Leading Through Adversity
How do you revitalize a company and reenergize its employees when you're simultaneously battling the most severe housing recession since the Great Depression and a tide of negative public opinion? That's the question I faced in August 2009 when I became Freddie Mac's sixth CEO in six years.
At that time, the company had been in federal conservatorship for nearly a year. There was no permanent CEO, no permanent chief financial officer, and no chief operating officer. Employee morale was understandably low.
Nonetheless, the company had continued to serve its vital role as a source of stable, ongoing support to the housing market. And it had taken on major new responsibilities to help families avoid foreclosure. These were considerable achievements that critics outside the company weren't acknowledging and employees weren't celebrating.
At other firms I've led through adversity, I relied on eight key leadership principles. I've put those same principles to work at Freddie Mac to help revitalize this essential company and reinvigorate our employees.
Integrity and ethical behavior are essential for business success
Some say that ethics and profits are in tension with one another. I say that ethics are an essential precondition for business success.
As a GSE in conservatorship, Freddie Mac undergoes special scrutiny every day. But any company, in any field, must understand that while an outstanding reputation takes years to build, it can be destroyed in a day.
Create an open, transparent, and direct culture
Winning the trust of your employees is absolutely essential – especially in trying times. You also need to make a real connection with them, individually if possible. That's why I've devoted so much attention at Freddie Mac to having small-group coffees and lunches with employees – holding more than 50 such events since August. And that's in addition to regular e-mails, voicemails, quarterly town halls, frequent divisional drop-by events, and a host of other ways we reach out to our employees on a regular basis.
All this requires significant CEO attention. The question is, Are the results worth it? I won't claim our work is done, but in recent internal surveys, employee sentiment was way up in nearly every important category that we measure.
Instill a sense of mission
Nothing does more to energize your employees and your company than focusing them on the higher meaning and importance of what they do. For the highly skilled, mission-driven people of Freddie Mac, the national housing and economic crisis we're working to solve is a tremendous motivator.
A leader who embraces the company mission is telling employees, "I am one of you; I value what you value; I'm here for the same reasons you are." Establishing solidarity in this way helps reassure employees, customers, and others that they can count on you in good times and bad.
There's a corollary to letting your people know you share their commitment. You also have to defend the company when the need is clear. One of the senior executive's highest duties is to stand up for the company against statements that could demoralize its people or harm its mission.
Develop a business plan that all employees can understand and articulate
We developed a good, straightforward 18-24 month plan at Freddie Mac. In the short term, we needed to complete two necessary preconditions: complying with Sarbanes-Oxley Section 404 and implementing new accounting standards. We needed to continue building credibility with decisionmakers by aggressively serving our mission. Finally, we needed to improve our infrastructure and business processes. Our goal was to create circumstances such that policymakers will make decisions that are both good for the country and good for the employees of Freddie Mac.
Our employees have embraced this plan. They remain understandably concerned about Freddie Mac's future, but they're channeling their energies into meeting our statutory mission to provide liquidity, stability, and affordability to the U.S. housing market.
Communicate the company's values, mission, and plan constantly to employees
I use every communications channel at my disposal to communicate Freddie Mac's purpose, our performance, and what we're trying to accomplish. This communications effort must also be consistent. My goal is to reach out to employees at least once or twice a week. And I never pass up an opportunity to connect what employees are doing to the larger goals of the company.
Hire good people, then delegate freely, give managers autonomy and hold them accountable
Good people are your great engine for achievement and your lasting legacy. That's why major hiring decisions matter so much. From the time I arrived at Freddie Mac, I focused intently on hiring a CFO and COO. The task consumed a lot of my time – but I knew it was commensurate with its importance.
If you give those big personnel decisions the attention they deserve, your efforts will be repaid. The corollary is, if you've hired well, you can generally trust your people to deliver until proven otherwise.
Enforce teamwork and avoid silo management
When companies lack teamwork and are split into silos, the wasted productivity and emotional energy is terrible. So one of the most valuable things a CEO can do is send a clear signal that silo thinking is unacceptable, and "what's best for the company" thinking will be rewarded.
At any company, senior management must be expected to cooperate with each other and act as a team. And this should be backed up with practical measures, such as compensation plans that reward senior executives insofar as possible based on the company meeting its overall goals, rather than individual departments meeting their individual goals.
Learn by walking around
A company that ignores its most experienced and committed people cannot possibly succeed. But one that values their contributions and ideas will win their loyalty and gain a leg up on the competition.
In addition to frequently walking around and talking with employees, I've established a CEO Council at Freddie Mac that gives me regular and direct access to respected employees who provide insights and information about the company. This is one more way I try to break out of the CEO bubble and not rely on the usual management hierarchy alone.
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Putting these eight principles into practice isn't a cure-all. But I'm encouraged with the progress we're making.
I learned early on that Freddie Mac is home to a highly skilled group of employees who came to this company because they care about our vital housing mission. Their efforts are making a real difference in preventing foreclosures, advancing the housing recovery, and helping the broader economy. That tells me these leadership principles are the right ones – and that we're on the right track.
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