Archive for November, 2009

Leader, Know Thy Self

November 23, 2009

As an executive coach, I enjoy reading what others have to say about leadership: leadership styles, what it take so to be a leader, the (insert #) most important leadership traits, etc.  If you were to try and take all the various musing on what a great leader should be as truth, it seems to me that the only thing you would come away with is a strong sense of inadequacy. Those that manage just a few people all the way up to CEOs of large enterprises ask themselves such questions as, “Did I show enough empathy in my conversation with Mary this morning?”  “Am I “visionary” enough?”  “Are they following me because they respect me, or because they fear me?”

I advise my clients to read all they can about leadership, but to not get caught up in emulation at any cost.  I believe that the single most critical thing about being a leader is to know thy self.  We are all different, and we all have our leadership strengths and our challenges.  We are different at our core, at the level of our genetic heritage, the way our brains are wired, our appearance, our nature.  We are also different in our experiences, our backgrounds, our family systems, our education, our nurture.

I could no sooner be a leader in the style of Winston Churchill than I could be an Olympic gold medalist.  However, if I posses self-awareness, I can be aware when a leadership situation plays to my strength, or if the situation will be a challenge for me.  If the circumstance requires a style that is powerful for me, I can take action with confidence.  If the style required will be a challenge to me, I have two choices.

The first is to focus on what is required in the situation to see if I can shift to the mode required.  The answers to two questions will tell me if I can make this shift: do I have the knowledge of what is needed, and do I have the energy and capacity to stretch to that less than familiar role?

If the answer to either of these two questions is “No”, then my remaining choice is to decide who does have the power to do what is necessary under the circumstances.  This can be a hard thing for a leader to do: recognize that someone else may need to take the lead on a particular initiative or crisis.  However, the best leaders are those that mentor others to be leaders themselves without requiring the acolyte to be a replica of the boss.

5-D Leadership is one of the best books on this subject.  Written by Scott Campbell and Ellen Samiec, the examples of leadership success and failure as a result of self-awareness, or the lack thereof, are fascinating.

One of my favorite aphorisms is, “You cannot be someone you are not until you know who you are.”  Truer words, in my opinion, were never spoken.  In future writings, I will explore a method to gain self-awareness.

Corporate Governance: A Word of Caution About “Affiliated” Directors

November 12, 2009

There has been a dramatic increase in the attention given to corporate governance issues subsequent to the spectacular failures of board oversight at such companies as Enron and Global Crossing.  The most noteworthy response to these acts of corporate fraud was the passing of the Sarbanes-Oxley Act in 2002.  While the bill only applies to publicly traded companies, privately held businesses quickly realized that this was the new de facto standard for them.

Specifically, the term independence has taken on increased significance.  Directors who are independent of the day-to-day operation of a firm are deemed better able to represent the interests of shareholders than “inside” directors.

Unfortunately, as the need for qualified independent directors has risen, the risk of personal liability for directors has grown, causing many qualified individuals to think twice before accepting board positions.  Additionally, otherwise qualified, independent, directors must undertake considerable education to fully understand the scope of their oversight and policy making responsibilities in an industry that they may be unfamiliar with.

When CEOs and current board members seek the expertise needed for their boards, they quickly realize that they have such experts right under their noses in the form of the firm’s attorney, CPA, financial advisor, etc. What an elegant solution to their need for informed, non-employee, directors!  Or is it?

Board members who are also professional advisors fall into a category know as affiliated directors.  They may not receive a W-2, like an employee, but they do receive a 1099.  Many board deliberations have direct or indirect impact on the use of professional advisors, thus how independent can these advisors be as board members?

Affiliation takes other forms.  Directors need to be independent of themselves, not just the company.  Golf buddies and old friends on a board are loath to break the “code of congeniality,” the killer of challenging discourse.  Directors with close ties to a specific group of shareholders are likely to be conflicted.  Directors cannot “represent” a particular constituency, they must act on behalf of all shareholders.

CEOs and current board members must have the courage to look for director candidates who have proven talents, principal among which should be the ability to both collaborate and disagree within the decision making process.  Add a lawyer or CPA to your board?  Sure, but not your lawyer or CPA.

As you consider director candidates who would be deemed affiliated, my advice is, “Don’t do that!”  Directors should provide a competitive advantage to the organization.  Make that goal a reality by creating a board of truly independent thinkers.  I leave you with a quote by William Bowen, author of The Board Book: “We don’t learn much when we are surrounded by the likes of ourselves.”