Employment Agreements

By Mike Myatt, Chief Strategy Officer, N2growth

Get it in writing...The need for a sound employment agreement is not something to be trivialized. I recently received an e-mail from a CEO who was unceremoniously “asked” to resign by his board of directors. He asked me to author a post on the value of employment agreements in hope of preventing other CEOs from unnecessarily subjecting themselves to a forced resignation scenario. So, in today’s post I’ll outline a few items meant to help you protect your career longevity… 

At the senior executive level, jobs are both harder to come by and harder to keep. There is simply more at risk by the time you reach the C-suite than at any other point in your career. Yet I never cease to be amazed at the number of executives that place themselves in jeopardy by operating without the benefit of a solid employment contract. In my opinion there is absolutely no reason to assume the duties, responsibilities and obligations that go hand-in-hand with an executive position unless you understand what you’re playing for, as well as what the ground rules are. The funny thing is, at no time is it easier to secure an employment contract then when you are in the greatest demand…before you begin work.

There is no argument that every individual position certainly warrants terms and conditions that apply to the context and nature of said specific position…that being said, at a minimum, you should attempt to insure that your employment contract includes the following provisions:

  1. Job Description: Never accept a position unless a clearly defined job description has been incorporated into your employment contract. Roles, responsibilities, delegation of authority, reporting lines, performance expectations, etc. should all be outlined in great specificity. If you’re the CEO and you don’t ask for a board seat then shame on you…This is your chance to nail down the operating parameters under which you’ll be judged, so err on the side of removing any ambiguity that does not favor your position.
  2. Term: Make sure and set yourself up for success, and not failure, by giving yourself enough runway to get the job done. The bigger the challenge, and the more that is at stake, the longer you’ll need to get the job done. I wouldn’t accept a C-level position without a minimum of a two year, non-cancelable agreement in place. Moreover, in many situations a 3 – 5 year agreement would not be overreaching.
  3. Compensation: Be sure that your employment agreement clearly spells out fixed and variable compensation, as well as any executive perquisites. It is usually the subtle nuances of compensation that are not well defined. Therefore, whether it is the accrual of PTO, the terms of a sabbatical, bonus hurdles, vesting schedules, relocation constraints, strike prices, etc., you need to be very specific. The best rule of thumb is to consider anything not in writing as being non-existent.
  4. Indemnification: In today’s litigious and compliance oriented world it is critical that the company indemnify you against reasonable risks that you assume in the performance of your duties. Among other things you should seek a hold harmless provision against all judgments, fines, penalties, and any amounts paid in settlements in connection with any threatened, pending, or completed action to which you might be named by reason of your employment.  Additionally, you should require the company to defend you in such actions while maintaining your right to provide for your own defense if you believe it is in your best interests. Lastly, don’t forget to have the company maintain E&O, or professional liability insurance on your behalf if it is available. 
  5. Termination: It is likely that your tenure will come to an end at some point in the future, so it is important to have a clear understanding of all aspects surrounding termination. Make it a point to clearly define what constitutes termination for cause vs. termination for non-cause, as well as any compensatory items relating thereto. Make sure that there is absolute clarity in regard to what constitutes a default or breach of your contract. In that vein, you should not only provide for reasonable notice provisions, but also for a lengthy right to cure provision in the event of an alleged notice of default or breach. Remember that the key to avoiding early termination is to make it less expensive for the company to let your contract expire, than to pony-up for termination penalties, break-up fees, golden parachutes or liquidated damages. 
  6. Winding Up Provisions: If and when your contract eventually comes to an end, make sure to have clearly delineated winding-up provisions in place in your agreement. These provisions should include (unless prohibited by law or regulation) a gag provision on the circumstances surrounding your termination. The gag provision should contain a non-slander provision, and provide for a positive reference. Additionally, no external media announcements about your termination should occur without your prior consent and approval. Lastly, some form of transition should be provided for as well. These options could include a short-term consulting assignment, an entrepreneur in residence provision, and/or a year of outplacement services.

Bottom line…pay attention to your future going into a new position and when the inevitable occurs, you’ll have few regrets on the back side.  

President’s Day – Part Two

By Mike Myatt, Chief Strategy Officer, N2growth

President's Day - Part 2Today’s post is the second in a two-part series celebrating President’s Day by examining the leadership traits of George Washington and Abraham Lincoln. In yesterday’s post I looked at the unimpeachable character of our first President, and in today’s post I’ll examine the resolve of our sixteenth President. It is an astute person who studies history and applies the lessons learned to their present day life as a method for preventing the completely avoidable mistakes that plague many. I hope that these brief examinations into the lives of George Washington and Abraham Lincoln will help you become a better and more effective leader.  

If I were to take a casual poll asking readers to name our two greatest Presidents it would not shock me at all if Washington and Lincoln would show very well among their peers. However, what I find so interesting in comparing and contrasting these two great men is that while they were both men of staunch character, willing to do the right thing regardless of opposition or public opinion, they were also men who rose to their place in history by taking very different paths. 

Washington was seemingly blessed with success at every turn, while Lincoln failed much more often than he succeeded during his lifetime. Even during Washington’s early years where he was often considered to be brash and impetuous, he was nonetheless considered a bright light and incredibly successful for his age. He was always seeking out positions of leadership and responsibility, and was rarely met with any set-backs to speak of. By contrast, for the majority of Lincoln’s life he was largely regarded as a person of little consequence, if he was regarded at all. While he sought positions of leadership and responsibility, he was met with continuous challenges and defeats. Interestingly enough, many of Lincoln’s perceived successes ended in failure. 

Simply put, Abraham Lincoln is one of the most inspirational case studies in examining the leadership traits of persistence, commitment, determination, passion, conviction, and overcoming failure. There is perhaps no greater lesson the world can offer in overcoming failures and understanding the value of persistence than what can be learned from looking at the life of Abraham Lincoln. Born into poverty, Mr. Lincoln was faced with defeat throughout most of his life. He twice failed in business, lost eight different elections and suffered a nervous breakdown. The following bullet points summarize Lincoln’s path to the White House:

  • 1816: Lincoln’s family lost their home and he had to quit school to support them.
  • 1818: His mother passed away.
  • 1831: He failed in business.
  • 1832: He ran for state legislature and lost, also lost his job, and while he wanted to go to law school he couldn’t get in.
  • 1833: He borrowed money to start a new business and was bankrupt by the end of the year. He spent the next 17 years paying off the debt.
  • 1834: He ran for state legislature again and this time he won.
  • 1835: He was engaged to be married and his fiance died.
  • 1836: Mr. Lincoln suffered a total nervous breakdown and spent six months in bed recovering.
  • 1838: He sought to become speaker of the state legislature and was again defeated.
  • 1840: He sought to become elector and was defeated.
  • 1843: Lincoln ran for Congress and lost.
  • 1846: He ran for Congress again and this time he won.
  • 1848: Lincoln lost his re-election race for Congress.
  • 1849: He sought the position of land officer in his home state and was turned down.
  • 1854: Lincoln ran for the US Senate and lost.
  • 1856: He sought the Vice-Presidential nomination and lost receiving less than 100 votes.
  • 1858: He ran yet again for the US Senate and lost.
  • 1860: Abraham Lincoln was elected as the sixteenth President of the United States.

It was in fact Abraham Lincoln who later said: “My great concern is not whether you have failed, but whether you are content with your failure.” Lincoln was obviously someone who was more focused on pursuing his goals than being guided by a fear of public opinion or of failure. Thomas Edison failed more than 1000 times before he successfully invented the light bulb and he was later quoted as saying: “Many of life’s failures are men who did not realize how close they were to success when they gave up.” 

The bottom line is that great leaders are not easily deterred. While most professionals don’t naturally associate the words “success” and “failure” as having anything to do with one another, under the right circumstances failure is absolutely the best experiential learning tool available. In fact, I would go so far as to say failure is an essential element of becoming successful. You can easily validate this premise by placing any individual under the scrutiny of the following litmus test…if you show me a professional who has never experienced failure I’ll say that person is likely an underachiever who either hasn’t tried hard enough or is very new to the world of business. Great leaders don’t fear failure, rather they fear the loss of what could have been achieved had they not had the courage to press on.

A President’s Day Look at Leadership

By Mike Myatt, Chief Strategy Officer, N2growth

President's DaySince we’re headed into President’s Day weekend and the commencement of Lincoln’s Bicentennial celebration, I thought I’d take this opportunity to author a two part series in which I’ll examine the leadership characteristics of the two Presidents for which the holiday is celebrated; George Washington, and Abraham Lincoln. In today’s post I begin by taking a brief look at the life of George Washington in an attempt to quickly offer some leadership tips that you can apply to your role as a C-level executive….

First a bit of history…in the minds of many, President’s Day is the holiday in which we celebrate all men who have held the office of the President of the United States. However, it was originally established in remembrance of George Washington’s birthday, and according to the Office of Personnel Management the holiday is still officially referred to as Washington’s Birthday. It wasn’t until 1865, one year after Abraham Lincoln’s assassination, that Lincoln’s Birthday was first officially celebrated. As it turns out, celebrating two Presidential birthdays in one month (Lincoln’s on the 12th and Washington’s on the 22nd) was just too much for law makers to endure. So in 1968 legislation was enacted to celebrate President’s Day on the third Monday in February to both simplify the calendar and create a consistent 3 day weekend for federal workers. Anyway, enough of the history and on to the leadership lesson…

Born in Westmoreland County, Va., on Feb. 22, 1732, George Washington was a surveyor by trade, joined the Virginia militia just prior to the French and Indian War, served as a delegate to the First and Second Continental Congress, was commander in chief of the Continental Army during the American Revolution, and was the first President of the United States (1789-97). His rise to success was nothing short of meteoric, rising to the rank of Lt. Colonel by the age of 22, and his transformation from an arrogant and often brash young man to a polished and savvy leader was also quite remarkable.

Even though Washington was both personally and professionally polished becoming well known for his economic, military, business, and social success, it was his character that he was most admired for. The arrogance of his youth had been transformed into a true and unwavering confidence in his own judgment, underpinned with an implacable foundation of principled moral conviction. George Washington was a man of integrity beyond reproach which made him a man worthy of respect and a force to be reckoned with. It is important to realize that he did not just espouse a vision, but that he was willing to put his life at risk to defend his vision, and live his life with the singular pursuit of seeing his vision become a reality.

Washington’s life gives testimony to the fact that great leaders can accomplish great things. It is important to remember that Washington was not merely a man among midgets who garnered his success because of the ineptness of his contemporaries, rather he was someone who rose to the top of a peer group comprised of John Adams, Thomas Jefferson, Benjamin Franklin, James Madison, and John Hancock among others.

The lessons here are simple…be a person of action, stay passionately convicted to your vision, make sure that your motivations and decisions are based upon a deeply rooted sense of character and integrity in both your personal and professional conduct, and be willing to take great risks in order to insure that your vision becomes a reality. While this brief post cannot even come close to doing justice to incredible life of George Washington, and the leadership qualities he possessed, I do hope it provides some inspiration and some guidance as you move foreword on your own leadership journey.

Tomorrow we’ll take a brief look at the life of Abraham Lincoln in the conclusion of this two part series…

Blogging Hits a Crossroads

By Mike Myatt, Chief Strategy Officer, N2growth

Blogging at a CrossroadsI read a perceptive post today entitled: “Blogging Hits a Crossroads” by Jason Lee Miller. The premise of his piece is that the landscape of the Blogosphere is changing radically, and that as such many “A-Listers” have either quit, or are contemplating giving-up their blogging endeavors. Miller’s post is quick to point out that blogging is competitive, requires a great investment of time, subjects the blogger to the ire of those who have dissenting opinions, and that it is becoming increasingly difficult to make money blogging. I concur with all of the aforementioned assertions, but must admit that I am far from quitting…In today’s post I’ll add a few thoughts to those shared by Mr. Miller.

What makes the Blogosphere interesting is also precisely what makes it so annoying at times…the low barrier to entry. The simple fact is that anyone can blog, which explains why many estimates place the number of blogs on the Internet at well over 150 million. The noise in this space is simply deafening…As Miller so aptly states in his post, “The good stuff lasts, the chaff separates from the wheat, the cream rises to the top, all that.” The dropping-off of a few “A-Listers” is of little consequence to me, or frankly to anyone else. The litmus test for blogging is, and always will be, does your blog add value, does it make a difference, and do people benefit from the opinions espoused?

Bloggers will continue to come and go…while some will be missed, many will not. Nevertheless the bottom line is this…blogs are not a tool for those looking to get rich quickly (that train left the station a long time ago), nor will they take an author of the inane and measurably change their world for the better. What blogs do offer is a viable and robust platform to be leveraged by those that have a message worthy of communicating. Blogs can clearly be accretive, and will continue to add brand equity to those companies and individuals who grasp the value of social media.

For those of you who are interested in more thoughts on this topic I would suggest reading two previous posts: To Blog or Not to Blog, and Why N2growth Blogs.

A Real Hero…

By Mike Myatt, Chief Strategy Officer, N2growth 

A Real HeroA Real Hero…they do in fact exist. But just in case you’ve forgotten what a real hero looks like, or if your senses have been dulled by the media fascination with celebrity worship, then I would suggest you to take a close look at Chesley B. “Sully” Sullenberger III. The captain of US Airways flight 1549 is without a doubt a true hero. His calm demeanor, excellent decisioning skills, and command of his trade saved 155 lives when he successfully ditched his plane in the Hudson River. However it is perhaps his humble nature, unassuming personality, and his modesty that have endeared him most to the American public. In fact, the more we find out about him the more we like him. It is not the fact that the media jumped on this story that surprises me, but it’s the fact that he seems to be getting more attention by the day that’s unusual. “Real heroes” are wonderful people worthy of celebration, and in my opinion, Sully deserves every good thing that comes his way…

I can tell you that I for one have found it truly refreshing to have the media focus on a real hero as opposed to the oh so boring social icons (athletes, recording artists, movie stars, politicians, the super-wealthy, and other sudo-celebrities) who are all too often forced upon us while being portrayed as heroes when they are clearly not. Will “Sully” finally be the individual that brings our nation back to its senses with regard to what really constitutes an American Hero? One can only hope…

My life would not be adversely affected if I never heard of, or saw anything ever again from the likes of Madonna, Sean Penn, Charlie Sheen, Rosie O’Donnell, etc. If the media wants to help restore our nation as opposed to contribute to its decline, my suggestion would be that they spend more time on the true American Heroes…soldiers, firefighters, law enforcement officers, principled educators, medical practitioners, responsible parents, student achievers, volunteers, good Samaritans, and the every day hard working Americans.

Coach vs. First Class

By Mike Myatt, Chief Strategy Officer, N2growth

nogh said...
Jason Calacanis shared this image and I couldn’t help but repost it. While there is much that can be said about the difference between Coach and First Class, it’s hard to come-up with anything that demonstrates the difference better than this…nough said. 

Super Bowl Ads

By Mike Myatt, Chief Strategy Officer, N2growth

Super Bowl AdsWell, another Super Bowl has come and gone…While the ad rates continue to climb each year, from my perspective, the ads themselves seem to be declining in their appeal and their effectiveness. My belief is that with rare exception Super Bowl advertising makes no business sense whatsoever. My guess is that the Hyundai ads will appeal to those in the market to buy a car, and the timing of the Cash4Gold and H&R Block ads will also resonate will many. But for the majority of the companies who purchased a spot this year it will simply be a waste of good money, as they cannot economically justify the expenditure by any sane method of analysis. In reality Super Bowl ads are far from genius, and in fact more closely resemble irresponsible and frivolous action by advertisers. In today’s post I’ll point out the flawed business logic in purchasing Super Bowl advertising, and even provide a few suggestions to advertisers for better alternatives…

Okay, let’s do some basic math…A 30-second Super Bowl spot sold for more than $3 million dollars (that’s more than $100,000 per second) this year, and that’s just for the air time. If you factor in the costs for talent and production it is likely that the total costs for one 30 second commercial could cost between $4 and $5 million dollars. All of this is an attempt to catch the largest single group of captive consumers available on TV. Last year’s Super Bowl had more than 97 million viewers, and this Super Bowl is estimated to eclipse 88 million viewers. No doubt this is an interesting opportunity, but is this smart business? I think not, but read on and draw your own conclusions…

This years Super Bowl advertisers included Anheuser-Busch, Coca-Cola, Doritos, Hyundai, Monster.com, GE, ETrade, GoDaddy.com, Pepsi, Audi, Cash4Gold, Sprint and H&R Block among others. I don’t know about you, but other than finding Alec Baldwin humorous, and wondering why a Korean auto manufacturer understands the needs of Americans better than US auto makers, none of the ads I viewed while watching the Super Bowl will positively influence my personal buying decisions. I want you to take a few minutes and ponder the following questions:

1. How would you feel if you were a shareholder of any of the companies that advertised on the Super Bowl? Would you feel that this was a responsible use of funds?

2. How many bottles of Coke, cans of nuts, bags of Doritos, domain names etc. have to be purchased to even come close to breaking even on these type of ad spends?

3. Will you spend your money any differently as a result of these ads? The only thing I’m sure of is that I won’t purchase certain products from some of the advertisers who aired commercials that I thought were ridiculous or offensive. Even if the creative was good, I still find it an abuse of shareholder trust to spend corporate funds this foolishly.

For those who would say that Super Bowl ads are not about increasing short-term sales, but are intended to increase brand awareness and mind share I would dispute this thinking as well. There are any number of other venues and mediums that would generate better buzz than a Super Bowl ad…Even if you wanted to buy TV spots, just think of all the targeted cable TV spots that could be purchased with that type of budget…In many markets you can buy a 30 second prime-time cable TV spot for under $200 dollars which means you could run more than 35 ads per day for 365 straight days for the cost of a single Super Bowl ad.  

If these corporations really want to generate some positive brand play why not distribute these funds to shareholders or donate the money spent on Super Bowl ads to charity? The reality is that in most cases Super Bowl ads are pure ego buys and have nothing to do with rational business investments. If you are a shareholder of any of this year’s frivolous advertisers I would encourage you to voice your opinions and hold them accountable for their poor judgment.  For the two or three advertisers who had the right message to the right market for the right reasons…job well done.