Leading Teams

Emotional Intelligence Is Overrated: The Problem With Measuring Concepts Such as Emotion and Intelligence

August 10, 2023 By Nagesh Belludi Leave a Comment

In the contemporary landscape, relying solely on cognitive intelligence tests to evaluate the managerial potential of MBA students is increasingly considered inadequate. It has become fashionable for successful managers to need emotional intelligence to thrive in their roles.

Within human resources, there is a growing trend to define an individual’s ability to understand emotional expressions as a form of “intelligence,” measuring it through an emotional quotient (EQ) and considering it a personality trait. However, it is worth noting that people often find it refreshing to shed the façade they present in public and freely express their genuine thoughts, emotions, and actions in informal “off-the-record” situations rather than conforming to formalities during official meetings.

While some proponents argue that EQ encompasses all dimensions of managerial success that IQ fails to measure, this widely accepted viewpoint lacks credible scientific evidence. Unlike IQ, a clearly defined measure of cognitive abilities, there is no agreed-upon definition of emotional intelligence, and various EQ tests produce vastly different results. Moreover, societal biases and cultural upbringing can significantly influence EQ scores. Indeed, the claim that EQ is twice as vital as IQ is an entirely baseless and unproven assertion.

Emotional intelligence is an intricate and dynamic concept encompassing a broad spectrum of emotional competencies, social skills, and self-awareness. Attempting to simplify it into a single score may not adequately capture its subtleties and complexities.

From the Inside Out: How Empowering Your Employees Builds Customer Loyalty

August 7, 2023 By Nagesh Belludi Leave a Comment

At a time when apathy and distrust are so endemic in many organizations, some companies have nurtured employee loyalty to create customer loyalty flourish. The following case studies will substantiate the cultivation of a positive work environment that prioritizes employee recognition and support invariably results in exceptional customer service.

The Nordstrom Way: Enabling Employees to Have the Freedom and Vision to Become Self-Directing

Nordstrom’s founders created a culture that prioritized a “worshipful relationship” with its luxury department store customers and empowered employees to do everything they could to please them. The Nordstrom Handbook emphasizes outstanding customer service and encourages employees to set high personal and professional goals, expressing confidence in their abilities. The company’s Rule 1 reads: “Use good judgment in all situations. There will be no additional rules. Please feel free to ask your department manager, store manager, or division manager any question at any time.” Nordstrom’s success is a testament to empowering employees and supporting policies prioritizing exceptional customer service.

Flying the Fun Skies at Southwest Airlines: Giving Employees the Freedom to Deliver a Great Brand Experience

Southwest Airlines achieved great success early on due to its committed and motivated workforce. Founder Herb Kelleher recognized the importance of prioritizing employee satisfaction to create a culture of caring for one another and providing excellent customer service. Kelleher famously said, “The business of business is people—yesterday, today, and forever. If the employees aren’t satisfied, they won’t provide the product we need.”

To create a positive work environment, Southwest Airlines encouraged fun among its employees, setting it apart from other airlines that were considered dull and unappealing. Celebrating employees and their families is deeply ingrained in Southwest Airlines’ culture, and it is evident in the prominent display of pictures capturing these special moments throughout their office spaces. This people-centric culture helped the company attract and retain talented workers passionate about their jobs and provide top-notch customer service, which made flying with the airline a fun experience. Despite the potential cost savings, Kelleher remained committed to celebrating employees with parties, banquets, gifts, birthday cards, and outings, citing the value of having the fewest customer complaints in the industry.

Beyond the Call of Duty: Ladies and Gentlemen Serving Ladies and Gentlemen at Ritz-Carlton

The Ritz Carlton is renowned for its exceptional customer service, with the empowerment of employees being a critical factor in their approach. The company’s philosophy of “Ladies and Gentlemen Taking Care of Ladies and Gentlemen” highlights the importance of treating customers and employees with respect and dignity. Regardless of their rank and title, employees can spend up to $2,000 per day per guest without seeking supervisor approval to solve problems and deliver personalized and unforgettable guest experiences. This approach may seem costly, but it empowers employees to use their judgment to create memorable and personal experiences for guests. One of my friends enjoyed staying at a Ritz-Carlton hotel a few months ago, where he ordered a burger and a milkshake. Unfortunately, the hotel did not offer milkshakes, so he settled for a glass of water. However, to his amazement, the waitress surprised him with a milkshake to accompany his burger. She went the extra mile without being prompted by scouring the kitchen for milk, ice cream, and cold milk to create the shake.

Idea for Impact: Empowering Employees is a Strategic Approach That Yields Significant Benefits

Empowering employees goes beyond providing the necessary tools and training; it fosters a culture of trust, autonomy, and ownership.

How you treat your employees directly impacts how they treat your customers. When you prioritize making your staff feel appreciated and supported, they are more likely to provide exceptional customer service. A positive work environment can foster innovation and creativity within your organization while attracting and retaining top talent.

Why Incentives Backfire and How to Make Them Work: Summary of Uri Gneezy’s Mixed Signals

June 20, 2023 By Nagesh Belludi Leave a Comment

Misguided Motivations: The Folly of Incentives in the Great Hanoi Rat Massacre

In the late 18th century, Governor Paul Doumer of the French colonial government had a vision to modernize Hanoi. His plan included the introduction of toilets, which unfortunately attracted disease-spreading rats. As time passed, the rat population became a growing concern. In a desperate attempt to control the vermin invasion, the government launched a program that rewarded citizens for every rat tail they brought in, hoping to reduce the rat numbers. However, this seemingly brilliant solution turned into a catastrophic event.

Unbeknownst to the government, the citizens of Hanoi discovered a loophole in the system. Instead of exterminating the rats, they started amputating the rats’ tails without killing them. This allowed the rats to continue to breed more rats with tails, as these would become a future source of income.

The situation quickly descended into utter madness. Driven by insatiable greed, some individuals established rat-breeding farms to maximize their rewards, while others resorted to importing rat tails from distant regions. The unintended consequence of this perverse incentive scheme was a massive explosion in the rat population, exacerbating the very problem it was meant to solve.

This ill-fated event, known as the “Great Hanoi Rat Massacre,” is a notorious example of the dangers of perverse incentives.

The Unintended Consequences of Incentive-driven Actions

In his insightful book, Mixed Signals: How Incentives Really Work (2023,) Uri Gneezy, a distinguished behavioral economist from the University of California-San Diego, masterfully presents compelling examples that highlight the profound disparity between the intended behaviors incentives aim to promote and the unforeseen behaviors they unintentionally trigger. Gneezy’s astute analysis illuminates the perplexing nature of these gaps, offering invaluable insights into the actual workings of incentive systems. Another example of this point is the situation with many doctors operating under Fee for Service (FFS) payment models. In these models, doctors are incentivized to perform additional tests and procedures to increase their own payment. As a result, their focus may shift from promoting overall health to simply recommending more procedures.

To avoid sending confusing messages through incentives, Gneezy emphasizes the importance of carefully considering such initiatives’ potential outcomes and unintended effects. Gneezy strongly advocates for the use of prototype incentive programs.

Consider the case of the Wells Fargo cross-selling scandal, which was caused by aggressive sales practices. To increase the number of accounts held by existing customers, the company decided to motivate bank employees to promote additional services, like credit cards and savings accounts, to customers with checking accounts. However, due to a lack of proper oversight, employees resorted to fraudulent practices by creating over three million unauthorized credit card accounts without customers’ knowledge or consent. These unethical practices harmed customers who ended up with unwanted and unnecessary accounts, violated their trust, and exposed them to fees and penalties. In order to prevent such a scandal, Wells Fargo could have implemented prototype techniques and established an auditing system to verify the legitimacy of accounts randomly.

The Irony of Fines as Deterrents in Action

Gneezy brilliantly dissects the flawed notion that imposing fines is a universal remedy. He highlights how fines, often intended as deterrents, can backfire by diverting people’s focus from deterring behavior to merely avoiding punishment. For instance, when drivers are warned about the perils of texting while driving, they may genuinely reflect on the risks involved and the value of their own lives. However, the introduction of a $500 fine shifts their mindset. Now, their attention shifts from personal safety to the likelihood of encountering law enforcement. If they perceive a lack of police presence, the thought process changes to “No police around, no risk of getting caught—time to text!” In this way, the imposition of fines skews individuals’ attention from contemplating potential hazards to the probability of facing the consequences.

Recommendation: Fast-read Mixed Signals: How Incentives Really Work (2023.) Greezly’s work serves as a resounding reminder that designing an incentive system to encourage desired behavior while minimizing unintended consequences is no easy feat. Greezly’s advice on balancing multiple metrics to avoid the pitfalls of fixating on a single metric at the expense of others and the importance of regularly reviewing and updating the system while keeping a vigilant eye on unintended consequences is undeniably accurate.

Potluck Perfect: The Dos and Don’ts of Etiquette

May 29, 2023 By Nagesh Belludi Leave a Comment

Potluck parties are a great way to bring together friends and family on a budget, but just because they’re casual doesn’t mean etiquette should be forgotten. Here’s what both hosts and guests need to know:

For hosts, it’s essential to be clear about what guests should bring, pre-plan the menu, and ensure expectations are within guests’ abilities and budgets. Ensure there’s something for everyone to enjoy. Non-cooks and visitors-to-town should be allowed to bring a charcuterie tray or bakery dessert.

Give guests small, simple jobs, but make sure they’re easy and convenient.
Encourage socializing. Introduce guests to each other and plan some group activities to get everyone interacting. Plan fun activities, such as lawn games, music, or a bonfire (if weather permits.)

For attendees, let the host know in advance what you’re bringing and check what others are bringing. Let the host know if you want to prepare or bring something else.

Bring enough food for everyone to try some and put some effort into it; don’t show up empty-handed or with something as simple as a bag of chips. Put some effort in. Don’t be disrespectful to those who’ve slaved over the stove.
Don’t bring a dish or dessert with a serving missing. If your family demands a taste test, divide your preparation into individual servings and transfer them onto a decorative plate.
Don’t bring something only you can eat or something super exotic. Stick with what you know and opt for creative dishes from your family or tradition.
Don’t bring a dish that needs to be finished or heated in the oven; bring everything you need to serve your dish.
Put your dish’s ingredients on an index card and place it next to your pot, so guests with food allergies or dietary restrictions will know what they can eat.
If you have dietary restrictions, don’t make a big fuss; bring something you can eat.
Arrive on time, offer to help wash up, and try to taste a little bit of everything. Don’t double-dip when eating appetizers or touch all the rolls in the basket.
Complement other dishes, ask for a recipe if you’re interested, and don’t expect to leave early with your dish or leftovers unless the host suggests it.

Idea for Impact: A successful potluck gathering is akin to a warm embrace that envelops all in attendance, making them feel right at home and where there is plenty of delicious food and drink to go around.

The Bikeshedding Fallacy: Why Trivial Matters Eclipse the Important Ones

May 26, 2023 By Nagesh Belludi Leave a Comment

Parkinson’s Law of Triviality, also known as the Bikeshedding Effect, is a mental model that underscores the inclination to place undue emphasis on a simple or easily comprehensible matter while ignoring more significant ones.

The term “bikeshedding” originated from a book by C. Northcote Parkinson (who gave us Parkinson’s Law.) To illustrate the idea of bikeshedding, Parkinson evokes a situation where a cross-disciplinary committee discusses the design of a nuclear power plant. Most of the members have a limited understanding of nuclear reactor design. Consequently, they will likely rely on the experts’ opinions on these critical matters.

However, when the discussion turns to a relatively simple topic like a humble bike storage shed for employees, everyone feels the need to contribute. This is attributable to the people’s desire to be recognized as valuable contributors and showcase their competence by providing their thoughts on something everyone can understand. As a result, the committee spends a disproportionate amount of time deliberating on trivial matters like the shed’s building material or paint color while turning its back on critical issues such as how to foolproof the fuel control system.

In essence, Parkinson’s Law of Triviality highlights the human tendency to focus on easy-to-understand matters, even if they are less important, because individuals feel more confident and productive doing them.

A Tagline for Most Meetings: Much Said, Little Decided

April 22, 2023 By Nagesh Belludi Leave a Comment

A one-hour meeting with eight people is an 8-hour meeting.

It’s ludicrous that a $5KK expense budget requires a tiresome justification and sign-off by senior executives, but gathering a bunch of well-paid professionals to dawdle away for a few hours and burn the same money in low-value interactions is totally unchecked. Besides, no one seems satisfied with the quality of the output of these ‘decision meetings,’ let alone committed to following through.

Idea for Impact: Want a better decision? Plan a better meeting! Treat time spent in meetings consciously by emphasizing decision-making over information-sharing.

Treat Employees Like Volunteers

April 20, 2023 By Nagesh Belludi Leave a Comment

Treat your employees as volunteers—as if they’re free to leave at any time. Volunteers want to connect to a mission. They want to make an impact by investing their time and energy because they want to, not because they need to. Moreover, unlike employees, volunteers aren’t constrained by the command-and-control structure.

You’ll pay greater attention to the non-monetary needs of your employees, and you’ll better align your goals and their goals. You’ll be more intentional, preferring transformational motivation, not transactional motivation.

When Implementing Change, You’ll Encounter These Three Types Of People

April 6, 2023 By Nagesh Belludi Leave a Comment

To successfully make changes in your workplace, you’ll need to have everyone on board. But don’t try to get them all to accept change at once. Not everyone responds to change similarly; some employees will not react well to it initially.

According to Hans Finzel’s Change is Like a Slinky Paperback (2004,) you must anticipate your allies and adversaries. Determine which of these three groups each of your employees belongs to and adapt.

The Innovators and Early Adopters. Some people love the challenge of change for its excitement and the opportunity to spearhead change. These employees can research the topic, develop prototypes, and act as “change ambassadors” to motivate people further down the hierarchy.
The Careful Majority. Most employees will support change once they’re reasonably confident it’ll succeed. Demonstrate to skeptics what the change will represent and how it will benefit them and the company. Acknowledge concerns—both the spoken and unspoken—and the discomfort of being in unfamiliar territory while focusing on what’s within their control. Eventually, the majority will follow the early adopters’ lead.
The Holdouts. A few employees may resist—and even sabotage—change because they feel uncomfortable about it, don’t believe in it, or can’t see any benefits in it for themselves. If their contentions are worth the time and energy to debate and discuss, make a fair effort to gain alignment on perspective and resolution on position, but be firm with your strategic direction. Get key organizational leaders to give these dissenters reasons and opportunities to get on board, but let them know the price if they don’t accept change.

Idea for Impact: The best managers understand that each employee has different skills, sentiments, wants and needs—and work to put each employee in a position to feel valued and contribute.

These are the Two Best Employee Engagement Questions

March 30, 2023 By Nagesh Belludi Leave a Comment

Engaged employees are more likely to be effective, stay with your company, and nurture a favorable corporate culture. To gauge employee engagement levels regularly, run a pulse survey and ask these two questions:

To what degree are you proactively engaged in improving the tasks you’re responsible for? Does your workplace actively seek your ideas to make those improvements?
To what degree do the processes that you are working with enable you to be highly successful in your job?

Seek ideas meaningful for improvements from people on the job. Demonstrate commitment to taking significant action and follow through.

Managerial Lessons from the Show Business: Summary of Leadership from the Director’s Chair

March 13, 2023 By Nagesh Belludi Leave a Comment

Notes on Directing: 130 Lessons in Leadership from the Director’s Chair (2008) explores the parallels between directing the stage and managing projects. The shared themes include ad hoc teams, one-off goals, tight time frames, limited budgets, nebulous chains of command, shared objectives, etc.

Compiled by writer Russell Reich from the notes of British stage director Frank Hauser, this tome contains 130 meditations on casting actors, rehearsing, stage-setting, supervising the production units, and handling critics.

Organized temporally from a director’s initial encounter with the play’s script to its final production, this slim volume is so much more—it’s not just for stage directors.

#7: “Learn to love a play you don’t particularly like. You may be asked—or may choose—to direct a play that, for any number of reasons, you don’t think is very good. In such cases it is better to focus and build on the play’s virtues than attempt to repair its inherent problems.” Idea for Impact: Focus on virtues and strengths, not weaknesses. Spend more of their time reinforcing the good performers than dealing with untrainable performers—i.e., you can never remediate grievous weaknesses. Position the person somewhere else where her talents are a better match.
#33: “Every scene is a chase scene. Character A wants something from Character B who doesn’t want to give it.” Idea for Impact: Productive relationships with balance and joy call for continuous concession and managing one another’s expectations. Work hard to ensure that all sides feel contented with a negotiated compromise.
#73: “Know your actors. Some like a lot of attention; others want to be left alone. Some like written notes; some spoken. Get to know them. It doesn’t have to take long. It’s a good investment that will pay enormous benefits later.” Idea for Impact: Embrace individualized management. No two employees are alike—their temperaments, qualifications, experiences, and backgrounds shape them into thoroughly unique people who’re persuaded, challenged, and inspired in different ways. So why treat them all the same way?

Recommendation: Read Notes on Directing. It’s a worthwhile meditation in managing people, projects, and yourself. Anyone who must get things done through people will find insightful meditations on getting to the core of the narrative, handling people with diplomacy and nuance, and navigating conflict.

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Leading Teams

Wondering what to read next?

The Nordstrom Way: Enabling Employees to Have the Freedom and Vision to Become Self-Directing

Flying the Fun Skies at Southwest Airlines: Giving Employees the Freedom to Deliver a Great Brand Experience

Beyond the Call of Duty: Ladies and Gentlemen Serving Ladies and Gentlemen at Ritz-Carlton

Idea for Impact: Empowering Employees is a Strategic Approach That Yields Significant Benefits

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Misguided Motivations: The Folly of Incentives in the Great Hanoi Rat Massacre

The Unintended Consequences of Incentive-driven Actions

The Irony of Fines as Deterrents in Action

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