JUNE 2010 NEWSLETTER   National Restaurant Search LLC National Restaurant Search has remained the food industry's most respected executive search firm for nearly three decades. Over the years we have built relationships, credibility and reputation by establishing an exceptional level of trust with both our clients and candidates. Our profession is an art, not a science. The quality of creative thinking the recruiter brings to his art, the judgment he uses in assessing prospects against client requirements, and the skill to close in a manner beneficial to the client and candidate come only from experience. There is simply no substitute for experience. With offices in Chicago, Atlanta, and Minneapolis, we offer a full range of search and consulting services to national and international corporations, early stage entrepreneurial companies, private equity and venture capital firms. For more information visit www.RestaurantHeadhunter.com Ron Stockman President National Restaurant Search Ron@Restaurantheadhunter.com www.RestaurantHeadhunter.com www.linkedin.com/in/ronstockman National Headquarters National Restaurant Search 700 E Diehl Road Suite 130 Naperville, IL 60563 Phone 630-482-2900 Fax 630-482-2922 Articles 1: Restaurant Finance Monitor Article on National Restaurant Search 2: Pondering the Poach by Deborah L. Cohen Compelling Visions: Content, Context, Credibility and Collaboration Author: Jeffrey Gandz Jeffrey Gandz is Professor, Managing Director Program Design, Executive Development, Richard Ivey School of Business. The vision thing is still with us, but while leaders insist in having a compelling vision, the fact is that many both the leaders and the visions leave people standing still, unmoved. A leader who engages stakeholders when developing a vision will, in the end, articulate one that resonates strongly and impels people to act. One of my favorite Peanuts cartoons shows Lucy, once again, lecturing Charlie Brown on the meaning of life: "Charlie Brown, life is like a deck chair on a cruise ship. Passengers open up these canvas deck chairs so they can sit in the sun. Some people place their chairs facing the rear of the ship so they can see where they've been. Other people face their chairs forward— they want to see where they're going. On the cruise ship of life, which way is your deck chair facing?" Replies Charlie, "I've never been able to get one unfolded." Unlike Charlie Brown, leaders today must have a vision. There are many stakeholders employees, shareholders, governments, special interest groups, and the media— who simply demand to know, Where is this organization going and what is going to get it there? Everyone who is a leader or wants to be a leader of an organization, division, department or team must be able to formulate, articulate and communicate a compelling vision if they are to engage and inspire people to follow them. They must also ensure that their followers find meaning in this vision, the context in which they operate. If followers can find this meaning, if they can grab on to it, hold it in their hands and make it a mental bookmark, their actions are likely to reflect and support their leaders vision. Some visions compel people to act whereas others leave people cold or even alienate them from their leaders. This causes some leaders to give up on the visioning challenge, to let their actions rather than their words convey a sense of direction. Other leaders are simply reticent when it comes to establishing clear, directional targets for their organizations. Perhaps they don't want to be held to account for reaching or not reaching these targets; perhaps they don't want to publicly commit to some strategic direction; perhaps they think that a clear vision may appeal to one group and turn off another. Compelling Visions Compelling visions that move people to action, change their behaviors, focus on key priorities, and follow the pathway that the leader lays out, have three attributes that can be summarized under the broad headings of content, context and credibility. Beyond that, they are developed as part of a collaborative process that engages key stakeholders. The Content of Visions Compelling visions are not just slogans. For example, consider General Electrics e bring good things to life or Imagination at Work, Nikons Our Aspirations Meeting needs. Exceeding expectations, Hondas How we see things or Coca-Colas Its the real thing. These may all have worked well as advertising slogans or signature lines, but they didn't lay out with any degree of clarity what the leadership of these organizations wishes them to become in the future. Toronto-Dominion Banks vision, To be the Better Bank, is more goal-oriented, while Manulife Financials is more specific, stating boldly that its vision is to be the most professional life insurance company in the world: providing the very best financial protection and investment management services tailored to customers in every market where we do business. These vision statements give a better sense of where those companies are heading. But, since they are targeted to multiple stakeholders, they also lack the specificity that some of those stakeholders would like to see. The content or substance of a leaders vision must appeal to would-be followers as well as the leader. This appeal generally rests on the belief of followers-to-be that the leader can deliver something that they want and need the feeling that their leader serves their needs and that they can achieve through their leader. They might assume this servant-leader role for altruistic reasons, without care for her or his own needs, or on the other hand, to satisfy their own needs through satisfying the desires of their followers. Effective leaders are good at understanding the wide variety of physical, economic, psycho-social, and emotional needs that people have, and in their ability to tailor a vision so that it promises to satisfy unmet needs. The person who doesn't have a job, cant pay the rent, has a family to support and has other basic needs may be attracted to any vision that seems to promise material rewards and security. Someone who has savings, a secure pension or is near retirement age may not care too much about getting paid more, but may put a high value on the social satisfaction that they get from doing their job the quality of interaction that they have with clients, suppliers, co-workers, and so on. Someone who has a high need for achievement may be attracted to an audacious vision; someone who has a high need for security may reject that same vision in favor of one that promises security and stability. Charismatic or transformational leaders can get followers to transcend their narrow, personal economic interests and embrace the leaders mission, whereas transactional leaders operate on a more material plane. Both types have to develop a content-rich vision to motivate people to follow them. For any leader, the challenge is to figure out what will turn people on, at least those people who will be essential for achieving the vision. The problems arise when very different, sometimes totally contradictory, things turn on the people who need to be motivated to follow. A CEO or executive team may be turned on by profit growth, especially when they have substantial stock options that vest when certain profitability targets are met. The union leader may see these profitability targets being achieved only through plant closures, loss of jobs and consequent reduction in union membership. Little surprise, then, that the union leader does not enthusiastically embrace the leadership vision. For the vision of profitable growth to be embraced by both union leaders and management, each has to see a payoff somewhere in the content of that vision. It is not essential that everyone agrees with every aspect of a vision, only that they find something in that vision which resonates with them. What Makes a Great Leadership Team? Individuals Don't have to be Well-Rounded, But Teams Should Be Authors: Tom Rath and Barry Conchie Adapted from Strengths Based Leadership (Gallup Press, January 2009) Over the years, Gallup has studied thousands of executive teams. In most cases, our leadership consultants conduct an in-depth interview with a team's formal leader (usually the CEO) and also conduct interviews with each member of the leadership team. This enables us to compare the strengths of each person sitting around the table so that we can start thinking about each one's individual development and succession planning— and perhaps most importantly, how the team looks as a whole. As we worked with these leadership teams, we began to see that while each member had his or her own unique strengths, the most cohesive and successful teams possessed broader groupings of strengths. So we went back and initiated our most thorough review of this research to date. From this dataset, four distinct domains of leadership strength emerged: Executing, Influencing, Relationship Building, and Strategic Thinking. While these categories appear to be general, especially when compared to the specific talent themes within the StrengthsFinder assessment, it struck us that these broader categories of strengths could be useful for thinking about how leaders can contribute to a team. A more detailed language may work best for individual development, but these broad domains offer a more practical lens for looking at the composition of a team. We found that it serves a team well to have a representation of strengths in each of these four domains. Instead of one dominant leader who tries to do everything or individuals who all have similar strengths, contributions from all four domains lead to a strong and cohesive team. Although individuals need not be well-rounded, teams should be. This doesn't mean that each person on a team must have strengths exclusively in a single category. In most cases, each team member will possess some strength in multiple domains. A tool like Gallup's StrengthsFinder assessment can be useful in determining how all team members can maximize their contribution to the group's collective goals. According to our latest research, the 34 StrengthsFinder themes naturally cluster into these four domains of leadership strength based on a statistical factor analysis and a clinical evaluation by Gallup's top scientists. As you think about how you can contribute to a team and who you need to surround yourself with, this may be a good starting point. (See graphic "The Four Domains of Leadership Strength" to see how the 34 StrengthsFinder themes sort into the four domains of leadership strength.) Explaining the Four Domains Leaders with dominant strength in the Executing domain know how to make things happen. When you need someone to implement a solution, these are the people who will work tirelessly to get it done. Leaders with a strength to execute have the ability to "catch" an idea and make it a reality. For example, one leader may excel at establishing a quality process using themes such as Deliberative or Discipline, while the next leader will use her Achiever theme to work tirelessly toward a goal. Or a leader with strong Arranger may determine the optimal configuration of people needed to complete a task. Those who lead by Influencing help their team reach a much broader audience. People with strength in this domain are always selling the team's ideas inside and outside the organization. When you need someone to take charge, speak up, and make sure your group is heard, look to someone with the strength to influence. For example, a leader with a lot of Command or Self-Assurance may use few words, but her confidence will continue to project authority and win followers. In contrast, a leader using Communication or Woo might get people involved by helping individuals feel comfortable and connected to the issue at hand. Those who lead through Relationship Building are the essential glue that holds a team together. Without these strengths on a team, in many cases, the group is simply a composite of individuals. In contrast, leaders with exceptional Relationship Building strength have the unique ability to create groups and organizations that are much greater than the sum of their parts. Within this domain, a leader with Positivity and Harmony may work hard to minimize distractions and to keep the team's collective energy high. On the other hand, a leader with Individualization might use a more targeted approach to getting people involved. Or a leader with strong Realtor or Developer may be a great mentor and guide as he pushes others toward bigger and better achievements. Leaders with great Strategic Thinking strengths are the ones who keep us all focused on what could be. They are constantly absorbing and analyzing information and helping the team make better decisions. People with strength in this domain continually stretch our thinking for the future. Within this domain, a leader using Context or Strategic might explain how past events influenced present circumstances or navigate the best route for future possibilities. Someone with strong Ideation or Input may see countless opportunities for growth based on all of the information she reviews. Or a leader drawing from his Analytical theme might help the team drill into the details of cause and effect. In recent years, we have studied leaders who built great schools, created major nonprofit organizations, led big businesses, and transformed entire nations. But we have yet to find two leaders who have the exact same sequence of strengths. While two leaders may have identical expectations, the way they reach their goals is always dependent on the unique arrangement of their strengths. Lessons From Team Fumbles How Senior Leadership Teams Can Make-Or Break-An Organization Author: Susan Lucia Annunzio The colossal business failures of the past few years underscore the fact that the conduct of a company's leadership team is directly correlated with the organization's long-term performance. Once-venerable institutions such as Bear Stearns, Lehman Brothers, Merrill Lynch and Royal Bank of Scotland paid the ultimate price for the behaviors of their leadership teams. Merrill Lynch & Co. offers an illustrative case. It has been widely reported that former CEO Stanley O'Neal, who was dumped in October 2007, thwarted debate, ignored feedback from other firm leaders and fired people whose views didn't mesh with his own. These behaviors sent a loud message to the rest of the company that differences of opinion would not be tolerated. Observers pointed out that the breathtaking losses suffered by the firm (later taken over by Bank of America) might have been minimized had O'Neal not marginalized or fired those who tried to warn him about overexposure to credit risk in the subprime market. A similar situation played out at HBOS, a U.K. banking and insurance group taken over by Lloyd's Banking Group in January after a near collapse. Paul Moore, the former head of group regulatory risk for HBOS, was fired in 2005 after warning the bank's board about the danger of lending money "to people who have no jobs, no provable income and no assets." In written testimony before the Commons Treasury Committee submitted in February 2009, Moore said, "Anyone whose eyes were not blinded by money, power and pride, who really looked carefully, knew there was something wrong... But sadly, no one wanted or felt able to speak up for fear of stepping out of line with the rest of the lemmings who were busy organizing themselves to run over the edge of the cliff behind the Pied Piper CEOs and executive teams." By firing Moore, the HBOS leadership team made clear what would happen to people who raised a red flag. Had they chosen to send a different message, the bank might still exist as an independent entity today. The demise of Bear Stearns, as recounted in Kate Kelly's 2009 book, Street Fighters, can be tied to a variety of destructive behaviors. Among them were: a bizarre combination of dictatorial behavior and detachment on the part of former CEO Jimmy Cayne; the rejection of the philosophy espoused by a previous CEO, Alan Greenberg, which Kelly described as "cutting losses early, saving money on paper clips and envelopes and guarding religiously against outsized risk," and a culture that rewarded loyalty and punished dissent. The single biggest mistake the Bear Stearns leadership team made was its refusal to face harsh realities. The leadership was presented with multiple opportunities to cut losses and change course. For years, executives cautioned of coming problems. One mid-level executive worked for three years early in the decade on a plan to better evaluate risk, which CFO Sam Molinaro supported. Cayne summarily dismissed the detailed plan as too complicated. Some warning signs flashed brighter than others. As Kelly reported, two Bear hedge funds had failed in 2007 when the subprime mortgage crisis began to heat up. The firm carried an enormous portfolio ($30 billion) in risky mortgages. It was hemorrhaging clients. Yet top leaders dismissed several opportunities to raise capital as late as January and February of 2008. Company leaders steadfastly refused to remove the blinders. Filtering from the Top During more than 20 years of working with top leaders at a wide range of companies, I have observed that what goes on in the C-suite sends shock waves throughout the organization. Behaviors that originate with the CEO and his direct reports filter down, where they are repeated and magnified. And just as business failures can be traced back to the conduct of the leadership team, so can business success. High-performing leadership teams breed high-performance companies. Management NetApp, a Fortune 1000 network storage solutions business based in Sunnyvale, Calif., is a stellar example. NetApp displaced Google at the top of this year's Fortune 100 Best Companies to Work For list. Founded in 1992, the company has about 8,000 employees throughout the world and boasts customers that include Oracle, Yahoo, Apple, SAP, Southwest Airlines and the U.S. Marine Corps. Revenues grew from less than $1 billion in 2003 to $3.5 billion in 2009. NetApp credits its success to the environment it has carefully built within the senior leadership team and throughout the company. Every four to six weeks, the five top leaders get together to take the pulse of their business, the market and the economy. They meet over dinner, learning from one another and making sure they agree on the company's direction. Attended by the CEO, vice-chairman, president and two executive vice presidents, these meetings supplement daytime business review sessions, which sometimes include other executives. There's no hierarchy at NetApp's senior leadership meetings, nor do the participants worry about stepping into someone else's territory. Candor is a key company value. The participants often disagree with one another. They hash out the issues and once they make a decision, they move ahead. There are no "meetings after the meeting." These behaviors are engrained in the company's culture. Vice Chairman Tom Mendoza recalls the time a new employee made a point at an executive staff meeting that then-CEO Dan Warmen hoven strongly disagreed with. The young man respectfully challenged the CEO by putting forth facts to support his own position. The two hashed it out and the meeting moved on. Mendoza and other senior executives were impressed by the man's behavior. "He was terrific," Mendoza recalls. NetApp expects employees to take risks. As Mendoza puts it, "If you don't take a risk, you just took a risk. If you don't make a decision, you've made a decision." As the extent of the current economic crisis was becoming apparent, NetApp turned its attention to how to emerge as a stronger company, as it had done after severe challenges in the past. As a result, senior leaders decided to lay off 6 percent of the staff. Consistent with their commitment to treat people with respect, they immediately took to the road. They told employees how and why they came to the decision and answered their questions as fully as possible. They declined to have laid-off employees escorted to the door-a humiliating exercise that was occurring throughout the country. "I got about 70 e-mails from people thanking me for the way they were treated," Mendoza recalls. "They said 'I love this company. I wish it didn't have to happen, but I wish you well.' " Setting the Tone Like at NetApp, the leaders of Google deliberately set out to create a culture of high performance. In their IPO filing with the Securities and Exchange Commission, founders Sergey Brin and Larry Page began: "Google is not a conventional company." They were not referring solely to the now-famous Google work environment, which includes free food and roller hockey twice a week in the parking lot of the Mountain View, Calif., headquarters. Rather, they were signaling that they intended to set the tone for how the company would operate. By flattening the organization and modeling open communication and camaraderie, Brin and Page showed employees how they expected them to interact. They also provided a model for employees to approach their work. "A management team distracted by a series of short-term targets is as pointless as a dieter stepping on a scale every half hour," they wrote. The leadership team exemplified its commitment to the long term by encouraging Google engineers to spend 20 percent of their time on projects that interest them, regardless of how long they might take to come to fruition. Half of new product launches have originated from the "20-percent time," Marissa Mayer, Google's vice president of search products and user experience, has told reporters. The best leadership teams naturally and often unconsciously learn from one another. In their 2008 book, Senior Leadership Teams, authors Ruth Wage man, Debra Nunes, James Burrus and J. Richard Hackman reported on their research into what is required for leadership teams to perform superbly. Based on data from 120 teams around the world, the authors found, "The best teams are continually being coached-and are coaching themselves— to evolve, learn and grow. They learn from their leader, each other, and their experiences." The single biggest mistake the Bear Stearns leadership team made was its refusal to face harsh realities. NetApp co-founder and Executive Vice President Dave Hitz, whose background was engineering, credits Mendoza with teaching him a simple algorithm to solve every problem: Who owns the problem? Do I trust them? How do I find an owner I trust? As the company grew, Hitz realized that Mendoza's approach was more powerful and scalable than trying to solve the problem himself. The authors of Senior Leadership Teams noted that even in the best teams "team growth and development are largely informal and ongoing, so subtle that, at times, an outsider might miss them." Imagine the effectiveness of teams that deliberately optimize their own performance. By assessing their values and goals, as well as the way they function, leadership teams can determine whether they need to change. Nevertheless, despite the serious ramifications of their conduct, few leadership teams recognize or acknowledge the impact of their own behavior. The senior leaders of Unite Group PLC, the U.K.'s top developer and manager of student accommodations, decided to address their own performance head on. Unite, a FTSE 200 company, created a written charter for the leadership team that lays out the values, behaviors and expectations for individual team members and the team as a whole. The team published the charter and asked to be held accountable for living up to it, especially during challenging times. According to Unite CEO Mark Allan, the process of developing the charter is more important than the document itself. "When you go through that exercise, it gives a shared reference point to hold colleagues to account," he says. "We believe that the way the leadership team behaves is the way the rest of the organization will behave." Because of its work to develop and live up to its charter, Unite was better prepared than most companies to address the difficult challenges brought on by the economic downturn. Rather than making decisions out of fear, the leadership team looked for the opportunities raised by the changing market. It has concentrated on connecting the company's values to its commercial performance and new business imperatives. "It would have had a hugely negative impact if we had not been able to address difficult issues so robustly," Allan says. Winning without Fear Hard times are a fertile breeding ground for fear-based behavior. During such times, leaders often obsess about what they have to lose, rather than think rationally about what steps they need to take to win. In contrast, high-performing leadership teams commit to proactive, fact-based decision-making rather than reactive, emotion-driven decision- making. They balance the needs of the short and the long term. visit www.RestaurantHeadhunter.com for more information