Decide Who Belongs On “The Bus”

“Getting the right people on the bus” has become a routine phrase among business leaders, thanks to the breakthrough research in Jim Collins’ book, Good to Great. Mr. Collins and his crew compared outstanding national companies with their less successful competitors—for example, Kroger vs. A&P, Nucor vs. Bethlehem Steel, Walgreen vs. Eckerd—to find what made the difference between success and decline.

According to Mr. Collins, the leaders of these standout companies put people before strategy. They got the right people on the bus, moved the wrong people off and ushered the right people to the right seats. Only then did they decide where to drive the bus.

In a family business, getting “the right people” on the bus takes a unique spin because the children that are loved so well may not be “the right people” for a particular bus—I mean, business.

Sometimes a business leader can move his son to a different seat; sometimes she can tell her daughter that she needs to get off at the next stop and transfer to another bus that will more likely take her to her own destination. Sometimes the business leader needs to look for other leaders beyond the family who can drive the bus in the right direction.

Does this mean the owner needs to sell the bus? Not necessarily. The Ford family chose a series of non-family executives to lead Ford Motor Company until the presumably right great-grandson of Henry came along. Young Bill Ford grew up passionate about the automobile business, received a top-flight Princeton education and was groomed with a variety of company responsibilities until he was chosen as CEO in 1999. How successful his leadership will be remains to be known. However, Henry Ford’s descendants retained 40 percent of the voting stock, so they could determine not only when one of their own should get on the bus, but when he should drive it.

Mr. Collins’ kind of leader—one who can take a company from good to great—emerges through a hierarchy of the following capabilities to become a top executive:

Level 1: Highly Capable Individual—makes productive contributions through talent, knowledge, skills and good work habits.

Level 2: Contributing Team Member—contributes to the achievement of group objectives and also works effectively with other people in a group setting.

Level 3: Competent Manager—organizes people and resources toward the effective pursuit of predetermined objectives.

Level 4: Effective Leader—catalyzes others to commit themselves to vigorously pursue a clear and compelling vision.

Level 5: Executive—builds enduring greatness through a paradoxical combination of personal humility plus professional will.

The Level 5 executives that Mr. Collins discovered—those whose companies sustained successful performance for 15 years or more—were all cut from the same cloth, whatever their industry. They demonstrated a “compelling modesty” and left their egos behind. They relied principally on inspired standards, not charisma, to motivate. They channeled ambition into the company, not themselves. They groomed successors for even more greatness than their own.

Paradoxically, the Level 5 executives also demonstrated unwavering resolve to do whatever needed to be done to produce the best long-term results, no matter how difficult. They persistently looked out the window, not in the mirror, to discover the ingredients of success, commending other people and external factors rather than taking the bow themselves.

Are Level 5 leaders born or can they be home grown? Mr. Collins cites tough life experiences of several of these leaders, such as overcoming cancer or the trauma of war, as formative, but not necessarily decisive. Their inner personalities remain a mystery, but their performance within the company can be observed and described.

As business owners begin to determine who has the potential to lead their companies, they may also want to employ a widely used tool: a “360-degree assessment” tailored to the kind of leadership their companies need currently. A 360-degree assessment is a brief evaluation form completed from all the points of the compass by those who work around, above and below a candidate, usually five or six observers who complete the form anonymously. The compiled data is then shared with the candidate, so he/she can determine priorities and develop strategies for growth.

Such an evaluation, tailored to Mr. Collins’ research, might ask these observers to rank the candidate from “poor” to “excellent” on characteristics such as the following:

• Demonstrates good work habits (Level 1). 
• Contributes to the effectiveness of the team (Level 2).
• Organizes people so they can reach their objectives (Level 3).
• Stimulates the group to achieve high performance (Level 4).
• Credits others more often than promoting self (Level 5).

Asking those who work closely with your daughter or nephew to evaluate them on these essential leadership criteria will help clarify, with the help of more objective data, who belongs on the bus and who doesn’t. You may want to ask the maintenance people as well to complete an evaluation. They may know more about your potential successors than you imagine.

If owners must ask someone they love to move to another seat on the bus or leave the bus altogether, it helps to have data such as a complete 360-degree assessment available, especially if the data is used productively. This data must be sifted and focused into one or two realistic goals against which individuals can measure themselves. The individuals can then make a plan to raise their leadership capabilities, if not to Level 5, perhaps a notch above where they stand now. Often, support or feedback provided by a mentor or coach can help a person implement an effective growth plan or determine if he or she is on the right bus or the right seat.

Challenging your successors to develop their leadership potential may be the best thing you can do for your company and your family’s future. Great leaders are as rare as great companies. However, the buses are constantly leaving the station.

Ellen Frankenberg, Ph.D. (ellen@frankenberggroup.com), is a family business psychologist in Cincinnati, Ohio, and author of Your Family Inc.