Emerging growth companies must climb a steep hill to penetrate their market, grow revenue, and attain profitability. Setbacks, disappointment, and frustration are common occurrences. The company founder is driven by a vision — and by the upside that comes from owning some or all of the company. But most employees are only getting a paycheck — and the chance to get in on the ground floor of what they hope one day will be a fast growing company.
Employee morale is an indispensable driver of a company’s success. It boosts confidence, commitment, and productivity. A drop in employee morale can quickly lead to disappointment and resentment — and an exodus of employees without whom the company can’t function.
We asked Newport partners how successful CEO’s they know respond to setbacks.
Helen’s career has focused on developing and executing strategies for business development and growth for leading retail and consumer companies. She has worked with private equity for more than 25 years-- as CEO of seven PE-owned consumer and retail companies and as an operating partner to eight PE firms.
Entrepreneurs live to fail. They have a clear understanding that to succeed requires taking risks and that risks often lead to failure. However, they are acutely aware that it takes many failures to finally succeed. Therefore, the faster they fail, the sooner they will succeed. Setbacks, frustrations, and failures are merely the path to success. Real entrepreneurs live this everyday and rarely allow their employees to see how these normal everyday frustrations and setbacks affect their spirits or morale.
Kim Denney is an experienced Houston area leader with a record of solving top-level problems as an executive with broad responsibilities in the Chemical, Petrochemical, Energy, and Manufacturing industries.
True entrepreneurs are born with a positive outlook on life. They're always looking for the silver lining, even during a torrential downpour. And they find those silver linings. Setbacks give them the opportunities to rethink their approach, learn from mistakes, and to seek input from others. These lessons are valuable and are often quickly applied to the next phase of the business.
Their typical lack of patience makes entrepreneurs action-oriented. The successful entrepreneurs harness that "urge to do something" to talk to employees and listen to their concerns. It's possible their worries are misplaced, or that the business owner can easily deal with the issues the employees are worried about. It is heartening for employees to know that the leadership team truly understands what's happening and that they are actively working to improve the situation. There's always value in exploring another's perspective, and the business owner who takes the time to do this can help him/herself while giving those around him a morale boost in the process.
Jack is a Newport partner in New York who is a strategic CFO with experience in public and private companies. He has experience with private equity as CFO of portfolio companies and as an operating partner helping to drive exits.
First, setbacks, frustrations and the like are par for the course, which something the entrepreneur should keep in mind to avoid overreacting in a negative fashion. Keeping a steady, positive approach is essential: not getting too high when the business is doing well and not getting too low when the business is having problems. The mental state of the entrepreneur and management team can help maintain productivity and the team marching towards success. Keeping the right "face" to employees boosts morale. Nonetheless, the entrepreneur and management team must be honest and candid with employees about what is actually happening.
Ferey is a senior strategic investment professional with 25 years of experience spanning management consulting in 12 countries, investment banking and principal investing, as well as serving as CEO/President of high-technology ventures.
A CEO has to keep employees’ energy levels up and focus on activities that are directed at delivering the mission of growth.
Fred has been successful both as an executive and an entrepreneur. Much of his career has been spent in different sectors of the healthcare industry.
First a CEO has to be a zealot - a true believer in what he or she is developing. Second, they need to be an evangelist who can convey their passion to their team. Aligning goals — sharing equity with the key members of the team so that everybody has a potential to win — can ensure loyalty and support. But when there are bumps in the road it helps to have at least one confidant (like a Newport advisor) you can openly share your concerns with.
Bill has deep expertise in building and running industrial manufacturing and construction companies.
The communication, leadership, and vision emanating from the executive office is directly reflected in the employee's morale. Set the company's goals and establish the plan to achieve them. Include the employees in the plan, providing accurate and honest feed back. Take responsibility rather than assigning blame.
Lynn Lednicky is an experienced leader with a track record of success in the energy industry. As President and Founder of Lednicky Enterprises, he has provided expert advice to the energy, utility, and infrastructure sectors. His engagements have included M&A support, operational and financial restructuring, renewable energy, project development and financing and advising on production and use of natural gas as a domestic transportation fuel.
Many entrepreneurs are a part of some type of business or entrepreneur networking group. This allows them to see what others are experiencing and either learn from best practices or commiserate.
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Billie is a Newport partner in the Pacific Northwest who has been Executive VP and CIO of TrueBlue Inc. (NYSE: TBI) the largest industrial staffing firm in the U.S.
The need for perseverance can be seen in financial terms but is more often defined/tipped in emotional terms. If entrepreneurial passion doesn’t come with a high degree of personal awareness and emotional intelligence, the tough patches can be catastrophic. Some of the most talented visionaries lack softer perseverance tools. The best ones have open conversations with members of their teams who rely on them - those involve negotiations, agreements, and on-going feedback/sharing. Perseverance can also be greatly increased by seeking out independent advisors. Having an advisor who keeps tabs on your commitments to your business and your own personal well-being can be powerful. Ultimately investors and exit strategies depend on a founder/visionary driving hard — but maintaining some objectivity about the success of their business.
Mark is a co-founder of Newport Board Group and its Chief Knowledge Officer.
A leader should never appear discouraged in a way that depresses the spirits of their employees. That said, employees will always see through false optimism. Be honest about your frustrations and impatience but never let your team doubt your abiding optimism that the company will struggle its way through its challenges and eventually be successful.
John has delivered top- and bottom-line results running a wide range of companies and dealing with challenges like acquisitions, lean manufacturing, supply chain optimization/low cost sourcing, new product development and brand and channel management.
Entrepreneurs, in my experience, are a very optimistic lot. Sometimes this optimism borders on the unreasonable but does contribute to an underlying confidence within the broader enterprise.
Eran has diverse experience in executive management, venture capital, private equity and M&A, including turnaround, restructuring and special situations transactions.
The CEO must focus on the half full glass, on the positives. The whole company should see him or her as constantly anticipating future success and actively engaged in fulfilling their dreams and ambitions — and those of their employees.
Ready to break through the second stage of growth? It's time to create a performance based culture.
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