Three CEOs on Praise

Three CEOs shared their perspectives with me on what role praise plays in their leadership style. My guests included Robert Stack, President and CEO of Community Options; Mitch Pisik, President and CEO of Breckwell Products; and Bob Fishman, CEO of Resources for Human Development.

(read the whole article)

My first guest was Robert Stack, CEO of Community Options.  He spent time in high school volunteering to work with the developmentally disabled.  After college he went back to see how his old volunteer group was doing, and found they were out of business.  He decided to bring business savvy — and thus financial stability — to the nonprofit world of finding employment options for developmentally disabled people, and founded his own nonprofit.

People work for these reasons –

  • to feel valued
  • to be recognized
  • to make decisions or have control
  • and lastly to make money

Something that makes a big difference is giving public recognition in front of peers.

Criticism needs to be done privately for a couple of reasons, including the need to keep people feeling a certain level of safety — without a baseline level of safety, you can’t have teamwork.

If you are ever going to violate that assumption — if you ever criticize someone publicly — be sure it’s done calmly and strategically.  Any public criticism that was done impulsively or with anger, makes everyone feel less safe because it makes you seem out of control.

You may not have control of every situation, however as a leader you do need to have control of your own emotions.

How do we teach our subordinates to praise more?

The most effective approach, Robert says, is to model it.  Robert related how he watched one of the investment banks that recently imploded, and saw how their top leader set a tone that was arrogant, rude, demeaning, nasty, and a bad way of leading.  And the opposite also works — you can set a positive example.  It’s one of the most powerful things a CEO can do.

At the risk of using a sports analogy, Robert sees himself as being in the bleachers.  He expects his managers to be on the sidelines cheering and encouraging.  You have to create a culture of constantly thanking people and appreciating them.  Robert sees a CEO as being there to collect information and allocate resources.  He cannot read minds, and so he constantly asks for as much info as he can get.  “I think you’re doing a great job, and I need you to tell me what you need in order to do an even better job.”

Robert likes to provide executive management training as a way to express his confidence and feeling of value for his folks.  It’s an extended way to praise, as well as to invest — providing training shows that you care, that you believe in them, and you want to help them grow.

By investing in folks via training, you show faith and trust in them, and you signal that you value people.

Robert says the worst kind of control freak is a remote control freak.  You cannot control the culture of every different office.  He has to give them autonomy and show confidence.

For December, Robert took several hours to call every direct report, and all of their reports, and even the third tier managers who had been with the firm more than a few years.  Those conversations were extremely influential and rewarding for all concerned.  As a prior guest said, ‘the currency of leadership is attention’ — and the most effective leaders of all time, from Lord Nelson to Abraham Lincoln, had the ability to focus 100% on the person to whom each was speaking — and making the other person feel important and valued.

And praise needs to be heartfelt.

Robert says that time is worth an enormous amount, and that an ounce of praise is worth a pound of criticism. When you really understand that and internalize it, you will have exceptional results.

My second guest was the CEO of Breckwell, Mitch Pisik. Breckwell is headquartered in Arlington, Texas.

Mitch worked as an executive at large global companies including Kraft, Newell-Rubbermaid, and Novartis/Gerber Foods, in addition to being President and CEO a couple of mid/smaller enterprises over the past six years.  The larger international firms are well known for strong management; yet, as with all companies – some managers and leaders are better than others.

Now that Mitch is CEO he’s creating a highly effective corporate culture.  He believes that companies are driven by results, and results flow from people and the motivation of those people.

To get that, you need sincerity — you have to really mean what you say, and you have to be seen to mean it.  Praise is one arrow in your quiver.

Mitch has run a variety of divisions in his career; including those in Accounting, Finance, Operations, Business Development and General Management. He knows that everybody is motivated differently.  You should NOT follow the Golden Rule, of “doing unto others as you would have them do unto you.”  Because you really want to “do unto others as they want to be done unto.”  In other words, don’t treat them as you want to be treated — treat them as they want to be treated.

And you have to be careful — because doing it wrong is worse than doing nothing.

You can motivate with a new title.  You can motivate by giving a raise.  And you can motivate in some very simple ways — things can be simple and still work very well.

A recent example: Mitch received a huge smoked turkey as a gift from a customer this year.  Mitch gave it to his CIO as one of the ways of expressing to the CIO that he had done such a good job this year.  And the CIO really felt appreciated, because Mitch gave it very deliberately and sincerely. It wasn’t the turkey — it was the recognition that made the gift meaningful.

Mitch believes all praise needs to be specific, and also timely.  Lots of employees fear that their boss, and especially the CEO, doesn’t know what they (the employees) do all day.

Every time Mitch visits a location, he asks the local leadership for the details of who recently accomplished something that was very impressive. He then praises and acknowledges those people with specifics of their actions, and how they are making an important difference to the team, the customers, and the company.

I call that “positive gossip” — it signals that folks are paying attention and care. It’s the only gossip you should ever repeat.

Mitch has seen CEOs go to a branch location and only talk to the manager.  That’s a lost opportunity.  You absolutely should go visit every level of the organization and, by paying attention to them, signal that they are important.

I wonder if some leaders resist that because they feel self-conscious, as if they are thinking “I’m just Fred, I just happen to be CEO but I’m not important, and I’d feel silly acting like some Field Marshal inspecting the troops.”  And the reality is if you’re the CEO you have duties that come with that role.  Maybe Fred is no big deal, but the CEO is always a big deal.  You have positional power and you have to direct your attention thoughtfully.

Mitch believes most people will give you the benefit of the doubt, and will assume you deserve your position.  If you act as if you deserve to be the boss, over time you’ll feel it too.  Repeated behavior will alter your attitude and beliefs.

Mitch repeats that you have to give it, and you have to give it right.  Sincerity is vital.

Sometimes, if you offer cash rewards, you can occasionally insult them.  Only rarely offer it in advance like a carrot.

Another great tool is the hand-written note.  And Mitch prefers to mail it to the person’s house.  That way the spouse is much more likely to see it, and it helps raise the morale of the whole family.

Another praise tool is the special parking space for the Employee of the Month.  Mitch abolished all the special close-in parking spots for the top executives, and only kept the Employee of the Month parking spot.

Usually we want to praise in public, however that’s not always the case.  Sometimes people prefer to not get praise in public because they are shy.  Mitch actually had someone quit because he was so shy and so uncomfortable with the way the praise was given by his supervisor.  They did ultimately get him to come back, however the manager doing the praising was tone-deaf about this employee’s strong feelings on the matter.  The moral is, give them praise the way they want to get it.

Remember, praise is about the recipient, not about meeting the emotional needs of the person giving it.

Mitch would give “Company Dollars” redeemable at the company cafeteria, and very publicly hand out $5 worth of these to each member of the departments that hit their weekly and monthly goals.  This helped create a friendly competition between the work groups and departments and pods.  This sort of public praise can serve multiple purposes.

And once again we see that the currency of leadership is attention.

When we have supervisors hand out gift certificates to staff, it’s not really for the direct benefit of the workers so much as it is (I believe) to train the supervisors to look for good things so they can notice and praise them.  If you’re a supervisor and you end your shift with a bunch of coupons still in your pocket, it means you were not out there on the floor looking for things to praise.  Doing this trains you to look for “good stuff.”

Mitch believes that if you manage with sticks and carrots, you need to have a bias towards the carrots.  And the praise has to be extremely specific — he prefers it be numeric and defined in advance.  You never want the praise or rewards to come across as capricious.

So praise, Mitch believes, needs to be specific, timely and sincere.  Incentives need to feel positive to the recipient.

You can also overdo it.  It needs to be administered with an appropriate amount of frequency and enthusiasm.  You have to know as many employees as possible – at all levels of the organization.  If you make a big deal over something that they don’t see as a big deal, it can come across as condescending, or you can set the recipient up for ridicule.  And it can make you look like you don’t know what’s really going on.

So if you’re not sure how things will be received, you might underplay it.

I like to encourage managers to make a list of their direct reports, and for each one, find out what they care about, find out what motivates them, and find out where they want to be in five years.  Use that information to figure out how to deliver praise that will be meaningful to the recipient.

My own praise formula — the color-by-numbers approach I teach to new managers — includes these steps:

  1. The specific sensory inputs that I had around their behavior — I saw or heard or smelled something
  2. The impact the person’s behavior had on the world — the difference they made
  3. The character trait in them that drove their behavior — like caring, honesty, or patience
  4. The positive future — “That’s the kind of blocking that wins a pennant” or “Your patience will help make next week’s staff training a big success.”

Mitch had a financial analyst one time who wanted to go into sales.  Mitch provided him with opportunity to excel at being a financial analyst – and told him that if he did that then the opportunities would come. He did a great job as an analyst, was then given the sales position, and has since continued to flourish.

Mitch also believes in specific numeric challenges.  He ran a national franchisor and manufacturing firm headquartered in NY.  The labor cost as a percent of total cost of sales was around 12%.  One month they got it down to 11.7% (a record); and the plant manager (who had been with the company for 20 years) was very pleased.  Mitch told him that the improvement was good – but that we were really doing our job once we hit 9.5% (a huge improvement). As you can imagine Mitch was met with skepticism.  Mitch then told him: I believe your people can do it – and I will give $1,000 to each of your 12 Supervisors the first month they do it.  “And I believe you can do it,” he said.  Mitch let the manager pitch the supervisors and be the hero.

It took just one month for them to hit 9.5%.  Mitch paid $12,000 in bonuses and it saved the company over $100,000 for the month.

So then, Mitch offered them a second $1,000 if they could keep it below 9.5% for three consecutive months, including the one just completed.  And they did that too, and even got it below 9.0% in the third month.

Another example — Mitch joined his current firm, Breckwell, which had not designed a new stove in five years and had never won a design award in the 30 years it has been in business.  He challenged them to design a new stove and win a design award for it.  Six months later they had a new stove – and it won the design award.  All during the process at each milestone, Mitch made sure to celebrate their progress.

In sum, Mitch says if you can motivate and inspire your people, and they believe you care about them, the financial results will be terrific and will prove well worth the time and effort invested.

My third guest was Bob Fishman, CEO of Resources for Human Development, and author of “The Common Good Corporation.”

Bob started as a family counselor, and saw how dysfunctional relationships in families could produce bad outcomes, and saw also how similar dysfunctions existed in corporations, sometimes to an even greater extent than in families.  Conflicts in families are hard to manage with just two people.  Organizations will sometimes accept extremely destructive behavior — the same destructive behaviors that in a family will lead to psychosis and breakdown.  So it was no surprise to him that he saw breakdown at the organizational level.

What organizing systems were at work that allowed this behavior?

Bob decided to create his own organization to eliminate these bad organizing systems and these dysfunctions.

For example, suppose you had a family where one parent acts as if he knows absolutely what is right.  And imagine a child growing up in that family who has their own vision of what is right.  There will be conflict, and such a parent will not say “this is not my preference” — he will say instead call the child names and tell the child she is crazy.  You have a dysfunctional family.  The child can choose to keep silent, or oppose aloud and be punished.  Sometimes the child will move toward self-abusive behavior.

You see the exact same behavior with managers who pretend that they know exactly what we need to do in order to create a successful future. As though people are in management because they know the future.  No one knows the future.

When managers act as if they have all the answers, you create a psychotic environment, and to survive in that environment you have to join the psychosis.

In Bob’s organization, people are not made managers because of any ability to predict the future — they are made managers because they can engage a group successfully in a process for managing difficulties that come up and moving toward an ever-changing future.

If you are a manager and you think you have to have all the answers, and you’re at GE and a worker tells you “hey that compressor won’t keep that refrigerator cold,” you’ll likely say “let the engineers figure that out, and stop thinking.”  This actually happens all the time.  There are plenty of warnings — they just go unheeded.

Managers ought to be able to accept new data, accept challenging input, and enroll the team — in solving problems as they arise and in responding to an ever-changing future.

The problem with authoritative, top-down leadership is that input from the group is discouraged.  Most corporations do this, Bob believes — it is not a Common Good Corporation.  It rewards behavior that is psychotic.

Bob has 4,000 employees, and he feels he has to remain at all times humble, and open to new data.  So all policies are reviewed by working groups using the guidance that the future is ever changing and nobody knows the future.

Bob has managed to create a holding company that has defied the problems that have long plagued the holding company model.  They will entertain any business idea that is legal.

Bob is also a great skeptic of strategic planning that tries to limit what you will work on or consider, because you’re effectively making unprovable and unknowable predictions about the future. Things like “sticking to our knitting” reflect this thinking that Bob rejects.

How can Bob praise while also remaining humble?

Bob prefers to see people rewarded and recognized not as individuals but as groups.  Everybody gets the same bonus as everyone else in the group.  Each group member knows the group’s members, they know the budget, and they know the goals.  They all have the same benefits.  Managers and workers will have the same benefits when they are in the same group.

People may have higher salaries depending on their role, however performance bonuses are always shared.

There’s a big risk that individualized rewards can reduce team cohesion.  Bob is a great proponent of a recognition and reward system that reinforces, rather than undermines, the effective functioning of the group.

Bob suggests creating an explicit social contract or written group understanding of how the group will handle things like money — create a group process for forging explicit expectations as to how the group will handle new ideas, will handle bonuses, will handle people who come in claiming to know the future.

Praise and recognition are basic to the community. Praise needs to be based on shared values, and you will have a stronger organization if you make those values explicit, and reach those conscious agreements using a shared and explicit process.

Tagged with: , ,