by Mark Brigman
Bob found himself in a company board meeting where they were discussing their strategy to minimize the adverse financial effects of the massive recession that was looming. Companies across the US, and the world for that matter, were purging their workers by the thousands.
But Bob had a different plan for Barry-Wehmiller. He had worked hard to earn his employees’ trust, and he was not about to lose it. Ten years earlier he had pledged to treat people like family, and he did not want to hand out pink slips. He understood that anyone could lead when times are good, but great leaders are able to shine when times are difficult.
Bob summoned his leadership team and shared a plan. Rather than have a few hundred people feel all of the pain from their financial woes by losing their jobs, it would be best if all employees shared in the sacrifice, as a family would. Bob recommended a plan that included having each team member take four weeks of unpaid vacation and the company would freeze its 401k match program. This approach made for an interesting proposition.
Many employees stood to personally lose more than $10,000 of benefit, but Barry-Wehmiller employees also embraced a culture that taught them to consider fellow team members before their individual gain. Sounds good for a book, but do you believe it?
In ten days, Bob led a charge that stabilized the company and included a $20 million savings program. Employees were able to maintain employment and continue to march forward. The company leaders understood the uncertain times, so they communicated with their workforce to maintain a high degree of trust and transparency. What do you think happened to employee morale and performance over the next year?
For most US companies, 2010 was one of the worst years in financial performance because of the carnage caused by massive layoffs and exceptionally high unemployment rates. On the contrary, Barry-Wehmiller experienced a record-breaking year in operating income.
In the lowest of low times, economically speaking, Barry-Wehmiller’s employees were more engaged than ever, had high levels of trust with their leadership team, achieved record setting productivity, all while earning a lower annual wage than the year before.
Their company has grown at a rate of 20% per year since 1988 when their new leadership model was adopted. And their return on investment has been 15% per year, as compared to the S&P 500, which has been only 3% per year in the same time period. One of their measurements of success is the divorce rate of their employees relative to the general population. Barry-Wehmiller feels that the divorce rate metric is a strong indicator of personal wellbeing—and they are right.
Bob Chapman stated:
Every one of your team members is important and worthy of care. Every one of them is instrumental in the future of your business, and your business should be instrumental in their lives. This isn’t simply idealism, though there’s nothing wrong with that. Business leaders are always looking for investments with the potential for good returns, but our focus is on creating value for all stakeholders.
Machinery can increase productivity in measurable increments, and new processes can create significant efficiencies. However, only people can stun you with quantum leaps. Only people can do ten times what even they thought they could. Only people can exceed your wildest dreams, and only people can make you feel great at the end of the day. Everything we consider valuable in life and business begins and ends with people.
Bob Chapman is a man and CEO who understands his people and has a “higher purpose.” Isn’t it amazing what employees are willing to give if they trust their company’s leadership? Unfortunately, it seems that most people view their salary as an exchange for their happiness. With great corporate leadership, employees should have both—a good income and happiness. Great leadership is what makes both happen and this is precisely what Mr. Chapman has modeled for us to follow.
Alignment:
Before we jump headfirst into the alignment section of the Partnership Success Pyramid, I want to take a moment to level-set the terms: vision, mission (purpose), and core values. I periodically see inconsistent uses of these terms, so I feel compelled to gain alignment, pun intended, with you before proceeding.
A company’s vision is its long-term, finish line goal that the organizational leaders have set in place. Jim Collins and Jerry Porras call the vision the Big Hairy Audacious Goal (BHAG) in their insightful 1994 book Built to Last. A company’s vision is the mental picture of reaching the summit of the mountain. An example of a pharmaceutical company’s vision could be, “Our vision is to rid the earth of brain cancer by the year 2030.”
A company’s mission (sometimes referred to as the company purpose) is their “why.” A mission statement should appeal to the emotions of everyone who hears it, and it should inspire others to support the cause. Simon Sinek offers a concise description of a company mission statement in his best-selling book Start With Why. Sinek suggests that companies should offer a compelling vision that is focused on why the company exists, not what they produce or how they produce it. An up-scale automobile manufacture may have a mission of, “we exist to redefine affordable luxury and to force change to mediocrity and status quo.”
In the early years of Ford Motor Company, their company mission was to make automobiles that could be purchased by every member of the working class. Up until this point, only the financial elite could afford an automobile. This belief and conviction to their company mission challenged them to innovate and be the architects of the assembly line of mass production that revolutionized manufacturing and significantly reduced the cost of production. This innovation was instrumental in making the automobile affordable to every working-class citizen.
Core values are the guiding principles and traits that describe and steer our behavior. John Bloomberg, author of Good to the Core, describes core values as the critical guides that lead us in making decision in business and in life.
Our core values are the timeless beacons that direct us to what we believe so that we stay true to ourselves and true to those whom we care about.
Some examples of company core values include:
Honesty
Self-Improvement
Self-Discipline
Self-Respect
Integrity
Courage
Selfless
Accountability
Dedication
There are two important aspects to consider with core values. First, each core value should be a test-of-fit for every employee of the organization. For example, suppose a company has a core value of creativity/risk-taking. If this is not a core belief and core behavior of every employee, then it will dilute and undermine the intent of the other core values. Second, each core value should be used to evaluate fit for every strategic partner. If not, this lack of alignment will seem like you are speaking a different language to an entirely different species.
Aligning Vision, Mission, and Core Values
From a business perspective, alignment, or congruence as it is sometimes referred, of people is an imperative element for long-term success. As business leaders work to develop their companies over time, they must seek out others who naturally share similar views and philosophies on business and life. Alignment of vision, mission, and core values is critical to minimize costly turnover and to maximize the speed of accomplishing company goals.
Some may argue that this approach of specifically aligning to those who believe what you believe is short-sided, that it takes the alignment philosophy a bit too far. After all, contemporary organization leadership tells us to embrace diversity of thought, right? Diversity of some things is great, but not diversity of business beliefs and values. Alignment of vision, mission, and core values is an absolute must.
Let’s put the topic of strategic partnerships aside for a minute and discuss employees within your own company. It is critical that you hire talented people who are naturally aligned to work toward the same vision and goals of your company and that they operate using the same values structure that your company has established. In busine
ss, there is nothing more powerful than a group of intrinsically motivated people who have a common mission. If we are able to align with people who have the same “why” as us, great things are likely to happen.
Employees who are motivated by money first, will always put money above vision and mission, and that does not help the company achieve its long-term vision, mission, or goals. As a business leader, it is your responsibility to find high-value employees and partners who align with your beliefs, your core values, so they will be intrinsically motivated to accomplish goals that align with your company’s goals.
Countless studies have shown that trust is forged and accelerated when we align with others who share our same beliefs. When we surround ourselves with people who believe what we believe, we tend to be motivated to achieve similar goals and do it in a similar way. This natural alignment offers great efficiencies to group work, especially as groups grow larger and include multiple companies.
Smart companies start their new employee interviewing process by asking the job candidate to share his/her values and beliefs. Then the interviewer communicates various scenarios to the candidate and asks how he/she would react to a given situation as a means to gain insights on the candidate’s natural inclinations. The answers offered by the candidate are obviously used to “determine his or her fit” within the company. We call these cultural norms.
Toward the end of the interview process, after the questions have been asked and a sense of the candidate’s “true makeup” is determined, the interviewing manager starts to share the values and beliefs of the company. A company’s core values describe the very DNA that every employee should possess, without exception. The core values should be top-of-mind when an employee is faced with a tough decision, especially when it involves business ethics.
When we execute a strategic partnership, we should view the partnering company as an extension of our own firm. When we hire new employees, industry best practices tell us to find employees who are naturally inclined to perform in the way that our firm is designed to perform. When we align with co-workers and strategic partners who believe in our company’s vision, goals and values, the efforts required to manage each employee are significantly lessened, thereby speeding the timeframe to solid results.
It is imperative that our strategic partners not only know our core values, but they should align with each of them as well. Why? So we can build and maintain trust more quickly and more naturally. We cannot trust in something that we do not believe, and we cannot expect our partnering companies to trust in something that they do not believe. Our company core values guide our daily work activities based upon our beliefs, regardless of who is watching.
The illustration above is an overly simplified depiction of group behaviors. On the vertical axis, we have some level of results, and on the horizontal axis we have time. In order to achieve the highest level of mutual results, the “company activities” must be aligned with the “provider activities” and vise-a-versa. As you can see, PA-1 is much more closely aligned with the “company activities” than PA-2. Philosophically speaking, seeking and gaining alignment of vision, mission, core values, and goals between partnering companies will lead to greater levels of performance and overall partnership value. Later in this book, I will describe how to ensure continual alignment with your partners when I introduce the Strategic Partner Leadership Model (SPLM).
Let’s take the company EKS&H as an example. This company provides tax, auditing, and consulting services. The firm is 40 years old and has 650 employees. It is a well-regarded organization with high levels of employee and client loyalty. Their company core values include
Integrity and ethical values
Direct, open, and honest communication
Commitment to clients
Product quality and reliability
Continual self-improvement/self-renewal
Having fun
People as the source of our strength
Team-orientation/commitment to each other
Creativity/innovation/risk-taking
Strong work ethic
EKS&H has quite a few core values. They have ten unique lines that represent about fifteen traits. This number goes quite a ways beyond the recommendation of three-to-five. My first reaction is that EKS&H include some values that are not core to every employee. This is to say that they have included some values that are aspirational, values that they intend to foster. Remember that core values must be core to every person so you have alignment. It is great to have aspirational values, but they must be identified and treated uniquely. For example, core values are an absolute must to be hired, while aspirational values are “nice to have.”
If EKS&H truly has 650 employees who embody the core values of open, honest, and direct communicators, committed to clients, risk-takers, with a strong work ethic, then they will absolutely hate working with a company filled with indirect and closed-minded communicators who are completely risk-averse, who work six-hour work days and are completely unwilling to prioritize a client or project over their family time.
Transparency:
The third element of partnership success is transparency. By definition, when we engage a company and make them our strategic partner, we become dependent upon their performance. That is, our partner’s ability to deliver on tasks and goals will have a direct effect on our ability to deliver on tasks and goals. This interdependence is one of several reasons why transparency is critical to long-term partnership success.
When we speak of transparency, it is imperative that the parties be open and honest as they communicate issues, performance outcomes, and potential challenges that may lie ahead. By being candid and timely with communications, your partner will have the maximum time afforded to make adjustments to his/her individual responsibilities in order to minimize any collateral challenges that may exist due to a specific situation.
One gentleman whom I interviewed in preparation for this book was Darren, the former owner of a very successful data center that was acquired a few years ago. During my conversation with Darren, he described that air conditioning systems are incredibly important to data center operations due to the extreme heat that all of the electronics equipment emits.
He issued a request for proposal to a number of leading air conditioning/climate control providers to supply equipment and maintenance to his facility. Throughout this evaluation process, Darren started to form relationships with some of the company representatives that were competing for his business. One provider in particular had a salesman named Tim. Tim had spent a good amount of time compiling the requirements before he submitted his company’s “best and final” offer for Darren’s contract. After seeing Tim’s proposal, Darren was shocked to see such a low price.
Darren grabbed the phone and called Tim to gain some understanding about his proposed pricing. He felt that Tim had a great understanding of the requirements, but he obviously missed something in his proposal as it was significantly lower than all of the other bids. In their phone conversation, Tim said he would be completely transparent with Darren and share the full financials behind his proposal.
After reviewing line-by-line, Darren quickly realized that Tim had offered a proposal that was “break-even.” That is, Tim offered a price that included no profit margin for his company. Darren, being a savvy businessman, knew exactly what this would mean. All would be well until Tim’s company was faced with the decision to send their only available technician to Darren’s company and make $0 profit, or send the technician to another opportunity that was sure to have a profit margin built in.
Sure enough, after a brief conversation, Tim stated that he wanted Darren’s business as he had planned to market and tout this “high-profile” account to other prospects. Tim felt certain that landing a big datacenter account would give him additional credibility to gain additional business that would offset the margin loss from the ultra-competitive bid. Although Darren appreciated the transparency and creative approach,
he demanded that Tim adjust his rates so that Darren’s service calls would not only be prioritized first, but he would also get the most skilled technician to service his equipment. They eventually agreed to terms and had a long and mutually beneficial relationship.
Transparency can come in many forms. In the case of Tim, he was willing to be completely transparent in showing the detailed financials of his service proposal. Another form of transparency is offering open, honest, and timely information to our partners. It is our natural humanistic tendency to refrain from sharing bad news. However, the truth is, when situations go bad, having additional time could mean the potential to minimize damage that was caused by an unforeseen event.
Although it is never pleasant to pass on unfortunate news, the message will have to be communicated at some point and, generally speaking, the sooner the better. It has been my experience that communicating unfortunate news early can be seen as a trust builder between parties as the message is delivered in a timely, good faith effort so that your partner has the best opportunity possible to pivot to minimize the adverse impact that may be caused.
Being transparent starts by having the parties agree, up front, to specific key performance indicators (KPIs) that will be collected and communicated between partners. The metrics or KPIs should be collected and distributed in periodic reports as agreed to by the parties. The sharing of these important metrics will help drive understanding and maintain performance transparency between the organizations.