A Leader's First 90 Hours

Source: https://www.nettl.com

As a new leader at any level, what will you do in your first 90 hours on the job?  Fascinating question.  A very important question in my view.  HBS Professor Emeritus John Quelch wrote a thought-provoking piece recently for HBS Working Knowledge on this topic.  He reminds us of the terrific book, First 90 Days, written two decades ago by Mike Watkins.  Quelch argues that the world is moving so quickly that new leaders need to focus on their first 90 hours; they simply can't wait to take certain actions given the pace of change.  Whatever you think about Quelch's arguments and recommendations, there's one piece of advice that resonated with me.  He advocates for careful consideration of actions during those first 90 hours that will signal your values as a leader.  I wholeheartedly agree.  

Think about how people throughout your team or organization will interpret your words and actions during those first few days.  They will be reading between the lines, chatting with their colleagues, and reflecting on the meaning behind your actions.   Through it all, they are trying to discern what is important to you, and what your priorities will be.  Who and what do you value?  

Therefore, consider carefully the way others will perceive those initial actions.  Who are you meeting with during those early days?   What are you emphasizing in your communications?  What small changes will you make to signal your values?  Are there any immediate investments you can make that suggest a new way of leading?  How open and transparent will you be in relation to what prior leaders have done?  Considering these questions carefully will be highly important as you set the tone in those first few days in a new role. 

Your Next Customer Could Be Your Mom

Source:  stockvault.net

I read an intriguing story in Fortune recently about Carvana, the company that has re-envisioned the new used-car buying experience. The article, by Nicole Gull McElroy, focuses on the organizational culture.   McElroy describes the core principles at the heart of Carvana's organizational philosophy. One principle proves to be particularly compelling. It's so powerful because it's so simple: treat every customer like your mother.  Why is this principle so effective at communicating the organization's values and philosophy?  It clearly guides employee behavior.  They don't need much explanation, or even guidance from senior management.  They can apply this criteria independently in any decision they make.  Would I act in this manner if my mother was buying this car?  McElroy explains:

This growth story, say the Carvana founders, is rooted in a single concept to which nearly every human can relate: Your next customer could be your mom. And that’s what Rachel Haynes, a customer advocate, was shooting for when in May 2020 she managed the sale of a BMW to one Texas husband as a Mother’s Day surprise for his wife, who had recently beat cancer. Haynes surprised the couple on delivery day, filling the back seat of the car with balloons, signs of congratulations, and a gift basket stocked with a blanket she crocheted, a bottle of Champagne, and a Starbucks gift card. No one asked her to do that; it isn’t in her job description and had no bearing on a commission check (Carvana doesn’t offer any to begin with).

“We said it from an early stage: We’ll take the best person with the best skill set every time,” says Keeton. “No expert is worth a ding to our culture.” That constant focus on culture is why, he says, anecdotes like that aren’t outliers at Carvana. Envisioning your mom on the receiving end of a sale is one of the company’s seven guiding principles. The remainder: We’re all in this together; there are no sidelines; be brave; zag forward; stay scrappy; and don’t be a Richard. (That last one is a tweaked version of, ahem, don’t be a word that rhymes with sick.  

Do Materialistic CEOs Take More Risk?

Professors Robert Bushman, Robert Davidson, Aiyesha Dey, and Abbie Smith have written a fascinating paper titled, “Bank CEO Materialism: Risk Controls, Culture and Tail Risk.” They actually measured how materialistic bank CEOs were, and they examined the impact that the CEO's personal value system might have on the risk culture of the banks that they led. 

Their sample included 284 firms and 445 CEOs during the 1992-2013 time period.   They examined personal ownership of luxury goods as a proxy for the "materialistic" nature of a bank CEO.    They labeled CEOs as materialistic if they owned an automobile that cost more than $75K, a boat longer than 25 feet, or a home worth more than twice the median price of homes near their company's headquarters.  They also ran their analysis using higher cut-offs for each of these luxury goods (for example, they raised the purchase price of cars to $110,000).   Then, the researchers also examined the banks' risk management cultures.  They did so by collecting data on the risk management index of each bank.  This index draws on data from reports that the banks file with the Federal Reserve each year, and it strives to evaluate the "strength and independence of the risk management function" at each institution.  

What did they find?  The scholars report, "Using an index reflecting the strength of risk management functions (RMI), we find that RMI is significantly lower for banks with materialistic CEOs, and that RMI significantly decreases after a materialistic CEO succeeds a non-materialistic one and increases after a non-materialistic CEO replaces a materialistic CEO."  

Finally, the scholars report an increase in the number of materialistic CEOs over the years.  I find the study very interesting, both because of the findings and the great care that the scholars took to try to measure key variables.  We all might believe intuitively that value systems matter, but this study actually shows a relationship between a leader's values and the behavior of the organization that he or she leads.  Naturally, these scholars are not saying that buying a big house or a large boat is inherently bad.   However, they are suggesting that we should pay attention to actions and decisions that may reveal a leader's value system.   Their personal purchasing decisions are one piece of a larger picture, and we should pay attention to all the cues available to us.  In the end, it doesn't mean we should reject a leader who may display signs of being materialistic...but we should be a bit more vigilant about the impact that the leader may have on the organization's culture.  

Confronting Unethical Behavior in the Workplace

I recently read a thought-provoking piece by Darden Professor Mary Gentile about what she calls values-based conflicts in the workplace.  Gentile argues that we often hear a series of rationalizations if and when we try to raise concerns about the ethics of certain behavior in organizations. Gentile argues that it is worthwhile to step back and try to understand the nature of the objections and rationalizations. In so doing, one can formulate a more effective response and can speak up more effectively. Here are the questions we should consider according to Gentile: 

• What are the main arguments you are trying to counter? What are the reasons and rationalizations you need to address?
• What’s at stake for the key parties, including those who disagree with you? What’s at stake for you?
• What levers can you use to influence those who disagree with you?
• What is your most powerful and persuasive response to the reasons and rationalizations you need to address? To whom should the argument be made? When and in what context?

I think these four questions are incredibly helpful.   Moroever, I'm particularly interested in the second question.  I think that question pertains to any conflict in the workplace, even if it has nothing to do with ethics.  Suppose you want to question a plan of action proposed by another manager.  Asking yourself what they have at stake in this situation, how invested they are in this plan, can be important, as it may help you understand the extent to which they will be defensive.  Moreover, it will help you understand what might trigger interpersonal friction and conflict in this situation.  If you want to engage others in a productive debate (i.e. constructive conflict), it's crucial to understand how high the stakes are for the other party, to understand where their passion and emotional investment resides.  

Four Principles of Values-Based Leadership

Several weeks ago, I had the privilege (for the second time) of hearing former Baxter CEO and current Kellogg Professor Harry Kraemer discuss values-based leadership.  Kraemer offers four principles for leaders to consider, as they try to lead with purpose, conviction, and integrity.  This short video introduces you to the four principles.  For a more in-depth discussion by Kraemer, you can click here.

Design Rituals to Reinforce Organizational Values & Culture

Mollie West and Kate McCoubrey Judson have published a wonderful blog post for the Huffington Post about how to strengthen organizational culture.   They focus on the importance of establishing rituals that bring the organization's mission, purpose, and values to life.   I've always believed in the value of such rituals.  At universities, such rituals include ceremonies such as convocation and commencement, as well as alumni reunions, honor society inductions, and new student orientations.   Of course, they also include many smaller rituals that are part of everyday life on campus.   For us, these rituals reinforce our institutional values and remind us of the meaning and purpose of our work - to transform the lives of the young people who come here to learn and grow.   West and Judson describe the importance of rituals in this excerpt from their article:  

Companies practice rituals of all kinds—celebration rituals, eating rituals, storytelling rituals. Why are they important? Rituals engage people around the things that matter most to an organization, instilling a sense of shared purpose and experience. They spark behaviors that make the work and the company more successful.

Rituals can be powerful drivers of culture, so they should be thoughtfully designed and nurtured. This starts with setting an intention. What is the organization’s unique purpose and set of values? What mindset and behaviors will help people deliver on those? A great ritual will reinforce that mindset and those behaviors in a way that feels authentic to the organization and its people. What works at one company, might feel totally foreign somewhere else.

It’s also important to think about what will make a ritual stick. Why will people want to participate? Can it start organically and catch on, or will people look to certain leaders to model it first? Designing a ritual that will sustain over time requires tuning in to the organization’s existing culture, beliefs, and behaviors. 

Inculcating Your Organization's Core Values in Your Employees

How do you inculcate your organization's core values in your people?  How do you make sure people understand and live out those values in their day-to-day work?   Here are a few tips:

1.  Take the opportunity to communicate the core values on many occasions in many different arenas.  Communicate those values simply and consistently.

2.  Recognize and reward those people whose extraordinary efforts embodied those values and made the organization better as a result, even when they could have taken an easier road perhaps with better short term results.

3.  Be consistent.  Make sure that top leaders act in a way that is consistent with the values that they articulate.  They can't just espouse certain values; they must back it up with action.

4.  Engage your employees in an ongoing discussion of the merits of these values.   Why do they matter?  How do these values manifest themselves in day-to-day work?  Don't just talk at them.  Create a conversation with them about those values.

5.  Create case studies of situations in which the organization may have strayed from those values.  Talk candidly about what the negative consequences were, and discuss the lessons learned from that experience.   Focus on learning, not on blame.

Walking the Walk on Corporate Integrity

Scholars Paola Sapienza, Luigi Guiso and Luigi Zingales have conducted interesting new research on the topic of corporate values and integrity.    Kellogg Research Insights reported on the research. In that article, Sapienza notes, "We didn’t find any correlation between the cultural values that a company advertises and what its employees perceive from the inside once they're working there."  In other words, it really didn't matter whether a company crowed about its values and integrity on its website or on other publicly available documents.  The bottom line:  employees watch what managers do, not just what the company says on paper.   Employees make an independent determination as to whether the company and its senior leaders have integrity.  They watch to see who walks the walk, as opposed to worrying simply giving credit to those who talk the talk about integrity.

Ok, the research results don't surprise most of us (that doesn't stop scholars from claiming that their findings are surprising... it helps get you published, after all!).   Still, the findings should remind us to take another look at how we "walk the walk" at our firms.  As leaders, what do we do that might contradict public proclamations about values and integrity?  Have we given our employees any reason to doubt the authenticity of our claims about honesty, integrity, and respect for one another?  

Rules are made to be broken

You have all heard the phrase, "rules are made to be broken." Of course, the phrase makes compliance professionals cringe! The bottom line, though, is that it is very difficult to count on rules and procedures alone to govern behavior. If we want to insure that people do the right thing, we need to inculcate a strong set of values throughout the organization. We need people to understand the criteria they ought to use to make key decisions. We need to establish a framework that guides decision making, because we will never anticipate all situations, and we can never design "perfect" rules.

Defining Your Company's "Critical Behaviors"

Many companies outline a set of values by which they wish to operate, and they define the financial goals they wish to achieve.   Senior leaders often spend time describing those values and goals at various company events.  Company newsletters, posters, and wallet cards list the organizational values too.  However, many firms do not take the extra step to define clearly the individual and team behaviors necessary to live those values AND for the firm to achieve financial success.  Great companies take great care to outline the crucial behaviors required for success on both fronts (financial and values).   Moreover, they connect those behaviors to the personal development plans and merit assessments of each employee.  Goals-Values-Behaviors: Every firm should make sure they have addressed each leg of the stool.