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Wednesday, January 15, 2014

BEWARE OF THE MBA'S

BRYCE ON MANAGEMENT

- They only understand numbers, not people.

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Be afraid, be very afraid! They're back! No, I am not talking about zombies but rather the MBA hotshots who are once again invading corporate America. This is the group who caused havoc in the 1980's by cutting and slashing everything in sight, all in the name of productivity. In the process, they did considerable damage to the corporate psyche. Let me give you an example.

Cincinnati, Ohio is well known for many things, soap, jet engines, pork, and many other things. It is also well known for its Machine Tool Industry. Such companies build high precision instruments from raw materials for use in manufacturing and aerospace. There was one company in particular, and I do not want to mention their name herein, which was the preeminent machine tool company in the world. Founded in the 1880's, the company was known for its craftsmanship and loyal work force.

The key to the company's success was its training school where employees were taught the proper ways of building machine tools. The school was so good, the company not only produced superior products, but it added to the bottom-line of the company. For example, if you graduated from the school, but left the company for a job elsewhere, you were inclined to recommend the company's products simply because you knew how they were made.

This all changed in the 1980's when the company hired a team of MBA consultants to study the business and recommend changes. One of the team's first suggestions was to close the school as they perceived it as a waste of money. This created an uproar within the ranks of the employees as they understood the impact of the school. Nonetheless, management sided with the MBA consultants and closed the school. Not long afterwards the company began to suffer from absenteeism and tardiness, something they had never experienced before. Morale declined, as did corporate loyalty, and employees started to bailout to work for competitors. Quality defects began to emerge, something unimaginable in earlier times, all of which resulted in customer complaints.

Now, three decades later, the company still exists but it is no longer in the machine tool business anymore. A company who had dominated the industry for almost 100 years, abdicated their line of work and turned to plastics instead.

Today, I am seeing a return of the MBA consultants who understand numbers better than people. Instead of focusing on people skills aimed at negotiations, customer service, and quality, they are obsessed with numbers and run a multitude of spreadsheets where they track such things as telephone calls made, cold calls, orders shipped, and inventory. To their way of thinking, it's no longer about people, just numbers.

As in the 1980's, the MBA number crunching is beginning to cause problems, such as employee morale, defects in workmanship, and delays for the customer. I know of one small business going through this currently. The young MBA's running it are only interested in numbers, not in service, quality, building relationships or delivery. The result, the company went from average monthly net profits of $30K to $1K, yet they are convinced they are doing the right thing. Maybe they are planning on going into the plastics business.

The lesson here should be rather obvious: You do not run a business exclusively by numbers. True, it would be irresponsible not to collect data and monitor the activities of the business, but these are just the dials and gauges to the automobile; the human-being still drives the machine. When you lose sight of the human factor, you have lost everything.

So, if you run into an MBA in the corridors of your business, be afraid. I would much rather have the zombies. At least you can kill them, the young MBA's just keep slashing everything in their path.

Keep the Faith!

Note: All trademarks both marked and unmarked belong to their respective companies.

Tim Bryce is a writer and the Managing Director of M&JB Investment Company (M&JB) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

For Tim's columns, see:   timbryce.com

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Copyright © 2014 by Tim Bryce. All rights reserved.

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