Leadership Barometer 20 Lower Credibility Gap

October 16, 2019

There are hundreds of assessments for leaders. The content and quality of these assessments vary greatly. You can spend a lot of time and money taking surveys to tell you the quality of your leadership.

There are a few leading indicators that can be used to give a pretty good picture of the overall quality of your leadership. Here is one of my favorite measures.

Lowers Credibility Gap

In any organization there exist credibility gaps between layers. These gaps lower the trust within the organization and make good communication more difficult. Great leaders have a knack for lowering these gaps by filling in believable information in both directions: up and down.

When there is tension between one layer and another, great leaders work to find out the root cause of the disconnect.

It could be a nasty rumor, it could be based on a prior breach of trust, it might be an impending reorganization or merger, it could be due to an outside force like a new government restriction. Whatever the root cause will determine the key to elimination of the gap.

Use your nose

Excellent leaders have a nose for these problems and head them off while the gap is a small crack and before it becomes like the Grand Canyon. They help people breach the divide by getting the two levels to communicate and really negotiate a better position.

Weak leaders are more like victims who wait till the battle is raging and the chasm is too broad to cross without a major investment in a bridge.

Silo thinking vs. Team mates

The insight that usually helps is to remind the differing camps that they are really on the same team.  Silo thinking leads to animosity between groups.  Great leaders remind people that they share common goals at a higher level. There is no need for warfare.

A leader who has this skill is easy to spot because there are few paralyzing situations that have to be resolved. If you are one of those leaders, it will be evident. If you are not, it will also be evident. Seek to knit the organization together at every opportunity.

Bob Whipple is CEO of Leadergrow Inc., a company dedicated to growing leaders. He speaks and conducts seminars on building trust in organizations. He can be reached at bwhipple@leadergrow.com or 585-392-7763.


Merging Cultures

March 14, 2015

Hand Mixer with Eggs in a Glass Bowl on a Reflective White Background.When there is a merger, acquisition or other major organizational change, the different cultures must be blended into a coherent new culture. Managers often assume this will happen naturally over time, so they do not focus on this aspect when planning the merger.

WRONG! Achieving a stable culture where people are at least supportive if not enthusiastically driving a singular mindset is the most significant challenge for most change efforts. Do not assume things will work out; instead, take a highly proactive approach to defining a new culture.

In every case, even when the action is described as a merger of equals, one group will feel they have been “taken over” by the other. Curiously, in many instances, both groups feel they have been taken over because employees in each former group will need to modify procedures to accomplish the union.

Usually, one of the parties is assumed to be in the driver’s seat, so it is the other party that needs to endure the bulk of changing systems. Lack of trust and genuine animosity lead to resistance when it comes to blending the two groups into one.

It is common to have the conflict occur as passive resistive behavior. People will have the appearance of agreeing, but subversively undermine the other group however possible. This kind of “we – they” thinking can go on for years if allowed. So what actions can management take to mitigate the schism and promote unity? Here are a dozen ideas that can help.

1. Start early – Do not let the inevitable seeds of doubt and suspicion grow in the dark. Work quickly after the merger is announced to have teambuilding activities.

Openly promote good team spirit and put some money into developing a mutually supportive culture. Good teamwork is not rocket science, but it does not occur naturally. There must be investments to accomplish unity.

2. Have zero tolerance for silo thinking – This is hard to accomplish because human beings will polarize if given the opportunity. Set the expectation that people will at least try at all times to get along.

Monitor the wording in notes and conversations carefully and call people out when they put down the other group. This monitoring needs to include body language. Often rolling eyes or other expressions give away underlying mistrust.

3. Blend the populations as much as possible – Transplant key individuals from Group A with counterparts from Group B. If this is done with care, it will not take long for the individual cultures to be hard to tell apart. Sometimes the transplanting process is unpopular, but it is an important part of the integration process.

4. Use the Strategic Process – It is important to have a common set of goals and a common vision. If the former groups have goals that are not perfectly aligned, then behaviors are going to support parochial thinking. When conflicts arise, check to see if the goals are really common or if there is just lip service on this point.

5. Reward good teamwork – Seek out examples of selfless behavior from one group toward the other and promote these as bellwether activities. Verbal and written reinforcement from the top will help a lot. You might consider some kind of  award for outstanding integration behavior.

6. Model integrated behavior at the top – Often we see animosity and lack of trust at the highest levels, so it is only natural for the lower echelon to be bickering. People have the ability to pick up on the tiny clues in wording and body language. The leaders need to walk the talk on mutual respect.

7. Co-locate groups where possible – Remote geography always tends to build polarization in any organization. If merged groups can be at least partially located under one roof, it will help to reduce suspicion by lack of contact. If cohabitation is cost prohibitive, it is helpful to have frequent joint meetings, especially at the start of the integration process.

8. Benchmark other organizations – Select one or two companies who have done a great job of blending cultures and send a fact finding team made up of representatives from each group to identify best practices. This team can be the nucleus of cooperation attitudes that can allow unity to spread through the entire population.

9. Make celebrations include both groups – Avoid letting one group celebrate milestones along the way while the other group is struggling. Make sure the celebrations are for progress toward the ultimate culture instead of sub-unit performance.

10. Align measures with joint behavior – Make sure the measures are not contributing to silo thinking. If the goals are aligned for joint performance, have the measures reinforce behaviors toward those goals. Often, well intentioned measures actually drive activity that is directly opposite to the intended result.

One way to test for this potential is to ask, “what if someone pushes this measure to the extreme – will that still produce the result we want”?

11. Weed out people who cannot adjust – A certain percentage of the population in either group are going to find it difficult to get over the grieving process. Identify these individuals and help them find roles in some other organization. It will help both the merger process and the individual.

On the flip side, identify the champions of integration early and reward them with more exposure and more span of control.

12. Create incentives for the desired behavior – People should be encouraged in every way to act and think in an integrated way. This can be encouraged by having the incentive plans pay out only if the joined entity performs seamlessly.

The road to a fully functioning integrated culture can be long and frustrating. By following the ideas given above, an organization can hasten the day when there are few vestiges of the old cultures, and people feel a sense of belonging to a single new order.


Merger Problems

January 23, 2015

M&A or Merger and Acquisition text on blockNumerous studies have found over 50% of mergers and acquisitions fall short of expected results, primarily due to the failure of the cultures to integrate well. Why, then are CEOs so cheerful when they head into one of these major restructuring activities?

 

In my book, Trust in Transition: Navigating Organizational Change, I discuss 30 different systemic problems with making mergers work and give antidotes to each of them. In this brief article I will describe what I believe are the five most serious problems and suggest ways to mitigate them.

1. Relying too much on the mechanical process

When MBA students learn about M&As, the content usually is focused on the financial and legal details of setting up a combined entity from two unique groups.

Topics covered include asset valuation, due diligence, negotiation, legal aspects, management structure, and numerous other organizational things that must be considered. Few programs give equal attention to the cultural part of the equation.

Students are left to assume that the culture simply “sorts out” by itself over time. That oversight is huge because cultural issues are usually the root cause of merger problems.

For example, the Daimler-Chrysler merger in 1998 was a classic debacle that cost Daimler nearly $36 billion over a decade. The magnitude of a loss that large, was almost $10 million per day for 10 years! The major reason for the breakup was the failure of the two cultures to integrate.

To improve the M&A process, it would be helpful to give the cultural integration equal footing with the legal and financial aspects of the activities from the start.

2. Loss of objectivity leads to inadequate planning

Top leaders can easily see the benefits, and they look seductively attractive. The costs and hassles seem to be manageable, so not much energy is spent on internal culture issues or potential external problems for customers.

The upside of the deal is championed, while challenges are pushed aside. Objectivity gives way to passion for the deal.

Anyone who questions the validity of an assumption or brings up a potential problem is labeled as “not a team player,” so reasonable dissent is extinguished.

Here are three antidotes for this situation:

1) have a trusted Devil’s Advocate on the senior team who will prevent myopic optimism,

2) explore potential problem areas and design solutions that mitigate risk, and

3) calculate the ROI based on the best guess of the benefits, but inflate estimated costs and problems, because real costs will surface later and often be larger than anticipated.

3. Lack of adequate training

Leadership training is crucial during any kind of reorganization. Many organizations back off on training for leaders because there is so much chaos during the integration that most leaders are “too busy to sit in the classroom.”

Antidote: Bring the classroom to the chaos. What better time is there to do leadership development than right there in the middle of the crucible? Skilled L&D professionals can leverage the urgent need for solutions into pragmatic problem solving and motivational skills.

Supervisors are also in urgent need of leadership training during a reorganization. Reason: they form the critical trust link between the management layers and the workers. Changes faced by each supervisor are stressful personally, yet this individual is vital in creating order for the other people.

Weak or bully supervisors often come unglued due to the pressures of a merger. They need training and assistance in order to perform their function when it matters most.

4. “We Versus They” Thinking

From day one, the leaders must not only preach the avoidance of “we versus they” thinking, they must model it and insist on it.

I often hear language that indicates lack of full integration years after a merger has been supposedly completed. It is essential to replace parochial thinking with “us” type language and actions.

One way to help speed the integration is to co-locate the groups. That is often impossible in the short term, so transplanting some key resources from one group to the other is another way to make it harder to tell who “we” are and who “they” are.

5. Loss of Trust

In the anticipation of a merger or acquisition, adrenaline drives expectations of what the merged entity can accomplish. It is easy to assume the individual needs will be resolved and team cohesion will somehow settle in quickly.

That is usually not the case, and often bitter feelings linger on, hurting the integrated organization for years.

Candid and frequent communication is needed to keep people informed and allow top managers to feel the angst of workers. It is in these interfaces that trust is either maintained or destroyed by the behaviors, words, and body language of senior leaders.

Ten Best Practices

Anticipate a bumpy ride, and expect that significant psychological calming is going to be needed at times. Here are some additional ideas that may be helpful:

1. Be clear and transparent throughout the process.

2. Create design teams early to help people connect with the future more quickly.

3. Include the customer in every decision, especially during the chaos phase.

4. Assume the risk of setbacks willingly, and do not let unexpected issues spoil the overall process.

5. Invest in some Emotional Intelligence training for people in the organization, especially management.

6. Celebrate positive movement in an integrated way to model the spirit of the merged culture.

7. Bring in a grief counselor to help people cope with the loss and the transition.

8. Train leaders to model the integrated behaviors, and do not tolerate silo thinking.

9. Consider cross-locating or co-locating people, where possible.

10. Prune redundant resources delicately with a sharp scalpel rather than a long line of guillotines.

There can be times of joy and accomplishment during any merger or acquisition. It is possible to maintain trust, even amidst the chaos. After all, the vision for the whole activity is a brighter future.

The wise leader will recognize that changes of this magnitude require extraordinary effort and patience to achieve the anticipated result.

By focusing the same level of effort on establishing the right kind of culture as they do on the financial and legal aspects of reorganization, leaders can ensure they meet or exceed their goals.


Book Released This Week

August 22, 2014

Trust in Transition Cover060To my friends and associates:

I announced the existence of my new book on this blog a couple months ago and have written a few posts about some of the key points since then. This week was the official launch of the book. YEA!

Info at www.astd.org/transition

When organizations go through major changes such as mergers, acquisitions, or other large-scale reorganizations, trust is often lost, and as a result most transitions do not live up to expectations. My book offers a multitude of ideas to prevent the problems or repair the fragile trust that has been damaged. It is the result of five years of writing and extensive research coupled with my 40+ years of practical experience

Here is a link to a brief (two minute) video about the book. https://www.youtube.com/watch?v=PDf6UTafrO8&feature=youtu.be

If you are involved in a transition of any kind — or are likely to experience change — you will find this book quite useful, regardless of your position in the organization. I will be doing international programs, keynotes, and workshops on the ideas over the next few years, so if you are interested, just contact me.


Merger Double Duty

August 9, 2014

small babies twins on parental hands isolated on white backgrounThe announcement of a merger can send people scurrying to their offices to begin piling up sandbags of defense against the flood of change.

Many mergers are handled with all the sensitivity of a Gestapo raid. The story below may seem extreme, but it literally goes on in many organizations that rush into a takeover.

In the planning phase of the merger, top management has a gag rule on information because they are afraid people would panic if they knew what was going to happen.

They are convinced that to avoid sabotage, and other problems, it is best to keep things “under wraps” until the merger is ready.

Rumors start as a result of all the secret meetings. Layoffs are expected, because one primary result of a merger is to consolidate staff positions.

People are aware of this and hope they will be one of the survivors. In reality, some people are smart enough to hope they do not survive.

Top brass announces the merger, but it is really not a shock to the people in the organization. They are just glad to have the news out in the open. Being held in the dark is a most uncomfortable feeling. Now, at least people will know if they are “impacted” or not.

The dreaded day approaches and finally arrives. The boss calls the impacted people in one by one to tell them the bad news.

Guards walk them back to their area to get belongings and escort them out the gate. A quick handshake and the exchange of the employee pass is all it takes to complete the deal.

Oh sure, there is the promise of support from HR: “Go to a place off company property over the next week, and we will help you network in the community for another job.”

A packet arrives in the mail to sign up for COBRA Insurance to tide over the family. I would have thought they would call it BOA CONSTRICTOR Insurance rather than COBRA Insurance. At least that title would fit the reality.

A remaining employee, let’s say Mary, breathes a sigh of relief until the boss calls her into the office and says,

“As you know, we have let Jake go, so you will now cover his responsibilities.”

Mary says, “But I already have a full workload of customers, and I don’t know anything about Jake’s job.”

The insensitive Boss says, “Just do the best you can, and remember, as one of our most talented people, you still have a job here.”

In a daze, Mary wanders into Jake’s empty office. She looks around and shakes her head. “Well, I might as well dig in here and see what Jake’s job entails.”

She looks halfheartedly into Jake’s desk drawers, throws out an old can of shoe polish, and starts trying to make sense of the mess. She looks at the 4-drawer file of Jake’s former customers, now her responsibility.

Think about this scene. Have you ever tried to decipher someone else’s files with no crossover? It is impossible.

The sound of the phone ringing in her office wakes Mary up. She runs down the hall and grabs the phone in time.

It is the familiar voice of one of her own customers. Thankfully, she is able to answer the question and satisfy the concern. She does a double take and realizes that there are 14 messages on her answering machine from the past two hours.

She starts clearing out her backlog and becomes totally engaged in her old job – the one she knows and can handle.

Every day for the next several weeks, Mary goes to Jake’s office for a couple hours (usually including her lunchtime) in a feeble attempt to keep the most vocal customers in Jake’s area from blowing up.

There is little understanding or history to back up her actions, so she is not very effective. It is impossible to keep up with Jake’s workload in a couple hours a day, so Mary focuses most of her attention on the job she understands.

Customers eventually write nasty e-mails to the top manager who jumps all over the area manager. Customers are taking their business elsewhere because there is no service being rendered.

The boss rushes into Mary’s office and says, “Mary, you are not performing like your usual self. We have customers that are your responsibility who are defecting. I know you are super busy, but you simply cannot afford to ignore customers who are in need.”

Mary says, “You are right, Bill. I cannot. Another thing I cannot afford is to work here for you any longer. My family and my doctor tell me I am heading for a stroke, and I am simply unable to perform what is expected. Therefore, I am handing in my two week’s notice.”

Note the simple but inevitable consequence of a decision by top management to ignore transparency out of fear. The old saying, “penny wise and pound foolish” applies in this case.

The company lost valuable customers and one of its most valuable employees. In addition, this situation is going on multiple times in the work unit, because Mary was not the only one whose work load doubled with no training.

There is no way to make up for this damage. It is a major blow to the business; in many cases it is fatal.

The fault here is not the merger itself. It is the veil of secrecy around the planning that was the major culprit. That is silly because holding back information really did not prevent it from becoming common knowledge.

Limiting transparency made the damage much worse than it could have been.

I am not saying that mergers are a picnic if people are informed ahead of time, and there are legal restrictions on how much information can be shared.

Many of the problems will occur no matter how the disclosure is handled, but if we contrast the above scenario with a slightly modified one, the result has the potential of a brighter outcome.

The area manager calls all employees together on day one. He says, “We are contemplating a transition, and we are probably going to need a layoff in the next few months.

None of us are happy about this, but it will probably happen. The best thing you can do now is focus on your job. As we plan for how many people will need to leave, I will keep you informed and be available for questions.”

During the next couple of weeks, the need for a layoff becomes clear. The boss calls Jake into the office and says, “Jake, as you know we are projecting a layoff. It looks like you will be impacted and either be let go or have to assume a different role.

I would like to work with you to find the best option for you and see if we can keep you in the company in a different role. I will do my best.

You should begin networking now, both inside the company and outside. In the meantime, can you please work with Mary to introduce her to your customer base?

I will tell her that we are combining her job with yours, but we will reduce her report writing duties to allow her more time to accomplish the combined area.”

In the discussion with Mary, the boss stresses that she is a highly valued employee being called on to stretch her influence with the customer base. A reduction in paperwork will provide some relief in order to allow her more face time with customers.

She will also receive a modest bump in pay as a result of the increased responsibility. She will inherit Jake’s accounts and should get up to speed on them over the next two weeks.

I grant that this second scenario is far from easy or painless for all parties, but the consequences are far less debilitating for the business.

By treating all employees like adults from the start and leveling with them, many of the problems in the first scenario were prevented.

The most significant reason for the difference between the two cases is that the top boss or HR function allowed the local manager to operate with transparency.


Why M&As Fail

June 24, 2014

HindenbergAccording to one study, (Selden & Colvin, 2003, Harvard Business Review) nearly 80% of mergers or acquisitions fail to reach their initial performance targets.

Not all of those crash and burn, but the results are none-the-less disappointing.

The reasons for these failures are as numerous as leaves on a tree. I believe there are some conditions that align to stack the odds in the direction of failure rather dramatically. Here are ten examples:

1. Perspective Problem

When first contemplating a merger, the benefits are rather easy to see and to quantify.

The problems or impediments are far more numerous, yet most of them are hidden from view, like bats in a cave. They will eventually come out and swirl around us, but at the start we do not know the magnitude of the problems.

If we are lucky, and we picked the right cave, the problems will be small and manageable, but if we are unlucky, the sky can turn black with a swarm of issues, and our safety nets are woefully inadequate.

2. Over Enthusiasm

The senior leader “falls in love” with the concept of the merger and loses a sense of reality.

If anyone dares to question the sanity of what is being contemplated, that person is dubbed a non-team-player and sent off to the minor leagues.

Just as love can be blind, managers can ignore the symptoms of problems until it is far too late. Then, all that can be done is to mitigate the damage.

3. Focus on Financials

The deal is conjured up as a financial arrangement having to do with ownership of property, technology, and processes.

The cultural aspects of getting people to work together effectively is assumed until the deal is struck.

The polarization between groups and the interpersonal hassles metastasize throughout the organization and become untreatable very quickly.

4. Wrong People on the Bus

During the run up to a merger, people are aware of what is going on, even though there is a laughable charade of secrecy.

The highest performers recognize the risk and have their alternate landing spot already selected. By the time of the announcement, some of the best people already have job offers elsewhere.

The poorer performers hunker down in the trenches and become problems to deal with after the news is announced.

5. Lack of Trust

The games played during the due diligence and negotiation end up destroying trust within both organizations, and neither group has much trust in the other entity.

Building up a culture of high trust is a daunting task under the best of conditions, and trying to do it amid the chaos of a whole new organization is about as likely as the sun turning blue.

6. Stiffing the Customer

The customers of both organizations don’t care a whit about the integration. They just want seamless service and excellent quality products on time.

When both organizations are urgently focused on stamping out internal problems and redefining their processes, there is little focus on satisfying the established customer base.

In hundreds of ways the poor customer’s needs get shoved to the back burner every day. Since there are alternatives, it does not take long for smart customers to turn elsewhere.

7. Uncertain Environment

People at all levels are petrified. They really do not know their future, and they just hang on until the dust settles.

Teamwork is pretty rare, and everyone is looking out for number one. Meanwhile the work is not getting done as before because people are not getting clear marching orders.

8. Spotty Communication

Since a good portion of the discussions are supposed to be secret (which is a true sham since everyone in both organizations knows what is going on) little credible communication is coming out of the top level.

This environment is a perfect incubator for rumors and gossip that only add more instability to an already fragile system.

9. Faulty Assumptions

Many of the procedures must be recast with both groups having to change in some ways. It is common for both groups to feel they have been “taken over” and forced to revamp their culture to accommodate the other entity.

Bitter feelings arise as people would rather live in the world that existed before. Of course that is not possible, so there is a grieving process going on, just when the organization needs people to be at their best.

10. Chaos

You can observe true chaos in one of these situations. It is as if a major earthquake just hit off the coast, and people on the island are scrambling because of the tsunami to follow. Not much constructive work is happening during this time.

These are just ten of the conditions that make the M&A process so chancy. There are dozens of other negative things going on as well. It is no wonder the track record of success against the goals is so low.

My new book, Trust in Transition: Navigating Organizational Change, explains how to improve the odds dramatically by focusing equal energy on the cultural parts of the integration as the mechanical process. Doing this mitigates all of the problems listed above and gives a fighting chance for success, despite the issues.

Trust in Transition Cover060The book will be launched on August 18, 2014 by ASTD Press and is currently available for preorder. The book is about how organizations must do a better job of preserving and enhancing trust when they go through changes such as reorganizations, mergers, acquisitions, or other restructurings. Your purchase of the book includes access to a set of videos that enhance several of the key points. For a video introduction to the book, click here.


New Book: Trust in Transition

June 21, 2014

Trust in Transition Cover060Is it possible to make major organizational transitions without catastrophic loss of trust?  I think there is, but the odds are against you unless you change the conventional thinking process. What is required is a new approach toward navigating organizational change.

My new book, Trust in Transition: Navigating Organizational Change, will be launched on August 18, 2014 by ASTD Press and is currently available for preorder.

The book is about how organizations must do a better job of preserving and enhancing trust when they go through changes such as reorganizations, mergers, acquisitions, or other restructurings.

Your purchase of the book includes access to a set of videos that enhance several of the key points.

There are numerous books on managing change, and many books and articles on M&As. My book is unique in that it focuses on the actions and behaviors needed to maintain the vital trust between people and organizational layers during the process of change.

A link between trust and organizational performance has been demonstrated in numerous studies. The correlation is strong, and the leverage offered by high trust is impressive. Most studies show a two to five times productivity benefit in high trust groups over low trust groups.

Can you name any other single factor that can offer a 200% improvement in productivity?

When organizations contemplate changes, the manner in which the effort is planned, organized, announced, managed, and led has everything to do with the impact on trust.

Unfortunately, in the vast majority of cases, the changes end up having a profound negative impact on the culture just when trust is needed the most. This condition ends up undermining the change effort and leads to a documented dismal track record of almost 80% of transitions not living up to expectations.

Thankfully, failure can be avoided by taking steps right from the start of a change process to act differently and prevent problems from occurring. The old adage of “an ounce of prevention is worth a pound of cure” holds true for this situation.

If some changes in mindset can be accomplished from the earliest plans for a change, the ability to retain or even grow trust during change is possible.

My book is about how to break the cycle of change failure by focusing as much effort on the cultural integration as on the mechanical parts of the change process.

Unfortunately many leaders have had professional training in the MBA schools that emphasizes the mechanical aspects of the change process such as negotiation, due diligence, financial valuation, or legal implications.

These subjects are critical in transitions, but they should not squeeze out the considerations of how to get people to work well together during and after the transition.

The focus on the financial and legal implications of a change are forced on center stage, and what ends up back in the wings is the fragile culture of trust between people in the organization. That is a problem, because the end result is a change effort that works well on paper but often fails to meet expectations in the real world.

The book contains dozens of areas where leaders unwittingly make errors in judgment which undermine the changes all along the way. By following a parallel path that works just as hard on the culture as the deal, leaders can greatly improve the odds of success.

I will provide a series of articles on this blog over the next few months that look at different aspects of the change process to suggest pragmatic antidotes to common problems.

Investing more leadership attention to the culture early in the change process will have a profound positive impact on the success rate.

I hope you find the tips I offer in the book and in future articles to be helpful at preserving trust in your organization. Nothing could be more vital for your ultimate success.