend some time every week chatting with each employee. Then prioritize and invest more time with:
    • those who ask for your help.
    • those who need your help, but may not ask for it—especially those employees who may be struggling with some assignments because of their weaknesses.
    • those who are transitioning into their roles or may be experiencing changes.
    • those whose ideas and performance have the biggest impact to the organization—now or in the future.
    • those competent employees who understand the responsibility you’ve assigned them and the results expected. Especially with employees who need little help and direction getting things done, focus on ensuring that your expectations and priorities align with theirs.
  • Give your employees the freedom and responsibility to do their jobs. Set high standards and make them accountable for achieving the results.
  • Give your employees continuous, timely feedback: not just during the HR-required mid-year or end-of-year performance reviews. Thoughtfully use every meeting, design review, brainstorming, project closure, or client-presentation as a teaching moment.

Leadership Lessons from the Spectacular Rise and Fall of Avon’s Andrea Jung / Book Summary of “Beauty Queen” by Deborrah Himsel

When companies do well, their CEOs are often heralded as outstanding visionaries and brilliant innovators. In particular, when macroeconomic conditions are favorable, these CEOs are sheltered from scrutiny because the spoils of their success deflect attention from their leadership shortcomings (see my previous article on how success often conceals wickedness.) When the tide turns, however, the leadership deficiencies are exposed for all to see. The CEOs are the first to get the blame, even if they may not merit it.

Deborrah Himsel’s Beauty Queen offers an insightful tale of the spectacular rise to the top and the tumultuous fall from grace of Andrea Jung. Beauty Queen divides Jung’s tenure as the CEO of cosmetics company Avon from 1999 to 2012 into two halves: Jung led six consecutive years of double-digit growth initially and then presided over a series of operational missteps that led to her resignation. Alas, Avon has never since recovered—its numerous restructuring efforts have failed, and its strategic and financial performance has severely deteriorated.

The Rise of Andrea Jung and Avon (1999–2005)

'Beauty Queen: Inside the Reign of Avon's Andrea Jung' by Deborrah Himsel (ISBN 113727882X) Promoted at age 41, Andrea Jung brought glamour, charm, and personal style to her CEO’s role. She quickly reshaped Avon’s image and articulated a powerful purpose for the company. She injected energy into a decaying cosmetics brand and pushed Avon into new profitable markets in China, Russia, and other countries. When Jung became CEO, 60% of Avon’s sales were in the United States; by 2011, only 17% of sales were in the United States and 70% were in developing markets.

Jung’s revival of Avon’s fortune catapulted her fame; she became one of America’s most recognized chief executives. Fortune magazine named her one of the most powerful women in the world. Jack Welch recruited her to General Electric’s board of directors.

Beauty Queen attributes this initial success not only to Jung’s inherent strengths in marketing and branding, but also to her right-hand person Susan Kropf. Kropf was a brilliant operations person, who balanced Jung’s acute lack of skills in running the day-to-day operations of a global company.

The Fall of Andrea Jung and Avon (2005–2012)

Avon’s sales started to slow down in 2005. And, Susan Kropf’s exit in 2006 corresponded with the dawn of Avon’s misfortunes. Andrea Jung never replaced Kropf; Avon was left without a chief operating officer.

As Avon started to struggle, Jung’s inadequate operations experience became a serious liability. A streak of self-inflicted problems resulted in strategic and operational disasters that took a huge financial toll and resulted in a flight of Avon’s top talent. Jung failed to deal effectively with failures of computer systems in Brazil, inadequate inventory and supply-chain management, poor management of working capital, and a staggering bribery scandal in China.

Jung’s lack of expertise to deliver results went up against her bold projections about the business’s future. Straying from Avon’s door-to-door direct selling roots, Jung experimented with a direct-selling channel, but quickly abandoned her strategy of running Avon retail stores. Her attempts to start baby-goods and other new product lines foundered after just two years. Avon’s many acquisitions failed; a silver jewelry company (Silpada) that Jung bought for $650 million had to be sold back to the original owners for $85 million.

Avon never recovered from the blunders that Andrea Jung presided over

Avon Beauty Products After Jung’s several turnaround efforts had failed to take hold, she resigned in 2011. Her replacement, former Johnson & Johnson executive Sheri McCoy, has since struggled to turn the company around.

The bribery scandal in China impaired Avon. In 2014, Avon settled the case with the Justice Department and the SEC for $135 million. To boot, Avon not only spent $350 million on legal fees, but also lost ground in the burgeoning cosmetics market in China.

Avon’s market value fell from $21 billion (1-Mar-2004) at the height of Jung’s success to $1.1 billion (15-Jan-2016). The company’s stock price fell from $44.33 to $2.50.

Lessons from Andrea Jung’s Leadership Style at Avon

Some of the most instructive leadership lessons from Beauty Queen are,

  • “Studying the trajectory of the Avon CEO is a great way to learn leadership. Andrea’s career … offers invaluable lessons about finding the right balance between substance and style.”
  • “Her story is a cautionary tale, one that suggests the critical importance of being aware of your weaknesses and how they can sabotage you.”
  • Leaders should know when to go. “If Andrea had departed in 2008, she would have left with her reputation and halo fully intact … CEOs that are successful early on often err on the side of staying too long.” [See my previous article on why leaders better quit while they’re ahead.]
  • Companies should pair up their leaders with deputies who have complementary skills to offset the Achilles’ heels of the leaders.

Recommendation: Skim through the first six chapters of Beauty Queen for an informative quick read on Andrea Jung’s rise and fall at Avon. Thumb through the next five chapters for an uninteresting discussion of broad leadership lessons and action lists in dry PowerPoint style.