Cracking Cross-Team Collaboration

As Managing Director of Strategic Development for the UK & Ireland at Experian, Steve Thomas has done a lot of work integrating a company that’s acquired 200 businesses over the last 15 years. Yet he was acutely aware that the structure they were brought into was not compatible with long-term success.

“We weren’t able to project growth from the divisions at the desired revenue,” he explains. “The four top opportunities across the group were cross-divisional. It was clear we had to work differently to achieve our ambitions.”

As with many businesses adapting to modern challenges, agile and collaborative working offered solutions, so Steve pooled some of his best talent into a cross-functional team. But in his efforts to change the business, he was struck with how to balance resources.

“The innovation team never suffered from capex or opex availability, but from resources. The people essential to the project were needed in other areas of the business so they didn’t dedicate enough time to it,” he explains.

Steve goes on to relate how the existing operations were also put under strain to perform at the same standards, yet with less means. “With leaders giving up people to the project, they felt they didn’t have the resources to do what they’d committed to, making meeting revenue targets more challenging,” he says.

Redefine the tribe

Gary Browning, NED and former CEO of Penna shares similar experiences. “I inherited a company that in 2006 was very siloed and almost set up to be internally competitive,” he reveals. “It was really difficult to get people to work together across divisions for the benefit of the client. We had people asking why they should allow their top person to go off and work on something that didn’t count towards their own results. It took a couple of years and huge amounts of investment to break down that mindset.”

Gary describes how the company had to “redefine the tribe”, encouraging people not to see themselves as a member of one of its divisions but of the whole company.

“Interestingly, we had more resistance the further up the organisation we went. The younger, more junior staff had a real desire to be part of the one tribe, but as you went up to middle managers, seniors managers and MDs, they wanted to keep ownership of their people, P&L and clients – that’s where we had to do the most work,” he explains.

Progress was made by creating a system that rewarded collaborative behaviour. “Previous management’s view was that to achieve collaboration, you should remove all measurements from a local level. They took out local P&L and had just the one measuring a £100 million business with no local KPIs. That may sound like a solution to breaking down silos, but it caused a huge problem in the business because we completely lost accountability. I put those measurements back in again, but it was into an environment where people already wanted to collaborate,” Gary explains.

“We did that in a number of ways: hard bonuses, soft rewards and spot bonuses. We launched an employee of the month scheme, but the only way you could be nominated was through behaviour, not sales. We promoted and recruited for behaviours and set KPIs for them. But we never totally cracked it – it’s incredibly difficult.”

Win over your divisional leaders

While Roger Edwards, Managing Director of the Municipal Division at Biffa, embraces the collaborative approach his company is taking, he is able to shed light on the impact cross-functional teams have on divisional MDs. Biffa’s lead agile team is working on a project that will transition customers to a digital platform, but it’s also applying a lower-burning collaborative ethos to ‘business as usual’.

“Having just successfully listed on the stock market it’ll be crucial to act for the greater good, because ultimately we’ll be judged on share price and not on divisional success. We need to create the mindset that it’s the company first and division second,” he explains.

However, being a divisional MD himself, Roger sees the challenges at a local level, in particular not knowing how long your team members will be gone if reassigned, how to hit the numbers without them, or whether to hire replacement resources in their absence.

So how can a company support its divisional heads? “If I let someone go for the benefit of the business, I want to know that it really was of benefit,” says Roger. “Communication on the milestones and success of the project are needed so that people can understand and support it.”

Communicate the rationale

Cross-functional teams can be a way to test and promote staff in areas they have the most potential, but you must be clear on what you’re trying to achieve and why.

“Most people fear change and won’t want to go into the unknown without reassurances,” says Charlie Wagstaff, Managing Director at Criticaleye. “Communication is always central to that, but you must also create an environment in which team members really feel they are better off for the work they are doing. That means finding what people are good at and growing them in the area of the business most suitable to them.”

Carol Peckham, Vice President of HR Transformation for the UK & Ireland at DHL Supply Chain, also argues for clarity on the responsibilities of those people. “For me, you have to understand where the critical talent pool is so you can use it on priority projects, rather than always asking colleagues to do things on top of their day job, which tends to be the norm in a lot of organisations,” she says.

“We’ve been looking at cross-divisional talent sponsorship so we’re talking very honestly about what each individual needs to do to develop their own careers across DHL. We’re also recognising people who proactively move colleagues around the organisation.”

It’s a slow process at DHL, where leaders have taken a gentle approach to agile working due to concerns about resistance. “There are more ideas coming through and we are only at the beginning. Ultimately, there is a fine balance that needs to be addressed. This type of approach requires agility and the right behaviours to adapt at speed, but at the same time you need to bring colleagues with you and allow them to see the benefits of working across divisions,” Carol explains.

These insights were shared during Criticaleye’s recent event, How to Bust Organisational Silos.

By Mary-Anne Baldwin, Editor, Corporate

Do you have a story you’d like to share on cross-functional working or agile teams? If so, please email maryanne@criticaleye.com

Don’t miss our next Community Update, which provides practical ways to improve diversity.

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Trust in the Top Team

A business can move so much faster when leaders trust one another and are able to work together towards a common goal. Conversely, when senior executives behave as a disparate collection of individuals, the consequences affect not only the CEO, but the entire business.

As Hera Siu, Managing Director for Greater China at Pearson, says: “You want people to be able to debate and agree to disagree on certain topics, but once they leave the room they [must] present a unified front to the rest of the organisation.

“They should be open to ideas and constantly challenge themselves, so they’re asking: ‘Is there another way to do it?’ If the team is to be effective it will be a living thing and [will] evolve. The loudest member will learn to listen more, while the quiet ones will speak up because trust has been built.”

If senior executives start to prioritise their own agendas and forget what’s best for the business, that all-important alignment can be lost. Matthew Blagg, CEO at Criticaleye, says: “When trust isn’t there, the senior executive team won’t be able to execute their objectives, and that can happen for many reasons, such as when the CEO isn’t capable. Similarly, problems occur when the competencies of one or more individuals are not right, and especially when politics form.”

True north

It’s up to the CEO to articulate the direction of the business and then decide whether the current crop of senior executives have the talent and desire to get there.

Leslie Van de Walle, Criticaleye Board Mentor and Chairman of SIG and Robert Walters, says: “Cracks appear when the business is not performing in-line with the common purpose; some people start doubting the vision or personal agendas creep in.”

This needs to be dealt with swiftly. “If a person has been given a fair chance to realign but they haven’t changed, that person needs to be dismissed or replaced,” adds Leslie. “If you don’t make that decision quickly it taints the rest of the team, or they become disturbed because you’ve not reacted to it.”

Of course, getting the chemistry of the top team right is one of the biggest leadership challenges a CEO will face. Neil Matthewman, has appointed six new senior executives since becoming CEO of Community Integrated Care (CIC) Group four-and-a-half-years ago. He has introduced ‘away days’ and offsite sessions so that executives can discuss strategy and overall performance. Recently, he brought the executives together to run through team development.

“We started to explore behaviours. Getting to know each other is important and we’ve invested more in team-based activities in order to maximise the potential around the table,” he says.

It takes work to ensure that communication doesn’t solely occur in weekly meetings when the focus is on short-term priorities. Gary Kildare, Chief HR Officer at IBM Europe, comments: “There are still many organisations that have appraisal systems and management by objectives; that’s great but it needs to go way beyond that for senior leaders.”

Gary argues that there must be an emotional connection that allows them to feel part of the team: “You may start off a little bit mechanically to ensure that regular discussions and meetings are taking place. Often a bit of forcing needs to happen by the CEO and other senior leaders in the team, but through these sessions you should be building trust, which allows more ideas and information to flow openly.”

It comes back to alignment, clarity of purpose and openness, which enable senior teams to navigate challenges, whether that’s a turnaround, disposal, acquisition or moving into new markets. “There has to be something that pulls them together and not just business as usual,” Gary comments.

If a business is to achieve sustainable success, both the CEO and board have to recognise why it’s important to reassess and appraise the qualities and chemistry of the top team. Matthew at Criticaleye comments: “More conversations need to be had about how long someone will be on the journey for.

“Skills are interchangeable within great teams so if someone leaves − including the CEO − the results are not impacted. It’s a matter of having a succession process.”

By Dawn Murden, Editor, Advisory

What are your thoughts on forming trust in the top team? If you have an opinion that you’d like to share, please email Dawn at: dawn@criticaleye.com

Read more on succession here.

Or, see what Hera Siu from Pearson said about Building a Winning Team in China

https://twitter.com/criticaleyeuk

 

5 Tips for Leading a Global Team

Comm update_9 July (1)

Managing a globally dispersed team is a tricky proposition. First and foremost, you have to ensure people are collaborating, sharing knowledge and working together in order to achieve clearly defined objectives. To do this, you will need to be sensitive to other cultures, have a system which accounts for working across different time zones, and be relentless in how you communicate in order to avoid misunderstandings.

It presents a personal challenge because as a global leader you have to deal with complex operational issues and maintain your energy and enthusiasm despite the long, unsociable hours and endless travelling. Criticaleye spoke to a range of executives to get their views on how to overcome these hurdles and successfully lead a team that is spread around the world:

1) Set Clear Targets 

The team has to understand what they’re aiming for and how they’re supposed to get there. Anne Stevens, Vice President for People and Organisation at mining company Rio Tinto Copper, says: “The most important thing is achieving alignment within the team and with the business. Set specific goals at the individual level but also for the team, with clear roles and accountabilities.”

Ian McCubbin, SVP for North America, Japan & Global Pharma Supply at GlaxoSmithKline, comments: “We use quite a rigorous personal development and objectives planning process… and share that openly with the team. We try and get people to work together making one of the objectives a joint objective, for example with somebody in Japan and somebody in North America, because you want to encourage collaboration.”

2) Be Flexible With Time 

A common mistake is to operate in such a way that virtual meetings and calls are scheduled to suit ‘HQ time’, which often results in employees from ‘other’ offices having to work an unfair number of unsociable hours.

Anne says: “I’m not sure if you can ever make it completely fair in a truly global environment because it is virtually impossible to meet everybody’s needs but it is critical that everybody is flexible and adaptable to make this work well. We alternate calls on a regular basis from southern hemisphere to northern hemisphere so that people do an early or a late stretch, on a rotational basis.”

According to Els Vandecandelaere, Vice President of HR at pharmaceutical company Janssen, if organised in the right way the differences in working hours can be used positively. “Sometimes working in global teams is seen as a hurdle. However I’ve been in teams where they take advantage of the different time zones, whereby the person on the West Coast [of America] would work and then, at the end of their day, pass over to the Asian team, almost like the project follows the sun,” she says. “There’s a lot of mileage you can get from that.”

3) Utilise Technology 

Staying in touch with employees is getting easier as technology and connectivity keeps improving. Ian McCubbin says: “We’ve been experimenting with FaceTime… I can FaceTime my guy in Japan who can be walking around his factory and he can show me stuff at the same time we’re talking.”

Ian Mills, Group Vice President of the Worldwide Technical Expertise Platform at global service solutions business Sodexo, uses a specialist content management system to share knowledge across the team. “We form groups on a particular subject and then use our collaborative tools which will send out updates if someone has been active. That works pretty well,” he says.

The key is to use the various channels and applications now available. Gary Kildare, Chief HR Officer at IBM Europe, says: “Communication is tough when your team is spread around the world and in different time zones. One of the practical leadership skills needed today is the ability to communicate successfully whether it’s in person, through email, via web or TV link, by phone or conference call.”

4) Bring People Together 

While technology undoubtedly has a significant part to play in communication, you do need to be visiting your team in their various locations in person on a rolling basis.

“Face to face contact with colleagues operating overseas is a critical element for successful business transformation; cultural nuances and body language can be missed on video links, and being in the country will provide deeper insights into the local political, economic and business climate,” says Bryan Marcus, Former Regional Head for Latin America at Volkswagen Financial Services, who adds that he made sure there was always money in the budget for people to travel and meet one another.

It’s important to bring the whole team together too, even if it’s only once or twice a year. “Those sessions are partly for business but they’re more about relationship building and then once you have that relationship and set the common direction… you’ve got what I would call functional and check-in sessions that can be virtual,” says Ian McCubbin.

5) Be Culturally Aware 

Time needs to be taken in order to understand other cultures. Ian Mills says: “Never forget the cultural side of how to manage teams, because if you’ve got that wrong, it doesn’t matter what you do with communication… A lot of it comes down to experience. My advice to anyone starting off managing a global team is to do some cultural awareness training.”

Anne says: “It’s around people being open to seeing things from a different perspective. That means recognising and being sensitive to other cultures and the fact that something that might work in Mongolia, for example, may not work in North America.”

According to Els, the best approach to developing relationships is by focusing on individuals. She explains: “I always start with the person. While I believe it is important to know the basic dos and don’ts, I don’t over-think the culture too much. I believe there’s much more variability in individual behaviours than there is in national culture, which is an average of everyone in that country.”

***
Ultimately, good leadership will always get the best out of a global team. It requires, on personal level, maintaining your focus no matter how complex working schedules get, engaging employees, establishing a strong sense of purpose and keeping motivation levels high to ensure the right business outcomes are delivered.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Why Business Strategy is Changing

Comm update_2 MayA shift in strategic thinking is underway as boards come to realise that they must respond faster to the changes shaping the global marketplace. The old notion of a set five-year plan has been transformed by the use of more emergent strategies, where assumptions about the future are tested more frequently and, if a new direction is needed, the business is fluid enough to be able to adapt quickly.

“I am seeing a change taking place where the top-down, long-term view needs to be supplemented by more focus and agility in recognition of how you are going to achieve it, so the building blocks within corporate strategy are definitely becoming more dynamic,” says Ruth Cairnie, Non-executive Director of the FTSE 250 engineering firm, Keller Group, and former Executive Vice-President for Strategy & Planning at Shell.

Rebecca Lythe, Chief Compliance Officer at retailer Asda, comments: “Technology is moving so quickly and the landscape has changed in terms of how easy it is to do something quite disruptive, so mature businesses have to learn to be a lot more agile. It is still important to set a strategic direction looking some years ahead, but it’s how you get there, the time horizons within it and how you keep your strategy up-to-date which have all accelerated.”

The pace of change knows no bounds. Kevin Craven, CEO of the Services division at infrastructure provider Balfour Beatty, says: “You only have to look at what’s happened in the telecoms industry, where miles and miles of cables and wires in the ground have been replaced by mobile phones and masts. The entire economic model just shifted dramatically…

“No market is free from disruptive influences, so you clearly have to be monitoring your world and your customers and think about how you might respond to those shifts.”

Clearly, leadership teams must be better prepared when a disruptive shift does occur. “You should have at least envisaged the tough questions and how you might answer them, otherwise you’re not providing genuine value to your shareholders,” says Kevin. “One of the answers might be to say: ‘We need to close our doors.’ Another could be to sell to the innovator that’s tearing up your marketplace… [and] if you don’t want to go to those lengths then at least be prepared to be radical.

“For example, last year, because of a divergence with the group strategy, we decided to dispose of a business unit. It was one of the most profitable businesses in the group but it became clear that we were no longer the right parent for that business to achieve its potential.”

Big decisions

If CEOs delude themselves about the need to adapt, strategies will fail. Roger Martin, Criticaleye Thought Leader and Academic Director of the Martin Prosperity Institute at Rotman School of Management, comments: “The most common thing to do in the world of strategy in business these days is to complain about the V.U.C.A. world we live in – so everything is volatile, uncertain, complex and ambiguous – and then say that because of this it’s impossible to do strategy.

“But if an organisation doesn’t understand it has to make choices about where to play and how to win, it might as well not do strategy. That’s why more than eighty per cent of all strategic plans are pretty much useless.”

Peter Shore, Chairman of Arqiva, the UK’s national provider of TV and radio broadcast infrastructure, says: “Once a year we go offline for two days… to look at our individual industry segments from the bottom up. We look at where we are, assess our strengths and weaknesses, then from the top-down we try and assess where the big technical shifts or the big industry or customer shifts are going to be in our markets, and therefore where the big opportunities are for us to push our next investments.”

The board-level strategy has to be clear but the roll-out for a global business will not necessarily be homogenous, which does present some risks. Simon Dawson, Associate at leadership and organisational change consultancy Transcend, comments: “Emergent strategies are fine so long as there is connection across the organisation and rules to operate by. The danger is that people fall into a state of ‘self assembly’, whereby they go off and do their own thing believing they’re contributing to the whole strategy but, in reality, different parts of the organisation are moving in different directions.

“For example, when I worked in a telecoms business that was supposed to use emergent strategies, things were fine until the board got rid of the CEO as a result of the business underperforming. Then it quickly became clear that [the business] was just formed of little silos of people doing their own thing, none of which really connected.”

Communication must be frequent so that the vision remains relevant. Roger says: “As a business grows larger, the delusion of believing you can have uni-directional strategy set from the top just becomes more and more far-fetched.

“What you have to do is lay out a strategy direction from the top then say to the business units: ‘Here’s what we’re trying to accomplish as an organisation, please try and make something consistent with that.’ It’s then a process of going back and forth between the top and the bottom, which hones, refines, tightens and aligns your strategy.”

Ruth comments: “You need constant communication so that the view from the HQ about what the world is like, and whether the strategy can be implemented, is constantly up to date. You mustn’t be in the position where your assumptions are out of date, so it’s about constantly testing whether your assumptions are still valid and whether you are delivering on the strategy you set out; if not, an adjustment may be needed.”

For Rebecca, it’s about senior management being as candid as possible: “Strategy execution today means… having open and honest conversations within the leadership team about whether something has moved faster than you thought and, therefore, what the new implications are for the business.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Making the Move to Group CEO

CE update 19.02.14Becoming Group CEO is the pinnacle of an executive career, but those with ambitions of taking the helm of a global business should be careful what they wish for. From managing the board and marshalling the views of divisional heads, to communicating with the media, analysts and shareholders, it’s a 24/7 responsibility which provides the ultimate test of a person’s ability to lead.

“The biggest impact for me was recognising the demands of the City and shareholders,” says Mike Turner, Non-executive Chairman at engineering concern GKN and formerly Group CEO of BAE Systems. “What surprised me at first was that at the half-yearly or yearly presentation the shareholders and analysts weren’t interested in the results, they really wanted to know about the future growth prospects of the company. That brought home to me the need to be able to articulate a clear, long-term growth strategy.”

Pim Vervaat, who became Group CEO of plastic manufacturing company RPC following five-and-a-half-years as CFO, comments: “Being good at governance, numbers, talking to banks; this alone is not enough to make the transition to CEO. You really need to have an interest in the people and the key strategic drivers of the business.”

A change of mindset will be needed by those who’ve stepped up from a divisional CEO or regional MD role. Leslie Van de Walle, Chairman at building material company SIG, who made the transition from Divisional CEO to Group CEO at United Biscuits, says: “Divisional heads often underestimate the difficulty of always getting the right compromise between the various stakeholder objectives. When you get to group level you have to balance decisions against the needs of the business, the shareholders, the wishes of the board… and the interests of suppliers and customers.”

Carl-Peter Forster, Non-executive Director at engineering company IMI and formerly Group CEO at Tata Motors, says: “You have to move on from being very operationally focused, which most divisional CEOs are, to becoming much more strategic. Leading a group calls for a more indirect way of influencing and motivating people.”

In focus

The pressure of being the public face of the business can come as a shock to the uninitiated. Judith Nicol, Director at executive and non-executive recruitment specialist Warren Partners, says: “Most people at the very top of organisations are absolutely gobsmacked by how much everyone scrutinises them on a daily basis.

“You become the cultural compass and people take in everything from how you’re walking around the building, how you look, your mood… It all becomes so much more important when you’re a chief executive.”

Mike comments: “The UK press is pretty demanding, and that was a challenge, but the biggest struggle I had was in dealing with the government… In the end I had to talk with then Prime Minister Tony Blair to try and get him to understand that this county’s defence equipment base would just disappear unless he adopted a defence industrial strategy.

“In business, you’ve got to look to the long term. I’m afraid a lot of politicians just look to the next election.”

To make it as a Group CEO, you need experience across a range of functions and situations to understand how a business operates. Pim comments: “As CFO you have got to deal with shareholders, the board, and all the stakeholders quite closely already…  Working closely alongside the chief executive in a public company for five years has helped me immensely.”

Likewise, taking on a NED role as an executive will certainly give you valuable insights. Carl-Peter says: “Dealing with the board was certainly something I found to be a bit of a challenge and it was the one area I wasn’t particularly well prepared for… An external NED role would have helped massively because it puts you in a position where you can observe things objectively.”

The real differentiator for the best CEOs is the ability to see the bigger picture, showing superb leadership skills and possessing the strength of character to handle the constant pressure of being in the spotlight. Leslie says: “You have to be clear not only about the attraction of the role and the power associated with it but also the downside, which is the fact that you are alone and that you are ultimately responsible and accountable for whatever your team and the group does.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Where’s the Future in CSR?

Comm update_21 JanThe pressure is on for boards to back effective corporate social responsibility (CSR) programmes as no company can run the risk of being accused of putting profits before people or the environment. While businesses have to accept that stakeholders and the wider public will continue to demand greater engagement and disclosure, there remains the thorny question of how the value and impact of such schemes can be measured.

So what does best practice in CSR really look like? According to Martin Cook, Commercial Managing Partner for the UK & Ireland at EY, there is a growing trend for businesses to tackle major social issues, often in spaces vacated by the state, and being upfront about doing so and linking it to their brand.

He explains: “In tackling significant issues, businesses are working together, not just with third sector organisations, but with the public sector and other businesses to achieve common social and business aims. There has been something of a CR [corporate responsibility] revolution in the last decade among those organisations with a long-term commitment to making a difference.”

Ian Wright, Corporate Relations Director at global drinks business Diageo, says: “It’s not corporate philanthropy of the old kind; rather, it’s about doing good for people through a very clear business orientation… In the last few years I have become much more a regular attendee at the board meetings for sessions on this topic and it is regularly under scrutiny on the executive committee.”

The attention given to sustainability is only going to increase. Mary Jo Jacobi, Non-executive Director at Mulvaney Capital Management and a Criticaleye Board Mentor with extensive experience advising companies in the energy sector, comments: “In the past, responses have been: ‘We’ll spend some money here; we’ll do some charity there.’ The companies that have succeeded have been the ones that have had a serious consultation process with the communities in which they operate… [and have] found out what’s important to the local community and worked on those things, as opposed to just coming in with a blanket approach and throwing money around.”

In other words, while ramping up investment in CSR is welcome, it needs to be done in a way that feeds strategically into an organisation’s goals. Nicolas Mamier, Director at brand consultancy Appetite, says: “Planning for CSR should be undertaken with the same rigour as strategic brand planning – with a central strategy that is understood by everyone in the organisation. Companies go wrong by seeing CSR as a series of initiatives rather than part of their key commitments.

“Additionally, we find that relying solely on traditional governance measures does not always allow for objective feedback on performance as too many internal influences can take control. Therefore it can be helpful to actively enrol external community stakeholders that act as objective ‘control and feedback’ elements of the organisation’s performance.”

Bruce Cox, President and CEO of Pacific Aluminium, a subsidiary of Rio Tinto, says: “In the case of more developed geographies I have come to believe that the demonstrated use of a ‘moral compass’ in the way [a business] deals with all of its relevant stakeholders is far more important than directing resources or money to community activities. The ‘moral compass’ in this context should be defined as what the average person in that community would see as fair and reasonable in conducting business in a modern society.”

Change for the better?

Engagement is clearly a key aspect of any successful CSR agenda. Tracy Faulkner, Vice President of Global Communications for Shell’s Downstream business, says: “We work to incorporate the views of people living close to our operations when we make decisions that may affect them… Being part of a community means sharing a range of benefits with those around us. These can include local jobs and training, contracts for goods and services, and the investments we make in community programmes.”

At Diageo, Ian sees a clear responsibility to bridge the skills gap in the communities in which it operates: “We’re expanding fast into Africa, Asia and Latin America and those are often areas where we don’t find the skills that we need… One of our major programmes is to put those skills back into the community with what we call ‘Learning for life’, [which] is basically a programme that delivers [hospitality, retail, entrepreneurship and bartending] industry skills to people who would otherwise not have access to them.”

On a broader level, companies can build a framework on how to operate by using The UN Guiding Principles on Business and Human Rights. Luke Wilde, founder and CEO at business consultancy twentyfifty, comments: “Global business leaders should see these frameworks as helpful indicators of the direction of social and political expectations, changes in the business environment and possible direction of future legislation. Being ahead will avoid the costs of catching up later, and most likely will place your company in favoured positions for contracts, licences and finance.”

Certainly, these Principles offer international credibility and can help companies gain political support, but it’s something that requires constant revision. Mary Jo says: “They are just guidelines; a broad-brush approach that may or may not be relevant to each company in each local situation. That’s where consultation and conversation become very important… And remember, best practice is only best practice for so long, and what may have worked in 2013 may not be appropriate in 2014.”

For Martin, a robust approach to CSR means treating it as something that runs through the business and having processes set up to show this is the case: “Being able to measure and publicly report on your social impact in an age where trust has become eroded and greater transparency is the norm, particularly with the growth of social media, is vital. It is one thing to aim to make a difference and quite another to demonstrate that you are actually doing it.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

CEOs & Chairmen: The Missing Piece

Comm update Faces - 18 septemberMad as it may seem, a CEO once felt the need to hire a private investigator to follow the company chairman’s every move, such was the breakdown in their relationship. It shows how the dynamic between CEO and Chairman, like any relationship, can go catastrophically wrong and why every effort has to be made to ensure that both parties are in agreement about what’s best for the business.

Without trust, there is going to be trouble. Julia Robertson, Group CEO of outsourced HR services provider Impellam, says: “[The chairman] was on the board before I arrived, so I’ll talk to him openly about whatever legacy issues I’ve found and what I think we should do about them, and I’ll ask him if there’s anything I haven’t considered. What makes the difference is if you communicate openly and transparently, whether the news is good, bad or ugly.”

It makes sense for a CEO to manage expectations by defining the terms of the relationship. Rob Margetts, Chairman of mapping agency Ordnance Survey and former Chairman of insurance giant Legal & General, recalls: “When I first became Chairman of Legal & General, then CEO David Prosser sat me down and said: ‘Now this is how we’re going to do it; you are going to commit in your diary two hours a week for us alone. I’m going to come prepared with all my items which I’d like to let you know about that are going on and I want you to do the same. Then we’re going to reach agreement on what’s the best way forward.’”

Powerful Combination

There are any number of reasons for a breakdown between the CEO and chairman, but without question the biggest is when the lines become blurred about who has responsibility for the business. Jamie Pike, Chairman of plastics manufacturer RPC Group, says: “You cannot have two chief executives trying to run an organisation, so the chairman must be hands-off. If he feels the need to be hands-on it probably means a new CEO is required.”

Julia comments: “If [my chairman] got involved in any of the areas of my remit and didn’t keep me informed as to why he was getting involved, that would cause me a problem. So it’s about clarity, accountability and respect.”

Self-control and discipline are required to keep more heated debates behind closed doors. Brian Stevenson, Criticaleye Board Mentor and NED at Agricultural Bank of China, and formerly Chairman of Global Transaction Services at RBS, comments: “If you’ve got a chairman and chief executive that are clearly not getting along together, or have disagreements about strategy, or anything that’s visible to people, then that sets the tone for your whole organisation.”

Don Elgie, CEO of insight and communications agency Creston, comments: “The course that the company takes and the support that the CEO needs from the Chairman are vital for the future health of the company, and not to have that could seriously damage or delay the progress that a company makes.”

Provided the boundaries have been set and expectations managed, a CEO can benefit enormously from a good chairman’s input and insights. Christian Nellemann, CEO and founder of PE-backed XLN Telecom, says: “As our business has grown and gone through a number of different stages, I’ve had to change my leadership style and way of operating and engaging with direct reports and employees in general. It has certainly been incredibly helpful to be able to discuss issues with somebody that has already been there and done it… my chairman is very much my mentor.”

It shouldn’t be forgotten that if a chairman feels investors aren’t being served well, then they can issue marching orders to the CEO. This can’t be a ‘matey’ relationship so again it comes back to having the right balance.

Sam Ferguson, CEO of EDM, an information management provider, says: “The job of my chairman is totally different to mine. He doesn’t manage the strategy; he doesn’t manage acquisitions. His only job is actually to manage the board.”

According to EDM’s Chairman, Iain Ferguson, “there’s positive tension, of course”, and he believes that’s healthy when doing big things like making major acquisitions and changing the way a company operates. “But because we’re very aligned and transparent and because there’s a tight and effective leadership operation in the business, it works very well,” he adds.

Words like ‘harmony’ and ‘chemistry’ may be over egging it slightly, but ultimately if the working relationship is right then the company will be in a strong position. As Glen Moreno, Chairman of education and publishing concern Pearson, says: “Everybody assumes it but [the CEO-chair relationship] is the key to everything… You need a basis of trust and confidence and to be talking all the time.”

I hope to see you soon.

Matthew

https://twitter.com/criticaleyeuk

Criticaleye launches its new logo

Criticaleye new logo

 

It is an exciting time for Criticaleye as we launch our new logo!
Now that we’re in our 10th year of building an unique Community, we decided to create a new logo and a stronger way of communicating that better reflects the Criticaleye that we are today. The new logo, like the Community itself, is bolder and stronger than ever before.

Please take a moment to look at a brief here which depicts the rationale behind this change. Whilst only a visual representation externally, this logo symbolises a much bigger shift that is going on within our organisation, one that allows us to reflect on the success of the Community to date and look ahead to the next ten years with the same belief and confidence that our Community has in those of us who deliver unparalleled service on a daily basis.

We hope you are as excited as we are about this milestone!

Criticaleye

Why Boards Need to Show Respect

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Trust and confidence in a business takes years to build and can be squandered in seconds. That’s nothing new. What’s changed is that board members need to work harder to maintain trust than they have before. They have to show they respect their customers and stakeholders and are able to communicate with both transparency and authenticity. Silence and aloofness will just leave a business vulnerable to attack.

Sir Michael Lyons, Chairman of The English Cities Fund, a Criticaleye Associate and formerly Chairman of the BBC Trust, comments: “Anyone who understands the value of their brand will also recognise that maintaining public trust is a core business issue. Whether a Plc, a public body or even an individual, your brand determines who buys from you; how much they are willing to pay and their future loyalty… Putting a proper value on maintaining public trust is a job for both the CEO and particularly the board. It’s not a job to leave until difficult times are upon you.”

It’s certainly vital for someone like Jane Furniss, CEO at the Independent Police Complaints Commission. “Public confidence and trust is a real challenge for an organisation like ours,” she says. “One of the things we spend a lot of time on is the different audiences who need to have confidence that we’re doing our job without fear of favour to any one party and are relentlessly focused on the evidence and not on people’s personal interests.

“It’s more acceptable if our work is not liked by some people because of what we’ve found or not found, but what’s not good is if people think the way we’ve done our job isn’t fair or isn’t based on the evidence. It’s not just how we communicate the message but how we help people understand why we’ve come to those conclusions.”

Questions of perception, duty and responsibility have to be weighed up and failures are going to get punished. Michael says: “A company’s behaviour eventually determines the regulatory framework they live within, and nowhere is that clearer at the moment than for the newspapers following the [Leveson Inquiry]. Whether or not there is statutory regulation, they will be facing a tougher regulatory regime in the future as a result of abusing the trust that was given them.”

A catastrophic breakdown of trust, as witnessed in parts of the media sector and financial services industries, will take years to rebuild. Alison Carnwath, Chairman of commercial property company Land Securities Group and a Criticaleye Associate, says: “Banks are not trusted as they have treated customers and shareholders badly. They have sold unsuitable products and cost taxpayers money. No business wants to end up where they have been. Watch how they rebuild trust and ensure you never have to be in that place.”

So it is incumbent on CEOs to keep standards high. For Jane, this is especially important given the very human tragedies that often lead to IPCC investigations. “We’re currently doing a serious review with an independent panel of experts on how we investigate cases where people have died in custody,” she explains. “Because of the sensitivity of this issue and in response to the criticism that we and the police have received, we decided to launch this study. We’re consulting academics, politicians, lawyers, campaigners and, crucially, families of those who’ve suffered, and are seeking their views to help us understand what’s gone well and not so well and how we can improve the system, and we’ll publish that report.

“If you aren’t convinced that you are getting things right or if people believe you’re not getting things right, it’s really important to be transparent and not hide away. You need to engage with people and be non-defensive, even if you are being criticised from every corner.”

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Sum total

The CEO cannot work in isolation when it comes to fostering trust. The tone at the top, as set by the executive team, must be consistent and authentic, but the non-executive directors also have a massive role to play here.

Alison says: “NEDs are witnessing at close hand in board meetings how a CEO behaves and talks about staff, shareholders and customers and his attitude to certain issues, and if they feel he is being neglectful or intolerant of certain people or issues then they have to try and steer him in the right direction.

“If you’re an experienced NED and you’re used to being in different business environments, you can see those companies that are prepared to modernise and those that are not prepared to embrace it and the new, more open society that we live in… You really can feel the culture of an organisation.”

Some of those businesses which haven’t taken this seriously, which see it as a distraction or some form of political correctness, are the ones which have ended up in trouble. Gary Kildare, Chief HR Officer at IBM’s Global Technology Services in New York, says: “It is more prominent today because of the significant economic, financial and social issues around the world which are negatively impacting citizens and employees.

“Businesses are very focused on maintaining, building or regaining trust. They are endeavouring to be more open; introducing or publishing codes of practice and conduct; aligning business strategies with leadership behaviour; getting more interested in client satisfaction studies and measurements; investing in corporate citizenship and appointing ‘chief trust officers’.

“It’s too late to think about what you should do when you are the headline in the news. It’s all much more than publishing annual reports, marketing, the AGM or having a website – business in general is becoming much more transparent.”

There’s no use trying to avoid this or think it doesn’t apply to you as a leader, although maintaining such openness can be arduous. Bruce Cox, Managing Director of Rio Tinto Diamonds, which is set to be sold by Rio Tinto, argues that trust is easier to achieve if there is ‘two-way communication’. Even though the exact future direction of the business he runs may not be clear, Bruce sticks to his view that it’s essential to keep talking with people and to be as transparent as possible.

“There’s a huge amount of change and uncertainty, so it’s more important that we do everything possible to maintain the relationship with our [employees] to keep that communication up,” he says. “If you’re not continually interfacing with various stakeholders they will begin to believe their own concerns are true rather than being rational about those concerns… [it’s important] there’s more human contact or more social interaction through… meetings where the stakeholders have an equal opportunity to talk and to contribute, rather than the manager or director communicating down.”

As ever, the organisations which have leaders who appreciate this will be better placed to succeed and make it through challenging periods of change. Peter Cheese, Chief Executive of The Chartered Institute of Personnel and Development (CIPD), says: “We need to be able to demonstrate to the wider public what is going on and how businesses are responding. We’re looking for more open, transparent leadership and moving on from old models of the past which were more about top-down control and management.”

Gary agrees: “Leaders should be concerned if the business feels too comfortable, routine or complacent. The role that they play is to ensure that there is robust professional challenge and no-one and no subject should be out of bounds to scrutiny on a regular basis.”

Why Social Media has Changed Innovation

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The sources of innovation are changing. As communication channels evolve, companies must learn new ways to open up to customers and collaborate with employees and third parties in order to develop ideas. Harnessing those insights so that experimentation and business strategy are aligned is a major headache, but it’s one that must be dealt with if organisations are to stay competitive.

Social media presents an opportunity to rapidly create communities with employees and customers, but for genuine engagement and innovation to happen something more sophisticated is required from businesses. Tulsi Naidu, Operations Director for UK & Europe at Prudential, says: “I suspect all businesses now are doing a range of blogs and Twitter-type interactions, but I’m particularly excited about our ‘colleague ideas’ portal which we launched about a year ago.

“It’s an open portal which started guerrilla-style through a home-coded collaboration forum by a bunch of IT colleagues, and is now being rolled out to over a thousand people. It has a lot of energy around it because people tend to dive in every day, look at their favourite ideas and post comments.”

Ruth Cairnie, Executive Vice-President of Strategy and Planning for Shell International, explains that a programme was introduced to capture innovative suggestions from employees and external parties. “Entrepreneurs in all kinds of organisations can submit their ideas to us and we have a team of people who vet those ideas, decide which ones would have potential, then they can be supported with investment and expertise to turn an idea into reality,” she says, noting that one such suggestion, relating to a floating liquefied natural gas facility, is “now on its way to become part of a world-class project”.

Ideas have to be shaped so that they inform the business strategy. Annette Burgess, Commercial Director of books and stationery wholesaler Baker & Taylor UK, says: “All stakeholders need to play an active role in social innovation, but I think there needs to be a gatekeeper in terms of looking at what points and which conversations should go onto these social innovation platforms. The difficulty is that as well as having all these meaningful conversation, not all ideas will be taken forward in this collaborative process, so somebody needs to steer the initial conversations.”

Paul Baxter, Social Business Leader at IBM, explains that the company engages in real-time conversations internally for the purpose of innovating. “It could be around redefining corporate values, which we have done, or it might be about thinking how we redefine our product or service proposition in the marketplace,” he says. “Everybody in the organisation will come online and contribute but, importantly, it’s not just an opportunity to gripe about anything that comes to mind, it is structured around key themes which are carefully moderated.

“In terms of how you derive insight from that mass of data, we use our analytical tools to look at what the hotspots are around the conversation, what the key influences are and then, as an output, we’ll make sure we go back to check that everyone is up-to-date with what the main insights are that came out of that very large online conversation, and which ideas are going to be taken forward.”

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Rock the boat

There has to be a leap of faith from executive teams in how ideas are encouraged and rewarded. After all, as much as introducing something ‘new’ is perceived to be good, the reality is that it can stir up friction within an organisation. “You need to welcome change and innovation, but many business leaders are absolutely terrified of it,” says Don Elgie, CEO of insight and communications company Creston.

In a number of industries, the pace of change is relentless. Simon Johnson, UK and International Group Managing Director for publisher HarperCollins, comments: “If you’re not creating fresh approaches, you’re in trouble. Our ability to do this is a key competitive advantage because, while we aren’t trying to become the biggest publisher in the world, we are trying to build the fastest, most creative, nimble and innovative business.”

Beyond driving ideas through social media and variations of crowdsourcing, the fundamental problem within a vast number of companies is how to create an innovative culture. It requires maintaining the traditional hierarchy, operations and efficiencies within the organisation while, at the same time, there is effectively a shadow business running alongside which is agile, flatter in structure and able to drive new strategy development and product innovation.

This leads to conflicts about culture, performance measurement (think of the traditional retailers fighting their ‘space vs online’ battles) and degrees of permissible experimentation. Where exactly is the line between hitting quarterly targets and securing the long-term future and success of the business? Just how far can innovation be pushed within an organisation so that it doesn’t just undermine day-to-day performance, but even produces ideas that render the existing business obsolete?

Each company has to decide on its boundaries and definitions of success. Simon comments: “It’s about avoiding the ‘innovators dilemma’. For a business like ours, which has been around for a long period of time, it’s vital that we are the disruptor and not the disrupted. That may mean at some stage disrupting your own business model, not just focusing on the short-term financial targets. Generally, incumbents have a predisposition to not evolve because they are worried about destroying their legacy business.”

This can be kept at bay if the focus is on the customer and defined goals. Tulsi comments: “We’ve made a point of saying everything must have a conclusion and being able to go in and look at the graphs that tell you how many ideas you have on there, what stage of the process they are in and whether they are under consideration, in implementation or have been stopped from further progress.”

If the engagement and passion are right, then ideas should flow. Costas Markides, Criticaleye Thought Leader and Professor of Strategy and Entrepreneurship at London Business School, comments that “ideas can come from anybody, anywhere, anytime so any processes that help to put this philosophy into practice are welcome”. Although there is nothing particularly new about this per se, he does acknowledge that the speed at which technology can be used to galvanise the ideas of numerous people does give a different twist to innovation.

Paul says: “Over the next decade or so, companies will start to think about how they foster, measure and reward collaboration and knowledge-sharing internally. Rather than just being about how much business you have sold or how much revenue you have earned, the extent to which people are collaborating and seen to be leading thinkers within the business, and the ability to put some objective measures around this, will be built into some of the HR scorecards of the future.”

No one is saying this is easy, but executives must be brave and experiment rather than assume that the old ways of creative thinking are going to provide the competitive edge going forward.