Getting Good Inc., Part II

It was a nice honor to be noted as one of America’s fastest growing companies as an Inc. 500 company two years in a row in 2006 and 2007 (one of them here), but it is an even nicer honor to be noted as one of the Top 20 small/medium sized businesses to work for in America by Winning Workplaces and Inc. Magazine.  In addition to the award, we were featured in this month’s issue of Inc. with a specific article about transparency, and important element of our corporate culture, on p72 and online here.

Why a nicer honor?  Simply put, because we pride ourselves on being a great place to work — and we work hard at it.  My colleague Angela Baldonero, our SVP People, talks about this in more depth here. Congratulations to all of our employees, past and present, for this award, and a special thanks to Angela and the rest of the exec team for being such awesome stewards of our culture!

Across 22 years and two companies now, our system of giving performance feedback has evolved significantly. I thought I’d take a pass at chronicling it here and seeing if I had any learnings from looking at the evolution. Here’s how things evolved over the years:

• Written performance reviews. The first year of Return Path, we had a pretty standard process for reviews. They were more or less “one-way” (meaning managers wrote reviews for their direct reports), and they only happened annually.
• Written 360 reviews. We pretty quickly moved from one-way reviews to 360s. I wrote about this here, but we always felt that being able to give/receive feedback in all directions was critical to getting a full picture of your strengths and weaknesses.
• Live 360 reviews. In addition to the above post/link, I wrote about this a bit further here and here. The short of it is that we evolved written 360s for senior leaders into facilitated live conversations among all the reviewers in order to resolve conflicting feedback and prioritize action items.
• Live 360 reviews with the subject in the room. I wrote about this here…the addition of the subject of the review into an observer/clarifying role present for the facilitated live conversation.
• Peer feedback. At some point, we started doing team-based reviews on a regular cadence (usually quarterly) where everyone on a team reviews everyone on a team round-robin style in a live meeting.

The evolution follows an interesting pattern of increasing utility combined with increasing transparency. The more data that is available to more people, the more actionable the feedback has gotten.

The pluses of this model are clear. A steady diet of feedback is much better than getting something once a year. Having the opportunity to prioritize and clarify conflicts in feedback is key. Hearing it firsthand is better than having it filtered.

The biggest minuses of this model are less clear. One could be that in round robin feedback, unless you spend several hours at it, it’s possible that some detail and nuance get lost in the name of prioritization. Another could be that so much transparency means that important feedback is hidden because the people giving the feedback are nervous to give it. One thing to note as a mitigating factor on this last point is that the feedback we’re talking about coming in a peer feedback session is all what I’d call “in bounds” feedback. When there is very serious feedback (e.g., performance or behavioral issues that could lead to a PIP or termination), it doesn’t always surface in peer feedback sessions – it takes a direct back channel line to the person’s manager or to HR.

The main conclusion I draw from studying this evolution is that feedback processes by design vary with culture. The more our culture at Return Path got deeper and deeper into transparency and into training people on giving/receiving feedback and training on the Difficult Conversations and Action/Design methodologies, the more we were able to make it safe to give tough feedback directly to someone’s face, even in a group setting. That does not mean that all companies could handle that kind of radical transparency, especially without a journey that includes increasing the level of transparency of feedback one step at a time. At Bolster, where the culture is rooted in transparency from the get go, we have been able to start the feedback journey at the Peer Feedback level, although now that I lay it out, I’m worried we may not be doing enough to make sure that the peer feedback format is meaningful enough especially around depth of feedback!

Half the Benefit is in the Preparation

This past week, we had what has become an annual tradition for us – a two-day Board meeting that’s Board and senior management (usually offsite, not this year to keep costs down) and geared to recapping the prior year and planning out 2009 together.  Since we are now two companies, we did two of them back-to-back, one for Authentic Response and the other for Return Path.

It’s a little exhausting to do these meetings, and it’s exhausting to attend them, but they’re well worth it.  The intensity of the sessions, discussion, and even social time in between meetings is great for everyone to get on the same page and remember what’s working, what’s not, and what the world around us looks like as we dive off the high dive for another year.

The most exhausting part is probably the preparation for the meetings.  We probably send out over 400 pages of material in advance – binders, tabs, the works.  It’s the only eco-unfriendly Board packet of the year.  It feels like the old days in management consulting.  It takes days of intense preparation — meetings, spreadsheets, powerpoints, occasionally even some soul searching — to get the books right.  And then, once those are out (the week before the meeting), we spend almost as much time getting the presentations down for the actual meeting, since presenting 400 pages of material that people have already read is completely useless.

By the end of the meetings, we’re in good shape for the next year.  But before the meetings have even started, we’ve gotten a huge percentage of the benefit out of the process.  Pulling materials together is one thing, but figuring out how to craft the overall story (then each piece of it in 10-15 minutes or less) for a semi-external audience is something entirely different.  That’s where the rubber meets the road and where good executives are able to step back; remember what the core drivers and critical success factors are; separate the laundry list of tactics from the kernel that includes strategy, development of competitive advantage, and value creation; and then articulate it quickly, crisply, and convincingly. 

I’m incredibly proud of how both management teams drove the process this year – and I’m charged up for a great 2009 (economy be damned!).

People First

I do not think it’s telling that my fourth post in this series of posts on Return Path’s core values (kickoff post, tag cloud) is something called People First.  Ok, it probably should have been the first post in the series.  To be fair, it is the first value on our list, but for whatever reason, the value about Ownership was top of mind when I decided to create this series.

Anyway, at Return Path,

We believe that people come first

And we aren’t shy about saying it publicly, either.  This came up in a lengthy interview I did with Inc. Magazine last year when we were profiled for winning an award as one of the top 20 small- and mid-sized businesses to work for in America.  After re-reading that article, I went back and tried to find the slide from our investor presentations that I referred to.  I have a few versions of this slide from different points in time, including one that’s simpler (it only has employees, clients, and shareholder on it) but here’s a sample of it:

That pretty much says it all.  We believe that if we have the best and most engaged workforce, we will do the best job at solving our clients’ problems, and if we do that well, our shareholders will win, too.

How does this “people first” mentality influence my/our day-to-day activities?  Here are a few examples:

• We treat all employees well, regardless of level or department.  All employees are important to us achieving our mission – otherwise, they wouldn’t be here.  So we don’t do a lot of things that other companies do like send our top performing sales reps on a boondogle together while the engineers and accountants slave away in the office as second-class citizens.  That would be something you might see in a “sales first” or “customer first” culture
• We fiercely defend the human capital of our organization.  There are two examples I can think of around this point.  First, we do not tolerate abusive clients. Fortunately, they are rare, but more than once over the years either I or a member of my senior team has had to get on the phone with a client and reprimand them, or even terminate their contract with us, for treating one of our employees poorly and unprofessionally. And along the same lines, when all economic hell broke loose in the fall of 2008, we immediately told employees that while we’d be in for a rough ride, our three top priorities were to keep everyone’s job, keep everyone’s compensation, and keep everyone’s health benefits. Fortunately, our business withstood the financial challenges and we were able to get through the financial crisis with those three things intact.
• We walk the walk with regard to employee feedback.  Everyone does employee satisfaction surveys, but we are very rigorous about understanding what areas are making people relatively unhappy (for us, even our poor ratings are pretty good, but they’re poor relative to other ratings), and where in the employee population (office, department, level) those issues lie.  We highlight them in an all-hands meeting or communication, we develop specific action plans around them, and we measure those same questions and responses the next time we do a survey to see how we’ve improved
• We invest in our people.  We pay them fairly well, but that’s not what I’m talking about.  We invest in their learning and growth, which is the lifeblood of knowledge workers.  We do an enormous amount of internal training.  We encourage, support, and pay for outside training and education.  We are very generous with the things that allow our employees to be happy and healthy, from food to fitness to insurance to time off to a flexible environment to allowing them to work from another office, or even remotely, if their lives require them to move somewhere else
• I spend as little time as I possibly can managing my shareholders and as much time as I can with employees and prospective employees.  That doesn’t mean I don’t interact with my Board members – I do that quite a bit.  But it does mean that when I do interact with them, it’s more about what they can do for Return Path and less about reporting information to them.  I do send them a lot of information, but the information flow works well for them and simultaneously minimizes my time commitment to the process:  (1) reporting comes in a very consistent format so that investors know WHAT to expect and what they’re looking at, (2) reporting comes out with a consistently long lead time prior to a meeting so investors know WHEN to expect the information, (3) the format of the information is co-developed with investors so they are getting the material they WANT, and (4) we automate as much of the information production as possible and delegate it out across the organization as much as possible so there’s not a heavy burden on any one employee to produce it
• When we do spend time with customers (which is hopefully a lot as well), we try to spread that time out across a broad base of employees, not just salespeople and account managers, so that as many of our employees can develop a deep enough understanding of what our customers’ lives are like and how we impact them

There are plenty of companies out there who have a “shareholder first” or “customer first” philosophy.  I’m not saying those are necessarily wrong – but at least in our industry, I’ll bet companies like that end up with significantly higher recruiting costs (we source almost half our new hires from existing employee referrals), higher employee churn, and therefore lower revenue and profit per employee metrics at a minimum.  Those things must lead to less happy customers, especially in this day and age of transparency.  And all of those things probably degrade shareholder value, at least over the long haul.

Return Path Core Values, Part II

As I said at the beginning of this series, I was excited to share the values that have made us successful with the world and to also articulate more for the company some of the thinking behind the statements.

You can click on the tag for all the posts on the 13 Return Path’s core values, but the full list of the values is below, with links to each individual post, for reference:

1. We believe that people come first
2. We believe in doing the right thing
3. We solve problems together and always present problems with potential solutions or paths to solutions
4. We believe in keeping the commitments we make, and communicate obsessively when we can’t
5. We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it
6. We believe in being transparent and direct
7. We challenge complacency, mediocrity, and decisions that don’t make sense
8. We believe that results and effort are both critical components of execution
9. We are serious and passionate about our job and positive and light-hearted about our day
10. We are obsessively kind to and respectful of each other
11. We realize that people work to live, not live to work
12. We are all owners in the business and think of our employment at the company as a two-way street
13. We believe inboxes should only contain messages that are relevant, trusted, and safe

As I noted in my initial post, every employee as of August 2008 was involved in the drafting of these statements.  That’s a long post for another time, but it’s an important part of the equation here.  These were not top-down statements written by me or other executives or by our People team.  Some are more aspirational than others, but they are the aspirations of the company, not of management!

Solving Problems Together

Last week, I started a series of new posts about our core values (a new tag in the tag cloud for this series) at Return Path.  Read the first one on Ownership here.

Another one of our core values is around problem solving, and ownership is intrinsically related.  We believe that all employees are responsible for owning solutions, not just surfacing problems.  The second core value I’ll write about in this series is written specifically as:

We solve problems together and always present problems with potential solutions or paths to solutions

In terms of how this value manifests itself in our daily existence, for one thing, I see people working across teams and departments regularly, at their own initiative, to solve problems here.  It happens in a very natural way.  Things don’t have to get escalated up and down management chains.  People at all levels seem to be very focused on solving problems, not just pointing them out, and they have good instincts for where, when, and how they can help on critical (and non-critical) items.

Another example, again relative to other workplaces I’ve either been at or seen, is that people complain a lot less here.  If they see something they don’t like, they do something about it, solve the problem themselves, or escalate quickly and professionally. The amount of finger pointing tends to be very low, and quite frankly, when fingers are pointed, they’re usually pointed inward to ask the question, “what could I have done differently?”

The danger of a highly collaborative culture like ours is teams getting stuck in consensus-seeking.  Beware!  The key is to balance collaboration on high value projects with authoritative leadership & direction.

A steady flow of problems are inherent in any business.  I’m thankful that my colleagues are generally quite strong at solving them!

Return Path Core Values

At Return Path, we have a list of 13 core values that was carefully cultivated and written by a committee of the whole (literally, every employee was involved) about 3 years ago.

I love our values, and I think they serve us incredibly well — both for what they are, and for documenting them and discussing them publicly.  So I’ve decided to publish a blog post about each one (not in order, and not to the exclusion of other blog posts) over the next few months.  I’ll probably do one every other week through the end of the year.  The first one will come in a few minutes.

To whet your appetite, here’s the full list of values:

1. We believe that people come first
2. We believe in doing the right thing
3. We solve problems together and always present problems with potential solutions or paths to solutions
4. We believe in keeping the commitments we make, and communicate obsessively when we can’t
5. We don’t want you to be embarrassed if you make a mistake; communicate about them and learn from them
6. We believe in being transparent and direct
7. We challenge complacency, mediocrity, and decisions that don’t make sense
8. We value execution and results, not effort on its own
9. We are serious and passionate about our job and positive and light-hearted about our day
10. We are obsessively kind to and respectful of each other
11. We realize that people work to live, not live to work
12. We are all owners in the business and think of our employment at the company as a two-way street
13. We believe inboxes should only contain messages that are relevant, trusted, and safe

Do these sound like Motherhood and Apple Pie?  Yes.  Do I worry when I publish them like this that people will remind me that Enron’s number one value was Integrity?  Totally.  But am I proud of my company, and do I feel like we live these every day…and that that’s one of the things that gives us massive competitive advantage in life?  Absolutely!  In truth, some of these are more aspirational than others, but they’re written as strong action verbs, not with “we will try to” mushiness.

I will start a tag for my tag cloud today called Return Path core values.  There won’t be much in it today, but there will be soon!

A Lighter, Yet Darker, Note

I’ve been meaning to post about this for some time now since my colleague Tami Forman introduced me to this company.  It’s a riot.

You know all those well-intentioned, but slightly cheesy motivational posters you see in places like dentists’ offices?  The kind that talk about “Perseverence” and “Commitment” and “Dare to Dream” and have some beautiful or unique, usually nature-centric image to go with them and their tag line?

For the sarcastic among us, you must visit Despair, Inc.’s web site, in particular any of the “Individual Designs” sections featured on the left side navigation.  The posters are brilliant spoofs on the above, with such gems as “Agony” and “Strife” and “Despair” (whose tag line is “It’s always darkest just before it goes pitch black”).  E.L. Kersten is one funny, albeit strange dude.

Worth a look, and everything is for sale there, too, in case you need to have these posted in a back room somewhere.

The Gift of Feedback

My colleague Anita Absey always says that “feedback is a gift.”  I’ve written in the past about our extensive 360 review process at Return Path, and also about how I handle my review and bring the Board in on it.  But this past week, I finished delivering all of our senior staff 360 reviews, and I received the write-up and analysis of my own review.  And once again, I have to say, the process is incredibly valuable. 

For the first time in a long time this year, I got a resounding “much improved” on all of my prior year’s development items from my team and from the Board.  This was great to hear.  As usual, this year’s development items are similarly thoughtful and build on the prior ones, in the context of where the business is going.  Since one of my prior year’s items was “be as transparent as possible,” I thought I’d share my development plan for the coming 12-18 months here on my blog.  If you’re reading this and you report to me, you’ll get a longer form debrief at our next offsite.

1. Continue making the organization more of a Hedgehog, lending more focus to our mission and removing distractions wherever possible.

2. Move the organization’s leadership team from “pacesetting” to “authoritative” management styles by focusing more on :

    a. standards of excellence around employee behavior and performance: develop a more clear performance management system, raise the bar on accountability around leadership and management issues, shift management training from tools to values-based coaching

    b. clear communication loops: balance open door policy with manager empowerment by getting the executive in charge to fix issues (instead of fixing them myself) and/or facilitating stronger manager-employee communication

    c. constant translation of vision into execution: foster clearer context and deeper employee engagement by not just communicating vision, but communicating HOW the vision becomes reality at every opportunity

3. Sharpen elbows further around leadership team: identify key attributes of success, weed out underperformers, re-scope other roles, and clarify “partner for success” opportunities as part of core responsibilities. Make each individual’s development needs public in the senior team (I guess this is the first step towards that!)

4. Make the organization more nimble, inspiring a bias for action through shifts in priorities and cross-functional swat teams where required

So there you go.  If you work at Return Path, please feel free to hold my feet to the fire in the coming months on these points!

(This is the third in a series of three posts on this topic.)

In previous posts (here, here) , I talked about the difference between Mentors and Coaches and also how to select the right ones for you. Once you’ve selected a Mentor or Coach, here are some tips to get the most out of your engagement.

Starting to work with a CEO Mentor is fairly easy. Give them some materials to help understand your business, and then come prepared to every session with a list of 1-2 topics that are keeping you up at night where you want to benefit from the person’s experience.

Kicking off a CEO Coach engagement is more in-depth. I always recommend starting to work with a CEO Coach by doing a DEEP 360.  Not one that’s a bland anonymous survey instrument, but one that involves the Coach doing 15-20 in-depth interviews with a wide range of people from team to Board to others in the organization to people you’ve worked with outside the organization, including some non-professional contacts.  Let the Coach really learn about you from others.  The reason for this is that, although you may have an area of development that you want to focus on (like I did when I met Marc), you may actually need help in other areas a lot more acutely.

In general,  I’d say these are a few good rules of thumb for getting the most out of your Coach or Mentor relationship and sessions of work together:

• Do your homework.  If you have an assignment to read an article, take a survey, or just write something up, either do it or cancel the next meeting or it will be a waste of everyone’s time
• Be present.  Step away from your desk. Turn off email.  Silence your phone.  These are some of the most valuable times for your own personal development and growth, and they are few and far between when you get to be a CEO.  Treasure them
• Bring your whole self.  Even if your coach is a full 5 on the Shrink-to-Management Consultant scale I mentioned above, people are people, and you’re no exception.  You have a bad day at home — it will show through at work and it will impact your Coach conversations (maybe less so your Mentor ones).  Don’t ignore it.  Mention it up front
• Don’t bullshit.  You know when you’re wrong about something or have made a mistake.  You may or may not be great about admitting it publicly, or even admitting it to yourself.  ADMIT IT TO YOUR COACH.  Otherwise, why bother having one?
• Encourage primary data collection.  The biggest place I’ve seen coaching relationships fail is when the Coach or Mentor only has access to a single point of information about what’s happening in the organization — you.  Even if you’re not in full-on 360 mode, encourage your Coach or Mentor to spend time with others in the organization or on your board here and there and have a direct line of communication with them.  If they don’t and all they’re working off is your perspective on situations, their output will be severely limited or subject to their own conjecture.  Especially if you can’t get the prior bullet point right (garbage in, garbage out!)
• Make it your agenda even if it means changing on the fly.  You may be working on an analysis of your team’s Myers-Briggs profile with your Coach – and that’s the topic of your next meeting – but right before the meeting, you learn that one of your CXOs is resigning.  Change the agenda.  It’s ok.  It’s your time, make it work for you
• Learn to fish.  At the end of the day, a good CEO Coach should offer you ways of thinking about things, ways of being, ways of learning in your organization, processes to give you the ability to do some elements of this by yourself – not just answering questions for you.  Sports trainers are useful for an athlete’s entire career to push them harder in workouts, but they also teach athletes how to work out on their own
• Reality check the advice.  Make sure to test the strategies that Coaches or Mentors are giving you against your organization.  All strategies won’t work in all organizations.  These conversations should offer a variety of strategies – you can pick one or pick none and do something totally different.  The value isn’t in being told what to do, it is in going through the process of deciding what to do for YOUR organization with some expert inputs and reflections on other experiences
• Close the loop.  I’ve written before about how to solicit feedback as a CEO.  To make sure your coaching work is effective, be sure to include feedback loops with your key stakeholders (team and board) on the things you’re working on with your CEO Coach

It’s worth the money.  CEO Coaches can be really expensive.  Like really, really expensive.  $500-1,500/hour expensive.  CEO Mentors can be free and informal, but sometimes they charge as well or ask for advisor equity grants.  Even if you have a thin balance sheet, don’t be shy about adding the expense, and you shouldn’t pay for this personally.  Adding 10-20% to the cost of your compensation will potentially make you twice as effective a CEO.  If your board doesn’t support the expense…well, then you may have a different problem.

There’s a lot written publicly about this topic.  Jason Lemkin at SaaStr has a particularly good post that really puts a fine point on it.  And the coaching team at Beyond CEO Coaching a new boutique coaching firm specializing in coaching black CEOs, writes in “Who are you not to be great?”, “You can play it safe and reduce your risks and likely the rewards, or you can go big.  We at Beyond CEO Coaching want to help you to go big.”

By the way, this entire framework applies to non-CEOs as well.  Every professional would benefit from having a Coach and a Mentor in their life, even if those aren’t paid consultants but more senior colleagues or members of the company’s People Team.  Sometimes a Mentor and a Coach are one and the same…sometimes they are not.

Thanks to a large number of Bolster members I know personally who are CEO Coaches and Mentors for reviewing these posts — Chad Dickerson, Bob Cramer, Tim Porthouse, Marc Maltz, Lynne Waldera, Dave Karnstedt, and Mariquita Blumberg.

What a View, Part II

In Part I, I talked about how Return Path’s 360 reviews have become a central part of our company’s human capital strategy over the past five years.  While most staff members’ reviews have been done for weeks or months now, I just finished up the final portion of my own review, which I think is worth sharing.

I always include my Board in my own 360.  My process is as follows:

1. I send the Board all the raw (and summarized) data from the staff reviews of me, both quantitative and qualitative.

2. I send the Board a list of questions to think about in terms of their view of my performance (see below).

3. I have a third party moderator, in my case a great OD consultant/executive coach that I work with, Marc Maltz from Triad Consulting, meet with the Board (without me present) for 1-2 hours to moderate a discussion of these questions.

4. The moderator summarizes the conversation and helps me marry the feedback from the Board with the feedback from my team.

The questions I ask them to consider are different from the question my staff answers about me, because the relationship and perspective are different.  For each question, I also summarize what their collective response was the prior year to refresh their memory.

1. Staff management/leadership:  How effective am I at building and maintaining a strong, focused, cohesive team?  Do I have the right people in the right roles at the senior staff level?

2. Resource allocation:  Do I do a good enough job balancing among competing priorities internally?  Are costs adequately managed?

3. Strategy:  Did you feel like last year’s strategy session was thorough enough?  Do you think we’re on target with what we’re doing?  Am I doing a good enough job managing to it while being nimble enough to respond to the market?

4. Execution:  How do I and the team execute vs. plan?  What do you think I could be doing to make sure the organization executes better?

5. Board management/investor relations:  Do you think our board is effective and engaged?  Have I played enough of a role in leading the group?  Do you as a director feel like you’re contributing all you can contribute?  Do I strike the right balance between asking and telling?  Are communications clear enough and regular enough?

6. Please comment on how I have handled some of the major issues in the past 12 months (with a listing of critical incidents).

The feedback I got is incredibly valuable, and once I marry it with the feedback I got from my staff, I will have my own killer development plan for the next 12-24 months.