The ability to get others to buy into our ideas and initiatives and rally them to the cause is a primary skill of all leaders.
DACA immigrants are important to the economic competitiveness of the U.S.
Some immigrants or children of immigrants have had a transformational impact on the U.S. and on the world. These entrepreneurs have created millions of jobs, changed how we live and put the U.S. on the forefront of the information technology industry. We should remember and appreciate their contributions.
5 traits of effective leaders
I have written a number of articles about the traits of effective leaders. In this article, I share five traits that are important to me, based on my personal experience. Embracing these traits have allowed me to be a more effective leader.
Carefully consider the unintended consequences of breaking a commitment
Article originally published in the Philadelphia Business Journal on October 21, 2019
Have you ever failed to fulfill a commitment you made to someone and experienced unintended consequences? How did that make you feel? The adage “your word is your bond” has significant meaning to those who place high importance on trust and in meeting their commitments. It defines their character.
A case in point are the unintended consequences of President Donald Trump’s abrupt Oct. 7 announcement to immediately pull American troops out of northern Syria, exposing the Kurds in the region to attacks by the Turkish military. The Kurds are a distinct ethnic group and they live within regions of Turkey, Syria, Iraq and Iran. The U.S. withdrawal provides an opportunity for the Turkish military to seize the portion of Kurdish territory claimed by Turkey and will permit the resurgence of ISIS.
The Kurds have been a key ally in the U.S. fight against ISIS. They view the U.S. withdrawal as an abandonment of a commitment to protect them against Turkey. Turkey is also an ally of the U.S. and is a member of NATO.
Soon after Trump’s announcement and the U.S. military withdrawal, many ISIS fighters escaped detention. There are now militias roaming the region, which is falling into chaos.
Shortly after Trump’s order to withdraw American troops, the military forces of Turkey attacked the Kurds, notwithstanding Trump’s threat to “totally destroy and obliterate the economy of Turkey if he considered their actions to be off limits.”
On Oct. 14, Trump announced economic sanctions on Turkey in an attempt to halt the Turkish military onslaught against the Kurds. On Oct.17, Vice President Mike Pence announced a five-day ceasefire to give the Kurds time to evacuate the region. The prime minister of Turkey described it as only a pause in operations. In exchange, Trump announced the lifting of economic sanctions. However, a day after the ceasefire announcement, the Turks continued to shell Kurdish civilians. Sen. Mitt Romney (R-Utah) said, “The cease-fire does not change the fact that America has abandoned an ally, adding insult to dishonor.”
As a result of the U.S. troop withdrawal, the Kurds have cut a deal with Syrian President Bashal-al-Assad to protect them against Turkey, significantly strengthening the Syrian president in the country’s civil war and boosting Russia’s influence in the region. Apparently, Trump did not think through these unintended consequences nor a possible resurgence of ISIS, which are not in the best interests of the U.S.
In a press conference on Oct. 9, Trump was asked if in future times of need, whether it’s going to be more difficult to develop alliances. Trump responded, “No, it won’t be. Alliances are very easy…” My personal experience is that this is not the case. Trust is built over time, but can be destroyed very quickly. People who violate their commitments are not trusted.
One wonders how the South Koreans and Israelis are feeling now. They must be wondering, “Can we trust the U.S. to keep its commitments to us?”
A Washington Post article dated Oct. 13 is headlined, “Trump orders withdrawal of U.S. forces from northern Syria, days after Pentagon downplays that possibility.” Every effective leader listens to the experts on their staff, and it is reported that they and a number of Senate Republicans warned Trump about U.S. troop withdrawal, but he ordered the withdrawal anyway. It’s an embarrassment to the U.S. for Trump to unexpectedly announce a U.S. withdrawal, contradicting the earlier comments by the Pentagon.
An Oct. 13 article in The New York Times headlined, “Pullback leaves Green Berets feeling ashamed, and Kurdish allies describing betrayal.” The article quotes a U.S. military officer stating, “[The Kurds] trusted us and we broke that trust. It’s a stain on the American conscience.” In the same article, an official allied with the Kurdish-led Syrian Democratic Forces, is quoted as stating, “The worst thing …is betrayal [of your comrades].”
Trump has talked about his desire to pull troops out of Syria in the past. His abrupt action without a plan to protect American interests in the region led to strong condemnation by former members of his and previous administrations, and by both Republican and Democratic members of Congress.
Former Secretary of Defense James Mattis, during an interview on Meet the Press, stated, “[We] will have to see if [the Kurds] are able to maintain the fight against ISIS.” Mattis continued, “I think Secretary of State [Mike] Pompeo, the intelligence services and the foreign countries that are working with us have it about right, that ISIS is not defeated.”
Mattis was asked, “How do you turn [U.S. abandonment of the Kurds] around?” He said, “You turn issues like this around based on trust, and re-instilling trust is going to be very difficult for the Americans at this point.”
Sen. Lindsey Graham (R-S.C.), a fervent Trump supporter stated,“I think he’s putting the nation at risk, and I think he’s putting his presidency at risk … I hope he will adjust his policies.” During a Fox and Friends interview, Graham said, “The biggest lie being told by the administration is that ISIS is defeated.”
On Oct.16, The House of Representatives passed a resolution condemning the U.S. Syrian troop withdrawal by a vote of 354 to 60, with two thirds of the House Republicans voting for the resolution, including the Republican House leadership.
So, what are the lessons to be learned from Trump’s withdrawal of troops from northern Syria?
- Always consider the unintended consequences of your decisions.
- Listen to your advisers.
- If you lose the confidence and trust of allies due to a broken commitment, they may go elsewhere for what they need, lessening your influence in the future.
- If you lose support on a major issue, you lose political capital.
- Don’t let others think you don’t know what you are doing. It makes you and your organization look bad.
A leader’s effectiveness and their organization’s or country’s standing depends on the degree to which others trust them. Don’t violate that trust. Don’t walk away from your commitments.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated columnist 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.
Whistleblowers are crucial to uncovering wrongdoing. They must be protected.
Article originally published in the Philadelphia Business Journal on October 14, 2019
The whistleblower accusation about President Donald Trump’s July 25 phone
conversation with Ukraine’s President Volodymyr Zelensky has dominated the
news. Since then, another whistleblower has come forward. Given the spotlight on
these whistleblowers, I decided to update an April 2016 article I wrote on the
importance of protecting whistleblowers from retaliation.
Many times, a report by a whistleblower is the only way to uncover illegal or
unethical acts in the private sector or in government. The whistleblower who
uncovers and reports wrongdoing in business is a hero, and in government, a patriot.
Whistleblowers in government are protected by the Whistleblower Protection Act of
1989. Congress passed the Sarbanes-Oxley Act (SOX) in 2002, requiring public
companies to put in place a whistleblower hotline to report fraud and illegal
activity. Those who retaliate against whistleblowers are subject to criminal
penalties. All organizations should have a hotline in place.
Why is a whistleblower hotline important?
A hotline provides employees a safe place to file a report about illegal or unethical
activity. Hotline reports from employees provide an opportunity for your company
to address issues in a proactive manner, and avoid or lessen financial liability and
legal or reputational damage to your company.
Are some hotline reports found to have little substance or be malicious in some
manner? Yes. The reports with no merit can be screened out. That is part of the
process. A rough measure of the climate within an organization and a company’s
relationship with employees are reflected in the types and substance of the hotline
reports that are submitted.
In practice, employees use hotlines for anything they are uncomfortable reporting
using normal company channels, mostly due to fear of retaliation. In addition to
financial fraud or other illegal activities, these reports could run the gamut from
perceived violation of employee anti-discrimination laws, to violation of company
travel and entertainment policies, to a tyrant in a management position making life
miserable for direct reports.
Role of the audit committee
The audit committee of the company’s board has the responsibility to review hotline
reports and the results of the subsequent investigation. The hotline is monitored
either by the organization’s internal auditor, legal counsel, or in some cases, an
outside firm.
Whoever is monitoring the hotline informs the chair of the audit committee and the
CEO of hotline reports, as long as the CEO is not the subject of the report. In the
event that the hotline report involves the CEO, the monitor directly informs the
chair of the audit committee.
Because I used to work for a tyrant, when one is reported through the company’s
hotline, as a member of many audit committees, I always take a personal interest in
how the complaint is investigated by executive management and the actions to be
taken.
Without hotline protection, employees might not report wrongdoing for fear of
retaliation
While president of PQ’s industrial chemicals group, an employee informed me that
his general manager had violated an important company policy, which could have
had serious ramifications. PQ did not have a hotline at that time.
After searching for and identifying his accuser, the general manager brought him to
meet with me and asked the employee if he, the general manager, had violated the
policy. What an intimidating position in which to put the employee! Not knowing if
the general manager would be terminated and fearing retaliation if he wasn’t, the
employee withdrew his report of the violation.
I terminated that general manager a short time later. I don’t know why the general
manager thought he could get away with intimidating his employee.
Outside of the protection of a company’s hotline process, don’t expect an individual
to make an accusation of wrongdoing if the accused will continue to exercise power
over or could cause harm to that individual. Why would they place themselves in
harm’s way?
Even within the hotline reporting process, the reporter is taking a risk if the accused
remains in their position. This is clearly evident as the hunt for the identity of
Trump’s whistleblower by the president’s supporters plays out on the national stage,
in attempt to damage the whistleblower’s credibility.
Is it necessary to reveal the identity of a whistleblower? Not if evidence is
uncovered that corroborates the allegations made by the whistleblower. Why put the
whistleblower in harm’s way?
All hotline reports need to be investigated
Even when the evidence and subsequent investigation indicates that the allegations
are factual, there are those who will attack the whistleblower to divert attention
away from the accused. Those who attack a whistleblower to discredit or intimidate
them don’t realize that they destroy their own credibility and character, and damage
any trust that people may have in them in the future.
Those who retaliate against hotline reporters need to be terminated. Handling
hotline reports in the right way builds employee trust and will significantly reduce
the possibility of a scandal and damage to your reputation or that of your
organization.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker,
advisor and nationally syndicated columnist 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.
360-degree input: The most effective way of assessing employee effectiveness
Article originally published in the American City Business Journals on September 4, 2019
As CEO, how do you determine whether the individuals who report to you are
effective with the people they deal with? Have you ever been concerned about the
people reporting to your direct reports? Some individuals manage up very well, but
their peers and subordinates may find them untrustworthy or very difficult to work
with.
A major responsibility of every boss is to assess the performance of the individuals
who report to them and provide feedback on strengths and areas for improvement.
This includes boards providing feedback to CEOs.
A more complete picture of an employee’s performance
The best way to understand how a direct report performs is to obtain 360-degree
input from the people they deal with. A 360-degree anonymous input process can
provide a more complete picture of an employee’s performance. Information is
collected by interviewing the employee’s direct reports and peers to get a sense of
their effectiveness and how well the employee works with others in the organization.
Interviews can be conducted by the individual’s boss or by an outside firm,
depending on the culture of the company.
In my role as a coach and counselor, I am periodically told of leaders within
organizations who are ineffective at what they do, lack the trust of those they deal
with or are tyrants. Those who deal with these people question why the ineffective
individuals remain in their roles or aren’t given feedback to improve. They ask, why
don’t their bosses know about how poorly they are viewed by the organization and if
they know, why don’t they do anything about it?
I often hear frustration from those who I coach and counsel about their bosses who
are terrible leaders. Because that individual’s boss may not be aware of how
ineffective these direct reports are, I would add an additional feature to the 360-
degree interview process.
Ask how effective their leaders are in their roles
360-degree interviewees should be asked if they would like to share anything about
the effectiveness of any of the direct reports of the individual under review. This
would help alleviate frustration because there would be a way to make their views
known about the ineffectiveness of that direct report.
In a perfect world, this should not be necessary. In the real world, it only indicates
the degree to which tyrants and those who do not engender trust are tolerated. The
employee hotline to the audit committee of the board is a way to report a tyrant if
senior management takes no action. In some cases, it’s the CEO who is a tyrant or
does not engender trust of the organization. If the CEO is not coached to improve
their style, it reflects poorly on the board. When the company starts losing good
employees to competitors, perhaps the board will take action.
From personal experience, 360 degree feedback was the most valuable performance feedback
My personal experience working for a tyrant was prior to the introduction of
whistleblower hotlines and the 360-degree input process. I was promoted to be the
tyrant’s peer, and then promoted to be his boss. He continued to create an atmosphere
of fear and intimidation, so I fired him. While working for the tyrant, I was very
close to leaving the company. Had I left, the company would have been deprived of a
future CEO.
As chief operating officer of PQ Corporation, I introduced the practice of 360-degree
assessments to the organization. When I became CEO, I asked my board to conduct
annual 360-degree assessments of me. It was the most valuable performance
feedback I have received during my business career.
What to do if the process is politicalized?
There are those who believe that the results of the 360-degree input process should
only be shared with the employee as a developmental tool. Even if an outside firm
conducts the interviews, I believe the boss should also receive the report to
understand how the employee is interacting with their direct reports and their peers.
The 360-degree process can be politicalized, and feedback could be tainted.
Inconsistent, one-off politicalized comments can be readily identified and screened
out.
Be sure to provide performance feedback periodically to your employees. Done
properly, it is the best way to help your employees grow, develop and improve their
leadership effectiveness.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker,
advisor and nationally syndicated columnist 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.
9 ways to build trust within your organization
Article originally published in the American City Business Journals on August 6, 2019
Given the importance of trust in enabling organizations to thrive, this article
updates my April 2016 article, “How to earn employee trust to build a high-
performance team.”
Have you ever worked in an organization where there was a low level of trust
among peers, or where direct reports did not trust their boss or the CEO of the
company? This type of organization has a toxic atmosphere, which significantly
reduces its effectiveness.
What is “trust?” The Merriam-Webster dictionary defines trust as a “belief that
someone is reliable, good, honest and effective … one in which confidence is
placed.” Wouldn’t we all like to work within organizations where all employees
feel this level of trust in their leaders and peers?
Stephen Covey, the late motivational speaker, writer and advisor, once wrote,
“Without trust we don’t truly collaborate; we merely coordinate or, at best,
cooperate. It is trust that transforms a group of people into a team.” When people
don’t trust each other, there is an invisible elephant in the room, which may
adversely impact the effectiveness of the decision process.
Whether you are CEO, a mid-level manager or an individual contributor with no
direct reports, trust needs to be earned. So, how do you earn the trust of others?
Be consistent and readable by those within your organization
As a CEO or other leader, there should be no misunderstanding as to your tone at
the top – the values to which you hold yourself and your employees accountable,
and the type of organizational culture you are nurturing. Employees trust and want
to work for an organization with high ethical standards, and work for a leader that
lives by those standards.
As a leader, ensure your expectations are understood. Situations will arise when
decisions need to be made by your employees for which there is no operating
procedure or precedent. Employees will fall back on their good critical judgment
and proceed in a way consistent with your expectations, tone and culture.
Meet your commitments
Don’t make a commitment you cannot keep. If the situation changes and you find
that you can’t keep a commitment, notify the individual immediately. She may have
made a commitment to others, based on your commitment to her.
Don’t blame other people for your mistakes
If you make a mistake, own it and share how next time the issue will be handled in
a different manner. You don’t create trust by blaming others for your mistake.
Employees that do this never last long within the kind of organization in which we
all want to work.
Allow your direct reports to share with you a contrary point of view
I have worked for bosses who were not interested in contrary views. This did not
engender trust. As the leader, compare other’s opinions on how to proceed on an
issue with your own view. Through discussion and debate, you may accept their
view, or may discover a third alternative path, better than either of the first two
paths. Follow this process and you will rarely choose the wrong way to proceed.
Create an environment that allows employees to share the brutal facts of
reality
As a leader, you want your people to feel safe in sharing bad news. Don’t shoot the
messenger. You can’t solve a problem unless you know what it is. You want your
people to have trust and confidence that you will listen to them.
Help employees develop a sense of ownership in what they do
Empower employees, don’t micromanage. Show your employees that you trust
them by letting them decide how to accomplish an objective. This will help your
employees develop a sense of ownership in what they do. When this occurs, you
can rely on them to drive results.
Be accessible and transparent
Create opportunities for all employees – not only your direct reports – to talk with
you. Walk around the office or factory floor. Ask how people are doing. However,
avoid telling them what to do. If an issue arises that needs to be addressed, talk with
your direct report responsible for the area. Hold town meetings to talk about the
business and respond to employees’ questions. Be as transparent as possible,
realizing that there are things that cannot be publicly shared.
Before making a decision, hear both sides of an issue
No matter how compelling an argument is presented by an individual on one side of
an issue, there is always the other side, which may be more compelling. Hear both
sides before making a decision. The individual on the losing side of the issue won’t
like your decision, but will respect the fact that you went through a fair process and
heard both sides.
Live your values
Living your values engenders trust. As CEO of PQ Corporation, I experienced a
minor OSHA recordable accident while traveling on business. I insisted that the
accident be written up, and for that quarter, I was one of PQ’s safety statistics.
Word was spread to our 56 manufacturing facilities around the world that the CEO
called an OSHA recordable accident on himself. This demonstrated that I held
myself accountable to the same standards as I held our employees.
The best talent will want to work for companies where there is a high level of trust
with the senior leadership and among fellow employees. These are the companies
that have the lowest turnover and achieve the highest long-term returns to
shareholders. This is the type of company at which we all want to work.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker,
advisor and nationally syndicated columnist 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.
6 ways for a CEO to think like an activist investor
Article originally published in the Philadelphia Business Journal on July 22, 2019
CEOs of many public companies raise their guard when they receive a phone call
from an activist investor wanting to discuss how their company can improve its
performance and shareholder return. This is not necessarily the right reaction. In
April 2015, I wrote an article on this subject. This is an update of that article.
Activists invest in underperforming companies and push for improved shareholder
return through cost reduction, a change in business strategy or leadership, or the
pursuit of strategic options. If shareholder return cannot be improved through other
means, the activist might push for outright sale of the company or one or more of its
operating units.
If unsuccessful in convincing the CEO and board to implement their proposals to
increase shareholder return, an activist may threaten a proxy fight to seat their own
director slate.
All outside directors have a fiduciary duty to be independent, even if nominated by
an activist and seated through a proxy fight. These directors need to make their own
independent decisions based on what is best for the shareholders after board
deliberation, not what is best for the activist who nominated them.
Some activists are interested only in making a quick return, with no concern for the
potential of a company to generate much higher returns for its shareholders over the
long term. This adds to the pressure of companies to sacrifice the long term in favor
of quarterly results. The interests of short-term oriented activists may not be in the
best interests of most of the company’s shareholders. Other activists are in it for the
long term, as are many shareholders, and their proposals need to be heard and, if
valid, seriously considered.
Dealing with activists who are adversarial is a distraction to the CEO and the board
and takes time and focus away from the business. A proxy fight puts the CEO and
the board in the public spotlight. How do you lessen the likelihood that your
company becomes an activist target?
Think like an activist when formulating and executing strategy
Companies that outperform their peer group are usually not targets of activists,
because the potential for improvement is less when compared to companies that
underperform. Outperforming your peer group should be your objective regardless.
The board needs to hold the CEO (and themselves) to high-performance standards
Activists like to target under-performing companies that have a weak CEO and are
governed by a weak board. I have served as a director of three public companies.
When a new director joins our board, the last thing my fellow incumbent directors
and I want is to be viewed as not having held the CEO to high-performance
standards.
Ensure decisions are made based on what is best for the shareholders, not the CEO or board
What is in the best long-term interests for the shareholders should be the focus of
the CEO and the directors, not what is in their personal best interests. After an
evaluation of the alternate strategies to improve financial performance and
shareholder return, if selling the company is in the best interests of the shareholders,
this is the strategy that should be pursued by the board, recognizing that the CEO
might be replaced and the directors will step down after the sale.
Guard against complacency
The directors of a company need to guard against complacency, which may set in
due to the growing relationship directors have with the CEO over time. Independent
directors are just that – independent. The most important responsibility of directors
is to hire the CEO and determine the CEO’s compensation based on results. The
board of directors must also be capable of terminating the CEO if warranted.
Engage with large shareholders
In his February 2015 letter to independent directors, F. William McNabb III, former
chairman and CEO of Vanguard, the world’s largest mutual fund company, wrote,
“We’ve observed that the best boards work hard to develop ‘self-awareness,’ and
seek feedback and perspectives independent of management. They ask the right
questions to understand how their company may be different than [their] peers, and
whether those differences are strengths or vulnerabilities.”
McNabb continues, “We believe boards that provide such context to investors are
less likely to be surprised by activists or proxy votes, and more likely to have strong
support of large long-term shareholders.” Wise advice.
If you do receive a phone call from an activist, listen
Activists spend a significant amount of time studying industries and the companies
that comprise those industries. Many times they know more about the industry and a
company’s competitors than the company itself. They are a source of valuable
information, and can provide a prospective different than that of the CEO or
directors of the company. The strategies they suggest to increase shareholder
performance may have validity, and change the paradigms of management and the
board.
In addition to public company CEOs, much of the advice above is also valid for the
CEOs of private companies. CEOs, think like an activist. Boards, hold the CEO to
high-performance standards.
Recognize that the company is there for the benefit of the shareholders and guard
against complacency. Engage with large shareholders, but be careful not to violate
SEC Fair Disclosure rules against providing inside information to selected
shareholders. When an activist calls, listen to their ideas to increase shareholder
value. These are the best defenses against activists, who will go after lower-hanging
fruit.
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.
How to use the goal-setting process to achieve great performance
Article originally published in the American City Business Journals on July 9, 2019
Setting an organization’s annual financial goals has importance beyond financial considerations. If the probability of achieving the financial goals is low and in most years the goals are not achieved, employee morale suffers and the ongoing funding of growth initiatives critical to the long-term success of the company is jeopardized.
I have written articles on this subject, in January 2015 and in December 2018. This article shares some additional perspectives on the goal-setting process.
Setting goals at PQ Corporation as a business unit leader, then as the company’s CEO and later as a board member of other companies approving the financial goals of their CEOs, I have developed a perspective on the annual goal-setting process. Done effectively, goal setting drives execution and individual, team and organizational performance.
As a business unit leader, I worked for CEOs who set stretch financial goals for the company. Upside potentials were not balanced against downside risks. These CEOs believed that actual performance with stretch goals would exceed the performance that would have been attained, had the goals been set more realistically.
However, since there was a relatively low probability of achievement, many employees did not take ownership in these goals, and most years the company fell short of achieving them. The board of directors held management accountable for achieving what they said they would achieve, and when performance fell short, the board was not happy.
After I was named CEO of PQ, I changed our annual financial goal-setting approach. Each business unit set goals that were reasonably attainable, based on strategies that provided a path toward achievement. However, I set the expectation that the financial goals should be exceeded by the greatest extent possible, and our employees should have fun doing so.
The higher the financial performance, the higher the bonus payment for that portion of the bonus tied to financial results. We were completely transparent by sharing with the employees the bonus pool formula, and they were energized as their results increased the size of the pool as well as their own possible bonus payment.
PQ business unit leaders occasionally wanted to build a reserve (i.e. commit to a lower earnings number) in their goals, if there were downside risks in their business plans not offset by upside potentials. I permitted them to do so. Adding up all the earnings of the business units, I would consider whether the corporate earnings goal was reasonably attainable. If not, I would build a president’s reserve into the company’s earnings goal. This is not common practice among many CEOs.
As the months passed, employees developed and executed strategies to exceed their goals. With this new approach, PQ’s earnings grew from $14 million (adjusted for an adverse material competitive situation) to $43 million over five years which included 9/11 and the severe recession of 2002.
After 2000, we never had a down quarter. As measured by revenue growth, earnings growth and return on assets, we moved from fourth quartile performance to first quartile performance, compared with 17 public peer companies within the chemical industry.
I did not achieve these earnings results — the men and women who operated our businesses around the world achieved them. I focused on tone at the top, corporate culture, ensuring we have the right people in senior leadership positions, and corporate strategy.
My approach as CEO of PQ — setting reasonably attainable goals that resulted in achieving earnings growth — was endorsed by Shark Tank star Kevin O’Leary. At the 2018 Disruptor 50 conference in Philadelphia, O’Leary discussed the factors that influenced the return of capital of the 37 companies within his venture portfolio. O’Leary said, “A study showed … 90 percent of the [cash] returns came from companies run by women.” Why?
O’Leary said, “Companies run by men hit their quarterly sales targets 65 percent of the time. … Women-led companies hit their targets 95 percent of the time. … If you are on a winning team in any sport, … you have a winning culture. Winning cultures have different metrics than just financial reward. Being part of a winning team is powerful. These [women-led] teams are constantly hitting their targets.”
O’Leary talks about his views in a March 2018 CNBC article headlined, “Shark Tank star Kevin O’Leary: Women-run businesses make me the most money – here’s why.”
In this article, O’Leary says, “If employees aren’t meeting their goals … frustration can lead to turnover, which is particularly costly for small operations. Women are better at avoiding this pitfall.
“When you meet your goals 95 percent of the time, you change the culture of your business. People feel they’re working in a winning organization. That’s why women are doing better in business — they keep their people. The staff are sticky. They want to work there because they’re hitting their goals. … You don’t have to reach for the stars, you want to win 95 percent of the time. That’s the secret sauce.”
The shareholders of the company don’t know what the annual financial goals of the company are and don’t care. They only care if the financial results exceed previous year’s results and exceed the investment returns of similar companies within the industry.
The goal-setting process is a means to an end — great performance. As leaders of our respective organizations, we should change our paradigms about goal setting. Financial goals should only be an intermediate target, and exceeded by the greatest extent possible, in an environment where employees are rewarded handsomely for doing so.
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.
People quit bosses, not companies
Article originally published in the Philadelphia Business Journal on April 29, 2019
Performance goes beyond the achievement of financial or other goals to which leaders are held accountable. I frequently hear complaints by employees, including those employees who report to CEOs, that their bosses lack fundamental leadership skills. Ensure you don’t lose your good employees because of the lack of leadership skills of the individual they report to.
I offer the following advice to all leaders to improve their leadership style:
Don’t micro-manage
A frequent complaint is that bosses micro-manage and tell direct reports how to accomplish a task, rather than state expectations, ensure the resources are available to get the job done, and cut the direct report lose to achieve results.
Steve Jobs, the former chairman and CEO of Apple once said, “It doesn’t make sense to hire smart people and tell them what to do. We hire smart people so they can tell us what to do.” Lee Iacocca, former automobile industry executive once said, “I hire people brighter than me and then I get out of their way.” Why don’t all leaders have the same philosophy as Jobs and Iacocca?
Acknowledge the work of a direct report
A number of individuals have shared with me that their work is not acknowledged when passed up through the organization. I personally experienced this when I was told that all work leaving our department had to have the name of the department’s manager on it, rather than a cover letter transmitting the work of a direct report. I knew that this was not the kind of manager I wanted to work for.
In another instance, I was told by the creator of an advertising campaign of an experience she had after she presented her work during a meeting with a client. The client loved the campaign. After the presentation, she was not invited to join her boss and the client at a lunch celebrating the campaign’s creation. Why was her boss tone-deaf and insensitive to how that made her feel? This is not the way to inspire and motivate direct reports.
Respect female colleagues as you would respect male colleagues
I have heard from many women that they are not as respected as men within the workplace. Many feel that this is not purposeful, but part of an ingrained cultural norm.
A company with an organizational culture that tolerates a hostile work environment or doesn’t respect both men and women sends signals to some current and potential employees that they are not welcome and valued. The recent #MeToo movement has shined a light on the issue of sexual harassment in the workplace and it hopefully signals the start of a cultural change.
All organizations should create a respectful environment and provide advancement opportunities regardless of gender to all employees based upon their skills and track record of accomplishments.
Don’t tolerate a direct report who is a tyrant to his or her direct reports
I used to work for a tyrant who did significant damage to morale. I nearly left the company but was promoted around him and became his peer within the company. I was promoted again and became his boss. I fired him. Had I left, the company would have been deprived of a future CEO.
I still wonder why the CEO of the company tolerated the tyrant. Don’t make this mistake if you have a tyrant working in your organization.
Perform 360-degree reviews of your direct reports
What is the best way to obtain a full picture of the effectiveness of a direct report? Obtain 360-degree feedback on their performance. Done properly in organizations where this process has become a cultural norm, this performance tool provides feedback to direct reports to help them be more effective.
Obtain input about your direct reports from people reporting to them, from peers and from senior individuals within the organization. This information can be used in the direct report’s performance review. In many cases, it is the best way to identify and communicate to the direct report their strengths and areas for improvement.
At my company, I introduced a 360-degree feedback system while president of our world-wide chemicals business. Not only did I receive and communicate 360-degree feedback to my direct reports, but I subjected myself to the same process, conducted by our company’s CEO.
When I became the CEO of the company, I continued this process, with the chairman of our board who obtained 360-degree input on me from my direct reports. I found it to be one of the most valuable feedback mechanisms to help me improve my performance as a CEO. To undergo 360-degree reviews was my decision. It should not be mandated by the board but be a decision for the CEO.
It is said that people quit bosses, not companies. Boards, ensure your CEO is an effective leader. CEOs and other leaders within the organization, ensure the leaders below you are effective. If they are not effective, you are apt to lose your high performing employees, perhaps to a competitor. In today’s tough business environment, you can ill afford to lose them.
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.
To develop your company’s future leaders, push them outside their comfort zone
Article originally published in the American City Business Journals on April 9, 2019
An important responsibility of every leader is to develop future leaders for their organization.
One of the most effective ways to do this is to push your direct reports outside of their comfort zone. Give them challenging assignments in areas that they have never faced to broaden their experience and see how they perform.
In June 2017, I wrote an article describing my experience taking a large French multinational chemical company to the U.S. International Trade Commission, accusing them of dumping product in the U.S. at below their home market price. I share an update of this article because it’s illustrative of how you can develop employees by getting them outside their comfort zone.
The benefits of stepping out of your comfort zone was a lesson I learned early in my career as my company’s business manager for anhydrous sodium metasilicate (ASM), which is used in a variety of metal cleaning and other industrial applications. It was also a lesson for the senior leadership of my company in the further development of a mid-level manager who eventually became CEO of the company
We faced import competition for ASM from Rhone Poulenc, a large French chemical and pharmaceutical company, at a price significantly below their home market price in France. We felt this was a violation of U.S. dumping regulations, designed to protect U.S. industry from unfair international trade practices.
ASM producers in the U.S., including my company, were losing market share. If found guilty of dumping, the remedy would be the assessment of dumping duties on imported ASM from Rhone Poulenc.
As the business manager of this product line, I received approval from my company’s CEO to file dumping charges against Rhone Poulenc with the U.S. International Trade Commission. I was 33 years old at the time, with no experience in these kinds of legal matters. However, my product manager and I knew the market well, which provided the foundation for building the case, and we both relished the challenge.
The attorney retained by our company’s general counsel insisted that my product manager and I be the public face of our company’s case. I soon learned what that meant.
I recall flying to Washington, D.C., for an evidentiary hearing in front of the ITC staff, asking our attorney at the airport just prior to boarding if he was ready to provide testimony for our company.
He said, “No — you are the one who is going to testify today.”
He said he didn’t tell me ahead of time because at this hearing, he didn’t want me to over-prepare, but just to respond to questioning.
It is hard for anyone to imagine the horror I felt not having written out in detail what I wanted to say. Talk about being outside of one’s comfort zone.
Fortunately, I knew the facts, which helped me state my company’s case despite my trepidations.
The hearing accomplished the substance and optics of what our attorney wanted — to pit a small, privately-owned, domestic company dedicated to serving the ASM market against a foreign company many times our size competing illegally through product pricing that met the criteria of dumping.
The preparation for the hearing in front of the ITC was very intense. Over a period of months, we responded to questions from the ITC investigative staff in preparation for the hearing in front of the ITC commissioners. The staff asked for significant details to ensure that the commissioners had the information needed to understand the dynamics of the market in order to determine if dumping was occurring and render a decision.
Our credibility and the trust we built with the investigative staff was an important factor in the case. Whenever we realized that we had provided information to the staff that was inaccurate, we immediately corrected it, even if it hurt our case.
The hearing in front of the ITC commissioners was held in a chamber very similar to that of the Supreme Court. Somewhat intimidating.
At the ITC hearing, my product manager and I were well-prepared to give testimony as the plaintiffs. A pivotal moment occurred when the Rhone Poulenc attorneys misrepresented a meeting their clients had with us, accusing us of improper marketplace behavior. As I was listening to their mischaracterizations, I whispered to our attorney that we had notes of that meeting which countered their testimony. He asked me to pull the notes, and as he read them, a smile crossed his face.
Our meeting notes, entered into evidence, undermined much of Rhone Poulenc’s credibility.
When the ITC commissioners announced their decision, they unanimously found in favor of my company and against Rhone Poulenc. They assessed the highest dumping duty on any chemical imported into the U.S. to date. My product manager and I felt as if we had won gold medals at the Olympics.
So, what did we learn from this experience? Whether you are dealing with customers or the investigative staff of a federal agency, you develop credibility with those you deal with by always being honest and factual. This will differentiate you from those that aren’t. Credibility builds trust and confidence, and this will favor you in borderline decisions.
We also learned to operate under pressure and to get out of our comfort zone. It was a rewarding experience.
Leaders, expose your employees to new, meaningful experiences. Get them out of their comfort zones. There is no better way for them to develop.
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.
Lesson from Michigan State University: Empathy Is a Key Leadership Trait
Article originally published in the Philadelphia Business Journal on January 22, 2019
One of the most important skills of any leader is to know when and how to communicate empathy. The third senior leader at Michigan State University during the past 12 months, Interim President John Engler, has just demonstrated that he lacks this skill in remarks he made about the sexual abuse victims of Dr. Lawrence G. Nassar.
On Jan. 24, 2018, Nassar, physician to athletes at MSU and national team doctor for USA Gymnastics, was sentenced to 40 to 175 years in prison (concurrent state and federal sentences) for sexually abusing young women. Around 150 women gave impact statements in court prior to his sentencing. It has been reported that there are at least 265 Nassar victims.
A Jan. 11 Detroit News article quotes Engler, speaking about those sexual abuse victims who were not personally in the news, as saying, “In some ways they have been able to deal with this better than the ones who’ve been in the spotlight who are still enjoying that moment at times, you know, the awards and recognition…”
“Enjoying that moment … the awards and recognition?” Did Engler not understand how inappropriate and insensitive that sounds?
On Jan. 12, the chair of the MSU Board of Trustees, Dianne Byrum, commented in a Twitter message, “[Engler’s] remarks were ill advised and not helpful to the healing process, survivors, or the university.”
On Jan. 16, Engler resigned his position as interim president of MSU effective Jan. 23, after learning he lost the support of five of the eight MSU trustees and would be terminated if he didn’t resign. In his resignation statement, however, Engler did not acknowledge the comments that led his loss of MSU trustee support. He did not express regret that his comments were hurtful to the athletes who were abused by Nassar. He blamed politics as the reason for his loss of trustee support.
Understanding when and how to express empathy was an issue with the previous president of MSU, Dr. Lou Anna Simon, who Engler replaced, and the vice chairman of the MSU board, Joel Ferguson. I wrote an article about Simon and Ferguson in February 2018 headlined, “Viewpoint: Michigan State tone deaf to abuse by Nassar.”
In that article, I wrote that in the face of growing criticism from many of the students, faculty and staff at Michigan State on how Simon handled the accusations against Nassar, and after losing the confidence of a number of MSU board members, Simon resigned her position as long-time president of the university on Jan. 24, 2018.
In her resignation letter, Simon wrote, “To the survivors, I can never say enough that I am so sorry that a trusted, renowned physician was really such an evil, evil person who inflicted such harm under the guise of medical treatment.”
Simon added later, “As tragedies are politicized, blame is inevitable. As president, it is only natural that I am the focus of this anger.”
“Politicized,” Dr. Simon? I am not sure how the abuse of so many young women can be politicized.
Similarly, MSU Vice Chairman Joel Ferguson was also insensitive and tone deaf to Nassar’s victims. During an interview on a Detroit radio show before Simon’s resignation, Ferguson commented, “There are so many more things going on at the university than just this Nassar thing.”
“Just this Nassar thing,” Mr. Ferguson? As someone who holds the same position as Ferguson at another university, I believe his remarks and attitude were completely inappropriate.
After being widely criticized for his insensitive comments, a spokesperson for Ferguson released a statement that in part said, “Mr. Ferguson deeply regrets his comment and apologizes to those he offended.” Amid calls for his resignation from the MSU board, he chose not to do so, and remains on the MSU board.
An important responsibility of an effective leader is to set the right tone at the top and nurture the right culture at their organization. What a leader says or doesn’t say in part sets the tone and culture. Your employees and other stakeholders listen to you. Be sensitive to what you communicate to them.
Your employees may make statements or act in a way consistent with your attitude or what you say. Show compassion to those that have been wronged or hurt. That’s what effective leaders do.
Stan Silverman is founder and CEO of Silverman Leadership, and is the former CEO of PQ Corporation. 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. Follow Silverman on LinkedIn here and on Twitter, @StanSilverman.