the productivity of employees, how
they feel about the company. The happier your employees are and the more
they understand about the company
and what it stands for, the better the
company will do.
NN: What does it mean, in practice, to
be a transformational leader?
PC: Again, I think that transformative
CEOs are constantly making change in
a company. It may be a small change,
it may be a very large change, a change
in strategy, a change in tactics, whatever. Change is very difficult for many,
many people. Even positive change can
be disruptive [to] an organization. The
CEO’s skill or art in terms of how to
handle change in the smoothest possible way is very, very important.
In some cases, change can never
be smooth. If you’re letting a large
amount of people go, if you’re closing a factory, if you’re leaving a certain
country, whatever—it’s not very easy
to make that palatable to most people involved. And in that case you just
have to go with the flow.
Actually, I think that the culture of
the company should reward change.
I’ll give you an example. When I do
turnarounds, there are three things
I’m focused on. One is cost reduction.
Cost reduction is actually the easiest to
do. It’s not fun to do cost reduction,
particularly when it involves people
directly, but it’s the easiest.
The second area is organic growth.
Very often, people say, “How can I
possibly grow my business if you’re
cutting my spending, my support,
my marketing, my advertising?”—
whatever they’re dependent on. But it
actually can be done by being smarter
about all of those functions. One particular area of a company I went to
had a broken new-products program.
New products represented 50 percent
of the sales of the company every year,
so there was constant change required.
Yet, amazingly, the culture of the company was: If you’re an employee, avoid
new products; it’s risky, they may not
work out, it’ll hurt you. So I worked on
changing the culture to reward people
for success in new products and letting
them fail—knowing that even if you’re
good, there’s always a high probability
that a number will fail.
I also wanted to reward people
involved in new products publicly,
which can change a culture very
quickly. I adopted a policy of what I
called spot bonuses. These were checks
given directly to people involved in a
certain successful new-products program. They weren’t necessarily large
checks. What really mattered was the
public demonstration of their skills
and their success, which in many ways
meant more to the employee than getting financially compensated. Once
you do that a few times, people very
dramatically get the idea that “hey,
maybe new products is the place where
I can grow my career,” not to avoid it.
NN: What does authenticity mean
to you? What does it mean to be
PC: I think you inspire people by telling the truth as you know it. Internal
communication and external communication are very important—internal
with your employees is probably most
important, but certainly external, with
your business partners, with your
suppliers, with your customers, with
your financial connections, the people
who support you financially. It’s very
important to be honest.
NN: What does it mean to connect with
people individually as a leader?