When Steve Jobs died of cancer earlier this year, the “weepingand wailing” seemed to go on for weeks. It was as if America'sgreatest hero had passed away, and all the techies with their“i-things” were lamenting his passing.

Then, over the following several months, articles and TVbiographical specials let America know a little more about SteveJobs, such as his rise from a marketer of an early personalcomputer invented by a friend in the back of a garage to the grandmarketer and wizard of all those “i”—phones, pads, pods, tunes, and“apps,” as in Apple. But the more we learned, the stranger thisgreat entrepreneur became. Frankly, Steve Jobs was not a verylikable guy. Even his own company fired him once, though they laterhired him back. He had a mean temper, and if things did not go hisway, well…then hit the highway.

It just so happens I am not an i-thing user. My PCs have beenIBM/Microsoft since the 1980s; however, I understand that Apple andMac users are true believers, and that i-things can do a marvelousjob. Like Bill Gates of Microsoft or Facebook-creator MarkZuckerberg, young geniuses, as Jobs once was, can play a mean game,often with their most faithful partners. Consideration of others isnot foremost in their minds. Their single-mindedness is for theproduct, the tool, the next invention and its marketing—even ifthey spend 24/7/365 working and begin to emit odd aromas aroundtheir offices.

Sometimes the smarter one has less common sense and, all toooften, common courtesy. In Jobs' case, he knew he had cancer andwas told at one point that surgery would almost certainly provide acure, as the cancer was in its early stage. Instead, apparentlythrough stubbornness, Jobs chose a holistic-medicine route that ledto his early death at age 56. Maybe that is what all the moaningand groaning was about.

Comparing Apple to Microsoft

I am not an advocate of annual or semi-annual job-performancereviews. The relationship between an employee and his or her bossshould be daily. This means the employee that is doing well willknow it. Likewise, the one doing poorly should also know it—orshould at least be warned that improvement is needed. The problemwith conducting only periodic reviews is that too often emotion andpersonal-relationship factors interfere with sound and usefulreview. Apparently, according to Kurt Eichenwald's article in theAugust 2012 issue of Vanity Fair, that is what has causedMicrosoft to fall on hard times since Bill Gates stepped down asCEO. His replacement, a guy named Steve Ballmer, a friend fromGates' days at Harvard, took over in the 1990s. According to thearticle, Microsoft has been in decline ever since. Could themanagement style be to blame? Apparently, Ballmer is a tough guywho plays politics. One product manager is quoted as saying, “Ifyou don't play the politics, it is management by characterassassination.”

“Small changes in corporate policy began to be perceived asslights to those who hadn't been lucky enough to land at Microsoftin time to become millionaires. When the company decided around2003 to save money by no longer providing towels to employees usingthe company showers, the response was pure fury. The olderemployees had millions, and the younger ones couldn't have atowel?” Eichenwald continues, “'If you just add up the time peoplespent sending angry e-mails about the towels disappearing…I expectthey lost a lot more money than the cost savings from the towel,' aformer lead software-design engineer said.” The towels wereeventually reinstated, but Microsoft had gone from a business ofcreativeness to one of bureaucratization.

“There was this institutionalized system, and it was likedesigning software by committee,'” one engineer said. “Sometimes,”Eichenwald adds, “the problems from bureaucracy came down to asimple reality: The young hotshots from the 1980s, techies who hadjoined the company in their 20s and 30s, had become middle-agedmanagers in their 40s and 50s. And, some younger engineers said, agood number of the bosses just didn't understand the burgeoningclass of computer users who had been children—or hadn't even beenborn—when Microsoft opened its doors. When younger employees triedto point out emerging trends among their friends, supervisorssometimes just waved them away.”

Undoubtedly those creative urges were viewed negatively onannual reviews.

A Company's Performance

“Many American companies that had adopted a much-vauntedemployee evaluation system have lately been turning away from it,”reported Michael E. Kanell in the July 22, 2012 AtlantaJournal-Constitution. “[This] leaves Microsoft taking theheat. Known as 'stacked ranking' or 'forced ranking,' the processmade famous by GE is really just a version of what teachers callgrading on the curve: a few people at the top, a few at the bottom,and the rest clumped in the middle.

“The practice leaped into the spotlight—at least for people whostudy how companies perform—when Vanity Fair's Augustissue published a profile of technology icon Microsoft. Thecompany's malaise, the author argued, was partly pegged to itsevaluation system.” It was the same “management by objectives”process that I first criticized in September 1983 in “The MBA vs.The MBWA,” which appeared in Insurance Adjuster Magazine,predecessor to Claims. Back then, what Microsoftexperienced in the early 21st century was called “The Great Malaiseof the Eighties.” Management types with their MBAs were everywhere,suggesting certain pathways to prosperity. If Harvard BusinessSchool had suggested that the way for a company to make money wasfor all the executives to stand on their heads in the hallway witha nickel in each of their mouths, then hallways of corporations allover the nation would have been full of guys standing on theirheads with nickels in their mouths. It might have worked, too; theywould have been out of the way of the employees who actually wereaccomplishing things.

It was the anticipation of bad performance reviews that ledEnron's employees to commit the dirty deeds that led to thecompany's demise and the loss of billions of dollars to those whohad invested in it. “Performance” was translated to “bring in bigbucks, even if you have to do it unethically.” This is the exactsame mind-set that has ruined America's banks.

Until the 1980s I had never heard of a “performance review.” IfI did well, then the boss let me know it. If I screwed up, thenhe'd let me know that, too, right on the spot. It didn't take aformal once-a-year sit-down session in the boss's office to findout if things were going well. Rather, one knew [how it was going]immediately. But the MBAs said that annual formal written reviewswere needed, so every corporation and small business from Maine toHawaii suddenly adopted performance reviews.

In this new Harvard Business School (or Stanford or MIT orwherever) MBO format, the chief guy dreams up objectives for theyear, and each underling has to dream up ways of meeting the bigguy's goals, even if those goals are virtually impossible to meetor are missed because of circumstances far beyond the control ofthe underling, like financial crises, natural disasters, or evenwar.

If the goal is not met, then the underling's performance ratingwill suffer. If he or she was lucky and either met or exceeded thegoal—usually through the effort of his or her own underlings—thenthat person received big pats on the back and a large bonus. Theobjectives were formalized in some format, and each section's ownunderlings were given their own objectives to meet on which theirperformance would be judged. What happened if the underling had abetter idea, perhaps some new product or service that was not inthe formal objective? Well, if it didn't fit the boss's objective,then it would get rejected, as apparently was happening atMicrosoft. Who had time for such nonsense as innovation when therewas an objective to be met? “Quit wasting time and get back towork.”

Now there is nothing wrong with a company having a goal orobjective. The problem is when the objective becomes a fanaticismthat blocks common sense and reality. This has happened to a lot ofgreat companies. The goal became a god, and those who didn'tworship that god got the boot.

Management by Wandering Around

Tom Peters' alternative to MBOs was management by wanderingaround (MBWA). The boss should wander around and find out what hisor her customers and competitors really think, or what ideas forimprovement the employees might have. That is what truly innovativeexecutives did, whether or not it fit some Harvard Business Reviewmodel. When, back in 1983, I suggested that MBOs were a waste oftime, several managers and executives called to thank me. They alsosuggested I might not survive long, because the company hadseriously invested in this MBO business. They figured the bossesmight not like my comments in the column. However, it was likethose “monthly department meetings,” meaning another waste oftime.

By the end of the year, nobody heard another word about MBOs.Everybody was too busy doing more important things. A few yearslater, after I was selected to conduct the “monthly meeting” of thedivision, that, too, came to an end. It was like the time Harvard(or some other ivory tower) suggested that departments should gettogether at a park and play children's games and have a picnic. Ofcourse, the boss guys thought, that might be a useful project. Butit, too, was a boring waste of time and money—tomfoolery for nogood reason that took us away from accomplishing our jobs.

ISO 9000: The New Paradigm

Then came ISO 9000, sometime around 1995. Our then-CEO gave atalk about how important this new system was going to be and how,if we didn't know what it was, to go look it up, because it wascoming, and we were all going to do it. So I looked it up. It wassimply a system by which things were designed to a pattern,supposedly to fit international standards. Again I consulted thegreat business guru, Tom Peters, who suggested that it was thegreatest pile of nonsense that had come along in years. One coulddesign life preservers made of solid lead, he said, and as long asit was designed to a pattern it could be ISO 9000-approved, even ifit was entirely useless. We never heard of ISO 9000 again, either.

Relationships and Job PerformanceEvaluations

Perhaps the fastest growing area of tort claims is employmentpractices liability. Once it consisted only of perils such aswrongful termination, but today there are a variety of individualperils such as sexual harassment; religious, age, sexualorientation, racial or handicap discrimination; and similarpersonal breakdowns between an employee and the employer. As withmany such torts, a number originated in California and wound up asworkers compensation claims: “My boss yelled at me, and now I'mdepressed and have to receive psychiatric care and am nowdisabled.”

During the years I audited County of Los Angeles claim files Isaw a number of such claims. California has all sorts of speciallaws that apply to employment practices claims and how they are tobe handled. In investigating such a claim, the starting point wasalways the official personnel file—the one with the written annualreviews in it. More often than not, however, those reviews weresimply personal opinions, and the employee's written responsesdemonstrated that personality conflicts were often the source ofthe employee's problem.

I recall one male physician at a county teaching hospital whowas so nasty to students and other employees, especially women,that they often left in tears. He alone generated more claims thanall the other staff put together. I never met him, but wish I had,if only to see for myself if he was as nasty as he appeared to bein these claims. I suspect, from what has been reported about SteveJobs and his relationships with co-workers and his employees, thathe undoubtedly left a few folks in tears as well. When one of theco-founders of Apple suggested that one key employee be awardedsome stock in the company, Jobs refused. It's clear that Jobs wasno Saint Steve. Perhaps he was the only worm in the Apple. Withouthim, will Apple become like Microsoft?