Trains of thought Featured

8:00pm EDT September 27, 2007
Just as survival demands that organizations accept and embrace change, Andy Reardon might argue that achieving success ultimately means that leaders, too, must be willing and able to grow and develop.

 

Since becoming president of TTX Co. in 2000 and being named CEO in 2001, Reardon says his leadership of the $1.2 billion railroad equipment provider has shifted from an autocracy to a much more collaborative approach, emphasizing delegation and based on a strong foundation of trust, respect and a desire to push leadership and decision-making to all levels of his organization.

“I came into this position wanting to achieve certain things but subconsciously did so with a style that has clearly evolved since then,” Reardon says. “The style with which I came in wasn’t nearly as good as the style with which I manage now. Admittedly, I came in somewhat autocratically, as I think a lot of new CEOs do, and it’s out of fear of failure. That fear causes you to be, as fear typically does, rather myopic. You begin to live under the illusion that you’ve got all the right answers, and you can’t accept a diversion from that.”

Since unleashing the power of his employees’ experience and talent, Reardon says the new and innovative ideas that have resulted have been truly remarkable. And while the potential benefits of collaboration are probably obvious to most, Reardon says what keeps many business leaders from cashing in is their general reluctance to surrender some amount of control over their organization. After all, it is the CEO who is responsible for a company’s overall performance, and it is he or she who ultimately will be held accountable.

“I think a lot of CEOs want to do it, but they’re afraid of letting go,” Reardon says. “Letting go can make you insecure because you’ve got somebody telling you, ‘I want to spend $10 million here, and here’s what I believe this company can derive from it.’ It’s a case of how much you trust that individual. You’re making some big judgments here. They’re going to have long-term impacts on the company. At the same time, you can’t bring this talent in the door that has everything you want, that would be a find in anybody’s top management, stifle it and think you’re going to keep them there. Not for very long. Not with the kind of people I want.

“You get far more vision and creativity when you unleash the minds that you’ve hired and let them explore and let them make a few mistakes. You really begin to unleash the power of their experience, their talent, their passion and their work ethic. Before you know it, incredible, new ideas that never were yours tend to bubble up to the surface that make you say, ‘Wow.’”

Under Reardon’s leadership, TTX has increased its fleet capacity by 33 percent and made more than $3 billion in capital improvements. And though he says his leadership style is still a work in progress, one thing he has undoubtedly improved upon by leaps and bounds is his tendency to grant his team the authority to make their own decisions.

“As you become more mature and grow, you say, ‘Wait a minute, this isn’t the way things should be — I’ve hired a lot of talent and I’m telling them how to do their job?’” Reardon says. “That’s backwards.”

Building the team

Because much of a leader’s ability to delegate stems from his ability to trust those to whom he is granting authority, Reardon says the first step in creating a truly collaborative environment is hiring and retaining people who can handle that responsibility.

“My immediate predecessor, Ray Burton, used to say, ‘A good CEO should work hard to put himself out of a job,’” Reardon says. “When you reflect on that, it’s actually correct. Now, it’s kind of like seeking perfection. You’ll never get there, but you keep working at it and working at it, and when you have the mindset that you can rely upon, then you can begin to let them go.”

But what is the “right” kind of employee around which to build a collaborative environment? Reardon has had the good fortune to have hired every one of his direct reports. Though the members of his executive team might represent a diverse set of backgrounds and skill sets, what they share is an attribute that Reardon describes as “judgmental experience,” a quality critical to an individual’s aptitude for handling responsibility.

“In each of their fields, I look for what kind of experience they have, and coupled with that experience, what their sense of judgment is like and how they have exercised it over the years,” Reardon says. “It’s one thing to suggest that you want people with a certain amount of technical expertise — that goes without saying. But equally as important is their sense of judgment in that expertise and how much of an opportunity have they had and how much responsibility have they had with which to exercise that judgment experience. That is critical because as all of us grow older and hopefully wiser, you want to develop a bank of wisdom, and you get there by exercising judgment.”

For example, one area in which Reardon believes many leaders struggle to make decisions is information technology. Whether they pass on a golden opportunity because they don’t fully understand its potential benefits or they make a blind decision that comes back to burn them, Reardon says an overall lack of understanding on the part of leaders complicates the decision-making process. As such, he considers himself lucky to have an experienced and knowledgeable head of IT who is trusted to make the appropriate decisions.

“I certainly don’t know what he knows about IT, and I never will,” Reardon says. “But I trust him, and I understand him well enough that I will bet on his judgmental experience, and when you can trust somebody’s judgmental experience, it’s huge.”

Of course, having the right team members in place is only half the battle. Reardon says the key to keeping them there is using communication as a means of understanding the desires and motivations of each individual. As part of TTX’s manager evaluation process, each manager has an annual meeting with every one of his of her subordinates that focuses exclusively on discussing what that person’s desires and aspirations are.

“There’s no way you’re going to find out what motivates somebody and how you’re going to retain them unless you at least talk to them and find out,” Reardon says. “You really have to figure out not only what you want out of somebody, but you also have to figure out what makes this person tick. How do they derive their satisfaction in life? What really turns them on? Professionally? Culturally? Valuewise?”

Creating the atmosphere

Creating an atmosphere conducive to collaboration starts at the top, and Reardon says an environment such as the one he’s helped to create at TTX is based on a mutual respect in which a leader’s respect for his subordinates is perhaps even more important than theirs for him.

“We’ve all seen the boss that says, ‘That’s the dumbest thing I’ve ever heard, you idiot,’” Reardon says. “That won’t get you very much traction. The fear of disrespect, if you will, can close off an awful lot of constructive thought. Conversely, creating the atmosphere where all ideas are welcome, when you apply that notion to the fact that you’ve recruited some top-notch talent, that atmosphere is critical. When people see that, you really begin to get a free flow of creative thinking, and that is the single biggest atmospheric catalyst.”

Making an organization of individuals comfortable with contributing its ideas and thoughts is sometimes a monumental task. Reardon says at TTX, by making sure to keep plenty of white space on his calendar, utilizing an open-door policy and routinely sitting in and offering his thoughts at department meetings, he has, over time, created an informality of communication that he says has helped encourage constructive dialogue among several layers of the organization. Additionally, each quarter Reardon hosts a lunch in the executive conference room attended by 12 members of the company, who are not his direct reports, during which the employees are encouraged to discuss the pros and cons of working at TTX. Reardon says the lunch is just one means he uses to connect with the whole of the organization.

“It kind of helps me keep my finger on a pulse that I otherwise would not be able to reach,” Reardon says. “The only way you can do that is to spend face time with people, whether it’s our hourly associates or whether you’re out on the docks in Portland or Seattle or whether you’re here at headquarters, walking around, poking your head in people’s offices, asking them about a project that you might already know all the answers to, but it’s a forum to initiate dialogue, to simply spend face time. People begin to open up more to you.

“You have to let people know that you want their ideas, and that you’re not going to disrespect them by dismissing an idea out of hand, even though it may not be the right idea. What they need to understand is that you respect their experience and their judgment and you may adopt it or you may not. If you decide not to, they know you will provide them a thorough understanding of why not. Similarly, if you do adopt it, you will do so with the idea that you understand the wisdom of it.”

While collaboration certainly entails allowing members of a team to contribute to an organization’s overall direction, in the case of TTX, it also involves a leader who is prepared to delegate. In doing so, Reardon draws a distinction between granting responsibility and granting actual authority. Managers are responsible for their respective departments, but they also need to have the authority to make the necessary decisions within their jurisdictions.

“You really need to let that department head know they’re the captain of their own ship and not only are they entitled to make those decisions, but they must make them,” Reardon says. “It’s critical that CEOs let go. Otherwise you stifle the very creativity you sought, unwittingly in most cases.”

While fostering collaboration at the top of an organizational chart is one thing, Reardon adds that to truly tap the intellectual capital of an entire organization, decision-making must be pushed down to all levels.

“One of my pet peeves about organizations is there is a culture that develops after a fashion that says, ‘Only at a certain level are you capable of making decisions,’” Reardon says. “I think all of us know there’s a certain level of fallacy in that. You’ve got enthusiastic, properly ambitious minds, and they thirst for responsibility.”

The obstacles to creating a collaborative organization are far overshadowed by the potential rewards of doing so. Reardon says the responsibility of a leader is to do his part by formulating a mission and trusting, with some oversight, that it will be carried out.

“The role of a CEO is, with a lot of input, to set the course, delegate responsibly and stay abreast of the developments but disappear from the details,” Reardon says. “Let your best minds do their jobs.”

HOW TO REACH: TTX Co., (312) 853-3223 or www.ttx.com