Filed under: Cultural Alignment, Leadership, Organizational Culture — Mike Frommelt @ 11:23 am

We’ve all heard the saying “What gets measured gets done”.  I certainly understand the spirit of this one, but I’m a mood to be contrarion today, so I’ll beg to differ.

In my experience lots of stuff inside of companies get measured but never really gets addressed or fixed.  Case in point; When I was in HR, I tracked retention/turnover on a consistent basis.  I was told by my superiors in HR the company needed this information and it was important to the long term health of the company.  The years I worked in this company our turnover rate was 25%.  I supported a group of 400 employees (most of them professional level), so every year I was tasked with replacing 100 positions.

I personally thought this was apalling (and very expensive) but despite my tracking of the numbers, I saw zero real efforts being made to curb turnover.  In fact, one of the most senior people in the company would stop by my office most days and ask “How many people have you hired for me today?”  Inside my head I  retorted “well, 2 but I lost 4″.  The answer that actually came out of my mouth however was “2 sir”, since I needed my job.  It was pretty obvious that I was not going to get any points for pointing out our turnover numbers for the day or week.  I’m sure many of you have had similar situations, feeling like you are measuring something for no reason.  It’s frustrating and it’s a big time sink that could be better spent on something else.  It’s also a reason that good people will leave your organization - because they don’t feel valued, heard or that they are making an impact.

I’d like to make a change to the quote above.  I think it should really say, “What senior leadership makes a priority will get done”.  I know this paints me as a callous hierarchy monger who believes the whole world is run by a few people at the top, but the truth is inside most companies, this is the truth.

If you are a CEO and you want something done in your company - you don’t have to start measuring it to make it be; all you have to do is tell someone you want it done.  Word spreads like wild fire and people start lining up to satisfy your latest craving.

So, what’s my point?  The point is, if you are running a company, be intentional and communicative about your priorities, values and desires are for the organization.  Don’t just allow non-productive or non value added activities to keep happening just because someone in a department somewhere wants to track something. Make it meaningful and directed to your greater mission and you will find people rowing in the same direction with you.  You will  find that people who are not willing to row with you, will find their way out, and those who are will be more likely to find their way in.  In the end everyone will be both happier and make more money.

‘nough said.

Mike Frommelt

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Filed under: Cultural Alignment, Leadership, Talent Management/Recruitment — Mike Frommelt @ 4:11 pm

I had an interesting conversation today with a friend.  He was sharing his frustration with the current culture of his company; They are a very large organization that has been made even larger due to a recent merger.  His feeling is that since the merger (and the downturn in the economy) the culture in his division has become one where “bullying” wins the day.  Heavy pressure is placed mainly on the high performers of the company to continually do more with less - probably because the performers are more apt to take it.  i.e. They are more committed to the success of the company and its initiatives and they are capable of getting lots of things done.

He went on to explain he doesn’t believe the overall culture of the greater organization is this way, but he wonders why the senior leadership at corporate HQ would tolerate this from the leaders of his division.  And quite honestly, he’s running out of patience and tolerance of the situation.

This is one of those often hidden, but very powerful drivers of corporate culture.  By not punishing this “bullying” behavior the top brass is in effect condoning it.  It becomes very hard for good employees to look beyond their current chain of command and accept that top management is really interested in retaining their best talent, when they turn a blind eye to behavior that clearly drives away talent.

My friend went on to ask a mainly rhetorical question of me; “Isn’t this a dangerous thing for the leadership to allow”?

“Of course”, I responded.

“So how do you fix it?”, he retorted.

I don’t think my friend was really expecting an answer, he’s smart enough to know it’s a very complicated question.  However, it really started me thinking.  In my experience it’s just too easy for leaders to excuse away high turnover, or “highly talented” turnover (the loss of their most talented employees).

I assume most can relate to the following scenario on the day that great employee resigns:

The first reaction from the leader (a Vice President) is the immediate panic of realizing how much this person was doing in their area.  ”Who will take their clients”, “Who will give that presentation” etc…

The possible solutions to the problem run rampant in their mind; Can I  somehow talk them into staying?  Does that include a counter offer?  If so, I’ll need HR involved, will they agree to the counter?  Do I have someone inside ready to go if they don’t accept our counter?  If not, how long will it take to refill this role, who will I need to get involved in that process - HR, an outside recruiter? etc, etc…

Once the initial shock wears off and a somewhat plausible plan emerges to cover the workload, the VP starts to consider the broader ramifications of this departure.  What will the CEO say?  How will I respond when I’m asked the inevitable questions about this employee whom everyone respected and was always ranked as a top performer?

Unfortunately, this piece is often easier to remedy than the workload problem.

“What happened with Bill” the CEO asks, “he was a great producer - I hear he’s leaving us.”
“He’s going to ABC Company” the VP explains.  ”He said he had an offer he couldn’t refuse and we just couldn’t match”.

The crafty VP then adds a slight twist to the message to ensure their own status is maintained;  ”I guess he was not as loyal as we thought”  or “We’re better off anyway, Bill wasn’t as great as everyone thought”.  ”I think he’s crazy, he’ll be back here in a month asking for his job back”.

If the VP is exceptionally smooth they may even deflect the entire situation in an effort to draw sympathy from the CEO.  ”One thing for sure, he’s definitely put me in a bind - I guess you really can’t count on anyone these days - I suppose I won’t be seeing my kids much over the next few months”.

Although slightly skeptical, the CEO  has bigger fish to fry, so she lives with the explanation.  In essence, she makes a choice; “Do I take the time to investigate this further or do I get on with business.  ”Besides”, she thinks, “This VP has always been a producer, if I dig too far, I may lose him too - putting me in a bind”.  In the end it becomes a lot easier to just let it go.

When this gets repeated in multiple departments over a span of time, the company finds itself with a lack of A Players, very few prospects for future leadership, and a generally less than productive workforce.

But what about those exit interviews conducted by HR, don’t those root out the bad leaders and fix this problem? Unfortunately, not very often.  Remember, I said this was a talented employee.  Most talented employees are pretty smart, and it’s not a very smart person who burns bridges when they leave an employer.  They will come up with a whole host of excuses as to why they are leaving, but none will include the real reason - their boss is a poor leader, or even a bully.

The only real answer I can see to this dilemma is for CEOs and Senior Execs to make retention of great employees part and parcel of the company culture.  That means paying real and consistent attention to it.  In a recent article from James Heskett, one of the foremost thinkers/writers on corporate culture implores CEOs to “manage by the numbers - the nonfinancial numbers”.  This means tracking retention, identifying problem areas and working hard to resolve them.

You may think this is an HR function and the CEO need not be involved, but I whole-heartedly disagree.  It doesn’t take long for a sharp HR leader to figure out where retention really falls on the priority list. A few months in a row of bringing the numbers to the CEO and seeing no action, quickly tells him/her there are better ways to spend their time.  It must become a PRIORITY of the CEO; it doesn’t have to be personally carried out by him or her, but it must have a champion in the highest offices of the company.

The companies who do this well have seen the upside it brings - better talent, higher productivity and ultimately greater profitability.  Conversely, those who do it poorly continue to come up with great excuses on why the company is not performing - but I guess what else would you expect?

Mike Frommelt

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Filed under: Cultural Alignment, Leadership, Organizational Culture, Talent Management/Recruitment — Mike Frommelt @ 2:51 pm

I’ve read multiple blog posts and articles regarding the way social media is changing corporate cultures.  For a long time, I’ve resisted this notion because I personally believe that a corporate culture will only change when specific behaviors change, particularly the behaviors of those at the top of the organization.  However, I’m starting to come around to the idea of these tools are having a real effect on corporate cultures - mainly because they are tapping into a very primal and powerful force that does drive behavior change - FEAR.

Because of tools like Facebook, Twitter, Linked In and others, today’s world is more transparent than it has ever been.  No celebrity, CEO or even Average Joe can say or do something now without the fear of it being blasted all over the internet for everyone to peruse.  In my business, I see this through the lens of potential candidates for positions:  After I call and discuss an opportunity to a candidate, it doesn’t take very long for them to get a sense of the corporate culture of my client. They can very quickly pull together posts from Facebook, Twitter and sites like GlassDoor and Vault to hear actual employees describe their experiences at the particular company.   Candidates are also able to get a quick (although rough) estimate of a company’s turnover by looking at former employees on Linked-in.  I recently worked on a search for a senior operations professional with a company who had gone through a couple other people in the role in the last two years.  I was asked by no less than a dozen high potential candidates to explain why this company has had a problem keeping people in this role.

This kind of transparency should be scary to CEOs, Senior Leaders and HR Professionals. People are talking about your company out there and making determinations on how good or bad of a place it may be to work.  This all ties into your “employer brand” and it has real consequences on who you are able to attract - despite whether you are recruiting yourself, or using outside recruiters.  Great candidates, the ones who are succeeding in another company, quickly pull together a “case file” on a potential employer.  They are busy, successful people and if there are a more than a few obvious reasons why this job/company may not be a better situation than where they are now - they won’t take a serious look.

My hope is that this new normal will start forcing companies to behave better, to be more transparent and just generally more decent; even if it is mostly from fear of being found out.  So, I guess I have to give in and say that the use of social media really is impacting corporate cultures…as much as I hate to admit it took me awhile to get here!

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Filed under: Cultural Alignment, Organizational Culture — Mike Frommelt @ 3:51 pm

If you have read any posts/articles of mine (or of my colleagues at KeyStone) you know how passionate we are about corporate culture/core values and how important we believe they are to business success.  But what about those companies (we all know some) who seem to have a poor culture yet create strong financial results year after year?  Is it possible to overcome a “bad” culture with something else that drives revenue and profitability?

Earlier in my career I worked for a couple companies who paid absolutely no attention to building a positive culture, or any culture for that matter.  In fact, one of these companies had a reputation as a  ”bad” culture;  A difficult place to work.  Indeed, for myself it was a difficult place to work.  My belief was that  senior management didn’t care much about employees, we all seemed to be interchangeable parts in a machine.  Turnover was very high and the company seemed not to be concerned. Top line growth was by far the highest priority.

Yet, one would have to say this company is nothing short of very successful.  At their high point,  they were $3 Billion in revenue with over 15,000 employees worldwide. It would seem to me that if you grow to $3 Billion, you must be doing at least a few things right!  And, even though turnover was very high, there were a certain number of employees who stayed with the company many, many years and seemed to thrive in the culture.

When I co-founded KeyStone, a mentor told me a great story about his former business in Florida.  The story goes that when he bought the business, he inherited a group of employees who were drug dealers, drug users and other petty criminals.  He went on to describe how he fired all of these employees and started over with people who shared his core values.  As you might expect, when he did this, his business quickly turned toward the positive.  However, the kicker to the story is what happened to the other businesses  who picked up his former employees.  They too became more profitable and more successful!  Why?  Because, according to the story, the owners of those businesses were also drug dealers and petty criminals - having other drug dealers on the payroll was a natural fit.  They shared core values.

I’m sure this story was embellished for effect, but it makes a great point.  Shared values are a very powerful thing.  A group of people with similar drivers/motivators/values can literally change the world for the better (Google, Amnesty International) or unfortunately for the worse (Enron, 9/11).

I’ve come to believe corporate (or organizational) cultures are not really “good” or “bad” at all; rather they are “strong” or “weak”.  Either the culture is aligned well, with people who share core values, or it is a collection of disparate employees moving in different directions.  When the latter happens, chaos becomes the order of the day and growth/profitability and success becomes nearly impossible.

So… can “bad” cultures have great results?  Yes, sort of.  I’ve found that cultures do not necessarily have to be great places to work to be successful, but they do need to have at least a decent level of alignment around values to create any lasting success.  Reputed “bad” cultures are not bad for everyone, and likewise “good” cultures are not good for everyone.

This is what is truly great about capitalism and the United States of America, company cultures come in endless varieties, and as an employee, you can choose the style that suits you best.

We at KeyStone Search happen to believe that companies with employee centric cultures, those that truly realize their people are their strongest asset, will find lasting success easier and more and more fulfilling overall. However, we realize and must admit there will always be companies and leaders who believe otherwise.  This is also the great thing about the U.S., you don’t have to be all things to all people - we’ll stick with the clients committed to building stronger cultures and our competitors can have the others.

As always, we welcome your feedback.

Mike Frommelt

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Filed under: Cultural Alignment, Organizational Culture, Talent Management/Recruitment — Mike Frommelt @ 5:23 pm

The following article was published recently in the Entrepreneurs Organization online newsletter, Octane.  It is the story of a client of KeyStone’s who made a hire on their own and regretted it due to a poor cultural/values fit. The story is true, of course, the names have been changed to protect the innocent.  Read the article HERE

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Filed under: Cultural Alignment, Leadership, Organizational Culture, Talent Management/Recruitment — Bob Schoenbaum @ 3:36 pm

Why is it that some 40% of new CEOs are fired, or “retired,” within their first 18 months, and 64% of them never make it to their fourth anniversary on the job?

Virtually all of our business at KeyStone Search with founder/CEOs happens after they’ve had one or more failed hires for the same position. These clients are reluctant to spend dollars on executive search and only take the plunge after they understand first hand the significant costs of hiring the wrong person. They have experienced the costs of lost momentum, stunted  growth of the business (or losses, worse yet), direct severance package costs which can be one to two years salary and benefits and staff turnover due to stress created by the failed executive.

These CEOs understand the business can’t afford another hiring mistake but don’t know where they went wrong. They only know that the person failed on the job. The individual had a track record of success, was poised and confident, and had all the “right answers.” Therein lies the beginning of their problems… they didn’t ask the right questions! The CEO probably didn’t probe deeply about the things that matter - values. They didn’t ask about values or didn’t know what values they were looking for! Values such as honesty, integrity and work ethic are meaningful, yes, but more important are the values that are unique to your organization. Many entrepreneurial leaders haven’t defined the unique core values that drive their company’s culture. Having the right skills and experience and being successful in one company only translates to success in another company when there is a match with that company’s values and culture.

Nat Stoddard and Claire Wyckoff are the authors of The Right Leader, Selecting Executives Who Fit. They suggest that to ensure that a leader fits, two key changes to the traditional selection process must be introduced.  The first change is to rigorously define and measure the organization’s overall culture. The second change is to carefully assess the final candidates’ characters–their values, beliefs and business philosophies. The mantra “If you can’t measure it, you can’t manage it” applies to culture and character just as well as it does to Six Sigma or Lean management programs.

The recession will be over some day, but the world is only getting flatter, and the business landscape more competitive. Do whatever it takes to understand, identify and create a common language to describe your unique culture. Then, dig into more than candidate’s skills and track record.  Don’t wait until the next time you’re losing sleep over a bad hire to think about adding values to the hiring equation.

Bob Schoenbaum

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Filed under: Cultural Alignment, Organizational Culture, Start-ups — Mike Frommelt @ 3:23 pm

Greg Huang, editor of Xconomy Seattle (xconomy.com) had a great idea.  He decided to ask six Seattle area start-up CEOs to describe their corporate culture in one word.  Of course, he went on to write about the results of this experiment in Xconomy on 8/21/09.  He aptly titled the article Six Startup CEOs on Their Company Culture, Boiled Down to One Word. I happened to read the article at the time and found it slightly interesting that none of the six CEOs used the same word to describe their cultures.

Since then, both Robert Buderi of Xconomy Boston and Bruce Bigelow of Xconomy San Diego have picked up the ball and conducted similar experiments in their cities.  Again in each case, the CEOs were of startup organizations and again, none of the words used to describe their culture was a duplicate of any other.  In fact, of the 18 companies/CEOs interviewed, the same one word description was never duplicated.

I believe that these studies, although certainly scientific or conclusive, point out something very important about corporate culture.  I am a firm believer that every corporate culture is unique and different, as unique as the individuals that lead them and work in them.  Yet, even I am shocked that out of 18 start ups there was not even one duplicate in the group.  One would assume that these organizations have alot in common -being start-ups they are trying to grow rapidly, many are likely to be raising money to fund growth, and certainly all are working hard to get the most out of their probably scant resources.  Yet when asked to describe their cultures, they were all unique.  Descriptions ranged from “paranoid” to “focused” to “cool” and even “humble”.

In our practice here at KeyStone we have found that cultures, just like individuals, are extremely multi-dimensional.  Trying to group them into smaller categories is difficult and I believe it can actually can be dangerous.  For example trying to categorize all the companies in the Xconomy articles under the label “start-up culture” (a term I’ve heard numerous times) would be a big mistake. 

Others terms I hear frequently are “Public Company Culture”, “ESOP Culture” and “Family Company Culture”.   Although these types of companies may have some things in common regarding their cultures, lumping them together and making decisions (strategy, hiring, training, process) based upon them would be a crucial mistake.

Great articles - I hope Xconomy keeps these coming in their other cities, I would love to see the results! 

Mike Frommelt

Tags: Add new tag, Start-ups
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Filed under: Cultural Alignment, Leadership, Organizational Culture — Mike Frommelt @ 1:42 pm

I read a very interesting article today in the New York Times regarding the corporate culture of Apple. The article, titled “Apple’s Obsession with Secrecy Grows Stronger” outlines what the author insinuates is a cultural norm within Apple, to maintain near absolute secrecy regarding their inner-workings.   Among other evidence to support the theory, a former employee is quoted as saying “  “They make everyone super, super paranoid about security- I have never seen anything else like it at another company.”

Of course, this seems very legitimate and in fact, prudent, given the way new and innovative ideas/technology can be stolen these days. However, it would seem Apple takes it to the extreme, striking myself (and the author)  a bit odd in our current “share everything”, “meet me on Facebook” society. 

The article goes on to describe the private nature of Mr. Steve Jobs himself.   Certainly, anyone who keeps up with the world of business even a little bit, is aware of the attempt to keep Jobs’ recent health issues a secret.  Of course, this ultimately proved impossible, and now some are even accusing Apple of a intentional campaign to mislead the public.  One could make all kinds of conjecture on Jobs’ motives, and many have, but  I doubt we’ll ever know exactly.  Nor does it really matter in my opinion. 

What is through all of this, is that Jobs’  is a very private guy, both personally and professionally. I for one agree wholeheartedly agree the author that this style, value, behavior, or whatever you want to call it, has indeed shaped a key part of the overall culture at Apple.

In giving public speeches regarding corporate culture, I advance the opinion that approximately 70-90% of any company culture can be identified by investigating the CEO at a “core values” level (assuming they aren’t a new CEO hired from outside the company).  My point is the CEO ultimately creates the reward system within the organization and they do so according to their core values.  Put simply, what they punish, tolerate, reward, ignore etc… becomes the standard of behavior.

This nearly always sparks a question, and sometimes a vehement disagreement from someone the crowd (which is exactly why I say it).  “That cannot be possible in a large company” an audience member once yelled out.  ”It just doesn’t make sense that one person can ultimately dictate culture for thousands of employees”.
My rebuttal is to describe high profile examples like the hiring of Bob Nardelli at Home Depot, or Carly Fiorina at Hewlett Packard, or even William McInerny at our local icon, 3M.   All three of these are large companies who had strong, even iconic, cultures that began changing the day these CEOs were hired.  Of course, they couldn’t do it completely by themselves, but as CEOs often do, they changed out key managers for those who were more closely aligned with the new vision.  These new lieutenants helped ”implement” the new cultural dynamics and way of doing business.

I don’t know if the ”70-90%” statement above is accurate, I say it more to make a point than anything else.  However, one thing I do believe wholeheartedly, is that culture is driven by core values, and the higher level the leader, the more effect their core values have on the overall culture.  I’ve seen it too many times to believe anything else is  possible.

Going forward I’ll be adding Jobs & Apple to my list of examples.

 Mike Frommelt

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Filed under: Uncategorized — Mike Frommelt @ 10:39 am

Being a bit behind on my reading, I’ve just had a chance to finish April’s edition of Chief Executive Magazine.  Despite my lack of timeliness, I couldn’t resist making comment on an article called “Want Better Performance? Say you’re Sorry” by John Kador.

My well thought out, enlightening commentary on this is article is a great big “Duh”.

Don’t get me wrong, I’m not making fun of the writing, John Kador, or the even the content of the article; I think it is very well done and the evidence provided to back the theory that CEOs willing to apologize for mistakes are more effective, is both sound and illuminating.  Overall, it’s a great article.

However, I marvel at the fact this is something that comes as a surprise to today’s CEOs (although I believe it wholeheartedly based upon many execs I know). 
It makes me ponder a whole host of things; How did we get to the point where apologizing is almost unheard of anymore?  Who’s fault is it that we are in this quandry? What can we do to change it?

It also strikes me as ironic that I have never met a CEO who wouldn’t like their employees to be more “accountable”, yet apologizing for mistakes at the top is completely taboo.

 I know, I know, the lawyers and our generally letigious society drive this  behavior, right?  ”Don’t admit to anything or you’re just setting yourself up for a lawsuit”. 

Yet, more and more of this type of data is hitting the press; When an organization, a CEO, a Politician or just your run of the mill human being, apologizes sincerely for a mistake - they are generally forgiven by their by customers etc…  It is being proven that the number of lawsuits actually goes down after an effective apology.

Who’d a thunk it? Most customers, clients, constituents etc… don’t really expect perfection, they just want common decency, accountability and humble behavior when a mistake is made.  Maybe business is still just as simple as “people working with people” afterall.

Mike Frommelt

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Filed under: Cultural Alignment, Leadership, Organizational Culture — Mike Frommelt @ 2:53 pm

A couple of weeks ago, I had the pleasure of attending a Bruce Springsteen (and the E-Street Band) concert at the Xcel Center in St. Paul.  I’ve been a Springsteen fan for many years, going back to high school - nearly 25 years ago.  I’ve had the privilege of seeing the band live 6 times over the years, and I have always been amazed at the talent, the energy and of course, the  music itself.  However, this time around, I found myself marveling in a new way; Pondering business lessons we all could take from Bruce and the band.  I know, I’m showing my age, and maybe my nerd factor. 
One disclaimer here, I’m a fan, but I’m not a fanatic. I don’t know the ins and outs of Bruce’s personal life, his kids, what he said to Clarence back stage last week etc…. So, I may be opening myself up a bit here to some correction on the details from the hard-core fans.  However, from the seat of someone who is a slightly more than a casual observer, the similarities to some well heeled business best practices are undeniable.

First of all, consider the signs of the band’s success. Other than a few short breaks, the band has been together for almost 40 years.  That’s right, 40 years.  The Wild, The Innocent and E-Street Shuffle came out in 1973 and the ‘break through” album, Born to Run came out in 1975.  If longevity says anything about success, these guys have it.  Also, I’ve got to assume Bruce and the gang are not living check to check, so if that’s how you define success, they’ve got it there too.  An amazing collection of work that will last many lifetimes… By just about any measure the band is incredibly successful.

Here’s the ways I think Bruce and the band hit it on the head in regards to business.

 1)The Hedgehog Concept/Stick to what you know - Choose what you can be best at and focus on it.  Bruce and the E-Street Band just make great music and perform great live shows.  Not much else.  Rarely do you see Bruce anywhere other than on stage.  Not many interviews, no “experiments”  in acting, or anything else. Obviously, they know where their bread gets buttered and they stick to it.  (I’m intentionally skipping Little Steven’s foray into acting on the Sopranos, not worth mentioning). 

2) Humble leadership/Set an Example - The Boss is obviously in charge while on stage, but he also works hard to ensure he never upstages the band.  The famous “introductions” of the band (if you’ve been to a concert you know what I mean) are actually one of the most exciting points of the show.   In most shows, Bruce will also give the band a break while he comes out and plays alone for awhile.  The boss working just as hard, or harder than their staff?Now that’s a unusual site these days.

3)Enjoy your work/shared core values- When you see the band perform, they really look like they are enjoying it, and enjoying each other.  Is it all an act?  Maybe, but if it is, it’s a darn good one.  Hard to believe they could spend that much time together purely for the money.  This is where I will also take a little leap and say that most likely, the core values of the band are well aligned.  Again, hard to believe they can work together that long, and put on such high quality performances unless their beliefs (at least in terms of work) were similar.

4)Customer Service/Delight the customer - Anyone who has been at a Springsteen show knows about their desire to delight their fans.  When I first saw Bruce in the 80s, they played for over 4 hours.  This past show was right around 3 hours, but given the band is getting on in years, I’ll concede them an hour of jumping, dancing, sweating and singing their guts out.  I’ve seen many other performers over the years and never have I seen a show that has the same enthusiasm, length, or spririt of a Springsteen concert.  In fact, over the years, I’ve taken people to the show who were previously not even fans and through one experience they became big time followers.

Also, along these same lines, I can’t even imagine how sick the E-Street band is of playing “Born to Run”.  Yet, every show they play it, and play it like it’s still a top 40 hit.  Give the client what they want and they will continue to come back.

I could go on, but you get the point. This entry was not intended to be a hard hitting business education piece anyway.  In the end, I guess you could totally disagree and say “It’s just rock and roll” - but maybe not.

Mike Frommelt

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