Invantage Advising

Category: Psychology of Business

  • How to To Avoid Bad Business Relationships

    How to To Avoid Bad Business Relationships

    Originally appeared in Forbes.com 1/1/18.

    Business runs on relationships. Which means that as with personal relationships, we can and will make mistakes. Every marriage starts out with the best intentions, but 30% (at least) end in divorce. Every CEO is hired with optimism (and great investment.)  But a significant percentage will end in forced turnovers, most of these due to ethical problems.

    Failed relationships in business have high costs, both financial and emotional –expensive golden parachutes, failed hires who waste costly training, partnerships and investments that lead to misery and conflict, investments that make you wish you had put your money anywhere else, buyouts that lead to the destruction of a business you’ve nurtured over decades.

    The owner of a branding firm, listening to a talk on how to get the ideal client, asked, in the Q &A, “Ok, but what about nightmare clients?” A venture capitalist told me her firm’s biggest problem is finding out—too late—that the founders of the firms they’ve invested in are impossible to work with.

    Can bad business relationships be prevented? Not entirely. But two strategies will help improve the odds of avoiding a painful business divorce.

    • Know what positive and negative indicators to look for before entering into a business relationship.
    • And think twice when positive values are missing or negative ones raise red flags.

    Positive Indicators

    Elsewhere, I’ve laid out a model of leadership that identifies 5 essential character traits and cognitive capacities you should look for in a leader before you entrust him or her with responsibility for fortunes and lives. The model is based on a marriage of two unexpected bedfellows—100 years of research and thinking in psychology and psychoanalysis, and a remarkable document on leadership, the Army Field Manual on Leader Development. Possession of these five vital capacities does not guarantee success. But significant deficiencies, combined with a failure of self-awareness and absence of the ability to learn and develop does guarantee failure or disaster. The five capacities are:

    • Trust—the ability to inspire trust and trust others
    • Self-control/Discipline
    • Judgement/Critical Thinking
    • Self-Awareness
    • Empathy

    Assess these five positive traits before committing to an important business relationship.  We all have weaknesses and deficits.  Probe to see if your prospective partner/CEO/President/senior manager is aware of the areas where he needs to improve and has specific, meaningful ideas about how to accomplish that. He should be open and non-defensive with a concrete plan for dealing with areas of deficit. You don’t need to worry about a leader who can say, “I know my vision and drive gets in the way of my being empathic, so I make sure I have a trusted advisor who says, ‘Slow down’ and tells me I’m neglecting to take into account the effect my decision is going to have on others.”

    Negative Indicators

    If you feel something is off or wrong, it probably is. Don’t ignore your gut reaction out of wishful thinking or search fatigue.

    If someone has behaved badly in the past they are likely to do it again, unless they’ve gone through an extensive process of self-examination and personal change and can openly describe this process. By all means, give someone a second chance, but only if he or she has tackled the personal vulnerabilities that led to past problems and has an ongoing plan to deal with them. Non-defensive openness in discussing this plan is essential.

    Pay attention to red flags.  A history of litigious behavior is a non-starter. So is any hint of dishonesty.

    As you are getting to know a potential partner in business, listen to what she reveals when talking about her past business relationships. And pay attention to how she treats you as you jointly negotiate the early phase of a working relationship. A person’s character comes through whether she’s planning a get-acquainted lunch or negotiating a high-stakes merger. If someone is exhausting when you are trying to set up a phone call, you can be sure it won’t be any better when you are closing a major deal.

    I watch for personality traits and habitual behaviors that predict business relationship difficulties. Here are some character types that lead to problematic and tiring business relationships:

    • Blamers – Don’t sign on with people whose narratives of their past business relationships are dominated by grievances and blaming. Oddly, some people with this character trait can be very engaging. They tell stories of alleged unfairness that are compelling and may activate an urge in you to prove you’re better than all the villains they’ve encountered in the past. Don’t fall for these “convincing blamers.” Always look for self-awareness – does the person think about his contribution to a past problem?
    • Dependent types—While this is unlikely to be a problem in CEO selection, be on the lookout for this trait when you’re considering taking on a new client. Do you feel like you have to do all the thinking, planning and organizing? Some people quickly turn every relationship, business or personal, into a parent-child one. They don’t want your expertise, they want to be taken care of.
    • Over-idealizers –Beware of individuals who think you are just fantastic and tell you that repeatedly. Some who practice this flattery are sincere, but the idealization can flip into blame when you disappoint (see “blamers,” above). For others, it continues unabated, covering up an immaturity and mental laziness that will leave you doing all the work.
    • Entitled and exhausting—This trait will show itself in the earliest contacts. The danger is you won’t take it seriously. I was once approached by another consultant who wanted to talk about collaborating on an approach to a new market. As we planned a get-acquainted coffee, she suggested a café near her apartment, in a neighborhood I never have reason to go to.  I decided to be agreeable and met her at the place she requested, telling myself the inconvenience was no big deal.  And it wasn’t. But the character trait of entitlement was. I should have known that our first foray into joint consulting would be awful. I had to quickly terminate the nascent partnership.
    • Strangely passive/indifferent—Unfortunately, this personality problem is difficult to detect early on—it emerges over time. As you try to work together you find yourself getting increasingly frustrated by the other person’s lack of initiative, emotional flatness and willingness to let nothing happen. Get out when you can.

    People in business are constantly entering into relationships—choosing a critical leader, engaging an advisor, considering a partner or buyer, investing in a new CEO’s business, contracting with a new client, agreeing to be a mentor. Giving some thought to the personality issues and interpersonal psychology underlying relationships can help prevent sunk cost, regret and frustration down the road.

  • Want To Avoid A Catastrophe When Hiring A New CEO? Try Using This Simple Checklist

    Want To Avoid A Catastrophe When Hiring A New CEO? Try Using This Simple Checklist

    This post was originally published on the Forbes online Leadership Blog on 11/29/17.

    What are the fundamental cognitive capacities and character traits that a person absolutely must have to fulfill a leadership role when lives and fortunes are at stake?   I became interested in developing a simple tool that defined these fundamentals.   My search was initially prompted by curiosity about the language of the U.S. Constitution’s 25th Amendment, much in the news lately, which states, in Article 4,  that the Vice President and a majority of the Cabinet can remove a President from duty if he is “unable to discharge the powers and duties of his office.”

    I started to wonder how the Vice President and cabinet members would actually critically assess “ability to discharge the powers and  the duties of the office.”  What standard could they use?  A little searching led me to conclude that there really wasn’t such a standard readily available.  But as a psychiatrist, I knew about “ego functions” and “executive functions”, two sets of ideas that together describe in detail the specific mental and emotional components that go into the creation of  a high functioning, reliable adult.

    A little more searching led me to a remarkable document, the Army Field Manual on Leader Development (AFM). In over 130 pages, the AFM lays out the U.S. Army’s expectations regarding core capacities for leadership.  In fact, the AFM is based on the same well-founded psychological knowledge about adult development and functioning that I was familiar with.

    I distilled the AFM’s core leadership competencies, integrated it with my psychiatric knowledge and experience and created a five-point checklist for determining ability to serve in a position of high responsibility.

    But it occurred to me that the President of the United States is far from the only person to whom we entrust our lives or fortunes—the checklist would be useful in a Board’s search for a new CEO, a university’s search for its next President, or even your search for the next nanny you are going to trust with your children’s lives. VC firms considering an investment would be wise to  ensure a company’s CEO possesses these essential capacities.

    In assessing a potential leader, you can’t expect perfection.  But you should expect a leader to be acutely aware of any personal shortcomings and have a positive, ongoing plan to improve and compensate for weaknesses.

    Possession of these core competencies does not guarantee leadership success. It’s the reverse. Serious deficiencies in one or more of these capacities can predict significant problems or failures.

    Five Core Cognitive Capacities And Character Traits A Leader Must Have

    Here is a brief introduction to the five core cognitive capacities and character traits a leader at a very high level of responsibility needs:

    Trust—This includes both the ability to inspire trust and the ability to trust others. The leader lacking in trust can’t form functional teams, is drained of energy by habitually feeling beleaguered and consistently blames others. Mutual trust is essential to the maintenance of an ethical climate in an organization.

    Discipline/Self-control—A leader must have the capacity to contain himself in the fact of strong negative emotions and not resort to angry outbursts, blaming, or impulsive action. Self-control is necessary for a powerful leader to resist temptation, wait for additional information, think before acting, and avoid the abuse of power.

    Critical Thinking/Judgment— The abilities to assess, plan, strategize, problem solve and analyze are all dependent on critical thinking, perhaps the highest level mental function. The capacity for critical thinking allows a leader to anticipate far-reaching consequences of actions, gather and synthesize opinions and data, remember past experiences and use them to inform but not imprison current thinking.

    Self-awareness— A leader lacking in this trait is blind to her weaknesses and biases and therefore unable to compensate for them or grow in capacity. She cannot assess her impact on others and as a result her communications are confusing.  Because she is unable to monitor her own emotional states she is vulnerable to plowing into obstacles or creating crises. Without self-awareness, a leader is dangerously blind to what she doesn’t know.

    Empathy—Empathy is the capacity that allows a leader to understand the perspectives and feelings of others and foresee the impact of his actions and events on them. Effective communication depends on empathy. Without leader empathy, team morale is fragile.  The leader lacking in empathy is driven by his own needs and blind to or indifferent to the needs of others.   Empathy is not the same as compassion, or caring about others’ needs and experience.  Manipulative and authoritarian leaders can be adept at intuiting other peoples’ vulnerabilities and exploiting them.  Adding the capacity to care about—not just perceive—the experience of others creates a beloved leader.

    The search for the traits of great leaders permeates business literature, both popular and academic. What’s different about this model?  Most attempts to identify the traits of great leaders look to real-life examples.  For example, what made Jack Welsh, Steve Jobs, John D. Rockefeller etc. transformative business leaders?  The five core competencies model starts in the opposite direction.  Based on a solid century of psychological and psychoanalytic research and theory, the model describes the fundamental capacities of a strong, mature, wise, trustworthy, healthy adult human being.  Let’s start there in selecting our leaders.

  • Want to be a Great Leader? Never Intentionally Humiliate Anyone

    Want to be a Great Leader? Never Intentionally Humiliate Anyone

    This post was originally published on Forbes Online October 6, 2017

    It didn’t take Rex Tillerson’s reported mega–gaffe (originally reported by NBC news) — allegedly calling his image-sensitive boss a “moron” at a Pentagon meeting — to acquaint us with the idea that it’s a bad idea to humiliate your boss in public. No doubt Tillerson, who neither confirmed nor denied the report as of this writing, knows that as well and never intended his muttered or sputtered comment to be public. The hot water he’s swimming in does remind us that there’s no such thing as “private” any more. It’s wise to proceed on the principle that you should always consider yourself in “public” when mocking or insulting your boss.

    Less obvious, perhaps, is the principle that a leader should never humiliate anyone.  Period.  Never as a strategy, certainly. Never on purpose. Never “by accident” if you can possibly avoid it.  And if you do humiliate someone inadvertently, make amends quickly.

    Here’s why humiliation is  so damaging to both the leader and the led.

    There is no human immune to the feeling of humiliation, a sickening flush of exposure and shame when someone makes us look different, foolish, stupid, ugly or unlikeable. I suspect it’s a remnant of our evolutionary hard-wiring designed to reinforce our ability to belong to the group, which back in the day  was essential to survival.

    Acting and appearing in ways that meet social norms still has survival value. Correcting your peoples’ odd, inappropriate or culturally unacceptable behavior has value in business, as does, obviously, delivering criticism. But do it tactfully, or in private. Using humiliation to change people’s behavior is not just costly — it leads to employee disengagement or departure for starters — it also does not work.

    A person who feels humiliated retreats automatically to a defensive position and can’t listen constructively. So, their behavior isn’t going to change; they’re just going to hate and mistrust you.  Their loyalty will be weakened  and their motivation to succeed and make you look good will be diminished, if not damaged irreparably. Inevitably, humiliation is followed by anger or even rage, which becomes  even more dangerous when that anger is suppressed and out of the person’s awareness.

    There is one exception to humiliation having an entirely negative effect. I know people who have been humiliated by the consequences of their own bad behavior.  That deep sense of exposure and failure can be a powerful motivator to change and succeed.  But this only happens when the person sees herself as coming up short compared to her own ambitions, standards and ideals — not when the humiliation is driven by someone else.

    There are some obvious ways leaders humiliate people — yelling at them publicly, mocking them, criticizing them contemptuously in front of others.  The Pittsburgh Post Gazette recently reported on a document written by disgraced Congressman Tim Murphy’s chief-of-staff.  It makes for wince-inducing reading, amounting to a manual of “what not to do” as a leader.  The memo describe Murphy’s humiliating patterns of behavior towards his staff including putting them  in a position when they can’t succeed and then yelling at them for failing, asking the impossible and getting enraged when it’s not delivered and refusing to adjust his behavior when grave concerns are brought to his attention.

    Meanwhile, the now too familiar reports of sexual harassment and bullying in Silicon Valley, the offices of media moguls and on politicians’ platforms also provide an obvious “don’t” list for the leader who accepts that humiliating people is bad for business, whoever the target is.  This means, among other things, do not comment gratuitously or publicly on someone’s appearance or behavior.  This includes breast size, weight, dress, voice, disability, quirk, height, tic, or hand size.

    Paradoxically, it may be harder to avoid humiliating people in the obvious ways I just outlined, since excessive anger, entitlement, corporate culture, alcohol and other disinhibiting forces are often implicated when a leader habitually humiliates others.  And these are tough problems to tackle, not responsive to simple do’s and don’ts, or as we know, well-written employment policies.  A leader who uses humiliation regularly needs to be do some serious self-examination and change, or be confronted and tackled by peers or superiors and advised to alter his behavior or get out.

    There are less obvious ways though that even a well-intentioned leader can inadvertently humiliate people. Because these missteps tend to be driven by oversight or hurry rather than character, they are more avoidable or correctable.

    Here are three best practices to avoid inadvertently humiliating people on your team:

    1. Make sure that everyone personally affected by a change is informed—preferably personally—before news goes out to a larger audience.  I’ve seen project managers learn that their project was disbanded or re-named through emails sent to a larger group.  When I’ve asked the leaders involved why they didn’t let the effected person know beforehand, they often just didn’t think about how that person would feel and simply wanted to move forward. It’s worth the time it takes to call each manager impacted by a change before the whole company learns about it. You’re not asking their permission, but rather communicating that you know they might have feelings about it.  Nothing is more humiliating for a manager than learning about a change at the same time his team does.

    2. Believe, or act as if you believe, that everyone is doing the best they can. I learned this from one of the most extraordinary leaders I know, who always projected a sense of calm and purpose no matter what the crisis swirling around her.  I asked her how she could deal with the immense internal politics she faced every day in the large enterprise she ran and she said, “I just assume everyone is doing the best they can.” That doesn’t mean you can’t fire someone whose best isn’t good enough, but don’t get angry and humiliate them.

    3. Back off when you’re angry or frustrated. You can only correct people effectively when you are calm.

    Finally, apologize when you’ve humiliated someone.  A video was leaked of MSNBC host Lawrence O’Donnell swearing in an angry rant due to technical difficulties during a September show.

    O’Donnell followed up promptly with an apology tweet, and I hope with a personal apology to his technical staff, none of whom, presumably, wanted the show to go badly.  What I like most about O’Donnell’s tweet is “a better person would’ve had a better reaction.” He’s right, and offers no defense.  In doing so, he humanizes himself without offering a justification, reminding us we all wish at times we were better people.

  • Rising Women Leaders — Overcoming 10 Obstacles To Powering Up

    Rising Women Leaders — Overcoming 10 Obstacles To Powering Up

     

    This post was original published on Forbes’ online Leadership blog on 11/19/17.

    Most women leaders I’ve worked with, including many with tremendous leadership talent, are uncomfortable with the use of power and find it tough to endure the associated interpersonal stresses. But gaining power over people and resources is what allows you to get good things done.  It’s worth getting comfortable with it.

    I’ve also met a handful of women who have reached the top echelons of power— CEO, department chair, organizational president— who seem very comfortable with the mechanics and psychological demands of being in a power position.  They can even appear to be invulnerable.

    But for women who have not yet developed a rhinoceros-hide shell, but still are excited by the rewards of leadership, here are ten problem attitudes and behaviors that many women (and some more sensitive men) new to leadership often have in relation to power—and how to deal with them:

    1. Discomfort with having the power to decide, leading to over-reliance on consensus-building. A good leader gathers as much data and input as she needs to reach a decision and then makes it decisively. You’ll need to learn to tolerate (ideally, calmly ignore) the surprise, anger or generalized grumbling that may arise among those whose opinions were not followed.

    2. Over-responsiveness to other peoples’ agendas at the expense of preserving time and energy to pursue your own. Always keep your own agenda and goals in mind.  Women tend to be adept at continuously scanning the environment and subliminally registering other people’s needs. And then thinking they need to do something about them! Too often I’ve seen women leaders listen willingly to other peoples’ agendas without even noticing they are sidelining their own priorities.

    3. Hesitation about taking actions that will make other people unhappy. Leadership inevitably involves making many decisions that make some people unhappy.
    Some necessary decisions, like letting someone go, are obviously painful. But even everyday decisions that reject someone’s opinion or don’t meet someone’s wishes cause emotional pain. Women are hardwired or socialized (or probably some of both) to monitor the social environment.  So, we tend to be more aware of negative emotions in the people around us. As a leader, you need to be willing to cause unhappiness and not let it drain your energy or distort your focus.

    4. No (or insufficient) “empathic wall.” Empathy is a vital capacity for successful leadership.  Without it you can’t communicate with your team or customers, manage competently or anticipate problems.  However, too much empathy is a liability.  It’s vital to be able to stand in another person’s shoes, but it’s equally vitally to get your own back on quickly.  This requires a functioning “empathic wall”—the ability to appropriately screen out other peoples’ emotional responses so that your system doesn’t overload.

    5. Difficulty visualizing yourself as a leader. If you don’t see yourself as a leader, you will miss leadership opportunities. Think about what a leader does operationally– takes initiative, sets the agenda, makes decisions, starts things, crafts strategy. When you face a problematic situation, think, “What should a leader do in this situation?” Then remind yourself to go ahead and do it, even if you haven’t been officially designated as “leader”.  Displaying leadership activity is what gets you recognized and promoted to leadership positions.  Let’s say you see a major problem you want to bring to your boss’s attention. Instead of saying “What do you want to do about this,” write a memo to your boss saying you see a problem, have a specific solution to propose and would like to go ahead and implement it.

    6. Lack of familiarity and/or comfort with the social psychology of power. We work in social systems that have certain power cues that signify leadership. Women often don’t exhibit these cuing behaviors.  They include: setting and controlling the agenda for meetings, physically holding on to the chair’s position when leading a meeting, initiating and especially ending discussions and having people come to you at your convenience (time and place) for an appointment rather than the reverse. Instead of emailing “Are you available Tuesday at 10?  Where do you want to meet?” say “Let’s meet in my office at 10 Tuesday.” This doesn’t mean you’re a jerk.  But leave it up to the other person to respond, “Sorry,Tuesday at 10 doesn’t work for me, is there another time you’re free?” if they need to.

    7. Being vague about what you expect of people, both above and below you. Follow up on meetings with a memo outlining what was agreed on and next steps you are going to take and those you expect others to take.

    8.  Waiting for permission. This one is self-explanatory.  Don’t do it.  Within reason. Plough ahead with your ideas. When permission or a go-ahead is essential, push for it and try to frame the matter as a done deal: “I’m ready to put the new plan in place. Let me know if you have any issue you want to discuss.”

    9. Lack of practice thinking and acting strategically about power. Power is a resource that needs to be managed, allocated intelligently and protected.  Try to map out who is going to react to your exercising control, what the immediate impact will be and what longer term effects might be.   Plan two or three steps ahead.

    10. Failure to take credit. Some of the leaders I admire most are those who publicly and regularly give specific credit to the people on their team.  But don’t confuse expressing gratitude and encouragement to others with relinquishing the credit you deserve.  It will take your breath away when a peer leader or boss takes credit for your work, but it does happen. Try to prevent this by publicly claiming your own work before somebody else does.

    Without power, you can’t chart a course, alter an outcome or get resources to bring your ideas to life. You will not be transformed into a Machiavellian monster if you let yourself get comfortable with it.

  • New Forbes Blog on Self-Awareness

    New Forbes Blog on Self-Awareness

    I’m delighted to join the team of contributors blogging for the Forbes leadership channel.  Take a look at my first post here. There are so many ideas that come from psychoanalysis, neuroscience, psychiatry and psychology that really have not been accessible to people in business, or translated for maximum utility for a top leader in business or finance.  There’s definitely interest and understanding that the psyche plays a role in business decisions.  But the vast majority of the psychological theory and advice available for business relies too heavily on cognitive psychology — though that has its place–and pop psychology.

    I want to bring complex, subtle, powerful information about how the unconscious mind effects  thinking and decision-making.  I want to delve into the odd, anomalous, irrational and passionate aspects of human activity.

    I’m convinced that this perspective has tangible financial value in helping decision-makers avoid costly (and often repetitive) errors.  I’m so grateful to Forbes for the platform to make that case.