Soft Stuff Matters

Hard-charging, results-oriented managers may not see the importance of “soft” issues like a company’s values and culture. But to Josh S. Weston, Chairman and CEO of Automatic Data Processing, Inc. (ADP), “soft stuff matters.” Here are the eleven “soft” management principles Weston has used to lead ADP to nearly $2 billion in sales.

1. Give your people top billing.

Each company must choose its own way to do this. At ADP, we go to great lengths to be an informal, non-political, loosely structured organization where employees talk up and down the tiering levels. We try to create a culture that’s not stuffy and makes every associate feel that our executives are accessible.

More than 10,000 ADP associates are now shareholders in the company. More than 2,000 managers participate in our stock option plan. I try to be a part-time instructor for many incoming groups of new hires, and I try to meet our associates throughout the country.

2. Use full-time champions.

In our society, most managers gauge their importance by the size of the entity they’re leading. The better a person thinks he is, the more he wants to be responsible for something bigger than he was responsible for yesterday.

However, I believe full-time champions are absolutely necessary on your toughest jobs, and your toughest jobs usually aren’t the ones with the most employees or the biggest revenue level. That’s why at ADP we try very hard to make the best person accountable full-time for the toughest job and to overcome the normal instinct to measure a person by how many employees he supervises.

3. Communicate well and often.

At ADP we communicate via many media, from VCR tapes that run on screens in different parts of the company to audiocassette tapes people can listen to as they travel to and from work. We have both formal and informal meetings; some include breakfast, lunch, or dinner. Our rule for sending a message: Don’t settle for communicating it only once and only in writing. If you don’t think you’re “overkilling” communications, you’re probably not communicating enough and rumors will begin to dominate facts.

Also, remember it’s okay to skip levels when you’re communicating. The A’s need not talk only to the B’s and ask the B’s to tell the C’s. The A’s should talk to the D’s, the E’s, and the F’s.

4. Be a “hands-in” executive.

When a person is “hands-in,” he’s even more deeply involved than someone who is “hands-on.” He delves into the detail work to get a corroborated understanding of what’s going on in the company and to convey to employees (or “associates” at ADP) that each one is doing an important job. Very often, you learn information from an associate that you couldn’t possibly learn from sitting in an office on the top floor.

Some people think that being so involved is impossible. I look at it this way: If I were to detach myself from intermittent hands-in involvement, I would eventually spend more time getting up to speed on something I missed than I would spend by simply staying involved. I would forfeit teaming opportunities because I’d be out of touch with the organization.

My style of intermittent hands-in includes many techniques. We have more than 50 locations, and I visit each one every year. At every location, I talk one on one not only to the senior managers but also to more than half a dozen middle managers.

I also review some of our accounts payable. Once a month, the corporate controller and the controllers from each of our largest strategic business units will give me about 30 randomly selected accounts payable vouchers to examine. The entire accounting organization knows I look at these vouchers. I’m not performing a normal auditor’s review, verifying arithmetic or checking receiving tickets against invoices. I’m looking for activities that appear not to have been handled as I’d expect they would be.

For example, I once noticed some large disbursements for leasehold improvements to one of our locations; the disbursements had been approved by all the right people. But, in one of my visits to the site, I saw something peculiar and asked if we could review the logic of that decision-not to criticize anybody, but to see how we could improve a process that permitted us to spend $300,000 on lease-holds for a building we were likely to vacate in two years.

Now about a dozen of my senior associates, some of whom are not even in the financial channel, also look at random samples of large accounts payable vouchers.

And, finally, we apply the hands-in philosophy to our telephone systems. My direct dial number is available to every client and to anyone else who asks for it. My secretary picks up the phone only if I don’t answer it after three rings.

How do I cope with the interruptions? If an insurance salesperson is calling, I have a polite way of turning that off in 15 seconds. But most people who call need to reach me, not somebody else. I go home at night with no pink “return call” messages on my desk.

5. “Zero base” your organization periodically.

Several years ago, I visited the Federal Express sorting plant in Memphis to learn firsthand how the firm manages to keep its employees so motivated. I discovered Federal Express had, at the time, an average span of control of one supervisor for every eight workers in a firm of 30,000 employees. ADP had an average span of control of one-on-five. (We’re now at one-on-eight.)

Federal Express CEO Fred Smith and I figured that if his company had the same span-of-control ratio as ADP had, it would have employed 4,000 more supervisors and two extra levels of business management.

6. Watch out for “group think.”

There’s a big difference between brainstorming and decision-making. To some managers, group decisions seem safe. They feel democratic and comfortable because nothing is done unless everybody agrees. However, while getting multiple inputs, or what I call “group think,” is valuable when you’re examining an issue, you need to stop the opinion-gathering as you get closer to making a decision.

Why? If a group is making the decision, you start searching for the common denominator among the group members. That inevitably dilutes the effectiveness of the decision. When you’re brainstorming, six people are better than one. But when you must make a decision, one or two people are far better than six.

7. Outsource nonstrategic functions.

For various reasons, many supervisors want to control everything that passes through their departments. I call it the NIH, or Not Invented Here, syndrome.

For example: Many companies design and redesign their own business systems, such as payroll or human resources, even though independent auditors advise against it. If your firm is handling internally a nonstrategic function that other specialized firms also perform, like a cafeteria service, a cleaning service, or security system maintenance, look at what others are doing before you conclude that it makes more sense for you to design and run your own system.

8. Don’t just throw dollars at R&D.

If you examine some of the recent developments in the computer services field, you see that the large staffs at IBM take a long time to get their products to market. Compare Microsoft’s time to develop MS-DOS to IBM’s development of analogous products. Look at how long it took Apple to develop the Macintosh and then how much longer it took IBM with far, far more people to get to a similar point.

Try to identify the point at which more is less on a project.

9. Set aside time to think.

At ADP, 39 plus one adds up to more than 40 plus zero. The 40-plus-zero employee is the harried worker who at 40 hours a week just tries to keep up with what’s in the “in” basket. He tries to do whatever he thinks he’s supposed to do. Because he works his full 40 hours with his head down, he takes zero hours to think about what he’s doing, why he’s doing it, and how he’s doing it. Where does the work go after he does it? Does he need to do it in the first place?

On the other hand, a 39-plus-one employee takes at least one of those 40 hours to think about what he’s doing and why he’s doing it. That’s why the other 39 hours are far more productive.

10. Change your organizational structure occasionally.

Force some organizational change every now and then, for two reasons. First, yesterday’s company can’t possibly meet tomorrow’s challenges.

Second, there are invariably some ten-mile-per-hour people in your company on a sixty-mile-per-hour highway. If you don’t face up to such understandable variations in skills until you reach a crisis, your performance will suffer.

Ask yourself: Who are my top people, and what am I doing to make them even better? Who are my least effective people, and what am I doing to make them better or to move them into something else?

11. Put your business strategies first.

Never, never allow your business strategies to become subservient to your balance sheet. At ADP, we depreciate all hardware to zero in three years. We never want to hang on to a technology, or to any other investment, because it’s still on the balance sheet not fully amortized.

We’ll never defer any expense incurred just because it sounds good to match the expense with the future revenue stream. Get the expenses out of the way, so if you want to change or abandon a particular project, you can consider the strategic implications totally unfettered by what’s on the balance sheet.

I realize it’s hard to adopt this “quick write-off” business philosophy in a society that focuses so much on quarterly earnings, particularly when you have to face security analysts every quarter and your CEO is pressuring you. Every penny per share helps. But, if you can influence the decision-making at your firm, don’t allow your balance sheet to control your future strategies.