Leadership in Uncertain Times

Even the staunchest optimist would have to admit that we are in some difficult times. It is up to those of us in leadership positions to bring our companies and our nation through these times to prosperity and abundance again. There are a few tings that we can do to assure that we are leading effectively and toward prosperity.

1). Lead, don’t follow. Remember that it is your job to lead your company forward, not to follow the corrupt politicians and greedy traders on Wall Street. Let your employees know that, while things are, indeed, rough out there, your company intends to win in these difficult times.

2). Don’t be greedy. The spectacle of CEOs taking multi-million dollar payouts when their companies are failing is not only disgusting, it is very dangerous, not to mention immoral. It is dangerous for several reasons. First, it invites greater government intervention in corporate decisions. Second, it incites fury. While the time in America is not here where CEOs are pulled from limos and killed in the streets, this has happened at many other periods of history throughout the world. And some of the most dangerous words in the English language are: “It can’t happen here.” Third, it takes needed capital from the company.

You must show leadership by sharing the pain of all stakeholders with them. If your employees and stockholders or members of your firm are suffering, you shouldn’t be taking major bonuses. Use your head.

3). Don’t be stupid. Keep in mind that every single decision you make is a public relations and employee relations decision. If you’re one of the “C” Level executives who has been foolish enough to surround yourself with “yes” people and butt-kissers, get a clue and fire them! It is time that leaders realized that they are nothing without their employees. It is also time to realize that employees may stick with an uncaring and arrogant executive in the tough times because jobs are scarce. But executives also need to realize that their best employees always have other options and that, even for their mediocre employees, there will come a time when changing jobs is much easier. Good employee relationships now will help assure that you make it through these times, and continue to prosper when the tough times are over.

The same holds true of customers, only more so. Customers will not stick with a company in tough times unless that company has built solid customer relationships. And don’t think that doing things like taking a big bonus when you’re laying people off isn’t both known and taken into account by the public when making decisions about which stock to invest in, which product to buy, and which companies they favor.

4). Get out of La-La Land. I see far too many “C” Level executives living in a world of their own. We had one of our Executive Round Tables about 8 months ago where I and a couple of our clients predicted the mess we’re in now. One of our “C” Level executives was furious. He spouted the party line that everything was solid and it was simply “Liberal propaganda” that things were getting close to a dangerous point. Well, I’m not a Liberal, although I don’t have the unreasoned hatred for Liberals that so many seem to have. Neither were the other people predicting this mess. But the reaction of reactionaries tends to be to discount any truth or facts that don’t fit with their world-view. Their mind is made up. Who needs facts?

A leader is intelligent and farsighted enough to recognize when things are going downhill and takes effective action, not burying his head in the sand. The CEO who got upset with us has landed at a company as its CEO now. I sincerely hope for the sake of his stockholders that he has taken his head out of the sand (or certain parts of his anatomy) and is operating on reality instead of ideology. Save ideology for arguments over adult beverages. Practice pragmatism and reality in running your company.

5). Practice prosperity thought and behaviors. One of the more foolish things that executives can do in tight times is to panic and act like the sky is falling. Reality: America and American companies have weathered tough times before and they will this time. Keep in mind that a good deal of the panic out there is manufactured by the political candidates and the media. It gets candidates elected and sells product for the media.

Instead of buying into the hype, as a leader you need to both keep calm and convey calm to your employees, your customers, the public at large and the markets. Wall Street is a place where emotion rules. The stock price of a company has little to do with its actual prospects but, rather, with a perception as seen by highly emotional traders. This has very little place in your boardroom. See the whole picture. Operate with logic and calm. And believe in the future of your company and the free market system as a whole. Walk and talk prosperity and abundance and they will be yours. Don’t commit fraud, of course, or lie to people, but put on the best honest face possible and believe that you will come through any troubles.

6). Fight government interference. Finally, we are in a position to have a great deal of influence on how far the government gets to stick its very large nose into our businesses and lives. Keep them out of it as far as possible! Don’t support government intervention.

In a free market system government intervention is deadly. It makes losers out of winners and winners out of losers. We know best how to run business, the government doesn’t. And, look, none of the candidates running for the top offices, and very few of the Congressional candidates have ever actually run a highly successful business. Contrary to propaganda, government and business are two highly different entities. While the government and businesses have been getting in bed with one another a great deal recently, this is a loss for everyone. For the people, it curtails our civil rights and freedoms. For businesses it curtails our rights to run our businesses the way we believe will generate the best cash flow. Businesspeople who support government intervention would do well to remember the old adage about government and business. Getting in bed with the government is like getting in bed with a hippopotamus. It is very warm and comfy until the hippo roles over.

Now go out and lead!

J.

Making It Through The “Financial Crisis”

Sorry for the hiatus --- my wife and I have been moving from one side of town to the other. We had sold a loft we owned and lived in about 3 years ago. This was at the advice of our “C” Level clients and a banker friend. We, therefore, didn’t wind up losing tens of thousands of dollars on it, as we would have if we waited any. Developers have been building literally hundreds of new lofts in the Denver LoDo area, many of which are standing empty.

We then, again with the advice of some very money-wise people, moved into a cracker-box (and rented three storage sheds for our “stuff”) to wait out the housing crisis, which, three years ago, everyone assumed would be over in a year or so. Right. Well, to make a long story endless, when it was clear that the housing crisis wasn’t resolving anytime soon, we decided not to camp out any longer in the cracker box, and got a house that we could actually put our furniture, hundreds of books and other treasures in. And therein lies a column…

No one can predict what is going to happen in a financial crisis. I am very against “Wall Street Welfare.” We are, at least for the time being, capitalists, or, to be more accurate due to decades of encroaching government regulation and meddling, socialistic capitalists. Capitalism means that there will be winners and losers. It also means that, while there are winners and losers, no one has to be a permanent loser.

The alternative, except in a utopia, is either that everyone but the government winds up in mediocre circumstances (Socialism) or that everyone but the government is kept in poverty (Communism) or that everyone but the government and the favored corporations is kept in loss or mediocrity (Fascism…look at the actual definition of Fascism, not how it is currently used by demagogues trying to get your vote…and see why there can never be such a thing as “Islamo-fascism.). Now, call me idealistic, but I am a laissez-faire Capitalist (as well as a Libertarian, but that is a whole other Oprah). Let the free market be free and let it decide. Let there be winners and losers, and let that be determined, not by government collusion or regulation, but by hard work, serendipity and wisdom in investing. Unfortunately, my opinion is in the minority in this country of ours — which became great by the majority of those with influence being of the same opinion I am now…both as a pure Capitalist and a Libertarian.

Back to this current “financial crisis” and executive employment, however.

One thing that you never read much about unless you dig is the fact that many more people became wealthy during the “Great Depression” than lost everything. Unfortunately, my grandfather, who was an attorney and heavily invested in stocks, wasn’t one of them, or I’d be sipping Mojitos under a Caribbean sun right now instead of writing to you. But the fact is that economic conditions do not determine whether or not you’re going to be wealthy. Many other factors do.

One of those factors is making wise choices. For example, our company is actually dong quite well right now. We produced the same amount of revenue by the end of the third quarter as we produced all of 2007. And we expect another record year in 2009. The reason is simple. We have set up our company so that it does well in a boom, in mediocrity or in a recession. We’ve deliberately stayed small enough so that we can swap out “modes” in which we’re working in about a month. And I am a “news junkie” and “policy wonk,” so I have a pretty good idea what’s going on in our country and how it is likely to effect our business, at least in the short-term.

But no one can predict the long-term with any degree of accuracy. Hence, our housing odyssey.

Executives need to remember this and make a personal employment plan similar to the way we run our company. Choosing a company to run wisely is, of course, the best way to assure that your position is safe. If you are currently a CEO or COO, or have influence with these folks, it is a little late, but there is still time to ask what you can do that is counter-recessionary. Virtually any company can make money in a recession, or even a depression. While the time to plan this is during a boom, just like it is best to start networking while you’re employed, it is better to start late than never.

Our clients do quite well in a recession (and, regardless of government figures, there have been several over the last 25 years). They also do well in a boom. There is no great secret here — just good planning and a recognition that economic conditions need not be frightening if you are prepared to prosper from them.

If you are unemployed now, you are probably a little terrified. Relax. There is no reason to be. If you are well-networked, know where the unadvertised (or even as-yet-not-open) jobs are, and can get someone to introduce you to their fellow board members or executives, you will be employed again rapidly. If you are not well-networked, look at a well-connected Executive Transition Coach who can introduce you to the people you need to meet. If you’re in the Front Range/Denver, Colorado area, I’m happy to meet with you and give you some direction. If you are not, ask around to your friends and golfing partners and find a coach who is well-connected, successful, and experienced in dealing with top executives. Even the best coach will run less than a couple of weeks salary for top executives, and is the best investment in your career you can make — so long as you recognize that there are plenty of scams in this business and choose carefully.

All in all, however, don’t “buy into” the panic and fear that the media is generating. This is how they sell newspapers and news shows. Everything is always a crisis. There is always “breaking news” about some disaster somewhere. The media loves the crisis “flavor of the week.”

Getting through this “financial crisis” is not difficult. It just requires a bit of paying attention, managing attitudes and making wise decisions. As always, please feel free to give me a call if I can be of any help.

To a prosperous year,

J.

Evaluating Your Staff

It is close to that dreaded time of the year again. No, not the holidays, although their impact on productivity is enough to make any of us a bit Scrooge-like. Rather, it is close to time for first of the year evaluations of your staff. While your company probably has a form that lower-level supervisors can use, evaluating executive staff is a whole different breed of cat. Here are some tips to help make it less painful

1). Keep it as objective as possible. Rather than speaking in generalities, speak in facts and evidence of success or failure. Quantify the wins and the losses of your executive staff as much as possible. As Harold Geneen (Chairman and CEO of ITT in its halcyon days) used to say, “The slavery of the numbers will make you free.” Use them here, too.

2). Have specific examples, demonstrations and evidence on hand. Make sure that you take the time to prepare for an evaluation of a staff member.

3). If you can get away with it, skip so called 360 evaluations. They’re useless and lead to less effective executives. Often executives who are being evaluated on the absurd 360 forms, just like teachers who are facing student evaluations, will make decisions that will make them popular with everyone so they won’t get a poor eval. This means that companies with these monstrosities wind up with less effective executives. While you don’t want a complete jerk in an executive position, you do want a leader who may have to make very unpopular decisions for the good of the company. Let the individual’s superior evaluate him or her, not their staff or peers. 360 evals are nothing but a tool for character assassination, political power plays, and staff grudges. Skip ‘em if you can. If you can’t, begin lobbying for their abolition for the good of the company. (Call me for more on this if you’d like.)

4). Reward long-range thinking even more than short-term success. American companies have a fatal flaw which has led, in part, to the current crisis on Wall Street. American companies are “quarter” oriented. In other words, American companies look at what is produced in a quarter or a year, not in a five year plan.

But five year plans are essential for true, prudent and responsible corporate growth. Long-range strategic thinkers, however, often get stabbed in the back by their CEOs or Boards (not to mention the [unprintable expletive] media!) for not producing $X amount of revenue in a particular quarter. Sometimes, however, as any chess player will know, you must take a few strategic “hits” to gain long-term success. Asian companies think in terms of 2, 5 or even 10 year plans and reward executives who have foresight and strategic planning expertise. They are much smarter than American companies. This is why Asian companies who compete head-to-head against American companies kick our butt time and again. And now, in addition to the excellence of Japanese products, we’re going to have Chinese and Vietnamese products to compete against. Yes, China is having some regulatory problems. But the executives involved in these often get the death penalty. This is not a bad idea for American companies to adopt, at least so far as ending an executive’s career, if not his life.

Take a clue from the people who have had an unbroken 5,000 year plus civilization and business world, and reward strategic, long-term thinking even more than short-term revenue success.

5). Evaluate the ethics and values of your staff, not just their performance. Unless you want to be another Enron, make it clear that “success at any cost” is not tolerated. Put together a strong, but reasonable code of ethics, and demand that it be followed completely. Punish those who do not follow it, especially at the top, with immediate termination. A beheading is always good for morale and productivity.

6). Observe interaction with peers and subordinates. Rather than a 360, get out of your office and observe. Evaluate on real interaction, not on reported interaction. Learn to be a bit sneaky and unobtrusive, so you can quietly observe from anywhere. And get out on the floor rather than hiding in your office. If you aren’t observing the personal interactions of your employees, you’re setting yourself up for trouble down the line. Don’t be a snob. Hobnob with everyone from the custodian to your second in command with equal respect.

7). Evaluate on attitude as much as on performance. It should be clear that each member of your executive is truly on the team, and not a loner pretending to be on the team.

8). Make it a two way conversation. Too many evaluations are one-way conversations. At the executive level it should be a two-way conversation. Put your ego aside and ask for honest and blunt feedback about what you and the company should be doing differently. If you actually get an executive with enough guts to tell you the truth, don’t punish him or her, promote him or her, or, if you can’t promote this person, keep him or her by your side. Someone who will tell you the truth is a rare commodity in American business these days.

9). Don’t B.S. your staff. Don’t tell them one thing and reward another. At the executive level your staff deserves and needs to know what you’re really thinking and what your real goals are, not some press release mumbo-jumbo. If you’re dishing out mumbo-jumbo because you’re concerned about a team member betraying you, fire him or her and replace that individual with someone you can trust. If you can’t fire him or her because he or she is friend or relative of a board member, it is time to call me and let’s get you outta there!

10). Set realistic goals that can be reached with a reasonable amount of effort. Those who set unattainable goals to keep their executives in check are simply fools. Set goals that stretch the weak areas and play to the strong areas of each executive. Then check back periodically. Remember that one of your vital jobs as a CXO is to coach and mentor your staff. If you’re on a “power trip” or find helping your staff to be threatening, please do us all a favor and quit and go be a Tibetan monk or something useful, because you’re a very bad CXO. Good top level executives help their staff reach corporate and personal goals — not play head games with them.

Remembering these ten essential keys to senior staff evaluation will produce a staff with trust and respect for you, and, as well, increased productivity.

One final thing. Please ignore the gloom and doom sayers on Wall Street and our government. If this particular government didn’t discover crisis after crisis we might not keep putting these folks in power. The “Wall Street Crisis,” we will find, is a bit like “Weapons of Mass Destruction.” Choose to opt out of the recession and go out and be prosperous. Think and behave in ways that generate prosperity instead of fear. Remember that three times as many people got wealthy in the Great Depression as lost everything. I choose not to participate in this recession, and I hope you’ll join me.

If you want to speak further about these concepts, please feel free to email me at jheckers@heckersdevgroup.com or call me at 720.581.4301. If I’m not in please leave a message and I’ll get back to you ASAP. Please note that you are a reader of my CEO Skills Corner column.

Now go make lots of money!

J.