Chapter 16
Is That the Best You Can Do? Motivating People by Challenging Them
When I hired Bruce Karatz, who would go on to be the CEO of Kaufman and Broad, he was already a go-getter—a lawyer willing to give up the security of a law firm to work for a homebuilder.
For his first nonlegal assignment, I asked him to drive out to Riverside, about 90 minutes east of Los Angeles, to check out some land we were considering buying. Bruce was enthusiastic, went out there a few times, and wrote a report for me. I let a couple of days go by without responding, until Bruce came in and asked me what I thought.
“Is that the best you can do?” I asked.
Bruce looked a little worried. He said he would work on the report some more. When he brought it back, I asked him one more time: “Is that the best you can do?” He took it away, made some more revisions, and brought it back a third time. I asked him the same question again. By that time, Bruce was pretty sure he was about to be fired. He threw up his hands and said, “Yes, that’s the best I can do.”
“Good,” I replied. “Now I’ll read it.”
Bruce felt a bit jerked around, but he was a good sport—and smart enough to see that I had managed to get his finest work. I never had to pull that stunt on him again because he knew that I expected his best effort. Years later, when executives at more than 100 companies were accused of backdating stock options, Bruce’s high profile attracted the attention of federal prosecutors, who charged him with a raft of offenses. Ultimately, he was acquitted of any serious misconduct but convicted on three minor charges. At loose ends while awaiting sentencing—he ultimately received home confinement—Bruce threw himself into helping Los Angeles’s most successful gang intervention program, Homeboy Industries. Founded by a Jesuit priest, the organization employs former gang members in a bakery, a café, and a variety of other occupations. When Bruce became involved, Homeboy was on the verge of collapse because demand for its services had grown while the recession had dried up its funding. Bruce applied his marketing genius and helped Homeboy generate new business and additional investors.
During the years we worked together directly, Bruce’s performance always reminded me that your best motivator always is an unreasonably high goal.
High Expectations and Shared Challenges Create Loyalty
I like people who are self-motivated, as I am. But even the best athletes have coaches, and the brightest students need mentors.
I believe the best way to mentor is to challenge people and then to set an example by letting them see you in action. My former assistant Jay Wintrob, now president and CEO of SunAmerica Financial Group, calls me an “untraditional mentor” because from his earliest days on the job, I simply started handing him projects. I never sat him down and said, “This is the way I want you to approach this.” I just sent him off and made sure he was comfortable coming to me with questions as they arose. To this day, Jay calls that my “go figure it out method” of leading. In fact, that was the line Alan Cranston used with me when he asked me to chair his Senate campaign.
I used that method many times throughout my career, particularly with Jana Greer, who you read about in Chapter 7. Jana, who is now president and CEO of AIG SunAmerica Retirement Markets, Inc., came to work for me when she was just 22. Not long after she joined, our vice president of corporate communications resigned. I called Jana to my office and asked, “So have you ever written an annual report?”
Jana later told me her first thought was, “I don’t know that I’ve ever read an annual report.” But all she said at the time was no. I informed her that she was about to write ours. She asked for examples and suggestions, which was the response I was hoping for. “You’ll get it done,” I told her. “I’m not worried at all.” As it turned out, I was right. She got it done and she did an excellent job.
When you challenge people to dig deep and do more and better than even they imagined they could, it creates a particular bond. Certainly that was true for Jana, just as it was for Jay and for Bruce. To this day I share a fierce loyalty with each of them.
Nothing Motivates Like Achievement
I find that the most effective way to motivate people is to accomplish big things together. When you set the same unreasonable goals for your employees that you do for yourself, your expectation becomes a gesture of respect. That’s what I hoped would happen when I gave our foundations’ chief investment officer, Marc Schwartz, a particularly challenging task.
Facebook came to my attention in a personal way in 2010, when U.S. Secretary of Education Arne Duncan asked if I would meet with Facebook founder Mark Zuckerberg and brief him on our decade-long efforts to reform public education. Mark and his chief operating officer, Sheryl Sandberg, came to our home on a Saturday, and we spent several hours discussing the crisis facing America’s public schools. Mark and Sheryl were impressive, smart, and driven. I appreciated that Mark was self-made and had all his own money tied up in his company. He had made all the right moves in starting the social media site and his thoughtful approach made me believe his batting average would remain high. Although I didn’t understand all the nuances of social networking, I understood its potential to generate information and money for advertisers, especially for local businesses or start-ups. It was clearly a powerful model. I knew that if our foundations could secure a stake in his privately held company, we wouldn’t have to wait 10 years to realize our investment’s potential—probably more like one or two. I decided we needed to invest in Facebook.
I called Marc Schwartz into my office to tell him my idea. He had been working for me only a few months when I gave him the challenge: “Buy us a stake in Facebook. I don’t care how you do it, but buy us a stake.”
It would not be easy. Marc would have to find a fund or an employee who had shares in the company and needed liquidity. He would have to do a lot of research and talk to everyone he knew and somehow dig his way to a willing and credible seller.
I usually communicate with my investment team by phone, or they see me in my office. But after I laid out that goal, every time I saw Marc, and the times I called to check in, my first and sometimes only question was “Did you buy Facebook yet?” I could see the frustration on his face and hear it in his voice. Every time, he would say no and give me the latest roadblock he had hit and then start to say he didn’t think it could be done as soon as I wanted it done. And every time, I replied, “Uh huh. Buy Facebook.”
After several weeks of this, Marc hit pay dirt. His creativity and resourcefulness led us to a great find and a secure investment. My investment team likes to joke that I accept a no after the tenth no. Marc didn’t quite hit 10, but we got close. Instead, because he was challenged to his limits, Marc found opportunity for us where even he was skeptical it could be found and certainly not in the timeframe I demanded.
We secured the bulk of our investment just before Goldman Sachs purchased a big chunk of Facebook, pushed its valuation way up, and launched a feeding frenzy, long before the company filed to go public. Had we waited, we never would have gotten our stake at the price we did, if at all.
What’s Better Than Praise—Money and Higher Expectations
I’m not effusive, even in moments of triumph, and I don’t hand out compliments lightly. That makes my employees value them all the more when they receive them. It also means that I get the maximum impact from the positive feedback I give because the person hearing it knows I’m sincere. The best praise is specific, genuine, brief, and, ideally, followed by setting a new, more demanding goal. Entrusting people with greater responsibility and greater expectations is the highest form of praise.
A bonus tied to performance is even better than praise. Whether we’re comfortable admitting it or not, material rewards are how we keep score in the business world. The best employees don’t work solely for money, but nobody works without it. While I was running SunAmerica, if the company and our employees performed well, they would receive a bonus and additional stock options, which was pretty unorthodox at the time. Giving my team an immediate and concrete return on their efforts was better than a hundred flowery phrases. It also made them see the value in the challenges set for them.
Fear Is Not a Motivator—It Only Gets You Unhappy Employees and Poor Work
When it comes to motivating people, fear is as overrated as praise. I don’t use it because it’s disrespectful of employees. What’s the point in demonstrating over and over that you’re more powerful than they are?
I also don’t believe in explosions of temper. For one thing, as you’ll recall from our earlier examples, emotion clouds your judgment. If your emotional outbursts simply provoke another emotional reaction—like fear—nobody benefits.
I don’t casually tell people their jobs are at stake. I don’t raise my voice, and I rarely curse. People know when I’m unhappy. But I don’t express displeasure over failure if it’s preceded by serious effort toward one of my unreasonable goals. This means my employees are never afraid to try and to fail. I still believe the same thing I said to Jay Wintrob when he first started: “Show me a person with an unblemished track record and I’ll show you a person who has dramatically underachieved.” There is a lot to be said for batting .600. If you’re doing 10 things and only 4 are failing, that’s pretty good.
Many of my senior employees, in fact, talk about my willingness to let them fail as long as they learn from the experience. Very early on in attorney Deborah Kanter’s career with our foundation, I asked her to handle the purchase of some land from another major nonprofit institution. Her background was in tax and intellectual property, and the lawyers for the seller put something over on us. Although she had pushed beyond her expertise, Deborah felt she should have caught the sellers’ maneuver. She came to me to report it, fully expecting to be fired. She told me precisely what had happened and that it was possibly too late to do anything about it.
I sat and thought for a minute. Then I said, “Well, I’m supposed to be the real estate expert. I should have caught it too. Let’s see what we can do to mitigate any damage.” We just moved on. In the end, it turned out that we were able to fix the initial problem. Deborah went on to tackle even more tasks outside her comfort zone. Most recently, she took on managing the construction of The Broad.
If you let your employees fail without punishment, you’ll win their loyalty, their hardest effort, and their willingness to take risks with you. No one will resort to finger-pointing or cover-ups.
Think about the last time fear motivated you to do something well, to exceed your limits, or to really contribute. I’m guessing you won’t recall a positive experience. Fear does not inspire loyalty, creativity, or genuine commitment. It’s a waste of time.
Whether You Succeed or Fail, Keep Moving
If you don’t reach your goal, or achieve only part of it, there’s no shame. That’s what’s great about an unreasonable goal—even when you miss it, you’ll probably get farther than you ever thought possible. If you fail, just figure out why, learn your lessons, and move on to the next thing.
And if you succeed, I recommend doing exactly the same thing: move on. Nothing breeds complacency quite like a string of successes. In that sense, success and failure can be equally dangerous—one can immobilize you with self-satisfaction and the other can paralyze you with fear. Think of them both as preparation for the next unreasonable challenge and use what you’ve learned to tackle it.