Short of declaring failure and shutting down your company, laying off employees is the worst thing you may have to do as a startup CEO. I’ve had to lay people off on three separate occasions. It was difficult and emotional—those days were the worst of my career, and probably rank in the top 10 worst days of my life, period. This isn’t firing for cause—employees aren’t being asked to leave because of their own failings. They’re being asked to leave because the company can no longer afford to keep them. It’s not their fault.

It’s a truly awful process. Some CEOs will fall into the trap of thinking that because it’s invariably messy, it doesn’t matter how you do it. I couldn’t disagree more. Layoffs are bad, but how you handle them makes all the difference in the world. Here are a few best and worst practices for orchestrating layoffs.

Best Practices

1. Cut earlier and deeper than you have to. You really, really don’t want to go through this a second time. Assume you have less runway than you anticipate, and cut early. Cut more employees than you think you need to in order to reduce the risk of a second round of layoffs. Things are always worse than they look, even when the situation is bad enough to consider layoffs. Financing will take longer than expected to come through, receivables will dry up, and so on. 

2. Remove poor performers. You have no choice but to remove people if their positions are being cut altogether, regardless of performance. However, you can also take this as an opportunity for some major house cleaning. Just be sure to work with someone (a lawyer) who can help you navigate the legalities—particularly if you’re dealing with employees outside the US. 

3. Plan your talking points in advance of meetings. When I’m planning all-hands meetings, I tend to write bullet-point notes and talk freely instead of scripting my comments—but not for this. A round of layoffs is likely to be one of the most emotional moments of your career, and when you face your employees to deliver the news, you won’t be in your usual headspace. Don’t wing it. Plan everything you’re going to say—both to the individuals being let go and to your team as a whole—in advance. How you handle these meetings will depend on the size of your company and how many layoffs you’re doing. Regardless, you want to communicate respect for and appreciation of your employees throughout the process. 

4. Follow layoffs with an all-hands meeting. Layoffs are emotional for the entire team. Follow up with an all-hands meeting to explain what happened, why you made the choices you did—preferably with metrics to back up your decisions—what’s next for the company, and whether people who weren’t laid off are at risk in the future. (Be honest!) Ideally, the people you’re laying off should be included, too. You want to honor and thank them in as public a forum as possible. For those who remain, it’s important to cultivate security and trust. However you’re communicating with your employees, you’ll need to increase your efforts, and clarity is always better. Let them in on the state of the business, financials, and expectations. You don’t want to skip over the pain that comes with layoffs, but you do need to be prepared to move forward effectively. 

5. Treat employees who were laid off with dignity and honor the work they did. This will come into play when we talk about what not to do, but it’s important to remember that they’re being laid off for no fault of their own. One meaningful thing you can do is help people find their next step. Promoting the profiles of your former employees on job boards, portfolio lists, etc., offering your own connections if it’s relevant, or giving excellent referrals when you can are all great places to start. Severance is also key. Be sure to consult your board and follow your company policies, if you have them, then be as generous as you can afford to be. If you can offer a safety net or bridge, do so. 

These folks will still be alumni of your company, so the way you handle them personally will impact how they talk about the organization, rate you on Glassdoor, and refer to you as a leader. Every step of the process matters—whether it’s how you broke the news, how public things were, how helpful your team was, how much you paid—and will impact your company’s brand as an employer and your own reputation as a CEO. 

Worst Practices 

1. (Per above) Do not assume, because layoffs are awful and messy no matter what, that it doesn’t matter how you do it. It absolutely matters. 

2. Do not treat the people you fire like criminals. Don’t hire security guards or bring boxes into the office before breaking the news. Think very carefully about what systems you need to restrict access to, when, and whether there are any loopholes. Sure, you don’t want someone to be able to download a whole list of contacts from HubSpot. But do you really want them to be cut off from their email, calendar, and personal contacts? Shouldn’t you work with them to set up an autoresponder or figure out what happens to their email?

3. Do not promise this will never happen again. You can’t predict the future. You can say “we made the best decision possible, so that hopefully we won’t have to do this again.” Offer reassurance through facts and transparency rather than empty promises. 

4. Do not delegate the responsibility for deciding to lay off employees. As the CEO, this decision is yours to own. Also, do not blame someone else or the economy. Circumstances contribute, but at the end of the day, the buck stops with you, and again, you’re the one making the decision. 

5. Do not make mistakes about who is on which meeting invitation list or which employment list. Double check the list yourself, then have someone else check it. 

FAQs

I held a webinar recently with about 20 CEOs on this topic, and there were a number of questions that came up with interesting crowdsourced answers. Here are some snippets of some of them:

Q: How much severance is the right amount?

A: This is impossible to generalize—if you’re really out of cash, you may have your hands tied. If you can stick to your normal policies, you should. Companies represented on the call tended to give 1-2 weeks per year of service. Other thoughts that came up were: (a) offering a long post-termination exercise period for vested options, (b) accelerating some vesting, (c) creating a Salary Bridge program, which we did once at Return Path. The Salary Bridge program offered people an additional X weeks of continuing severance beyond the standard package if they still hadn’t found a job (but were trying and could show us they were trying) after their severance ran out. Very few people needed this, but the goodwill from offering it was huge.

Q: Have you ever considered salary cuts?

A: Yes. Usually a big layoff will come with some kind of salary cut for those who are staying, even if it’s just executives or just you as the CEO (which is more symbolic than anything else, but symbolism matters). Companies also had experience with doing salary cuts and reinstating the salaries as soon as the economic situation improved. One company talked about doing a 5% salary cut but then offering everyone a 10% bonus based on company financial milestones. In situations like this, it’s also a good idea to share metrics. How many jobs are you preserving by making cuts? 

Q: Do voluntary termination programs work? 

A: They might make you feel better, but be wary of doing them lest you lose key people you don’t want to lose!

Q: Can I expect additional employee attrition after a layoff?

A: Almost certainly. Any time you jolt the system, you’ll produce some unintended consequences. People will feel less stable in their role. Do your best to reassure key employees—even to the point of bringing a couple of them into the know immediately ahead of a layoff—so you don’t lose more people you don’t want to lose. Be wary of offering additional compensation or bonuses for them to stay, unless you are promoting them into expanded responsibilities (which can make sense if you’re consolidating things). Offering some people a raise “for no reason” while you’re letting other people go isn’t a great look.

Q: What about customer communications?

A: Our group was very mixed on whether or not you should do proactive external communications about a layoff. If you run a B2B organization, being a little more transparent with customers shows them you care about them—and gives you an opportunity to talk to them about any changes that might affect them, their service team, or their service levels. In a B2C organization, you’re likely either going to do something public like a short, empathetic blog post, or nothing at all. In all cases, please make sure you have a well developed internal FAQ and clear policies about who can and can’t talk externally as a company representative before doing a layoff so you’re not caught flat-footed.

Layoffs are messy and unfortunate, but you can still handle them artfully as a leader. How you handle layoffs will impact how your company recovers, it’ll impact your reputation as a CEO, and most importantly, it’ll impact the lives of the employees you laid off. I talk a lot about having a people first culture. One of the things I’ve learned about building companies with this in mind is that it’s got to be true all the way through. Even when you resort to layoffs, the people come first. 

(This post also appeared on the Bolster blog.)

Book Not-So-Short:  Not Just for Women

At the request of the women in our Professional Services team, I recently read Sheryl Sandberg’s Lean In:  Women, Work, and the Will to Lead, and while it may seem like dancing the meringue in a minefield for a male CEO to blog about it, I think it’s an important enough topic to give it a shot.  So here goes.

First, given the minefield potential, let me issue a few caveats up front.  These are deep, ages old, complex, societal issues and behaviors we’re talking about here.  There is no quick answer to anything.  There is no universal answer to anything.  Men don’t have the same perspective as women and can come across as observers (which in some respects, they are).  Working moms don’t have the same perspective as stay-at-home moms, or as single women.  We try to be good about all these issues at Return Path, but I’m sure we’ve only scratched the surface.  </caveats>

Perhaps most important, my overall take on the book is that it’s a very good business book that everyone should read – not just women.  I have a strong reaction to the reactions I’ve read and heard about the book – mostly from women dismissing the book because Sandberg has immense financial resources, so how could she possibly know the plight of the ordinary mom, and how could she understand what it is like to be a stay-at-home mom?  That reaction is to dismiss the dismissals!  I found the book to be very broadly applicable.  Of course things about life with a two-working parent family are easier if you have more money.  But that’s completely not the point of the book.  And Sandberg doesn’t once criticize stay-at-home moms for that choice – in fact, she acknowledges feelings of guilt and inferiority around them and admiration for the work they do that benefits all families and kids, not just their own.

Here are a few of the biggest areas of thinking, AHA, or questioning, that the book gave me:

• One of Sandberg’s underlying points is that the world would be a better place with more women in leadership positions, so that’s an important goal.  It’s interesting that few enough of our leaders are women, that it’s hard for me to draw that same conclusion, but it makes sense to me on the surface, and there’s some research about management teams and boards to back it up.  As far as I can tell, the world has yet to see a brutal female dictator.  Or a fair share of political or corporate scandals caused by women.  There are definitely some horror stories of “tough boss” women, but probably no more than “tough boss” men.  It’s interesting to note that in our society, leadership roles seem to be prized for their power and monetary reward, so even if the world wouldn’t be a better place with more female leaders, it would certainly be a more fair place along those two dimensions
• I felt that a bunch of Sandberg’s points about women were more generalizations about certain personality types which can be inherent in men and women.  Maybe they’re more prevalent in women, even much more, but some are issues for some men as well.  For example, her general point about women not speaking up even if they have something to say.  I have seen this trait in women as well as more introverted men.  As a leader, I work hard to draw comments out of people who look like they have something to say in a meeting but aren’t speaking up.  This is something that leaders need to pay close attention to across the board so that they hear all the voices around their tables.  Same goes for some of the fears she enumerates.  Many male leaders I know, myself included at times, have the “fear of being found out as a fraud” thought.  Same goes for the “desire to be liked by everyone” holding people back – that’s not gender specific, either.  All that said, if these traits are much more prevalent in women, and they are traits that drive attainment of leadership roles, well, you get the point
• The fact that women earn 77 cents on the dollar in equivalent jobs for men is appalling.  I’ve asked our People Team to do a study of this by level, factoring in experience and tenure, to make sure we don’t have that bias at Return Path.  I know for sure we don’t at the leadership level.  And I sure as heck hope we don’t anywhere in the organization.  We are also about to launch an Unconscious Bias training program, which should be interesting
• Sandberg made a really interesting point that most of the women who don’t work are either on the low end or high end of the income spectrum.  Her point about the low end really resonated with me – that women who don’t earn a lot stop working if their salaries only barely cover childcare costs.  However, she argues that that’s a very short term view, and that staying in the workforce means your salary will escalate over time, while childcare costs stay relatively flat.  This is compounded by the fact that women who lean back early in their careers simply because they are anticipating someday having children are earning less than they should be earning when they do finally have children.
• The other end of the income spectrum also made sense once I parsed through it – why do women whose husbands make a lot of money (most of whom make a lot of money as well) decide to off-ramp?  Sandberg’s point about the “Leadership ambition gap” is interesting, and her example of running a marathon with the spectators screaming “you know you don’t have to do this” as opposed to “you’ve got this” is really vivid.  See two bullets down for more on this one.  But it might not be straight-up Leadership Ambition Gap so much as a recognition that some of the high-earning jobs out there are so demanding that having two of them in the household would be a nightmare (noting that Dave and Sheryl seem to have figured some of that out), or that moms don’t want to miss out on that much of their children’s lives.  They want to be there…and they can afford to.  Another related topic that I wish Sandberg had covered in more depth is the path of moms who off-ramp, then re-on-ramp once their youngest children are in school, whether into the career they left or a different one.  That would be an interesting topic on many fronts
• Societal influences must matter.  The facts that, in 2011 – Gymboree manufactured onesies that say “smart like Daddy” and “pretty like Mommy,” and that JC Penney teenage girl t-shirts say “I’m too pretty to do homework so my brother has to do it for me” are more than a little troublesome on the surface (unless Gymboree also produces “handsome like Daddy” and “wicked smart like Mommy,” which somehow I doubt).  The fact that women do worse on math and science tests when they have to identify their gender at the top of the test is surprising and shocking
• I am really fortunate that Mariquita only works part time, and it’s unclear to me how our lives would work if we both worked full time, especially given my extremely heavy travel schedule, though I am sure we’d figure it out.  And there’s no way that I carry 50% of the burden of household responsibilities.  Maybe 20-25% at best.  But I was struck by Sandberg’s comments (I am sure true) that in two-working-parent families, women still carry the preponderance of household responsibilities on their shoulders.  I totally don’t get this.  If you both work, how can you not be equal partners at home?  A quick mental survey of a couple of the two-working-parent families we know would indicate that the parents split household responsibilities somewhat evenly, though you can never know this from the outside.  This should be a no brainer.  Sandberg’s point that men need to “lean into their families” is spot on in these cases for sure
• On a related note, Sandberg’s comment that “as women must be more empowered at work, men must be more empowered at home…moms can be controlling and critical…if he’s forced to do things her way, pretty soon she’ll be doing them herself” made me smile.  I have definitely seen this “learned helplessness” on the home front with dads quite a bit over the years
• One really good point Sandberg makes is that younger employees who don’t have kids should be allowed to have a life outside of work just as much as women who do have kids.  And that she pays people for the quality and quantity of their output, not their hours.  These are principles that match our values and philosophy at Return Path 100%
• Probably the most startling moment in the book for me – and I suspect many other men – was Sandberg’s vignette about the young woman at Facebook who was starting to “lean back” because she might someday have a family – before she was even dating anyone!  This really gave me a lot of pause.  If widespread (and I assume it is), there are clearly societal forces at work that we need to do more to help women early in their careers overcome, if they want to overcome them
• Sandberg’s point that a rich and fulfilling career “is a Jungle Gym, not a Ladder” is spot on, but this is true for men as well as women.  It matches our philosophy of Scaling Horizontally perfectly
• Another very poignant moment in the book was when Sandberg talked about how she herself had shown bias against women in terms of who she called on in meetings or lectures during Q&A.  Again, lots of pause for me.  If female leaders have the same societal bias against women, that’s a sign that we all have real work in front of us to help level the playing field around giving women air time.  Similarly, her example of the Heidi/Howard study was fascinating around how women with the same characteristics are perceived differently by both male and female co-workers gives me pause (for the record, I know the Heidi in question, and I like her!).  Likewise, the fact that female leaders are often given unflattering nicknames like “The Iron Lady” – you’d never see something like that for a man in the same position.  At least Thatcher wore the name as a badge of honor

I hope this post doesn’t end up as a no-win piece of writing where all I do is touch a few nerves and inspire no ongoing dialog.  “Let’s start talking about it,” the ending theme of the book, is a great way to end this post as well.  As with all tough issues, articulating the problem is the first step toward solving it.  Women need to allow men (as long as the men are open-minded, of course!) to think what they think, say what they think in a safe space, and blunder through their own learnings without feeling threatened.  And men need to be comfortable having conversations about topics like these if the paradigmatic relationship between women and leadership is going to continue to shift instead of avoiding the topic or just calling in HR.

Hopefully this blog post is one step towards that at my company.  Return Path colleagues – feel free to comment on the blog or via email and share stories of how we’ve either helped you or held you back!  But overall, I’m glad I read this book, and I’d encourage anyone and everyone to read it.

Book Short:  On The Same Page

Being on the same page with your team, or your whole company for that matter, is a key to success in business.  The Four Obsessions of an Extraordinary Executive, by Patrick Lencioni, espouses this notion and boils down the role of the CEO to four points:

1. Build and maintain a cohesive leadership team
2. Create organizational clarity
3. Overcommunicate organizational clarity
4. Reinforce organizational clarity through human systems

Those four points sound as boring as bread, but the book is anything but.  The book’s style is easy and breezy — business fiction.  One of the most poignant moments for me was when the book’s “other CEO” (the one that doesn’t “get it”) reflects that he “didn’t go into business to referee executive team meetings and delivery employee orientation…he loved strategy and competition.”  Being a CEO is a dynamic job that changes tremendously as the organization grows.  This book is a great handbook for anyone transitioning out of the startup phase, or for anyone managing a larger organization.

I haven’t read the author’s other books (this is one in a series), but I will soon!

(This post was written by my colleague Bethany Crystal and originally published on the Bolster blog yesterday. While I am still trying to figure out what posts to put on this blog vs. Bolster’s blog since the blogs are pretty similar, I will occasionally run something in both places.)

At Bolster, we believe that 2021 will mark the rise of the on-demand economy for executives. More than ever before, executives are seeking out roles that distinctly aren’t full-time for a variety of reasons – they’re in between full-time roles and want to stay engaged and meet a wide range of potential employers; they’re retired or semi-retired/post-exit and want to keep working, just not full-time; they’re fully employed but are looking for advisory opportunities to help others; or they are committed to the more flexible lifestyle that being an on-demand affords. As business leaders, you might be wondering how to take advantage of this trend and incorporate on-demand talent onto your existing team. Don’t worry – we’ve got you covered.

Let’s start with a quick primer on the distinct types of on-demand talent. Here are the four most common themes we see among our member network at Bolster:

The Four Types of On-Demand Talent

1. Interim: Someone who is partially or fully dedicated to working with your company, but only temporarily (you can think of them as “filling a gap”)
2. Fractional: Someone who works part-time (or “fractionally”) with your company on an ongoing basis (they “own” the function on a long-term, part-time basis)
3. Advisor or Coach: Someone who supports your existing team by offering external advising, coaching, or mentorship as needed (this might be on a temporary or long-term basis)
4. Project-Based: Someone who is brought on to complete a specific project or a fixed span of work (this is the closest to typical consulting work)

Depending on your business needs, the capacity of your existing team, and your resourcing, you might find it useful to have one or more on-demand executives in the mix at any given time. We’ve also found this can be a great way to keep things fresh at the leadership level and make sure new ideas are circulated with some regularity.

Business Opportunities for On-Demand Talent

While every company’s on-demand talent needs will vary, we’ve already seen a few patterns emerge from the 2,000 executives in our member network. Here are a few times to think about bringing on-demand work to your business.

Choose interim work if you need…

• A temporarily placeholder at the exec level
  Whether unexpected or planned, transitions at the executive level can come with a high cost: Any week that goes by with an unfilled seat adds more work to the team, contributes to business lag, or both. While full executive searches can take six months (or more!) to get right, many CEOs find it helpful to bring on interim help as a “stopgap” in the meantime. The most obvious benefit of interim on-demand work is to prevent your business from falling behind in areas where you may not have a deep bench below the executive level. And you might also consider that bringing in a seasoned professional as you conduct your full-time search will give your team a proxy to compare against, making that placement process a bit easier. Last – while it’s not a guarantee, there’s always the chance that your interim hire is a great fit for you and wants to stick around for the long term! You then benefit from an on-the-job “interview” or audition.
• Surge capacity staffing
  Imagine a situation where your business doesn’t need an executive in a particular function. You’re small, scrappy, and you’re getting along perfectly well with the team you have in place – and you can fill in the bits of executive leadership required for that function yourself from time to time. But then something pops up where you need to be the CEO and can’t afford to ALSO be the CXO. An interim CXO could be the right solution. For example, the 3-5 months run-up to a Series A or B financing could be a good time to bring on an experienced CFO if your only relevant team members are handling AP, AR, and Payroll. Or you could be working on your company’s public launch with a less experienced marketing team and an agency – and an interim CMO could make all the difference between success and sideways.
• Parental leave coverage
  With a growing business trend of increased parental leave coverage, CEOs are starting to use interim executives to fill holes that might temporarily exist on the leadership team. Interim work is particularly useful if there isn’t an obvious “second in command” role on that team who might take on a stretch project in their absence. Implemented correctly, bringing on an interim exec can also help to squash any fears of “getting replaced” while someone is away on leave. As an added bonus, bringing in a new face (if only temporarily) can give the remaining team a chance to “try out” a new leadership style and share feedback about what worked and didn’t work during the interim period.

Choose fractional work if you need…

• A seasoned professional’s experience and skillset (but not all the time)
  Before every full-time leadership hire, there is the sticky “in between” period of need. That’s the period when some work starts piling up, but not quite enough to fill an entire work week for one person at the executive level – or the period when you know you need a more seasoned leader in a function but just can’t afford one full-time. If you don’t have an experienced executive in the role, you miss opportunities for effectively setting up scalable practices and processes. Often, a lack of senior focus in a functional area means that you miss strategic opportunities, and sometimes it also means that you expose yourself to risk that could be avoided with the right person having ownership of the function. This is the perfect time to introduce fractional work to your business. The most classic example of fractional executive talent is the CFO who oversees the bookkeeping and accounting for several companies at once. But you can find a fractional executive for just about anything. You might consider this type of on-demand executive if you don’t yet have anyone in that functional area, if you have a team of less experienced specialists or even a more junior generalist leader in that functional area, if you want a taste of what it’d be like to dedicate more resources there, or if you need just a few things done right, without having to think about them yourself.

Choose advisory or coaching work if you need…

• Mentorship for your current executives
  Sometimes it’s helpful to see what “great” looks like in order to achieve greatness yourself. If you’re looking for a way to give a current leader an added boost to their development plan, consider bringing on someone who can serve as a mentor or advisor on a temporary or long-term basis. Someone who has been in your shoes before and can give advice and guidance based on their experience. This on-demand exec role has two big benefits: The first being that it demonstrates to your executive team that you’re committed to their ongoing success and growth, which boosts morale (and hopefully performance). The second is that you’ll be able to equip your current team with the tools they each need to scale instead of having to bring on a new wave of executives for each business stage. The advisor or coach usually works a few hours per month, once they’ve set up a strong coaching relationship.
• Access to top talent without the full-time price tag
  Just as remote work unlocked the potential to find “the best of the best” without geographic constraints, on-demand work does the same at the executive level. More and more, we’re seeing CEOs incorporate advisors to their business as a way to gain exposure to best in class talent (at a fraction of the cost). This can be a great way to introduce subject matter or functional expertise into your organization without committing to a full-time salary.

Choose project work if you need…

• A fixed-scope expert engagement at the executive level
  Just as tools like Task Rabbit made it possible to find experts to accomplish tasks on a personal level (such as moving furniture or painting a bedroom), on-demand talent makes it possible to find seasoned executives to complete one-off projects at an expert level. That’s why, on Bolster, we ask each each member to indicate what roles they can take on, and also what projects they can be hired to do. As a CEO, you might consider outsourcing some of the crunchy stuff at the exec level that might take a lot of time, or in cases where you need a quick turnaround to get to an MVP. Common projects we’ve seen to date include building sales commission plan structures, designing a go-to-market launch plan for a new product, running due diligence on an acquisition, overhauling pricing and packaging, working on a strategic plan, TAM analysis, budgeting process, or creating a diversity & inclusion strategy for the company.
• An experimental project that won’t distract the current team
  One final area where you might consider on-demand work is for a project that feels more like an addendum to your current business, or an early experiment. At Bolster, we brought on an on-demand executive to help us think through and roll out a brand new product that we’re in the early days of testing right now. We’ve seen other CEOs use project-based work at the exec level for things like evaluating market expansion possibilities or speccing out the MVP of a potential new product.

This is just a short list of some of the possibilities where on-demand talent might support you in your business today. One of our favorite parts about this type of work is just that – the flexibility it offers to you and your team. Whether your business is just getting started or if you’re operating on all cylinders, don’t forget to consider on-demand work as part of your CEO toolkit for this year and beyond.

– Bethany Crystal, February 2, 2021

The Best Place to Work, Part 0

I keep getting questions about a deck I’ve used several times at Techstars, Seedcamp, DreamIt, and the like which is called “7 Ideas for Creating the Best Place to Work.”  So today I will launch a 7-part series over the next 7 weeks to describe my 7 points.  As always, this is not intended to be perfect or comprehensive, but it is a bit of lessons learned over the last 12-13 years at Return Path.  It’s just 7 ideas – not the only 7 ideas.  And there’s nothing magic about the number 7, despite what George Costanza says.  Or Steven Covey.

Here’s the outline:

1. Surround yourself with the best and brightest
2. Create an environment of trust
3. Manage yourself very, very well
4. Be the consummate host
5. Be the ultimate enabler
6. Let people be people
7. Create a thankful atmosphere

Let’s go!  I will create a tag cloud for this series called Best Place to Work.

Book Short:  Like Reading a Good Speech

Leaders Eat Last, by Simon Sinek, is a self-described “polemic” that reads like some of the author’s famous TED talks and other speeches in that it’s punchy, full of interesting stories, has some attempted basis in scientific fact like Gladwell, and wanders around a bit.  That said, I enjoyed the book, and it hit on a number of themes in which I am a big believer – and it extended and shaped my view on a couple of them.

Sinek’s central concept in the book is the Circle of Safety, which is his way of saying that when people feel safe, they are at their best and healthiest.  Applied to workplaces, this isn’t far off from Lencioni’s concept of the trust foundational layer in his outstanding book, Five Dysfunctions of a Team.  His stories and examples about the kinds of things that create a Circle of Safety at work (and the kinds of things that destroy them) were very poignant.  Some of his points about how leaders set the tone and “eat last,” both literally and figuratively, are solid.  But his most interesting vignettes are the ones about how spending time face-to-face in person with people as opposed to virtually are incredibly important aspects of creating trust and bringing humanity to leadership.

My favorite one-liner from the book, which builds on the above point and extends it to a corporate philosophy of people first, customer second, shareholders third (which I have espoused at Return Path for almost 15 years now) is

Customers will never love a company unless employees love it first.

A couple of Sinek’s speeches that are worth watching are the one based on this book, also called Leaders Eat Last, and a much shorter one called How Great Leaders Inspire Action.

Bottom line:  this is a rambly book, but the nuggets of wisdom in it are probably worth the exercise of having to find them and figure out how to connect them (or not connect them).

Thanks to my fellow NYC CEO Seth Besmertnik for giving me this book as well as the links to Sinek’s speeches.

In Defense of Email, Part 9,732

I commented today on our partner Blue Sky Factory’s CEO, Greg Cangialosi’s excellent posting in defense of email as a marketing channel called Email’s Role and Future Thoughts.  Since the comment grew longer than I anticipated, I thought I’d re-run parts of it here.

A couple quick stats from Forrester’s recent 5-year US Interactive forecast back up Greg’s points con gusto:

– 94% of consumers use email; 16% use social networking sites (and I assume they mean USE them – not just get solicitations from their friends to join).  That doesn’t mean that social networking sites aren’t growing rapidly in popularity, at least in some segments of the population, and it doesn’t mean that email marketing may not be the best way to reach certain people at certain times.  But it does mean that email remains the most ubiquitous online channel, not to mention the most “pull-oriented” and “on demand.”

– Spend on email marketing is $2.7b this year, growing to $4.2b in 2012.  Sure, email by 2012 is the smallest “category” by dollars spent, but first of all, one of the categories is “emerging channels,” which looks like it includes “everything else” in the world other than search, video, email, and display.  So it includes mobile as well as social media, and who knows what else.  Plus, if you really understand how email marketing works, you understand that dollars don’t add up in the same way as other forms of media since so much of the work can be done in-house. 

What really amazes me is how all these “web 2.0” people keep talking about how email is dying (when in fact it’s growing, albeit at a slower rate than other forms of online media) and don’t focus on how things like classifieds and yellow pages are truly DYING, and what that means for those industries.

I think a more interesting point is that in Forrester’s forecast, US Interactive Marketing spend by 2012 in aggregate reached $61b, more than triple where it is today — and that the percent of total US advertising going to interactive grows from 8 to 18 over the five years in the forecast. 

The bigger question that leaves me with is what that means for the overall efficiency of ad spend in the US.  It must be the case that online advertising in general is more efficient than offline — does that mean the total US advertising spend can shrink over time?  Or just that as it gets more efficient,
marketers will use their same budgets to try to reach more and more prospects?

Book Short:  The Little Engine that Could

Authors Steven Woods and Alex Shootman would make Watty Piper proud.  Instead of bringing toys to the children on the other side of the mountain, though, this engine brings revenue into your company.  If you run a SaaS business, or really if you run any B2B business, Revenue Engine:  Why Revenue Performance Management is the Next Frontier of Competitive Advantage, will change the way you think about Sales and Marketing. The authors, who were CTO and CRO of Eloqua (the largest SaaS player in the demand management software space that recently got acquired by Oracle), are thought leaders in the field, and the wisdom of the book reflects that.

The book chronicles the contemporary corporate buying process and shows that it has become increasingly like the consumer buying process in recent years.  The Consumer Decision Journey, first published by McKinsey in 2009, chronicles this process and talks about how the traditional funnel has been transformed by the availability of information and social media on the Internet.  Revenue Engine moves this concept to a B2B setting and examines how Marketing and Sales are no longer two separate departments, but stewards of a combined process that requires holistic analysis, investment decisions, and management attention.

In particular, the book does a good job of highlighting new stages in the buying process and the imperatives and metrics associated with getting this “new funnel” right.  One that resonated particularly strongly with me was the importance of consistent and clean data, which is hard but critical!  As my colleague Matt Spielman pointed out when we were discussing the book, the one area of the consumer journey that Revenue Engine leaves is out is Advocacy, which is essential for influencing the purchase process in a B2B environment as well.

One thing I didn’t love about the book is that it’s a little more theoretical than practical. There aren’t nearly enough detailed examples.  In fact, the book itself says it’s “a framework, not an answer.”  So you’ll be left wanting a bit more and needing to do a bit more work on your own to translate the wisdom to your reality, but you’ll have a great jumping off point.

Book Short:  Vulnerability Applied to Leadership

Getting Naked:  A Business Fable About Shedding The Three Fears That Sabotage Client Loyalty (book, Kindle), is Patrick Lencion’s latest fable-on-the-go book, and it’s as good a read as all of his books (see list of the ones I’ve read and reviewed at the end of the post).

The book talks about the power of vulnerability as a character trait for those who provide service to clients in that they are rewarded with levels of client loyalty and intimacy.  Besides cringing as I remembered my own personal experience as an overpaid and underqualified 21 year old analyst at how ridiculous some aspects of the management consulting industry are…the book really made me think.  The challenge to the conventional wisdom of “never letting ‘em see you sweat” (we *think* vulnerability will hurt success, we *confuse* competence with ego, etc.) is powerful.  And although vulnerability is often uncomfortable, I believe Lencioni is 100% right – and more than he thinks.

First, the basic premise of the book is that consultants have three fears they need to overcome to achieve nirvana – those fears and the mitigation tactics are:

1. Fear of losing the business:  mitigate by always consulting instead of selling, giving away the business, telling the kind truth, and directly addressing elephants in the room
2. Fear of being embarrassed:  mitigate by asking dumb questions, making dumb suggestions, and celebrating your mistakes
3. Fear of feeling inferior:  mitigate by taking a bullet for the client, making everything about the client, honoring the client’s work, and doing your share of the dirty work

But to my point about Lencioni being more right than he thinks…I’d like to extend the premise around vulnerability as a key to success beyond the world of consulting and client service into the world of leadership.  Think about some of the language above applied to leading an organization or a team:

• Telling the kind truth and directly addressing elephants in the room:  If you’re not going to do this, who is?  There is no place at the top of an organization or team for conflict avoidance
• Asking dumb questions:  How else do you learn what’s going on in your organization?  How else can you get people talking instead of listening?
• Making dumb suggestions:  I’d refer to this more as “bringing an outside/higher level perspective to the dialog.”  You never know when one of your seemingly dumb suggestions will connect the dots for your team in a way that they haven’t done yet on their own (e.g., the suggestions might not be so dumb after all)
• Celebrating your mistakes:  We’re all human.  And as a leader, some of your people may build you up in their mind beyond what’s real and reasonable.  Set a good example by noting when you’re wrong, noting your learnings, and not making the same mistake twice
• Taking a bullet for your team, making everything about your team and honoring your team’s work:  Management 101.  Give credit out liberally.  Take the blame for team failings.
• Doing your share of the dirty work:  An underreported quality of good leaders.  Change the big heavy bottle on the water cooler.  Wipe down the coffee machine.  Order the pizza or push the beer cart around yourself.  Again, we’re all human, leaders aren’t above doing their share to keep the community of the organization safe, fun, clean, well fed, etc.

There’s a really powerful message here.  I hope this review at least scratches the surface of it.

The full book series roundup as far as OnlyOnce has gotten so far is:

• The Three Signs of a Miserable Job (post, book)
• The Five Temptations of a CEO (post, book)
• The Four Obsessions of an Extraordinary Executive (post, book)
• Death by Meeting (post, book)
• The Five Dysfunctions of a Team (post, book, Field Guide)
• Silos, Politics and Turf Wars (post, book)
• Getting Naked (post, book)

Book short:  Life Isn’t Just a Wiki

One of the best things I can say about Remote: Office Not Required,  by Jason Fried and David Heinemeier Hansson, is that it was short.  That sounds a little harsh – part of what I mean is that business books are usually WAY TOO LONG to make their point, and this one was blessedly short.  But the book was also a little bit of an angry rant against bad management wrapped inside some otherwise good points about remote management.

The book was a particularly interesting read juxtaposed against Simon Sinek’s Leaders Eat Last which I just finished recently and blogged about here, which stressed the importance of face-to-face and in-person contact in order for leaders to most effectively do their jobs and stay in touch with the needs of their organizations.

The authors of Remote, who run a relatively small (and really good) engineering-oriented company, have a bit of an extreme point of view that has worked really well for their company but which, at best, needs to be adapted for companies of other sizes, other employee types, and other cultures.  That said, the flip side of their views, which is the “everyone must be at their cubicle from 9 to 5 each day,” is even dumber for most businesses these days.  As usual with these things, the right answer is probably somewhere in between the extremes, and I was reminded of the African proverb, “If you want to go fast, go alone. If you want to go farm go together” when I read it.  Different target outcomes, different paths.

I totally agree with the authors around their comments about trusting employees and “the work is what matters.”  And we have a ton of flexibility in our work at Return Path.  With 400 people in the company, I personally spend six weeks over the summer working largely remote, and I value that time quite a bit.  But I couldn’t do it all the time.  We humans learn from each other better and treat each other better when we look at each other face to face.  That’s why, with the amount of remote work we do, we strongly encourage the use of any form of video conferencing at all times.  The importance of what the authors dismiss as “the last 1 or 2% of high fidelity” quality to the conversation is critical.  Being in person is not just about firing and hiring and occasional sync up, it’s about managing performance and building relationships.

Remote might have been better if the authors had stressed the value that they get out of their approach more than ranting against the approaches of others.  While there are serious benefits of remote work in terms of cost and individual productivity (particularly in maker roles), there are serious penalties to too much of it as well in terms of travel, communication burden, misunderstandings, and isolation.  It’s not for everyone.

Thanks to my colleague Hoon Park for recommending this to me.  When I asked Hoon what his main takeaway from the book was, he replied:

The importance of open communication that is archived (thus searchable), accessible (transparent and open to others) and asynchronous (doesn’t require people to be in the same place or even the same “timespace”).  I love the asynchronous communication that the teams in Austin have tried: chatrooms, email lists (that anyone can subscribe to or read the archives of), SaaS project management tools. Others I would love to try or take more advantage of include internal blogs (specifically the P2 and upcoming O2 WordPress themes; http://ma.tt/2009/05/how-p2-changed-automattic/), GitHub pull requests (even for non-code) and a simple wiki.

These are great points, and good examples of the kinds of systems and processes you need to have in place to facilitate high quality, high volume remote work.

Book Short:  Culture is King

Joy, Inc.:  How We Built a Workplace People Love, by Richard Sheridan, CEO of Menlo Innovations, was a really good read. Like Remote  which I reviewed a few weeks ago, Joy, Inc. is ostensibly a book about one thing — culture — but is also full of good general advice for CEOs and senior managers.

Also like Remote, the book was written by the founder and CEO of a relatively small firm that is predominately software engineers, so there are some limitations to its specific lessons unless you adapt them to your own environment. Unlike Remote, though, it’s neither preachy nor ranty, so it’s a more pleasant read.  And I suppose fitting of its title, a more joyful read as well. (Interestingly on this comparison, Sheridan has a simple and elegant argument against working remotely in the middle of the book around innovation and collaboration.)

Some of the people-related practices at Sheridan’s company are fascinating and great to read about. In particular, the way the company interviews candidates for development roles is really interesting — more of an audition than an interview, with candidates actually writing code with a development partner, the way the company writes code. Different teams at Return Path interview in different ways, including me for both the exec team and the Board, but one thing I know is that when an interview includes something that is audition-like, the result is much stronger. There are half a dozen more rich examples in the book.

Some of the other quotable lines or concepts in the book include:

• the linkage between scalability with human sustainability (you can’t grow by brute force, you can only grow when people are rested and ready to bring their brain to work)
• “Showcasing your work is accountability in action” (for a million reasons, starting with pride and ending with pride)
• “Trust, accountability, and results — these get you to joy” (whether or not you are a Myers-Briggs J, people do get a bit of a rush out of a job well done)
• “…the fun and frivolity of our whimsically irreverent workplace…” (who doesn’t want to work for THAT company?)
• “When even your vendors want to align with your culture, you know you’re on the right path” (how you treat people is how you treat PEOPLE, not just clients, not just colleagues)
• “One of the key elements of a joyful culture is having team members who trust one another enough to argue” (if you and I agree on everything, one of us is not needed)
• “The reward is in the attempt” (do you encourage people to fail fast often enough?)
• “Good problems are good problems for the first five minutes. Then they just feel like regular problems until you solve them” (Amen, Brother Sheridan)

The benefits of a joyful culture (at Return Path, we call it a People-First culture) have long been clear to me. As Sheridan says, we try to “create a culture where people want to come to work every day.” Cultures like ours look soft and squishy from the outside, or to people who have grown up in tough, more traditional corporate environments. And to be fair, the challenge with a culture like ours is keeping the right balance of freedom and flexibility on one side and high performance and accountability on the other. But the reality is that most companies struggle with most of the same issues — the new hire that isn’t working out or the long-time employee who isn’t cutting it any more, the critical path project that doesn’t get done on time, the missed quarter or lost client.  As Sheridan notes though, one key benefit of working at a joyful company is that problems get surfaced earlier when they are smaller…and they get solved collaboratively, which produces better results. Another key benefit, of course, is that if you’re going to have the same problems as everyone else, you might as well have fun while you’re dealing with them.

If you don’t love where you work and wish you did, read Joy, Inc. If you love where you work but see your company’s faults and want to improve them, read Joy, Inc. If you are not in either of the above camps, go find another job!