“The Learning CEO” is a phrase I coined a number of years back to help my clients understand the high correlation between knowledge and success. As a CEO Coach there is little doubt that I’m passionate about CEO development, and there is one simple reason why…it works. Great CEOs are like a sponge when it comes to the acquisition of knowledge, the development of new skill sets, and the constant refinement of existing competencies. In today’s post I’ll examine the benefits of being a Learning CEO.

I get along very well with successful CEOs largely because our relationships are often focused on both the acquisition and application of knowledge. In fact many of the CEOs I advise are used to my regular queries about their most recent learning experiences and how they’re applying that knowledge. I believe Michael Angelo said it best when he uttered the words “Ancora Imparo” which when translated from the Italian means “I am still learning.” By the way, his first public use of this phrase was noted to have been on his 87th Birthday.

Let me be clear that when I speak of “The Learning CEO” I’m not promoting intellectual elitism, rather I’m addressing those who have a true and sincere passion for learning…there is a difference. Intellectual eletists are by-in-large braggarts that acquire knowledge (or feign possession thereof) for public acclaim and their own self-promotion. By contrast, Learning CEOs spend much more time acquiring knowledge than engaging in public displays of their “superior” intellect (see a previous post on intellect).

In concurrence with Michael Angelo’s quote above, I have never been a believer in the adage “you can’t teach an old dog new tricks.”  In fact quite to the contrary, I believe anyone (yes I mean anyone) can change/learn/grow/develop given one prerequisite; the desire to do so. When it comes to topic of learning, it has been my experience that there are generally three types of people: those that constantly seek to acquire knowledge, those that think they already know it all, and those that just don’t care. What distinguishes members of one group from another rarely has anything to do with intellect, wealth, social pedigree, career standing, or other like pursuits…It has everything to do with desire.

Examine for a moment the following scenario that is regrettably all too common…How many times have you observed an older and more experienced person fail to solve a problem that a younger and less experienced person solved with seemingly little effort? While experience is a valuable commodity, in-and-of-itself and to the exclusion of other traits and characteristics, the sole reliance on experience can be a barrier to professional growth and maturity. Don’t rely on experience as a substitute for continued development, but aggressively seek to augment your experience with new learning as an enhancement and accelerant to your experience.

Whether young or old, experienced or inexperienced, the best way to approach personal and professional development is to always stay in the learning zone. When you think you have all the answers is when you are headed straight for the proverbial brick wall. Always seek out people who know more than you do, and actively pursue learning from them. That being said, most things in life happen as a result of choices we make…It is clearly within your grasp to make the choice to gain an understanding of what it is that you don’t know and determine how you want to deal with that situation. It’s your choice choose wisely.

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Kudos to the top 7 C-level executives at Goldman Sachs for agreeing to forego their bonuses this year…Goldman Sachs CEO Lloyd Blankfein, Presidents and co-Chief Operating Officers Jon Winkelried and Gary Cohn, CFO David Viniar, and three vice chairmen: J Michael Evans, Michael Sherwood and John Weinberg all voluntarily refused their annual bonuses. Only 11 days ago I authored a post (”It’s Bonus Time Baby…“) severely admonishing Goldman Sachs for planning to dole out nearly $7 Billion dollars in bonuses while accepting $10 Billion dollars of Bailout funding. As critical as I can be at times when I sense something is afoul, I am also quick to tip my hat to those who do the right thing…Congratulations gentlemen.

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So, what’s your story? If your personal or corporate brand doesn’t tell a story, then your brand is lacking the very essence of what makes a strong brand to begin with…The story. There is no denying that everybody loves a good story, and there are numerous reasons why. Think about the novels you’ve read, movies you’ve watched, speeches you’ve listened to, ads that have hooked your interest, or virtually any other message delivered by any other medium and it’s the story that either seals the deal, or leaves you feeling cheated. In today’s post I’ll discuss the value in creating a strong brand story…

A story is the root level driver behind successfully communicating any message. Well crafted stories whether delivered visually, textually, verbally, etc. are the instruments that tug at your emotions, speak to your logic, support your beliefs, and reinforce your positions. Great stories engage, inform, persuade, entertain, mobilize, convict, flatter, and inspire. So my question is this, why wouldn’t you want your brand to tell a great story? Think about any strong brand and they tell a great story.

The inspiration for today’s post was an outcome of an on-site meeting I had today with a new client in which we spent a great deal of time dissecting their brand. In a collaborative exercise designed to have my client articulate their value propositions in the form of a story, there was no doubt that they came away clearly understanding the power of developing an effective brand story which can be leveraged across markets and mediums. If you’ve ever been captivated by a skilled orator whose ability eloquently and articulately paint brilliant word pictures, you understand what I’m trying to communicate. 

When all is said and done, the brand story needs to engender trust while implanting your brand promise in the minds of your various constituencies in a manner that is memorable, authentic, relevant, and actionable. While branding is a complex subject to be sure, it all begins with the story…tell it well and succeed, tell it poorly and fail. This is a simple, yet powerful message that I encourage you to take to heart.   

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Are you a “hero leader?” Do you like to swoop-in and save the day? Do you see yourself as the white knight who can solve any problem or challenge? If you do, you have what I refer to as ”hero leader syndrome.” Any leader’s belief that he or she can do everything better than anyone else (even if it’s true) is a root cause of inhibiting workforce productivity. Creating unnecessary dependencies between leaders and team members, while often unintentional and/or well-intended, is nonetheless a far too common practice for the “hero leader.” In today’s post we’ll take a look at the myth of the hero leader…

Is your workforce comprised of independent, highly motivated, and effective individuals, or is it built upon the limitations of employees completely dependent on you as their leader? Here’s a news flash…great leaders don’t create a state of dependency. In fact, they won’t allow dependencies to exist…rather they mandate independent thinking and decisioning.

If you’re overworked, tired, and feeling stretched so far that your rubber-band is about to snap, it is likely because your doing the work of your subordinates, rather than holding them accountable to perform their own duties. Your role as a leader is to develop talent to the highest levels of independent and autonomous thinking and execution. Great leaders don’t subscribe to a “Do-It-For-You” methodology of talent management, rather they lead, mentor, coach, and develop team members by getting them to buy-into a “Do-It-Yourself” work ethic.

Great leaders view each interaction, question, or even conflict as a coaching opportunity. Don’t answer questions or solve problems just because you can, rather teach your employees how to do it for themselves. If you make it a habit of solving problems for people, you simply teach them to come to you for solutions at the first sign of a challenge. Great leaders don’t allow themselves to be placed in this position. They don’t allow employees to leverage them, they leverage the employee, and in doing so, it’s a win for the executive, the employee and the enterprise as a whole.

The trick is to meet questions, challenges, conflicts etc., with intelligent questions of your own. You need to meet question with questions. Questions allow you to direct the conversation and not be sucked into it. By redirecting the flow of a conversation, you elicit critical information and show that you care about what the other person is thinking. The following 5 tips will allow you to ask effective questions:

1. Be sincere in your questioning. Forget about what’s in it for you, and think about how you can help the person you’re communicating with. Do not manipulate or control the other person, but make an honest effort to find out how you can help them achieve their objectives by coaching them and not just serving up a solution on a silver platter.
2. Learn to ask effective questions. Don’t ask questions that can be answered with a simple yes or no. Use questions that begin with who, what, where, when, why or how in an attempt to enable dialoging. If the other person is doing all the sharing of information, you will find yourself in the enviable position of being able to assess, evaluate, and synthesize the information being shared. While the other party is talking…you are learning. Once you understand what the issues are you’re now in a better position to coach and teach. 
3. Use questions to stimulate and challenge. Ask questions that are insightful such that they require thought to be answered. Help people understand how bright they are and where their talents and gifts are by setting a high chinning bar. When you engage people with stimulating and probing conversation they learn and grow.
4. Get personal in your questioning. Use questions that encourage the other person to reveal their thoughts and emotions. These questions will help you truly get to know the other party and to build common ground and rapport. If you can move beyond the analytical to the personal, the other party is much more likely to reveal their bias or agenda.
5. Demonstrate your competency without giving the answer away. Ask questions that reveal your subject matter expertise, and that demonstrate your ability to provide meaningful solutions without actually doing so. These types of questions should engender credibility, and therefore provide the other party with confidence that you can handle the situation in a manner that is in alignment with their best interests. Force people to move beyond surface level discussions by taking them past their comfort zones with intelligent questioning. Never settle for the general, ambiguous, vague, or standard answer. Continue probing until you are satisfied with the answer.

If you want to become a great leader, master the art of teaching and coaching through the application of skillful questioning. Work on developing a list of well thought out questions that are situational, industry specific, product specific, market specific, positionally specific, etc., and use them to put you in a position to help others, not by feeding them, but by teaching them how to fish…

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Is Starbucks and economic bellwether, have they just been mismanaged, or are consumers simply becoming more savvy? Why do I ask, or perhaps more to the point, why do I care? Whenever an industry giant stumbles there are lessons to be learned. If you couple Starbucks recent earnings announcements, with massive store closures and other corporate re-engineering initiatives, there can be little doubt that Starbucks is in trouble. Put candidly, Starbucks has gone from an industry darling to just another turnaround. So, in today’s post I’ll share some insights that all CEOs can apply to their businesses in hopes of avoiding a Starbucks like event…

Let’s start by looking at Starbucks recent earnings announcement:

• Quarterly Earnings: Starbucks Q4 earnings fell 97%, to $5 million, from $159 million in the year-ago period. To be fair, this figure included a $105 million charge for restructuring, and other costs associated with executing Starbucks re-engineering plan.
• Annual Earnings: Full-year earnings also fell, 53%, to $316 million, from $673 million last year.
• Same-Store Sales: U.S. same-store sales also cratered, down 8% from Q4 2007. The company cited decreased store traffic, as well as lower average customer check prices, thanks in part to a reduction in merchandise and in-store music sales.

In all fairness, I believe there’s an element of truth to be found in each of the scenarios posed in the opening question of today’s post. Let’s examine each one:

• Is Starbucks an economic bellwether: Absolutely…Times are tough, consumer confidence is down, and retail spending is off. While some of us don’t see coffee and pastries as discretionary spending, the majority of Americans still do. Starbucks store traffic is down, their average ticket price is down, and many of those still frequenting Starbucks are literally pinching their pennies. Coffees are now often being purchased on credit or by rounding up change, something that wasn’t as prevalent even a few months ago…
• Has Starbucks been mismanaged: Yes and no…on the positive side of the equation Starbucks has been an innovator on numerous fronts, and as a result built a category dominant brand. On the negative side, Starbucks grew too fast, spent too loosely, and let quality and customer service take a back seat to expansion hurdles. The reality is that even with all of Starbucks brand power, and the genius of Howard Schultz, their overall business model had intrinsic flaws, and management took too long to recognize this.
• Are consumers simply becoming more savvy: Look, you don’t have to be a rocket scientist to figure out that you can buy a month’s worth of coffee at the grocery store for just a bit more than what you’d spend on one drink at Starbucks. When something is new and hip, or when the economy is flourishing, consumers will pay a premium. When a trend (see a previous post on trends) begins to run its course, and/or the economy wanes, pricing premiums evaporate in a New York second. Put simply, not too many consumers are interested in paying a 600% mark-up on their coffee even though the lines are shorter these days… 

Bottom line…Starbucks fell asleep at the wheel and took their good fortune for granted. If you can believe it, Starbucks ran their first TV ad this year…They should have been plowing money into advertising to expand their dominant brand equity in good times creating a competitive gap that would have been tough to overcome. Instead, they waited to launch their first TV commercial as a Hail-Mary desperation pass when the game had already been lost. Will Starbucks live to play another day? Sure they will, but it will be a long, tough climb back-up to the top of the mountain…

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In celebrating Veteran’s Day each year it is virtually impossible not to think of our founding fathers and the sacrifices they made when they fought to establish our country’s independence. Those thoughts of respect and admiration in turn always lead me to think about of our troops currently fighting to protect our way of life and preserve our freedom. The more you begin to ponder the heroism of our military (past and present) the more you begin to consider the traits possessed by our nation’s warriors. I believe the same characteristics that are present in the heart of a warrior are also present in the most successful executives and entrepreneurs.

Regardless of whether or not they have served in the military, today’s business leaders would be well served to possess the characteristics of a warrior in their pursuit to achieve sustainable growth and long-term success. Commitment, attention to detail, discipline, service above self, honor, integrity, perseverance, the ability to both lead and follow, to execute with precision, and the ability to adapt, improvise, and overcome are all traits that will serve you well in the boardroom.

There are many so-called management gurus in today’s politically correct world who would take great exception to what I’m putting forth in today’s post. They would tell you that the classic strong leadership traits that define our nation’s best military leaders are outdated, and that they don’t display a proper amount of empathy and compassion. I’m here to tell you that strength and compassion are not mutually exclusive terms…rather the strongest leaders are in fact the most compassionate leaders. When I was in the service my troops slept before I did, they ate before I did, and they were cared for before I was. A leader’s greatest responsibility is not for his/her own glory, but it is for the well being of those whose care has been entrusted to said leader.

The characteristics mentioned above will allow you to inspire and lead with a focus and commitment not present in DNA of those leaders who don’t have the heart, mind, and soul of a warrior. It is the ability to stay mentally focused on achieving the mission at hand, regardless of circumstances, that will help you take your organization to that next level. 

A warrior’s heart has served my family well in both business and life in general. It is the mental agility, a fierce determination, and a never say die attitude that has carried us through the best of times and the worst of times. My father was a Marine before he was an attorney, I served in the Army before I entered the business world and my son is currently an officer in the US Air Force. While not all great business leaders have served in the military, those of you who possess the heart of a warrior understand the advantages you derive from your military bearing and state of mind. I’ve rarely come across students of military history that don’t have a great command of both strategic thinking and tactical implementation.

I strongly recommend to all business leaders that they learn to develop a command presence, and lead from a committed and passionate position of strength. The word “passion” comes from a Latin root which means quite literally to suffer. If you’re passionate about something it means you care so much that it hurts…Refusing to surrender, and having the ability to make the tough decision or the needed sacrifice, will allow your company to continue taking ground and will keep the competitive advantage on the side of your enterprise.

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Managing Outlook is nothing short of a pain in the *** if you don’t pay attention to it. In coaching top CEOs and entrepreneurs I find that one thing they all have in common is an over abundance of e-mail. When e-mail was originally labeled as the “Killer App” it was because e-mail was thought to be the ultimate productivity enhancement tool. Regrettably, I believe e-mail has become the “Killer App” for most executives because it actually kills their productivity. The truth of the matter is that e-mail in-and-of-itself is not the problem, rather it is how you utilize it that determines whether or not e-mail is an asset or a liability. In today’s post I’ll share the same tips and techniques that I use myself to handle the constant deluge of e-mail…

By the time you have reached the C-suite level it is very likely that you receive between 100 and 300 e-mails per day (some of us receive multiples of that number). Even at the low end of the aforementioned range, if you assume it takes 2 minutes per e-mail for response, that means you can expect to spend a minimum of 3 plus hours each day dealing with e-mail (assuming you choose to deal with it). The worst part is that without a methodology for processing e-mail, it is likely that the time you spend on e-mail will be spent in a reactive, unfocused, and undisciplined manner which will only further dilute your efforts. If you implement the five techniques mentioned below I guarantee you’ll be able to recover some much needed time for your day while boosting your overall productivity:

1. Learning to use Outlook to its full potential: I find that most executives only use Outlook to about 10% of its potential. By learning to not only use native Outlook features, but also to use third party add-ons, Outlook’s functionality can be massively improved. My favorite add-on is PlanPlus for Outlook by Franklin Covey. PlanPlus not only allows you to see all Outlook features (folders, multiple calendar views, tasks, and your inbasket) in one window without having to toggle back and forth between applications, but it also adds key features such as project management, goal setting, and a great note taking tool. It only takes about 30 minutes to master and will take your productivity to a new level.
2. The Basics: Whether or not you choose to install PlanPlus, the first step to take with Outlook is to whitelist anyone who you wish to receive e-mail from. Go to your Outlook toolbar and click on Actions > Junk e-mail > add sender to safe senders list. You can either add the sender and/or their domain to your safe senders list making sure that they don’t get filtered out. Next create a folder structure for your messages. You should set up folders and sub-folders that mirror how you do business by creating separate folders for events, categories, by names of key individuals, departments, functions, clients, etc. Once you have set-up your folders create rules which will send messages directly into the folders by-passing your inbox altogether. Go to Tools > Rules and Alerts > E-mail Rules and route as many e-mails as possible to destination folders striving to keep your inbox volume minimized. You can now check these folders at times convenient to you or to staff designated to monitor said folders. You can also write specialized macros to program special events within Outlook.
3. Spam and Junkmail: Set your junkmail folder to auto-delete junkmail on arrival. I never waste anytime checking junkmail because there is no junkmail to be checked. Sure from time-to-time a piece of important e-mail will find its way to my junk email folder and will be deleted, but if it is important enough, the sender will figure out how to get in touch with me. There is no full proof system and I simply choose to play the odds which are substantially in my favor if I’ve done a good job of whitelisting. Additionally, you may choose to use a third party spam filter which you can use to screen incoming mail by designated keywords. This is worth investing in as for a nominal investment you can easily get rid of the most frivolous forms of spam.
4. Leverage Staff: I only receive e-mail directly from a few designated individuals, or after the e-mail has bubbled-up through staff who has screened or filtered it according to instructions that I’ve provided. The reality is that most people’s needs can be met by staff in my organization which prevents me from having to respond to correspondence that shouldn’t have been addressed by me in the first place. You’ll find that only about 10% of the e-mail you receive is “important” but most executives treat e-mail as if it is all “urgent”. By limiting the amount of e-mail that you actually see to mission critical e-mails you insure that you’re working of the right items while being brutally efficient with your time.
5. Rules to Follow:  1.) Educate your staff and external contacts how you wish to be communicated with. Make it a point of telling them when and why to e-mail you and not to e-mail you. Set reasonable expectations by letting them know how long it will take you to respond. Severely chastise anyone who sends you a chain e-mail regardless of the topic. 2.) Only respond to e-mail twice a day; once in the morning, and once in the evening. 3.) Only handle e-mail one time…once you open an e-mail, read it, understand it, and take action on it by replying to it immediately, deleting it, archiving it, or forwarding it to a staff member for response. Resist the temptation to defer a response to a later time unless absolutely necessary. 4.) Turn-off your auto-notification settings to avoid the Pavlovian response instilled by audio or visual prompts notifying you of a new message.

You can either choose to manage your e-mail or have it manage you. I hope the tips mentioned above will add some time back to your day, and help you be more productive.

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When passion impedes purpose…an interesting title, but is it really possible for passion to impede purpose? Isn’t passion a good thing? Sure, in most cases passion is an asset that will carry you though tough times, sharpen your perspective, and help you succeed in the face of overwhelming odds. That being said, I’ve also witnessed passion run-a-muck and cause untold harm.  It has been my experience that passion only becomes a barrier to success when it is misunderstood and/or misapplied. So, in today’s post I’ll examine the downside of unbridled passion, so that passion can remain an asset, and not end-up becoming a liability for you or your company…. 

The word “passion” comes from the Latin root which quite literally means “to suffer.” Therefore it should come as no surprise that those who are passionate in their pursuits are often willing to make personal and professional sacrifices in order to reach their objectives that the unimpassioned simply won’t make…In my book that’s called an advantage. As a top CEO coach, I can tell you that I’ve rarely come across a successful CEO who hasn’t been a truly passionate individual.  

Passion is an emotion of exuberance that can almost single-handedly fuel greatness. History is littered with accounts of marginally talented individuals who have risen to greatness based upon little more than being passionate about the pursuit of their objective. Passion creates a “refuse to lose” mentality which can enable the average person to move outside comfort zones, take-on greater risk, go the extra mile, and achieve phenomenal results. 

Where things begin to get a little tricky is that passion without perspective and/or reason can actually serve to distort one’s perception of reality. These distorted perceptions can quickly become a very slippery slope that will blur the lines between fact and fiction…very dangerous territory for CEOs. Have you ever known someone who wanted something to be true so badly that they started to adopt positions and manufacture circumstances to support their own false reality? Just because you can convince yourself that your position is correct, doesn’t necessarily mean that it is…

Just as there exists a very fine line between brilliance and insanity, there also exists a fine line between passion and many negative traits such as narrow-mindedness, narcissism, fanaticism, delusion, and even paranoia. For instance, there is a big difference in an entrepreneur who is passionate about his business, and one that is emotionally over-invested in his business.

Healthy passion for one’s business actually brings focus and clarity of thought, which serve to accelerate growth and create sustainable success. However being emotionally over-invested in one’s business can lead to irrational decisioning, prideful or ego-driven actions, the use of flawed business logic, and poor execution. These are the regrettable and completely avoidable precursers to unnecessary loss and/or failure.

It is not at all uncommon for entrepreneurs and executives to be too close to the forest to see the trees. Passionate professionals thinking clearly will seek independent outside counsel and advice to continually gut-check and refine their thinking. Emotionally over-invested professionals will either avoid counsel or surround themselves with the proverbial yes-men. Another trait of healthy passionate thinking is to recruit tier-one talent at the executive leadership and senior management levels in order to stimulate innovation and thought growth. Effective leadership teams have a balance of left-brain and right-brain thinkers from a variety of backgrounds so that they can draw from the broadest possible array of experiences when formulating positions and options. Emotionally over-invested professionals tend to surround themselves with very small teams of like minded individuals from similar backgrounds who tend to reinforce one another’s thinking instead of challenging it. 

I applaud those of you reading this post who constitute the passionate minority…I would however also counsel you to take pause and evaluate your current positioning and thinking. Are you operating in a vacuum? Do you seek advice and counsel from those who will tell you the truth, or from those who will just tell you what you want to hear? Is your passion creating clarity, focus and purpose, or is it blinding you from seeing the reality of your current situation?

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It’s bonus time again baby…Let the games begin. Some things never change, but just once it would be nice to see fiscal responsibility take precedence over the blatant greed and disregard displayed by the likes of Goldman Sachs, and Morgan Stanley. Some of the recent bonuses doled out by these financial institutions who were recent recipients of billions of dollars via the bailout are nothing short of ridiculous. Given the current state of the economy, massive layoffs, and the overall financial uncertainty in the lives of many Americans, do these types of actions do anything to restore trust in corporate America? The answer is no…In today’s post I’ll share my thoughts on the bonuses which are being paid out by these two institutions…

I understand that this is the time of year where employee expectations are high, and so is the volume of chatter around the water cooler in anticipation of that great corporate tradition…The Year-End Bonus. But more now than ever, the expectations of the citizenry of this great nation for Wall St. to do the right thing are also high. So given that our economy is in a shambles, and the fact that many Americans are financially suffering more than they have in years, are Morgan Stanley and Goldman Sachs doing the right thing? Here are the numbers, you be the judge…

• Morgan Stanley, which is receiving $10 billion from the US government, is shelling out almost $6.5 billion in bonuses (more than $138,000 per employee) even though its profits fell 41% and its shares have tumbled by 69%.
• Goldman Sachs, which is also getting $10 billion from the bailout plan, is paying out almost $6.9 billion in bonuses. That’s more than $200,000 per employee, and despite a 47% drop in its profit and 53% drop in its share price.

By any reasonable standard the numbers laid-out above reflect everything wrong with corporate America…greed, arrogance, self-indulgence, and a misplaced sense of entitlement. Those of you who have read my thoughts on compensation know that I’m a big believer in performance based pay. However my idea of a well constructed performance based compensation plan, while having tremendous upside when hurdles are eclipsed, also has a substantial downside when attainment goals are not met. Good plans both reward performance during goods times, and they penalize a lack thereof in bad times. The real problem is that these are not just bad times, they are unprecedented bad times, and times when CEOs and Boards of Directors need to depart from the ways of old, and do the right thing.

I can’t even begin to communicate the number of times I’ve heard employees complain about the size of their bonus…It was if they felt entitled to significant rewards solely based upon the fact that they happen to be employed. Is a year-end bonus a right of entitlement or a privilege to be earned? I believe that it is all to often the former and not the latter. The question is during these challenging times should Goldman Sachs and Morgan Stanley take a giant step backward and rethink things? I believe they should.

Imagine working at Goldman Sachs where bonuses in any given year are expected to range from secretaries receiving $10,000, analysts garnering close to $100,000, junior executives seeing as much as $2-4 million and top income producers receiving upwards of $40 million dollars in bonus money…To be fair, this years bonuses are down, but are they down enough? Could you in good faith accept a large bonus being paid out of the bailout and ultimately funded by tax payer dollars? I couldn’t…

At the end of the day, employers should hire well, bonus generously, and provide public thanks where merited. Employees on the other hand should be thankful for the privilege of having gainful employment and be grateful for any bonus compensation received. However this year is different…Wall St should see this and do the right thing. All I can hope for is that the employees of Morgan Stanley and Goldman Sachs will perhaps consider giving some of their bonus to those less fortunate this year…    

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Workforce reduction is not an operating strategy…Regrettably, tough economic times are often the precursor for ushering in massive rounds of corporate downsizing, rightsizing, layoffs, corporate restructurings and the like. Reducing headcount in an economic downturn is almost a Pavlovian response for many executives. It’s as if workforce reduction is priority number one in some corporate operating rule book. Here’s a news flash…in the 212 pages of my book “Leadership Matters…The CEO Survival Manual,” nowhere do I espouse an unplanned mass reduction in labor as a brilliant business move.

Let me state this as simply as I can…a business should always be rightsized, or better yet, it should always be optimized. If you find yourself carrying too many employees such that you have to eliminate positions to manage cash flow, then your operating plan was flawed to begin with. Managing revenue risk through workforce reduction is simply a sign of poor executive leadership. If an employee is a valued asset one day, and somehow expendable the next day, then I question how valuable they were to begin with.

If you can layoff large groups of employees then I question your need for them in the first place. Irrational exuberance and optimism on the part of executive leadership is not viable justification to go on a hiring binge. The thought that people are simply expendable resources constitutes flawed business logic. Good hires should be sustainable hires.

The bottom line is that as a CEO you never want to be too far ahead, nor too far behind the hiring curve. So the obvious question is this: how do you know if the size of your workforce is optimized? You rightsize all the time…My CEO clients have their CXOs justify headcount on a regular basis…They keep them on a short leash to avoid shortfalls or bulges in workforce size. I can already hear the naysayers complaining about not having time for this level of employee evaluation. Oddly enough, these are the same executives that find themselves making massive unplanned cuts in head count because they weren’t proactive in their approach to begin with.

There are any number of financial and non-financial metrics that can be assessed to evaluate whether or not the depth and breadth of your workforce is optimized. Each organization is different, and its not even so important which metrics are used, just that some logical standard is put in place. Whether it be something as simple as revenue per employee, or a complex formulaic approach to contribution margin, measurement needs to occur much more frequently than is the case in most corporations today.

The moral of the story is this…Any idiot can grow a workforce or shrink a workforce, but it takes great executive leadership to optimize a workforce.

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