We Should All Practice the Human Side of Leadership

by Articles

Article originally published in the Philadelphia Business Journal on February 4, 2019

I recently had the privilege of speaking about the human side of leadership at a fireside chat event sponsored by the Union League of Philadelphia. My fireside chat partner was Karin Copeland, CEO of Create X Change and former executive director of the Arts and Business Council of Philadelphia.

I described the human side of leadership as a set of beliefs and practices that bring out the best in leaders and their employees, a company’s most important asset. These beliefs and practices help the company achieve a competitive advantage over the long term.

Where do these beliefs and practices come from? Some are discovered through the practice of the art of leadership. Others are intuitive and instinctive.

So, how does one practice the human side of leadership?

Set the right tone at the top and nurture the right culture

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

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

What are the elements of tone and culture?

  • Treat all employees with respect.
  • Act ethically and with integrity in all that you do.
  • Never lie. It undermines trust with everyone you deal with.
  • Understand that you are measured not just on financial results, but also on customer experience and company reputation.
  • Don’t micromanage – set expectations, empower and hold direct reports accountable for results.
  • Set goals with your direct reports’ participation so they have ownership in them and in what they do at the company.
  • Don’t permit a tyrant to abuse the people reporting to them.
  • Protect whistleblowers and fire those who try to retaliate against them.
  • Adopt employee-friendly policies.
  • Listen to the people in your organization. They can teach you the best lessons.

Recognize that emotional intelligence is a key leadership trait

In a 2004 Harvard Business Review article, “Leading by feel,” University of New Hampshire psychologist John D. Mayer wrote, “Emotional intelligence is the ability to accurately perceive your own and others’ emotions; to understand the signals that emotions send about relationships; and to manage your own and others’ emotions.”

Based on my experience interacting with others, the following six EQ behavioral rues will contribute to your leadership effectiveness.

  • Recognize how other people perceive you.
  • Don’t communicate with others in a way that puts them on the defensive.
  • When a direct report shares an idea or proposes a new initiative, listen.
  • Take the blame if it’s your fault. Give credit where credit is due.
  • Avoid being an imperial leader. Don’t threaten others to achieve your goals.
  • Don’t self-aggrandize.

Communicate empathy

One of the most important skills of any leader is to know when and how to communicate empathy. Former Michigan State University Interim President John Engler and former MSU president Lou Anna Simon, who he replaced, both demonstrated that they lack empathy. They made insensitive remarks about the sexual abuse victims of Dr. Lawrence G. Nassar, physician to athletes at MSU and national team doctor for USA Gymnastics, who was sentenced up to 175 years in prison for sexually abusing young women.

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. 16, Engler resigned his position as interim president of MSU effective Jan. 23, after losing the support of the MSU board. In his resignation letter, Engler did not acknowledge the comments that led to his loss of MSU trustee support. He blamed politics as the reason.

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, “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.

It is evident that neither Engler nor Simon knew how to communicate empathy.

Allow employees to violate the rules when it is in the best interest of the company to do so

I learned this as a sales manager for my company early in my career. I ordered a recall of contaminated product without the authority to do so. My boss was traveling and unreachable. Due to the rising cost each day the recall was delayed, I ordered the recall.

I was celebrated, not terminated for my decision. I was taught how to make employees feel trusted, empowered and valued by their boss. Hire people with common sense and good critical judgment so they know when to violate the rules.

What do the above four leadership practices have in common? To me, they help define the human side of leadership. As a leader, whenever I have a doubt about how to deal with a situation, it’s hard to go wrong if I follow the simple adage, “Lead like you like to be led.” Good advice for all leaders.

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 and on Twitter, @StanSilverman.

CEOs and Board Members: Beware of Unethical Leaders

by Articles

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

by Articles

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lessons Learned from the Philadelphia Starbucks Incident

by Articles

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

On May 2, the City of Philadelphia announced that it had reached a settlement with the two African-American men, Donte Robinson and Rashon Nelson, who were arrested on April 12 at a Starbucks in the up-scale Philadelphia neighborhood of Rittenhouse Square.

Within minutes after their arrival, Robinson and Nelson were asked if they would like to make a purchase. When they indicated that they were waiting for a colleague, the café manager called the police who arrested them for refusing to leave.

Under the terms of the settlement, Robinson and Nelson will each receive one dollar from the City. Their attorney has waived his fee. The City also committed to a $200,000 program to introduce Philadelphia high school students to careers in entrepreneurship.

Starbucks has also reached a settlement with Robinson and Nelson, the financial terms of which have not been disclosed. Both parties agreed to work together to address the issue of unconscious racial bias. Starbucks also offered to pay for Robinson and Nelson to obtain online degrees through the Starbucks College Achievement Plan at Arizona State University.

The arrest of these two individuals caused an uproar and accusations of bias and discrimination against black customers. In a public statement, Starbucks CEO Kevin Johnson described the incident as a “disheartening situation … that led to a reprehensible outcome.”

Quoting from the Starbucks Value Statement, “With our partners, our coffee and our customers at our core, we live these values … creating a culture of warmth and belonging, where everyone is welcome.”

This is Starbucks’ business model. It is not unusual for people to wait before making a purchase until their friends or colleagues arrive.

So, what are the lessons learned from this incident?

Practices are just as important as policies, and must be applied in a consistent manner

Starbucks has a no loitering policy, as indicated by a photo of a “No Loitering” sign in one of its cafés, published in Heffx. When should that policy be invoked, and are all people treated in the same manner?

Given Starbucks’ mission statement and business model, improved training is needed so employees understand when the presence of an individual within a café becomes loitering and when calling the police is justified. As a result of this incident, this is especially important moving forward.

Always work to defuse situations, rather than inflame them

Philadelphia police commissioner Richard Ross apologized for the arrests of Robinson and Nelson, stating, “While … [it] is apparently a well-known fact with Starbucks customers, not everyone is aware that people spend long hours in Starbucks and aren’t necessarily expected to make a purchase.”

In many situations, the police exercise discretion in how they handle incidents and defuse situations. Perhaps in this case, had they probed for additional information from the café manager and patrons, they would have learned that it is not a regular practice to ask individuals to leave within minutes after arriving, and the entire incident could have been avoided.

The CEO needs to be front and center in these types of situations

Credit goes to Starbucks CEO Kevin Johnson for promptly responding to this public relations crisis by traveling to Philadelphia to apologize to Robinson and Nelson, and engaging in dialogue with city leaders on how to move forward. He certainly limited the reputational damage to the company by doing so. A lesson for all CEOs.

This incident could have been avoided had everyone involved exercised common sense and good critical judgment. This should be a major criterion for hiring anyone to a position where lack of these traits can lead to significant adverse legal and reputational issues for any organization.

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