Tag Archives: EQ

Using EQ to Plan Management Succession

How to go about preparing a privately owned business for management succession… 

GDF Professional Services had been a successful company for over 10 years in the business of providing organizational development consulting. Located in the Research Triangle area of North Carolina, the firm had capitalized on the local economic growth and availability of talented human capital. Over the past few years, the platform included leadership, change management & organizational psychology services for local companies. While most clients had 30-100 employees, some were smaller, and others were considered “middle market.”

The two primary owners, “G” & “D”, had determined that they desired to cut back on their hours at work and aimed to eventually hand the business over to a strong management team. However, management group members, while strong in their individual disciplines, had not coalesced into a cohesive team and were unprepared to succeed the founders in running the company on a daily basis.

The challenge was to help the managers prepare to take over and prepare the owners to begin to step aside. To do so would require innovation in the business model, systems, processes, and offerings of the Firm. In order to introduce innovation, a baseline needed to be established and performance measured. One of the best predictors of decision-making habits among managers is a behavioral assessment that measures one’s Emotional Quotient (EQ). Scheduling mentoring sessions to discuss competencies followed the administration of the EQ assessment.

     As the management team members began to share not just facts, but heartfelt emotions, dreams, and recommendations, it was necessary to have a process to capture and assimilate all the content. Each mentee meeting, each owner meeting, each team meeting was captured in detailed notes. Additionally, consultative questions in the individual sessions regarding assigned EQ worksheet exercises yielded additional insights. The information was culled weekly for follow-up items on the individual and team level, as well as combed for items to take up within strategy sessions with the owners. A rudimentary knowledge management system was put in place for this purpose.

Nearing the six month mark, the group was becoming anxious as to what was to follow. Someone suggested that the EQ mentoring continue at the staff level so that staff members could benefit from the same body of knowledge and practice that the leadership team had. Simultaneously, the owners agreed to undergo EQ mentoring themselves in order to enhance credibility with their key reports.

The other signs of progress were:

  • The weekly management team meetings were supplemented with weekly departmental meetings that did not require the presence of the owners
  • The weekly individual mentoring sessions were replaced with monthly sessions, but weekly exercises continued
  • The weekly group educational sessions were replaced with bi-weekly ones
  • The owners agreed to hold a year-end retreat to discuss drafting a succession plan

More work needed to be done in terms of clarifying roles and responsibilities, the funding source for the succession plan, selecting a leader from within the management team or from the outside, and insisting that the owners go on record as to what they will hand off when and to whom. However, all were very encouraged at the likelihood of success based on the transformation of the culture experienced during the process.

Un-Madoff Your SMB

Even if a business has strong financials, talent is not enough – integrity is needed. Master investor Warren Buffett’s position on business performance has been: “In looking for people to hire, you should look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you.”  Given his track record, good corporate governance seems to be an essential part of long-term business success. Whether we go back to Michael Milken and his securities fraud, or more recently to Enron and Bernie Madoff, we have a wealth of examples of how poor checks and balances led people with intelligence and energy to behave in ways that clearly lacked integrity and cost many other people millions of dollars.

A 2003 joint Harvard and Wharton study entitled Corporate Governance and Equity Prices found that companies with good corporate governance generated superior future returns and higher profits and sales growth. The study created a “Governance Index” (G-Index) for each company based on the number of these 24 anti-shareholder provisions the company possessed. The higher the index score, the worse the company’s stock performed. Using data from 1990-1999, the study found find that companies with a low G-index score (i.e., a “democracy” portfolio) outperformed companies with a high G-index score (i.e., a “dictatorship” portfolio) by a statistically significant 8.5 percent every year. By 1999, a one-point difference in a company’s G-index score was associated with an 11.4 percent drop in a stock’s market value. Further, firms with weak shareholder rights were less profitable and suffered lower sales growth than comparable firms in the industry.

A 2009 joint Yale-Harvard study finds that the outperformance effect has waned in recent years as investors have learned about the importance of good corporate governance and adjusted the stock prices of good and bad companies accordingly.

In other words, bad corporate governance is now discounted in stock prices. Small-cap stocks and privately held businesses, where data is less available, seem to dodge the scrutiny of the large-cap stocks and purchasers of their stocks can take a “ding” on the regular.

 

 

How can we change the pattern in small to medium businesses?

  1. Better corporate governance measures in privately held businesses should include a progression towards true, independent boards.
  2. The boards should be evaluated on an annual basis (check out the Center for Board Excellence.)
  3. Matters such as compensation, family members in the business, succession plans, etc. need to be discussed in board meetings and action plans developed.
  4. Organizational development principles should lead to better talent management and the assignment of shared decision-making outside the CEO’s office.
  5. Internal controls need to be examined and improved to mimic best practices of a public company in a Sarbanes-Oxley environment.
These are a start–what would you recommend?

 

Focus on EQ Rather Than IQ

While one may not be able to improve IQ, the ability to improve one’s Emotional Quotient has been shown effective in enhancing management decision-making.     EQ Mentoring is most successful when directed management team members who support an organization’s executives.

“Emotional intelligence isn’t a luxury tool you can dispense with in tough times. It’s a basic tool that, deployed with finesse, is the key to professional success.”

~Dan Goleman in The Harvard Business Review

What is Emotional Intelligence (EQ)?

Effective and timely decision-making is at the heart of good performance. To improve performance, we need to understand how to make better decisions. At the most basic level, our ability to make good decisions and, in turn, perform well is captured by our competencies. Competencies are the things we know how to do and what we are good at are capabilities. Most performance management processes are built on the concept that competencies are the direct antecedent or predecessor to good decision making and high performance. What determines our competencies?

Preceding our competencies are our behaviors. Behaviors include our day-to-day activities that determine where we focus our time and where we focus our energies. Cognition precedes behavior. Slightly oversimplifying this concept, cognition refers to one’s intellectual capacities, thoughts, knowledge, and memories. This is the rational part of our brain. What finally precedes cognition in this physiological sequence to high performance is one’s EQ—a body of personal characteristics and social abilities that are closely tied to success in both our professional and personal lives.

How is EQ Improved?

In order to establish a baseline, an EQ Assessment is taken at the inception of the competency improvement process by each team member individually. The mentoring process is explained to the group and some recurring group meetings are held (minimum of once/month) to reinforce concepts in a team environment. Primarily, however, the mentoring  occurs individually and the scheduling of weekly meetings with each team member (half hour ea.) creates an environment for concepts to “grow legs” and become implemented.

The mentoring is administered by a professional certified in the process and competent to interpret the assessment results into a personal development program. The five competencies (self-awareness, self-regulation, motivation, empathy and social skills) that constitute one’s EQ scores are evaluated and a plan created to improve the mentee’s lowest area(s) first.

During the weekly sessions, hypothetical scenarios are discussed between mentor and mentee to identify thought processes, offer alternatives, and learn better decision-making styles. After six to eight weeks, the hypothetical gives way to actual work examples and on-the-job learning occurs. Generally, it is at this point that executives can see early signs of improved management skills.

As the mentee becomes more enlightened, additional tools and assessments are introduced to keep the free flow of information positive, eye-opening, and stimulating. Generally, a follow-on assessment is administered at the six month point and a joint decision is made as to how to proceed.

NOTE: For EQ improvement to become part of the culture, it is generally advisable that the owner/CEO/etc also submit to the process and go through their own mentoring. After such, there is opportunity to learn new methods of interaction that reinforce principles and better habits learned.

Lukewarm Defenders of Change

Inside every company there is a culture. In order to remain competitive, companies need to make cultural and process changes that are holding them back. How the employees respond is a critical predictive factor in the achievement of the desired outcome.

 

“There is nothing more difficult to take in hand, more perilous to conduct, more uncertain in its success, than to take the lead in introducing a new order of things; because the innovator will have for enemies all who have done well under the old conditions and only lukewarm defenders in those who may do well under the new.”

-Machiavelli

As Machiavelli points out, leading others to a new order is tough work. Here are some management suggestions on how to make it a part of your culture:

Know your people

  • What is the thing they like most about their position? What would they change?
  • Have them explain why they are on this particular career path.
  • What do they think about the company and its management? What do they believe should be done differently?
  • Ask them who have been the greatest influences in their lives/careers. Listen intently and ask follow-up questions.
  • Ask what they like to do away from work.  Don’t make them uncomfortable. Make it known you are interested in getting to know them as people.
  • Share what values are important to you and why. Provide some stories where appropriate—people relate to stories.
  • Find out about their personal and career goals; share your own.
  • Become vulnerable. Ask what you could do better to serve them and the department/company.

Please remember to respond with empathy.  Demonstrate sincere interest in what your people say, significance to them, and how they feel about it.

Assign properly

1.    Delegate those things that would be helpful to you and to their development.

2.   Select the most strategic person to complete the task(s).

3.   When possible, get the employee to create a plan to complete the task(s).

4.   Ask the employee to repeat back their understanding of the desired outcome and process.

5.   Have a mid-point check-in on complex tasks.

6.   Follow up in a positively.

7.   Consider the rotating tasks.

8.   Delegate tasks that enhance cross-training.

9.   Try to include some delegation to everyone in the group.

10. Ask for input at the end of each task.

Motivate

Internal Motivation:

Have the employee ask himself these three questions—

  • Do I have awareness about my passions?
  • What would I ideally like to look forward to each morning?
  • How do I make this ideal happen?

Discuss how the answers to these questions must factor into job responsibilities and performance.

External Motivation: How do you reward your employees?

The columns below offer employee types, potential felt needs, and some suggested rewards. For each employee, think about needs and rewards. (You may pull from categories more than once).

EMPLOYEE DESCRIPTION

NEEDS

REWARDS
1. Employee feels disconnected from others.

Likely Need:

Appropriate Rewards:

 

2. Solid worker boasts of recent accomplishments.

Likely Need:

Appropriate Rewards:

 

3. Someone who displays a knack for learning and innovation.

Likely Need:

Appropriate Rewards:

 

4. Turnover in a department causes an employee to withdraw.

Likely Need:

Appropriate Rewards:

 

5. A shining star complains about the lack of opportunity for advancement.

Likely Need:

Appropriate Rewards:

 

 a. Security

b. Socializing

c. Esteem

d. Achievement

e. Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 1. A letter of praise sent to the CEO and a copy of it given to the employee.

 

2. The right to select and manage a project.

 

3. A dress-down day.

 

4. An opportunity to gain some training & development.

 

5. An extra vacation day.

 

6. Involvement in a new committee/team.

 

7. Peer “attaboys” posted in lunch room.

 

8. Opportunity to lead a presentation/team.

 

9. Reassurance that his/her position is vital.

 

10. Role in developing a new company program.

Too Much? Technology Intrusion @SXSW

The Washington Post, reporting from Austin, provided coverage of South by Southwest 2012. While there were certainly gadgets galore, applications abounding, and technology that teased, today’s article brought up the premise that technology threatens the fabric of our relationships. The intrusion of interruptive “advances” can overwhelm the brain, says Amber Case, a cyborg anthropologist.

Avi Zev Weider offered a documentary for screening, “Welcome to the Machine,” that attempted to ask the question of how inter-human relationships are compromised. Similar to the Matrix film series, there was a strong undercurrent that the network is not always our friend and we need downtime, to unplug and be human and regenerate.

How does this vein of thought factor into our office environments? The tyranny of emails, interoffice communications, tweets, posts, etc can overwhelm even the most resolute worker. I’ve been in many businesses wherein the employees–even department heads–are afraid to walk away from their desks for fear that they may receive a communication to which they do not have the opportunity to respond in real time.

There is something inherently wrong with being captive to the powerful tools that were created–ostensibly–to make our lives better. In working with employees in a number of companies, I have given the employees permission to work strategically on projects, check their messages according to a predetermined schedule, and enjoy the resulting focus, clarity, and peace of mind.

In my own life, it can be harder to set the smartphone down when I know someone may try to communicate with me. The Tweets, email messages on my work email, emails on my home email, text messages from family & friends, alerts that I’ve set up to keep the day flowing, blog updates, LinkedIn updates, etc just keep rolling in and it can be soooo seductive to allow the flow to determine my pace and disposition.

What can we collectively do? Simple, purposeful choices can break the habitual “checking in” that can be so distracting. Determine when you will pick up your cell–make it less frequent than you’ve been observing. Schedule email reading and response time. Most importantly–schedule “think” and “rest” times. Without them, our collective quality of life, contentment on and off the job, and health–physical and emotional–will all suffer.