Building a Leadership Team to Drive your Business

Over the past few years, I have noticed a disturbing trend as I meet with both our shipper and carrier associates. They have changed their leadership team again. The VP of Transportation or Logistics (in manufacturing and retail organizations) or the President or other senior officer (in transportation organizations) has now been replaced multiple times. In fact, in some companies, they change executives like some people do spring cleaning in their homes. “It is out with old and in with the new.”

What is interesting for me is that in some cases, as an outside consultant, I have had the opportunity to work directly with the business leader and the company. I have been able to observe their performance and that of their superiors and subordinates. I have the following observations to share with you.

In some situations, the terminated business leader was doomed to fail. The expectations for the individual may not have been realistic. He or she may not have received the full support of the business owner or senior executive or the collaboration between them wasn't there. The departed person was charged with implementing the failed or poorly conceived vision of the business leader. The terminated executive “took the fall” for the unsuccessful business plan or weak leadership of his or her boss.

In other cases, the individual did not perform at the required level. He or she may have not had the required skills, did not fit with the company culture and/or did not work well with his or her peers. In some cases, there was an overreliance on specific subordinates who were not performing their jobs at an acceptable level. This overreliance and/or a poor hiring process cost the individual his or her job.

I also observe a pattern in some organizations where, on an almost annual basis, they appear to take and implement the good ideas of the new executive. Once that is done, the executive has outlived his or her usefulness. It is time to replace this individual with another leader who can bring fresh ideas and approaches to the business.

Other companies seem to take a “toe in the water” approach with their new hires. They create a new position and hire a new executive. At the first sign of an economic downturn, the position is closed and the executive is terminated.

Some companies take a somewhat risky approach to replacing their key leaders. They will recruit an individual from outside the industry to fill a position. Years ago I came into the freight transportation industry from the telecommunications business. I didn’t know a fifth wheel from a forklift. But I learned the basics.

There is value in bringing a fresh approach to a long-established business. When I look at the freight brokerage industry, as an example, I see many people with strong backgrounds in areas (i.e. IT, Finance) other than freight operations who are revitalizing this segment of the business.

However, I have also observed some people who have not been able to come up the learning curve and adjust to the industry. They don’t take the time and apply the energy to learn the nuances of the freight business. They try to change the business and customers to fit their paradigms rather than adapt to the new business.

Taking on too many leaders without relevant industry experience, and without them receiving good training, can lead to problems. The business leader who brings outsiders aboard must commit to supply them with a basic grounding in the business, either directly or through trusted advisors and subordinates.

Building a Strong Leadership Team

These are my take-aways.

1. Start with a solid plan that reflects a blend between bottom-up improvements and the top-down vision.

The business leader, the leadership team and the new executive must be on the same page with respect goals, metrics, support staff, timelines and results. For an executive contemplating making a switch to a new organization, this individual should engage in a dialogue with his or her future superior to make sure there is alignment on all of these items. If the connection isn’t there from the beginning, this should raise a red flag as to whether it is wise to change jobs.

2. If your company is changing executives every year, the business leader should reflect on whether this approach is working.

Is your company able to perform at a high level with the constant changes in the leadership team? Would your company produce better results with a more stable team? Is the constant turnover by design or a reflection of poor hiring and business practices?  The leader should ask, "What am I doing to create this situation?"

I was struck this week by a Stifel report I read about CH Robinson. It contained the following quote about this company.

“Consistency of management. John Wiehoff has been CEO for 15 years. Many of his direct reports have been with the company for 20 to 25 years. One cannot underestimate the value of the company's lower turnover rate when it comes to developing sticky relationships with shippers, deeply penetrating accounts to capture wallet share, and building relationships with the company’s carrier base.”

My sense is that many companies, in their zeal to embrace the latest idea or trend, they miss the value that continuity of management brings to their organization.

3. As an employer and employee, think carefully about the mission, values and culture of the company.

Creating a weak management team can cost the leader his or her job as well. As a prospective executive with a new organization, do you see alignment with the core principles of the company? Are you comfortable with how they embrace change and how they solve problems?

Ask the leader about the last crisis that the company faced and how they dealt with it. Is the leader aware of what is going on in the industry? How is the company dealing with multi-channel distribution, automation and/or driver recruitment? Do their plans make sense to you? Are they working? Can you help make them work better or are you going to be stifled in this effort?

4. Is this a newly created position or has this post been in place for many years?

This is an important question to ask before you join an organization. The newly created position is often the first job to be purged during an economic downturn. The senior leader second guesses the earlier decision and reverts back to the previous organization structure. You may wish to join another organization rather than find yourself in a job search 9 or 12 months later.

5. Is it time to bring in some people from outside the industry?

Does the company have a plan to facilitate the learning curve for a new executive from another industry? Have they done this before successfully? Or are they just repeating a failed process? What is the company’s annual employee turnover rate and their annual executive turnover rate?  How long did the previous executive hold the position you are applying for?

What are they doing to enable a knowledge transfer from the boomers to the other age groups in the company? Are you comfortable that as the boomers move out, there is a leadership team and "bench strength" in place to carry the company forward successfully? As a new hire, will you be “part of the solution” or “part of the problem?”

Building a talent pool is one of the most important jobs of business leaders. As an outside consultant, we are in a unique position to see which of our associates are doing this well and which ones are not. There is nothing more important than building a stable, productive, and winning leadership team. Both the employer and employee should do their due diligence before shaking hands.

If you would like an independent assessment of your organization and leadership structure, feel free to contact me at dan@dantranscon.com. To stay up to date on Best Practices in Freight Management, follow me on Twitter @DanGoodwill, join the Freight Management Best Practices group on LinkedIn and subscribe to Dan’s Transportation Newspaper (http://paper.li/DanGoodwill/1342211466).