From the outset, I struggled with the notion of Encore funding something like this. Who would believe we were trying to better understand our consumers for reasons other than making more money? Given our previous experience with nonprofits, would any important groups be willing to openly partner with us? Was such a public benefit initiative the right kind of investment for a for-profit company to make?
I decided if we were serious about understanding our consumers and committed to being a constructive voice in the discussion about the collection industry, it was an imperative. We discussed the idea with our board and they were supportive of us moving forward. The benefits of bringing together a broad coalition of partners to develop data and analyses that could shift the dialogue toward facts instead of emotions and anecdotes far outweighed the monetary cost and the potential of being second-guessed about our motives. We funded the Consumer Credit Research Institute and announced it publicly in December 2011. Our partners included some of the leading universities in the country, nonprofit groups, and the Urban Institute.
CHAPTER 10
WHY IT ALL MATTERS
Working on Your Ego Is the Highest Act of Leadership
BRANDON
From 2009 to 2011, our cash flows, revenues, and earnings increased at a compounded rate of 25 percent. Our analysts and investors expected that to continue into the future, of course. Due to the slowdown in lending after the financial crisis of 2008–2009, however, banks now had 50 percent less distressed debt. This created a dearth of new portfolio opportunities, leading to our industry’s second dramatic price increase in the previous seven years. Fortunately, India was saving us tens of millions of dollars a year in operating expenses, which gave us much greater purchasing flexibility. Even so, the embedded growth expectations seemed barely feasible.
In February 2012, we assembled our global leadership team for a two-day strategic planning retreat. We met shortly after the launching of our new call center in Costa Rica, designed to service those customers whose preferred language was Spanish. Our first order of business was to talk about the implications of the Consumer Financial Protection Bureau’s decision to directly oversee our industry. The bureau’s charter was to protect American consumers who were in the market for financial products and services. This meant everything from loan origination to collections. The bureau had published a 950-page compliance and examination manual in October 2011 and could show up on our doorstep any time after January 1, 2013. Encore had never been under the direct oversight of a regulatory body and getting ready for our first audit would be a monumental undertaking.
Besides preparing for the bureau’s audit and expanding our Costa Rica site, three potential strategic priorities competed for our attention: acquire a new company, purchase a sizable portfolio, and divest ourselves of a struggling acquisition. All were intriguing, and each presented its own set of challenges.
Our biggest opportunity—and my team’s greatest concern—was the acquisition of a company outside of our core competence. Our track record on acquisitions was zero for one, so I wanted everybody’s thoughts on whether this one could be different. We discussed the takeaways from our 2005 acquisition, including how I failed to outline clear expectations and hold the management team accountable. We concluded that the current opportunity had significantly more promise. There was a strong cultural fit with the leadership team, their business would leverage our core capabilities, and it was large enough to meaningfully impact Encore’s bottom line. Everybody was excited and hopeful we could complete the negotiation.
This wasn’t enough to hit our growth target, however. In addition, Amy was proposing to purchase the legacy portfolio of one of our largest competitors, who had stopped acquiring new portfolios in 2011. This $150 million transaction would be the largest in Encore’s history. Besides the large price tag, we would need to stage the introduction of the accounts into our system to avoid overwhelming our employees and undercutting the performance of other portfolios. Although it would be the most operationally complex deal we ever completed, there was little debate. We had previously completed several transactions with failing competitors and had learned how to integrate them.
Our last potential initiative was a long time coming. Our 2005 acquisition had barely been profitable for us and hadn’t added a meaningful client in two years. It was time to move on—but how could we do so without negatively impacting the workforce?
Reflecting during a break, I had a feeling of déjà vu. It was 2005 all over again: In a very short time period, we would be attempting to simultaneously execute five complicated strategic initiatives. The results last time hadn’t been pretty, and I didn’t want to repeat the same mistake. I needed to limit our focus.
When we resumed, I told the leadership team, “I’m concerned that we’re over-extending ourselves. Besides scaling up our site in Costa Rica and getting ready for the CFPB, we need to choose only one or two other initiatives.”
“I’m confused,” Paul asked. “Why would we limit ourselves?”
“Do you remember the last time we tried to take on too many things at once?” I asked.
“Only too well. But we’re a tighter, deeper, and stronger team now. People think enterprise wide. We shift resources without drama when top priorities change. We solve challenges together instead of finger-pointing. Look at how we managed through the last two years. That should make all the difference.”
I went around the room and, to my surprise, even the most conservative members of the management team agreed we could pursue all of these strategies while maintaining strong performance in our core business. I thought back to the Investment Committee meetings where I had so often pushed my team to be more aggressive. Now, I wasn’t convincing them; they were convincing me! Despite the ups and downs of the past few years, this amazing group of people had maintained their resolve and positioned Encore to leap forward in the next few years. I was in awe of what we had become.
The element of the strategy I was directly responsible for was finding a suitable outcome for our legacy 2005 acquisition and its 150 employees. I was steadfast in my commitment to not cause people to unnecessarily lose their jobs. Just because I couldn’t make the company work didn’t mean it couldn’t be successful. It was a long shot, but I believed it could be a good strategic fit for one particular company in our industry. I reached out to that company’s CEO, and he did his due diligence. In the end, we paid his company $4.3 million to complete the sale. While unorthodox, the amount was identical to the cost we had projected to shut it down. It allowed the vast majority of our employees to retain their jobs.
The other transactions were proceeding forward, and we seemed likely to close all three deals around the same time, depending on the financing. Within a month, Paul and his team had raised the $275 million we needed, and the burden shifted to Greg and his Legal team. They worked tirelessly to simultaneously create new financing agreements along with three purchase and sale documents. Before leaving each day, I walked around the thirteenth floor of our headquarters in San Diego to check on morale. All the work we had done to build the team was being put to the test. Despite fatigue and eighteen-hour days, attitudes were upbeat.
Finance and Legal teams rarely get the credit they deserve, and I was never more appreciative of their efforts. On May 9, 2012, we announced the completion of all three transactions—as well as the result that collections, revenue, and earnings had increased by 20 percent in the first quarter! Everything had come together, just as my team had promised.
At our annual shareholder meeting in New York in June, I asked Manu to have lunch. I hadn’t seen him in months, but when we sat down at the table, he reached into his briefcase and handed me an envelope. My heart dropped, fearing a resignation note. We were on such a roll.
I didn’t want to open it, but when I looked up at the big grin on his face, I knew it must be something else. I would never have guessed in a thousand tries. A letter addressed to Manu from the Great Places to W
ork Institute had informed him that Encore India had been selected as thirty-seventh on the list of the “Best Companies to Work for in India”—two places above Johnson and Johnson and seven above Microsoft India. I didn’t even know they had applied!
I was awestruck at the magnitude of this award. A start-up debt collection firm, struggling to survive as recently as 2007, was now one of the elite companies in all of India. A leadership team that was relentless about its own personal and team development had partnered with a workforce that cared about collective, not individual success. They had encouraged our U.S. team to challenge conventional wisdom and worked tirelessly to help people on the other side of the world get back on track financially. They didn’t see themselves as a low-cost call center for an American company. They had proudly created an Indian company with its own brand and identity, and had sought to hire the best and brightest. They just happened to be in debt collections.
Two years later, they would rise to fourteenth on the list.
For the remainder of 2012, we focused on executing our plan and hitting our financial milestones. All five of our strategic initiatives were going as planned and our results increased each quarter. Our stock price increased 50 percent during the year, ending at $30 per share.
On the home front, Dana was in the second year of her Master’s in Nonprofit Leadership program, Trevor was beginning high school, and Aidan and Leah were thriving in their Montessori school. Adding that to the successes at Encore, I felt truly blessed—but also somewhat guilty. Why were we so lucky? I began wondering if I had the right balance between work, family, and community.
This uneasy feeling was reinforced by the exposure Dana’s program was giving me to leaders of nonprofit organizations in San Diego. These were immensely passionate individuals dedicating their lives to helping those less fortunate. I had always focused on work and spent little time giving back to the community. I wrote plenty of checks, but rarely gave any time. I was glad Dana was doing her part to represent our family, but still …
For the first time in my fifteen years, I thought about leaving Encore. Not in reaction to a fear of failure, like with Capital One, but from a place of curiosity about what could be next. I felt I would be leaving Encore in a stable place with a robust culture.
Dana and I talked at length, and she supported whatever decision I made. I spent time with friends and mentors to get their perspective and guidance. There were good reasons to make a change, but even stronger forces not to: stature, loyalty, and uncertainty. For almost a decade, much of my identity was tied to being the president and CEO of Encore. It came with a high level of access to money, people, and information. Most of my friends in San Diego held similar positions. Would they still accept me if I left Encore? What would I offer at social gatherings? I loved the people at Encore—would I be abandoning them? Were our relationships based solely on work? And what would I do if I left? I hadn’t gone two weeks without working since college. Could I succeed on my own?
I was scheduled to be a guest speaker at an upcoming LaL seminar. It was a short session in which participants take stock of their personal growth to date and work on any core beliefs holding them back. I was just supposed to share Encore’s story of change, but I decided to redo the entire seminar to focus on these questions about leaving. I wanted to really look at my fears and find a way beyond them. Inertia is powerful. Even if I left Encore, I was afraid I’d take the comfortable route: get on a few boards, fall into whatever opportunities came my way. What did I really want to do? If I just ended up taking a CEO job elsewhere, why leave Encore?
Through the exercises and authentic conversations with other participants, I saw that all my questions were symptoms of unconscious fears and beliefs I had about my worth: “No matter how hard I work or what I do, I’ll never be good enough.” And “If I don’t have a title, I don’t matter.” Stated out loud, they seemed silly—but I sensed these beliefs were holding me back from clarifying what I truly wanted.
After a lot of soul-searching, I decided I wanted to find a new path, one defined by conscious choices instead of riding along with the current. I regretted never coaching one of Trevor’s sports teams, and I wanted a different outcome for Aidan and Leah. We had just four more years with Trevor before college and I wanted to make the most of them. I met with George Lund, who asked me to keep an open mind about staying. Meanwhile, the board evaluated options for finding a new CEO. I pushed forward with our initiatives.
In early April 2013, the board identified my successor and we announced my departure. I would stay on through a ninety-day transition period.
After the announcement, I was a little withdrawn, and I started moving on in my mind. Shayne must have sensed it when he was in town a few weeks later, because he started asking me what I felt.
“Not much” was my immediate answer.
“I think you’re numbing, Brandon,” he said to me directly. “In some ways, this has been your challenge from the beginning: You disconnect from others and how you’re feeling.
“There are a lot of people who are grateful for their time with you,” he continued. “They’re going to be sad you’re leaving. If you don’t stay emotionally present till the end, you’re not going to create the space for them to mourn this transition.”
“Isn’t that making it about me?” I asked. “I don’t want to make a big deal of my departure.”
“I’m talking about being real and authentic. You need that, and they need that.”
Instead of rushing through to the end, I cherished each moment. I had meaningful discussions with one or two employees almost every day. Sometimes they just wanted to be reassured that nothing was wrong. Other times they wanted to share their favorite story or interaction.
A few weeks later, I toured our operating sites one last time to say goodbye and introduce the new CEO. An account manager pulled me aside in Phoenix.
“I’ll always remember you as a simple person who left a profound impact on people,” she said. “You always made me feel important. It was a true privilege to work with you.”
I was about to brush it off, and then I stopped myself. As her words brought tears to my eyes, I let them fall. In fact, I let myself experience strong emotions many more times in the coming weeks as people shared their gratitude and memories with me. I hugged a bunch of people who meant the world to me.
At each site, I was given a book full of notes from employees. Almost nobody said what a visionary leader I was or how many smart decisions I made. Turns out people couldn’t care less about my desired images of appearing smart and capable. Instead, they thanked me for little things like remembering their kids’ names or walking around with my head up instead of looking down at my phone.
Mostly, they thanked me for treating them like human beings and for putting the right decision ahead of being right, and our collective goals ahead of looking good. People seemed to deeply trust that I would do what was best for the whole. Even more, that I encouraged them to act that way with each other and with our consumers. The note that inspired me the most came from Greg Call.
“I could write about your rare combination of sharp intellect and the ability to connect with people. But what impressed me the most over the years are the little things: making sure that everyone feels included, respected, and attended to. Thanks for the example you set.”
Their words struck a chord in me. I competed for so long to be the smartest person in the room, to be the one in the spotlight. I thought that was how you led people—how you got recognition and success. If not for the work I did to challenge the self-worth drivers I didn’t even know I had, I would probably still be that way.
I thought back to that day in 2007 when we had to terminate 10 percent of our workforce. I had felt nauseated and sworn I would never again let my ego prevent me from doing what was best for Encore. Looking back, I hadn’t been perfect—but I had been committed.
I had listened, looked within, and developed a new way to lead. I l
earned to value transparency, empathy, and vulnerability as much as business intellect. Today, I’m able to be present with my colleagues, family, and friends; see different possibilities; and create a collective agenda instead of one dominated by my opinions. I believe Encore’s runaway success was directly tied to this shift in management philosophy and culture. I just wish I had learned this lesson way back when I started leading people!
SHAYNE
I was saying goodbye to Jessica, Brandon’s executive assistant, after a day of consulting with him in 2012, when she pulled me aside.
“I wanted to thank you,” she said. “I’ve never worked in a place like Encore. I felt it from day one, and it’s only grown.”
“What do you mean?” I asked.
“Life is simple here. Don’t get me wrong, we work really hard—but all of my other jobs prior to this were … toxic. Gossiping, groups and people vying against each other, personal agendas. You never really knew whom you could trust. It was exhausting. I dreaded coming to the office. But here, there’s genuine authenticity. I see it in the executive team, their direct reports, and it rubs off on all of us.”
She touched her heart, seeming to refer to the cadre of executive assistants who supported the leadership team. “I really didn’t think I wanted to come work for a debt collection company, but I love it here.”
The emotion of her words stayed with me as I flew home, and I later shared it with the rest of the LaL team. As much as I get excited by helping organizations collaborate more effectively to achieve daunting challenges, moments like Jessica’s words of gratitude reconnect me even more deeply with my noble goal of healing the pain and separation caused by our egos. Each of my colleagues has been inspired over the years by our clients’ sense of relief and gratitude when they can really let down their guard and bring their whole selves to their work relationships.
Ego Free Leadership Page 22
