Chapter 5

The Right Things at the Right Time

The costliest mistake that leaders make is failure to delegate. It drowns leaders in the daily trivia sprouting from “failure to ship,” which means loss of cash and risk of business failure, especially for businesses with sales up to $500 million (SMEs). Remarkably, the simple decision to delegate fuels powerful growth in leaders and their businesses, even as it multiplies uncertainty and stress.

Verne Smith led an organization of a thousand-plus meat-cutters in 150 Chicago-area Jewel Food Stores, when meat was still cut in the stores. As a very young trainee, I watched Verne in his office plan his day:

• Dump the bottom desk drawer in the wastebasket.
• Dump the middle drawer into the bottom drawer.
• Dump the top drawer into the middle drawer.
• Dump his inbox (full of memos) into the top drawer.
• Me to Verne with horror: “What are you doing!?”
• Verne to me with a grin: “They can phone me if they want me.”

The point, for those still marveling at a world with memos: Verne had built leaders who would do the right thing, surrounded with a system that framed their responsibilities, detailed correct practices, and measured their performance. He delegated daily operations to them, and then checked and coached as needed to maintain performance momentum. He knew better than anyone what his teams needed to thrive.

When should a CEO or top leader delegate? The idea is to build a system that thrives on delegation and dictate as little as possible.

What's your balance of dictating versus delegation? Next week track each transaction with D (Delegated) or d (dictated) for three days (usually your busiest). Tally the totals each week, and figure the percentage delegated. Repeat for two more weeks. Combine the results. Your goal is 75 percent D and 25 percent d.

WHEN TO DELEGATE AND WHEN TO DICTATE

Regardless of the result, work on sharper goals or more skilled leaders, and immediately delegate more. What happens when you delegate more? You quickly see where reinforcements are needed. The results often stop the debate, which enables the strengthening you want.

Leadership Tip: Ask your key leaders to do this measure for four weeks and schedule a sharing of scores and their actions to improve.

The Secret Measure

Delegation is the best quick measure of organizational strength that I've seen. If you compare operating statements, customer ratings, and growth, the higher the D, the more likely the organization will be eating its competition's lunch. Why? It launches more employees toward key goals than any other formula; ownership fuels pride that drives to the goal line. It moves the leader to coaching, multiplying his skill and knowledge through many people, instead of keeping him in the game as the main player, limited by his capacity. And it lasts because it forces development of other leaders, and because it doesn't depend on the leader's energy to row the company boat.

When to dictate (other than a fire):

• When there isn't time for your team to repair its mistake.
• When there is a huge unexpected risk, outside the norm.

What to dictate. It's divided between specifying and approving. “Specifying” means scheduling the work and defining the outcome. “Approving” launches subordinates who have agreed on targets and plans with the CEO to move to accomplish the plans. Hurdles or deviation pull the CEO back in as helper to the owner of the activity. The more the balance is toward approving/advising and away from specifying, the stronger the team, and usually the better the results.

From Dictate to Delegate

The trap is sliding from “what” to “how” in the mistaken belief that the leader knows the best way to implement the priority. Not only is this seldom the case, but a regular diet of “here's how to do it” from the boss will drive your best people out the door in stunning numbers.

Future leaders grow up being praised for what they do individually, but often flounder as they shift toward leading. Peter Drucker is still right: The leader's job is to get the right things done. It seldom is to do them. The trick is to find the balance. Sort your inbox into three piles:

1. Delete: forget it.
2. Delay: put it aside; your people will fix it if needed.
3. Delegate: needs to be done. Yes, delegate everything.

Now fear jumps into your lap, whispering that only you can fix it. Instead, ask these power questions:

1. What do you think we should do?
2. What will it take?
3. How will we measure progress?
4. When will we be done?

Once begun, delegating means helping as little as possible but checking regularly on progress to look for problems, and providing help only as needed to get past the problems.

Check in according to the skill of the person who has the project. More skill = less checking, and the converse is also true.

Dictation leadership does damage in the following ways:

• It drowns initiative in others. Why step out? Just wait to be told; it's safer.
• It confuses most leaders because it collides with their plan (that you approved).
• It erodes communication lines; unless it's direct from the boss, it doesn't matter.
• It creates a wasteland after your order is carried out. What now?
• It adds to your workload because you now own problems with the follow-up.

Still fighting it? Here's the real rule: Whenever you dictate, you've failed.

Corollary: The growth of your company (in profit) is inversely related to how little work you do yourself. Yes, the less you do, the more successful your company will be.

Delegation is the most misunderstood critical skill in the leader's toolbox. It's not a handoff; it's a way to powerfully and quickly multiply your team. The foundation is their conviction that you will always delegate to them—always. Of course, excellence is expected every time.

Once you've handed over the responsibility, you can become a helper. Until you do, you're a dangerous dictator.

Every leader has three jobs:

1. Grow leaders who deliver results.
2. Set priorities.
3. Manage risk.

The foundation of delegation is active accountability, which means that you and your team know that you'll check on progress, expect problems, and count on them to drive to success with whatever help is needed. You never take the ball. Like a great coach, you prepare and guide your team to win. Let's look at the formula.

First comes the setup:

1. Pick the team.
2. Surgically define the outcome and the fences.
3. Get agreement on the timeline.
4. Schedule checkpoints.

Adjust and finish:

1. Check as planned, asking, “How are we doing?” and “What do we need?”
2. Knock down doors to get your team what they need (and no more).
3. Steps 1–4 can be done in less than a half hour. If it isn't done, your odds stink.

MEASURING THE ROI OF PEOPLE DEVELOPMENT

This is about knowing when to hold ’em and when to fold ’em. Only the wisest leaders invest in their people instead of talking about it. The rest do what one client did: “Well I needed to keep him from looking for a job with another company, so we sent him to some training!” Fortunately, months later an outside coach helped this former team leader prepare for a spectacular five-year career marked by success in leading three different departments: engineering, production, and sales. Of course, he's talented and worked hard.

Don't you have at least two or three folks like that in your organization? If not, get them this year, and find them a job. As Bear Bryant, legendary Alabama football coach said, “Get the winners into the game.”¹ How does a company get the winners into the game?

Take this culture test to see if you're even trying. Rate each statement true or false as they apply to your top leaders. Total your Ts and Fs, and check your score at the end. Answer how it is, not how you'd like it to be.

1. They'll pick up what they need just by working here.
2. Things are fine; don't rock the boat.
3. We need them in their current jobs right now.
4. We can't afford to train for jobs until we need to fill them.
5. I learned it the hard way, and it's working for me.
6. We don't have time or money to do skills assessments.
7. We can teach machine or accounting processes, but we can't teach leadership.
8. People who want to learn will find a way.
9. People are either leaders and managers or they aren't.
10. We're doing okay. How much better will it really be?
11. We can measure the return on a machine, but a person? Not so much.
12. We've got every position filled with a capable person.

How did you score? If there are more than three Ts, you're grinding to a halt, vulnerable to competitors.

Look at your favorite NBA team. There are three truths in the NBA:

1. Gifted coaches consistently seem to do better (San Antonio Spurs).
2. Teams with average players finish in the bottom half.
3. Top teams constantly bring in players and send them out.

You don't have to be the best leader in the world to be successful, but if you have a mediocre team or worse, you're doomed. Excellent teams have excellent players playing in the best positions for them and the team. It's simple. Apply that to your business.

Find Your Players

The excellent players are only in two places: within your business or outside it. Why not look both places?

In your business, do this simple procedure annually, without fail. Rate each leader with a single letter that combines job performance and work discipline:

A = Exceptional

B = Good, reliable

C = Needs improvement

Evaluate your scores. If all are rated the same, repeat the exercise with clearer instructions. Spot outstanding leadership potential by checking for these strengths, which come from studies of genius:

• Works well with others.
• Unusually perceptive.
• Works hard.
• Makes connections rapidly across unrelated information.
• Consistently delivers good results on time.²

Unless all five are present, odds of success as a senior leader are slim.

If you're looking for players outside your business, make it your business to meet and know the best players at your competition. They may be young, unproven, and driven, not yet a superstar. Think broadly. Look beyond your direct competition to companies known for superb talent. Their weakness often is the problem of hanging on to talent when there's top talent blocking their upward movement.

Grow Your Players

Respond to their scores (as demonstrated in the following paragraphs), in addition to the next individual development step or training:

A players. There should be at least one in every department. If not, get one or grow one. Craft a three-year plan with each of them that's focused on their goals and the help to get there. Spend more of your leadership time and thought on these people because they are setting the pace for the company.

B players. If this is an A-potential person, find out what it will take to get them there; it's either training or reassignment. The person may be in a job that demands skill in a weak area or is new. The personality-conflict explanation is seldom the real reason, although occasionally it's a contributor. Sometimes a B player will be a B player. If they are contributing well, appreciate them and keep them challenged. They don't need to become an A player.

C players. Choose the path you'll take with them. Some C players will always be plodders, so put them in plodder jobs because some plodders are fundamental to business success. If they might have potential, identify specific growth areas with those people, track it monthly, and give them half the time to become a B that you think it should take. If their C rating is a cover for unsatisfactory performance, see “Pull Weeds” on page 111.

Move Them

Put A or B players into new roles where they shine. When they've mastered the current role at 75 percent, start looking for their next place to contribute. Yes, create positions for them, usually by collecting portions of existing jobs to match their next development need. The strongest companies put their strongest people in jobs with the highest impact on company results. They do this even when their strongest people demonstrate a technical knowledge gap. They've learned before, and they'll learn again. Don't wait.

Pull Weeds

When people fall short, follow these three steps, always in writing:

• Tell them what they need to step up to acceptable performance, with a target date.
• At the target date, determine if they have improved enough or they haven't. If yes, praise and ask them to build on their improvement. If no, give them thirty days to meet the targets.
• At thirty days, they either stay in their jobs because they've improved enough, or they move to another position, within or outside of the company. Move them to positions that they can likely do well, if possible. If not, thank them for their service and see them out of the business.

Act

Without exception, every leader I've talked with has admitted to moving too slowly much more than moving too fast. The difference is that if you move, there's probably room to adjust. If you hover over the nest, nothing hatches. You can get advice from your best advisors before you move, but move when you're 75 percent sure, not 105 percent.

THE PROS AND SIGNIFICANT CONS OF EMPLOYING FAMILY MEMBERS

Jerry started working with his dad in their manufacturing business when he was a kid. He went on to become its successful president, with a helicopter and forty-four-foot boat for him and his wife, Susan, to enjoy. Susan was another matter. For a while she did well, but as the business grew, the stress of managing finances and office staff worried her enormously. When I met Jerry, he confided that he was sleeping less than two hours a night, and he and his wife fought daily at home and at the office, to their mutual chagrin. When he brought in an outside office manager, his wife resisted at first, understandably reluctant to give up control to someone new. Only as she stepped into a new role as his partner in ownership, and they hired a VP of operations, did the business and their marriage stabilize. They took their first vacation in eleven years, and five years later, they sold the business for more than they dared to imagine. This happy story hides the complex difficulties that accompany family members in a business.

Three explosive issues are usually present in a business that includes more than one family member:

1. Parental fantasy. Early-stage business building is like observing your kids’ early adolescence or the early relationship with your spouse. Hope, essential for powering through tough times, obscures reality in the foggy desire that your family member will be an exceptional contributor to the business. The facts usually disappoint. The question is only about the damage to the business and the family.
2. Adding a family member as an employee, regardless of competence or desire, multiplies the risk of family pain, dilutes essential business culture, and adds complexity that risks the success of the business. Picture the juggler who moves his juggling act to the high wire at Cirque du Soleil.
3. Succession, especially for the CEO and primary owners, has been well discussed in the literature. The hidden problem is for him or her to grasp and implement the necessary shifts in role from leader to advisor. Without that shift, the business will die or be sold, but denial and habit powerfully work against both. The hidden shift is the declining power and influence that successful succession demands. More bluntly, in early years, employees do what they are told; in later years, the advisor is limited to occasional suggestion. The path is familiar, like parenting: significant power in early years to occasional powerless guidance as the child moves into her twenties. The trick, seldom mastered alone, is knowing where one is along the line and what spot optimizes results for the business. The two are seldom the same. It is much more fraught if the successor CEO is a child, because of the inevitable emotional riptides.

Critical insight: Supplement your basic three advisors (CPA, attorney, financial) with a dream team of outside professionals experienced in the sweep and complexity of business strategy and operations. Otherwise, your key advisors join you in not knowing what you don't know. The basic three advisors’ deep skills are essential to your success, but their peripheral vision is often impaired by success in their narrow field and limited exposure to the complexity that you face as CEO. Ask these outside professionals regularly for tough insights to penetrate the fog of business as usual so that you can see clearly what is needed next.

After all that, if you still insist on adding family members to your business, then consider the three stages of the process with all their implications.

Stage 1: Bringing Family into the Business

Employing your son, daughter, or other relative in your business may be the worst investment you'll ever make. It's high risk financially and emotionally, the odds of pain are high, and the business results often will fall short of the contribution that a skilled nonfamily member delivers. Yes, folks do it all the time, and yes, it appears to work. But as a wag said, “You're comparing their outside with your inside.” The other owner's experience looks okay from the outside, and problems too often are dismissed as unique family dynamics. Hiring your relative is much like addiction. It's unfamiliar at first, then it's wonderful, and then it's impossible to get away—or nearly. Like a teenager, you think, “It won't happen to us,” until it does. Let's cut through it: An owner who hires a relative is doing it mostly for himself or herself, not for the relative.

Disregard these rules for hiring a relative at your peril:

1. Start with the health of your business, not the possible contributions of your family member. Most businesses succeed or fail because of what their people do or don't do, not what their machines do. How can you tell? If there's a problem with a customer, you wouldn't allow it to be blamed it on a machine, would you? If the machines are operating directly with your customers, then you'd look at how they were set up, their weak spots, and so forth. You would expect that a worker would intervene to prevent a problem or solve it. That means that your employees matter. A lot. So your rule for hiring is about what the employee can deliver to the business, not the reverse.
2. Hire any qualified relative before they are age twenty-five in a menial job with a boss that respects you enough to require your relative to perform. Set a termination date when they start, and require a written evaluation from the employee and boss of no more than one page (it should include three sections: strengths, weaknesses, learnings).
3. Tell every relative that they must successfully work at another firm for three to five years and be promoted at least twice. More is better. They must provide a performance evaluation from that employer before you'll consider them.
4. Explain that you can only hire them if there's a real job opening in the company.
5. Use an ownership meeting (meeting of owners) to evaluate the relative versus the other best candidate for the job, and may the best person be hired. If possible, turn down your relative's job application at least twice, and be specific about the skills they need to develop to be considered.
6. Use an ownership meeting to clarify your purpose in hiring the relative. If it's mostly about family, be clear about that in the meeting.
7. To avoid crippling your relative, assign him or her to your toughest manager, with the express requirement that they earn his or her respect. That respect is a requirement for further employment or promotion.

If by now you're nodding your head and saying, “We're doing all that,” then ask someone you trust (your dream team?) to audit what's really happening with the family employee. Are all seven rules being followed?

Are you willing to follow them?

Stage 2: Running the Business and the Spirit Problem

The spirit problem exists as soon as the second employee is hired, relative or not. The spirit problem is that as the leader, regardless of title, your opinions guide any employee who's been with the company a month or more. In fact, you exist in their heads as a fully formed person with specific opinions about everything in the business.

The first transaction: The employee looks at a task and asks himself, “What would the boss want?” The question is a problem, but the bigger problem is the employee's imagination, which decides what the boss would want and enacts it. Never mind that the employee has no idea what the boss really wants.

The second transaction: The employee starts training an employee and asks, “What would the boss want?” As before, the trainer applies a mix of personal experience, her own training, and her imagination about the boss to spell out how a job is to be done. Until the boss checks, he doesn't know what the employee thinks he thinks!

The third transaction: The employee, now a senior executive, makes a difficult and complex decision, secure in the knowledge that the boss would do it the way he just did it. When the boss discovers the decision and disagrees profoundly, the mess from the “boss ambush” can stretch from fear by the employee to a rush of powerlessness that sticks like gum to a shoe. The “boss ambush” is well meaning and inevitable because leaders’ views on complex issues will vary.

Stage 3: Turning Over Leadership to a Family Member

The spirit problem is a modest challenge until the leader wants to step back. Stepping back requires either a new leader or selling the business.

Hiring a relative to become president or CEO means moving him through all departments in the business and requiring success in each. With proper preparation and an authentic willingness to continue to learn, the new CEO may have a chance to succeed. The problem is that because his mom or dad ran the business, his decisions will be influenced by his memory of what the parent “would” do. That memory may drive either compliance or rebellion, but the problem is the same: the outsize influence of the parent. It's good in theory—the parent has wisdom—but unless this memory is updated with the current reality, it's almost always a liability.

A manufacturing company was successful for twenty-five-plus years, through ups and downs, but finally dissolved into bankruptcy because the son couldn't see past his dad's practice of cutting employees to the level that current sales would support. The problem was that he didn't move past the cutting to pump new life into the business, either by borrowing money for operating capital or investing in sales growth. He didn't seem to see what he didn't see. Excruciating.

But then consider this killer question: What is the new role of the current CEO, and what is the path for him and the relative to reach their respective positions (likely, the current CEO becomes chairman)? This vital dance too often focuses on the replacement person and not nearly enough on the tough task of the incumbent to reinvent himself and his role in the company that he's devoted his life to building. This dance juggles the continued health of the business and its employees, funding retirement for the exiting CEO, and threading the path of a parent and leader with a son or daughter.

There is little expert guidance, other than legal and financial, provided for the retiring CEO by his long-term advisors. Neither is sufficient. It's not about the technical land mines, although they need attention. It is about a man or woman who has succeeded for years by being in charge, assessing risk and acting, being in the pilot's seat. Riding in the back of the plane is so unfamiliar that it breeds unhealthy reactions.

What's a former pilot to do? Get expert help in the form of a mentor who will tell the truth. Then follow these steps:

• Write a letter to the new CEO outlining your confidence in and expectations of them. Hand it to them and take yourself out the door.
• Ask the new CEO how you can be helpful, both in form and content.
• Suggest this framework, because neither of you is experienced at this.
• Types of situations where you might be helpful in the “how,” but not the “whether”:
  • Major investment.
  • Major hiring.
  • Firing high-level senior person.
  • Major restructuring.

Yes, you're available when the stakes are high if you'll limit your advice to asking or suggesting questions to aid in the decision. As soon as you shift to prescribing from questioning, the historic fog of your relationship will dilute your wisdom and put the decision at risk.

How can you construct situations where you can be together without the business being the topic on the table? For some, this is a nonstarter. For others, it's a powerful placebo to deal with the very real loss of your position, power, and respect. Your greatest risk may be that you are unwilling to live the life you now have and try to sneak back to power. Some do, but often at eye-watering cost to family and the business.