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Sunday, 14 July 2019

Running a Dysfunctional Board? It May Need Surgery!

It is always rewarding when kind readers take time out to comment on Ivan’s Blog especially when the feedback is positive.  The reward is enhanced when the feedback is posted by an old friend and colleague from Vistage. 

Last week’s post brought forth quite a list of interested comments largely about various issues resulting from some unconsidered consequences of thoughtless decisions.    In particular two of them related to the leadership of charities and from the appointment of a “hired gun” in place of perhaps a family member. 

Let’s examine the position of a charity CEO.  On the face of it the CEO is running a relatively conventional and indeed commercial organisation. Some obvious differences would be the weight of regulation, the need for very high quality marketing and lead generation together with an organisational structure designed for the sector (highest possible integrity, for example). 

It is this structure that tends to cause the most issues. Typically in the UK, Housing Associations are structured as charities and that implies that leadership can seem to be a split responsibility.  An average HA would have a CEO, Finance Director and probably a Director of Fund-Raising and occasionally other specialists. These are the executive team and they normally report to a non-Executive Board of Trustees led by an equally non-executive Chair. 

So far, so good.  The problem arises in the definition of the roles and responsibilities of each sector of the leadership. I had a typical CEO as a consultancy client and his life was continually frustrated by the Chair who had a high opinion of his own leadership qualities especially operational. 

I suggested that the CEO start at the root cause and that was the relaxation of rules that allowed almost at-will growth in the number of Trustees and that had reached sixteen.  In addition the Trustees were flexing their muscles and were setting up small operational committees to which the executives were expected to report. 

It needed root and branch reorganisation because it had got out of hand but turkeys don’t normally vote for Christmas.   In the fullness of time the situation was corrected with appropriate surgery but it took time and patience to achieve it.  It answered the Florence Nightingale question: “Who is in charge here?” 

In the other leadership issue the problem arises through a dysfunctional situation at Board level.  The rationale for the appointment of a professional leader is, in many cases, obvious. For example a family business has run out of what even the family consider to be suitable talent for the role and even worse, while there are young and talented people in the business, they are considered to be as yet unready for promotion. 

An obvious solution is to scour the market and find someone with the experience and skills to take on the task. It would be more obvious and far more sensible to find someone with an attitude and behaviour dedicated to an understanding of the possible ramifications of the appointment. 

The real issue here is emotion. If a business has been run in the family perhaps for a couple of generations then the pain of bringing in someone without  that bond on to the Board and expect them to achieve change without trauma is foolish, not to say reckless. 

Again I have had several instances of highly qualified people being appointed to the leadership of a family owned business in an effort to maintain control.  The normal route is to offer a small block of equity to the incoming executive with the promise (!) of more as the business develops. 

Call me a cynic but in all the years that I have been with Vistage I can’t recall a single successful instance of an incoming CEO being given or even sold a majority stake in the business. 

Emotions run high, factions emerge and office politics reign supreme. Perhaps the best solution is to prepare the business for sale and when it happens, walk away without a backward glance  (and that I have seen, several times). 

Above all, never lure people into the business with vague promises.  If an applicant is rated as suitable after a comprehensive assessment of their abilities, then keep your word (it’s integrity again)

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Sunday, 7 July 2019

Considering Joint Managing Directors? Avoid it Like the Plague!

I feel that I can approach this topic without fear or favour simply because I have been through the situation personally and, quite frankly, it wasn’t a particularly happy experience. 

This was helped by using the experience I gained in several consultancy jobs where I found that the same problem is really widespread. 

It can be and frequently is a function of a family business and often occurs because an earlier generation is reluctant to cause disturbance in the family and hence the business by promoting one member over another. 

So what is this all about?  Simply put it is the cop-out decision to continue the family domination through joint-leadership, Managing Directors/CEOs and even Chair of the board and it can be a recipe for family discord at the very least. 

It is an easy solution on the face of it in the hope that each of the participants will modify their behaviour and compromise whenever there is potential discord.  The trouble is that because running a business is a job for a decisive mind, there can be a marked reluctance to listen to another opinion and compromise. 

Ideally the best way to manage a business is collaborative with  a significant proportion of decision making being effected at several levels through the organisation. 

For example Dan Pink in his excellent book, Drive, postulates the  concept of autonomy, mastery and purpose at all levels; autonomy to give freedom to the team to make decisions, which in turn encourages mastery through enhanced knowledge and all effected with a sense of purpose. 

David Marquette (Turn the Ship Around) takes much the same view as does Stephen Covey in his Seven Habits. 

It all comes together by the wise words from as long ago as the Crimean War and the strong opinions of Florence Nightingale (1820-1910) who, when presented with  a difficult decision in a failing hospital would ask: “Who is in charge here?”  

None of these gurus (and there are many more of them) are suggesting that the best form of leadership is top-down with the only autonomy being in the hands of the ultimate leader.   In fact the opposite is usually the case. 

If we consider the purpose and culture of the business and query its provenance then we must realise that it has to start somewhere and somehow.  It doesn’t just happen. 

I am strongly of the opinion that at almost any stage in the life of a business it is the primary function of the leader to determine the purpose, the culture, the mission and the values to be espoused by all involved and then to drive those criteria relentlessly into the organisation. 

In many ways it is the only top-down function of the leader especially if one of those criteria is the autonomy of decision making. If we allow and encourage decision making at all levels then the consequences of occasionally indifferent performance must be addressed and accepted. 

So, back to the topic in mind. Even in well adjusted families opinions on just about everything can be ventilated and argued over when there is discord at the top. If the culture and values of the organisation are compromised then there will be discord and uncertainty in the ranks and that can lead to splitting of decisions. In other words if I don’t like  the decision from one joint leader then I can always try another with a more compatible (for me) solution. 

There is, of course, the option of the vote at board level, heaven forfend.  The very necessity to need a vote implies that there is a split in the ranks and taking the vote strengthens it. 

I had a member of my Vistage CEO peer group who had 24 professional partners and when I naively suggested that decision making must need to be by consensus, he looked at me in astonishment. “Consensus?” he said “They demand unanimity”. I asked how they make decisions in the business as a consequence and he said, shortly “We don’t”. 

Be warned - splitting the ultimate decision maker, whatever the rationale,  can be a recipe for indecision throughout the business and that is a very undesirable outcome. 

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Sunday, 30 June 2019

Short of Talent? Take The Risk and Build a Promotion Culture!

Some years ago in my consultancy days I had a contract to work with a university in setting up a corporate structure to exploit technological advances being developed. 

In essence there were five subsidiary companies each headed by a Managing Director who was the proponent of the specific technological advance. 

My function was to ensure that any developments, joint ventures, agreements and arrangements with outside organisations were conducted with due regard to good commercial practice. 

All very straightforward and I worked very closely and, I think, successfully with the MDs who, let it be said, tended to find the commercial constraints occasionally irksome. To give them their due their attitude and behaviour changed as they began to realise the importance of the commercial aspects as distinct from the academic. 

The contract ran out after about six months and I felt that we had put together a structure with the right people in place that would certainly serve the university well in the future. 

A month or two later I was rather surprised to see a recruitment advertisement for a part-time Chief Executive to undertake the overall leadership and describing the job that I had been doing. 

Fairly obviously I fired off an application in the firm conviction that as I had already done the job and indeed had created the whole commercial function I would have at least a chance. That is, of course, on the assumption that I hadn’t actually made a mess of the contract and ddin’t know it.

Two days later I received a letter from a recruitment consultant to tell me that I was not considered suitable for the position.  

Under normal circumstances I would have binned the reply, accepted the decision and got on with my business but this seemed, to say the least, perverse so I called the consultant to ask if he had actually read my letter. This explained in some detail how I had set up the structure, recruited people, and endeavoured to impart a commercial culture in the businesses. 

Ah yes”, he said, “but you didn’t go to University and you don’t have a degree so you wouldn’t understand how the business operates.''

I gave up and got on with my life.  They eventually appointed a high-end academic, PhD of course, and I heard later that he had lasted less than 12 months. 

The recruitment consultant had done his job properly.  He had filtered the applications with the basic criteria for a start but had done it without sensible judgement. 

I recall a speaker at my Vistage CEO peer group making the point that if we hire someone based on skills and experience, we are just as likely to fire because of inappropriate attitude and behaviour. 

I am not by any means a recruitment specialist and I defer absolutely to those who are. However, I do believe that given a great attitude as a primary requirement the importance  of skills and experience becomes less onerous. 

It is glib to say that skills are often specific to any business and need to be learned on the job.  Will and Kenneth Hopper in their ground-breaking book, The Puritan Gift call it domain knowledge and emphasise its importance by strongly recommending internal promotion rather than external recruitment wherever feasible. 

In these days of exceptionally low unemployment we need to do all we can both to retain high quality people and to use promotion rather than salary as a career enhancing tool.  

I do not need to emphasise that all our best people are being lured by offers of massive salary increases simply because that is an easy way to solve the problem.  Easy maybe but the ramifications can be serious internally. 

Finally leaders need to get over the “not quite ready for promotion” syndrome.  Predatory competitors will take no notice and will try to seduce all your best people. 

Go for it and prove to your people that you are prepared to take a risk with your great young people. It is one of the most compelling tenets of a go-ahead retention culture. 

As the great medieval Rabbi Hillel said with exceptional prescience:

If not now, when?

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Sunday, 23 June 2019

As CEO How Do You Run The Business? You Need to be Hands Off!

One of the members of my Vistage CEO group has been looking at how his business is structured and as a consequence, has been looking at the various roles and responsibilities involved.

After a fair amount of thought his decision initially was to promote his deputy to the role of Managing Director and take on the new role of Chief Executive Officer himself.

This caused me to think about the definition of roles, certainly at a senior level in a business, and how these definitions can and should be communicated to everyone to ensure the minimum of overlap.

The role of the CEO starts, I would suggest, with the statement that the CEO does not run the company although he/she has the responsibility for ensuring that the business runs effectively.

Moreover, that responsibility covers not only the successful performance of the business but also the vision, the strategic direction of the business, the need for the maintenance of the values espoused, the personnel and HR policies, and the overall financial health of the company.

These are not day-to-day operational matters but are crucial in the effective running of any business.

Perhaps it makes sense to point out that the role of the CEO is much closer to that of the Chairman rather than merely a promoted Managing Director, with all that that implies.

There are certain areas of activity which are part of the CEO role which include a constant monitoring of capital investment, the recruitment policy, the health and safety policy, maintaining the virtuoso aspects of all new recruits and constantly looking for talent both outside and even more importantly, inside the business.

On the other hand, the role of the Managing Director under these circumstances is a far more hands on role with full responsibility for the successful operation of all the facets of the business and without the temptation to micro-manage.

In short the difference is that of a “hands on” role as distinct from a “hands-IN” or even worse, “fingers-in” role.

For some people, the change from a hand-on role to a very much hands off role can be difficult to cope with and I have heard it said on occasion that:

·      “I feel almost embarrassed at apparently having nothing to do when the people are working hard for the business and I seem to be doing nothing”

Please note: the word at issue is DOING.

One of the our US speakers, Ole Carlson, during the time that he was a Group Chairman in Vistage, used to put up a banner at meetings which said, in effect:

·      “We only do CEO stuff around here”

and that neatly encompasses the difference between a strategic and an essentially tactical role in the business.

In the Vistage peer group system there is often a tendency for members to bring to the table issues which are essentially operational and which, frankly, should be considered on an operational basis.  The people running the business know far more about how to run it than a group of people without having any domain knowledge.

On the other hand, the leadership role theoretically can be transposed from one company to another simply because the role has broad similarities, company to company.

That is a massive generalisation, of course, and some domain knowledge is very valuable in the management of the business but it does say that many functions of leadership are transferable.

Overcoming the pain of not being involved day-to-day takes a considerable amount of persistence and dedication, and mainly, a determination by the CEO that his/her hands don’t need to be dirty.  There are other and better ways of demonstrating the value on the CEO role to the business and that starts with “hands off”.

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Sunday, 16 June 2019

Having Communication Problems? Try These Seven Tips to Help!

Possibly the most contentious issue in running a business is that of communication, good or bad.  It is significant that many employee satisfaction surveys rate communication as “could do better”.

This can be mystifying to many leaders who genuinely rate the subject as being of prime importance and make every effort to keep everyone informed.

One of the members of my Vistage CEO peer group says that leadership is just about people and communications and you can’t fault that as an ethos.

So why is it, when so many leaders honestly believe that they are doing everything possible to communicate effectively, many of the recipients disagree?

More often than not it is in the methods we use.  

The real problem lies in the fact that people might hear but they don’t necessarily listen

The problem is even more apparent with the written word that people don’t even read .

There are several critical factors that can improve the way that information is transmitted and, more importantly, received.

Whether we are communicating face to face, in print, digitally, by audio or video, the requirements are the same. We need to ensure that the methods we choose are the most effective and are justified by the results.

There are seven basic requirements then for effective communication as follows:

The Audience
Make sure that you are giving the right message to the right people.  I recall an occasion where the leader decided that everyone should be given information about the company’s finances and he set up company-wide meetings to tell them.

It wasn’t very successful to say the least so he changed the scheme to small groups where discussion was encouraged and that proved a great improvement.

One of the problems of top-down communication is that we know all about the subject and consequently tend to forget that other people don’t necessarily know.  The effect of this mismatch is either insufficient information being transmitted or, worse, too much and that can clog up the message.

Test the message by trying it out on someone who is not involved and ask for feedback on both the message and the style.

There is the tale of the Best Man at a wedding who started his speech by saying: “I have been told to keep it short and clean so I have been holding it under a cold tap for the last ten minutes!’  

Rambling on merely gets in the way, is distracting and disguises the intended message so keep it short (and clean).

Again make sure that you are giving the right message to the right people.  It may seem obvious but like those who insist on sending a .cc to everyone in an email, we only irritate people if we include those who are peripheral in that instance.

Accuracy and Truth
It always surprises me that when some people explain  a situation they don’t always come clean on the facts.  Maybe this is a defence mechanism but it doesn’t help when the subterfuge is uncovered.

It is not only a lack of accuracy, it can be a matter of untruthfulness.  You will be found out eventually and trust will fly out of the window.

Why are you communicating something?  Is it merely to pass on information or are you asking someone to respond or take action?

Whatever it is you should state your expectations clearly, succinctly and, if needs be, assertively.  There is nothing worse than going out of a meeting with everyone saying “What was all that about?”  

Unless you have unfettered feedback you will never know whether your message has been received and understood. Getting that real feedback is not a matter of saying “Do you understand (or similar)?” because  all you are likely to get are nods of agreement that mean nothing.

Feedback is the crux of great communication so ensure that you ask the questions that will uncover  what has been heard. Ask questions that paraphrase the message and then what action is proposed as a consequence.

There are hundreds of books published on the whole subject of communication so why do we find it so difficult? These tips should help at least to improve your performance.

A very important point.  Communication is not top down or bottom up.  It is only effective when it is a two-way mutual process.

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