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“It is easy for us to sit here and take potshots at CEOs who put their stock price and their shareholders before their employees.[…] But that’s their fiduciary duty. They have a duty to their shareholders, legally, before almost anyone else, and certainly before the employees. The employees are just assets.”

Reading David Berman’s recent article, “Greed still works“, in the Globe and Mail’s Report on Business I was struck by how many CEOs still don’t see the relationship they have with their employees as sacred. In the article, Berman interviews Bryan Burrough, the author of Barbarians at the Gate: The Fall of RJR Nabisco, a seminal book that explores the backroom deals that featured so prominently (and infamously) in the late 1980s’ leveraged buyouts.

It was a good read when first published, and it’s still a great book – pick up a copy if you haven’t already – but the above quote made me stop and think. Thirty years on the majority of CEOs still don’t appreciate the importance of the relationship they have with their employees. CEOs have a duty to provide an environment where employees can do their best work, which, in turn, helps to deliver value for shareholders.

In my recent conversations with CEOs and senior executives of large companies, all of them were crystal clear in stating that businesses exist to make a profit – no-one disputes that. But perhaps the “greed still works” title of the piece is misleading. What shone forth with every word spoken by the executives I interviewed were the strong links everyone had with their employees. These are critical to the success of any organization.

I’d argue that while many see employees as liabilities on the balance sheet, effective CEOs see them as key to the fulfillment of their fiduciary responsibilities to shareholders. Without productive, well-managed employees it is impossible for the core function of a business to operate.

Each and every executive I spoke with recognizes this. Employees bring value to the business, and the person at the top is accountable for providing a work environment that engages every employee.

Nick Forrest

I had the honour of interviewing seven outstanding CEOs and senior executives this week. What an amazing group of people! Collectively, they have amassed hundreds of years’ worth of experience in corporate business. Their skillsets and knowledge are impressive.

Even though they all work in different sectors and industries, several themes quickly became apparent:

They really like people. As one CEO said to me, when I asked him if he liked people, “I LOVE people!” These individuals deeply care about people; it’s what energizes them. They know that the decisions they make affect their employees (and the communities in which they operate) and they feel the weight of those implications on their shoulders.

They never stop learning. The CEOs and senior executives with whom I spoke are humble enough to realize that the learning never stops. They actively seek out feedback, welcome best advice from their direct reports, enter into spirited dialogue with their peers, and read avidly. They know that their managerial path is a long one, and don’t delude themselves into believing that they have reached the end of it.

They make fun an essential part of their life. There was a lot of humour, a lot of laughter during the interviews. These people like to have fun! And they know that their employees relish a great working environment, where their talents are valued and nourished, where their roles are clear and their authorities to do their work well established. But above all this, employees appreciate laughter. Successful CEOs and senior executives know and encourage this.

They understand the difference between leadership and management. One CEO said, “Leadership is like a Mars bar. It picks you up and you feel great. But then at 3 o’clock, the sugar rush is over.” Management, on the other hand, makes things happen. And without great managers, there are no followers for leaders.

We will be releasing portions of these interviews in the upcoming months. Stay tuned by checking out for more information.

Nick Forrest

The big story this week is the $34B buyout by Halliburton Company of rival drilling company Baker Hughes Inc. There are still regulatory hurdles to cross and shareholders to persuade, but if the deal passes, what will be some of the implications for the company?

Well, for starters, its combined workforce will be a major challenge to manage. Halliburton states on its website that is has approximately 80,000 employees world-wide; Baker Hughes has more than 59,000. With a merged employee population of 139,000 spread out in more than 80 countries, the super-charged organization will dominate an already extremely competitive industry, offering hydraulic fracturing and oil field services.

How can one person manage such a large number of employees? Naturally, there is little doubt that post-merger, the number of employees will retract, due to elimination of duplicated departments and the scaling back of more expensive and riskier, less desirable, ventures. However, even if a fifth of the combined workforce is terminated, that still leaves an enormous number of employees to be led and managed. That’s a tremendous accountability for one individual.

In my experience, the key insights for a CEO heading a large workforce are:
1. Understanding that they have more, not fewer people to manage;
2. Realizing that they are accountable for everything; and
3. Appreciating that they need to manage, and not lead, more.

It’s a whole different ballgame when one commands such a large employee population. It’s the CEO’s accountability to maximize the productivity of each and everyone of their employees.

Nick Forrest

Today is November 11th, Remembrance Day (Veterans’ Day in the U.S.A.). This is the day we remember the sacrifices made by fellow citizens in order to preserve our cherished constitutionalized freedoms.

We do not use this time to glorify war; instead, we pause to reflect on the implications of it. We recollect the hardships endured by our fathers and mothers, grandparents, brothers and sisters. We mourn those who suffered and those who lost their lives.

Is the concept of sacrifice a vanishing one? For many of us who live in North America, we have been insulated from the direct hits of war. Yes, our countries have active armed forces and all of us know of someone who has served in some way, either abroad or at home.

But now the word “sacrifice” means different things to different people. I asked several people this morning in the line-up at my local coffee shop what the word means to them, and got various responses, ranging from, “Not having my morning coffee!”, to “Tightening my spending”. Not one person correlated sacrifice to the importance of November 11th. How sad that over the decades since the Great War the word “sacrifice” has become trivialized and its impact minimized.

We are just so lucky, and we don’t know it. We really don’t have a clue. Let us all pause to reflect today at 11 a.m. what sacrifice truly means.

Nick Forrest

Whatever side of the fence you find yourself regarding the allegations concerning CBC journalist and host Jian Ghomeshi, the fact is that Mr Ghomeshi, an employee of the Canadian broadcasting corporation, was terminated from his position.

From a managerial leadership point of view, a dismissal is unpleasant. But it’s the manager’s job to apply consequences to disappointing actions, subpar performance, and/or a failure to meet behavioural expectations.

In my book, How Dare You Manage? Seven Principles to Close the CEO Skill Gap, I write about how CEOs are accountable for making sure that within their organization, managers add value. And the “sacred relationship” of manager and direct report must be protected and respected. A functional relationship employs truthfulness as a key driver. On the other hand, a dysfunctional relationship will thrive when anaklesis (i.e., the inability of individuals to hold honest conversations about issues with others due to a fear of damaging the relationship) takes root.

Perhaps anaklesis reigned for some time at the CBC before the axe fell. Only time (and it appears that a lengthy legal battle is about to begin) will reveal all the details and steps taken during Mr Ghomeshi’s tenure.

At the simplest level, in the Ghomeshi case, a manager made a decision to terminate an employee. Given the star power of the former CBC employee, no doubt this decision was escalated to the highest ranks. A recent statement issued by CBC CEO Hubert T. Lacroix, confirms this. The corporation is supporting its management’s decision to avoid internal dissonance by taking what it considers to be a fully justifiable managerial step.

Nick Forrest

Retail giant Tesco has been in the media spotlight after a spectacular turnaround in fortunes in recent years.  The third largest retailer in the world is battling a changing retail landscape as well as a profit mis-reporting scandal that has seen its share price halve.

The media is having a morale-destroying heyday with the company. All the advice I have read about helping Tesco appears to ignore their key asset: 500,000 thousand employees.

New CEO, Dave Lewis, is reported to have emailed staff asking for their ideas on things the company can do to fix the troubled retailer. You may ask employees for advice, but the frontline also require some clear declarative statement of direction before the ship runs right onto the rocks.

Does Lewis know how to manage 500,000 employees?  Not many leaders do. Leadership is all about engaging and encouraging employees that the future will be better.  But management makes it happen. The employees of Tesco need their management team to clarify their work and integrate it, ensuring all divisions are well aligned and working seamlessly together to get today’s work done efficiently and effectively.

There is obviously the key step of steadying the ship at retail giant Tesco with the right strategy, but more immediately, now is the time to step in and lead and manage the situation.

First, right the ship: have immediate management reassure their employees and get on with engaging their shoppers. Plunging morale without strong counter arguments from all levels of management is a recipe for disaster. It won’t be enough. Energizing the workforce gives senior management time to develop the new strategy and then implement it.

Next, Dave Lewis needs to take a long hard look at the entire business: its structure, operations, defining key roles and accountabilities. Finally, he must identify the people he needs to implement it. A good way to test the resilience of a company is the health of the manager/subordinate relationship in the organization. This is the relationship that binds polyester together and gets stuff done through thick and thin. How good is the management team at Tesco? Only time will tell.

There is a lot of gas left in Tesco’s tank. It is a great company going through difficult times. Effective CEO management is the only way it will return to its former glory.

Nick Forrest

I recently came across a quote that deeply resonates with me.

“Repertoire is destiny”.

I did some investigative work and found out that it’s from the autobiography of Glenn Kurtz, Practicing: A Musician’s Return to Music. Mr Kurtz used the phrase to express his feelings about his repertoire as a classical guitarist: he felt that because the world’s arguably best composers such as Beethoven had not written music for his instrument, he was relegated to a second class of artists.

But I’ve been thinking about that phrase from the point of view of a CEO. What is a senior executive’s repertoire? What makes you stand out from the jostling pack of young, bright, capable executives? It used to be an MBA – now not any more. MBAs are just another generic requirement to an executive’s career. Undergraduate degree: check. MBA: check. Progressive experience: check. Mentor who can ease my transition into a top tier position: check.

So what’s in your toolbox? What is your repertoire?

For me, repertoire all starts with attitude. Executives should ask themselves the question: why am I doing this work? Honest answers might include: for the money, for the power, for the prestige.

I do not denigrate the human desire for social advancement or financial success. But if a manager manages, he or she should understand from the very beginning that it’s all about the people being managed! That relationship between manager and direct reports is a sacred one, one that should be respected by everyone in the organization.

I often talk about the Craft of Management as an essential component of a CEO. Yes, you are expected to raise the performance of your company in order to satisfy the Board and the various shareholders. Practicing a craft, however, means much more than just achieving monetary success. It means constant lifelong improvement; it means aiming to be the best one can be … in the craft you have chosen to excel in your life.

Because of the impact a CEO has upon the organization, he or she affects the lives of potentially thousands of employees. The CEO also affects the environment beyond the company: communities feel the repercussions of corporate decisions.

Returning to Mr Kurtz and his wistful take on “repertoire is destiny”: a CEO’s repertoire encompasses the types of behaviour he or she exhibits. If a CEO sincerely approaches management as a craft, their destiny will be a rich and full one. Their legacy will be amazing. Their employees will be happy and productive. And their organization will sing.

Can you describe your repertoire?

Nick Forrest