So, for last week, we learned three keys to courageous leadership.
The first one was to actively invite feedback by using the one thing feedback, phrased as
what one thing can I do, so that you're focusing on one thing.
You're not focusing on everything, but one thing.
Number two was to build mental strength through powerful questions, and then number three
was to challenge your core assumptions.
So the powers question attached to that is, if someone new was hired to do my job, what
is the first thing that they would change?
And that is such a helpful question.
I found myself asking myself that this last week.
If someone new was hired to do my job, what is the first thing that they would change?
But today, we're going to focus on the two hat solutions.
This is not to be confused with the six hats brainstorming.
This is the two hat solution, how to be professional at work with complex relationships.
So this comes about because most small companies have complicated relationships.
You know, they have spouses that work together, they might have children that work together,
or even best friends working together, all in the same business.
And so this session, this technique is really focused on dealing with the complexity by
creating simple ways to protect these relationships and make space for them to grow.
And the power question that's going to be with today's teaching is, would I ask this
of another person with the same hat?
And that'll make sense a little bit more as we get into it a little bit more.
For today, the pro tip is that this training will help you protect your relationships both
professionally and personally.
I myself have used this technique with my children and with my friends.
And the next pro tip is, it's never too late to implement this solution.
Once you hear it, you can immediately begin to implement it, and you can also revise it
as you go.
All right, is everyone ready to dive in?
As we're going through the material, please add questions, comments to the chat.
I'll keep an eye on that.
And it looks like we're all ready to go.
Dion, I'm going to hand it on over to you.
Yeah, thank you.
You know, one of the most complicated things I noticed, there was a time in my life when
I did a lot of CEO consulting, and I would come in and help companies jump the curve
to the next level.
And as I went in there, there was almost always some sort of complicated relationship, like
the CFO was the brother-in-law, or the son was, or the daughter was involved, or the
spouse was involved.
And these by themselves are not bad things.
But for the most part, it seemed to me that there didn't seem to be a clear strategy on
how to create space for them.
So we end up with this perspective or the perception of nepotism.
And you know, one of the arguments against nepotism is that it creates all these emotional
ties between people who are related, which may negatively affect decision making, performance,
you know, professional growth.
And you know, even, you know, Inc. magazine did a survey, and nearly 48% of people believed
that if you really wanted to succeed, you need to be the boss's child, the son or the
daughter of the boss, that's how you got ahead.
That was the secret.
We're getting at, you know, only one quarter agreed that success comes from just pure hard
work.
And this is one of the core elements in a culture that we want to create in our business,
we don't want to create a culture in which we have a situation where there is a perceived
barrier or a perceived ceiling, I can't progress, you know, in my career, because I'm not related,
I'm not part of the family.
And so that the concept of that can get very complex, even in a situation where there are
a lot of people from the same family, working, perhaps there's, you know, the husband, the
wife and one of the children, or some related person.
And this makes it very complex.
So I want to talk about a solution of how we can go about it.
There's really two, there's two approaches that I've seen, and I'm not sure that they
necessarily get the best benefit.
So the two solutions I've seen, number one is, you know, to avoid the appearance of nepotism,
they just forbid any relatives from working together, right?
So I've seen the, okay, we're not going to do any of this.
You know, I'm thinking of a very, you know, large nonprofit organization here in our city.
And you know, they're a big, they're a big group, several 1000 people, they will not
allow any
contractors, not even employees, they won't even allow contractors to work and do any work for
for the company if they have a relation in the company. So if somebody's working there and says,
oh, you know, my husband runs a contracting business, he could fix that. They won't do that.
So they literally have this absolutely no connection policy. I've seen that. The other
option is you just run everything and just deal with the muddle through the mess, so to speak.
And most small businesses tend to handle that, what I call the one hat problem. So the one
hat problem creates a lot of complexity. And I know we've told a story before, but it fits
very well here is the story that Henry Plout tells about a man's walking through his business,
walking through the factory, and he noticed his son berating one of the older managers, just
really awful, trashing him and speaking to him in the most awful way.
And so he walks up to his son and he says, meet me in my office. So they get to the office.
The father sits down and he said, you know, in this relationship, I wear two hats. On the one hand,
you know, I'm your dad. And on the other hand, I'm the CEO of this company. So let me put on my CEO
hat and tell you, you're fired. I will not have this in my culture. I've talked to you
about this many times. We've sent you on courses to improve your ability to work with people.
And I won't have that in my culture. As a CEO, I will not stand for that. So you're fired. Just a
second. Let me put my dad hat on. Son, I heard you lost your job. Are you okay? So in this
simple story, there is a wonderful space created for each hat. The compassionate dad who's standing
with the son who just lost his job, as though, you know, he was not related or in any way worked
with him. And the other one is that he worked as the CEO and acted as though they were not related.
So I want to break that down, why this is such a powerful story, because it lays out and we're
going to develop out how this could work in your business. How many of you can maybe throw in the
chat, how many of you are working with a spouse, you know, parents, son, daughter, some family
member, or even a best friend? Anybody? You got that going on, right? Now, I think this can work.
But I want to talk about how do we protect these relationships? And how do we make them? Because,
you know, I watch my parents. Growing up, I grew up in an entrepreneurial home, and my parents
worked together. And man, over the dinner table, they just talked about business all the time. Hey,
did you send the invoice to customer so and so? And all that was always going on. And it seemed like
our home was an extension of the business sometimes. And, you know, it's very tough,
especially if you're working at home, and you're working together, and you're homeschooling.
That's like a whole set of hats going on right there, right? Anybody know what I'm talking about?
So in that process, we came up with a methodology. And the methodology is called the two hat solution,
much like our story. Let me take a second and just talk through, you know, when we have the one hat,
I'm me, you're you, it creates a lot of complexity, there's a lot of blurring of the lines
relationally, where do the boundaries end? Can I tell you what to do? If you're my spouse,
you know, I had a woman executive say to me, look, I'm the CEO, my husband works for me,
you know, I feel odd telling him what to do, you know, and all the husband saying, you know,
I don't talk to my wife that way. Or I don't want to like give her instructions. And she's my wife.
And so, you know, do we lower our expectations? Because we related? Do we change the criteria
that we allow for this person because of the special relationship? How do you know what
message does that send to the rest of the team? Oh, well, they related. So that's just what it is.
And I think most people kind of resign themselves to what, you know, it is what it is. But there's
a far better way to do this. And to get past this kind of awkward conflict of interest,
unsure of, you know, what I really want to do and help, I can't develop the other person,
because they related, it's complex. So, you know, we've had several situations over the years.
And so I thought I'd just give you five scenarios of how this might work. And then as I bring out
Nori, I wanna talk and I wanna share with you
three key ideas on how to implement this two hat,
much like the father and the son example
in the story we told earlier.
So the first one is this,
let's take a married couple.
So in one of the companies that we ran,
we had a married couple and for their identity,
I'll just call them Sally and John.
And Sally and John worked together.
Now, Sally was a director of the company
and John was one of the managers.
So he wasn't at her level.
So, you know, but they didn't work in the same department.
And, but, you know, they had an affection,
they were sweet marriage.
So at work, you know, it was a little bit of PDA,
you know, public display of affection
and little, you know, not, it wasn't weird,
but so I asked, I sat down with them and I said,
hey, this can't be like this.
And they said, what do you mean?
I said, you have to have separate hats.
At work, you have to be Sally,
you have to be the director.
John, you have to be a manager in your department
and these two cannot be connected.
And so you have to act at work like you're not married.
And when you're at home,
you act like you don't work at the same place.
So when you get home, you put on your spouse hat
and then you can say, let me tell you about my dumb boss.
And yeah, even if you're referring to the other person.
So the issue is that what this does
is it protects the relationship because now we get home
and if we did not work at the same place,
we would share with them, how did your day go?
You know, that situation you were dealing with,
how's that working out?
Because what otherwise happens is Sally and John get home
and they have our whole discussion
and then they get back to work
and now we're all out of the loop
because we don't know what Sally and John discussed at home.
This makes for a very complex situation.
But when they're at work,
so John says to me, yeah, you know, but you know,
I'd like to just give her a little hug.
And I said, so John, here's the rule.
Would you do this for any other director in the company?
Would you walk around giving little hugs and kisses
to all the other directors?
I certainly hope not.
You know, and he was like, oh no, I wouldn't do that.
Then you cannot do that here.
You're mixing two hats.
You're making one hat out of the two.
So by having two separate hats,
we also found that when people are, you know,
connected to, for instance, you go to a club
or maybe you belong to the same church
and you hire somebody, a friend from your church
or from your, you know, your club.
And suddenly you've got this weird relationship.
You know, you knew each other one way with one hat.
You were, you know, members of the club
or members of the church.
And now you work together.
Now there's this weird awkwardness thing trying to,
you're trying to figure it out.
Well, the reason is you have to have
a distinct hat for that.
At work, it's as though you don't go to the same club
or the same church.
At church, it's as though you don't work
at the same company.
This idea we call a firewall.
We put up professional boundary, a firewall
that keeps the two hats separate.
You know, I was thinking of Teresa Cook
and I know she won't mind me sharing the story,
but, you know, with Teresa, there was a point in time
that Teresa actually ended up with three hats,
you know, because her and Graham worked together,
you know, brilliant perspective.
So on the one hand, she was a wife to Graham.
On the other hand, that was one hat.
The other hat she wore was as an owner of the company,
co-owner of the company.
And a third hat she wore was as a manager in the company.
So what was really odd about that relationship at the time
is I'd just come in as the president of the company.
So it depended in my relationship with Teresa,
depended on which hat we were wearing.
So if she was wearing her owner hat,
I would say things to Teresa
I would never say to another employee,
hey, I need you to know this is the cash flow
or this is the situation,
or, you know, this is a new thing we've signed in the,
you know, with whatever.
I would tell her owner things with her owner hat on.
And we'd literally say, okay, hey, Teresa,
I need you to put your owner hat on now.
She put her owner hat on and then we talk owner stuff.
Then I take it off and then I say,
I need you to put your manager hat on
because at that time, you know,
she was still does reports to Jenny, reported to me.
So at that point now, you know,
first I was reporting to her as an owner.
Now she's reporting to me as the president
and it kept it very clean
because when I was speaking to her about her manager hat,
I was talking to her about developing her skills,
her ability, helping develop her as a manager.
And then of course, when her and Graham were talking,
they had to figure out which hat they were using.
Are we doing our own hat and talking about this?
Is this my wife hat or is this?
And by simply creating those things,
what I noticed when people do this
is it suddenly creates a whole lot more space
for these different roles to develop.
So now you have your spouse hat and that's protected.
So when you're at home,
you act like you don't work together
and it makes space for your marriage,
makes space for your home life.
Otherwise, that's all you ever talk about.
Otherwise it's business 24 seven, right?
So, and there are things you wanna talk about,
your experience at work,
you wanna share with your spouse, not your coworker, right?
You wouldn't go,
the things you wouldn't share with your coworker,
but that you'd wanna share with your spouse.
So this idea, I've worked with my children before,
I've worked, you know,
and each time I've had to be very clear,
this is my dad hat, this is my president hat
or whatever hat I'm wearing,
so that it's very clear what the roles will be.
Now to make this work,
let's talk about three key ideas.
Idea number one, we call the firewall.
The firewall is making sure there's a clear break
between the one hat and the other.
So in other words,
we're putting up this professional boundary
that allows each relationship to develop more fully
as though the other hat doesn't exist.
This is really important,
which leads us to the second principle,
which we call the exclusion principle.
The exclusion principle is this,
when wearing one hat,
I pretend the other hat doesn't exist at all.
That's part of making the firewall practical.
So when I'm at work, I'm a boss,
and this person that I'm working with
is not my son or my daughter,
but when we're at home, in a home context,
then we don't work together.
So this really helps, you know,
and I'll talk about some best practices
to make this even more practical,
but by pretending the other element doesn't work,
by firewalling and keeping them separate,
what we're doing
is we're not only protecting the relationship,
we're creating an environment
in which both roles can much more fully develop.
Now we can have a fuller relationship as husband and wife,
because we're acting as though
we don't work in the same place.
And, I mean, it can be quite funny,
as you can well imagine,
there are many great stories we could bring in,
like the wife who reports to her husband and says,
look, can I just put on my spouse hat?
I work for a horrible boss, referring to her husband.
You know, so it can be funny,
but I think what it does is it makes it,
with that hat on, how would I respond
if that person did not work with me?
The third idea is called the leveling principle.
So we had the firewall, the exclusion principle,
and now the leveling principle.
Now what the leveling principle is meant to do
is it's meant to level the behavior
and treatment of the other hat.
And this is how it works.
If I have my best friend working for me
and something happens and I let it slip or let it slide,
because, you know, it's my best friend
and, you know, I know he's got a good heart
and I kind of cover it for him and whatever.
And, you know, several years ago, a decade or two ago,
I actually had this very situation happen
and I let things slip because it was my friend.
And, you know, we've known each other forever.
And so here was the problem with that is,
would I let another person who holds this position do that?
Yes or no?
If the answer is no,
then I need to use the leveling principle.
So when I sit down with my friend,
I'm not sitting down with my friend.
I take off my friend hat and I put on my CEO hat
or my boss hat and I say, this is me with my boss hat on.
Your job, this position that you hold,
this vice president role you hold has these requirements.
You did not meet them.
And I speak with them,
not just as though we're not friends,
I speak with them in a way that I would hold anyone else
in that position to the same standard.
And there is the leveling effect.
We level up.
with, hey, I would hold this, or the other positive way around if I would, I want to give this person a bonus, but now I don't want to give them a bonus because they might, you know, they're related to me or whatever.
But would have I given that position this bonus and if the answer is yes, then give the bonus to that position that happens to be, you know, your child or your spouse or your best friend.
So it goes both ways. Sometimes we're so worried about creating the wrong perception that people actually suffer and can't move up because they are the, they are related to you, or they move up artificially because they're related to you.
And you know, if the team members who are not related are watching very carefully to see what kind of leader, you're going to be.
It's interesting when they see you treat them the same way. And if they ask you, you can always say, I would have given this bonus to anybody who held this position, who did this amazing job.
And I'm not going to withhold the bonus just because they're related or we're special friends or there's a special relationship.
Any questions about that.
The exclusion principle and leveling. So what this does is it levels up and I can ask myself that question.
Would I do or say what I'm about to do or say if there was no special relationship at all?
And if the answer is yes, then go ahead. If the answer is no, then don't.
Let me share quickly five best practices that I have found really make this work.
So the first one I've already shared with you, number one, would I ask another person this question if they're wearing the same hat?
And if the answer is yes, I would go ahead with it. Number two, am I raising or lowering my expectations because this person has a special relationship with me?
Maybe you're tough on your kids and so you have an overly high expectation of them, but you would have never held another person to that standard if they worked for you.
Or you're letting things slip because they're related to you or because there's the special relationship.
So standards, am I holding the standards? So that's that's the second question.
The third. Is I think is a general rule, wherever possible, do not let family members report to one another if they're related by blood or marriage.
I think that's just wisdom if it's possible. I think putting as you know, putting somebody between you and the person you're related to is a really good idea.
So we've had situations where we've kind of changed the chart a little bit of who reports to who just so that a spouse wouldn't report to a spouse.
I think that just helps make it easier for them if that's possible. And then number four, compensation, make compensation based on actual market value, not on special relationships.
We don't say, well, you know, so let's say in Graham and Teresa's case, we wouldn't say, well, she's an owner. Let's just pay her extra.
No, we ask this manager position she holds. What is that pay? That's what we pay her. If the company declares a profit, then she gets her portion as an owner.
She gets paid one way as a manager, another way as an owner. Does that make sense? Keeping that simple and clean really helps protect the relationships.
So the fifth best practice is related parties cannot be involved in promoting, setting salaries or doing reviews.
It's much tougher. I mean, I'm not ever going to sit down and do a review on, you know, my spouse or my wife or one of my kids.
It's that that relationship is too complex and sometimes it's not as easy to switch hats as you might think.
So just be realistic that the hat switching has some boundaries to it. And so try not to stress the multiple hats thing.
So we've created a simple worksheet. And what I've in the worksheet, what we've done is we've laid it out in such a way.
I see it's already dropped there for you. If you look at the worksheet here, the exercise is, do you have a situation with a relative or close friend that is creating the one hat problem?
And if so, you know, maybe you can list what their roles are. On the one hand, you know, I'm a you know, I'm the mother.
On the other hand, I'm I'm also the CEO, as an example. So if you're the woman leading your organization and one of your children work for you,
but the mother and CEO role.
So giving those roles direct
and describing what those roles are.
And then how would you implement the two-head solution
is breaking it up so that you can use the leveling principle
and you can also break it up with this clear firewall idea.
So taking the time and then taking a minute to explain that
to the person involved usually produces a lot of space
and a lot of relief because you get things out of the way
that's grinding at your special relationship.
What would be an awful outcome
is if we didn't have the two-head solution
or in some of you have three, fine.
But if you didn't have the two-head solution
and you put these special relationships at risk
for the sake of the business, it's simply not worth it.
It's not worth it.
I cannot think of a single case
where it's worth stretching a special relationship
in that way.
And over the years I've learned to do this.
I started a business once with a very close friend
and then as the business grew
and it finally grew to 80 people
and he just stayed at the low end of the scale
even though he was a particularly large owner of the company
cause he helped me start it.
He owned shares in the business
but he's in the org chart,
he just got further and further away from me.
In the beginning it was just the two of us, it was all fun.
And then as I hired more and more people,
there were at one stage,
it was literally three levels between him and me.
And at work, I was the CEO
and he was the manager of what he did.
And after hours we were best friends
and we didn't work at the same place.
And that opened up our friendship to be...
And that's why he could tell me
he has a lousy CEO as a boss.
Okay, any questions around that?
Any practicalities?
So I addressed this issue
because I've seen this so many times.
So I'm gonna hand it back to you, Jenny
and then let's take a moment and talk through it.
If you have none of this complexity,
you're in a good place
but sometimes the complexity exists anyway.
So let's find a very creative way to deal with it.
Yes, thank you, Dion.
We do have some folks that do work with family members.
Nancy says she works with her dad or step-mom and her son.
So you can imagine the complexity of that situation.
Can you speak to for just a moment,
like as you're going along,
will there need to be times where you revisit
and you find that you've slipped into the one hat again
and you have to go
and you have to exercise the two hats again?
Absolutely, it's interesting that you put this in place
but if you don't keep it up
and that's why we literally say to the other person,
let me put this hat on.
They know where you're coming from.
They know the position you're taking.
Whereas on the other side, if you just drop that habit
then it can slip back to the one hat mode.
Yeah.
So I see there's several people,
I see Bev, daughter-in-law, friend, member, awesome.
You'll have a lot of fun having this discussion.
And it's not just for you, it's for them too.
It puts them in a more powerful position.
It levels, it's why we call it the leveling principle.
It levels it out, levels the playing field
so that they get a fair shot.
It's a good way of saying it.
Yeah, yeah, it's a two-way street.
Oh, Bev has a question.
This is so timely.
My daughter-in-law lives at,
I'll give you kind of the full scenario
because it hit me in the face yesterday.
My daughter-in-law lives in a different state.
I'm in California
and she's been working for me as a contractor.
Which is wonderful and it's been great.
And I have a couple of other employees too,
one friend and whatnot.
I got a letter yesterday from the Franchise Tax Board
informing me that I was gonna have to do
backup withholding for her,
having no idea that I think she has to file taxes
in the state of California,
even though she lives in Arizona.
And here I am, and this is not a conversation
I wanna have with my daughter-in-law yet,
or my son for that matter,
and talk about dual relationships
because they're not gonna be happy to hear
that she owes taxes to the state of California.
So my husband and I talked about it, it's like, maybe I
shouldn't hire, maybe I should just have her help me and we
could gift her. Yeah, I mean, all kinds of things went on in
my head. So this is so so helpful that I'm going to have
to say to her, I'm coming to talk to you as you as the owner
of the business. And now I'm going to be empathetic with you
as your mother in law and your mom to say, I am so sorry, we're
in this you're in this situation. There is no way I
ever I don't want to pay taxes in California, let alone you
have to pay taxes in California. So yeah, I'm, I
haven't had the conversation yet. We're still praying about
how to approach us. So thank you. Thank you. Thank you.
You're most welcome. And so the short answer is, mom never has
to have that conversation with her daughter in law. But the
president of the company has an obligation to have that
conversation with the contractor. Yes. So in that
clear thing, so started off and say, you know, what I've been
thinking about is that I actually wear two hats, explain
the hats, and then put the one hat on, and then put the other
hat on. So it had we known that had I realized that even at the
beginning, we could have had that Congress that
understanding law, you know, eight months ago. And she might
have made a different decision. I don't know. So thank you.
The contractor can that in that way, the contractor can resign
or even be fired. And moms can still love her daughter in law.
Yes. And that's what it does. It protects the relationship.