HOW TO MANAGE THE FIRST HUNDRED DAYS OF A NEW ASSIGNMENT: a guide for leaders and boards. SUMMARY OF SITUATION: COMPANY: Third Generation family business. The Board consists of 9 cousins/inlaws. There is a Hatfields vs McCoy conflict that is creating strategic paralysis, but the Board won’t bring in outside Directors. The Hatfield faction got enough votes to fire Roy McCoy, CEO of the business. Roy had been CEO for 23 years. INTERVENTION: The Board retained Stybel Peabody to conduct an external search for the next CEO. This search included interviewing Mark McCoy (VP Sales) and Harry Hatfield (VP Finance) for the position. Neither individual was recommended for the CEO role by Stybel Peabody. A non-family executive was chosen to become the first non-family CEO for this business. After the selection, Stybel Peabody worked with the corporate Board on how the Board could work with the new CEO. The Board would not consider an Executive Committee. But it did agree to appoint the leader of the Hatfield faction and the leader of the McCoy faction to act as liaison between the Board and the new CEO. The leaders of the Hatfield faction would serve as Chairman of the Board during odd calendar years. And the leader of the McCoy faction would serve as Chairman of the Board during even calendar years. In this way the continuity of the business as a family run business would be maintained. All Board issues would first pass through this new liaison. The Board agreed to bring in one external member of the Board. Tom President is the new CEO. Working with him and the Liaison group, the following program was developed. “The First Hundred Days: rapidly linking the leader with the job” leverages our understanding of the company plus our being outside consultants. TOM PRESIDENT: RECOMMENDED PHASE ONE OF THE FIRST HUNDRED DAYS:
Basic Theme: “My mission from the Board is to keep Company a viable, profitable family business if that is the wish of the Board. The goal is to build on what the last CEO has accomplished. And when it is time for me to leave, my mission is to have a member of the family become CEO.” Repeat the Basic Theme over and over again to anyone and everyone. Honor the contributions of the last CEO. Get him a great looking plaque, have a nice party. Invite customers, suppliers, etc. Bring in some people who might spoof him and videotape it. For creative ideas, call movie and theater director Michael Allosso. 508-358-7896. The CEO will say he doesn’t want the party. Don’t believe him!! * Line up the Board: involve the Liaison Group in the Initial Going-In Mandate. The Going In Mandate becomes the framework for the CEO Board evaluation and how the bonus will be determined. What is to be improved and what is the timeframe? What kind of performance would result in maximum bonus? What kind of performance would result in average bonus? What is to be preserved? (culture/values) What is to avoided at all costs? What products or people are untouchable? Is Mark a sacred cow that can’t be touched? Is the plant location a sacred cow that can’t be touched? What class of decisions can I make and inform the Board after the fact? What class of decisions can I make but should and get Board input before decisions are made? What class of decisions are really Board decisions?
Once there is verbal agreement, write up your understanding in the form of a memo. Give the liaison group copies. Keep your copy. Ask the liaison group to keep an open mind to your coming back to them in sixty days to again review the Going In Mandate based on what you have learned over the last 60 days. 2. Dealing with Mark and Harry Go to their offices individually. Start with Harry first. You want to get Harry’s honest reactions, uncolored by Mark’s reaction. Don’t have them go to your office. The office still will be perceived as “The Previous CEO’s Office” for a while. Repeat The Basic Theme. Stress your sincerity in accomplishing The Basic Theme. As proof of your sincerity, suggest something concrete to position them to improve their ability to contribute to the company’s future. Tell them you think them capable of higher-level contributions, etc. You want them to think about what they need to get to that higher level. MARK For Mark I recommend the Harvard Business School’s AMP Program or the Harvard Business School’s “Families in Business: from generation to generation.” “Families in Business’ is $6,500 and takes place in November. That time frame is good. For more information, go to: http://www.exed.hbs.edu/programs/fib/index.html HARRY: With Harry, I would recommend that the company underwrite his admission into the Financial Executives International and to attend one national conference a year. I would recommend the CFO National Summit sponsored by FEI. http://www.fei.org/info/chapters4.cfm Annual dues are $435 per year. I can introduce Harry to the President-Elect of FEI and get Harry involved at a Committee level. The goal is to develop a network of CFOs who are more senior than he is. Harry needs more external perspective at this point in his career. In two years, you might tell him you are open to championing his admission to the Harvard Business School AMP Program or a similar program at Wharton, Amos Tuck, or Stanford. I think Harry will be very pleased with this gesture. I think he would take advantage of it. With respect to Mark, I think he may not follow up.
It doesn’t matter if he takes advantage of your gesture or not. The key issue is to back up The Basic Theme with a concrete program to show the Board you mean what you say. If Mark does nothing with your overture, you strengthen your hand with the Board if you and Mark come to loggerheads six months later. MANAGING YOUR OWN NETWORK: Does the Company have a publicity function? If not, I can draft a press release to go to alumni news group at Cornell University, The Harvard Business School, The Boston Globe, The Boston Business Journal and your local newspaper. The same notice should also go to the following trade publications: x, y, and z. CONSIDER A CEO ADVISORY GROUP: Other CEOs are good for bouncing ideas in a confidential setting.
The Executive Committee (www.teconline.com). Contact Gordon White at 617 699-5995. Gordon was a non-family CEO of a third generation family business. **** GONE BUT NOT FORGOTTEN BUSINESS WEEK, June 2001 Executives facing the corporate ax have come to expect a
number of palliatives to blunt the initial pain of job loss: one-on-one
career counseling, resume editing, and the use of company equipment, among
others. Not nearly as well known but growing is a nontraditional form of
outplacement help. "Assimilation" consulting provides downsized
execs that were high in a company's pecking order with several months of
counseling -- -- at their former employer's expense -- on successfully
settling into a new job.
GOOD ADVICE.
"It was very helpful," says the president and COO of a Boston-area
technology startup who used Stybel Peabody Lincolnshire's outplacement
services after he lost a top job at a larger company last year. The man, who
asked not to be identified, says that after he joined the new company, he
would speak to his coach, Stybel Peabody President Laurence J. Stybel, for
about a half hour every week or so on the phone or over breakfast. The
executive says he received good initial advice: Stybel urged him to ask for a
clear understanding from his bosses -- the board of directors and company
investors -- about their expectations for him. The result, he says, was a
frank discussion about projects and employees they considered untouchable. THE FIRST HUNDRED DAYS: a programmatic approach to rapidly increasing new leader effectiveness Classic retained search is a transactional sale. It stops once the newly hired executive crosses the threshold of the door of his/her new office. The better search consultants may call up to inquire, “How is It Going?” Our clients retain us because they are seeking competent leadership for their unique needs. Search is only part of that process. We have an integrated suite of programs we offer client companies under the heading of THE FIRST HUNDRED DAYS: Rapidly Linking the Leader with the Job. Rapidly Linking the Leader with the Team. Rapidly Linking the Leader with the Enterprise. As part of our retained search work, we offer Rapidly Linking the Leader with the Team. There is no additional charge when it is part of a retained search agreement. It can be provided as a separate feature, independent of the search. The other two modules can be purchased separately. The framework behind Rapidly Linking the Leader with the Job is explained in our recent speech to the Financial Executives International. That speech is called “Framed to Fail: how companies mis-structure new assignments and what you can do about it.” *** FRAMED
TO FAIL: HOW COMPANIES MIS-STRUCTURE NEW ASSIGNMENTS AND WHAT YOU CAN DO
ABOUT IT. Laurence J. Stybel, Ed.D. & Maryanne Peabody STYBEL PEABODY & ASSOCIATES, INC. Sixty State Street, S. 700 Boston, MA 02109 Tel. 617-371-2990 Email: lstybel@stybelpeabody.com Website: www.boardoptions.com A
Speech Given to the Financial Executives International National Conference,
February 2002. *** You
have just been hired OR you’ve just hired someone from outside OR you have
just promoted someone internally. You
want to build an initial framework for later success. Key
issues we will discuss include: §
Looking at talent acquisition and talent departure as part of an
assignment cycle framework. §
What are the Difference Between Symmetrical and Asymmetrical
assignment cycles? §
What are the most productive things you can do in the first five days
of a new assignment. §
What is a Going-In Mandate?
§
How do you Negotiate a Going-In Mandate and Why Would you Renegotiate
it 20 Days Later? WE ARE LIKE PATHOLOGISTS For
nearly 23 years, STYBEL PEABODY Has provided senior executive outplacement
services. We
are like pathologists with labs in a corner of the basement. Cadavers come down the elevator to us. We do our pathology work in secret. By this I mean we might be the
only people who actually get a chance to talk to departing executives,
bosses, and colleagues. We discuss
our findings with no one. . We develop a picture of what happened, when it happened, and why it
happened. We are also like the pathologist in the basement who finds that no doctor upstairs is interested in coming down to the basement to ask, “how did these patients die in the first place and how can we avoid this happening in the future? We
want to discuss what we have learned from our work in the basement pathology
lab. THERE IS SUCH A THING AS A SENIOR EXECUTIVE ASSIGNMENT CYCLE(sm) The
retained search industry and the outplacement industry treat the hiring of
talent and the removal of talent as discrete transactions. By
transaction I mean that the symbolic event of the executive crossing the
threshold of the door to his/her new office symbolizes that the service is
over for both retained search and full service outplacement. What
happens once the executive crosses that threshold is not their concern. On
the other hand, for us this is just when the fun begins. The
retained search and outplacement industries are not being shortsighted. They are merely responsive to the
wishes of their corporate clients.
We
argue that there really is something called the senior executive assignment
cycle. To arbitrarily chop up
these events into separate transactions can be expensively wrong, given costs
of senior executive mis-hires. Let
me give you one example. Professor
Rakesh Khurana of the Harvard Business School examined the validity of
treating departure events and arrival events as separate transactions. Data
from the Fortune 200 firms were reviewed from 1978 until 1993. Professor
Khurana examined three variables. Variable
number one was CEO Departure.
Departure was either Natural or Forced. Natural
Departure was defined as a press announcement stating that the CEO was
retiring or resigning to join another company. Forced
Departure was defined as a press announcement stating that the CEO was
resigning for personal reasons or to go into consulting or some other vague
reason. Variable
number two was CEO Arrival.
Internal promotions were defined as executives who had been with the
organization more than 12 months before their selection. External promotions were defined as
executives who had been with the organization from zero to 11 months before
their selection. Variable
number three was an outcome measurement. This outcome measurement was defined as the annual
operating return for the firm—that’s operating income before taxes,
royalties, dividends, depreciation, etc. Annual Operating Return is the number least subject to
managerial manipulation. There
was an industry-adjusted basis for coding. The
company information was then tabulated over a 15-year period. RESULTS: The
200 firms studied had 221 CEO turnovers during the 15-year period of
observation. Insider
appointments were made 85% of the time. Professor
Khurana concluded that looking at the insider-outsider distinction might be
meaningless without explicitly taking into account the conditions surrounding
the departure of the predecessor. Outside
CEOs coming on the heels of the forced departure of the previous CEOs did
best when achieving positive changes in operating return. The hypothesis is that the Board is
sending a signal to the entire management structure by the forced exit and
the arrival of an outsider. This
reduces the initial period of resistance to change. The significance of this effect was greater than the .01
level of confidence. Forced
removal of the CEO followed by the introduction of an insider tends to
produce almost zero change. Natural
CEO departure followed by an outsider actually results in performance
declines. This may be that the
combination of natural exit with the arrival of an external CEO means the
board is creating mixed messages about its commitment to change. And this mixed message can result in
the highest degree of management resistance to new interventions. SYMMETRICAL
VERSUS ASYMMETRICAL ASSIGNMENT CYCLES(sm) From
our perspective, we view the shape of assignment cycles. Symmetry is the forced expulsion of
the previous CEO followed by the external hiring of the new CEO. Symmetry is the natural retirement of
the previous CEO followed by the internal promotion of the new CEO. Asymmetry
is the forced expulsion of the previous CEO followed by the internal hiring
of a new CEO. This
is the situation we are currently dealing with in a CEO search conducted by
Stybel Peabody. The
Board has concluded that the current CEO has not provided the direction
needed for the 21 century and has fired him. But they are going to hire an internal candidate to be the
leader of that new change. Their
rationale is that the internal CEO can make the most rapid changes because he
knows where all the problems are in the company. The Board calls this “hitting the ground running.” Using Professor Khurana’s research,
we have told the Board that the CEO may expect to receive high levels of
resistance to change because of the mixed messages communicated by the Board. And there is work that needs to
be done to anticipate and deal with this inevitable resistance. THE FRAMED TO FAIL SYNDROME: We
run a specific coaching program for new executives called The First Hundred
Days (sm). As part of our
assignment cycle framework, it is offered as part of our retained search work
and it is offered as part of our full service outplacement work. Why
The First Hundred Days? (sm) Most
companies give a new manager a 60-100 day grace period to learn. Towards the end of that 60-100 day
period, however, the first significant intervention is expected. Success
during this critical first 60-100 days provides a scaffold to build later
success. Failure
provides a probability that someone is going to light a bonfire under the
scaffold. There
are three basic questions that must be answered at the start of a new
assignment: what do I want to achieve, what do I want to preserve, and what
do I want to avoid? Let
the initial "achieve/preserve/avoid" mantra put a framework around
your actions for the first 5-20 days. The
answers to these questions are not intuitively obvious. Indeed,
you may have been given mis-information or incomplete information during the
job interview. We call this
incomplete information “Framed to Fail.” Job
interviews often focus only on what needs to be changed, systematically
avoiding the preserve/avoid component.
What needs to be preserved and avoided can nullify the ability to make
the changes that are necessary.
For you are a new VP Compensation & Benefits: Your mission is to use compensation as a tool to change the corporate
culture. Our present status is
that we are a functionally focused organization that is failing to pull
together. We want to create an
organization where the Departmental managers are focused on customer
retention and net income as the key matrix for success. Of course, we have a strong
paternalistic culture we wish to retain. The CEO’s brother-in-law is the head of Sales. Whatever you do, don’t get him upset! Visually think of change in three dimensions with change/preserve/avoid
being the dimensions. Here
is a tip for Job Candidates: It
is a great interview tactic to ask employers change/preserve/avoid
questions. They love it. Failure
to get that clear road map in the first ten days of your new assignment means
that you will eventually discover the three dimensions of change………by getting
your fingers slapped as your interventions fail! There
is nothing wrong with getting your fingers slapped. It is part of being a senior executive. But………. Failed
interventions in the first hundred days of a new assignment don’t build that
framework that allows you to have credibility. Avoidable
failure also wastes precious time.
THE GOING IN MANDATE Our
next concept is called The Going in Mandate. We
stress the programmatic, structured importance of negotiating AND then
re-negotiating the Going-In Mandate. During
day 2-5 of the new assignment, the boss/subordinate team should meet to
jointly complete the Going-In Mandate.
The going in mandate comes from Harvard Business School Professor Jack
Gabarro’s seminal work on CEO entry. The
Going-In mandate should include the following: What
needs to be changed and what is the time frame? What
needs to be preserved? What
needs to be avoided at all costs? What
things can I unilaterally change without consulting my boss? What
things should I consult my boss on before making changes? What
things should I let my boss make the final decision? These
ideas are intuitively obvious but seldom part of a structured management
procedure for insuring similar perspective between the new boss/subordinate
team. We
are simply recommending that these obvious ideas be formalized. THE
LONE RANGER Professor
Gabarro stresses the importance of building subordinates into a cohesive
team. Failure to value a team approach to decision-making leads to a
management style characterized by Gabarro as the "Lone Ranger
Syndrome." And the Lone Ranger Syndrome was associated with management
failure: "Compared to the
successful managers, (Lone Rangers) involved others to a much lesser degree
in the work of assessing and diagnosing organization problems. As a result,
their diagnoses of situations tended to be much more narrowly focused and
incomplete. Finally, they made changes that were perceived as inappropriate
or ineffective, either because the changes were based on partial or incorrect
diagnoses of problems or because the changes were badly implemented by a
management group that did not support them." In
other words, your first 1-15 days, you should be walking around the
organization and asking many questions.
Avoid summoning people to your office, as it creates a powerful first
impression that you are here to tell and not to listen. People may feel more comfortable
talking with you in their office and not yours. Avoid all reference to “Let me tell
you how we used to do it at my old company.” It suggests you are seeking to force-mold your new
company into the image of your old one. DON’T TACKLE THE MOST IMPORTANT PROBLEMS FIRST. Gabarro studied
seventeen management successions over time. Regardless of industry, size, or country, there was a
tendency for management changes to come in waves of three, with the second
change being the most dramatic. The
last change was often a refinement of the major changes that took place in
the second wave. Indeed, this three-wave cycle took place even among managers
in the study who (at the time) believed that their first wave of action would
take care of most of the major changes. Gabarro believes the three-wave effect
is a natural consequence of how new managers learn. Given
that there are at least three waves of change for any new manager, it is NOT
necessary for the first intervention to strike at the most
"important" problem. Important
problems are what newly hired executives are most often urged to fix first. We
would argue, however, that the most important problems tend to be the most
difficult to resolve. It is best to begin your new
assignment with an intervention where you can win. Use the first win to build on later success. In handling a major intervention,
consider breaking it down to waves of three. For example: For
example, instead of force-feeding a system wide benefits change, why not
first announce the change as an R&D project and try it out with the
functional area where the change will most likely produce the most positive
results? By calling it an
R&D project, you can later change the program without suffering loss of
political face. By testing it
out in the area most likely to be receptive, you have a safer platform for
extension. WHERE
TO BEGIN? Reserve
the most important problems for the second cycle of change. The critical second cycle should
build on the success of the first.
We recommend first cycle interventions focus on issues where there is
a high probability of success. For example: President
Clinton did the right thing when he made allowing gays in the military his
first major intervention: he had
campaigned on this issue, he had courted the support of gays, and he was
Commander-in-Chief. The
firestorm of protest from the Joint Chiefs of Staff and Conservative
Democrats made him back down.
Big mistake. By making
gays in the military his first intervention and then loosing on the issue, he
set an initial framework for his Adversaries. That framework was successfully duplicated when he
introduced his comprehensive health care program. On
the other hand, by the time President George W. Bush came to power, both
Democrats and Republications were embracing the concept of tax
reduction. The only squabbling
was over the amount of the reduction. Bush made this issue his first
intervention and it became his first success. His goal was to build on bi-partisan success for next
intervention----educational reform.
RE-NEGOTIATE
THE GOING-IN MANDATE As
mentioned earlier, The Going-In Mandate should focus on timeframes and
specific goals for Change/Preserve/Avoid. Once it is written, however, the Going-In Mandate will
likely need to be re negotiated
once the new executive has a better appreciation of what is realistic in the
organization. In managing a
subordinate, you might want to ask the subordinate to re-write the Going-In
Mandate based on what has been learned about the organization in the last
1-15 days. Try
to meet with your boss 16-20 days after the first day of employment to begin
this renegotiation process. You
want your performance to be evaluated based on realistic goals. You
don’t want to risk being Framed to Fail. SUMMARY The
retained search industry, the outplacement industry, and the corporate
clients both industries serve have a clear, simple, and inaccurate view of
the talent acquisition and talent removal process. They
view these issues as discrete transactions. We
believe there is evidence to suggest that there is such as thing as the
Senior Executive Assignment Cycle. We
believe that there can be competitive value by managing the Senior Executive
Assignment Cycle rather than managing separate transactions. Specifically,
the success of the new executive is dependent on the message the organization
sent in its removal of the predecessor.
Forced exit of a predecessor combined with the entrance of an outside
executive sends a symmetrical signal.
Natural exit of a predecessor combined with entrance of an outside
executive sends an asymmetrical signal.
Spend
time learning the conditions under which your predecessor left. Beware of asymmetrical assignment
cycles. Spend
the first 1-15 days learning what needs to be changed, avoided, and preserved
by getting out of your office and walking around or flying around. Avoid summoning people to your
office. Once
you have learned what needs to be changed, avoided, and preserved
re-negotiate the Going-In Mandate so that your performance can be evaluated
on a realistic basis. We have
provided a structure for designing the going-in mandate. Avoid
tackling the most important problems first during the critical first hundred
days. Tackle the problems where
you can win. And
if you find you misjudged the level of resistance, go to the mats and do what
needs to be done to win the first conflict. You can compromise on later conflicts. Don’t compromise on the first. This was the mistake Bill Clinton
made with homosexuals in the military. If
your subordinate mis-judged the level of resistance on the first
intervention, back that subordinate to the hilt on the first
intervention. Don’t compromise
on the first intervention. Change
comes in waves of three. Try to
break your intervention into three parts and use the first part to test the
level of resistance within the organization. Your second intervention will be that much more informed
and realistic. Finally,
an assignment cycle perspective to employment means that senior level jobs
tend to be driven by the company exit strategy. Exit strategies can be to have a lifestyle business, to
grow so that we can acquire others, grow so that we can be acquired, or grow
to have an IPO. Have
a crisp understanding of what that exit strategy and its time frame will be a
powerful factor in influencing the quality of the assignment cycle. Negotiate
hard for a decent severance package at the time you are hired. You will never be in a better
bargaining position to negotiate a good end to the cycle than at the
beginning of the cycle.
Framed to Fail Part II: Managing Enemies, Chums,
and Friends Keen
relationship management separates the merely competent from leaders who make
their companies thrive. Based
on our consulting work with senior executives, our First Hundred Days™ we want to provide a simple
framework for categorizing work relationships. Why
is a system for categorization of relationships important? Consider
the following scenarios: You expect me to contact Jane??!!! She contributed to my downfall. Jane is not a friend!! Yes, I wrote that stupid, off-the-cuff response. Yes I sent it to Fred. But I never expected Fred to show
that Email to the CEO. I
considered Fred a friend! What
do you think about these two statements? THE IMPORTANCE OF PROPER CATEGORIZATION In
the early phases of an intellectual discipline, categorization tends to be
broad and imprecise. For
example, in the early days of mutual funds, the two categories were Equity
Funds and Money Market Funds. As
the industry matured, more categories were created for ease of
communications. The popular
nine-factor Morningstar system is a simple, useful system for categorization
of equity funds: SMALL
CAP MID
CAP LARGE
CAP GROWTH BLEND VALUE In
relationship management, new executives often use broad and imprecise
categories: friends versus enemies.
Under
prolonged stress, however, we have seen senior executives cognitively regress
to the point of returning to this simplistic, dangerous categorization
system: friends versus
enemies. When
CEOs go through this type of cognitive regression with respect to how they
categorize Board members, the end of that CEO’s assignment cycle is clearly
in sight. One
of our roles during times of stress is to keep the categorization system
alive. A
simple factor system for categorization of relationships adds to the
precision of relationship management efforts. |
