My client/friend, let’s call him George, has been facing, at various times and with various frequency, all the necessary tasks that must be planned for and completed to enjoy a successful exit from his business. As we close in on the final 3 to 5 years before “pulling the pin” he has reflected on all that has been accomplished, and what else needs to be done.
I met George about 9 years ago when he was 56 years old. He was owner of a successful sales agency. George had been working in the business for 30 years at that point and was beginning to reap some of the perks that come with ownership. He was beginning to think about how to more fully involve the next generation and what planning needed to be done to do that. They were beginning to look at their insurances and business agreements to make sure everything was up to snuff. But as most business owners end up doing, he dropped the ball because he was spending all his time working in the business rather than spending quality planning time on the business.

Fast forward to today and George is still the owner of a successful sales agency, the next generation is still pretty much on the outside looking in after an average of 12 years apiece as employees. George has no idea what he’ll need financially to retire, what his business is worth, how to get the business to the next generation or even if the next generation is qualified for ownership He’s concerned about what he’ll do for health insurance, how he’ll replace the perks, what about the real estate, and on and on. George is thrilled with the next generation’s work ethic and demonstrated skills and abilities but no one knows if they have the skill sets to own a business.

As we began the exit planning process to clarify all of the above and more, George was absolutely amazed at all that has to be considered when he is “The Franchise.” Let’s take a look:
1. Will vendors respect the next generation as owners?
2. Will bankers be comfortable with the next generation?
3. How will he retire without bankrupting the business?
4. How can he replace the company car and expenses thereto?
5. What about health insurance, long term care and life insurance currently being paid through the business?
6. What needs to be done to determine the next generation’s skill sets?
7. Can we develop leaders or are they already there?
8. Do we have a strategic plan that aligns and creates accountability throughout the organization?
9. Will the next generation’s spouses be okay with having them put their signatures on the bottom line and maybe collateralizing their homes?
10. How do we integrate all the corporate and personal finances to make sure all these questions can be answered?

Needless to say, George was overwhelmed. My initial advice was that you can eat an elephant – one bite at a time. We have had a retirement needs analysis completed, the business is being valued by an expert in the industry, the next generation is undergoing executive assessment using industry standard tools, the CPA has brought all the books up to today, and we are progressing – one bite at a time.

The result of the process will be a business that succeeds to the third generation (part of that 15% that actually do) and will grow with great focus and enthusiasm. “The Franchise” will become an emeritus/senior advisor and the next generation of “The Franchise” will carry the ball. This time, however, all the planning will be kept up to date so that when we move this great company to the fourth generation it will be much easier to accomplish.

Bruce Grieshaber, Certified Business Exit consultant™
Senior Consultant
Grenell Consulting Group

1. Determine if can the company perform without you.
2. Have a customized exit plan
3. Have a strong tax strategy
4. Build an estate plan
5. Determine income replacement needs
6. Build income replacement fund
7. Build a 3 year strategic plan for the business
8. Make sure you have the right people in the right seats on the bus.
9. Have your legal ducks lined up.
10. Have strong internal processes and procedures.

Another aspect of thinking worth exploring is the role of intuition. In essence, intuition is usually defined as knowing something instinctively. Are you guided by your intuition  – those ‘aha’ moments – or do you analyze a problem backwards and forwards before making a decision?  And, more importantly, how are you doing? Do you have a solid track record of good judgment and decision-making?  It is not only new-age types who are encouraging us to use our sixth sense. Major business magazines are telling us to go with our gut feelings, and seminars and books on intuition are promising to help us become more successful in work and life. So how do you use your gut feelings?

Often, people who are biased more towards intuition are simply intellectually lazy and undisciplined in their thinking and therefore rely on gut feelings to make decisions. That is not to say that intuition is not helpful; it can lead us to wonderful, game-changing pathways.  However, those with a track record of good judgment and decision-making realize that intuition must be channeled through a slower and deeper process, requiring deliberate thinking and reasoning.  Clear thinking requires writing down your initial thoughts (intuition), putting them away and revisiting them again and again until you have captured your best thinking, and then sharing them with other trusted thinkers, creatives and analytics to get their input and refine the ideas and plans even further.   

Clear thinking also requires a context of reduced stress and external stimulation.  Most days we are bombarded with stimuli; emails, phones, internet searches, “got a minute” requests and on and on.  How can we think deeply under those circumstances?  We need to get away, get quiet and focus on one issue, problem or opportunity at a time.  If you are one of the best thinkers in your company, how often do you discipline yourself to do this—sit, think, write?  It is the job of a CEO to do this and to insist that other thought leaders in the company sit, think, write and plan.  Being constantly hurried only leads to acting on poorly formed ideas and leads to poor execution.

Generally, your thinking and intuition are more likely to be flawed in unknown territory and/or when you are facing stress. If your business is facing more uncertainty – global competition, new markets and new products – you are more at risk of being a victim of gut feelings and distorted, poorly formed thinking. When we have no other information to go on, we are more likely to choose the easiest path.  The evidence is pretty compelling that business leaders need to focus more on the slower thinking that involves conscious evaluation, logic and reasoning, advises Daniel Kahneman, author of Thinking Fast and Slow.  According to a study of school-aged children, it is the slower, deliberate, considerate thinkers who demonstrate more intelligence throughout life. 

In decision-making, if you take the shortcut by using your fast intuitive system, without the additional steps of analysis, you are opening yourself up to errors and biases, and even potential manipulation.   

Intuition has been valued in business because, similar to vision, it is considered to be a unique competitive attribute.  So sought after are the skills of visionaries that they are the most written about people in the world – Andrew Carnegie, John Rockefeller, Warren Buffet, and Steve Jobs.  In business, visionaries are also those who make the most amount of money.  But one could argue that Warren Buffet does not consider himself to be a visionary at all but a good researcher.  Active investors, on the other hand, often suffer from overconfidence in their ability to intuit future stock prices.

Overconfidence, or an optimism bias, is yet another human shortcoming interfering with intuition guided by critical thinking.  It is frighteningly common, in my experience, for business people without a track record of years of successful judgment and decision-making that they overestimate their individual and organizational capabilities and minimize the complexities of the market or the execution of their plan.  They rely on their confidence, their intuition (not guided by enough analytics) and go boldly forth, often with catastrophic results.  

 Good leaders have a humble confidence and surround themselves with both a creative and analytic think-team.  They trust their gut but follow a rigorous and deeper analytic process to get to clearer and better decision-making.

 Email your comments on this column or any aspect of effective business management to Tom at tcwalshphd@grenell.com.

 Thomas Walsh, PhD, is President of Grenell Consulting Group, a regional firm specializing in maximizing the performance of closely held organizations and their key contributors.  If there are specific topics you would like Tom to address, or if you have questions about managing your family owned or closely held business, please e-mail Tom at tcwalshphd@grenell.com.

The three key areas most affected by the poor leadership practices are employee retention, customer satisfaction and employee productivity .

The Blanchard companies, using data originally published by the Saratoga Institute, an authority on turnover and retention issues, suggest that at least 9% and as high as 32% of an organization’s voluntary turnover is a direct result of ineffective leadership.

What company can afford that?

The Blanchard

® Cost-of-Doing-Nothing Calculator uses data originally published by the

Saratoga Institute, a leading authority on turnover and retention, to identify that at least 9% and

possibly as much as 32% of an organization’s voluntary turnover can be avoided through better

leadership skills.

1

is good

I have shared that concept with numerous clients over the years, and while it is easy to grasp, the balance between get work and do work is always challenging. Sometimes, you have too much capacity and not enough sales. Other times, the sales are pouring in and the do work folks can’t keep, risking poor quality and customer relations.

“If you don’t invest the time to do it correctly today, you will spend more time and money in repairing mistakes tomorrow.”  – Don Paullin

My last two columns have explored the value of personality testing primarily as a pre-hiring tool for businesses. Now let’s take a look at how it can be used once a candidate has been hired.

Onboarding

To recap from my last column, Paul was hired as the VP of sales for a company we work with.  The company went through most of the hiring steps I outlined, and Paul was the best candidate.  However, as with all of us, a personality assessment revealed that he has his personality strengths and weaknesses, all of which were carefully probed in his interviews.

Paul was just what we were looking for.  He had industry experience and an 85% fit with the benchmark we had created for the position.  However, he had issues related to emotional intelligence (EI), and it was highly probable that they would interfere with his functioning optimally on the job. In other words, Paul was going to have problems identifying, understanding, and controlling his emotions and those of others.

Individual Development

To succeed in his new position, Paul will have to develop his emotional intelligence skills. It is important to get him started on the right track during onboarding. The personality assessment identified the following areas to target: Paul is so committed to his goals that he can be seen as indifferent to others.  If he comes on too strong at the beginning, he will be likely to turn others off in the very fragile early days.  He will need to set his goals and focus on building relationships with his team and others around him, or he is likely to create interpersonal problems with his team and peers.  He will need to reign in his impatience and work on being more gentle and supportive with his team as they get comfortable with one another. 

In short, Paul will need to resist his temptation to “hit the ground running,” and spend time listening, learning, building relationships, and getting input and buy-in to a plan of action.  Putting these EI skills into practice will be hard for Paul as he needs speed and challenge. He will want to impress people with how fast and hard he can ramp up.

However, the company is not looking for a revolutionary change, just strong evolutionary change.  Personality profiles will play a key role in bringing about this change, but not just Paul’s. To build healthy working relationships, the profiles of Paul, his supervisors, and team members will be evaluated and used as a tool to understand and appreciate the diversity of styles in the teams.

Supervisory Relationships

First, Paul and his boss/coach will use personality profiles to develop the foundation for a good working relationship. Part of the decision to hire Paul was that his boss, Moira, has the personality and coaching skills to work with him.  The coaching process while onboarding Paul will involve him and Moira reviewing their own personality profiles together, understanding their styles, and exploring how they might synergize or conflict.  There is likely to be conflict in this relationship because Paul usually believes he is right and tends to resist supervision.  He wants to lead, not follow.

Paul’s boss/coach needs to have a lot of finesse in building her relationship with Paul.  Using the results of the assessment, she can set the stage for Paul’s entry and help him focus and align his own efforts with that of his team. It is indeed a journey of self and other awareness.  Done early and right, the possibilities for success are enormous.  Done late or poorly, Paul will not stay long.  Thankfully, we are dealing with an emotionally intelligent leadership team that has experienced this type of onboarding before.

Team Development

“Individuals don’t win in business; teams do.” – Sam Walton

As Moira coaches Paul in the area of emotional intelligence, a key focus will be to help him understand and work with the other personalities on the teams he belongs to.  A careful review of the team members’ personality profiles is an important first step. During the onboarding process the executive team, including Paul, will share their profiles with each other and talk about their individual styles, strengths, and weaknesses.  This serves as a great way to promote understanding among team members, demonstrates to Paul that it is okay to have weaknesses and share them, and encourages everyone to be more open and candid with one another.

In addition, Paul will be coached in how to lead a team meeting with his sales team (all of whom have gone through their own personality assessments and coaching).  During that meeting, Paul and his team will be expected to share their profiles and develop more openness and candor.  This will help Paul and the team to become more aware of the potential landmines in their relationships and more rapidly integrate Paul into the team.

These meetings are focused on developing higher levels of emotional intelligence, for Paul and for the executive and sales teams.  They are proactive mechanisms to decrease the chance of derailment and increase the chance of higher level performance for individuals and teams.

When there are interpersonal issues, and there always are, Moira will coach Paul to refer to the personality profiles and deepen his understanding of why the issues exist. Then, he can devise strategies tailored to the personalities involved and more effectively deal with problems as they arise.

The proper, disciplined use of personality profiles brings a uniform tool to hiring, onboarding, and developing talent and teamwork in an organization.

Do you have any stories or questions on the use of profiles in your organization?

Email your comments on this column or any aspect of effective business management to Tom at tcwalshphd@grenell.com.

Thomas Walsh, PhD, is President of Grenell Consulting Group, a regional firm specializing in maximizing the performance of closely held organizations and their key contributors.  If there are specific topics you would like Tom to address, or if you have questions about managing your family owned or closely held business, please e-mail Tom at tcwalshphd@grenell.com.

1. All family members, whether active in the business or not, need to be put on notice by the family head, that the process is about to begin.
2. Family members active in the business can become a committee to examine the issues. Key executives or outside advisors may also have input.
3. The first question is: Are we prepared managerially to continue operating the business if something should happen to the CEO tomorrow?
4. If “yes,” then what are the plans for the next generation, and are these younger managers on a clearly defined executive track? Are their current jobs providing them with the necessary training and experience?
5. If “yes,” then you may stop here!
6. If “no’” then the question becomes what training and supervision do they need, and what are their reasonable expectations for their future in the company?
7. If you answered “No” to #3 above, the next question is what do we need to do financially and managerially to be prepared? What about wills, trusts, estate taxes, key person financing?
8. After you have addressed the immediate problems, then ask yourself what the ideal situation would be. Try to describe it.
9. Begin the planning process to make the dream the reality.

If you answer no to any of these, meet with an exit planning professional NOW!

“If you don’t invest the time to do it correctly today, you will spend more time and money in repairing mistakes tomorrow.” – Don Paullin

Would you describe your employees as Google-y, Apple-ish or Microsoft-esque? In other words, what do you know about the personalities that drive performance in your workplace? Studies on personality assessments as predictors of job performance consistently demonstrate their merit, confirming a significant improvement in job match when a personality assessment is administered. Companies that invest in personality testing are some of the most successful in the world. One Internet search giant, for example, tests for “Googliness” through a battery of 300 questions. Despite the proven success of personality tests, many hiring protocols still do not include them.
Do you ever ask yourself, what are the ideal traits for your company or for a particular job?

A typical hiring process goes something like this. A vague job description is written, applicants respond, screening takes place (usually by someone with little or no training in how to do it and with no pre-scripted questions), in-person interviews are conducted, and an applicant is hired. The trouble is, the applicant has about a 50% chance of being a great hire.

A better hiring process goes something like this:

1. A desired personality is crafted using a personality assessment. If possible, successful employees in the same position are assessed and the benchmark is created using their results.
2. A clear job description is written and includes the skills and competencies required.
3. Resumes and applications are screened.
4. Careful recruiting begins with meticulous attention to the desired competencies, skills and personality traits required.
5. Telephone screening is done using carefully scripted interview protocols designed for the position.
6. Applicants chosen for interviewing are asked to complete a personality profile to see how they will fit with the culture of the company and the position.
7. Profiles are scored and applicants are scheduled for interviews.
8. At least two interviewers are involved, and sometimes a panel of interviewers is used.
9. Components of the interview include:
1. introductions and rapport building;
2. a careful resume review, which means looking carefully at education and job history using a structured interview protocol carried out by well-trained interviewers;
3. a review of the personality profile to verify its accuracy and deepen understanding of the applicant’s strengths and weaknesses, and to see how close they come to the profiles of people who are currently successful in the position; and
4. discussion with the candidate about the job and any questions they might have.
10. The final team meeting to choose the best candidate takes place. Further interviewing might be required to clear up any questions or concerns.
11. Carefully scripted reference interviews are conducted.
12. An applicant is hired.
13. The applicant has about an 80 to 90 % chance of being a great hire.

Overrule the results of the profile at your own risk:

It is more common than not after a new hire does not perform well that the hiring team looks back and sees things which they missed or ignored in the profile.

John was the lead candidate for a VP Sales position with a salary of $130k plus bonuses. He had good experience (verified) as a salesperson and some experience as a sales manager (not well verified). Nonetheless, he made it through the screening steps and reached me for a final review of his personality profile. He did not quite fit the well-designed benchmark we created for a sales manager but did fit a sales-only benchmark. Specifically, he came out as relatively impatient, not attentive enough to analytic thinking, not very detailed, and pretty poor at managing his time and priorities – traits often found in sales people but usually derailing characteristics in a sales manager. Here was one of the cautionary notes in his profile report: “May not pick up on other employees’ moods, wants or needs; may not be patient with others or tasks; may tend to procrastinate; may not follow through with paperwork.”

This sales recruit’s personality match was only 70% for the success benchmark we used. However, the team loved him and was anxious to fill the position and move on. John was the best candidate they had, and they chose to hire him rather than continue their search. Within four months, it was clear that the profile (and interview verification) was correct. He was simply a mishire and our coaching was not enough to compensate – not all salespeople make good sales managers. We threw away a ton of money, made the hiring team look bad, demoralized the sales team, and John had to look for another job; all because we did not pay attention to our well-devised protocol.

It is almost always a bad move to settle for a mediocre fit. You would not choose a spouse based on ‘so-so’ compatibility nor should you choose an employee, with whom you may work for decades, based on a so-so fit. Everything you do should be to get the best possible hire for each and every position.

In his Harvard Business Review blog, Steve Martin identifies his research that led him to identify seven personality traits of effective salepeople. I highly recommend reading this brief blog. If it is not a compelling argument for leaders to utilize proven methodologies such as personality testing to uncover important personality traits and characteristics, I am not sure what might be.

http://blogs.hbr.org/cs/2011/06/the_seven_personality_traits_o.html