Management Matters Blog

Management Matters with Mike Myatt: Dealing with 'Corporate Crazies'

By: Mike Myatt, Chief Strategy Officer, N2growth

--You can run, but regrettably you cannot seem to hide from the "corporate crazies." Over the years, I've simply come to a conclusion that many otherwise savvy business people have yet to grasp; you can’t argue with crazy.

We’ve all heard the saying "pick your battles," and in my experience one of the most futile battles that can be waged is attempting to change the mind of someone who already lives in an altered state. So, as we move forward into 2009 I’ll share some thoughts on how to make sure the lunatics don’t gain control of the asylum in the year ahead.

Let’s begin by defining “crazy.” While most of us don’t encounter clinical insanity in the workplace on a frequent basis, we regrettably must contend with a whole host of other frustrating characters--the irrational, the ignorant, the closed-minded, the pathological liar, the overly political, the self-serving, the zealot, the megalomaniac, the CFO (just kidding), the power hungry and any number of other “corporate crazies.” The corporate landscape is littered with very sane people who are better suited for the padded room, or the romper room, more than they are the board room.

It is simply not fruitful to attempt to debate business logic with those who do not recognize logic to begin with. If there’s one tidbit of wisdom you need to take away from this post it’s that you cannot convince someone who always thinks they’re right that they are in fact wrong. No matter how logical and grounded your approach, they simply won’t except your facts over their opinions, emotions, and self-interests. So, what can you do when logic and reason fail to prevail? The following list of suggestions is my New Year’s gift to you in hope that it will allow you to outsmart those that feel they cannot be outsmarted.

1. Define Acceptable Behavior: This first thing all CEOs need to do is to accept responsibility for any “corporate crazies” who have taken residence in your organization. They serve at your pleasure and are your issue to deal with. Rest assured that if their behavior is bothering you, then it’s highly probable that their behavior is adversely impact others to an even greater degree. Just having a definition for what constitutes acceptable behavior is a positive step in containing the crazies. Creating a framework for decisioning, using a published delegation of authority statement, encouraging sound business practices in collaboration, team building, leadership development, and talent management will all help even out the uneven. Having clearly defined job descriptions so that people know what’s expected of them and a well articulated chain of command to allow for effective communication will also help people to play nicely.

2. Hit Conflict Head-on: While you can’t always prevent conflicts it has been my experience that the secret to conflict resolution is in fact conflict prevention where possible. By actually seeking out areas of potential conflict and proactively intervening in a fair and decisive fashion you will likely prevent certain conflicts from ever arising and if a conflict does flair up, you will likely minimize its severity by dealing with it quickly.

3. Understand the WIIFM Factor: Understanding the other person’s WIIFM (What’s In It For Me) position is critical. It is absolutely essential to understand other’s motivations prior to weighing in. Other than the obvious solution for dealing with difficult people (choosing not to deal with them at all), the best way to calm the perpetual storm is to help them achieve their objectives. If you approach problem relationships from the perspective of taking the action that will help others best achieve their goals, you will find few obstacles will stand in your way with regard to resolving conflict.

4. The Importance Factor: Pick your battles and avoid conflict for the sake of conflict. However if the issue is important enough to create a conflict then it is surely important enough to resolve. If the issue, circumstance or situation is important enough, and there is enough at stake, people will do what is necessary to open lines of communication and close positional gaps.

5. View Conflict as Opportunity: Hidden within virtually every conflict is the potential for a tremendous teaching/development opportunity. Where there is disagreement there is an inherent potential for growth and development. If you’re a CEO who doesn’t leverage conflict for team building and leadership development purposes you’re missing a great opportunity.

Bottom line: If you can’t avoid the crazies there is still hope. I sincerely believe productive working relationships can be formed with even the most difficult of people where there is a sincere desire/need to do so. Turning the other cheek, compromise, forgiveness, compassion, empathy, finding common ground, being an active listener, service above self and numerous other approaches will always allow one to be successful in building rapport if the underlying desire is strong enough. If taking the high road fails, or is not the best course of action, then relax, you’re the CEO; you can always let them go, which is probably what you should have done long ago.

Management Matters with Mike Myatt: The Next Domino to Fall

By: Mike Myatt, Chief Strategy Officer, N2growth

--The next domino in the economic downturn is already starting to fall. The more layers of the onion we peel back on the chaos in the capital markets, the worse the news seems to be.

I have long been a believer in the axiom ”where there’s smoke, there’s fire,” and trust me when I tell you that the fire is far from being under control, much less extinguished. You see, while most of the attention in the mainstream media has been focused on the debacle in the real estate and public markets, the next wave of failure is about to rear its ugly head. In this week’s column I’ll share what I believe is the next segment of financial collapse set to rock the investment world…

Riddle me this…What conclusion should you draw from the simultaneous occurrence of a bear market, a recession, the virtual collapse of the investment banking industry as we know it, massive government bailouts, and the capital and credit crisis? The answer: Big trouble in the Private Equity markets. News Flash…private investments are inexorably linked to public markets, and we’re on the brink of watching many private equity firms suffer the same fate of their public counterparts. The problem is this…many private equity firms have yet to write down their investments, and are still carrying them at book value, which can only mean one thing…they are significantly overvalued.

Think about it…private equity markets were perhaps even more frothy than the public markets over the past few years. Massive amounts of deals were being done at very aggressive valuations that just won’t hold-up in today’s economy. Try this analysis on for size…take a random sampling of PE deals closed in 2005 and 2006 and look at their original valuations. Then revalue those some companies by marking them to current market conditions. The big sucking sound that follows is the painful realization of equity erosion. Does this sound familiar?

The real shame is that the same short-term greed mongering that affected the public markets is about to rear its head on the private side of the table. Remember that PE investments are high risk investments, yet the big players in this market are institutional investors who simply got greedy and took on more risk than they should have. Again, does this sound familiar? It only gets worse…not only has the door been slammed on the public exit for many PE investments, but PE investors are likely going to be hit with big capital calls that can’t or won’t be met. This simply means a sell-off of PE investments at deep discounts is impending.

Even if you can’t connect the dots based upon recent adjustments in valuations in the real estate and public markets, just roll back the clock and revisit the evisceration of the paper wealth that occurred during the dot-com era when the bubble burst on frivolous valuations at that time. The moral of the story is this…don’t be at all surprised when the bottom falls out of the private equity markets…

Management Matters with Mike Myatt; Web 3.0

By: Mike Myatt, Chief Strategy Officer, N2growth

--As quickly as Web 2.0 arrived, it is being overcome by the next generation of digital applications and toolsets. Moreover, the need for broader understanding as to how to implement a more sophisticated internet strategy is becoming necessary in order to remain competitive in the market. In this week’s column I'll share my thoughts about why you can't afford not to jump on the social networking bandwagon.

So what's with all the buzz about social networking? As a CEO or entrepreneur, why should you care? With so much being written about the impact of social networking on business, and the numerous examples of companies that are capitalizing on its many benefits, I'm amazed at how few companies still just don't get it. Not only has social networking arrived but it is clearly here to stay. All you need to do is look at the tremendously successful companies that have been built upon the platform of social networking (MySpace, YouTube, Ryze, Linked-In, Twitter, FaceBook etc.) or the unprecedented growth of other forms of social media and you will quickly recognize that you better board the plane before it flies away...

Let's start with a bit of background…the term "Social Networking" in its most classic sense is best defined as the study of how people interact with one another. It studies the dynamics between nodes (people) and links (their relationships). Since the term was coined in 1954 by J.A. Barnes, its significance has leapt from the halls of academia to gain visibility in the boardrooms of global corporations. It has evolved from the study of human relations in sociological, anthropological and psychological settings to the study of professional relationships and organizational theory in business environments.

The difference between "old school" networking and the current form of social networking is the introduction of technology-based communities and user-driven content on the internet. The proper use of blogs, podcasts, video, webinars and other social media gives greater voice and brand extension to a broader base of constituencies than could have ever been addressed before. When all the buzzwords and techno-jargon are removed, social networking is about aligning interests and motivations to build relationships, and establish a sense of extended community and create influence.

There are intelligent and well-established business people with virtually non-existent networks and little true influence, and there are what would on the surface appear to be obscure individuals with huge networks who wield tremendous amounts of influence. Social networking analysis has shown that the greatest amounts of power and influence inside the corporation don't necessarily reside at the top of the org chart as one might think. Studies have concluded that the individuals who possess the most influence in a company are the most trusted people with the broadest base of connections, and not necessarily the person that has the highest rank or biggest title. Likewise, the same holds true for external networks It is about the quality (are the people in your network significant?), character (do the people in your network trust you and do you trust them?) and relevance (are the people in your network capable of wielding influence that is aligned with your needs?) of the people in your network that matter.

While social networking is clearly allowing major corporations to be more productive by extending their brand and having better communication throughout the entire value chain, it is its impact on small business that is perhaps most impressive. The ability of social networking to level the playing field for the individual practitioner and the small or medium enterprise is truly awesome. It was the Internet that established the global economy, but it is social networking that is making it a reality. Businesses who ignore social networking will regret it, those that venture in with a lack of understand will be eaten alive by it and those that properly leverage social networking will create tremendous competitive separation.

As a CEO or entrepreneur, if you are not leveraging social networking, you're wrong…Forget the excuses, the rationalizations and the justifications, as you don't have time not to embrace social media. If you are doing your job, you will aggressively move to leverage both your personal and corporate brand through social networking. If you're a CEO who doesn't blog, wake-up and start. Social networking will allow you to gain mind-share with your constituencies like never before, while improving customer loyalty and increasing both personal and corporate brand equity. Social networking will allow you better manage your reputation in the best of times, and when the inevitable corporate faux-pas occurs, it will allow you to stop the bleeding much faster. If you don't understand social media and social networking hire someone who does.

The old axioms "you'll reap what you sew" or "give and you shall receive" have never been more accurate than when applied to social networking. If you are truly motivated to provide value and benefit to those in your network then you will receive value in return. However if you are a user and abuser of your network, only taking from others and giving nothing in return, you will bleed your network dry only to watch it crumble before your eyes.

With proper motivation, careful construction and active management of your network there is no reason to assume that it won't be a success. Focus on leveraging the most important spheres of influence for the mutual benefit of those in your network. If you adopt the suggestions contained in this post and embrace social networking your personal network will grow with geometric progression while spanning industries, geographies and cultures. Moreover you'll extend your corporate brand, increase customer loyalty and create a broader sense of community both inside and outside the enterprise.

Management Matters with Mike Myatt: Teach Them to Fish

By: Mike Myatt, Chief Strategy Officer, N2growth

--Do you feed your employees, or do you teach them how to fish? Do you like to swoop in and save the day? Do you see yourself as the white knight that can solve any problem or challenge?

If you do, you have what I refer to as “hero leader syndrome.” Any leader’s belief that he or she can do everything better than anyone else (even if it’s true) is a root cause of inhibiting workforce productivity. Creating unnecessary dependencies between leaders and team members, while often unintentional and/or well-intended, is nonetheless a far too common practice for the “hero leader.” In this week’s column we’ll take a look at the myth of the hero leader…

Is your workforce comprised of independent, highly motivated and effective individuals, or is it built upon the limitations of employees completely dependent on you as their leader? Here’s a news flash…great leaders don’t create a state of dependency. In fact, they won’t allow dependencies to exist…rather they mandate independent thinking and decisioning.

If you’re overworked, tired, and feeling stretched so far that your rubber band is about to snap, it is likely because you're doing the work of your subordinates, rather than holding them accountable to perform their own duties. Your role as a leader is to develop talent to the highest levels of independent and autonomous thinking and execution. Great leaders don’t subscribe to a “Do-It-For-You” methodology of talent management, rather they lead, mentor, coach and develop team members by getting them to buy-into a “Do-It-Yourself” work ethic. Great leaders view each interaction, question or even conflict as a coaching opportunity. Don’t answer questions or solve problems just because you can, rather teach your employees how to do it for themselves. If you make it a habit of solving problems for people, you simply teach them to come to you for solutions at the first sign of a challenge. Great leaders don’t allow themselves to be placed in this position. They don’t allow employees to leverage them, they leverage the employee, and in doing so, it’s a win for the executive, the employee and the enterprise as a whole.

The trick is to meet questions, challenges, conflicts etc., with intelligent questions of your own. You need to meet questions with questions. Questions allow you to direct the conversation and not be sucked into it. By redirecting the flow of a conversation, you elicit critical information and show that you care about what the other person is thinking. The following 5 tips will allow you to ask effective questions:

1. Be sincere in your questioning. Forget about what’s in it for you, and think about how you can help the person you’re communicating with. Do not manipulate or control the other person, but make an honest effort to find out how you can help them achieve their objectives by coaching them and not just serving up a solution on a silver platter.

2. Learn to ask effective questions. Don’t ask questions that can be answered with a simple yes or no. Use questions that begin with who, what, where, when, why or how in an attempt to enable dialoging. If the other person is doing all the sharing of information, you will find yourself in the enviable position of being able to assess, evaluate and synthesize the information being shared. While the other party is talking…you are learning. Once you understand what the issues are, you’re now in a better position to coach and teach.

3. Use questions to stimulate and challenge. Ask questions that are insightful such that they require thought to be answered. Help people understand how bright they are and where their talents and gifts are by setting a high chinning bar. When you engage people with stimulating and probing conversation they learn and grow.

4. Get personal in your questioning. Use questions that encourage the other person to reveal their thoughts and emotions. These questions will help you truly get to know the other party and to build common ground and rapport. If you can move beyond the analytical to the personal, the other party is much more likely to reveal their bias or agenda.

5. Demonstrate your competency without giving the answer away. Ask questions that reveal your subject matter expertise, and that demonstrate your ability to provide meaningful solutions without actually doing so. These types of questions should engender credibility, and therefore provide the other party with confidence that you can handle the situation in a manner that is in alignment with their best interests. Force people to move beyond surface level discussions by taking them past their comfort zones with intelligent questioning. Never settle for the general, ambiguous, vague or standard answer. Continue probing until you are satisfied with the answer.

If you want to become a great leader, master the art of teaching and coaching through the application of skillful questioning. Work on developing a list of well thought out questions that are situational, industry specific, product specific, market specific, positionally specific etc., and use them to put you in a position to help others, not by feeding them, but by teaching them how to fish…

Management Matters with Mike Myatt: Good Employees Are Not Expendable

By: Mike Myatt, Chief Strategy Officer, N2growth

--Good employees are not expendable. As a CEO running a company during tough economic times, if your strategy to survive the economic downturn is to implement a slash and burn approach to cost cutting, I would suggest you reevaluate your thinking.

Regrettably, tough economic times are often the precursor for ushering in massive rounds of corporate downsizing, rightsizing, layoffs, corporate restructurings and the like. Reducing headcount in an economic downturn is almost a Pavlovian response for many executives. It’s as if workforce reduction is priority number one in some corporate operating rule book. Here’s a news flash…in the 212 pages of my book “Leadership Matters…The CEO Survival Manual,” nowhere do I espouse an unplanned mass reduction in labor as a brilliant business move.

Let me state this as simply as I can…a business should always be rightsized, or better yet, it should always be optimized. If you find yourself carrying too many employees such that you have to eliminate positions to manage cash flow, then your operating plan was flawed to begin with. Managing revenue risk through workforce reduction is simply a sign of poor executive leadership. If an employee is a valued asset one day, and somehow expendable the next day, then I question how valuable he or she was to begin with.

If you can lay off large groups of employees then I question your need for them in the first place. Irrational exuberance and optimism on the part of executive leadership is not viable justification to go on a hiring binge. The thought that people are simply expendable resources constitutes flawed business logic. Good hires should be sustainable hires.

The bottom line is that as a CEO, you never want to be too far ahead, nor too far behind the hiring curve. So the obvious question is this: how do you know if the size of your workforce is optimized? You rightsize all the time…My CEO clients have their CXOs justify headcount on a regular basis…They keep them on a short leash to avoid shortfalls or bulges in workforce size. I can already hear the naysayers complaining about not having time for this level of employee evaluation. Oddly enough, these are the same executives who find themselves making massive unplanned cuts in head count because they weren’t proactive in their approach to begin with.

There are any number of financial and non-financial metrics that can be assessed to evaluate whether or not the depth and breadth of your workforce is optimized. Each organization is different, and its not even so important which metrics are used, just that some logical standard is put in place. Whether it be something as simple as revenue per employee, or a complex formulaic approach to contribution margin, measurement needs to occur much more frequently than is the case in most corporations today.

The moral of the story is this…Any idiot can grow a workforce or shrink a workforce, but it takes great executive leadership to optimize a workforce.

Management Matters with Mike Myatt: Surviving the Economic Downturn

By: Mike Myatt, Chief Strategy Officer, N2growth

--As odd as it may sound, if you want to survive the economic downturn, increase your marketing expenditures. If you're the short-sighted CEO who cuts back on marketing, branding, and advertising budgets in an attempt to reduce costs, shame on you.

Top CEOs recognize that economic slow-downs are not all doom-and-gloom. In fact, the smartest executives understand that swimming upstream against the conventional wisdom of the risk adverse can actually create significant opportunities for growth. By making heavy operating investments into marketing, advertising, business development, and sales initiatives, the aggressive enterprise can create significant competitive separation during a time when many are pulling back on such expenditures. In today’s column I’ll make the business case for applying contrarian thinking by becoming very bullish in the face of a waning economy.

Let me start by asking a question with the intent of pointing out the obvious. What better time could there possibly be to ramp-up sales and marketing investments when your competition is slashing costs and going into hibernation? The answer is, there couldn’t be a better opportunity to increase market share, sales penetration, and brand equity than to exploit the flawed business logic of timid competitors. The fallacious thinking which underpins some of the slash-and-burn management tactics that tend to get traction during economic downturns can ultimately devastate a business that adopts a bunker mentality.

If you doubt my logic, all you have to do is look at the research and historical data supporting my conclusions. McGraw-Hill Research assessed 600 companies across 16 different industry categories analyzing their advertising expenditures during the recessionary periods of the early 80’s. The results of the research showed that companies who maintained or increased their advertising budgets during recessions demonstrated significantly higher growth in revenue and brand equity, both during the recession, and for the following three years, when contrasted with competitors that eliminated or decreased marketing, advertising, and branding expenditures. Another study by the Center for Research & Development revealed that companies who aggressively advertised during a recession garnered almost 5 times the market share of their cautious competitors.

The research mentioned above is also validated by examining the historical marketing data for companies that thrived during the Great Depression. The reason that brands like Kellogg, Coca-Cola, Kodak, Campbell’s, and others survived those devastating economic times was their total commitment to continued marketing, advertising, and branding initiatives. My final warning is not to become a CEO who sacrifices long-term shareholder equity considerations for short-term financial benefits. Because Wall St. often rewards cost cutting measures with a temporary bump in stock price, fiscally conservative CEOs tend to focus on short-term benefits for all the wrong reasons.

The smart CEOs realize that cost-cutting does not constitute a sustainable business model and will forego temporary incremental moves in lieu of long-term, disruptive moves. This more aggressive strategy will ultimately reap more significant rewards from the market when the analysts realize the company is positioning itself to exploit current market disequilibrium while favorably positioning itself for the coming growth cycle. This thinking most definitely applies to your marketing outlook.

The reality is that when Company “A” cuts back on marketing initiatives and Company “B” increases marketing initiatives, Company “B” will take marketshare from Company “A”. As noted above, history has shown us that recessions create new brand leaders as aggressive companies are creating their future while conservative companies attempt to protect their future. Smart CEOs, while certainly aware of risk, spend considerably more time managing opportunities than they do risk.

Management Matters with Mike Myatt: Are Recruiters Effective?

By Mike Myatt, Chief Strategy Officer, N2growth

--Sourcing tier one talent is an issue for all businesses. I was recently asked if recruiters are effective, or if they're worth the investment.

Since my firm has a talent management practice which includes a practice group that provides both contingent and retained search services, to be fair, I must disclose my bias before addressing today's topic. While I clearly have a strong bias favoring an outsourced recruiting model, the question merits a bit of exploration in order to provide a fair answer.

In the text that follows I'll do my best to manage my bias and provide a transparent and authentic answer to a question I'm sure most of our readers have asked themselves at some point in time.

Let me begin by providing some historical background on organizational behavior which might serve as a useful backdrop for today’s post. While I could go as far back as Plato’s writings on the essence of leadership, Aristotle’s lectures on the topic of persuasive communication or even refer to Machiavelli’s work on organizational power and politics, for the sake of brevity and relevancy I’ll fast forward the late 1800’s in America.

It was during this period of time that I believe we can find the roots of modern HR. It was during the late 1800’s that industry recognized that people problems were a very real and rapidly growing concern in the workplace. It was also during this time that the US Government stepped-in to provide the first real legislative protections for the workforce.

As time has continued to march forward, America has moved from the concept of “personnel administration” to “human resources administration” to “human resources management” and now we are moving on to “talent management.”  Nomenclature aside, the biggest challenge that HR departments face today is that of multiple and often competing agendas which in turn tends to cause staffing inefficiencies and often results in lackluster performance. As with the evolution of most functional departments in corporate America, with the passing of time has also come some empire building and title inflation. The HR department is no exception to this regrettable state of dysfunction.

Let me ask you to think about your HR department for a moment How large is it, how big of a budget does it command and most importantly how productive is it? Upon reflection you’ll find that much of your HR department is likely charged with defensive posturing associated with managing compliance and litigation risk.

Other staff members are likely charged with training and administration activities, some have fallen into IT roles developing applicant tracking systems, while others perform marketing and research activities surrounding candidate development. How much of your staff is actually charged with recruiting and how senior are these people? It is not that HR departments are incapable of making high volumes of consistently great hires, it’s just that most or not organized to do so. If your executive level recruiting is being handled by staff level HR shame on you. The following are just a few reasons why I believe in most cases a company is better off leveraging the services of an outside recruiting firm:

1. Outsourcing allows companies to focus on core business while leveraging a broader, deeper and more senior recruiting talent pool than they could normally afford to organically payroll.

2. When payroll costs, ad budgets, job posting fees, research costs, IT costs, lost opportunity costs, etc. are considered it is more affordable to use a recruitment firm. Why spend your budget when you can let the recruiter spend theirs?

3. There are many benefits associated with using an outside recruiting firm including realizing the benefits of a confidentiality buffer which keeps the employer in relative anonymity until they are ready to engage with a candidate.

4. Recruiting firms have existing long-term relationships with passive job seekers not readily known to most HR departments.

5. Recruiting firms have access to a wider range of candidates who may not have ever considered working in a particular industry or for a specific employer.

6. As mentioned earlier most recruiting firms are staffed with very successful senior talent as opposed to corporate recruiters who are usually less tenured.   

7. No charge replacement guarantees makes using an outside recruiter a very low risk proposition.

8. Recruiting firms have a broad array of industry trends and information which can often be useful to employers in terms of benchmarking and analytics.

Good luck and good hiring!

Management Matters with Mike Myatt: Partisan Politics Not Always Bad

The truth about partisan politics is that contrary to public opinion, it's not always a bad thing. Likewise, bipartisan efforts don't always reflect altruistic behavior and selfless acts. From my perspective, it isn't necessarily the stance you take, but rather the reasons underpinning your decision to adopt a position that matter most. In today's column I'll share the unpopular truth about partisan politics.

In this last week I have harshly criticized others for both their partisan and bipartisan behavior, and I have also been criticized for my staunch partisanship. I’m not going to spend much time debating specific positions in the text that follows, but I am going to ask that you take a hard look at the motivations underlying positional differences, and then to draw your own conclusions from there.

Let’s begin by understanding that the intent behind a multi-party system is to insure integrity, transparency, and accountability. Partisanship serves as a fundamental check and balance allowing different perspectives, voices, and agendas to be put forth for consideration. I would submit that the danger lies not in the practice of partisan politics as it was designed, but rather in the disingenuous and self-serving interests of those who choose to abuse their positions in an effort to be viewed as non-partisan.

In fact, I would further submit that when an individual believes his or her partisan beliefs are in contravention to popularist bipartisan agendas, that they have a moral and ethical obligation to stand firm in partisan opposition.

The truth of the matter is that it can take a lot of guts to cross party lines, or it can display a complete lack of intestinal fortitude. The question should not be whether a person acts in a partisan or bipartisan fashion, but rather why are they choosing to do so.

Is their choice based upon doing things right, or doing the right thing? Is the decision based upon holding firm to their values and beliefs, or does the decision compromise values, ethics, and beliefs to satisfy public opinion and to protect their personal popularity?

Let me digress for a moment and address the issue of popularity. It becomes a very slippery slope when a politician, celebrity, executive, parent, child, friend, etc., develops a need to be popular, and in turn places that need ahead doing the right thing. When the primary motivating factor underpinning a position or a decision is to be liked, compromises in personal integrity and character quickly follow. In today’s culture where our nation has become obsessed with celebrities, and being politically correct, the need to be perceived as popular has become a demanding master to whom many strive to serve.

Popularity, vanity, narcissism, or other forms of self-indulgent or self-serving behavior are very temporary states. These characteristics while initially appealing, have no moral quality, serve no higher purpose, and are fleeting at best. While anyone can spin their way into popularity on a temporary basis, long-term respect is earned by not catering to special interests, not by compromising your values and beliefs, but by fighting for the right thing regardless of public opinion.

In this last week we have seen numerous calls to set aside partisan agendas in support of putting our nation’s interests first. In principle, I concur with the sentiment of the aforementioned battle cry. However, this assumes that the Bailout plan is truly in our nation’s best interests. I am much more impressed with those politicians, journalists, pundits, and other individuals who have opposed the bailout on principle, than I am with those that have looked for cover by walking the middle of the road.

My personal belief is that the heroes of this last week are those individuals who have stood boldly to oppose a flawed piece of legislation. It is incumbent on all of our elected officials to adopt whatever partisan or bipartisan positions necessary when and where it serves the best interests of our country. I have supported the Republicans and Democrats who have opposed the Bailout plan, and I have likewise hammered the Republicans and Democrats who have indulged in fear mongering and played party politics in supporting a rush to pass a flawed piece of legislation.

Management Matters with Mike Myatt: Facing Up to Rogue CEOs

By: Mike Myatt, Chief Strategy Officer, N2growth

--Rogue CEOs. Given the recent failures of banks and financial institutions previously thought to be untouchable, there has been a tremendous amount of justifiable venom being spewed at the CEOs of these firms. Their ignorance, and in some cases their arrogance, allowed these rogue CEOs to operate outside of normal business rules, conduct self-serving agendas, and partake in self-dealing transactions all while receiving outrageous compensation.

Before I go any further, let me state that I believe we should understand that the overwhelming majority of CEOs operate within the bounds of reason and ethics consistently placing stakeholder interests ahead of their own. The real question we should be asking is where were the boards of directors during this period of mismanagement?

You see it is the board who is responsible for holding the chief executive accountable. Even where you have a CEO who is inclined to misbehave, an actively engaged board of directors simply won’t allow it to happen. In today’s column I’ll examine the role of the board of directors in keeping CEOs accountable.

Before I proceed further, and for contextual purposes, I believe it’s important to actually define the role of the board of directors. While there are certainly a variety of opinions as to the roles and obligations of a company’s board of directors, from my perspective they can all be boiled down into four simple responsibilities:

1.Shareholder Accountability: A board member’s primary responsibility is to act in good faith as a fiduciary in representing the long-term best interests of shareholders. A board’s actions and decisions must be able to pass the litmus test of public scrutiny (legally, morally, and ethically), rise above personal agendas, and always place shareholder interests above all else.

2.Corporate Governance: A board must insure that the corporation’s charter and by-laws are adhered to. Moreover a board must use its best efforts to hold executives accountable for insuring that corporate actions fall within other legal, financial, regulatory, and compliance boundaries. Ignorance and apathy are not the traits of a good board. Great board members are proactive, involved, supportive, consultative, experienced, and savvy. They know the rules, play between the lines, and do the right things. 

3.CEO Oversight: It is the board’s job to select the CEO, provide the CEO with support and guidance, and to hold the CEO accountable. Good boards exercise great care and prudence in profiling CEO candidates, recruiting the right CEO for the job, providing the CEO with a clear job description, successfully onboarding the CEO, and holding the CEO accountable for meeting a set of clearly defined expectations. Good boards do not attempt to micro-manage a CEO, rather they understand their highest value in being a value added resource for the CEO focused on helping the CEO become successful.

4.External Visibility: A key responsibility of the board is to serve as an external champion of the corporate brand. Board members should have a clear understanding of the corporate vision and mission, and where prudent, evangelize the message for the benefit of the corporation. Whether this requires providing networking assistance, investor relations support, or engaging the media, a highly regarded and active board can add substantial value to the enterprise.

In the text that follows I’ll offer several points that will help a board evaluate whether or not they have the right CEO for the job:

Tenure: I am a firm believer that there is no such thing as a standard shelf-life for a CEO. No rules of thumb apply when evaluating whether a CEO has outworn his/her usefulness purely from a chronological perspective. I’ve witnessed CEO’s where the company has outgrown their skill sets, and/or abilities within a year of hire (a bad hire…), and I’ve also observed many instances of CEOs that have successfully guided companies for 20 years. The question is not how long a CEO serves, but rather what he or she does while serving. Whether age 32, or age 72, a board must ask themselves, is our CEO doing the job, and perhaps the better question is, are they the best CEO for the job?

Performance: The topic of performance is a multi-faceted issue. A CEO’s performance should be benchmarked against a variety of key performance indicators which are clearly spelled out in the chief executive’s employment agreement. When evaluating performance, a board must evaluate whether a lack of performance exists across all areas or in a single area, whether the lack of performance is a short-term aberration vs. the likelihood of it being a burgeoning problem, and whether the CEO can be coached through the performance gap, or whether the lack of performance is an irreconcilable issue.

Ethics Violations: The character of the CEO is often synonymous with the brand of the enterprise. Once a chief executive has violated the public trust, or made a gross or negligent error in judgment which could taint the corporate brand, a board should move swiftly to restore the integrity of the corporation. Many things can be spun, justified, rationalized, or managed, but a lack of ethical behavior on the part of the chief executive is not one of them. Let me also be clear that a good employment contract will make null and void any favorable severance packages where malfeasance, misfeasance, gross negligence, or fraud on the part of the CEO is present.

Loss of Confidence: Once the board, the employees, the capital markets, the press, or other key constituencies have lost confidence in the CEO, the board must replace the CEO. A CEO cannot lead, motivate, or inspire without the trust and confidence of those they serve.

Lack of Development: The corporate enterprise and the business world in general, are dynamic, fluid, and evolving environments. Therefore great chief executives cannot be static in their personal or professional development, or in their strategic and tactical approach to doing business. A CEO that does not exhibit the ability to change, innovate, and grow with the world around them is someone who will likely need to be replaced.

In the final analysis, the board’s decision as to whether a CEO should be replaced is a decision that should be made within the framework of managing risk and opportunity. The board must weigh the transitioning a CEO against the financial costs, the impact of the business disruption and lack of continuity that can come with replacing the CEO, the market reaction to a change in leadership, and whether the decision is ultimately motivated by right thinking. Lastly, and perhaps most importantly, the title of “Director” should not be synonymous with “Crony.”  Any board member not willing to uphold the aforementioned duties and responsibilities should be replaced in a New York second.

When to Consider Corporate Restructuring

By Mike Myatt, Chief Strategy Officer, N2growth

--Times are tough, and they're likely to get tougher, so my question is this; Should you, or should you not, consider a move toward corporate re-engineering? Whether directly or indirectly, your business will likely face negative repercussions of the struggling economy at some point, and there will be tough decisions that need to be made. The mere discussion of corporate re-engineering can cause fear, anxiety, and in some cases even panic. This is so much the case that some CEOs will avoid restructuring initiatives at all costs. There are even some business theorists that warn against undertaking complex restructurings because of the great risks involved. My question is this: Since when have fear and avoidance become prerequisites for success as a CEO? Give me real leaders who possess courage, vision, and a bias toward action, and spare me the timidity of mediocre managers posing as leaders. In today's column I'll examine the benefits of, and the need for corporate re-engineering.

Anybody could be a CEO if business were a static proposition. If change and innovation weren’t critical success metrics, and the enterprise could just run on auto-pilot, you could replace the CEO with a General Manager. The fact is that business is not a static endeavor. Quite to the contrary; there are few things that require as much fluidity as effectively increasing profit, growing revenue, and driving brand equity in today’s global marketplace. In fact, I would go so far as to say that if you as a CEO are not consistently re-engineering elements of your business in today’s business climate, one of the following two conditions exist; 1) You have a perfect business, or; 2) You are an ineffective CEO.

What do great CEOs do when the business model, the strategic plan, and the revenue hurdles don’t seem to be in alignment? They make changes. They don’t sit idly by and watch the business lose market share, suffer margin erosion, see their competitive value propositions vaporize, or watch their brand go into decline. Great CEOs are willing to make the tough decisions…that’s what they’re paid for. Facing reality and being able to make what are often times very painful organizational/structural decisions are the hallmarks of great CEOs.

In an attempt to avoid confusion as to what I’m speaking about, I put together the following definition of corporate re-engineering: “Corporate Re-engineering is simply leadership recognizing, taking ownership over, and acting to correct strategic or tactical business flaws, and/or to realign elements of the enterprise with current or anticipated changes in market conditions.” This isn’t rocket science, rather it’s just plain-old, good leadership. It is actually the fiduciary obligation of a CEO to make the needed changes to protect shareholder value.

So why is it that so many CEOs shirk their responsibility, stick their heads in the sand, and avoid making necessary changes? It is my experience that they either lack the personal skill sets, or haven’t built the right executive team to lead change, they just don’t recognize the need for change, or they just don’t care. The good news is that there is a cure for all four of the preceding problems: Items one through three can be solved with an emphasis on leadership development and talent management, and item four can be solved by holding the board of directors accountable for CEO performance and firing the CEO who doesn’t care. Following are five representative tips that will help you recognize the need for a re-engineering initiative:

1. Unusual declines in revenue, margin, marketshare, customer loyalty, or brand equity.

2. Even if the above areas are not yet in decline, but you are witnessing unusually slow growth or zero growth you still have a problem.

3. The inability to recruit or retain tier-one talent.

4. Current or anticipated changes in market conditions that will adversely impact your business model.

5. Obsolescence of intellectual property, products, services, solutions, or competitive value propositions.

The bottom line is this…Bleeding is not a healthy thing. Whether you’re experiencing a slow bleed or you’re hemorrhaging, both instances can be fatal without treatment. If your company is in products, services, or businesses that you wouldn’t enter into if you weren’t in that particular arena today…Get Out! Stop the bleeding, and reinvest your financial and non-financial resources into more profitable endeavors. I don’t believe corporate re-engineering to be evil, but even if it is, it is a necessary evil.