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For CEOs Only

A CEO peer group can be an invaluable learning and networking experience, but a waste of time if it doesn't fit a CEO's specific needs. Here's what to consider before joining a group.
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Business 101

How to find a CEO peer group that's worth your time--and money

In January 1997, Geri Johnson was grappling with the most difficult decision of her 20-year career as CEO of Johnson Oil, in Prineville, Oreg. Should she incur significant debt to bring her company into compliance with new federal regulations, or take on a partner--or simply sell out? Johnson, a 60-year-old self-described workaholic, longed to discuss her options with others in an atmosphere of candor and confidentiality. She found that in a CEO-only discussion group to which she belongs. Within six months, Johnson recalls other business owners in the group had "helped me separate the emotional from the practical." Once she had that clarity, she realized it was time to sell the petroleum-products-distribution company, which had revenues of more than $5 million.

Unfortunately, not all CEO discussion groups are created equal. Two years ago Craig Moreland joined a CEO peer group in hopes of finding insight and expertise that could help him grow his company. "Most of the people in my group were focused on daily firefighting rather than being strategic," laments Moreland, whose $2-million company, Coast Label, manufactures custom labels and tags in Newport Beach, Calif. "We were covering a lot of remedial things, like financial statements." Moreland spent a year in that group before switching to another, more sophisticated one. He had learned an important lesson: the wrong peer group can be a waste of time.

Until recently, a few large organizations, like TEC/the Executive Committee and Young Presidents' Organization (YPO), dominated the market for CEO-only discussion groups. Their annual fees were high (TEC charges up to $8,700), and their waiting lists were often long. But as demand has burgeoned, so has the number of smaller regional companies that assemble and facilitate peer-group gatherings. However, as Moreland discovered, it pays to shop carefully. Keep in mind that the most successful peer groups generally--

Attract Varied Expertise. Look for groups that offer a broad cross section of skills and strengths. Nancy Hanson, president of Roxbury Mills, a 48-employee knitting mill in Queens, N.Y., belongs to a Women Presidents' Organization peer group that includes not only other manufacturers but also an architect, a designer, and the head of an advertising agency. "It's like an advisory group that helps me gain a different perspective," says Hanson. She is currently devising a new marketing strategy to sell a custom product through an 800 number--a plan that requires the kind of expertise she probably wouldn't find in a room full of manufacturers.

In industries in which most companies do business only locally, peer-group diversity can be geographical. Peter Schrader belonged to such a group of construction companies for eight years and declares that Schrader & Co., his $1.2-million remodeling company, "is far stronger and my skills are far more advanced than they would ever be without that network." Through his group, Schrader, situated in Burnt Hills, N.Y., found a mentor in California who showed him how to integrate design capability into his company.

Stay Small. Experts agree that 10 to 15 people is an ideal size for a CEO peer group. With more members than that, you may spend most of your time waiting to be heard. Find out exactly how many members are permitted in a group, and beware of organizations that justify larger numbers because "not everyone comes all the time." A peer group with a spotty attendance record won't develop an atmosphere of trust and won't provide you with a consistent sounding board.

Stress Confidentiality. "At every meeting, we ask if anyone knows of any breaches of confidentiality," says Keith Alper, president of Creative Producers Group and a member of a Young Entrepreneurs' Organization (YEO) peer group. Loose lips get you kicked out of his group. "It's a totally open forum to discuss anything," says Alper, whose corporate-communications company is based in St. Louis. "It's almost like a religious experience, and confidentiality is absolutely sacred." Sound extreme? Maybe so, but it's a way to remind members to be discreet. Some groups will even ask you to sign a confidentiality agreement.

Clearly Define "Peers." You may think of your peers as CEOs who run companies as big as yours or who are in related industries. But not all peer groups have the same definition. Ray Silverstein, president of President's Resource Organization, a network of peer groups in Chicago, says that he likes to "mix up industries" but generally groups companies by the number of employees. Other organizations might put small and large companies together.

Expect Accountability of Members. "If the group gives you suggestions, you must come back to the next meeting and report on what you've done," says Jim Schell, who runs Opportunity Knocks, a peer-group organization based in Bend, Oreg. An effective peer group puts you on the spot by demanding to know what you've done lately. "One of our group members knew he had to make a termination," recalls Ray Silverstein. "At the next meeting the first thing his peers asked was, 'Well, did you do it?' The group forces you to take action you don't always want to take."

Don't Stress Business Generation. While it's natural for business relationships to evolve within CEO peer groups, that should never be your primary motivation for joining. That's because your desire to present your company in a positive light might prevent you from discussing your problems and weaknesses. "We have an agreement that no one in the group is allowed to solicit business from any other member," says Steven Krauser, who runs Network Associates, a CEO peer organization based in Hicksville, N.Y. "I was in there for 13 months before anyone would even refer me," says Joseph Cosgrove, a principal at Coronado Travel, in Roslyn, N.Y., and a Network Associates member. As the son-in-law at a $20-million family-owned travel agency, Cosgrove has used his group to discuss succession issues.

Stick to a Consistent Format. Most peer groups meet monthly for anywhere from a few hours to a full day. A typical agenda might include follow-up from the last meeting, a guest speaker, a visit to a member's company, or a detailed discussion of one company's most pressing issue. Pricier groups, such as TEC, also entitle you to a few hours of between-meeting consulting time with your facilitator or another expert. What format will suit you? How long can you afford to be away from the office? Do you want members of your group visiting your company? If there are guest speakers, will they address topics that interest you? Is the format flexible enough to deal with unforeseen crises?

Have Good Facilitators. A facilitator's job is to prevent entrepreneurs from monopolizing the conversation, leaning toward self-obsession, or dodging the tough questions. "Seventy-five percent of the success or failure of one of our meetings is due to the facilitator," says Jim Schell. "You have to be able to extract the valid points from the meeting, bring out the quiet people, and shut up the noisy ones."

What if you form your own group? Even then you'll probably need some type of moderator. The Phoenix Network, a nationwide group of 24 public-relations companies, annually elects a president who helps set agendas and facilitates its biannual meetings to "make sure we stay on task with the issues we've agreed to cover," says president David Neuger. And PrezNet, a peer group formed by company owners in Lincoln, Nebr., opted to hire an outside facilitator.

Encourage Trying Before Buying. Ask to sit in on a peer-group meeting before you join. To protect confidentiality, the group probably won't allow you to remain for the entire meeting, but you should be able to stay long enough to gauge the chemistry in the room. If, after you've joined, you feel strongly that you've misjudged your choice, don't be afraid to make a change. Many peer groups stay together for years, but even their biggest boosters concede that it's important to assess regularly the return on your investment of time, energy, and money. Peter Schrader, for instance, values his Business Networks group but feels it is time to take a break. "I now have a very clear vision of what I want to accomplish," he says, "and I desperately need the time to implement it."

Donna Fenn is a contributing editor at Inc.


Red Flags: Peer-Group Pitfalls

Considering joining a CEO discussion group? Watch out for the following warning signs:

1. High turnover among group members. Peer groups should place a premium on relationship building--and that's impossible when people are coming and going every month. Look for a group that accepts new members every six months or, better yet, once a year.

2. Advice that isn't based on actual experience. Entrepreneurs are notorious for being opinionated, but opinions don't necessarily translate into knowledge. "We have a rule in our YEO group that you're not supposed to give advice. You're just supposed to relate your own experience," says Keith Alper of Creative Producers Group, in St. Louis. "If people give advice and they're not knowledgeable, that can be very damaging."

3. Instant intimacy. Peer groups foster an atmosphere of immediate camaraderie that's easy to abuse. Be wary of peers who try to solicit your business or ask for business referrals before you've had the chance to build up trust.

4. Your own impatience. Can't wait to get your concern on the table? Not so fast. "It's very helpful to be a listener," notes Business Networks member Peter Schrader. "Everything that's said, you take back with you. Sometimes it makes you think, 'This is something I ought to clean up at my company, too."

Resources

  • TEC/the Executive Committee (800-274-2367) operates peer groups nationwide. Membership costs range from $5,400 annually (plus a $400 onetime enrollment fee) for companies with $750,000 to $3 million in sales to $8,700 annually (plus an $800 onetime fee ) for those with more than $3 million in sales.
  • Young Presidents' Organization (800-773-7976) is for CEOs not older than 50 with at least 50 full-time employees and, generally, $7 million in sales. YPO charges $2,000 in annual dues, plus various local chapter fees.
  • The Council of Growing Companies (800-929-3165) has 20 peer groups. The organization seeks high-growth companies with at least $3 million in sales.
  • Women Presidents' Organization (212-688-4114), run by Women Inc., operates 15 peer groups nationwide and charges $1,000 a year. Service businesses must have $1 million in sales; product-driven companies must have $2 million.
  • Smaller organizations within your own region frequently have annual fees ranging from $1,500 to $8,000. One notable exception: Jim Schell's Opportunity Knocks, in which members pay just $99 a year.
  • Do-it-yourself groups are another alternative. Plenty of entrepreneurs start their own peer groups and take turns facilitating meetings or pool resources to hire a professional facilitator. Homegrown peer groups can be just as useful as their pricier alternatives if they work hard to maintain structure and discipline.
  • " Taming the Beast," an article in the April 1996 issue of Inc., provides an in-depth case study of one CEO's experience as a member of a peer group.



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