The E-Mail Read 'Round the World: Executive's Cautionary Tale
NEW YORK The only things missing from the office memo were
expletives. It had everything else. There were lines berating
employees for not caring about the company. There were words in
all capital letters, such as "SICK" and "NO LONGER." There
were threats of layoffs and hiring freezes and a shutdown of the
employee gym.
The memo was sent by e-mail on March 13 by the chief executive
of Cerner Corp., which develops software for the health-care
industry and is based in Kansas City, Missouri. The company has
3,100 employees worldwide.
Originally intended only for 400 or so company managers, it
quickly took on a life of its own.
The e-mail message was leaked and posted on Yahoo. Its
belligerent tone surprised thousands of readers, including analysts
and investors.
In the stock market, the valuation of the company, which was $1.5
billion on March 20, plummeted 22 percent in three days. Now
Neal Patterson, the 51-year-old chief executive, variously
described by people who know him as "arrogant," "candid" and
"passionate," says he wishes he had never hit the "send" button.
"I was trying to start a fire," Mr. Patterson said. "I lit a match, and
I started a firestorm."
That is not hard to do in the Internet age, when all kinds of
messages in cyberspace are capable of stirring reactions and
moving markets. Late last year, for example, a young California
investor pleaded guilty to criminal charges that he made $240,000
by sending out a fake news release that resulted in a sharp drop in
the stock of Emulex Corp., a communications equipment
manufacturer.
But in this case, Mr. Patterson was certainly not trying to
manipulate the market; he was simply looking to crack the whip on
his troops. That sometimes requires sharp language, he said, and
his employees know how to take it with a grain of salt.
Business professors and market analysts apparently need more
convincing. They have criticized not only Mr. Patterson's angry
tone but also his mode of communication.
Mr. Patterson ran afoul of two cardinal rules for modern
managers, they say: Never try to hold large-scale discussions over
e-mail; and never, ever, use the company e-mail system to convey
sensitive information or controversial ideas to more than a handful
of trusted lieutenants - unless you want the whole world looking
over your shoulder, that is.
In Mr. Patterson's case, this is what the world saw:
"We are getting less than 40 hours of work from a large number of
our K.C.-based EMPLOYEES. The parking lot is sparsely used
at 8 a.m.; likewise at 5 p.m. As managers - you either do not
know what your EMPLOYEES are doing; or you do not CARE.
You have created expectations on the work effort which allowed
this to happen inside Cerner, creating a very unhealthy
environment. In either case, you have a problem and you will fix it
or I will replace you.
"NEVER in my career have I allowed a team which worked for
me to think they had a 40-hour job. I have allowed YOU to
create a culture which is permitting this. NO LONGER."
Mr. Patterson went on to list six potential punishments, including
laying off 5 percent of the staff in Kansas City. "Hell will freeze
over," he vowed, before he would dole out more employee
benefits. The parking lot would be his yardstick of success, he
said: It should be "substantially full" at 7:30 a.m. and 6:30 p.m. on
weekdays and half full on Saturdays.
"You have two weeks," he said. "Tick, tock."
That message, management experts say, created an atmosphere of
fear without specifying what, if anything, was actually going wrong
at the company. Moreover, it established a simplistic gauge of
success - measuring worker productivity by the number of cars in
a parking lot is like judging a book by its word count.
But the more costly error was releasing such an inflammatory
memo to a wide audience. Whenever a company does that these
days, it is practically inviting a recipient to relay it to friends or
even corporate rivals. At that point, a message of even the mildest
interest to others will start churning through the farthest corners of
the Internet.
For Cerner, a rapidly growing company that had $404.5 million in
revenue last year, the e-mail promoted a market upheaval. On
March 22, the day after the memo was posted on the Cerner
message board on Yahoo, trading in Cerner's stock, which
typically runs at about 650,000 shares a day, shot up to 1.2 million
shares.
The following day, volume surged to 4 million. In three days, the
stock price fell to $34 from $44. It closed in New York at $30.94
on Wednesday.
Mr. Patterson said that the memo had been taken out of context
and that most employees at Cerner understood that he was
exaggerating to make a point. He said he was not carrying out any
of the punishments he had listed. Instead, he said, he wanted to
promote discussion. He apparently succeeded, receiving more
than 300 e-mail responses from employees.
As the stock fell began to fall after the posting of his e-mail, Mr.
Patterson sent out another e-mail message to his troops. It was
both an apology to those he offended and a confirmation of the
work-ethic problem within the company.
It began: "Please treat this memo with the utmost confidentiality. It
is for internal dissemination only. Do not Copy or E-mail to
anyone else."
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