5 Reasons Executives Wait Too Long to Fire Their Direct Reports

Of all the difficult decisions executives face, few torment them more than having to fire someone on their own team. High-risk innovations, layoffs, and even major acquisitions don’t cause as much angst as removing someone from a senior position.

Recently, a client of mine — a division president of a large manufacturing company, let’s call him Kyle — struggled with this problem. One of his VPs of sales had missed his targets for the third consecutive quarter. The VP had been given a coach and additional resources to help him succeed, but was still unable to turn around his performance, causing significant employee turnover in his region. Removing him seemed like the obvious choice, but Kyle was tortured by the thought. “I want to give him one more chance,” he said. “Is it wrong to want to give him every possible chance to make it?”

Kyle, who did not routinely struggle with difficult decisions and leads one of the highest performing divisions in his company, is not alone. Firing someone is a decision rife with complexity and personal angst. But avoiding it only prolongs the inevitable and increases the consequences of keeping a poor performer at the top.

In my work with senior executives, I’ve observed five things that often get in the way of making the necessary call. Recognizing and correcting these behaviors early on can help you overcome the fear of firing an under performing leader and prevent the damage that may occur if you don’t.

A determination to fix others. Well-intended leaders often feel genuine commitment to helping direct reports succeed. The importance of coaching and feedback has been drilled into them. But when your commitment to someone’s growth exceeds their ability to grow, you are unwittingly contributing to their failure.

Kyle offers a case in point. He set out to help his VP of sales turn things around and he wasn’t going to stop until he did. He saw the VP’s under performance as his own personal failure to effectively develop younger executives. In reality, however, the VP was years away from thriving in a role with such high demands. While Kyle’s desire for people to succeed was admirable, his belief that he could, and should, make that happen was a form of arrogance.

This is not uncommon. Another HR executive I worked with prided herself in developing leaders others had given up on. She invested in coaching, training, and created “developmental assignments” for struggling leaders. She sometimes succeeded at uncovering great talent that others had prematurely discarded. But too often, under the guise of creating a culture that prized employee development, she set people up to fail by keeping them in roles they’d long proven to be incapable of handling.

Be careful not to confuse your commitment to employee development with masked “savior syndrome.” Playing the hero could come at the expense of someone else’s career.

Fear of delivering a fatal blow. One of the unique complexities of removing an executive from their role is the damaging consequences it may have on their career. Falling from a high perch can make a leader damaged goods when pursuing future opportunities. As a result, bosses may experience guilt when it comes time to let that leader go — guilt for not preparing that person to take on their current role or guilt about the struggle that person might go through when looking for a new job. But you can do much greater damage to their career and reputation by allowing them to publicly struggle. A better solution is to have an honest conversation with that person and offer support.

In Kyle’s case, a conversation with the VP of sales about his poor performance and his future aspirations enabled Kyle to see that not succeeding in this role didn’t deem the VP unemployable or untalented. While disappointed, the VP knew he wasn’t delivering, and was relieved to acknowledge it. He’d been thinking about other roles in the organization for which he was better suited. Kyle saw that he could help his VP look for more suitable opportunities within the broader organization or provide a reference for him at another company.

Other leaders can follow this example. Feeling guilty about a potential outcome that you have no control over helps no one. In fact, 68% of executives who are fired find a new job within six months.

Ego. Firing executives is especially difficult when you hired them in the first place. The decision to hire someone is a rejection of your leadership and it’s natural to fear what people will think when you need to go back on that decision and remove them. But no one is infallible to making a bad hire, and no one has complete control over whether someone succeeds. You should do everything you can to hire with rigorous standards and onboard effectively. You should not become so attached to your own hires that you lose objectivity.

In the example of Kyle, he had promoted his VP of sales two years earlier and he feared his judgment would be called into question if the VP failed. Though the VP excelled during his first year, further solidifying Kyle’s decision, market headwinds and major competition made his second year difficult. The VP was simply too inexperienced.

It’s common for leaders to be blind to the shortfalls of those they hire. But Kyle needed to see that, while the decision to promote his VP was a calculated risk, the conditions of that risk had evolved and keeping the VP in his current role could have serious consequences for the whole division.

Public visibility. When an executive is fired, the world inside and outside the organization sees it. Irrationally or not, people speculate about what’s going on. While you can’t control what people think about a major decision, you can minimize unfounded conjecture by being intentional in your communications about the exit and why it happened. Internally, try to normalize difficult exits by letting your team know that moving on is a part of business and be gracious to those who are leaving. Externally, focus on looking forward. Publicly acknowledge the aspirations your organization aims to reach or the challenges you are working to address. Remember, it looks far weaker to ignore poor performance than it does to address it.

Kyle feared that his boss, the CEO (for whom he was a succession candidate) and other key stakeholders outside the company, might conclude his division was unstable or his team was weak once he fired his VP of sales. And for the VP himself, it could mean public embarrassment and loss of respect. What Kyle needed to consider was what people might conclude if he didn’t remove the under performing sales VP. It is far more cruel to leave a leader publicly poundering, particularly in Kyle’s case when the VP’s under performance drove other talented employees out the door.

Perceived indispensability. Often, executives fear the disruption a departing executive might cause. Certain it will result in irreparable damage, they convince themselves and others of the executive’s indispensability to justify tolerating a poor performance or bad behavior. I have seen this fear used as an excuse for not firing under performing executives many times, but I have never seen this fear materialize. With a carefully choreographed transition plan, it’s possible for an office to return to normal quickly. Important people, like top customers, understand that things change. What they want to know is how you’re going to take care of them, regardless of who does it.

One of my clients once put up with horrific behavior from their sales executive because they “couldn’t possibly risk” losing his customer relationships. Externally, the sales exec was highly regarded. He spoke at conferences alongside top customers and was regularly invited to exclusive gatherings of prominent buyers. Internally, he was loathed for what he got away with: never attending meetings, refusing to learn new technologies, and consistently violating travel expense guidelines. Eventually, a newly appointed leader had the courage to clean house and replace him, and those who followed in his example, with fresh talent. They didn’t lose one customer in the wake of these exits, and within a year, top-line revenue had grown by 35%.

The complicated decision to remove a senior leader from their job should never be taken lightly. And while there’s no way to avoid some fallout from such a choice, the decision to ignore irreversible poor performance is a choice with far greater consequences. By acknowledging the above behaviors, and practicing ways to overcome them, you will not only help your organization move forward, but also the employees you’re afraid to let go.

5 Little Words That Will Make You a Much Better Leader

Author Simon Sinek offers a dead simple mantra to instantly level up your leadership.

We all know great leaders excel at articulating their vision. What’s less often appreciated is that listening is an equally valuable leadership skill.

Why? First, because feeling truly heard is deeply empowering for a team. As Yale business professor Marissa Kind has explained, “when employees feel listened to, they are less likely to feel emotionally exhausted and less likely to quit their job. They are also more likely to trust — and like — their bosses, and feel committed to them.”

Second, because you need to actually hear and process information about the world to be able to set a sensible vision in the first place. Listening well makes you smarter.

So how do you get better at this essential but under sung skill? There are a million suggestions out there, but perhaps one of the most powerful is also the simplest. It comes from author Simon Sinek and consists of all of five little words.

“Be the last to speak.”

In the quick snippet of a talk below, Sinek offers a profound leadership lesson that’s dead easy to remember: be the last to speak.

“I see it in boardrooms every day of the week, even people who consider themselves to be good leaders, who may actually be decent leaders, will walk into the room and say, ‘Here’s the problem. Here’s what I think, but I’m interested in your opinion. Let’s go around the room.’ It’s too late,” he warns.

Instead, cultivate the skill to hold you tongue until everyone else has weighed in. Not only does this allow other participants to feel heard, but it gives you an obvious advantage: you get to hear everyone else’s brilliant ideas before you contribute your own. Of course, you’ll say smarter things compared to when you first walked in itching to put your ideas instantly out there.

The logic behind the idea is unassailable, but actually putting this wisdom into practice can be harder than it sounds, Sinek warns. We’re all dying to jump in and prove our brilliance or correct others’ errors, after all. But if you can manage to just keep your mouth shut, you’ll instantly level up your leadership.

Here’s Sinek’s complete advice if you want to check out the complete two-minute clip.

10 TRENDS FROM THE TRENCHES 2019: CHANGE ISN’T COMING, IT’S HERE. ARE YOU READY?

BY ANDREA (ANDI) SIMON, PH.D. CORPORATE ANTHROPOLOGIST | CEO SIMON ASSOCIATES MANAGEMENT CONSULTANTS

 

After a busy 2018 of Vistage workshops, keynotes and client engagements across the country and around the world, I thought this was a good time to reflect on the Trends from the Trenches I’ve been hearing and seeing from CEOs and their key executives—and from their clients, college students and customers. What are they seeing? What are the major trends they are confronting as they wrap up 2018 and begin to plan for the new year? Well, some are rather disturbing. Others are very encouraging. Here are ten that are worth sharing. But please, don’t get change fatigue. The pace and path of change are not slowing down. I invite you to enjoy the journey and learn how to “see, feel and think” in new ways. Here we go…

Pay Attention to these Top 10 Trends

George Washington vs. Workplace Drama

10 Ways to Dial It Down from America’s Founding CEO

When George Washington was a teenager, he both copied out by hand and tweaked 110 “rules of civility and decent behavior.” These rules had been compiled by Jesuits in late 16th century France and made the voyage across the Atlantic Ocean.

Manners were up in the air in this new world when Washington put quill to paper. You see, manners were designed for men of high standing, determined by birth. “Court”-liness literally referred to a king or nobleman’s court and how one should act in that context.

What was expected of most commoners was not really manners but deference. You can see this in some of the rules that Washington copied out.

For instance, rule 26 began, “In pulling off your hat to persons of distinction, as noblemen, justices, churchmen, and company, make a reverence bowing more or less according to the custom of the better bred…”

Manners for everyone

But you can also see a break from hard caste in the very next sentence with “but among your equals…” Washington would oversee the rise of a new nation in which most men were equals (with the unforgettable exception of slaves).

These new people believed that the democratization of power called for not less but more widespread observance of manners. Washington sought to model these manners in his life, on the battlefield, as a farmer-businessman, and as president.

10 rules plus one more

Many of Washington’s rules are still relevant today. For this issue on how to motivate your team in the workplace, I offer a curated list of 10 rules on how to behave that will help today’s leaders to command respect, capped off with a bonus rule that we all would do well to head.

  1. Every action done in company ought to be with some sign of respect to those that are present.
  2. Show not yourself glad at the misfortune of another though he were your enemy.
  3. Let your discourse with men of business be short and comprehensive.
  4. When a man does all he can, though it succeed not well, blame not him that did it.
  5. Be not hasty to believe flying reports to the disparagement of any.
  6. Speak not injurious words neither in jest nor earnest; scoff at none although they give occasion.
  7. Be not forward but friendly and courteous, the first to salute, hear, and answer; and be not pensive when it’s a time to converse.
  8. Detract not from others, neither be excessive in commanding.
  9. When your superiors talk to anybody neither speak nor laugh.
  10. Speak not evil of the absent, for it is unjust.

Bonus: Labor to keep alive in your breast that little spark of celestial fire called conscience.

Help Your Team Do More Without Burning Out

As we begin our coaching session, Nick is fired up. He radiates energy, his eyes are beaming with determination, and he never really comes to a full rest. He speaks passionately of a new initiative he is spearheading, taking on the looming threats from Silicon Valley, and rethinking his company’s business model completely.

I recognize this behavior in Nick, having seen it many times over the years since he was first singled out as a high-potential talent. “Restless and relentless” have been his trademarks as he has risen through the ranks and aced one challenge after another.

But this time, I notice something new. Beneath the usual can-do attitude there is an inkling of something else: Mild disorientation and even signs of exhaustion. “It’s like sprinting all you can, and then you turn a corner and find that you are actually setting out on a marathon,” he remarks at one point. And as we speak, this sneaking feeling of not keeping pace turns out to be Nick’s true concern: Is he about to lose his magic touch and burn out?

Nick is not alone.

In a psychologist’s practice, common themes rise and wane across a cohort of clients. Right now, I see a surge of concern about speed: getting ahead and staying ahead. More clients use similar metaphors about “running to stand still” or feeling “caught on a track.” Invariably, their first response is to speed up and run faster.

But the impulse to simply run faster to escape friction is obviously of no use for the long haul of a life-long career. In fact, our immediate behavioral response to friction shares one feature with much of the general advice about speeding up: It is plainly counterproductive and leads to burn out rather than break out.

To add insult to injury, the way to wrestle effectively with the challenge of sustainable speed is somewhat counterintuitive and even disconcerting — especially to high-performing leaders who have successfully relied on their personal drive to make results.

From ego-drive to co-drive

The key to speeding up without burning up is a concept I call co-drive. Sustainable speed does not come from ego-drive, that is, your own personal performance or energy level, but rather from a different approach to engaging with people around you.

Rather than running faster, Nick needs to make different moves altogether. First, he must let go of his obsession with his own development, his own needs, his own performance, and his own pace. Second, he must start obsessing about other people.

It may seem illogical, but the leap to a new growth curve begins by realizing that the recipe is not to take on more and speed up, but to slow down and let go of some of the issues that have been your driving forces: power, prestige, responsibility, recognition, or face-time.

The talent phase in our careers tends to be profoundly self-centered, even narcissistic. If you need to move on from the first growth curve in your career, and want to take on more challenges, you need to exchange ego-drive for co-drive.

Co-drive requires that you momentarily forget yourself — and instead focus on others. The shift involves an understanding that you have already proven yourself. At this stage, the point is to help those around you perform. The change to co-drive involves moving from a stage of grabbing territory to a stage characterized by letting go of command and control.

Beyond teamwork

So here is what Nick needs to do: Rather than striving to be energetic, he should aim to be energizing. Rather than setting the pace, he should aspire to make teams self-propelling. Instead of delegating tasks, he should learn to lead by congregating.

Be energizing, not energetic. Here is the paradox: You can actually speed things up by slowing down. There is no doubt that being energetic is contagious and therefore a short-term source of momentum. But if you lead by example all the time, your batteries will eventually run dry. You risk being drained at the very point when your leadership is needed the most. Conveying a sense of urgency is useful, but an excess of urgency suffocates team development and reflection at the very point it is needed. “Code red” should be left for real emergencies.

Nick has always had a weak point for people, who, like himself, are high-energy and get things done. These “Energizer Bunnies” are his star players. However, with the co-drive mindset, Nick needs to widen his sights and recognize and reward people who are good at energizing others. Energizing behavior is unselfish, generous, and praises, not just progress, but personality too.

Seek self-propulsion, not pace-setting. If you lead by beating the drum, setting tight deadlines, and burning the midnight oil, your team becomes overly dependent on your presence. Sustainable speed is achievable only if the team propels itself without your presence. Jim Collins wrote that great leaders don’t waste time telling time, they build clocks.

Self-propulsion comes from letting go of control, resisting the urge to make detailed corrections and allowing for informal leadership to flourish. As Ron Heifetz advocates, true leadership is realizing that you need to “give the work back” instead of being the hero who sweeps in and solves everybody’s problems.

In Nick’s case, he should resist the urge to take the driver’s seat and allow himself to take the passenger seat instead. Leading from the side-line, not the front line will change his perspective. Instead of looking at the road and navigating traffic, he is able to monitor how the driver is actually doing and what needs to improve. In his mind, he should fire himself — momentarily — and see what happens to his team when he sets them free and asks them to take charge instead of looking to him for answers, deadlines and decisions.

Congregate, don’t delegate. From very early on in our careers we learn that in order to solve big, complex issues fast, we must decompose the problem into smaller parts and delegate these pieces to specialists to get leverage. Surely, you can make good music by patching together the tracks of individual recordings. But true masterpieces come alive when the orchestra plays together.

One example is the so-called Trauma Center approach. When a trauma patient comes in, all specialists are in the room assessing the patient at the same time, but constantly allowing the most skilled specialist to take the lead (and talk), not the designated leader.

The most well-run trauma teams I have observed know when to jump in and when to step back. To put it simply, it’s no use working on a finger if the heart is failing. A trauma team relies on trust and patience. They trust each other’s specialty and work very symmetrically. There is a very strong “no one leaves before we are done” mentality in those teams.

To Nick, this may sound like good old teamwork, and while Nick is certainly driven by a good measure of self-interest, he is also an accomplished leader who masters the dynamics of teamwork: Having shared goals, assigning roles and responsibilities, and investing in the team.

But there is more to co-drive than plain teamwork. It is about re-working the collaborative process it self. Rather than cubicled problem-solving, sustainable speed requires a shift toward more collective creation: Gathering often, engaging issues openly and inviting others to improve on your own thoughts and decisions.

Co-drive requires a different mindset. And it goes beyond team-work. Adam Grant from Wharton has done research demonstrating that a generous and giving attitude towards others enhances team performance.

Try, for instance, to take a look at your own behavior yesterday and gauge the balance between giving and taking. Givers offer assistance, share knowledge, and focus on introducing and helping others. Takers attempt to get other people to do something that will ultimately benefit them, while they act as gatekeepers of their own knowledge.

Grant’s conclusion is clear: a willingness to help others is not just the essence of effective cooperation and innovation — it is also the key to accelerating your own performance.

Maturity and Caliber

Headhunters call this change of perspective from ego-drive to co-drive “executive maturity.” The mature leader’s burning question is: how do I help others perform?

The developmental psychologist Robert Kegan calls the leap a subject/object shift. You progress from seeing and navigating in the world on the basis of your own needs and motives — and allowing yourself to be governed by these needs — to seeing yourself from an external position as a part of an organism.

It requires a certain caliber and self-assuredness to act in this way. The ability to put your ego on hold may require a great effort. It might be worthwhile reminding yourself of the words of the American President Harry Truman: “It is incredible what you can achieve, if you don’t care who gets the credit.” If you succeed in making this shift, and thereby improving the skills of the people around you, then you will also experience a greater degree of freedom.

So next time you are feeling stuck, don’t ask: “How can I push harder?” but “Where can I let go?”

by Merete Wendell-Wedellsborg

Understanding Why We Overreact at Work

Dirk was puzzled about what just happened. To the best of his knowledge, he had only asked Jerome (a recently hired senior executive), to deal more proactively with some of the company’s clients. But Jerome had suddenly become angry, defensive, and stalked out of his office.

Jerome, for his part, was also confused. Why had he reacted like that? Usually he was quite in control of his emotions. Somehow, however, Dirk’s comments had hurt, and he had reacted without thinking.

We can understand something of what happened between Jerome and Dirk by understanding that the human brain is wired for pattern recognition. In short, our brain acts as a sort of pattern matching and pattern generating machine, and when things aren’t already in patterns it tries to make sense of what it sees by fitting it into familiar shapes. Our previous experiences are used as a shortcut for understanding and interpreting new information. It makes sense: if a match can be found between new and old data, then our stored knowledge can be applied to the new situation at much less “cost” than our brain having to figure it all out again.

The same kind of sense-making process is at play when it comes to our relationships with other people. Based on our existing “relationship data bank,” our brain unconsciously organizes new experiences in such a way that they fit the relationships we are familiar with. Thus, when we are trying to understand someone we don’t know well, our brain tricks us into assuming that this person will behave similarly to a previously experienced other. We feel good about a person who remind us of loved ones, while alarm bells will go off in our brains if that person reminds us of previous acquaintances who caused us pain. In this way, we often attribute to people characteristics that aren’t really there, automatically and without thinking. And we tend to act towards people in the present based on our experiences from the past.

After calming down, Jerome realized that Dirk reminded him of his overbearing father. When Dirk leaned over his big wooden desk and told Jerome to be more proactive, it reminded Jerome of how his father used to lean over the kitchen table and ask why he wasn’t more of a go-getter. His over-reaction was almost exactly what he had done in fights with his father, too – getting angry and storming away.

This “erroneous” interpersonal connection was first described by Sigmund Freud in his famous Dora case under the name of transference. Trying to understand this unsuccessful therapeutic intervention with his patient, he came to realize that its reason lay in his failure to recognize the transfer of emotions held by Dora for a person from her past onto Freud himself.

Given that the original sources of our transference reactions are important people of our early years, such as parents and other caregivers, as well as siblings and close family members, transference reactions tend to be directed toward people who perform roles similar to those originally carried out by these people. Thus, doctors, teachers, celebrities, and authority figures in general are particularly prone to acti­vate transference responses.

It is transference when you fall in love at first sight with the person who reminds you of someone with whom you had once a passionate love affair. It is transference when you trust someone instantly, without realizing that this person reminds you of a trusted figure from the past. It is transference if you are enthralled by a boss who resembles an encouraging and supportive grandmother. It’s also transference if you take an immediate dislike to someone who reminds you of a negative influence in your past.

If you have ever had an emotional reaction to someone which was clearly too intense for the situation, you have most likely experienced a transference reaction. As transference reactions are essentially a reliving of the past, the reaction they trigger is often inappropriate, and even bizarre, in the context of the present.

Transference reactions are not troublesome in moderation. They can create problems, however, when our reactions become excessive, and when they prevent us from building an appropriate relationship with someone who can have a strong influence on our lives. And when we are susceptible to repetitive, excessive transference reactions, we are most likely troubled by some deeper issues or unfinished business from the past.

While our unconscious transference reactions can easily lead us astray, creating awareness of them can help us to become more conscious of our hidden motivations and learn to avoid repeating mistakes and thus to be more in control of our lives.

Reflect on patterns of behavior that have gotten you into trouble, and where you feel that your judgment has repeatedly been poor. To help you in analyzing what has happened, ask yourself the following questions: What kinds of people make me feel anxious, angry, sad, or happy? What do I like or dislike about them? And who in my past do these people remind me off? How are they similar or different? Discovering the ghosts of past is the first step towards not letting them interfere with life in the present.

Dealing with transference issues on your own can be challenging. You might consider enlisting a therapist or coach. With their help, past conflicts can be worked through and left where they belong — in the past.

Allow for Pushback

When You Want Your Team to Disagree

We’ve all been there: a project manager or supervisor asks you to do something you disagree with for some reason. Perhaps the assignment in question takes up too much time or maybe the proposed strategy doesn’t work with the overall mission. In any scenario where employee and supervisor are in disagreement, the situation is ripe for office drama.

As an employee, this can cause a lot of anxiety. No one likes having to step out of their comfort zone to challenge someone who is in a position of power. When your livelihood depends on your paycheck, sometimes it’s easier to just sit back and go with the flow even when you vehemently disagree with something, for good reasons.

The other side of the desk

For the supervisor, these types of disagreements present a whole different set of obstacles and opportunities. Being a leader means being being confident in your ability to make decisions for your entire team. But this responsibility does not mean that every choice you make is perfect.

In fact, if you are a good leader with hiring authority, you will have assembled a team where each individual was carefully selected based on their own unique skill set. Since each person has something different to bring to the table, it would be foolish for a supervisor to refuse to acknowledge the opinions of their employees.

After all, even if you are at the head of a ship or department, you cannot possibly know everything. It is for that very reason that leaders have staffed their teams with able workers.

How can leaders allow for pushback?

It is absolutely important that employees respect their supervisors. Yet fostering a collaborative environment where everyone has a voice doesn’t have to mean losing respect. As with most things in life, there is a right and a wrong way to go about it.

There is a major difference between constructive criticism and disrespect. If, for example, an employee responds to a disagreement by simply shouting, “you’re wrong,” this obviously does not help create a an environment of respect.

If instead, disagreements and concerns are met with substantial evidence as to why this plan may not work, then any leader would be wise to consider what is being said. An employee may say, “I really appreciate your ideas, but I do have some data that possibly contradicts with the goals of this project.” This is much easier to work with.

As a leader, paying attention to how concerns are worded will help you gauge how to respond. A hostile employee may be carrying baggage from elsewhere into your meeting, meaning you may have to read between the lines of what is being said in order to get to the bottom of their concerns.

But employees who come prepared and armed with helpful data should absolutely be taken seriously and listened to by superiors. In fact, you may be surprised at how much insight they are able to offer.

What pushback makes possible

No one likes being met with resistance, but sometimes it is necessary both for the leader’s professional growth, as well as the employee’s.

Think of it this way: You hired each person for a reason. Allowing them to voice respectful dissent shows that you trust your own hiring decision. If you let your employee voice their concerns, it helps to foster an environment where passive agreement is discouraged.

You are saying, It is okay not to agree with everything. That is a good thing because friction during the collaborative process forces more creative thinking and better end results. A team full of “yes men” accomplishes very little that is also new. A team of “let’s think this through” men will bring new ideas to the table.

Take a beat

Disagreements do not have to result in office gossip and they most certainly do not have to result in a sit-down with human resources. More often than not, those things represent a failure to truly communicate.

So when you find yourself in disagreement with someone you work with, especially one of your employees, maybe take a beat. In that time, think of the best way to allow for pushback in the spirit of collaboration. If you can turn this into an opportunity to boost mutual respect, there’s no telling how much you can accomplish together.

by Brittany Hunter

How A Cleaning Lady Inspired Awesome Leadership

In an interview with Adam Bryant of the New York Times, Charles Schwab CEO Walt Bettinger shared a lesson he learned in college during a business strategy final exam.  Bettinger needed to ace the test so he could graduate with a 4.0.  He spent hours reviewing formulas and case studies.  On the day of the exam, his professor handed out just one sheet of paper and asked the class to turn it over.   It was blank.  He explained, “I’ve taught you everything I can teach you about business in the last 10 weeks, but… the most important question is this: What’s the name of the lady who cleans this building?” Bettinger was stunned.  It was the only test he ever failed.

He told Bryant, “…I got the B I deserved. Her name was Dottie, and I didn’t know Dottie. I’d seen her, but I’d never taken the time to ask her name. I’ve tried to know every Dottie I’ve worked with ever since.”  The experience taught him “…you should never lose sight of people who do the real work.”  Bettinger’s lesson in humility impressed me.  By revealing his failure to Bryant, he chose to be vulnerable.  Instead of pounding his chest in the interview, he opened his heart.

Charles Schwab President and CEO Walt Bettinger.

What are the payoffs from being vulnerable?  It can inspire awesome leadership.  For example, in 2017, under Bettinger’s leadership, Charles Schwab topped both the J.D. Power and University of Michigan Customer Satisfaction rankings for all Financial Advisory Companies.   Bettinger is also a Candor All-star, one of a handful of CEOs whose average five-year shareholder letter rankings landed Charles Schwab in the top quartile of my annual Candor Analytics and Executive Tru$t Survey.  These kinds of results are inspired by leaders who are adaptive, authentic and accountable.

Awesome leaders choose to: 1) adapt to the needs of the time by aligning their values with responsible actions; 2) authentically practice candor by separating truth from lies and alternative facts; and 3) are accountable and expect accountability from others.

1. Adapt and align values and actions:  Bettinger learned about aligning his values and actions from his father.  He was 18 when his dad resigned from a tenured chemistry professorship after other professors voted to form a union.  He could no longer work at this university because his colleagues seemed more focused “on themselves than on the students”.  Seeing his dad adapt his life to be true to his value of serving others made a lasting impression.

2. Be authentic and build trust:  Bettinger joined Charles Schwab in 1995 after the firm bought a retirement services company he had founded.  The transition from entrepreneur to executive was not easy.  At his first performance review, Bettinger expected to hear he was doing a great job.  Instead, he learned he would be fired if his performance did not improve.

Tough words to hear, but Bettinger appreciated the honesty.  Later, he used this lesson to remind his managers about the importance of candor.  Twice monthly, they are expected to send him a Brutally Honest Report (BHR) about what is working and not working at the company.  Awesome leaders practice candor to build trust.

3. Choose accountability and integrity:  When hiring people, Bettinger wants to know if they will take responsibility for their greatest failures or blame others.  Being accountable for our choices and outcomes can free us from guilt and lead to greater clarity about future choices.  When we see how the world looks through other people’s eyes, we will be more effective in managing difficult work and life situations.

Bettinger’s leadership skills were tested when he took the CEO reins from Chuck Schwab in 2008 during the financial crisis.  His shareholder letter that year ended with these promises:

“As I close my first letter to our valued stockholders, I’d like to emphasize the things that remain true to Schwab, no matter how stormy the external environment may be.

Our Commitment to Clients: We pledge to deliver premier service, build trusting client relationships, offer competitive pricing, and continue the great Schwab legacy of innovation – both in products and in technology.

Our Commitment to Stockholders: We pledge to be vigilant in terms of risk management and expense controls – treating every dollar of expense as if it came from our own wallet – as we work to enhance stockholder value.

Our Commitment to Employees: We pledge to invest in our people and the resources needed to grow this company for years to come.”

Bettinger kept Schwab accountable and focused on these pledges during the first difficult five years of the crisis up to 2013.  And he didn’t stop.  For the past five years, core net new client assets have grown about 50% and Schwab’s stock has increased 182% compared to 66% for the S&P 500.

Awesome leaders who act with integrity are more likely to be smart risk-takers.  To be adaptive, authentic and accountable means to keep one’s eye on the prize and lead with integrity.  The word “integrity” means to be whole.  To be whole means to care about others, even those who may be different from us.  This leads to awesome empathy – the ability to stand in someone else’s shoes and see what their world looks like.

For Walt Bettinger, it meant learning the name of the woman who cleaned his classroom.

What Superpower Successful Entrepreneurs Have in Common

3 Practices to Cultivate Your Empathy Advantage

It’s no secret that entrepreneurship is a difficult path, with many pitfalls along the way. According to Merriam-Webster, the very definition of an entrepreneur is someone who “assumes the risks of a business or enterprise.”

There’s no magic solution that’s going to remove that risk or guarantee your business will succeed. When you set out to build a new business, you do so with the knowledge that many who have gone before you have failed.

That said, there is one skill you can cultivate that will significantly increase your chance of success: effective empathy.

Unlocking your empathy advantage

It’s easy to brush past empathy as another “soft skill” that’s nice to have, all things considered. But in the modern world of business, effective empathy is a skill that can make or break your ability to succeed.

At its core, empathy is the ability to see life from another person’s perspective, to “put yourself in another person’s shoes,” as the saying goes. In business, effective empathy allows you to get inside the mind of your target audience, and identify problems (from their perspective) that you can help solve.

Contrast this with the approach many entrepreneurs take: scratching their own itch by solving their own problems and selling the solution. Sometimes, this works—but only because enough people with the same problem are seeking a solution. Maybe you’ll luck out, but it’ a risky bet.

Ángel Cabrera, President of George Mason University, put it this way in a report from Forbes, “At its very heart, a business is the beauty of bringing together people and things to make the community better off—these are the businesses we admire. Empathy is the one tool that makes it all happen.”

Here are three practices I’d recommend for cultivating your empathy advantage:

1. Seek first to understand, then to be understood

This comes directly from Stephen Covey’s classic bestseller, The 7 Habits of Highly Effective People. When this approach becomes your priority, every interaction with a potential customer becomes “How can we help you?” instead of “Here’s how we can help.”

That subtle difference completely shifts the conversation, making your potential customers feel valued. This approach keeps you on track to create products or services that meet real needs your audience shares.

If you only adopt one of these practices, choose this one. Setting your own ambitions aside to truly understand another person is a required first step to cultivate empathy.

2. Use data to understand others

Conversations with customers are crucial. But as your business grows, they become increasingly difficult to scale. That’s where data comes in, which provides a high-level perspective on your audience’s needs.

This data could be in the form of purchase trends, campaign success, or digital tracking data from a tool like Google Analytics. Inside Platform University, we also recommend audience surveys as a great way to get a pulse on your audience from time-to-time.

Whatever the source, it’s best to inform your empathy rather than relying solely on “gut feelings” or “hunches” you haven’t backed up with audience research first.

3. Test your assumptions, repeatedly

By its very nature, every new business is filled with assumptions. It’s impossible to avoid that. The key is to identify your assumptions and test them, before betting the farm on a “sure bet” that might surely fail.

In The Lean Startup, Eric Ries identifies two core “Leap of Faith” assumptions which every business makes. The first is the “Value Hypothesis,” which assumes your product delivers value to the customer in some way. The second is the “Growth Hypothesis,” which assumes new customers will find the product, and that the business model can scale.

For your business to succeed, your assumptions about both value and growth need to be accurate. That’s why you should identify the assumptions you’re making, and find creative ways to test these with your audience or target audience.

The ability to empathize effectively is one of the surest indicators of whether or not an entrepreneur will create a lasting business, regardless of the industry or niche.

Regrettably, it’s also one of the most likely skills to be overlooked, denigrated as an innate skill you either have or you don’t. The truth is, anyone can cultivate empathy with an intentional approach.

Use this to your advantage, and place empathy at the core of your business. With that superpower in place, you’ll drastically increase your chance of success.