How to Achieve Leadership Alignment

Kathy (host):
Well, hello there, and welcome back to another episode of Help! My Business is Growing, a podcast where we explore how to grow and build a business that is healthy and sustainable. I’m your host, Kathy Svetina, a fractional CFO and founder of NewCastle Finance, a company where we believe that everything that you do in your business is eventually going to end up in your finances, and to get to healthy finances is to have a healthy business. Well, the question is, how in the world do you get there? Well, this is where this podcast comes in to help.

Kathy (host):
Every successful business at the top got there thanks to effective leadership. When this leadership alignment is present, it can lead to business growth and success, but if it’s not there, it can cause significant problems with your employees and the business overall along the way. And of course, that means that the financial performance is going to be a problem also. So what exactly is leadership alignment? How can you achieve it in your business? Why is it so crucial for organizational and financial success, and what does it take to get the leadership alignment right?

Kathy (host):
As a quick reminder, all the episodes on this podcast, including this one, come with timestamps for topics that we discuss, and each one has its own blog post. You can find all the links and the detailed topics in this episode’s show notes. My guest today is going to be Andy Katzman. He is the founder and CEO of Andy Katzman Small Business Advising. He’s a human resource and operations executive with over 20 years of experience and has designed and implemented HR strategies for many businesses in a variety of industries and lifecycle stages. Join us.

Kathy (host):
Andy, welcome to the show!

Andy (guest):
Awesome. Thanks, Kathy. How are you?

Kathy (host):
I am doing great on this lovely Friday afternoon in Chicago. As we talked about, we have some great weather today, finally.

Andy (guest):
Finally! It’s been, you know, a typical Chicago spring where it’s yo-yo back and forth. But yes, the sun is out, and it is Friday indeed. Awesome!

Kathy (host):
We’re going to be talking about a topic that is really important in business, but I see businesses not really understanding that there’s something wrong there and how to fix it, and that’s leadership alignment. So let’s first talk about what are some of the problems that you see in companies when they don’t have that leadership alignment, and why is it truly important to fix those problems?

Andy (guest):
Yeah, it’s a great question, and it is a really pressing issue from my perspective, you know, working in HR, people operations, and business operations types of things. I think leadership alignment is incredibly important from a couple of perspectives. One, obviously, we want companies to be well-oiled machines, and we want employee leaders to bring their own perspective and their own ideas, but we need them to figure out how to take those ideas and bring other leaders along to implement those ideas for businesses to be successful.

Andy (guest):
I think if you also take kind of a step back and you look at things from an employee perspective, you also really need to figure out how you get that leadership alignment and then communicate that down to employees, whether that’s just the basics, Kathy, of what’s going on from the business perspective or a strategy perspective, or if there are big changes going on, what does the change management look like? And sometimes, as leaders, I feel like we lose sight of what it’s like to be an employee, and sometimes, if we don’t have that information, employees jump to conclusions or they kind of go to these cataclysmic scenarios in their head, which is not healthy, nor is it productive. So it’s just really important for leaders to be aligned and be very empathetic. And just think of the days when we were employees or individual contributors, and when we didn’t have information, how that impacted our day-to-day lives at work and at home.

Kathy (host):
Yeah. And also the other thing too is, you know, as a leader, you might be working on a certain initiative for a long, long time, but just because you’re so embedded in it, it doesn’t mean that your employees might have any idea what’s really going on. So that’s another thing to be cognizant of. That just because you’ve been working on this for a long time, it doesn’t mean that your employees have any idea what’s going on, and they might be jumping to their own conclusions.

Andy (guest):
That’s right. And you know, especially as more companies are going back to being in more traditional settings, where they’re in office, and employees are not used to seeing lots of closed door meetings. Or if there are things that are going on, again, it’s human nature to kind of go into the “what’s going on?” You know, this is weird. And, you know, things feel weird. People can pick up on energy. And it’s just important. I always say we have to be as transparent as we possibly can. There’s obviously work as leaders that we’re doing that is confidential or that we need to kind of keep close to the vest or close to a working team, but whatever we can share with employees, I always feel that is always a best practice, just that way. Employees understand and can see that the leadership team is doing the best that they possibly can, but they also understand, like, “Okay, we’ll tell you when we can eventually tell you. But right now, there are things that are going on that we can’t share with employees quite yet for a multitude of reasons.” And we don’t need to. There are ways that you can work through that, but this is one of those fine balances, you know, of being a leader and an employee. And you know, how you manage to do these types of things?

Kathy (host):
And, you know, this is a lot of the times, that’s how silos happen in the business. And the bigger the organization gets, the more silos can develop. Let’s talk a little bit about these silos. Because, you know, I come from a corporate environment where silos happen a lot, and you have people with their own agendas, and generally, when you have silos and people with their own agendas, the business will eventually suffer, because people are looking for their own agendas versus what is, you know, the greater good for the company and also the greater good for the customer. So let’s talk about this. When you start to see in your business that it’s getting bigger and you’re starting to see the silos develop, is there anything that you can do as a leader, as an owner of that company, to prevent that before it becomes a true problem?

Andy (guest):
Yes, I definitely think there is. I think those leaders that have high emotional intelligence, and can kind of pick up on these things, which I think a lot of leaders do. This is the time where I tell people, and I’m telling some clients right now that I’m actually advising through this, this is where you need to slow down to speed up. You need to understand, you need to check in with the team. You need to make sure that the team is aligned, that if there are silos, you need to understand what’s going on. Is it because, like you mentioned, there are hidden agendas, or not necessarily hidden agendas, but ulterior motives or things that people, they only have part of the scope of work where they understand what’s going on? It’s like the Apple computer type of a thing. It’s like everyone only works on their part of the widget to contribute to the greater good of the product. But it’s one of these things that CEOs or presidents or boards of directors sometimes need to slow down and make sure that the team is aligned, and make sure that the team really understands what’s going on and what the implications are, you know, the good, the bad, and the ugly. And once you have that, it’s easier to do that at the onset than it is to do, you know, early on, midway, or towards the end of big corporate initiatives.

Kathy (host):
You’ve mentioned that you have clients that struggle with this. Obviously, things are confidential, but is there any way that we can talk about this in terms of your clients, like, what are they going through? And how are you helping them through that, and what are some of the things that they are working on so that it doesn’t get worse?

Andy (guest):
Yeah, you know, it’s interesting. All of my clients are a little bit different, but all are in some different horizon of their business. Some are in startup, you know, true startup mode. Some are in active growth mode. Some are just in maintaining mode, right? So for me, my counsel to them is really just figuring out and thinking about what their role is, and how as a leader, it goes back to my comment a little bit ago, is that you need to be that empathetic leader.

Andy (guest):
And so there are issues right now where, you know, I have a client that is having some contract issues with their MSAs, and things aren’t necessarily clear in the MSA in terms of who’s going to be responsible for what, or how this is going to impact the business. And there are things that you need to think through about that before you sign that MSA, whether it’s from a resourcing perspective, a talent acquisition perspective. It’s like, do we have the bench to do this type of work right now? We’re all after business. We all want to, you know, be successful business. But again, we need to be thoughtful, deliberate, and intentional with the work that we do. Because if we don’t, if we don’t look like a well-oiled machine, and it’s more than just looking like a well-oiled machine, it’s about being a well-oiled machine. We only have one chance at this. Once we lose our credibility with the employees, then we’re shot. That’s it. We’re done.

Andy (guest):
And you know, now as leaders, and as consultants, and as you’re a consultant too, Kathy, you know we are who employees are talking about at happy hour on Friday night. It’s “those guys, you know, you can’t believe what they did again.” We were them. You know, I remember in my 20s, when we were talking about those types of things, but now we are the people that people are talking about on Friday night over beer or a cocktail.

Kathy (host):
Yeah, and it’s interesting to see that dynamic happen in the businesses, especially when, you know, there’s a lot of change happening in the business, and I see a lot of businesses struggle with it. So let’s go into, you know, if you are seeing that there’s misalignment happening within your team, within your leadership team, what are some of the specific tools that you can use, and what are some of the things that you have seen that work well? Yes, we said communication. But what exactly, how exactly does that look like? Do you like, gather everyone in the room and, like, have it fight it out? I mean, what do you do?

Andy (guest):
Yeah, it’s definitely not a fight, but I definitely, I’m sure you’ve been a part of this too, where conversations can become contentious, but that type of productive conflict is not a bad thing. We don’t want people raising their voices. We don’t want people being mean and calling names, but productive conflict is actually a great way to get work done and having disagreements. We don’t always want to be stuck in groupthink. We want different perspectives and different things. We just have to learn how to be respectful and respect one another with that, you know.

Andy (guest):
And as corny as this may sound, one of the best tools that I think that’s out there, that I think we’re all very familiar with, is truly a SWOT analysis. So the strength, weakness, you know, opportunities and threats. And I think using SWOT analysis, you know, as you’re going through giant, you know, corporate initiatives, or you’re going through, you know, big, you know, evolutions within your business, or, you know, looking at, for capturing, for new horizons. A SWOT analysis is a great tool that’s out there. And I know people throw SWOT analysis and nine box, and you know, all of these terms out there all the time, but I am a huge fan of a SWOT because A, it’s collaborative, B, it’s visual, and then it gets people talking and saying, maybe this is more of a threat than an opportunity, or this is a strength, or, you know, this is a weakness, but it gets the team to have that visual, and gets people talking and marching in the right direction. That’s

Kathy (host):
Great. And you know, when you have these meetings and you do the SWOT analysis, and you know, there’s always people in the room that feel like I would say a little bit shy about voicing their opinions and like giving you their true thoughts, especially as a leader, you’re in a position of authority, like, how do you get people really talk about their true feelings and their true issues in the room? Or would you do maybe, like an anonymous survey? Would you think that’s more useful?

Andy (guest):
I think a lot of people probably agree, like, surveys are good, but you need to really be deliberate with surveys. I think a lot of times, companies and leaders will say, we’re going to do a survey, they do a survey, and then the results go into the trash can because they’re scared to share them, or they don’t want employees to understand what’s really going on behind the scenes, right? So from a survey perspective, there can be some danger there, but if you really take those results and commit to what’s going on, and I’m a firm believer, when you do a survey, you commit at the onset about, here’s what we’re going to do with the information, and here’s when we’re going to share it so employees know, like it’s going to be looked at, and we’re going to share the information with employees as well.

Andy (guest):
If you don’t give those next two steps, it can become dangerous, and then you lose that again. Talking about credibility a few moments ago, you lose that credibility with employees, I think, for leaders and leadership, you know, to work together. It’s up to a CEO or a president or, you know, sometimes it’s the board of directors to make sure that the leaders have that safe space, have what I call those four wall conversations, where we know you have the ability to speak up, have the psychological safety to kind of share your opinion, share what you’re trying to accomplish, without any retribution, or without any sort of, you know, kind of pushback, kickback, or any sort of damage or harm, but that all comes from the very top and needs to be cascaded.

Andy (guest):
It’s one of these things, and I hate to speak in cliche about it’s like, you know, actions speak louder than words. It’s where I think leaders, especially you know, new joiners to leadership teams, need to see that a CEO or someone in the C-suite, the SVP suite, whatever truly believes that and makes that actionable for them.

Kathy (host):
I think a lot of that is also the emotional intelligence of the leaders as well, because getting feedback and getting criticism from your employees might be really hard, so you have to be able to take that and make it a constructive, type of conversation that you can then do something about and not take it personally. Have you seen places where people have gone into this process with the best intentions in mind, trying to get the feedback, and then once they got it, the leaders just either didn’t believe it or they just didn’t want to act upon it? Or have you seen things like that happen with the people that you worked with?

Andy (guest):
I have, and it’s even with people that I would call that have that high emotional intelligence. And it stems back around, you know, culture audits, our climate surveys, where they, you know, a CEO that I once worked for looked at the results and said, “This is like this. This can’t be.” And I’m like, the 350 employees of this organization did not all band together to bring you down or to, you know, create chaos. This is really what’s going on, and we need to do something about this.

Andy (guest):
And it all stemmed about communication and credibility. But it was one of these things, that the CEO definitely did not want to see nor hear, but it came through loud and clear. And you know, again, it goes back to it was one of these things where we’re just going to dance around it, we’re not really going to address this issue, and it ended up becoming a much bigger issue because we didn’t address the issue and get out ahead of it.

Andy (guest):
And I always like, I think it’s important, I don’t want to say always like, but I think it’s very important that leaders are vulnerable and that leaders, you know, none of us are perfect, like what we’re learning as we go. Work is a science experiment. Leadership is a science experiment. Sometimes it works, sometimes it’s, you know, it’s going to blow up in our face, but we still need to try our best, and we still need to go back to that, being those empathetic leaders and thinking about it from an employee perspective.

Andy (guest):
That’s one of the things I’ve done prior to, you know, when I was in industry, and now as a consultant that I guide with Kathy, is to say, like, we need to think of this from the shoes of employees, and we need to think of it from their perspective, because we’re here for them, you know, they’re depending on us to make the right decisions to be good stewards of the company, so that way they can put dinner on the table, they can take their kids on vacation, so they’re looking to us. So we have to be comfortable with the uncomfortable. Yeah,

Kathy (host):
And have you had, I always like to, like, weave stories into this podcast as well, because I think that is how people really learn. Do you have an example of a company that you worked with where they were reluctant to do this, and they had a specific problem. They were reluctant to do this type of employee engagement, and at the end, it turned out to be a really good thing for them.

Andy (guest):
Yeah, I think there’s a couple examples that I could, that I have within my career, that something like this has happened. Maybe I’ll walk you through kind of the first example, which is more along the lines of where we didn’t make where we made the wrong decision, and we didn’t go about and fix it the right way, and kind of what the collateral damages. And then I could talk about, you know, kind of a positive example as well.

Kathy (host):
Yeah, I love those types of things because now we know what not to do. That’s right.

Andy (guest):
That’s right. One of the examples that I have is, I know of a company where a CEO, you know, made a very controversial business decision. And I want to, you know, I need to anonymize a lot of this, just because of what’s going on. But you know, the CEO made a very controversial business decision, and instead of getting out ahead of this business decision, and getting out ahead of trying to figure out what they needed to do, they danced around it. They came back to the leadership team and said, for all intents and purposes, like we’re not talking about it, like this is not that big of a deal, but it was a huge deal.

Andy (guest):
Nine employees walked out of a company that I work for because the CEO made a bad decision. The CEO did not share the why or the how. I think in the back of their head, the CEO knew that the decision was bad, but instead of getting out ahead of it and saying, “I made a bad decision because I was trying to save the business, or it was because we need to do X, Y and Z,” they became radio silent. And that goes back to the onset of our conversation, where that void of communication creates all of these issues.

Andy (guest):
To have nine employees of a 100 person company, so 10% of the employees, walk out because they saw this decision being made and knew what the downstream effects were going to be, created a ton of collateral damage and a ton of credibility issues. It was left to two people on the leadership team, me and someone else, to clean this mess up. And there’s only so much that a Chief People Officer or Chief Administrative Officer can do, or the President of the company or the Chief Commercial Officer can do. It was an absolute disaster, and it took a lot of coaching and a lot of phone calls to try to get them to come along. And they absolutely didn’t. They just kind of drew their line in the sand and said, “It’s not that big of a deal. We’ll find other employees.” I love to be part of employee-centric cultures, and to hear that just broke my heart. It’s not the type of company that I ever want to be aligned with.

Kathy (host):
That’s a sad story, but it’s a really good cautionary tale of what happens when a company does something wrong, or when a leader does something that completely goes against the values of the employees. When we think about the owner and the CEO of the company, you’re also a steward of the culture as well. It’s not just about the financial responsibility that you have towards your employees and your board, if you have it, but also there’s this culture stewardship that you have to be upholding. Because if you go against your values and against the culture in the business as the leader, how are you going to model that for the employees otherwise, right?

Andy (guest):
That’s right. Maybe I’m a bit of an anomaly, but I’ve been very fortunate in my career to work with private equity and VC partners that have been very employee-centric for the most part. These VC and PE partners wanted to look at retention. They wanted to look at why employees are leaving. They really were digging into exit data. They were really digging into the annual culture audits or the quarterly pulse checks to understand what was going on. I hear horror stories all the time where people are treated more like a commodity than an asset. But luckily for the majority of my career, I had it the opposite, where the investors and the board saw people as the asset and not the commodity. So I’m very blessed to have had those opportunities. But I know that’s not necessarily how business works most of the time.

Kathy (host):
Yeah, and especially in the VC world, when it’s growth at any cost. It’s very unusual to see that, and that’s one of the things, I mean, I have nothing against the VC world. They can do their thing, but it goes against my healthy and sustainable business premise, and something that I am always pushing the business owners and the CEOs to do. Business needs to be healthy and sustainable, because if you’re just growing at any cost, you’re going to have a lot of casualties and employees. They remember, and it’s a small world. Once the word gets out that this particular company is just using people and discarding them, you’re going to have a problem getting good, talented people.

Andy (guest):
That’s exactly it, and you’re spot on, Kathy. That’s the name of the game right now. It’s about retention, it’s about attraction. It’s about creating the great employee experience, because employees talk. It is a small world. We have things like Glassdoor, we have things like Comparably, that are working against us. So we want, and I understand why those tools are out there, but we want to build authentic cultures. We want to be authentic leaders. And we don’t want to just do it for the sake of doing things. But there are those things that are out there that come back to bite us. I just think it’s really important to always do things on the up and up and really think of doing right by employees and delivering on a really strong employee value proposition.

Kathy (host):
Because, you know, people that are good at what they do, they have options. They can go work for someone else, right? And they might be paid even better than what you give them. So let’s stick with this culture theme for a little bit. Before we started recording, when we were prepping for this podcast, you said something really interesting, and I think this really needs to be said on the podcast. We were talking about M&A and the due diligence. How a lot of companies focus on the financials, they focus on the legal aspect, but not a lot of them actually look into whether that particular acquisition is a culture fit. Can we talk a little bit about that?

Andy (guest):
Yeah, it’s very interesting. I learned very early on in my career, I’ve been blessed with some really great mentors throughout my career. One of the first times I was ever on a corporate development or an acquisition type of project, one of the things that the CEO said is, “We need to make sure that there’s cultural alignment. We need to really understand the people before we go any further.” Going in and leading that due diligence process, and then coming back and talking about the synergy analysis or synergy alignment, I’ve seen where a CEO said, “There’s too many things here with cultural misalignment that it doesn’t make sense for us to do this. We want to respect their culture, but we also want to assimilate them into the larger culture. We need to pull the plug on this, because it’s just not going to work.” I know he was saying, “I know how this is going to pan out for us.”

Andy (guest):
Then I’ve worked for other companies where the HR or the people due diligence came in very late into the picture, and it was too late. There was an asset purchase agreement that was already signed. We were starting to buy one of these companies, and we didn’t do the right culture analysis. It came back, and as we were building this company, the culture became a very toxic culture. We did everything we possibly could and tried every trick. Brought in every consultant that you could imagine to help us with these things. But it was too far gone because there was so much cultural misalignment.

Andy (guest):
So to your point, it’s very important that the people side of things is very involved in a diligence process from the onset. Because if not, M&A, as you know, is hard enough as is. The people part of M&A is hard enough as is. And when there isn’t that people alignment, and you’re seeing two totally different types of cultures, it’s not going to work. You need to do that early on to make sure that there is that synergy and alignment.

Kathy (host):
If you’re doing an M&A right now, if you’re trying to acquire a company, what are some of the things that you should be looking at if you’re trying to figure out whether there is a culture fit or not? Are you looking at their HR data? Are you looking at exit surveys? What should you be looking at?

Andy (guest):
Yeah, I think there are a few things. I definitely think you should be looking at exit data. I definitely think you should be looking at other metrics. You should be looking at turnover reports. You should be looking at how long it takes to fill roles. I think also, you know, we’ve all gone in and done M&A work before. We’ve gone in as the auditors, or you know, kind of disguised as someone that you really aren’t. I think you just have to go with a little bit of your gut feeling and see, like, what does it feel like? How suspicious are people? Are people walking by the conference room? It’s part art, it’s part science, and a part of it is a little bit of intuition. But I think using data to help, at least for the initial part, when you’re going through the initial part of the conversation, is a very great way to go about gathering the information and helping you make some assumptions, or helping you figure out what are the questions you need to ask to make sure that synergy and alignment is there.

Kathy (host):
What if you have, let’s say that you’re a smaller business. We’re talking about businesses that are between 10 and 50 million, and they don’t really have that HR function as evolved to have the exit surveys, and maybe they have turnover ratios and all that stuff. If you’re working with limited data, and especially if you’re acquiring a smaller company, because it just makes strategic sense, because you want that certain location, or whatever it might be, and if you don’t have that data, what could you be looking at to figure out if there’s a cultural alignment, or are you just kind of working from your gut at that point?

Andy (guest):
So I think it kind of depends. I’ve been a part of deals where employees of small companies are very plugged in and know what’s going on, that a company is being sold to a bigger entity because the founder wants better opportunities for their employees. When something like that happens, then I find it really important, Kathy, that if the CEO of the company to be acquired is okay with it, to do interviews and get some qualitative and quantitative data that way. If not, then it goes back to a little bit of just the intuition.

Kathy (host):
Also, you know, using intuition as you’re having these interviews is like, are people telling you what they think you want to hear? Are they really telling you what you’re asking them, right?

Andy (guest):
That’s right. And I think part of that too, I think, you know, being around, you and I’ve been around a long time doing this, I think we can see through what’s BS and what’s true. Sometimes it’s hard to do that, but I think you’re able to really pick up and figure out what’s lip service and what are the real facts, too.

Kathy (host):
Andy, if someone is struggling with leadership alignment and culture fit in their business, they’re a leader, and they’re like, “Oh, there’s definitely something happening in the business. I have no idea what to do and what’s the next step.” What is something that they can do to bring them closer to that alignment?

Andy (guest):
I think it’s probably just as simple as checking in with your leadership team, asking the leadership team and saying, “Hey team, I feel something’s amiss with us right now. Am I right? Am I wrong?” And again, if that CEO or that board or whomever has created that psychological safety, then that team should be able to speak up and say, “Hey, here’s what’s really going on.” I think that’s kind of the first place that you need to go.

Andy (guest):
I think another thing that’s always really helpful, I love when CEOs do the coffee catchups or just sit in the lunchroom, take employees out for lunch or a drink or something, and get some information. Not in a nefarious way, when I say “get information,” but they’re able to really talk to employees and say, “Hey, is your manager? Did your manager share X, Y and Z with you? Or, are you getting the feedback that you need? Or did you get the feedback that we were able to expand a client because of all the great work that you did?” A good CEO, or anyone that’s in the C-suite, or in anyone at a leadership level that gets that information is really going to be able to see what’s going on or how employees really feel and what communication is really like. But I think the first place to start is in that boardroom, in that leadership room, making sure that leaders are talking and that the CEO is really plugged into how the team is feeling.

Kathy (host):
It seems like it’s also having these official communication channels, like, “Hey, you know, something’s off here. Let’s talk about it.” And then there’s this unofficial, the grapevine channels of, “Let’s grab a drink and just talk and chat how things are going,” right?

Andy (guest):
That’s right. A lot of times, it’s the informal communication and the informal connections where you get a lot of the most important information, the best data out there, to get a real pulse of what’s going on within the organization.

Kathy (host):
Yeah, and I’ve seen that working with people as well. It’s like the best thing is when you just go and have coffee with someone, or maybe a drink after work, and they’ll tell you a lot of things. You just have to listen.

Andy (guest):
That’s right, especially for younger, impressionable, newer employees. When someone from the C-suite or a leadership suite reaches out to them, they may be shy at first, but when they see you’re trying to do this in a genuine way, not in a disingenuous type of way, they’ll share. You may not get the full story, but again, it goes back to just being perceptive and having high emotional intelligence. You can read between the lines and understand what’s going on.

Kathy (host):
So Andy, where can people find you?

Andy (guest):
Yes, so Kathy, it’s a great question. Actually, my website is going live later today. The official name of my business is Andy Katzman Small Business Advising. And my website is aksba.net. It’s a small business advising all-around human resources and people operations, business operations, and mergers and acquisitions.

Kathy (host):
Awesome. So we’re going to have all of that in the show notes too. If you want to connect with Andy, I highly, highly recommend you do. He’s a fabulous guy, and he’s full of knowledge. He taught me a lot of things, especially about M&A and the culture fit. That is one nugget that I’m definitely taking away from Andy. So go connect with him. Andy, thank you so much for being on the show.

Andy (guest):
Thank you so much, Kathy. It’s great being a part of your show.