Business Management. It's Simple. Like Contract Disputes.
As a former journalist, one of my most persistent and consistent rituals is as leisurely reading of the Sunday newspaper (print version preferably) as circumstances permit. Over the years, I enjoy the Corner Office feature of the New York Times business section, where CEOs and similar types discuss their career and leadership experiences.
This past Sunday's column featured a particularly succint summary of how to run an organization effectively from Shivan S. Subramaniam, chairman and CEO of FM Global, an insurance company. His message resonates with my own experiences as a member of three different firms and a litigator handling commercial lawsuits. The bottom line is honing the message and priorities, communicating them and then trusting people to implement them, even if they do so in their own style.
Asked about early leadership lessons, Mr. Subramaniam noted:
One is that people don't necessarily do things the way you would do them. And if they don't follow precisely the way you think about something, that doesn't necessarily mean that they're wrong. That took some maturity to understand -- also, that not everybody will behave the way you behave.
But the bigger picture is to make very sure that everybody in the company has the same goal in mind. That was always the more important thing I learned over time. It matters less what people do or how they do it, but do we all agree on the same goals?
Over the years, that has led to us having very simple goals at our company. We call them "key result areas" or K.R.A.'s. We're multinational -- we've got 5,100 people, 1,800 of whom are engineers. We're very analytical. But we have three K.R.A.'s, nothing terribly fancy. And everybody focuses on them. One is on profitability. One is on retention of existing clients. And one is on attracting new clients. That's it.
You can talk to people in San Francisco, Sydney or Singapore, and they'll know what the three K.R.A.'s are. All of our incentive plans are designed around our K.R.A.'s, and every one of those K.R.A.'s is very transparent. Our employees know how we're doing. And, most importantly, they understand them, whether they're the most senior manager or a file clerk, so they know that, "If I do this, it helps this K.R.A. in this manner."
As a related point, Mr. Subramaniam commented on learning something from one of his imporant role models:
He's the one who really started to teach me about the importance of simplicity. Things like, "If you can't explain it to me in a couple of sentences -- what the idea or what the concept behind it is -- it's obviously something you don't know how to do. If you've got to write a whole page to describe something, that doesn't make a lot of sense."
In concluding, Mr. Subramaniam distilled and explained his management philosophy:
My philosophy of leadership is that four or five of us can come up with a much better decision than just I can alone. And if you follow that philosophy, you'll probably have a very good, talented management group around you. People can always perform a whole lot better than how you think they're going to perform. You need to really give them the opportunity to do that.
Ultimately, Mr. Subramaniam's remarks, which emphasize the importance of what's important and not being a micromanager, reminded me, oddly enough, of a similar dynamic in learning how to deal with commercial litigation.
One of my very first tasks as a new Chicago business lawyer was to advise a client with a small business on a busy street about his rights when a contractor installed a new driveway with some imperfections and variances from the specifications of construction contract. I found out that a court was unlikely to take action if there had been "substantial performance" of the agreement and something along the lines that "the law does not trifle with trivialities." So, I learned how to tell a client something that he or she did not want to hear, but was in his or her own best interest: "relax."
Ever since then, that has informed my approach to evaluating performance, whether in terms of an employee or other party to in a contract or business law dispute. Usually, if the important things have been covered, even if not quite perfectly or exactly how you would do it, then that's pretty good.
Jeremy A. Gibson is an experienced Chicago corporate lawyer, who handles the preparation, negotiation, interpretation and implementation of contracts and agreements for small and large businesses. In addition to the Loop, he is available to meet about business law matters in Deerfield, Oak Brook, Rosemont, Schaumburg and elsewhere.