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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.

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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.

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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:

 

 

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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.

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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.

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#1 Lesson for Leaders From the Academy Awards

It will undoubtedly be Hollywood’s most famous unscripted moment ever. In front of a worldwide audience of close to 33 million people, Warren Beatty and Faye Dunaway were handed the wrong envelope and presented the award for Best Picture to “La La Land” at the Academy Awards.

Except that movie wasn’t actually the winner of the Best Picture Academy Award, as we all now know. A partner with PricewaterhouseCooper had handed the stars the wrong envelope, a mistake that will follow him the rest of his life.

academy-awards

Jordan Horowitz demonstrating leadership when he stepped up to the microphone to correct the mistake at the Academy Awards.

In the midst of emotional acceptance speeches, producer of “La La Land” Jordan Horowitz learned of the mistake. He immediately stepped right up to the microphone and said, “There’s a mistake. Moonlight, you guys won best picture.” He stayed on stage during the resulting chaos and graciously said, “I’m gonna be really proud to hand this to my friends from ‘Moonlight.’”

The young producer is being heralded for his grace under pressure. He did what a good leader does under a stressful situation: he took charge and handled the problem.

In TV interviews afterwards, Jordan said, “My heart was a little broken, but it’s one of those things that just gets thrown at you. You can choose to lean into it or break away from it.”

In my career in the turnaround industry, I often deal with leaders in a crisis situation. Things do get thrown at them. They lost their number 2, their biggest customer went to a competitor, they can’t make their loan payments. Whatever it is, a business is going to face tough times.

I’ve seen a full range of responses from leaders in these situations. They may choose to be dishonest with their lenders, they may put their heads in the sand or they may continue blindly down the same path that put them in that position, hoping for a miracle.

The first step these leaders have to take is to face reality. They have to take a good luck at what the situation is so they can deal with it. Then a good leader has to take charge.

As Jordan said, “It happened really fast. Listen, I’m a producer. I gather things together and I change directions and I march things forward.”

In a nutshell, that’s what happens with CEOs. They gather the information they need, make decisions and march forward. Luckily, most leaders don’t have to do so on live TV in front of tens of millions of people.

Another company trying to march things forward right now is PricewaterhouseCooper, the second largest accounting firm in the world. The New York City-based company has overseen the Oscars balloting and presentation for 83 years, an association it takes great pride in and leverages with new and existing clients.

Tim Ryan, U.S. chairman and senior partner, was in the audience at the Academy Awards when the incident happened – that moment when two members of his firm came out of the wings and his business would soon move into the spotlight.

“I knew something was up,” he said in an article in the New York Times discussing the moment when he saw the two PwC employees interrupting the best picture acceptance speeches. “It’s not their job to come out on stage.”

The reviews for PwC’s performance that night came in and they were not good. Many people had comments along the lines of “You had one job.” Les Moonves, Chairman and CEO of CBS, said “If they were my accountant, I would fire them.”

PwC apologized for the error and took full responsibility. Monday night, 24 hours after the mistake, PwC issued a statement that read in part, “For the past 83 years, the Academy has entrusted PwC with the integrity of the awards process during the ceremony, and last night we failed the Academy.”

(Soon after, the firm placed the blame on partner Brian Cullinan, U.S. board chairman and managing partner for PwC’s Southern California practice. I was surprised that they singled out one of their employees so quickly, which shows a lack of support for a partner of their firm.)

What happens to Brian’s career, PwC’s reputation and whether they are around for year 84 of the Oscars remains to be seen.  Both leaders stepped forward to take charge. But while Jordan handled the crisis perfectly, Tim took responsibility for the mistake, but in doing so threw his partner under the bus – which is not the way to handle a crisis.

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Funny, But True: Lipstick, Vacations and The Pope

In November 2015 Tesla lowered its delivery goal from 35,000 cars to 33,000 cars. While it did meet production goals for the quarter, they weren’t able to deliver all the cars to buyers. In a letter to shareholders, one of the excuses the car company gave included that “customers were on vacation.” I guess they had forgotten to call Tesla to put a vacation stop on their car, right after calling the newspaper.

Macy’s once missed its fourth-quarter earnings, and claimed it was due to competition from off-price stores. According to CFO Karen Hoguet, “We did some consumer research, and the customer said she likes going to the off-price retailers because she doesn’t have to put lipstick on.”

I had not known that women divided the world into two categories: places where lipstick is needed, and places where it is not.

When the restaurant chain Cosi’s stock fell in 2015, they had an answer. It was the pope’s fault.

whats-your-excuse“Business interruptions resulting from the pope’s visit on Sept. 22–26, 2015, negatively impacted 30 percent of our company-owned restaurants,” the company said in a release. It seems when Pope Francis visited DC, Philadelphia and New York, his followers stayed away from purchasing items from their restaurants. I would have advised them to follow the lead of a restaurant in DC. Just prior to the pope’s visit, Rumors created a sandwich called “The Pope’s Favorite Sandwich.” Or Cosi’s could have created “The Pope’s Daily Bread.”

Leaders can always find excuses when things are not going well with their companies. Admitting mistakes or acknowledging that sales goals or quarterly earnings were not met can be seen as something shameful, so leaders try to hide the facts. Or get creative in explaining what happened.

The same thing goes when criminals are caught, which actually is shameful. In a previous blog, “Excuses for Fraud: Now We’ve Heard It All,” I wrote about some of these folks who got caught and tried to explain their actions.

One of my favorites was the evil twin excuse, most likely from a guy who had watched too many soap operas. A man from Glasgow was accused of identity and benefit fraud. He claimed the authorities were really looking for his evil twin brother, who also had children born on the same days with the same names as his listed on his passport. Talk about coincidence!

Read more outlandish excuses in the blog, including the guy who gave himself the raise he thought was denied – stealing exactly that amount of money every month. For 20 years.

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

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3 Ways to Discover Your Super Powers and Your Kryptonite

 

If leaders want to succeed they need to be self aware, a topic I covered in the recent blog, “What to Grow as a Leader? Become This.” A study I referenced found that a high self-awareness score was the strongest predictor of overall success.

A good leader needs to know what his super powers are. And his kryptonite.

A good leader needs to know what his super powers are. And his kryptonite.

As Anthony Tjan wrote, “In my experience — and in the research my co-authors and I did for our new book, Heart, Smarts, Guts, and Luck — there is one quality that trumps all, evident in virtually every great entrepreneur, manager, and leader. That quality is self-awareness. The best thing leaders can do to improve their effectiveness is to become more aware of what motivates them and their decision-making.”

To grow as leaders, we need to know what our strengths and weaknesses are, or as Tjan puts it, your super powers versus your kryptonite. So how do you go about becoming more self-aware?

  1. Feedback Analysis

In his popular book “Managing Oneself,” management consultant Peter Drucker recommended the process of Feedback Analysis as the only way to identify your strengths. Write down your expected outcomes for key decisions, then compare that with the results 9-12 months later.

This method will show you within a few years where your strengths are, which is the most important thing to discover about yourself. For example, he wrote, “The feedback analysis showed me, for instance—and to my great surprise—that I have an intuitive understanding of technical people, whether they are engineers or accountants or market researchers.”

  1. Assessment Instruments

Tjan recommends you take personality tests to learn more about yourself. Think about it – many businesses use assessment tools to test potential employees. But what about testing yourself and your senior managers? Here are three he mentions.

  • The Predictive Index Behavioral Assessment. This simple test is designed to determine your four core behavioral drives: dominance, extraversion, patience and formality. You can then identify patterns of behavior and motivations.
  • Myers-Briggs. The Myers-Briggs Type Indicator identifies basic preferences in four areas. Are you more introverted or extraverted? (E or I) Do you prefer to look at logic first or interpret facts and add meaning? (S or N). When making decisions, do you look at logic or take into account people and special circumstances? (T or F) And lastly, do you prefer to make decisions or leave your options open? (J or P) Answers to the questions will determine which of 16 personality types you are with a four-letter code, such as INFP, ENTP or ESFJ. (A friend once told me she thought she was an ESPN. I told her to take the test again.)
  • Entrepreneurial Aptitude Test (E.A.T.) Tjan developed this test that measures the four key drivers for entrepreneurial success he wrote about in his book: heart, smarts, guts and luck. This brief survey measures your HSGL distribution with a graph showing the percentage of each trait.
  1. Ask for feedback from co-workers

This method can be a bit trickier than just taking a test or assessing yourself. People, especially those who work for you, can be reluctant to be honest in their feedback.

In the article “How to Get Feedback When You’re the Boss,” James Detert, associate professor at the Cornell Johnson Graduate School of Management recommends constantly asking for feedback with requests for specific examples. If someone recommends you communicate more with employees, ask them for a suggestion on how to do that.

Or turn to a few trusted co-workers with this question, recommended by Dr. Marshall Goldsmith: “How can I do better?”

And when you get the feedback, listen without interruption. Ask for clarification where needed and thank them for their comments at the end of the discussion. Responding gracefully to their feedback can encourage them to continue to offer it. And putting their suggestions into action when advisable sets a good example to them of a leader working to grow and improve.

You can also enlist professional help in this area, especially as anonymous feedback is generally more honest.  Hiring a qualified professional counselor or coach can help you elicit feedback by sending out anonymous evaluations and compiling the answers for you.

With all this information, you can learn which are your super powers and what is your kryptonite.

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

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Funny, But True: Shaking My Pom-Poms

I never fantasized about being a cheerleader. But there I was, in a court of law, waving my pom-poms wildly with the rest of the courtroom.

I’ve done a lot of things in my career I never would have predicted. Handing out pom-poms to a judge and to everyone in attendance in a courtroom ranks high on the list of unforeseen events.

Cheerleader Supply was a $65 million a year revenue business, selling cheerleading supplies and uniforms. When the company’s financial situation was in dire straits, I was brought in for a Chapter 11 restructuring. That was early in my career and I learned a lot from working with that company.

It was a tough fourth quarter at the Super Bowl for Atlanta Falcons fans. But those Falcons cheerleaders never stopped yelling and waving their pom-poms.

It was a tough fourth quarter at the Super Bowl for Atlanta Falcons fans. But those Falcons cheerleaders never stopped yelling and waving their pom-poms. (Photo courtesy of Yahoo Sports)

One of those early lessons is no matter how bad things are at your office, as CEO, it’s your job to be a cheerleader for your team. You have to keep up the morale of your team, no matter how bad things look. Your team members will be looking to you for inspiration during the fight to keep your company growing and thriving.

With Cheerleader Supply, my job as leader was made easier by the fact that everyone involved wanted to see the company succeed – the judge, lawyers and bankers were all on board with my restructuring plan. It was a lot of hard work, but we made it. On the day we emerged from bankruptcy, I gave everyone in the courtroom and the judge pom-poms to celebrate our win after coming back from so far behind. I still have that pom-pom in my office as a reminder that no matter how tough things get, one of my major roles in working with companies is that of cheerleader.

Dr. Robert Gerwig, who writes the Lead Strategic blog, wrote, “Great leaders are cheerleaders. If you’re not one, start today. You don’t have to be an extrovert to provide encouragement, support, recognition and inspiration. Do it your way, do it authentically, but become a great cheerleader. You’ll be amazed at the results and long-lasting benefits.”

I was recently looking at the bio of the leader of a company and saw this: “John serves as CEO and Cheer­leader for his busi­ness.” That’s a line that should be in every CEO’s bio.

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

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Want to Grow as a Leader? Become This

I was speaking with a friend about our experiences with interviewing and hiring. He once interviewed a woman and asked her what mistakes she had made and what she had learned from them, a fairly common interview question. “I haven’t made a mistake,” she responded.

That would be the end of any interview for me. That woman demonstrated she wasn’t self-aware enough to know what mistakes she had made, much less learned anything from them.

We all have unique strengths and weaknesses, and if you want to grow as a leader, you need a firm grasp on what yours are. The single best way to grow as a leader is to be truly self-aware. As Benjamin Franklin said, “Observe all men: thy self most.”

Self-awarenessOnce you know your own strengths and weaknesses you can leverage and maximize your strengths to the best of your ability. As for your weaknesses, identify the ones you can improve on and take steps to improve those skills. Then hire people who excel in those areas you have identified as weak for you.

I’ve written about the Disney brothers before in Famous Sibling Partnerships That Worked. Walt Disney, the more famous of the two, was the visionary. The creator of Mickey Mouse, the most famous mouse in history. But his vision would never have become a reality without his co-founder, his brother Roy, who was the money guy and the one who made Walt’s visions a reality.

The results of a study done by Green Peak Partners and Cornell’s School of Industrial and Labor Relations in 2010 emphasized the quality of self-awareness and its importance for a leader. The study examined 72 executives at companies with revenues from $50 million to $5 billion.

One of its findings? “Leadership searches give short shrift to ‘self-awareness,’ which should actually be a top criterion.  Interestingly, a high self-awareness score was the strongest predictor of overall success. This is not altogether surprising as executives who are aware of their weaknesses are often better able to hire subordinates who perform well in categories in which the leader lacks acumen. These leaders are also more able to entertain the idea that someone on their team may have an idea that is even better than their own.”

Erika Anderson is a business coach and writer and says when people with low self-awareness want to grow, “it’s like someone who wants to travel to New York and he thinks he’s starting in Philadelphia – but he’s actually in Botswana.  The steps he would take to get to New York, thinking that he’s in Philly, will definitely not work for him (that pesky ocean is going to be a big shock).”

It’s only by being brutally honest with yourself about your own weaknesses that you are able to find people to fill in those gaps to help your company grow. I have an entire section in my book, “How Not to Hire a Guy Like Me” on leveraging the talents of others to your advantage. It’s critical when growing a business, which is why you hear that interview question about strengths and weaknesses so often.

Focuses on our weaknesses may not be fun. Author Aldous Huxley said, “If most of us remain ignorant of ourselves, it is because self-knowledge is painful and we prefer the pleasures of illusion.” But those pleasures of illusion do nothing to help you grow as a leader.

Knowing herself even helped a World No. 1 professional tennis player.  “I think self-awareness is probably the most important thing towards being a champion,” said Billie Jean King.

Coming soon: How leaders can become more self-aware, and how high self-awareness affects team performance