Little Changes CEOs Make Can Lead to Big Ones

 

Trash cans and toilet paper. You wouldn’t expect CEOs to concern themselves with such mundane items. Aren’t they supposed to concentrate on managing the company’s resources, developing and implementing long-term strategies and communicating with the board of directors?

Yes, of course. But part of their overall strategy may need to include small changes in the workplace that can lead to big shifts in employee outlooks and increased productivity in the workplace.

Suzanne Sitherwood has been CEO of Laclede Gas Company since 2012. An article in the Wall Street Journal yesterday, “CEOs Sometimes Use Small Changes as Wedge for Broad Transformation,” detailed a few of the design changes she made when she took over to foster an interactive atmosphere.

These included moving into her assistant’s office, installing a round table for management meetings to foster “a sense of unity and equality” and keeping her office door open. And she banned the use of individual trash cans in offices.

Yes, that’s right. Trash cans were taken out of individual offices and moved to communal areas to encourage staffers to meet face to face. So instead of tossing a crumpled-up piece of paper into the bin by your desk, you had to get up and walk into the main area, where you just might run into a co-worker doing the same thing.

That’s one of the more creative ways I’ve heard of encouraging interaction among employees. Steve Job’s tried to institute another not-so-popular idea when he built the Pixar headquarters. He wanted to design the building with only one set of bathrooms in the atrium, rather than the usually placement of being tucked off to the side. (Fortunately for the employees in offices located far away in the wings of the building, he was overruled.)

Both these CEOs know that attention to small seemingly insignificant details like these can lead to bigger changes in their companies. Laclede Group, now rebranded as Spire, was once considered a conservative, unexciting utility. After Sitherwood took over, she turned that image around. The company made two major acquisitions of other gas utility companies, and increased the stock more than 50 percent.

A little change that that led to a major turnaround for me had to do with toilet paper. I was brought in to manage a computer parts company in Texas after the bank had forced the egomaniacal, ineffective CEO out. Although he was highly educated, he didn’t know diddly about how to treat employees.

His wife, affectionately known to the employees as the Dragon Lady, was the COO. It didn’t take me long to find out what she had done to earn this nickname. She was rationing coffee and toilet paper.

My first day there, a meek-looking secretary shyly approached me and asked for $20 to buy the daily allotment of coffee and toilet paper. I’d actually never heard the term “daily allotment of coffee and toilet paper” outside of a war-time situation. It seems Dragon Lady had limited how much of these items employees were allowed to use.

My decision was easy in this case. Banish the daily allotment – toilet paper and coffee for everyone! That one small change signaled to the employees that they mattered to the company. That one small gesture changed everything. The employees regained their faith in the company and they all begin working together to save it. We stabilized the company, sold it in six months, and all the employees kept their jobs.

There’s one change designed to improve office morale I find a little questionable. Last year President Nobuaki Aoki of the MK Taxi company in Kyoto, Japan, installed six personalized vending machines in his company.

These machines have his photo on them and in addition to snacks, dispenses sound bites in his dialect like “Groom yourself well and smile,” “Good job,” and “Thanks for working hard again today.” The idea, of course, is to boost employee morale. But I’m guessing these words mean a lot more coming from a supervisor rather than a machine.

Think about small changes in your office that could boost employee morale. But think twice about the vending machine.

 

 

My Moves Like Jagger

They must be getting some kind of satisfaction. The last three tours of The Rolling Stones grossed $401 million. Fifty-four years after childhood friends Mick Jagger and Keith Richards first formed what has been called the World’s Greatest Band, the band is still performing and drawing record crowds.

So I was interested in an article written by Rich Cohen in the Wall Street Journal recently called “The Rolling Stone’s Guide to Business Success.” This band  has been “among the most dynamic, profitable and durable corporations in the world,” he writes. They must have learned a thing or two along the way.

I agreed with many of the five lessons he targets from the long and successful career of the band. I’d like to focus on one in particular.

Cut the anchor before it drags you down

 Blues guitar player Brian Jones formed The Rolling Stones with Mick, Keith and pianist Ian Stewart, joined soon by bassist Bill Wyman and drummer Charlie Watts joined. They played their first gig at the Marquee Club in London in July 1962.

A rebellious middle-class young man, Brian could reportedly master an instrument in a single day. He was leader of the band and also served as its manager.

But he soon adopted too much of the rock star persona, doing drugs and not showing up for sessions. As Keith Richards said in an interview in the Rolling Stone magazine, “I enjoyed his company, and I tried incredibly hard, in 1966, to pull him back into the group. He was flying off. But my attempts to bring Brian back into focus were a total failure.”

Mick, Keith and Charlie felt they had no choice but to fire him. A month later he was found dead on the bottom of his swimming pool at the age of 27. A sad story but the guys did the right thing for the band. They had to cut the anchor before it dragged them down.

As Principal of GlassRatner in our restructuring and bankruptcy practice, I have to cut a lot of anchors at companies we’ve worked with as clients. It’s necessary for a variety of reasons. Ineffective managers may have been promoted beyond their ability and incapable of performing their jobs. Employees have gotten lazy and are more concerned with getting a paycheck than doing much to earn it.  Or the company may just be bloated and need to be streamlined to crawl back to health.

I’ve had to fire employees at client companies for embezzlement or incompetence. And as I wrote in my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” I once had to fire the CEO’s 83-year-old grandmother as her main contribution to the company was knitting him socks.

Sometimes I have to get rid of people because they have become troublemakers, hurting the morale of the other employees, spreading false rumors or stirring up drama in the workplace. As I heard a speaker say one time, “If you spend your whole day putting out fires, it’s time to fire the arsonist.”

It’s not a pleasant task. But efforts to save previously valuable and now-floundering employees rarely works. Like the efforts The Rolling Stones made with Brian Jones, they generally fail and are just a waste of time.

While I may not have Mick Jagger’s net worth, estimated at around $360 million, I do share some of his moves. Cutting anchors is one of them. It’s one of the keys to the success of any company and helped in the unparalleled career of The Rolling Stones. As pointed out in the article, “Why have the Stones lasted while all others faded? Whenever I asked an old-timer, I got the same answer. It’s Mick—his clearheadedness, his lack of sentimentality.”

Qualities of Millennials and How to Work with Them, Part Two

This is the second of a two-part series on working with millennials. The first post introduced three qualities of millennials in the workplace. Part two will examine how to embrace these qualities and use them to retain quality employees and contribute to the success of your company.

Building a motivated, dedicated workforce. That’s one of the most critical components to the success of your business, as I mentioned in part one. As Principal of GlassRatner in our restructuring and bankruptcy practice, I see so many instances where a company may have many of the basics covered, like having a good product and effective distribution channels, but are struggling due to a high rate of turnover and the lack of a productive workforce.

Qualities of millennials include being tech savvy, not being motivated only by money and being used to working in teams to find creative solutions. Here are some ways to embrace these qualities to enhance the success of your business and retain those employees:

1. Leverage their knowledge of tech by instituting a form of reverse mentoring.

While older generations may have decades of knowledge in their field, millennials tend to keep up more with social media and changes in technology. They are the first generation to grow up immersed in tech. So ask their advice, give them a seat at the table if you’re discussing how to incorporate social media into building your brand. They will feel appreciated and valued, and your business will benefit.

The Wall Street Journal article “Mentor Your Boss” mentions a website founder who made a 21-year-old intern their expert for social media. Stacy DeBroff said, “There are so many changes and so many technologies coming alive, and twentysomethings, who have ‘grown up’ using social-media sites, tend to find solutions quickly.”

2. Make their work feel meaningful.

More than once I’ve had employees leave, either with no other job or with one that paid significantly less. And it’s not just happening to me.

A 2012 survey showed 56 percent of millennials would take a pay cut to to work somewhere that is changing the world for the better. Think about that for a second. More than half your workers may leave, for less money, if they felt they’d found a more meaningful place to work. And 91% say that a company’s social impact efforts are important when they are considering which companies to work for, according to the article “Study: Millennials’ Work Ethic Is In The Eye Of The Beholder.”

So take a look at your business. How is it helping people and helping the world? Focus on that narrative about your business and share it. Make your millennial workers feel proud to work for your business because they are working to make the world a better place.

As reported in the Wall Street Journal in “Helping Bosses Decode Millennials—for $20,000 an Hour,” the consultant Lisa McLeod helps companies “set a ‘noble purpose’ to strengthen young employees’ connection to their work.” And share stories of how your company benefits the world with stories rather than statistics, as they find those more compelling.

chart13. Incorporate more brainstorming and teamwork into your business.

In a 2013 survey conducted by IdeaPaint on millennial workplace trends, millennials were asked to complete the statement, “My favorite place to generate big ideas is ….” More than 86 percent responded by saying either collaborating with a small group of colleagues (2-3) or brainstorming with a large group of people.

Millennials feed off the energy of others in the workplace. Give them the opportunity to work collaboratively by forming teams and holding brainstorming meetings during which they are encouraged to share their ideas and they feel their opinions are valued. Create collaborative working spaces.

Making changes in your workplace to embrace the differences that millennials bring will pay off. As this article in Fortune, “How tech-savvy millennials humanize your workplace” pointed out, “The so-called “millennial” has become more than a demographic age group; it is a mindset. A way of looking at the world and, regardless of age, declaring, ‘there has to be a better way.’”

You want that mindset working for you and your business.

How to Have a Successful Failure

This is the first in a two-part series on how your business can not only survive but also thrive after a major setback by embracing failure as an opportunity. This blog discusses successful businessmen who persevered after failures and ultimately became successful. Part 2 will contain specific tips on how you can achieve a successful failure for your business.

After two failed attempts to design an economical and reliable car, Henry Ford lost his financial backing and the confidence of people in the car business.

Undeterred and tired of those who knew nothing about design injecting their opinions, he found a more appropriate business partner from Scotland, Alexander Malcomson, who promised to not interfere in the design process.

With Malcolmson’s backing, Ford designed the Model T, which debuted in 1908 for $825. In the first year, 10,000 were sold. When the price dropped to $525 four years later, sales zoomed and Ford had a 48 percent share of the automobile market.

Henry Ford used what he learned from his failures to make a better product. “Failure is simply the opportunity to begin again, this time more intelligently,” he said.

Get Past Feeling Like a Failure

As a Turnaround Authority, I practice this philosophy when I work with companies that are failing. When I meet with senior management, they are often feeling pretty bad that the company is having difficulties. They may be feeling like failures on several levels.

One of the first things I try to do is to help them focus not just on past failures, but the opportunities the company now has in its current situation. These can often be difficult to see when your business is not doing well.

Great examples can be found in companies that not only survived the Great Recession but also actually came out stronger. An article in the Wall Street Journal in 2012, “For Big Companies, Life is Good,” referred to an analysis done by the Wall Street Journal of corporate financial reports. It found that “cumulative sales, profits and employment last year among members of the Standard & Poor’s 500-stock index exceeded the totals of 2007, before the recession and financial crisis.”

These companies turned to deep cost cutting and cautious investing to outperform their competitors. “U.S. companies became leaner, meaner and hungrier,” said Sung Won Sohn, a former chief economist at Wells Fargo & Co.

What is a Successful Failure?

Once you’ve acknowledged that your company is failing and that this situation can be overcome, that presents you with an opportunity to emerge leaner and meaner, what is termed a “successful failure.”

Let’s say your company does totally fail. Look at that as an opportunity to try again. Here’s just one example of a guy whose business failed and he came back even stronger.

Gary Heavin dropped out of college in 1976 and started a gym, becoming a millionaire by age 25. But his rapid expansion and high overhead costs led to financial difficulties and by age 30 the company went bankrupt.

Taking the lessons he learned from that business failure, Gary started Curves, a women-only gym. Again, he met with rapid success. He then franchised the business, which now has 10,000 locations around the world, and he is a billionaire.

Failures can be turned around into success stories if you perceive them as opportunities. After all, that’s what I do as the Turnaround Authority. It can happen for your company, too. Come back for part two for my tips on how to get started.

Getting the Most Out of Your Advisors

Welcome to part two of my three-part series on working with advisors. Last week, I discussed How to Find the Best Advisors for Your Business. This week I share my top tips on utilizing their expertise to foster the growth and success of your business.

  1. Be clear about your expectations and create accountability

A new advisor may have been planning on a phone call every quarter, while you envision monthly face-to-face meetings. In the article “How to Use Advisors to Supercharge Your Business,” Eli Portnoy writes about giving up some equity in his company to his advisors and getting nothing in return. “Our advisors were fantastic and really wanted to help. The problem wasn’t them, it was me. My advisors were brought on at random, and furthermore, I failed to create structure and accountability.”

Leveraging the lessons he learned the first time around, when he brought on new advisors he made it clear what he was looking for from them. He drew up a two-year contract that stated they would meet or talk on the phone every other week and have an in-person session or dinner once a quarter. If all obligations were met, they would receive equity in his company after the two-year period.

  1. Be honest with them

To get the most out of your advisors, you have to operate in an arena of mutual trust. That means you have to share the challenges you are facing and your financial situation accurately.

This may be uncomfortable at times if things are not going so well. But perhaps especially in bad times, your advisors can prove crucial to weathering a difficult situation by first forcing you to confront the issues.

I devoted an entire chapter to facing your harsh realities in my book, “How Not to Hire a Guy Like Me: Lessons Learned From CEOs Mistakes.” Failure to do so is one of the major mistakes I have seen CEOs make, time after time.

If you share your information honestly, your advisors can be the ones forcing you to face your harsh realities before it’s too late. Maybe you are having a cash flow problem and aren’t sure how to resolve it. One of your advisors may have dealt with a similar scenario and have suggestions on the best way to deal with the situation. You can’t get the best advice without revealing the true picture of the financial situation of your company.

Your advisors may have some other great ideas to share with you even when it’s not a time of crisis. Let’s say you’re having your most successful year yet. Your advisors may have ideas on how to build on and leverage that success.

  1. Listen to their advice

While this sounds like just common sense, I can’t tell you how many people I’ve dealt with who had ended up in dire financial shape and it wasn’t because they weren’t getting good advice. They just didn’t listen to it.

I read an article in the Wall Street Journal last week, “Tuning Out: Listening Becomes a Rare Skill.” The article cited a study done in 2011 in Organizational Behavior and Human Decision Processes that found that the more powerful the listener is, the more likely he is to dismiss advice from others.

You can gather the best advisors in your industry and share details about your business. But none of that will do a darn bit of good if you don’t actually follow it. These leaders are those that John Steinbeck was speaking of when he said, “No one wants advice – only corroboration.”

Finding the right advisors and working with them in the best way possible can make a huge difference in the success of your company. Eli Portnoy, the young man who made mistakes the first time around and then instituted structure and accountability, saw a huge difference in his company. “Thinknear took off within months of creating the new advisory board and structure. My personal weaknesses as a CEO became strengths and with the help of my advisors I was able to supercharge our trajectory.”

Advisors can make a big difference in your business, but there are still professional advisors you need to hire. For part three of this series, I’ll talk about those.

It Takes Finesse to Fire a Family Member

Mitchell Kaneff, the CEO of Arkay Packaging, told the story of firing his father in the article “Why I Fired My Father From the Family Business.” Although his father had made him president, his dad remained as CEO and still made a lot of the decisions.

Their completely different styles of management came to a head one day with the COO claiming he was resigning as he found it impossible to work with two men with such different styles.

So Mitchell called his dad and gave him a choice — he could either buy Mitchell out or Mitchell would fire him. Expecting his father to be angry and hurt, he was stunned when his father instead replied, “I am so proud of you. You’re right. It’s time for me to leave.”

Any kind of situation that involves letting someone go rarely goes that smoothly. Unfortunately, as the turnaround authority, I’ve been in the situation many times of having to fire people. It’s never more difficult than when it’s a family member.

Once you have terminated a regular employee, your ties are severed and both the company and the employee can move on. Not so with a family member, where heated emotions and resentments over the termination can affect the family dynamic for years.

That’s why it’s so critical to handle firing a family member in the correct way, as an article in this week’s Wall Street Journal pointed out, “You’re Fired … But I hope to see you at the next family reunion.”

Because ties with this person are not severed and you will continue to see each other, it takes a lot of planning and delicacy to terminate a family member the right way.

The article quotes Raymond Lucas, senior vice president of financial planning and training for Integrated Financial Partners, who said, “Remember: When all is said and done, you need to be able to sit at the Thanksgiving table together.”

The first step is to work with the family member to see if the situation can improve. Perhaps he or she could be moved to a different position or get more training to be more effective in the job. But when it reaches a point that it’s apparent it is not going to work out, there are a few things to do before meeting with the employee.

First, document the reasons you are taking this step. Then try to get agreement on the termination from other family members working in the business so you have a united front.

When it’s time to terminate the employee, meet with him privately. A crucial step is to let him know that you value his happiness and you realize he is not happy with the current situation. Make it clear you will support his efforts to find another more suitable position. Another important step is to listen to his side and make him feel heard about his situation.

It’s never an easy situation to handle, but doing it the right way can make a huge difference in your family. For more tips on handling this delicate process, please read my column “How to Fire Grandma and Still Get Invited to Sunday Dinner.”

The Value of the Low-Tech Whiteboard in a High-Tech World

I had to chuckle when I saw an article last week in the Wall Street Journal, “High Tech’s Secret Weapon: The White Board.” Even though I am a fast adopter of technology, I am a major supporter of using the whiteboard in my work as the Turnaround Authority. In fact, I even devoted a whole subchapter of my book, “How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes,” to the whiteboard, touting it as one of the keys to success.

So I found it humorous to see this old-fashioned tool referred to as a secret weapon. What was even more interesting is that the article is about the company that developed the note-taking app Evernote. I use Evernote every day, making notes in my iPad that are automatically synced to my computer so I have them with me wherever I go. I can take photos and create to-do lists as well. And the best thing is that these notes are totally searchable so I never waste time tracking down information I need.

I loved learning that almost every surface of the offices of Evernote in Silicon Valley are covered with IdeaPaint, which allows the employees to write on the walls with dry-erase markers. Evernote relies on this low-tech way to engage employees in focusing on developing their high tech products. And it seems many other high tech firms do the same.

As the author, Farhad Manjoo, noted, “Whiteboards are to Silicon Valley what legal pads are to lawyers, what Excel is to accountants, and what long sleeves are to magicians.”

Here are just a few things to love about the use of a whiteboard for business.

1. Anyone can use it

We can all pick up a marker and draw on a whiteboard. I can’t say the same for the ability for everyone to master collaborative software or being able to share documents digitally.

2. It allows people to focus

I would argue that we focus better when looking at the large canvas of the whiteboard than staring at the small screen of a computer, having been conditioned since we were children by the teacher diagramming sentences and doing math problems on a large chalkboard.

3. It points out gaps in logic

One of my favorite ways to use a whiteboard is to draw timelines. I find that drawing on a whiteboard helps a group to clarify complex situations and analyze the issues involved in a particular situation.

For example, I once worked with a racetrack that took 18 months and $100 million to build, and just 30 days to run out of cash. We created a 12-month timeline to get the racetrack out of bankruptcy. It was ambitious, as we had a lot to accomplish for the company to make that goal. But by putting everything that needed to be done on the whiteboard, each person could visualize their own responsibilities and how crucial it was that they each complete their jobs on time so we could make the deadline.

4. It enables collaboration and buy-in

When people participate in the whiteboard process they can clearly visualize their roles and how they all need to work together to accomplish the set goal. And if everyone is allowed to participate and share their ideas freely, you generally achieve automatic buy-in of the steps to achieve that goal.

I’ll continue to incorporate the latest technology into my business. But I will forever be a fan of the good old whiteboard. It’s nice to know all the whiz kids in Silicon Valley agree with me.

Look for me November 10 at 4:30 at the Book Festival of the Marcus Jewish Community Center of Atlanta. I’ll be discussing my book,  ”How Not to Hire a Guy Like Me: Lessons Learned from CEOs’ Mistakes.” The event is free and open to the public. Click here for more information.