Gartner Predicts that Mismanagement of People Will Foreshadow Labor and Legal Turmoil.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--Oct. 11, 2000

According to Gartner Group, Inc. (NYSE: IT and ITB), through 2004, 70 percent of enterprises that do not recognize and minimize employee dissatisfaction will have to fend off legal actions and public relations disasters caused by poor service, poor quality and poor business practices. Enterprise executives, especially those in high-pressure technology and knowledge-based companies, should understand the correlation between employee mistreatment and business disruption. Gartner outlines four people-management behaviors that drive employee dissatisfaction.

"Executives and managers who see their companies engaging in mistreatment of employees should raise a warning flag and begin to quantify and qualify the risks to attracting staff, maintaining service, building a customer base and broadening business," said Diane Tunick Morello, vice president and research director at Gartner. "Executives who ignore or downplay the connection between employee mistreatment and business turmoil put their employees, customers, partners and shareholders at risk," she said.

According to Gartner, four people-management behavior patterns must be detected and rectified, because they foreshadow mistreatment of important internal and external relationships with employees, customers and partners.

Behavior 1: Get Rich Quick -- In this behavior pattern, employees are hired by venture-capital-rich entrepreneurs who promise an initial public offering (IPO) within 12 months. In return for promised wealth, employees are expected to work long hours and maintain a single-minded focus on company growth. Both the entrepreneurs and the recruits agree to exploit each other. Within a year, however, the behavior becomes unsustainable: IPOs stall, entrepreneurs tire, the staff burns out.

Possible problems resulting from get-rich-quick behavior include: Poor customer service, little enhancement or development of products and services, branding of participants and partners as being unsuccessful and loss of intellectual property as employees depart.

Behavior 2: Pay to Stay -- Usually stemming from weak management, employees salaries are continually raised to make up for constant understaffing, underinvestment in tools and archaic thinking. Managers believe they can keep employees content with higher salaries until such problems within the organization are resolved -- which they rarely are. The pay-to-stay behavior can last indefinitely, weakening employees, partner and customers.

Possible problems resulting from pay-to-stay behavior include: Employee indifference to quality defects, service problems, sycophants' backing of questionable strategies, high turnover, lost suppliers and buyers, lost market position and hostile takeovers.

Behavior 3: Fire Drills -- In this behavior pattern, business managers jump into new markets with great ideas and much enthusiasm, but they provide little direction or management talent. They change direction, priorities and success measures daily, distract people by pursuing impulses rather than opportunities, and accept every offer that comes their way. Employees in this unstable environment never get a chance to complete projects and thus lose a sense of accomplishment.

Possible problems resulting from fire-drill behavior include: Failure to complete new initiatives, busted budgets, ballooning cost structures, inability to improve or retire old products, failure to introduce new products and negative recruitment messages.

Behavior 4: Boxing In Employees -- Businesses forgo workforce effectiveness in exchange for operational efficiency. Senior managers talk about personal development and new opportunities, but when the individuals make a move to pursue those opportunities they are denied or delayed until replacements are found. Companies that tend to box in employees also tend to fill positions from the outside and penalize managers for losing head count to internal transfers.

Possible problems resulting from boxing-in-employees behavior include: Unplanned reliance on contractors, employees' subtle boycotting, high turnover, low morale, customer indifference, ineffective market penetration and negative recruitment messages.

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