International Paper (IP) CEO Mark Sutton is the real deal. A 30-year IP employee, he has managed to redirect this 117 year-old institution from simple paper (think office supplies) to packaging (think of all those Amazon boxes).
Through skillful and strategic divestitures and acquisitions, Sutton unloaded underperforming legacy operations (beverage packaging and wood products) while picking up those visionary directions (again with the Amazon boxes. Plus UPS, Fedex, et al) that are the forward-thinking antithesis of Intel, this month’s Laggard.
The paper business has a tough history. I’ve been in a few paper mills; it’s a real “heavy industry” environment, and well, the aromatic challenge is significant. They don’t smell like roses. It’s manufacturing at its core, and the people working there earn every dime.
Sutton’s approach to visionary success is different than most large-company manufacturing CEOs. He didn’t do it by focusing on bricks, mortar, and fast dollars; he took a simple, leadership centric approach.
“People think of us as a manufacturing company, but we’re really in the people business.”
Say what?! That’s crazy talk coming from a manufacturing boss, who went on to say “…the real differentiator for long-term value creation is people.” Not assets, not creative financing, not outsourcing jobs to China. People.
The success of IP is obvious and notable. The stock price has nearly doubled in four years, productivity is up 40+%, driving earnings up as well. This guy knows what he’s doing. It’s hard not to write a tome praising this guy—both his approach and results. I’ll end with a quote from him we would all do well to remember:
“You’re not a leader because you were named to a position or have a degree in your back pocket,” said Sutton. “You become a leader when the people who’re supposed to follow you decide you’re a leader.”
Mark Sutton is the real deal, and an exemplar. And he’s this month’s Leadership Leader.
Milquetoast
We left Volkswagen alone for six months to see if they’d learn any lessons from the emissions cheating scandal. No need to rehash ex-CEO Martin Winterkorn’s epic leadership failure, and we’re not surprised that he’s no longer on the Porche and Audi boards, since that’s what we suggested last October.
Now that VW has taken an $18+ billion provisional charge to cover the fallout, wiping out almost all of the shareholders’ dividends, someone doesn’t think the senior executives — including Winterkorn — deserve their business-as-usual bonuses for 2015 performance.
Normally, it’s the shareholders who rise up like the villagers in Young Frankenstein. Not this time.
Who then, labor? After all, most of VW’s half a million workers don’t get bonuses, and almost all will be affected by slumping sales. Nope.
It was VW CEO Mattias Mueller who actually suggested a reduction in executive bonuses to the board steering committee after the German state of Lower Saxony — a major shareholder — complained. Mueller was eventually able to twist the board’s arm to accept a 30% reduction in bonuses, but they didn’t like it.
How much are we talking about? Well, in 2014, the $61 million in executive bonuses accounted for more than 75% of the executives’ total compensation. Yep, $18 million in base salary plus $61 million in bonuses.
If I were the shareholders, I’d be pissed about their base salary, too. And I might storm the castle if any executive got a bonus while the emissions scandal was still unresolved.
So good on Mueller for bringing the proposal forward. Shame on both he and the board for feeling entitled to the fat share of the spoils. A lost opportunity to for a leadership team to take accountability and show they care about the serfs.
The only thing this executive board deserves to share is April’s Leadership Milquetoast award. Prosit!
Laggard
Bottom line up front: Intel is cutting 12,000 jobs because its leadership has no vision.
Okay, that’s not entirely fair; their vision is so short-sighted that the strategy that’s based on it is taking them down the tubes.
CEO Brian Krzanich, the “safe pick” to move from COO to CEO in 2013, announced the cuts last week as an effort to be more efficient and invest in areas like data centers, memory, and the internet of things.
Not to worry, says Stacy Smith, just named to move from CFO to de facto COO, “we’re in the midst of this transformation and we’re executing well through it.” Their new strategy will take them from being the “heart of the PC to the heart of the Cloud,” says Smith.
That’s some bold thinking, considering declining PC sales — at least the prediction of it — is so last decade.
Just like culture, the failure of a company to recognize and understand changes in the market and their external environment falls squarely at the leader’s feet. Intel’s conservative culture has made them slow to adapt to both, doing more of the same in a down market.
What’s the evidence? Just this past January, Krzanich (who, with Smith, have more than 60 years combined at Intel), declared 2016 to be a macroeconomic copy of 2015 and identified robotics, automation and integration as “next emerging trends.” He also predicted that industrial use of drones could really take off (pun intended).
Wow! Or as the English would say, “Brilliant!”
Having missed out on the smart phone and tablet markets, Intel’s leadership completely misjudged the speed people would abandon PCs and is late to need identifying development opportunities beyond the cloud like artificial intelligence and virtual reality.
It’s possible that the introduction of new blood in the form of a President for the Internet of Things could turn Intel from its seemingly dogmatic culture. After all, past performance doesn’t guarantee future returns.
And in the meantime, 12,000 Intel employees get an opportunity to find somewhere else to work.
Thanks, Mr Krzanich. Intel’s culture may have eaten its strategy for breakfast, but it can’t have been a very satisfying meal. For that you get to be April’s Leadership Laggard.
First, my bias — I “grew up” in Human Resources, finishing my coprorate stint with successive roles at the VP/SVP HR level. So, I somewhat “know from which I speak…”
The skills required of senior HR leadership of today and the future are so incredibly different than those required in the past, that the job almost seems to be a different profession.
Gone are the days of employee advocacy, pseudo-ombudsman, and feel-good party-planners.
Present & future HR leaders must have consummate business skills, including sound, educated, financial acumen. Additionally, HR specialist managers must maintain that specialty expertise (compensation, benefits,recruiting) while learning and leading with those same skills listed above.
Organizations must be able to look to their HR leaders for financial information on the human capital efforts, emphasis, and directions. Simply determing “cost” isn’t enough — we’ll need to show, demonstrate and explain real “VALUE.” In other words, why the hell should a company give you money and resources instead of putting those same resources to work in marketing, product development, or R&D??
We cannot stress enough that future HR leaders must know — KNOW — the business. I don’t mean the HR business or profession, but the “business.” They have to get their hands dirty; be willing to take on a multitude of non-HR responsibilities and accountabilities — HR is merely a specific background for a top executive, it doesn’t define their over-arching role and deliverables.
The best example I can give is that the largest private employer in free world — Wal-Mart — selected someone with NO human resources background to lead their human resources function. They clearly needed a “leader” first, an “HR expert” second. I believe this is the future we are going to realize, and their will be many incapable of getting on that bus.
The most significant skills — bar none — that these future HR leaders must have include:
1. Real business understanding — get their hands dirty enough to understand HOW and WHY we make money,
2. Financial acumen, and
3. Talent management: identification, development and recruitment.
This train is leaving; get on, get off, or get run over. Organizations have a right to these expectations, and I believe they will insist on receiving them in the not-too-distant future.
My thoughts on succeeding in HR and adding real value to both the organization you work for and your professional career:
1. First, you cannot effectively manage human resources from a book, a website, or some online forum. You can’t. You can pick up tips and tidbits, some compliance knowledge, and a few very generic processes. Most of the rest — the other 98% — takes individual thought, planning, experience and creativity.
Compliance is simple — a CD-ROM could do it. Effective application of employment laws in a successful business… THAT takes work.
2. Quit searching online and asking others for templates. Sit down, learn a bit from those plethora of books you should have, talk to a few people who may have some insight, THEN CREATE YOUR OWN. Using someone else’s, even customized, isn’t yours. And it usually won’t work, since someone developed it SPECIFICALLY for their organization. And no, you don’t really just want to “see what one looks like.”
3. Rating categories and forms will not, under any circumstances, make an effective performance management system. Just one more pain in the rear for line managers to deal with. It’s bigger than the forms, folks. Forms may have a role, but they are not the core of performance management.
4. Learn to recruit. REALLY recruit. It is the SINGLE MOST IMPORTANT THING WE DO. Second to none. Those who feel they have “outgrown” recruiting — rethink that. Maybe you’ve outgrown hourly recruiting, but you still better be an effective talent manager, and that includes sourcing and recruiting.
5. Never train because someone asks for training. In all likelihood, training isn’t the answer. Except in matters of compliance (usually education, not training) or technical skills, training is really only effective for development, seldom for corrective action.
6. Google is your friend. Research. A lot. Of everything… asking in some online forum INSTEAD of researching isn’t just lazy (though yes, it is), you are harming your learning experience. You need more than pointed answers, clouded by someone else’s experience. Find out WHY things work that way, HOW we got where we are, and WHAT you can do to impact meaningful change.
7. Speaking of training, learn it. If recruiting is #1, employee/managerial development is a close second. Knowing how to develop managers — coaching and training, is a skill ALWAYS in demand. Go to Toastmasters. Offer to teach at some affiliate or association group. Learn with green “wannabe” supervisors. But learn to train and develop.
8. Don’t ask anyone “How can I justify XXX” until you can JUSTIFY IT TO YOURSELF. Attending conferences, implementing a new program, allocating resources… if YOU don’t know why, how the heck can you convince someone else???
This field is no longer for those with good “people skills;” it’s for those who understand that human capital is an adjustable, malleable resource that we are responsible for developing. Time to step it up a notch…
I don’t generally support pay reductions. They seldom have the desired effect. Having said that, and in contrast to others (mentioned below), Shell’s Ben van Buerden is the poster-child/rock star for CEO pay reductions, after he saw his total package drop nearly 10% amid our crazy oil pricing environment.
Contrast that with BP’s Bob Dudley, who recently received a 20% increase in his pay package, after smoothly revealing that 2015 was the worst financial year in the oil giant’s history. The worst. The Board’s compensation committee also said that executive directors received no increase in base salary in 2015 and that senior leadership would not see salary increases this year either.
How, exactly, does that conversation work? “I’ll take 20%, please. Let them eat cake.”?? I didn’t want to give Dudley any more airtime, or we could have made him this month’s Laggard.
Shell’s Board said: “Shell’s executive compensation reflects delivery of our strategy… there is a clear alignment between the company’s performance and our compensation policies.” I should say so. If van Buerden has to go back to the cost-cutting well with added layoffs and/or pay restrictions, at least he’s felt some of the pain, and has some degree of personal credibility.
Look, we can all argue for days about CEO compensation. Having the burden of thousands of families depending on your decision-making is certainly worthy of compensation. But optics matter as well. In these times for Oil & Gas, a CEO accepting/insisting on a pay reduction (or at least not a pay raise given only to you) is a solid standard to which others should aspire.Shell’s Ben van Buerden set that standard, we appreciate it, and he’s our Leadership Leader for March.
Leadership Milquetoast
Being a veteran doesn’t give me any special standing to be disgusted at the waste that brought down the CEO and COO of the Wounded Warrior Project. It’s a way too familiar story in the non-profit world, and we’ve all been warned to be careful who we give our money to.
I’m disappointed, of course, because that means millions of dollar (possibly tens of millions) were diverted from helping a cause near and dear to my heart. But I can’t say I’m surprised.
Oddly, what was least surprising to me was the milquetoast way WWP handled the firing of CEO Steve Nardizzi (who helped found WWP in 2003) and COO Al Giordano. Nardizzi has long been a vocal critic of the charity rating system, and even predicted this very reaction to alleged wrongdoing in his July 15, 2014 post about how charities “should lead the dialogue about charity ethics and effectiveness.”
(The fox guarding the henhouse? The first sentence presciently reads, “There’s no shortage of news coverage on the charitable sector when a charity … is suspected or proven to be fraudulent.”)
I watched with disappointment as WWP Chairman Anthony Odierno’s attempted to regain the nation’s trust on the morning news. He said that while the charity’s independent review may have uncovered some opportunities to strengthen some controls and policies, “a lot of the allegations were not accurate.”
Hardly a damning enough indictment to justify decapitating the senior leadership team. In fact, Odierno’s dead-pan assertion that the dismissals were for “certain judgment decisions that could have been made better” left my spin-detector buzzing.
CBS news claims to have spoken to over 100 current and former WWP employees who described lavish spending and a toxic culture. That’s enough smoke for me to reach for a fire extinguisher.
Leaders get just one opportunity to admit wrongdoing in their organization the right way. Acknowledge it, take responsibility for it, and apologize for it. Odierno missed his chance.So congratulations for another apology-that-isn’t, Mr Chairman. It didn’t win our trust back, but it did win you this month’s Leadership Milquetoast award.
Leadership Laggard
Full disclosure: someone from Zenefits keeps spamming me asking if I want their help running my business. Not likely.
What a month it’s been for Zenefits, the beleaguered San Francisco-based human resources software startup who’s CEO resigned last month over “compliance failures.” Parker Conrad stepped down amid “revelations” that some of the Zenefits salesforce was selling health insurance without required licenses, and David Sacks was promoted from COO to CEO and promised to fix their “inadequate” compliance processes and controls.
According to Sacks, the company grew so fast, it outgrew its culture and controls, which (I suppose) would have kept it from breaking so many laws. To un-grow, Zenefits gave out about 250 pink slips – almost all to the salesforce (whose boss left right after Conrad). Hopefully, they didn’t let anyone go who had a broker’s license… they didn’t have enough of those in the first place.
Oops, I forgot. Right before the layoffs, Sacks banned drinking at work. Talk about kicking employees while they’re down.
Culture’s a funny thing – sometimes literally. Last summer the company’s management felt its culture needed adjusting so it sent out a memo last summer that declared building stairwells were no longer to be used for smoking, drinking, eating, or sex.
So what’s the big deal? Sounds like a great place to work.
The problem is Sacks. Or more accurately, Sacks was already part of the problem, and now he’s CEO. What was the board thinking?
Are we to believe that the COO didn’t know that the salesforce was selling insurance without brokers’ licenses – that’s been public knowledge since at least November! Zenefits would certainly like their clients and investors to believe it, but I have a hard time with the idea of a CEO and VP of Sales creating a culture void of ethical behavior by themselves. What is this, Volkswagen?
Apparently, Sacks has disavowed any knowledge of wrongdoing and laid the blame for the culture at Conrad’s feet; that seems to be good enough for the board.
And it’s good enough for us… to make the Zenefits board – including Sacks – our Leadership Laggards for March. Congratulations, gentlemen.
Straying from organizational values is a slow fade.
Too often, senior leadership is so disassociated with how their people reflect corporate values outside of the organization, the brand is severely tarnished long before it’s noticed and damage control is initiated just after the nick of time.
It’s refreshing when a leader recognizes the culture is changing – or has changed – and jumps on an opportunity to address it and get the organization back on track.
Disclaimer: While Bill McRaven is a friend, we have exactly one Aggie and zero Longhorns in our firm.
What a breath of fresh air to have the University of Texas System Chancellor remind the System’s senior leaders that leading by example isn’t an option, and their example should be a good one.
In short, Chancellor McRaven (aka retired Admiral Bill McRaven who oversaw the bin Laden raid) wrote a letter to all UT System presidents and athletic directors reminding them that the US flag and national anthem still mean something and deserve respect. He adds that because young athletes learn so much of their behavior from adult athletes, UT athletes and staff would do well to demonstrate respect for the flag as a positive example for others.
So a man who understands service before self and the sacrifices made to keep this nation free asks, “… encourage your coaching staff and your players to stand up straight when the National Anthem is played; to face the flag and place their hand over their heart as a sign of respect to the nation.”Isn’t that what we all learned as kids?
Culture starts at the top, and the top of the UT System knows it. Well done, Bill. You’re this month’s Triangle Performance Leadership Leader.
Leadership Milquetoast
Xerox. A lifetime of “just after the nick of time.”
The company could have—should have—owned the whole damned computer industry. Bigger than Microsoft, bigger than Apple, bigger than IBM. It was theirs for the losing. And they just keep on losing it… their corporate tagline should be, “Xerox—just after the nick of time.”
Xerox built and programmed the first GUI (graphical user interface), before Apple, before Microsoft. Your mouse could point a cursor to information on a screen. It was connected to other computers via this thing they invented called Ethernet. In a nutshell, Xerox invented the PC. Way cool stuff.
Alas, the powers in Xerox believed it was a fad, and support for it would lessen support for their buggy whips paper copiers. Later, Xerox tried to get on board with their own line of PCs… just after the nick of time.
Xerox understood and engineered inkjet printers in the late 90’s. Delaying for further analysis and power struggles (after all, printers were not buggy whips copiers), they waited until HP’s inkjet division was larger than all of Xerox; then they launched an inkjet division… just after the nick of time.
IBM sold their PC business a decade ago; HP a few years ago. In the midst of this intense industry focusing, Xerox buys a service company to complement its buggy whips copiers, now surprisingly, must split it off… just after the nick of time.
If this company would ever get out of its own way, it could crush an industry. Unfortunately, it can’t, so won’t. Revenue in 2015 was almost 5% less than in 1999.Hate to lay all of this on Burns, but to modify the Polish idiom, “Your circus, your monkeys.” Our February Leader Milquetoast.
Leadership Laggard
It was all we could do to pass over Martin Shkreli, the much-reviled ex-CEO of Turing Pharmaceuticals, KaloBios Pharmaceuticals and Retrophin, as a Leadership Laggard since we started the newsletter segment last September. His buffoonery may have reached apogee with his latest stunt, amazingly not related to the three companies he’s nearly ruined.
He could have easily made it any month for his narcissistic profiteering on drugs at the expense of sick people. If you’ll recall, last summer he raised the price for a drug used by HIV patients by more than 5,000% for no reason except greed. Thankfully, he failed in his attempt to do the same thing in November with a drug to fight another parasitic – this time hoping to garner a price a thousand times higher than today’s cost.
And who could have argued the Laggard label when he was indicted in December for defrauding investors in his hedge fund Ponzi scheme at MSMB Capital [mis]Management and pillaging the Retrophin coffers to cover his tracks.
That’s right, Shkreli owns the only copy of the latest Wu-Tang Clan album, and is threatening to erase Dennis Coles’ (aka Ghostface Killah) contribution to the recording because he didn’t like Coles’ criticism of the drug profiteering.
If Shkreli didn’t like what Coles had to say, he probably wouldn’t be happy about me calling him a spoiled, 5th grade bully who clearly doesn’t care who gets hurt – financially and physically – along the way, as long as it’s all about Martin Shkreli. As if I care about his happiness.
He’s classic Laggard who, thankfully, finds himself without a leadership position to screw up this month.
There clearly are several significant workplace trends looming in front of us that we would do well to recognize. I’ve mentioned many of them here in this blog. Additionally, other authors, consultants, and practitioners have also done a good job of trying to predict the future.
As with all pseudo-science, however, some of it is pure bunk.
For instance:
Baby-boomer retirement, and its purported “sucking sound” on available talent, is quite possibly much ado about nothing. Let’s look at it logically: The definition of a baby-boomer is someone born between 1947 and 1963 – spanning almost 2 decades. Couple that with the current trend of later retirement, and you have a group of people born over a 20-year timeframe, retiring individually 55-75 years later at various ages. At best, it’s a non-event; at worst, it’s generational in nature, and very specific to population demographics — for instance, it’s clearly more prevalent in the midwest than in either coast, or in the top 10 most populated metroplitan areas.
Organizations are realizing that generational issues are not materializing as expected. No big surprise, really. We’ve been dealing with diverse workforces for a hundred years, including race, gender, and age — “generational” differences aren’t any more significant, and merely require purposeful thought to overcome. Workers do not have to view society, the world, and the workplace equally to be productive. Frankly, I believe we’ll see more of employees just “coming to work to work,” and less senseless attention on those things that don’t directly effect their ability to be productive.
So, when futurists write columns and books, and read the tea leaves to determine where we’re headed, use your noodle and some common sense before blindly drinking the Kool-aid.
A big trend that does needs attention – there is clearly a growing dearth of leadership talent available. This isn’t as much a function of baby-boomers leaving as it is our desire for new, fresh leadership at a time when the leadership “bench strength” is at its weakest. Many hyper-performing employees don’t necessarily view management as a logical progression from their current assignment, and we haven’t done a good job of painting a favorable picture of becoming a leader (think SOX requirements, jail terms, bad publicity for poor performance, etc.). Further, many of those extended-career boomers don’t necessarily want to work that “extension” as a high-stress leader. We better start growing managers and leaders – and fast!
In short, many real trends, contrary to those consistently broadcast like chicken little’s falling sky, are as much a “movement” in the workplace as they are trends.
