The Blog

Last week I was working with two client groups where the discussion turned to the manager-direct report relationship. The sustainability of a company flows directly from the protection and nurture of that interaction, which is why I call this the “sacred relationship of the organization.” Organizations thrive, plane or even die depending on the health of this relationship.  The chief reason employees leave a company is a dysfunctional relationship with their immediate manager.  Senior managers need to ensure that the manager-direct report relationship is highly functional.

In business (and in my book) I make a distinction between accountability and responsibility. I define the former as “a contract between managers and their direct reports” and the latter as “a feeling of obligation and caring, which, if it is not tied to accountability, can end at the level of feeling…and may or may not lead to action.”

Consider the number of these types of relationships in your organization, hundreds? Thousands? Each one is a costly investment by you. It is critically important for you to clarify the language that’s used in this relationship. Companies succeed when every employee is working on what their managers hold them accountable to do – not on what they choose to do.

Nick Forrest

Canadian Pacific Railway’s CEO Hunter Harrison just doesn’t get it. Or worse, he gets it – but is a master at deflecting blame.

Mr. Harrison is on record as stating that the Lac Mégantic tragedy occurred as the result of the actions of one person (i.e., the train operator). He’s in a lather about the recently released Canadian Transportation Safety Board’s report, saying that the new safety procedures are out of proportion and would not have prevented this accident.

That one employee has been singled out for blame is lamentable. Why are the CEO and the executive team not in the dock as well? This accident was not the fault of a lone employee.

A CEO is accountable for creating the environment, policies, processes and managing the behaviours of all their employees.

So maybe because of one person’s behaviour the accident was triggered. However, the CEO is accountable for this behaviour. It is his company, his strategy, his capital equipment (underserviced as evidenced by fires and brake failures), his employees who are trained to operate the trains at specified levels. If they fail, he fails. There is no such thing as “teflon management” for any manager. His employees’ mistakes are his mistakes.

Any incident, such as the terrible one that occurred at Lac Mégantic where 47 innocent people lost their lives, does not just occur as the result of the actions of one lone employee. Instead, it occurred because of a series of systemic failures in an organization headed by a full-steam-ahead CEO who failed to provide the required management and resources to enable employees to successfully carry out their work.

Mr. Harrison appears to miss this point.

Nick Forrest

This is an open letter to CEOs everywhere.

Dear CEO,

You have to dare to be the greatest CEO you can be, or you should not take the job.

You say that your employees are important… your “most valuable asset”. But when you make that statement, do you actually believe it to be true? What does that really mean to you?

For example, do all your employees feel useful at work? Are they fully engaged with their assigned tasks and with the organization as a whole? Are they paid fairly? Do they have the right benefits?

If you have answered “yes” to the above questions, you are in a position to build a great company. Great companies emerge when all employees believe they are contributing to producing something that is good and worthwhile. And employees must be properly compensated for their work.

You, the CEO, have an incredible impact on your organization. Just by your day-to-day presence and actions, you enable the work environment.

The question is: What sort of a work environment will it be? Are you going to deliberately and consciously put in place systems that provide conditions under which every employee can do their best work?

You have the power. Use it wisely.

Nick Forrest

Yesterday’s newspaper featured the following headline: “Wharton Makes a Claim to the Business School Party Scene”. How disillusioning that such a respected college at the University of Pennsylvania would brag about being a “party-hardy” school in order to attract a certain caliber of M.B.A. student.

But then, that seems to be the trend with North American institutions these days. I took a look at how M.B.A. schools in Canada market themselves and was puzzled with their positioning statements. To quote a few:

“Make your degree pay quickly…” (Ted Rogers School of Business, Ryerson University, Toronto ON)

“Over 94% of our graduates rate the program a good or excellent investment and, on average, achieve payback on their investment within 3-5 years.” (Queen’s School of Business, Queen’s University, Kingston ON)

“Our rigorous application process ensures you will be motivated, encouraged, inspired and challenged by others just like you.” (Rowe School of Business, Dalhousie University, Halifax, NS)

“Stand apart from the competition…” (Schulich School of Business, York University, Toronto ON)

“[We] will give you an edge in your career…” (Rotman School of Management, University of Toronto, Toronto ON)

It seems that the marketing for M.B.A. programs focuses on: the ability to score a high-paying position shortly after graduation; payback on investment; becoming a member of a unique, preclusive club; and lastly (and most alarmingly for future leaders), gaining a competitive edge within the rat race.

None of these four marketing appeals focus on humility and developing the ability to engage employees.

The students themselves don’t dispel or disavow this strategy. For many of them, an M.B.A. means one thing and one thing only: money. In today’s education environment, where an undergraduate degree is a given, a graduate degree becomes a necessity. But from the marketing I read, the students will be taught to step on someone else in order to get ahead. Self-absorption is encouraged. The quest for more money and a better position is a promised output.

There is nothing in business schools’ marketing materials about sacrifice, about providing a service to others, about caring for employees. Nowhere do I see an appeal to future managers about how to build great teams of employees who can flourish in their own right.

This is the antithesis of what being a great manager is all about.

Nick Forrest

On September 18, 2014, the people of Scotland will decide on their country’s future. Will they remain part of the United Kingdom or become a fully independent country?

You may ask yourself, what does this have to do with managerial leadership?

It all comes down to effective thinking. Effective thinking is the key prerequisite for a successful CEO. It is the core executive competency. Without effective thinking, everything an executive says and does is shaded with mediocrity and prone to dangers of a strategic nature. This type of executive brings an inherent ineptness to the table and can compromise, in the long term, the company they lead.

The Scottish reference is a great example, and this bring me back to the upcoming referendum. I have been thinking: How did it come to this? After 300-plus years of being in partnership with England, Wales and Northern Ireland, what set in motion this historic referendum?

From what I can see, this referendum was the result of politicians making decisions to gain short-term advantages, but failing to understand the long-term implications and consequences. Let’s look at some of these decisions.

In November of 1996, the Stone of Scone was returned to Scotland. The return of this key symbol of Scottish independence was guaranteed to exacerbate passions of nationalism and independence. Congratulations, John Major! The construction of a Scottish parliamentary complex (begun in 1999 and opened in 2004) cemented the desire of Scottish nationalists to break away from the UK union and provided a platform and a process to do it. Way to go, Tony Blair! Finally, thanks to an agreement between the Scottish and the UK governments, the referendum question was decided. The question that may throw into disarray a historical union is, “Should Scotland be an independent country?” (Note that the question does not address what independence will actually mean.) A simple majority (50 per cent plus one) is required to pass it. Good going, David Cameron!

What is happening right now in the United Kingdom provides a severe lesson for CEOs and senior executives. Decisions undertaken today may have far-ranging implications ten, twenty or even thirty years down the road. Don’t let your poor decisions create a poisoned chalice for your successors.

Nick Forrest

The equivalent of a tsunami of double-doubles and a mountain of fries has been written about the Burger King-Tim Hortons deal. Permit me to add my thoughts from a managerial leadership point of view.

A megadeal of this magnitude would create challenges for any CEO. As it happens, Burger King’s CEO is the youthful 34-year-old Daniel Schwartz, who background is in “financial engineering”. For those of you who may be unfamiliar with this field, financial engineering is defined as the study of financial theory and the application of mathematical and computational finance. This is an fascinating choice for a CEO who now becomes accountable for the effective performance of 135,000 employees (about 35,000 from Burger King and 100,000 from Tim Hortons) in the fast food industry.

The Burger King CEO is used to managing numbers, and not people; he spent several years after college on Wall Street, primarily working for 3G Capital, the giant investor group who owns Burger King. For both the U.S. and Canada, there are several major questions to be answered: is this deal occurring so that Burger King can take advantage of the more favourable Canadian taxation rates? What repercussions would this have? And will the combined fast food chain undergo the process of slashing and selling that 3G Capital is infamous for?

More immediately, what skills will Daniel Schwartz need to effectively manage a workforce of that size?  The employee count will triple and he will be overseeing two separate business units. With twice the work, will the complexity be twice as much?

My advice to Mr. Schwartz is this: remember the basic insights of CEO management! They are:

You have more, not less, people to manage.

You may think you only have to manage a few direct reports at the executive level, but in actual fact you are accountable for the management of thousands of employees. You need to make sure that the environment in which they work is energy-inducing as well as their performance is efficient and effective.

You are accountable for everything – yes, everything.

You are a manager-of-the-whole. That means you set the standards everywhere. It’s your company, your structure, your results.

You need to manage more, rather than lead more.

You may think that leadership is the key element in a CEO role, but it’s management that focuses, organizes, teaches and helps enable 135,000 employees succeed at their work. Leadership is hollow without the management processes to support it.

It will be interesting to see what philosophy of management Mr. Schwartz espouses and what he will extract from this merger.

Nick Forrest

I live in Toronto (Canada) and we are gearing up for what promises to be a thrilling municipal election this October. And that’s not something you can say very often about city politics.

For those of you who don’t watch Jimmy Kimmel or other late-night show hosts, our present mayor, Rob Ford, has been a comedian’s dream. He has bounced from one calamity to another and despite a plethora of scandals, is now polling, unbelievably, in second place.

The mayoral candidates – and there are many –  have all tried to position themselves differently, by informing voters about who they are, why are they here, and what they are building. It’s a fascinating display of the power of the story for a would-be leader. Let’s examine the stories of the front-runners.

John Tory, currently leading in the polls, has a terrific resume (businessman, former provincial member of Parliament, active volunteer) but I haven’t heard a story from him yet, just a list of accomplishments. He probably looks great on LinkedIn and his Wiki entry is lengthy, but a bullet-point list does not a compelling story make.

Rob Ford is “everyman’s mayor”. His story is a simple one. He downplays his family’s wealth, instead preferring to stress the more humble beginnings of his family, his commitment to football coaching, and his penny-pinching approach to spending. He doggedly repeats his catch-phrases and never deviates from the script. It’s a story that goes down very well with his voter base.

Olivia Chow stumbled at the beginning of her campaign when, in response to a question of what makes her different, answered, “I’m not male. Not white.” Ouch! Her flippancy may have alienated many voters. Also, her insistence on her immigrant beginnings does not resonate in a city comprised of, overwhelmingly, immigrants. I wasn’t born in Canada either. So what?

Finally, we come to the underdog, David Soknacki. Soknacki has struggled to have his story heard above the baying of his more PR-conscious opponents. He has chosen less expensive media (Twitter, indie newspapers) to broadcast his message. When I mention his name to friends, the inevitable response is, “He sounds good. I like him, he makes sense.” But his story has not reached a sufficiently large population to make a difference to his polling numbers.

I often coach senior executives on how to develop their stories; many are hesitant in sharing personal experiences. But the value of these stories is incredibly powerful. Transparency leads to trust, which will eventually translate into greater commitment, and ultimately, extraordinary results.

A stale story, or one that is long on facts but short on emotion, will get these leaders nowhere. It’s a lesson that we see in politics, as well as in the boardroom.

Nick Forrest