Start in the Corners

As many companies approach their fiscal mid-year it is not uncommon to pause and evaluate how they are doing against their objectives.  They determine whether or not changes need to be made to the strategies that they implemented some months ago.  The companies that do this best are the ones that start in the corners.  Let me explain.

Some years ago I spoke with an executive consultant who had broad experience in the Far East.  He said that manufacturing in some countries was more difficult than others because of cultural practices. This is the example he described.

In country A, when it came time to clean the house the process started in the middle of the room.  Diligently, the dust and dirt was neatly swept into the corners where it was out of sight. 

In country B the process was in the reverse.  Cleaning started in the corners and the dirt was swept to the middle of the room.  From there the dust pan removed it outdoors.

To the unseen eye, both rooms were clean.  It was only when the windows or doors were opened and the wind blew in that the difference was noticeable…the consequences clear.

If your plans are not working out as anticipated, don’t look at the issues in the middle of the room.  More often than not, they are only symptoms of the problems. Instead, look behind the curtains and in the corners of your room to find the fundamental flaws in your plan.  Bring that which is unseen out and into the open for critical review. 

It may prove difficult, even embarrassing, to acknowledge that you did not start with a `clean` slate that was capable of supporting your ambitions.  But until you address these underlying issues, nothing that you try to do will have a reasonable chance of success.

Do you have the strength of character as the leader to admit your error and clean the room properly?  Or will you continue to push the dirt to the corners, out of sight, until revealed by the breeze which inevitably blows through.

The Three C's of Hiring

One of the most important tasks that you are called upon to complete in your leadership role is that of  building at team.  At the end of the day, it is not about you accomplishing objectives but rather your team fulfilling their respective responsibilities that all contribute to the results of the whole.  So selecting the right team members is of critical importance.

Broadly speaking, there are three key components to the process.

1.  Competence.   

Begin by fully describing the duties of the position that you seek to fill.  Then determine the skill set that you believe is required to meet your expectations.  These become the minimum requirements that you will consider.  It is important that you define these issues clearly and completely as you will likely be presented with candidates with similar but different skill sets and you may be tempted to accommodate their abilities.  The interview process is an emotional one for both the candidate and the employer.  Because you have established your criteria during an unemotional time and have done so with proper reflection and input from others, these must remain your benchmark. Therefore be confidant that your needs are properly expressed and look for skill sets that meet your minimum requirements.

2.  Chemistry

Teams succeed because everyone has a role through which they contribute.  Recognizing this, you must find candidates whose skill sets not only fulfill your requirements but which also complement the skills of other team members.  This should be an outcome of defining your expectations.

Chemistry is a broad term to remind you that skills, personalities and as well as other factors need to be part of your decision.  If your company highly values moral and ethical behavior, why would you introduce someone whose character is not consistent with these values.  Likewise, if your approach is to build and maintain long term relationships with your client base, you really don't want or need someone who is a hit-and-run specialist.

When you try to incorporate an individual into the wrong culture, you are headed for disaster.  Some organizations are large enough to tolerate a bit of a misfit.  But as a rule, square pegs in round holes do not work.

3.  Compromise

Nothing good ever happens when you compromise in the hiring process.  Placing a body simply for the sake of filling a position is far worse than leaving it open for a longer period of time. But this happens when we let emotions get in the way  and we react to pressure rather than holding to the principles that we have built.   If you have been unable to find the right person to fill the role, don`t hire the person who, by default, is the least of the evils.  Instead, return to the criteria that you first established and determine if these needs are still properly expressed.  If that is the case, hold on to your goal.  The consequences are far more than appear on the face of it.  For example:

• A compromise means that you have hired less than you require.  You are now faced with the wasted costs of recruiting and training; you have delayed hiring the right person; and you face the termination expense once you accept reality.  
• A compromise opens the door for questions both internally and externally.  Clients are likely to ask `what were you thinking`while employees question your ability to make sound judgments.  Your standards are only as high as the lowest that you will accept.
• The wrong chemistry can make the whole workplace a toxic place.  Can you really afford the impact of lost productivity from the existing workforce whose efforts are disrupted by the lack of chemistry.

It is not always easy to find the right person to fill a gap in your organization.  But good companies attract - and retain - good employees.  Likewise, those who are willing to compromise the hiring process for the sake of expediency will also get what is coming to them.  

It is your choice.  Is it really that hard of a decision...

5% Too many

How would you react if you knew that the airline you chose sported a safe landing percentage of 96%?  Before you answer let me remind you that there are about 100,000 flights per day worldwide.

Or how would you feel if your doctor's diagnosis was accurate 96 times out of 100?  You would likely not book Monday morning or Friday afternoon appointments...

If the bridge you were about to cross had a sign that said "...the engineer for this bridge graduated in the 85th percentile..." you might be tempted to look at the car behind you and say '...after you, please...'

Our desire is that performance in these fields is 100%.  But recognizing that these are all skills based situations, we know that perfection is simply not attainable.  Best effort is what we hope for, along with a little luck.

But how do our expectations change when it is a matter of character and not competency?  Don't we rightly expect more?

What, then,  are we to make of the results of a recent Ernst & Young survey that indicated that 95% of Canadian CEO's and CFO's responded that they would adhere to behavior that was legally, morally and ethically responsible.  This includes properly reporting revenue and expenses; not engaging in brides or other types of corruption; and not turning a blind eye to activities like child labor. (Apparently Canada scored very high in this survey.)

Wow, one out of twenty confesses that they would cheat in order to gain an advantage or to make performance look better than it is.  It strikes me that the number may be low because these are people admitting, in an anonymous survey, to a willingness to cheat.  How many others had their fingers crossed as they answered the question...

The reality is that there is NO ROOM for a failure of ethics in the Boardroom.  There cannot be ethics  that you exercise based on circumstances or the behavior of a competitor or the need/desire to secure a contract.  And yet 1 in 20 thinks it is OK.

Don't take the sting out of that by asserting some greater good can come out of it; that the order keeps many employed or that others were offering bribes too. Once Pandora's Box has been opened, literally all hell has broken loose.

In some jurisdictions it is considered acceptable to turn a blind eye; to grease the palm; to endorse corruption,  But none of that makes it RIGHT.

As leaders, we have an individual and a collective responsibility to always do that which is legally, morally and ethically correct.  'Situational ethics' cannot find a safe harbour in our behavior because 'situational ethics' is the same as no ethics.

Five percent of Canadian boardrooms apparently think otherwise.  Let's expose them for what they are...CHEATERS.  

Hold your nose!

I am an unapologetic capitalist.  Capitalism in a democracy works, in a perfect world.  And short of a benevolent dictator, it is likely the best we can expect. To that end I subscribe to wealth creation as a viable motivator.

I have no opposition to inventive, creative, risky and unique initiatives.  To be certain, these are the types of activities that propel us...usually forward but sometimes not.  I applaud those who are willing to fail in the attempts to succeed.

What I despise are those who use other peoples capital - be it financial, emotional or time -in vainglorious efforts because these people care not about the consequences.  And there are always consequences.  Sadly, the net seldom catches all the innocents who fall while perpetrators somehow push the eject button and parachute to safety before the crash.

Just this week Goldman Sacks agreed to a penalty in excess of  $5 billion US for trading activities in the period of 2005-2007.  Further costs will increase their payout to over $6 billion.  In so doing they join a celebrated list of offenders that include J.P. Morgan Chase ($13 billion); Bank of America ($16 billion); Citibank ($7 billion) and Morgan Stanley ($3.2 billion).  Their collective activities provided significant fuel for the fire that continues to smolder in the world economy.

Yet despite these record payouts, NOT ONE SINGLE PERSON WAS HELD ACCOUNTABLE and none face any prosecution.  None have repaid obscene bonuses earned from these despicable actions. They all pushed the eject button in time.

As a partial consequence, for almost a decade we have been mired in a period of global  economic stagnation. Politicians, bureaucrats and economists have not been able to find the formula to remedy matters.  And now we have the Panama Papers which outline the economy of the super-rich and offer insights to their tax avoidance activities.  Some estimates suggest that the amount of money hidden away in these 'off-shore' tax havens may reach as high as $37 trillion.  That is an unfathomable amount.  Here it is expressed in numerical fashion.

$37,000,000,000,000.00 

Even if this figure is high by some multiple (it could just as easily be low because the law firm exposed by the papers is only the fourth largest provider of these tax havens), it is an obscene amount. For purposes of context consider that the global Gross Domestic Product is estimated to be about $75 trillion.  So the money hidden may represent half of global GDP.

Keep in mind two important facts about this amount.  The first is that this is the amount that is HIDDEN.  It does not include the amounts that the account holders publicly declare. These are individuals whose wealth exceeds the requirements of any person over several lifetimes. Regardless, they are fully capable of paying taxes without impinging on their ability to maintain their lifestyles. The other account holders are crooks.

Secondly, these funds are not working towards global economic activity, apart from the lawyers and bankers who administrate these funds.  Were it otherwise we would see their contributions and they would be more likely subject to proper tax consideration. The reality is that these funds are in excess of the needs of the account holders and thus can afford to sit in relative dormancy.

It is impossible to determine what impact the tax on these funds would have on health, education or infrastructure spending.  Suffice to say that it would be significant...

My takeaway from these two issues?

Our problem is not one of wealth creation so much as it is a problem of wealth distribution.  For every public figure like Bill Gates or Warren Buffet who are openly declaring their wealth and treating it as a public asset, there are tens or hundreds of thousands who refuse to acknowledge their responsibility to return to society that which is due.

In some perverted way they feel entitled to the funds in their possession while ignoring the fact that their wealth has simply been the accumulated transfer of the 'wealth' from millions - perhaps billions - of every day citizens. We are those who have transferred money from our pockets to the pockets of these super rich simply through the purchase of some every day staple of life, be it bread, rice, fuel or some other necessity that flows upward to those who own the conglomerates.

Trickle down economics is just a fantasy.  The super rich do not spend more because they have more. They simply accumulate  more. The truth is that economies grow when the least of us is able to make purchases because these funds naturally flow upward.

Consider, when a car company invests in a new plant that creates 1000 new jobs, economists suggest that the actual impact is the creation of an additional 5000-6000 jobs.  There is a 'multiplier' effect due to all the other products and services that are needed to support the new plant.

What then if only half of that $37 trillion was repatriated in the form of tax and used to assist the least of those in society; we would be injecting as much as 20%  more into the global GDP.   The multiplier effect would drive that impact in a staggering way.  And the primary beneficiaries would be the super wealthy because they already own the majority positions in the companies which grow or manufacture the goods that will be purchased.

We have enough wealth, just as we have enough food and water,  It is a matter of fairness and distribution.

Our leadership at both a political level and at a corporate level continue to fail us.  They have led us into recession because of greed, plain and simple.  Truthfully it is an oxymoron to call them leaders.  In reality they are self-serving bullies...in expensive suits.

And here is the real catch-22.  Other CEO's should be publicly condemning the actions of these Wall Street cheaters.  But to do so means disrupting the 'old boys club', potentially making it more difficult to access funds when they are needed for mergers, acquisitions or other purposes.

Politicians are wary to upset the off-shore apple cart because these account holders are also the largest contributors to their election campaigns.  Remember too that it was the politicians who established the governance that allows these tax avoidance schemes to exist in the first place and revelations suggest that many of them are profiting from the schemes themselves.

As an authentic leader it is not enough to be ``legal``.  You must also pass the ethical and moral smell test.

And these all stink!

Are you missing the Ms?

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• Mary T. Barra, General Motors Co. (GM), Heather Bresch, Mylan Inc.,Ursula M. Burns, Xerox Corp.
• Debra A. Cafaro, Ventas Inc.;Susan M. Cameron, Reynolds American Inc.;Safra A. Catz, Oracle Corp. (co-CEO);Lynn J. Good, Duke Energy Corp..Marillyn A. Hewson, Lockheed Martin Corp.
• Lauralee E. Martin, HCP Inc.;Gracia C. Martore, TEGNA; 'Marissa Mayer, Yahoo Inc.
• Beth E. Mooney, KeyCorp; Denise M. Morrison, Campbell Soup Co.;Indra K. Nooyi,, PepsiCo, Inc.
• Phebe N. Novakovic, General Dynamics Corp.;Debra L. Reed, Sempra Energy Corp.
• Barbara Rentler, Ross Stores Inc.;Virginia M. Rometty, International Business Machines (IBM) Corp. 
• Irene B. Rosenfeld, Mondelez International Inc.;Meg Whitman, Hewlett-Packard Enterprise

Do you recognize any of these Company names?  They are all members of the Fortune 500 and all have female CEO's.   In Canada, we have equally talented female CEO's:Heather Reisman at Chapters-Indigo; Linda Hazenfratz at Linamar; Karen Sheriff at BellAliant among many others.

Can you then explain to me again why you don't think that women are fit for executive positions?  Or for any position of responsibility in your business...

The fact of the matter is this.  There is no level of responsibility that cannot be done equally as well by a woman as by a man.  And with the greater emphasis being placed on emotional intelligence today, it is clear that women should have an advantage over men when being considered for positions of leadership.

None of this should come as a surprise.   By 2017, more graduating doctors will be women.  The same is true for lawyers.  Over 40% of MBA graduates at the leading schools are women.  Interestingly, women are graduating more MBA's in the influential categories of marketing, communications, accounting and management; the fields that more typically stream to executive roles.

Overall performance on gender equality in the boardroom is an international embarrassment.  We can blame the old boys network for that.  However there is no excuse to perpetuate the myth.  Not only is it demeaning and degrading to over half the population, it just makes bad - no, horrible - business sense to deny yourself access to over half of the eligible candidates for important roles in your company.

Ignore the truth at your peril.  As in every circumstance, the best will be chosen early.

Lessons from The Donald.

US politics are being shaken to its core.  The establishment is losing its control over the process as Donald Trump runs disruptively against traditional thinking in the Republican party.  His success, to date, is scaring mainstream voters across the US and indeed, around the world.  But it is foolish to think that he cannot win the nomination and perhaps even the Presidency.

That said, polls suggest that it is really a vocal and disenfranchised group that provides provides the basis for his strong showing.  This group is fed up with the status quo and they are looking for a leader to offer an alternative.  In Trump they have found a voice.

We can learn some important lessons from this scenario that have direct application in our business environment.  Here are a few for your consideration.

1.  People look for leadership.  Every survey that I have read over the past 10 years shows a substantial level of disengagement in the workplace.  Some statistics put the figure as high as 60%.  During the early part of the economic crisis the number of management personnel reporting dissatisfaction reached levels in the 40-50%.  As the leader you must fulfill your responsibility to actually LEAD.  If you do not, then the people will find someone else to follow.  It is human nature.
2. Control the narrative or you will be controlled by it.  Trump has said very little of substance but he has controlled the narrative.  People are no longer listening to the policies of his competitors because they have been relegated to a defensive position.  It has ceased to be a case of which candidate is the best.  By controlling the narrative Trump has positioned himself as the lessor of the evils.  He seldom runs on the basis of his experience or expertise but rather he compares himself to the competition with the attitude that implies '...I have my faults but I am better than them...'.  Your leadership position requires you to establish the priorities and the strategies.  When you don't - when you lose the narrative - someone else will fill the void...and likely not according to your agenda.
3. Might does not make right!   For the most part, Trump has acted like a school yard bully.  He wants to build walls and keep out the undesirables.  He belittles others; speaks condescendingly, he has a clear superiority attitude about him.  While this bravado appeals to some within the Republican party, it clearly does not resonate with the majority of the total population.  In contrast, authentic leaders have self confidence that is a reflection of the esteem that others have for them.  It does not come at the expense of others.  In your work place you must lead on the basis of your authenticity; your integrity and your competence.  There is nothing about bullying, threatening, cajoling or coercing that has anything to do with leadership.  
4. Organizations are organic and must change or die.  This is something most western governments, including the US and Canada, are not recognizing. Perhaps the single most important lesson we are learning from Trump is that the political status quo is simply not working.  A populace that is better educated and better connected is legitimately expecting more from government.  The middle class especially is a group forged by the fire of the economic malaise of the past decade.  It has grown tired of the lies and self serving interests of many politicians and their backers.  But these politicians continue to resist change.  In your leadership position you know that change is inevitable and it is usually a positive sign.  Your adaptability is critical in keeping pace with changes in technology; employee participation; and customer expectations.  Leaders change or are left behind and the message I hear coming from Trump supporters is just that.  The truly unfortunate thing is that Trump is the only one giving voice to this matter.  Others are simply defending the indefensible.

Trump is not leading.  He is simply providing an alternative.  Likewise, if you do not lead with authenticity others will find an alternative. 

Employees will find alternative employment or an alternative leader.  Customers will find alternative sources.  Suppliers will find alternative markets.

I doubt that Trump appreciates or cares about the lessons he is imparting.  Win or lose, he will still have a soft landing.  The same cannot be said for your failure to lead.  

Remember...reputation is what others think of you; character is what you really are...

Choose character! Lead well.

Survival Guide

As I have noted here, several times, we are uncharted territory.  So I thought that this primer might serve as a helpful reminder of how to cope until things improve.  Feel free to add to the list, and send along your thoughts for all the share.

1. Hire people who will work for minimum wage.  After all, in these times no one expects superior service, value for money, or a pleasant disposition from the people who represent you.  Why pay more when it does not really matter?
2. Hold off on any investments that will make people more productive.  Keep old computers, cell phones and internal systems.  No one is spending money these days so it would be a waste of resources to make it easy to deal with you.
3. Refrain from using any social media.  Facebook is a fad; the internet is insecure; and all the other options are only being used by kids in high school...and that is not your target market.  Until they come up with something better than a fax machine, trust word of mouth to promote your business.
4. Lower your prices.  Being the cheapest has always been a tried and true marketing approach. Look at Apple.  Their cell phones and computers cost way more than competitors and where has that got them?
5. When you sell at a lower cost you can justify lowering your quality too.  So see how you can cut corners.  Should people not get what they pay for.
6. Rule by fear; its a proven motivational approach.  And it will ensure that no one troubles you with recommendations for improvements that you will ignore anyway.
7. Resist external advice.  What the hell does anybody else know about how to run a business. Besides, most of that advice will cost you something and why pay for another opinion.  You already have lots of opinions of your own!
8. Wait it out.  Things will eventually return to normal.  The last decade or so has simply been an aberration (look it up).  Then let the good times roll again.
9. If things really get tough, the government will know what to do.  You can count on a bail out because they are simply flush with cash and they are in the rescue business.
10. When all else fails, cheat.  You have a second lifetime to rebuild your reputation.

So there you have it.  This is by no means a comprehensive list but it will give that jump start you have been looking for.  Oh, I forgot, you already knew all these things.  You are just glad to have to have someone else confirm it for you...