Leadership in the Coronavirus Era

The Coronavirus (also known as COVID-19) truly defines uncertainty for every business and every person. No one can predict what’s going to happen, how long it’s going to last, or what the real impact will be.

What I know is right now the impact is significant and in many different ways. I’ve had hospitality clients lay off significant numbers of their employees. Many non-profits are closing down, and the ones that are open (because they’re an ‘essential business’ are navigating waters they’ve never navigated before.

Most families today are two-income families. With kids home, that means one parent has to take off work. And despite the increase in work from home, there’s not a lot a person can work on when they’re taking care of the kids.

The impact, of course, is not limited to business. We are all worried about our jobs, family, friends and associations.

This extraordinary time sees three related crises all at once. This isn’t just an economic crisis; it’s a health crisis, an economic crisis, and ultimately a crisis of the unknown: what will it look like when it’s over. And all three are of a scale never seen before.

As a leadership and workforce strategist, part of the strength I bring to the table is I’ve “been there/done that”.  I’ve either done it, witnessed it, or led it in my 30-year career. But nothing in our lifetimes compares to this.

There are extraordinary demands on leaders in every avenue.

So what is a leader to do? My guidance is – do what all leaders are supposed to do in normal times – and, do it on steroids.

My guidance is – do what all leaders are supposed to do in normal times – and, do it on steroids.

It’s all about communication

Even in the best of times, I’ve never seen an employee survey where the results said, “there’s too much communication.” Now is the time to over-communicate. Even if you don’t know the answer, communicate that. (Any response is better than no response at all.)

That means frequent one-to-group communication (e-mails, video conferencing, virtual coffees and happy hours).  It means saying “here’s what I know, and here’s when I’m going to get back to you”.

People are nervous. They need to hear from you.

And when there’s bad news, be upfront and immediate with it. Don’t hide bad news. I have a client with a very successful business in the hospitality industry. He realized early on that he was going to have to lay off employees (about half of his team). He realized that on the evening of Thursday, March 5 (well before the restaurants shutdowns and quarantines). He texted me early the next morning, I gave him my thoughts and potential strategies. By noon, he addressed all his employees, preparing them for bad news. On Monday, March 9, he gave the bad news to everyone. Nothing was sugarcoated or delayed. As soon as he knew, he made sure his employees knew.

You are always on stage.

Your people take their cues from you. If you are calm and thoughtful, you’ll put people more at ease. If you’re not, well, that’s an issue to.

Take a look at our leaders on a national stage. Who are we paying attention to? Which of them are making decisions, showing empathy, and are doing the right thing?

I’m not going to single any one politician out; I can do without the politically related comments at a time like this. But I would like to mention one person I’m listening to without fail: Dr. Anthony Fauci. We he speaks, I listen. He’s calm, cool, fact-based. He thinks before he acts and speaks. He’s tremendously knowledgeable and even though this pandemic is unprecedented, he acts like he’s been there. (And in a way he has: he’s advised every President since Ronald Reagan). In a nutshell: he’s acting the way a leader should act.

What You Do (and How You Do It) Is Critical

All you can do is your best. But make sure that – to the best of your ability, you create a sense of trust. Trust is a combination of communication and honesty. (That’s not so hard, but it’s hard to practice it every day). Trust also derives from your established values and ethics.

Always follow your values; your decisions will be much easier.

It’s all about Emotional Intelligence

What are your people thinking and feeling? What are their issues? Are you asking, do you understand (because you need to). This is even more important when employees are working remotely. People need to feel tethered to the organization they work for.

When you’re conducting video-based meetings, pay extra attention to non-verbal clues from your team. As much as possible, connect on an individual basis with those you work for and with you. Ask how they are (and mean it). Show compassion – but you can’t fake compassion if you don’t have it.

You Don’t Have the Luxury of Time

In these unchartered times, there’s nothing to fall back on. The adage that it takes 10,000 hours to become an expert is still probably true, but we no longer have that much time.

So make sure to make decisions quickly – and be prepared to change your mind frequently. (This what we call leadership agility). You can second guess yourself all you want to in six months from now. But at this time – make change, enact change, but don’t get tied down to any decision you make.

And try and embrace everything and anything new! There has never been a better time to experiment – because we have to. I’d never participated in a Google hangout until 3 days ago. It can be done.

You Don’t Have All the Answers.

So make sure to ask your team what ideas they have to help during these turbulent times. It gives them a sense of ownership and helps them help you. And make sure to empower your leaders to lead – not everything need come to and through you. There will never be a better time to see who can step up than now. Adversity breeds success.

Be True to Yourself.

Remember who you are and don’t forget where you came from. You have established values, principles and ethics. If you haven’t done so already – write them down and review them every day. Intellectual curiosity – learn more, ask more questions, research and thus improve and become more valuable to those around you.

How I Learned To Delegate

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The best lesson I ever learned on delegation came in 1997.  I was running teams for AAA (the Automobile Club) in our Burbank and Glendale offices.  These teams were comprised of outside salespeople (who sold AAA memberships, auto & homeowner’s insurance) and inside salespeople, who handled existing policyholder issues by phone and walk-ins.

Our team was a really top-performing team – probably in the top 5 out of 100 in the company in terms of sales and volume.

But the single biggest frustration I had was on Fridays.  All the big member issues, complaints and problems somehow always hit on Friday afternoons.  Time and time again, I had to intervene and handle these major complaints, and it was sucking the life out of me.  Between dealing with an angry customer, trying to navigate the corporate bureaucracy to get resolutions to the problem, and bringing the issue to  completion was exhausting, to say the least.  On a day – Friday – where I should have been spending time congratulating my team for their accomplishments, I was on hold waiting to talk to an underwriter about why a car didn’t get properly added to Mr. Johnson’s automobile insurance policy.

My boss had a suggestion.  He reminded me the team was really successful, that he knew I was working hard, so he said, “next Friday at lunch – go to the beach and take the rest of the day off.”

That sort of thing never happened at AAA back then (or, as far as I know, even today).  We were supposed to be in our offices every day from 8-5.  And remember – this was 1997.  No one really had cell phones and e-mail was a couple of years away.  I loved the beach – still do – but I was freaking out.  Who would handle the complaints? How bad would my desk look when I returned to work on Monday?

But I was grasping at straws, so I agreed.  On Friday morning, I told two of my supervisors that I’d be out of the office that afternoon and unavailable.  And, I went down to the beach.

It was not a relaxing afternoon at the beach.  Actually, the entire weekend was not pleasant: I was determined not to go in to the office on Saturday or Sunday, but was dreading Monday morning.  How many voice mails and customer complaints would be waiting for me when I returned?

Turns out, there were no voice mails.  There were no unresolved customer complaints on my desk.  I was shocked.  Was it possible there were no complaints at all on Friday?  It couldn’t possibly be true!

And it wasn’t.  In checking with my supervisors, there were still plenty of problems.  But without me there, they simply solved the issues themselves.  Everything was taken care of.

That one afternoon off transformed my way of thinking about delegation.

  • When you as a leader are not available, your good employees will step up if you empower them. Leave the office and untether for a day.  See what happens.
  • You are not essential to the everyday operation of your team 24/7. (If you are, then you’re doing it wrong).
  • A great way to identify leaders is to find out who steps up when you’re not there.
  • The key to a Self-Managing Team is not delegation, it’s empowerment. Let them make decisions and take responsibility.

That afternoon off, more than 20 years ago, is analogous to a few days off without e-mail today.  If you do it properly, it can be done.  So do it!

The Best Performance Review I’ve Ever Seen

Ditch the old way you’ve been doing things and get back to basics.  Performance metrics should set your standard, so people will do the things you actually want them to do.

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Boy, have I seen a lot of performance reviews.  They’re basically the same things over and over.  And we get an inordinate number of questions from clients asking for “a sample performance review template” they can emulate in their own business.  Many executives have always managed and evaluated this way, to say nothing of how we pay and promote.

Yet in the past few years away, there’s been a shift away from performance reviews, which is completely understandable.

Performance reviews don’t work because we don’t ask employees what they do to advance our organizational and managerial goals.  We’re not specific enough.  So maybe I should revise that comment accordingly: Performance reviews don’t work as they’re currently devised.

The Importance of Expectations

My experience is that most e­­mployees do pretty well at hitting objectives if they know the specifics that are expected of them.

But here’s the problem: Managers and executives do a lousy job of setting expectations.

Think about it: If employees are going to be evaluated based on attendance and productivity, they deserve to understand why.  “Why do I need to be on time?  I get my work done, so why does it matter?”

Businesses do a great job of creating volumes of requirements for employees; there’s seemingly a rule for everything.  But why?  How do those requirements help us reach our individual goals?

Subjective vs Objective

The CFOs of the world tell us that performance reviews are necessary because they’re objective. When we attribute numbers to the results, we objectively give raises and bonuses and measure performances.

This ideology buys into what I call The Myth of ObjectivityTM.  Of course, everyone (especially CFOs) would love to see performances broken down into averages, medians, and charts.  But that’s not objective.

When a manager reviews an employee’s performance, what really creates the difference between a 3.5 and a 4.0?

Answer: nothing.  Therefore, the rating system isn’t objective after all.  And since it’s subjective, it basically defeats the purpose of having a performance review to begin with.

(Yes, I know that ratings can effectively motivate salespeople and workers with repetitious jobs such as manufacturing, but the latter will disappear soon, due to AI and robotics.)

The Best of the Best

The CEO of at an insurance brokerage firm in Pasadena, CA, wrote the best performance review I’ve ever seen.  I was sitting in a meeting with the CEO and his executive assistant, and we were reviewing our punch list.  I could tell the CEO was getting a bit impatient, so I made this suggestion: “Let’s take a break. My team can finish everything on our own.”

Greg brightened up after I made my suggestion, and asked his assistant, “Remember what your performance is based on?”  She nodded.

Now he’d piqued my curiosity.  “What’s your performance based on?” I asked her.

“My performance and salary increase are based on the number of times Greg gets to golf every month,” she said.  “If he plays at least eight times a month, I get a good performance review and a 10% salary increase at the end of the year.”

Then it hit me.  It was the perfect performance review!  I know many HR veterans are undoubtedly recovering from their fainting spells, but hear me out:

  • The criteria were clear.

Melissa understood exactly what was expected of her, and she was easily able to repeat her goals.

  • The goal was measurable.

Eight rounds of golf per month (or 96 per year)

  • It advanced the executive’s goals and objectives.

Greg wanted to golf. It was a personal goal, and it was important to him.  [Pro Tip: If you want people to do something, incentivize them.]

  • It allowed a talented person to innovate and work autonomously.

For Greg, it didn’t matter how Melissa got him out on the golf course, just that she made  it happen.  So her performance wasn’t tied up in minutiae; it was solely focused on the end result. In other words, she had permission to do whatever she needed to do to get him golfing.

Melissa became a more effective assistant, because every interaction she had factored into that goal.  And she was a much more effective gatekeeper.  (“Does that person really need to have a meeting with Greg, or can I handle it?”)

Summary

Rethink your 15-page form for performance reviews.  What do you truly want that person to do?  What’s the end goal?  Can’t we simplify things, and make our objectives attainable, measurable, and real?  The answer: Yes, we can.  But then the question becomes, “Are we willing to break through the mentality that We’ve always Done It This Way?”

Over the next decade, businesses who are willing and able to change are going to become winners. Your formula for success doesn’t involve being stuck in the past.

Forbes List Fail

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Recently, Forbes unveiled its newest list – “America’s Best Small Companies 2010”,which led me to wonder: What criteria did the magazine use to determine the “best small companies”? 
Instead of taking a thoughtful, comprehensive approach to this process, Forbes chickened out, took the lazy way out, and insulted all small business owners and those of us who work with them.  And, in the process, Forbes embarassed themselves.  Their list should have been called “America’s Best Publicly Traded Small Companies Based on the Best Earnings Growth and ROE in 2010,” because that’s what the list really is.  What it decidedly is not is a list of Americas Best Small Companies.
Someday, Forbes will realize there’s more to a successful – or “best” – company than a stock price.  But that’s probably too much to hope for.
First, Forbes excluded millions of small businesses by requiring that candidates: “…for our list had to be publicly traded for at least a year, pull in annual revenue between $5 million and $1 billion, and boast a stock price no lower than $5 a share.”  That eliminates a lot of companies – there are about 27.5 million businesses in the United States, but only about 6,500 are publicly traded.  There are also thousands of successful small businesses that earn less than $5 million in revenue, but are profitable nonetheless.  (In any event, the $5 million threshold was an illusion; the company on the list with the lowest revenue was Nevada Energy, with $29 million in sales).
But, we’ll cut Forbes a break here.  They probably didn’t want to research millions of companies, and it’s a lot easier to measure publicly traded companies, since their financial reports are naturally made available to the public.
But that’s where the breaks stop.  For Forbes imperically decided the only attributes that comprise a “Best Small Business” are:
  • earnings growth;
  • sales growth;
  • return on equity in the past 12 months and over five years; and
  • stock performance compared with that of its peers.
Say what?
Long-term, sustainable success in business – especially small business – is based not only on financial terms, but the quality of a company when it comes to such crucial areas such as:
  • employee satisfaction and productivity;
  • customer satisfaction and loyalty;
  • how well a company benefits its community and strategic partners as well as its vendors. 
Satisfied employees are always more productive; becoming an employer of choice takes a combination of corporate values, compensation, challenging work, a good environment and the opportunity for personal and professional growth.  Businesses measure this all the time through Employee Satisfaction Surveys, or 3600 Surveys.
Customer satisfaction and loyalty – also easy to measure and benchmark – were not included as criteria by Forbes.  Why?  Because this list was clearly intended not to be the “Best Small Companies in America” – but actually a tip sheet for short-term investors and traders. 
I’m not suggesting that financial measurments be eliminated when determining a best small company – it should just not be the only measurement.
Values play a significant role in successful business.  How an owner’s values permeate throughout the workforce is essential to long-term success.  Having and implementing long-term values such as quality of product and service; commitment to clients and customers; appreciation and understanding of the workforce creates a culture where the “best” truly comes out. 
It’s ironic, then, that Forbes on one hand says, “we dropped companies that are thinly traded and those with fuzzy accounting or major legal troubles,” and on the other hand names Medifast as the #1 Best Small Business in America.  Medifast, as you might know, is in the middle of a major lawsuit in which Fraud Discovery Institute accused the company of “ … pyramid-style selling – is unsustainable and will lead to a revenue trajectory similar to other multi-level marketing companies: dizzying initial expansion followed by lackluster revenue or worse…..”
Whether these accusations are true or not – they are illuminative.  If Medifast is indeed one of “America’s Best Small Companies,” won’t they still be there in 2011 when the lawsuit is behind them?  Why rush?
If you’re a day trader looking to make a quick buck – the Forbes list might be just right for you.  If you’re looking companies to emulate or model as a Best Business – Forbes is out of answers, and this list is one epic fail.
Follow Eric Swenson on Twitter: www.twitter.com/managingpeople.

Employees First

Dave Berkus is an accomplished speaker, author and angel investor.  He provides common sense advice to all businesses through his blog, Berkonomics.

His recent post deals with the frustrations of business owners who perceive that government regulations always favor employees.  His advice?  Recognize the realities of the times.

He’s right!

Workplace Litigation Trends Report

This is the 7th year that Fulbright & Jaworski has surveyed senior corporate counsel regarding litigation.  I’m focusing on the responses that affect businesses – and selecting those answers.  The results are illuminating!

In which area is there the most litigation pending in the U.S.?

Contacts: 53%
Labor & Employment: 49%
Personal Injury: 27%
(participants could pick more than one type)

In which area has there been the greatest increase in multi-plaintiff cases whether they be class, collective action, or significant multiple plaintiff action?
Wage & Hour: 46%
Labor Union: 13%
Age: 11%
ERISA: 10%


[What types of cases] will see the greatest increase in 2011?
Discrimination: 39%
Wage & Hour:35%
Labor Union: 17%

ERISA: 5%

Ten Truths for the Boss

Anyone who’s read this blog over the years, or who knows me personally, is aware that one of my heroes is Michael Josephson.  Mr. Josephson has commented for years on the relationships between ethics and successful, sustainable business models.  One of his greatest radio commentaries discusses “10 Truths for the Boss”, which I’ve put here:

Why is it that most employees think their bosses are at least a little out of touch? Probably because they are. Even those who worked their way to the top lose some credibility and effectiveness because they don’t recognize what I call Ten Truths for the Boss:

  1. The more certain you are that “it can’t happen here,” the more likely it is that it will. Be careful about overconfidence and complacency.
  2. There are lots of things you don’t know, and lots of people who hope you don’t find out. Hardly anybody tells you the whole truth anymore. Information is filtered through the fears and career aspirations of subordinates, and many employees believe you will “kill the messenger” if they deliver bad news so they tell you what they think you want to hear.
  3. To those who want to please you, your whisper is a yell and your comments are commands. Be careful, people may do foolish things to please you.
  4. What you allow, you encourage.
  5. There’s never just one bad employee; there’s the employee and the manager who keeps him.
  6. At least someone who works for you is “gaming” the system so they appear to reach their business objectives with smoke and mirrors rather than real achievement.
  7. According to the law of big numbers, if you have lots of employees, you probably have a few crooks and psychopaths working for you.
  8. Few people think as highly of your ethics as you do.
  9. No matter how many good things you do, you will be judged by your last worst act.
  10. No matter what your job description says, what matters most is how you manage relationships and people.

The Josephson Institute of Ethics website is here.

To follow Mr. Josephson on Facebook, click here.

To follow Mr. Josephson on Twitter, click here.