Family Harmony in an Evergreen® Company
Family harmony and sustaining an Evergreen® business do not always jive. It takes hard work, even when all family members are mostly in sync. Learning ways to navigate these challenges has been one of the unexpected benefits I’ve gained from joining Tugboat Institute®. Here are some of the insights I’ve gained from many conversations with other multi-generational ownership groups.
If absolute family harmony - with siblings, children, cousins, nieces and nephews, in-laws - is your highest priority, it’s probably best to sell the business. The odds are, if you’re going to sustain your business over many generations (the essence of an Evergreen business), you will experience some degree of family discord. Not everyone will believe all decisions are “fair.”
The decision-making generation has the most responsibility to lay the groundwork to remain Evergreen and promote family harmony. Ideally, this would begin with the first generation, but that’s uncommon. Things get messier with each successive generation, especially if there is a lack of clarity about “family ground rules.” The generation in leadership must start from where they are.
There are a myriad of issues and possibilities to sort out. What are the criteria and expectations of ownership, governance, executive leadership, and employment? What is a “fair” way to distribute existing and future wealth? How, if at all, should those who work in the business be treated differently than those who don’t? Should “rules” be solidified in a trust, or should each successive generation have the flexibility to modify how things work?
There is no right way to transition ownership and leadership of a business from one generation to the next. The key is for the decision-making generation to own and communicate decisions – over and over. The next generation deserves and benefits from clarity and context. Too often, families don’t have those conversations and each person is left to create their own story.
These questions should be an explicit part of your work. They should be an agenda item at family meetings, holding company or business board meetings - whatever is most appropriate for your context. The work requires the same level of rigor as any other critical issue. And it is critical. Your Evergreen business needs clear answers in order to thrive.
When I stepped into leadership, our family business, High Plains Bank, did not have a clear set of “rules” to move from one generation to the next. In part, this is because the first two generations were small and intimate. Generations 1 and 2 included six people (grandparents; parents; uncle and aunt) who acquired the business together and worked closely for more than 30 years.
Generation 3 includes nine who are actively engaged but scattered about the state and country. Generation four includes as many as 15 (our family has a history of spouses getting involved) who are even more geographically dispersed and who don’t know each other well.
We must become far clearer on our “family ground rules” if we hope to sustain our Evergreen business for another three generations and beyond. If we don’t add clarity and cultivate an ownership mindset in the next generation, the level of the attachment to the business is likely to dissipate to the point that people are indifferent to being Evergreen.
Our family has been making progress. I realized at Tugboat Institute Gathering of Teams we still have much to do. With the help of Tugboat colleagues, I have a clearer sense of the work to be done and growing confidence that we can remain both Evergreen and a harmonious family.
I have been part of structured and informal Tugboat conversations with colleagues such as Jeet Kumar, George Giudici, Karen Keim, Steven Burger, Tom Rosztoczy, John Egger and my Tugboat Forum members, among others. Many of the Tugboat colleagues who have helped me sort through family issues may not remember these conversations. That’s the power of Tugboat’ Institute's design. Even informal conversations can provide transformative ideas.
24 Hours in the Life of a Healthy Kid
If you are a parent or if you ever watch the news, you are aware that, for years now, the conversation around kids and their mental health has become louder and more urgent. The effects of social media and our internet culture, paired with an increasingly prevalent culture of achievement in and outside of schools and the astoundingly isolating experience period during and after Covid have created a generation that struggles with anxiety, depression, and a host of other challenges.
In this Tugboat Institute® talk, Dr. Denise Pope, Senior Lecturer at Stanford’s Graduate School of Education and the co-Founder of Challenge Success, addresses this topic with a focus on potential solutions to this mental health crisis. How can we help our children build resilience and find balance and well-being? What practices that have become mainstream are, in fact, damaging to our young people today?
Watch and learn what you can do to make sure your children and other young people in your life are getting what they need to grow into strong, stable adults.
Revolutionizing our Health Care Plan Through Reference-Based Pricing
The economics of modern healthcare have become a labyrinth for employers to negotiate, usually annually, where costs typically spiral out of control year over year. In the face of these perpetually and rapidly rising costs, at Stotz Equipment, we have been seeking a better path – both for us and for our employees – for some time now. A few years ago, we hit on an innovative strategy that is proving extremely effective and successful: reference-based pricing (RBP). RBP has garnered attention in recent years for its potential to rein in healthcare expenses while ensuring quality care, so we decided to give it a try.
In short, through RBP, which we began offering as an option for our employees just three years ago, we have seen significant savings. Specifically, this year, in year three, I would estimate that at Stotz, we saved about 65% on health care costs with this plan. At the same time, we have been able to provide high quality health care to our employees, without compromise. It’s made a staggering difference.
As you consider whether or not this might work for your company, let’s begin by establishing a clear understanding of what RBP is and how it works. I am leaning on my CHRO, Jared Nielsen, as I lay this out.
RBP represents a departure from traditional models. Instead of relying on complex negotiations between insurers and healthcare providers to set a percentage discount on a service whose price may fluctuate wildly, RBP sets a predetermined reimbursement amount for medical procedures. The reference point is typically based on a percentage of what Medicare would pay for the same service. At Stotz, we aim for 150% of Medicare costs. RBP plans are administered by a third-party administrator (TPA), and variations do exist across different groups and regions, where targets may differ based on local dynamics.
In the traditional healthcare model, in addition to the inability of an employer or an employee to control or predict the cost of a given service, lack of choice is a limitation. If your preferred doctor is ‘out of network,’ you are out of luck. And for the company providing insurance, it is nearly impossible to control costs. Any efforts to keep employees’ costs relatively stable can mean huge, unexpected increases in costs for employers, often every year.
What does RBP actually look like in action? It’s not complicated. The employer, with the help of a TPA, sets the reference price for various medical services. Employees have access to this information, so they know what to expect. When the need arises, the employee seeks treatment, from whichever facility or provider they like. The insurance plan pays the healthcare provider the predetermined reference price. If the provider accepts the reference price as full payment, the process ends here. Occasionally, the provider will push back, which can lead to a process called ‘balance billing.’ More on that in a moment.
How much below standard prices will the RBP prices be? It varies widely, but usually, it’s between a 300%-700% difference, when you’re talking facility costs. Providers tend to be a little lower than that unless they’re specialty providers. The savings are felt on both the employer and employee side, at least at Stotz. Because we are an Evergreen® company, we share our successes with our employees no matter how we are winning. Therefore, the windfall created by these significant savings didn’t go straight to the company’s bottom line. Rather, we passed a great portion of it on to employees.
With the traditional plan, we cover most of the premium costs for the employee – $200 of $250 for an individual. The employee pays the remaining $50. When employees elect to enroll in RBP (it is optional at this point), we cover 100% of their costs. They are saving $50 per paycheck, or $100 per month. The savings for families are even deeper; the traditional plan starts at $260 per paycheck for a family, but with RBP, it drops to $50. Those on the family plans are saving over $400 per month.
Why aren’t 100% of our employees enrolled in RBP? There are several reasons that can help you, as a leader, decide if and how to implement this in your company. First, it is new and different, and often, people are wary of radical change like this, especially when it comes to something as important as health care. In the first year, we offered it as an option and about 50% of employees elected to enroll. Secondly, although the TPA has set a rate for service, this doesn’t mean that all providers will accept this right off the bat. This is where balance billing can occur. It is not uncommon for a big bill to arrive, and then the employee has the responsibility to bring it to the TPA and start the process of negotiating for a better price. This period of negotiating – balance billing – can take time. Employees might find it stressful to receive a series of huge medical bills and wait for a long time to have the negotiations resolve. These employees might prefer the traditional plan.
On the employer side, there are some downsides as well. Occasionally, a provider refuses to accept the TPA rate, and then we have to fight it. This is rare, and only happens in about 1% of claims, but it does happen. My team manages this when it happens, so it means time, effort, and therefore money for us. Occasionally, our team decides to settle and pay over the 150% of Medicare, and that is also a cost we bear, but again, it’s rare. Even when there is not a fight, employees are inevitably going to come to Human Resources when they have claims or bills that arrive and they are not educated on the process yet. So it does cost us, but the costs go down over time.
Despite initial hurdles and trepidation, RBP is gaining traction within our team. In year three, enrollment numbers have grown to about 2/3 of the company. This evolution underscores the growing acceptance and efficacy of RBP in mitigating healthcare costs. Our progress with this initiative so far is encouraging. I can envision a healthcare landscape where RBP becomes the norm at Stotz, obviating the need for traditional plans. The benefits are palpable: reduced administrative burdens once everyone gets used to the new program, stabilized premiums, and empowered employees making informed healthcare choices.
For us, reference-based pricing has been a game-changer in a healthcare landscape fraught with escalating costs. We are self-insured, and that is an important part of why this makes sense for us. Beyond that, the tolerance of your employees to try something new and the expertise on your team to manage the transition are the only other critical ingredients. It’s a great program. By anchoring itself on transparent reimbursement rates and empowering employees with cost-effective options, we believe that RBP could be the path to vastly improved affordability and accessibility in healthcare, not just for us, but for many companies.
Your Next Hire Could be a Felon
Jeffrey Korzenik is an economist by profession. Outside of work, his passion is furthering the cause of Second Chance Hiring. Those two endeavors are not as disparate as they might seem. Author of Untapped Talent, Jeff has spent many years advocating for what he sees as a solution to two societal and business problems all at once - supporting programs that help identify and place the right people with felony records in the right job for them.
In this Tugboat Institute® talk, Jeff shares that in today’s tight talent market, which demographics tell us will not ease anytime soon, there are nevertheless 19 million people with felony records who struggle mightily to find gainful employment. Many of them never served any time in jail at all, and others have committed to turning their lives around. In the right circumstances, with the right support, the right people can become stellar employees.
Watch and be inspired to explore the possibility of Second Chance Hiring for your organization.
Evergreen Company of the Year™
Get to Know O.C. Tanner, the Inaugural Evergreen Company of the Year™
Here at Tugboat Institute®, we recently announced our first ever Best Evergreen Companies™ list as well as our first ever Evergreen Company of the Year™ award. Today, we’d like to introduce you to O.C. Tanner, the inaugural Evergreen Company of the Year. O.C. Tanner represents excellence across all of the Evergreen 7Ps® principles, and we are proud that they will carry this title and stand forever as the first in what we expect will be a long list of wonderful Evergreen® companies. Understanding O.C. Tanner and what makes them so deserving of this award is a wonderful way to better understand Tugboat Institute and the Evergreen movement. Let’s take a moment to get to know them better.
History of O.C. Tanner
O.C. Tanner was founded by Obert Clark Tanner, in 1927. The company, which originally made seminary graduation pins and class rings, was founded on the twin pillars of beauty and kindness. In the early days, Obert sold his wares out of the back of his car, but in the 66 years he led the company, he succeeded in growing it to $214M in revenues.
When he started the company, Obert was a professor of philosophy at the University of Utah; he believed deeply in education and in the dignity and worth of people. Obert’s dedication to education remained steadfast throughout his lifetime. As soon as the company was able, or perhaps even a bit before, Obert made sure that they gave back to the community regularly. He favored supporting educational institutions and programs, and even today, O.C. Tanner maintains close relationships with educational institutions and programs of all sorts.
Before he stepped down from leadership of O.C. Tanner, Obert understood that if wanted his beloved company to remain grounded in the values that meant so much to him, he would have to plan for it. He created a visionary Transition Document that laid out the guidelines and processes that would guide ownership and leadership succession far into the future. His ability to grasp and articulate the importance of staying private in order to maintain culture and a commitment to Purpose was far ahead of his time. But he succeeded; Obert’s spirit and vision remain alive and palpable in the company today.
Guided by his dedication to beauty and kindness as well as his commitment to creating a superior product, Obert developed the motto that is still often repeated today; “let’s get a little better every day.”
Leadership at O.C. Tanner
Tugboat Institute® got to know this remarkable company through Dave Petersen, who served as CEO for more than 15 years. Dave became a member of Tugboat in 2021 and has been a wonderful community member. Right in line with the values and spirit of the company he led, Dave has contributed a great deal to our community. His contributions culminated in his agreement to host Tugboat Institute @O.C. Tanner in 2022. A group of about 100 Tugboat members spent two and a half days in Salt Lake City, learning with and from Dave and his team, including Scott Sperry, who was COO at the time. During our visit, we began to get to know Scott, and were impressed by his deep commitment to strategy and to building structures that ensure the company will endure for the long term. In the past year, Scott has stepped into the CEO role, and we are thrilled to get to know him better in the coming years. After serving the company so well for so long, Dave has transitioned into the role of Vice Chair of the Board, where, along with Stephen Tanner Irish, Obert’s grandson, he continues to contribute to this extraordinary company.
Who is O.C. Tanner today?
The Evergreen Company of the Year™, by definition, represents the pinnacle of excellence across the Evergreen 7Ps principles. O.C. Tanner is indeed excellent across them all, but four of them are worth calling out specifically here.
When it comes to Pragmatic Innovation, there is no better example. Though they started out making pins and class rings, today, O.C. Tanner is the global leader in software and services that improve workplace culture through meaningful employee recognition experiences. They have literally transformed from a manufacturing company into a global leader in SaaS, all while remaining true to their identity and their purpose of celebrating and honoring people. This is the kind of innovation that is key to building companies stay relevant and that will last 100 years or more.
When it comes to keeping the company Private, O.C. Tanner is also an exemplar. First, Obert understood the extent to which this was critical, as well as the extent to which it could be at risk if steps were not taken to protect its private status. Second, he understood that the riskiest moments in any company’s life are the moments of transition – both ownership and leadership - so he zeroed in on those when he created his Transition Document. Although it dates back to 1977, this document stands as a unique and powerful example of how clear leaders and owners must be if they intend to preserve their companies for the long term. Almost 50 years later, it still serves as a model for many leaders who seek to accomplish the same.
When we speak about Purpose, we recognize that there are almost limitless possibilities for the shape and scope this might take for different companies. However, we explicitly understand that the Purpose of an Evergreen company will be authentic and will aim to make life better for its employees, their families, their communities and the world. O.C. Tanner’s purpose is clearly and simply stated: “We help people thrive at work.” The excellence they have achieved comes not from the statement itself. While it is authentic, ambitious, and clear, alone, it does very little. The excellence lives in the way the purpose is infused across all aspects of the company, from products, to processes, to policies, to work with clients, to projects in the community, to relationships, and beyond. It is not simply why they exist; it is who they are.
Finally, O.C. Tanner is exemplary when it comes to People First. People First is not only the foundation of their culture and philosophy, but it is also literally their business. Scott Sperry spoke to this in O.C. Tanner’s recent press release, following the announcement of the award. He said, “Our purpose is to help people thrive at work. I'm proud to work alongside a team and with clients that truly believe in this mission.”
We are honored to count Dave, Stephen, and Scott, as well as many of their colleagues at O.C. Tanner, among our friends at Tugboat Institute. And we could not be more thrilled to share them with you through this profile, as our first Evergreen Company of the Year.
Navigating the Challenges of a Dramatically Shifting Energy Landscape
Scott White, CEO of IGS Energy, has had a front row seat to the complexity of the energy industry and to what happens when shortages occur his whole life; he grew up with a parent who ran a natural gas company. Scott believes that the changes we can expect in the coming years will be even more challenging than the last five decades. As the global demand for energy continues to grow, we will need to grow and expand our capacity to meet it, but it won't happen overnight.
In this Tugboat Institute® talk, Scott discusses the various means by which our society might allow for a sustainable increase in energy demand while protecting grid resiliency and maintaining affordability. In particular, he shares some specific strategies business leaders can employ to protect their companies against eventual shortages and price volatility.
Watch and be inspired to think about how you and your company can innovate and tackle energy challenges.
Paddling for a Purpose
This is a story about the evolution of the Evergreen® business I founded in 1977, The Motz Group. It is also a story about me and my personal journey as I approach the end of my career and the next phase of my life. As I suspect might be true for most Evergreen founders and leaders, the two journeys – the professional and the personal – are deeply intertwined.
Motz is a Natural & Synthetic Turf & Field Construction company. We create and supply infill products for outdoor spaces where people move, play, and compete. Our team is also driven by Purpose, which is reflected in every aspect of our work. At Motz, we move people to better lives. As the company has grown over the years, we continue to intentionally partner with businesses and organizations that align with our purpose.
An important step forward happened in 2019, when I took a sabbatical for 90 days and embarked on a bike ride around the country. I spoke about this experience at Tugboat Institute® Summit in 2019. In many ways, it was the catalyst for the story I am going to share today. I set out to raise money to benefit Parkinson’s research and while my original intentions were somewhat modest and mostly personal, it became a Purpose effort that was embraced by The Motz Group. (link to my original talk HERE) It was powerful to see how engaged both our organization and the community became. When I returned, I was determined to level up our efforts at Motz to put our Purpose into action and to do it in a big way.
When I transitioned out of my longtime CEO role, my duties shifted away from leading the Motz enterprise, and one of my main objectives became the creation of a full, embracing, corporate strategy of moving a community of people to a better place. We recently launched the purpose arm of our business, Motz Moves. Motz Moves encompasses community engagement, owner engagement, and our business philosophy to make the biggest possible impact.
Our team has a great passion for giving back to the community. When we started to assemble the collection of these efforts under Motz Moves, they became even more engaged. We offer four paid days off for every employee to engage in volunteer work that is meaningful to them. We also established a corporate service day, where we work together toward a specific cause. These are just a couple of examples of how we empower our employee owners and support community partners in creating positive, lasting change.
As I approached my 70th birthday, I felt the urge to do something to commemorate this milestone in my life. Drawing from the extremely rewarding experience I had in 2019 on the bike, on my 65th birthday, I decided to undertake a new challenge.
Beginning in January of this year, I started building a canoe. I started from a tree, cut it down, and milled the wood with the goal of making it into a river-worthy canoe. On June 29, I will embark on a 3,000 mile canoe expedition that will start in Cincinnati, go down the Ohio River, up the Mississippi, up the Illinois and into Lake Michigan, cross over into Canada, go through the Northern Tier, back down Lake Huron to Lake Erie, and then down the Ohio to Cincinnati to complete the loop. For about a third of the trip I will travel downstream, a third will be flat, and a third upstream.
The impetus for this trip was largely personal, to be sure. I have moved out of the CEO role I occupied for so long and like other Evergreen founders and leaders in my position, I was eager to find meaning and purpose as I start my Second Act. As I approach my milestone birthday, I want to accomplish something difficult, prove I am still physically fit and mentally strong, and have the perseverance needed to stay the course. But unlike my bike trip, from the start, this initiative has been closely tied to Motz, our Purpose, and ways in which we can elevate our work in our communities.
This trip, which is called Paddle for a Purpose, will benefit an organization called The Bridge Adaptive Sports & Recreation, which increases awareness and promotes opportunities for individuals to participate in adaptive sports and recreation in order to improve their quality of life. Participating athletes have experienced significant challenges in their lives – stroke or multiple ailments of disability, either nervous or physical – but there's tremendous opportunity for them to still enjoy an active, vibrant life, versus just surviving. Helping further the work of this organization is exactly in line with our purpose of moving people to better lives. So, I have shared and will continue to share my progress, starting with the canoe build and on through the expedition itself, with my entire team. I’ll be posting weekly videos to the Motz Moves social media channels so anyone can follow the expedition. Our team and supporters can get involved in so many ways.
First, there are a lot of logistics involved in planning the many phases of this trip; this effort is a piece that the team is and will be involved in. Our marketing team is collaborating with The Bridge to get the word out, so more people are aware of the opportunity to engage and support. Company-wide, people are joining in to create a spirit of camaraderie on the water together. There'll be multiple places where team members, athletes from The Bridge and other interested groups and individuals are going to join for a day, paddling for a purpose together. And then people are working together on other initiatives that correspond to this, to further increase our impact.
Beyond Motz, there's an incredible cottage community of volunteers called River Angels. It's much like on trails; people are happy to help when you pass through. I imagine they’re thinking, "Gosh, this poor soul is out there paddling away. We're going to offer him up a cold drink or a bite to eat." I see a lot of opportunities to interact with the local communities as I move through them. What excites me the most is just really getting to know people across the Midwest, because it's always the serendipitous meetups, just salt of the earth people, that re-instill your faith in humanity.
I think circles are powerful. The metaphor of traveling a great distance to end up where you started, but having gained so much knowledge and experience, is powerful. And the ripple that a circle on the water creates, when a pebble is dropped or a paddle touches the water, is meaningful as well. The excitement around this initiative is growing like a ripple – getting broader and reaching farther in all directions.
As I plan and prepare for this trip, I can’t help but think how much my expedition is like both business and life, especially for the Evergreen leader. Sometimes, for example, we’ve got to paddle against the flow. I've experienced paddling against the flow, and you really have to learn to read the water and all the nuances to make any progress forward. Just like everything else, it seems like the hardest sections and the hardest challenges teach you the most. The reward of accomplishing something that you were not sure you could do, and that makes people’s lives better, is priceless.
To follow Joe’s Paddle for a Purpose journey in real-time and learn more, visit motzpaddleforapurpose.org. You can also follow us on YouTube, Facebook, Instagram and LinkedIn!
Persevering One Step at a Time
When Steve Doerfler and his partner bought out their boss at Metalcraft in 2006, they knew that they would have to work hard and overcome obstacles to help their new company grow and thrive. Many of them, however, both professional and personal, were entirely unexpected and unique.
In this Tugboat Institute® talk, Steve shares his journey of leadership through the buyout, several years as President, over a decade more as CEO, and now as Chairman. Although it has not been easy, it has shaped him as a leader and, he believes, made him better.
Watch and be inspired to turn your challenges into vehicles for strength and transformation.
Overcoming the Fallout of Hiring the Wrong CEO
In business, leaders are often reluctant to share stories of failures. However, like everywhere else, the most valuable lessons usually emerge from acknowledging and dissecting what went wrong. At Concentric, the security firm where I serve as Executive Chair, a few years ago we had a difficult experience that grew from a failure. We hired the wrong person into our top leadership position, and it cost us. While it was painful, we learned an enormous amount.
Hiring at all levels is important, and in all cases, a bad hire costs time, effort, and therefore money. In most cases, the damage – to the budget and to company culture – done by a bad hire can be limited by a quick reaction; if you can recognize and remove the person quickly, you can minimize damage done. But when you hire a CEO, the stakes are much higher and the process of recognizing and correcting the mistake can take much longer. This is our story.
As a founder, I was the first CEO of Concentric. When I was ready to step down from being CEO and hand it off to the next leader, I tapped the man who had helped me found the company in the beginning; he had contributed a great deal to building Concentric and had done a great job in previous roles. He was a good listener and a tireless worker, he made good tactical decisions, and he seemed able to bring different groups within the company together to form consensus and set projects in motion. His strengths in his previous roles, however, which gave me the confidence to move him into the CEO role, turned out to be his greatest weaknesses as the leader of the company.
It should come as no surprise that trust is a critical element of leadership and a high-functioning team. The executive team must trust the leader, and the entire team must as well. When I brought in this new CEO, I was comforted by the fact that he was a known entity, both to me and the company, and therefore, in addition to assuming he had the skills to get the job done, I made the leap to assuming that his long tenure equaled trustworthiness. A final, critical component of this situation was that this was a big transition for me, professionally and personally, to move from the CEO role into the Executive Chair role; I was heavily invested in the transition working out. For all these reasons, I allowed myself to be blind to some of the early signs that we had a problem.
Although it took me far too long to realize he was the wrong person for the job, in retrospect, the signs were there from the beginning. The lessons we’ve drawn from this experience fall into two categories: how to recognize and act quickly when your new CEO is not the right person for the job, and how to avoid making this bad hire to begin with.
When you are in charge, you can either choose to surround yourself with people who will think for themselves and challenge you when necessary, or with people who are your fans, who will laugh at all your jokes, and who will always agree with you. I did see early on that my new CEO was choosing to surround himself with fans. His skill at bringing people together translated into a strong desire for harmony and an aversion to pushing the envelope and asking hard questions. Instead of raising a red flag, I explained it away, and reminded myself what a good tactical decision-maker he had proven himself to be. In addition, a strong leader needs to have a strong North Star, and not be malleable, or susceptible to the influence of his team, whether they be superiors or subordinates. In the absence of this North Star, a bad leader can find themselves captive to the team below them, always shifting and changing to please the team. This was happening, and this is a warning sign that I overlooked – again, largely because I was so invested in this working and so convinced that trust was in place.
The initial allure of promoting someone from within the company, someone trusted and familiar, can sometimes blind decision-makers to the challenges of transitioning from an employee to a leader. It turned out that the skills that had made our new CEO successful in his previous roles did not transfer to his new position. This seems clear to me now, but I couldn’t see it at the time. I realized too late that the fit wasn't right, although the signs started to appear immediately.
In retrospect, I see that I could have prepared myself to look for and identify warning signs such as a lack of curiosity, an inability to challenge information, or a failure to articulate a compelling vision. Being on the lookout for things like this can help preemptively address potential leadership mismatches. However, even with vigilance, mistakes can occur, leading to a tumultuous period of cleanup and recovery.
The aftermath of a bad CEO hire is far-reaching, impacting not only internal dynamics but also client relationships and overall company culture. In our case, trust was eroded with many of our stakeholders, internal strife spiked up, and there were tangible negative effects on the company's bottom line.
Once I finally took action, there was a lot of work to be done. The bad CEO had broken trust with clients as well as knocking our internal culture off balance. I resumed the role of CEO and spent the next few months making an apology tour, to try to repair the damage done. During this time, we lost some clients and saw our revenues dip. These were concrete, financial, existential problems we were dealing with.
Internally, I instigated a cultural reset within the organization to mitigate long-term damage. A lot of relationships had been damaged, some beyond repair. There were people who saw the problems early on and were alienated because of it. Then there were the people who were holding sway over the CEO, who did not want to relinquish their position of power. We lost some people from both groups as we put the company back together.
Fortunately, when we were stabilized and ready for our next new CEO, I had a clearer view of what I was looking for and was able to find and hire a wonderful person for the role. This time, we sought a leader with vision and a strong sense of values, a true North Star that aligned with our Purpose, and a willingness to lead the team into new territory, even if it caused people to shift out of their comfort zones. We were lucky to find just the right person. Under his leadership, we have not only repaired the damage caused by the bad CEO, but we have doubled, and then tripled in size. Concentric is now thriving, and I am grateful that we were able to recover from that challenging setback.
In any company, the impact of the CEO is enormous, which means that the consequences of a wrong hire can be drastic. In Evergreen® companies, this risk is perhaps even greater because what gets damaged the most – relationships – is the bedrock of all People First, Purpose-driven organizations. Fortunately, Evergreen companies are also in it for the long haul, so if they have the will and the leadership to undertake to repair a broken culture, provided the financial mistakes are still repairable, they have the time to make it happen.
I hope our experience can help others avoid learning this lesson the hard way. It’s a mistake that can threaten the very existence of a company. In our case, we were fortunate; despite the setbacks caused by our failed leadership hire, Concentric has emerged stronger, with a renewed sense of purpose and direction.
The Inevitable Bridge: Giving Away Your CEO Role
For CEOs, and even more so for company founders, the prospect of stepping out of leadership, handing the reins over to your successor, and letting go of the company you have poured your heart into for years can be a challenge. Especially for Evergreen® leaders, who tend to be humble and gritty, their work has been a labor of love; they are so heavily invested in the success of their team, their team’s families, and their company that trusting it will be ok without them is almost akin to watching children go out into the world independently. But it must and will happen to all leaders.
In this Tugboat Institute® talk, Kris Maynard, founder and Executive Chairman of Cathedral Holdings, shares his own experience around this moment in his leadership journey. As a founder, he chose to step into the role of Executive Chair first, to ensure that the transition was smooth and gradual, but the end result is the same; someone else is in charge now. His story will shed light on this process for leaders who are looking toward this transition, and while his lessons learned will not make it easy, they will certainly help prevent surprises and prepare you for some of the more unexpected aspects.
Watch and be inspired to prepare for and thoughtfully shape your own transition out of leadership, when the time comes.