Building a future Featured

8:00pm EDT July 26, 2008

Think back to when you were 16 years old and envision the most important thing you wanted to buy at that point in your life. Maybe it was a car, or perhaps it was just your favorite record or cassette tape. Chances are that you weren’t thinking of a lifetime investment, but that’s why Herman J. Russell is a little different — and undeniably successful.

As a 16-year-old growing up in Atlanta during the 1950s, Russell had already been working for eight years and had saved a hefty chunk of money. Instead of blowing his money, he invested it by buying a vacant lot for $125 — a lot he says would cost $50,000 today.

“My daddy taught me the art of saving at a very young age,” Russell says.

He then built a duplex on that lot during his senior year of high school, and when he returned from his freshman year of college, he painted it.

“That was just the beginning of my real estate development,” Russell says.

Now, more than a half a century later, what started as a duplex built on a vacant lot has turned into H.J. Russell & Co., a $300 million construction and real estate development company.

It’s not always easy to build an organization from scratch, let alone to sustain it for as long as Russell has, but as he gets older, his one desire is to ensure that the company he founded and still serves as chairman for, lives on long after he does. So just as he builds solid foundations for all of his clients, he has done the same for his business by doing three things to ensure his company’s foundation is strong enough to stand the test of time. Over the years, he’s focused on hiring the best people, creating a great atmosphere for them and moving them up in the organization, and that even included moving someone into his own position.

“I always have in mind that I’m building an institution — something that will live when I’m not here and continue to live,” he says. “That’s what you want.”

Hire the right people

Russell has seen his share of talented young people come into the company, but he’s also seen a handful of that talent pool leave because of their own dishonesty. The key is to minimize that handful and get as many of those honest, talented people as possible. When you do this, you’re building your business with solid people, which will help ensure its success and sustainability.

“The key to finding good people is looking at the education of the people and looking at the reputation of that individual,” he says.

One’s education is easier to detect because you can simply look at the resume, but honesty is another issue.

“You can’t really tell until you put the people in the game, but people who have been trained can sometimes detect honesty much easier than people who have not been trained for that,” Russell says.

He has potential hires spend a day with a psychologist for psychological exams so that he can get an expert opinion from someone who can better read a person than himself.

“I have interviewed and hired enough people to have my own gut feeling, and I do follow my gut feeling, but I want the scientific evaluation,” Russell says. “I get that to go with my gut feeling.”

In addition to the psychological testing, he also does background checks and drug testing on top of the standard interviews.

“You take all of that and put it in the hopper, and you come back 99 times right in your decision-making,” he says.

Beyond the time it takes to do the various tests, it also costs some money. Russell estimates that his company spends at least $300 to $500 for every hire, depending on the position, but despite the cost, he says it’s worth it in the long run.

“It’s better to spend the money and time upfront,” he says. “It’s 100 times cheaper upfront than on the tail end — it costs more. It’s like saving a child — you can save a child and keep that kid from going to prison with a good education. A good education is much cheaper than paying to keep someone in jail.”

Beyond the simple costs associated with turnover, having the right people will also help you build your company for long-term success.

“You want to have the very best,” Russell says. “You want to be the very best. You want to serve your customer with impeccable service. It pays off for you. It’ll be better if you have the right people on board.”

Create a great atmosphere

When Russell ran into one of his employees, he was thrilled to learn of her recent successes. The employee was a young woman originally from Africa who was initially hired at a time when she didn’t even have a college degree, but on this day that Russell spoke to her, he learned that through the company’s education program, she had earned not only her bachelor’s degree but also her master’s degree.

“Talk about something that made me feel good,” he says. “She gave me a hug like I’ve never had before.”

With more than 3,000 employees, Russell doesn’t see everyone on a regular basis, but he still wants all of his people to know he cares about them and wants to see them succeed, so it’s important to have a great work environment that fosters that sentiment. When employees know you care, it will keep them with your business longer and help you better create long-term success.

“Have a good atmosphere and you have an organization they can grow in and continue to learn,” he says. “You make sure that if they work hard and do a good job, they’re going to be paid well, they’re going to have fringe benefits and have an education program.”

That education program that helped the young woman earn both of her degrees is just one example of one of the benefits that the company offers. If an employee earns all A’s, then the company

will pay for all of his or her books and tuition. If employees don’t earn all A’s, they still receive a percentage from the company, which decreases as the grades do. Employees can major in any subject they feel will enrich their job, and they’re not required to stay with the business after they graduate. That may seem like a recipe for turnover, but Russell says other incentives keep them there after they’re done with the education program.

For example, the company offers family events about six times a year, such as a Thanksgiving devotional service, a Christmas party or picnics.

“If you got a family situation, nine times out of 10, you’ll have a better employee,” Russell says. “When you see people happy, they’re going to be more productive and they’re going to be a better influence to have around you.”

The company also takes time twice a year to recognize employees for their accomplishments and give out awards, which come accompanied with prizes such as televisions, checks or an overseas vacation. All of it is designed to motivate employees, and Russell says that while it can be hard to know what will motivate each of your own employees, it’s the motive, not the prize itself, that will win them over.

“I’ve never missed the boat on recognizing people and giving people something that they didn’t realize they were going to receive,” he says. “Even if you give someone a trip somewhere, if they don’t want to use it, they can give it to their mom or father. When you make a good genuine effort, you don’t miss the boat when you’re trying to motivate people.”

Move people up

The last key to creating long-term viability for your company is to promote people into higher positions, and sometimes, that even means replacing yourself. A few years ago, Russell started to realize it was time for him to pass the torch to someone else.

“I knew I wanted some faster legs, a good solid mind, lots of good youth and all,” he says.

In 2004, he was eager to turn the CEO reins over to his son, who he had moved up through the organization in recent years.

“I’m fortunate enough to have three kids, but someone in your organization, you should bring up, even if it’s not a family member, that you know has it,” Russell says. “You should treat that person or individual like your own family member and bring them along, and you just need to let go.”

Whether you’re hiring your replacement or someone else’s, it’s important to move your employees up in your organization, and to do that, you have to identify talent.

“It’s the same thing I look for when I hire,” Russell says. “You look for the very best. You look for the best-equipped person you have educationwise, experiencewise, with the right attitude, with the right mindset, someone who loves humanity. ... You can’t hardly be a leader if you don’t love humanity.”

It’s hard to be on the lookout for these types of people with just one set of eyes, so Russell has always relied on his management team to increase the likelihood of choosing the truly best people for promotions.

“All of our senior people detect the younger people, and they mention in the senior meeting, ‘This is someone we need to watch and make sure that they’re on the right track,’” Russell says. “It’s brought to the attention of senior management people because somebody who this person is working under can see this potential.”

Once you’ve identified someone for a particular position, it’s important to talk to that person about his or her future.

“The first thing I always ask — ‘What area do you think you need some improvement in?’” Russell says. “We all — I don’t care who--have some improvement we need to make. I don’t know the area but some area. You found out, and you make sure that you open those doors for that person to improve themselves.”

You may run into a situation where a person can’t see his or her weaknesses, and if it’s something you can see, then you should make the recommendation for that person. This initial communication session can be very telling.

“When I recommend something to the right people, they take it very well, and they appreciate it ...” Russell says. “If they get out of shape about it, that’s the test, that’s the wrong person.”

As you and your young protégé work collaboratively to improve his or her skill set and get that person ready to take the next position, it also helps strengthen your business.

“We’re not going to be here forever, and if you want your organization to live forever, you always got to have depth in your organization and put people in the position, so when that time comes, they’re ready,” Russell says. “We never like to pigeonhole people in the organization. We like them to see the big picture.”

HOW TO REACH: H.J. Russell & Co., (877) 787-7351 or www.hjrussell.com