The CEO said to me, “You know, the extra benefit, on top of others from this project, is that you made me hear things that I don’t want to hear.” I thanked him and added that we all run up against two blocks from time to time: We don’t, or won’t, hear what we don’t want to hear; and we don’t, or won’t, see what we don’t want to see.
What this man had completely overlooked was his competent daughter. In deciding who would eventually succeed him, he had concentrated on his two sons. He had also refused to hear about his wife’s uneasiness about her part-time clerical job in accounting, way down in the organization. She was a quiet, competent, non-interfering worker, but she knew the employees worried that he was keeping her there as a spy.
After our talk, the CEO took corrective action on both fronts. He now communicates more with his children. And he has moved his wife to corporate secretary, where she reports directly to him and has contacts only with people outside the firm.
One of the classic functions of a good adviser is to identify areas in the company that need attention but which clients would prefer to avoid. The adviser’s job is then to insist, politely but firmly, and persistently if necessary, that company leaders address issues they have ignored for too long.
If you want to know whether or not you are one of these “deniers,” think about the issues your advisers have raised recently that you have chosen to ignore. In what situations have you brushed off their advice, changing the subject or silently concluding they weren’t qualified to advise you on that issue? You might be right about their qualifications, of course. But if you’re wrong, substantial, even if hidden, costs can accrue.
Two strategies can help protect you from making a habit of denial: the group meeting with advisers and the do-it-yourself (DIY) method. In the group approach, you arrange for your advisers—typically five or six—to meet with you for a couple of hours in your conference room or somewhere off-site. If they don’t know one another, have a group lunch first to help the group coalesce.
CEOs usually remember to include their accountant and attorney in the group. They typically invite a management consultant, if they have a relationship with one. They should also include in some circumstances a risk manager (insurance), a real estate specialist (if properties are important to the business), an information technology specialist (if computers are important), or a financial specialist (if the business is capital intensive or uses a lot of outside money).
The reason for including varied advisers is that each sits atop a body of moving information. No executive can keep up with all the nuances of change, interpretation, or application in all these areas. When you talk with advisers in a group, they may arrive at different conclusions than if you talked with them individually, because the cross-disciplinary discussion shows them a dimension they hadn’t seen. If you find yourself saying to one adviser that his or her counsel differs from what you’re hearing from another adviser, you’re overdue for a group meeting.
Doing it yourself
It’s no accident that businesses which survive and prosper are frequent users of outside advice, spend a lot of money on it, and find it a good investment. Still, the typical entrepreneur is determined, self-confident, and eager to control expenses. So here is the DIY approach, which is often sufficient for handling day-to-day problems.
Start by making a list of things you don’t want to see or hear. You can’t do it alone, of course, since obviously what you have been persistently ignoring may be somewhere beneath awareness. Ask others for their opinions. Try to do so in a relaxed way, putting it in the context of a “self-improvement exercise.” If your respondents don’t have reason to fear retaliation, they should give you honest answers. Start with your direct reports, then ask your spouse and other people important to you or the business.
If you are surprised at what you find, you have to ask why. “Why don’t I want to see or hear these things?” The answers may vary: The subject is disagreeable or time-consuming; you feel vulnerable or fear is involved; you think it’s one of those problems that really can’t be solved.
Then weigh what actions are called for, and make a cost-benefit assessment of each. One option, of course, is to continue to avoid hearing or seeing. If you choose this strategy, you should then ask people to spell out the costs of not dealing with the problem. If they can’t make a case that it is worth solving—or has to be solved—maybe the avoidance strategy is best.
When there’s a clear net cost to continuing to dodge the problem, you must honestly examine your motives and weigh alternative actions. If you’re avoiding the matter because it is disagreeable or time-consuming, delegation may be a good approach. One executive I worked with was so consumed in managing a growing firm that he put off dealing with problems involving the poor performance and behavior of long-time employees. We worked out a plan whereby vice presidents were delegated the task of solving some of these problems. He asked me to take on the other two. Within six months, we had settled all these matters.
When the underlying reason for inaction is a feeling of vulnerability, the cause is often a fear of loss of power or control. Example: An undercapitalized firm struggled mightily to make a profit. Sales rose but profits didn’t, despite an apparently efficient operation. The client was spending far too much on financing and poor purchasing because of cash shortages. The CEO always blamed the banks, but the cause turned out to be his ignorance of the capital markets and a fear of loss of control of the business. We brought in a financial adviser whose principal contribution was to tutor the chief executive while they developed the solution together.
Fear or vulnerability also may be a people problem, tied to old obligations or loyalty to family members or employees. The first thing to do in these situations is to review with an attorney the worst potential problems from, say, dismissing a senior employee or buying out a disgruntled shareholder. That does not mean a legal solution is always appropriate, but attorneys are a source of useful information on the long-term costs of continuing to avoid a problem.
Unsolvable problems
Only the inexperienced argue that all problems can be solved. While logic may be on their side, the cost of solving a problem may be greater than the benefit. Worse, the cost may include unacceptable aspects.
In one company, the vice president was saddled with an older brother who was a drunk. This wasn’t an easy problem since the older brother was the CEO and a 60 percent shareholder. Nothing the younger brother could do to help him with his problem worked. The CEO would not even discuss the effects of his drinking. The younger brother and I met with the company’s attorney and accountant to discuss the remaining options. At this fairly hard-eyed meeting, we decided the least damaging course for the family and the company was for the vice president to grit his teeth and bear it. The CEO, age 55, had diabetes and heart trouble and was a heavy smoker. He probably wouldn’t live more than five years. Grumbling by employees and suppliers about erratic decisions at the top could be tolerated for a time. So the younger brother, 44, toughed it out for three more years—until the CEO had a massive heart attack; he died soon thereafter and the brother took charge.
On balance, there was more benefit to enduring the problem than in forcing a solution. Years later, the younger brother told me that the meeting, at which his advisers unanimously urged him to hang in there, was what had kept him going. And it’s a larger, successful company today.
Avoiding or denying critical problems eventually erodes the respect that every CEO hopes to deserve. You don’t have to deal with these problems, but sometimes the cost of not doing so is to become a joke in your own company.
James E. Barrett heads the family business practice at Cresheim Consultants in Philadelphia.