Think Inc.
A forum for Hawaii's
business community to discuss
current events and issues

Sunday, November 10, 2002

Monkey on my back | Excellence requires hard accounting


Too much micromanagement can cost
your company its best and brightest

By Michelle Alarcon

Effective management takes on a different meaning at each level of society's technological and economic development.

Our present stage is known as the "Information Era" brought by development in high computer technology. This is characterized by an explosive rate at which knowledge is accumulated, stored and retrieved by computers; and distributed worldwide. Business competition is fierce and global. Economic survival requires creativity and quality. Organizations must develop and nurture this competitive advantage from its own employees. The best management style seeks to unleash and nurture this creative advantage by allowing freedom, flexibility, participation and idea generation.

Compare that with the Industrial Revolution era. During that time, the economy was dominated by machine-run factories in production industries. Productivity was measured by quantity and speed of production. Then, a highly regimented, autocratic management style was accepted and may have been effective in controlling and monitoring the flow of production. This type of management is now considered dysfunctional and simply bad. Some call it micro-management -- a style characterized by total control, lack of trust and lack of flexibility.

A micro-manager dictates how employees do their jobs and constantly monitors the petty details. There is lack of delegation, no sharing of authority and a lack of employee empowerment. Oftentimes, the micro-manager misses the big picture while spending most of the time on the petty details of control.


A devastating result of this type of management is the inability to maximize employees' ideas, potential and contribution to the firm. There is no progress because decision making is slow. Productivity is low as employees are stifled, unmotivated and frustrated.

This often leads to many employees leaving the company and high turnover costs. This cost can be staggering. In a July 2002 editorial article by Carla Johnson in HR Magazine titled "Capturing Turnover Costs," she said that "the challenge for HR is to capture all the costs, so that strategies can be aligned with true expenses." Categories such as pre-turnover, separation, vacancy, recruiting and new-hire processing can be used to guide the search for pertinent expenses.

She further reported that various surveys and benchmarking studies had found huge variations in turnover costs. According to the American Hotel & Motel Association's 1997 U.S. Full-Service Deluxe & Luxury Hotel Benchmarking Study, the average annual turnover cost of a hotel was $631,400. In William M. Mercer's 1998 FAX Facts Survey on Employee Turnover, 55 percent of companies surveyed estimated the cost of turnover at $10,000 per person or less, 10 percent calculated it at more than $40,000 per person. And a 1998 retention study by Manchester Consulting found turnover costs are most likely to fall within the range of $1,000 to $10,000 per employee.

Competitive advantage today calls for a high-powered work system that requires employee involvement, training, communication and information, and a democratic management style.

Behavioral scientists propose the presence of three psychological states that could result in a highly motivated and productive worker. The worker must experience a.) meaningfulness or significance of one's job b.) responsibility for outcomes and c.) feedback on the work performed. Wise management never underestimates people's pride and dignity for work. Recognition goes a long way. When the environment is happy, work translates to play. Money matters but that's not all there is.

My survey of employees with the longest tenure -- from 10 to 15 years -- cited factors such as autonomy, empowerment, freedom, trust and a caring manager as the most common reasons for job satisfaction. Pay and benefits did not even make the ratings. Employees view these as their basic entitlements. What employees believe distinguishes their company from the competition is the human resource competitive advantage. A good corporate culture attracts the best and the brightest.

If you think micro-management plagues your organization, talk to employees and look for signs. This may be thwarting your company's growth and success.

Michelle Alarcon is an assistant professor
of management at Hawaii Pacific University.
She can be reached at


Creating excellence requires
hard accounting for soft stuff

Despite their public pronouncements, some
businesses invest little in their employees

By Irwin Rubin

Did you ever run into a business professing, "Our people are our least important asset?" Of course not! The words on plaques and posters, if they exist, always say the opposite. But businesses do not always "walk the talk."

Against all logic -- given that they need more from their most important asset under times of stress and downsizing -- the first budget cut when sales and profits begin to drop is, you guessed it, the training and development budget!

Underlying these actions is an unspoken, erroneous and very expensive myth: The soft-stuff of management (like leadership development, interpersonal skill building, conflict resolution and the like) have no direct bearing on the organization's hard bottom lines.

Rather, training and development are treated as a luxury.

"When we have the time and money, we will let our people off from their real work to take that 'touchy-feely stuff.' "

Let's take a hard look at the danger of this myth.

Consider the following "hypothetical example" of an organization of about 1,000 employees (not unlike the number one of Hawaii's most recent bankruptcy cases had a few short years ago).

Consider an average week in that organization where the following sampling of human dynamics are taking place: One person is talking stink about someone to a third party who is nowhere near (a game I call the triangle game); people are asking one another what the boss meant during this morning's staff meeting, rather than asking the boss directly during the meeting; a person is going around another person to get a job done because they can't get along.

A very conservative estimate of the amount of time and energy "invested" in situations like these -- and they are but a small sampling of dynamics that fall into the familiar category of "office politics" -- would be one half-hour per employee per week. But this very conservative figure must be at least doubled. Why?

Because, every "talk stink" conversation takes two people. In other words, it takes two people to have one dysfunctional interpersonal relationship.

So, the organization has now wasted 1,000 person hours that week. Multiply that figure by 50 weeks (assuming the average person gets 2 weeks vacation) and you now have 50,000 person-hours wasted.

If we next assume that an average investment per hour per employee for all employees from the CEO on down is $20 per employee hour (including wages, benefits, etc.), we have accounted for, conservatively, $1 million directly off of the bottom line. Double the original conservative estimate of one half-hour per employee per week and you will account for $2 million directly off of the bottom line.

Still think the "touchy-feely stuff" is a luxury?

Irwin Rubin is a Honolulu-based author president
of Temenos Inc. His column appears monthly in the
Honolulu Star-Bulletin. Reach him at

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