HUMAN RESOURCES

Looking Out for Number 2

Creating an effective working relationship with your second-in-command and sharing responsibility.
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Sharing responsibility and trust with another manager is never easy, especially when it's your company. But failure to create an effective working relationship with your second-in-command could spell disaster

If we had a dollar for every time we heard seconds-in-command grumble about the frustrations of working for entrepreneurs, we would have a wonderful new profit center here at Inc. Chances are, you've heard some of the big gripes before -- the capriciousness, the closed-mindedness, the constant interference.

Well, chief executives do their share of complaining, too. If you want to know how bad things can get, consider the case of Michael Fanning.

Three years ago Fanning, who founded Potpourri Foundry Inc., a manufacturer of home-fragrance products in Huntington Beach, Calif., hired a bright young man to handle the financial and operational ends of his business. After three years in business, Fanning, a high-energy marketing and creative type, had decided his own time was being spread too thin. Revenues were then at about $1.5 million a year. Fanning wanted a right-hand man who could take care of the budgets and forecasts, deal with bankers, and help supervise the company's 60-odd employees. The goal was to free himself up so he could go after new customers and set the direction of the business.

During the first few months Fanning was delighted with the way things were going. The new executive was an absolute whiz at crunching numbers, which bought Fanning more time. Fanning did have some reservations about the new manager's sometimes overly aggressive manner, but that seemed forgivable given the man's knowledge of finance, and the pressures of growth. "I thought it was all part of growing a company," says 48-year-old Fanning.

But as time went on, the individual's style and, increasingly, his values loomed as an issue. More than once, Fanning would come home from a business trip to catch an earful of complaints about how harshly his second-in-command had treated employees. A few disliked working with him so much they left the company. Vendors, too, bristled at his negotiating demands and quietly told Fanning. Before long Fanning had no choice but to ask himself if his number two man was really somebody he could count on to make good decisions. Was he comfortable with someone like this running his company? He thought about it long and hard on a flight back from a business trip to Taiwan and stopped for a day in Hawaii to think some more. The more he thought about it, the more he realized that, putting aside the person's technical know-how, the answer was no.

If Fanning had any lingering doubts about whether to terminate the relationship, they quickly vanished when tax officials from both California and the federal government began hounding him for payroll taxes that his number two hadn't paid. "You can imagine the feeling of betrayal," says Fanning. "I'd been entrusting my soul." Fortunately, the business made it through. Mindful of the risks, Fanning recently did away with the number two job and reassigned duties to other people in the company. "Given all the things that can happen, I'm surprised that more companies don't go under," he says.

Fanning's reaction is quite normal. Many business owners we know would sooner strain themselves to the breaking point than trust anyone to make important decisions for them. But the reality is that you can't do it all by yourself -- not if you want to grow your company and buy some sanity for yourself. What entrepreneurs need to learn is how to work closely and productively with a second-in-command. They need to know how to structure and maintain the relationship and how to build trust.

Over the past few months we've talked to more than 150 CEOs and their number twos about how they work together. We've asked them lots of questions about what works, what doesn't work, and how things could be improved. We think we've gained some insights into what number twos and bosses think of each other -- and how you can achieve the best possible teamwork at the top:

Be honest about what you want. This should be obvious, right? Judging from what we hear from CEOs and the men and women who work for them, it isn't. Why? Because number twos, evidently, get hired for all kinds of reasons: pressure from bankers; weariness, even boredom, on the part of the founder; and once in a blue moon, because a CEO is truly interested in sharing some responsibility.

Before you bring someone in, stand in front of the mirror. Ask yourself what you're really trying to achieve -- and what kinds of decision making you're willing to part with. Your ideas will undoubtedly change, but going through the exercise up front may save you some pain later on.

Think chemistry. Considering the hours CEOs and their deputies spend together and the close quarters in which they spend them, liking each other is an absolute must. In the course of selecting your second-in-command, you'll find plenty of individuals who look good on paper. But you need to test compatibility, too.

Ken Davidson, chairman, president, and CEO of Henley International Inc., in Sugarland, Tex., was lucky. He persuaded a former college roommate to take the number two job. The two play together in a rock-and-roll band on weekends, as they did in the late 1960s. But assuming you have no longtime friends suited for the job or available, do what Kent Williams did. Before making his decision, Williams, CEO of Oscar Merald & Associates, in Greenville, S.C., went out to eat three times with the man he ultimately hired. "I'd known him in a business setting," Williams says, "but I wanted to feel comfortable with him as a person, as well."

You don't need to like everybody you hire, but your number two is different. If you can't imagine being stuck with the person for five hours in the Topeka airport, keep looking.

Contrary to what you may think, values matter. You don't have to enjoy the same music. You don't have to like the same food. But on business basics -- attitudes toward growth, how to treat people, and so on -- you need to be on the same wavelength or be able to get there quickly. If you're not of one mind, you'll split the company in two. Employees will take sides. They'll pit you against each other. To hear people who have skipped this step tell it, things can get ugly.

Figure out -- ideally before you bring a number two on board -- the principles at the core of what you're trying to accomplish. Make sure the two of you are in agreement. If personal goals figure into the equation -- one CEO, for instance, wanted to optimize the potential sale price of his business -- spell them out. Otherwise, you'll butt heads needlessly. Whatever the basics are, hold your number two accountable to them, and be prepared to be held accountable in turn.

Carve up the territory and stand back. If you really want to build a productive relationship at the top, be specific about who's handling what. You and your second-in-command should pin down each of your areas of responsibility and levels of authority -- regarding spending, hiring, and so on -- and clearly articulate the hoped-for results. Then get out of each other's way -- and be prepared to avoid each other at certain times, if necessary. Of course, most CEOs find that it's painless to draw the lines but next to impossible not to cross them at some point. The name of this particular game is self-discipline: set the ground rules and obey them religiously.

There are some good reasons to stick to your knitting. If you're constantly hovering, your number two will feel less responsible for what happens, which means that all sorts of problems will be yours. The people who work for him or her will soon figure out whose opinion really matters, and they'll try to pull you back into the loop. Ultimately, the person you hired to alleviate your burden will be rendered totally ineffective, and you will become less effective by taking that burden back on yourself. No matter how neatly you define your respective roles, rest assured there's always going to be some overlap between the two of you. Ideally, though, you'll think twice before you gum up the works.

Loyalty. Inexperienced CEOs think they want loyalty. They think that what they want is a hardworking servant who's good at following cues. But don't kid yourself. When it comes to making critical decisions, loyalty can be a big handicap. What you need is somebody who can stand up to your crazy ideas.

Understand, we're not talking about someone who will undermine your basic principles. We're talking tactics -- how you move ahead, how you use resources to meet your goals. "You want somebody who can help you think things through," says Mike Shanker, the second-in-command at Broadway & Seymour Inc., a computer-services company based in Charlotte, N.C. Often, that means somebody who can tell you you're wrong.

Find a style of communicating that works. CEOs, as a group, seem alarmingly undisciplined about the way they communicate with their number twos. They don't see that interaction as a big issue. Ironically, their seconds-in-command see it as their bosses' single biggest problem area. Many complain that their CEOs don't take the time to talk; others complain that the communication is too random and informal -- which, in their minds, indicates lack of respect for their position.

Communication is one of those disciplines you simply can't ignore. One way or another, you need to find an approach that works. Is there a system that works for everyone? Clearly, no. But if catch-as-catch-can isn't working for you, try holding regular meetings. Several number twos have found that weekly or bimonthly meetings help them get a clearer understanding of what the owner is thinking. Such meetings also offer a regular forum for presenting ideas.

Talk more than you think you have to. Some CEOs and their number twos go a step further in the communication department. They set up special meetings just to talk about how things are going between them. Often, those meetings are held off-site, away from constant interruptions -- over breakfast, for example. As one number two, a woman from Florida, explains it, these conversations are not just catch-up sessions but focus specifically on what's not working and how to fix it: "I'll use our sessions to say, 'Here's a situation we could have handled better. Next time, could you try to do it this way?' And he'll do the same."

"When you work as the number two, it's easy to get demoralized," adds Anne Dikovics, vice-president of Home-medic Lifeline Inc., in Pennsauken, N.J. "It's a very lonely job, so you need to create a mechanism for feedback."

Don't lock horns in broad daylight. We said it above: disagreements can be good. They can lead to smarter, better decisions. But be conscious of where you have them. Understand that if you and your number two voice your differences in front of other people, you'll lose control over how things are interpreted once a decision is made. No matter what the issue is, employees are going to look for a loser, and that "loser" will have a tough time implementing the decision once the dust has cleared. "It can set off a really negative dynamic within the organization," says one second-in-command, who's had to eat his words more than once.

You can't anticipate every disagreement. But you should be able to flag the other person if potential differences emerge. "We can tell if we're sitting in a meeting and we're not on the same sheet of music," says Bill Finck, Dikovics's boss at Home-medic Lifeline. So what happens? "Well, usually, we table that part of the discussion and find a time to talk about it privately," he says. If you can't find a way of alerting each other, be prepared to face the consequences later on.

Go away often and don't call. Technology makes it much easier for CEOs to get away -- and, at the same time, harder for them to actually leave. We heard about a CEO, for example, who would regularly use his car phone to call his number two, just minutes after he'd pulled out of the parking lot. In a lot of cases, he'd just ask, "What's happening?" To which the number two would sarcastically reply, "Nothing's different from when you were here, except it's a little quieter."

If you want your second-in-command to make decisions independently, you have to let him or her do it. Of course, you can be sure there will be some choices you wouldn't have made -- and possibly won't like. Owners are forever agonizing over what to do about that. "In your heart, it's so hard to say, 'Here's a problem; now go and solve it,' " admits John Bourget, CEO of Beta One Inc., a market-research company in Farmington, Conn. If you want the relationship to work, you have to learn to understand how the other person thinks and support that person's decisions.

If you feel the urge to check in all the time, you have a problem. Get rid of the car phone. Or maybe you need to rethink what you really want.

Money isn't the point. Sooner or later, practically every second-in-command we spoke with realized that what mattered most in a relationship with the boss wasn't so much how the two parties defined their roles; it wasn't how they communicated; it wasn't even money. It was trust -- difficult to define, as many of them noted, but not hard to recognize. Saying you trust your number two, as nearly all CEOs do, is easy. But talk is cheap. Ask John Vinton, who, until he quit, worked as second-in-command at R. W. Frookies Inc., a cookie company in Englewood Cliffs, N.J.

"Owners don't realize it," says Vinton, "but they could say, 'By the way, I'm going to cut your paycheck by 10%, but I want you to run the company for me.' That would make number twos happier than if they said, 'I'll give you more, but I'll run the company.' When push comes to shove and somebody says, 'Go do that, do it your way, and I'm behind you,' that's what really turns people on. The absence of that drove me away."


THE VIEW FROM #2: LORI WRIGHT

Wright rose through the ranks to her number two position, operations manager at Buckingham Computer Services Inc., a fast-growing high-tech company in Midland, Mich. Buckingham's founder has been finding it extremely difficult to delegate many of his responsibilities.

"I sat in a managers' meeting, and the founder said, 'Now, I want you to keep me informed on things that I want to be informed about.' What do you want to be informed about? 'Things that are important to me.' So we're playing guessing games here. I thought, OK, we'll try to figure out what you think is important. Then something will come up that we think isn't important enough to relay to him, and he'll come in and say, 'Why didn't you tell me that?' Or he'll walk down to my office, sit down, and strike up a conversation. A half hour of my time goes by, and nothing gets accomplished. Or we'll discuss something, come to a verbal agreement, and I'll go do it. Later he'll say, 'Why did you do that?' Well, we talked about it. 'No, we didn't.' Since it wasn't a formal discussion, there was miscommunication."

A FAILURE TO COMMUNICATE?

62% of number twos say their bosses communicate by "catching up" as catch can, but there are no formal ways of communicating

23% say their biggest problem with their number ones is communication

16% say their bosses never or only sometimes listen to them


THE VIEW FROM #2: CHICO LAGER

For two years, until January 1991, Lager was the CEO of Ben & Jerry's, the $77-million Waterbury, Vt., ice cream manufacturer. Since Jerry Greenfield had not played an active management role for several years, Lager shared operational duties with Ben Cohen and struggled to keep their respective leadership roles in balance.

"If you don't develop a relationship with the founder in which people perceive you as making decisions, as being a force to be reckoned with in the company, you'll have no credibility with the people who work for you. You go into meetings, and you're paralyzed -- you get all this input, and instead of making a decision, you say, 'I'd better see what Ben thinks.' You can't operate that way. Or I'd go on record talking down this or that idea, but Ben would want to do it. Then I'd have no credibility when I had to go around saying, 'Hey, guess what, we're going to do this, and it's a great idea.' It became a very negative dynamic within our organization."

WHO'S IN CHARGE HERE?

64% of number twos said they aspire to be a number one

46% of number twos who thought just one person should be in charge said they should be the one

29% of number twos thought employees perceived them as running the company

25% said they do run the company


THE VIEW FROM #2: P. J.MAYES

Mayes has played a variety of number two roles with four different companies, including the western U.S. distributor for Raleigh Industries, a large British bicycle retailer, and Sundance Spas, a manufacturer of portable spas. Her areas of responsibility have ranged from finance to customer service to human resources. Currently, she is controller at Distribution Video and Audio, in Clearwater, Fla.

"The greatest weakness of all the entrepreneurs I've worked with is managing people. When they got to the point where their companies were so large that they could no longer deal one-to-one with everyone, they had to have supervisors and managers -- at that point, they were in trouble with their management skills. That was usually the reason they looked for a number two in the first place. Maybe they didn't put value on having people skills, or they didn't pay attention to it, or it was difficult for them -- I don't know which, or why, but I found it to be a constant problem."

TIME FOR DALE CARNEGIE?

42% of number twos said their bosses needed to work on their personalities or their people skills; only 13% of number twos said their own people skills needed work

27% of number twos said their biggest problem with their number ones was differences in personality and style

26% said their biggest area of disagreement with their bosses concerned dealing with employees

Last updated: Jul 1, 1991




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