2 Critical People Skills Effective Leaders Possess

2 critical people skills effective leaders possess

I am often asked how our clients are doing – are they growing, making money, investing in people and equipment? My answer is almost always the same: organizations that are led by effective leaders, regardless of their industry, size, or geography, are doing well in the short-run and are positioned for future success.

There are many traits of effective leaders and much has been written about the topic. But two traits that both deal with people often stand out—effectively aligning people and their talents within an organization and motivating team members for peak performance.

Putting the Right People in the Right Roles

Aligning people in an organization is different than filling an organization chart. Leaders align people and managers fill desks. Putting the right people in the right spots and convincing them to move together in the same direction is more of a communication issue than a design issue.

An effective leader determines the strategic position for key employees based on the organization’s needs and team member skills, and then sells the vision to the employee and convinces others to embrace the opportunities created. Often the goal is to convince team members that the result was consistent with their own ideas.

Motivating For Peak Performance

The other trait often associated with successful companies is a feeling of empowerment within the organization. Effective leaders tend to trust and motivate others and are less controlling and demanding (but still have high expectations). They realize peak performance in an organization is a result of the collective efforts of all, not a few. Motivation and empowerment result in more energy and better ideas.

Where are you when it comes to these two traits—aligning people (getting the right people in the right spots) and motivating others, rather than dictating demands? Today might be a good time to pause and reflect.

 

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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The Role Employees Can Play in Detecting Fraud

The role employees can play in detecting fraud

One often-overlooked control opportunity for an organization is the eyes and ears of its employees. By some accounts, over one-third of all organizations that fail do so as a result of theft or fraud. Yet 80 percent of companies have few procedures in place to protect them from fraudulent behavior.

Most people associate whistleblower policies with large, publicly-traded companies that are required to adhere to various regulations and laws. But there is a place in privately-owned and not-for-profit organizations for the implementation of such programs.

Not only is fraud more damaging to smaller companies, but the opportunities to commit fraud are generally greater due to lax or absent policies and controls, less direct oversight, and fewer checks and balances. Issues most often encountered are improper billing; misappropriation of cash or other company resources; theft of property, equipment, or inventory; violation of local, state, and federal laws; and fraudulent financial reporting.

Implementing some form of a whistleblower policy can help mitigate the risk and potential damages associated with improper behavior in the workplace. Some best practices in rolling out a program include:

  • Developing a code of conduct and expectations for employees that outline their responsibilities to disclose concerns.
  • Setting a tone at the top that makes it clear you do not condone unethical behavior.
  • Having procedures in place to communicate concerns:
    • To a Human Resource department representative, or
    • To a designated member of the management group, or
    • Via an independent telephone hotline.
  • Encouraging employees to report concerns, not complaints.
  • Not calling it a whistleblower policy. This phrase connotes a negative image and divisive feeling. It should be called something like an Employee Concern Policy or Issue Identification Policy.

Owners and management are charged with protecting the tangible assets and reputation of their businesses. Internal controls, surprise audits, and utilizing your external accountants all help accomplish this goal. But think how much more effective it would be if you had all your employees on the watch.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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Leaders Invest, Managers Control Costs

Leaders invest managers control costs

During my 35+ year career I have observed what sets successful organizations apart from those that struggle or suffer from limited growth. More than anything, long-term success often comes down to the quality of the company’s leadership—even more so than the uniqueness of its product or service, its quality, or the market it serves.

One trait of a successful leader is making investments for the good of the long-term prospects of the organization. Costs are easy to deal with if you have a manager mindset—you control them, cut them, and find more efficient ways to get things done. Costs are a necessary part of business, but controlling them will not materially increase the value of your organization. Investments, on the other hand, involve an outlay of money in search of a longer-term return of profit. That approach takes courage – and a strong leader.

Investments come in many forms—equipment, people, new technology, expanded markets, new products, etc. They often involve significant up-front costs, but effective leaders are confident that the investment will pay off in the long run. I have observed leaders effectively analyze the merits of capital equipment additions, but miss the “softer,” less tangible opportunities.

Three sound investment areas that come to mind are technology, human resource management, and the company’s succession plans for key employees.

  • Investing in technology allows you to more effectively and efficiently accumulate and manage data with goals towards maximizing efficiency and increasing profit margins. This does not just mean purchasing new hardware and software; it often requires an overhaul of processes and systems that you may have utilized for years or generations.
  • Hiring a top-notch human resource executive (either full-time or part-time) can assist with hiring, retention, risk mitigation, strategic planning, efficiency, and more. A recent survey of corporate executives indicated that, in today’s world, the CEO’s most important executive is not the CFO, but the chief people officer.
  • Leaders often wait too long to hire a key person’s successor. This results in missed opportunities for knowledge transfer, tapping good candidates in the marketplace, and exploring new ways to do things.

Effective leaders are always looking for ways to enhance long-term success—often at the expense of short-term profits. This concept takes courage. Are you up to the challenge? People are watching and counting on you.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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Improve Results By Revisiting Your Organizational Structure

Improve results by revisiting your organizational structure

One of a leader’s most important responsibilities is to put the right people in the right spots to advance the short- and long-term causes of the organization. Whether you are running the accounting/finance group, the manufacturing operations, or leading the firm as CEO, there is no more important responsibility.

The organizational structure you have in place today may not always be the most effective. Perhaps instead of a functional structure, as many use, a geographic, product, or customer/market format would be a better choice. They all have strengths and weaknesses.

In this age of technological advances and information sharing, why are most companies’ organizational structures the same as they were years ago? The answer is that change is a daunting task. First you have to determine if an alternative structure is beneficial. Then you need to find the right people to fill the positions. You then have to sell it to the organization’s stakeholders—inside and outside the company.

A worthwhile exercise is to imagine starting over. Think outside the box and ignore any constraints. Starting with a blank sheet of paper, consider what structure you would design if you were creating your business from scratch. Don’t feel limited by those working with you; that’s the next step to fill in the boxes. It is a long term play and not easy.

Today’s new form of organization is much more horizontal than vertical and provides a landscape that promotes creativity and innovation by all. Often the best ideas do not come from managers, but those actually doing the work. Trust your good people—in many cases they have more to offer than you give them credit for. Along the way you might even reduce headcount as the value of some middle managers is questioned.

Give it a try—start over and see what unique thoughts you come up with. The end result could be a more effective and efficient organization and a more engaged workforce.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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Leaders Understand That Being Busy is Not Necessarily Being Productive

Good leaders know that busy is not the same as productive

Does your “to-do” list seem endless? Do you often ask yourself at the end of the day why you did not get to certain items or tasks? We all have limited time to accomplish those things we are charged to do – for some, it’s eight hours and for others it is ten, twelve, or more. Whether they are running a company, a department, or a civic organization, good leaders prioritize their efforts and focus on those tasks that derive the best returns.

It is commonly accepted that if you focus your attention on the top 20 percent of tasks based on importance, you will get an 80 percent return on your time. Think of what this means and how you spend your time on strategic tasks, with customers, and with your employees.

We often default to checking off the easiest tasks and procrastinate on the tougher ones. But as leaders, we should spend most of our efforts addressing the areas we are uniquely qualified to tackle—those that are difficult to delegate. If something can be done 75 percent as well by someone else, let them do it. So what if it is not perfect? The benefits of focusing your attention on bigger, more value-added tasks far outweigh any shortcomings related to the delegation of less critical initiatives. Striving for perfection often gets in the way of productivity and derails the accomplishment of valuable initiatives.

Remind yourself that activity is not accomplishment. Determine the requirements of your position or role. Then, prioritize these requirements based on the importance to their organization or group and your unique qualifications to accomplish the tasks. Delegate everything else. Spend your time judiciously—it is in limited supply! Leaders who follow this fundamental approach are often the most successful.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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Take Time to Review Your Corporate Documents

Take time to review your corporate documents

We all evaluate risk in our businesses—enterprise risk, credit risk, liability risk, etc. Designing and adhering to good governance practices should be part of any organization’s risk management processes.

Your corporate documents, particularly by-laws, shareholder/partner agreements, non-compete and non-solicit agreements, confidentiality agreements, and intellectual property assignment agreements are often overlooked. However, a little effort in this area can protect the company and its owners from unintended consequences that can impact the value of the organization.

What kind of risks might you assume? They include:

  • Transactions such as dividends, bank borrowings, officer elections, and compensation and other corporate actions may be deemed to be unauthorized if your corporate documents are not properly adhered to.
  • Shareholders/partners and businesses put their futures at risk by not anticipating and providing for the smooth navigation through the transfer of ownership within a closely-held business, family business, sales to outsiders, redemption issues, etc.
  • Employees may leave the company and solicit clients and other team members.

Why don’t we spend more time evaluating the effectiveness of corporate documents or requiring employees to execute non-compete, non-solicit, confidentiality, and intellectual property assignments? There are two reasons:

  1. We don’t anticipate the unexpected. We think everything will be fine, we are successful, our team members and owners are all good trustworthy people, and we can work things out as they arise.
  2. We don’t understand and appreciate the full value of these documents.

In my experiences serving middle market companies, I have seen too many unfortunate situations related to the lack of respect for corporate documents. Most could have been mitigated with a little bit of attention.

Do you know what is in your by-laws and shareholder agreements? Are they relevant today? Do you comply with them?

If you would like to hear more, please contact me. If you have a story, please share.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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Think Boldly About Talent Development to Accelerate Your Company’s Growth

Think boldly about talent development to accelerate your companys growth

We often think of growth in a tactical way. How can we sell ten more widgets? How can we tweak our pricing, quality, service, etc.? We all get caught up in this type of short-term thinking from time to time. But would you rather grow your business one unit at a time or grow the top line in leaps and bounds? I think we would all opt for the latter, but to get there, the path requires thinking outside the box, courage, and investment.

The most successful companies—the ones with solid growth patterns and increasing bottom lines—are generally led by people who do a good job of taking courageous positions. To grow exponentially we need to invest in talent, technology, and equipment. Of those three, adding and developing talent is perhaps the most important. A leader needs to develop and lead leaders, not lead followers. Followers can execute strategies but they cannot add the value necessary for significant growth.

Have you stretched your comfort zone financially and otherwise to attract and develop the best engineers/production people, sales managers, and IT and human resource professionals for your company? When all of these functions work together it creates an environment in which your business has the best chance to flourish. Developing a world class team is an investment in the future growth of the business, not a cost.

To add maximum value to the organization and to promote a growth culture, all of your key employees must look in the mirror and ask themselves if every activity they are involved with is the best use of their time and talents. We often fall into the trap of working on the easiest and most time sensitive tasks. But if your organization is populated with employees who take this approach on a regular basis, it is time for some changes. Get the right people in the right spots and have the confidence that growth will follow.

Exponential growth is attainable, but only as a result of leaders believing that the actions they take today will result in tomorrow’s successes. Don’t believe it? Contact me and I will share examples of situations where we have seen it happen.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

 

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4 Important To-Dos Before You Contact a Retained Executive Recruiter

4 important to dos before you contact a retained executive recruiterThe past year has been very exciting in my world of retained executive search, especially when working with privately held companies. My conversations with business owners and CEOs have been relatively consistent. They have weathered the storm, built solid cash reserves, and now want to determine how best to deploy that cash.

In these discussions, owners generally identify the following options for their available cash:

  1. Acquire a company
  2. Launch a new product
  3. Give additional compensation to key talent, which I like to define as those executives whom you cannot live without (or, more plainly speaking, those who will leave your business harmed if you arrive at work tomorrow and learn they are leaving)
  4. Upgrade executive talent
  5. Do nothing and keep the cash

Option three is interesting, and one I will address in a future blog post. For now, let’s discuss what happens if you choose option four: upgrading your existing talent.

Before you contact a retained search firm, here are a few important items to consider:

  1. Give serious thought to what exactly is frustrating you with the executive you plan to replace. For instance, you may be frustrated that your CFO does not effectively partner with sales and operations or cannot articulate financial terms to non-financial people.
  2. Identify the executives, board advisors, or outside service providers you can trust with your decision to replace an executive. Their input can be very valuable, since they know and understand your business.
  3. Ask these advisors which defects they have observed in the executive you plan to replace, and what skills you should look for in the search process. Ensure you are on the same page regarding the qualities that will be essential in the right candidate.
  4. Make sure you understand compensation parameters. Discuss the current state of the market with outside professionals to confirm that what you are trying to locate exists.

Going through these steps will put you in a good position to conduct a successful search. At this point, you will be ready to contact your trusted retained recruiter and begin the recruitment process!

 

Tyler A. RidgewayTyler A. Ridgeway is a director with Kreischer Miller and a specialist for the Center for Private Company Excellence. Contact him at tridgeway@kmco.com.   

 

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Whose Job is it to Manage Risk?

Whose job is it to manage riskEveryone in an organization needs to strive to minimize risk at all levels. As a leader, though, you are ultimately charged with identifying risk factors, assessing their likelihood, and putting into place a plan to mitigate any impact on the business. The organization, your team members, and your family depend on you to carry out this important responsibility.

Risk comes in many forms—financial, customer, supplier, employee, regulatory, environmental, litigation, leadership, technology, and on and on. It permeates everything you do within your company. By properly managing risks, you will reduce the impact on your organization if a risk factor comes to fruition.

Here is a basic road map to fulfill your responsibility:

  • Understand that as a leader, you are ultimately responsible but you do not have to do the heavy lifting. Your managers should be assessing risk factors within their functional areas.
  • Have strategy sessions with your team to discuss areas of risk—what can go wrong, how it might impact your business, and what actions you need to take to minimize the impact. A leader’s job is to ask probing, thought provoking questions that advance the discussions to an effective conclusion.
  • Meet with external confidants —board members, industry executives, your accountant, insurance broker, attorney, friends, etc. — to discuss their perspectives on risk.
  • Develop and implement a plan that encompasses your conclusions.

Don’t ignore difficult decisions hoping something won’t happen! Be forward thinking. Reducing risk is important to not only help your business succeed, but also to maximize its value. A buyer will evaluate risk—you need to do it too.

Too few leaders spend time on the topic of risk management. What are your thoughts? Share in the comments.

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

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Tips for Finding an Outside Director for Your Private Company Board

Tips for finding an outside director for your private company boardSo, you have made two important decisions: first, to utilize a board of directors and second, to have an outside director who is not associated with the day-to-day operations of your company. Now, how do you find a capable candidate?

The first step is to develop a job description outlining expectations and anticipated time commitments, as well as a skill set inventory for the right candidates. What is important to you at this stage of your company—industry expertise, business acumen, functional background, growth experience, access to strategic contacts, etc.?

Next, identify candidates that fit your criteria. The best places to prospect for candidates are to talk to your professional advisors (accountant, lawyer, banker, insurance broker, etc.), contact applicable industry associations, review annual reports for local public companies, engage an executive recruiter, contact the National Association of Corporate Directors, and talk to other business owners you know.

After you have identified prospects, make sure you personally contact them to explore the opportunity and start the interview process. They will want to hear your vision, passion, and desires, which will help them determine whether the opportunity is a good fit for them.

One warning—try to stay away from friends and relatives. You are looking for someone to hold you accountable, provide strategic, objective strategies, and challenge you and other members of management. Often this is difficult, if not impossible, for friends and family to do effectively.

Adding an outside director can provide a significant benefit to your organization. These are a few helpful hints to navigate the process but I would be interested to hear your success stories in identifying the right candidates for your organization.

 

Stephen W. Christian, CPAStephen W. Christian is managing director of Kreischer Miller. Contact him at schristian@kmco.com or 215.441.4600. 

 

 

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