Most Americans seem to be okay with that. A good number want to extend the tax cuts for these rich folks for reasons that escape me. And we all know the inequities will only continue to grow: The system for paying CEOs is broken beyond repair since the people in control of the system, who are the CEOs and their boardroom buddies, are the ones who benefit from it.

Randall Stephenson, the CEO of AT&T, made more than $20 million in 2009 while laying off around 12,000 people. Many Americans, including a good number of workers who are making less now than they or their parents did in 1970, seem to care more about protecting Mr. Stephenson’s right to earn and keep as much money as he can than about the 12,000 people who lost their jobs because of his management team’s incompetence. Verizon CEO Ivan Seidenberg only earned around $17 million in 2009 but he laid off more than 21,000 folks. William Weldon at Johnson & Johnson had total compensation in 2009 of $25,569,844 and his company laid off nearly 9,000 people.

These obscene compensation packages are only going to get more obscene but at some point, the workers who have been getting shafted for forty years are going to rebel. They’re going to stop believing leaders who tell them they are important but never pay them as if they really are. They’re going to ignore those cynical leaders who praise their participation in initiatives that improve their organizations when the only ones who benefit from those improvements are the leaders and, in better economic times, the shareholders. They’re going to dismiss leaders who say that employees are their most important asset while treating them like commodities.

Johnson & Johnson has a credo that states: “We are responsible to our employees…We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate.” If Mr. Weldon’s compensation is fair and adequate, what does that say about the compensation of all of the J&J employees who make the company successful? And how does laying off 8,900 people provide a sense of security?

We can’t do anything about executive compensation, but we can stop being suckers. A pat on the back is nice but a raise is nicer. An invitation to join a prestigious team is an honor but a higher salary is more useful. A thank-you from the CEO may be rare praise but being paid a fair wage is even rarer.

It’s not hard to imagine a CEO who makes hundreds of times more than his average worker creating a high-performance environment, but I can’t imagine it would last. At some point even the most naïve employees will realize they are just tools.

For more agitation, click on these articles:

• He Is 400x More Valuable Than You Are
• Shut! Up!
• Layoffs and the Failure of Leadership
• Dilbert Rips Employee Engagement
• Excessive Executive Compensation Derails Excellence

An academic report by the Economic Policy Institute argues that “the nonrandom assignment of students to classrooms and schools—and the wide variation in students’ experiences at home and at school—mean that teachers cannot be accurately judged against one another by their students’ test scores, even when efforts are made to control for student characteristics in statistical models.”

Although that makes a lot of sense, I understand where the push for value-added gauges comes from. As a parent, I’ve never felt that the effectiveness of my children’s teachers has been evaluated in any meaningful way. Average and incompetent teachers return, year after year, to inflict their ineptness on their students. Lacking any reportable measures of competence, they are unaccountable for their performance except as part of an aggregate school’s overall performance. Teachers need to be accountable for the quality of their work, but measuring that quality has been elusive.

The EPI report offers alternatives that rely less on test scores such as “systematic observation protocols with well-developed, research-based criteria to examine teaching,” but, as the report observes, “American public schools generally do a poor job of systematically developing and evaluating teachers.” And this is only getting worse as shrinking budgets cut funds needed for teacher development.

If nothing else, the value-added gauges will force schools and teachers’ unions to come up with better measures of teacher quality. Without that motivation, no measures will be found because nobody welcomes performance measures. I don’t know how many companies I’ve worked with where one department or another claims that what they do cannot be measured (and often, it’s marketing). Well, it can. It may not be easy. Your first attempts to measure performance may fail. But if you don’t persist, if you choose not to measure teacher performance, how can education at your school possibly improve?

To read more about quality education, click on these articles:

• Best-Practice Teaching
• School Districts Saving Money
• Lessons from High-Performing K-12 Schools
• Inspiration for a New Education System
• Reinventing Education with Baldrige
• Baldrige and K-12: Not for the Faint-Hearted

• Trader Joe’s is roughly the same size as Whole Foods. It is owned by Germany’s Albrecht family but still managed by its founder.

• The company is very selective about where it puts new stores. It’s only adding five locations this year. It looks at demographics to choose sites in places that fit its distribution infrastructure.

• Trader Joe’s offers a limited selection of products. Typical grocery stores carry 50,000 SKUs; Trader Joe’s sells about 4,000, about 80% of which bear the store brand. “With greater turnover on a smaller number of items,” Fortune writes, “Trader Joe’s can buy large quantities and secure deep discounts. And it makes the whole business—from stocking shelves to checking out customers—much simpler.”

• Trader Joe’s pays its suppliers on time without the extra charges for advertising, coupons, or slotting fees that other supermarkets charge.

• The company buys directly from manufacturers that ship straight to Trader Joe’s distribution centers, which ship daily to stores. The stores don’t carry much inventory so ordering must be precise.

• Store managers can make low six-figure incomes while full-time employees can start at half that, and Trader Joe’s annually contributes 15.4% of employee’s gross income to tax-deferred retirement accounts.

• Trader Joe’s is becoming more corporate. As a former employee observed, “You have to grow up at some point. You have to start following rules. You have to start putting in checks and balances.”

It’s becoming more systematic in its approaches within a culture that has been very successful. As the article notes, “A Trader Joe’s brings with it good jobs, and its presence in your community is like an affirmation that you and your neighbors are worldly and smart.”

So that’s why they put a Trader Joe’s in my hometown.

To read more about successful cultures, click on these articles:

• A Baldrige Leader
• What Great Organizations Achieve
• Zappos and a Sustainable Culture
• Guided by Your Culture
• Sustaining the Culture
• 2009 Baldrige Award Winners

The point of the Kano Satisfaction Model is that organizations need a profound understanding of their customers’ requirements to increase satisfaction and secure loyalty. Not all customer requirements are equal. The Baldrige Criteria ask: “How do you use customer, market, and product offering information to identify and anticipate key customer requirements and changing expectations and their relative importance to customers’ purchasing or relationship decisions?”According to Kano, “relative importance” can be characterized as basic, performance, and excitement.

Basic services or features do little to improve satisfaction unless they fail, in which case they can cause serious dissatisfaction. We expect the checkout lane in a store to move relatively quickly and without any problems. When it does, we don’t feel more satisfied with the store because that is what we expected. When it doesn’t, we feel frustrated and dissatisfied.

Performance services or features are those that produce customer satisfaction. If the store you are visiting is Wal-Mart and you get excited about paying the lowest prices, the signage showing great deals is a differentiable service. If you are shopping at Target, the wide and welcoming aisles and the quality of the merchandise may be differentiable services. Wal-Mart, Target, and other stores must be clear about the drivers of customer satisfaction to attract and retain customers.

Excitement services or features are the unexpected “wows” that customers experience. It may be an unexpected low price, a particularly helpful clerk, or product selection beyond your expectations. These are the moments that cement relationships with your customers and prompt them to tell others about their experience.

Kano’s model is hierarchical: You must provide the basic services before you can offer differentiable services, and you must do both before you can “wow” your customers.

And before you can do any of these, you must be absolutely certain that you understand who your customers are and what each customer group requires.

To learn more about customer satisfaction and engagement, click on these articles:

• Creating a Unique Customer Experience
• Stakeholder Mapping
• Be Careful How You Measure Customer Satisfaction
• Walk in Your Customer’s Body Armor
• Bottom-Line Value of Customer Engagement
• 10 Critical Questions: Your Customers

Chip Conley’s Joie de Vivre hotel chain in the San Francisco Bay area struggled after 9/11. In an interview on FastCompany’s Web site (click here), Conley talks about turning to Maslow’s hierarchy of needs pyramid to understand how to connect to the higher needs of employees, customers, and investors. He developed an employee pyramid with three basic themes: “survival at the base, succeed at the middle, and transformation at the top. Applying that to employees, it’s money, recognition, and meaning.”

Conley and his leaders worked on building a culture of recognition and meaning:

• Senior leaders ended their meetings on a positive note.
• They created an environment of recognition throughout the organization.
• They made a rule that the person giving recognition needs to be from a different department than the person being recognized.
• They added questions to the twice-annual work climate surveys measuring performance on the top-of-the-pyramid attributes.
• They held offsite retreats with line level employees to promote recognition and instill meaning.
• They measured relationships to help evaluate manager effectiveness.

Joie de Vivre’s focus on the employee pyramid seems to have produced results: It was named one of the top ten “Best Places to Work in the Bay Area for the fifth year in 2010.

One note of caution: Recognition and meaning cannot replace fair pay. Wages in this country have been stagnant for so long, and jobs are so hard to come by these days, that senior leaders seem to give little thought to increasing wages in any meaningful way. If the productivity gains of the last two decades that have spawned record executive pay had also led to commensurate increases in worker pay, one could argue that the American economy would be significantly stronger because millions of hardworking Americans would have more disposable income on hand.

Recognition and meaning are essential to employee satisfaction and engagement, but they are an airy substitute for fair pay.

To read more about employee engagement, click on these articles:

• Engaging Employees to Improve Performance
• What Drives You?
• Workforce Well-Being
• Paying Disengaged Employees\
• Bottom-Line Value of Employee Engagement
• Increasing Employee Satisfaction in a Time of Decline

In “Six Keys to Being Excellent at Anything” (HBR, August 24, 2010), Tony Schwartz quickly dismisses the myth that greatness is determined by our genetic inheritance. He analyzes current thinking about building personal capacity as well as his company’s experience working with executives to state that how hard we are willing to work determines our level of excellence. The minimum level of practice required to be expert in something, according to people who have studied this, seems to be 10,000 hours. That’s about seven years of practice at 4.5 hours per day, six days a week (this will make more sense when you read Tony’s list).

Schwartz offers six keys to achieving excellence:

1. Pursue what you love. Passion “fuels focus, resilience, and perseverance.”
2. Do the hardest work first. Great performers delay gratification and do the most difficult first.
3. Practice intensely – for 90 minutes without interruption. Then take a break. And great performers practice no more than 4.5 hours a day.
4. Seek expert feedback in intermittent doses. The feedback should be simple and precise.
5. Take regular renewal breaks. Relaxing allows time to rejuvenate, metabolize, and embed learning.
6. Ritualize practice. Build specific, inviolable times to practice. As Schwartz notes, “will and discipline are wildly overrated.”

I know a very successful leader who could have written this list. I figure he’s put in about 200,000 hours of practice (okay, he “practiced” far more than 4.5 hours a day) and he’s still learning, growing, and building.

Try keeping up with that.

By the way, you can apply these six attributes to an organization, as well.

I’ve written about the impact of leadership changes in “Leadership Matters Most,” citing the example of AT&T Universal Card Services, which was launched using the Baldrige model, climbed to second in the U.S. credit card industry in just 30 months, and then changed leadership and dropped to eighth over the next 30 months.

In “Keep Your Eye on Process Improvement” (HBR, August 18, 2010), Brad Power recounts the story of Allied Signal, which used Six Sigma in the 1990s to produce 31 straight quarters of earnings-per-share growth of 13% or more. Leadership changed in 2000 and 18 months later, the Six Sigma culture had essentially disappeared.

Sustainability of the positive changes associated with Baldrige, lean, and Six Sigma is not difficult if leadership and ownership don’t change, but such changes are inevitable. CEOs move on, quit, or retire. Companies merge or are acquired. So the ultimate sustainability question is: How can we keep the transformation going after those who led it are gone?

I see two ways this can happen. The first is to replace the leaders of the transformation with new leaders who fully support it. If the CEO is replaced by the COO who was personally involved in changing the culture, the transformation will continue unabated.

The second way is to establish a culture that compels new leaders to embrace it. A good example is the Ritz-Carlton Hotel Company, which won the Baldrige Award in 1992 and again in 1999. Simon Cooper took over leadership of the company in 2001 and has led a major expansion of the hotel chain, but he did not mess with the culture even though he had no part in developing it. The Ritz-Carlton sustains its competitive advantage because Mr. Cooper recognized that the culture he inherited was helping to produce the results he wanted to achieve.

Of course, even the strongest cultures can be dismantled if new leaders fail to see their value. In the end, sustaining programs such as Baldrige, lean, and Six Sigma does not depend on the results they produce: It depends on leadership.

To read more about sustainability, click on these articles:

• Sustainability: A Business Imperative
• Sustainability Forces Wheel
• What People Need to Hear
• 4 Parts of True Sustainability