business-goal

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.

howtocompetitive

How to Win Business in a Competitive Marketplace

Article originally published in the American City Business Journals on March 5, 2019

All business leaders face the issue of how to win business in a competitive marketplace. Price the product or service too low, and you are leaving money on the table. Price it too high, and the customer or client will go to a competitor.

While I was national sales manager of PQ Corporation, a producer of both commodity and specialty chemical products, they constantly faced competitive pricing decisions to retain current customers’ business was well as win the business of new customers.

Many of PQ’s customers and the customers of our competitors were supplied under the terms of sales contracts that were one or more years in duration. Before the end of their supply contract, many of these customers would put their business out for bid for the next contract term.

In the competitive marketplace, this was an opportunity for us to win a future customer’s business currently supplied by a competitor, and an opportunity for a competitor to win the business supplied by our company.

We worked hard to differentiate ourselves on customer and technical service, as did our competition. Price, however, played a large factor in whether we won or lost the business.

So, as a business leader, how do you increase the probability that you will win in the competitive marketplace?

Work to be the preferred provider

At PQ, we were always on the journey to be the preferred provider by providing a great customer experience. We wanted to be the company that every customer would preferentially buy from. Our goal was to help our customers be successful in their businesses by being a great supplier.

Our products always met specifications, our plants were responsive to emergency deliveries and our sales and customer service people worked to resolve any issues with the account.

Build strong customer relationships 

The larger and more strategic the customer, the more we called on them and developed relationships with the leadership hierarchy within the customer’s organization.

Our sales representatives “owned” the customer relationship — they were the ones who kept in frequent touch with the customer to understand trends in their business and any issues they faced with the use of our products. They brought in our knowledgeable technical service people to trouble-shoot and resolve issues.

The regional sales manager as well as the national sales manager would develop relationships up through the customer’s organization. After I was appointed the CEO of PQ, I developed a relationship with my counterpart —the CEO, or if more appropriate, the group president of the business purchasing our product.

Get the “last phone call” 

If a competitor out-bid us for a customer, we needed to know about it before the competitor was awarded the business. We wanted the opportunity to convince the customer of the value we brought to the supply relationship beyond just the product price, and if necessary, meet the competitive price. That is the value of developing a strong customer relationship — to get the last phone call before the business is awarded.

When I was president of PQ’s Canadian subsidiary, we were working on a 10-year contract to supply a pulp and paper mill in Whitecourt, Alberta, with product used in pulp bleaching. Our plan was to build a production plant adjacent to the customer to ensure a reliable supply of product.

One afternoon, the business manager responsible for negotiating the supply contract with the customer came into my office in Toronto and told me he just learned that we had competition for the business — a U.S.-based supplier.

This customer was strategic for us. The plant we would build to supply their pulp and paper mill would be strategically placed to supply other pulp mills throughout Alberta. We didn’t want this opportunity to go to a competitor.

I asked our business manager to make an appointment with the customer’s CEO. I wanted to meet with him to close the deal.

We arrived in Whitecourt the next day and sat across from the CEO and his team. We presented how our company was in the best position to supply not only their product requirements but also their technical service needs, and how our multiple plants in Canada would be there as backup to provide product to their pulp and paper plant.

We didn’t need to cut the price we originally offered — all we needed to do was freeze the price for three years, something the U.S. competitor wouldn’t do. At the end of the meeting, the CEO and I looked each other in the eye, stood up and shook hands across the table. I knew we had a deal.

Without the relationship previously established by our business manager and the non-monetary value we could deliver to the customer, in addition to being able to freeze the price for three years, I am not sure we would have prevailed in winning the business.

Be dedicated to continuous improvement

In PQ’s commodity chemical business, where our products and those of our competitors were the same chemically, price was an important competitive differentiator. A strong commitment to continuous process improvement to drive costs down was critical to the ability to compete.

In our specialty chemical business, where our products and those of the competition were differentiated based on product cost/performance, this metric must continually improve at a pace greater than that of competition. Continuous improvement can be incremental or step-wise, with large improvements based on innovation and a change in paradigms. This permits greater pricing flexibility than a competitor, whose improvements may lag, and is key to long term competitive success.

When going up against a competitor, you want them to think, “Oh no. Not those guys.” That’s how good you want to be. That’s how you win business in a competitive marketplace.

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 be an inspiring leader

Learn How to Be an Inspiring Leader

Article originally published in the Philadelphia Business Journal on February 26, 2019

What makes a truly great leader? In part, it’s the ability to inspire followers toward an aspirational goal. I miss the inspirational leadership of three former leaders, whose words and their delivery of those words inspired many of us.

Former President John F. Kennedy, in his Sept. 12, 1962 speech, announced the national goal of sending men to the moon and returning them safely to Earth before the decade was out. As a high school student at the time with the goal of going to college and earning a degree in chemical engineering, I was inspired by not only Kennedy’s audacious challenge to overcome the immensely difficult technical and engineering barriers, but also by his confidence that the goal could be achieved.

Former President Ronald Reagan, in his Jan. 20, 1981 inaugural address, spoke of the exceptionalism of Americans in a very positive, uplifting message, describing the “will and moral courage of free men and women,” and how committed we are to defending freedom. Reagan’s eloquent speech was a call to action for all Americans to be the best they could be, and serve as an example for the rest of the world to emulate. He is the president I most admire.

Former British prime minister Winston Churchill on June 4, 1940 delivered his “we shall fight on the beaches” speech to Parliament to rally his citizens during World War II. Churchill’s speech, reenacted by Gary Oldman, in the film, “The Darkest Hour,” is an inspiring example of how a national leader can mobilize a nation’s citizens toward the most challenging goal it has ever faced – national survival. In the film, one can overhear the comment, “He mobilized the English language, and sent it into battle.” Unfortunately, not very many leaders can do the same today.

So, what did Kennedy, Reagan and Churchill have in common? They had wonderful command of vocabulary and knew how to inspirationally communicate their goals and beliefs with emotion in an up-lifting way that won the hearts and minds of their citizens. They united the nations they were leading at the time.

How does a business leader win the hearts and minds of those they lead? How do you become an inspiring leader? Certainly, it takes more than great communication skills. Inspirational leaders have other skills as well.

Lolly Daskal is a leading executive leadership coach and founder of Lead From Within. In her article, “Six powerful traits of the most inspiring business leaders,” Daskal identifies these traits as people skills, credibility, authenticity, emotional intelligence, motivation, and positivity.

Murray Newlands, an entrepreneur, business advisor and speaker, in his article, “Seven characteristics of inspirational leaders,” says that inspirational leaders have a clear vision of the future, express unerring positivity, listen to their people, are grateful to their team, communicate impeccably, are trustworthy, and are passionate about what they do.

Based on my own experience as a CEO and director on the boards of numerous companies, I would like to add to the list of characteristics and traits of inspirational leaders identified by Daskal and Newlands, as follows:

Is genuine in words and actions, and is a person of high ethics and integrity

A leader who is not genuine and lacks ethics and integrity will not earn the respect and trust of the people within their organization. They will certainly not inspire followers to achieve great results. Board members, be sure you hire a CEO with these traits.

Communicates the importance of the company’s goals

The senior leadership team of the company needs to communicate the importance of the company’s goals in both group meetings and in one-on-one conversations with key opinion leaders within the company.

Employees need to feel that the goals are meaningful and achievable and will have a positive benefit for them and the organization. The goals should be aspirational, and stretch beyond the normal reach of individuals.

Identifies the role that employees play in attaining the goal

After completing a new strategic plan, as the recently appointed CEO of PQ Corporation, I communicated the goals of the company to our business units, and just as importantly, the role each business unit had in achieving those goals. The role of our low-growth commodity chemical business was to generate cash flow, through very heavy emphasis on continuous improvement. This cash flow would be invested in our high-growth specialty chemical and catalyst businesses.

After I made my presentation to the employees of our commodity chemical business, one of the employees commented, “This is the first time I was told what our role is in the achievement of the company’s strategic goals.” In my former position as COO of the company, I was too close to the strategic planning process to realize that the different roles of business unit employees to achieve the company’s goals had not been explained to them. All individuals who take part in achieving the goals of the company should have a personal ownership of the role that they themselves play in the achievement of those goals.

Frequently provide updates on progress

By frequently sharing updates on the progress towards achieving the company’s goals, an inspirational leader has the opportunity to keep the focus on what the company is trying to accomplish. It keeps the company’s employees in the game.

Great inspirational leaders have great communication skills. To those that have a fear of public speaking, you can conquer that fear by facing it head on, by receiving coaching and taking every opportunity to publicly speak. You will never regret that you developed this skill. Someday, you, like Churchill, Kennedy and Reagan, may be able to mobilize the English language and send it into battle.

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. Follow Silverman on LinkedIn here and on Twitter, @StanSilverman.

Get out of Your Comfort Zone & Push Through Your Self-Perceived Limitations

Get out of Your Comfort Zone & Push Through Your Self-Perceived Limitations

Article originally published in the Philadelphia Business Journal on January 15, 2019

People often share with me the real and perceived limitations they face in pursuing their goals. As we enter 2019, I would like to share with you this look back at an article I wrote in December 2015 headlined “Advice for the New Year: Push through your self-perceived limitations.”

Why do people experience various degrees of success over the course of their careers? During my career, I have observed many successful people and those wanting to achieve success. There are those who succumb to their self-perceived limitations, and those who find a way to push through them.

The proverb, “Whether you think you can or can’t, you’re right,” is ascribed to Henry Ford. Your attitude and your ability to push through self-perceived limitations play key roles in how successful you will be.

A friend at my gym drove this home for me a number of years ago. I had been doing assisted pull-ups on an exercise machine that uses counterweights because I believed I did not have sufficient upper-body strength to do a pull-up without them. My friend came up to me and said, “I know you can do pull-ups unassisted.”

I told her that I hadn’t done unassisted pull-ups since high school and I couldn’t do them now. She egged me on, challenging me to do just one. By now, a crowd was gathering, and I felt huge peer pressure to try to do one pull-up. I walked over to the machine without counterweights and, with my friends watching, nervously jumped up six inches and grabbed the pull-up bar. To my surprise, I was able to do two!

I never used the counterweight machine again. Over the subsequent three months, I pushed hard and worked my way up to three sets of 10 unassisted pull-ups. I learned a valuable lesson from my friend: You are only limited by your own self-perceived limitations. Thank you, Patti Morris!

Sometimes it takes a friend, colleague, coach or mentor to inspire you to the next level. When you move to that next level, you never look back – you only look forward. As leaders, our job is to inspire others around us – to help them move to that next level.

To me, one such individual is Seth Godin, the author of “The Icarus Deception,” who writes about Icarus, the character in Greek mythology who flies too high and too close to the sun. His wings melt off and he crashes 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 also shortchange not only yourself, but also those who depend on you, or might benefit from your work.”

People fly too low due to fear and self-perceived limitations. If you fly too low, you are not preparing yourself for a time that may come when your job or profession becomes obsolete and you must re-launch your career. So, during your career, be sure you don’t fly too low. Take risks and fly high, and if you crash, you will pick yourself up and fly again.

Get out of your comfort zone and take on new challenges. Albert Einstein once said, “Anyone who has never made a mistake has never tried anything new.” You differentiate yourself among your peers by trying new things, sometimes failing, but moving forward. This trait will help you land your next job. Employers, hire those who embrace change, rather than those who don’t.

The type of company at which you want to work should value employees who are not afraid to innovate, embrace change and, yes, occasionally make mistakes and learn from them.

Your attitude, which is apparent to everyone you interface with, plays a significant role in your success. Be a person who sees a world of abundance and possibilities, not one who sees a world of limitations and scarcity. Push through self-perceived limitations. You never know what the future holds or where it will take you.

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.

How to navigate office politics

How to Navigate Office Politics

Article originally published in the Philadelphia Business Journal on October 2, 2018

I am periodically asked how to successfully deal with office politics. I often share an article I wrote in August 2016 on this subject. This is an update of that article.

Throughout my career, I have watched the game of office politics play out in many organizations, including my own. Office politics can have negative implications for the people playing the game, their co-workers and the organization itself.

Why do people play office politics? They feel that the only way they can advance within an organization is at the expense of others – making themselves look good, while making others look bad. They deflect responsibility and often blame others, both peers and subordinates, for their own failures.

They take undo credit for the success of initiatives beyond their contributions, and misrepresent the facts to cast themselves in a favorable light. They are good at “managing up.” To the senior leadership of the organization, they heap undo criticism on their peers. They destroy trust, and when trust is destroyed, the organization becomes toxic and dysfunctional.

I have often wondered why the boss puts up with the actions of employees who play office politics. Either they are blind to it or think that they will achieve better results than if the organization performed as a high-performance team in which employees trusted each other. They are wrong.

Bosses will often try to counsel employees who play office politics to get them to change, with mixed results. The employee will often deny their destructive behavior. Many times, their political behavior is due to their personality. They won’t change. That is who they are.

I have written extensively on the importance of tone and culture within organizations. Those managers who undercut their peers and play political games are setting the wrong tone and culture, which will be emulated by those within their group, undermining trust with employees in other groups. Silos are created and information is not shared, to the detriment of the entire organization.

As part of every manager’s performance review, tone and culture need to be assessed, including that of the CEO. If the tone and culture are wrong, regardless if the manager is currently achieving results, the results will not be sustainable.

Eventually, employees who play office politics are recognized for who they are and the damage they cause. They are either terminated, or depart on their own when their political gamesmanship has been uncovered and is no longer useful to them at their current company.

So, as an employee within an organization, how should you defend against those who are playing political games to undermine you?

There is an old saying, “Keep your friends close, and your enemies closer,” ascribed by some to Chinese general and military strategist Sun Tzu in his book “The Art of War” (circa 400 BC), and by others to the 16th century political philosopher Niccolo Machiavelli in his book, “The Prince.” This saying can also be applied to office politics.

By keeping your adversaries close, you can get insight into what they are doing and thinking. You also have the opportunity to sway their thinking, and show them that undermining you is not a productive use of their time. You may be able to co-op them, and get them to be one of your supporters rather than a detractor. However, once they violate your trust, you may never fully trust them again. Once lost, trust is very difficult to regain.

On various occasions during my career, I have been the subject of political attacks by others. Did I ever confront the individual? No. I felt that would be counter-productive. Whether or not to confront someone is a personal decision, and depends on each individual situation.

How did I successfully cope with these attacks? I built a strong informal organization through which I got things accomplished. I built alliances with others by helping them accomplish their objectives. Through these alliances, I was made aware of political attacks that were not visible to me. I did the same for those with whom I had developed alliances. Did this strategy work? I was the one who rose up through the organization, not them.

So, how can you rise above office politics? Meet your commitments to others. Build trust with your peers. Develop alliances. Keep your adversaries close. Build political capital. Most importantly, do your job and achieve results, and let those results speak for themselves.

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. Follow Silverman on LinkedIn here and on Twitter, @StanSilverman.