Wanted: Executives with Integrity, or At Least a Sense of Shame

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I spoke a few days ago with a thoughtful, intelligent ex-management consultant who understands the financial big picture very well. What was his take on the crisis, I asked him?

“The whole thing comes down to a serious misalignment of incentives of all the major players,” he said. “Low interest rates and rising asset prices led banks, lenders, ratings agencies, credit insurance and other markets astray–everyone’s incentives got way out of whack.”

As a description, I buy it. But as a diagnosis, I don’t know whether to be disgusted or depressed. I think I’ll be angry.

“The incentives are out of whack” is the language of behaviorism—appropriate for a Skinnerian stimulus-and-response study of rats and cheese in a maze. Looking at the world through Skinnerian lenses has many virtues—not, however, including the concepts of responsibility or integrity.

In a time of financial faltering and blooming Ponzi schemes, this matters enormously. We have a once in a decade chance to alter the trustworthiness and ethics of the financial industry.

Will our new financial regulators view this as a chance to redraw the maze and manage the cheese distribution? Or will they also focus on restoring integrity?

How bad is it? Another friend told me about a conversation between an investment banker and a regulator—the banker said, with a sly wink, “You know, you folks shouldn’t be letting us get away with this.”

“Letting us get away with this?” Who put the gun in your hand? Who raised the drink to your lips? Who do these people think is responsible for their actions? The chief behavioral scientist at the SEC?

Just 7 years ago, post-Enron, Samuel diPiazza, tCEO of PricewaterhouseCoopers, and Robert G. Eccles, a former HBS professor, wrote, in Building Public Trust:

…even transparency and accountability are not enough to establish public trust. In the end, both depend on people of integrity. Rules, regulations, laws, concepts, structures, processes, best practices, and the most progressive use of technology cannot ensure transparency and accountability. This can only come about when individuals of integrity are trying to “do the right thing,” not what is expedient or even necessarily what is permissible. What matters in the end are the actions of people, not simply their words…without personal integrity as the foundation for reported information, there can be no public trust.”

Exactly.

Trust, integrity, and ethics are essentially about the link between individuals in society. Not between rats and cheese.

It must be tempting for Mary Schapiro, new SEC head, to respond to the political howling with a new Sarbanes-Oxley. Please don’t. As Jim Peterson says, “Any law that passes the US Senate 99 to 1 has got to be seriously flawed.”

What we don’t need more of is behavioralism–more paperwork, detailed regulations, disclosures, and Chinese walls. What we need more of is what diPiazza said—trustworthiness and integrity. On the regulatory side, that means better enforcement and sanctions.

But politics are critical too, and fulminating politicians can be as short-term focused as any banker. The public has a big role to play.

May I suggest shame, humiliation, and public shunning. Maureen Dowd has made a nice beginning  but everyone needs to pile it on.

Consider two contrasting headlines yesterday:

Ford Has Worst Year Ever But Won’t Ask For Aid

and

What Red Ink? Wall Street Paid Hefty Bonuses.

Which one is about mice, and which about men?

Get mad as hell about this.  Go shame a Wall Street banker today–we expect people to feel shame, not rats, so their response should tell us something.

 

 

Why Consultants Speak Like Idiots

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I have always been simultaneously amused and appalled by consultant-speak–and no more than when I hear it coming out of my own mouth. You know the buzz words. Like snakes in the underbrush, they lie everywhere, buried inside complex sentences:

* “The key to success for your organization is to discern how to leverage your assets for maximum return.” (Nowhere in Merriam-Webster is “leverage” a verb).

* “We’re experts at operationalizing your business strategy.” (“Operationalize” is simply.  not. in.  the.  dictionary).

* “Let’s utilize existing frameworks wherever we can.” (This one actually is in the dictionary, but it’s  a pretty complicated way to say “use,” dontcha think?)

More cringe-inducing, we don’t just write idiot-speak, we actually talk it!  It’s humorous at best, but trust-damaging at worst.  Imagine being a client and having to decipher all this lingo.  Imagine being a client, sitting through the 100th presentation given by the third consulting firm to be hired in the last three years, and thinking quietly to yourself, “I thought these guys were going to be different.”

One way we can stand apart – while simultaneously creating real human-to-human connection – is to simplify our language. You know, say it in plain language.

For an insightful and humorous take on this subject, check out Why Business People Speak Like Idiots: A Bullfighter’s Guide written by Brian Fugere, Chelsea Hardaway, and Jon Warshawsky – notably, three consultants. Here’s an excerpt from the book:

“Jargon, wordiness, and evasiveness are the active ingredients of modern business-speak, and they make up the Obscurity Trap. This trap is particularly pervasive, and its perpetrators are evil people who want to destroy civilization as we know it. (Well, okay, not really, but it felt good to get that out.) We call this a trap because the people who spew jargon and all of that evasiveness really aren’t evil at all.

"They’re us.”

Ouch.

What can we do? 

Listen to yourself. What do you hear? What are you really trying to say?

Envy, Resentment and Trust

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Resentment is like taking poison—and waiting for the other person to die. 

Sounds absurd, but anyone who’s honest will recognize not only the absurdity of that stance, but the fact that we nonetheless indulge in it all too often.

Then there’s resentment’s close cousin envy.  “Envy is the ulcer of the soul,” said Socrates.  The parallel metaphors of ulcers and poison are not accidental.  They are internally corrosive issues masquerading as external.

I want to highlight two other writers whom I find do a wonderful job of exploring the darker regions of the soul. One is Phil McGee; the other is Peter Vajda.  Both have commented on this blog from time to time.

Here are a few choice comments from each on the subject.  Peter’s comments come from  “I Want What You Have.”  Phil’s come from his post "Three Men."   
I recommend reading both in the original. 

Here is a taste, in alternating call-and-response format:

In the throes of envy, we become mired in a sense of lack and deficiency. And, like an ulcer, envy eats away at you, consciously and subconsciously. It seems to be the energy that is running your life – a life of frustration – feeling like you’re being decimated from the inside out.  Peter Vajda

He was the oldest of the group and the ring leader and most of the people in the room seemed to respect and care about him. He was, therefore, the target of my jealousy and dislike. Phil McGee

The honest reality with envy is that it’s never – repeat never – about the other person. Envy can be a blind spot. As Pogo said, “We have met the enemy and he is us.” Few folks realize they are their own worst enemy when it comes to envy.

He had, I came to realize, a sharp wit and great sense of humor and he enjoyed life, a feeling rare in me until I began to question why I disliked so many people instead of wondering what was wrong with me. Somewhere inside I knew I was cheating myself and that I was afraid of getting close enough to feel the rejection that was sure to come.

While focusing outward on what others have, the envious one is also dwelling on “what’s wrong with me.” In this place of self-loathing and self-pity, when we feel “less than”, we tend to focus on what we don’t have. Lack attracts lack. Caught in a downward spiral of envy, you move backwards, sowing seeds of doubt and limiting your potential.

Les…helped me to see that I was wrong about people. They really don’t exist for the sole purpose of making my life miserable. Actually when I seek their friendship and counsel and am open to them it seems they will do anything to help me see the light of love rather than the blind darkness of fear and resentment.

You can decide to not be envious or jealous. It is a choice.

Indeed it is. And choosing to be free of envy and resentment makes you able to trust, as well as trustworthy.

Thanks,Phil and Peter.
 

Interview with Charles Green at Dave Stein’s Blog: I Would Buy From this Guy

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Dave Stein has posted an interview with me (along with some kind words) in his post, I Would Buy From This Guy. 

First, thank you, Dave.  (And special thanks to Jill Konrath for echoing the sentiment!). It’s an honor.

As I’ve gotten to know Dave,  I am struck by his solid instincts of commonsense and integrity–and by the breadth of knowledge and experience in the sales industry.  He has been a sales consultant, trainer, author, blogger, and networker.  Everywhere I turn in the sales arena, people seem to know Dave,  and at every contact I have with him I am impressed with his insights and wealth of knowledge.  I appreciate the honor of his comments.

Check him out at his company, ES Research Group.  You won’t regret.

 

 

Transparency and Selling

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President Obama directly links transparency to economic performance.

In his inauguration address, he asserted “…those of us who manage the public’s dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.”

Lately transparency has been in short supply.

Offices for sale. Ponzi schemes. The former mayor of Baltimore has just been indicted on charges that she accepted illegal gifts, including gift cards intended for the poor that she allegedly used instead for a holiday shopping spree.

Whether with respect to government, or to building client relationships, transparency is at the very root of trust.

That may seem obvious. Motherhood and apple pie. But for those of us with a career background in sales, transparency requires deprogramming. We were taught:

• Never share a weakness
• Never admit a competitor strength
• Never share cost information
• Always get as much margin as you can
• Don’t share information that could decrease your ability to close a sale

Oh yeah, and be customer focused.

What goes around comes around. In the long run, the truth inevitably bubbles to the top. You can get credit for saying it—or blame for resisting it.

As Charlie Green said in a HuffingtonPost piece, “If we see someone as being transparent, then nagging questions about motive disappear. We no longer speculate about, ‘What’s in it for him? What’s the hidden meaning? Why’d he say that? Is he lying?’ and so on. We accept the person at face value for what they say, even if—sometimes, particularly if—what they say reflects imperfection. That works in sales and in politics.” 

Yet, we’re trained to go in come back with information that will close the sale. Hunt it, kill it and bring it back to eat.

• What if, instead of dancing around an answer we don’t know, we just admit we don’t know?
• What if, instead of promising something we probably can’t deliver, we admit that and then tell them what we can do?
• What if, instead of offering “teaser” pricing and then covertly getting it on the back end, we share our cost structure?

These examples are counter-intuitive—downright treasonous in some circles.

Without the pretension, void of false promises and out on a limb – we are, admittedly exposed, naked and vulnerable.

But wouldn’t you rather buy from a seller who is willing to show you his cards, even if—perhaps because—you both know it might cost him the sale? That visceral reaction works in reverse when transparency dominates relationships (think Madoff, Blagojevich).

Transparency creates a powerful pull toward you. It also, by the way, lets you sleep easier.

I Have Done Nothing Illegal

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You know the old joke: “Legal ethics is an oxymoron.”

Now, it may or may not be that lawyers are disproportionately ethically challenged. But the real oxymoron is not about lawyers—it’s about the legal-ization of ethics.

An act can be immoral or unethical without being illegal. And the absence of illegality does not make an act moral. This should not be a hard concept to grasp.

Yet, there is no shortage of businessmen and politicians who aggressively assert legal non-guilt as if it could mask the stench of grossly unethical behavior.

Googling “I have done nothing illegal,” and variations on the theme, provides such gems as these:

Illinois Governor Rod Blagojevich—“I’m here to tell you right off the bat that I am not guilty of any criminal wrongdoing.”

New York’s former State Senate Majority Leader Joseph Bruno, responding to a damning indictment, sounds like the ex-boxer he is, saying
“After being hounded for three years, I am being indicted on a prosecutor’s sleight of hand.” Bruno insults an entire profession by calling millions of dollars in sales-commissions-or-is-it-kickbacks “consulting fees.”

Remember Senator Alan Cranston of the Keating Five? Talking to congress, he said, “You know that I broke no law.”

Enron’s Jeff Skilling testifies that he and Lay never broke the law.

Confirming their virtue, his buddy Ken Lay said: “We don’t break the law.”

Former New Jersey Senator Robert Torricelli, explaining the scandal that led to his resignation: “…had not denied taking gifts from Mr. Chang, but said that he took no ‘illegal gifts’…”

Back in 2006, San Jose’s mayor Ron Gonzales kept it simple. Indicted for fraud, bribery and conspiracy, he said “I broke no law.”

Lousiana’s former Governor Edwin Edwards, being charged with $1M in racketeering and extortion said, ”I know I didn’t break any Federal laws.”

Really blurring the ethics/law boundaries, Pennsylvania State Senator Fumo’s 2007 response to a 139-count Federal indictment was, “I know in my heart that I have not done anything illegal.”

Over on Long Island, the late Republican Joseph Margiotta was convicted of federal mail fraud and conspiracy charges in a municipal insurance kickback scheme, and served 14 months. Even then, he explained, “I didn’t break any law.”

When Don Imus was brought back to the air from the racist dead, part of the rationale for it, as provided by the CEO of Citadel Broadcasting was, you guessed it, “he didn’t break the law.” So I guess all that other stuff—no biggie.

I can’t wait to hear from Madoff. His scam deftly sought out legal vacuums. So if and when he says, “I’ve broken no laws,” it’s important we remember he’s still a sociopathic ripoff artist.

When someone says, “I didn’t do anything illegal,” you can bet your bottom dollar they did two things wrong. One was the scam itself.

The other is worse. They have demeaned both the law and ethics.

The law cannot and should not substitute for ethics. For one thing, it puts an unsupportable load on the law—and lets unethical and immoral people off the hook.

Worst of all, it equates moral arguments to whining complaints made to third parties. That’s a recipe for abdicating personal responsibility. You can’t trust people who have no inner moral compass. A thief with a legal loophole is still a thief. A con artist with a good lawyer is no less a con artist.

That is the true meaning of “legal ethics is an oxymoron.”

When someone to whom we entrust our life savings or our political leadership acts badly, and then defends himself by saying,“I broke no law,” they should be shunned and shamed—outed and shouted—exposed to derision and disgust in all forms of public dialogue. Not to mention voted out or fired.

Bruno, Blago and Bernie ought to be ashamed of themselves. If they can’t even manage that, their status in court has no claim on our judgment.

Sales Benchmarking: What to Measure in a Tough Economy?

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To turn the tide on sputtering revenue numbers, sales organizations ratchet up pressure on sellers to hit targets.

Many will seek a fool-proof formulaic antidote. The more scientific it feels, the more control it gives over success–or so they presume.

Some swear by sales benchmarking.  Landslide Technologies’ SFA (sales force automation) application ensures you can “govern the sales process in an effort to drive large deals through the sales pipeline in a consistent manner."  Just use the SFA application to track your big deals and they’ll pump out new accounts like a canning machine on an assembly line.

Do benchmarks work?  Or are they a desperate attempt to CYA at each level of the food chain in the event of a day of reckoning?

One recent article from a worldwide sales training company described benchmarking as “a sales rep’s GPS, helping to map out routes that were either successful or time-consuming in the past in order to devise a more efficient course”.

Here’s their GPS system:

To simplify this already-simple model: all things being equal, if you make more calls per day (CPD) or increase your close rate (CR) or increase the average size deal (ADS) or if you have more salespeople (SP), you will increase your AS (Annual Sales).

The author of the article lauds this wildly lagging indicator of performance stating, “their (sellers) improved time management efficiency as the result of this benchmarking model will free themselves up from dependence on marketing departments for leads, support and differentiators.”

I couldn’t make this stuff up.

Feeling liberated yet? What a relief! Without burdensome leads, support and differentiators from marketing, sellers can work the levers on the benchmarking formula and land on their AS (don’t pardon the pun).

Some of the largest sales organizations tell their team to abide by their model – or else.

Now, let’s stipulate that tracking and measuring sales activity is critical to success. Still–too many sales organization have a knee-jerk response to sluggish short-term performance, namely engaging in short-term solutions.

There lies the slippery slope of micromanagement.  Knee-jerk short-term solutions to short term indicators.  It’s a recipe for low trust and high turnover.

Eventually, quality selling activity gives way to “prettying up” the spreadsheet. “My, that’s a good looking chart,” says the visiting exec from HQ.  Meanwhile, the team is thinking, “those numbers are bogus; plugged into Excel the night before to impress the brass.”

GIGO.  Garbage in, garbage out.

When I managed a regional sales organization, corporate decided to split the sales force into hunters and farmers–to improve the “cost of sales” ratio of gross comp to revenue.

We lost a $10.5 million deal. Why? We severed the relationship between their rep and the procurement director.   They, in turn, severed us.

We broke their trust, plain and simple.

What benchmark tracks lost accounts and missed opportunities due to relationship issues? None I know of–yet their impact is an order of magnitude bigger than what benchmarks mark.

Harvey McKay (author of Swim with the Sharks without Being Eaten Alive) offers a better predictor of selling success than all the formulae, algorithms and sales funnels combined. It’s a list of questions he calls the McKay 66.  He suggests that relationship-oriented information is king (mostly centered around the client relationship – not their stated needs).

For example:

* #39. On what subjects (outside of business) does the customer have strong feelings?
* #55. What is he/she most proud of having achieved?
* #58. What moral or ethical considerations are involved when you work with this customer?

Doesn’t it make intuitive sense that knowledge of answers to these kinds of intimate questions reveal more about our progress with a prospect or account than the number of dials, appointments or calls?

Selling always was and always will be, first and foremost, a referendum, not on process and statistics, but on the loyalty developed between sellers who can build relationships with buyers.

The Path of Redemption Leads to Trust

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Let’s take a break from Madoff, academics, and business processes.  Let’s go way inward and talk about redemption.

In 1997, Robert Duvall’s The Apostle won many nominations and awards.  It features a jagged but dead-on role by Farrah Fawcett, and the best work I’ve ever seen Billy Bob Thornton do.  But mostly, it’s Duvall.

Some reviewers can’t find the redemption in it.  I think it’s about nothing but.

Duvall’s character is a sinner of every sort—a cheating, lying, womanizing and self-congratulatory preacher.  In a fit of rage, he unintentionally kills his soon-to-be-ex-wife’s boyfriend, and sets out on the lam in the deep rural south, calling himself “The Apostle E.F.”

What follow is a series of epiphanies for him.  At every turn of his life, he rediscovers the beauty in life and other people, and in serving them—at the same time realizing with horror how deeply he had sinned.  And at each turn, the consequences of his sin catch up with him. 

He is forced to move on to another place, where again he gains a new insight, again realizes the depths of his sin, and again accepts the consequences of his sin by being forced out of yet another home.

It ends with him working on the chain gang, yet praising the Lord.  Because for every realization of his sin, he knows he grows to a greater appreciation, and becomes more willing to do the right thing.  Every step down represents more learning, humility and dedication to service.

Something like that happens in the last of the Carlos Castaneda Don Juan series, Journey to Ixtlan.  Don Juan and Don Jenaro explain that because they are magical warriors who can see things others can’t, they also cannot be understood by mere mortals. In a palpable sense, they can not go home to Ixtlan anymore.  Yet offered the same choice again—to learn and be alone, or to be common but together, they would choose the lonely life of the magician.

William James, in Varieties of Religious Experience,  wrote about the “once-born” and the “twice-born.”

The once-born has always led a life of quiet faith. The twice-born, by contrast, knows what hell looks like, having been there, and so appreciates the difference. 

I think Duvall, Castaneda and James all spoke the language of redemption.    The religious sense of “redemption” is delivery from evil or sin.  It has a strong sense of “now I know what I never knew before, and I know it to be true in a way I never knew before.”

* Redemption is a complete change of perspective.  Redemption means “I have seen the light,” or, more colloquially, “holy crap, I never realized.”

* Redemption is what the Angel Clarence teaches Jimmy Stewart in Bedford Falls, and Ebenezer Scrooge in London. 

* Redemption is why alcoholics will ignore priests and spouses, but listen to a fellow alcoholic—they’ve been there and seen the light.

* Redemption is the ultimate act of empathy.  It is about radically revising ourselves to see another reality. 

Redemption alone isn’t sufficient to trust someone.  Ex-smokers, for example, can be giant pains-in-the-butt because they’ve exchanged one cause for another.

But it’s a powerful start.  The ability to see (at least) two sides of a coin is the foundation of getting along with others.  And thence to trust.

The ROI of Business Friendships

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Karen Salmansohn publishes a “Be Happy Dammit Tips” Newsletter. She quotes some fascinating statistics about the value of business friendships. For example:

– People with a best friend at work are seven times more likely to be engaged in their work.

– Close friendships at work boost employee satisfaction by nearly 50%.

– People with at least three close friends at work are 46% more likely to be extremely satisfied their job – and 88% more likely to be satisfied with their lives.

– Employees who are good friends with their bosses are more than twice as likely to be happy with their work.

The relevance of friendship is not new to the world of professional services. David Maister writes about friendship in his article titled Young Professionals: Cultivate the Habits of Friendship . He asserts, “The way most clients choose among professionals is essentially identical to the way people choose their friends. At the point of selecting a professional to work with, clients go with providers who can:

(a) make them feel at ease;

(b) make them feel comfortable sharing their fears and concerns;

(c) can be trusted to look after them as well as their transaction and (d) are dependably on their side.”

It seems logical to infer that clients who view you, their business advisor, as a friend are at least doubly more likely to be engaged in the work you do and be satisfied with the results you produce.

Take stock: how many clients can you call “friend”?

The Trouble with Buying Processes

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Big companies have a process for buying things. They define the specs, they shop the vendors, they use specialized purchasing departments to define procedures and processes.

They have similar processes for recruiting human capital (aka human beings). Define the specs, shop the vendors, use special processes.

And ditto for selling. Define targets, channels, measure hit rates, etc.

What these processes all have in common is a focus on the efficiency of the process—and not so much on the effectiveness of the result.

Purchasing managers, HR recruiters and sales managers alike would benefit from Malcolm Gladwell’s recent New Yorker piece title Most Likely to Succeed: How Do We Hire When We Can’t Tell Who’s Right for the Job?

Gladwell’s opening metaphor is about predicting the success of a college football quarterback in the pro game. Despite extraordinary efforts at analytical and statistical rigor—you just never quite seem to know.

His target subject is teaching—how difficult it is to predict the success of a teacher by focusing on any available statistical predictor.

Yet the value of getting it right is huge. Gladwell points to research that says a good teacher dwarfs the effect of any other factor on a child’s education. The US could overcome its middle-of-the-road global relative performance simply by substituting the bottom 6% of teachers for average teachers.

The problem is, you can’t predict success in teachers, anymore than you can in quarterbacks.

The solution, he says, is to stop focusing on accreditation and criteria. Instead, have the equivalent of apprenticeships, open admissions, tryouts open to all. The good ones prove themselves quickly, as do the bad ones. Find out who they are not by controlling input metrics, but by letting people jump into the water and seeing who can swim.

I suggest that the same problem exists in evaluating suppliers, recruits, and sales funnels. These are all deeply complex, human, messy relationship issues. Good customer, employee and supplier relationships make a huge difference.

But the prevailing business wisdom is that we can analyze and measure our way into defining the right relationships. Think of RFPs (requests for proposal) or recruiting specs.

The motivation behind select-by-spec and hire-by-numbers is complex. It’s part blind faith in “science.” It’s part fear-driven cover-your-butt desire to appear blameless. It’s part fear of interaction with other people.

But whatever, it’s hurting us. In the name of efficiency, many business processes have been employed to bring human relationships to a least common denominator level. The result has been low effectiveness.

Let people mix it up. Inefficiencies can be dwarfed by effectiveness. It’s as true in work as it is in the NFL and the classroom.