How Not to Hire a Guy Like Me

by

5 Tips for Running a Healthy Family Business

 

Family-owned companies make up between 80 to 90 percent of businesses in the United States. But only 30 percent of new family businesses survive into the second generation. Here are some tips to help make sure yours is one of the those that survives to the second generation and beyond.

  1. Have clearly defined roles

Family businesses should be like others with job descriptions, goals and regular reviews. As the article “6 Steps for Maintaining a Thriving Family Business” points out, “Family firms tend to be more informal than other companies, and that can lead to misunderstandings about expectations.”

With clearly defined roles, each family member can act independently, without feeling the need to fight for territory or worry about stepping on someone else’s toes. A business can be much more nimble and responsive if everyone knows what their role is.

  1. Try to separate your business life from your family life

This can be one of the hardest things to do. It’s natural when any co-workers gather to discuss business. But when it’s a family business, that talk can tend to dominate.

Some families have rules and set boundaries. No business talk at the dinner table or at family gatherings. This can be especially important for couples who work together.

Francis and Susana V. Ptak co-own Gascoyne Laboratories, an environmental testing lab. In the article For Couples Working Together, Setting Ground Rules is a Must, she says, “Two things have helped us not kill each other. One is that we don’t do the same thing (Francis is a chemist and handles the analytic end of the company; Susana takes care of the business side), and the other is that we don’t talk business at home. In the car, yes, but once we’re actually at home, we just talk family stuff.”

  1. Make sure each family member is trained and suited to the position

Working at a family business shouldn’t be seen as an entitlement. Any family member should face the same screening and testing as any other applicant. They should also receive any training necessary to excel at their job. I’ve seen family members hired and promoted to senior positions despite their lack of necessary skills or suitability for the job.

This article, “Avoid the Traps That Can Destroy Family Businesses,” addresses the issue of family members working for a business as a last resort.

“We’ve encountered many companies that are populated by next-generation members who failed in other businesses or spent their 20s (and sometimes their 30s) as aspiring athletes, artists or musicians before signing on to the firm as unprepared 40-somethings. Despite their lack of experience, these offspring may ascend to leadership positions because of the family connection, increasing the chances that the business will fail.”

  1. Encourage innovation by having several generations involved

Research has shown that family firms are actually more innovative despite a reputation for sometimes relying on old, traditional ways of doing business. One way to encourage continued innovation is by involving members of the younger generation as soon as possible.

Identify younger members of the family who have an interest in the business and get them involved early with internships and entry-level positions. Let them rotate among different departments to see where their interests and talents are. Encourage them to work for other companies for a few years if they’d like and bring that experience and knowledge back to yours. 

  1. Have a clear succession plan 

Having an updated succession plan is crucial for any business. It is even more vital for a family business as family feuds may erupt upon the death of a business founder. In one memorable case in my career, the one I refer to as Crazy Charlie, a business owner died and his daughter became CEO as there was no board-approved succession plan in place. Son Charlie was unhappy about this, primarily because he had been stealing money from the company and we confronted him about it. He expressed his unhappiness by threatening his mother, who controlled the board of directors, with a kitchen knife.

The greatest threat to a family business is the failure to plan and manage succession well. Read more about creating a succession plan in my post Don’t Miss the Exit: Make a Succession Plan.

by

The Top (Self-Serving) Reason You Need to Keep Your Employees Happy

 

 

Why should I thank my employees for coming to work? Why do we need employee appreciation events like lunches, dinners and parties? I gave them a job, which they are lucky to have these days. Isn’t that enough?

You may have heard these sentiments expressed by CEOs and business owners. Or perhaps you’ve had similar thoughts yourself. Isn’t every two-hour lunch event decreasing your employees’ productivity and costing your business money?

The answer to that is yes. But if these events help keep your employees happy and prevents them from leaving, you are saving money. A lot of money when you consider the high cost of turnover for filling any one of those jobs.

You can find out just how much that cost is with this Turnover Calculator  from The Predictive Index, a workforce assessment company.

This six-step calculator takes into account items such as the cost of covering the position during the time it is vacant, the hiring manager’s time, advertising for the position, resume screening, company time spent interviewing and background checks.

Other costs include the time to onboard the new hire and time for that person to obtain full productivity.  (To obtain the full report on this site, you will have to give your name, company and email at the end. There are other online calculators available as well.)

A study done last year by the Society for Human Resource Management, the 2016 Human Capital Benchmarking Report, concluded the average cost-per-hire is $4,129. And that doesn’t include the additional cost associated with onboarding the new hire.

Whatever the final figure is, it’s indisputable that losing an employee is expensive. So, next time you find yourself concerned about the cost of yet another employee outing or party, remind yourself that if that event helps keep people happy and engaged, it’s a bargain for your business.

The good news is the biggest thing you can do to help retain employees is also the simplest. Show appreciation. Say thank-you. These simple gestures can contribute to your bottom line as well. In an  article in the Wall Street Journal about showing appreciation at the office, it was reported that more than half of human-resource managers say showing appreciation for workers cuts turnover, and 49 percent believe it increases profit.

To read more about how appreciation helps and recognition needs to extend beyond the paycheck, please see my blog Any Time of Year is Good to Express Appreciation.

Here’s some further reading on ways to retain your employees.

How Loyal Employees Contribute to Your Bottom Line
This is a two-part series on the importance of developing and maintaining loyal employees. Part one explores why every company should focus on having loyal employees and how doing so contributes to its revenue. Part two offers tips of how to develop loyal employees.

Work-Life Balance Key to Recruiting, Retention
This two-part series is on the growing importance of offering a work-life balance to employees in your company. Having a work-life balance was ahead of money, recognition and autonomy for more than half the people surveyed in a study done by Accenture in determining whether or not they have a successful career. Part two, Work-Life Balance, the #1 Thing to Offer, discusses the one critical component your workplace must have to keep employees.

by

5 Things to Know About DIP Financing

If you aren’t familiar with the term DIP financing, well, that might be a good thing. That means your company hasn’t had to explore the possibility of bankruptcy.

DIP (which means debtor-in-possession) financing is for companies in financial distress, primarily for those who have filed for Chapter 11 bankruptcy. Even if you think you may never have to worry about bankruptcy, it’s good to understand what DIP financing is. It is important that you obtain financing PRIOR to filing for bankruptcy protection. To do otherwise seriously jeopardizes your ability to survive.

Remember, even if you are contemplating filing bankruptcy, that does not have to mean the end of your business. Many companies successfully emerge from bankruptcy and DIP financing can be one of the tools your company uses to get it through a difficult time.

Here are five things you should know about DIP financing.

1. This form of debt can allow a company to continue operating until the assets of the company are sold or the business is successfully reorganized. Companies in distress need money to continue operating. But they may already have cash flow problems, and once they have filed for Chapter 11, other forms of credit may dry up, they may begin to lose revenue as customers go elsewhere and they may have additional expenses related to the bankruptcy. So, they may need another source of cash quickly. DIP financing is often the best answer.

2. DIP financing can sometimes be obtained from an existing lender. Sometimes an existing lender will lend money in the form of a DIP loan. They may do so to protect their interests, finance a sale or to protect a liquidation of your assets. The majority of DIP lenders last year were interested parties, according to DebtWire’s North America DIP Financing Report for 2016.

But a current lender may be reluctant or unable to increase its debt level with a company that has filed Chapter 11. A DIP from another lender can be the answer to obtain financing when other sources are not available.

3. Unlike some forms of debt, DIP financing takes top priority, despite it being the newest form of financing for a company. Remember, “Last in, first out”. This is referred to as super priority. A DIP load will be paid back before any other existing debt. This of course is critical to the lender as they have reassurance they will most likely get paid back, even if the company ends up being liquidated. Note that Administrative Claims of the Bankruptcy could be carved out prior to your Super Priority Claim. A good lawyer can assist in this process.

4. Interest rates can vary widely. Rates in 2016 varied from 12% to 18%, according to DebtWire’s DIP Financing Report. Most had maturity rates of less than a year, while some were as short as three months. Note that interest rates for smaller DIP loans (less than $1.0 million), which have more risk to the lender could approach 20%+ range.

Amounts vary widely as well. I’ve worked with companies that needed DIP loans of less than $1million but most required millions of dollars to finance their survival.

5. DIP financing can help restore confidence to the company’s vendors and customers. Knowing that a lender has examined the business and its ability to repay the money, and is willing to lend it more money can help calm concerns in the market. Customers and vendors that may have been tempted to take their business elsewhere may be reassured that the company has the funds to continue operations, keep vendors current and is committed to emerging from bankruptcy.

If you’d like assistance in obtaining DIP financing, please contact me directly at LKatz@GlassRatner.com or (404) 307-6150. We have many sources throughout the country. We also have several local lenders that specialize in smaller credit facilities.

by

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.

by

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.

by

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.

by

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.

by

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.

by

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.

by

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