CEOs Didn’t Start with Fancy Jobs, And Your Kids Don’t Have to Either

As a former peanut seller, I know how much I learned from hawking those bags of goobers at Atlanta Crackers games as a young boy. I also learned many lessons from being a bag boy, babysitter, gas station attendant and a paper boy.

I think of those days every time I see parents stressing over their children finding the perfect summer job, believing it will be the key to their future success. While I understand their concern, I know the most successful people didn’t start as an intern in a fancy office.

One of my first jobs was selling peanuts at Atlanta Crackers baseball games at the Ponce de Leon Stadium, now replaced with a shopping center. The Sears building in the background is now Ponce City Market.

They were baby sitters, fast food employees and vacuum cleaner salesmen. Like me, Warren Buffett started as a paper boy. In my blog, Want to Be a CEO? Any Job Can Be a Good Start, I wrote about the early jobs of the CEOs of Netflix, Dell and Yahoo. None of them included an office with a desk.

Reading about their first jobs is one of my favorite parts of the interviews with CEOs and founders in “The Corner Office” column in the New York Times on Sundays. Here are just a few of my favorites:

Lisa Gersh, former Chief Executive of Goop: After realizing she wanted more than the $1 an hour she got for babysitting, as a preteen Gersh went to classes and got a degree in umpiring girls’ softball. She blew the whistle during games on girls older than she was for $5 an hour.

Mark Nathan, CEO of Zipari: At the age of 10, he took a wheelbarrow and collected old newspapers. Then he’d tie them into bundles, throw them in the back of a station wagon and take them to an industrial market that recycled newsprint. He got $15 for a load.

Deryl McKissack, CEO of McKissack & McKissack: Descendants of slaves, McKissack’s family owns the oldest African-American architectural firm in the country. Deryl began making architectural drawings when she was six.

Ashton B. Carter, former secretary of defense. Carter worked at a carwash when he was 11, but after complaining that he wasn’t included in the tip distribution, got fired. Then he got a job at a Gulf gas station and also worked as an orderly in a hospital. His duties included taking dead people to the morgue.

Yuchon Lee: CEO and co-founder of Allego. In kindergarten Lee resold fancy stickers his father brought back from Japan. In his later years in elementary school, he sold silkworms.

If your child doesn’t end up with a fancy office job this summer, remember that valuable lessons come from any job. And they may have a great “first job” story to tell in their later years when people ask about their success.

Should the CEO Be Fired? That Depends

In the wake of multiple problems splashed across headlines worldwide, speculation has run rampant that Uber co-founder and CEO Travis Kalanick may be on his way out. Issues include claims of sexual harassment at the company, massive loss of users and even a widely circulated video of the billionaire getting in a fight with a driver over fares for black cars.

In an article on Mashable, 5 Ways to Save Uber From Itself, the number one suggestion to save the global company is to fire Kalanick. “If you cut off the head, the body can function … at least temporarily,” the writer claims. Other business analysts claim that while he was once the ride-sharing company’s biggest asset, he is now their biggest liability.

But is firing the CEO the best solution? I advise companies that the decision to fire a CEO is never a simple one and should not be done in haste. There are several factors to take into consideration. And firing a CEO can often set the company back, especially in a time of difficulty.

A recent article in Fast Company, “Why Uber Shouldn’t Fire Its Bad Boy CEO,” made the case that Uber may actually benefit from keeping Kalanick in the CEO’s chair.

The article references this article on the Harvard Business Review, “Holes at the Top: Why CEOs Firings Backfire,” which explains why CEOs are often swiftly shown the door when times are bad.

“When companies do well, their CEOs are showered with money, perks, and adulation. When they do poorly, they’re given the blame—and the boot.”

The writer, Margaret Wiersema, is a leader in corporate strategy and CEO replacement and succession. She studied all instances of CEO turnover for a period of two years and found most CEOs were replaced not by the board after careful thought and deliberation, but at the insistence of investors upset over returns.

She compared performance of the companies from two years before a dismissal to two years after, compared performance with industry averages and then compared the performance of companies whose CEOs had retired as opposed to those whose had been fired.

Wiersema came to the same conclusion that I have after decades of working with companies in turmoil. “Most companies perform no better – in terms of earnings or stock-price performance – after they dismiss their CEOs than they did in the years leading up to the dismissals. Worse, the organizational disruption created by rushed firings – particularly the bypassing of normal succession processes – can leave companies with deep and lasting scars. Far from being a silver bullet, the replacement of a CEO often amounts to little more than a self-inflicted wound.”

I’ve seen companies where CEOs were fired for far fewer infractions. For example, perhaps the CEO didn’t make the numbers for a year or two. The business was still profitable, but it was below expectations and not as profitable as projected. Those CEOs often get fired within 3-6 months, rarely leading to the increase in profits that was hoped for. As for Kalanick, while Uber may be in a public relations crisis, and thousands of users have protested conditions at the company by following the instructions on the social media hashtag #deleteuber, the company is still growing. The head of North American operations claimed growth during the first 10 weeks of 2017 was better than the first 10 weeks of 2016. So maybe he is here to stay. At least for now.

Firing a CEO is not an easy or simple decision and shouldn’t be rushed, especially if big changes are being made to turn a company around. Those changes can take time.

Ultimately, it’s up to the board of directors. They have to make the decision based on a number of factors. But more often than not, it pays to keep the CEO because he can be a part of the solution, even if he was originally perceived as part of the problem.

My book “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” is now available as an ebook.

You Can Fight Fraud. And Win.

We all know Smokey the Bear’s slogan. “Remember – only you can prevent forest fires.” You can use the same slogan for fraud: only you can prevent fraud in your company.

I couldn’t let National Fraud Awareness Month slip by without mentioning a major contributor to revenue loss for a company. In its 2016 Global Fraud Study, the Association of Certified Fraud Examiners (ACFE) reported that a typical organization loses 5% of its revenue in a given year as a result of fraud.

Let that sink in a minute – 5% of your total revenue. Billing schemes and check tampering pose the greatest risk. And here’s another thing to think about, the perpetrator’s level of authority is strongly correlated with the size of the fraud. The higher up the thief, the bigger the theft.

I have written extensively about fraud as it can severely damage a company, and can even cause it to fail. While you can’t prevent fraud 100 percent, you can lessen its effect on your business. Does your company have strong enough fraud prevention measures in place? Here are a few articles to get you started.

Best friends, grandmothers, partners, even church ladies – I’ve seen them all commit fraud. When it comes to protecting your assets, trust no one. Don’t ever think that you know someone well enough to say, “He would never do that.” Maybe not. But don’t find out the hard way.

Sadly, the same goes for family members. Just read about the sad case of Gladys Knight and her son and what he did to her poor chicken and waffles restaurants.

I once worked with a company where the younger brother was running the business and took a salary beyond the limits allowed by the corporate minutes. Unfortunately, the fraud was only discovered after Daddy died and the statute of limitations had run out.

Fraud can occur when you have three elements: pressure, opportunity and rationalization. Knowledge of the fraud triangle is the basis of any successful fraud-deterrence program.

To catch fraud early, you need to know what the red flags are. One of these is when an employee exhibits behavioral changes, undergoes a sudden change in lifestyle or has financial difficulties. Read the article for four other red flags you need to be on the alert for.

According to the ACFE, the most common way internal fraud is detected is by receiving a tip from someone. One of the things your company can do is set up an anonymous hotline for anyone to report suspected theft. Their numbers show that organizations that had one were much more likely to detect fraud than those that didn’t – 45.3% to 28.2%.

My book “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” is now available as an ebook.

5 Tips for Handling Crises

It made national headlines last week: Atlanta’s I-85 bridge collapsed. A three-mile stretch of highway, carrying 250,000 drivers a day through the middle of the city, was shut down after a massive fire caused a bridge to collapse.

Thousands of business owners were suddenly faced with a huge problem. How do they get their employees to work? What about delivery trucks? What about customers getting to their place of business? Businesses close to the collapse faced a worse crisis as access to their companies was compromised. Several businesses in the area are closed as they figure out what to do.

The I-85 bridge collapse in Atlanta caused a crisis for many metro-area businesses.

There were a lot of unknowns about the situation. But one thing is for certain – a city with massive traffic problems already was about to get a lot worse.

As a CEO or business owner, you may have thought through many contingencies and have a plan for what to do in certain circumstances. Maybe you have a bad-weather plan that covers managing your company for a week or two if conditions prevent people from driving to work. If you did have a plan on how to handle transportation issues in the event of a major artery being closed, congratulations!  You are ahead of the game.

For most people, however, a bridge collapse of this magnitude or some other unpredictable crisis falls into the “Expect the Unexpected” category. Here are a few tips on how to manage your company during a time of crisis.

  1. Don’t panic. Don’t stress yourself by imagining worse-case scenarios. Remind yourself you are capable of leading your company in good times and bad and you’ll figure out a way to manage this one as well. People take their cues from you and it’s important for you to remain calm in the face of any type of crisis. Manage your stress levels. When I deal with CEOS in a crisis situation, teaching them how to manage the stress in their lives is crucial to guiding them through a crisis.
  1. Correspond with employees, vendors and stakeholders as soon as possible. People don’t do well with uncertainty. Even if you don’t yet have a plan, reassure everyone that you are meeting with senior management and will be back in touch with your plan. Reassure them and convey a sense of calmness will let them know you are on top of the situation.
  1. Ask for your employees input. As part of gathering information to formulate a plan, it can be a good idea to ask your employees as well as senior management for any intel they may have about the particular situation. For the bridge collapse, asking for information people may have heard through their neighborhood associations about alternatives or finding out information about their access to public transportation can be helpful.
  1. Get creative. Consider all possibilities in the wake of a crisis. If ever there is a time for out-of-the-box thinking, it can be during a time of crisis. Some Atlanta companies have implemented staggered working hours for employees, added more options for telecommuting and are giving discounts to employees for monthly passes on public transportation. A rental car company that has an empty lot and is cut off from getting new inventory is thinking of sending new renters to the airport and compensating them accordingly.
  1. Pick one plan and stick to it. As I advise in my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” when facing a crisis, pick one logical and reasonable plan and stick with it. Align everyone and everything in your company towards this goal and for this plan.

My book “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” is now available as an ebook.

Funny, But True: Two Cases of Too Many Zeroes

Fraud isn’t funny. But some of the failed attempts at fraud can be. Here are my nominations for two people who deserve at least an honorable mention for the Darwin Awards. Neither of their genes should be in the pool.

Like trying to cash a check for $360 billion. In 2008, a 21-year-old man in Texas went to a bank in Fort Worth with a check, claiming he needed the money to start a record company and his girlfriend’s mother had given him the check. That would have been enough money to buy just about any record company he wanted, along with all the rights to every Beatles, Michael Jackson and Elvis song ever recorded.

See anything suspicious about this check? (AP Photo/KXAS-TV)

But the tellers at the Fort Worth bank were just a bit suspicious of a check with 10 zeroes in the number. A call to the girlfriend’s mother confirmed that suspicion. She did not give him the check. My guess is she also did not have $360 billion sitting in an account. He was arrested on a forgery charge.

A woman in Georgia had a few less zeroes in mind when she filed a fake tax return, claiming an income of $99 million. She claimed she was due a refund of $94 million. Revenue agents wrote a fake check of their own, issued to Brigitte Jackson for $94,323,148 and told her to appear at a bank inside a supermarket to cash it.

Brigitte showed up, visions of riches in her head. But instead of leaving with the cash, she left in handcuffs, charged with attempted theft by taking and conspiracy to defraud the state.

While these instances are comical and easily spotted, most fraud is not and can go on for years, costing your business millions of dollars. The Association of Certified Fraud Examiners estimates the money lost by businesses at over $3.5 trillion a year.

In my years in the turnaround industry, I have seen dozens of cases of fraud, many of which caused owners to lose their businesses. It’s rarely this blatant, which means as a CEO or business owner, you have to be ever-vigilant.

March is National Fraud Prevention Month, a good time to access your businesses fraud prevention practices. Here are a few articles with tips on preventing fraud in your business:

 

 

March Madness Moments: Lessons from Winning Coaches

An estimated 81 million Americans will lose productive time at work because they are involved in that uniquely American pastime known as March Madness, resulting in a loss to American businesses of around $2 billion.

Go ahead and take a break from filling out those brackets to review a few quotes from some of the most winning coachs in the NCAA. When your employees do check back in to work, you’ll be ready and motivated.

Roy Williams, head coach at UNC since 2003, spends a lot of time during the basketball season recruiting for his next crop of players. While he doesn’t love the travel that entails as he darts off between games, he does watching the young men play. But when he recruits, he’s not just looking for talent. He is looking for character.

“When I decide that a kid has the talent I am looking for, then I try to find out about his character. I once had an elementary school principal in Wichita, Kansas, tell me, ‘Coach, I wish you’d say academics is the second priority.’ ‘No ma’am,’ I said. ‘because if he’s a great player and a 4.0 student but he’s going to be a pain in the rear end, I want it to be somebody else’s rear end.’”

Coach Williams also has great advice for dealing with critics and negativity that is equally adaptable for business owners. “If the mailman stopped to kick every dog that barked at him, he’d never deliver the mail,” he said.

Down the road a bit, his rival coach Mike Krzyzewski has been head coach at Duke since 1980 and racked up more than 1,000 wins. He shares something in common with Roy in that they both believe in knowing about the people they work with and those they coach.

“A common mistake among those who work in sports is spending a disproportional amount of time on ‘x’s and o’s’ as compared to time spent learning about people,” he said.

That’s a philosophy I follow in my work as the turnaround authority. When I go to lead a company, of course I look at the books and survey the entire financial picture of the business. But I also take time to talk to employees at every level to determine what’s working right, what’s not and how to leverage their skills, knowledge and talents. The employees of a company are one of its biggest assets, and it’s my job to learn all I can about that asset.

Coach K., as he’s called, has experienced plenty of losses as well. After a humiliating 109-66 defeat to Virginia in the ACC tournament in 1983, he was at a restaurant with a few friends. One offered a toast of sorts: “Here’s to a night let’s soon forget.” Coach K. lifted his glass and said, “Here’s to a night we will never forget.”

That doesn’t mean you have to dwell on your losses. But remember them. And learn from them.

The late John Wooden was head coach at UCLA, where he won ten NCAA national championships in a 12-year period, including a record seven in a row. He had several motivational quotes, many of which apply well to business leaders.

“A coach must never forget that he is a leader and not merely a person with authority,” is one that I keep in mind. And for their simple truth, I like, “Nothing will work unless you do,” and “Things turn out best for the people who make the best of the way things turn out.”

One of my favorite quotes is from the late coaching legend Dean Smith, who coached at UNC for 36 years. “If you make every game a life and death proposition, you’re going to have problems. For one thing, you’ll be dead a lot.” I remember that in times of extreme stress to try to put things into perspective.

That’s another thing Coach Smith did quite well, as player Peter Budko once recalled. “On the occasions when we didn’t win, he would tell us there were two billion people in China who didn’t care one bit about the outcome of our game. Perspective!”

Remember that perspective in a few weeks if your bracket doesn’t turn out so well. The two billion people in China don’t care about that either.

Funny, But True: Low-Tech Security Works, High-Tech Fails

Sometimes those “smart” houses aren’t so smart. Apple fan Marcus, a homeowner in Illinois, decided to outfit his home with every gadget available that claimed to be compatible with Apple HomeKit. His home had Hud LED lightbulbs, Ecobee thermostats with sensors through the home and an August Smart Lock. He could control the lighting, temperature and locks in his house with an app on his iPad.

Marcus enjoyed being able to walk up to his front door and having it unlock for him when his phone got within a certain range. He could let his dog walker in when he was not at home. When he was home, he could enlist his trusty assistant Siri to help him by giving commands like, “Hey Siri, dim the lights.”

Excited by these new fun features, (and thousands of dollars poorer), he invited his neighbor Mike to come over and check it out.

The Apple HomeKit is great, if you take certain precautions.

Then one morning as Marcus was leaving, Mike showed up and asked if he could borrow some flour. Marcus started to get out of the car to open the front door for him, when Mike said, “I’ll let myself in.” He walked right up to the door, and called out, “Hey Siri, unlock the front door.” The door unlocked.

So, what happened? His neighbor had figured out that if he called to Siri loudly enough through the door, she would hear him through the iPad Pro sitting inside and unlock the door. It worked. Marcus has since removed the August Smart Lock.

The story reminded me of when I installed my own security system at a company I was running. We were losing a lot of merchandise to theft through the back door of the warehouse. I needed a solution fast, so I put a “camera” next to each of the 10 doors. Actually, I just drilled a hole in the wall and fed a wire through it with a battery-operated red light right next to it. The camera and the wire didn’t go anywhere—and neither did my merchandise after that.

The camera functioned as a psychological theft deterrent that scared those who considered stealing. After reducing shrinkage, I had the money to upgrade the security and improve the inventory tag system.

My method worked for me in that particular case, but I know it wouldn’t have taken long for the thieves to catch on to my fake camera system. So, I don’t recommend it. But I can’t recommend the more expensive smart home system, either.