Creating Effective Senior Leadership

Or, How do we create the WIIFM* for Effective Senior Leadership? *WIIFM is our slang for ‘What’s In It For Me’ - greed is a powerful motivator. Read on.  

Creating an Effective Senior Leadership Team is the first OKR in Growth-Drive’s Three Dimensions of Business Growth™ process, and best-in-class businesses both motivate and nail their leadership’s feet to the floor with sophisticated WIIFM incentive plans.  Here's how.

You can read about it in my new book: best-in-class businesses “have an effective leadership team that is aligned with and accountable to the business' vision and mission, helping the shareholders achieve their objectives.”

If you participated in the Growth-Drive Summit last week you heard BEI Founder John Brown and me presenting on this important topic. The session is titled “The Intersection of Owner-Based Planning and Growth-Planning: Two Sides of the Same Coin”; we’ll be presenting again soon via webinar. We ended up running way longer than planned (and I was happy to invest the time) because the room was a-buzz with questions. Kids, do you think that creating a compensation WIIFM for senior leaders is important for delivering growing profits and transferable value?  

John is the person who invented exit planning as a profession, and he puts it best: “This is NOT exit planning!” This is planning that has an immediate impact on the team that leads growth while improving the risk profile of your client’s business. As we’ll see it’s a virtuous circle where your client can win big.

You may already know that the Growth-Drive system starts with the important step of creating senior leadership alignment about Strategic Capacity. But alignment alone does not create accountability to results. To drive growth, team alignment needs another ingredient: WIIFM incentives rewarding the hard work of growing free cash flow and transferable value. 

The trick is not the why of the WIIFM, it’s the ‘what’ and the ‘how’ around making sure that the senior team has the comp and accountability to deliver the results the shareholders want. 

How can you come up to speed on this important topic? I’m going to stop right here and tell you that the Business Enterprise Institute (BEI, home of all things Exit Planning) has created a powerful course called Owner-Based Planning that gets right to the team's WIIFM. I’ve participated, as have several fellow Growth-Drivers. BEI’s course is right on point. You can read about and even register for that course here.

Now for the rest of the story. Most private business CEOs motivate with some form of cash-based incentives because they hate to share equity. It’s typically some blend of discretionary and results-based bonusing.  But no matter how it’s structured it burns cash. What if it didn't? What if we could incent the same behaviors AND have more cash to invest in growth? Isn't this what the publics do?

Let’s take a 30,000 footer on incentive tools we can deploy in middle market and pre-middle market private businesses, then discuss how we can leverage these tools to win new client gigs. 

Here’s a quick look at the tools:

• Cash (always king)
• Synthetic Equity
• Incentive-based Non-Qualified Deferred Comp Plans
• ISOs
• Stock Appreciation Rights
• and more

Does this sound like a conversation that you, the Growth-Driving Advisor should be able to lead? You bet it does. 

"Now wait!" I hear you say, "business owners hate sharing equity." Yep, and you already know why: it comes down to control plus the risk of being stuck with retired/fired/quit employees as minority shareholders. Cash is clean and the CEO can decide who gets what. Well intentioned but often misapplied, and once the cash is given there’s no easy way to get it back if an employee misbehaves. 

What if you can create comp that’s non-cash and revocable? That’s tied both to profits and long-term equity value? What if we create plans that help attract and retain top talent? That motivates good behavior when it comes to work-for-hire, non-compete/non-raid and more? This might look like some blend of

• Non-Qualified Deferred Comp 
• Synthetic Equity Plans
• Company-Owned Life Insurance (COLI) - funded Succession Planning
• and so much more

Now… I hope you're seeing that these sophisticated tools might be mandatory for creating a best-in-class business. 

What’s in it for you, the business advisor? Ask yourself: who has the required expertise… AND a rolodex of business owners who might benefit…  AND is incented to uncover these planning and insurance opportunities? Say it with me: Personal Advisors - Wealth Advisors and Insurance Advisors, plus trust and estate attorneys. Oh, and tax planners. These are your COIs. And there’s a huge WIIFM for them because as the Growth-Driver you help create immediate revenue opportunities while also delivering huge value to the client. It’s a virtuous circle.  

By now you should be asking yourself three questions: 

1. “How can I learn about upping my game about these sophisticated tools?”
2. Where can I meet like-minded COIs?
3. How do I communicate the WIIFM FOR THE COI?

Well the first two questions can be answered by participating in BEI’s ‘Owner-Based Planning’ course and connecting with potential partners through the BEI online network. After completing the course you’ll have the specific knowledge for creating senior leadership accountability to successfully executing the Strategic Growth Plan. And stay tuned, Growth-Drive will be releasing a script you can use to educate your COIs about their WIIFM if they collaborate with you in profit and value growth gigs. Interested? I’ll bet. It'll be released in the community, join - it's free. 

We are committed to your success. By collaborating with leading innovators like BEI we are executing our vision: Growth-Drivers helping to increase the Strategic Capacity of $1 Trillion of middle market businesses. Only one question: Are you in? 

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