Michael Beck

The Three Most Common Leadership Weaknesses

Over my 20+ years as an executive coach, I’ve worked with and assessed lots of smart, experienced senior leaders. And with each assessment I did, a pattern began to emerge. I noticed that there were several important competencies that almost always are among their weakest.

This pattern is interesting, because these leaders are very smart, have many years of industry experience, and are responsible for many millions of dollars of revenue and profit. They’ve been CEO’s, presidents, owners, CFO’s, CTO’s, VP’s and directors. And yet… these competencies regularly show up as some of their weakest competencies. These three competencies are their ability to coach & mentor, their ability to influence others, and their ability to resolve conflict.

Why are these competencies so often among the weakest? I believe it’s because the skills necessary to excel at them don’t come naturally to most people – regardless of intelligence or experience. Here’s why these three competencies are so critical to a leader and how to go about improving each one.

Coaching & Mentoring

One of the most important responsibilities of a leader is to develop the people below him or her. There is tremendous opportunity and satisfaction as a leader in developing others. By effectively developing the people around us, we elicit excellence in a number of impactful and far-reaching ways.

Study after study has shown that an important factor in driving engagement is having the opportunity for professional growth. When a person becomes stagnant, they become bored and disengaged. As a leader helps someone expand their skill set and knowledge base, they make them more valuable and more versatile. In addition, when a leader coaches and mentors someone, they demonstrate their belief in them, their abilities, and their potential, which nurtures loyalty and responsiveness. One additional benefit of developing others is that it allows a leader to groom someone to take their place, thereby paving the way for the leader’s promotion.

Given the impact and far-reaching implications of developing others, it is critical to master this important function, and adopting a “coach-like” attitude and manner is the fastest and most effective means of accomplishing that.

What does a coaching style of leadership look like? Coaching embodies a number of competencies and strategies. Many of us, in an effort to help someone “get it right” (and in the name of expediency), tell others what to do and how to do it. And while this does get the work done, it does little to develop the other person, their skill set, and their confidence.

The alternative – the coaching approach – is to ask rather than tell. Instead of starting off by telling them what to do, ask them what they would do and how they would do it. This strategy serves a number of very important functions. Firstly, it demonstrates that you have an interest in what they have to say. When you listen to someone, it acts as a sign of respect because it demonstrates that you value what they have to say. The next benefit of asking is that their answers will give you a sense of how they think. The answers will reveal their level of insight and judgment and will illustrate their problem-solving abilities. And lastly, listening to the answers to your questions will provide clues as to how best to help them develop. It helps you understand which aspects of development they need help and guidance with.

Influencing

Mastering the ability to influence others is critical to the success and effectiveness of a leader. A strategy, no matter how well thought out, will get mediocre results if there isn’t strong buy-in. A leader will always get compliance because of his or her authority. But compliance and commitment are two different things.

If people are compliant, they will generally do just enough to keep from getting fired. The consequence is that a strategy will get results, but not nearly to the level of a strategy executed by a committed team.

How do you influence people? How do you change their perspective so you get buy-in? People “buy” emotionally. It’s true whether you’re selling TV’s, cars, ideas or strategies. They buy emotionally and then rationalize logically. There are two tools to employ in order to change someone’s perspective. They are the use of question-asking and the use of analogies.

Asking good questions is an art. It took me many years to master it, with lots of practice and plenty of missed opportunities. I’ve found that there are two sets of questions that need to be asked. The first set of questions are those that give you insight. They are curiosity questions that help you better understand why someone sees things the way they do, thereby allowing you to effectively change or correct their perspective. The second set of questions are those give them insight. They are questions that help them rethink things.

The second tool for influencing people is the use of analogies. Analogies are an excellent vehicle for bringing someone around to your way of seeing things. Generally, you’ve been giving the issue at hand far more thought than they have and therefore have a deeper understanding of the problem and/or solution. Using an analogy helps people “see” and “feel” the concept you’re talking about and does it in such a way as to keep them from becoming defensive with respect to their position. Once you’ve come up with a meaningful analogy, it’s much easier for someone to shift their thinking and their perspective.

Resolving Conflict

The ability to resolve conflict is essential to a leader’s effectiveness. If conflict is allowed to fester, it erodes engagement and erodes the respect a team has for its leader.

Workplace conflict tends to arise from poor communication, unmet expectations, differing perspectives, and stress. Ultimately, these each can be minimized or eliminated by improving interpersonal skills, setting clear expectations, shifting people’s perspectives, and helping to reduce stress. But the stage has to be set before the issues can be resolved.

The blueprint for resolving conflict starts with acting to avoid further escalation. The more frustrated and upset a person is, the more difficult it is to resolve a situation. The next step is to de-escalate the situation. I’ve found that an excellent way to begin that process is to “state the obvious”. “Stating the obvious” means simply to acknowledge that the frustration and/or disagreement exists. It’s often the perfect way to open the door to resolve conflict. Just by starting with, “Look… we’re both frustrated by this,” sets the stage for a resolution. It acknowledges that you recognize the other person is frustrated, it doesn’t point a finger at them, and it implies that you’d like to work things out.

Once the stage is set for coming to a resolution, the next step is to understand the other person’s perspectives and or motivations. As discussed above, the most effective means of accomplishing this is through the use of good questions. In this case, a “good” question is one of curiosity about why they feel the way they do, phrased and asked in a manner that keeps them from becoming defensive. A simple example of what a good question might be is, “What am I doing that frustrates you?”, followed by, “Why does that frustrate you?” In contrast, a question that would cause them to become defensive would be, “Why do you have to get so angry?” Once you gain insight into the underlying issues, you can work together to resolve the conflict.

If you’d like help improving your ability to coach & mentor, influence others and/or resolve conflict, please give me a call.

Leadership Development is Key to Business Value

Our research suggests that the pace of exits and successions will begin to increase this year. This conclusion is due to several factors. Life expectancy in the U.S. has risen above 80 years old, up from 72 several decades ago. Accordingly, the expectation of retirement age has also risen. When life expectancy was 72 years old, retirement age was considered to be 65, but now, because people are living longer, owners are waiting until their 70’s to retire. And the final factor suggesting increased activity is that the leading edge of the Baby Boom generation turns 73 this year.

As I’ve written in another article, the number of businesses that will hit the market in the coming years will far outstrip the number of interested buyers. The consequence of this excess supply is that only the most attractive businesses will find a buyer.

Although there are several important factors that make one business more attractive than another, a key issue is the strength of the leadership team. The strength of a leadership team not only impacts the value of a business but affects the likelihood that the deal will close.

Ken Sanginario, founder of Corporate Value Metrics and creator of the “Value Opportunity Profile” is an expert at valuing companies. He helps them increase their value and improves the likelihood they will sell. According to Sanginario, the strength of the leadership of a company will influence the value of a company by as much as 15-20%. By way of example, if a company has a capitalization rate of 20%, strengthening the effectiveness of the leadership team can realistically increase its capitalization to an effective rate of 17% – a significant boost in sales price.

Additionally, if a business’ leadership team is weak, the likelihood that a deal will go through diminishes dramatically. Tom West, author and president of Business Brokerage Press has stated that businesses with a seven-figure sales price will only close 25-33% of the time.

Therefore, if you (or your client) want to maximize the likelihood of selling a business and selling it at full price, the strength of the leadership team must be addressed.

Here’s what has to happen. The leadership competencies of the team need to be assessed so their strengths and weaknesses can be identified. Once the assessments are done, a program of leadership development should be undertaken to ensure the team’s effectiveness. Although development can usually be accomplished in about six months, this initiative should be started 2-5 years in advance of a transition. Because, just as one good year of EBITDA won’t impact a business’ value very much, neither will one year of strong leadership. You must demonstrate a pattern. Don’t wait until a few months before you go to market to address leadership issues. Start now, establish leadership effectiveness, and boost buyer confidence.

If you’d like help assessing and developing your leadership team, please contact us. It’s our specialty and our passion.

Peer Groups Aren’t Effective for Developing an Executive

If you’re a CEO or President of a company, a peer group can be a really valuable asset because it a) provides networking opportunities, b) provides outside perspective on strategy, and c) allows you to help others. But peer groups aren’t effective at developing an executive’s leadership competencies. There are a number of reasons for this.

The first reason relates to the fact that leadership competencies are developed over time. It takes regular focus to break ineffective habits and form new, effective ones. Meeting once a month in a round-table setting with big-picture discussions just can’t address someone’s specific development needs.

The second reason relates to assessment. Peer groups aren’t designed to assess a leader’s strengths and weaknesses. The group can only discuss issues that someone brings to the table, and of us are poor at assessing the quality of our leadership abilities. In fact, I’ve never met an executive who thought they were a poor leader. Yet, we all know many executives who are poor leaders! This reality makes leadership development in a peer group pretty much impossible.

The third reason relates to blind spots. We all have them regardless of experience, intelligence and/or education. Peer groups can help point out strategic blind spots, but aren’t very good at pointing out leadership blind spots. It really takes someone working closely, one-on-one with a leader to spot them and bring them to light.

A fourth reason that peer groups aren’t effective at leadership development relates to personal productivity. Group discussions can be good for high-level topics pertaining to business strategies, but they don’t lend themselves to improving day-to-day functioning. Leaders need objective input from someone who has insight into how they function at work in order to improve productivity.

What then, is the best course of action for leadership development? It used to be mentoring by fellow executives – getting insights and guidance from someone in the company who could share the benefit of their years of experience. Unfortunately, because of cost-cutting and increased work load, those days are gone.

Instead, many executives turn to executive coaching to provide the assessment, insight, and guidance needed to improve. Peer groups have their place, but for personal development, one-on-one work is the most effective. If you’d like help in developing your leadership effectiveness and would find a confidential, objective sounding board useful, please give us a call at 503-928-7685.

3 Keys to Successor Success

No one puts their company in the hands of a successor unless they are pretty sure they’ll succeed. Yet many successors don’t. (Some say as many as 70% fail.) Why is that?

While it’s true that economic conditions or competition can hurt a company’s success, more often, the company’s demise is due to missteps by the successor. Most of these missteps occur because, although they understand the “mechanics” of the business, they haven’t honed their leadership abilities, their strategic thinking, and their decision-making skills.

Leadership Abilities
The effectiveness of a person’s leadership is determined by how they are viewed by the people they lead. A leader who is not respected or trusted can’t be very effective. In contrast, a leader people trust and respect will always get better results. People decide how much they trust and respect a leader based on how that leader acts, how they interact with others, and how they guide the organization.

When a leader demonstrates that they do what they say they’re going to do (acts with integrity) and demonstrates that they are the kind of person they claim to be (acts in integrity), people learn they can trust him or her.

When a leader interacts with people in a manner that shows they respect and value them, the leader will earn the respect of those around him or her. Leaders accomplish this by treating people like people (rather than like things) and by treating adults like adults (rather than treating them like children).

When a leader guides the organization with clarity, develops meaningful initiatives, is inspiring and demonstrates good judgment, people will stay engaged and do their best.

Strategic Thinking
The ability to think strategically is essential for leaders guiding an organization. Development of a proper strategy allows a leader to prepare an organization for faster growth and profitability. Without an understanding of what a strategy is and how to develop one, leaders will often focus on goals and tactics. In the absence of a true strategy, these goals and tactics are often misguided and usually result in new issues arising.

A good strategy addresses an issue or problem and provides direction for the company. By developing a true strategy, excellent results can be achieved, and the desired financial goals realized. In order for leaders to develop a good strategy, they need to uncover what the real underlying problem is and not react to the symptoms it causes. A strategy which addresses a symptom always creates more issues.

But a good strategy by itself is not sufficient. There needs to be buy-in for the strategy. Without buy-in, a leader simply gets compliance, and compliance is not the same as commitment. The results gained from the efforts of people who are only doing what is asked of them are very different from the results achieved by people who are enthused and committed. How do you gain buy-in? Leaders get people on board through influence and persuasion. A leader who is skilled at influence and persuasion has the ability to change people’s perspectives and beliefs. That skill relies on our ability to understand other people’s motivations and perspectives. Once we understand why they see things the way they do, we can then offer a new perspective on the situation in a way that resonates with them.

Decision-Making Skills
Poor decisions lead to poor results. That much is clear. But how does someone go about improving their decision-making skills? A successor needs to develop sound judgment, business savvy, and foresight in order to make good decisions.

Judgment is developed over time by learning to evaluate all available information and options, learning from mistakes, and learning to balance risk and reward.

Business savvy is developed by thinking broadly about all aspects of the business, by being aware of what’s going on with the company, the economy, the customers, and the competition, in addition to developing an understanding of human nature.

Foresight is developed by learning to consider all possible outcomes and developing strategies to address each one, by seeking outside perspectives and opinions before making important decisions, and by learning to anticipate the unexpected.

To ensure a successor has the greatest chance to succeed (and the owner has the greatest chance of getting paid), go beyond the mechanics of the business. A good place to start is with our free Successor Readiness Questionnaire. It can give you a sense of how ready your successor is to take over. Help successors improve their leadership abilities, teach them how to think strategically, and help them develop sound judgment and good decision-making skills.

If you’d like help with assessing and/or developing a successor, please give me a call. It’s our specialty.

When Successors Manage Instead of Lead

Most owners feel they’ve done a good job preparing their successor, yet many successors fail once they take over. One of the major causes is that they continue to manage the company rather than lead it. And when people get “managed” engagement drops and results suffer.

Two of the most common ways an executive “manages” people are by “treating people like things” and by “treating adults like children”.

How does someone “treat people like things”? They do it in several ways. They do it when they’re insensitive to them and interact with people as if they have no feelings. They treat people like things when they ignore the fact that everyone has hopes and dreams and fears and stress. They treat people like things when they relate to people as if their own goals and aspirations are more important than another person’s goals and aspirations. And they treat people like things when they don’t show respect for people nor value their contributions, efforts, and potential.

When someone treats a person like a thing, it sends the message that they are unimportant and that they just don’t care about them. And when people sense a leader doesn’t care about them, they start not to care about that leader. When the company tolerates leaders who don’t care about people, people tend not to care about the company. And when people don’t care, there is no engagement.

In contrast, an effective leader understands that people’s hopes, dreams, fears, and stresses are real and matter to them. A leader inspires people. A leader interacts with people as people, helping them to be their best. A leader treats people the way they themselves want to be treated. And a leader helps people achieve their own goals.

How does someone “treat adults like children”? Think for a moment about how parents relate to children and why they relate that way. They generally tell children what they need to do and when they need to do it. They do that because they don’t trust a child’s judgment, their sense of responsibility, and/or their self-discipline. They regularly check up on children because they don’t trust them to follow through on their commitments. They check up on children because they don’t trust them to be responsible.

When a leader doesn’t trust people to do what needs to be done and doesn’t trust their judgment, he or she is treating them as if they are children. When they micromanage people, they are treating them like children. And when they treat people like children, it shows a lack of respect and trust. When people feel they aren’t respected and trusted by a leader, they lose respect for that leader. When people feel they aren’t respected and valued, there is no engagement.

If someone doesn’t know what to do, then our job as a leader is to develop their knowledge and abilities. The shortcoming lies with the leader, not the follower. If someone lacks the necessary judgment for a task or decision, then our job as a leader is to develop their judgment. If their judgment remains inadequate, then either we aren’t as competent a leader as we need to be, or we just have the wrong person on our team. Either way, resorting to treating someone as a child is a poor course of action.

Regardless of how well a successor knows the mechanics of a business, if they don’t hone their leadership skills, the best they can hope for are mediocre results.

If you’d like help evaluating your successor’s leadership abilities and/or help with developing their weaker areas, please contact me.