Would you trust Enron?
Of course not, at least not with
what we know now. But before the scandal broke, thousands of
investors, expert fund managers and
many other smart people put a lot of
trust into Enron and its executives.
Fortune magazine even
named Enron “America’s
Most Innovative Company”
for six consecutive years.
Maybe you didn’t trust
Enron, or even necessarily
know what Enron was, but
your financial adviser probably did. If you trusted your
adviser with your money
and he or she trusted
Enron’s executives, well,
the end result was probably bad.
Business is built on a chain of trust. The
stockholders trust the company’s directors who trust the officers of the company. There may be additional intermediaries, such as a financial adviser or stock
broker, but everything hinges on trust.
When that trust breaks down, things
get ugly. Unfortunately, it happens all the
time. Enron got plenty of press but think
about how many times you read about a
local banker or business executive who
was committing fraud at a company.
As a CEO, you have to walk a fine line
between trust and control. If you trust
someone too much, you may leave yourself open to mistakes of inexperience or
just general oversights. If you don’t trust
your team enough, you become a control
freak, stifle innovation and your growth
comes to a screeching halt. Failing to
trust your managers means you’ll be
spending all your time making day-to-day
decisions, leaving yourself no time to
manage the big-picture strategy of the
organization.
The balance between trust and control
is difficult to find because, as the CEO,
you are ultimately responsible for what
happens in the company. It’s a heavy burden to carry, but worrying about what an
employee in a far-off office might do is
counterproductive to your long-term
growth, not to mention to your health.
The only thing you can do is prepare.
Surround yourself with good people who
can help you avoid bad situations. You have to trust in your managers and advisers, but no one is ever going to have
everything covered.
You can have a high degree of faith in
humanity and believe that people are
good by nature and will do their best, but
for me, it’s my faith in God that lets me
sleep at night.
You do your best to oversee the operations, but the
old Ronald Reagan saying,
“Trust but verify,” applies
here. Try to set things up so
that there is always someone
checking someone else’s
work. One person might
make a costly oversight, but
if you have someone else
checking, the odds are in
your favor that the mistake
will be caught before it costs you money.
You also need to be accessible to all
your employees. Walk around and get to
know as many of them as you can. Herb
Baum, the former CEO of Dial, used to
host “Hot Dogs with Herb.” He’d cook
hot dogs out on the factory floor for the
workers to give them a chance to speak
about whatever was on their mind. The
idea is, if there’s a major problem, someone is going to speak up. Maybe a
machine isn’t working properly and it’s
costing productivity, or maybe someone’s manager is doctoring timecards.
If employees feel comfortable talking
to you, that’s another layer of protection. Good people don’t like associating
with bad ones, and they’ll help you
identify potential problems, regardless
of whether it’s with a process or a person, if you just take the time to ask.
You have to take a lot of risks to be successful in business. One of the biggest
risks of all may be the trust we have to
place in our managers who control our
money, our inventory and our people. To
mitigate the risks, all you can do is educate yourself, educate your managers
and get the best advisers you can. If you
do all that, the only thing left is to place
portions of your business in the hands of
those you trust the most.
FRED KOURY is president and CEO of Smart Business
Network Inc. Reach him with your comments at (800) 988-4726
or [email protected].
