Ego Free Leadership: Ending the Unconscious Habits that Hijack Your Business

Ego Free Leadership: Ending the Unconscious Habits that Hijack Your Business

by Brandon Black

ISBN: 9781626343795

Publisher Greenleaf Book Group Press

Published in Business & Investing/Processes & Infrastructure

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Sample Chapter



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Our Preoccupation with Self-Worth


I stepped into the blazing August 2005 sunshine of New York City. The temperature was 95 degrees and the humidity hit me like a wave. I was headed to the biggest meeting of my career and had decided to clear my head by walking the ten blocks from my hotel. After a dozen paces, however, I was soaked in sweat.

My boss, Carl Gregory, was retiring as the CEO of Encore Capital Group, and the board of directors had agreed to make me his successor. I was fortunate to achieve a lot of success early in my career: I was managing thousands of people by the time I was twenty-seven, had helped Encore avoid bankruptcy, and was on the Nasdaq stage when we took the company public in 2003. Now, at thirty-seven, I was poised to be its leader. I was on my way to finalize the terms of my agreement with Nelson Peltz, a member of the board and Encore's largest shareholder. I had worked at Encore for five years, and Nelson and I had a good relationship. He had a reputation for being a ruthless negotiator, though, and several board members offered to advise me on how to handle the meeting. Instead, I did my own homework, even hiring a compensation consultant to benchmark my proposal. My request was fair and well deserved. I was confident I would prevail.

I arrived a few minutes before our scheduled start time of 2:30 pm, which gave me time to wipe the sweat off my face. We were meeting in a restaurant partially owned by Nelson. It was between the lunch and dinner service, and when we sat down, we were the only two people in the place. I laid out my rationale in fine detail.

"Well done, Brandon," Nelson said when I finished. "But this is a zero- sum game. Every dollar I pay you is a dollar that doesn't go to the shareholders. As the largest shareholder, I don't like that."

"I understand," I replied, "but a dollar means a lot more to me than it does to you."

"No," he said flatly, "a dollar is a dollar."

I couldn't believe his response. I made my arguments again, this time with added emphasis on the salary benchmarking, which was clearly impartial. He didn't budge and told me that his offer was final. Time to walk out or fold. I stood up, looked at the door — and then shook his hand. Nelson knew all along that there was no way I was going to walk away from this opportunity. He had all the leverage. Never take a knife to a gunfight.

I prided myself on my ability to convince others. I had often been the young executive having to overcome perceptions that I wasn't up to the challenge. Winning this negotiation was my chance to prove I could roll with the big guys. I couldn't believe how poorly it went. I got the job, but it still felt like I belonged at the kids' table.

The air outside was stifling, the heat and humidity mixing with my anger and embarrassment. I felt naive and inexperienced. I was supposed to meet another board member, Alex, for a drink. He had offered to help me negotiate with Nelson, but I refused. As I walked, I racked my brain for any plausible excuse to cancel.

The room at Smith and Wollensky's was crowded. Alex was at the bar and he waved me over. He raised his glass and toasted my success. I should have been thrilled. Instead, it felt like I had blown my first big opportunity. Should I have held out for more money? If I couldn't advocate for myself, was I really up to this job? I tried to shove my doubts away on the flight home to San Diego. Dana, my wife of just a few weeks, met me at the airport. We went through the details of the meeting, and she was relieved I hadn't tested Nelson's resolve.

Over the weekend we talked about how I planned on handling the challenges facing Encore. It was a period of unprecedented change on all fronts.

Our core business was under tremendous pressure. While the financial crisis of 2008 was still three years away, our industry had begun its own recession. Encore Capital acquires unpaid consumer debts, mainly credit cards, from banks and other large financial institutions. The company becomes the de facto creditor, and we work to collect money from those consumers who regain their ability to pay. On average, 80 percent of the consumer accounts we acquire pay us nothing. The other 20 percent pay us approximately sixty-six cents on the dollar. The critical variables that determine our profitability are the purchase price for portfolios of unpaid debt, the total dollars we collect, and the operating costs required to generate those collections. Between December 2004 and January 2005, the prices for portfolios increased by almost 100 percent, making new investments largely unprofitable. Prior years of very profitable investments had given us a small window of time to adjust our operating model. It was up to me to figure out how to adapt.

We hadn't anticipated such a dramatic shift and had no contingency plans. So, during the first eight months of 2005, we reacted by launching a variety of strategic initiatives designed to offset the price increases and diversify our revenue. Sort of like throwing spaghetti against the wall. We acquired the largest portfolio of unpaid receivables in the company's history, along with an operating site of 200 people; hired an experienced management team to create a new business vertical focused on a different asset class; acquired a company outside our core business; and opened our first international site in India. Bold moves for a company our size. The big question was whether my newly formed executive team had the leadership and business skills to make the moves pay off.

During the prior five years, as COO, I had worked closely with Carl and the company's CFO, Barry Barkley. It took time to build our leadership rapport, but the three of us found a solid working rhythm. I learned invaluable lessons from both of them. Now that era was ending.

Barry had retired in June, and Carl was stepping away in October. The new CFO, Paul Grinberg, had a world of experience and was one of the smartest people I'd ever met. But the two of us approached problems very differently. He came up with all the reasons why initiatives wouldn't work, while I could only see the finish line. I couldn't figure him out. Weren't we supposed to identify ways to grow the company? Why was he always so negative? If we were going to navigate our way through these challenging times, our relationship had to work, but we weren't clicking.

Paul wasn't the only new member on the leadership team. We had hired an Operations executive to replace me and added two leaders to oversee our new business ventures. All three were experienced, but new to our industry. I saw early on that they were struggling, but I needed to concentrate on my transition. They'd have to figure it out on their own.

As I talked this over with Dana, she was concerned that I wasn't being honest with myself. She thought I was overcommitted and wasn't organized enough to take care of all my new responsibilities. I told her I was perfectly capable of handling everything — and suggested she "focus on herself" instead.

"Now you're dismissing my feelings," she told me straight up.

From the beginning of our relationship, Dana refused to put up with my bullshit. Given that both of us were previously married, she insisted that we meet with a therapist to ensure we built a strong foundation for our relationship. She was always pushing me to be more authentic with her and with my six-year-old son, Trevor. I trusted her advice when it came to our family, but I was a different person at work.

"It'll be fine," I said, hoping to end the conversation. "I just need time to focus and work with the team. We'll get there."

"Really? I've heard that before. I think you should get some help."

I nodded but didn't respond. The job would be a challenge, but I was confident. I needed to learn more about managing balance sheets and dealing with shareholders, analysts, and regulators. But my leadership capabilities were strong. I'd been successful so far, right? Besides, my team needed to see I was in control and had the answers.

I was glad to get back in the office on Monday to focus on our key initiatives. Late morning, I had a meeting with Paul to talk about our acquisition.

"We'll close on time," he said, "but I don't know how we'll fit culturally. It can be hard for founders to take direction. Getting their management team to operate with our rigor is going to be difficult. When I tried to talk to them about metrics, they kept telling me not to worry, that they knew their business."

"Do I need to fly there?" I asked.

"I'd say 'yes,' but there are too many issues here."

"What are you talking about?"

"It seems like all I do is listen to people complain about project delays and who's to blame for missed projections. The new guy, Dave, doesn't understand our business. I was babysitting while you were gone the last couple of weeks."

"OK, I can fix that."

"While you're at it, can you deal with the Technology team? They keep fighting with Operations about why critical software enhancements are more than sixty days behind schedule. When we get in a room, IT blames Operations for constantly changing the scope of the project, while the Ops guys see the IT team as rigid and incompetent." He sighed. "I've got five more examples like that."

Paul could be a glass-half-empty guy, but this time I sensed real frustration. When I had tried to address similar concerns with the executive team several weeks prior, I got polite pushback and silence. Apparently, they still hadn't gotten the message. We were in a tough spot, and this team didn't seem to have the skills or maturity to understand the magnitude of the problem. Maybe Dana was right; they did need help. I asked Paul if he had any ideas.

"I've got a solution, but it's unorthodox," he said. "The focus is on identifying unproductive leadership behaviors and involves several week-long training sessions over a year. The organization is called Learning as Leadership, and the seminars are held in Sausalito, California. Instead of them coming here, we go to them."

I looked at him incredulously.

"It would be our team mixed with leaders from around the country," he continued hurriedly. "We get the benefit of their experience. I've done it before. It's amazing."

Where is this guy coming from? I wanted some quick help, not a multi-week distraction. Paul was so enthusiastic, though, that I didn't know how to politely turn him down. We asked two of Learning as Leadership's (LaL's) partners, Shayne Hughes and Lara Nuer, to meet with us in October, the same month I would formally become CEO. I would play along so Paul would feel like I was being a good "partner."

Shayne and Lara spent the first half of their visit meeting one-onone with my team to get a sense of our overall challenges. When I finally stepped into the conference room to be debriefed, I was prepared for them to be arrogant, self-absorbed, and overeducated. But they neither looked nor acted like consultants I had met before. My misgivings quickly began to fade once the discussion began.

Both seemed keenly interested in understanding my challenges. Lara asked penetrating questions: "What are your developmental areas as an incoming CEO? What is the impact of your team's dysfunctions on your business performance? What do you envision would be possible if you and your team could talk openly and constructively about difficult topics?" Several leaders on my team seemed incapable of "looking in the mirror," and Lara's questions were good ones for them to address.

Shayne and Lara explained how the LaL process explores the formative experiences we've had growing up, shaping our view of the world. In particular, the process investigates how our "ego" triggers counterproductive leadership behaviors that impede performance. That certainly rang true when I looked at my team — "childish" was how I thought of some of their behavior.

While they had thoughtful answers to my questions, I still couldn't get over the time commitment and format. "It sounds like one big networking event where we commiserate and waste time on other people's problems. Why would we ever do that?" Let's see how they respond to that.

"You told us not five minutes ago about an executive on your team who won't acknowledge his limitations during performance reviews," Shayne responded. "You think if we come down here and make him come clean in front of the team, he's going to respond productively? In a larger group, while interacting with leaders from different industries with similar problems, he'll have the anonymity to be honest with himself. His coach will challenge him offline. Then, when he's ready, we'll talk as a team. You won't waste time, you'll save time."

"I get it," I told him. "I was just testing you."

Shayne opened his mouth, closed it, and shook his head.

I needed to buy some time to reflect on the meeting. What started out as a courtesy discussion had turned into something for me to seriously consider.

"Let me talk with Paul and think about it over the weekend," I told them. "We'll get back to you."

I knew Paul was in favor, so that was the easy part. As much as I found the travel and the comingling with others to be odd at best, Shayne and Lara's logic was compelling. But could I really commit the team to the travel and time out of the office? I kept coming back to one indisputable point: I needed a leadership development solution. Nothing else we looked at seemed promising, and LaL had a seminar starting in November. I decided to give them a shot.

At our next executive staff meeting, I told my team that we would all be attending a five-day leadership seminar up in the San Francisco Bay Area. I reinforced the messages I took away from Shayne and Lara and let the team know that Paul had attended their program previously. When I finished, I looked around the room, expecting uniform acceptance, perhaps even a round of applause.

"Why didn't we talk about this as a group?" asked one executive.

"Who decided it was mandatory?" lamented another.

"Are you kidding me?" I snapped after several more complaints. "Many of you are new to the company and are in the largest roles of your career. We're investing a lot of money so that you can be your best. Discussion closed."

I wasn't back in my office twenty minutes before one of my vice presidents knocked on the door, raising more questions about LaL. I cut him off. "How about you just worry about getting your job done?" If you did that, I thought, we wouldn't need to spend money on development.

In preparation for our first program, LaL conducted a 360-degree feedback for each of us. A few weeks later, Shayne, now my executive coach, scheduled a debrief call to go through my results. The issues didn't surprise me: I debated people, didn't solicit information from others before making decisions, and always needed to be right. Common traits of a strong leader, I thought. "Don't worry," I told him. "The benefits outweigh the detriments. I debate with people to find out how attached they are to their ideas. The truly committed people continue the discussion, which gets us to the right outcome. If the final answer is what I suggested in the first place, it's only a coincidence."

"There are a lot of comments here about how people are afraid to speak up," he pointed out.

"This isn't a democracy!" He was starting to bug me now. This wasn't an issue that needed to be solved. "Don't you agree it's the CEO's job to make the big decisions?"

There was a long pause.

"Why do you think so many people gave the same feedback if it wasn't important to them?" he asked. "Is it possible these behaviors get in the way of your team reaching its full potential? Take your debating, for example. Is it possible that it is more about you being right than what's best for Encore?"

As far as I was concerned, CEOs needed to be confident. Having a strong ego was integral to being a successful executive. I decided not to debate this with Shayne.

"Maybe," I muttered, and then changed the topic to whether my team was taking their feedback seriously.

Excerpted from "Ego Free Leadership: Ending the Unconscious Habits that Hijack Your Business" by Brandon Black. Copyright © 2013 by Brandon Black. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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