OPTIMIZING BUSINESS PERFORMANCE

performI have coached a number of companies whereby management is doing everything right– clear vision, core values, mission statement, USP (Unique Sales Proposition), and have clearly branded themselves in their respective market.  The problem is the team members have not bought into these changes.  So, what is the problem?

The foundation for getting your employees to take ownership in the Strategic Plan, is to give them a game worth playing. Please keep in mind that your business certainly is not a game, but nonetheless you must create an environment where people are given the expectation and the understanding that only their personal best is allowed to support the team effort.

It is no longer just a matter of properly motivating and inspiring your people; every game worth playing has to have rules that are designed to help everyone win. So, what are the rules of your game? Does everyone know what the rules are? How do you get everyone to buy into the rules of the game?

Preparations

Without the preparation of clearly defined roles and responsibilities, the rules of the game are never clearly defined. What ultimately happens is that employees make up their own rules, many times not aligned with Strategic Plan. This leads to mismanagement and further miscommunication, and that is a recipe for disaster. What are the necessary steps to avoid the chaos?

1- Agreements

Managers and employees establish clear agreements for the expectation about the work that is to be done, the quality of the work, and how and when it is to be done. Within the body of these agreements are the Roles and Responsibilities, Accountabilities, Key Performance Indicators (KPI’s), the Systems, and the Work Flow.

Unless these items are clearly defined and clearly documented, you are left managing by abdication. By establishing an environment of Management by Agreement, only then are the standards fully communicated and documented.

2- Communication

Any and all changes in the Roles and Responsibilities and the Mapped Procedures, occur only after there is mutual agreement between the manager and employee. Agreement needs to be reached about anything that might deviate from the expected results, work, and standards.

3- Responsibilities

By having an agreement, employees take full responsibility for performing the work and achieving the results as agreed upon. The managers are accountable for providing the employee with the necessary resources, tools, guidance and training to achieving the work.

4- Changes

The employee and the manager are accountable for immediate notification for any and all changes or exceptions to the established agreements.

5- Space

Managers can assume the work is being done as agreed upon, unless notified by the employee. To avoid micro-management of the employees, a mindset change needs to happen to allow employees the space to do their job, with the understanding they know what is expected of them, when it is expected and how it is expected.

6- ‘Huddles’

Schedule regular ‘huddles’ with the employee and manager to communicate and update the progress of the work and the KPI’s. By regular communication, testing and measuring, only then can you confirm that you are on track with the plan.

7- No Exceptions

Failure to notify each other of changes, exceptions, or missed due dates is unacceptable. Period. Your management strategy can only be effective if you are willing to hold your employees and your managers accountable for their agreements, and if you are willing to hold yourself accountable to those agreements.

8- Trust

Relationships built on trust are developed as managers and employees keep their commitments and successful results are achieved. Trust is an ideal to live by, without trust your management strategy cannot work. Find a way to implement these Rules of the Game, and make them rules that you live by in your business. You will find that you start taking huge strides toward consistency in your business and predictable results. You will also go a long way toward creating a company culture that people are attracted to and fulfilled by.

Conclusion:

Problems with getting your employees buy-in?  Just contact me for a free 2 hour consultation.

SEX, ETHICS AND BOSSES

bad bossesAn AICPA Economic Outlook Survey, which polls chief executives, chief financial officers, controllers and certified public accountants with executive roles in U.S. companies, found that businesses expect an increase in recruitment, staff training and spending in the next 12 months as economic conditions improve. Most of the executives questioned (56 percent) say their companies have the right number of employees, but 15 percent said they planned to hire immediately, up from 13 percent last year. Meanwhile the portion of those surveyed who said their companies had too many employees shrank from 10 percent to 8 percent.

Part of the problem with C level executives when dealing with employees, is that the employees don’t share nor understand the Type A+ personality of their bosses and they judge them harshly for it during tough economic times. Some mentioned that executives were thought to be ‘job slashers’ and lacked concern for their employees. In fact, based on executives’ own survey responses, they agree that they are getting worse at basic human interaction as the economy improves.

What’s the Disconnect?

A survey conducted last year by Booz Allen (BAH) found that executives largely believed the job was out of their hands and that they couldn’t help their company achieve its’ goals. A full 64 percent said they had conflicting priorities, while 54 percent said they don’t believe employees and customers understand their strategy.

That’s bad news for companies where executives’ capabilities in no way support the strategy. In that scenario, only 14 percent of such firms report above-average growth. It’s particularly troubling when 64 percent of managers don’t feel their company’s strategy will lead to success.

Being Ethical

A study released last year by the Economist Intelligence Unit, titled “A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services” found that executives in the financial services industry didn’t see much to gain by conducting their business ethically. Does anyone remember the economic downturn of 2007-2008 which had a direct correlation from the securitization and purchase of ‘subprime’ mortgage loans?

Although 91 percent of those surveyed placed equal importance on ethical behavior and financial success, more than half (53 percent) think advancing their career would be difficult without being “flexible” on ethical standards. Only 37 percent believe their firm’s performance would improve if employees acted in a more ethical manner.

While 97 percent of those same executives feel qualified to handle their job — and 67 percent have raised awareness of the importance of ethics at their firms — 62 percent of financial executives admit they care very little about what goes on in departments beyond their own. But many of those same execs think their own departments are an ethical breach waiting to happen.

Sexism

Harvard Business School professor Boris Groysberg and research associate Robin Abrahams reviewed interviews of nearly 4,000 C-suite executives conducted by the school’s students between 2008 and 2013. Of those executives, 44 percent were women.

What is interesting is that 88 percent of male execs were married, compared with 70 percent of women. A full 60 percent of male execs had spouses who don’t work full-time outside of the home, while only 10 percent of women did.

Most male executives saw work-life balance as women’s work. Each side found it inconceivable that a man could pick up the slack, address work-life conflicts and actually contribute something other than money to the household. Meanwhile, the amount of stay-at-home dads has doubled since 1994.

What this review found is that executive’s contracts are locked-in and 16 percent said their company didn’t have a succession plan in place and that it would take up to three years to find their replacement.

Conclusion

Executives have lost the trust and understanding from their employees, and therefore honest and open communication has ceased. To engage employees, it is imperative that all executives and employees fully understand and embrace the strategic plan for the business. It is no longer acceptable to point the finger and say it’s management, and visa-versa. The real disconnect is the lack of accountability, with shared core values and a common and shared goal.

BRAND YOUR PURPLE COW

Purple CowYou can have the greatest product in the world, the most superb service, but, if no one knows about it, you will have a warehouse full of excellent products, and you will be sitting around your office, waiting for the phone to ring.

Strategic Positioning

This is where companies make a big mistake with their marketing. It’s important to have great products and great services. But too many companies fool themselves by thinking, “If people knew how great our products or services are, they’d buy us every time.”

They try to market themselves by saying things like: “We’ve got the best quality, the best product, the best customer service, and the best people.” I’ve got three words for you: WASTE OF TIME. Yes, all those things are important, but they won’t help you be successful with your marketing.

It’s not about the product; it’s about the positioning. Strategic Positioning or Brand Positioning is a statement of who you are. It is what your target customers think about when they hear your brand name. Red Bull owns the words “Energy Drink.” 1-800-GOT JUNK? owns “junk removal.” What words do you want to own? What will make you stand out from the herd?

Seth Godin in his book The Purple Cow says that you should stand out from the herd of competitors the way a purple cow would stand out from a herd of cows. That’s not just a little different. We’re talking “dramatically different,” and that takes courage.

The old rule of marketing was playing it safe. So, you created a good product or service, and then you sold it with sales people and advertising. You took out ads, you spent money, and you tried to drive customers to your business that way. That used to work, but it doesn’t any more.

Today it is different, you need to create remarkable products or services that your target market customers will seek out and talk about. They will spread word‑of‑mouth about your brand.

It starts with being dramatically different. You’re either a Purple Cow of a product or service, or you’re a commodity (whereby you sell only on price). But that’s only part of the challenge. You must also be dramatically and meaningfully different to your ideal target market customer.

Just being good is not enough. Your competitors are good. Your customers won’t even start down the path to buy your product unless they think you’re remarkably, distinctively, and meaningfully different. You don’t win the marketing battle with the best product or service. You win the marketing battle with Strategic Positioning. So let’s think about how you can position your company.

There’s no one best way to position your company (or brand) so you appear uniquely different from your competition. You need to choose a position that sets you apart in a way that appeals to your ideal target market customer. There are six basic ways to achieve that:

1. Position your company based on price point.

Walmart, for example, offers “everyday low prices.” Price positioning can work the other way, too, when people use a high price as an indicator of high value. Consider this story told by Dr. Robert Cialdini, the author of Influence.

The owner of a jewelry store that specializes in Indian jewelry purchased some good quality turquoise pieces and priced them reasonably, based on her experience. But, even though the store was full of tourists, those pieces didn’t sell. That happens in retail.

The store owner did what store owners have probably done since the beginning of commerce. The night before she left on a buying trip, she wrote a note to her staff, directing them to display the turquoise pieces prominently and to cut the selling price in half. She imagined that customers would snap up the jewelry at the low price and she could move on to other things.

When she returned from her trip, she was pleased to note that, as she expected, the pieces had all been sold. Then she discovered that her staff had not done what she had asked. Her assistant misread the note, and, instead of cutting the prices by half, the assistant had doubled them. The jewelry sold better when the higher prices sent the message to customers that the pieces were of higher quality. There are many stories like this that marketers tell each other.

2. Position your company by creating a new category.

That’s what Red Bull did. Before them, there was no “energy drink” category.

3. Position your company as something different from the category leader.

In rental cars, the classic Avis advertising campaign, “We’re number two, so we try harder,” is a great example.

4. Position your company as a specialist.

1-800-GOT-JUNK? is the specialist in junk removal. There are coffee shops all over the country that sell coffee and a host of other things like hamburgers and breakfast, but Starbucks positioned itself as the coffee specialist, the brand you know offers premium coffee.

5. Position your company as the master of a distribution channel.

L’eggs was the first supermarket pantyhose brand and became the largest-selling pantyhose brand in the country. Paul Mitchell became a $600-million hair and skincare brand by focusing on the professional hair salon channel. Ping did the same in golf clubs by focusing on the pro-shop channel.

6. Position your company by being explicit about Who your target market customer is.

Curves is the gym solely for women. AXE (or Lynx, in some countries) cologne positions itself as the cologne that makes young men irresistible.

How to find your Strategic Position

Here are two questions that I recommend to help you identify your Strategic Position:

  1. In what area(s) could you be perceived as the leader of a category or niche in your industry?
  2. In what area(s) could you be perceived as being dramatically and meaningfully different from your competitors?

IMPROVE YOUR CUSTOMER EXPERIENCE

Customer ExperienceGallup’s research shows that few employees are aligned with or empowered to deliver the core elements of their company’s brand identity and promise. Executives must start by engaging their employees and then taking these steps to help their workers become effective brand ambassadors.

1- ACKNOWLEDGE THAT ALL EMPLOYEES PLAY A KEY ROLE IN BRINGING THE BRAND TO LIFE.

Successful branding is not just a marketing or sales function; it is an essential activity for human resources, management, and leadership.

2- AUDIT YOUR INTERNAL COMMUNICATIONS

Thus ensuring that all communications are consistent with your brand identity and promise. Invest in making employees aware of your brand promise, and empower them to act on it.

3- ARTICULATE WHAT YOUR BRAND REPRESENTS AND WHAT YOU PROMISE TO YOUR CUSTOMERS.

Inject the core elements of your identity into the workplace constantly and consistently across time, locations, and channels. Use these elements to define not only how you treat your customers but also how you manage, coach, and treat your employees.

4- DEPLOY SIMPLE PROCESSES

And ensure that you highlight and discuss the core elements of your company’s brand identity every day. Use minute meetings, lineups, or staff gatherings to provide specific examples of how to deliver the brand promise.

5- USE SIMPLE TOOLS

This might include such things as wallet cards as ready references to the brand, and require employees to memorize the key brand elements.

6- REGULARLY ASSESS HOW WELL YOUR EMPLOYEES KNOW AND UNDERSTAND YOUR BRAND PROMISE.

All employees — especially those in customer-facing roles — should believe in and feel they have the resources and permission to deliver your brand promise. Provide additional support in areas that fall short.

7- ENSURE THAT NEW EMPLOYEES UNDERSTAND YOUR BRAND IDENTITY AND PROMISE.

All new employees should be able to articulate what your company stands for and what makes you different within their first 30 days of employment, and your managers should reinforce this message every day.

8- MAKE SURE THAT EVERY EMPLOYEE UNDERSTANDS HOW HIS OR HER JOB AFFECTS THE CUSTOMER EXPERIENCE.

This is particularly important for roles that are not customer-facing. Constantly connect the dots between what employees are paid to do and what your organization stands for.

9- RECOGNIZE EMPLOYEES WHO DELIVER YOUR BRAND PROMISE TO YOUR CUSTOMERS.

Recognition is an important psychological need. Employees who know that they will receive recognition for acting on the brand promise will have a strong incentive to do so.

10- REGULARLY SOLICIT OPINIONS FROM YOUR EMPLOYEES ON NEW AND BETTER WAYS TO DELIVER YOUR BRAND PROMISE.

Convene town hall meetings that allow employees to share their ideas and receive feedback. Demonstrating an authentic commitment to alignment is the best way to embed it in your company’s culture.

ARE YOU A BAD BOSS?

Bad BossYour staff avoids you. No one stops by your office, desk or “skypes” you to check-in. This is a probable sign that your employees are afraid of you or have simply lost confidence in your leadership.

Inability to make decisions without your input. You staff constantly asks you for advice on the smallest details. It’s likely you haven’t empowered your employees, or they’re just too afraid of potential consequences if they don’t approach you on everything. There’s definitely a balance so make sure you check out my colleague’s post (Stephen Lynch) about having an open door policy.

A high turnover. Look at how many people you’ve directly or indirectly managed and have resigned within 1-2 years. Leaving for more money is likely not the initial motivator. People typically leave their boss not the company (unless you have a terrible company culture). Quite obvious, but few fail to face this reality.

Former employees disappear, forever. Nothing says it more than anything if your ex-employees don’t keep in touch or you don’t get recommendation requests. Good bosses typically become mentors or role models for ex-employees.

Lack of feedback. You fail to communicate with your team and may not have set expectations, goals or timelines. Bad bosses often change their mind frequently leaving their team feeling off balance. You’re also not available to receive feedback about yourself. Most people like to see progress and to progress in their careers. It’s important that you provide timely feedback. Positive feedback is typically best and constructive feedback is important if something needs to be improved or corrected.

If any of the above is true, here are 4 simple tips you can use to engage your team and help you get out of that bad boss category:

  1. Create transparency. Don’t keep your team in the dark. Share your company’s performance, track and communicate progress. It will help your team understand that the things they work on directly impact the company’s success and ultimately their own.
  2. Make work meaningful. Reinforce the importance of everyone’s role. Provide clarity and direction by defining both team and individual goals. Avoid ambiguity at all costs. This will help foster ownership and will help get things done.
  3. People-Focused Culture. Promote the sharing of ideas, suggestions and improvements. Recognize people for their achievements. Live your company core values and have your team nominate colleagues who meet different core values.
  4. Nurture employees and create a path for growth and opportunity. Create opportunities for career development and progression. Talk to your employees about their career plan. Does their current role make full use of their strengths and abilities? Provide feedback (both the good and constructive) sooner than later.

CONCLUSION

Take the time to think about the points above and keep in mind that highly engaged employees are 26% more productive and on average their company’s earned 13% greater returns. Creating a more engaged workforce benefits the company, your team, and yourself.

EXCERPTS FROM WARREN BUFFET’S ANNUAL LETTER

Warren Buffet“Investment is most intelligent when it is most businesslike.” –Benjamin Graham, The Intelligent Investor

This tale begins in Nebraska. From 1973 to 1981, the Midwest experienced an explosion in farm prices, caused by a widespread belief that runaway inflation was coming and fueled by the lending policies of small rural banks. Then the bubble burst, bringing price declines of 50% or more that devastated both leveraged farmers and their lenders. Five times as many Iowa and Nebraska banks failed in that bubble’s aftermath as in our recent Great Recession.

In 1986, I purchased a 400-acre farm, located 50 miles north of Omaha, from the FDIC. It cost me $280,000, considerably less than what a failed bank had lent against the farm a few years earlier. I knew nothing about operating a farm. But I have a son who loves farming, and I learned from him both how many bushels of corn and soybeans the farm would produce and what the operating expenses would be. From these estimates, I calculated the normalized return from the farm to then be about 10%. I also thought it was likely that productivity would improve over time and that crop prices would move higher as well. Both expectations proved out.

In 1993, I made another small investment. Larry Silverstein, Salomon’s landlord when I was the company’s CEO, told me about a New York retail property adjacent to New York University that the Resolution Trust Corp. was selling. Again, a bubble had popped — this one involving commercial real estate — and the RTC had been created to dispose of the assets of failed savings institutions whose optimistic lending practices had fueled the folly.

Here, too, the analysis was simple. As had been the case with the farm, the unleveraged current yield from the property was about 10%. But the property had been under-managed by the RTC, and its income would increase when several vacant stores were leased. Even more important, the largest tenant — who occupied around 20% of the project’s space — was paying rent of about $5 per foot, whereas other tenants averaged $70. The expiration of this bargain lease in nine years was certain to provide a major boost to earnings. The property’s location was also superb: NYU wasn’t going anywhere.

Fundamentals of Investing:

  • You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
  • Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.
  • If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.
  • With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
  • Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)

During the extraordinary financial panic that occurred late in 2008, I never gave a thought to selling my farm or New York real estate, even though a severe recession was clearly brewing. And if I had owned 100% of a solid business with good long-term prospects, it would have been foolish for me to even consider dumping it. So why would I have sold my stocks that were small participations in wonderful businesses? True, any one of them might eventually disappoint, but as a group they were certain to do well. Could anyone really believe the earth was going to swallow up the incredible productive assets and unlimited human ingenuity existing in America?

Summary

When Charlie Munger and I buy stocks — which we think of as small portions of businesses — our analysis is very similar to that which we use in buying entire businesses. We first have to decide whether we can sensibly estimate an earnings range for five years out or more. If the answer is yes, we will buy the stock (or business) if it sells at a reasonable price in relation to the bottom boundary of our estimate. If, however, we lack the ability to estimate future earnings — which is usually the case — we simply move on to other prospects. In the 54 years we have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.

LEARN FROM PRIVATE EQUITY FIRMS

Equity firmsExisting leadership teams can become too attached to decisions that were made in the past, particularly if the existing leaders were involved in making those decisions. If a Private Equity firm (or other external investor) were to take a financial stake in your company tomorrow, what changes do you think they would want to make?

You don’t have to wait for someone to invest in your company to experience the benefits of seeing your business from an “outside in” perspective. Here is my take on an article from Booz & Co on the key lessons the world’s best performing Private Equity firms can teach business leaders.

Cash is King

If a Private Equity firm were to acquire your company, they often use debt financing to fund the purchase. This creates a real urgency to optimize the cash flows of your company to help repay the debt. To do this, they would aim to tightly manage your accounts receivables, streamline and optimize your inventories, and scrutinize all discretionary expenses.

Put yourself in their shoes. Imagine you have just invested in your business. Examine every expense item and categorize them into three buckets.

1. “Must have” (required to keep the lights on)

2. “Smart to have” (creates a future strategic advantage)

3. “Nice to have” (everything else).

The next step is to eliminate as many of the “Nice to Have” expenses as you can.

Core vs. Non-Core?

Optimizing cash is all very well, but building the long-term value of your company means going beyond financial engineering and cost cutting. In order for a Private Equity firm to successfully exit their investment they need to convince future buyers that they have positioned your company for long-term growth and profitability.

It seems counter intuitive, but as management thought leader Peter Drucker said, “The first step in a growth policy is not to decide where and how to grow. It is to decide what to abandon. In order to grow, a business must have a systematic policy to get rid of the outgrown, the obsolete, and the unproductive.

This usually means analyzing your product lines, service offerings, and office locations to assess their future profitability and growth potential. Some activities might be “Core” to your business right now, but they may not be the right activities for you to be investing resources in going forward.

I often say to clients, “You must continually pull the weeds to create a beautiful lawn”. It takes real courage to make these strategic decisions, but when you do, it frees up resources to focus them on the right “Core Activities” that will drive your long-term success.

Get it Done

In the first one hundred days of ownership, Private Equity firms have little appetite for socialization and consensus building. They feel a sense of urgency to implement the strategic changes they have identified.

Business leaders can learn a lot from the Private Equity firm’s need for speed. Yes, getting consensus and alignment about these changes is ideal, but you can’t please everyone, and waiting too long to implement the necessary strategic changes can profoundly impact your company’s future outcomes.

Right Management in The Right Bus, Going The Right Direction

Private Equity firms know that a strong management team is critical to business execution and the ultimately the success of their investment. Sometimes they invest in a company based on the strength of its management talent. Otherwise they will act swiftly to put the right management team in place. Research has shown that middle managers are the key to successful business execution.

As RESULTS.com CEO Ben Ridler says, “As a CEO, getting the right front line managers in place is critical to success. You have two jobs. Either you are coaching and developing these managers, or you’re looking for their replacement.”

Align Incentives

Private Equity firms pay modest base salaries, but add incentives to align everyone’s interests so that the staff share in the upside. They also share in the downside. Private Equity firms will reduce or even eliminate incentive payments if the company fails to achieve the agreed targets. Often time’s staff are given real “skin in the game” in the form of equity in the company. Because this equity is essentially locked up until the Private Equity firm sells your company, or lists it on the stock market, it aligns everyone’s long-term interests.

Make Performance Visible

Private Equity firms pay rigorous attention to a carefully chosen set of Key Performance Indicators (KPIs) that will drive the success of your business model. They make this performance visible, and to keep the managers and their teams focused on the most important metrics and projects that will move the business forward. Radical transparency drives business results.

Conclusion

Take a few minutes today to imagine yourself in the shoes of an outside investor who is performing due diligence on your company with the intention of investing in you. What would they identify that needs to change about the activities your company is currently performing, or how it is currently managed?

KEYS TO EFFECTIVE COACHING

helpBusiness coaching has gone from fad to fundamental. Leaders and organizations have come to understand how valuable it can be, and they’re adding “the ability to coach and develop others” to the ever-growing list of skills they require in all their managers. In theory, this means more employee development, more efficiently conducted. But in reality, few managers know how to make coaching work.

According to the 2010 Executive Coaching Survey, conducted by the Conference Board, 63% of organizations use some form of internal coaching, and half of the rest plan to. Yet coaching is a small part of the job description for most managers. Nearly half spend less than 10% of their time coaching others.

With such limited time devoted to coaching, organizations need to be sure their managers know how to do it right. To improve the quality and impact of your coaching efforts, start by giving your individual managers tangible information about how to coach their direct reports. Typically, managers meet their coaching obligations by giving reviews, holding occasional meetings and offering advice. For coaching to be effective, they need to understand why they are coaching and what specific actions they need to take.

Coaching focuses on helping another person learn in ways that let him or her keep growing afterward. It is based on asking rather than telling, on provoking thought rather than giving directions and on holding a person accountable for his or her goals.

Broadly speaking, the purpose is to increase effectiveness, broaden thinking, identify strengths and development needs and set and achieve challenging goals. Research has boiled down the skills managers need to coach others into five categories:

1. Building the relationship.

It’s easier to learn from someone you trust. Coaches must effectively establish boundaries and build trust by being clear about the learning and development objectives they set, showing good judgment, being patient and following through on any promises and agreements they make.

2. Providing assessment.

Where are you now and where do you want to go? Helping others to gain self-awareness and insight is a key job for a coach. You provide timely feedback and help clarify the behaviors that an employee would like to change. Assessment often focuses on gaps or inconsistencies, on current performance vs. desired performance, words vs. actions and intention vs. impact.

3. Challenging thinking and assumptions.

Thinking about thinking is an important part of the coaching process. Coaches ask open-ended questions, push for alternative solutions to problems and encourage reasonable risk-taking.

4. Supporting and encouraging.

As partners in learning, coaches listen carefully, are open to the perspectives of others and allow employees to vent emotions without judgment. They encourage employees to make progress toward their goals, and they recognize their successes.

5. Driving results.

What can you show for it? Effective coaching is about achieving goals. The coach helps the employee set meaningful ones and identify specific behaviors or steps for meeting them. The coach helps to clarify milestones or measures of success and holds the employee accountable for them.

You should seed your organization with coaching role models. All managers need some guidance on the whys and hows of coaching, but most organizations can’t afford to train them on a large scale, so the least you can do is make an effort to create a culture of coaching. The key is to create a pool of manager-coaches who can be role models, supporters and sustainers of a coaching mindset.

When you select the right people and invest in their development and position them as coaching advocates, you plant the seeds for expanding coaching well beyond the individual manager-direct report relationship. Your role models demonstrate effective coaching both formally and informally, and they help motivate others to use and improve their own coaching capabilities.

Always link the purpose and results of coaching to the business. Managers have to know the business case for coaching and developing others if they’re to value it and use it effectively. Where is the business headed? What leadership skills are needed to get us there? How should coaches work with direct reports to provide the feedback, information and experiences they need to build those needed skills? Set strategic coaching goals, tactics and measures for the organization as well as including coaching as an individual metric.

Conclusion:

Finally, give it time. It’s not surprising that managers feel they don’t have enough time for coaching. Even if you make learning and coaching explicit priorities, time is tight for everyone. But as your coaching processes and goals become more consistent and more highly valued, in-house coaching will take root. Your managers will have a new way to develop and motivate their direct reports. Individuals and groups will strive to build new skills and achieve goals. And your business will be on track to a more efficient, comprehensive system of developing people.

PRIDE

PrideAs John Maxwell writes, that when you think of the word pride, does it strike you as positive or negative? There are certainly many positive types of pride. It’s good to “take pride in our work.” We like it when someone tells us, “I’m proud of you.” And nearly everyone wants to live in a neighborhood where people display “pride of ownership.” All of these expressions communicate a positive kind of pride: dignity, respect and honor, traits that we all can embrace.

But pride isn’t always positive. Pride can also mean conceit, arrogance, or superiority. This kind of pride is based on self-centeredness, and it’s destructive.

Selfish pride is especially destructive to relationships. That’s because the opposite of loving others is not hating them but rather being self-centered. The great writer and apologist C.S. Lewis had this to say about pride:

“The point is that each person’s pride is in competition with everyone else’s pride. It is because I wanted to be the big noise at the party that I am so annoyed at someone else being the big noise…. Now what you want to get clear is that Pride is essentially competitive, is competitive by its very nature, while the other vices are competitive only, so to speak, by accident.”

Pride gets no pleasure out of having something, only out of having more of it than the next man. We say that people are proud of being richer, or cleverer, or better looking than others. If everyone else became equally rich, or clever, or good looking, there would be nothing to be proud about. It is the comparison that makes you proud: the pleasure of being above the rest.

So how do we solve the problem of pride? I believe there are several steps we can take to counteract our tendency toward self-centeredness.

1. Recognize and Admit Your Pride.

C.S. Lewis said about acknowledging pride: “If anyone would like to acquire humility, I can, I think, tell him the first step. The first step is to realize that one is proud. And a biggish step, too. At least, nothing whatever can be done before it. If you think you are not conceited, you are very conceited indeed.” You will not solve a problem that you don’t know exists.

2. Express Your Gratitude.

Henry Ward Beecher said, “A proud man is seldom a grateful man, for he never thinks he gets as much as he deserves.” There is something about saying “thank you” that takes our eyes off of ourselves and puts them back on the blessings we’ve received and the people who’ve blessed us.

3. Practice Servanthood.

A person who is truly great is always willing to be little. But pride fights against servanthood, because a proud person demands to be served. Serving others requires us to focus on their needs rather than our own, and this also reminds us of how we are part of something bigger than ourselves.

4. Laugh at Yourself.

There’s an old saying, “Blessed are they that laugh at themselves, for they shall never cease to be entertained.” Once you begin to look for the humor in your behavior and situation, you find it everywhere. Prideful people take themselves way too seriously. By laughing at yourself, you begin to see how absurd we can all be sometimes.

If your pride pushes you toward performing with excellence, doing your best, and finding joy in the accomplishments of others, it’s probably helping you become a better leader. But if there’s even a hint of competition or self-promotion in it, it’s probably having a negative effect on your relationships. That can hurt both your life and your leadership. If that’s true, do what I try to do: shift my focus onto others and follow the tips above.

VISION, DON’T BE SHORT-SIDED

This is a perfect example of the ‘Art of Negotiations’.

In 2007, ABC/ESPN and TNT agreed to pay the National Basketball Association a combined $7.4 billion for the right to broadcast games on their television stations for eight years. Every month, the NBA takes this money and divvies it up by sending out 31 checks to team owners around the country (and one in Canada). But wait, there are only 30 NBA teams. Why is the NBA cutting 31 checks? That extra check goes to a pair of obscenely lucky brothers named Ozzie and Daniel Silna. Technically the brothers’ combined income was enough to make them the 7th highest paid people in the entire league last year. Together they earned roughly $2 million more in salary than superstars Kevin Durant, Dwyane Wade, Chris Bosh, Chris Paul and even LeBron James.

Daniel and Ozzie Silna

But there’s just one problem. Ozzie and Daniel Silna are not professional basketball players or current franchise owners. Neither of them have ever played a single minute in the NBA and, in fact, they are universally despised by executives at the NBA. So how are they earning so much money? Ozzie and Daniel Silna are the former owners of an American Basketball Association (ABA) team called the Spirits of St. Louis. Back when the ABA folded in 1976, the Silna brothers agreed to dissolve their team in exchange for what seemed like a meaningless concession involving a tiny percentage of future NBA broadcast revenues. At the time, no one ever could have ever imagined that this would accidentally turn out to be the greatest sports business deal of all time. A deal that the NBA woefully regrets every season to this day, and has made the Silna brothers, extraordinarily wealthy.

The NBA’s Big Regret

Ozzie and Daniel Silna were born in 1933 and 1944, respectively, to a pair of Latvian immigrants who had settled in New Jersey in the 1930s. Their father ran a small textile business which both brothers took over until the company was sold in the early 1960s. Soon after, Ozzie and Dan launched their own knitting business that eventually grew into one of the largest manufacturers of polyester just as disco fever swept the nation in the 1970s. Dan Silna, a lifelong basketball super fan, suggested that they use some of their newfound wealth to acquire an NBA franchise. They attempted to purchase the Detroit Pistons for $5 million, but their offer was rejected.

As strange as it sounds, at the time there were actually two professional basketball leagues operating in the United States, the National Basketball Association (NBA) and the American Basketball Association (ABA). The ABA was founded in 1967 as an attempt to chip away at the NBA’s monopoly on professional basketball. And there was absolutely a time when the ABA posed a significant challenge to the NBA’s dominance. ABA owners started an all-out salary war by offering young players much larger contracts than their NBA counterparts could afford. The ABA also introduced exciting new concepts like the three-point line and the All Star Game dunk contest. Future NBA legends Julius Erving, Moses Malone, Connie Hawkins and Larry Brown all got their start in the ABA.

Julius Erving ABA Game

When the Silna brothers’ attempt to purchase an NBA franchise came up short, they did the next best thing and went shopping for an ABA team. In 1973 they stuck a deal to purchase the ABA’s struggling Carolina Cougars for $1 million. Almost immediately, the brothers decided to move the team to St. Louis where they hoped to reach a larger contingent of basketball fans. They poured $3 million of their own money into the newly named “Spirits of St. Louis” signing hot young players and upgrading the team’s facilities. They also hired a young announcer fresh out of Syracuse broadcasting school by the name of Bob Costas to do the team’s play-by-play commentary.

The 1974 Spirits of St. Louis

In their first season, The Spirits of St. Louis made the playoffs where they defeated the ABA defending champion New York Nets before losing to the eventual winning team, the Kentucky Colonels. Unfortunately, that was the high point for the Spirits. A year later in 1976, the American Basketball Association went belly up. As part of a dismantling agreement, the four most viable ABA teams would become full-fledged NBA franchises. Those four lucky teams were the Denver Nuggets, Indiana Pacers, San Antonio Spurs and New York Nets (today’s Brooklyn Nets). Of the three remaining ABA teams, the Virginia Squires went bankrupt before any financial compensation agreement could be made with the NBA. That left the Kentucky Colonels and the Spirits of St. Louis. As part of the dismantling agreement, both teams needed to approve the merger for the deal to go through. The Kentucky Colonels’ owner (who was the president and largest shareholder of Kentucky Fried Chicken) accepted a $3.3 million buyout offer and then went on to successfully run for Governor. Having just poured their hearts and souls into their beloved Spirits, the Silna brothers were much more reluctant to accept a quick buyout and disappear from basketball forever. They did eventually agree to accept a $2.2 million lump sum in exchange for their former players who were successfully drafted into the NBA. But that wasn’t quite enough to make them satisfied.

At the time, NBA television viewership was barely a blip on the ratings radar. Even an NBA championship series would be shown on tape delay after the 11pm news. So, for NBA executives it seemed like a very meaningless and inconsequential concession to offer the Silnas a small percentage of “Visual Media” (television) revenues to make them go away. They didn’t even offer a small percentage of all NBA revenues, their offer was 1/7 of any revenues earned by the four ABA teams that were being absorbed. In other words, the Silna’s agreed to give up their ABA franchise in exchange for 1/7 of the television revenues generated by the Spurs, Nuggets, Nets and Pacers. And here’s the kicker: The 1/7th ownership stake would last in perpetuity. Meaning, forever, or as long as the NBA exists as an viable entity. Specifically the contract reads “The right to receive such revenues shall continue for as long as the NBA or its successors continues in its existence.” Their attorney who negotiated the deal, would get a 10% cut of the Silna’s royalties.

For the first years, between 1976 and 1978, the Silnas did not earn a dime from the NBA and the league looked like it had negotiated a brilliant deal. In 1979 however, the Silna’s received their first royalty check in the amount of $200,000. For the 1980-81 season, the Silnas earned $521,749. Then, between 1980 and 1995, the NBA’s popularity exploded thanks to players like Kareem Abdul-Jabbar, Larry Bird, Magic Johnson and later Michael Jordan, Charles Barkley and Shaquille O’Neal. And with that explosion in popularity came several very large television contracts.

Magic and Jordan

The first mega contract that the NBA struck happened in 1997 when NBC and Turner agreed to pay $2.7 billion to broadcast games on television. Five years later, ABC/ESPN/TNT agreed to pay a combined $4.6 billion. In 2007, ABC/ESPN/TNT signed an eight year deal for $7.4 billion. Every time a new deal was stuck, the Silna brothers cashed in. During the 2010-2011 season, the Silna’s earned a royalty of $17.45 million. For 2011-12, they earned $18.5 million. For the most recent NBA season, 2012-2013, the Silna brother’s share of TV revenues was just over $19 million. In total, since that original 1976 agreement was stuck, Ozzie and Daniel Silna have earned a whopping $300 million in NBA television royalties. And if that’s not crazy enough, they are expecting to receive an additional $95 million over the next five years! But wait, it gets better…

Because the language in their original contract covers all “visual media” revenues, last year the Silna’s took the NBA to court over money earned from sources that were unimaginable back in 1976. For example, international broadcasts, internet rights and the NBA TV cable network. Recently, a Federal judge sided with the brothers and ruled that the NBA must pay them to cover incremental revenues from the last few years, and increase future royalties from now on! Oh, and by the way, in 1982 the NBA offered to buy the brothers out of their contract for $5 million paid over 5 years. The Silna’s rejected that offer and countered with $8 million over 8 years. The NBA declined.

By: Brian Warner