Steve Markoff has earned trust and respect in the business world.
The 63-year-old entrepreneur has been building a business career since his childhood. He’s had a hand in starting more than 10 companies since the 1960s, including the three privately held companies he currently heads, A-Mark Financial Corp. a financial services firm dealing in rare coins, precious metals and collectibles that had $2.8 billion in annual revenue according to the most recent figures on Hoovers.com A-Mark Entertainment and ProCon.org.
Yet he says the most important document he has ever produced is, in essence, a confessional of mistakes.
In 1991, Markoff penned a contract between his business entities and their outside legal counsel. The contract outlines every mistake he has ever made in dealing with attorneys. The contract was later published in a law journal and still serves as a reference for Markoff and others.
He says if you are going to become an effective CEO, you must be willing to use the mistakes you make as a constructive tool to make yourself better. In many cases, mistakes are a far better teacher than successes. “Some people learn by reading books. I learn when I screw something up,” he says. “If I do something good, I don’t learn from that because it doesn’t register. But when I make a mistake, that registers.”
A business needs a plan and a vision, but the only way you will truly find the right way to grow your business is through a process of trial and error that includes a large dose of self-analysis and a heavy reliance on the talents of those surrounding you.
All good businesspeople, when they make a mistake, will be hard on themselves to a point.
“That’s what makes them good,” Markoff says. “The ones that aren’t good will shrug it off and blame somebody else.”
But the real key is in how you take the initial acknowledgement of your mistake and turn it into something positive for both you and the company.
When Markoff sat down and outlined all the mistakes he’d made in dealing with attorneys, it was an eye-opening experience.
“When I was putting this contract together over a couple of years, it showed me how simple the process really is, how dealing with attorneys is really no different than dealing with anybody else,” he says. “That is common sense, understanding that attorneys work for you, and not vice-versa. The world of attorneys is not a big black hole that everybody thinks it is, but they are trained in adversity, and many forget that the clients are not the ones they should be adverse to.”
Keeping a record of mistakes and shortcomings can be very difficult for a CEO, especially if you have cast yourself as the authority on all company matters. But Markoff says a willingness to admit mistakes is a sign of strength, not weakness. Your company will be better off in the long run if you use your shortcomings as a learning opportunity. “As they say, the banker who has never made a bad loan really isn’t a banker,” he says. “Any successful organization is one successful by trial and error. I don’t think any one person is smarter for the future, next week, next month, next year, without changing course and making some mistakes.”
The “attaboy” ratio
Many of the same principles that apply to you also apply to how you deal with your employees. Employees need an environment where the positives they produce are emphasized, and the mistakes they make serve as lessons, not downfalls.
By his own admission, Markoff isn’t a warm and fuzzy people person, but he says he’s become aware of a sort of ratio that pertains to employee morale.
He calls it the “attaboy” ratio. Every piece of criticism an employee receives must be counteracted with at least 12 “attaboys,” or instances of encouragement. The ratio isn’t exact, but the message is that if encouragement does not far outpace the criticism, the employee will likely feel that he or she isn’t doing a good job. “I’ve thought about why that is,” he says. “I think it has to do with a person’s need to feel good about themselves. When they’re told they did a good job, people appreciate it, but it doesn’t seem to stick. Criticism, for some reason, goes much deeper, and it stays longer.”
But don’t confuse simple encouragement with raising the morale of your employees.
Giving “attaboys” is one thing. Giving your employees a real sense of value is something far more involved.
“Morale doesn’t come from cheerleading people,” he says. “Morale is something much more foundational. Morale is people’s acceptance of the fact that they’re moving forward with themselves careerwise and that they’re involved in a company that is doing things right.”
You give employees a sense of moving ahead with their careers by challenging them, even if they are wary of the challenge at first.
“I try to stick to the facts because that’s my style,” Markoff says. “I say, ‘Look, I’ve been doing this a long time, I have a pretty good view and I’m usually right, so try it. If it doesn’t work, we can always evaluate it.’”
Employees do their best when they feel that the company is behind them and their work. It’s not a sink-or-swim situation when Markoff sends one of his employees on to a new task.
“Start swimming, but if you need a life raft, call for one,” he says. “When that happens, people are usually very happy to go out and try because they realize there is very little, if any, downside if things don’t work out the way I think they should.”
If you don’t support your employees, your chances of keeping them decrease drastically because employees talk to each other.
“People quickly get a feeling because all offices and staffs talk,” Markoff says. “They quickly figure out if you’re trying to sacrifice somebody or leaving them out alone without a life raft.” Giving employees a sense of security begins with the company culture, which begins at the CEO’s desk.
Employees will value what the leaders value. If you want a company that values honesty, integrity and the contributions of employees, you have to start by acting that way yourself.
If you behave in a dishonest manner, or leave your employees in the dark, expect negative things to happen because that’s the example you are setting.
“To me, honesty is extremely important,” Markoff says. “If I’m doing something personal, even though it’s a privately held company, I’d never consider writing it off as a company expense. First off, it’s probably a violation of tax laws. But more importantly, it gives the idea to employees that if the CEO is going to cut corners and steal from the company, why shouldn’t they?
“If they see that the CEO is taking money out of the company that he shouldn’t, the smart people should start looking for a job elsewhere because that person is setting the wrong kind of culture for the company.”
Hands on the wheel
Growing a company is very similar to taking a road trip. It’s the CEO’s job to control the steering wheel, accelerator and brake.
Markoff says there will be detours, so you will have to turn the wheel at times. You will have to manage the accelerator through slow times and fast times, and if an obstruction blocks the road in front of you, you’ll need the brake.
The way you keep your hands on all three components is through communication. You must let everyone else in the company know that you are in control, but at the same time, seeking their input. “You have to be openly communicative at all times and let people give you real input into the brake, accelerator, steering wheel and destination,” he says. “You can’t do it all alone. People that do it all alone flame out, in my view.”
Markoff says he believes in developing a consensus on issues whenever possible. He holds weekly department head meetings both to disseminate information and build consensus.
The foundation of good communication and getting employees to the point where consensus can be reached begins with accessibility on your part.
Markoff has a written open-door policy in which he encourages employees to come to him and his managers with questions, ideas and concerns.
If you repeatedly communicate with your employees and get them to believe that you and your management team are willing and able to answer questions and consider their ideas, a funny thing can happen. “If people understand (an open-door policy) is really there, they don’t use it very often because that means the company is reasonably well-run,” Markoff says.
To grow a company, you need confidence in your managers to get their jobs done. That means you can’t constantly be looking over their shoulders But while you can’t micromanage, you also shouldn’t simply deliver an assignment and turn your back.
There is a zone somewhere between being a control freak and completely shunning your responsibility as a supervisor, and you must find it when delegating.
“Delegation is really misunderstood by a lot of people,” Markoff says. “I’ll be a little political I think the way you don’t delegate is you give somebody a job and then turn your head away from it. For example, I think in Iraq, President Bush probably thinks he’s a good delegator. He says to Donald Rumsfeld, ‘OK, you run the war,’ and that’s it. But delegation without oversight is abdicating your responsibility.”
Markoff says experience teaches you the right supervision zone for your company. Most of the time, it will be mostly clear.
“Common sense-wise, it’s pretty clear,” he says. “If somebody sits over you while you’re typing, telling you to use this word or that, you probably won’t last too long there. But if you accept everything an employee does as is, with no feedback, the product probably won’t be as good.”
It goes back to making sure your company supports your employees and gives them a chance to reach their full potential.
“You need to constantly make sure your team is up to the task, up to the competition and a step ahead of it,” he says. “That’s an ongoing process that happens all the time. You need to have your bases covered.”