Posted at 1:55 PM ET, 07/20/2009

Final Post from The Intelligent Leader

On behalf of Harvard Business Publishing and, thank you for your interest in The Intelligent Leader. For the past year, this space has delivered thoughtful commentary on the intersection of the leadership and management ideas from with the news coverage found on This post concludes the series.

To continue the leadership and management conversations, please visit's On Leadership, and, where you can subscribe to our eNewsletters. You can also follow HarvardBiz on Twitter.

Thank you
the Editors

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Posted at 10:25 AM ET, 06/23/2009

How the Recession Is Changing Talent Management

tammy-erickson-110.jpgTammy Erickson is a McKinsey Award-winning author. Her blog Across the Ages can be found at

By now we've all heard the phrase that a recession is too precious to waste.

Recessions are times when we make changes in the way we do things — consciously or not. Although it would be smart to do it consciously, probably some of the most significant changes have just, well, happened.

The shift underway today, embedded in companies' responses to this recession, will have major unintended consequences for the relationship between organizations and the individuals who perform work (I hesitate to even use the word "employees"). As msnbc reported recently, there's been a "furlough frenzy" in corporate America lately.

We're on a slippery slope.

Recent history illustrates how significant shifts in the nature of the relationship between organizations and workers have resulted from practices put in place during a recession. For example, it was during the recession of 1981 that the idea of a "layoff," meaning a permanent separation with no prospects for recall, came into widespread use. Prior to that recession, the idea that an employer would dismiss workers permanently was so rare that the Bureau of Labor Statistics did not even keep track of such cuts! Furloughs, with the clear commitment of a return when business picked up, were used instead. The reality that jobs were no longer "for life" sunk in.

The recession of 1991 saw another substantial change: many individuals became contractors out of necessity — and a significant proportion chose to continue to work as contractors even after "permanent" jobs became available. We accepted the idea that some people may never be full-time employees again and began our evolution to a "free agent nation."

This recession is ushering in a return to furloughs. Hewitt Associates recently surveyed 518 U.S. firms and found that 70 percent had implemented or were considering implementing furloughs. Major companies such as Dell, American Airlines, and DuPont already have announced plans to send workers home for a few days or a few weeks without pay as a way to cut costs.

Much of the attention paid to this trend has focused on the cost-savings opportunities for employers and worried about the economic hardships and potential rights violations to employees. Employers who use temporary hiatuses rather than layoffs save on severance costs, as well as future rehiring and retraining expenses when an economic turnaround eventually comes. Employees, in theory, suffer through some hardship, but not as much as would have occurred with a layoff. Yes, but . . .

This practice is further changing — in irrevocable ways — the relationship between employers and employees. This practice is reframing, perhaps even severing, the idea of "full-time" as many of us have understood it for years.

When I took my first job out of graduate school, my employer had me sign an agreement that whatever I did — whatever I created, invented, wrote — whether or not it occurred during some official forty hour period, was the property of the company. Since then, I and most of us in professional or managerial roles have viewed the work we do as only loosely related to any particular hours. We work nights and weekends. We grumble about work-life balance. We accept that the deal we have had with our employers was all encompassing.

But the idea of furloughs, particularly for managers and professionals, is planting the seed of a new way of looking at work in our minds. Suddenly companies have asked us to work, say, 32 hours a week rather than 40. Hmmm. What does that really mean? Most of us were never working 40 hours — we might have been working 50 or maybe even 60. We were answering emails at odd hours, writing in the early hours, calling Singapore at night. Does this mean that we should now work 20% less than we were before . . . or does it mean we should work literally 32 hours?

For many, I believe the conclusion will be that we should work the hours specified by the company and perhaps do other things — start new businesses on the side perhaps, sell stuff on eBay, take another job, go back to school, whatever — with the other time.

In this shift, companies will lose far more than the number of hours they think they've cut back. Companies will lose that sense of total dedication — the sense that what I produce on my own time is theirs, that I have a responsibility to answer emails whenever they arrive or participate in odd-hour phone calls.

This shift sits well with many in Gen X who have already tended to bind their involvement more carefully than have the all-out Boomers. But for both generations, it will be a new way to look at work — another step on the slippery slope of recessionary lessons moving us from (1) you don't have a job for life, to (2) you may never find full-time work with one employer, to now (3) even a full-time job is really only a contractor job in disguise.

From a talent management perspective, it's essential to recognize that decisions you're making this year are likely to set the tone for the relationship with employers for decades to come.

I hope you'll share your thoughts and experiences.

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Posted at 1:15 PM ET, 06/16/2009

What Outside Executives Need to Succeed

baldoni_110.jpgJohn Baldoni is a leadership consultant, coach, and speaker. His blog, Leadership at Work, can be found at

"I don't know anything about cars," revealed Edward Whitacre in an interview with Bloomberg News given after being named the new chairman of General Motors. "A business is a business, and I think I can learn about cars. I'm not that old, and I think the business principles are the same."

Long-time Michigan political observer, Jack Lessenberry, lauded GM's hiring of Whitacre as an example of the new leadership the company will require if it is to succeed.

But Whitacre is joining a company with a history of rejecting executives from the outside. H. Ross Perot and Jerry York, as a surrogate for investor Kirk Kerkorian, tried without success to shake things up at the board level. Another senior executive who failed to change G.M. was Elmer Johnson. According to the New York Times, Johnson was so frustrated he wrote a memo saying "Teamwork has been replaced by Balkanization. Our culture discourages open, frank debate among G.M. executives in the pursuit of problem resolution."

Hiring an executive from the outside for any company is always a gamble. According to a 2008 study conducted by the Institute for Executive Development (IED) and the Alexcel Group, thirty percent of executives hired from the outside fail to meet expectations within the first two years. One key reason that executives — not simply those from the outside — fail, is an inability to collaborate with others.

Negative trends aside, it is useful to consider those positive characteristics that will make the newcomer an asset to his new business.

Keen intelligence. Not only do you have to be a quick study, you have to be able to size up the gaps as well as the opportunities. Learning the business is the easy part; finding out what works and what doesn't requires not only experience but insight. Lou Gerstner, a former McKinsey partner, was particularly adept at determining corporate strengths and weaknesses. After trimming IBM to fighting weight, Gerstner pursued strategies that would capitalize on IBM's unique capabilities rather seeking to be all things to all customers.

People skills. It is common sense to value your people but it may be "so common" that it is often neglected. The outside leader needs to reach out to employees and treat them as colleagues. One technique that many executives employ and that I encourage newly promoted executives to adopt when meeting their direct reports for the first time is to ask: what can I do to help you? Such a question does two things: one, it establishes the direct reports as the experts; two, it positions the leader as one who wants his people to succeed.

Strong will. The hidebound mindset that made hiring someone from the outside necessary will seek to maintain the status quo. Some in senior management will feel slighted that one of their own is not running the show. While they do want the organization to succeed, they will want to protect their domains and their influence. A new leader must stand up to entrenched powers and their stale ideas. Therefore, he will have to fight hard to be heard, believed and eventually followed in his own organization.

One executive who has shown strong backbone in bending the culture of his new employer, Ford Motor Company, to a common purpose is former Boeing executive, Alan Mulally. As reported in Fortune, Mulally, as CEO, has instituted the One Ford approach, which seeks globally-derived vehicle platforms as well as a more collaborative approach to planning and execution. [Note: While Mulally was new to the auto industry when Ford hired him in 2006, he is an engineer with extensive background in product development and manufacturing.]

Organizations bear responsibility for the high washout rate. The IED/Alexcel study also demonstrated that on-boarding programs and mentoring programs are valuable. Executive coaching, too, can help. In other words, don't let the executive fend for himself; provide him assistance.

For the sake of us taxpayers who have a stake in General Motors, I hope the company provides Whitacre — as well as any other outsiders he may bring with him — with more than a tutorial on the automotive business. He, like all outside executives, needs the support of management so that he can earn its trust and help the company succeed in very trying times.

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Posted at 12:00 PM ET, 06/12/2009

Give Shareholders Say on Pay

Anne Sheehan is the director of Corporate Governance for the California State Teachers' Retirement System. This post is part of the HBR Debate: How to Fix Executive Pay.

Executive pay is broken.

The ratcheting up of executive pay contributed substantially to the economic crisis, because the risk and reward equation got out of balance. Yes, you have to pay for performance and you want your leaders to take some risks, but only informed risks. Many companies have rewarded very risky moves made without much understanding of the implications.

The way companies have been setting pay also has contributed to compensation inflation. Executives note the rising incomes of people they consider their peers, and they expect to keep up; nobody wants to be below the median. And so it continues. That's not a good way to determine pay levels. Other people's salaries are but one data point in the equation, but not the primary variable.

I also think that the matter of pay has moral connotations, when you consider that regular working people have lost half of their 401ks, and many have lost their jobs, only to see over-the-top bonuses paid out to those responsible for the mess. That moral outrage needs to be acknowledged, and if companies don't respond to the issue, the government will.

That won't be a pretty sight. Visit YouTube and watch Ed Liddy testifying at the AIG hearing, trying to explain some of the firm's excesses.

What's the solution? CalSTRS doesn't support federal regulation, but we do support say on pay, and we're asking our portfolio companies to allow shareholders advisory votes on executive compensation policy. We're also expecting greater transparency and coherence in these policies — written in plain English — and independent compensation committees. We've shared executive compensation principles and guidelines with 300 largest portfolio companies. We are an active shareholder, and we want their interests aligned with ours.

To people who say you have to pay them a lot to keep them? I say, in this economy, where will they go? I don't have any objection to paying well for high performance; I have a problem with the overly compensated CEO (sometimes, the guaranteed-to-be-compensated CEO) whose company goes off a cliff.

Boards and, especially compensation committees, need to focus carefully on their compensation plans, how they are structured, and the consequences of shortsighted pay models. They need to demonstrate to shareholders that they understand the sentiment of the country on this issue and they they "get it."


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Posted at 9:25 AM ET, 06/12/2009

Regulating CEO Pay Is Not the Answer

Ira Kay is the global practice director of executive compensation consulting at Watson Wyatt Worldwide. This post kicks off the HBR Debate: How to Fix Executive Pay.

We're at a crossroads for CEO pay — and by extension for corporations and competition in general.

The conventional wisdom says executive pay played a substantial, perhaps dominant, role in the financial crisis and recession by encouraging excessive risk-taking. As a result, there's huge public support right now for the idea that the basic executive pay model should be changed that it should be rethought, reformed, legislated, and regulated. This is a natural reaction to unprecedented events. And the Obama administration is about to present its own philosophy on CEO pay in the form of compensation rules for twice-bailed-out companies.

But legislating and regulating executive compensation has the capacity to do real damage. Our research has shown that the traditional executive pay model using cash and stock incentives continues to work for the vast majority of companies. It motivates leaders to steer their companies toward high performance. Luck plays a part in whether or not the companies actually get there, but the pay-for-performance model certainly sets companies up to succeed. Our research shows that in general, high-performing companies' CEOs get paid a lot, and low-performing companies' CEOs get paid much, much less.

Furthermore, CEO pay is already self-correcting. Boards have heard the outcry from shareholders, activists, the media, and the public. All across corporate America, the compensation committee debates of the past few weeks have been notably different from previous years'. To borrow President Obama's language, the board members "get it." We survey directors annually and have found they have become far more conservative in making their CEO pay decisions.

An important factor prompting this change in board behavior has been the freezing up of the CEO labor market. This year, CEOs don't have as many employment alternatives as they used to. In past years, the intense competition for good CEOs helped boost executives' pay packages. In fact, a poor understanding of the executive labor market underpins much of the conventional wisdom about CEO pay. Many assume that some chief executives must browbeat their weak-willed boards into giving them lucrative deals — even in bad years. But in the vast majority of cases, that's simply not so. Boards do "buckle," in a sense, but only to the realities of the labor market. Big-company directors are convinced that the right CEO can add billions of dollars' worth of value for shareholders, and in most years, the right CEO is a scarce commodity.

CEO pay will self-correct in another sense too: Profits and stock prices are likely going to increase more modestly in the coming months and years, and that slower rate of growth will affect chief executives' realizable pay — the true value they earn in incentive and equity pay.

So I would suggest not a wholesale rethinking of the traditional executive-pay model but a more measured approach that specifically counters the role that pay may have played in causing excessive risk taking. As many have argued, perhaps it was the failure of the financial firms' risk models to identify the true downside risks that led to this crisis.

While this moment in history presents challenges for corporations, it also presents an opportunity for boards to get rid of executive pay components that irritate shareholders and employees. And that is what we recommend. Directors now have more clout to stand up to CEOs and refuse things like lucrative severance packages in case of takeovers, and they have eliminated some prerequisites. CEOs often don't realize how big an impact some of these perks can have on people's attitudes. We recommend protecting core incentives and minimizing the irritants, with an eye on balancing the risk components in the pay program with the pay-for-performance components.

But our recommendations are always framed in practical, economic, rather than moral, terms. Outraged employees and investors are bad for the CEO and bad for the company. For example, if employees are annoyed at their leader, productivity and thus profitability might slip. What matters to me isn't whether there's a moral crisis in executive compensation but whether companies can stay competitive and balance pay for performance with the right risk profile.


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Posted at 10:00 AM ET, 06/10/2009

Competitive Advantage Is Fleeting (And It's Okay to Admit It)

rita-mcgrath-110.jpgColumbia Business School professor Rita McGrath studies innovation, corporate venturing, and entrepreneurship. Her blog Dynamic Strategies can be found on

For as long as I've been working in the field of strategy, a taken-for granted assumption among executives, students and academics has been that the goal of a great strategy is achieving a "sustainable competitive advantage."

As the field migrated from a subject called "Business Policy," having to do mostly with the job of the general manager, to the current conception of "Strategic Management," we picked up a vast number of tools, frameworks and analytical approaches that promised to make the world of strategy one of greater rigor, science and analytical depth. The ultimate goal was to pinpoint a path to achieving a highly profitable position which could then be sustained. The logic accompanying this goal was impeccable: within the context of stable industry boundaries, identify an attractive position and learn to defend it against rivals so that the stronghold could be preserved for a long time. And actually, many of our traditional manufacturing industries — from autos to steel to industrial equipment — did very well with that set of assumptions for a very long time.

The idea was so successful, in fact, that its premises have become embedded in many of the ways we do business today. From our financial models, such as using net present value analysis to value projects, to our investment models, which presume more or less predictable and long life-spans for given business activities, we have built a lot of operating frameworks on the idea that our lines of business will be around for a while. And not only around, but profitable.

All this began to change in the early 1990's, when a number of scholars, such as my colleague Ian MacMillan and his co-author Rich D'Aveni, started talking about a phenomenon they called "Hypercompetition." In hyper-competitive environments, to paraphrase Hobbes, the life of a competitive advantage is nasty, brutish and short. In other words, advantages don't last for very long before competitive entry, imitation and matching erode their edge, or customers move on, or the environment changes in such a way that the advantage becomes irrelevant. I don't think there is much disagreement that this dynamic characterizes many categories.

One implication of hypercompetition that has not yet gotten the attention it deserves is that the skill of getting out of things and re-focusing your organization is likely to be just as important as spotting opportunities and moving to capture them.

I suggest that the vast majority of companies struggle with letting go, while the more adroit strategists make the necessary judgment calls and move on. For instance, in taking the Max Factor line out of the United States, Procter & Gamble's management has made a really tough call. Max Factor, the person, was a Hollywood legend, and the cosmetics company that bore his name built a highly recognizable brand. P&G acquired the brand in 1991 but has struggled to build its US market share, even as the company's competing "Cover Girl" brand seemed to dominate the hearts and minds of American shoppers. Internationally, in contrast, Max Factor does rather well in markets like the UK and Russia, which generate the bulk of its billion dollars plus in sales. The less-than-stellar US performance was not for want of trying on P&G's part — indeed, the company invested millions. Nonetheless, the advantage Max Factor once possessed in the US market was continuing to erode, at which point the company made the call to get out.

Now consider what a decisive exit from an eroding advantage does: it frees up precious time and attention (today's most scarce managerial commodities); it sends a strong signal about what is strategically valued; it reduces competition for attention for potentially stronger operations; and it allows staff who might have been loyally sticking to a once-important business a way out. Sometimes, you can almost hear the collective sigh of relief when such a decision is finally made. You can easily think of your own contrast cases of companies who stuck with declining categories for far too long. General Motors is of course a vivid recent example, but we can conjure many more.

I think we can all accept that getting talent and resources out of declining areas and into more promising ones is a good thing. So here's the problem: we are still coping with many systems, from the way we hire, promote and develop people, to the way we value assets, that fail to take into account the fragility of competitive advantage.

For instance, the Wall Street Journal recently reported that "Many Companies Hire as They Fire." The article outlined how, in search of skills that can support growing areas, firms are firing people who were associated with previous successful operations and seeking to hire people with the right skill sets for those that represent the company's future. In effect, firms are imposing the costs of adapting to the temporary-advantage phenomenon on their employees, who often join a company under what I'll call the sustainable advantage thesis. There is both a mismatch of expectations and an asymmetry of burdens.

Perhaps we need to start thinking about building the reality of temporary advantages into the way we hire, develop and allocate talent.

Surely, if an employee knew that a declining advantage for a firm could mean their skills were no longer interesting or relevant, that would pique their interest in continuously improving on talents that would be relevant. Surely it would be more attractive for firms to be able to avoid the trauma of mass layoffs and the uncertainty of being able to find the skills they need on the open market. Indeed, the Journal article reports that companies are increasingly finding it difficult to find just the right external candidates, a difficulty that can impede their own future growth.

Perhaps there is a role here for corporate policy, or public-sector policy, on how the dislocations produced by declining advantages are to best be met. An interesting case in point is Denmark, which makes substantial public-sector investment in upgrading skills of unemployable people so that they can be attractive to growing, rather than declining, businesses.

So what are your ideas for how we can get better at letting go, get better at minimizing the trauma for people caught in the backlash, and get better at making those tough calls in the first place?

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Posted at 2:25 PM ET, 06/ 2/2009

Why I Don't Want to Own General Motors

kanter_110.jpgHarvard Business School professor Rosabeth Moss Kanter blogs at about leadership, innovation and change.

If I had wanted to buy General Motors stock, I would have talked to my financial manager. Now I am forced to own it, along with other American taxpayers, because of the federal government's bankruptcy deal.

It is hard to see what good will come of this, and it sets a dangerous precedent. If the U.S. needs a major auto company, we have one already in Ford. Ford has proven to be nimbler, more innovative, more globally-integrated, and more competitive than GM. It saw the need to change earlier, changed faster, and did not need a government bailout. Ford's advertising is trying to make the most out of its accomplishments, but I fear that Ford will be dragged down by the GM situation and be forced to cut too deeply into its own flesh as GM is cut to the bone.

The government's rationale for its involvement with GM falls in the "too big to fail" department. I know that the current administration is dedicated to ending the recession with as few human costs as possible in lost jobs and lost wages. Yes, the auto industry's woes coincided with the financial meltdown creating a liquidity crisis which left the federal government with the only pockets deep enough to invest in the bail-out and buy-out. But the macro-management of the economy at the federal level begins to look like micro-management when they get into the details of owning (or running) specific companies.

Is this a productive new use of assets?
No. Is this a move toward transforming transportation? No. Is there a significant national security interest? No. Will this save more jobs than it kills? No. Will this promote innovation and industries of the future? No.

Okay, maybe there is some prospect of a leaner, more competitive company being created in the restructuring that will make me proud to own it and maybe to consider buying a GM car — if the name GM even survives. But the indicators make this look unlikely, for example: GM's lag in producing energy-efficient models; falling auto sales in general plaguing even world-leader Toyota; new business models such as Zipcar encouraging people to see cars as shared utilities rather than must-have personal possessions; and low-cost innovations such as the Tata Nano coming from the developing world. So I stick with my string of No's.

Where others see merely bankruptcy, I see a bankruptcy of ideas. The issue for GM is not just financial failure, it is a failure of imagination. Even Ford has a long way to go to be the Company of the Future.

The signs of GM's imminent failure were there well before the weak plan presented to Congress in November, which I criticized in detail in a Wall Street Journal interview. It would have been better to let the company fail on its own and then assist affected workers, dealers, and communities directly with transition support to start new businesses and create new jobs. We will have to assist them anyway, because the GM that emerges from bankruptcy will be a shrunken, hollow version of its former self, perhaps competitive but not viable in the long term without even greater change. This move smacks of preservation more than innovation.

I would advise the Obama administration to to help innovative new companies emerge from the ashes of GM. The entrepreneurial spirit will restore the American economy more effectively than propping up falling giants.

And if the administration wants to make bold moves, I suggest that what America needs is a big national innovation initiative, equivalent to the space program, to reinvent transportation. Not just to make it greener and more energy-efficient, but to make it radically different.

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Posted at 7:45 AM ET, 05/29/2009

Empathy: Not Such a Soft Skill

Bell_110.jpgKatherine Bell is Deputy Editor at Harvard

Empathy is the word of the moment in the media, as President Obama and the GOP disagree over whether Supreme Court Justices should use it.

In this debate, empathy has come to imply an emotional impulse to root for the underdog. Ron Elving wrote at "In the parlance of their party, Democrats use this word to mean sensitivity to the plight of the poor, the disadvantaged and the downtrodden... Republicans, for their part, regard empathy as a code word for emotion." To explain Obama's all-female shortlist of candidates for the court, Paul Taylor of the Pew Research Center pointed to a 2008 finding that 80% of Americans believe that women are more compassionate than men, arguing that "Empathy and compassion aren't synonymous, but they're close cousins."

All of this makes empathy sound like the softest of soft skills.

But here's the Oxford English Dictionary's definition: "The power of projecting one's personality into (and so fully comprehending) the object of contemplation."

Nothing in that definition tells us how we're supposed to judge the object of our empathy once we've imagined ourselves into his or her point of view.

As a writer and teacher of fiction, I've learned that empathy isn't about being nice or tolerant. It's not about feeling sorry for people or giving them the benefit of the doubt. It's an act of imagination in which you try to look at the world from the perspective of another person, a human being whose history and point of view are as complex as your own. When you write a piece of fiction, you need to imagine yourself into the minds of the bad guys as well as the good — without forgiving or excusing or oversimplifying them. It's tremendously difficult, which is why so few novels contain a variety of equally convincing characters.

It can be disturbing, too. A friend of mine, Yiyun Li, recently published a novel, The Vagrants, in which she brings the reader fully inside the mind of a young pedophile as he walks the banks of a Chinese river, hoping to find an abandoned baby girl he can take home and bring up as his own. (Publisher's Weekly called the book "magnificent and jaw-droppingly grim.") Yiyun's writing didn't make me feel sorry for her character or excuse his behavior. It made me understand the story in a completely different way. And it made me complicit — or, to put it in business terms, accountable.

Last week, David Brooks argued in the New York Times that successful CEOs are "organized, dogged, anal-retentive and slightly boring" instead of "warm, flexible, team-oriented and empathetic." It's not at all clear to me why he considers these mutually exclusive. And I'd argue that at all levels of management empathy is a critical skill. If you can imagine a person's point of view — no matter what you think of it — you can more effectively influence him. Empathizing with your team, your boss, your coworkers, and your colleagues won't make you a pushover — it'll give you more power.

In his 2001 HBR article, "Leadership in a Combat Zone," Lieutenant General William Pagonis, Director of Logistics during the Gulf War, wrote:

Owning the facts is a prerequisite to leadership. But there are millions of technocrats out there with lots of facts in their quivers and little leadership potential. In many cases, what they are missing is empathy. No one is a leader who can't put himself or herself in the other person's shoes. Empathy and expertise command respect.

Put that way, it doesn't sound quite so soft, does it?

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Posted at 10:45 AM ET, 05/27/2009

Crisis Raises New Issues for Executive Coaches

baldoni_110.jpgJohn Baldoni is a leadership consultant, coach, and speaker. He is the author of six books on leadership, including Lead By Example, 50 Ways Great Leaders Inspire Results.

1999 was the year of me! 2009 may be the year of us!

At least that is what we may infer from a new survey of seventy executive coaches conducted by WJM Associates, an executive coaching firm located in New York City. As the survey states, "the change [in coaching priorities] seems to reflect the trend of executive coaching being used by organizations to address specific business issues, rather than for individual, general 'self-improvement'."

This makes good business sense. 1999 was a good year. It was a time of the new economy when e-commerce was transforming the way people and business interact and operate. Top five coaching objectives 1999 were for "self-awareness, personal goal setting, work/life balance, stress management [and] improve quality of life." 2009 is a very different. We are mired in the deepest economic downturn since World War II. Analyzing today's coaching priorities which are specifically requested by client and their employers gives us a handle on how businesses are coping with the huge upheaval.

Build/Align/Motivate Team. Organizations need executives who know how to get people to follow their lead, especially in challenging times. It takes a leader who knows how to assemble the right people and put them in the right places so they can do the right work. Motivating them comes from providing them with the right resources and right opportunities. This is not always easy when resources are scarce so the leader needs to be seen as doing what she can to help her team succeed.

Executive presence. Leaders need to demonstrate their earned authority. Presence is the manifestation of earned authority that comes from knowing how to do things as well as having earned the respect of others. Another critical aspect of presence is composure. Leaders need to keep it together when everything else around them is falling apart. Leaders demonstrate their mettle during crisis.

Effective communications. If you want to lead others, connect with them. Yes, it is imperative to articulate the message, the goal, and the outcome. But you also need to invest yourself. That comes from listening to others as well as allowing others to give you honest feedback. Learning from what you listen is critical to moving the organization forward. Use the down time to learn more about the capabilities of your people.

Interpersonal savvy. As Harvard author and psychologist, Daniel Goleman, has taught us, leaders must be able to get along with others. The ability to relate to others as a fellow human being is essential to gaining buy in for a leadership objective. Sure you can tell people what to do, but if you do not earn their trust you will get compliance, not commitment. Being everyone's pal is not necessary, but treating others with respect is essential gaining trust, an attribute that is essential to holding teams together in trying times.

Strategic thinking. So often we coaches hear the need for managers to think and act more strategically. A reason more managers do not do so is because their bosses keep them occupied with tactics so they do not have time to think let alone act strategically. Therefore, senior leaders must give their direct reports room to breathe, reflect and consider alternatives that will affect not just a department but also the enterprise. Now is a great time to map out new strategies that may help your company find ways to make the best of bad times.

Of these five, only "executive presence" is focused on the individual; the other four are focus on relationships with others or in the case of "strategic thinking" what executives can do for the business. That said, we cannot forget the individual, as my friend and fellow Harvard blogger, Stew Friedman, demonstrates with approach to Total Leadership, individuals must be tuned into their inner selves and satisfy those specific needs if they are to be truly effective, especially over the long term.

Executive coaches are business professionals; like all consultants who succeed they have learned to adapt to changing business conditions and respond to evolving developmental needs. And that may be a hidden benefit of the executive coaching process. Since most coaches work for a number of different businesses, good ones have experience working not only with different executives, but different cultures and disciplines. That provides coaches with a long view of how organizations respond to change and how those changes affect employees. That insight, over and above the coaching process helps individual executives gain perspective that they can apply to help their organizations manage tough times as well as good ones.

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Posted at 9:00 AM ET, 05/27/2009

Stop Bankrolling Carbon-Intensive Projects

The current fiscal crisis on Wall Street reveals what can happen when long-term risk is ignored in the interest of short-term gain. Like subprime mortgages, climate change present far-reaching hidden dangers, and the financial industry should be paying attention. If you're a Wall Street research analyst, bond rating agency, or bank, you should scrub your portfolio of subprime carbon assets that may prove toxic in the years ahead. Cap-and-trade programs are being launched in several regions around the world, which will affect coal plant operators' bottom lines. To avoid a debacle like the one we're facing today, financial players must stop bankrolling carbon-intensive programs.

Today's Management Tip was adapted from "Short-Term Strategies Don't Work for Wall Street or the Planet," posted by Mindy S. Lubber.

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Posted at 10:30 AM ET, 05/22/2009

Is Your Company Brave Enough to Survive?

vermeulen-110.jpgFreek Vermeulen is an Associate Professor of Strategic & International Management at the London Business School. His blog, Strategy Freek, appears on

As a professor of strategy, lately I've been getting asked quite a lot, "What can our company do to survive the downturn?" I'm sorry, but the real answer is, "Not a lot."

The market is Darwinian: the strongest ones survive. And an economic downturn is like winter in Alaska; many animals can live a happy life in Alaska all through spring, summer, and fall, but when winter comes, it's not a great place to be. It's a much tougher environment — and only the fittest survive.

If you're not very strong, if you haven't accumulated much body fat or haven't developed the ability to hibernate, I am afraid it is going to be tough for you, too. "But what can I do to become stronger? Get thicker skin? It's getting a bit cold here!" you might cry. Well, I am sorry (again), but winter in Alaska is not a great time to try and become stronger. It is a tiny little bit late for that...

But I do think there are a few survival techniques from looking at firms' downturn survival strategies, although they are not for the faint-hearted.

First, we see quite a lot of firms display what we in management academia call "threat-rigidity effects." When under threat, facing a shortfall in performance, firms are inclined to more narrowly and firmly focus on the one thing they do well (e.g. their core product or service), stop doing other things, and become more hierarchical and top-down in terms of management control.

Unfortunately, this often makes things worse, or at least prevents you from coming up with any solutions.

What firms are better off doing, is opening up; exploring new sources of potential revenue and experimenting with bottom-up processes to generate such ideas and innovations. Let me give you an example.

I am in touch with a company, here in London, that provides custom-made software for all sorts of logistics systems, which they offer in combination with personnel training. Unfortunately, the vast majority of their customers are automotive companies, like General Motors and Ford... clearly not a great position to be in right now. This recession has definitely been winter in Alaska for them, and at first they went through the usual cost-cutting and rounds of lay-offs.

After a while, though, the CEO decided to try something a bit different. He initiated some processes for all employees to start generating ideas for potential new sources of revenue, which they enthusiastically participated in (it was not like they had anything better to do...). Most ideas were rubbish; some ideas were so-so, but a few ideas were really good! One of these ideas has now brought them a substantial new source of revenue.

One team had noticed that there was always one business unit doing rather well among their automotive customers; the unit providing spare parts. That's understandable; in a downturn, when people stop buying cars, more people need to have their cars repaired. And this greatly helps the spare parts units. So, this team decided to propose an inventory control product specifically aimed at the spare parts units of automotive companies. And it worked.

This is the opposite of the usual "threat-rigidity effects" — rather than focusing and becoming more narrow and top-down, this company opened up, organized bottom-up processes and tried something new.

This is a brave thing to do, when the winter blizzards are turning your ears frosty, because it feels like spending money rather than saving it. But finding the "spare parts division" among your customers might just see you through the downturn.

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