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Why Your Data Problem Is Actually a Leadership Problem · Private Equity Data Guy

• 0:00
  HR cannot create culture.
• 0:03
  Leaders create culture every day, every minute, every second, in every meeting, in every interaction, in every moment of silence.
• 0:15
  It is the way they treat people.
• 0:18
  It is the way they interact with people.
• 0:22
  It is the way they share information.
• 0:25
  If they honor the eight promises of the hidden Emotional Contract, they will have a healthy culture.
• 0:35
  If they violate those promises, they will have an unhealthy culture.
• 0:39
  Behind every value creation plan, there's a data problem nobody wants to talk about.
• 0:44
  Fragmented systems, metrics nobody trusts.
• 0:46
  And decisions made on gut feel dressed up as analysis.
• 0:49
  Welcome to the Pedata Guy.
• 0:51
  Each week, host Graham Crawford talks to the operating partners, advisors and practitioners who are doing the work inside portfolio companies.
• 0:58
  If you care about what actually drives returns in the market, then you're in the right place.
• 1:02
  The PE data guy starts now.
• 1:06
  Philip Curran has spent his career inside the rooms where leadership either holds together or quietly falls apart.
• 1:12
  He's the founder of Rinovare, a senior human capital advisory firm that provides interim chro leadership and strategic counsel to CEOs, CHROs and private equity operators.
• 1:22
  Philip's also the creator of the RQ system, which we'll get into.
• 1:25
  On August 17, Philip publishes his first book, The Hidden Emotional Contract, which describes the eight promises that build trust, culture and performance in companies.
• 1:34
  It's four decades of leadership work distilled into an unspoken agreement that decides whether teams trust, take risks, deliver, or quietly pull back and protect themselves.
• 1:44
  Earlier this year, Philip and I core wrote a piece on the two blind spots killing value in PE Portcos Data integrity and leadership integrity and how those two things always travel together.
• 1:54
  Today we're going to dig into the half of the story that most data people never see and the book that finally gives it a name.
• 2:00
  Philip, welcome so much to the to the show.
• 2:03
  Thank you.
• 2:03
  Always enjoy our chats and glad we're getting to record one.
• 2:06
  Same here.
• 2:07
  So tell me about the high level about the book.
• 2:10
  Like what inspired you to write the book and put all this experience onto paper?
• 2:17
  Absolutely.
• 2:18
  It struck me when you were doing your intro, 40 years of experience, it's like, oh my God, I'm old.
• 2:26
  But here's the premise behind a lot of my leadership work.
• 2:33
  Leadership operates on two planes.
• 2:37
  At the enterprise level, you have the leadership system, the structures, decision rights and alignment that determine how a company runs.
• 2:47
  At the interpersonal level, you have the relationship between the leader and every person that they lead the hidden emotional contract.
• 2:57
  My new book is about that second plane.
• 3:00
  It's the set of unwritten promises that leaders make every day about dignity, clarity, Safety, meaning growth, recognition, belonging and agency.
• 3:14
  And what happens when those promises are broken.
• 3:17
  The book explains why people stop giving their best long before the numbers show it and how leaders can rebuild trust in a way that restores performance.
• 3:30
  I think it's important to understand too.
• 3:34
  That.
• 3:38
  Like the article that we co wrote, really dealt with leadership at an enterprise level.
• 3:44
  And my.
• 3:45
  My firm has developed a diagnostic tool called the RQ diagnostic.
• 3:51
  RQ is renewal quotient that measures leadership reliability at the enterprise level.
• 4:02
  But you can't understand leadership.
• 4:06
  And importantly for a PE audience, you can't understand leadership and its ability to deliver on the value thesis for an organization unless you understand leadership at both planes, the enterprise and the interpersonal.
• 4:23
  Right.
• 4:24
  And this is why it takes me back to why I wanted to co write that article with you in the first place.
• 4:29
  Because there are some fascinating parallels.
• 4:31
  Like we spend a lot of our time looking for the hidden data contracts and the hidden metrics that dictate the company's success that don't appear on any board packs or any dashboards anywhere.
• 4:41
  And this is true.
• 4:42
  How do you go about taking something as intangible as the quality of leadership and turning it into, well, maybe not necessarily numbers, but putting some quantification around it so that it can drive action?
• 4:56
  A good data dashboard drives action.
• 4:57
  So how do you go from something as intangible as leadership and take it into something tangible that people can take action on with the RQ system?
• 5:05
  Yeah.
• 5:06
  I think the important thing is that the hidden emotional contract is not a checklist, it's not a dashboard, it's a framework.
• 5:14
  What I've tried to do is give leaders a model so that they can understand the expectations, the unspoken expectations that their people come to work with and that they understand what they are.
• 5:33
  But equally important, they understand how easily they're broken.
• 5:40
  And most leaders break these eight promises unintentionally.
• 5:47
  But when they're broken, people withdraw.
• 5:51
  They protect themselves, they stop taking risk, they stop innovating, they stop collaborating.
• 6:00
  And you can always tell.
• 6:04
  I can always tell when I do due diligence and I'm looking at the organization.
• 6:11
  I can always tell when you have a high trust, high performance team.
• 6:19
  Because the feel is different.
• 6:21
  It's.
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  It's human, it's warm, it's collaborative, it's innovative, it's high energy.
• 6:30
  People feel like they are part of something bigger than just themselves and they love that.
• 6:37
  But you can also tell when the contract's been broken because when people withdraw, when they protect themselves, the environment becomes colder, it's more brittle.
• 6:52
  It's less trusting, it's more political, it's more transactional.
• 6:57
  When you walk into a portfolio company, like, how quickly do you feel that?
• 7:02
  I really think so.
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  I have the advantage of walking into portfolio companies in a couple of roles, actually, in three different roles.
• 7:13
  I've walked in as a consultant,.
• 7:16
  I've.
• 7:17
  Walked in as an interim chief human resource officer, and I've walked in as a leadership architect brought in by private equity or by the CEO, because something's off.
• 7:32
  We just don't know what.
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  Leadership at all levels will put the absolute best face on things.
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  But observing interactions between leaders and the people they lead will really give me good insights into how well maintained the hidden emotional contract is.
• 7:56
  We'll go Back to Business 101.
• 7:59
  Everybody in business has read Peter Drucker, and everybody in business knows that Peter Drucker said, culture, eat strategy for breakfast.
• 8:10
  Yes.
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  A very famous quote.
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  The hidden emotional contract is really what gives rise to culture.
• 8:17
  And I talk about this in the book.
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  If you ever want to see a bunch of executives just absolutely tune out, get them in a meeting and say the word culture.
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  They'll all start nodding and they'll say, oh, yeah, culture.
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  Very important, very strategic, very someone else's job.
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  And they talk about culture.
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  I mean, I've had CEOs talk about we need to have a culture of innovation.
• 8:53
  We need to have a culture of accountability.
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  We need to have a culture of urgency.
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  As if my checklist.
• 9:01
  I've heard all of those.
• 9:03
  Yeah, yeah.
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  As if we can just print posters, put them on the wall in the break room, and voila, we have a new culture.
• 9:11
  So I go so far as to say that leaders have no idea what culture is.
• 9:18
  Yeah.
• 9:19
  Well, let me test my definition on you, and you can give me marks out of 10.
• 9:22
  If nobody's accountable for an objective, if it's a shared leadership team accountability, that means nobody does it.
• 9:27
  Right.
• 9:28
  Based on my experience, in order to make.
• 9:29
  Truly make progress, that could be on revenue, that could be on efficiency, that could be profitability, that could be time to market, that could be whatever.
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  You need somebody with a.
• 9:38
  With a head on it, and that's your thing.
• 9:41
  Right.
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  And then they'll drive forward, and then you.
• 9:42
  Then you get action.
• 9:44
  But the thing with culture is you can't do that because my.
• 9:47
  My understanding of culture is.
• 9:49
  It's a.
• 9:49
  It's a shared understanding across an organization of what gets rewarded and what gets punished, and that's the sum of everybody's behavior, like every leader across the organization.
• 10:01
  So whether you like it or not, as a leader, you're contributing to the culture of the team, the department, the company.
• 10:07
  I would give you a solid C.
• 10:09
  No, I'll take a C.
• 10:11
  I've had worse grades than that.
• 10:13
  And the reason I don't disagree with you, Graham, I just think it's an incomplete definition.
• 10:18
  We start the book by defining culture.
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  It's not fair to ask people to read a book that discusses a concept without giving them a working definition.
• 10:29
  So the working definition that I use is pretty basic.
• 10:33
  It's pretty simple.
• 10:34
  But culture is the lived experience of people working for you, and it is driven by the exhibited behaviors of leaders.
• 10:55
  It's that simple.
• 10:58
  So I've been in situations where, you know, I've been sitting in the chief Human Resource Officer seat, and the CEO said, phil, I need you to create a culture of.
• 11:13
  I'm out.
• 11:14
  It doesn't work that way.
• 11:15
  HR cannot create culture.
• 11:18
  Yeah, leaders create culture every day, every minute, every second, in every meeting, in every interaction, in every moment of silence.
• 11:31
  It is the way they treat people.
• 11:34
  It is the way they interact with people.
• 11:38
  It is the way they share information.
• 11:41
  And if they honor the eight promises of the hidden emotional contract, they will have a healthy culture.
• 11:52
  If they violate those promises, they will have an unhealthy culture.
• 11:57
  Leaders can't avoid creating culture.
• 12:01
  The only decision they can make is, are we going to create it by accident or intentionally?
• 12:09
  Right.
• 12:10
  Leaders who say, oh, my door is always open.
• 12:12
  I always want feedback like, please come and disagree with me.
• 12:14
  But, yeah, you come and disagree with them, and then they sideline you, in which case the door can be open as much as you like, but people ain't going to walk through it.
• 12:22
  Absolutely, yeah.
• 12:24
  Or you knock the narrative off its road.
• 12:27
  I want us to come back to different definitions, because I think culture, whereas a collectively creative thing, as you said, that all leaders take part in either accidentally or by design.
• 12:37
  But I think you said to me before that you quickly discover in a new company that the leadership team within themselves is operating from different definitions of reality, not necessarily disagreement.
• 12:49
  In fact, the dangerous part about it that I've found is that there are different definitions that avoid disagreement, that, like, on the surface, appear to agree with each other.
• 12:58
  And I think you've described an example where, like, five executives give five different definitions of an active customer, and then you're inevitably going to get different revenue numbers.
• 13:06
  Like, what do you actually look for in the first few weeks that uncovers those things?
• 13:10
  Because those are.
• 13:11
  We're back into the crossover again.
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  Those are data Points, those result in data points that drive decisions and actions in a company.
• 13:18
  They are.
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  In the example in the article we jointly wrote, five executives, five different definitions of what is a customer.
• 13:28
  Obviously it gives rise to different definitions of revenue, but somewhere along that work stream, downstream managers and rank and file employees have to make adjustments, make decisions, do things on the fly to compensate for the fact that they're
• 13:56
  getting different definitions of what is a customer.
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  And that causes slower work, slower decision processes, operational breakdowns, reporting issues.
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  So there's an organizational cost to leadership, misalignment.
• 14:16
  Yeah.
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  And I see this play out in my world as well, because one of the other ways it plays out, I get dependent on the company culture.
• 14:24
  But if I'm a department that's tasked, for example, on increasing the number of active customers, I'm going to look across all those definitions.
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  I'm going to pick the one that makes it the highest.
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  If I measured on an efficiency on a per customer basis, I'm going to pick the one that's the lowest.
• 14:37
  Right.
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  And those things will be open to me and all that will come back up the chain afterwards.
• 14:42
  As a result of that is a green dashboard that potentially shouldn't be green depending on wherever it's taken.
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  But if the culture is not there of like, it's okay to say that something isn't working.
• 14:51
  This is the whole raison d' etre of an article.
• 14:53
  Right.
• 14:54
  Isn't that these two things wind around each other all the way?
• 14:56
  Exactly, exactly, yeah.
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  A counterexample of that of when it's done well.
• 15:03
  Right.
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  I spent many a year working at Capital One and it's got one of the best data architectures that I think you could ever, possibly ever have.
• 15:11
  And actually within there there are many definitions of active customer, but it's extremely well governed and it's for a purpose.
• 15:17
  So depending on which regulator you're reporting to, they have different definitions of active customers and therefore we have to maintain different definitions of active customers in order to file against reg requirements appropriately, or marketing might need to see
• 15:30
  it differently or somebody else.
• 15:33
  But each of these definitions has a very clear label, has a very clear metadata about it, very clear explanation of how it's calculated, why it's calculated, who it's for and how it should be used.
• 15:43
  It is possible to have those different definitions, but only if you've got extremely good analytical and data governance rigor around it that's well published, well known, well understood across the organization.
• 15:53
  I 100% agree.
• 15:55
  And we talked about how these two issues of data integrity and leadership integrity wrap themselves around each other.
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  And honestly, I couldn't answer the question which came first, the chicken or the egg?
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  Because in different circumstances, either one could be the originating problem.
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  Decision evaporation.
• 16:17
  I'm super interested in this one.
• 16:18
  So you've described decisions that get made in a meeting, but then nothing actually happens afterwards.
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  What causes that usually.
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  So these are issues that are really enterprise leadership levels.
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  There are enterprise leadership level problems.
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  The scenario you've described really boils down to typically one of two different issues.
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  So decision re litigation is usually a result of unclear role definitions.
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  At the senior leadership level.
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  It may be that the decision falls in this gray area between two leaders understanding of their responsibilities.
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  So it's fallen into a crack.
• 17:08
  Absolutely.
• 17:08
  Yeah.
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  I've also seen it where it falls in the overlap.
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  And I actually recently was working with a client where we uncovered multiple issues where three or more leaders were fighting over a single issue.
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  My experience, that's a trickier one to resolve than the.
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  It is the gap.
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  The overlap is harder than the gap.
• 17:35
  It is because then you have to go to one or more leaders and say, that's not your job.
• 17:41
  That's.
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  That's our job.
• 17:43
  And that doesn't feel good, depending on the, you know, how it's been set up.
• 17:48
  But.
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  But that's.
• 17:49
  That's a primary issue.
• 17:50
  The secondary issue is around strategic clarity when a decision is made.
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  And maybe it falls into one leader's area of per, you know, one leader's purview.
• 18:08
  But the organization or the leader responsible for executing this decision do not believe that it is aligned with the strategic direction of the organization.
• 18:22
  And so they do.
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  Don't put the foot on the gas.
• 18:27
  And they bring it back to the table to say, are we sure?
• 18:33
  And so I've seen those being the two primary causes.
• 18:36
  But when you have an organization that is prone to relitigation of decisions, it slows the decision cycles.
• 18:45
  And in most organizations, decision velocity matters.
• 18:51
  I would say there are a very small handful that I've dealt with that decision velocity maybe wasn't a critical issue.
• 18:58
  But in private equity situations, decision velocity always matters.
• 19:04
  Yep, I know that.
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  And to have people putting their foot on the brake and saying, are we sure?
• 19:12
  Let's talk about this again.
• 19:15
  Let's bring this up at the next monthly executive leadership meeting.
• 19:19
  Let's take this offline.
• 19:20
  That's my favorite one.
• 19:21
  Yeah.
• 19:22
  I mean, I see it when it keeps coming back to the leadership meeting.
• 19:27
  I see it when a decision gets made in the meeting, but then people get on the elevator to go to their offices and another meeting happens on the elevator and they're, oh, yeah, no, no, we.
• 19:39
  No, that's not right.
• 19:40
  Yeah, always the meeting, after the meeting.
• 19:43
  Yeah.
• 19:44
  And so all of those things destroy value.
• 19:48
  I've got a game for us to play now.
• 19:49
  Like a game show.
• 19:50
  There's a number that you provided I think is great.
• 19:53
  So in companies with weak accountability, you'll consistently see forecast accuracy that's like below 60%.
• 20:00
  So forecasts are off by 60% and project slippage above 40%.
• 20:04
  So projects coming in late.
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  Most operators, including me, potentially would look at that 60% forecast issue and say, this is a data project.
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  Like there's something wrong with data.
• 20:13
  But potentially it could be a leadership project.
• 20:16
  Let's have a hypothetical situation.
• 20:18
  And the game show is leadership problem or data problem.
• 20:21
  Right.
• 20:21
  So say you and I go into this portco together, Philip, and how would we begin to pick through that and find out which it was?
• 20:29
  So leadership and data is never relegated to a single issue.
• 20:36
  They're.
• 20:37
  They're both universal and leadership problems.
• 20:42
  In my experience, data problems are never unique to a single issue.
• 20:47
  Yeah, they're universal and.
• 20:49
  And wrapped around each other typically as well.
• 20:51
  Right.
• 20:52
  So if we play the game and you and I are brought in and said, is it data or is it leadership?
• 21:01
  I would say that the way to determine that is to evaluate the leadership system as a whole and to evaluate data management, data integrity as a whole.
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  And if there are problems in leadership, they're intertwined with problems in data.
• 21:22
  If we evaluated the leadership system as a whole, we can bring it back to that single issue and see how it might be affecting it.
• 21:31
  Similarly, if you looked at data integrity as a whole, you can then drill down and say, how's that affecting this issue?
• 21:40
  Yeah.
• 21:41
  Both end up at the.
• 21:42
  Hey, there isn't a universally agreed definition of what we're forecasting, what the numerator and the denominator are for this forecast.
• 21:50
  Another way accountability failures show up that you've talked about is the fire drills, heroics, single people carrying large parts of the business as a bottleneck.
• 22:00
  I see this all the time too, like one person's spreadsheet or when such and such a person is on vacation, everything falls apart because they're the only one who knows the macros.
• 22:10
  Human APIs, I like to call them, for my more tech savvy friends.
• 22:14
  Many Companies have human APIs walking around inside them that are very useful because that shows up as heroics and dependability and that person's critical.
• 22:26
  Why do you think it is that PE backed companies breed that particular brand of hero?
• 22:30
  In particular, is there something specific about pe?
• 22:33
  And I know the issues that causes from a data perspective, but what issues does that cause from a leadership perspective when you've got that single point of success, human API.
• 22:42
  Right.
• 22:44
  So I think there are a few issues.
• 22:46
  One is private equity operates at such speed that forward momentum is always the singular driver.
• 22:58
  It's not an environment that lends itself well to taking a step back to assess and then move forward.
• 23:09
  It's a do something and if it's wrong, we'll fix it on the fly kind of culture.
• 23:13
  If we read some of the writings of our friend Max Salazar, he would tell you that people are put into roles in private equity not because they are the best person for that role, but because they knew the
• 23:29
  person who was putting somebody in the role and that private equity is the ultimate good old boy network.
• 23:36
  And they.
• 23:37
  Yeah, and it may be that that person's chosen because they will either go in with the remit or the other capability to create speed.
• 23:45
  But speed doesn't always equal velocity, right?
• 23:48
  Exactly, exactly.
• 23:50
  I think both of those to a greater or lesser extent in different organizations are present.
• 23:58
  I think the very nature, the personality of executives that are drawn to private equity lends itself to this hero culture because these are people who one are convinced of their own immortality and, and.
• 24:16
  Their own expensive capabilities.
• 24:19
  Yeah, we both, both met the archetype.
• 24:22
  Look, I mean I've, I've been that person.
• 24:24
  A lot of my work, my writings, my teachings about leadership come from the fact that, that early in my career I had a lot of success.
• 24:36
  It went to my head and I became convinced of my own rightness.
• 24:45
  And I tend to make a lot of decisions intuitively.
• 24:51
  I see patterns and that pattern recognition allows me to make decisions and make quantum leaps rather than worrying about crunching a lot of numbers.
• 25:03
  I know where this is ending up and so I just go there.
• 25:06
  I also kind of became an asshole because of all that.
• 25:11
  And I realized one day that I didn't like the guy looking back at me in the mirror when I shaved every morning.
• 25:18
  How long ago was that?
• 25:19
  Like, was there a particular shave you were having where you came to that realization or, you know, did it accumulate?
• 25:24
  And regardless of the answer, when you had the realization, what, what, what did you do?
• 25:28
  What action did you take?
• 25:29
  I described it to a very close friend and he said, oh, that was a close shave, Graham.
• 25:36
  Thankfully, it happened a little over 30 years ago, so it caught Me early career, it caught me early in my leadership journey.
• 25:51
  But it also gave me the opportunity to change my trajectory and to do that by studying leadership.
• 26:02
  And that gave rise to me consulting on executive and leadership issues.
• 26:06
  Yeah, many of that kind of resonates with me I think, you know, and I look at my, my own decision to come out of corporate was, you know, based on similar things.
• 26:15
  Maybe I don't have the courage to self brand the way that you did, but what was certainly true for me.
• 26:22
  Yeah.
• 26:22
  It may not be the most effective branding in the world.
• 26:25
  Trust me, I used to be an asshole.
• 26:26
  Yeah, no, no, it's fine.
• 26:28
  The same is true in private equity as well.
• 26:30
  Like in those CEO roles like you have to.
• 26:33
  Sometimes certain behaviors beget success and outcomes and you know, the size of company, type of company, type of role, the situation the company's going in and I think to Maxwell's point, are all factors that dictate what the correct
• 26:47
  leader is.
• 26:49
  Absolutely.
• 26:49
  But the get shit done, whatever the cost, cut costs, whatever the cost, go fire people, whatever the cost requires a certain type of person.
• 26:57
  And in one of the rolls, rolls, for example, I understand what needs to be done to be successful and I could do it, but it wouldn't feel like me.
• 27:05
  Right.
• 27:05
  And I think I'd reach a certain point in corporate, like I understand the rules of this game, how to play it, what's required to be successful.
• 27:12
  I don't want to play that game.
• 27:14
  Right.
• 27:15
  I want to play the game, you know, differently away from the world of transformation theater and managing perception as a, as a critical part of whatever.
• 27:24
  I'd rather work in an outcome based, a truly outcome based, meritocratic environment.
• 27:28
  But I greatly appreciate you sharing that and I'm sure it helps you be better at what you do.
• 27:34
  Well, I appreciate that it's important, especially for a PE audience.
• 27:41
  The work I do around the RQ diagnostic.
• 27:45
  RQ is renewal quotient.
• 27:48
  And really it's a measurement of a leadership team's ability to constantly renew itself in the face of challenge and change without losing focus on their strategic objectives.
• 28:02
  And it is truly a measure of the leadership system at the enterprise level.
• 28:11
  Private equities embrace that concept because not only do we measure the reliability of the leadership system, we pinpoint problem areas, but we also quantify the cost of the organization of any misalignment in the leadership team.
• 28:33
  But private equity tends to totally ignore the hidden emotional contract.
• 28:41
  And as I said at the start of our conversation, if you're going to understand leadership, if you're going to Understand the performance of an organization.
• 28:52
  You have to understand leadership on both planes, the enterprise and the interpersonal.
• 28:59
  And so I think that's an area where the kind of hero operations that we see, the kind of slash and burn that we sometimes see, the cost management at all cost approach, they're actually detrimental to the hidden emotional
• 29:18
  contract.
• 29:19
  And as we also talked about, culture trumps strategy.
• 29:25
  But culture is the hidden emotional contract at scale.
• 29:31
  Right.
• 29:32
  It's the collection of all the hidden emotional contracts in the organization.
• 29:35
  Right?
• 29:36
  That's absolutely right.
• 29:38
  So we talked about the two different types of the emotional contract.
• 29:40
  But your book, which is coming out on August 17th, just after this episode airs, talks about eight promises.
• 29:46
  Can you just walk me through the eight promises and what they.
• 29:50
  What they are in that.
• 29:51
  In that hidden emotional contract?
• 29:53
  Oddly enough, I can surprise.
• 29:58
  It may have been very difficult for me a couple of years ago when I started formulating this book, because originally I had over 30 concepts that eventually became called promises.
• 30:14
  I was able to fold them into each other.
• 30:18
  And some, you know, when I talk to people very often they'll say, but what about fairness?
• 30:26
  Isn't fairness one of the eight promises?
• 30:29
  It's like, well, no, not actually, because fairness is implicit in a lot of the promises.
• 30:37
  To answer your question directly, Graham, the first promise is dignity.
• 30:44
  And that's the leader saying, I'll treat you with respect in how I speak, how I decide, and how I act.
• 30:54
  You have inherent worth just because you're a human being.
• 30:58
  You live and breathe, and I will treat you with dignity.
• 31:02
  The second is clarity.
• 31:06
  And this is where you can see strong links between leadership at the enterprise level and leadership at the interpersonal level.
• 31:18
  I will help you understand why what we're doing matters and how it affects everything around you.
• 31:29
  I'll put your work into context.
• 31:32
  If we don't have strategic clarity coming from the senior leadership level, we can't provide.
• 31:38
  Yeah, the people are working without purpose,.
• 31:40
  Then basically, yeah, yeah.
• 31:41
  The third is safety.
• 31:43
  And safety is not just physical safety.
• 31:47
  It's emotional safety, psychological safety, professional safety.
• 31:52
  And what does that mean, I won't get fired?
• 31:55
  Well, physical safety is.
• 31:56
  Is clear.
• 31:58
  Right.
• 31:59
  Psychological safety would be.
• 32:02
  I'm.
• 32:03
  I am free to ask questions, to challenge processes, to point out problems without fear of retaliation or loss of job.
• 32:19
  The next is meaning to understand why your work matters and connect it with a mission.
• 32:26
  And in each chapter of the book, I introduced the concept by providing a story from my career in.
• 32:40
  In most instances, it's.
• 32:43
  It's a story from my consulting work in.
• 32:49
  In A couple of instances.
• 32:50
  It's actually a story from my career,.
• 32:53
  But I can't wait to read and guess which ones.
• 32:56
  Oh, it's very clear.
• 33:00
  But meaning I always come back to.
• 33:03
  And I use this example in the book.
• 33:07
  I was doing work for a medium sized machining organization.
• 33:16
  The work the people did was they machined parts for manufacturers and they were machining metal to extraordinary tolerance levels like the width of a human hair would mean this was a defective part.
• 33:39
  People were standing at metal lathes and other pieces of machinery, standing on concrete, working in a loud environment.
• 33:50
  I mean, eye protection, ear protection optional.
• 33:55
  And the CEO one day said, I don't understand.
• 33:58
  You know, our turnover has always been very low, very stable, but it just seems like it's starting to rise and I don't understand why.
• 34:08
  And so I spent time talking with the employees and the kind of comments that I got were things like, yeah, our work doesn't matter.
• 34:18
  I mean, I'm just making a piece that will go into another machine and you know, so who cares?
• 34:26
  I shared that with the CEO and the CEO was flummoxed.
• 34:29
  I love that word.
• 34:31
  Yeah, the good ones.
• 34:33
  Gravestrabble.
• 34:36
  And he was, he explained that the machine, the machinists were creating parts that were going into primarily medical equipment.
• 34:51
  Heart, lung machines that kept patients alive during surgery, defibrillators that could bring people back when their heart stopped beating.
• 35:01
  And instead of just putting out a newsletter to say, here's where your work goes, he brought people on site and had a company all hands meeting.
• 35:16
  And he actually introduced people to a little boy that was saved by a piece of medical equipment that had their part in it.
• 35:27
  Yeah, that's cool.
• 35:29
  And he actually changed the logo to include a tagline and it was XYZ Company.
• 35:37
  We don't just make parts, we save lives.
• 35:43
  And people had a newfound meaning to their work.
• 35:48
  And so that was a great example of someone understanding the hidden emotional contract, understanding that people needed to have meaning in their work and providing it.
• 36:00
  So the next promise is growth.
• 36:06
  People have to think that there's a believable path forward for them, that they will be better tomorrow than they are today, that they will become worth more in the marketplace by being here, more marketable.
• 36:22
  Yeah, the next is recognition.
• 36:24
  Recognition and promotion are not the same thing.
• 36:28
  And this is actually an example that came from my career where I contrasted my first two bosses.
• 36:39
  And I called it A Tale of Two Bosses.
• 36:42
  Instead of Charles Dickens had written a book about modern corporate life.
• 36:45
  This reference my first boss, I did a project outside of Work.
• 36:54
  Because I thought, this is something the company needs to consider.
• 36:57
  And I brought it to him, I gave it to him, and I heard nothing.
• 37:03
  And a week later, I went to him and I said, hey, Pete, did you read it?
• 37:09
  Well, yeah, I mean, I got it, but it wasn't needed.
• 37:15
  It wasn't asked for.
• 37:18
  And I said, okay, but did you actually read it?
• 37:22
  And he looked at me and he said, hank, Phil, if you have time to do this, I've got more work I can give you.
• 37:28
  I told him, yeah, I'd done it all outside of work, but that didn't really matter.
• 37:33
  And I walked out of his office feeling totally defeated.
• 37:37
  Not because they didn't accept my white paper and my recommendations, but because I felt absolutely invisible.
• 37:49
  And about three months later, I was in a new, new role at the largest human resource consulting firm in the world.
• 37:58
  And I was working my butt off because I was trying to prove that I belonged there.
• 38:05
  And one day, wrap on the edge of my cubicle, and the office head comes in and he sits down.
• 38:16
  And Larry did not normally make house calls in the cube farm, but he sat down and he looked at me, and I was never Phil.
• 38:27
  I was always just Curran.
• 38:30
  He goes, curran, I saw the report you wrote for the very big corporation.
• 38:39
  That's really good work.
• 38:40
  But listen, I want you to take off early today.
• 38:45
  You're putting in way too many hours.
• 38:47
  You are going to burn yourself out.
• 38:50
  Your career is a marathon, not a sprint.
• 38:53
  And it was the first time I thought, he actually knows the work I'm doing.
• 38:57
  Yeah.
• 38:57
  He knows I exist.
• 38:58
  Yeah.
• 38:59
  And he cares.
• 39:01
  And.
• 39:02
  And, you know, what I found out was that this was actually Larry's superpower.
• 39:09
  He saw the people that worked for him, and we would have gone through walls for him.
• 39:15
  So there's a difference between recognition and promotion.
• 39:19
  The seventh is belonging.
• 39:21
  And that is I know the work I'm doing.
• 39:25
  But am I personally part of the story that this organization is telling, or am I an outsider?
• 39:34
  Do I see myself in it?
• 39:35
  Yeah.
• 39:35
  Yeah.
• 39:36
  And the last is agency.
• 39:39
  Everybody likes to have some amount of control over the work they're doing.
• 39:44
  And a great example I give is an insurance brokerage firm brought me in.
• 39:51
  In the insurance brokerage world, the guys who go out and ladies who go out and sell and manage the client relationships, they're.
• 40:00
  They're.
• 40:01
  You could call them brokers, but the firm is a broker inside the firm.
• 40:04
  They are called producers.
• 40:06
  They said, we're hiring producers, but two years later, 70% of them have failed and are gone.
• 40:17
  Well, that's appalling.
• 40:20
  And so I started looking at the organization, talking to people.
• 40:25
  It's a recurring theme.
• 40:26
  I talk to people.
• 40:27
  I know.
• 40:27
  It seems.
• 40:30
  What.
• 40:30
  What I found was that the organization and the CEO came out of private equity.
• 40:36
  No insurance broker experience.
• 40:39
  The president and chief operating officer came out of private equity and no insurance broke.
• 40:44
  Maxwell likes the story.
• 40:46
  And they were convinced.
• 40:49
  Now, what they were doing was they were buying up small brokerage firms and creating one large firm out of it.
• 40:58
  So they were convinced, I mean, with religious fervor, that the way to be successful was to standardize everything.
• 41:07
  They standardized tools, processes, systems.
• 41:11
  But they standardized sales.
• 41:14
  Yeah, they standardized.
• 41:14
  Now, I don't mean the key skills.
• 41:16
  Right.
• 41:17
  Yeah.
• 41:17
  I don't mean sales support.
• 41:20
  I mean they standardize sales.
• 41:22
  There was a prescribed methodology.
• 41:26
  You do 50 cold calls a week.
• 41:29
  It will generate X number of meetings, that will generate Y number of sales with an average value of Z.
• 41:36
  And that will get us the new business revenue that we need.
• 41:41
  And it gave absolutely no thought to.
• 41:47
  The producers that I'm hiring have a network.
• 41:52
  They're experienced salespeople.
• 41:55
  They know what they're doing.
• 41:58
  And they absolutely were against talking that a discovery meeting was forbidden.
• 42:06
  You go into that first meeting because you're the expert.
• 42:11
  You go into that first meeting and you know the industry and you know a little bit about the organization, and you tell them you're probably facing these issues and here are the solutions we can bring to the table.
• 42:21
  And here's the contract.
• 42:22
  Let's go.
• 42:23
  Yeah.
• 42:24
  Yeah, I can see why that wouldn't work.
• 42:26
  I gave them my findings.
• 42:27
  They totally disagreed.
• 42:29
  The.
• 42:30
  You know, the.
• 42:31
  One of the things about consulting is the client doesn't have to take your advice.
• 42:37
  Two years later, they still had 70% turnover among producers, among new producers.
• 42:46
  When I worked with them, I'm one of the top 10 brokers in the country in terms of.
• 42:52
  Of revenue.
• 42:53
  They'd fallen out of that top 10.
• 42:57
  They're still doing fine financially.
• 42:59
  But what they had broken was the hidden emotional contract.
• 43:05
  They broke agency.
• 43:06
  Yeah, it's.
• 43:09
  Yeah, I can see how each of these would go wrong.
• 43:11
  And I'm sure many companies get many of them wrong, which makes the book well worth reading.
• 43:15
  Right?
• 43:15
  So I'm.
• 43:16
  I need to.
• 43:17
  We could talk for a long time, Phil, but I need to.
• 43:20
  I need to wrap up.
• 43:22
  And thank you for all of the great insight.
• 43:24
  Thanks for listening to the PE Data guy.
• 43:26
  The place where private equity meets data.
• 43:29
  Please forward this episode to your favorite private equity friend.
• 43:32
  Thanks for listening.
• 43:33
  See you next time.