HR Skills: Critical for Entry Level Managers to CEOs

There are many routes to the CEO suite, but human resource jobs are often discounted as “not the proper path.” Change may be coming though, and sooner than you think.

Did you see December’s Harvard Business Review article, titled “Why HR Chiefs Make Great CEOs—Really”? The piece focuses on research conducted by Ellie Filler and Dave Ulrich. They analyzed similarities between top performers with Chief titles. The bottom line? The best performing Chief Human Resource Officers displayed traits most similar to those of successful CEOs, more so than high performing CFOs, CMOs, or CIOs. In fact, only Chief Operating Officers, whose roles and responsibilities often overlap with CEOs, displayed higher similarities.

It’s important to recognize the critical skillsets that human resource jobs enable employees to develop: namely, managing human capital to strengthen a company. Leaders at all levels must make HR a primary focus if they want to build a team that can generate sustainable growth.

For any company to succeed, it is critical to attract and retain the right talent. Companies need to organize, compensate, and build a change-adaptive culture. While the CHRO leads these efforts for a company, these keys are the responsibility of Chiefs at all levels, independent of their job titles.

Premier organizations like The Conference Board regularly report on CEO views of top global business priorities. Their 2015 survey results are due in March, but most expect last year’s top five CEO concerns to stick:

  1. Human capital
  2. Customer relationships
  3. Innovation
  4. Operational excellence
  5. Corporate brand and reputation

With Gartner reporting that over 85% of the U.S. workforce is not fully engaged (at a cost of $370B annually), the top priorities for every manager needs to include a focus on human capital and employee engagement.

The Harvard Business Review indicates that companies will increasingly look to executives with HR experience as CEO candidates, following path finders like Mary Barra, the current CEO at General Motors. Hopefully that’s true. But even a powerful CEO can’t fix engagement issues by him or herself.

All companies need to emphasize the human capital element of every manager’s job to increase the success of the organization. Integrating HR assignments as part of the development plans for future leaders is part of the solution.

The bottom line: HR skills are critical at every level to the success of any company—really.

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Suppliers and Appliers: Another Key to Sustainable Success

“If you can’t explain it simply, you don’t understand it well enough.” —Albert Einstein

Does your company understand what type of business it is? In my experience, there are three types of companies. Understanding what type of company you are is a key factor in unleashing your potential for truly sustainable success.

In a previous blog I shared my definition of sustainable success: (1) maintain above average market growth while you (2) earn employee engagement, (3) deliver shareowner value, (4) create customer loyalty, and (5) operate as a conscious and accountable member of the community.

To accomplish these objectives, companies must start by understanding what type of business they are, and must connect their understanding of the company to the priorities they set and the choices they make. There are three types of companies: suppliers, appliers, and combos.

Suppliers

The majority of companies in the world are suppliers. They provide products that meet customer’s needs. The product must match or beat the customer’s expectations in many areas, including specific features, availability, delivery, and quality. The best of these companies make it easy for potential new customers to choose products by selling them either directly or indirectly via convenient means. Accessibility to their product is key for supplier companies.

The best suppliers can also create new products, staying one step ahead in the game. Pricing is nearly always an important factor and profits stay high only for companies with demand or without competition (e.g. patent-protected drugs). One of the biggest challenges for suppliers is maintaining customer loyalty, even when competitors offer lower prices. Suppliers must invest financial and human capital in each of these areas to stay one step ahead of their competitors.

Appliers

Some companies understand a customer’s needs so well that they can become appliers. Using goods and services from multiple sources, appliers install or deploy a product that helps a customer solve problems.

Applier companies understand that their employees are their greatest asset. Investing heavily in human capital is important for appliers. Competition is part of every market, but appliers understand their employees can set them apart by delivering value and building strong relationships. One of the biggest challenges for appliers is to stay up to date on all the products and services in their industry, but appliers who build strong relationships can earn higher levels of customer loyalty and often, higher profitability.

Combos

The final category comprises combination companies, or what I call “combos.” They are both suppliers and appliers. A great example is Home Depot. With their original motto “You can do it. We can help,” Home Depot has generated revenue both as a supplier of goods and an applier of expertise. Another example is Xerox: “Do what you do best. We’ll manage the rest.” Similar to Home Depot, Xerox supplies customers with technology and applies technology to meet customer needs.

Companies like Xerox compete on features, availability, delivery, quality, or price as a supplier and compete on solving customer problems as an applier. Companies that both supply and apply have the challenge to compete against firms that specialize in only one area but also the opportunity for loyalty and higher margins by becoming a true partner with their customers.

Priorities and Choices

Today, there are great companies succeeding in all three categories. This success stems from an understanding of what type of business they are. Does your company understand what type of business it is? Are you a supplier? Are you an applier? Are you both? The answers lead to decisions that will make your business more successful.

As a supplier, do you understand your customer well enough to anticipate their future needs? Who makes the buying decision for your customer? Is it an applier? What part of your value proposition is most important in your market? Do innovations in technology change your relationship with your customer?

As an applier, are you investing enough to keep your workforce current? Are you leveraging your customer knowledge to expand your business? Are you pricing your services to match the value you provide customers?

As a combo, how do you manage both parts of your business to optimize each? When do you recommend your own products and when are you best served to recommend others?

Achieving sustainable success is the objective of every company. In all cases, a clear understanding of your business enables you to make decisions on where to invest resources and where to focus to achieve growth—for the long term.

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Success without Control

The pressure to succeed in today’s market is ever present. In many hyper-competitive work environments, companies are looking in every direction to gain any possible edge. Yet everyone is operating with access to the same information.

Some company leaders respond by attempting to centralize decision making in an effort to gain tight control over the rapidly and constantly changing forces that influence business outcomes. Others have learned a key lesson—centralizing decision making is often the worst thing you can do to improve performance because of one simple truth: control is an illusion.

So, how do you succeed without overreaching for control? Generally, you do everything possible to maximize the probability of success without control. But how? A good place to start to look for tips and best practices is the 2014 list of Most Admired Companies. Great companies do five things, consistently. They:

Increase discipline: Discipline is a critical component of sustainable success without control, and is a key to increasing its probability. First, companies that succeed are meticulous in planning the work and working the plan. But an often forgotten element of discipline is also the ability to adjust. Amazon is a master of discipline. In fact, they have developed a reputation of adjusting before others. Bezos’ ability to envision and adjust ahead of the market is set to be proven yet again. Learn how to adjust before it’s your only choice, and you will be ahead of the game when it comes to discipline.

Increase support: Companies that succeed over the long haul understand that their employees are their most important asset. Accordingly, firms that choose to invest in these assets by supporting their employees will get great returns. Starbucks sets a great example of support by innovating around employee education and benefits policies. Practices such as these attract a motivated, loyal employee base. Informed and motivated employees don’t need to be controlled. Encourage and enable your staff and you, too will unleash talent in your organization.

Encourage creativity: I propose that creativity is actually the ability to manifest, or create, the future. Another key to success without control is for companies to ensure they are aligned in everything they do. Is there a direct correlation between what they say and what they do? Whole Foods succeeds in this arena, by connecting what they say and write with what they do. Their senior leaders have also been very transparent about what they think and what they feel. The Whole Foods team is raising the bar when it comes to paving a new road for how we do business. Is your organization connecting what it says to what it does?

Encourage insight: The development of insight is one of the most valuable investments you can make, both personally and as a business. Confidence comes from understanding who you truly are. Forward thinking businesses are offering mindfulness programs to their staffs. Google’s popular meditation course Search Inside Yourself has been wildly successful. They clearly see this investment as a valuable part of their growth strategy. Offering programs of this sort will help your company tap into a powerful resource.

Reinforce values: Values are the foundation of relationships and of sustainable success without control. When people can connect to their values, and connect their values to their company’s values, the coherence that results can fuel a stronger commitment to the company’s success. CostCo’s focus on a concise code of ethics makes for an easily communicated value statement that shows in every phase of business. Are your organization’s values known to all? If not, consider a new communication strategy to get the message out.

Taken together, these five steps will both unlock the potential in your organization and lead to sustainable success without ill-advised overreach for control. Use this guidance to help make good choices with customers, costs, and financial capital while you stay knowledgeable about competitors and be an active, positive force in your community.

Following this roadmap won’t guarantee that your company will be added to next year’s list of Most Admired Companies, but it will absolutely help your company maximize the probability of sustainable success without control.

It’s the best you can do.

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The Most Important CTO

When I refer to “CTO,” does Chief Technology Officer come to mind? Or maybe Chief Training Officer? How about Chief Tax Officer? You might be surprised to learn that I am referring to another CTO—the most important CTO. In my opinion, the MVPs among CTOs are Chief Talent Officers. Often referred to as CHROs (Chief Human Resource Officers) or EVPs or SVPs of Human Resources, Chief Talent Officers lead teams that can make a sustainable difference in the performance of any group.

Having just returned from a national summit of Fortune 1000 CHROs/CTOs hosted by EVANTA where I was asked to speak, I was reminded again of lessons my Dad taught me over 50 years ago: Results come when relationships come first.

Spending time at the summit with top talent/human resource professionals was enlightening. In the company of the very best in their field, I was struck both by the quality of their respective best practices but also by their willingness to openly share over the course of two days.

Some highlights:

Chief Cynthia Trudell kicked off the session by describing how PepsiCo faces its “talent conundrum” by building a world-wide talent pool that can operate across a complex and evolving global marketplace.

Mark Reid shared some of the great work being done at USAA to earn amazing employee engagement results, unleashing the creativity of its talented workforce.

Susana Suarez and Glenn Gilkey shared Fluor Corporation’s strategy for their Human Resources organization to be its very best, including a strong focus on professional development.

Michael D’Ambrose from Archer Daniels Midland made a powerful case for companies to step up to their social responsibility to support future talent and help the million high school students who do not graduate each year.

Marissa Andrada offered insights from Starbucks where they have established a new relationship with their talent by shifting to a successful partnership that has positively impacted their bottom line.

Jeri Buchholz provided an inside view on supporting innovation at NASA.

Alejandro Quiroz led a great discussion on what it’s like to partner with a great CTO/CHRO organization at Whirlpool where innovative approaches help them with global workforce challenges.

Breakout sessions were led by an equally impressive set of Chiefs including Dean Carter at Sears, John McMahon at Cumberland Gulf, Peggy Pego at PSEG, Regis Mulot at Staples, Shibu Varghese at The University of Texas MD Anderson Cancer Center, among others.

My talk focused on choices each Chief can make to be their very best, even in tough times. I offered my All-In Roadmap to the attendees as a tool for unlocking their potential and the potential in their teams. From their feedback it was clear my message struck a chord, and I was grateful to have served such a distinguished audience.

It is clear that the market success enjoyed by each of these industry leading companies can be tied, in large measure, to their respective focus on talent and their obsession to deliver for and through their employees. I applaud their tenacity and dedication.

CTOs (Chief Talent Officers, including leaders with other titles who focus on talent) rule!

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10 Ways to Set Your Team Up for Success

“Talent is energy waiting to be released through an honest involvement in life.” These words, written by New York Times bestselling author Mark Nepo sure hit the nail on the head. If you view your team’s talent in terms of potential energy, you are sure to find a near-endless supply of innovation, motivation, and problem solving—but only if you do your part.

In my experience, leaders who relentlessly focus on each of the following ten areas unleash the talent (energy) in any organization and deliver sustainable results.

Selection: Hire thoughtfully. Consider not only past experiences but also personality and EQ—emotional intelligence. Will a candidate be able to succeed given the dynamics of the group they are joining? It takes more than book-smarts and experience to effectively operate within a team.

Education: Invest in your people. When employees feel supported while expanding their skills, your whole team will gain the fruits of their learning, and usually, their loyalty.

Communication: Remember that communication is the joint construction of meaning. Always seek feedback to ensure the desired message is getting through. Verbal and written communication is equally important.

Organization: Build to align. How you organize your team will determine how it functions. Strive to create synergies that help to balance skills and personalities across your teams.

Compensation: Pay at market value, and balance pay components to align with your short and longer term strategic focus where you can.

Recognition: Celebrate accomplishments both formally and informally. Positive reinforcement is an effective motivator. A simple, “nice work,” as well as performance bonuses or company-wide award programs will go a long way toward engaging your team.

Promotion: Once you recognize the role models on your team, promote them. Your employees will understand what it takes to move up.

Retention: Never assume your employees will stick around long-term. What can you do to retain your best leaders (at every level)? When others call to poach your best and brightest, employees should have no hesitation as they hang up the phone. You may need to take a closer look at what keeps your employees loyal.

Performance management: Review both the what and the how of expectations and results. Where misalignment exists, be sure to correct for it with effective consequences.

Values: Establish clear values across the team. Reinforce these values on a regular basis by taking them “off the wall” and putting them “on the agenda.” This will set the tone for the organization.

The only sustainable advantage for organizations is people. Tap into this energy—this talent—by recognizing its potential in every interaction and in every project. When a strong focus is centered around supporting the people who make up your organization, their ability to serve your customers, shareholders, and their community will be multiplied and it will be sustainable. With continued attention to these ten areas, the success of your team will be unleashed.

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A New Definition of Sustainable Success

My dad once said that any baseball player can have a good season, but it takes a different kind of focus to be great throughout his entire career. The goal of any athlete should be sustained excellence, Dad said. He also taught me that in business, the same rule applied.

As a career HR professional, Dad taught me that focusing on employees is the key to sustainable success and growth for a business. When markets shift and customers’ needs change while technology enables new solutions, it’s a company’s employees who design, develop, and deliver the services and products that keep customers happy and attract new ones. I learned the key was to create cultures where employees would bring their best to work each day. Employees who fully engage enable companies to thrive, year after year.

When I went to business school, professors helped me expand my notion of sustainable success. They indicated the focus for sustainability should include the shareowner. I learned it’s a company’s shareowners that provide the capital necessary to run and build a business. Shareowners who can count on consistent, long-term growth will likely see improving stock prices and increases in dividends. In turn, capital will continue to flow to the company to fuel growth over time.

During my first job at Sperry Corporation, my notion of sustainable success expanded yet again. In sales, it became crystal clear that a company’s focus should always be the customer. It’s a customer who decides if a company is successful by making a buying decision. Companies must work hard to earn customer loyalty. While a satisfied customer might seek a slightly better product feature or better price from a competitor, loyal customers won’t. Building loyal customer relationships enables a company to enjoy sustained success, quarter after quarter.

More recently, my understanding of what sustainable success truly means expanded again when I learned about the four questions former CEO Sam Palmisano used when he ran IBM. The first three were in line with what I had learned about employees, shareowners, and customers:

1. Why would someone work for you?
2. Why would someone invest their money with you?
3. Why would someone spend their money with you—what is unique about you?

But the fourth question caused me to expand my thinking again:

4. Why would society allow you to operate in their region?

This last question caused me to shift my thinking in two ways. First, it expanded my recognition of the impact of an organization and got me thinking about what measurable outcomes are required to claim success within a specific community. We had employee engagement surveys, customer satisfaction analyses, and enough financial reporting to choke a horse. But being a good corporate citizen in the community includes more than an occasional philanthropic donation for social good or caring for the environment beyond simply not polluting. Sam’s fourth question requires more than a “do no immediate harm” approach; it requires a “make it better” solution.

Second, this new question also shifted my perspective about time. Unlike the first three questions that had an unspoken time frame of “quarter to quarter” or “year to year,” this question shifted my thinking from the short term to the truly long term. Thinking in terms of “decade to decade” or “century to century,” such that it could continue indefinitely, is clearly a new bar.

Taken together, this expanded view of inclusion along with a completely new view of accountability over time forms a new definition of sustainable success. Those companies that deliver truly sustainable growth are focused on all constituencies and a true long-term perspective. Companies that earn employee engagement, deliver shareowner value, create customer loyalty, and operate as conscious members of the community are accountable for the sustainable prosperity for this and future generations.

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The 5 Elements of Effective Leadership

Rick Miller featured in MWorld, the journal of the American Management Association:

START_QUOTE_30t_smYou may not realize it, but every person on your team at every level of your organization has the potential to be a Chief. By that I mean they have the potential to be a more effective leader, and you can make it happen. Let me explain.

Based on 30+ years of experience, I have developed a roadmap that enabled entire organizations to move from a position of losing market share to a place where record level productivity and profits occurred right alongside personal development and relationship building—for everyone involved.

You have likely been introduced to, and practiced, a variety of leadership styles, but I’m willing to bet that you haven’t considered the critical intersection that exists between the implementation of five key elements: discipline, support, creativity, insight, and values.

These five elements make up what I refer to as the All-In Roadmap. With this roadmap teams of employees tripled the growth rate in million and billion-dollar companies. The roadmap allowed me to connect with my teams, and most importantly, it helped my teams connect to each other and to themselves. The result was a measurable shift and strong, sustainable growth.

I have used the All-In Roadmap in a broad range of organizations—from startups to multinationals to nonprofits—in a number of industries. Each time, the result is growth—both personal and profit. After 30 years of putting these concepts to work, I am now sharing them so that they can work for you, too.

DISCIPLINE

Discipline is an orderly pattern of behavior that increases the likelihood of a desired outcome. In business, discipline is the essence of management. Discipline begins with self-discipline. When you are able to adhere to a particular practice, set of parameters, or guidelines will you effectively inspire others to do the same. There are five main choices when it comes to discipline. A chief chooses to envision, strategize, plan tactics, implement and measure, and adjust.

You can think of these five choices as the discipline toolbox. Implementing one or more of these choices on a regular basis will help you to be a better Chief. Here’s how.

Envision: It is not only the duty of executives to provide the vision for an organization, it is an opportunity for everyone. When you encourage each individual to choose and follow their own personally compelling vision, the energy behind them becomes boundless.

Strategize: Your team will be more effective if you share your strategy—at least part of it—with everyone. Those at the top can determine strategy, set goals, and allocate resources, but by sharing the “why” behind the “how,” the entire team will move more cohesively toward the targets.

Plan tactics: A Chief understands the critical nature of detailed tactical planning and the role it plays in the probability of a strategy’s success. When all members of a team set their own work goals and are encouraged to give input during planning, execution is much more likely to run smoothly.

Implement and measure: Success occurs when you plan the work and work the plan. Quality implementation and careful measurement are the backbone of discipline. They provide shape and direction so that any project can move forward.

Adjust: Change is the only constant. When a Chief recognizes this and creates an environment that nurtures an optimistic perspective about change, then your team members feel comfortable seeking opportunity when change arises rather than recoiling in fear of the repercussions.

SUPPORT

Support is the structure that holds an organization together. It is made up of tangible components, such as offices, factories, and all things tech. It is made up of visible components such as the organizational structure, company benefits, and resources. But most of all it is made up of the interactions—spoken and unspoken—that transpire between people.

These interactions drive the pulse of an organization. Fueled with the proper support, your team can move mountains. Thus, it is the duty of a great Chief to help ensure that proper support is always given. To do so you can choose to model, inspire, enable, encourage, and question.

Again, think of these five choices as the support toolbox from which you will utilize the tools you need to build a sound support structure.

Model: The credibility required to build trust and earn respect comes from consistency. As an effective Chief you will not only talk the talk and walk the walk, you will be the talk and the walk. When you align how you talk with how you feel, think, write, and act—all in alignment with your values—your authenticity will be felt by your entire team.

Inspire: An effective leader’s authenticity, as created by modeling, will also serve to inspire the members of an organization. As an effective Chief you will choose to inspire as well as be open to be inspired by others. You will recruit and align people to a cause without relying on positional power, which will serve to better integrate your team as a cohesive whole.

Enable: A great Chief is an enabler, in the best way. As a servant leader, you provide freedom for individuals to exercise new capabilities and to choose to be Chiefs themselves. An organization thrives when people feel empowered and accountable.

Encourage: When you choose to encourage others while also seeking encouragement yourself, you will be able to change the underlying tone in any organization from one of resentment to one of respect. The ripple effect of encouragement has the potential to extend far beyond employees.

Question: An effective leader has a natural curiosity and learns to foster this curiosity in others. Underlying this curiosity—this need to question and understand the connection between people and ideas—is the ability to listen. Choosing to listen while questioning may be the single most important element of being Chief.

CREATIVITY

Creativity is traditionally defined as it pertains to innovation, but I define creativity in an unconventional manner. I propose that creativity is actually the ability to create, or manifest, the future. There are five main choices when it comes to creativity. Chiefs create the future when they choose to feel, think, speak, write, and act in alignment with who they are. Your creativity toolbox will be used by continually checking to ensure that each of the following choices is made in a consistent manner with the others.

Feel: When you are aware of and attuned to your emotions, you will have access to a strong source of truth. Listening to gut instinct, which is very much a physical and mental feeling, is crucial for the fine tuning required of a great Chief.

Think: We all think, of course, but when you choose to actively think—that is, to manage your thoughts—not only does your intellect become more organized, but you fuel the energy that will help to create the future. As the saying goes, “Watch your thoughts, they become words. Watch your words, they become actions.”

Speak: As an effective Chief, you can choose your words carefully, acknowledging the energy behind verbal communication and the impact words have on the future being created. Speaking involves more than words, however, so care must also be taken when considering eye contact, facial expressions, and body language.

Write: The written word enjoys a greater level of permanence and impression. People have long understood the power of the pen as a creative force to influence others. Writing is the action of bringing together feelings, thoughts, and words in a concentrated and powerful manner. I recommend utilizing this tool to be a more effective leader. Write down your thoughts and your dreams, and write away your fears.

Act: Building on the previous creativity choices, our actions are the culmination of creativity. We are held accountable for our actions more than for any other form of creativity. When you act in alignment with who you are, the ease with which your goals are met will increase along with the quality of your efforts.

INSIGHT

Insight is the understanding that comes from self-awareness. Such powerful insight can be a challenge to discover in a world that appears to move faster and faster each day. The development of insight is key to increasing confidence and effectiveness. Be on the lookout for insight in the simplest experiences in life and from the least expected places.

There are five ways you can learn more about yourself. When you choose to be present, still, accepting, generous, and grateful, you develop the ability to know yourself in a way that you may not have previously considered.

Be present: When you choose to be totally attentive and participate in the moment, the activity you are engaged in will be energized and you will be more effective as a leader. When present, you give 100 percent of your attention to the people with whom you are engaged. This simple practice can completely transform interactions and relationships.

Be still: When you choose to be still for a certain period of time on a regular basis, you will develop the ability to listen to the voice that matters most—your own. In this noisy and fast-paced world, the ability to be still will help any individual be a Chief.

Be accepting: You have the choice to accept people and situations for who and what they are. In doing so, you can avoid the frustration of trying to change people and change the past. The first step toward acceptance, however, is self-acceptance.

Be generous: When you choose to be generous with your time, possessions, and money you may find that instead of having less, you have more. To balance that generosity, however, you would benefit from getting comfortable with receiving. A continual flow of generosity, both giving and receiving, will teach you as much about effective leadership as the P&L reports.

Be grateful: A truly effective Chief will find gratitude not only in moments when everything is going well, but also in moments of struggle. The grace required to face tough times and remain thankful is a blessing.

VALUES

Values are the foundation of relationships and of effective leadership. Underlying each choice an individual makes are his values. When you choose to make evident your own values, all while seeking out the values of other team members and the organization itself, you will become a more effective leader.

I believe that values are a personal choice. Rather than list a set of values for you to follow, I urge you to take some time to choose your own values or reaffirm values you have already in place as a way to deepen your commitment to the driving force behind everything you do—business, personal, or otherwise.

I offer these five elements as a guideline that you can follow, but know that you can implement these elements and their corresponding choices in a way that works best for your unique situation. You may find that you do not need to modify your current discipline habits, for example. I am sharing this roadmap so that you may find an alternate path toward your goal when your current route no longer serves you.

By integrating the five elements of my All-In Roadmap, every individual in an organization can be a Chief, or be a better Chief. It’s not about title or level anymore. It’s about who we are that drives what we do and how we do it. Helping your team align these elements will unlock their potential and drive growth in and around your organization.

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Missing Warren Bennis—A True Chief

The following thoughts are extracted and inspired from Warren Bennis’ New York Times obituary by Glenn Rifkin printed on August 2, 2014.

The world lost what Harvard Business School Professor Bill George called the “father of leadership” when distinguished author, consultant, and professor Warren Bennis died on July 31.

A distinguished professor of business administration for more than 30 years at the University of Southern California, and author of over 30 leadership books, Bennis believed in the adage that great leader are not born but made. Indeed, great leaders, whom I call Chiefs, are made by their choices. Warren Bennis was a real Chief. “The process of becoming a leader is similar, if not identical, to becoming a fully integrated human being,” Bennis has stated. He was also among the first who believed in leadership tenets that are now widely followed, including the following:

We need leaders who can connect what they do to who they are. Bennis has said, “The leader never lies to himself, especially about himself, knows his flaws as well as his assets, and deals with them directly.” It takes insight to be able to know oneself in this way, and it makes for outstanding leadership.

We need leaders to face corporate corruption by building trust from the inside out. Creating a culture of individual accountability—again, through the development of insight—is the key to rebuilding trust.

We need high-quality training at the nation’s business schools. While ethics training in school is a good start, leaders must double-down on the job as well, with consistent actions to ensure that a culture of ethical behavior is the most visible attribute in an organization.

Warren Bennis also remained optimistic about the next wave of business leaders, labeling it “the Crucible Generation.” Because the incoming leaders are inheriting a complex global environment, they will better understand the territory in which they lead, Bennis thought. These young leaders are just in time, as the world faces challenges that will put them to the test.

If more leaders follow the advice of Warren Bennis, I, too, remain optimistic about the future of business. Bill George put it best, “Warren’s legacy will be found in the leadership of the people he touched personally with inspiration, kindness, and thoughtful mentoring.” Luckily, he has also left a large body of work for new generations of leaders on how to succeed. Warren will be missed.

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Zappos’ Holacracy—A Brilliant New Idea or Not Necessary?

Did you see the news that Zappos announced it is abolishing bosses? Zappos refers to their “new” approach as holacracy, and it’s already being heralded as tech’s latest new management craze. In summary, holacracy is management by committee with an emphasis on innovation—even the CEO formally relinquishes authority by agreeing to a constitution and reorganizing everyone into decentralized teams that choose their own roles and goals.

The objective of holacracy is to unleash the potential of every employee to behave like a Chief. While I am a huge fan of Zappos CEO Tony Hsieh, in my view this organization design is not new, nor is it required to unlock employee potential. Here’s why.

Holacracy is Not New

I recall a sales review I did almost 20 years ago as a Regional Vice President at Unisys Corporation. During a forecasting session, a sales representative told me he had no idea when a computer sale would close because his customer made all decisions by committee. That’s when I first learned about a company named W.L. Gore.

The sales rep told me that founders Bill and Vieve Gore started W. L. Gore & Associates in 1958. The company initially served the electronic products market. The company’s 1969 discovery of a versatile new polymer led to the development of many new applications in medical, fabric, and industrial markets.

What distinguished Gore from its start in 1958 was its innovative management structure. Specifically, it has never utilized traditional managers, titles, or budgets, and it has always been very wary about economies of scale. Amazingly, their CEO has never been appointed by the board, but instead has been chosen by peers. The Gore culture expects every associate to act as a Chief. As a result, what has Gore accomplished?

Today, Gore is one of the 200 largest privately held U.S. companies with 10,000 employees (called associates) and more than $3 billion in revenue. In 2014, Gore retained its position as a member of the U.S. “100 Best Companies to Work For” list, as one of the few earning this distinction every year since the ranking was initiated in 1984. Gore has been granted more than 2,000 patents worldwide in a wide range of fields, including electronics and polymer processing, and has had more than 35 million of its medical devices implanted, saving and improving the quality of lives worldwide.

If it’s so successful, should every company move to holacracy?

Holacracy is Not Necessary

In my experience, neither Zappos’ holacracy nor Gore’s committee structure is required to enable companies to create a culture of Chiefs, in which individual potential is unlocked. I have personally worked in a wide range of companies and company structures that delivered great results with cultures that enabled every associate to act as a Chief. For example, an internet startup facing a market crash grew revenue from $1M to $11M in just a year, and a multinational tripled its revenue growth rate from 5 to 15%, growing to $5B while facing intense market competition. In each case, both employee and customer satisfaction reached new levels.

The keys to success can be found in Jim Heskett’s and John Kotter’s book Corporate Culture and Performance. First published more than 20 years ago, it provides great insights on how any leader in any company can build a culture of Chiefs.

Heskett and Kotter offer specific, research-based advice on how to create performance-enhancing, change-adaptive cultures where Chiefs lead at all levels. They focus on actions (discipline, support, and creativity) and attributes (insight and values) that unlock employee potential, drive innovation, and lead to sustained success:

10 Specific Ways to Build a Culture of Chiefs in Any Company

  • Establish a vision for the organization that emphasizes consistent tactical adjustments
  • Communicate consistently and broadly
  • Display an “outsiders” propensity to embrace change and new ideas
  • Reinforce the importance of innovation
  • Build and maintain an “insiders” credibility
  • Establish leadership or the ability to produce change as an important focus at all levels
  • Decentralize decision making where possible
  • Promote carefully, and demote when necessary
  • Operate as a servant leader

The bottom line: success comes from an engaged employee group in which individuals at every level are empowered to act as Chiefs. This culture can be created in any organization with the right attention and intention.

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A New Measure of Business Success

We are currently facing some of the most difficult global challenges in a generation: inclusion, recession, and depletion.

Inclusion: nearly three billion people will enter the global middle class in the next 20 years.
Recession: the global economy is still feeling the effects of the 2008 financial meltdown.
Depletion: the climate is warming, which is straining our resources and depleting nearly two-thirds of our ecosystems (e.g. soil, fish and forests).

But there is good news.

While these problems are escalating worldwide, there has been a growing movement in the business community toward “triple bottom line” solutions—those that focus on people, profit, and the planet. Triple bottom line solutions actually enable companies to solve customer problems while driving increased profitably and improving society.

Sound too good to be true?

There is an increasing body of research to support this claim. For example, R. Paul Herman’s Human Impact + Profit (HIP) methodology tracks, rates, and ranks companies’ quantifiable impact on society, connecting “doing well” with “doing good.” The research from Paul’s 8-year old company shows consistent improvements in results with triple bottom-line strategies. While Paul’s ground-breaking book The HIP Investor is targeted at current or prospective business owners, the HIP Scorecard is also a management system that shows how business leaders can benefit from doing the right thing, the right way.

Simplification is almost always a good idea, particularly when you are attempting to focus a large group to act on complex global challenges. Since research supports exponential returns with this approach, I offer this equation as the new measure of business success:

Responsibility3 = people + profit + planet

Want even better news?

There is a dramatic increase in the number of business leaders who are working together and taking a Responsibility3 focus. Networks of these enlightened leaders are quickly growing around the world, and they include small to medium sized companies (the American Sustainable Business Council has over 200,000 members) as well as some of the world’s largest companies (the World Business Council for Sustainable Development has over 170 multinational members). These networks also include more established groups that are adding Responsibility3 to their existing charters (the Young Presidents’ Organization has over 21,000 members worldwide). These groups are all focused on exponential vs. incremental change.

Building on this momentum, several of these powerful networks recently chose to align. As a result, the Business Alliance for the Future was formed. And while work is underway to determine how best to measure progress in all three areas, this alliance of networks has chosen as its motto: “The future of business is making the future its business.”

The bottom line: Business is increasingly taking responsibility for a truly sustainable future.

That’s really good news.

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