Mistakes happen to the best of people and organizations. When I was promoted to Chief Financial Officer at the age of 29, I articulated my fear of making a mistake to one of my mentors. It was overwhelming to accept and consider the responsibility of the lead financial role. I would be the last one to review information before it went to the President and Board. The response I got from expressing my concerns was great – You will make mistakes, I guarantee it. What sets great leaders apart is how they deal with the mistakes.
What I learned from that experience is that leaders can impede or even stop the ability to develop and execute strategy if they do not take responsibility for their own mistakes. Lack of execution can cause the organization to miss revenue opportunities and quickly burn through cash.
When you are a leader of an organization one of the toughest responsibilities you have is leading by example. The Type A leaders who are bold enough to put together a start up or buy a company may not be sufficiently self-aware to take responsibility for their own actions and, as a result, when something goes wrong they can turn into one of three personalities: the Victim, the Judge or the Warrior. What happens next depends on which personality the leader assumes.
The Victim says, “I can’t believe the team did this. They are out of control and now this project is ruined.” This is followed by public accusations that humiliate workers.
Leaders, put on your big girl or boy pants and take responsibility as the Warrior.
The Judge says, “I can’t believe this happened. I am so stupid for trusting the team and I am never going to do it again. The project is ruined.” This is followed with micromanagement and control freak like activities.
Either personality can lead to turnover in the organization, which significantly slows down the organization’s ability to develop and execute strategy. A Star player on your management team will not stay and live in chaos. The star players on the team are all updating their resumes and keeping their ear to the ground to determine what other positions they can pursue. They will resign and say something like: “This opportunity was just too good to give up” or “They approached me, I was not looking.” They were not looking until the leader turned into the Victim and/or Judge and created chaos and an uncomfortable working environment. The culture is such that the star player cannot contribute in a meaningful way and they will leave you. Baby boomers tend to have a deeper sense of loyalty, so they may stay and hope the situation will change. The Millennial generation, in contrast, will bolt quickly once the Victim and/or Judge show up. They are very focused on making certain they can personally contribute immediately.
The Warrior says, “I’m responsible for this team and actions. How can we correct and learn from this mistake?”
Instead of using blame and shame to work through the dissonance, Warriors use tools like awareness, compassion, integrity, and ownership. Warriors empower their team to fix issues with customers at the earliest point possible. Warriors take responsibility and execute. Execution leads to building enterprise value and higher existing values.
Leaders, take an honest assessment of your leadership style and adopt a Warrior attitude!
Responsibility can be scary. Leaders put on your big girl or boy pants and take responsibility as the Warrior. Stop the blame and shame, micromanaging and control freak ways that keep the organization from executing. We all have the ability to change once we become self-aware – take an honest assessment of your own actions.
Board members, investors, coaches, and mentors – challenge the leaders of the organizations in this area. Although it can feel distressing to challenge a leader without it sounding like a personal attack, it comes with the territory. I have sat in many a meeting when I knew the Board wanted to ask these types of questions and did not because it is uncomfortable. You have a fiduciary responsibility to address the issue if you think it exists. If you suspect it exists – it almost certainly does.
Star players – before you update your resume and bolt, try to effectively manage up and have a frank conversation with your leader about the situation. Even if it does not work and the leader does not change, it is good practice for you. To help develop the dialogue, consider reading the book, “Crucial Conversations, Tools for Talking When Stakes Are High,” (Patterson, Grenny, McMillan, and Switzler), before initiating the conversation.
As a Chief Future Officer, I can help you analyze your financial results and determine if the actual results are aligned with your strategy. Contact me at firstname.lastname@example.org or www.mindybarkerassociates.com.
The perpetrators of fraud often rationalize their choices by telling themselves, “No one pays attention to what I do anyway.”
experience I have found that whether you are a new business owner or an experienced CEO, it’s easy to overlook some basic controls in your organization to detect and prevent fraud. I’ve put together six practices you can…and should…implement if you have not done so already.
Read further at The CEO’s Guide to Fraud Prevention.
What kind of question is that … of course you would not purchase a piece of equipment that does not work! Yet you may be doing exactly that if your hiring practices have not grown and evolved to support the growth of your company.
As the founder or CEO of an entrepreneurial growth, or family owned company, an honest evaluation of your hiring practices might highlight if you are investing in employees who do not “work.” In this context, “work” means they are not suited for the current stage of your company, prompting the question, “How did I not see this happening inside my own company?”
Entrepreneurial growth founders and CEOs tend to hire friends and family at the early stages of startup, relying on people who they trust, and with whom they have an existing relationship. This type of employee tends to be fiercely loyal to the founder, willing to put in the hours to help get the startup moving in the right direction. My observation has been the founder has enough day-to-day interaction with all employees to fill in the gaps and correct shortfalls that result from hiring based on relationships versus skills and qualifications.
As your company has evolved, perhaps these types of employees are no longer team players; or possibly your superstar employees have become discouraged as the company has grown and changed, so they are leaving and taking valuable company intelligence with them.
Companies that survive three years in business and realize success in their revenue goals also find that the needs of the organization have changed. Hiring practices require more structure and objective measures, which means additional up front planning when considering a new hire. Here are my recommendations for putting in place that structure and objectivity:
- Complete job descriptions for existing and new positions. Since this process has Fair Labor Standards Act (and other regulatory) implications, refer to a source such as the Society for Human Resources Management (SHRM: http://bit.ly/1pJUinA), for guidance.
- Use the job description to create a job posting, describing the new position and the criteria for candidates to apply.
- Make certain you have an organization chart that clearly illustrates everyone’s relationship within the company.
- Properly communicate to existing employees you are hiring a key team member and explain the reason for the hire and eligibility requirements for applying for the new position.
- Prepare a template of key metrics the employee must have for the position before you identify the first candidate. Metrics such as job skills, education level, and experience should be included.
- Reproduce the template for each candidate you interview. Use it to evaluate all candidates during the hiring process to help you stay focused on the essential needs of the organization – rather than letting your emotions get away from you and hiring someone you really like but is not suited for the position.
During the actual interview, the founder/CEO and select team members, trusted advisors or others, should be involved in interviewing candidates using the interview template for that position. Final applicants should be vetted with a background check, confirmation of all certifications, degrees and employment verification, prior to making a formal, written offer to the selected candidate.
If you have suddenly realized that it’s time to implement more formal structure and hire key executive positions for your growing business, contact Mindy Barker & Associates to find out how we can assist with the process. From developing the criteria for key executive positions, to working with firms to source qualified candidates, we will not only lead you through the process, but also leave you with a documented procedure to follow as your company continues to grow.
Countless Americans seem to have an insatiable desire for immediate gratification. This drive for gratification has led to an increase in “on-demand” start-ups, such as Uber, one that is frequently in the news these days. These start-ups address needs such as transportation, food, entertainment and beauty treatments. The short-term euphoria derived from the instant gratification meets a perceived (or even real) need, resulting in billions of dollars being available to fund these companies. Investors have bet the companies will build enough revenue and momentum to go public. With an opportunity to exit through an Initial Public Offering (IPO), they can get a great return on the investment. The IPO market has allowed some unprofitable, high-growth companies to pass through the gates and create hope for others – including Amazon and FitBit.
History often repeats itself – there were many “on-demand” start-ups during the dot.com boom in the 1990s that were unsuccessful, including Webvan, known as poster child of the dot-com “excess” bubble, according to techcrunch.com. My belief is that the initial euphoria of immediate gratification is then seized by the control freak in us who wants to choose our product. For example, when the apple from the grocery delivery shows up with a bruise or we cannot communicate with the office manicurist, the urgency for immediate gratification dies and we drive to the grocery store to pick our own perfect apple or to the spa to get the manicurist of our choosing.
The success of Uber has given the on-demand space an extra surge of enthusiasm and creativity. Many riders frequently use Uber because they appreciate the experience and the price. On the one hand, this is a great business outcome; the fact remains, the company eventually has to make money. Uber continues to struggle with growing regulatory issues that will eat into revenue, create higher operating costs and, ultimately result in higher rates. I recently landed in the New Orleans airport and requested an Uber car at the airport. An immediate and distinctive pop up on my phone alerted me that all Uber rides were $75 from the New Orleans airport due to city ordinances. This is compared to a $15 cab ride to my client’s office. I cancelled my Uber request and went to the cabstand.
The message to entrepreneurs and business owners is that we can learn from history, and basic business fundamentals are clear – you have to make money selling the product. Investors expect a return on investment, and at some point will be unwilling to continue to fund a losing proposition. Keep your books and records current to ensure all your products are making money or, by default, you could be making the decision to fund a loss leader.
Sunday began the week with the Holiday of Love – St. Valentine’s Day. How do love and emotions influence our decisions about business and investing?
Many people have used the services or read about a Unicorn or a Unicorn “wanna be” without even knowing it. Fortune.com defines a Unicorn as a once mythical, now reality, start-up business valued at more than $1 billion and includes Uber ($62.5 billion), Airbnb ($25.5 billion) and Snapchat ($12 billion)*.
Jacksonville-based Fanatics is a local Unicorn valued in excess of $3 billion that is putting Jacksonville on the start-up map according to a First Coast News report (http://fcnews.tv/1om5Exd)
Speed to market for a unique new idea is critical for start-ups. The exuberance of growing a company fast can generate more endorphins than the Boston marathon, while the adrenaline rush can lead an enthusiastic business owner to burn through huge amounts of cash in an attempt to gain market share. This cash burn must show traction – is the cash you are investing to gain market share paying off? Are the dogs eating the dog food or, in other words, are you acquiring as much of your target market as you project or need to justify continuing to increase the value of the Company and command the incredible valuations such as in the previous examples?
The basic principles of running a business, i.e. the eventual need to generate enough revenue to create a profit remain a core value of building a business. For example, if the cost of production plus acquiring market share is more than what you are selling the item for, that’s a no-win situation down the road. Using metrics and projections, founders and owners must continue to evaluate building enterprise value in order to provide a return on the investment to shareholders.
My experience serving as the Principal of a Private Equity Firm and as a CFO of small and large entities provides a depth of experience that can help with the analysis your business needs to understand if you are on the right track for building enterprise value. Please contact me to discuss your unique situation.
* http://fortune.com/unicorns/. Note these are estimates of the companies’ enterprise value based on the latest rounds of private financings. These companies are private and it is difficult to find the exact valuation.