Executive Burn and Churn JPG

First a quick primer, Burn and Churn (B&C) is really just a euphemism for high turnover jobs for both trade positions and for professionals.  There is a fairly easy way to identify standard burn and churn jobs.   They are high turnover because the jobs are very difficult or impossible to accomplish for some reason or another.   There is almost a standardized model for this type of job.  Usually the manager of the office or organization is somewhat stable.  They have been on the job for several years and at one point they even held the B&C position.  When recruiting they usually are quick to communicate that they did the difficult job at one point and succeeded in their efforts through lots of hard work.  I find that, more often than not, the managers got through the B&C job from sheer luck.  If it was sales they may have stumbled upon, or inherited, a big account that allowed them to coast until the promotion opportunity presented itself.  If it’s some kind of service work, there was some environmental factor that made it so they could survive the job.  Maybe the route they were given was much more forgiving than alternative routes.    Examples of B&C jobs I’ve personally become familiar with in my life include Satellite dish installers, Certified Nurses Assistants, and uncounted types of sales positions.  For one reason or another the goals for the individual are nearly impossible.   They could be unrealistic quotas or budgets that are so restricted one person has to do the work of three.  These types of jobs are countless and the number one tell sign is very high turnover.  

Normally Although rare, some managers do try and communicate that the job is miserable and that most people quit, but they tend to also promote the rewards if someone can stick it out, i.e. the potential for high income or promotions.   From an organizational standpoint, most of these jobs are purposefully structured to maximize hyper productivity out of new employees and as soon as that employee starts to return to some form of average productivity, the company separates from the employee and the next person is hired.  The long term stable hiring manager then pulls the next resume out of the stack and the cycle continues.   But sometimes there is a twist on this model.  Sometimes the workforce is stable but the management churns.  This model isn’t typical, but for an observer of business, this is when things can get interesting as there are very good and very bad outcomes from this.  

First let’s look at when management churn is a good thing.  I’ve seen this at larger and more progressive companies that work hard at developing their management teams.   As an example, General Electric has adopted this model. I’ve heard one senior manager at GE say that they weren’t a manufacturing company that made great widgets, they were a people company that made great managers. The structure of the GE model is designed so that future senior managers are identified and moved around the company from plant to plant with regularity.  It’s usually every couple of years.  The managers get a very broad view of the company and the teams at all of the disparate operations learn best practices from all of the organizations the journeyman manager has touched previously.  The different operations don’t really see a big change as the old manager hands the leadership baton to the new manager. Both managers are still in the GE Family.  Any long term initiatives at the different GE plants are stable and the old and new managers work together if need be.   

On the other side of the management churn model is when upper managers are bouncing in and out of the organization with regularity.    They do it for the same reasons that the line level folks tend to bounce.  The motivating factors to leave the company includes unrealistic expectations, limited resources, and a relentlessness to the demands of the organization on the person.  The challenge with this situation is that when a senior manager leaves it creates a continuity voide.  There tends to be big issues with morale and culture not to mention stability issues in other areas. 

How do these companies survive if they can’t keep managers?  Logicly the businesses with continually churning management should eventually go bankrupt.   I’m sure some eventually do.   The thing is, many high quality companies still churn through management.   It’s really not a problem for the company if it’s just a continual reprioritization of focus.   What do I mean by that?  All departments and operations have metrics.  They include sales, production, and profitability, among many others.   Usually the stress on the site manager comes from some form of impossible to achieve goals set by absentee or senior management.  Senior management will demand high levels of performance from every available metric in the organization.   If we think of the:  price / quality / service (sometimes called good / cheap / fast) rule, we know the point of the rule is to communicate that everything is in balance, i.e. “you can only have two”.  As a manager you can’t have high productivity, low cost operations, and high quality output.   Usually one of those metrics isn’t being met.   

When some new site manager comes in they are tasked with fixing the metric that wasn’t working.  Maybe costs were too high at the plant.   Maybe it was that production output was inconsistent.  The new manager will reprioritize the operational mix then the manager changes act like a pendulum.   For example, if the big issue was inconsistent production output, the new manager will come in and do what they need to do to drive output up.  Production increases usually stem from higher investment into personnel and training.  By default that means profitability goes down, etc.  A few years later after being beat down about profitability in countless ways, the plant manager leaves and a new one comes in.   They are tasked with increasing profitability, so they cut training and staff.  The profit goes up but eventually productivity goes down.  Senior management starts to beat up the site manager about productivity to the point of frustration and then eventually that manager leaves and the pendulum swings back.  The core initiatives and metrics the organization runs on doesn’t change. It’s just the local operations are continually reprioritized by a revolving door of managers. The longer serving line level employees learn to sway with the operational tide as it goes in and out.  

I have found this becomes a truley big issue when the pendulum is swinging between long and short term thinking in elements external to the company.  When the switches being manipulated are things like staff working hours, or raw materials on hand they are fairly easy to manage and, for the most part, are limited to the organization.   But going back to the productivity issue.  What if the skill level available in the local community is much lower than the company needs to operate efficiently?  

If the company can’t find the people they have to make the people, and once made, they have to give the people a reason to stick around beyond just a contractual obligation.  This requires a very long term focus. It’s not just training, it’s creating a whole network of initiatives internal and external to the organization.  This type of ‘make your own’ could include investments into training programs and partnerships with slow moving entities like local K12 systems and colleges.  The “give them a reason to stick around” initiatives could include partnerships with local government on family friendly parks, transportation, and affordable housing.  Depending on the size of the organization and the initiatives needed, these efforts could be hugely substantial.  No one person can pull it off, it takes more of a universal culture change at the organization.   It would take years for a site manager of a large production facility to eventually get the right team in place to make everything happen.   It really becomes a corporately led economic development initiative.  Unfortunately, if there is absentee management, say an international parent organization, that initiative can die very quickly if they start to focus on the short term.   

What does that mean for anyone involved with the project? Hundreds of people and years of work can be lost overnight when a company churns a manager.   If your on the outside, say a vendor or an agency providing support, the work that went into setting everything up evaporates with the new incoming manager.   At this point B&C doesn’t just create chaos with one person’s life, it creates organizational and community chaos.  

It almost seems impossible to fathom, especially so when you consider the regularity of it all.  We have to ask, why does it happen?  It all boils down to people.  There is an old adage that people don’t leave jobs, they leave managers.  The site manager who’s trying to do all of this could have that disinterested senior management located in another state or country.   After years of trying, and getting push back, they may give up and leave just like the frustrated individual contributor.  The organization as a whole can change because in reality, no matter the desires of the local manager, the whole organization is simply a pawn in a greater game of business.  

I’ve seen organizations that were wholly owned subdivisions of other companies being sold again and again every few years.  This happens because other, larger organizations, want that ‘piece’ in their portfolio but generally never do anything with the company they buy.  That can get a bit hard to wrap your head around if you don’t follow business machinations.    An example would be when a large retailer may have some huge initiative to drive profitability by bringing as many vendors as possible in house, i.e. vertical alignment.   If I own a fast growing chain of day spas it stands to reason that I’d make more profit if I owned the company that made most of the beauty products I sell with my spa services.  So the CEO of the spa company would go buy a beauty products manufacturer and try to manage the plant so it best suits the spa retailers profitability needs.  Of course the manufacturing plant manager is going to be very frustrated when the spa company CEO starts tinkering with operations with little knowledge beyond a basic understanding of manufacturing.  This is where the parent company CEO, who got that way because they are good at business, start’s managing by spreadsheet, i.e. a focus on short term profitability.   Since manufacturing is really about the long term as much as the short term, this is when things start to get tough for everyone involved in the local facility.  The spa services company may fire the plant manager or the local plant manager may simply get frustrated when they keep running into corporate roadblocks and leave on their own accord.  The next plant manager, chosen by the short term parent company comes in and all the existing long term initiatives grind to a halt.   

Eventually, usually driven by a bad quarter or year,  the spa company will realize that it’s not good at manufacturing.  It returns to its core as a  retail and services organization and spins off “non-core assets”.  Some new parent company will scoop up the manufacturing facility and the pendulum swings again.   

As long as we live in a world where companies can be bought and sold like used cars, this type of burn and churn behavior will continue to happen at the management level.  Fortunately because it happens so often there are some good rules to follow.

If you work for the organization and your not the site manager, then just be as good as you can be in supporting the new managers as they arrive and as flexible as possible emotionally.  Don’t get hung up that four years of your effort just got thrown out because of a change in management.  Always be as indispensable as possible on whatever the initiative dujour is.     

If you are a senior manager just hired to head up a big organization or plant and you realize that your being tasked with the impossible, just do your best to roll with the insanity.   I would recommend that you start looking for something new, at what hopefully will be a much more reasonable organization.  I would do this from day one of realizing that you are tasked with the impossible.  I would also recommend that you try and be open as you can with your teams.   Life is always more palatable if you can share the stress with others.  

If you’re a partner organization working on a big long term initiative with some company and they keep changing management, step away from it if you can.  If not, work with other external partners in demanding some form of contractual commitment.  At the very least this gives you something to fight with when the new manager comes in and wants to change everything.  

Burn and Churn will always be a standard business model for many individual contributor jobs.  It’s rarer for management but it does happen.   Unfortunately B&C at the highest levels of a large local company is like everything else at the management level in that it has an impact, sometimes a huge one, beyond the specific manager.  In business, especially mature organizations, unplanned change in leadership is a warning sign beyond just profitability issues.  No matter if you are an employee, partner, vendor, or in any other way affiliated with the company, it’s best to be cautious with your interactions with the company that’s burned out and churned a new head manager.  The last thing anyone wants is to have is hundreds or thousands of hours of effort on some big business initiative go down the tubes because of a change in corporate direction driven by a new management team.  There is one saving grace in all this.  No matter what you are doing, just save as much of the work as you can.   In this type of environment management churn will most likely happen again.   If you are purposeful and plan carefully you might be able to pick up right where you left off when the cycle of burn and churn brings back in another manger friendly to your efforts.  In this way, even if the company won’t think long term, at least you can and that will be a win for everyone.

Posted by Mike Peluso

Mike Peluso writes about the collision between between the business / professional world and life. He also writes about the journey involved with the Peluso Presents efforts including the Blog, Books, and Podcast so that others may benefit from his efforts. From Mike: I spend hundreds of hours working on these articles every year with no compensation other than support I get through donations. You can support with a tip and by Subscribing to the Podcast (and writing a review on iTunes would be really appreciated as well!) One time tips: www.paypal.me/pelusopresents https://venmo.com/pelusopresents

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