Disclaimer - Names, geographies, and businesses have been altered to maintain confidentiality.
<Equity Partnership, Real Estate
Defusing A Bully, And Rationalizing
An Ad Hoc Management Style
Background
Spring, 2001
The partnership invested in real property. The partners included Will and Jack, and Will's son Sean.Will and Sean lived in northern California. Jack lived in Chicago.
Property site management and maintenance personnel numbered 123. Management, including support staff, numbered 39, spread over three geographies. Capital Transactions and Finance were in Chicago. The search for new acquisitions, property management, marketing, sales, and maintenance were in the Southern Region, in northern California. A growing property management operation was in the Northwest Region.
I knew Will socially. He asked me to take a look at their operation and see if I could come up with anything.He had not specific problems he was concerned about, and he had no idea of what needed to work better.
What I Found
Partners and Their Issues
1. Sean ran the division that managed the properties.
2. When Will and Jack were in a transaction, they were hard to reach when needed. When they were not in a transaction, they micro-managed, all the operations, causing problems and upset. Will and Jack were unaware of the problems they caused. No one told them.
3. Will was concerned about worsening economic conditions and their ability to cover possible operating losses. In that regard, he was worried about Jack's liquidity, but he had said nothing to Jack, afraid it might cause a rift.
4. Will also got angry and verbally abusive. Sean was a frequent target, but no one was immune. Sean avoided eye contact with Will, rarely talked to him, and was seldom alone in a room with him. Father and son never talked about it.
5. Privately, everyone voiced love and sorrow for Sean, the stoic.
6. Sean was even harder on himself than his father was.
Issues in the Three Regions
1. No region satisfied Accounting's month end requirements, despite the loud and frequent complaints of Lee, the head of Accounting. Too many month end forms were turned in incomplete, improperly filled out, and late.
2. All three administrative functions -- Accounting, Operations, and Transactions -- complained about the Northern Region, run by Sam. All who complained said northwest managers thought themselves superior to everyone else in the company. According to Accounting, they were the worst at satisfying month-end requirements.
3. The head of accounting, Lee, and head of transactions, Alice, though highly dependent on each other, never cooperated, and criticized each other often. This was a nuisance for all. Many complained privately. No one spoke up.
What We Did
1. Will, Jack, Sean, and I spent a day discussing the above findings.
2. Before we met, I told Will that he set the tone. If he tried hard, everyone else would. If he tried hard, they could change anything they wanted. If he did not try, no one else would, and nothing would change.
3. Regarding process, they agreed to summarize what the last person said before the next person talked. They also agreed to let me interrupt. They were free to interrupt my interruptions.
4. I put micro-management on the table.
a. Will said that could do business no other way. Sean grunted. I suggested that Sean summarize Will, then ask questions about Will's statement. He did, then asked Will, "How could you not know the trouble that would cause us?"
b. Jack stepped in, took my suggestion, and asked Sean for examples. During Sean's examples, Jack and I interrupted Will's interruptions.
c. Each time Sean offered an example, Jack, with my encouragement, asked Will to summarize. Each time, Will needed four and five iterations before Sean found his summary acceptable. To his credit, Will kept summarizing until Sean said yes.
5. I put liquidity on the table.
a. Bashfully, making oblique eye contact, Will said to Jack that he was concerned about the economy and Jack’s liquidity. Jack acknowledged that he was optimistic to a fault. He asked Will what he wanted. Will turned to me. I suggested that they get an accounting of their reserves, review each property, assign each a cash reserve, and then compare the total requirements to current reserves. (They discovered that their requirements exceeded their cash, and spent half a day deciding which properties to sell.)
b. We arranged to hold monthly liquidity meetings, estimating trends and reviewing cash on hand for all flagged properties.
6. I put Will's abuse on the table.
a. Several weeks before we met, I told Will that others had described him abusing Sean. He said, "They did? I do? This is important. We must do something about this." He asked what he should do. I suggested that he do and say nothing until we met as a group. Until then he might be on the lookout for things he does that others might consider abuse. I told him I was glad to talk if he noticed anything. I did not hear from him before we met.
b. When we met, I suggested that he listen, summarize, and ask questions. If and when appropriate, he might apologize. Will summarized.
c. Jack described several fits of rage by Will, who summarized each.
d. Will asked Sean if this was his experience. Looking at the floor, Sean said yes. I asked Sean to describe his experience. Silent for a long time, Sean said, "Yes." I asked Sean what his own experience was of Will's anger. Horrible, he said. Wagging hand and foot furiously, Will sounded defensive as he started to speak. Jack interrupted Will. I suggested that Will summarize Sean, and not explain. He did.
e. Sean described a time Will abused Alice.
f. Will looked stunned, wagging foot and hand furiously. He apologized. Who are you apologizing to, Sean demanded. You, said Will. But, said John, what about these other people? Will said that he would apologize to them, too.
g. Sean expressed disbelief that Will was unaware of what he did when he was angry. I asked Sean if I might speak, and he agreed.
h. I told them that witnessing anger was as harmful as being attacked by anger. I reminded Sean that he had witnessed a lot of anger.
i. I reminded them that I struggled with anger. Being angry is like being drunk. I fall into a hypnotic trance. Once back, I remember nothing of what I did. I was startled to discover my father was unaware of what he did. It was normal that Will is unaware. Engaging with Jack and Sean was a big step for Will.
j. To help him become aware, we must continue what we have started here -- let him know when he is raging, interrupt him, describe what he is doing, have him summarize, and encourage him to ask questions.
k. That ended our first day.
Reflecting On The Day
1. No other client, in a first meeting, used the tools of summarizing and inquiring as well as Jack. His contribution to the day's success was essential.
2. Will's effort set a productive tone that carried. Will granted Jack an authority he did not grant me. When Will balked at my instructions, Jack backed me up and Will went along. Not once did Will balk at Jack's instructions.
3. The meeting and format -- long, intense discussion, sitting around a table, was hell for Will, who has difficulty sitting, or remaining in one room for long. Heroically, he stuck with it.
4. Sean took up summarizing immediately and began doing it consistently, though inquiry stumped him that day. An accomplishment of the day: Sean repeatedly stood up to his father. Afterward, he didn't regret this, though he doubted anything good would come of it.
The Next Day: The Partners and Senior Staff
1. Will, Jack, Sean, and I spent the next day with senior managers from each administrative function and region. I structured and facilitated the discussions.
2. Each partner summarized the previous day's discussions, including the discussion of Will's rage. Then, one by one, around the table, each executive spoke on each issue, and then each executive was summarized by a partner.
3. Interruptions by Will and Jack were discussed first. Both expressed surprise at the plethora of examples. Jack took the lead summarizing, inquiring, and then apologizing. Will followed. All agreed this was a priority fix.
4. Will discovered that everyone had stories of his anger.
a. Jack repeated incidents he had related the day before. Alice described Will's abuse of Sean. Lee described his abuse of Sean and Alice. Sean described abuse of Ann, Lee, and Alice. Sweating through his shirt, wagging hand and foot furiously, Will listened and summarized.
b. Alice said she did not believe Will would change, and she was worried what Will would do when Don [the consultant] was not around. Lee, Ann, and Sean agreed with Alice.
c. All agreed that if it happened when Don was not around, they would discuss it when he was around.
d. Alice said that Will's effort during the day led her to risk saying what she did [in c., above]. Lee, Ann, and Sean agreed. Jack was impressed with Will's commitment.
5. Month-end reporting was discussed at length. Lee described the various errors made on the month end forms. Regional heads summarized each complaint Lee described. Improving the timeliness and quality of month end reporting was assigned a top priority.
6. Finally, we discussed Lee and Alice.
a. Partners and executives described how they worked together. Consequences were assessed. Both Lee and Alice summarized.
b. Lee and Alice each shared what she valued about the other and what she wished was different. Each summarized. The team agreed to discuss Lee and Alice at every staff meeting until things improved.
The Next Six Months
1. Partners, senior executives, and I met for a day and a half, every other week, for three months. Then we met monthly for three months.
2. Prior to the first staff meeting, the partners and I held an all-day liquidity meeting, at which the cash requirements for every property were established.
3. Once a month, before the staff meeting, the partners reviewed all flagged properties and cash requirements.
4. At every staff meeting, we addressed Will and Jack's micro-management interruptions, Accounting's reporting requirements, Lee and Alice, and Will's anger.
5. Each incident of micro-management by Will and Jack was described, summarized, and discussed. The unintended negative consequences were assessed. Acceptable alternatives were agreed to. Incidences of micro-management declined steadily over the next twelve months.
6. Property reports that did not satisfy Accounting's needs were distributed and discussed. Misunderstandings, competing demands, and conflicting requirements were uncovered. Solutions were designed and implemented. Accounting reported dramatic, continuous improvements, from the start. As the Northwest region's reporting improved, so did its relations with Accounting and Transactions. Six months later, Accounting announced that all regions satisfied their month-end requirements.
7. Each unsatisfactory communication between Lee and Alice was discussed, with each summarizing the other. Both reported exhaustion after these discussions, which neither liked. But both said they were necessary and valuable. The frequency and severity of their private complaints and public feuds declined steadily over the next year. Each expressed appreciation for the other's effort.
8. We examined Will's fits. Witnesses and victims shared their observations and emotional responses. Will summarized. Often, he would start to object, and say that was not how he remembered it. I reminded him that when we are hypnotized by our anger, we remember little of what we do. All said Will was having fewer fits and expressed appreciation for his effort.
9. Five months into the project, during a meeting with some of their bankers, Will humiliated Sean. All who witnessed it were horrified, including the bankers. Lee, Alice, and Ann witnessed the incident and were angry with Will. Days later, at the next staff meeting, when we tried to discuss the incident, Will refused to acknowledge his anger or his actions. He discounted what others reported. He refused to summarize. Everyone left upset.
10. I was a guest in Will's house. That night, before bed, we met, by chance, in the kitchen. We were both still upset. We should have said nothing. Instead, said something, he discounted what I said, and I pushed on, summarizing what others had said. We ended still upset. The next day Will failed to show up for the staff meeting. Everyone felt demoralized. That was how the first six months ended.
We took the next three months off.
The Second Six Months
Will refused to work with me any longer. I continued to work with Jack and Sean. Despite not working with me further, Will continued to reduce the frequency of his angry tantrums. Two years later, a close associate of Will and Jack said that the change in Will, and the improvement in his relationship with Seam, was a miracle.
We turned to property marketing. Sean, Ann, and Tony formed the Property Marketing Team. Ann supervised Southern Region property managers. Tony, a recent college grad and old family friend, was new to Sean's staff. We began weekly phone meetings. We looked at each property in the region, going into detail on those flagged by Tony.
We invented as we went. When we started, the data used to make marketing decisions was incomplete and unreliable. We refined the data we wanted to see and how we used it. Tony was assigned responsibility for collecting the weekly marketing data. He was given a bonus pool to distribute at his discretion. He learned to give useful feedback. Within two months, all properties were reporting on time with acceptable formatting and accuracy.
Better data produced better decisions -- reflected by improved net to rent. We uncovered gaps in the procedures and training of rental agents. At first, we corrected these one at a time. Once we saw the larger picture, we instituted formal training. I took the lead in writing scripts for the phone, visits, tours, and closings. Agents role-played the scripts and then received feedback from the staff and other agents. The training, designed and run by me at first, produced improvements in net to rent, as well. I trained Tony and Kris to take over the training from me.
Copyright © 2004-2012 Don Rossmoore