When Steve Hartman’s business partner passed away early last year, he lost more than a friend and a colleague. “He was my sounding board,” says the CEO of Industrial Thermo Polymers Ltd., a manufacturer of polyethylene foam products in Brampton, Ont. “We would share ideas, strategize and talk about the future of the company and how we were going to get there.”
Hartman found himself alone at the top — a feeling familiar to many entrepreneurs. But then he heard about TEC (The Executive Committee), an organization that assembles small groups of CEOs for monthly meetings. Suddenly, Hartman had 12 virtual business partners with whom he could talk intimately. Today, he uses his peer group to benchmark his firm and credits it with saving him $500,000 by showing him where to find lower prices on raw materials.
Hartman is one of a small but growing number of CEOs that have found support in exeuctive peer groups. Several groups across Canada, such as TEC, Presidents of Entrepreneurial Organizations (PEO) and Young Entrepreneurs’ Organization (YEO) unite non-competing CEOs for confidential discussion of their business challenges. With the help of a trained facilitator — often a seasoned chief executive — and a highly structured format, leaders share their business successes and obstacles, giving them opportunities to learn and grow. But membership isn’t for everyone: sure, you may be in control at the office, but once you join a group you have to set your ego aside. Plus, there’s a significant time commitment and potentially steep fees to boot.
Dave Wall joined Vancouver-based Virtus Inc. after hearing about it through local busineess associates. “I was attracted to the idea of talking to CEOs in other industries,” says the president of Norpac Controls Ltd., a Burnaby, B.C.-based engineering firm. Soon after joining Virtus in 1999, Wall brought a difficult situation to his peers: his second-largest customer was demanding to see his private company’s financial statements. Wall resisted, but feared losing the client. His CEO panel suggested he divulge performance ratios confirmed by his bank instead, something the customer was just as happy with. “There are a lot of things testing business leaders today,” says Wall, “and my group helps me keep my courage.”
Peer groups give you a rare chance to network with people on the same growth track as you. “Most major decisions that define the future of your company, you’re making for the first time,” says PEO president Mark Rivers. “Finding a group of people who have been or are going where you’re going is an effective way to learn, be challenged and expose your own blind spots.”
Some peer-group organizers also offer annual retreats, one-on-ones, online forums, guest speakers and consultant databanks. But most members join for the monthly peer discussions. Executives are usually grouped by the dozen and matched by revenue. To avoid seating direct competitors at the same table, the groups are never arranged by industry. Men dominate most groups, making up about 85% of members.
At PEO, group meetings are broken into three sections. First, members update each other on what’s happened since the last meeting, identifying any “fires” that need putting out. Next is the “content” portion, in which a member might present his new business plan and receive feedback, or an outside expert could deliver a relevant presentation. Finally, fires are revisited and members brainstorm solutions. Other organizations follow different formats, but all offer CEOs the opportunity to discuss specific situations and debate solutions, solicit unbiased feedback and hold each other accountable for following through.
For all their benefits, however, CEO peer groups aren’t a one-way ride to nirvana. First, you have to pay annual fees in the thousands of dollars (see sidebar), a potential barrier for smaller firms. If your wallet is big enough, your ego shouldn’t be. Constructive criticism is the name of the game; you have to be able to dish it out and to take it. As Hartman puts it, “No one in the group is afraid to say, ‘That’s a dumb idea’.” Next is the issue of trust. Although some organizations require members to sign non-disclosure agreements, opening up still can be difficult for some CEOs. “A relationship has to be developed,” says Dean Martin, president of Mississauga, Ont.-based flooring wholesaler Melmart Distributors Inc. It took the TEC member three months before he was sharing sensitive company details.
There’s also the question of time. Monthly meetings, which require prep time if you’ll be presenting, run from three hours to a full day, plus travel time; there can also be one-on-one meetings and annual retreats. Regular attendance is necessary if your peers are to take you seriously, and when they do, watch out: a culture of accountability permeates peer groups, so you’re expected to follow through on your peer-induced plans. “My peers put real pressure on me to get stuff done,” says Martin. “I’ve often said to my wife, ‘It’s amazing that I pay for this abuse!'”
It may be difficult, but for Martin, it paid off: he credits TEC with his success last year, when sales grew by more than 10% and profits by more than 20%. “TEC taught me the importance of delegating day-to-day tasks, which left me time to manage the strategic growth of my company.”
A peer group sample
Perk: Members-only website offers relevant content and a team of sponsor experts who answer questions.
Presidents of Entrepreneurial Organizations (PEO)
Fees: $6,000 to $10,000/year
Coverage: Greater Toronto Area
Perk: New members meet with an advisor to match CEO to a group and develop a year-long plan.
TEC The Executive Committee
Coverage: B.C., Alberta, Saskatchewan, Manitoba, Ontario, Quebec
Perk: Monthly one-on-ones with group chairs for deeper exploration of problems and solutions.
Young Presidents’ Organization (YPO)
Fees: US$2,250/year, plus a one-time fee of US$1,000, and chapter dues
Coverage: B.C., Alberta, Manitoba, Ontario, Quebec, Newfoundland, New Brunswick, Nova Scotia
Perk: Multi-chapter conferences held in exotic locales.
Perk: Offers a High-Performance Team Exchange, a group-learning session for members of a single company.