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Tag: ceo coaching

CEO Coaching: Treat People Like Gold and You’ll Have More Gold

A recent Wall Street Journal article (“How Higher Wages Can Increase Profits”) indicates that higher wages can not only reduce turnover and increase recruiting of talented people (no real surprise there) but also increase productivity in existing staff.

So higher wages in this example (expense for the business) can achieve higher profit—pretty cool! Mysterious altruism at work? As a CEO, it’s worthwhile exploring the science behind this as too often compensation is done on the fly.

I cut my teeth in a multiunit retail setting where payroll was one of the top expenses companywide. If you threw in general and administrative (G&A) labor, it was the largest expense (stay with me so we can get through the dry stuff to get to the point). We tightly monitored payroll-as-a-percentage-of-sales but let local management determine how to handle it. In fact, even if that line item seemed high, but the store or region produced a high level of unit profitability, we typically ignored it.

Some stores achieved high profit margins with low payroll costs (we eschewed the terms “labor” and “employee”), because they had fewer people. But they were damn good and worked hard, supporting the notion of “gift exchange” that economists espouse (i.e., treat people better than market forces, and they’ll reward you with more and better work). It also turns out that when and how you increase wages makes a big difference.

I’m not a fan of government-imposed wages for several reasons, but I am a big fan of businesses that can create wealth and happiness for their people. The fact that it’s good business to treat them better than the company down the street delights me. It’s not about minimizing rewards; it’s about optimizing them! When you are pondering compensation, it is prudent to look not only at the field of accounting, but also psychology and behavioral economics!

The research in the above-mentioned article tries to isolate compensation as a factor, and the message is that more expense in this area on your income statement might achieve higher profits.

But if you think about the sum of all rewards, the conversation gets much richer and more fun!

If you can create a supportive, inspiring, high-energy culture that’s challenging and rewarding and provides higher compensation, you have a real competitive advantage! Think about managing your culture as carefully as you manage your expenses.

There are a lot or reasons to treat your people like gold that have nothing to do with profit and for you that may be good enough. But the fact that capitalism (done right) and humanitarianism are often aligned is a pretty cool thing.

 Todd Ordal is president of Applied Strategy®. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He is a former CEO and has led teams as large as 7,000. Todd is the author of Never Kick a Cow Chip On A Hot Day: Real Lessons for Real CEOs and Those Who Want To Be (Morgan James Publishing, 2016). Connect with Todd on LinkedIn, Twitter, call 303-527-0417 or email [email protected].

These are the critical skills every CEO should have

A new CEO asked me which important leadership skills he needed to succeed. I suspect he thought my answer would include things like industry knowledge, technical brilliance, negotiating prowess and capital structure analysis.

Those are all interesting, but they aren’t success factors I’ve observed in my many years of coaching successful CEOs. I told him I’d provide my answer in writing so thought I’d share it here.

First off, let’s define a successful CEO. Here’s my take: “One who can lead others to profitably address a market in a sustaining fashion.” Please note that my definition doesn’t include gaining notoriety, extracting exorbitant rewards and being loved by all. If those are more important to you, you’ll need a different list.

Each of these could use many paragraphs to identify exactly what they look like, how you’d measure success and how you develop the skill, but I assume you want a three-minute, not three-hour, read. If you spend a moment on each one, you’ll get the gist of it.

  1. Listen well.
  2. Communicate effectively (with precision and passion and by understanding your audience).
  3. Be curious (understanding that the questions are more important than the answers).
  4. Think strategically (this is about process, not intuition).
  5. Continually strive for self-improvement.
  6. Be resilient (accept failure as learning, not failure).
  7. Allow others to be great (creating the right environment and giving credit).
  8. Create wildly effective teams (gain alignment and trust and be brutally honest, committed and focused on the team’s, more than the individuals’, success).
  9. Serve others (both internally and externally).
  10. Master process (great leaders don’t just shoot from the hip).
  11. Balance confidence and humility.

I could’ve added one more to get to a dozen or made them all start with the same letter or put them into a poem, but this is serious stuff!

You can’t be good at everything, but you must be good at leading others. Great leaders require followers, so most of these skills center on getting people aligned and focused on what’ll make your company successful.

How do you measure up? What would your team say?

CEO leadership skills: you’ve gotta work at it

Have you ever caught yourself thinking, “Damn, I wish I had his natural ability!” Not so fast, buckaroo!

Peyton Manning couldn’t throw a perfect spiral when he came out of the womb, and Albert Einstein couldn’t do math. Pat Conroy couldn’t write, and Charles Lindbergh couldn’t land an airplane! (OK, Nat King Cole might’ve been able to croon…)

The same goes for leadership. Find 10 CEOs who are labeled as brilliant leaders, and you’ll find that 9.5 of them worked their ass off to become that way.

I’ve worked with hundreds of talented leaders (i.e., those who can craft a compelling vision, align the troops and storm the castle). Some have higher IQs than the average bear, some were blessed with the right parents, and some have a built-in cosmic level of emotional intelligence. But I have yet to meet one who didn’t work very hard at becoming better. They didn’t come out of the womb saying, “Follow me!”

I have, however, met numerous poor leaders who wished for enough natural ability to do what the aforementioned ones could do. They assumed their ability level was fixed and the others were just lucky. It ain’t so! (A great resource for this topic is Mindset: The New Psychology of Success by Carol Dweck.)

Luck plays a role in success. But leaders who have successful careers (measured by their ability to get others’ help with creating lasting value—monetary and otherwise) work hard at the business of their company and at developing themselves. This is lost on many wannabe executives.

There aren’t real shortcuts to effective leadership. Daddy may have started the firm, and you may inherit his equity and CEO title, but you won’t be an effective leader without the work. Being born on third base doesn’t make you a great baseball player.

To this day, I still sometimes find myself saying, “Damn, I wish I had his skill or luck!” when what I should say is, “Damn, I wish I had his determination!”

CEO Coaching: On Stability and Change

As business leaders look forward to the Biden administration, most (by my reckoning and other real news sources) are concerned about possible policy changes but welcome a level of stability (perhaps sanity).

Stability in business is good, but only if you’re meeting your objectives. Phrases like “operating like a well-oiled machine,” “keep the train on the tracks” and “if it ain’t broke, don’t fix it” all pay homage to stability.

In some regards, the CEO’s job is to create stability. Shareholders look for stable (and rising) growth in revenue and stock prices. Employees want a safe, stable platform to work from. Customers want to know that your product or service is predictable.

Until it doesn’t work … then the CEO’s job is to disrupt stability and create change … until there’s success — then they’re expected to create stability. Tough job description, isn’t it?!

Defensible strategic positions are hard to come by and even harder to protect. High profits and growth attract competition and innovation — as they should! — which creates instability. In capitalism, this is how we grow and prosper, even though it causes some initial pain. Protecting down and out ideas (think coal energy) has never worked and never will.

So, as a CEO, you need to embrace stability and change, and you must have skills to accomplish both. When you reach a defensible position, you want to reinforce it, stabilize it and hold on to it. But you also want to look for “the next big thing” so you can get ahead of it. As F. Scott Fitzgerald said, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” You must be able to deal with ambiguity and, simultaneously, create clarity for your team.

The skills, processes and behaviors required to build stability are different from those necessary to drive change. That’s why CEOs must have both management expertise (taming complexity and building stability) as well as leadership skills (looking at the future and driving change). Sometimes it’s more about leadership, and sometimes it’s more about management.

From my experience, there are those who are more innately better-suited for stability and those better at change, but if you’re going to have a long, successful career, you better appreciate and develop competency in both!

Hurricane Andrew

Andrew got me pumped up today! He found me on the web and wanted advice about planning for business growth. He’s just getting started, growing rapidly, and I’m not the right resource, but I pointed him toward a couple of solutions to help. Our 30-minute phone call was probably more helpful for me, however, than him.

Capitalism hums when entrepreneurs find an addressable market and throw their energy into it! Andrew knows a lot about what his customers need and what technology will satisfy that need. He must, however, learn how to run a business. Based on his enthusiasm and courage to ask for help, he will.

With so many large-scale problems right now (COVID-19; a blockhead who wants a permanent residence on Pennsylvania Avenue; people struggling while Congress fiddles; etc.), it’s easy to forget what made our country and economy strong. People like Andrew did.

Andrew will survive in a Democratic administration just about as well as in a future Republican administration (if the party doesn’t self-destruct by then). He’ll provide employment for more and more people, and their families will prosper. He’ll pay increasingly more taxes that will help build infrastructure. The service he provides his customers will help them grow, and they’ll provide the same benefits to us that Andrew does.

Good business is good for everyone. It wasn’t an inconvenience to talk to Andrew today; it was an honor.

Stand up for capitalism and well-run business! Support those voices that encourage business as well as environmental and social reform. (They are not mutually exclusive!) Many people don’t understand the relationship between business, GDP per capita and all the good things that come from it. If you’re willing to look, there’s a lot of information proving that the Andrews of the world do more good than “do-gooders” do.

Go get ‘em, buddy! I’m rooting for you!

How to break the cycle of luddites in management

I’ve had a few recent inquiries from bright, talented people who want coaching. They’re all in significant roles that can bring tremendous value to the company. Unfortunately, they work for Luddites who won’t pay for coaching. In fact, their efforts to ask for mentoring from their boss resulted in a cold shoulder and comments such as, “I shouldn’t have to coach you!”

I wonder: How do idiots like these get into management? Unfortunately, I know the answer. Luddites reproduce like rabbits! Bad management creates more bad management.

I don’t rant a lot in my blog posts, but for God’s sake, if you: (a) are a Luddite with the wherewithal to have an inkling of your thick skull, (b) have a Luddite working for you, or (c) can put a mirror in front of a Luddite — do something! Break the cycle!

The correct response to someone asking for help isn’t “Go away; you should know this!” Rather, it’s “I’m glad you brought this up; let’s see how we can get you some help!”

People who want to improve and ask for help are usually the stars of tomorrow, or even next week! Even a midlevel manager in a substantial company can provide huge value (or destroy it) through their work. Investing either time or money in these folks can pay immeasurable dividends!

If you’ve recently (or ever!) said to someone, “I shouldn’t have to help you with that” without first trying to help, you might think about a career change. Perhaps a volunteer job counting grizzly bears in Yellowstone.

If you put someone in a leadership role who doesn’t have management experience, for God’s sake, help them! And get some yourself! Luddites in management roles are like pythons in the Everglades. Pretty soon all the other desirable creatures are gone.

Co-CEOs? A look at the argument for two leaders

A recent piece in Harvard Business Review asks, “Is CEO a Two-Person Job?” I didn’t think so when I wrote this, and I still don’t.

I am impressed and appreciative of the relationship that these two leaders have developed but wouldn’t try to duplicate this arrangement unless you have an existing mind-meld, glued-at-the-hip, soulmate relationship going that can survive not only the challenges of running a business but also the challenges of marriage (currently a 50% failure rate).

The premise of this article, as you might imagine from the title, is that there is too much to do for one person to be CEO. It depends upon how the job is structured. I’ve seen CEOs of good size companies who have structured their job so that they have very few tasks to accomplish and spend a good deal of their time wandering about, deflecting blame. I’ve seen others who act like they snort cocaine in the parking garage before work and operate (usually poorly) at a feverish pace, fretting over details and trying to control everything in their sight. Neither is a good idea. With some good thought, the job of CEO can be structured like Goldilocks’ porridge; not too little, not too much.

Talented CEOs are no longer of the “command and control” variety like your father worked for. They are typically very inclusive and collaborate with their team on most big issues. One person at the top does not imply that they are the smartest person in the room. It does not imply that they alone decide on direction (e.g. vision and strategy) of the company or that they alone are the face of success and failure.

There is an exception to every rule, but have you frequently seen job-sharing work for Presidents, Prime Ministers or Monarchs? Does your city have co-mayors or co-police chiefs? How about military leaders? Does your children’s’ school have co-principles? Your favorite high-end restaurant probably has one head chef, right? Watching any football? Do you see many co-head coaches?

My list of reasons for one person with ultimate authority and accountability is part psychological but mostly pragmatic. I am also a product of my experiences and having shared a management position at one point early in my career and watched other organizations try it has given me enough empirical evidence to call bullshit when people try it. It is usually because a board (or company owners) cannot make a tough decision.

Here are some of my reasons for a single CEO:

If you have two people who own a leadership position, people are confused. At very least they have to think, “Do I go to Tom or Harry with this issue?” which slows them down. If you have someone slightly devious on staff, they know that they can appeal to both—like your kid going to Mom and Dad with a request for candy—to look for a “yes.”

If you share your CEO job, you’ll get the benefit of additional input, but you’ll also spend an inordinate amount of time coordinating with your “partner.” You can always make another buck, but you can’t make another minute. How many do you want to spend getting agreement before you do what you know is right? What happens when there is disagreement about this? Do you flip a coin?

Even with brilliant coordination, something gets dropped. “I thought that you were going to finalize that deal in Germany?!” If I am one of your board members or investors, I am not going to be happy about this!

What do you do about succession planning? If one of the CEOs gets hit by the beer truck do you fire the remaining one as she is only half of the equation?

If two CEOs is good, would three be better yet? If there are two CEOs then surely you should also have two CMOs, two CTOs, two CFOs, etc., right?

Once in a great while, the soulmate, mind-meld situation might exist in nature and perhaps a company will be better off for a short time if there are two leaders. Once in a great while you might survive a lightning strike, but that doesn’t mean you should purposefully plan golf outings in a thunderstorm.

CEO Coaching: A shocking look at strategy

Of all the questions a CEO must answer, “What’s our strategy?” is one of the most daunting. If you can’t explain it in a few sentences, how can your people execute it?

Significant changes to company strategy (e.g., “Where do we play, and how do we win?”) are frequent in startups but less so in established companies. Why would you radically change a working formula? You shouldn’t! That’s why most CEOs are adept at executing and less so at crafting strategy — they don’t do it more than once or twice (if at all!) in their career.

So, I’m always looking out for good examples of what a significant change in strategy looks like. Often, significant pain drives a significant change in strategy. If you ran the Kodak of old and your business went to hell, you’d look for something to sell besides film, right?

The recent COVID-19 pandemic has forced “creativity” into many companies, because they had a metaphorical gun to their head. Although many small distillers may have turned to making hand sanitizer, and GM used their manufacturing expertise to produce ventilators, those aren’t terribly instructive scenarios for most CEOs.

A better example was a recent story in the Wall Street Journal about the Taser manufacturer, Axon Enterprise. The company had already penetrated 95% of the law enforcement agencies in the United States (a shockingly high percentage!) so needed to expand their addressable market. They were driven by a need for future success, not because they had a gun (or Taser!) to their head.

Here is Axon’s CEO in a proxy statement (a worthwhile read, by the way), April 15, 2020:

“In 2008, as the financial crisis gripped the world, we decided to transform our entire business from being a simple TASER devices manufacturing firm into an integrated technology company making wearables and cloud software. The transition was anything but easy — we had many difficult learning curves to overcome. As competitors in the public safety space retreated, we advanced into new opportunities and established ourselves as the clear market leader in cloud-hosted digital evidence management and camera sensors.”

This market-driven strategy versus the previous product strategy may sound simple, but the internal changes required are significant, and their financial results indicate they have executed well.

Let me know if you have a good example to share. We often learn best by stories.

Organizational Effectiveness: Why are teams sometimes so painful?

I have a confession. Decades ago, in my undergraduate Psychology program, I routinely dropped classes with team projects. I found non-facilitated group exercises excruciating!

I had the same experience in graduate school. Group projects took so damn long to get going, and group members’ dysfunctional behavior (never mine, of course) drove me nuts! Funny, however, that sometimes the end product was pretty damn good!

Have you ever been on a jury? Did you want to ask the judge, “Excuse me, Your Honor. Like, did you go search for a bunch of dolts to put in this room with me just to piss me off?!” The first hour of conversation is like a group of 3-year-olds fighting over a Ghostbusters toy. Eventually, it gets sorted out, but there’s a lot of pushing, shoving and crying involved.

So, guess what I spend half my time doing as a coach? Working with CEOs on team effectiveness!

I suspect some of you have felt this way about teams, and for good reason. You can’t get off to a good start without working on the team itself before diving into the content. It’s like teaching someone to fly by putting them in an aircraft and telling them to give it a shot. If they live, they may become an ace flyer, but the chances aren’t good. Some instruction and orientation will speed the process and reduce the death rate.

To have a shot at success, a team has a finite number of requirements, first of which is knowing what success looks like! What’s the objective?

But before that, you must identify whether you have a team or a work group. Is it (to paraphrase Patrick Lencioni) a relatively small group with common objectives, rewards and responsibilities? If so, you might have a team.

In the business environment, having no skilled leader or facilitator is a surefire way to waste time and increase your failure rate. Talking about the objective(s), agreeing on responsibilities and rules of engagement, and getting to know one another seem ponderous, but I guarantee that this allows for faster and better results.

I don’t coach undergraduates; I coach CEOs. At this point, the game is real, and you can’t just “drop the class.” You can, however, work on the team before you work on the business, and you’ll be in better shape and get a better grade.