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Secret to Productivity: Law of Diminishing Returns

Filed under: Best Practices, Life Lessons, Professional Development — 4 Comments
January 18, 2012

A couple weeks ago our marketing manager passed around an email asking each employee what our Life is a balancing act2012 New Years Resolution were.

Knowing that if I hit “mark as unread” it would fade into other half-read emails in my inbox and I would never look at it again. So I shot back the first thing that came to mind:

“Manage to plan a wedding, keep my social media business alive and be a higher producer in my full time job … without pulling my hair out and burning out.”

I felt pretty good about that response until Bob (my much revered business mentor) sent in his response:

“Recognize the moment I’m at the ‘Point of Diminishing Returns‘ and act to change it up or drop it.”

Bob put into much better words what I have since adopted as my 2012 goal. It’s not enough to cross your fingers and hope you somehow pull of the impossible and come out unscathed. It a much more realistic to plan to practice a skill that takes time and experience to put into daily practice.

So this blog is dedicated to the principle that will be my overarching goal in 2012: the Law of Diminishing returns.

What is the Law of Diminishing Returns?

If you look at my rough interpretation of this concept, you’ll see a graph that shows a typical return on investment arc.

The basic concept here is that it is important when you are investing time, energy, money or emotions into something that you keep an eye on when the returns begin to decrease or plateau. Once you identify a plateau or a drop in return, stop.  It’s that simple.  Walk away and start fresh on something that will yield higher returns.

Law of Diminishing Returns graph

Bob is right, understanding the Point (see the “X” above) of Diminishing returns is the key to productivity and therefore success.

What does this look like in the business world?

Example 1: You have been asked to edit a report for your boss to present to his client.  You dive into the project and piece together all the key points and make sure it possesses a logical flow.  So far, high returns.  Then about an hour into the editing, you start to get nit-picky about margins, adding cool bullet points and changing the page number placement on the page to fit slightly better than before.  Warning!

You have to ask yourself: “Will the client or the boss know (or care about) the difference?” If you have to think too hard about it, you’re in a plateau and need to stop working on the report. Save it and move on.

PhotographerExample 2: You own a photography company and have worked hard to afford new lens and new shooting techniques each quarter. Your following is loyal, and sales are growing. This year, as usual, you dedicate hours upon hours to researching which new lens you can add to your collection and practicing new techniques only other photographers would appreciate.

At this point, unless your breakeven is accurate and your management processes are functioning well enough to afford you the time to delve into R&D for fun, your returns are quickly diminishing.  Unless your efforts will shortly allow you to charge more for your services, and therefore increase your revenue, this time is not highly productive.

How to apply the Law of Diminishing Returns to your business:

When I talked to Bob about my plans to apply the Law of Diminishing Retruns to my chronically over-committed life (not just work), he emailed me these thought provoking points:

 

At each planning or decision point, ask yourself:  Will this particular use of my Time and Energy bring me “RETURNS” sufficient to justify their (continued) investment?

 
(Note:  “Returns” can mean the satisfaction of either “giving” or “receiving”)
 

Do you know which aspects of the Relationships  in your life, Your Work and your Other Life Activities that are either at or beyond the point of Diminishing Returns for you?  In other words, what aspects of your Life have become no longer “worth it” to you or worse, even painful?

Can you identify the Relationships that are toxic to you – those that probably will or already do bring you “down” significantly?

  • Can you name the individuals?
  • Are you fully aware of the “price” you pay to keep each  relationship “alive”?
  • Can you modify them and/or let them go?  If so, how?
  • In your mind’s eye, can you see a clear picture of what your “toxic relationship” decisions would create for you?  Would your goals become less or more likely? What would each choice do to and/or for your “supply” of time and Energy?

How about the negative or “costly” (i.e. boring, meaningless, painful, exhausting) aspects of your current Work?

  • Can you identify the elements or your work that are most depleting or detrimental to you?
  • Do you have a true sense of the toll these “negatives” are having on you?
  • Is there any way you can improve them…and/or let them go? If  so, how?
  • If you could “fix” them, what would each “fix” cost and/or return to your supply of Time and Energy? How much “fuel” would it leave in or return to your tank?
 

How about your Other Life Activities?

  • What are the ”Top 3 things” that may be “draining your Time and Energy supply – where you’re either at or well beyond the Point of Diminishing Returns? (e.g. Golf!, T.V.?, Too much exercise?, too much debt?  Too Gold Scalemuch “required maintenance”?,    Too many commitments? Too much travel?, Too many “musts”?)
  • Assess the impact your Top 3 are having on your Time and Energy as weighed against their real benefit, if any.
  • What can you do to modify them?  Or, can you let them go?
  • If you could modify them – or let them go, what would happen to the level of “fuel” in your ‘tank”?
 
 
So, finally, consider the Time and Energy you’re expending on activities and/or relationships that yield few – if not diminishing – returns.  Imagine yourself being able to modify or let go of the “negatives” you’ve identified in your Life. Would you then be better able to carve out the necessary space and reallocate your scarce resources of Time and Energy for fulfillment of your Resolutions?  Much more likely. So one more thing…Think about your Resolutions.  Think about the word “Returns”. 
 
If you are able to sufficiently steward your Time and Energy, are you convinced your Resolutions are going to make your Life richer, significantly improve the ‘returns” you’re looking for as you go forward? Are they the “Right” priorities for you at this point in your life?
 
Make 2012 your best year so far!!
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Best Practice Coming Soon…

Filed under: Uncategorized — 1 Comment
November 14, 2011

I’ve been working for weeks on a scale and whitepaper I’m really excited to unveil at Collaboration!  

The premise of the scale is for bosses to be able to objectively evaluate the effectiveness of their employees and be able to gauge their value to the business by how much they are able to do in the least amount of time.  This is without burning out, but a way to acknowledge the top performers and protect them from being chased away from the organization by micro-managing bosses and/or horizontal loading (a.k.a. giving your best people more than their fair share of work, resulting in burnout.)

Reall cool stuff.  Stay tuned!

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Want to Get Rid of Your Low Performers? It’s Not about 10%, Groupon.

Filed under: Lessons from the News — Leave a comment
November 1, 2011

Groupon LogoThe Plight of Groupon’s Sales Staff:

Groupon is getting a lot of heat these days for their intense sales goals and their harsh 10% cut of their lowest performing sales people.   Groupon sets high targets for their sales staff and is trying to get the highest leverage from their employees for their IPO roadshow. They are also pressuring their sales staff to pull increasingly higher discounts out of their clients.  With 4,600 employees, Groupon looks to cut 460 jobs in 2011 alone. To make press rooms and bloggers buzz louder, it is rumored that Groupon’s sales staff is “miserable”.

What Can We Learn?

I see two angles here:

  1. We could think through the high level of strategy in play and where they missed the mark
  2. We could also focus on the cutthroat tactics of Groupon and pity the burnt out sales staff (as you know from my last blog, I have empathy for the burnt out employee
I favor the first choice. It seems the most valuable.

4 Things Groupon Gets Right?

  1. You should not allow low performers to thrive in your company

I think you’ll agree with me once I share my definition of “low performer.”

Definition:  A low performer is someone who is content to be marginal.  This type of person shies away from innovation, brainstorming, and thinking outside of the box. They like to check off heavily outlined to-do lists.  They do not like to be challenged and HATE performance reviews of any kind. No matter what type of training their  boss or colleagues try to equip them with, they revert back to the comfort of the way they always have done things. 

Can you think of any company that could exist with an abundance of people like this in their firm?  Ok, maybe a telemarketing company, where they hand everyone a list at the beginning of the day and then expect it all checked off before they leave. But hopefully you are not trying to start this type of business.

2. You should seek to retain top performers

Definition: A top performer is someone who thrives on learning, has a thirst for knowledge. They are not content to simply stick to the way things are done.  They like to “own” projects, and produce high volumes of work with out wasting their resources (time, energy, etc.) Their perferred management style is for their boss to outline a problem, let them go off and strategize the solution and execute it without extraneous team meetings.

These people make you competitive.  They bring innovation and drive to your organization and smart bosses will learn to identify their top performers and keep them.

3. You should set sales projections for growth – (unless you’re in survival mode, where you just need to break even… that’s a whole other topic.)

Is it wrong for Groupon to want to grow their business and leverage their employees to get there?  No. Inherently, that should not be called into question.

4. You should absolutely hold your employees accountable to their jobs

How can you expect a high degree of performance, when you do not hold your people responsible to their targets?  The good news is, your top performers will thrive on accountability. Why? They’ll be hoping you notice how far they exceeded your expectation.

Where Groupon Misses the Mark…

To take the above polar opposites and quantify it by looking at a percentage of sales, is too linear.

It is dangerous to set a target percentage and not weight the following other considerations:

  • How long has this employee been in this position? –  Give grace to the beginners, a learning curve should be expected. It should also have an anticipated end.
  • Is your sales target reasonable? – I know this sounds subjective, but there is a point where sales people are working through holidays, overtime and into a stage of serious burnout.  If  a manager has the sense to watch for this, and identifies it, he or she would most likely realize to push their staff for an additional 10% of income would be of no long term gain.
  • R.I.P. Enron – Remember who else ritualistically fired the lowest 10% of their staff?  Many links have been drawn from that practice to the result of cooked books. That’s the example I see from history.  Do you see any other ones?  Positive or negative?  I would be curious to know.

Bottom Line: There is No Magic Percentage

What if 50% of the company can be classified as low performers?  You’ve only succeeded in ridding your company of the lowest of this class of people who will only bring down your company.

On the other hand what if Groupon only hired top producers and then flooded them with work, setting crazy goals and squeezed out every drop of positive company culture? In that case, 10% is unreasonable and an example of poor resource management.  All they have created is a  fear-based culture.

There are better ways to sort through your top producers and low producers.  I only point out that seeking to do so in such a rigid way, seemingly without consideration of some of the above points, is not the most effective way to try to create an elite, competitive staff.

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Want to Be Promoted? Stop Working So Hard!

Filed under: Professional Development — 6 Comments
October 29, 2011

Have you ever felt like you give all your energy to work and come home feeling empty?  Or your mind is so fried by the end of the day you feel like a walking zombie?

This week I hit a wall.  Mentally, emotionally and go figure… physically. I was averaging 14 hours a day, giving over 100% in my full time job and my part time social media work. It had been building for several weeks.  You can sense when burnout is coming, and I was on high alert, but even that did not spare me the Wednesday night meltdown.

Thank God, the next day was my weekly Best Practices meeting with Bob. A chance to ask a few key questions to one of my business mentors.

Bob Biddinger was one of the original founders of Seagate and is a Silicon Valley consultant who worked with all the biggest names in high technology during the dot com boom.   He is a huge source of a lot of the information you’ll read on this blog.  In his retirement, he has volunteered his time to give back to businesses and mentor young ambitious workers. I am lucky to be one of them.

To kick off our meeting I asked Bob for advice about the amount of time and energy I was expending.

High Performers’ Dilemma

He provided me with what I’ll call the valley of being a high performer… beware, it gets bleak.

Here are his key points:

  • Higher performers typically make up the 20% of the company that actually does 80% of the work
  • Bosses see that and their expectations of their top performers increases. Instead of expecting 100% they now begin to expect 140%. Now 140% is the new standard
  • The result is that high performers are expected to work at 140% of their capacity all the time, while the boss typically off loads more work onto their shoulders to help out those who are less capable (or willing)
  • This inevitably leads to burn out
  • The crux of the problem is, if you go down to a 120% it now looks like you’re failing, relatively speaking

The bottom line is there’s a no win in performing above a 100% for the employee.  You work longer hours and your pay does not increase enough to offset the stress.

To add insult to injury, if a low performer works consistently at 60%, this becomes their norm.  However, when they occasionally go from 60% to 70%, they get the accolades. Keep in mind, they may make 10% less than you, but they work less hours and even come into work late.

Oh the injustice of it all!

Don’t Hard Workers Get Promoted? Not Usually.

You see as someone who continually wants to give more than 100% and exceed expectations, I would assume it’s all for the long term benefit of getting promoted sooner.

Wrong!

Often the hardest workers become irreplaceable and their bosses don’t want to promote them out of their department because they make them looks good. As Bob states, they can’t afford to let you go.

You may not get promoted, but to make up for it your boss may over compliment you and make you feel like your role is irreplaceable. Is this good enough?  No.

I watched a movie recently that completely came to mind when thinking of high performer abuse.  I would be remiss not to tie in this clip from the movie “Horrible Bosses”.

Self Check: Is This You?

Are you a so-called top producer in your company?  Are you chronically over worked and feel like there is little gain for your efforts?

If It Is You, Here Are 3 Warnings 

  1. Toxic Attitudes Kill: If you relate to the above, you’re going to have to get out of this situation which will become more and more toxic. The toxicity builds cumulatively and your attitude will grow more toxic. It defeats any leverage you may have with your boss because sooner or later you’ve lost your value to your team. It’ll also kill your future interviews; no one wants to hire a cynic. You can sprint, but you can’t sprint all the time. You’ll burn out, hate it and spew negative energy all around you.
  2. Youth is More Easily Abused: This typically happens to the younger crowd. The ambitious, fresh out of college, ready to put the pedal to the medal.  If this is you, watch to make sure you’re not trying to prove yourself valuable and unconsciously back yourself into a corner. You’ll be used, until you learn how to say no.
  3. Hard Economic Times Adds Pressure: Recessions mean under-resourced departments and higher rates of burnout. In these times when jobs are hard to find, bosses will have more of a tendency to overwork current staff because board members and stock holders need to see gains and when profits are down, costs are more highly controlled to keep the bottom line down. So take into consideration the times we are currently in.

How Do You Prevent Yourself from Working Over 100%?

That’s the key question.

 5 Keys to Working Smarter, Not Harder

  1. Take Inventory- You have to know where the 100% is for yourself.
  2. Learn to Say No the Right Way – You’ve got to know how to help yourself and your boss manage your productivity.  It is all in how you phrase it.  Instead of saying “no,” learn how to say “instead.”  Here are 4 ways to phrase it well:
    • I’m concerned that if I take on this extra load, it’s going to impact the timing and the quality of the other work. So there’s a risk, if you want me to take this on.
    • I’ll be happy to do it, but I’m going to have to de-prioritize some of the other work. Help me choose what items to push down on my list.
    • I know how you appreciate the quality of work I provide. I’m concerned if I get spread too thin there’s going to be some trade-offs in that quality.
    • I’ll be happy to do it, but let’s talk about the timing of the other deliverables that are on my plate.
  3. Know Your Options – Realize if you’re relating to this blog that you have several choices.
    • You can leave the company
    • Migrate to another area of the company with a new boss who “gets it” and or build new skills that make you more promotable
    • Note: This can be hard.  Try to volunteer for projects that allow you to work with other departments and build in-roads.  You have to be proactive about this.  Your boss will probably not help you.
  4. Work hard to get your boss promoted out of your department, and ideally you’ll be the likely replacement
    • Warning: This could be a burnout nightmare.
  5. Find short term solutions while you build/work on the long term
    • Ask yourself: Can I offload some of this work to another member of the staff?
    • Is there someone under you who is also looking to build skills to get promoted?  Try to work out a plan to train and develop the person under you to take off some of the more time consuming, lower profile pieces of your job to free you up to succeed, all the while giving them the chance to build new skills.
    • Pitch it to your boss like this: “I think Beverly would be great at these tasks, she’s a hard worker etc. If I give her these tasks, it will allow me to increase my production in these areas (tie into the value it brings to the boss/team overall).”
I’m not advocating for people to reduce their contribution to your company.  I am suggesting they consider themselves like a valuable resource to your company, and as such, to monitor and manage it effectively.

Word to Bosses

It’s all about leverage, isn’t it?

Your job is to effectively manage the employees under you and to inspire and push them to reach their potential and increase the value they bring your company.  Not a bad goal, in and of itself.

But if you push too hard, and abuse your highest performers, you may win in the short term, but you will eventually lose in the long term.

Why?

Your best people will leave.  They will reach their end and the boss will be stuck with the low performers.  He/she will end up with a lower leverage team and will probably have to step in to the project work itself… and eventually burn out or hire more people to start the process over.  We all know training new employees is time consuming especially if you have a pattern of high turn over.

Most bosses do not start out wanting to abuse their staff or be the cause of a stomach ulcer.  I truly believe that.  But if every boss managed their own energy and talent effectively it would transform the above nightmare.  But that’s a whole other blog topic.

Parting Word

Find solutions to managing your work flow or look to leave your company. There are several paths to choose.

Life is too short, don’t sit around and wait.

*                                              *                                                      *                                                       *                                                               *

Editor’s Note: The above subject matter is not a reflection of my work at Collaboration. I could not love my team more.  The personal burn out above is a reflection of my overly optimistic thinking that I can take on more than I can handle.  Call it ambition. But my conversation with Bob yielded some interesting thoughts about the value associated to consistently managing your time and energy without burning yourself out, or carrying an unfair percentage of your team’s workload. 
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Hello Gen Y!

Filed under: Uncategorized — Leave a comment
October 26, 2011

 

This blog is for you and it’s for me.

They say a sign of a successful person is someone who makes goals, writes them down and does them.  This was one of my goals this year.

I plan to take all the daily lessons, strategy and case studies I learn in business and create educational and short (A.D.D. friendly) blogs for anyone to read.

This is an environment to collaborate, comment and add value.  I encourage you to do so.

Also, please feel free to connect with me via Facebook, Twitter and LinkedIn.  I love digital networking!

To start off… feel free to answer the below poll and guide my prioritization.

 

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