Posts in category: Articles

Article originally published in the Philadelphia Business Journal on August 11, 2015

Should a retiring CEO continue to remain on the board? If that individual holds the position of chairman and CEO, should they remain as chairman once they vacate the CEO position? These are questions that boards often deal with at the time of CEO transition. How does a lingering CEO impact the newly appointed one?

When the former CEO remains on the board, especially in the case where they retain the position of chairman, there is a high probability that their presence could have a chilling effect on the actions of the new CEO. The last thing a new CEO needs is to be second-guessed by someone whose strategies are undergoing review and perhaps being changed. The retired CEO has a vested interest in not having the strategies they put in place changed, even if change is necessary to move the company forward. This is just human nature. The other board members won’t know if the retired CEO is challenging the new CEO because of their “ownership” in a former strategy, or if they have a real issue with the new CEO’s strategy.

If the retiring CEO retains the position of chairman, it is likely little will change regarding strategy unless driven by the chairman. The chairman may cede operational control to the new CEO, but ceding responsibility for strategic direction is not likely. However, in the case of a privately held company where the individual holding the position of chairman and CEO has a controlling interest in the company, appointing a CEO for operational matters is not uncommon. Because of their controlling interest, the chairman often retains ultimate responsibility for strategic direction, unless this responsibility is also ceded to the CEO.

Why do boards permit retired CEOs to remain as board members, or continue to serve as chairman of the board? Perhaps there is the thought that the board does not want to lose the business knowledge of the retiring CEO. This can be addressed by asking the retiring CEO to be available for consultation after retirement, at the option of the new CEO.

Perhaps the board feels that retirement would be an easier transition for the individual if they remain a board member. The board must make their decisions based on what is in the best interest of the company and its shareholders, not the retiring CEO.

The Conference Board’s September 2010 article by Jason D. Schloetzer titled, “Retaining former CEOs on the Board” shared a number of perspectives from board members and others on these issues:

• “Former CEOs could dominate the board agenda …”
• “It is very difficult to discuss steps that may reverse a course of action with a board that includes the person who made the original decision …”
• “Former CEOs can hardly ‘contribute constructively to board discussions without being concerned that they will undercut the effectiveness of their successors.’”
• “What you have now is a CEO who is neither gone nor forgotten.”
• “Former CEOs make excellent directors – of other companies.”

Schloetzer’s perspectives are very consistent with my own, and others who have experienced former CEOs remaining on the boards of companies they had once led.

When I was named CEO of PQ Corporation, the retiring CEO left the board. Many changes needed to be made to get the company growing again. I can only imagine his reaction if he had continued to sit on the board as I outlined my plans for change.

A similar issue exists when a senior executive is promoted to a higher position within the company. When I was appointed president of PQ’s Canadian subsidiary, the changes I made were challenged by the former subsidiary president, now at a senior executive position. My response was that the business environment had changed, and he would have made the same changes had he remained in that position. This was a face-saving way for him to accept the changes I was making.

The most important job of any board is to hire and fire the CEO. Board members should not encumber the new CEO’s chance to be successful by keeping the retired CEO on the board. Don’t expect major change if the retiring CEO retains the position of chairman of the board. Except in the case where the CEO has a controlling interest in the company, permitting the CEO to remain on the board or retain the title of chairman is not in the best long-term interests of the shareholders.

Stanley W. Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on August 4, 2015

As manager of operations planning early in my career at PQ Corporation, one of the most impactful lessons I learned was the imperative of breaking paradigms. Paradigms are an established and accepted set of beliefs, and in this context, ways of doing business. Our CEO, Paul Staley, asked Russell Ackoff, then professor of management at the Wharton School of the University of Pennsylvania, to talk with the senior leadership team at PQ about applying his idealized design approach to our manufacturing technologies to break our paradigms. I was very fortunate to be included in these sessions.

Ackoff described a meeting that he attended in 1951 of engineers and scientists at Bell Labs, a division of the phone company AT&T, in which the facilitator abruptly announced to the meeting participants that the phone system in the U.S. was just destroyed. How would they not only rebuild the system, but also improve it? The only criteria that they needed to meet were that the new phone system design had to be technically feasible and operationally viable. The facilitator was asking the meeting participants to break their paradigms and think out of the box.

In the process of identifying the specifications of the new phone system, the participants realized that given the expected growth of phone usage, continued use of the rotary dial phone system was not practical. Touch-tone dialing cut 12 seconds off the time it took to dial a phone number, and required much less investment than the capital intensive rotary dial system. At that moment in history, the touch-tone dial system became the technology of choice for the future phone system. Little did the participants know the significant impact that touch-tone dialing would have on our lives in the future.

A number of years later as president of PQ’s Industrial Chemicals Group at a meeting with our plant managers, I posed a similar question to the one that was posed at Bell Labs. I told the group that our Augusta, Georgia, manufacturing plant, built many years ago, was just destroyed. How would they redesign and build the plant to fulfill the product needs of the plant’s customers? The only criteria were that the design needed to be technically feasible and operationally viable.

The first individual to comment stated that he would rebuild the plant the way it was. When I ignored his comment, everyone realized that I was looking for another type of response. Soon we had listed on a flip chart state of the art technologies and manufacturing approaches used by similar industries, which we wanted to include in the new plant design. The cost to build and operate the plant would be significantly less using these new technologies.

We called this approach our ideal plant concept, similar to what Ackoff called his idealized design. Whenever capital additions were made to our plants, we considered the risks involved in adopting new technology, and whether we needed to de-risk the decision by applying and testing out the new technology in a less risky way. We also recognized that what is the latest state of the art today will be surpassed by new innovations tomorrow. In addition, this approach fit with our commitment to the continuous improvement of our manufacturing plants, as well as other aspects of our business operations.

Ackoff was considered a pioneer in the field of management science, systems thinking and operations research. He passed away in 2008. I regret that I did not think to reach out to him in his later years, and let him know the significant impact he had on my thinking.

Leaders, create a culture focused on breaking paradigms. Be familiar with technical advances within your industry so when the opportunity to make process improvements or add manufacturing capacity arises, you know the latest state of the art technology. This is a way to differentiate and create a sustainable advantage over your competitors. Remember the story of how the touch-tone phone system was adopted and its huge impact on how we communicate today. You might have a similar innovation within your business waiting to be discovered.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com.

Article originally published in the Philadelphia Business Journal on July 28, 2015

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. After having a terrible meal, each family member reveals that they personally had reservations about going to Abilene, but did not say so because each thought that the other members of the family wanted to go. No one shared their reservations, and off to Abilene they went.

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

Face the brutal facts of your reality

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 Apple iPhones would be viewed as recreational devices and would not interest the business community. Today, the business and personal PDA market is dominated by Androids and iPhones, and Blackberry is now a small player in this market. Was it overconfidence or arrogance that kept Blackberry from facing the brutal facts of their reality, and prevented it from keeping pace with the changing market? Where was the failure in Blackberry’s decision making process? Andy Grove of Intel Corporation coined the phrase, “Only the paranoid survive.” Apparently Blackberry wasn’t listening.

Understand your company’s strengths, weaknesses, opportunities and threats

A SWOT analysis of your company along with an honest and frank situation analysis will give you the framework to make decisions. These should be updated periodically. Where is the market for your products and services heading? How does your company stack up against the competition? Your company has just launched a new app that is taking the market by storm – what is the next “new thing” that will replace it? You want your company to develop it rather than the competition. Word Perfect and Lotus 1-2-3 were the word processing and spreadsheet programs of choice before Microsoft introduced Microsoft Office Suite. Within a short period of time, Word Perfect and Lotus 1-2-3 were relegated to the dust bin of history, surpassed by a superior product. Don’t let that happen to you.

Establish a culture that values discussion of alternatives

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.

Remain neutral until all opinions are expressed

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 for not listening to other points of view. Therefore, meaningful discussion does not occur, and the best strategy may not be pursued.

Value the “lone wolf”

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.

So, how do you cultivate an effective decision making process within your organization? Don’t underestimate your competitor’s ability to recognize and provide what the marketplace does not yet know it needs. Surround yourself with direct reports with good critical judgment who are not afraid to be the lone wolf and will argue their points when everyone else favors a different path.

Create a culture where the brutal facts of your company’s reality can be openly discussed. Remain neutral on possible strategies until all alternatives are presented and debated. Avoid going to Abilene. You will reach the best decisions, and your employees will feel that they have every opportunity to participate in the process. And remember, only the paranoid survive.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com.

Article originally published in the Philadelphia Business Journal on July 21, 2015

We have all worked at companies where employees have initiated rumors, spread innuendo or play office politics in a negative manner to advance their personal agenda at the expense of their co-workers. This behavior adversely effects working relationships and inhibits the effectiveness of the organization.

Trust is a critical component of all high-performing organizations. When trust is high among employees, organizations are able to face the brutal facts of their company’s reality in an open manner. Solutions to complex problems are found. When co-workers don’t trust each other or feel they are under personal attack, the process of problem solving breaks down. It takes time to build trust. It can be destroyed quickly, and can never be completely restored.

Why do some employees behave in such a negative manner? They see the world as a zero-sum game, a world of scarcity and not abundance. They are insecure. Perhaps they are mediocre performers. Their mindset tells them the way to advance at their company is at the expense of others. They may be jealous of those who are advancing more rapidly than they are, and rather than improve their own personal performance, they try to drag others down. They don’t take personal responsibility if things don’t go well, and they blame others for their own failures. In my experience, these types of people eventually fail. The organization will raise its defense mechanisms and ensure that they are not successful playing their political game.

For those pursuing a personal agenda to the detriment of others, you can instead take a path that will help you succeed. Pursue a personal agenda that is supportive of your co-workers. When you are supportive of them, they will be supportive of you. When you take the mantle of leadership on a specific issue, they will follow you and support your efforts.

If a co-worker play negative politics at your expense – just do your job. Let your results speak for themselves. Build political capital and alliances with those of like mind that will watch out for your interests, and do the same for them. Much of the work within organizations gets done by the informal organization. Become part of that informal organization, which will help you get things done. You might find an effective way to deal with an individual playing the game of negative politics. Depending on the circumstances and the relative balance of political capital, you may decide to challenge the individual and put them on notice that they have more to lose than you if they continue.

Leaders play a crucial role in nurturing an effective organization. On occasion, a leader may reach a conclusion or make a decision based on input from a single person, and not talk to all individuals involved, and therefore fail to get a complete picture of the situation. An individual speaking negatively about others may be attempting to advance their personal agenda. Leaders, listen for understanding, but do to not take sides until you speak with all parties. You can then make an informed judgment and decision – with all information in hand.

When reviewing the performance of your direct reports, be sure to collect data on the degree to which they are trusted by their co-workers, in addition to the results that they accomplish. Employees who are not trusted adversely impact the effectiveness of your organization and you will eventually part company with them. And remember – always listen to both sides before reaching a conclusion or making a decision. It will make you a more effective leader, and help improve the performance of your company.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on July 13, 2015

This is the 52nd article I have written on effective leadership over the past year for the Philadelphia Business Journal. I thought I would mark this anniversary by sharing some thoughts on what I have learned.

I was inspired to write on effective leadership by witnessing the drive, creativity and innovative mindset of the students of the Close School of Entrepreneurship at Drexel University and the entrepreneurs we visited on a trip to Silicon Valley and San Francisco in March 2014. Leadership is a critical skill of all entrepreneurs – it can spell the difference between the success and failure of a new venture.

Having built and led a global organization during my career, as well as serving as a director on for-profit and nonprofit boards, I felt that I had something to share about my experiences. Little did I realize that my interactions during the year with so many outstanding people who are leading organizations and building businesses would teach me about the power and drive of the human spirit.

I use a number of sources for my articles. I write about principles of effective leadership based on some 45 years of my own experience and observations working for and leading others as an individual contributor, mid-level manager, business unit executive and CEO, as well as observing other CEOs as a board member. I write about leadership issues that my readers experience at work and ask for my viewpoint. I also comment on CEOs and organizations that are in the news when their actions, whether good or bad, are teachable moments for all leaders. Finally, I interview and write about extraordinary leaders and what they accomplish.

So, what did I learn during the past year? I learned that effective leaders of organizations, whether firmly established or in startup mode, have very similar traits. These leaders and entrepreneurs have a different world view and mindset than other individuals. They see a world of abundance and possibilities, rather than a world of scarcity. They continuously improve on what they have created as well as improve on what competitors offer in the marketplace. They look for opportunities not only to provide customers and clients what they want, but anticipate what they may not yet know they need. Effective leaders and entrepreneurs enjoy meeting new people, and enjoy expanding their personal and professional network, which enriches their lives and benefits the work that they do.

I have written about Donna De Carolis, founding dean of the Close School of Entrepreneurship at Drexel University, the first free-standing degree-granting school for entrepreneurship in the United States. A role model and entrepreneur in her own right, she is teaching her students entrepreneurship and life skills and to get out of their comfort zone and take initiative. She is teaching her students to take a risk and how to de-risk their ideas, and not be afraid of failure. Anyone who has never failed has never done anything.

I interviewed Phil Rinaldi, the visionary CEO of Philadelphia Energy Solutions who saved two irreplaceable oil refineries in South Philadelphia, and 1,000 highly skilled jobs at the refineries paying $100,000 per year, not to mention creating an economic boost to the city by the businesses that support the refineries.

I wrote about my two editors, Julia Casciato and Alexa Josaphouitch, two Drexel English majors who worked at the independent student newspaper, The Triangle. Casciato served as the editor-in-chief for six months. The complexity of leading 43 staff members and publishing the paper out on time each week rivals the challenges of a CEO of any small business. When Casciato took the job leading The Triangle, this 21-year-old was willing to take a risk and step out of her comfort zone, a trait of all successful people.

I interviewed entrepreneur Collin Cavote, a then Drexel undergraduate senior and entrepreneur who founded Biome, a firm whose mission is to improve the quality of indoor air that we breathe. Biome is developing a modular biowall that consists of various types of plants that absorb carbon dioxide and toxins, and give off oxygen. In speaking with Cavote, it is clear that he is pursuing his passion to make a difference – to improve the environment.

I wrote about Dean Mahmoud and Logan Levenson, co-founders of Argyle Interactive, a rapidly growing two-year old website design, digital marketing and search engine optimization firm. I also interviewed Jonathan Shettsline, an undergraduate at Drexel who joined Argyle as a co-op for six months, and now works for the firm part-time as he enters his senior year. Mahmoud, Levenson and Shettsline, who are developing the SilvermanLeadership.com website, all have the mindset of other leaders and entrepreneurs that I have interviewed – with the help of their team, they want to build something enduring that will have an impact on others.

Christopher Wink, founder and co-editor of Technically Philly, an online publication covering the burgeoning entrepreneurial tech community in the Philadelphia region, captured this mindset in my interview with him. He said, “Many people are labeled by their view of whether the glass is half full or half empty. I ask, ‘What did you learn about the glass, let’s get another one.’” Wink has the positive, proactive attitude of successful people who are out to change the world.

My life has been enriched by the human spirit of the extraordinary leaders that I have met and written about, as well as those individuals who, over the years, I have learned from and who have provided experiences that I share with my readers. I am here to make a difference in the lives of others by writing about these people. By doing so, I hope I have helped others learn what it takes to be successful.

Stan Silverman is a writer, speaker and adviser on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corp. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership

Article originally published in the Philadelphia Business Journal on July 6, 2015

The acronym VUCA, meaning volatility, uncertainty, complexity and ambiguity, was coined in the 1990s by the military to describe the growing geo-political landscape in which it had to operate. The same acronym was soon applied to the fast-paced landscape of the business world. How should businesses modify their talent management and development initiatives to effectively operate in a VUCA environment?

In 2013, Kirk Lawrence, program director of the Kenan-Flagler Business School of the University of North Carolina, published an informative paper titled, “Developing Leaders in a VUCA Environment.” Lawrence states, “The volatility, uncertainty, complexity, and ambiguity inherent in today’s business world is the ‘new normal,’ and it is profoundly changing not only how organizations do business, but how business leaders lead. The skills and abilities leaders once needed to help their organizations thrive are no longer sufficient. Today, more strategic, complex critical-thinking skills are required of business leaders.”

So, how do you screen potential employees for VUCA skills that can be further developed? Ask them questions to determine if they possess the following:

Ability to exercise good critical judgment

Ask the applicant to share situations in the past where they had to make a decision but only had perhaps 20 or 30 percent of the information needed, and did not have the time or couldn’t obtain the remaining information. Did they exercise good critical judgment? Did they obtain input from others before making the decision, even if the decision was within their authority level? What was the outcome, and what was learned? Always hire people with good critical judgment.

Courage to violate company policy when it is in the best interests of the company

You should hire people who will question a company policy if by following it in a specific situation would cause financial or reputational harm to the company. Ask the applicant if they ever faced this type of situation and how they handled it.

As a business manager early in my career, I ordered the recall of a product which our manufacturing plant found to be contaminated after it was shipped to a number of distributors. The VP of our division was traveling with the CEO, and he was not reachable. As each day would pass, the cost of recalling the contaminated product would increase exponentially as it was distributed further into the channel. Without having the authority, I ordered the recall, knowing that I would either be celebrated or terminated. When I eventually spoke to the VP and told him what I had done, I was celebrated for doing the right thing. Had I been terminated, the company would have lost its future CEO.

Interpersonal skills needed to move an organization forward that resists change

Many people resist change because it creates uncertainty. In today’s business environment, change is a constant. The process of continuous improvement is an imperative for any business. It involves change. Ask the applicant if they have had experience getting an individual or a group of individuals to adapt to change, and how they did it.

So, how do you nurture VUCA skills in developing leaders within your organization?

Identify employees who have potential for growth

Every organization has employees who have strong interpersonal and leadership skills, achieve their goals, generate results, embrace continuous improvement and want to expand their responsibilities. These are the future senior leaders of your organization. Develop them by giving them additional responsibilities or promoting them to a position where they can continue to develop.

Expose developing leaders to a wide variety of new and unstructured experiences

Ask them to serve on groups charged with achieving a goal in a complex and ambiguous area. Hold them accountable for achieving a goal in an area completely new to them. See how they do, and provide feedback on how to improve their performance the next time they are given this type of assignment. Expect mistakes. It will be a learning experience. Anyone who has never made a mistake has never done anything.

As a business unit manager for my company, I filed an anti-dumping suit against a French manufacturer of a competitive product exported to the U.S. and sold below their home market price. Our attorney insisted that my product manager and I play a major role in presenting the case to the Commerce Department and the International Trade Commission. When the decision was announced, it felt like we won a gold medal at the Olympics! We were certainly outside our comfort zone, but what a learning experience.

Invite high potential employees into your inner circle

Expose high potential employees to your thinking on strategic and other complex issues and get their input. You will help these employees build VUCA and other skills. You will be giving them a gift – the opportunity to see how you think, as well as develop their own strategic and conceptual skills.

The societal, competitive and regulatory environment will grow even more complex over time, characterized by volatility, uncertainty, complexity and ambiguity. Your job as a senior leader is to prepare the next generation of leaders to effectively lead the organization in a VUCA environment.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanL eadership.com

Article originally published in the Philadelphia Business Journal on June 30, 2015

As CEO, do you know if your employees are satisfied with your organization’s performance management and compensation system? Have you ever been concerned about the effectiveness of your company’s managers in assessing the performance of their employees or how effective they are at allocating salary increase dollars?

As a writer, speaker and advisor on effective leadership, I receive many comments from employees on issues that are important to them. Some employees rarely get feedback from their manager on how they are performing. Others comment that their manager could be much more effective at assessing their performance, or are uncomfortable in holding this conversation with them. Many employees are never told how base salaries and salary increases are determined, or work at companies that don’t sufficiently differentiate pay based on the performance of employees.

Some employees feel that their managers “manage up” well, but are not effectively leading their direct reports, or are not team players with their peers. A few employees work for tyrants, and can’t understand why the senior leadership of their company tolerates this behavior. Many employees feel that forced rank-ordering or informing employees that they are A, B or C performers is counter-productive, and are aware that some leading companies are abandoning this practice. Other employees feel that there are insufficient salary dollars allocated to bring top performers to a salary level reflective of their performance and contributions to the company.

The performance management and compensation system of my company had a few of the characteristics outlined above. 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. The focus group reviewed and commented on the new system being developed during a number of iterations, and the input by the members of the focus group was key to making the new system a success. We followed this process because we felt that the best way to design and implement a new performance management and compensation system was to involve employees so they would have ownership in its development. Our new system was still 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?

Managers were trained in all aspects of the new system, including informal periodic sharing of performance feedback with their employees, in addition to more formal annual feedback. 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.

In addition, 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 while working on issues that impacted the entire organization. As CEO of the company, I also underwent a 360 review conducted by the chairman of the board with my direct reports. This was some of the most valuable feedback I received to improve my performance as chief executive officer of the company.

Our company did not force-rank employees, nor were employees told they were A, B or C performers. The performance assessments were written in prose, which was more effective than just “checking boxes” that described levels of performance. Employees were informed if they were meeting expectations and coached on how to improve their performance. This was done periodically throughout the year. Employees who fell short of expectations and did not improve over time left the company.

Salary ranges and midpoints of jobs were benchmarked with peers at other companies 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. 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.

When employees were promoted they would start their new job with a salary increase, but were placed lower in the salary range of their new job, compared with their place in the salary range of their previous job. Delays in filling open positions and adherence to the definitions of midpoint and 75th percentile performance usually provided more than sufficient salary dollars to make proper decisions about each employee’s salary increase. However, 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 less than earned salary increase to a high performer. You might lose them.

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

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 doubts 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. Companies where this occurs will perform better over the long run.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on June 23, 2015

I have encountered many entrepreneurs who are out to change the world. They have a certain mindset and certain traits in common:

• A belief and proactive attitude that they and their team can overcome obstacles, and successfully create an innovative product or service that potential customers or clients will want to buy
• Strong communication, interpersonal and networking skills, and the ability to sell their ideas to investors, customers and to their employees, and align everyone towards a common goal
• An ability to take risks, and recognize that an inevitable failure is part of the learning process on the path to success

Entrepreneurs have a different world view and mindset than other individuals. They have a positive can-do attitude, and see the glass as half-full, while others see it as half-empty. They see a world of abundance and possibilities, rather than a world of scarcity. They continuously improve on what they have created as well as improve on what competitors offer in the marketplace.

Entrepreneurs are innovative, and differentiate themselves and their company to create competitive advantage. When it becomes apparent that their innovation may not be a technical, commercial or financial success, they pivot, and change direction. There are many individuals that do not have these traits. A few minutes into a conversation, one can tell which type of individual you are speaking with.

As their client, I have witnessed these traits in Dean Mahmoud, Logan Levenson and Jonathan Shettsline of Argyle Interactive, a rapidly growing two-year old website design, digital marketing and search engine optimization firm. Mahmoud and Levenson co-founded the firm as seniors at Drexel University’s LeBow College of Business in 2013. Shettsline is an undergraduate at Drexel, who joined Argyle as a co-op for six months, and now works for the firm part-time as he enters his senior year.

I asked Mahmoud what keeps him up at night. He stated, “Making sure the team is taken care of, and they in turn will take care of our clients. We differentiate ourselves by understanding and exceeding our clients’ expectations.” This is a mindset required for success in any business. Mahmoud, Levenson and Shettsline are very good at networking and at giving an elevator pitch on the capabilities of their firm to attract clients. These are key skills for any entrepreneur.

Employee selection and leadership skills are imperatives for entrepreneurs. Hiring and leading employees is one of the most important things that Mahmoud and Levenson do. Hiring the wrong individuals can seriously impact their firm’s success. Their college classmates who went to work for established companies in individual contributor roles may not have the responsibility of hiring and leading employees until a number of years after they graduate. Entrepreneurs learn to become effective leaders very quickly.

The skills of entrepreneurs are valued by established companies. In her Jan. 9, 2014 article in Forbes Magazine titled, “We are all entrepreneurs: It’s a mindset, not a business model,” Donna De Carolis, founding dean of the Charles H. Close School of Entrepreneurship at Drexel, said, “When we choose to embark on a path not charted, we are engaging in a small act of entrepreneurship. Being entrepreneurial is essentially about thinking and doing something that we have not done before … It is about assessing a situation, designing alternatives and choosing a new way… that we hope will lead us to something better…” This is the mindset that employers favor.

Innovators and paradigm changers who work for established companies are also entrepreneurs. They create a disproportionate impact because of their mindset. They are committed to continuous improvement and growth, and are responsible risk takers. They achieve results.

It is said that if you have never taken a risk and at some point failed, you have never done anything. The most successful people throughout history have occasionally failed, but that has not stopped them from moving forward. Entrepreneurs know how to take responsible risks and learn from their mistakes.

Quoting Seth Godin, the author of “The Icarus Deception,” who references the character in Greek mythology that flies too high and too close to the sun, causing his wings to melt off, forcing him to crash into the sea. Godin writes, “It is far more dangerous to fly too low than too high, even though it might feel safer to fly low. You settle for low expectations and small dreams, and guarantee yourself less than what you are capable of. By flying too low, you shortchange not only yourself, but also those who depend on you, or might benefit from your work.”

Employers, hire those individuals who won’t fly too low. Hire individuals who think like entrepreneurs. Give them an authority level commensurate with their experience and expertise. Raise their authority level as their experience and expertise increase. Allow them to take responsible risks. Will they make mistakes? Yes. Will their initiatives occasionally fail? Yes. However, they will learn what not to do again. These are the employees who are your growth catalysts and who will move your company forward.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on June 15, 2015

I had the honor of addressing Drexel University’s Ph.D. graduates and wishing them well on behalf of the university’s board of trustees on June 11. I also addressed the Drexel College of Medicine graduates on May 17, and have done so for a number of years. In addition to delivering a congratulatory message as a representative of the board, I always try to share some advice that may help our graduates as they navigate their careers.

Graduates rarely remember who spoke at their commencement, but they will remember the message if it resonates with them. I always try to deliver a message that is short and to the point, in hopes that they will remember some elements of it.

This year’s remarks are as follows:

Graduates, you have just completed an enormous undertaking. Whether through further training or work, you will assume new roles and responsibilities. As you seek solutions to work or life’s challenges, I urge you to remember what you learned here about the power of teamwork, and the importance of interpersonal skills in accomplishing your goals.

The best advice I can share with you as you pursue your careers is to be open to new opportunities that come your way and embrace change. In fact, I encourage you to be proactive and create your own opportunities. You never know where these might take you.

I can look back to the first day after my commencement, and look at all of the opportunities that came my way or I was able to create, represented by dots along my career pathway. The dots do not line up in a straight line; they zigzag.

I accepted assignments outside of my comfort zone, and sometimes did something new and different. I took risks. Sometimes I failed, but I never let that stop me from moving forward.

You can’t connect your dots looking forward, only looking back. You need to create your own dots, to create the path to your own future. Tomorrow is the first day after your commencement. Always take advantage of opportunities to do something new and different. Take risks, and step out of your comfort zone. And some day you may get a chance to address a commencement and perhaps inspire those graduates to create their own successful journey.

I would like to share with you the following advice, which I think applies in any field. There are nine things that will help you advance in your career:

• your education, your experience and the expertise you develop in your chosen field
• the track record of success and the results you achieve as you gain that experience
• your commitment to yourself and others to always strive for excellence
• how you differentiate yourself by doing new things, and proactively embrace change and continuous improvement in everything you do
• your interpersonal skills, and how you lead others
• your good critical judgment and common sense
• your ability to expand your personal network, helping others, who someday will help you
• your integrity
• your professional and personal reputation

During your career, be sure to develop the first seven and protect the last two. Once you compromise your integrity or lose your reputation, you never earn them back.

My best wishes to you for much success and happiness in the future.

Please pass this article along to students and graduates, or to any individuals who are in the process of building their careers.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corp. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on June 9, 2015

FIFA, the governing body of international soccer, suffered a significant blow to its reputation May 27, when the U.S. Justice Department issued a 47-count indictment against 14 FIFA officials and sports marketing executives.

The indictment charges these individuals with bribery exceeding $150 million, racketeering, wire fraud and money laundering over many years, including bribes to award the 2018 World Cup to Russia and the 2022 World Cup to Qatar, a Middle Eastern country with little soccer infrastructure and where temperatures can exceed 110 degrees. Not ideal conditions to play soccer. Other countries have also launched investigations into 2018 and 2022 World Cup host country selection process.

Football, as the sport is called outside the U.S., is the world’s most popular game, generating billions of dollars in gate fees, broadcast rights and advertising dollars. Rumors have been rampant for quite some time about the corruption within FIFA, which controls the decisions regarding of who financially benefits from the game.

In a statement released by Loretta Lynch, the U.S. attorney general, she stated, “[The corruption] … spans at least two generations of soccer officials who … have abused their positions of trust to acquire millions of dollars and kickbacks. … Today’s action makes clear that the Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice…”

Sepp Blatter, president of FIFA, was indignant at the indictments. He replied, “The Americans were … [a candidate] for the 2022 World Cup and they lost,” suggesting that the action of the U.S. Justice Department was a result of that loss. He didn’t deny the corruption, only criticized those who brought it to light. Did he think that would enhance his reputation as president of FIFA?

Eric Zillmer, athletics director of Drexel University and guest commentator on ESPN, said, “So here we have the attorney general of the United States, where World Cup soccer is not as popular as it is in other countries, issue an indictment against FIFA officials. It is as if Blatter received a red card by an American referee.”

The magnitude of the money involved makes the sport ripe for corruption. Michael Garcia, the chairman of the Investigatory Chamber of the FIFA Ethics Committee and a former U.S. attorney for the southern district of New York, investigated the selection process for the 2018 and 2022 FIFA World Cup host countries. Garcia resigned his position in December 2014 when FIFA refused to make public his entire report. In its place, FIFA issued a summary of the report. Garcia stated, “[The summary report contained] … materially incomplete and erroneous representations of facts and conclusions.” One can only surmise that the refusal of FIFA to release the entire report of its own internal investigator indicates the extent to which FIFA will go to hide the truth of what really occurred during the selection process for the 2018 and 2022 World Cup.

Two days after the indictment was handed down, Blatter was reelected as president of FIFA, and then four days later, unexpectedly stepped down. He said he wanted to be viewed as taking the “high road,” stating, “I do not feel that I have a mandate from the entire world of football…” He is planning to stay in his current position until his replacement has been chosen, an event that is months away. Many governing members of FIFA are insisting he step down now, since the corruption occurred on his watch.

Blatter should have taken the high road and withdrawn from the election when the scandal broke. Better yet, he should have responded long ago to the rumors of rampant corruption that has plagued FIFA for years. He didn’t care about the organization’s reputation, nor did those members of the governing body of FIFA who elected him. One wonders the extent to which they financially benefited from the corrupt system.

So, what are the leadership lessons learned as the FIFA scandal unfolds? Tone at the top are the ethical standards by which an organization operates, and it is clear that Blatter did not set the proper tone and tolerated a culture corruption within FIFA. The investigation by the U.S. attorney is not over. It remains to be seen whether Blatter was directly involved in the corruption.

One thing is for sure – as the attorney general conducts her investigation, plea deals will be offered in exchange for evidence against the leaders of FIFA. We have seen only the tip of the iceberg. The facts will eventually come out regarding Blatter’s involvement and the involvement of corrupt FIFA officials and those corrupt individuals with whom they did business.

Blatter’s reputation and legacy have been permanently tarnished, regardless of the findings of the continuing investigation. He practiced leadership at its worst. Leaders, think about your reputation and the legacy you want to leave, and let those decisions guide the tone at the top and institutional culture you want to be remembered for.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on June 2, 2015

One of the most important roles of a CEO and their senior leadership team is to develop and successfully execute their company’s strategic plan. One of the most important roles of a board is oversight of the company’s strategy. To quote a line from “Any Road,” sung by George Harrison, “If you don’t know where you are going, any road will take you there.”

A strategic plan is a road map, approved by the board, to take the company from where it currently is to where the CEO wants to take it, over a multi-year plan period. It identifies objectives, the strategies that must be pursued to achieve those objectives, the obstacles that must be overcome and the resources needed to implement the strategies.

The strategic plan should be consistent with the vision and mission of the company.

The vision is an aspirational statement – the lofty purpose of the company, a statement that inspires employees. The mission broadly describes the business in which the company is engaged, the markets served and how the company differentiates itself.

The foundations of the strategic planning process are the situation analysis and the SWOT analysis. A situation analysis describes the economic, competitive, technical, regulatory and societal environment in which the company operates and will operate during the plan period. The company has little, if any, control over trends in these areas. During the strategic planning process, strategies need to be developed to permit the company to successfully navigate this changing environment.

A SWOT analysis outlines the company’s strengths, weaknesses, opportunities and threats. Strategies need to be developed for the company to build on its strengths, minimize the impact of its weaknesses, take advantage of its opportunities and defend against its threats. Directors should play an active role in reviewing management’s situation and SWOT analyses, offering their own views of each. Both need to be reviewed by the board and CEO on a continual basis to determine if strategies in place are still valid due to changing conditions.

In addition to outlining the objectives that the CEO and his senior leadership team want to achieve during the plan period, the plan also outlines the strategies to achieve those objectives. A strategic plan is not written to be placed in a drawer, until it is time to refresh it. The plan needs to be sufficiently short and to the point, so that it can be easily referred to. An executive summary is a must.

Much has been written about the role of the board in the development of the strategic plan. I believe that it is management’s responsibility to develop the plan with board input. The board’s role is advisory: to pose questions to management to stimulate thought and provide guidance, to assess the risks of the strategies under consideration and to evaluate alternative strategies. This process should take place over a number of board and board committee meetings, so that the directors have time to think about what is being presented before voting on the plan.

The board cannot hold management responsible for achieving the strategic plan if the directors play a direct role in its development. The board’s role is to help management think about issues that may not be on their radar. The CEO and the senior leadership team own the strategic plan. The board’s job is to monitor progress and hold the CEO accountable for results.

A CEO with a strong reputation and many past achievements has built up political capital. A board will take the CEO’s track record into consideration when assessing strategies that are presented for approval. However, strategies presented need to be evaluated on their merit by the board and rejected if they are judged to have a low probability of success, are considered to be too risky, or don’t fit the strategic direction of the company. It takes courage for a director to raise these types of issues. It is their job to do so.

So, what are some of the pitfalls boards need to consider when CEOs present the company’s strategic plan?

Failure to face the brutal facts of reality
As a director, I have sat through strategic planning presentations, incredulous that the CEO and business unit leader were not facing the brutal facts of their reality. In one example, the business unit held a weak market position, competing against companies with superior technology. Revenues and earnings were stagnant. It was very apparent that the strategies presented would not be effective in improving the business unit’s competitive position and initiate growth. The board convinced the CEO that the business should be sold.

Setting a strategic objective without the right strategies to achieve it
Without the right strategies, objectives will not be achieved. Employees will disengage and not feel a sense of ownership in the objectives. Boards play an important role by questioning the CEO to determine whether the right strategies are in place to achieve the objectives of the plan.

Doing the same thing and expecting a different result
Results will not change if strategies that have not been effective in the past continue to be implemented. During the strategic planning process, paradigms need to be challenged and changed. If no strategy is capable of achieving an objective, perhaps the objective is not achievable, and another objective should be chosen.

Underestimating the actions of competitors
As a CEO and board member, I have listened to business unit leaders outline long-term strategies to gain market share with no thought to how competitors might respond. You can be sure that they will. How will they respond, and how will the company defend against their response?

Not shedding a losing strategy
Much can be learned from entrepreneurs and their mindset. Entrepreneurs frequently face the specter of failure. What do they do? They pivot and pursue another strategy, another idea. Why? Because resources are limited, and they are forced to move on. Entrepreneurs shed losing strategies. You should too.

Failure to recognize that some leaders may need to be replaced
Members of the current senior leadership of the company may not have the experience, skills or mindset to execute the strategies or achieve the objectives of the strategic plan. They may need to be replaced with other leaders that are more capable of achieving the plan’s objectives.

CEOs, avoid these pitfalls. Directors, watch out for them. Ask penetrating questions so CEOs and the senior leadership team are more effective at developing objectives and strategies. Monitor progress, and hold the CEO accountable for results.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com . Website: www.SilvermanLeadership.com

Article originally published in the Philadelphia Business Journal on May 27, 2015

By micromanaging employees, you deprive them not only of the opportunity to learn, but to also feel accountable for decisions they make. Employees who do not feel accountable for their decisions will not grow in their jobs. Those with ambition will leave the company and go where they can be held accountable.

Occasionally, employees may need to make a decision within their authority level, but the decision involves high risk or could have a strategic impact. In these cases, employees should consult with their boss, or any other individual who has experience or expertise in the area. Through this process, the reward/risk profile of the decision can be better understood, and ways can be found to de-risk the decision. This is one of the reasons among many that you should always hire people with good critical judgment. Even though a decision may be within the authority level of an individual, they need to sense when to get input from others before making the decision.

Why do some bosses micromanage? They themselves are micromanaged by their boss, who expects them to have all the answers, regardless of how insignificant the issue. This is a sign of poor and ineffective leadership, and a poor organizational culture. The best people leave for positions where they won’t be micromanaged. The mediocre people stay, lowering the performance of that organization.

Staff units, don’t adopt policies that micromanage line or other staff units

Have you ever worked in an organization where policies that were put in place by over-zealous staff groups went beyond what is necessary to ensure uniform practices across the organization and compliance with legal or regulatory requirements? This micromanagement issue is voiced by many readers.

Certainly, organizations must ensure that its core values and operating principles are adhered to. These are derived from the tone at the top and institutional culture, which are set by the CEO and supported by leaders down through the organization. Policies are developed from core values and operating principles.

Effective leaders should ask if some of their firm’s policies are unnecessary, because they have no discernible benefit. Do some policies or practices micromanage decisions that should be within a line or staff unit leader’s discretion? Are some policies unnecessarily restrictive, and impede the ability of line or staff unit leaders to do their jobs?

Policies attract internal auditing resources to ensure compliance. Auditing policies which are unnecessary divert resources away from important compliance or other areas. They also may impede the freedom of leaders of line and staff units from taking action or making decisions. Don’t write policies and procedures unless they are necessary to adhere to a core value or compliance requirement, or ensure consistent practice across the company, such as with human resource policies.

Most readers are familiar with the concept of external and internal customers. The concept states that line units are the internal customers of staff units. I view this relationship between line and staff groups as more mutually supportive. Staff and line units must collaborate and partner with each other to create mutual success.

Should policies and practices that make little sense or impede the success of a staff or line unit be challenged? Absolutely! It is surprising how often this does not occur. Many employees feel “that’s just the way it is.” Not true. Policies and practices that don’t make sense can and need to be changed.

Hire employees with good critical judgment. Don’t micromanage – empower them, and hold them accountable for results. Staff and line units within a company need to collaborate with each other. Policies that don’t make sense need to be challenged and changed. Companies that adopt these principles as part of their culture are the ones that will excel.

Stan Silverman is a writer, speaker and advisor on effective leadership. He is the Leadership Catalyst at Tier 1 Group, a firm of strategists and advisors for preeminent growth. Silverman is vice chairman of the board of Drexel University, a director of Ben Franklin Technology Partners of Southeastern Pennsylvania and former president and CEO of PQ Corporation. Follow: @StanSilverman. Connect: Stan@SilvermanLeadership.com. Website: www.SilvermanLeadership.com