Sharing equity with your team can be a powerful motivator, and there are two basic ways most firms do it.
Kids and employees have an amazing ability to pick up on when our behaviors don’t match up with our words.
For those of you who are parents, you will be all too familiar with the fact that we tend to say one thing, but do another – which is something our kids are great at pointing out. Kids have an amazing ability to pick up on inconsistency, especially when our behaviors don’t match up with our words.
Every business has the occasional fire. When it hits, you should have plenty of people who we call “Firefighters” while avoiding folks we label “Snow Cones.
“Every business, from successful startups to well-established corporate giants, hits a rough patch or two. It’s just a part of doing business.
But if you’re going to weather those storms as an organization, you’ll need people who can handle the heat and won’t melt under pressure. In other words, you should be hiring plenty of who we might call “Firefighters” while avoiding bringing on folks we might label “Snow Cones.” Let me explain. Continue reading Are Your Employees Firefighters or Snow Cones?
Every year, I speak with nearly a thousand CEOs in detail about their companies. One of the key topics that I talk to all those CEOs about is their strategy for achieving future growth. Whether that’s expanding a business geographically, or even by entering new emerging markets, every CEO has a choice about how to achieve that goal of growth.
It turns out, regardless of what your growth goal is, you have three options to get there: Build, Partner, or Buy.
Let me explain what I mean by each of these options.
Your first option when it comes to implementing your growth strategy is to launch the new project yourself by investing your own resources and talent to build it. Building also involves learning, as there are certainly things you don’t understand about the new space and you will be learning on the job. Building has several key advantages, including the ability to have total control. There is also the fact that whatever gains you accrue through your growth are all yours to collect. That’s not to say that deciding to build doesn’t come with some risk as well. It generally takes more time than the other options, it is possible to make big mistakes due to the lack of knowledge I referenced and you have to invest all the capital, so it isn’t cheap.
A great example of a company that pulled off a successful Build growth strategy is Loctite, the adhesives company. Several years ago, the company decided that its growth goal was to double its sales. And to do that, the company made the decision to double its sales-force. In other words, they chose to invest in building their growth by hiring, training, and investing in new sales people that doubled their sales force – which is what created a lot of risk until that new sales team started to become productive. But in the end, it proved to be a wise investment as the company more than doubled its sales in just a few years.
A second option when it comes to putting your growth strategy in motion is to find another company to partner with who can help you reach your goal. In his popular book, Blueprint To A Billion, author David Thomson analyzed the seven factors that enabled companies to reach a billion dollars in annual revenue. And almost all the companies Thomson studied had what he calls a “big brother” partner, meaning a larger more-established company that helped them get into places and markets they couldn’t reach on their own. The best partnerships also leverage the different strengths each partner brings to the table, such as resources, talent, or market access.
A classic example of a Partner strategy like this paying off in a big way is when a then-scrappy startup called Microsoft partnered with computer giant IBM to sell the MS-DOS operating system on its PCs. IBM put MS-DOS on every single PC they sold. Microsoft, which had the best technology to offer, found a partner who helped it spread that technology through its vast distribution system all over the world – something little Microsoft could never have done at the time. Obviously, we know what happened after they created that beachhead on millions of PCs.
One downside of partnering, however, is that no matter how successful you are you still need to split the gains with your partner. There is also the issue of sharing decision-making and control with your partner – which is a dynamic that some organizations handle better than others.
Your third option in putting your growth strategy into place is to acquire a business in the area you want to expand into. The upside of this approach is that it’s typically a fast way to enter new markets and to acquire new expertise. But there is also potential downside, especially if you don’t know which questions to ask about whether your acquisition target is a good fit with your organization or not. As we know, many acquisitions fail to live up to their financial or performance expectations because the acquiring company hasn’t done its proper homework.
I was working with a fast-growing company in the credit and collections market. They worked with large multi-unit housing complexes to help collect overdue rent from tenants. But the company wanted to grow even faster, so it looked at acquisitions to reach their goals more quickly. The first deal they did was to buy a medical collections firm – which was something far outside their own area of expertise. While their intention to diversify into a new market made sense on paper, the company soon recognized that the acquisition was a mistake because they didn’t know enough about the medical collections industry. Fortunately for them, the company course corrected and recognized that if they were going to acquire, it should be in the housing collections market, where they could strive to be the best in the industry. They ultimately did this and found great success.
The mistake they made was to believe that acquisition was a strategy rather than a tactic to achieve the longer-term goal of growth. In their case, growth in their core market with bolt-on acquisitions.
So, when it comes time for your organization to think about how it needs to grow to meet its long-term goals, choose carefully when it comes to which tactic: build, partner, or buy. Any of these three options might be the answer to helping you reach your goal, just be sure you’re asking the right questions before you pull the trigger – just don’t confuse a tactic for a strategy.
When you’re hiring, think beyond the skills and experience a candidate might have and assess whether you want a patriot or a mercenary.
When you’re thinking about hiring people, especially those in mission-critical-type positions, you need to use caution because the stakes are so high anytime you make a bad hire. But beyond whether they are an A, B or C Player and the skills and experience a candidate might have, you also need to assess whether they are a patriot or a mercenary. Let me explain.
Patriots are employees who seek to join your company because they believe in your organization’s purpose and mission. They want to contribute to the cause. Maybe they are drawn by what your company does or how you do it because it resonates deeply with their own personal beliefs. This can be a very powerful draw for some job candidates, many of whom might even be willing to make personal sacrifices like taking less pay, relocating their family or even working long hours for the opportunity to be part of your organization. Patriots are also deeply loyal to the organization and tend to stick around even when times are tough and the bullets start flying. We often see startups filled with people like this who choose a job based on its higher purpose rather than higher pay because the organization doesn’t yet have the resources to offer much in terms of compensation.
Mercenaries, on the other hand, choose their next job based on how it will benefit them as an individual. You can identify a mercenary right away just by looking at their resume, where you’ll find lots of short tenures and plenty of job-hopping – something that’s common in job areas like sales and software developers. That’s not to take anything away from a mercenary’s skills: they are usually very talented and in demand. The tradeoff is that, unlike the patriot, if a mercenary’s personal needs aren’t being met, they are likely to jump ship at the first sign of trouble. Usually, they are just there for the money.
Why The Distinction Matters
One reason its critical to understand whether you are hiring a patriot or a mercenary is that your choice will impact your culture. Patriots are the people who live your culture on a daily basis and do things the way you want them done. Mercenaries, on the other hand, don’t always think the rules apply to them – especially if they are producing results.
While mercenaries can be very valuable to the growth of your company, you need to understand that they also carry a risk to your culture – at least depending on your business model. If you run a bond trading firm, for example, you might rely on a staff of 100% mercenaries – and that’s a good thing. But for most of us, especially those of us who want to build a company and a culture for the long haul, we need to be careful about how many mercenaries we have on staff relative to our patriots.
Consider the example of a company a friend of mine owns that operates in the government contracting space. It’s a tough business that relies a lot on relationships and social networks to be successful. That means that having a top-notch business development person is critical to any company’s ability to land new business. These folks have a very specialized, and valuable, skill-set – which means they can be hard to find and retain.
In the case of my friend’s company, he was fortunate to hire one of the best business developers around. And this guy delivered: he landed several large orders for the company (that he was well compensated for, by the way.)
But it also became apparent that digesting the work involved with those contracts was going to take my friend’s company at least a year to work through before they would be able to go out and bid on any new business.
Guess what happened? My friend’s business developer jumped ship rather than risk earning less by waiting for the company to chase new work.
This is a classic case of what happens when you hire a mercenary versus a patriot, someone who would have been willing to shift roles or jobs in the interim as a way to stay with the company and be part of its success over the long haul.
Both patriots and mercenaries can play important roles in your organization’s success. Just know what you’re hiring up front so you can plan best for the long run of your company.
Business partnerships fail frequently. But we can learn from how people in good marriages manage their relationships to improve the odds.
Starting a business is no small endeavor, especially if you’re doing it alone. That’s which why many entrepreneurs choose to partner up. Having a partner helps make starting a business seem less risky because it gives you two or more brains instead of one as you go along your journey. The same goes for joint ventures and other forms of business partnerships. And there have been some fantastic business partner success stories over the years like Pitney & Bowes, Hewlett & Packard and even Ben & Jerry.
But along with the successes come plenty of partnership horror stories. In fact, there are many parallels between going into business with someone and getting married. Even the statistics aren’t even as good as the success rate of marriage, where just about half of all of the relationships fail over time.
What that means is that when it comes to forging a business partnership, there are some lessons you can apply from the world of marriage to help improve your chances for success. Here are some tips to consider:
- Be Thoughtful About Who You Partner With.
Have you ever met anyone who got married after just meeting someone? That kind of thing only happens in the movies. Why? Because we all want to spend time dating someone and getting to know them before we get engaged to them. You should have the same attitude when it comes to choosing a business partner. Don’t jump into anything too quickly. Take your time to vet the other person and make sure you have the kind of chemistry that will last through the good times – and especially the bad ones – before you make the commitment in time and treasure to start a business together.
- Plan For The Break-up.
Nobody likes to think their relationship will fail, but the statistics are sobering: more than half of all partnerships, end in divorce. That means that right from the start, when you and your business partner are crafting a partnership agreement, you need to be planning on how you will end your relationship on good terms. Think of it like a pre-nuptial agreement for your business. That means detailing out how you will value the business when one partner wants out and how the buy-out will be structured.
If you don’t have this agreement in place and you hit an impasse in your relationship, you will find that things will get ugly – and fast. That’s because the incentives are all wrong. The partner who wants to leave the business wants to keep as much as he can while the partner who is staying wants to pay out only enough that it won’t impact the business. If you don’t have a way to structure that deal until emotions are high, you not only risk further damaging your relationship, you might also put the entire health of the business at risk as well.
I know of one example where two partners in a management-consulting firm went through a buy-out where they didn’t have an agreement in place when they started the business. The end result was that the partner who stayed with the business was forced to pay a premium to buy out his partner – which left his business with a massive debt burden for the next six years. That could have been avoided with better planning at the start.
While it might seem strange to plan for your partnership breakup from day one, you’ll be happy you did it later on.
- Work At It.
People’s objectives and goals in life change over time. That’s as true in marriage as it is in business. That means it’s inevitable that at some point, your partner’s goals will begin to differ from yours. The key to overcoming those changes if you don’t want to end your partnership is to constantly work on your communication and on setting clear expectations for each other.
I met the principals at a financial services firm where the two partners faced this very dynamic. One partner was solely focused on growing the firm while the other partner was comfortable with the level of wealth they had already achieved. While one partner was playing to win, the other was playing not to lose. It took extended discussions and concessions to find a way to move forward that keep them both happy.
They key is that they discuss those differences and learn to compromise on solutions that work equally well for both of them moving forward – or they could face the prospect of a partnership divorce.
- If All Else Fails, Get A Counselor.
If you and a partner reach a point where your interests and objectives are diverging fast, it can become very challenging to work out those differences by yourselves. That’s when it can really make sense to bring in someone to help facilitate your conversations similar to how a marriage counselor might work. In the case of a business partnership, you could turn to a mentor, a board member, or even a third party facilitator who could sit down and listen to the issues objectively. While those discussions might result in a decision to break up the partnership, a counselor could help you reach that point much more amicably and with less emotion than you could on your own.
The key point is that if you’re thinking about starting a business with a partner, head into that relationship with your eyes open because while you might be mitigating risk on one end, you’re also increasing it on another.
There is a single question that you can use to assess whether candidates understand the job and if they are A or C players.
The secret to hiring your next great employee might come down to how someone answers a single question. And you won’t be asking what kind of tree the person would be or about her Myers-Briggs profile. It all comes down to measuring performance. Let me explain.
The authors of the book Who suggest you can immediately begin to distinguish A players from B and C players, beginning with your initial phone screen. You do so by telling a candidate exactly how you will be measuring his or her performance in the job you’re hiring for.
How candidates react will tell you plenty about them. C players, for example, probably won’t be able to hang up the phone fast enough, since they don’t want any part of being measured. A players, on the other hand, will take your bait and get excited for the chance to excel. They might even up the ante by asking you what’s in it for them if they really crush it and exceed your expectations.
It turns out there’s an even better question you can ask candidates to help assess if they are true A players once you have them in for an interview. I learned about this magic question from Joel Trammell, the CEO of software company Khorus, who I wrote about in my book Great CEOs Are Lazy.
Joel believes that CEOs can’t delegate hiring decisions to someone else like HR. He perfected his hiring method by interviewing every single one of the hundreds of employees in his company.
Doing those interviews, Joel found that there was a single question that helped him assess whether a candidate understood the job being applied for and what he or she needed to do to excel in it.
“If I was to hire you, how would I know if you were doing a good job?”
This is a great question because it forces the candidate to put herself into the job and be thoughtful about how she might be measured by you, her boss. The answer you get will tell you a lot about the candidate’s maturity and comfort level with having her performance measured.
If you ask a C player this question, for instance, you might get some stammering followed by some noncritical metrics such as he will show up for work on time and not take extended lunch hours.
A players, on the other hand, will give you exactly what you’re looking for. Let’s say you are hiring a software engineer. When you ask an A player the magic question, he might respond by saying you will know whether he is doing a good job by using three metrics: the total volume of software code he produces on a weekly or monthly basis; the quality of the code based on a limited number of bugs; and his on-time delivery rate in which he hits the targets he said he would.
This would be a great answer because each of the metrics is measurable and quantifiable. You know if you had a group of engineers who were all willing to be measured on those metrics, you’d have a high-performing team.
Similarly, if you were hiring a salesperson, you might want to hear her answer the magic question by saying that you could tell she was doing a good job if she was exceeding her quota and selling profitable business, and her customer satisfaction rating was off the charts.
A key point here is that while you might know what you want to hear from a candidate, leave some wiggle room to be surprised and to learn something new about the position from an A player–someone who might think of a metric you’ve never considered.
The beauty of asking the magic question is also that, after the candidate gives you his answer, you pause for a second and say: “Let me write these down because, if I hire you, this is exactly how I will measure you after you start your new job.”
In other words, you can use the answer to the magic question as a great onboarding tool in which you have eliminated any chance that your new hire will be surprised about what is expected of him after he starts his new job.
How magical is that?
Great leaders focus in on what we can call the “Talk/Do” ratio. Put simply, they measure how much their employees talk and communicate compared to how much work they actually get done.
How do you go about evaluating the talent in your organization? There are obviously many different performance metrics you can look at. But sometimes an employee’s verbal skill and presence can cause you to overlook their real impact.
That’s why when it comes to evaluating the
talent in their organizations, great leaders focus in on what we can call the “talk/do” ratio. Put simply, they measure how much their employees talk and communicate compared to how much work they actually get done.
When you go through the process of categorizing your team in this way, you’ll find that most of your people will fall into one of three buckets. Not unlike how Goldilocks evaluated her porridge options, you’ll see that you’ll have some that are “Too Hot,” others who will be “Too Cold,” while the best will be “Just Right.” The real value of using this metric is to then use it as a coaching opportunity to get as many of your team into the “Just Right” bucket as possible. Let me explain what I mean.
“Too Hot” or Talk/Do Ratio Too High
We all know the people who talk all day long–and yet get very little done. Their verbal skills are usually impressive and it is hard to penetrate what is really happening without real effort. These are your “Too Hot” people; the ones who blow too much smoke. There is an old English phrase that applies here that goes: “At the end of the day, when all is said and done, more is said than done.” It applies to this group.
They are also the folks who can have a negative ripple impact on the rest of the organization because they eat up other people’s time in meetings and impromptu chitchat. As a result, everyone gets less done. These are people I also define as amplifiers. The coaching opportunity here, obviously, is to let these folks know that they quite simply need to spend less time talking–and more time getting things done. Try not to lose focus on their accomplishments due to their verbal skills.
“Too Cold” or Talk/Do Ratio Too Low
What leader doesn’t love the employee who keeps their mouth closed and their head down so that they get enormous amounts of work done? Sounds like a dream, right? While it’s great to have such productive people, it can actually be a detriment to the rest of the organization if they aren’t talking enough about what they’re doing–and when they’re going to do it by–to get everyone on the same page. We see this a lot with highly technical and introspective talent, like programmers, who would prefer to be left to themselves to work. The coaching opportunity here is to help these folks understand how engaging with others in the organization can make their work even more effective and engage the team.
“Just Right” or Talk/Do Ratio Correct
Finally, you have the people who have learned to strike the perfect balance between talking and doing–your “Just Right” bucket–their Talk/Do ratio is right on point. These are the folks who communicate without sucking people into too many conversations or meetings while also producing the right amount of output. The more people like this you have on your team, you’ll be amazed at how the level of cohesion and productivity begins to skyrocket. The only coaching lesson they need is to be encouraged to keep up the good work.
Realize that each organization has their own ratio and the right ratio for a high performer within that organization needs to match the business. Some require high communication to be successful and others expect people to put their heads down and work. When you are thinking about the Talk/Do ratio – you need to include the context of the culture.
So when it comes to evaluating the talent in your organization, consider using the Talk/Do Ratio to ask whether someone is Too Hot, Too Cold, or Just Right. Your organization will profit as a result.
If you want to learn more about other characteristics other great leaders share, check out my new book, Great CEOs Are Lazy, which is available for sale on Amazon now.
This article is excerpted from the book Great CEOs Are Lazy (Inc. Original Imprint, 2016)
A lot of the mediocre and hardworking CEOs we have run into over the years are exceptionally good at what we call “peanut buttering.” When it comes to allocating their time to the various tasks and stakeholders in their businesses—their boards, their supply chains, their investors, their communities, etc.—these CEOs do their best to spread their time as evenly as possible across all of them. The concern, of course, is to make sure everyone feels like they’re getting the CEO’s attention. In this effort, the CEO will work very hard, sometimes as much as eighty or more hours a week. The bad news is that this is the surest way possible to dilute the CEO’s impact on any one issue. Unfortunately, this concept of tending to every stakeholder is taught at many major business schools, which only perpetuates the error. This is done, in part, because CEOs aren’t certain what actions will drive the business forward; consequently, they work on all fronts, hoping one will yield results.
Lazy CEOs, on the other hand, play favorites with their time. Rather than allocating a uniform amount of time to everyone and everything, they give usually between 30 and 50 percent of their time specifically to the task of removing the constraint(s) in the business. Remember this: It’s only the work done at the point of the kink in the hose—the constraint—that will truly make a difference in your business. Whatever time is left gets distributed to the other stakeholders—some of whom may get zero CEO attention then, or perhaps forever. In an ideal world, smart CEOs would build a strong organization of individuals who would handle all of the work that is not at the point of constraint. That way, the only work our Lazy CEO would do would be to remove each constraint as it arose.
What do you do when someone who is unquestionably brilliant is also a jerk?
We all work with someone who is unquestionably brilliant. You know the type: the person who consistently comes up with great insights and ideas and who can cut to the quick far faster than anyone else in the organization. It’s hard not to step back and admire how the person’s brain works.
At the same time, such people can begin to think their gifts place them above everyone else in the organization. They tend to hog all the airtime at meetings by intimidating and maybe even ridiculing those who might have the audacity to offer their own take on a situation–thus suppressing collaboration and participation throughout the rest of the organization. They also follow their own rules and are evenabusive to the rest of the staff. They aren’t nice people to be around. In other words, these people are jerks–which creates real issues within your organization.
But since they are brilliant, what should you, as the leader of the organization, do about it?
Netflix CEO Reed Hastings has been very clear about what his organization does with its brilliant jerks: It gets rid of them. As he has said in the past about them: “Some companies tolerate them. For us, the cost to effective teamwork is too high.”
What Hastings came to realize is that regardless of how smart or even how productive such employees might be, they can actually begin to rip an organization apart from the inside if they don’t buy into the organization’s values and embrace working collaboratively.
In my upcoming book, Great CEOs Are Lazy, I call these folks “cultural terrorists” because of how destructive they can be to an organization. Certainly, your first option should potentially be to use coaching as a way to polish a brilliant jerk’s prickly edges. Obviously, you can’t make anyone a nicer person, but perhaps you can make the person aware of how damaging her behavior is to peers and see if she is willing to make changes accordingly.
If these folks are unable to change their behavior, however, then they leave you no choice but to exit them from the organization. By doing so, you’re making a powerful statement to the rest of your team about how important your culture is–what is tolerated and what is not. The longer you let them remain, the more damage they cause inside your culture and to your own reputation as a leader. People will lose trust in your abilities, which can undermine all the hard work you’ve done to build a strong team in the first place.
When you exit a cultural terrorist, it should be known within the organization that the person is no longer with you because of her behavior, not due to her performance on the job. This will set a tone about the kind of culture you want to build and the kinds of behaviors you’ll accept–and the kinds you won’t.
There are organizations where brilliant jerks are welcomed and where they thrive. For example, I know of several prominent consulting firms where individual contributions are valued more than teamwork. And that’s OK if that’s the kind of organization you’re trying to build.
But if you’re like Netflix and believe there is greater collaborative power through teamwork, then you need to act now when it comes to dealing with your brilliant jerks. You can’t afford to wait until after the damage has been done.