Category: Management

Workers with Criminal Records Pay for Their Second Chance with Greater Loyalty and Harder Work

(p. B1) CINCINNATI—While some companies try to attract and keep employees with yoga classes and lavish cafeterias, Nehemiah Manufacturing Co.’s perks include a social-service team and an attorney.

When two consumer-product veterans started Nehemiah a decade ago, their idea was to create more opportunities in a struggling part of Cincinnati. Increasingly, that meant hiring people who had a particularly hard time finding jobs: those with criminal backgrounds.

Now, workers with criminal records make up around 80% of the company’s about 180 employees—and Nehemiah has learned that offering a job to people trying to turn their lives around is just half the battle.

“We are investing in our employees in order to retain them,” said Richard Palmer, president of Nehemiah, whose brands include Boogie Wipes, Saline Soothers and other consumer products. “It’s no different than tech companies bringing in lunch and a foosball table.”

In one of the tightest labor markets in decades, more employers are willing to give ex-convicts a chance, trying to marry business needs and good intentions. Even large American companies are rethinking whether their responsibilities extend beyond their shareholders. JPMorgan Chase & Co. Chief Executive James Dimon said in October [1999] that the bank would step up efforts to recruit people with criminal backgrounds.

Hiring people with a criminal past can pay big dividends for companies, such as closer community ties and a loyal workforce. But keeping them on the job can be a struggle.

. . .

(p. B6) Since its first days, Nehemiah has become more deliberate about identifying candidates who are likely to be good, reliable employees and has developed a more formal system for providing them with support.

Today, Nehemiah’s annual turnover stands at roughly 15%, well below the 38.5% average for consumer-products companies, as reported by Mercer’s 2019 U.S. Turnover Survey. Nehemiah says it had operating income of $5.7 million on sales of $59.4 million in 2018.

. . .

“We found that the population we were hiring who had criminal backgrounds were our most loyal people,” said Mr. Palmer. “When we were looking for people to work overtime, come in on Saturday or go that extra mile, it was the second-chance population that was saying, ‘I’m in.’”

. . .

At Nehemiah, having a criminal past carries less of a stigma because so many workers have been incarcerated.

. . .

. . ., Nehemiah’s approach . . . means it can spot potential other employers might overlook. When Rayshun Holt came to Nehemiah roughly two years ago, Ms. Merida said he immediately stood out as someone the company wanted.

Mr. Holt, 40, spent two decades in prison after fatally shooting a friend when he was 15 during what he describes as a scuffle over a gun. While in prison, Mr. Holt reconnected to his faith, started taking classes and began coaching other prisoners on how to turn their lives around.

Released in 2016 with $96 in his pocket, he said, “I was filled with hope and overwhelmed by fear.” His first job was in a fast-food restaurant specializing in chicken fingers. “I was the oldest person there and the most enthusiastic. It was the first time in my life I was earning an honest check,” he said.

But he struggled to find steady work with decent pay. Nehemiah hired him as a second-shift supervisor at $19 an hour.

Ms. Merida said she was impressed by Mr. Holt’s passion, humility and sincerity when he told his life story, how he knew the streets but had already taken steps to turn his life around. “I knew this was a born leader who could really have a profound impact on our employees,” said Ms. Merida. “He could show them that no matter how bad it is, your life isn’t over.”

Mr. Holt now works as the company’s commercialization coordinator, responsible for taking new products and product improvements from concept to market.

For the full story, see:

Ruth Simon. “The Company of Second Chances.” The Wall Street Journal (Saturday, January 25, 2020): B1 & B6.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the same date and title as the print version.)

Why Did McPizza Fail?

Why do some products succeed and others fail? The answers may hold lessons for which future projects should be pursued and, if pursued, how to pursue them. Successes are sometimes researched; failures much less often. The passages quoted below are from an unusually deep dive into the story of McDonalds’s failed McPizza.

(p. 1) Maybe you are too young to remember. Perhaps you forgot. Or there’s a chance you’ve blocked it. But the home of the Big Mac began selling pizza in the mid-1980s, hoping to grab market share from national pie chains. McDonald’s gave up a few years later. Nobody seemed to lament the passing of McPizza, and nobody was urging its return. Which, to Mr. Thompson in the fall of 2016, made the topic all the more appealing.

. . .

(p. 8) One trick to keeping this enterprise alive and entertaining is Mr. Thompson’s refusal to accept answers to the show’s titular question, which he had learned by Episode 5. McPizza failed for reasons that should have seemed evident before it was rolled out: It’s way, way off brand, and it didn’t bake fast enough to keep pace with the rest of the menu.

. . .

Early on, Mr. Thompson learned that a McDonald’s in Pomeroy, Ohio, was the last franchise in the country still serving the pizza, and he raised money through Indiegogo to fly there and try it. (He described it as “at least as good as Little Caesars.”)

He wondered how the place kept selling an item that others in the chain didn’t offer. Once again, definitive answers were elusive because the franchise owner would not speak to him.  . . .

Several months after Mr. Thompson’s visit, the Pomeroy McDonald’s stopped selling McPizza. The podcast depicted this as retaliation against the show, a shameless effort to curtail old-fashioned muckraking. This makes sense only in the mind of “Brian Thompson,” whose baseline assumption is that McDonald’s ought to again sell pizza because people love it and because the company is in business to make money. Hence, any rationale for the product’s demise is under suspicion.

To Mr. Thompson’s delight, he keeps unearthing new rationales for the product’s cancellation. At one point, he heard about a McDonald’s in Adak, Alaska, a largely deserted island in the middle of the Bering Sea. For years, Adak was a Cold War outpost for Army and Navy barracks, but it was decommissioned in the early 1990s, and the McDonald’s there was abandoned. Last year, Mr. Thompson raised money online to travel the 3,100 miles there, hoping that the husk of a restaurant would contain his Holy Grail: a McDonald’s pizza oven.

He flew to Anchorage, then took a once-a-week, three-hour flight to Adak. After landing, he went straight to the McDonald’s and was disappointed to see it had been boarded up — there was no way inside. The trip seemed a grand bust. But as Mr. Thompson prepared to leave the island, his Airbnb host suggested he call a guy named Larry, who, it turned out, had once found a pizza oven in a derelict bowling alley. Evidently, it had been hauled out of the defunct McDonald’s. Larry determined it had been manufactured for McDonald’s by Garland Commercial Industries, a company in Freeland, Pa.

To “Brian Thompson,” this was a breakthrough on a par with the formulation of the laws of thermodynamics. He called Garland, and a representative put him in touch with a service tech in Cleveland who had once repaired McDonald’s ovens. Unlike the corporate P.R. department, this guy was chatty.

“They were only in McDonald’s for roughly two to three years because of the difficulty to program them,” the tech said on Episode 143. “I don’t even think there’s program manuals for it.”

And thus, to Mr. Thompson’s delight, three years into the show, he’d added another reason that McDonald’s killed pizza — the ovens were a fiasco.

For the full story, see:

David Segal. “Answering a Fast-Food Question, if You Care.” The New York Times, SundayBusiness Section (Sunday, November 1, 2020): 1 & 8.

(Note: ellipses added.)

(Note: the online version of the story has the date Oct. 28, 2020, and has the title “A Podcast Answers a Fast-Food Question That Nobody Is Asking.”)

2016 Law Requires FDA to Move to Mining Real-World Data and Away from Costly and Slow Clinical Trials

(p. A1) Drugmakers are trying to win drug approvals by parsing vast data sets of electronic medical records, shifting away from lengthy, and costly, clinical trials in patients.

. . .

For the companies, the use of real-world data can cut costs and shorten drug-development times. Instead of finding trial subjects, companies simply mine hospital and doctor files for cases where patients already took a drug in routine medical care, looking for changes in blood pressure, tumor size and other readings to see if the medicine is helping or causing a side effect.

. . .

(p. A2) . . . for rare diseases especially, it can take a while to even enroll enough patients in studies. And their cost can limit the number of trials that companies can fund, drugmakers say.

A 2016 law required the FDA to explore greater use of real-world data, and the agency is developing standards to assess the reliability of different data sources and which kinds of decisions the data support.

“Real-world evidence should not be a means toward dropping standards, but rather a mechanism to have more efficiency in evidence generation while maintaining standards,” said FDA Principal Deputy Commissioner Amy Abernethy, a former executive at health-data firm Flatiron Health.

A market has emerged in recent years for digital drug-use information. Iqvia Inc., which tracks prescription and health data, has about a dozen projects under way, said Nancy Dreyer, the company’s chief scientific officer of real-world evidence.

For the full story, see:

Peter Loftus. “Drugmakers Mine Data to Avoid Clinical Trials.” The Wall Street Journal (Tuesday, Dec. 24, 2019): A1-A2.

(Note: ellipses added.)

(Note: the online version of the story was updated Dec. 23, 2019, and has the title “Drugmakers Turn to Data Mining to Avoid Expensive, Lengthy Drug Trials.”)

Jim Collins Book “Had a Huge Influence” on Reed Hastings’s Creation of Netflix

(p. 6) The Netflix founder and co-chief executive, whose new book is ‘No Rules Rules,’ reads with his mind more than his heart: ‘I generally turn more to television and film for emotional nourishment.’

. . .

What’s your favorite book no one else has heard of?

Probably “Beyond Entrepreneurship,” by Jim Collins and William C. Lazier. It’s not nearly as well known as Collins’s “Good to Great” or “Built to Last” in the pantheon of influential business books. But it came out in the early 1990s, right around the time I was starting my first company, Pure Software. It had a huge influence on how I thought about that business and, later, what I aspired to create at Netflix. Collins and other business authors whose books I benefited from are a big reason I decided to write a book of my own, to try to pay it forward to other entrepreneurs in the same way those other authors have. Years from now, it would be great if someone who found “No Rules Rules” useful today writes their own book improving on it..

. . .

What do you plan to read next?

“Shoe Dog,” the memoir by Phil Knight, who created Nike — and yes, we’re also adapting it for Netflix.

For the full interview, see:

“By the Book; Reed Hastings.” The New York Times Book Review (Sunday, September 27, 2020): 6.

(Note: the online version of the interview has the date Sept. 24, 2020, and has the title “By the Book; Reed Hastings, the Founder of Netflix, Keeps His Library in His Pocket.” The first sentence quoted above, and the questions, are by the New York Times interviewer, who is not identified in either the print or the online versions. The rest is by Reed Hastings. The first sentence quoted above is in the print, but not the online, version.)

Reed Hastings’s book mentioned above is:

Hastings, Reed, and Erin Meyer. No Rules Rules: Netflix and the Culture of Reinvention. New York: Penguin Press, 2020.

Jim Collins’s co-authored book mentioned above is:

Collins, James C., and William C. Lazier. Beyond Entrepreneurship: Turning Your Business into an Enduring Great Company. Paramus, NJ: Prentice Hall, 1992.

Phil Knight’s memoir mentioned above is:

Knight, Phil. Shoe Dog: A Memoir by the Creator of Nike. New York: Scribner, 2016.

Monty Python’s John Cleese on Creativity and Open Offices

(p. D10) Creativity is almost always: unlearned. Ask young children, “Are you creative?” They’ll all raise a hand. By age 16, none of them will because they’ve had their creativity gently squeezed out of them by those who think conventionally.

. . .

One of the great mistakes is: the open-plan office. If I were starting a business—and this is a great time to reinvent the workplace—I’d give everybody an office. It’s essential you’re not interrupted when you’re working. And you must have lots of rooms for people to meet and play.

For the full interview, see:

Jeff Slate, interviewer. “20 ODD QUESTIONS; John Cleese.” The Wall Street Journal (Saturday, Oct 31, 2020): D10.

(Note: ellipsis added. The questions from the interviewer, before each colon, were bolded in the original.)

(Note: the online version of the interview has the date October 28, 2020, and has the title “20 ODD QUESTIONS; John Cleese on Why Open Offices Are Among History’s Greatest Mistakes.”)

Open Offices Reduce Productivity and Spread Diseases

(p. B4) When historians of the early 21st century look back on the pre-Covid era, one of the absurdities they might highlight is the vogue for gigantic, open-plan offices. The apotheosis of this trend of breaking down barriers between co-workers must surely be Facebook Inc.’s 433,555-square-foot Frank Gehry-designed open-plan office at its headquarters in Menlo Park, Calif. Opened in 2015, it’s now a ghost town, a monument to offices vacated by the pandemic.

Cramming cavernous spaces with as many desks as they could hold might have increased serendipitous interactions, but it almost certainly reduced productivity and helped spread communicable diseases, including coronavirus.

. . .

Cue the “dynamic workplace,” a pivot away from the open plan, built on the idea that with fewer employees coming to work on any given day, offices can offer them more flexibility of layout and management.

While open offices and dynamic workplaces share similar components—privacy booths and huddle rooms to escape the hubbub, cafe-like networking spaces, etc.—they’re philosophically distinct. One is intended to be a place where people come (at least) five days a week, and get most of their work done on site. The other is planned for people rotating in and out of the office, on flexible schedules they have more control over than ever.

. . .

Research on hot-desking in office spaces, for example—where employees give up a dedicated space in favor of first-come-first-serve seating—finds that it decreases socialization and trust. This happens because employees figure they might never again see the person they sit next to on a given day, says Dr. Sander. In other studies, employees complain they can’t find their colleagues, that it’s a hassle to find a new spot to work every day, and that such arrangements ignore humans’ innate territoriality and desire to make a space their own.

For the full commentary, see:

Christopher Mims. “Goodbye, Open Office. Hello, ‘Dynamic Workplace.” The Wall Street Journal (Saturday, September 12, 2020): B4.

(Note: ellipses added.)

(Note: the online version of the commentary has the same date and title as the print version.)

Radenbaugh Started Rad Power Bikes as Teenager in Family Garage

(p. B8) The residents of Garberville, Calif., didn’t know what to make of 15-year-old Mike Radenbaugh and the odd motorized bikes he was concocting in his family’s garage.

It was 2005, the home-brew era for electric vehicles, and there he was, a high school freshman zooming by at up to 35 miles an hour, not even pedaling. He seemed to defy gravity as he ascended the region’s steep winding roads lined with 300-foot redwoods.

. . .

Wires fried and batteries died. But after six months of experimentation, Mr. Radenbaugh had a semi-reliable electric bike. “It got better and better. And it got faster,” he said. “All of a sudden, I’d be riding into town passing slow cars. I quickly became known as the kooky e-bike guy in my little hometown.”

By his junior year, he’d founded Rad Power Bikes. Now based in Seattle, his company approached $100 million in sales in 2019. It has sold over 100,000 electric bikes. Numbers aren’t well reported for this young industry, but Rad Power Bikes is widely considered the largest e-bike seller in the United States.

. . .

What’s most impressive about the RadRunner is its use of smart design, wringing value from clever choices. The RadRunner has extra-fat tires to absorb bumps rather than an expensive front suspension. The rear hub motor is simpler and more cost-effective than what is known as a pedal-assist mid-drive. The LED controller mounted on the handlebars is basic, but it’s user-friendly and gets the job done. The detachable battery can be brought inside to charge.

. . .

Mr. Radenbaugh, now 30, manages a staff of 200 people. He described the current pace of change — and the myriad business challenges it poses — as “hyper-growth.” It’s not easy steering a transportation revolution. He said, “Every night, I feel like my brain was beat to pieces.”

For the full story, see:

Bradley Berman. “The Teenage Tinkerer Behind an E-Bike Revolution.” The New York Times (Friday, August 7, 2020): B8.

(Note: ellipses added.)

(Note: the online version of the story has the date Aug. 6, 2020, and has the same title as the print version.)

At Netflix “Adequate Performance Gets a Generous Severance Package”

Note that Netflix practices what Clayton Christensen called “emergent” strategic planning. Experimental responding to opportunities; no five year plans.

(p. B5) As a founder and co-chief executive of Netflix Inc., Reed Hastings has reshaped both the way people watch television and how the entertainment industry operates.

. . .

In his new book “No Rules Rules: Netflix and the Culture of Reinvention,” Mr. Hastings likens being employed at the streaming giant to being part of a sports team: Getting cut is disappointing but carries no shame. “Unlike many companies, we practice: Adequate performance gets a generous severance package,” reads one of Netflix’s mottos.

. . .

WSJ: In the book you say, “It’s impossible to know where a business like ours will be in five years.” What kind of prognosticating do you do?

Mr. Hastings: We keep trying experiments. The business model will be pretty similar in five years. Can we figure out animation? Can we catch Disney in family animation?

WSJ: You’ve said you want Netflix to be able to pounce on unanticipated opportunities. What’s an example of one you didn’t see coming?

Mr. Hastings: Nonfiction programming is a pretty good one. We started as superpremium TV, and the expansion into nonfiction has been a huge success. The whole sharing of content around the world has been a huge success. Prior to that, people thought Americans won’t watch content that’s produced outside the U.S.

For the full interview, see:

Joe Flint, interviewer. “BOSS TALK; Netflix’s Hastings Isn’t Fan of Remote Work.” The Wall Street Journal (Tuesday, September 8, 2020): B5.

(Note: ellipses added. “WSJ” and “MR. HASTINGS” were bolded in original.)

(Note: the online version of the interview has the date Sep. 7, 2020, and has the title “BOSS TALK; Netflix’s Reed Hastings Deems Remote Work ‘a Pure Negative’.”)

Hastings, Reed, and Erin Meyer. No Rules Rules: Netflix and the Culture of Reinvention. New York: Penguin Press, 2020.

Increase in Remote Work May Increase Quality and Diversity of Hires, Increasing Firm Innovation

(p. B1) A few years ago, Mr. Laermer let the employees of RLM Public Relations work from home on Fridays. This small step toward telecommuting proved a disaster, he said. He often couldn’t find people when he needed them. Projects languished.

“Every weekend became a three-day holiday,” he said. “I found that people work so much better when they’re all in the same physical space.”

IBM came to a similar decision. In 2009, 40 percent of its 386,000 employees in 173 countries worked remotely. But in 2017, with revenue slumping, management called thousands of them back to the office.

. . .

As long ago as 1985, the mainstream media was using phrases like “the growing telecommuting movement.” Peter Drucker, the management guru, declared in 1989 that “commuting to office work is obsolete.”

. . .

(p. B4) Apart from IBM, companies that publicly pulled back on telecommuting over the past decade include Aetna, Best Buy, Bank of America, Yahoo, AT&T and Reddit. Remote employees often felt marginalized, which made them less loyal. Creativity, innovation and serendipity seemed to suffer.

Marissa Mayer, the chief executive of Yahoo, created a furor when she forced employees back into offices in 2013. “Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people and impromptu team meetings,” a company memo explained.

. . .

At the beginning of the year, the unemployment rate was low and workers had some leverage. All that has been lost, at least for the next year or two. Widespread remote work could consolidate that shift.

“When people are in turmoil, you take advantage of them,” said John Sullivan, a professor of management at San Francisco State University.

“The data over the last three months is so powerful,” he said. “People are shocked. No one found a drop in productivity. Most found an increase. People have been going to work for a thousand years, but it’s going to stop and it’s going to change everyone’s life.”

Innovation, Dr. Sullivan added, might even catch up eventually.

“When you hire remotely, you can get the best talent around and not just the best talent that wants to live in California or New York,” he said. “You get true diversity. And it turns out that affects innovation.”

For the full story, see:

David Streitfeld. “Working From Home Has a Checkered Past.” The New York Times (Tuesday, June 30, 2020): B1 & B4.

(Note: ellipses added.)

(Note: the online version of the story has the date June 29, 2020, and has the title “The Long, Unhappy History of Working From Home.”)

Blacks Most Hurt by Creeping Credentialism

(p. A15) Nonessential degree requirements aren’t race-neutral. They embed into the labor market the legacy of black exclusion from the U.S. education system—namely, the antiliteracy laws that made it illegal for blacks to learn to read, the separate and unequal schools that kept them from catching up, and the limited progress since then on policies designed to remedy racial discrimination.

This spring, we and six other colleagues wrote a National Bureau of Economic Research working paper that questioned the fundamental assumption undergirding the proliferation of degree requirements: that workers without four-year degrees who earn low wages are low-skilled.

For the 71 million U.S. workers who have a high-school diploma but not a four-year degree, we used the skill profile of their current jobs as a proxy for their employability for higher-wage work. Their job experience suggests they are skilled through alternative routes, so we call them by the acronym STARs. They make up 60% of the active U.S. workforce.

Our research found that 16 million STARs have the skills for high-wage work, defined as earning more than twice the national median. Yet 11 million of them are currently employed in low-wage or middle-wage work. This suggests an extraordinary market failure: U.S. companies are systematically overlooking talent.

. . .

Our research suggests there are changes companies can make to address this problem:

• Hire for skills and work experience, not degrees. Rather than using the degree requirement as a default, employers should examine the skills that their jobs require and then use skill requirements for job postings, screenings and assessments. IBM adopted this type of skills-based approach with its New Collar initiative, launched in 2017.

. . .

Black workers face extraordinary barriers to economic mobility. By valuing skills over degrees, companies can improve the way the labor market functions for black STARs—a necessary step to ensure that the economy works for all.

For the full commentary, see:

Peter Q. Blair and Shad Ahmed. “The Disparate Racial Impact of Requiring a College Degree.” The Wall Street Journal (Monday, June 29, 2020): A15.

(Note: ellipses added; bullet point and italics in original.)

(Note: the online version of the commentary has the date June 28, 2020, and has the title “A Coronavirus Vaccine: Faster, Please.”)

The NBER working paper mentioned above is:

Blair, Peter Q., Tomas G. Castagnino, Erica L. Groshen, Papia Debroy, Byron Auguste, Shad Ahmed, Fernando Garcia Diaz, and Cristian Bonavida. “Searching for Stars: Work Experience as a Job Market Signal for Workers without Bachelor’s Degrees.” In NBER Working Papers: National Bureau of Economic Research, Inc., March 2020.

Houghton Shifted Corning from Cookware to Fiber Optics

(p. A13) When Amory Houghton became chief executive of Corning Glass Works in 1964, the company founded by his great-great grandfather was thriving. Known to the general public for Pyrex measuring cups and Corning Ware casseroles, it dominated the U.S. market for the glass used to encase TV tubes.

But the company, now known as Corning Inc., proved too reliant on those tubes, which accounted for as much as 75% of profit. In the mid-1970s, the company faced a recession and the loss of TV-related business as Japanese imports captured the U.S. market. Profits collapsed, and Mr. Houghton had to chop costs, including at the headquarters in Corning, N.Y. The global workforce dropped by more than one-third.

. . .

“It was tough making these cuts,” he said, “particularly when you lived in a small town where you knew a lot of these people.”

Corning bounced back, unlike many other U.S. manufacturing giants. That was partly because Mr. Houghton made a long-term commitment to development of fiber optics. He correctly saw that hair-thin strands of glass would replace copper wire in transmissions of voice and data. “It’s our turf, with our patents,” he said.

By the late 1990s, optical fiber and related telecommunications products accounted for more than half of Corning’s operating profits.

For the full obituary, see:

James R. Hagerty. “Executive Lifted Corning With Bet on Fiber Optics.” The Wall Street Journal (Saturday, March 14, 2020): A13.

(Note: ellipsis added.)

(Note: the online version of the obituary has the date March 13, 2020, and the title “Amory Houghton’s Bet on Fiber Optics Helped Save Corning.”)