Managing Toxicity in Senior Leadership: Keeping or Terminating the Employee?

Managing Toxicity in Senior Leadership: Keeping or Terminating the Employee?

In the realm of professional service firms, a toxic member in the senior leadership team can wreak havoc on organizational culture, employee morale, and overall business performance. Addressing this issue requires a delicate balance, considering both the pros and cons of keeping the employee and the pros and cons of termination. In this article, we will explore a fictional case study to illustrate the trade-offs involved in handling a toxic leader and offer insights on making the best decision for the firm.

Case Study: The Troubled VP

Imagine a boutique professional service firm, Excelius Consulting, which recently experienced a significant increase in market share under the guidance of its leadership team. However, within this triumphant team lies a dark shadow named Victor, the Vice President of Operations. Victor’s expertise is unmatched, but his management style is abrasive and demoralizing. His leadership has resulted in high turnover, a toxic work environment, and client complaints.

Pros of Keeping Victor:

    1. Specialized Expertise: Victor possesses unparalleled knowledge and skills crucial for the firm’s operational success. His departure may leave a considerable knowledge gap that could be challenging to fill.
    2. Short-term Stability: Victor’s presence maintains the status quo, ensuring continuity in ongoing projects and minimizing disruptions.
    3. Client Relationships: Over the years, Victor has forged strong client relationships, contributing significantly to the firm’s revenue. Retaining him might help sustain existing client partnerships.

Cons of Keeping Victor:

    1. Toxic Work Environment: Victor’s behavior negatively impacts team dynamics, leading to a decrease in overall productivity and employee satisfaction. This could result in long-term consequences for the firm.
    2. Talent Retention: The high turnover attributed to Victor’s leadership style can lead to the loss of other valuable team members, compounding the firm’s talent retention challenges.
    3. Reputational Risk: Continued association with a toxic leader like Victor can tarnish the firm’s reputation, potentially deterring potential clients and future employees.

Pros of Terminating Victor:

    1. Improved Work Culture: Removing Victor from the leadership team can help foster a healthier work environment, leading to higher employee morale, increased collaboration, and enhanced productivity.
    2. Talent Attraction: Demonstrating a commitment to employee well-being by addressing toxic behavior may attract top talent seeking a positive workplace culture.
    3. Client Confidence: Taking decisive action against toxic leadership demonstrates the firm’s dedication to high ethical standards, potentially boosting client confidence and trust.

Cons of Terminating Victor:

    1. Knowledge Loss: Victor’s departure may create a temporary vacuum in operational expertise, causing potential disruptions in ongoing projects.
    2. Client Relations Impact: Losing a key figure like Victor may strain existing client relationships initially, possibly leading to uncertainties about project continuity.
    3. Internal Resistance: Some team members might be apprehensive about the change and could resist the decision to terminate Victor, creating internal conflicts.

The Decision: Walking the Tightrope

After evaluating the pros and cons of keeping Victor versus terminating him, Excelius Consulting’s leadership team convened to reach a well-informed decision. While some members argued for immediate termination to prioritize employee well-being, others emphasized the need to explore alternatives to retain Victor’s expertise.

The CEO, Sarah, decided to adopt a multifaceted approach. Instead of immediate termination, Sarah chose to confront Victor about his behavior, emphasizing the necessity for transformational change in his leadership style. She encouraged him to enroll in Collective 54 to learn how to lead a professional service firm.

Over the following months, Sarah closely monitored Victor’s progress, providing constant feedback and support. Victor’s willingness to read, listen, and watch surprised everyone, and his interactions with the team gradually improved. The toxic work environment slowly transformed into a more positive and collaborative one.

While the decision to retain Victor came with risks, it paid off in the long run. Victor’s expertise, once overshadowed by his toxic behavior, became an invaluable asset as he learned to lead with empathy and emotional intelligence. Excelius Consulting not only retained its specialist but also gained a leader capable of fostering a thriving work culture.

Conclusion: Striking a Balance

Dealing with a toxic member of the senior leadership team is a challenging and nuanced endeavor. The decision to retain or terminate such an employee requires careful evaluation of the pros and cons associated with both options. The case of Victor at Excelius Consulting demonstrates that with effective role models, mentors, coaches, and peers, and a commitment to change, it is possible to transform a toxic leader into an asset for the firm. However, there are instances when termination remains the only viable solution to preserve the firm’s long-term health and success.

In the end, each situation is unique, and professional service firms must navigate these difficult decisions with a clear understanding of their specific context and the impact on their employees, clients, and overall organizational culture. By prioritizing the well-being of their workforce and remaining committed to fostering a positive work environment, boutique professional service firms can ensure sustainable growth and continued success.

Episode 140 – Lead Generation Inside the Small Service Firm: How It Is Different and What to Do About It – Member Case by Christian Banach

Small service firms need to generate leads but are constrained by limited resources. Budget and talent are in short supply. Therefore, what works in a small service firm is different than what works in a large service firm, or in a product company. Attend this session and learn what works, and what does not work, for small service firms.

TRANSCRIPT

Greg Alexander [00:00:10] Hi, everyone. This is Greg Alexander, the host of the Pro Serv Podcast, brought to you by Collective 54, the first community dedicated to the boutique professional services industry. On today’s episode, we’re going to talk about lead generation inside of a small services firm or an agency. And the reason why I want to have this conversation is because sometimes this term lead generation gets thrown around carelessly, and a lot of times the best practices that are available to people don’t apply to services companies only product companies, and they don’t really apply to small firms that are constrained by resources. You know, they sound great on paper. Then you go to implement them. You realize you need $1,000,000 budget, a team of ten, so it doesn’t work. So we’re going to dissect what is working for agencies. And we’ve got a great member with us today. His name is Christian Banach. This is what Christian does for a living and he’s got a lot to say about this topic. So. Christian, it’s good to see you. Thanks for being here. Please introduce yourself and your firm. 

Christian Banach [00:01:23] Thanks for having me, Greg. So, yeah, my name is Christian, but I am the founder of Christian Banach LLC. We are a business development and growth consulting firm. We work with primarily advertising and marketing agencies, but we work also with SAS companies, along with other professional services firm. And our job really is to help them get in the door with the types of companies that they want to do business with, and that’s oftentimes mid-market or enterprise level businesses. 

Greg Alexander [00:01:52] Okay. So very good. So I’m going to ask you a very simple question to start with, but it’s so important to get this definition correct. What is lead generation? 

Christian Banach [00:02:03] Yeah. Greg, that’s a great, great question that we do hear a lot of that thrown around in different ways to us. Lead generation is really the proactive engagement of prospects to generate a predictable pipeline of opportunities to a certain segment of a target audience. That’s what that means to us. 

Greg Alexander [00:02:22] Okay. So proactive, as important as what that means, is outbound outreach as opposed to just like receiving a referral or word of mouth or something like that. 

Christian Banach [00:02:33] Exactly. Yeah. So an inbound lead would be somebody who finds you through, say, a CEO or through word of mouth or through referrals. But when we’re talking about lead generation, it is more of a. A proactive approach in which you’re being really intentional about the types of companies and the types of people within those companies that you want to connect with. 

Greg Alexander [00:02:55] Okay, perfect. Okay. So with that as our foundation. Tell me how lead generation is different for agencies as opposed to product companies. 

Christian Banach [00:03:06] Yeah. So product companies, obviously there is a product, right? There is something tangible that somebody can hold that can feel, that can smell, it can touch. However, when you’re a professional services firm, you’re in most cases selling expertise. There is nothing to hold, nothing to touch, per se. So here you really have to demonstrate your expertise through case studies, through testimonials, through research, through various different ways where you can make a prospect, believe that whatever problem they’re looking to solve, that you have something that could help them solve for it. So it’s a little bit more challenging and much more complex than, you know, throwing a picture or an image up on a website somebody can click to buy. These are oftentimes also very much a consultative type agreements, right? So it’s very customized as well. So it’s much more complex than, say, a product. 

Greg Alexander [00:04:03] Yeah. Okay. Very good. All right. And how is lead generation different for small firms than it is for large firms? 

Christian Banach [00:04:11] Yeah, well, the biggest thing that I see here, the large firms obviously have much more brand recognition. So if you were to do some sort of lead generation or outbound call call or email and you work at IBM, the prospect is going to immediately know who you are and what you stand for versus if you’re a small professional services firm and you reach out, they have no idea who you are. So that barrier is much greater for a professional services firm that’s on the small side to break through, because I’m sure we’re all on the receiving end of emails and cold calls from various vendors. So we’ve been in our prospect shoes so we know what it’s like. And so how do you stand out? I’m sure with the work you do is great, but how do you stand out from all the other competitors that are out there? Yep. 

Greg Alexander [00:04:56] Okay, so by the time this airs, it’s going to be autumn of 2023. We’re recording here the last day of August. So in that time period. So tell me, tell me what’s working currently and why. And then as a second part of your question, tell me what’s not working currently and why? Or if you want to do those in reverse order, that’s fine too. 

Christian Banach [00:05:17] Sure. Yeah. Let me talk about what what isn’t working? You know, maybe first, I think a lot of people, when they think about lead generation, they really defer back to what, you know, kind of old school methods where you might get a list and you just sort of call it dialing for dollars, or you get an email list and you blast out an email to hundreds or thousands of prospects that used to work years ago. It doesn’t anymore. You really have to be much more strategic and thoughtful and who you reach out to, what you say to them. You have to be very personalized in your outreach to them. You can’t come across as like a robot or check your email. People will see right through it. So that has definitely changed. So there’s a lot more effort that is involved. And what’s also causing problems is technology itself. You know, is these inboxes are flooded now. There’s spam filters, there’s robo calls that are you know, your phones are blocking robo calls now. So the technology is blocking it. So it’s a lot more challenging to get through these days. On the other hand, there are certainly plenty of firms that we work with and others that are out there that are excelling. And what are they doing while they’re trying to doing the opposite of what I just said? They are taking the time to personalize their outreach communications to these different companies. They’re taking more of a quality over quantity based approach. What we’re also seeing is more creativity in what you’re reaching out with. And what I mean by that is sort of the old school way might be to contact the company and say, Hey, we’d love to get 15 minutes on your calendar or do a demo of our product and tell you how great we are and where our office is and about our company dog. And nobody has time for those things, right? They you really need to give we call give to get right you need to give value before you can expect value back. And what you want back from them is their time, right? Their time is worth something. So we’re seeing some of them are higher performing firms in the space. What they’re doing is they’re coming up with something. So maybe they have done some original research and they’re going to reach out to prospects and say, Hey, we’ve done some research into your industry. We’d love to share these insights with you on a call or I’ve seen others that are taking the approach of they might be organizing a virtual panel. And by that I mean as they pick a topic that’s really a hot topic, let’s say maybe A.I. and they’re reaching out to different senior managers, senior decision makers at their target companies and saying, Hey, we’d like to we’re organizing this panel. We’re getting eight thought leaders together to talk about this hot topic. And they’re using that as sort of a Trojan horse way to start building a relationship and contacting these people and then using that again to start building relationships. So the companies that are really. Doing well with this are thinking more long term. They’re thinking more about building relationships than they’re thinking about short term and transactional type regeneration. 

Greg Alexander [00:08:14] You know, one thing I would add to you, add to your list is community participation. So something I’ve experienced with Collective 54. There’s some of our members that are in collective that whose businesses have exploded as a result of that because they’re participating in the community. They’re not selling anything, but they’re in the community and people are getting exposed to them with their expertise and they’re proactively reaching out and saying, Hey, I noticed that you do X, Y, Z, I happen to have that problem. Can we chat? And it’s been fantastic to see the amount of business that’s been generated in the community. So and our community is only one. So the the lesson for the people that are listening is there’s all kinds of communities out there. And if you become a active participant in them and you adhere to the code of conduct, there’s there’s lots of benefits that can come from that. So just another idea. Okay. Next question. So who in a firm or an agency, a small firm should own lead generation? 

Christian Banach [00:09:10] Yeah, I think about this a little bit, depending on the size. Yes, small agencies. But if you’re under, say, ten people, you know, it can be challenging, right? Because you’re the founder, you’re wearing a lot of different hats. You probably don’t have the budget to go out there and hire somebody full time to do this. So in that case, I think you really need to get smart about how you’re prospecting, right? You’re not going to be able to do as large or volume of prospecting as maybe a larger firm would be able to do. But there are still some really tactical type things that you could do looking at things like your website, visitor ID, people that are visiting your website, people are engage with you on social media. If you have an email newsletter, who’s engaging a newsletter? So being really smart about who you reach out to and strategic and I think the owner can take that on, you know, in a smaller type of firm. That said, you know, if you want to up level and go beyond that, you know, I think at that point then usually this is on this is maybe firms of ten or more. You might then have somebody that’s a head of marketing or a head of sales or something along those lines. And at that point, they could potentially, you know, own this process as well. The challenge there is I see a lot of these firms is when you hire, say, a VP of sales, they may not want to do the prospecting. They may think that that’s maybe lower level type work for them and they want to be in the pitch in the close and get the deal sign. So sometimes it’s hard to motivate those folks to to do that type of work. But but I will say, you know, if you’re a small firm, you need to push your your team to do that. And and you might want to look beyond just those people to how do you involve maybe others within your team, you know, to be involved in this as well? You know, there are certainly you can go out and hire more of a junior business development representative. That’s certainly something to explore. Or, you know, you may want to explore outsourcing, you know, essentially what we do. But with a firm like ours, you know, you’re able to get the technology, you get the tools, you get the people, you kind of get everything, you know, all in one, which is, you know, generally for smaller firms, you know, they can’t afford all of those different elements. But by outsourcing, that is certainly a possibility for growth as well. 

Greg Alexander [00:11:26] You know, a collective even for one of our features is the process of benchmark, and that’s where we collect operational and financial metrics from our members. We’re always looking at kind of the firms that are doing really well in comparison to the average. What are they doing differently? And not to just give you a blatant plug here, but I can tell you that as it relates to lead gen, the firms that are doing better than average typically outsource it. And the reason why they outsource it is because it’s not core to who they are and what they do. And the idea of hiring these people and training them and retaining them, installing all the instrumentation and all the tech is, there’s a lot and it’s a very specialized skill. So, you know, spending money and having an expert do that for you, it would be my recommendation that to those that are listening, are you talked about obstacles to success. So let’s go there next. So I’m a I’m a small agency or a consulting firm of some kind. Maybe I’m 25 people or something along those lines. And you’re right, I realize I need to do lead gen because I want that predictable pipeline. That’s the thing that’s eluding me. What are the obstacles to success? 

Christian Banach [00:12:31] So a couple of things. So if you’re a size of 25 people, if you’ve grown primarily through more word of mouth and referrals, but we oftentimes see is that you sometimes still don’t have your value propositions and your ideal company profile really nailed down yet at times. Right. And you’ve kind of taken what have come in through the door, which is fine, which as you should. But when you’re going outbound, you really need to be very specific and you have to have a niche that you’re going after just to come out and say, Hey, we do marketing and we’d love to work with you. Is it enough? You’ve got to really zero in on specific problems that you can solve for clients. So a lot of the companies that we work with initially, that’s what we’re doing with them. To start off, we don’t just start off sending out emails or making cold calls for them. It’s really getting clear on their go to market from an outbound perspective because that is a different lens to think about it. So to me that is probably the number one challenge, is then also changing the mindset and wanting them to specialize in something. Because if you don’t, you’re not going to see success with outbound. 

Greg Alexander [00:13:39] Okay, very good. So the flip side of that question is, let’s say that I do this and it works. What’s the payoff? 

Christian Banach [00:13:47] The payoff is really scalable and predictable growth. Well, we work with our clients on and anyone that really implements a program like this is you will eventually start to know the metrics. The metrics meaning how many outreaches do I need to do to land a meeting on average? And then of those meetings I get what percentage do I convert to an opportunity? Which one of those what percentage of those opportunities converted to do business wins? When you start to know those numbers, you have that predictability. So if you’re looking to grow double in revenue, in revenue next year, you will know I need to do this many outreaches to get to that point and to get to that those number of wins that I’m going to need. If you get very busy and you can’t take on more clients, you could pull that back. So, you know, we’re it’s not uncommon to see clients of ours, you know, giving a ten X, you rely on their investment. But it does take time. You know, outbound sales cycles are longer than inbound sales cycles. That is another mindset shift that people have to take. So if your sales cycle is six months on an inbound lead, it’s going to be longer for outbound. So you still have to give it enough time in order to start to learn those metrics and then be able to dial it up or ballot down as needed. 

Greg Alexander [00:15:00] You know, one thing I would add to that is what we’re seeing is a decline in referral generation. And the reason for that is because the world has gone to remote work. Word of mouth and referral generation is impacted greatly by geographic density and face to face interaction. You know, so back in the day you’d go to a networking event and, you know, you’d meet ten, 15 people and there was all kinds of introductions and referrals happen kind of naturally. That’s the way humans spread. B2B brands, it’s face to face. I share something with you. Oh, that’s interesting. Tell me more kind of thing. Well, we’re not doing that anymore. We’re not doing that nearly enough. So the referral rate has gone down, and that’s been the bread and butter for most of the professional services firms. So if if you are experiencing a decline in referrals, I hope you’re not. But if you are two things, try to reengage in in-person networking as much as possible. This fewer opportunities, but you can do that. And then add, you know, outbound lead generation to your mix as part of your marketing strategy because something’s got to replace those lost referrals. And what we talked to Christian about today as one possible replacement for that decline in referrals. All right, Chris, and we’re out of our time here today, but it’s great to have you in the community. Your expertise is very relevant because you focus on lead gen for small agencies, which is what we’re comprised of. So it was wonderful to hear what you had to say today. I very much look forward to our Q&A session, which we’ll have in a few weeks. So on behalf of the members, thanks for being here. 

Christian Banach [00:16:38] Thank you, Greg. It’s been a pleasure. 

Greg Alexander [00:16:40] All right. We got three calls to action. So if you’re a member, look for the meeting. Invite when you’ll get a chance to attend question session sessions and you can ask your questions directly. Even if you’re not a member and you want to become one, go to collective 54 dot com and apply and the membership committee will consider your application and get in contact with you. And if you just want to learn more, go to Amazon and find my book. It’s titled The Boutique How to Start Scale and Sell a Professional services Firm. When we talk about subjects like this and many more, okay, until next time, I wish you the best of luck as you try to grow, scale and exit your front.