A CEO’s reflections on the 17th anniversary of 9/11

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Article originally published in the Philadelphia Business Journal on September 11, 2018

No one can ever forget where they were at 8:46 a.m. ET on Tuesday, Sept. 11,
2001. Two hijacked aircraft flown by terrorists destroyed both World Trade Center
towers. A third aircraft caused significant damage to the Pentagon. A fourth
aircraft was brought down by brave passengers and crew members in a field in
central Pennsylvania before it could reach its target, possibly the White House or
Capitol building.

As then CEO of PQ Corporation, I reflect on how that day impacted me and my
employees. I was at the Greenbrier Hotel in White Sulphur Springs, West
Virginia, attending a board meeting of the American Chemistry Council. After a
staffer entered the meeting and handed a note to the chairman, his face turned
white as he announced that a plane had hit the North Tower of the World Trade
Center.

We all gathered around a TV just outside the meeting room and watched with
horror as a second plane hit the South Tower. It was then immediately evident that
the United States was under attack.

My first thought was for the safety of our employees and those traveling away
from home. Our company operated in 19 countries, and it was not uncommon for
many of our employees to be traveling within their respective countries and
between countries around the world.

I called my executive assistant and asked that she find out if any of our employees
were on those four flights or were visitors to the World Trade Center towers or the
Pentagon that day. I also asked for a list of employees who were on trips to or
from the United States, as well as employees on flights scheduled to pass over the
continental U.S. I knew that it would be days before these employees could reach
their business destinations or home.

I wanted to return to corporate headquarters as soon as possible. Since all flights
were grounded, my wife and I drove our rental car seven hours to Valley Forge.
We stopped twice – once for gas and once to get something to eat.

The genuine concern and connection offered by the people who reached out to us
at both stops was nothing like we have ever experienced. They wanted to know
where we had started our trip and where we were heading. They provided advice
on the route we should take, and long-haul truckers made recommendations on the
best places to eat along the way.

I thought of this as a small slice of America at its best – strangers helping others.
People helping other people in need: It’s one of our country’s best cultural norms.

When I arrived home the night of 9/11, I learned that all PQ employees were safe.
I received a report indicating the location of those employees in travel mode. Our
travel department had already arranged hotel rooms for those who could not arrive
at their destination.

Rental cars were reserved for those who could drive home. Two of our plant
operations managers drove from Los Angeles to Chicago, where one lived, and the
other continued on to Philadelphia. The administrative assistant of our purchasing
manager was on her honeymoon in Europe. Our travel department was able to get
her and her husband on a flight back to the U.S. a few days later.

What do I recall as the “best personal experience” of the horrible tragedy of 9/11
and the days that followed? It’s that we all pulled together as a nation and we had
genuine concern for each other.

I recall the courage of first responders in New York and Washington D.C. – fire
fighters and police who saved countless lives at their own peril. I recall those first
responders who made the ultimate sacrifice and did not return home to their
families.

I recall the two F-16 pilots who took off from Andrews Air Force Base with orders
to intercept and ram hijacked United 93 flying towards Washington, D.C., to
prevent the hijackers from destroying the White House or Capital building. There
was insufficient time to arm the F-16s, so this was a suicide mission for these
courageous pilots. I recall those 40 brave passengers and crew members on that
aircraft who resisted the hijackers and brought the plane down themselves,
preventing an additional catastrophe.

I recall not having the American flag that I had proudly flown off the stern of my
sailboat for 14 years, regretting not keeping it when I sold that boat in August

2001. Flying a new store-bought flag at my home a month later was not the same
to me.

I recall the generosity of PQ employees who contributed funds to help the victims’
families. I recall attending the hockey season’s opening game of the Philadelphia
Flyers in October, where there was not a dry eye in the house when our national
anthem was sung.

I recall visiting the site of the World Trade Center a month after 9/11 to pay my
respects, walking on hallowed ground with thousands of other visitors.

I will never forget. None of us will ever forget.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker,
advisor and nationally syndicated writer on leadership, entrepreneurship and
corporate governance. Silverman earned a Bachelor of Science degree in
chemical engineering and an MBA degree from Drexel University. He is also an
alumnus of the Advanced Management Program at the Harvard Business School.
He can be reached at Stan@SilvermanLeadership.com.

What We Can Learn from John McCain’s Leadership and Patriotism

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Article originally published in the Philadelphia Business Journal on Sep 5, 2018

I have written many articles describing the traits of effective business and political leaders. The passing of Sen. John McCain (R-Arizona) provides an opportunity to reflect on those traits that differentiate McCain from his peers.

Since his death on Aug. 25 after a valiant battle with brain cancer, Americans have paid their respects to McCain, former congressman, presidential candidate and statesman, a true American hero and patriot. He was a man of courage, values, honor, ethics and integrity.

Accolades and expressions of respect have come from a broad array of both Republican and Democratic colleagues. What can we all learn about the leadership qualities of John McCain?

McCain was known as a maverick – a courageous leader and patriot who did what he thought was right, rather than what was politically expedient.

McCain served with honor as a naval aviator during the Vietnam War. He was shot down on his 23rd mission over Hanoi and was captured and brutally tortured while a prisoner of war from 1967 through 1973.

When the North Vietnamese learned that his father was an admiral in the U.S. Navy, they offered to release McCain from prison for propaganda purposes. McCain refused, demanding that those prisoners of war held longer be released first, consistent with the military code of conduct. He courageously placed principle above exposure to further torture and his freedom.

In 2008, when McCain was running for president, he defended his presidential campaign opponent Barack Obama against false allegations that Obama was an Arab and was not born in the U.S. – a common claim among those in the birther movement. At a campaign event in Minnesota, McCain responded to a woman making those allegations by stating, “No ma’am, he’s a decent family man, a citizen that I happen to have fundamental disagreements with…”

In today’s toxic political atmosphere, the defense of a political opponent rarely happens. He did what was right, rather than let the false allegations against Obama stand.

As a legislator, McCain practiced the art of compromise. He reached across the aisle to his Democratic colleagues in the Senate to get legislation passed. He was often criticized by his Republican Senate colleagues for selling out conservative principles. Both the Republican and Democratic parties are increasingly dominated by doctrinaire views. This is not in our country’s best interest.

In August 2017, I wrote an article headlined, “
Trumpcare Was Stopped in Its Tracks. Will the Republicans Now Invite the Democrats to the Table?
”

The Senate bill known as the Health Care Freedom Act, President Donald Trump’s signature legislative health care initiative, came to a vote on July 28, 2017. McCain and two other Republican senators voted “no,” resulting in one vote short of the 50 needed to pass the HCFA.

McCain had deep concerns about the legislation that might ultimately be passed by the Republican-controlled House and Senate, which the Congressional Budget Office projected would result in as many as 32 million people losing their health care insurance over time due to high cost and insufficient funding going forward. The loyalty of McCain was to his constituents and those Americans at risk for losing their health insurance, not the Republican party, and not the president.

McCain demonstrated courage in voting against the HCFA, unlike some of his Republican Senate colleagues, who placed loyalty to party above the welfare of the people who elected them. They would likely vote for any Republican health care legislation no matter how bad it was.

At his funeral service, McCain was eulogized by both former Presidents George W. Bush and Barack Obama.

In his remarks, Bush said, “John was honorable, always recognizing that his opponents were still patriots and human beings. … John detested the abuse of power. He could not abide bigots and swaggering despots. There was something inside him that made him stand up for the little guy. To speak for forgotten people.

“Courage and decency defined John’s calling, and so closely paralleled the calling of this country. … At various points in his long career, John confronted policies and practices that he believed were unworthy of this country. … To those in authority, John would insist that we are better than this. America is better than this.”

Former President Barak Obama said, “John believed in honest argument and hearing other views. He understood that if we get into the habit bending the truth to suit political expediency or party orthodoxy, our democracy will not work. That’s why he was willing to buck his own party at times. … [and] champion a free and independent press as vital to our democratic debate.

“John understood, as John F. Kennedy understood, as Ronald Reagan understood, that part of what makes our country great is that our membership is not based on our bloodline [or] … where our parents or grandparents came from or how recently they arrived, but adherence to a common creed that all of us are created equal.”

During her eulogy, McCain’s daughter, Meghan McCain remarked to the applause of the attendees, “The America of John McCain has no need to be made great again because America has always been great.”

Meghan McCain was sending Trump a direct message. Bush and Obama were more subtle in contrasting the values of John McCain with those of our current president.

The phrase “country before party” comes to mind as John McCain’s legacy to our country. All of our elected representatives should take a lesson. They pale in comparison to him. We will miss you, John McCain. Thank you for your service. Rest in peace.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

Advance Your Career by Being Different from Your Peers

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Article originally published in the Philadelphia Business Journal on August 28, 2018

People advance in their careers by differentiating themselves from their peers, just as businesses differentiate themselves from their competitors. An individual’s track record of accomplishments, skills and the experience gained in previous jobs can be used to achieve that peer differentiation.

Recently I had lunch with a college sophomore at Drexel University who was just finishing up his first six-month co-op work assignment at a company before returning to school. The co-op program is an opportunity for students to work full-time in their field to gain valuable hands-on experience. I asked him what he had learned during his co-op job and what he contributed to the organization.

He responded with the many ideas he offered to improve the organization’s business processes. Because his suggestions fell on deaf ears, he thought his experiences at this company would not help build his resume, which is one of the most important things anyone can do regardless of where one is in their career.

I told him to the contrary, his focus on continuous improvement is exactly what might make his resume stand out from the dozens submitted for a job opening and get him an interview. A commitment to continuous improvement, among other factors, is a differentiator for any job candidate.

In November 2017 I wrote an article headlined, “Eight ways to differentiate yourself to land that next job,” in which I identified traits attractive to potential employers. Employers will want to know if you possess these traits. How you respond to the following questions will differentiate you from your peers. 

1.   Are you results oriented?

You will be asked about the results that you achieved in your previous positions. How did those results support the goals of your organization, or those of a customer or client? Show how you have been innovative and have exercised initiative. A potential employer will assess what you can do for their company, based on what you accomplished at your previous company.

2.   Are you customer/client-focused?

All employees have internal and/or external customers/clients. If you are in a staff position, your job is to help other staff and line organizations within your company be successful in achieving their goals. If you are in a line position, your job is to help your company’s clients or customers achieve their goals to be successful in their businesses. How have you done so?

The Holy Grail of any business is to be the preeminent preferred provider to its market and the company that customers/clients will first choose to go to for products or services. How have you helped your previous employer travel the journey to be the preferred provider to its market?

3.   Do you embrace continuous improvement?

In your previous jobs, did you challenge paradigms and the accepted ways of doing things within your area of responsibility if you felt there was more effective or efficient approaches to accomplishing your organization’s goals?

4.   How do you de-risk your decisions?

You may have sole authority to make a decision that you deem risky. The way you de-risk that decision is by asking others for their opinions. It is not a weakness to ask others for their views – it’s a strength. The decision is still yours, but you get the benefit of others who may see the issue in a different light. Share examples of how you have de-risked your decisions.

5.   What is your leadership style?

You should share your expectations and jointly develop goals with your direct reports without micro-managing how those goals are achieved. You should help create a sense of ownership in your employees for what they do, and hold them accountable for results.

6.   Are you effective at selling your ideas?

People who are in sales aren’t the only ones who sell. Everyone is selling their ideas to their boss, their peers, the teams they serve on and to their direct reports. This requires good presentation skills. It also requires good listening skills, not only to address objections, but to be open to other ideas. Discuss how you have sold your ideas to your organization, and demonstrate that you listen and value the opinions of others.

7.   Do you keep commitments?

People who keep commitments engender trust. Without trust, no organization can properly function.

Don’t make a commitment unless you can keep it. If you find that for whatever reason, you can’t keep a commitment, let the other person know immediately. She might have made a commitment to another based on your commitment to her.

8.   Do you fit the culture?

Prospective employers will want to know if you are a good fit. Conversely, you will want to determine if the culture of a prospective employer is a good fit for you. Stay away from a company that has a reputation for unethical dealings with employees or with customers, or has a toxic culture.

The key to landing your next job is differentiating yourself, demonstrating that you are an effective leader and developing a reputation of achieving results within your field. Do this well, and employers will seek you out.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

Newly-Minted CEO? Focus on These 6 Areas

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Article originally published in the American City Business Journals on August 21, 2018

In August 2016, I wrote an article headlined, “Your first 100 days as CEO. What should you do?” I wrote that article after being asked by a newly-minted CEO for advice and guidance.

This is an update of that article, including what she felt was critical to her success during her first two years on the job.

You were just appointed CEO at a new company. The press announcements have been singing your praises, outlining your previous positions, expertise and track record of results.

The employees at your new company are wondering about your leadership style, your tone at the top and what changes you might make to the culture and strategy, as well as possible changes to the senior leadership team reporting to you. Your board of directors will be wondering the same thing. What you say and do will be watched intently by everyone within the organization. Expectations that you will move the company forward will be very high.

As the new CEO, what should you do during your first 100 days? The knowledge gained during this learning process will help you formulate changes to both the operational and strategic initiatives of the company.

1) Listen, ask questions and form impressions

Get to know the company and your direct reports. Talk with your board members and the individuals reporting to you, as well as those individuals reporting to them. What was the tone at the top and organizational culture under the previous CEO? Will the culture of the organization need to be changed?

2) What is the state of the company’s strategic plan?

How current is the company’s strategic plan, and are the various areas within the company pursuing strategies to achieve the plan? When was the last time the company performed a SWOT (strengths, weaknesses, opportunities and threats) analysis?

Is the strategic plan written to act on the SWOT analysis findings: build on the company’s strengths, minimize the impact of its weaknesses, exploit its opportunities, and defend against its threats?

When you are sufficiently knowledgeable about the business, you will need to discuss the changes you want to make to the company’s strategic plan with the board. It is critical that as CEO, you “own” the strategic plan, because you and your team will be held responsible for executing it.

3) What is the competitive position of the company?

What is the competitive position of the company’s various businesses vis-a-vis their competition? How active is the competition in attacking the company’s markets with new product offerings or aggressive product pricing?

Does the senior leadership team know why its customers buy from the company, and why other customers buy from its competition? Is this knowledge known throughout the organization, so every employee, even those who do not directly touch the customer, can perform their jobs in a way to strengthen the company’s competitive advantage and deliver a great customer experience?

What are the company’s growth opportunities? What is the cost position of the company in its markets? How competitive is the company’s process and information technology?

Are the employees committed to continuous improvement? Is the ethos of the company to be on a journey to be the best in the world at what it does? Do all employees and board members buy into and share ownership of this ethos?

4) What is the company’s financial position?

How strong is the profitability and cash flow of the company and how much debt is on the company’s balance sheet? How capital intensive is the company and what major capital projects are on the horizon?

What is your signature authority for capital projects beyond which you will need to take a capital project to the board for approval? What is the signature authority of your direct reports, and are you comfortable with it?

5) Learn about the senior leaders who report to you

What are the leadership styles, tone and culture of the senior managers of the company? Can they execute and deliver results? Do they inspire their employees?

Do they micro-manage their direct reports, or do they empower them to make decisions, so they have a feeling of ownership in what they do? Are employees allowed to take risks, and do they know how to de-risk their decisions? Do some of your direct reports need to be changed?

6) Develop a good relationship with your board and stakeholders

How does the board operate, and what are their expectations of you, the new CEO? What level of information detail do they require to oversee the company? How much experience does each have as a board member? Do they tend to drift beyond oversight and governance and get into operational issues, which is the responsibility of the CEO?

You should also spend time focused externally, speaking with major stockholders and customers. What are their expectations? What would they like to see that’s different from the previous CEO?

In my recent conversation with the newly-minted CEO that inspired that 2016 article, she validated the advice I had shared with her two years ago. She also commented, “Critical to my success was building trust with my colleagues and the board. The importance of having the support of my leadership team and the board cannot be overestimated.”

I cannot overemphasize this CEO’s comment on the importance of building trust, the foundation of which is honesty, ethics and integrity. Without trust, initiatives undertaken by the CEO will not have the full support of the board or her leadership team. It is the foundation of long-term sustainable success. Once trust is lost, it is nearly impossible to regain it. A lesson for all.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.

CEOs and Board Members: Beware of Unethical Leaders

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Article originally published in the Philadelphia Business Journal on August 14, 2018

The CEO or a division executive is incentivized to deliver stellar financial and growth results, but doing so with a demanding and intimidating style that causes some subordinates to violate ethical norms or the law. Does the CEO or division executive they think that they won’t get caught, and if caught, the board will turn a blind eye? What does this say about the individual and the culture of the organization?

In an October 2015 article headlined, “VW employees responsible for ‘Dieselgate:’ Where’s the legal, moral and ethical compass,” I wrote about the scandal involving Volkswagen, whose employees deliberately installed software on diesel cars that would give lower than actual readings in the emissions testing process. Not only did this action permit these cars to pass emission tests, the results were also used in VW’s strategy to market their “clean diesel” vehicle technology.

When questioned about diesel car emissions, Volkswagen at first denied there was an issue, management knowing full well that they were gaming the testing protocols. It was only after the EPA threatened to withhold certification of the company’s new car model did Volkswagen come clean and admit to the fraud.

After the Dieselgate scandal became public, the company’s stock price tumbled. Volkswagen CEO Martin Winterkorn was forced to resign. Two executives were sentenced to prison for their roles in the fraud. The global cost to Volkswagen is estimated to be $63 billion. That is what can happen when a company acts unethically and violates the law.

In a January 2016 article in Entrepreneur Magazine, “The Biggest Lesson from Volkswagen: Culture Dictates Behavior,” Robert Glazer wrote, “Culture is a powerful force that can cause people to make decisions that aren’t in their companies’ best interests.”

Glazer said, “CEO Martin Winterkorn was a demanding boss who abhorred failure. Former executives described his management style as authoritarian and aimed at fostering a climate of fear. A culture that discourages open dialogue and limits checks and balances can prompt cheating and fraud. A culture with high standards that accepts failures as growth opportunities, on the other hand, benefits both the company and employees.”

So, whose job is it to watch for the tell-tale signs that the CEO is so demanding that subordinates act unethically or violate the law to achieve results in order to please the CEO? It is the board’s job. For the direct reports of the CEO, it is the CEO’s job to ensure his or her senior team does not act in an unethical or illegal manner.

How is unethical or illegal activity uncovered? By the audit committee of the board and how it responds to reports that come through the employee hotline. By ensuring that there are controls, checks and balances surrounding the accuracy of key metrics. If data for these metrics are not checked and verified, there could be serious adverse consequences to the company if they are incorrect due to fraudulent intent.

In my August 7 Philadelphia Business Journal article, “Tone at the top & culture are mission-critical to all organizations,” I quoted Sabine Vollmer who wrote in the July 2018 issue of the Journal of Accountancy, “Boards that prioritize corporate culture, watch for red flags and set clear expectations will encourage ethical behavior throughout the company.”

Vollmer said, “Research over the past 20 years has continued to underscore that integrity drives performance. Corporate culture and tone at the top are considered key drivers of ethical behavior, but boards of directors often devote little time to the topic.”

Having once worked for a boss whose style was similar to that of Volkswagen’s Winterkorn, being promoted around him, eventually becoming his boss and then firing him, I have first-hand knowledge of the damage this type of boss can cause. I replaced that fired individual with the best general manger within the company at the time, who changed the culture of that organization.

Shortly after the start of my tenure as the president of one of my company’s world-wide businesses, I called a meeting of all our country managers to launch our continuous improvement program and to develop our operating principles. On that list was “we would obey the laws of the lands in which we operate,” an important principle that sometimes needs to be expressed explicitly.

My message to boards and to CEOs: Don’t tolerate individuals that act unethically or violate the law. Get rid of them, even if they are meeting or exceeding their financial and growth objectives. They are not worth keeping around. When their unethical or illegal activity becomes public, it will cause significant reputational and monetary damage to your organization.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

Tone at the Top & Culture Are Mission-Critical to All Organizations

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Article originally published in the Philadelphia Business Journal on August 7, 2018

The success of all organizations depends on how well their mission-critical systems operate. Technopedia defines mission-critical systems as those “essential to the survival of a business or organization, [such as sales, operations, cash management]. When a mission-critical system fails or is interrupted, business operations are significantly impacted.”

Tone at the top and culture are also mission-critical. To realize their importance, one only needs to look at the failure of tone at the top and organizational culture that resulted in scandals at Wells Fargo, Volkswagen, Uber and Theranos to name a few, to see the damage done to these businesses, their customers, employees and the reputations of their leaders.

Tone at the top is set by the CEO and the senior leadership team and reflects the ethical climate of the organization, while culture reflects how employees within the organization deal with each other, customers and other stakeholders. As the leader of your business, ensure that you set the right tone and culture. They become the behavioral norms of your employees.

Both tone and culture determine whether employees will trust their leaders and their fellow employees. Trust is built on honesty, ethics and integrity. Without trust, you can’t build a high-performance team. Without trust, you suffer high employee turnover and loose the talent you need to achieve business success.

Employees should be focused on growing the business and exceeding the expectations of their customers, and not worry about being undermined by their boss or a fellow employee.

If tone and culture are so important, why do employees of some organizations report that the tone and culture are poor, a sentiment periodically expressed to me?

One of the responsibilities of the board of directors of every company is to monitor the tone of the CEO, as well as the culture they nurture within the organization.

In an article in the July 2018 issue of the Journal of Accountancy, Sabine Vollmer wrote, “Boards that prioritize corporate culture, watch for red flags and set clear expectations will encourage ethical behavior throughout the company.”

Vollmer said, “Research over the past 20 years has continued to underscore that integrity drives performance. Corporate culture and tone at the top are considered key drivers of ethical behavior, but boards of directors often devote little time to the topic.”

So, how can a board determine whether the tone and culture are right within an organization? The reports coming into the employee hotline are a good indication. Employee hotlines, mandated for all public companies, are usually monitored by the audit committee of the board. All organizations should have hotlines. What the audit committee does with the information reported through the hotline determines how serious the company is about tone and culture.

In the case of Wells Fargo, employees used the bank’s confidential ethics hotline to report a toxic culture and fraudulent, unethical activity within the community banking division, led by Vice President Carrie Tolstedt. As many as 3.5 million bogus customer accounts were opened over five years to meet very aggressive growth goals.

In a Jan. 17, 2017 CNN Money article headlined, “Wells Fargo admits to signs of worker retaliation,” columnist Matt Eagan wrote about the employees who trusted that their reports of fraudulent activity to the confidential ethics hotline would be investigated. A few of these employees faced retaliation and were terminated.

After an investigation of the ethics hot line terminations, Tim Sloan, who replaced John Stumpf as the CEO of Wells Fargo, said, “Anything more than zero is too large.”

Did Stumpf, the Wells Fargo CEO at the time, know that these employees were terminated? This is a very serious failure of tone at the top and culture.

In an April 10, 2017 Wall Street Journal article headlined, “Wells Fargo Slams Former Bosses’ High-Pressure Sales Tactics,” columnist Emily Miller wrote that the independent report commissioned by the Wells Fargo board “portrayed … [Stumpf] as a tone-deaf leader who protected an irresponsible lieutenant [Tolstedt] and worked for board members who didn’t keep the pair in check.” Glazer wrote that “Ms. Tolstedt … was singled out 142 times in the report for setting the tone in the troubled retail-banking unit.”

 The resulting financial and reputational damage to Wells Fargo were in the billions of dollars. It is apparent that the board did not consider tone and culture mission-critical to the company.

All boards need to put a process in place to insure they are aware of the tone and culture set by the CEO and treat it as mission-critical. CEOs need to know that their performance, in part, will be assessed on their tone at the top and the organizational culture they nurture.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

Be Aware of the Unintended Consequences of Your Decisions

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Article originally published in the Philadelphia Business Journal on July 30, 2018

Nearly all of us have heard the term “unintended consequences,” but we may not be aware of how to avoid them. In February 2018, in the publication The Library of Economics and Liberty, Robert Norton wrote, “The law of unintended consequences, often cited but rarely defined, is that actions of people – and especially of government – always have effects that are unanticipated or unintended.”

When the unintended consequence of a decision is favorable, there is never an issue. The favorable outcome is considered a bonus. When the unintended consequence is adverse, depending on its impact, the decision-making process is questioned, as is the leader who made the decision.

In his article, Norton wrote about sociologist Robert Merton, who in 1935 identified the causes of unintended consequences – three of which are in the control of the decision maker. I would like to focus on these three causes: ignorance, error and immediacy of interest.

Ignorance and error

In both of these cases, leaders make decisions on issues without considering the unintended consequences, or before needed information is obtained. These are decisions that are not well thought out nor operationalized.

During my tenure as the CEO of our company, I sat through meetings at which the management of a business unit presented their plan to enter a new market without any consideration of the unintended consequence of a competitive response and how it would impact our company’s market entry.

I would ask, is the market growing at a sufficient rate to absorb a new supplier without a competitive response? Will competitors respond by price cutting, or in a different way? What differentiates our product in the marketplace to limit a competitive response? Why would customers switch buying from their incumbent supplier and decide to buy from our company?

How competitors might respond to a new market entry is unknown. A leader will often need to make a decision, but the information desired to make a fully informed decision is not available. Before making that decision, effective leaders listen to the opinions of their experts and they fall back on their own experience, common sense and good critical judgment. This is how they de-risk a decision and minimize the chance of unintended consequences.

Immediacy of interest

Merton describes the type of decision where “someone wants the intended consequence of an action so much that he purposefully chooses to ignore any unintended effects,” to the peril of the decision maker and the organization.

NASA’s decision to launch the space shuttle Challenger on Jan. 28, 1986 against the advice of the Thiokol engineers is an example of a decision driven by immediacy of interest. NASA had promised Congress a too aggressive and unrealistic launch frequency. The pressure to meet this schedule resulted in a catastrophic decision to launch the Challenger in adverse temperature conditions, well below the ambient temperature for which the solid rocket booster O-rings were designed.

Upon hearing Thiokol’s recommendation to delay the launch due to risks to the astronauts and the shuttle, one of the NASA officials stated, “I am appalled by your recommendation.” Another NASA official stated, “My God, Thiokol, when do you want me to launch – next April?” NASA launched Challenger, and shortly after the launch the O-rings failed, resulting in an explosion and the catastrophic deaths of seven astronauts and loss of the shuttle.

What is the cause of immediacy of interest type decisions? Certainly, hubris is one cause. Dictionary.com defines hubris as “excessive pride or self-confidence, arrogance. Arrogant leaders are rarely if ever successful over the long term.

Another cause of immediacy of interest decisions is the pressure to act, which in and of itself is a way of achieving results. However, at what risk and at what cost? How many times do we read in the press about unethical or illegal acts that were committed due to the pressure to get something done? These situations eventually almost always become public, adversely impacting the reputations of the individuals and organizations involved. The reputations of organizations recover over time. Those of the individuals never do.

How do you avoid immediacy of interest decisions? If you are the boss, set high expectations for achieving great results, but make it clear to the organization that it must be done in an honest and ethical manner. No other way is acceptable.

Surround yourself with people who will tell you what they think, not what you want to hear. Listen to your experts. They know more about the unintended consequences than you do. And remember, what you do reflects not only on you, but on your organization and your colleagues as well. Don’t let them down.

Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

To Improve Results, Benchmark Sister Operations Within Your Own Organization

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Article originally published in the Philadelphia Business Journal on July 23, 2018

I recently attended a conference at which the general manager of a business unit within a large company described how he was able to achieve a significant turnaround in operating results by benchmarking sister operations in his organization. He broke all accepted paradigms about what was possible. The adage, “don’t tell me it can’t be done – find a way to do it” came immediately to mind.

After his presentation, I asked how successful other general managers within his company were at applying his approach to improve the results of their business units. He responded that although he was willing to share his approach, no other general manager bothered to internally benchmark what he did to achieve the turnaround. He said there wasn’t a culture within the company to benchmark other operating units.

External benchmarking competitors is important to determine a company’s competitiveness in the marketplace and learn about best practices within the industry. However, it can be a difficult process to externally benchmark competitors due to the frequent inability to get the data that is needed.

Internally benchmarking sister operations that are achieving great results within the company is much easier. The data is available. So why isn’t it done as a matter of course?

Internal benchmarking is not part of the corporate culture

As with many other techniques to improve operating performance such as the process of continuous improvement, delivering a great customer experience or empowering employees to make decisions, internal benchmarking is not part of the leadership mindset in some organizations.

The CEO needs to be held accountable by the board to bring this mindset to the company and make it part of their culture.

Bonuses are based on business unit results and not corporate results

If there is no incentive to share what works across all business units, a huge opportunity is wasted. The shareholders don’t care about the results of individual operating units. They care about the results of the entire company.

Bonuses should be based both on individual operating unit results and corporate results, so there is an incentive for sharing what works within an operating unit with other operating units. When benchmarking improves the results of a business, it needs to be celebrated throughout the company to encourage more benchmarking.

“By helping you, I diminish my own chance for career advancement”

Unfortunately, some business unit leaders feel that they are playing a zero-sum game: “If I help to make you look good, I will not look as good.”

It needs to be made clear that in fact this attitude diminishes one’s chances of career advancement and will have a negative impact on the individual’s performance review. The desire to help others within the company will have a positive impact on one’s chances for advancement.

“It is a weakness to apply successful techniques developed by others”

Business unit leaders who feel that benchmarking others diminishes their own stature lose out on opportunities to improve their operating unit’s results and limit their chances to advance.

Using the ideas and applying the techniques of others shows you are open-minded and are not limited by the “not invented here syndrome,” which is universally frowned upon by all effective leaders.

Some business unit leaders are not comfortable with change

There is a universal expectation that all leaders will move their areas of responsibility forward and not be wedded to the status quo. Leaders who resist change shouldn’t be in their jobs and need to be replaced anyway.

Internal benchmarking and operational improvement need to be key components of any organization’s culture. It’s a source of competitive advantage.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and a MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

Advice to Professional Service Providers Early in Their Careers

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Article originally published in the Philadelphia Business Journal on July 16, 2018

I recently shared advice with a financial advisor relatively new in his profession on how to be successful as he builds his business. For the purposes of this article, I will call this individual David. The advice I shared was based on my own personal experiences dealing with financial advisors and asset managers, and my leadership experience in building trust with customers and clients. I believe this advice is applicable to anyone in the professional services business.

I told David that his success would be based on his ability to differentiate himself from others in the profession. He needs to ask himself, “Why would clients want to engage me and not someone else as their financial advisor?”

It’s all about the client

How many of us have had interactions with professional service providers where we felt that their approach was not about the client, but about them?

Where their focus was on selling you a financial product of their own firm, when the product of another firm was a better fit. Where their services were only transactional in nature, and not advisory. Where once you were signed up, their contact with you was infrequent. Where the investment product generated high fees for the provider compared with other investment alternatives. Where the product was so complex, you needed a consultant to help you understand it.

Clients lose trust in financial advisors when they attempt to sell you investment products on which they make a commission, rather than suggest the best investments that fit your needs, on which no commission is earned.

I told David that he needs to always do what is best for the client, regardless of whether or not the investments he suggests earn a commission. The best situation would be never to suggest an investment in which he had a financial interest, and if he did, it needs to be fully disclosed to the client. Over the long term, this would earn the client’s trust and lead to a much longer-lasting relationship.

Network, network, network

Networking is an important part of building any successful career. It is even more important as a professional service provider. Meeting new people who may become potential clients, asking friends and colleagues for referrals and providing recommendations is important in building one’s business.

Rejection and continued persistence is part of the job. David told me of an instance in which he had pursued a potential client for some time until that client invested a portion of his assets with him. David asked the client why he decided to do business with me, and he responded, “I admire your tenacity.” Obviously, David was not annoying to the client as he pursued him. It takes a lot of emotional intelligence to know how to do this and is a major key to success in any business.

Always provide your clients with a great experience

It is human nature for some financial advisors close to retirement age to be less aggressive than in their earlier years. They may no longer be paranoid about their business, which exposes them to competitive risk. I told David this provides an opportunity to win the business of new clients who may feel that their current financial advisor is not providing a great client experience.

There is also an opportunity for a newer associate to team up with an experienced financial advisor who may no longer be as focused as they once were in providing a great client experience. David could provide that great client experience, which will help protect the more experienced financial advisor’s client base.

Honesty, trust, and reputation are everything in all businesses, but more so when you are advising people on investment decisions. The minute a client feels that you are not putting their own interests first and foremost, trust is lost, and the loss of the client will shortly follow. David agreed, and stated that this is how he was building his financial advisor business.

We all should make honesty, trust and reputation the foundations of our careers, regardless of what business we are in. Once you lose your reputation, it is nearly impossible to earn it back.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and a MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School.

Breaking Paradigms to Create Competitive Advantage

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Article originally published in the Philadelphia Business Journal on July 10, 2018

In December 2015, I wrote an article headlined, “Don’t tell me it can’t be done. Find a way.” The article is about an event that changed how I viewed the necessity of breaking paradigms to create competitive advantage. That event influenced my leadership style, and still does so today. This is an update of that article.

As the leader of your organization, how many times do you hear from employees that something can’t be done? When I am told this, I now respond, “Don’t tell me it can’t be done. Find a way to do it.”

When I was the president of my company’s Canadian subsidiary, I led the team attempting to financially justify a new manufacturing plant to supply one of our products to a small geographic market in Alberta. There were insufficient revenues and cash flow to achieve a rate of return on the investment needed to justify the plant’s construction.

The CEO of our company challenged every standard design parameter of the plant. Due to his challenge, we changed our paradigms and redesigned the plant to reduce its capital cost and the number of people needed to staff it. The rate of return increased to above the threshold to fund the investment, and we were given approval by the board to build the plant.

This new plant design became the model for future plants of its type and gave us a very significant competitive advantage in the marketplace. The thought process we went through to design the plant was foundational to the company’s subsequent continuous improvement philosophy.

As depicted in the film “Pearl Harbor,” soon after the U.S. declares war on Japan after the attack on Pearl Harbor, President Franklin Roosevelt orders the Joint Chiefs of Staff to strike back by bombing Tokyo. These military leaders offer reason after reason why it can’t be done – the U.S. long range bombers don’t have the necessary range from the nearest U.S. base on Midway Island; Russia won’t let the U.S. launch from Russian territory, etc. Roosevelt says to them, “Don’t tell me it can’t be done”.

What Roosevelt did was challenge the existing paradigms of his military leaders. He wanted them to be innovative and think out of the box. It took the assistant chief of staff for anti-submarine warfare to do so, an individual you would not necessarily expect to come up with a solution to this challenge. He proposed that B-25 bombers carrying extra fuel be launched off an aircraft carrier that would sail within a distant range of Tokyo, reducing risk to the carrier. After launch, the carrier would turn back, and after the bombing run, the planes would fly to China and land there.

This bombing mission over Tokyo is enshrined in history as the Doolittle Raid, named for Army Air Corps Lieutenant Colonel Jimmy Doolittle, who trained the pilots and led the bombing mission. Even though the bombing mission did little damage to Japan’s military capability, it provided a needed boost to American morale, and at the same time showed the Japanese that they were within the reach of American bombers.

When “something can’t be done,” there is usually a creative path forward that can achieve the result desired, or a similar result that might serve the purpose originally intended. Your corporate culture must encourage out-of-the-box thinking and risk-taking for this process to take place. Collaboration among people from different operating units, technical disciplines and business units are sometimes needed to find the path forward, as occurred when the assistant chief of staff for anti-submarine warfare came up with the idea of how to bomb Tokyo.

I have learned that if accomplishing the original goal proves to not be doable, a path can be found to accomplish 80 or 90 percent of that goal, which is better than not accomplishing it at all.

Leaders, whenever you are told something can’t be done, challenge your direct reports to find a way to do it. To those who are tasked to find that path, think outside the box and challenge existing paradigms. You will be surprised at what you can accomplish. 

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

5 Principles That Will Improve Your Organization’s Decision-Making Process

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Article originally published in the American City Business Journals on July 3, 2018

How often have you faced a situation within your organization where the decision-making process was not effective in determining the best course of action?

When the results are less than what was desired, everyone wonders, “Why did we proceed down this path? Why weren’t alternatives fully considered?”

In his 1974 book, “The Abilene Paradox: The Management of Agreement,” Jerry B. Harvey, professor emeritus of management at George Washington University, describes a situation where a father-in-law suggests to his family that they all drive to Abilene for dinner, and everyone agrees.

No one shared their reservations about going to Abilene, so off they went. After having a terrible meal, each family member reveals that they personally thought that the other members of the family wanted to go.

Harvey writes, “The inability to manage agreement, not the inability to manage conflict, is the essential symptom that defines organizations caught in the web of the Abilene Paradox.”

Many companies face decisions that are more complex than the example described above, with ramifications significantly more impactful than a bad meal. How do you cultivate a culture within your organization to avoid the Abilene paradox and other more serious flaws in the decision-making process?

Whether the leader is the CEO of a large organization or a sub-unit of that organization, the quality of the decision-making process will depend on the organizational culture established by the leader. Direct reports quickly pick up on that culture and how the leader responds to contrary points of view.

It is critical for a leader to welcome open discussion and ask for opinions. When this is effectively done, better alternative strategies often emerge, different than those originally considered, allowing for a superior decision to be made.

When a leader expresses their opinion on a course of action early in a discussion, it is more difficult for other alternatives suggested by their team to be seriously considered. This is especially the case when the leader has a reputation for being opinionated and not listening to other points of view. Therefore, meaningful discussion does not occur, and the best strategy may not be pursued.

A leader should hold back their personal opinion until the team members have discussed their ideas. This should also be a time for leaders to listen to their direct reports and see how they approach the situation.

After discussing an important decision, come back to it in a few days to allow team members to reflect on their individual positions on the subject. Never criticize anyone for changing their mind.

Beware of the comment, “We need to move fast on this.” It should send up red flags and should not force a decision before the ramifications are carefully considered.

The worst thing for any organization is to have it populated by “yes-people,” or those who are reluctant to express their views, especially if they are contrary to the thinking of the leader, or of the group.

Having a contrary view when everyone else is leaning in another direction on an issue is difficult, but necessary to arrive at the best decision. These individuals may be labeled as not being team players, so it takes courage to be the lone wolf.

The view of the contrarian may not be adopted, but that view provides an alternative to which the popular view can be tested and confirmed as the best course of action.

To the lone wolves – how you express your contrary views is important to whether or not they are considered, as well as to your credibility within the team.

Research in Motion Limited (RIM), now known as Blackberry Limited, was the company that pioneered the personal digital assistant in 1999, and forever changed how people in the business world communicate with each other. They owned the market with Blackberry PDAs, which had email, text and phone capabilities.

A few years later, Android and Apple PDAs were introduced, aimed at the underdeveloped consumer market. These devices not only had an improved user interface and a much higher resolution camera, but also had the ability for users to add apps, increasing the functionality of these PDAs many-fold.

Blackberry did not respond, thinking that Androids and iPhones would be viewed as recreational devices and would not interest the business community. Blackberry spent time making minor improvements to their PDA. What they didn’t do is face the brutal fact of reality that they needed to make major changes to compete with Android and Apple in giving customers what they wanted – a PDA with significantly improved functionality.

Today, the business and personal PDA market is dominated by Androids and iPhones, while Blackberry is now an insignificant player in this market. Blackberry underestimated its competitor’s ability to recognize and provide what the marketplace does not yet know it needs. Andy Grove, former chairman and CEO of Intel Corporation coined the phrase and wrote a book titled, “Only the Paranoid Survive.” Apparently, Blackberry wasn’t listening.

Follow the decision-making principles above and you will increase the probability of making the right decisions for your business.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. 

It’s Time to Take a Serious Look at How You Evaluate and Compensate Your Employees

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Article originally published in the Philadelphia Business Journal on June 26, 2018

What is your company’s approach to assessing the performance of its employees, sharing feedback with them, and compensating them properly for their performance? Do you and your employees think that your approach is effective? What changes would you make?

In June 2015, I wrote an article to guide business leaders in how to improve their compensation and performance review system based on the work we undertook at my former company, PQ Corporation. This is an update of that article. Adobe Systems followed a similar path when they revised their employee review system in 2012.

For years, many employees at PQ felt that the employee performance review and compensation system was not effective. The opportunity to improve the system occurred when I was appointed president of one of the company’s operating divisions. I convinced the other two operating division presidents that changes were needed, and we received approval from the CEO to design a new system.

Working with the HR department and with the assistance of outside advisors, we made changes to the system, which we tested with a focus group of employees that included upper, mid-level and first line managers, as well as individual contributors. This was key to making the new system a success. We wanted to involve employees, so they would have ownership in the new system, which remained in place with only minor modifications some 15 years later when the company was sold.

So, what were the key elements of the new performance management and compensation system?

Performance was assessed on achievement of business and personal objectives

Managers were also assessed on the effectiveness of their leadership and management style. As part of this process, all employees were asked to assess their own performance. Managers gave informal periodic performance feedback to their employees, in addition to more formal annual feedback.

360-degree interviews were used to get a full picture of an employee’s performance

Annually, 360-degree interviews were conducted with the manager’s direct reports to get a sense of the effectiveness of their management and leadership style, tone and culture within their organization. These types of interviews were also conducted with the individual’s peers to learn about their teamwork and collaborative skills.

After I was named CEO of the company a number of years later, I continued to undergo a 360-degree review conducted by the chairman of the board. This was some of the most valuable feedback I received to improve my performance as chief executive officer.

Employees were not force-ranked

Our company did not force-rank employees – one of the best ways to adversely impact collaboration and teamwork. We did not want employees competing for salary increase dollars.

Employees were informed if they were meeting, exceeding or falling short of expectations and coached on how to improve their performance. This was done periodically throughout the year. We parted company with those employees who fell short of expectations and did not improve.

Compensation system was fully transparent

Salary ranges and midpoints of jobs were benchmarked using market survey data. Performance criteria were defined for the midpoint and for the 75th percentile of the salary range. To be paid at the midpoint, an individual’s performance had to meet the definition of midpoint performance. To be paid at the 75th percentile, performance had to meet that definition of performance.

To be paid above the midpoint, the employee had to significantly exceed expectations on a sustained basis over time. If an individual was being paid high in the range, they would need to sustain that performance each year, or their salary increase would be less than the annual salary structure movement, and they would slip back in the range.

How the performance review and compensation worked was explained to all employees in a very transparent way. There was no need to keep anything from them. This significantly increased the trust level between manager and direct report.

The response to the age-old question: I am not happy with my compensation

When an employee shared that they were not happy with what they were paid, they were told that they were compensated commensurate with their performance, and that if they wanted to earn more, they had to improve their performance or get promoted to a higher paying job.

Of course, the effectiveness of any performance review and compensation system depends on a fair and realistic assessment of an individual’s performance.

Were there sufficient salary increase dollars for promotions and to pay top performers?

Delays in filling open positions and adherence to the definitions of midpoint and 75th percentile performance usually provided more than sufficient salary dollars in the budget to make proper decisions about each employee’s salary increase.

If there were insufficient salary dollars to reward all of the high-performing employees within a unit, approval was granted to exceed the salary budget, but only after the manager of that unit demonstrated the need. The last thing you want to do is give a lesser salary increase to a high performer. You might lose them.

There is no reason why your company’s performance management and compensation system should not be transparent and easily understood by your employees. It will remove any doubt that they are being treated in a fair and equitable manner. This allows employees to focus on their job and not compensation issues. It will also help to retain top performers, helping your company perform better in the long run.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.