The United States Air Force Shoots Down Boeing

by Tom Hinton

Last week I watched the Congressional hearings on why the U.S. Air Force awarded a contract to Northrop Grumman Corporation and EADS North America to build its next-generation of aerial refueling tankers. The contract is estimated at $40 billion, and the deal includes 179 planes to be delivered over the next 15 years.

The Air Forces opted to give the new kid on the block a chance over the more experienced Boeing Company which has been building air tankers for 75 years and recently unveiled its new, state-of-the-art KC-767 which has already been delivered to Italy and will soon be delivered to Japan. What do these countries know that our own United States Air Force doesn’t?

For the record, EADS is part of Airbus, the foreign-owned and heavily subsidized aerospace giant. It is also The Boeing Company’s toughest competitor for military and commercial airplanes. It should also be noted that the initial Air Force contract will create an estimated 20,000 jobs -- including several thousand jobs in Alabama and Kansas -- while costing Boeing and its suppliers approximately 20,000 jobs in the state of Washington and other locations where is has facilities and suppliers who would build the KC-767 air tanker.

The Boeing Company estimates that if the Air Force moves forward with the contract award to Northrop Grumman and EADS -- and Congress approves the bid award -- some 40,000 jobs (current and new positions) will be affected in the United States. The EADS tanker airframe is based on an Airbus A330 commercial jet assembled in France; and, most of the assembly work would be done in Europe according to Northrop Grumman sources.

As I watched the congressional hearings I shook my head in disbelief. The U.S. Air Force’s top acquisition officers, led by Assistant Secretary Sue Payton, Lt. General John Hudson, and Program Manager Terry Kasten and answered the panel’s questions honestly and directly. They staunchly defended the bidding process, the contract review process, and the awarding of the contract based on the proposal criteria. But, they also acknowledged that certain criteria such as jobs and the economic impact to American workers, were not part of the proposal and, therefore, were not evaluated or considered as part of their review. As Assistant Secretary Payton told Congress, “jobs and economics are not part of the proposal criteria or bidding process.”

While I understand the Air Force must follow specific criteria and acquisition laws, it begs the question, why in the world is the U.S. Department of Defense undermining the American economy? This is like giving a child a loaded gun and then advising them not to shoot you! It makes absolutely no sense to the average American who is worried about jobs, industrial capacity, and making ends meet. Now, America's own military is shipping jobs overseas. I could understand their rationale if Boeing was incompetent, but it is not. In fact, Boeing’s Airlift & Tanker program continue to be recognized as a best-in-class company by no one less than the president of the United States who recognized The Boeing Company on two occasions with the Malcolm Baldrige Award, our nation’s highest presidential honor for workplace excellence.

So, let’s examine the impact of this decision and how it all came about. The current air tanker tango began in 2003 when Arizona Senator John McCain complained bitterly about pork barrel politics because the Air Force was about to award The Boeing Company a new air tanker lease contract. Never mind that Boeing had been building and supplying the Air Force with air tankers for over 50 years. McCain said the deal was wrong.

According to the Everett Herald, Senator McCain "nearly single-handedly killed Boeing’s multi-billion dollar deal" to lease 100 Boeing air tankers to the U.S. Air Force. As the Everett Herald explained, “In 2001, McCain's laser-like probe of defense budgets unearthed a $30 billion earmark to pay for leasing 100 KC-767 jets from Boeing -- without first following a competitive bid process. McCain’s criticism stopped the program three years later and caused a round of investigations that led to Boeing paying fines for its contracting practices, and major changes in the Air Force’s procurement and contracting procedures.

Subsequent federal investigations resulted in two Boeing executives, Chief Financial Officer Mike Sears and Darleen Druyun, a former Air Force Acquisitions official and then-vice president of missile-defense systems at Boeing, being fired for illegal actions relating to Air Force contracts. Druyun was also convicted of federal violations for her illegal actions and was fined and sent to prison.

Boeing's board of directors acted quickly after concluding Sears improperly offered Druyun a job in the fall of 2002 because Druyun worked for the Air Force. At the time, Druyun was reviewing the proposal for the Air Force to lease 100 Boeing 767 airborne-refueling tankers. Needless to say, these Boeing officials made a serious mistake and paid the price for their stupidity and illegal actions.

Boeing hired a new CEO and hoped the firings would convince Congress and the Defense Department that the company was acting decisively to right its ship. Then, the Pentagon stripped Boeing of $1 billion worth of satellite launches after another investigation showed the company used trade secrets stolen from Lockheed Martin, its chief competitor, to help win the launches. Instead of getting better, hings got worse for Boeing.

In March, Boeing Satellite Systems acknowledged it made improper technology transfers to China in the wake of two failed satellite launches in 1995 and 1996.

Finally, in 2006, when Boeing’s new chairman W. James McNerney, Jr. appeared before Congress and apologized at a Senate hearing for the company’s illegal and unethical tactics, and promised higher ethical standards, Senator McCain responded with praise for Boeing for "truly reforming and starting fresh."

But, the damage was done and Senator McCain had sent a clear signal to the U.S. Air Force Acquisition office -- no more deals with Boeing. That set the stage for a new round of air tanker bids which last week the Air Force awarded to Northrop Grumman Corporation and EADS North America. While the letter of the law was followed, it appears from circumstantial evidence that the U.S. Air Force had already made up its minds not to do business with Boeing’s Airlift & Tanker program.

In the midst of all these investigations and problems with a few bad apples at Boeing, Senator McCain and his colleagues forgot to ask one important question: “If not Boeing, who else will build the Air Force’s new air tanker?” But, McCain knew the answer was the Europeans and Airbus. He also knew his actions would cost some 20,000 Americans their livelihood. Certainly, McCain's tactics pushed the Air Force too far and caused them to avoid steer clear of doing business with Boeing. That's a serious mistake on the part of the Air Force and Senator McCain.

Rep. Norm Dicks, a powerful figure on the House Appropriations Committee, who represents the Everett, Washington area which his home to many of Boeing’s aerospace workers, predicted a "firestorm of criticism on Capitol Hill" over sending so many jobs overseas. Rep. Dicks added of McCain: "I hope the voters of this state [Washington] remember what John McCain has done to them and their jobs."

Some people suspect that this was “payback time” for The Boeing Company. But, Assistant Secretary of the Air Force Sue Payton said in her testimony that previous contracting issues and illegalities with Boeing had no bearing on the 2008 air tanker award. She indicated that Northrop Grumman Corporation and EADS North America won on the merits of their plane, a modified Airbus A330 that is bigger than the modified KC-767 that Boeing offered. Payton also noted that by law, the Air Force must consider European allies on equal footing with American manufacturers.

Assistant Secretary Payton is referring to laws such as The Buy American Act (41 U.S.C. § 10a–10d) which was passed in 1933, mandating preferences for the purchase of domestically produced goods in direct procurements by the United States government.

The section of The Buy American Act that the U.S. Air Force referenced in terms of the air tanker contract is an outdated provision which stipulates that foreign companies can be considered when “purchasing the material domestically would burden the government with an unreasonable cost (the price differential between the domestic product and an identical foreign-sourced product exceeds a certain percentage of the price offered by the foreign supplier), if the product is not available domestically in sufficient quantity or quality, or if doing so is in the public interest…”

Given the fact that The Boeing Company already has built a new air tanker, The Buy American Act is ridiculous and works to the detriment of America’s economy and declining manufacturing base. While the U.S. Air Force must adhere to the law, Congress should move immediately to strike The Buy American Act and ask the Air Force to re-bid the job so that Boeing has a fair chance -- assuming fairness is even possible given the McCain bias against Boeing now rooted in the U.S. Air Force.

It;s important to note that EADS, is a European entity that is heavily subsidized by foreign governments. The Boeing Company does not enjoy any government subsidies, so the playing field is not level. Already, the competition is unfair. The Boeing Company cannot compete fairly against such rules and antiquated laws that work against the competitive spirit of American businesses.

Another concern was raised by Congressman Dicks, who accused the Air Force of “bait and switch tactics” by telling Boeing that the Air Force wanted a medium-sized tanker, not a larger tanker which Airbus proposed. Then, the Air Force accepted a larger aircraft from Airbus, the modified A330. “Had Boeing known that the Air Force wanted a bigger jet, Boeing would have bid the 777," Rep. Dicks said at the Congressional hearing last week.

Interestingly, while Boeing was building the KC-767 tankers for Italy and Japan, it asked the Air Force if it wanted something bigger in its new air tanker -- like the Boeing-777. The Air Force told Boeing no, But then, the Air Force proceeded to select a tanker based on the airbus A330 specifications which is larger than Boeing’s 767 and almost as large as the 777. This is why Rep. Dicks accused the Air Force of “switch and bate” tactics -- accusing the Air Force of saying one thing to Boeing but doing another in dealing with Northrop Grumman Corporation and EADS North America. It appears the Air Force was not dealing honestly with Boeing because of the pressures from Senator McCain.

In awarding the new air tanker to Northrop Grumman Corporation and EADS North America, other questions have been raised by aviation experts as to whether the Airbus A330 is going to fit into Air Force infrastructure including airplane hangars that currently house KC-135's that use half the space. When the two planes are compared size-wise, the wingspan of the airbus is 42 feet wider than the 767. The airbus plane is also 34 feet longer and seven feet taller at the tail.

"You're going to need massive construction plans to rebuild hangars at airbases all over the world," complained Rep. Dicks.

Secretary of the Air Force Wynn defended the contract decision and told senators the planes were judged on nine key criteria and "across the spectrum, all evaluated, the Northrop Grumman airplane was clearly a better performer." In addition, he said the Boeing proposal was judged to be more risky and more expensive.

But, this statement also raises questions among Aviation experts who noted that the Boeing contract bid was considerably lower than the EADS bid, and the Boeing aircraft is already operational while the airbus KC-45A is still is the design phase.

Also, it has been noted that Boeing’s Airlift & Tanker program has won the prestigious Malcolm Baldrige Award for its quality and overall excellence.

The Air Force has complained that it is still flying Eisenhower-era air tankers built by Boeing and it needs to replace its aging fleet as soon as possible. If this is the case, experts ask, why delay the process when you already have a reliable, state-of-the-art air tanker being built by Boeing?

Finally, what about American jobs being shipped overseas to build a U.S. Air Force air tanker? Does this make any sense given the state of our economy and the need for skilled aerospace workers such as those employed by Boeing?

Responding to criticism of the contract award, Northrop Grumman officials said the KC-45A tanker will produce 2,000 new jobs in Mobile, Ala., and support 25,000 jobs at suppliers nationwide. The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, although the underlying plane would mostly be built in Europe, and it will use General Electric Co. engines built in North Carolina and Ohio.

While Northrop Grumman Corporation and EADS North America are good companies, this decision has made many Americans angry, and rightfully so. It smacks of politics and unfair competition which is exactly what the U.S. Air Force should be avoiding.

Boeing’s past acquisition mistakes have been corrected and paid for, literally. Boeing has been under new, leadership since 2006, and Boeing’s Airlift & Tanker program is second to none in terms of quality, business practices, and overall management excellence. If the United States Air Force is prohibited from considering economic factors, certainly the United States Congress and White House need to get their heads out of the clouds and step-in to make sense of this decision before Northrop Grumman Corporation and EADS North America fly away with American jobs and taxpayer dollars!

About the Author: Tom Hinton is recognized as America’s Expert on Business Excellence. Mr. Hinton is president of CRI Global, LLC, a training and consulting firm that helps its clients create a “Culture of Excellence in the Workplace." He is the author of four books and a popular speaker at corporate and association meetings. For information, email him at: tom@criglobal.com or visit: www.tomhinton.com

Southwest Sacrifices Airline Safety for Profits

by Tom Hinton

Over the years, I’ve admired Southwest Airlines for doing things right. It seemed that when other airlines were lowering their standards and compromising their commitment to service and quality, Southwest Airlines struck to its knitting and honored its words and promises to customers. In the process, Southwest created a successful and profitable airline. By offering low fares, frequent flights, a strong safety record, and motivated employees -- who had fun on the job and cared for their customers -- Southwest Airlines became one of America’s most admired companies and desirable places to work.

Now, Southwest is under fire by Congress, consumer groups, and the FAA for allowing more than 100 un-inspected planes to fly despite the fact that some planes had cracks in their fuselages. Four jets were found to have four-inch cracks requiring immediate repair. Six jets had signs of cracks starting to show.

Southwest admits that it allowed its planes to fly with cracks, but denies that it ever placed its crew or passengers in jeopardy. In a statement addressed to its customers, Southwest Airlines said, "We assure our customers that this was never a safety of flight issue." Aviation experts told NBC News that the early damage would not be catastrophic, but cracks could lead to serious problems.

Inspections of airplane fuselages became mandatory in 1988 after an Aloha Airlines Boeing-737 jet cracked open at 24,000 feet while enroute from Honolulu to Hilo killing a flight attendant and injuring seven of the 89 people aboard. Ironically, a passenger noticed a sever fuselage crack as she stepped aboard the Aloha Airlines jet in Honolulu, but never mentioned it to the flight crew.

To its credit, Southwest discovered the inspection oversight and notified the FAA. But, for reasons not explained, Southwest continued to fly the un-inspected planes on more than 1,400 flights. Federal law requires that planes be grounded until they are in compliance. Southwest cooperated with the FAA throughout the inspection process and told the media is was surprised when the FAA proposed a $10.2 million fine for violating federal regulations.

Is this just a series of misunderstandings and communication breakdowns, or is it -- as the head of a congressional committee suggests -- collusion between the FAA and the airlines it’s supposed to regulate?

Rep. James Oberstar, who chairs the U.S. House of Representatives’ Transportation and Infrastructure Committee, believes the FAA and the airlines have become too cozy. Oberstar said the committee's investigation was begun after two whistleblowers approached congress after years of trying to correct the inspection problems.

Oberstar called for the FAA to "clean house from top to bottom.” According to Rep. Oberstar, “the relaxed relationship between the FAA and the airlines have led to the sort of lax enforcement that allowed Southwest Airlines to fly at least 117 aircraft past mandatory inspection deadlines.”

Oberstar also said he believes similar violations may have occurred involving other airlines, but that those persons who have such evidence are afraid to come forward. What does this disturbing situation say about the integrity of senior management at the airlines and the independence of regulatory agencies like the FAA? Should consumers be worried? The short answer is a resounding yes! The reason is a lack of trust and integrity on the part of airline executives and the FAA.

When government agencies such as the FAA, the U.S. Consumer Product Safety Commission, the Food and Drug Administration, and the U.S. Department of Agriculture are compromised to the point where leaders fail to lead objectively, and government inspectors fail to perform their duties and uphold the sacred public trust, it is time to “clean house” and change the culture of those organizations as Rep. Oberstar suggests.

What is happening here is more serious than just coziness and a few omissions by business leaders and government agencies. What is happening here is a blatant disregard for consumer safety and the welfare of our citizens. If warranted, the Department of Justice and federal prosecutors should be asked to investigate and bring criminal charges against those government officials and corporate leaders who knowingly abused the law and abdicated their sworn responsibility to the public by placing an unsuspecting public in danger. In China, they shoot officials who disgrace their office and disregard the public good! While such penalties are extreme, a harsh message needs to be sent to those men and women we have entrusted with the safety of our airlines, drugs, food supply, and products. That message is simply this: honor your oath by doing your job; and, uphold the laws you swore to obey and enforce. If you cannot do this, quit your job. If you fail to uphold the laws, you run the risk of federal prosecution and prison.

I believe this is where the Southwest Airlines incident crosses the line. When airline executives knowingly thwart the law and risky public safety, it is criminal intent. You cannot convince me that Southwest Airlines, which is managed by hundreds of intelligent and competent people, overlooked one of the basic safety issues of an airline -- compliance with FAA inspections. It is no longer a matter of sloppy documentation and lax oversight; it is criminal behavior on the part of Southwest Airline executives and FAA inspectors who looked the other way. Rep. Oberstar is correct in calling for a top-to-bottom investigation. In order to stop these types of blatant violations, it will require much more than a slap on the wrist. Southwest and the FAA must be held accountable to the full extent of the law.

About the Author: Tom Hinton is president of CRI Global, LLC, a training and consulting firm that helps its clients create a “Culture of Excellence” in the workplace. He is the author of four books and a popular speaker at corporate and association meetings. For information, email him at: tom@criglobal.com or visit: www.tomhinton.com

What Makes a Good Employee?

by Bill Kalmar

May I have the envelope, please!

Each year at this time a momentous event is announced in the pages of a prominent magazine. No, I’m not talking about the Sports Illustrated swimsuit edition, although thoughts of that warm me up on frigid evenings in Michigan (sorry if that’s sexist). I’m referring to Fortune Magazine’s announcement of “The 100 Best Companies To Work For.”

For us quality and customer-service geeks it’s an opportunity to examine the inner workings of some of the best organizations in our nation. For the companies who applied for this recognition it’s a guessing game to see where they rank among some of their peers and who is labeled No. 1.

Ever since this list was first published I’ve been following and reviewing these companies like a broker follows blue chip stocks or a wine connoisseur absorbs Wine Spectator’s list of the top bubbly. We all want to work for an organization that espouses sound customer-service processes and provides employees with a safe, challenging, rewarding environment. Fortune Magazine lists those companies.

After the list is published each year, the featured companies are flooded with unsolicited applications. In fact, in the current edition of the list there’s a section entitled, “How To Get Hired By A ‘Best’ Company.” As the author points out, “Looking at the past decade, our top 25 each year have averaged job growth of 14 percent.” The author goes on to mention that it helps to know someone at the company, because thousands of people submit applications. Before it opened in 2006, the Doha Hotel in Qatar received 25,000 applications for 600 positions.

Before we get into the specifics of these companies, let’s first examine how they were chosen. There’s that special moment in the Oscar awards program where two or three sartorially correct accountants come out on the stage with a briefcase containing the envelopes naming the winners for the evening. Of course we learn how the balloting was done. So in imitation of the Oscars, here’s how “The 100 Best” were selected:

“More than 105,000 employees from 446 companies responded to a 57-question survey. Two thirds of a company’s score is based on the survey, which is sent to a minimum of 400 randomly selected employees from each company and asks about things such as attitudes toward management, job satisfaction and camaraderie. The remaining third of the score comes from an evaluation of each company’s responses to a culture audit which includes detailed questions about demographic makeup, pay and benefits programs, and open-ended questions about the company’s people-management philosophy, internal communications, opportunities, compensation practices, diversity programs, etc. About 1,500 companies participated in the survey. Any company that is at least seven years old with more than 1,000 U.S. employees is eligible.” (Courtesy of FORTUNE magazine)

I have used this listing in my presentations to illustrate the attributes of these organizations. In that regard, I first shared the following 12-point list with QualityInsider readers in “The Corporate Running of the Bulls.” Interspersed with that list are examples from the “100 Best” list:

What makes the “100 Best Companies To Work For” so great:

They make people feel that they’re part of a team or, in some cases, a family.

• With an average salary of $90,083, the 1,376 employees of American Fidelity Assurance call this Oklahoma insurer their “second family.”
• National Instruments yearly stages an employee-appreciation week with executives serving breakfast and culminating in a family outing day.
• Nugget Markets throws a year-end bash, and in 2007 took all of its 1,322 employees whitewater rafting.
• In 2007, as is the case every year, the Plante & Moran team gathers at its annual conference, an opportunity to bond. Partner Jeff Jenkins stated that the theme was to “amp it up,” which means that in workplace and with client relationships and in family-oriented activities, the staff was asked to ratchet it up another notch while living the “golden rule” (i.e., treat others as you would like to be treated) More energy results in better client service, a more enriching work environment and better results.

They encourage open communication, informing their people of new developments and encouraging them to offer suggestions and complaints.

• The CEO at Adobe Systems answers employee e-mails within 24 hours and employee councils feed management with ideas.
• After feedback from employees, SRA International switched insurers, added health savings accounts and adoption aid, and increased 401(k) matches.
• Four times a year employees at Nike are invited to an all-employee meeting where feedback and suggestions are encouraged.
• The head of Yahoo hosts monthly chat ’n’ chow lunches with employees and even answers employee questions online.
• Perhaps the lowest turnover rate in the hotel industry (18 percent) is attributed to J. W. Marriott Jr.’s visits to 250 Marriot properties each year and meeting with employees.
• Cisco Systems uses an employee feedback/suggestion system, “On My Mind.”

They promote from within, letting their own people bid for jobs before hiring outsiders.

• Eighty-five percent of managers at supermarket Stew Leonard’s were hired in house. This supermarket has been featured in many of quality guru Tom Peters’ columns. Here’s a bonus: CEO Stew Leonard Jr. has a surefire way to determine the strength of the economy: “I look for the mashed-potato effect. If customers are buying our freshly-prepared mashed potatoes instead of whole potatoes, then the economy is doing well. Lately, bulk potato sales have been going up, so there’s a concern about where the economy is going.” The so-called experts can cackle about their charts and their prognostications, but for me, I’m focusing any investments I might make on the “mashed-potato” metric.
• At S.C. Johnson & Son more than half of employees are over age 45, 28 percent have worked there more than 20 years, and 78 percent more than six years.
• Twenty-three percent of Herman Miller’s workforce are “Water carriers,” employees who have 20 or more years with the company.

They stress quality, enabling people to feel pride in the products or services they provide.

• Quick action by Mattel in recalling defective toys from China illustrated this company’s focus on quality and safe products.
• Granite Construction has a zero-accident goal and employees are rewarded, not fired, for bringing attention to unsafe situations.

They allow their employees to share in the profits through profit sharing, stock ownership, or both.

• Ten percent of employees’ pay is deposited into 401(k)s at Booz Allen Hamilton.
• Workers at Stanley own at least 50 percent of the company.
• How about a 43-percent stock price rise at EOG Resources, where all employees have stock options.
• Intuit offers all new employees stock options.
• Of the 3,558 employees of PCL Construction Enterprise, 2,200 employees own shares in the company, and many received dividend checks last year in excess of their annual salaries.

They reduce the distinctions of rank between top management and those in entry-level positions, and they bar executive dining rooms and exclusive perks for high-level people.

• Everyone gets overtime pay at David Evans & Associates.
• No one earns more than 10 times anyone else at TDIndustries.

They devote attention and resources to creating as pleasant a workplace as possible.

• Because during tax season the workplace is home six days a week for employees of Plante & Moran, management has designed a building with staff in mind: Custom wood stain throughout the entire building, work stations designed by focus groups, each staff member has his or her own space with a nameplate, and in the front lobby a huge assortment of flowers is replaced weekly. Dan Essad, human resources senior manager stated it best when he was interviewed recently by reporter Carol Marshall for the Oakland Business Review: “We care for our clients, we care for our employees, our community, our families, and that caring is reflected in our space.”

They encourage their employees to be active in community service by providing money to organizations in which employees participate.

• Every employee at Intuit receives four days off with pay each year to perform community service.
• Umpqua Bank provides 40 hours of paid time yearly for employees to volunteer in the community.

They help employees to save with matching funds.

• Aflac boasts a 401(k) matching fund.
• Seven and a half percent of salary is offered as profit sharing at Arnold & Porter.
• Genentech bumped up 410(k) match in 2007—100 percent up to 5 percent of pay.
• Here’s quite a bonus from Boston Consulting Group—15 percent of pay deposited in a retirement plan.
• Alcon Laboratories has the richest retirement program in U.S. business with employee contributions matched 2.2 to 1.
• A 15 percent of pay contribution by Russell Investments is part of their automatic profit sharing.

They try not to lay off people without first making an effort to place them in other jobs, either with the company or elsewhere.

• American Express had 6,000 internal job moves last year.
• There’s a no-layoff philosophy at FedEx.

They care about the health of their employees, sometimes providing physical fitness centers and regular exercise and medical programs. (This was a perk provided by too many companies to mention. This is a sampling.)

• Healthways has walking trails, bikes for rent, and easy-to-locate stairways to encourage exercise.
• Certainly this was to be expected—Nike has a decathletes dinner every year.
• Tennis and basketball courts are provided by AstraZenica.
• eBay has hired a full-time staff of personal trainers and nutritionists.
• A pool, cardio room, a racquetball court, putting greens, and horseshoe pits can be found at SAS Institute.
• At Goldman Sachs, where the average salary of $137,000 keeps people financially healthy, you will also find rock climbing, a martial arts boot camp, massage therapy and Pilates. Even with the over-the-top salaries paid here, the company will even outfit you with workout duds.

They expand the skills of their people through training programs and reimbursement of tuition for outside courses.

• Tuition reimbursement of up to $20,000 and bonuses for advanced degrees, which 65 percent of MITRE employees have, makes this a company that encourages learning.
• Let’s not undercut what Station Casinos is doing—free dealers school for staffers wanting to advance and gain new skills.
• Johnson Financial Group offers a graduate tuition reimbursement up to $10,000.

No. 1 is Google, which prides itself on having fun and minting millionaires. The stock just rose above $700 and 99 percent of employees have stock options.

There you have it. So update your resumes and start campaigning for that new job, unless you are fortunate enough to work at one of these extraordinary companies. I’m just pleased that all of you are still working and supporting my social security and Medicare.

P.S. Finally, for those of you who are anal-retentive like me, I did mention in last month’s column that I would report on two recent books, The Three Signs of a Miserable Job (Patrick M. Lencioni, Jossey-Bass, 2007) and one about General Electric—Jacked Up (Bill Lane, McGraw-Hill, 2007). I suspect that some of you have been searching for that. Rest assured that will be in next month’s column. I thought learning about the best companies better served me and you than harping on a miserable job. I hope you agree.

About the author
William J. Kalmar has extensive business experience, including service with a Fortune 500 bank and the Michigan Quality Council, of which he served as director. He has been a member of the Malcolm Baldrige National Quality Board of Overseers and a Baldrige examiner. He’s also been named quality professional of the year by the Detroit Chapter of ASQP. Now semiretired, he’s a freelance writer for the Detroit News; writes a monthly column for Mature Advisor newspaper; is a mystery shopper for several companies; is a frequent presenter and lecturer; does radio voice-overs; and competes in duathlons.

Editor's Note: This article appeared in the March issue of Quality Digest Magazine which can be accessed at: www.qualitydigest.com

Starbucks: Training or Retrenchment?

by Tom Hinton

An interesting thing happened this past week. On Tuesday evening, February 26, all across North America, Starbucks stores closed promptly at 5:30 pm and remained closed for three hours. With the exception of those Starbucks-licensed shops in supermarkets, airports, malls, hotels, and train stations, some 135,000 Starbucks employees gathered in various locations to complete three hours of training, motivation, and re-indoctrination.

While a handful of loyal Starbucks customers were locked out because they didn’t get the store closing message, most customers accepted this unusual occurrence and simply skipped their evening Java fix or found another place to hang-out with their laptop, book, or newspaper.

Since Tuesday night, a growing number of people have contacted me as “America’s Expert on Business Excellence” to ask the question: What’s going on with Starbucks? Due to the growing number of inquiries I thought it best to post this article on my Blog so that everyone got the same answer. Of course, listening to the voice of my customers, I discovered some interesting things that I didn’t know about Starbucks -- as much as I like the company -- and why Starbucks has been retrenching for the past year.

To borrow an adage from my parent’s generation, it seems that “what’s good for Starbucks is good for America!” But, lately, Starbucks’ slip has been showing! It’s evident from sluggish sales, leadership changes, and a myriad of other corporate problems that have been exposed. These problems and challenges have hurt Starbucks’ stock performance which has slid nearly 45% in the past year (Nasdaq: SBUX). It is currently selling at $17.98 per share down from a high of $38.29 on April 13, 2006.

Things got so bad for Starbucks that Howard Schultz, who had relinquished his title of CEO eight years ago in order to focus on the company’s customer experience and other life pursuits, reclaimed his CEO title on January 8, 2008. Schultz, who first joined Starbucks in 1982, is responsible for building Starbucks from a fledging coffee bean retail operation into the most prolific and successful retail coffee business in the world. Most Starbucks aficionados are not aware that Schultz left Starbucks in 1985 when his idea to establish Italian expresso bars in the Pacific Northwest was rebuffed by Starbucks’ original owners. Schultz had a passion for coffee and he left Starbucks to form his own company, Il Giornale, in 1985.

According to Wikipedia and Starbucks’ website, two years later, Starbucks’ management decided to sell its Starbucks. Schultz bought it and renamed Il Giornale to “Starbucks” and aggressively expanded the company’s reach across the United States. Starbucks popularized espresso drinks such as the cafe latte and introduced them to many Americans.

For 20 years, Schultz has done a brilliant job of building the Starbucks brand and expanding its reach around the world. He has given good jobs to more than 170,000 partners (employees), kept commercial real estate agents busy with the opening of more than 8,500 company-owed outlets worldwide plus 6,500 joint-venture and licensed outlets that employ nearly 70,000 adjunct personnel.

It’s fair to say that Howard Schultz has single-handedly created a cult-like following among millions of people who had previously only tasted freeze-dried coffee. There is no question that Schultz ranks among the best leaders in corporate America and his brilliant 20-year track record proves it. So, what has happened to Starbucks during the past 24-months? What changed?

I think the answer is a combination of three key factors:

First, there’s no question that economic pressures and the cost of making Starbucks coffee have taken their toll on the company’s profits and operating methods. This partially explains why Starbucks is slowing its growth and retrenching its efforts to focus on the basics of quality and superior customer service.

Secondly, given Schultz’s brilliant leadership and thorough understanding of the intricacies of the coffee bar retail business, his absence from the post of CEO created a Visionary vacuum inside the company. In turn, I think a “bean counter mentality” crept into operational decisions without taking into consideration two important factors: Culture and Customer Needs and Wants. Unfortunately, many of these internal changes at Starbucks were not well-received by customers who voted with their feet and tried the competition.

Thirdly, Starbucks got sloppy in terms of customer satisfaction, listening skills, and honoring its core values. While executives were busy crowding new products onto already-cramped retail floor space, and experimenting with things like books and CDs (which were positively received), store managers got distracted and seemed to be spending more time erecting marketing displays and banners instead of paying attention to their customers.

This misstep allowed Dunkin Donuts, McDonalds, and other aggressive local competitors to nip away at the once-loyal Starbuck customer base. Given the choice to pay $2.75 for a latte at Starbucks or 99 cents at Dunkin Donuts, many customers were seduced into trying a competitor’s brand. And, once a customer leaves, it’s very difficult to win them back.

So, fast forward to last Tuesday night’s “Art of Espresso” three-hour training when Howard Schultz took the stage and pronounced to his loyal and faithful partners, “Tonight, we will begin to elevate the Starbucks Experience for our customers. We are passionate about our coffee. And we will revisit our standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us. But, as I think about it, there is another -- perhaps equally important -- reason why we have scheduled this training. It’s to celebrate who we are.”

After three hours of motivation, training, and re-affirming the Values and Quality Standards that have made Starbucks a great American success story, Schultz reminded everyone that, “We are Starbucks. We should be incredibly proud of what we have built. We are the worldwide leader of specialty coffee. And, believe me when I tell you, we are just getting started. We will overcome the difficult and humbling challenges we face, and will be stronger for it. You have my word on that.”

I have no doubt that given Starbuck’s recommitment to excellence and the reappearance of Howard Schultz as CEO that Starbucks will rebound stronger and healthier than before. But, he’s right. Sometimes it takes a “difficult and humbling challenge” (like dissatisfied customers and unfocused employees) to kick you in the head before you “get it!”

Now, if you’ll excuse me, I’m off to my local Starbucks to see if my favorite Barista is honoring Starbuck’s newest customer pledge: “Your drink should be perfect every time. If not, let us know and we’ll make it right!”

While I’m there, I might suggest Starbucks strengthen that pledge to read: “Your drink will be perfect because instead of chatting with other employees about why I hate my boyfriend, I’ll be listening very carefully to you as I take your order. And, I’ll repeat your order while using your first name to make sure that the Barista hears it correctly, too!”

Oh yeah, have a nice day!

Cheers and Jeers: Restoring Civility in the Bleepin' Bleachers!

by Tom Hinton

I hate to be the one who blows the whistle and calls for a time out on the fans, but there’s a growing problem at high school and college athletic events that needs to be nipped in the bud quickly. It’s a problem that parents and school administrators are responsible for creating because they have not stepped-in to control their sons and daughters, or put an end to certain, unacceptable sporting event practices that clearly cross the line of civility and decorum.

I’m talking about the heightened irreverence and disrespect that student-fans are showing for the opposing team at sporting events. This is a problem that has gone far beyond the traditional rivalry cheers, barbs, and exchanges at football and basketball games. It’s now become a common occurrence at most high school and college sporting events I attend -- even girls’ sports have become infected.

It’s reached the point where an unsuspecting spectator attending his first game might think that the vulgarity, taunts, crude signs, and even offensive t-shirts are accepted practice among certain inept athletic directors and school administrators who should know better.

I recognize that students should be able to have fun; and, that sporting events offer a great opportunity to let off some steam and razz the other team. In fact, I think it’s an important element of school spirit and camaraderie to have a group of students form cheer squads, paint their bodies, and sit together to root on their team and goad the opponent. That behavior has been around since the gladiators fought in Rome’s Coliseum.

But, civility is lost and good sportsmanship is trounced when raucous students and their parents engage in over-the-line behavior such as booing, name-calling, or using vulgar language to harass and taunt the opponent. These are unacceptable practices and every high school and college administrator, and sports commissioners should establish very clear game conduct guidelines, and enforce harsh penalties for any school that does not control its spectators.

The line has already moved in the wrong direction. For example, many universities and high schools think nothing of allowing fans to wave noodles and streamers, or shout “Miss! Miss! Miss!” while a basketball player attempts a free throw shot from the foul line. If that was your kid at the foul line, how would you feel? Sure, you want to do everything you can to psyche out the shooter before he attempts his/her shot. That’s why coaches call timeouts -- to freeze the field goal kicker, right? But, once the player takes aim and shoots the ball, civility and etiquette should be the rule.

Consider an ugly incident that was reported by San Diego Union Tribune reporter Steve Brand. At a recent high school girl’s basketball game between two upscale private schools, La Jolla Country Day (LJCD) and Bishops, a Bishop High School basketball player was booed loudly and taunted by her former La Jolla Country Day schoolmates whenever she handled the ball. While these two teams have a vigorous rivalry, there was a complete lack of decorum among San Diego’s so-called privileged citizenry that populated the La Jolla Country Day bleachers and allowed their sons and daughters to engage in this inexcusable and embarrassing behavior.

Of course, you would think the administrators of La Jolla Country Day would have adequately addressed the incident? Apparently not, because when the same two teams met again a few weeks later, La Jolla Country Day’s parents and students replaced their vulgar taunting with hurtful, negative signs that were directed towards the young lady from Bishop. Again, how could a group of so-called upscale parents sit there and allow that to happen? It was a disgraceful repeat incident that offended not only the event attendees, but the entire community; and, it showed the LJCD parents and school administrators for what they really are -- classless egalitarians.

Someone needs to ask the obvious question. What are parents and school administrators doing to control their fans? We’re not talking about trying to control crazy, drunken Oakland Raider fans here. We’re talking about high school and college sporting events where parents, coaches, school administrators, and sports commissioners -- not to mention the game referees -- should have some modicum of control over the event and its environment. As one CIF official told reporter Steve Brand, “The gym needs to be viewed as an extension of the classroom. If a student was making a presentation in the classroom, would it be all right to boo? No, that’s disrespectful. Would you allow negative signs? No, that’s disrespectful, too!” I completely agree and applaud this approach to maintaining civility and decorum at high school and college athletic events.

So, why isn’t there more civility at these games? I think the obvious answer is that parents and administrators have lost perspective; or, they simply have no commons sense as was demonstrated by the La Jolla Country Day parents and students. Harsh, you say? Well, then you tell me why adults sit there passively in the stands and allow student-fans (and even other parents) to cross the line. Somebody needs to accept responsibility and call these idiots out.

Here’s a solution. Sporting Event Standards (similar to the 1999 program, “Pursuing Victory with Honor,” that was adopted by the California Inter-scholastic Federation) need to be approved, publicized, and enforced among parents, fans, and the student body. Security personnel at these games should be authorized to confiscate offensive signs and shirts as well as forewarn fans to refrain from vulgar outbursts and chants. Once this type of enforcement starts to happen, people will get the message that civility and decorum are expected and fans will begin to express their support and/or disgust during the game in appropriate ways.

There will always be booing of the referees and negative chants when a certain call goes against the home team. But, it doesn’t take a rocket scientist to know when bleacher behavior crosses the line. That’s when school administrators and sporting officials need to step in and control the fans in the bleachers.

It’s tougher to do in college sports, especially when cross-town rivals go at it. But, nevertheless, the same rules should apply here. My experience at college games has been that drunken fans are the root cause for most problems in the bleachers. I’m not sure eliminating beer sales is the answer because most of these fans, especially college students, are already drunk when they arrive in the bleachers and begin their offensive conduct and immature conduct. Short of removing them from the game, I don’t know what else can be done.

It’s not my intention to take the fun out watching the game by suppressing the spontaneity of sports fans. I love a good game and I certainly like to cheer on my favorite team. But, when you have to sit next to some-loud mouth jerk and listen to him repeatedly bellow out vulgarities or wave his offensive sign, well, now my rights to enjoy the game have been infringed upon. And, I don’t like it. Sometime, I’ll encourage him to sit down, but I don’t want to start a fight and I don’t want to get sued. So, it’s up to the school administrators, their security personnel, and other officials to calm him down or remove him from the bleachers.

It’s getting to the point where good fans like me are seriously considering staying home. Why bother? Who needs the hassle? And, that’s really too bad because when enough good fans capitulate and decide to stay home, well, now the idiots are running the asylum and ruining the game for the rest of us -- not to mention how it makes the players on both sides of the bench feel.

I just hope your son or daughter doesn’t come home some night after giving their best in a game, and feeling depressed and suicidal because of the unfair taunting and verbal insults directed their way from a few immature parents and students who should know better. That would be the ultimate tragedy, wouldn't it, sport fans? Let's remember, it's only a game!

About the Author: Tom Hinton is a popular author and professional speaker. His new book is entitled, 10,000 Days: The Secret to Finding Purpose, Peace, and Passion for the Rest of Your Life. For more information visit www.tomhinton.com or email him at tom@tomhinton.com

Love Is In the Air

by Tom Hinton

As St. Valentine’s Day approaches, I thought I’d share with you an interesting practice that is being used by my high school -age daughter, Becca, and her one thousand most intimate friends. They conclude every telephone call with this heartfelt phrase, “Love you! Bye.”

Becca and her friends have been using this valediction since they were in sixth grade. I’m not sure who started it but it seems to have caught on. Now, it seems like all the teen-agers -- boys and girls alike -- are using this expression when ending telephone calls with their friends. I even hear them saying “Love ya! Bye.” when talking to their parents. How refreshing!

Mind you, I haven’t sat down with Becca and asked her, “Hey, where did this phrase, “Love ya! Bye.” come from and who started it?” I know better. You see, I’m certain she would just look at me with that deer-in-the-headlights teen-age gaze and reply, “That’s the gayest (most stupid) question you’ve ever asked me, Dad!” Then she’d shrug her shoulders, toss her hair, and walk away disgusted once again with her father. Oh well, there are some things parents must figure out for themselves.

So, for all you parents out there, here’s my analytical interpretation of what’s really being communicated when our wonderful, little darlings are on their cell phones. According to my phone bill, my daughter (and I’m sure this applies to your sons and daughters as well) makes about 422 calls every school night between 3pm and 10 pm. I don’t know how this is mathematically possible, but I believe the number is fairly accurate. Most of these calls are short because they never seem to last more than a few seconds. Some of the calls are intense because they deal with “boy” issues. I know because I can barely hear what’s being said even with her bedroom door closed.

But, regardless of how all these conversations flow, they always hang-up as friends. You see, friendships are re-affirmed or all is forgiven at the end of the call with the simple phrase, “Love ya! Bye.” This way, all the kids get a good night’s sleep (if you count five hours as a good night’s rest) and arrive at school the next morning tired, but still friends. I think that explains it all.

Well, maybe not. Perhaps, there’s a deeper, more serious explanation. Perhaps this younger generation desperately needs friendship and love in their lives. You see, their parents have been poor role models in these categories with our high divorce rates, our penchant for war, guns, and violence; and, basically screwing-up the environment and the world we live in. Now that I think about it, maybe our kids are trying to tell us something… love is all you need.

About the Author. Tom Hinton is a popular speaker at corporate and association meetings. He is also the author of four books including 10,000 Days: The Secret to Finding Purpose, Peace, and Passion in Your Life. For information please email him at tom@tomhinton.com

The Heart of Work

by Tom Hinton

When I was a college student at the University of Maryland, I was very fortunate to land a part-time job in the Washington, D.C. area with a non-profit organization that served people with disabilities. My boss was named Robert. Despite the fact that Robert had been paralyzed from wounds he suffered in the Vietnam War, he was a positive and kind person who brought an abundance of excitement and positive thinking to the workplace. Even though he was confined to a wheelchair, Robert never let his physical limitations reduce his spirits. He was always upbeat and motivating. He was a great role model for us.

Robert expected good things from his employees and, in turn, he tried to instill in us a sense of responsibility to the organization and a commitment to give our very best, one hundred percent of the time.

Robert taught me several important lessons about leadership and how to succeed in the workplace. He believed that success in the workplace boiled down to two things --building positive relationships with other employees, and distinguishing yourself as part of the team.

When Robert talked about leadership, he was fond of citing the HEART acronym. He told us if we would lead with heart, we would always be successful regardless of the kind of business we managed or our rank or title. Here it is.

“H” stands for Humility. Never forget to check your ego at the door when you show-up for work. Always share the credit with those that got you there. If you are humble and give your team the credit for a job well done, it’s amazing how many people will want to be part of your team. Another part of humility is admitting you don’t have all the answers. Robert used to remind us that the best leaders solicit ideas and solutions from others because no two people see things the same. It’s just possible somebody else will have a good idea you didn’t think of! By the way, part of humility is acknowledging people for their good ideas. Humility is also putting the needs and interests of others first. Robert reminded us that the best leaders always put their teammates first. Great leaders are accustomed to being served last.

“E” represents Energy. When you arrive at work make sure you bring your best with you. Robert reminded us to put an extra jolt of energy and excitement in our voices when we answered the telephone or greeted a volunteer-member of the organization. He said that we should never forget that the person on the other end of the telephone line might be feeling down or in need of an emotional lift. Try to be the person who brings a little extra positive energy to the office because some people might have forgotten theirs.

Robert also told me that the fastest way to boost workplace productivity and results is to energize the workplace. Create a friendly, positive environment that invites people to give their best and enjoy themselves. Finally, Robert told us that there is no room in the workplace for toxic talk or negativity. Only positive energy would be allowed in his department. That’s why Robert never complained about the weather, the traffic, or his physical limitations. Although he was uncomfortable and suffered some physical pain, he never showed it. In fact, he always celebrated life to its fullest each and every day. Whenever we saw Robert wheeling around the office, we quickly realized that any complaints we had about life paled in comparison to what he had overcome.

“A” is for Abundance. Regardless of the cards life deals us, Robert believed that every person was capable of creating abundance in their life. He was a shining example of this. He took stock of his talents and attributes and did the best he could with them. If Robert awoke in the morning feeling sorry for himself or angry because he had lost the use of his legs, we never saw a hint of this. By the time he rolled into work, he had transformed any frown or physical discomfort into a smile and he was focused on doing the best he could.

Robert also taught us something else about abundance. It had little to do with money or possessions. When Robert spoke about abundance, he would always talk about the emotional aspects of abundance -- the heart and soul of abundance -- our ability to serve others. “The well of abundance never runs dry,” he was fond of saying.

“R” is for Respect. At work, we were frequently reminded to respect the needs of our members and each other. “Every human being deserves respect,” Robert would tell us. He also reminded us that there would be times during the day when someone would call our office and wouldn’t know how to ask for help. Perhaps it was their sense of pride or their inability to face their physical limitations. But, it was very important that we listen to each caller and give people a chance to work through their pain and anger. In the end, Robert reminded us, everyone wants to know you’re their friend; that you care about them as a person. This was Robert’s definition of respect. He understood that human dignity, when reduced to its lowest common denominator, amounted to kindness, caring, and understanding.

“T” represents “Think.” If there was one thing that got Robert hot under the collar it was when people opened their mouths before they put their brains in gear. Robert insisted that we think about what we wanted to say before we said it, and planned what we wanted to do before we did it! He encouraged us to write drafts before we sent a letter. Robert also suggested that we script-out our calls to prospective members before dialing the number so we didn’t get tongue-tied or lost in our thought process. It was good advice.

Robert, who served as a First Sergeant in his U.S. Army company, told us that when you are under fire in a combat situation, you learn quickly to think, or you might not survive. His military training and quick thinking saved his life when his company came under heavy enemy fire for several hours. Despite his wounds, he kept his cool and was able to drag himself and two wounded comrades to safety. His valor earned him a Silver Star. His story was a powerful reminder of why it’s important to train your mind and discipline your thought process so you can react calmly and quickly in any situation.

Twenty-five years later I still use Robert’s HEART acronym. I am also appreciative to have had the kind of boss who genuinely cared about his employees and was willing to give us many special gifts that would last a lifetime. Now, whenever I hear people talk about the heart of work, I think fondly of Robert and the heart he gave all of us who worked with him.

About the Author: Tom Hinton is the author of 10,000 Days: Finding Purpose, Peace, and Passion for the Rest of Your Life. Tom is a dynamic and inspirational speaker who helps his clients achieve personal growth and life balance. He can be reached at tom@tomhinton.com