May 2014

They Leyendecker View

May 2014: The New Leadership Dynamic

Back to Top
"If your emotional abilities aren't in hand, if you don't have self-awareness,
if you are not able to manage your distressing emotions, if you can't have empathy
 and have effective relationships, then no matter how smart you are, you are not going to get very far."

- Daniel Goleman
Publisher: Douglas Leyendecker
Managing Editor: Kelly Griego

Welcome to The Leyendecker View
Back to Top
"I've learned that people will forget what you said, people will forget what you did,
but people will never forget how you made them feel."

- Maya Angelou
As the financial crisis unfolded in 2008, global manufacturing and services company, Barry-Wehmiller, lost 30% of their orders nearly overnight. To survive they needed to save $10 billion in costs immediately. The board convened to discuss layoffs. CEO, Bob Chapman, refused to go down that road. So as an alternative, the company came up with a furlough program. Employees were required to take four weeks of unpaid time off within a year. When Chapman announced the program, he explained it was better that they all suffer a little than anyone suffers a lot. As he wrote on his blog, "I thought to myself: We're a family at Barry-Wehmiller, so we need to act like one. What would a responsible family do in this crisis?"
Amazing things happened. Employees who could afford more paid time off traded weeks with those who couldn't. Many took the opportunity to volunteer or spend time with extended family. Morale skyrocketed. And the company saved $20 billion in costs.
Once the economy picked up, the company's performance increased at a record pace. Why, Chapman asks on his blog? "Because our actions during a time of great distress didn't damage the cultural fabric of the company - like layoffs so often do - but rather strengthened it."
Author and management theorist Simon Sinek shares this Barry Wehmiller story in his recent TED Talk, "Why good leaders make you feel safe." Yes, talking about companies as families and leaders who foster a sense of safety is a bit squishy in nature. But more and more articles about what is being coined as "authentic leadership" are cropping up. At its core, this brand of leadership is about empathy, along with the self-awareness and willingness to be vulnerable that is required to cultivate empathy. Sinek does seem to be on the early side of what could very well be the next prevailing leadership standard.


 Leadership theory has of course always been evolving. It's a function of the macro and micro economic and business environments at any given time, as well as the nature of how work gets done and its implications on the leader-follower power dynamic. After the Industrial Revolution, leadership was largely authoritative. It was the best fitting style to the manufacturing economy, where workers performed rote tasks and were highly fungible. This mechanized labor naturally created a hierarchical bureaucracy; command and control worked.
In the 20th century, as workers needed broader and softer skills, they gained some power and became somewhat harder to replace. Benefits were introduced to compel the newly minted notion of extrinsic motivation. Contingency and situational leadership theories, which suggested that specific leadership styles should be applied to specific circumstances, dominated the majority of the 20th century. While more nuanced, 20th century leadership remained largely by the book, straightforward and autocratic, with a focus on organizational efficiency.
The predominant leadership trend of the past couple of decades has often been called transformational leadership, and it's shifted the focus to the followers. Because of this theory, we've heard terms like collaboration, shared leadership, decentralization, empowerment and engagement, to name a few.
As each leadership style has been a function of its contemporary context, when you look at today's work context, empathy not only makes sense, it becomes the clear imperative. As we discussed in the February issue of TLV, traditional power is becoming obsolete. The image of an all-knowing, blustering autocrat who leads rank-and-file followers is an outdated one that no longer matches the kind of interconnected, interdependent global economy we all work and live in today. With technology exponentially upping the rate of change and the scale of transparency, and global competition putting unprecedented demands on the need for constant innovation and nimbleness, leaders simply can no longer rely on the legacy autocratic model. The cushion to react after an issue arises that the pre-digital age afforded us has gone the way of the Blackberry.
The breakneck pace in which today's work must get done, and the way technology has caused so many traditional functions to splinter (do we have to learn how to deal in Bitcoin now?) has also created a need for more and more domain experts. This has shifted yet more power to the worker. As with any upset to the leader-follower balance of power, the leadership style must catch up.
When a leader has less personal experience with the work being done under him or her, the distance and potential for misunderstanding within a corporate culture grows. Something must bridge that gap, or the leader will become disconnected and the company will suffer.
Furthermore, we are still in the emotional fallout of the 2008 crash, where many remain suspect of leadership and executives in general, armed with evidence that they don't always have our best interests in mind.
How does one lead people possessing highly important expertise to a company's success and sustainability that the leader himself lacks? How does a leader convince team members their personal best interests are part of the company's strategic vision if their expertise is well beyond the leader's grasp?
Empathy. Not in the traditionally viewed touchy feely sense, but in the sense that it's the only next natural and logical theory of leadership for organizational success in our world today. When the best interests of your team are genuinely in mind, so too is the best interest of your company. Today, they are inextricably linked.
Leading with empathy just means leading from the inside out. It's about taking the time to stand in the shoes of your people, understanding the inputs on the work required of them, the pressures, the impediments, the risks, the joys and fun. When a leader is attuned to the needs and concerns of his followers, the followers feel looked out for. They feel safe. In today's often chaotic economy, with an unprecedented amount of pressure, and the ever-looming threat of being one scary stock market day away from a layoff, removing fear - and its insidious trickle down effect - from culture is the only way to galvanize your team.
While this might be the latest evolution in leadership theory, Simon Sinek sees the power of a safe environment as derived from evolution. Homo sapiens lived in a world where they were under constant threat - from weather, animals, lack of resources. Survival required cooperating and trusting each other. This person could sleep last night because another person stayed awake to stand guard, and vice versa. When homo sapiens began to band together, the seeds of civilization were planted. Big things happened.
The same is true today. People once again need to feel more secure in today's highly insecure world. Our companies are constantly under threat - threat of competition, an unstable economy, new technologies, internal strife. The only variable a company can control is what happens within it. When leaders apply empathy to rout out cultural fear, a culture of empathy takes hold, and employees are freed up to combine strengths and talents. From there, big things can happen. Bob Chapman's furlough strategy reminds us of this power of safety, of family.
What would a responsible family do in a crisis? "A loving family would share the burden," Chapman answers.
Ok, so it is a little touchy feely. But read in our section below how empathetic leadership is very much grounded in necessity, and is a powerful and contagious tool that breeds more collaboration and success. Read on to find ideas for how to improve and apply empathy in your own management or leadership style.
And since it's graduation season, below you can find six commencement addresses chock full of wisdom, humor, insights and advice.
"Empathy is about standing in someone else's shoes, feeling with his or her heart, seeing with his or her eyes.  Not only is empathy hard to outsource and automate, but it makes the world a better place."
- Daniel H. Pink
General Economic Perspectives
Back to Top
Welcome to the soap opera economy. One day all seems headed in the right direction with a great print on US employment. A few days later we see company earnings that are not matching expectations, which continue to change over the course of every quarter so that analysts and companies can be closely aligned when earnings are announced. But alas, a number of even those "well managed intentions" are coming up short.
The once ubiquitous and ever powerful retailer Sears now seems destined for a long, slow liquidation. Best Buy also looks doomed to the scrapheap of brick and mortar retail, which is being more and more usurped by online retail. Amazon rarely makes any worthwhile earnings, yet is currently in possession of a $144B market cap and a price earnings multiple of 489. You read that right, a PE of 489! Hmmm...Is there a canary in the coal mine or has the Federal Reserve permanently done away with canaries?
European voters just vomited all over the Brussels' technocrat establishment that rules the EU. We can now likely expect some form of quantitative easing in Europe to ensure there's enough money around to grease the skids of economy (read: to keep Greece from telling the EU they can shove austerity and their sovereign debt where the sun don't shine). Poor, poor central bankers. It's hard to determine if they are the protagonist or antagonist in today's narrative. How about both?
After some thinking, one has to ask, has economy always been about government stimulus and manipulation? Were we Baby Boomer's just naïve, leisure-addicted youngsters for too long to understand how economy really works? Or has the worm turned, the world changed, and is economy today of an entirely different nature, an entirely different structure from when our lives began? Why does it seem that economy can only move forward with massive monetary, fiscal and/or regulatory stimulus in the US, Japan, Europe and even China?
Government stimulus is certainly working very hard to keep economy going, but let's also remember what economy continues to keep in place...our sitting governments, those bastions of rule makers, rule enforcers and rule arbitrators that employ millions of people. If anything seeks sustainability in today's world, it is government, so government seems to be supporting economy, so economy can continue to support government. Oh, what a tangled web we weave.
The Hiring Market
Back to Top
As suggested above, recent national employment data has been pretty favorable. The unemployment rate has fallen below 6.5%, that once Federal Reserve benchmark meant to signal a return to more "normal" monetary policy. But as we all know, current Fed Chairman Yellen has ensured everyone that stimulus of some sort will remain until more confidence is gained in our economic momentum. Yet it seems difficult to understand what economic momentum really means without government stimulus. Let's keep in mind that the Federal Reserve's monetary manipulation to support economy really started with Alan Greenspan after the 2001-2002 recession...and it continues today, over a decade later.
No matter the employment and GDP numbers today and in the near future, we must remember they come from more than a decade of government stimulus. Our housing and auto markets are where they are because of government stimulus, and both of those sectors, plus their supply and services providers, make up a huge section of our economy.
If there is any natural, organic, employment growth in the country, it is surely coming from the new energy super cycle. This new innovation driven natural resource boom is slated to invest trillions of private sector - as opposed to government (taxpayer) - dollars in the "real" economy.  Can the new energy super cycle lead to the return of an organic, rather than a government sponsored economy and employment market? Expect over the next few years we will find out.
Managing the Modern Day
Back to Top
One of my favorite personal epiphanies: No one is taking the word "cycle" out of the dictionary any time soon. Those with jobs and professional endeavors through the previous Great Depression that occurred in Houston and Texas from 1981 to about 1995 remember that economy comes and goes. And, more importantly, it can go for many more years than one would hope. There is no perpetual hockey stick growth.
Looking around Houston and the energy industry today, it is obvious we are in the newest economic bubble. Surely there is long-term intrinsic value being created by our ability to significantly increase oil and gas production. But simultaneously, there is a surely a whole lot of capital being invested at the peak of certain parts of the energy cycle. On the one hand, these are certainly times to make hay while the sun is shining. At the same time, we must remain vigilant in not expecting the boom to last forever. A prescient bumper sticker from the mid-1980s should be a reminder...
"Please Lord, give us one more oil boom. We promise not to piss it away next time."
Time will tell if we're going to keep that promise.
BLS Corner
Back to Top
The Bureau of Labor Statistics recently released the Labor Force Characteristics of Foreign-born Workers Summary.
The foreign born are those who reside in the United States but who were born outside the country or one of its outlying areas to parents who were not U.S. citizens. The foreign born include legally-admitted immigrants, refugees, temporary residents such as students and temporary workers, and undocumented immigrants.
Highlights from the 2013 data:
  • The unemployment rate for the foreign born in the United States was 6.9% in 2013, down from 8.1% in 2012. The jobless rate for the native born fell to 7.5% in 2013, also down from 8.1% in the prior year.
  • In 2013, there were 25.3 million foreign-born persons in the U.S. labor force, comprising 16.3% of the total.
  • Hispanics accounted for 47.8% of the foreign-born labor force in 2013 and Asians accounted for 24.3%.
  • Foreign-born workers were more likely than native-born workers to be employed in service occupations and less likely to be employed in management, professional, and related occupations and in sales and office occupations.
  • The median usual weekly earnings of foreign-born full-time wage and salary workers was $643 in 2013, compared with $805 for their native-born counterparts.
Chart of the Month
Back to Top
The 10 most and least charitable states per capita: 2011
Last fall, the National Center for Charitable Statistics released the "Profiles of Individual Charitable Contributions by State, 2011" report (2011 data is the most recent available). We were curious to know the top and bottom 10 states in individual, tax deductible charitable giving (thus excluding political contributions), and that chart follows. (Note that the state data includes Washington, DC.) But first, key findings from the report:
"Total reported charitable deductions were $174.5 billion in 2011, compared with $169.8 billion in 2010, an increase of 2.8%. The average charitable contribution per return filed in 2011 was about 2.1% of income. Contributions as a percentage of income varied from 4.8% in Utah to 1.3% in New Hampshire, North Dakota, and West Virginia. Though the average charitable deduction per return was $1,201 in 2011, state averages ranged from $2,516 in Utah to $620 in West Virginia."

 Source: National Center for Charitable Statistics
The New Leadership Dynamic
Back to Top
"If you are humble, you are no threat to anybody. Some behave in a way that dominates others.
That's a mistake. If you want the cooperation of humans around you, you must make them feel they are important - and you do that by being genuine and humble. You know that other people have qualities that may be better than your own. Let them express them."

- Nelson Mandela
What is empathy?
To get started, this video explains empathy from a more scientific perspective, including what happens subconsciously when the brain experiences empathy.
Power robs the brain of empathy
Leaders, take note: A team of scientists from Wilfrid Laurier University in Ontario, Canada scientifically confirmed that power and empathy are inversely related. Participants of the study were asked either to write about a time they felt powerful or a time they felt powerless. Then, connected to brain-monitoring tools, each participant watched a video of someone squeezing a rubber ball. Those who had "primed" their brains by recalling a time they felt powerful registered lower activity in their brain's "mirror system," the part of the brain that experiences empathy. Those who had primed their brains with a lack of power felt more empathy. Fortunately, there's plenty of research that shows empathy can be learned and improved.
Daniel Goleman: On leadership and empathy
Daniel Goleman, the preeminent expert on emotional intelligence, encourages us to expand our definitions of leadership and empathy. He defines a leader as anyone who has a sphere of influence. As neuroscience has discovered, we can literally feel the emotions of those around us, if even subconsciously. Positive leaders cause their teams to feel more positive; anxious leaders cause their teams to feel more anxious. Empathy is a matter of giving people attention, so that we can better read their emotions, and then lead from there. Goleman also notes that a culture of empathy has been linked to increased sales, performance of the best managers or product development teams, and stronger performance in an ever more diverse workforce.

What is Authentic Leadership?
Authentic leadership is about building trust by showing the willingness to be sincere. The core tenets of authentic leadership are:
  1. Authentic leaders are self-aware, know their limits and strengths and are genuine.
  2. They put the mission and interests of the company above their own; results, not power or vanity, drive them.
  3. They lead with their heart, use vulnerability and emotion to connect with their people, and practice empathetic directness.
  4. They focus on long-term shareholder value and, in doing so, nurture their people and company.
Empathy is the most powerful leadership tool
Ginny Whitelaw, author of The Zen Leader, offers three steps for improving empathy and how to assert influence from a place of empathy:
  1. Deeply understand your own needs and interests, drivers and wants. Do the work to go beneath the surface.
  2. From there, become the other. Imagine the world through their perspective, think with their mind and attempt to know what is truly in their interests.
  3. Lead and communicate with them from that place of their interests. From there, explain how your idea serves them.
Whitelaw states well: "The less you put "I" in influence, the more likely influence will occur. Influence has nothing to do with the strength of my argument, my data, my eloquence, how loud or long I talk, how right I am, or how many big and powerful people I have behind me. Influence is not about me-in-my-skin at all. It is about the person I want to influence perceiving that my idea is in his or her interests. That's it. And as we've said, the surest way to do that is to become the other person and go from there."
Why empathy is the force that moves businesses forward
An empathetic leader can enhance intra-office collaboration, as well as improve outside business and customer relationships. "The door for empathy opens when we suspend our disbeliefs and openly engage new ideas. Relationship-focused success expands capacity and potential, and empathy is a business skill that actually grows when practiced and shared....Empathy in the workplace creates and encourages sharing ideas free from the fear of ridicule. If we are to keep our businesses relevant and our consumers happy, we must embrace empathy and let it be the force that drives us forward." Read on for an overview of the positive impact of a culture of empathy.
"The main tenet of design thinking is empathy for the people you're trying to design for.
Leadership is exactly the same thing - building empathy for the people that you're entrusted to help."

- David M. Kelley
The Best of the 2014 Commencement Speakers
Back to Top
Ahh graduation season...That time of year when notables share the wisdom of experience with bright-eyed 22-year-olds. And we get the chance to take stock of our own lives - what we've learned and experienced since our own graduations, how we've changed and grown. It's a hopeful time of year, and a nice opportunity to take stock of where we are. Below are some of the best of the crop of commencement addresses this year.
When perusing this year's speakers at scores of schools, a trend became glaringly clear...The similar political profile of the majority of commencement speakers. Statistician Nate Silver's team noticed this too and looked at the speakers from the top 30 schools in 2013 and 2014. He couldn't find one clearly aligned Republican in the whole roster.
It begs the question: How can students learn to think critically, if even to reinforce their beliefs and shore up their arguments, when not exposed to varying points-of-view?
Below, former Smith College president Ruth Simmons (who openly states her left-learning persuasions) beautifully takes on this issue, and the responsibility of all academic institutions to promote free speech. Simmons was a last minute stand-in for IMF Head Christine Lagarde, who backed out after students and faculty protested her invitation to speak. Out of good fortune, Smith College may have received one of the best commencement addresses this year.
Admiral William H. McRaven at UT Austin
A UT Austin alum himself, Navy SEAL Admiral William H. McRaven, opens his address to the class of 2014 by saying that he remembers his throbbing headache on his own graduation day, but not who the commencement speaker was. Those in this audience will likely remember his fantastic speech, though. There's so much wisdom here, it's no wonder it's been viewed well over a million times on YouTube. Watch for his many insights, fascinating tales of Navy SEAL training and nuggets like this: To change the world, you have to start by making your bed every day.

Ruth Simmons, former President of Smith College, at Smith College
IMF Head Christine Lagarde was scheduled to speak at this year's Smith College commencement. But a contingent of students and faculty protested, claiming that Lagarde represents a "corrupt system" that serves to oppress women. Lagarde backed out at the last minute. Ruth Simmons, former Smith president, took her place - and directly took on the imperatives of protecting free speech, even speech from those with whom you disagree. "Don't complain when the statement of your views leads others to disagree. Implicit in the affirmation of your right to voice your views is your obligation to protect the rights of others to their views. Don't shut the door to new knowledge and greater discernment by closing your eyes and ears and hearts and minds to what others have to offer."

Parker Mantell, graduate of Indiana University's class of 2014
"Doubt kills more dreams than failure every will." So says inspirational Indiana University graduate, Parker Mantell, who opens his speech by revealing he has a stutter. Despite his disability, he's defied countless expectations and went on to have an impressive string of internships that included working for Marco Rubio, Eric Cantor and Chris Christie - for each of whom he answered and made thousands of phone calls. He reminds us not to believe those who cast doubt upon us, but instead believe in ourselves and dare to expand our expectations of what we can achieve.

Charlie Day, writer and actor, at Merrimack College
Peppered with his trademark humor, Charlie Day, creator and star of "It's Always Sunny in Philadelphia," shares that when he graduated from Merrimack, he almost took a job at Fidelity Investments, despite knowing nothing about the industry. Certain he would eventually get fired from there, Day realized if he was going to fail, he might as well fail on the path he wanted to be on. After years of rejections and failure in the acting world, he and friends created what would become one of the longest-running television comedy series. He urges graduates not to do what makes them happy, but what makes them great. "You do not have to be fearless, just don't let fear stop you."

Jennifer Lee, screenwriter and director of "Frozen," at the University of New Hampshire
Jennifer Lee speaks about how being bullied as a kid caused paralyzing self doubt through her entire youth. When she was in college, after her closest friend died in an accident, she quickly realized there is no time in life for self-doubt. In memory of her friend, she pushed through her self-doubt to apply to film school and eventually created the success she's had today. "If I learned one thing, it is that self-doubt is one of the most destructive forces. It makes you defensive instead of open, reactive instead of active. Self-doubt is consuming and cruel and my hope today is that we can all collectively agree to ban it...Please know, from here on out, you are enough, and dare I say, more than enough."

Mary Barra, General Motors CEO, at the University of Michigan
Mary Barra offers graduates six lessons she's learned since she was a college graduate. One highlight is her advice to face issues head on and immediately. As she states, "Hope is not a strategy. Problems don't go away when you ignore them. They tend to get bigger."

Thanks for reading The Leyendecker View. We hope you find these perspectives unique, insightful and valuable.

We at Leyendecker & Associates are committed to the highest standards of value creation. 
Doug Leyendecker Jim Ford David Prodoehl Kelly Griego