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Changing our ego-system

Chitra Narayanan | Updated on January 13, 2018 Published on February 15, 2017

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Shayne Hughes, President, Learning as Leadership

Brandon Black, former CEO, Encore Capital Group

In their forthcoming book Ego Free Leadership to be released in mid March, Brandon Black, former CEO of Encore Capital Group, a debt recovery firm, and Shayne Hughes, president of Learning as Leadership (LaL), a culture change firm describe how they worked together to root out unproductive ego habits from Encore. Black himself was a reluctant participant. But slowly, as the team starts working collaboratively, Encore’s profits rose by 300 per cent – an enviable achievement as it came in 2008-09 at a time when the financial services sector was reeling under a global crisis. Excerpts from an interview with the authors on how they introduced this change:

In the beginning you highlight the difficulties in getting Encore executives to cooperate. A lot of them poke fun at the exercise. Is this a common problem? How do you overcome it?

The larger problem at the beginning of our partnership was the lack of engagement from the CEO. His refusal to engage gave his team permission to do the same. Asking your team to “look in the mirror” when you’re not willing to is not a recipe for success.

We address this challenge by conducting an in-depth, interview-based 360º feedback for team members. Each leader is coached through their defensiveness to recognise the behaviours most in need of attention. Deep down, everyone wants to grow—but sometimes it’s uncomfortable initially. Creating a safe environment for leaders to acknowledge the consequences of their derailers helps them take ownership for their own development.

Is it guaranteed that if the leader buys in, the others will too?

There is no way to guarantee that everyone will engage. For some people, working on themselves is simply too uncomfortable. We mix leaders from different companies so that they can begin to talk through their leadership dysfunctions with people they don’t work with, which can greatly diminish their fear of opening up.

Unfortunately, over time, those individuals who don’t learn to work on their ego tend to have a hard time performing at a high level in the organisation. If we don’t look at our weaknesses, in time our roles outgrow us.

Among all the cultural dysfunctions that you find in organisations, which is the most common that you encounter and which is the toughest to overcome?

Conflict avoidance is the most widespread dysfunction in large organisations. Even leaders like Brandon who love to aggressively debate business topics often struggle to give feedback on behavioural or performance issues. Those who don’t avoid err to the opposite: harsh steamrollers who don’t listen well. A caring, yet direct executive is rare.

This communication shortcoming contributes to one of the toughest tendencies to overcome: our visceral fear of — and compulsive tendency to — judge. The fear of judgement causes us to hold back (e.g., not ask for help) or lash out (e.g. get defensive). Our constant judgement of others erodes trust in our teams.

The India story of Encore is fascinating. Especially the fact it places 14th on Great Places to Work list. What led the India CEO Manu Rikhye not to get dispirited by Encore head office's lack of commitment to the call centre operations in the country and undermining its potential?

It’s not clear why Manu and his team pressed on despite the resistance from Encore US. He knew his team was talented and would succeed if given the opportunity. He had committed to the employees he hired that he would do everything in his power to create something special at Encore India.

His decision to challenge the US leadership team took a good deal of courage, especially when Brandon pushed back so intensely. Manu neither withdrew nor got upset — he calmly insisted on what he believed would work.

Is coaching needed only when companies are facing major turmoil?

We actually work more often with leaders and teams who are doing well. Companies send those individuals with the high potential in order to groom them for the next level. Newly formed teams come to start on the right foot. Most often, companies in growth mode send executives who are stretched in new roles, managing more people and greater complexity.

There is as much, if not more, bottom-line performance to reap from making a functional team outstanding than there is in making a struggling team functional. Even the best teams rarely push each other to work on their weaknesses or think holistically about the business.

Everyone knows the theory of open communication and transparency – and yet, managements remain too secretive. Why do you think this happens?

There are a variety of reasons why leaders keep information to themselves, mostly driven by fear. At Encore, Brandon initially kept even some of his most senior leaders in the dark about challenges and initiatives. He wasn’t sure that he could trust them to maintain confidentiality. He was also afraid that employees might leave or view him as an incompetent CEO if they had all of the facts.

The paradox here is that employees will trust you more when you are transparent about both the challenges facing the organisation and when you admit you made a mistake. Brandon learned that as he became more comfortable with the fact we all have limitations and that he needed to embrace his team’s strengths if Encore was to succeed.

Encore is described by Brandon as a debt collection startup. Do you think startups are more receptive to coaching and personal growth sessions rather than old giant organizations? Does size of organisation impact outcome?

At the time Encore engaged with LaL, it was a public company with revenues of around $100 million and a workforce of more than 1,000. While not a start-up, it was trying to build a new business line from scratch and integrate an acquisition along with opening an international operating centre. It was those challenges that drove the leadership team to engage with LaL. We believe every company has similar challenges to Encore, regardless of size.

The challenge larger organisations face when dealing with cultural transformation is that they have more layers of leadership that need to embrace the change. Smaller firms, including start-up companies can be more nimble and drive change more quickly.

Published on February 15, 2017
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