Issue link: https://nebusinessmedia.uberflip.com/i/840796
www.HartfordBusiness.com June 26, 2017 • Hartford Business Journal 21 BIZ BOOKS How to build a companywide leadership culture "L eaders Made Here: Building a Leadership Culture" by Mark Miller (Berrett-Koehler Pub- lishers, $22.95). Miller's tale about "bench strength" follows Blake the new CEO recruited from outside to fix an organization with declin- ing sales and profits. One week on the job and the head of HR retires. His executive team returns blank stares when he asks if there's an internal replacement. Those stares told Blake that real leader- ship heads the problems of the firm. On an interim basis, Blake brings in Charles, an accomplished HR pro. In addition to han- dling HR duties and finding a replacement, Blake needs Charles to help the team under- stand that leadership isn't about the titles they hold — it's about the example they set. During Charles' first meeting with the execs, he asked them to write down their definition of leadership. All had different answers, which meant that they and their teams were on different pages. He defined culture as "nothing more than the con- sistent habits of the people," and explains the role of leadership in terms of creat- ing a culture of employee devel- opment that devel- ops leaders (i.e. job owners not job doers). At the end of the meet- ing, Blake asked if there were questions. There were none. They met with the HR team next. The elephant in the room was apparent when one HR staffer asked: "What exactly is a leadership culture, why would we want one and assuming we do, how would we build one?" Charles and Blake explained that leadership "is the only sustainable competitive advantage" because it builds a team that's always on the "we have to be even better" page. The HR staff defined leadership as SERVE. S — see the future; E — engage and develop others; R — reinvent continuously; V — value results and relationships; E — embody the values. Recognizing that HR was on board with leadership culture Blake and Charles tasked them with developing a set of "how" questions and interviewing the executive team. There was pushback — especially from David the operations VP. He stated that it was his job to create a leadership culture for his team. When HR pointed out that there were several unfilled man- agement positions on his team and that internal candidates had been rejected, he responded: "When I need your help, which I doubt, I will call you." How many silo-dwelling Davids are on your team? It only takes one closed mind to derail the efforts of others. The HR team also contacted "Best to Work for" companies for their insights into leadership development. They found that much of the devel - opment was focused on lower-level managers and supervisors. Why? Because that's where "bench strength" comes from. Like a baseball team's minor-league system, these companies were prepar- ing employees to play in the major leagues. There was an added benefit, too. The lower-level trainees carried the devel- opment message to their staffs, which showed them paths to opportunity. HR also found that e-learning played a vital development role. Taking people away from their jobs to attend classes often had adverse effects on productivity. Providing flexible e-learning opportuni- ties was less dis- ruptive to indi- vidual schedules. The "final exam" involved actual leading. After complet- ing the course- work, they were given the oppor- tunity to lead project teams. S e a s o n e d leaders mentored "new" leaders through- out their learning activities. This showed everyone that the organization "walked the talk" at all levels. As workplace word- of-mouth spread, the company attracted top talent because it had a "Leaders Made Here" employment brand. When the HR team's results were pre- sented to the executive team, they (even doubting David) agreed that leadership builds business. Question to ask: How are you develop- ing "bench strength"? n Jim Pawlak is a nationally syndicated book reviewer. Jim Pawlak ▶ ▶ Like a baseball team's minor-league system, these companies were preparing employees to play in the major leagues. gap of around $300 million. At DRS, we believe no one should pay more taxes because others do not pay their share. That's why we have increased fraud interception every year. It's why I stopped the practice of routinely renewing sales tax permits to tax delin- quent and deficient businesses. C o n n e c t i c u t ' s business community has as much at stake as the rest of us in changing the wink- ing culture of cash, other off-the-books sales and diverting payment of trust taxes to prop up a failing business or cash in on unearned gains. That's not fair competition. It's theft. Then there's e-commerce. No other mar- ketplace continues to grow as fast. Yet no other sector is so federally protected from fair interstate competition. The U.S. Supreme Court punted to Congress on state taxation of remote sales. Twenty-five years later, Con- gress has done nothing. Like Amazon, more and more online mar- keters have decided to collect and remit sales tax. But despite substantial economic pres- ences in strong-market states like Connecti- cut, many others do not. The resulting tax gap is effectively paid for everyday by the rest of us — including Connecticut businesses com- peting to sell the same goods and services while absorbing the cost of tax collection and the disadvantage of cost-plus-tax pricing. Connecticut must more aggressively pur- sue sales tax compliance by every major seller, no matter where based, that has any form of substantial economic presence in Connecticut. There is another question of overall sales tax policy. Should our sales tax laws con- tinue to be honeycombed with special inter- est exclusions and exemptions? These tax expenditures are off budget and — not even including food — cost us $3.6 billion annual- ly. That's $3.6 billion paid by everyone so that some pay nothing. If ever there was a case for a broader base and lower rate, this is it. What about Connecticut business taxes? While our rates are comparatively high, the business-backed national Council on State Taxation continues to rank Connecticut among the lowest total effective tax burden states. But that does not mean we cannot do better. Led by DRS, supported by Gov. Malloy and working with the business community, we have already achieved a trifecta of cor- porate tax reforms. With conversion to a unitary, single-factor, destination-sourced approach, we have ended a tax regime that used to favor out-of-state businesses while burdening Connecticut-based businesses. Whether corporate income or pass- through income, DRS is also stepping up in audit to challenge those who tilt the play- ing field through off-shoring and transfer pricing schemes that are tax evasion by any other name. However, fewer and fewer businesses are organized as corporations. Personal taxation of pass-through business income now drives state business tax revenue. It's different taxes and different rules for businesses that differ in form only. There are also many other types of Con- necticut business taxes determined solely by the nature of the product or service provided. Add to that the irri - tant of Connecticut's so-called business entity tax, a fee that is often the first tax slap experienced by new enterprises well before turning even a first dollar of profit. As other states have done, it's time to at least consider rationalizing this mess with a single receipts-based tax that includes mean- ingful startup and reinvestment credits. In fact, there are so many ways to use smart revenue policy as an economic driver. With transportation gridlock and aged infra- structure ham-stringing growth, we need a modern toll system that generates essential reinvestment. Let's ramp-up tax credits for R&D, job creation, training for new workers, retraining for displaced workers and business reinvest- ment. We can even pay for it by getting rid of the remaining mishmash of tax credits and abatements that make no appreciable eco- nomic difference at all. Rather than pile on more loans, let's drag antiquated systems of public and private higher education into the 21 st century and then use tax policy to provide incentives for graduates to stay in Connecticut as next-gen- eration entrepreneurs and skilled workers. In exchange for real political and structural reform, we can also use tax policy — rather than bailouts, bankruptcies or yet another layer of government — to re-invent livability and economic viability in our struggling cities. Of course, economic renewal will also depend on a renewed business paradigm. For too long, America has celebrated profitability over productivity and sustainability. There's a good lesson in the past recession and the "too big to fail" melt down that followed. Under- investing and short-selling, commoditizing businesses and employees, and short-term profits at any long-term cost never grow a business or an economy. And let's be clear: Legislators debating pot and slots will not get us there either. Finally, Connecticut's economic strengths need to be the basis of any diagnostic for improved competitiveness. A long and strong run of economic performance still leaves us a great state to live and work. Connecticut may not economically be what it was, but there is no good reason why we cannot be what we want to be now and into the future. n Kevin Sullivan is the commissioner of the Department of Revenue Services. This col- umn was part of a speech Sullivan made recently at Hartford Business Journal's "CFO of the Year" awards luncheon. ▶ ▶ Let's ramp-up tax credits for R&D, job creation, training for new workers, retraining for displaced workers and business reinvestment.