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Tips on Hiring From the Corner Office

“Here’s a calculator, a pencil and a sandwich. We’ll be back in two hours.” That’s how one $2 billion hedge fund interviews for analysts positions.

That’s one of the things I’ve learned reading “The Corner Office,” a column by Adam Bryant that appears in the New York Times on Fridays and Sundays. He interviews CEOs with questions about leadership and management.

Because I deal with CEOs as well as function as an interim CEO in my business as The Turnaround Authority, I enjoy reading insights into other CEOs. When I’m running a company I do a lot of hiring and firing so I especially enjoy reading their thoughts on how they hire new people for executive positions.

Meridee A. Moore is founder of Watershed Asset Management based in San Francisco where they give the calculator, pencil and sandwich test. They simulate a real office experience and see how an analyst reacts to a tough assignment, looking for people who enthusiastically embrace the challenge.

She said they consider it a bonus if a person has had a rough patch in his or her past, because, “If you’ve ever had a setback and come back from it, I think it helps you make better decisions. There’s nothing better for sharpening your ability to predict outcomes than living through some period when things went wrong.”

Bill Marriott, executive chairman and former CEO of Marriott International, says as a young man he learned a lesson from President Eisenhower, who was visiting his family’s farm at Christmas. They were going to shoot quail but it was extremely cold, so his dad asked the president if he still wanted to go. President Eisenhower turned to young Bill and said, “What do you think we should do?”

From that Bill learned that the four most important words are, “What do you think?” Like me, he likes to hire people smarter than he is, but sometimes those people come with huge egos that preclude them from considering other people’s point of view. So when he interviews candidates he always looks for good listeners.

The CEO of YouSendIt, Brad Garlinghouse,  says he looks for people with passion. Some of the questions he asks include, “How would your friends describe you in college?” and “When you started working, how would your first group of colleagues describe you?” He also looks for humility so he asks if they have ever fired someone and what it was like. He is looking for a sense of empathy from their response.

Wendy Lea, chief executive of the customer experience platform Get Satisfaction, also looks for people who are self aware by asking her favorite question, “Let’s assume we’ve worked together now for six months. There’s something that I’m going to observe of you that I have no idea about right now. What would that be?” She finds that is a way to dig a little deeper into a person.

The CEO of International Medical Corps, Nancy Aossey, says one of her favorite interview questions is to ask candidates about colleagues who are not on their reference list, people they didn’t get along with. She wants to know what those people would say about the candidate.

You may be surprised what Karl Heiselman, the chief executive of Wolff Olins, is looking for when he asks candidates, “What’s your story?” He doesn’t just want to hear about the job they are interviewing for. He is trying to find out what they want to do with life and determine if they are being sincere.

If you are interviewing with a CEO it’s usually a given that you’ve already got the skills and experience for the position. So what they are looking for goes deeper than that. They are looking for people who are self-aware, display passion for the profession and are good listeners.

What do you think?

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Smart Businesses Recruit from the Military

Every year on Memorial Day we celebrate those who have made the ultimate sacrifice and died serving our country. We also take a moment to acknowledge the 1.5 million men and women serving in our armed forces today, helping to protect the freedoms we enjoy in the United States.

In addition to being grateful for their service, smart businesses also recognize the value that young people who leave the military can bring to their companies.

In 2008, senior executives at Walmart were dealing with the potential vacuum of young leaders to grow into store management roles. Their usual recruiting methods couldn’t keep up with their projected growth.

The CEO, Bill Simon, who was a 25-year veteran of the Navy and Naval Reserves, suggested the company create a program to recruit junior military officers.

“The thinking was that we could bring in world-class leadership talent that was already trained and ready to go,” said Jennifer Seidner, a senior recruiting manager at Walmart. “And then we could teach them retail, because we know that pretty well.”

The Walmart JMO program was launched and dramatically changed how Walmart recruits young talent. This past February the company announced that effective this Memorial Day weekend, it would commit to hiring more than 100,000 honorably discharged veterans within 12 months of leaving active duty for all types of positions.

Walmart isn’t the only company that sees the value in hiring young, trained talent.

The financial services company USAA launched the “Combat to Claims” initiative to train post-9/11 veterans to become claims adjustors.

“The reason the program is working so well is because military folks have such a sense of discipline and order,” said Joe Robles, the CEO of USAA and a retired Army major general.

Each year Victory Media publishes the “Top 100 Most Military-Friendly Employers” index to serve the 400,000 military personnel who leave the service each year to enter civilian work. The list is based on surveys of businesses with annual revenues of more than $500 million.

The trucking company Crete Carrier is on the list and actively recruits military on its website: “We’re looking for men and women with honesty and integrity, who assume responsibility and adhere to a code of ethics. In other words, if you succeeded in the military, we’d like to enlist your services. Welcome home.”

Another company on the list is Travelers Insurance. “We find that military veterans bring dedication and discipline to their roles, and that they seek and accept responsibility readily,” said John Clifford, executive vice president of Human Resources. “The skills they learned during their military service transition well to any position within our company.”

Other companies that actively hire military officers include Deloitte, General Electric, Shell, Amazon, Accenture and PricewaterhouseCooper PwC.

Hiring veterans isn’t just a feel-good thing to do for your country. It makes sense for your business. As Amazon CEO Jeff Bezos said, “We actively seek leaders who can invent, think big, have a bias for action, and deliver results on behalf of our customers. These principles look very familiar to men and women who have served our country in the armed forces, and we find that their experience leading people is invaluable in our fast-paced work environment.”

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Fraud is Everywhere

Readers of this blog and my new book, “How Not to Hire a Guy Like Me: Lessons Learned From CEOs’ Mistakes,” tell me they especially enjoy my stories about fraud. I have plenty more where those came from.

Fraud is everywhere, and not just at the multi-million dollar corporations I deal with. Anywhere you’ll find money and people with access to that money, you’ll find fraud. Parents even steal from organizations their children are involved with. Nobody, and no group, is immune to fraud.

Here are just a few recent examples, including the first one that appeared in the newspapers today.

• A former guidance counselor and assistant principal in the Memphis City Schools system made $120,000 from a scheme he ran from 1995 to 2010 that involved him helping teachers cheat on their certification exams. They paid him $3,000 and he paid test takers a couple of hundred to take the tests on their behalf. He was sentenced to seven years in prison.

• A New York socialite got 19 months in prison for swindling corporations out of at least $20 million. She asked CEOs to give her free and discounted goods that she said she would distribute as samples and promotional packages in her supposed large network of retail establishments and other outlets to increase sales. Instead she sold the merchandise for profit.  She funded almost 200 investment accounts and purchased expensive art with the money she stole.

• An Australian man stole $20 million from his company over a 12-year period by paying almost 300 invoices to a fake supplier that he had set up. He used his ill-gotten gains to buy racehorses, motorcycles and boats and gifts for young women he found while trolling “Sugar Daddy” websites. He pled guilty and was sentenced to 15 years in jail.

• A dentist in Toronto even swindled his mom in a Ponzi scheme that netted him $40 million. He used the money for personal expenses and paid off credit cards. I hope he at least bought his mom a nice Mother’s Day present.

• A PTA president in Atlanta made news when she was found to have stolen $57,000 that was meant for the PTA at her child’s school. Instead of depositing checks in the PTA account, including several donated by a local church, she deposited the funds into a bank where she worked and was also a co-owner.

• The Girl Scout motto is “Be Prepared.” But they weren’t prepared for this. A Girl Scout troop leader in California stole $6,000 of the proceeds from her scouts’ cookie sales by misusing a debit card tied to the account. She spent the money on buying gas, getting her nails done and purchasing items at Nordstrom and Victoria’s Secret. Seems she had quite a secret of her own.

I’ve said it before and I’ll say it again. Any time there is money involved, you must have checks and balances and review who has access to that money. Go by the scout motto and be prepared.

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How to Search for Superstars

In a previous column in this series on the initial steps of a turnaround, I wrote about the need to hire superstars. Of course, we’d all like to run a company made up only of the A-team, but never is it more critical than when we are trying to get a company turned around.

Look at it this way. If your car fell into a small ditch, your neighbors could probably give you a hand and push you back on the road. But if your car takes a dive into a deep ditch? You need a strong team of professionals to get you going again.

The companies I work with as a Turnaround Authority are in a deep, deep ditch. So I need the best possible team to get us out.

Often the superstars saw the company beginning to fail and have long ago jumped ship, further accelerating the downward spiral.

When I’m brought in, generally I’ve got a team full of B and C players and that isn’t going to get the job done. If we don’t have A+ people in key positions, we are doomed for failure.

I have to go out and find those superstars. I want to hire people smarter than me. I need people who can think outside the box and help come up with and implement creative solutions. I need people who are proactive and can get things done.

It can be a particular challenge to recruit superstars to a company that is in a turnaround situation. They often don’t want to come, or if they do, want a lot of money to do so. I like to find the ones who accept the position because they are up for the challenge because I know they are highly motivated to help us meet our goals.

So how do I find these superstars? First, I think about whether I want to use a search firm or not. That generally depends on the level of the position I need to fill. If I’m trying to hire for a $250,000 annual salary slot I will generally use a search firm, but for a $50,000 job I may not.

I’ve worked with people that balk at spending the money it costs to use a search firm. They are stressed out beyond belief, need someone ASAP to help run their business, but yet don’t want to invest the money to get someone in quickly to relieve that stress and get the company going again.

These people are not seeing clearly. They are not valuing their own sanity or the time they will have to spend during the hiring process. Headhunters are expensive but using one can be the best way to recruit the people you need.

Search firms allow you to cast a wider net, save you the time of interviewing, have expertise and connections in your industry and can help bring someone in quickly to relieve the burden on the other employees.

With these folks who insist on trying to hire a high-level position on their own using, I get them to agree to a timeframe during which they can try to find someone. If they don’t fill the position by a certain date, they agree to hire a search firm.

A lot of firms have turned to social media for hiring and it’s changing the world of recruiting. They use LinkedIn to ask for referrals, search for candidates by using keywords and for a fee, can post jobs on LinkedIn.

In a clever twist, Pizza Hut recently conducted 140-second interviews to fill its Social Media Manager of Greatness, going after candidates who can think at the fast-paced speed of social media.

Social media can also be used to find qualified “passive candidates,” those people who are employed but may be open to changing positions.

There are many ways to hire those superstars you need. The main thing to remember is that in a turnaround situation, you need them on your team as soon as possible.

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Sold! To the Highest Bidder

jackson_edisonwalthallentranceI’ve been operating as a court-designated receiver for a downtown landmark in Jackson, Mississippi. Now the former Edison Walthall is headed to auction. Read about the current state of this 1928 205-room hotel in this recent article:

http://www.clarionledger.com/viewart/20130506/NEWS01/305060019/Auction-set-old-Edison-Walthall-hotel

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Sharing My War Stories

I’ve always known that reaching a major goal takes a lot of work. Completing my new book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” was no exception.

It took me decades of work in the turnaround field to experience all the stories that are contained in the book, many of which would be difficult for me to believe if I hadn’t been there myself. Who gets shot at – twice – while working in this industry?

There are a lot more stories, although they don’t generally involve gunfire. One involves a knife – brandished by a son at his mother after he got fired. You’ll also read about church ladies stealing, CEOs cheating, CFOs lying, and a multi-million dollar company that rationed toilet paper for its employees.

One reader familiar with my industry commented, “You even figured out a way to work sex into a book about the turnaround industry.”

The first newspaper article about my new book appeared last week, and I’d like to thank the reporter, Bobby Tedder, for interviewing me and writing the story below. I’m not sure whom the headline about Titans refers to, though. I never played football for Tennessee. But I like the alliteration and the phrase Turnaround Titan would look nice on a business card.

Note: I’ll be interviewed this Tuesday on WREK, FM 91.1, the radio station at Georgia Tech in Atlanta, on the “Let’s Talk Business” show from 12:30 to 1:00 p.m. 

Business Turnaround Titan Pens Book of Wisdom

By Bobby Tedder, btedder@neighbornewspapers.com

Lee Katz, whose reputation as a company fixer precedes him, is finally offering a bound volume of words of wisdom for public consumption.
The Katz-penned “How Not To Hire a Guy Like Me: Lessons Learned From CEOs’ Mistakes” recently hit the market.

“It’s written for anyone. … Any business owner can benefit from it,” he said.

The Sandy Springs resident product has specialized in turning firms of varying sizes and covering a broad range of industries around. His crisis management career, including stints working with public and private companies, spans three decades.

He called the book the culmination of discussions with his many clients and friends.

“They told me I have so many great war stories to share,” he said.

That group of confidants reads like a virtual Who’s Who list from the business realm.

That would include former Home Depot co-founder Bernie Marcus, whose endorsement of Katz’s book is found on the back cover.

“Read it. Learn from it. Benefit from Lee’s many years as the Turnaround Authority,” Marcus wrote.

Among the many topics Katz tackles in the book are the elements of solid leadership and detailed advice on how to recognize and respond to internal fraud.

“People keep asking me what took me so long to come out with a book,” said Katz. “The answer is that I’ve been working 60- and 70-hour weeks all these years.”

The Georgia Tech alum’s tome could gain added traction beyond the business elite considering its content is not on the esoteric side.

The book is written in a language that is accessible to the average reader — or “folksy,’’ as Katz put it.

“Those people who have read it say it [reads] like me talking. … It’s very straightforward,” he said.

© neighbornewspapers.com 2013

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Who Will Stay and Who Will Go?

In this second of a series on the initial steps of a turnaround, the topic is how we decide who stays with the company and who will be let go.

In last week’s column, “The Initial Steps of a Turnaround: Nothing is Sacred,” I wrote that even if Grandpa Joe invented the rocking widget that started the company, if it’s no longer profitable that product line will be shut down. And if Grandpa Joe is still around and collecting a hefty salary while he spends the day perfecting his fly-fishing technique, he has to go as well.

In previous columns I’ve written about how I’ve had to fire business owners’ relatives and favorite long-time employees. It’s never an easy or enjoyable task but often has to be done to salvage the company.

300px-Blank_org_chart2So how do I decide who continues to collect a paycheck and attend the annual company picnic and who needs to pack up their things and go?

In an ideal situation, we will have time to assess the company’s situation, create a realistic budget, and then turn to the issue of downsizing staff if necessary.

I ask for the organizational chart and then take all the names off of the chart. I take the name of every person on that chart and put it on a separate piece of paper. Then I ask the senior management, “If you could start over again, how would you arrange the company? What positions are needed today to run the company?”

In good times companies tend to get fat. They add assistants, cars, desks, sometimes even buildings. Then as times get tough these positions and assets often remain even as the company’s financial situation begins to deteriorate. It’s a vital step to review the company’s organization in a fresh way.

That process may involve eliminating some positions, consolidating three jobs into two, or having people report in a different manner. Once we rearrange the organizational chart, we go through the names of the people on the pieces of paper and place them in the positions on the chart according to which person is the best one to handle that job, keeping in mind that we need the company’s best performers, its superstars, in the most challenging positions.

When that exercise is completed there will be names left that are not on the chart. And these are the ones we have to get rid of. They no longer have a role in the restructured company.

As for those superstars. In a number of situations the best employees have already left and those superstar performers are not available within the current pool of employees. So once we have stabilized the personnel that are remaining, provided new opportunities for some of the current people and gotten the company on the correct financial path, we need to conduct a search to find those key people.

We can’t run a company with all average people. We need to create a “Lake Wobegone” situation, where like the children there, all the workers are above average.

In the next post I’ll discuss how to search for superstars.

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Initial Steps of a Turnaround: Nothing is Sacred

Sometimes people ask me what prompts a business to hire me as a Turnaround Authority. At what point does a business decide it needs some outside person to come in and tell them how to run their own company?

Sometimes I am hired by a bank to assess a company’s viability prior to it making a loan. However, the primary way I am hired is at a bank’s request when a company is in default. Generally there are provisions in the loan documents from banks or bondholders that upon a default, a financial advisor will be retained by the borrower.

In the absence of such provisions in the loan documents, the bank can still “strongly suggest” that the borrower hire someone either in the case of default or because the bankers have become concerned that the company has lost money over the past few years. They are worried about its long-term survivability.

The Board of Directors may also be concerned about whether management has been evolving and changing in response to its customers and market trends. Senior management may be starting to worry whether their jobs are secure.

As the situation becomes more unstable, all this negativism starts to infect the entire company and flows through other key employees. They in turn then become less efficient and the downward spiral starts.

Everyone is feeling under pressure and often the CEO or business owner has become so overwhelmed he or she doesn’t know where to start and sometimes has pretty much given up on making any decisions at all.

That’s often when I am called in and am hired as a consultant or interim CEO. Now their problems become my problems. So how I do I get started to turn this business around?

For the next few posts, I’ll discuss the initial steps I take when I am hired to turnaround a company. Let’s start with what I look at.

Everything.

I want to look at everything that happens in that company, between the front door and the back. I want to look at all their vendor relationships. I was to see an organization chart of all the people at the top. I want to see all contracts, personal guarantees of senior personnel and loan docs.

I want to know about all the assets the company owns, information about all its products lines or services, what distribution channels are set up and how much is spent on shipping and freight. If the business generates scrap, where does that scrap go?

I always ask to see the current business plan. I’ve long since given up being surprised when I find out that when the “current” business plan was last reviewed, we were all listening to “Thriller” on cassette tapes, talking about Reaganomics and trying to solve Rubik’s Cubes. (I’ll write more on the necessity of having an updated business plan later.)

I tell the senior management that nothing that is in place is sacred. Nothing is untouchable, not even the idiot son with the big corner office whose interest in the company doesn’t extend past the big numbers on his paycheck. I will be looking at every aspect of the company.

We may need to shut down product lines. I don’t care if Grandpa Joe invented that rocking widget when he was down to his last dime and there’s a bronze cast of it proudly displayed in the lobby. It hasn’t made money since the Carter administration. It’s going to be retired.

We may need to change facilities, order inventory differently and collect receivables faster.

The point is to throw away all the old assumptions so we can begin to look at operations in a new, fresh way that may generate ideas to cut out the fat to operate more efficiently and discover ways to become profitable.

Next week I’ll write about how I determine which key personnel will stay in the new company, and which ones will go.

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He Who Burns Bridges Better Be a Good Swimmer

The son of a good friend of mine was working his first job, for a bank. He had problems with his new boss and finally decided to leave. He apparently did so in a rather ungracious manner with a few choice remarks to his boss.

Five years later, his former bank bought the bank where he then worked. His boss still worked there. Guess who was the first to lose his job?

burning-bridge-570x234We all remember the story of Steven Slater, the JetBlue flight attendant who dramatically burnt his bridge. He lost his patience one day, cursed out the passenger who bonked him on the head with a suitcase over the plane’s PA system, grabbed two beers and escaped down the inflatable slide he had released. Those were the last two beers he ever enjoyed as a flight attendant.

The saying, “Don’t burn your bridges behind you” is believed to be from the military originally. When heading into battle, an army needs to leave a way to retreat if necessary.

In the business world, it means leave every situation in good standing. This is good advice not only because it’s the right thing to do, but also for pragmatic reasons, you never know when that burnt bridge can get you in trouble. As the poet, Dylan Thomas wrote, “When one burns one’s bridges, what a nice fire it makes.”

I know how tempting it can be. You’ve been miserable in a job for years, overworked, underpaid and unappreciated by a horrible boss. You finally land a new job and boy, wouldn’t it feel fantastic to tell your soon-to-be-former-boss exactly what you think of him?

Yes, it would feel fantastic. For a few minutes. Then you are left with possible repercussions you can’t even foresee that could happen months or even years down the road, like my son’s friend.

One mistake I’ve seen young people in particular make is believing that if they live in a large city they can get away with burning a few bridges along the way. In a city of several million, no one will know, right?

Wrong. Although a city may be huge, the people involved in a particular industry run in a much smaller circle. You never know who knows whom and when your name might come up.

On the plus side, if you do maintain a good reputation and leave previous jobs on good terms, that could also benefit you in ways you don’t anticipate. When many business owners are looking to fill jobs in their companies they often ask their peers if they know of anyone looking for work.

As I taught my children and tell young people I work with, the business world runs on relationships — they are the fuel that feeds your business. If possible, maintain good relationships with everyone you work with.

As one anonymous person said, “Burning bridges only makes it harder to get around and cover more ground.”

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Leverage Technology to Look Smarter Than You Are

It was a great “gotcha” moment. I had been negotiating the sale of all of the assets on a receivership in another state for a month. The deal was pending in a motion filed with the court. The attorney for the other side had been dragging his heels over every development. But of course, when I go on vacation, he goes to court and tells the judge that he needs a change and that I’m not a professional receiver because we’ll have to delay the change for a week while I’m gone.

iPad-explainer-video-NEW--007So I get an email from my counsel, who is in Boston, telling me the other side wants to amend a document and they need my signature. Not such a big deal, right? Well, it is if you’re on a boat traveling from Sweden to Russian and just after I received the email, the Internet and all of the electronics on the boat, including printers, stopped working.

All technology was dead in the water – no pun intended.

I figured there must be some Internet available somewhere on the ship, and sure enough, turns out the Captain has his own proprietary system that they use for navigation.

Now I had access but how to get a document signed from onboard? Fortunately, I had an app called SignEasy that allows you to legally sign documents from smartphones and tablets. I had the attorney send me a PDF of the document I needed to sign, inserted my signature and sent it back.

Yes, it cost me $150, the minimum the Captain wanted to access his Internet, for a job that took less than five minutes. But in my clients’ eyes I need to be seen as a guy who gets things done and is accessible to them, no matter what the circumstances. The attorney in Boston was so impressed with how fast I turned that document around (and that he could tell the other side to stuff it), he referred another piece of business to me. “If you can get stuff done like that, I want you on my team,” he said.

I’ve learned that using the right technology can make you look smarter than you are. Before I had gone on a previous cruise I took some computer classes at Apple, then hired the teacher for an additional two hours to sit with me and educate me on the best iPad applications for my business. It was well worth the investment. I wanted to be able to conduct business from anywhere in the world, whether I was on land or at sea, with just my iPad.

Another app he told me about that I now use daily is called Evernote. I can make notes, take photos, create to-do lists on any of my devices and they are updated on all of them. These notes are also completely searchable so I don’t waste time hunting down a phone number or note I’ve made. I can share notes with friends on social media and record voice and audio notes, perfect for when I’m traveling.

Some people seem to pride themselves on not owning a smartphone or don’t see the use for an iPad. I would just say this, if you’re not using the latest technology, you can bet your competition or the guys on the other side of the negotiating table are. If you want to compete in today’s world, you need to use every tool available to you. And that includes the latest in technology.

Don’t you want to have your own gotcha moment?