The State of the American Manager Is…Weak

Risk managers, understandably, spend most of their time worrying about external threats. But occasionally we are forced to acknowledge that our own organizations can be the most fertile seedbeds of risk.

Gallup’s State of the American Manager report is one of those inputs that should compel organizations to look inward. Gallup lays out startling data on the woeful state of American managers: most are disengaged, compelling their employees to perform at much lower levels. Prevailing promotion and hiring practices are big culprits, as a small minority of people given management roles actually have the skills to succeed with leadership responsibilities. A lot needs to change to recover all of the lost productivity.

According to Gallup, about 82% of managers lack the appropriate skills for their positions. Poor hiring practices beget low engagement with the job and organization: 65% of managers say they are either not engaged, or actively disengaged.

Essentially, managers are phoning it in. Many readers won’t be surprised by this; most of us have had bad bosses at one time or another, and Gallup found that exactly half of American workers have left a job just to get away from a dreadful manager. They also found strong a strong correlation between manager quality and employee engagement:

All told, managers account for “at least 70% of the variance in employee engagement scores across business units.” And it’s powerful to see the effects of low employee engagement on productivity:

What does all of this poor managing cost? Gallup claims the current situation drains $300–$400 billion from the U.S. economy each year.

The extent of this problem, and its effects, are staggering.

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Thankfully, the solutions are easy to articulate. We have vast ranks of unsatisfied and unengaged managers because we are putting the wrong people in leadership positions. Too many organizations plot career paths based on title, not talent.

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A great front-line employee might not be a great manager, but that’s how we typically promote people:

Reason #2 is the other systemic problem: promoting based on seniority. High-performing organizations, on the other hand, promote based on performance rather than who’s next in line for a title change.

Sub-par hiring and promotion practices continue, of course, because overhauling them is a huge job with large up-front costs. Whole company cultures need to be changed in the process. Many (most?) organizations obviously prefer to stick with the status quo.

Are there any quick fixes that can help turn the tide?

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Actually, yes. Something companies can start doing right away: hire and promote more women into management roles:

Access to the full Gallup report can be found here.

The Risky Side of Unmanaged Spreadsheets

For years enterprises have attempted to move away from spreadsheets in favor of enterprise resource planning (ERP) systems, accounting systems and various other software systems and applications. Yet, no matter how hard organizations try, it seems spreadsheets will not go away.

Besides being easy to use and accessible, people are comfortable working with spreadsheets. When they have a job to do, spreadsheets are there—not waiting for IT. Yet when left unmanaged, the risks associated with spreadsheets can prove costly, resulting in bad business decisions, regulatory penalties, and even lawsuits. In some instances, unmanaged spreadsheets are costing organizations millions of dollars.

For example, last October a spreadsheet mistake cost Tibco shareholders $100 million during a sale to Vista Equity Partners. Goldman, Tibco’s adviser, used a spreadsheet that overstated the company’s share count in the deal. This error led to a miscalculation of Tibco’s equity value, a $100 million savings for Vista and a slightly lower payment to Tibco’s shareholders.

Earlier this year it was discovered that the Lubbock Housing Authority mistakenly posted applicants’ personal information on its website. In a rush to get the spreadsheet online before the holiday break, staff inadvertently posted the wrong file. As a result, the names, addresses, complete social security numbers and estimated incomes of applicants appeared online for all to see.

Then there was the case of Bulkhead Beef. The company filed a federal complaint against rival meat purveyor, Revere Meat Co., for taking key competitive information including its most valuable data found within its yield formula spreadsheet. While one case involved theft and the others appear to be fat finger errors, these cases confirm that left unmanaged, spreadsheets expose organizations to risk.

Despite the risks associated with spreadsheets, however, they remain a critical analysis tool for enterprises large and small. In the coming years, spreadsheets can be expected to grow in size and complexity. This means the challenges of managing them, and the associated risk, will only increase.

Why spreadsheets remain relevant

For years, businesses have attempted to do away with spreadsheets in favor of ERP systems, which offer the controls necessary to minimize risk. In today’s global economy where outsourcing is the norm and M&A activity is high, however, there is a lot more collaboration. The complexities associated with integrating data between multiple ERP systems makes spreadsheets an appealing option for analysis.  Disparate ERP systems don’t work together; therefore, rather than waiting on IT, spreadsheets are being used as the point of integration. Once data is exported to an Excel spreadsheet, however, the controls in place are gone. There is no way to monitor changes, control access, or to ensure that errors or risks were not introduced into the process.

While there are many cloud-based applications businesses can purchase to replace spreadsheets, the reality is that spreadsheets remain a reliable standby. When business shifts and an application that was purchased no longer fits, or an analysis is requested that the application doesn’t provide, the ability to export data to Excel is a reliable option that business users continue to turn to. While there are risks, they are willing to take them to get the job done. Fortunately, technology advances are enabling enterprises to overcome spreadsheet complexities. Automated risk and analysis solutions provide much needed insight into potential risk and errors that may be hiding in spreadsheets. Yet many organizations don’t use spreadsheet management solutions simply because they are unaware this technology exists.

Taking the risk out of spreadsheets

Taking a methodical approach to understanding where risks may hide is the first step in managing spreadsheets across an organization. Spreadsheet management solutions offer detailed insight into spreadsheets, regardless of where they reside on a network or how many exist. These solutions provide visibility into who is working on a spreadsheet, how many people are working on it, when something changes, what changed, and who made those changes. The ability to monitor and track this information over a period of time provides valuable insight into whether policies are being met, while making it significantly easier to identify potential risk.

For even greater transparency and risk management, many spreadsheet management solutions will allow threshold alerts to be set if certain changes occur such as commission percentages or diluted shares. These red flag-type alerts can be customized to meet a certain criteria and can be as basic or detailed as necessary. Thresholds also can be set to alert auditors to disparate currency and tax changes; this information is especially useful when dealing with global mergers and acquisitions. Threshold alerts serve as automated checks and balances to ensure that inaccuracies are not missed. For example, had an alert been set to notify auditors when the number of shares was changed in the Tibco case, this issue could have been avoided.

Threshold alerts also could have prevented the Bulkhead Beef and the LHA situations as well. There is significant value in understanding the data lineage and being alerted when things just don’t appear right. If people are downloading documents and information that is not within their job responsibilities or there is a sudden increase in the amount of data being viewed or pulled that is inconsistent with past access, for example, having an alert system in place can help enterprises stop potentially damaging situations before they occur.

Spreadsheets aren’t going away

Spreadsheets can be found nearly everywhere within a company. Excel spreadsheets continue to meet the analytical needs of companies today, especially when it comes to analyzing and reporting financial results and providing evidentiary support for decision-making. They are used for managing forecasts, inventory levels and much more.

It is clear that spreadsheets are not going away. Until enterprises wake up to this reality, news stories will continue to appear detailing the latest spreadsheet disaster. There are user-friendly enterprise offerings available for managing spreadsheets. With the right infrastructure, transparency and governance can be achieved, and costly errors and unwanted headlines avoided.

 

Legal Lessons from Starbucks’ Race Together Campaign

Starbucks Coffee Race Together Campaign

One aspect of Starbucks Coffee’s recent “Race Together” campaign encouraged employees to engage customers in a discussion about race. This effort—which had employees write #racetogether on customers’ cups to encourage dialogue—was well intentioned. However, the speed at which it was scrapped shows just how difficult it is to incorporate political and social discussions into the workplace.

The term “hostile work environment” often gets thrown around without any thought to what that really means. The greatest misconception is that anything hostile or abusive that happens at the workplace is illegal. Albeit inappropriate, screaming at an employee or calling him stupid is simply not illegal.

The flipside of that coin is that conduct does not necessarily have to be abusive or threatening to create a hostile environment when the subject matter is a protected category under Title VII, which prohibits discrimination by covered employers on the basis of race, color, religion, sex or national origin. Forcing employees to engage in discussions with strangers about race without any control over how the customer will respond opens an opportunity for the work environment to become incredibly uncomfortable for employees.

Employers have a duty to protect their employees from harassment based upon protected categories by customers, not just other employees. So if a customer responds to an offer to start a conversation about race with a mean-spirited joke or simply a racial epithet, the employer will have to take action against that customer. If these types of responses become repetitive, the employer would likely have an obligation to stop the source of the conflict—in other words, cease the practice of having employees start discussions about race.

There are many other pitfalls in having workplace discussions around sensitive topics that fall into protected categories under Title VII. A discussion of this sort, in spite of the best intentions of the participants to be thoughtful and candid, can easily bring to the surface differences in thought among employees, which may result in ill will. Likewise, comments made during these conversations could be used as evidence that a particular manager is prejudiced against certain types of individuals. Individuals certainly have different perceptions of the meanings of different comments and actions, so a manager might feel that comments he makes do not show any sort of prejudice, while the people hearing the conversation can come to a completely different conclusion. Should the manager then take some disciplinary or other job-related action against an employee, the conversation may be used as the basis for a discrimination lawsuit. At that point, what the speaker intended is less relevant than how the comment is perceived by a judge or jury.

Most employers today certainly haven’t taken steps to instigate this sort of discussion in the workplace. But events do arise in the news that relate to these topics and become the fodder for water cooler conversation. Most employers do not want to become the “speech police,” monitoring every communication among employees that might not relate directly to the business. Yet, these conversations can, just as the discussion on race that Starbucks initiated, become problematic. Then, the key is to make sure that employees are aware of their opportunities to report behavior that causes them discomfort. Open door and non-harassment policies attempt to encourage employees to come forward well before any workplace conduct would become a truly actionable illegal hostile environment. Encouraging use of this process can assist employers in nipping problems in the bud.

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Handling a complaint related to an uncomfortable discussion can have its own problems. Chances are that the employee being complained of did not understand that talking about what he saw on the news the night before should be grounds for his being called out. Many employees wrongly believe that the First Amendment protects the right to discuss these events at a private employer’s place of work.

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Thus, when having the conversation with the offending employee, the employer needs to be prepared to educate the employee on the differences of opinions and perceptions that different people have as well as the employer’s right to keep discussions out of the workplace.

While the conversation about the Starbucks “Race Together” campaign will likely die down, employers can continue to expect the occasional need to address misunderstandings and comments as long as the outside world is focused on these issues. In light of that, here are some steps employers can take to be prepared.

  • Train managers that they should not be engaging in conversations on non-work-related controversial topics with their employees.
  • Train employees and managers in the reporting procedures under open-door policies so they know how to raise a problem before it becomes a big issue.
  • Train employees that your nondiscrimination and harassment policy extends not just to their fellow employees, but also to customers and vendors.

Finally, and most importantly, be responsive when employees raise concerns. Not every complaint is a valid one and not every event that makes somebody uncomfortable is inappropriate. Sometimes an employee must be told that their complaint is not going to result in any changes. Failing to follow up with the complaining employee creates an atmosphere of distrust or leads to the belief that the employer does not mean what it says about preventing illegal harassment.

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Drug-Free Workplace in the Age of Marijuana

Advocates for the legalization of medical marijuana have had a busy year. Three states–Maryland, Minnesota and New York–passed legislation this year, while Florida, Ohio and Pennsylvania have pending legislation or ballot proposals. Additionally, in two states, Colorado and Washington, voters have approved recreational marijuana in addition to medical marijuana, with the issue pending in Oregon and Alaska.

These measures have prompted many employers to ask if there is growing societal acceptance of marijuana and other drugs and should they expect a possible increase in employees using drugs on the job.

New data suggests the answer to both of those questions may be yes. An analysis from Quest Diagnostics, which provides workplace drug testing to private and public employers, found that in 2013, the percentage of employees that tested positive for drugs increased for the first time in 10 years, fueled by a rise in marijuana and amphetamines. The analysis involved 8.5 million urine, oral fluid and hair workplace drug tests in the United States.

The cost of substance abuse, including alcohol, on businesses, in terms of employee absenteeism, occupational injury, and impaired reasoning and reaction time, is significant–more than 6 billion annually by some estimates.

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A survey sponsored by the National Institute on Drug Abuse found that drug-using employees are 2.

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5 times more likely to have absences of eight days or more, 2.2 times more likely to request early dismissal or time off, 3 times more likely to be late for work, and 5 times more likely to file a workers compensation claim.

As a result, most businesses have comprehensive drug-free workplace programs in place, and 57% of American businesses required all job candidates to pass a drug test in 2011, according to the Society for Human Resource Management. Due in part to these workplace efforts, substance abuse by workers subject to testing declined incrementally over the past decade, giving hope that the epidemic of drug use and misuse was abating.

But the Quest Diagnostics report suggests those gains may be reversing. The positivity rate for 7.6 million urine drug tests in the U.S. workforce increased 5.7% in 2013 over 2012 rates, the first time the positivity rate for combined national workplace urine drug tests has increased since 2003.

As human resources executives work to implement and maintain drug-free workplaces, additional findings in the analysis offer valuable insights into current trends in workforce drug use:

  • Marijuana continues to be the most commonly detected illicit drug, according to the Quest Diagnostics analysis of urine drug tests. Marijuana positivity in the combined U.
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    S. workforce increased 6.2%, to 1.7% in 2013 compared to 1.6% in 2012. These increased positivity rates are consistent with findings from the 2012 National Survey on Drug Use and Health (NSDUH), which showed an increase in self-reported past-month marijuana use between 2007 and 2012–both among those respondents subject to employer drug testing and those not subject to such testing.

  • Amphetamines positivity continues to increase, continuing a multi-year trend. Combined U.S. workforce data in urine showed a 10% year-over-year increase in amphetamines positivity in 2013 compared to 2012. Of note in the U.S. general workforce, methamphetamine positivity in urine drug tests increased 27%; oral fluid methamphetamine positivity increased by 50%, and the positivity rate in hair testing jumped by 55%, suggesting that the higher incidence of methamphetamine identification in drug seizures by law enforcement is starting to be reflected in workplace testing. Amphetamines positivity rates are now at their highest levels on record and methamphetamine positivity rates are at their highest levels since 2007, across all specimen types.
  • Oxycodones positivity declined for the second consecutive year. Although the rate of opioid prescribing–the amount of opioids distributed and the average prescription size–all increased markedly in the United States over the past decade, the Quest Diagnostics Drug Testing Index report showed oxycodones positivity declined 8.3% between 2013 and 2012 and 12.7% between 2012 and 2011 in the combined U.S. workforce. Four states experienced double-digit declines in oxycodones positivity rates in both 2013 and 2012: Florida, Massachusetts, New Jersey and Ohio. Hydrocodone positivity remained at 1.3% between 2012 and 2013.
  • Despite double-digit increases in marijuana positivity in the two states with “recreational” use laws–Colorado and Washington–analysts at Quest Diagnostics cautioned that it is too early to tell whether the new statutes are correlated with increased positivity. Marijuana positivity rates in Colorado and Washington increased 20 and 23%, respectively, in the general workforce between 2012 and 2013, compared to the 5% average increase among the U.S. general workforce in all 50 states. However, both Colorado and Washington experienced dramatic increases and declines in marijuana positivity rates in the years prior to legalization, suggesting that multiple dynamics are affecting testing results in both states.
  • While the Quest Diagnostics Drug Testing Index report indicates that workforce drug use increased last year, HR managers have a variety of tools at their disposal to ensure safe and healthy workplaces, including vigilant oversight, strong zero-tolerance employment policies, employee drug screening, stigma-free mental health counseling and employee assistance programs. Preventing substance abuse in the workplace keeps employees safer and healthier, and leads to higher productivity, lower costs and a healthier bottom line.