As the owner of a Silicon Valley public-relations firm, Lou Hoffman felt something was missing in his work life--a boss to tell him how he was doing. Just because he was top dog, Hoffman figured, didn't mean he was above the need for an annual review. And, like most small-business owners, he had no board of directors to tell him if he was screwing up.
So where did he turn? In a wild leap of faith, Hoffman gave the job to...his employees. In the spring of 1995, consultant Allison E. Hopkins moved into the San Jose-based Hoffman Agency for several days with an unusual mandate: to conduct confidential employee interviews and hand Hoffman a report card that he promised to share with his staff.
"EARLY WARNING." Clearly, this is not an exercise for the faint of heart. Although generally positive, Hoffman's workers trashed their genial boss for his internal communications skills, rating him a dismal three out of 10. "My first review was not a real pleasant experience," notes Hoffman, 39. "But you get over it." Indeed, he has just had Hopkins back to do a third review, and this time, he agreed to present his report card to the world (table).
That's because he has become a bit of an advocate for such evaluations. His 41-employee company posted $3.6 million in revenue last year, a sum Hoffman swears he could not have reached without the critiques. "I would likely have missed some of the early warning signs of problems," he says. The $7,500 he spent on the process this year is worth every penny, he says.
It was hardly desperation that drove Hoffman to call on Hopkins, president of Core Elements Inc., a Saratoga (Calif.) human-resources consulting firm that advises small-to-midsize businesses. His agency was doing well and growing smartly, representing such high-tech clients as Hewlett-Packard Co. and chipmaker Cyrix Corp. But Hoffman knew that a solid bottom line doesn't mean that all is well--or that things couldn't be better. The reviews are meant to provide a reality check on Hoffman's leadership and make sure there is nothing brewing in the ranks that he should know about.
And so, mid-morning on May 16, Hopkins settles into one of two comfy oversize chairs in a windowless conference room. Over the course of the day, four workers--two of Hoffman's top executives, one account manager, and a recent junior hire--each take a turn in the second chair for an interview that lasts roughly an hour. Over a week, Hopkins will conduct similar meetings with half the staff. The other half will participate by filling out a 54-question survey completed by all employees.
In a warm, encouraging voice, Hopkins plies them with questions about both Hoffman and his nine-year-old agency. A box of tissues stands ready, but today the emotions are at a fairly low wattage. Hopkins, part business analyst, part lay psychologist, leads discussions that range from the adequacy of the library to feelings about the job. With one senior manager, she probes one of last year's hot issues: that Hoffman takes too long to resolve unpleasant personnel issues, such as firing nonperformers. "I think he's gotten better at that," the manager says. Hopkins scribbles notes in a spiral-bound pad and leans forward, Oprah-like. "Are financial results more available, or is Lou still holding on to that information?" she asks. "He will share them with me and [another senior manager], but he doesn't want to share them with the agency overall," the employee answers.
Hopkins asks another manager what Hoffman's priorities should be, and she answers with a laugh: "He should spend more time with his family." Hopkins presses on, fast-paced and upbeat. "Do you think you need to be a workaholic to keep up?" The worker says no, but adds that less-senior people may feel compelled to follow Hoffman's example. She then adds: "It bothers me when I get E-mails on the weekends."
Throughout the day, the employees identify some serious issues they feel Hoffman must deal with: He is pulled in too many directions, especially with the opening of a new office in Singapore, and he hasn't designated a second-in-command to take over when he's gone. Employees feel that career paths at the agency are not clearly defined.
Suspicious at first that the process would lead nowhere--and that Hopkins might betray their confidences--many employees now feel empowered by the interviews. Account manager Rachel Imison says it's healthy to vent problems in a safe and constructive setting. Account executive Pamela E. Rupert says Hoffman's review gets everyone talking about change. "People are definitely buzzing," she says. Account executive Jacob Rice says such openness "is the kind of thing that makes me want to work here."
But experts are divided on the value of the process. William M. Cockrum, an adjunct professor at the John E. Anderson Graduate School of Management at the University of California at Los Angeles, says subordinates rarely have the experience to evaluate a boss properly. "No question, they will have an opinion. But is that opinion valid?" he asks. David L. Bradford, a senior lecturer at Stanford University's Graduate School of Business, warns that such outsider-initiated evaluations might discourage workers from confronting their superiors when problems arise. "People may pull their punches and wait until the consultant comes back." More positive is James E. Schrager, a senior lecturer in business policy at the University of Chicago's Graduate School of Business. Small-business owners often become isolated and blind to the need for change, he says. Seeking employees' opinions provides valuable information and at the same time boosts morale.
Hopkins says she has done similar evaluations for about a half-dozen companies, including public relations, law, and advertising firms. (None agreed to be identified.) Only Hoffman has invited her back year after year. Most don't see the need, reserving return engagements for "crisis situations." And not all clients handle the feedback maturely, she says. One owner found her negative review so upsetting that she refused to share the results with her workers, a tactical error that resulted in ill will and even some employee resignations. "People were furious that she had pulled the rug out from under them," says Hopkins, who now requires all clients agree beforehand to share the evaluation results.
That's not a problem with Hoffman. A quiet, intense man who values others' opinions, he says his employees have taught him that he needs to delegate more, communicate better with his staff, and handle confrontation more directly. So when he meets with Hopkins to get the results, he listens intently, taking notes. She hands bulleted charts across the conference table, stopping at one titled Lou's Quantitative Measurements, which displays scores from the written survey, highlighted with little sunbursts beside those qualities that have improved since last year.
The news is mostly good--scores are up overall, though down in spots. Hopkins has identified two top challenges for the year: managing the agency's growth and Hoffman's expanded responsibilities (a "personal bandwidth" issue, she calls it), and defining career paths for his staff.
Hoffman brightens at her suggestion that he hire a controller and, perhaps later, a chief operating officer to handle more routine internal matters. "My life would get easier real fast," he says. A controller would help Hoffman deal with another identified problem: Many employees think he's too nice and trusting of his workers. A controller could assume the role of the tough manager, holding the line on unreasonable employee requests.
RESOLUTION. But Hoffman is irked about that career-path complaint--voiced by 28 of the 31 workers surveyed. "The agency lets people define their own career paths," he shoots back, his face tightening. Hopkins does not disagree but points out with therapeutic calm: "There is something going on, and you have to analyze it."
Hoffman decides to put off that particular analysis until later but tackles some of Hopkins' findings at the semiannual state-of-the-agency meeting in June. He announces that he will expand the senior management team from three to five and hire a controller in the next few years. Then, just a month later, he deals with the career-path question. A senior manager has been charged with defining the skills and responsibilities of each position in the firm so that the route to advancement is clarified. A written report, to be drafted with Hopkins, is scheduled for completion in October.
Does Hoffman plan to put himself in the hot seat again? Of course. He believes that that's where a boss belongs--at least once a year.