SBN Staff

Sunday, 24 February 2008 19:00

Opening the vault

Henry L. Meyer III doesn’t want to be the best violin player. He

also doesn’t want to be the best trombone player. Likewise for

the oboe, kettle drum and viola.

But he does want to hear the strings grow softer while the

brass intensifies and the percussions pipe in. He wants to hear

the strings play quickly to intensify their sound, joining the others

as he conducts the orchestra to the song’s dramatic conclusion.

While many people may want to be the best musician, Meyer

wants to be the best conductor.

“I really think of myself as the orchestra leader,” he says. “I

can’t play any of the instruments as well as the people I’ve got.

They can only play notes. They can’t play music unless somebody is coordinating it.”

As chairman and CEO of KeyCorp, his conductor role hasn’t

been without challenges. When he took the reins in 2001, Key sold

a significant amount of loans in its portfolio to exit riskier businesses, but doing so resulted in a $1 billion charge against its earnings. On top of that, analysts wrote that year — and for the next

three years to come — that Key was one of seven banks that

would get taken over.

As a result, the board wanted the senior management team

strengthened and performance to improve — not easy tasks for a

new CEO, even if he did have the inside knowledge from having

spent his entire career growing with the company, and it was that

previous experience that guided Meyer in what to do.

Meyer had been part of a team in 1994 that had established Key’s

values following its merger with Society Corp. He knew those values — teamwork, respect, accountability, integrity and leadership

— were crucial to success and that some of those needed to be

more heavily emphasized, and he set shorter-term goals that

would get them out of the cellar.

“We set the middle as our goal when we were dead-ass last

because that was moving past half the field,” Meyer says.

Build a strong team

One of Key’s values is leadership, and while that extends

throughout all levels of the organization, it starts at the top.

Meyer needed solid team players to strengthen his team to get

the organization moving forward again, so he looked for those

that didn’t need to be lone rangers.

“There’s a saying that one of the great football coaches used,

and that is that the best 11 can always beat the 11 best,” Meyer

says. “The 11 best would be individuals. The best 11 is a team.

When your strategy is relationship, it means you have to hand off,

you have to count on, you have to trust and value your partners.”

One way to gauge teamwork in a person is to role-play with

a candidate by providing him or her with a situation and asking what he or she would do and how he or she would handle

the problem.

“If every word is, ‘I, I, I, I do this, I would do this,’ that’s different than saying, ‘We’d get the legal department on this ... and

we’d talk to HR,’” Meyer says. “Those are giveaways. What’s

the mindset? Especially if I ask you in a situation, and I haven’t

sent it to you, your initial reactions are going to be sort of the

way you would systematically go through solving the problem,

and we just look for trends.”

Meyer also likes to meet candidates in different settings to

better gauge if they’ll fit with his team.

“You can tell a little bit more,” he says. “Not everyone drinks,

but with a glass of wine and a more relaxed atmosphere, you

can get another insight into somebody — how social are they?

How comfortable are they in that environment?”

In one such situation, Meyer remembers a man who seemed fixated on the wall behind him and became frustrated that the man

couldn’t look him in the eyes.

“This isn’t somebody I wanted to work with,” Meyer says. “He

wasn’t shifty, but just the idea that you can’t look somebody in

the eye just doesn’t sit well with a banker. What are they hiding? That’s a very important factor. Very few people flunk that

test. He did. I’m sure he’s a good banker somewhere, but it

wasn’t going to be in our company. I don’t believe there are bad

people, but I believe there are bad fits.”

Key also uses psychological testing, and while it has never

hired or rejected someone solely on the test’s results, Meyer

says it’s an excellent tool to confirm or correct the instincts

you usually have already.

With one individual, the man said all the right things, but

Meyer just felt like he was acting.

“The tests came back and said, ‘Don’t hire this guy. There’s no

team in him — he’s an actor,’” Meyer says. “I was like, ‘Wow, I

thought that, too.’ Most of the time it confirms or raises a,

‘Wow, we all thought this way; maybe we should do some more

interviewing.’

“It’s very valuable. There’s just a ton of data behind some of

the tests that they do and what it tells you.”

Additionally, it’s important that several different people assist

in the hiring process, so at Key, five to eight people will interview candidates.

“If we all came from different backgrounds, we’d look at

somebody differently, so have that input and variety of background,” Meyer says.

Before getting interviewers together to discuss what they

thought of candidates, Meyer suggests speaking with people

individually to avoid groupthink.

“We’ve all had experiences where there’s a loudmouth in the

group, and usually the loudmouth gets his or her position out first,”

Meyer says. “Sometimes that will reduce the amount of opinion on

the other side, so groupthink is people who don’t want to talk, nodding their heads, but my experience is they almost nod their head

regardless of which positions — it’s just sort of the first position.”

He says this can be particularly damaging because if one person has concerns about a candidate, but everyone else loves

that person, that one interviewer will be less likely to raise

those concerns for fear of being chastised or accused of not

being a team player.

“Eliminate the opportunity for groupthink by getting opinions before it’s part of a massive opinion,” Meyer says.

Through this type of process, Meyer was able to bring on a

new chief financial officer and someone to head the national

banking group. He’s hired several key leaders since those initial hires, and the mix he has now has strengthened the company’s leadership.

“I hope the next CEO and even the person after him or her

doesn’t have to go outside as much,” Meyer says. “We really

have ... some outstanding individuals who are also good teachers. I’m more focused on internal development, so we don’t

have to go outside in the future.”

Hold people accountable

Another value near and dear to Meyer’s heart is accountability. This starts with listening, which is one of the most important characteristics a leader should possess. When Meyer’s

youngest son was 4 or 5, he came home from preschool one

day and asked what Meyer thought was a riddle — why do people have two ears and one mouth?

“Damned if I knew,” Meyer says. “I was thinking left brain and

right brain and sort of was taking a minute.”

His son interrupted his thought process before he could find

a conclusion.

“Dad, it’s so simple,” he said. “Listening is twice as important

as talking.”

That preschool lesson showed Meyer that even with a

Harvard MBA, he still had some learning to do, and that skill

helps him recognize issues and hold people accountable.

“Listening is terribly important, and when somebody isn’t working out, you hear it,” Meyer says. “It isn’t stabbing in the back. It’s,

‘Gosh, that didn’t work the way, and that person didn’t do the ...’

It’s not overwhelming, but you start to hear it.”

He regularly eats in the cafeteria so he can talk with employees, and the things he hears are often a basis for looking into

what could be deeper problems. If it’s performance issues,

reviews can easily confirm or correct these issues, but when

Meyer took over as CEO, reviews weren’t done consistently, so

he raised that expectation of his managers.

He holds reviews with his senior members every six months

and expects employees to have one annually. That accountability helps managers better address performance problems

throughout the organization to ensure efficiency and progress.

When issues do arise, reviews need to be more frequent, and

communication is key.

“You have to sit down with the person and let them know that,”

he says. “How unfair would it be if two or three of my senior people got together and said, ‘John or Jane just isn’t making it,’ and we

never told them? How do they know they’re supposed to improve?

At about the sixth month, you sit down with the person and say,

‘Look, it doesn’t appear to be working. You got to work on this, this

and this. We’re going to get together every month and just check

the progress.’”

While sometimes we hold on to employees who are good people but fail to perform, sometimes we hold on to people who

meet numbers but do so in a demeaning manner. Meyer would

rather see those “talented” people go to another company if

they aren’t on board with Key’s values and ways of working.

“You have to define what your best talent is,” Meyer says.

“Those people that are walking away are very good at something,

but they’re not very good at everything. ... They’re valuable in one

small sliver, which is generating business. We really are a relationship-oriented company, and while I kid about I can’t play all

the instruments, I don’t think anybody can.

“You need teammates. You need people to help you, and back

to the 11 best, we really believe that if you don’t have team-work in your chemistry, in your DNA, that you’re going to be

valuable somewhere else. Yes, we’re losing some good producers, but they’re not good employees in the broader sense.”

Regardless of if the problem is performance- or attitude-driven,

if things don’t improve in six months to a year after the initial

review, make a bigger decision.

“I don’t think you can do it much shorter than that because then

you’re just not giving the person the chance to improve,” Meyer

says.

Act quickly and don’t drag out the process of letting those

people go.

“We’re all worried about making mistakes because it’s people’s careers,” Meyer says. “But usually the die is cast in the

organization long before those of us at the top making those

decisions make the decision.”

When you make the decision quickly, while it may be hard,

Meyer says you can at least take solace in the fact that most

people will ask you, “What took you so long?” reiterating that

you made the right decision to help move the company ahead.

“My experience is I will make a mistake, but I’m going to be

right a lot more than I’m wrong, and the company has benefited

so significantly by acting faster as opposed to just throwing life

preserver after life preserver,” Meyer says.

These expectations for managers to perform reviews and

employees to do their jobs properly emphasize accountability

and help illustrate that value in employees’ every day work

lives. As a result, the number of completed performance

reviews has significantly increased, and Meyer and his team

better know where people stand and of what they’re capable.

Teamwork makes the difference

Meyer learned how important the teamwork value is during a

case study discussion while attending Harvard Business

School. In a class of about 80 students, his professor asked if

anyone would like to present the case they had been asked to

prepare. Meyer thought he had it nailed, so he, along with

about seven others, raised their hands, but the professor started at the opposite side of the room with the presentations.

“By the time he got to me, my answer was mathematical, analytical, shallow, not very creative, and I learned so much just in the

time he went around,” Meyer says.

By hearing a former marine talk and take one approach and

a woman from the Boston Philharmonic Orchestra take another, it opened his eyes to different viewpoints and how collaboration could reach the best solution.

“The light went off that people’s backgrounds help give you a

view that you just won’t have, and when you’re making important decisions ... how crazy would it be for me to make that

decision just on my background?,” he says. “I want the two

ears and one mouth.”

While listening to others viewpoints and discussing ideas,

you may run into some harsh disagreements, too, so it’s important to help everyone work collaboratively to come to the best

plan, and as a leader, you can’t come off too strongly.

“If people have a strong opinion, there’s usually a good reason for it,” Meyer says. “Trying to be the orchestra leader, I

look for them to try to come to the middle. I learned this early

on: If I say, ‘This is what I want to do,’ there aren’t that many

people that say, ‘Let’s go right or left — that’s what he wants to

do,’ so I try very hard not to give out where I want to go right

away.”

Instead, Meyer takes a more passive approach to voicing his

opinions.

“If anything, I learned in business school that trying to plant little seeds, so they think it’s their idea to go the way I originally

wanted to go, is a very acceptable way to get everyone on board,”

he says.

After reaching conclusions, it’s important to support each

other in getting there, and Meyer notes that aside from ethical

and legal issues, very few paths are black and white.

“There’s a lot of gray on how to get from here to there,” Meyer

says. “One good example is here at Public Square. I could ask

my management committee members on how to get from

KeyBank’s front doors to Tower City the fastest way or the way

with the least disruption, and some of them will go left, and

some will go right, some will pass one of the quadrants, and

some will stay away from the quadrant.

“They’re all going to get there. There is no right or wrong.”

While everyone takes different paths to get to that final destination, Meyer recognizes that he may have to step in once

and awhile to override the team if people get off path.

“I, by position, not by individual, own the corporate strategy

because it’s the product of the board, and the board represents

the shareholders, so if we get off of that, then I have to step in,”

Meyer says. “Below that, if what they’re doing is consistent

with getting there, then that’s their decision. They have to run

that. They have to own that.”

Having a values-focused leadership style has made a difference and allowed Meyer to grow Key’s net income from $132

million in 2001 to $1.06 billion in 2006. And with $4.9 billion in

total revenue in 2006, the analysts wrote that Key is now one

of the players doing the buying instead of being bought. That

growth has created a change in the migration pattern at Key, as

well.

“There was a time back in that 2001 period where we were

feeding more banks,” Meyer says. “Today, more banks are feeding us, and that signifies a change.”

Now, above his original goal of being in the middle, he wants

to move higher.

“We don’t want to be in the middle of the pack,” Meyer says.

“Whose goal in life is, ‘Hey, I want to grow up and be in the middle?’ ... We’re not in the middle — just above it. Our goals have

moved up, so that we can think of ourselves as winners. Our

goal is not to be No. 1 because No. 1 is usually never No. 1

twice in a row, but if we can be in the top quartile in terms of

performance for our employees, clients, communities and

shareholders, this would be a stock everyone would want to

own.”

As he moves in that direction, he has to continue to lead by

example.

“You can’t talk the talk,” Meyer says. “We’re too transparent

for that. In any business, people know if their leaders are walking or just talking.”

For instance, When Meyer is out with clients, he’ll order a

bottle of wine, but it will only be a $40 to $50 bottle.

“I don’t buy $150 bottles of wine because I don’t drink them

at home,” he says. “If I treat the company’s assets the same way

I treat my assets, then I’m walking the walk. That’s what I

expect people to do.”

When people see you walking the walk, they’ll know how to

act in their own situations, as well.

“I don’t have a company car,” Meyer says. “I drive my own

car. That tells people that when you’re in Cleveland, take a cab.

Don’t call a limousine because that isn’t the way Henry does it.

People aren’t stupid. They can pick up what the signals are,

and if you send the right signals and walk the right walk, good

things will happen as long as you’re walking the right way.”

HOW TO REACH: KeyCorp, www.keybank.com or (800) KEY2YOU

Tuesday, 29 January 2008 19:00

Moving forward

When Frank Murphy merged his company, Smart Document Solutions, with Companion Technologies last year, the president and CEO of the newly formed HealthPort had to act quickly to get 2,700 employees on the same page. He knew he had a limited amount of time before the blame for ongoing problems would shift from past management to him, and he wanted to make sure everyone understood what he expected and where the health information services and products company was headed.

Smart Business spoke with Murphy about how his penchant for action made the transition successful.

Take action. When I was first appointed to my first CEO position, my boss told me as we were walking in the front door, ‘My first boss told me this, and it’s served me well — hire somebody, fire somebody and paint the lobby.”

That is not as literal as some may interpret it. It’s a figurative penchant for action. What he meant by that was take noticeable action, and do it quickly.

When you take over a new role, you have 90 days, after which you own everything that happens — good, bad or indifferent. There’s no more blaming the past manager or team for what you inherited for the culprit for business woes.

You own it, so take noticeable action, and the people that are going to help you make the business more successful will quickly join in. Get somebody doing something that they weren’t doing before, and people stand up and notice. ‘Hey, this new team is taking action. The new leader is taking some action that needed to happen a long time ago.’

Be decisive. A leader who does-n’t make decisions, who waffles, gets his management team into a position of standing still — ‘If he’s not going to make a decision, I’m not going to make a decision because I don’t want to go out on a limb.’

When you start getting that groupthink of, ‘Inaction is what he or she wants,’ then you develop a company that is focused on inaction. Then you have your customer facing managers who need something to happen and confused about what corporate is doing. Then the frustration starts to build, customers start to feel it, and your business starts to go sideways.

Delegate. If the CEO holds too much responsibility or decision-making authority (himself or herself), you start to develop a management team that isn’t going to challenge themselves or challenge their team or think outside the box. They’re going to come back to you for everything.

Delegate a portion of the responsibility all of the time, whether it’s research this or decide which way is the best way to go, and go do it. It depends on how important a decision it is. Some of that depends on the experience of the particular manager or management team member that is handling that particular initiative.

Gauge the priority of the initiative, the financial impact of the initiative. As CEO, be involved in the large decisions always and in the decisions that don’t have the major financial impact but may be new online marketing initiatives. Give your managers the opportunity to try new things without constantly coming to you. Allow them to be inventive, creative, think outside their zone.

Help people make decisions. I empower my management team and encourage them to make decisions but quickly tell them, ‘If you have questions, ask. If you’re unsure, come to me — I’m not going to make the decision for you, but we can talk through different angles that I may have experience with or where I see a hole in your analysis.’

So [I’m] getting them to the point where they’ve looked at the ins and outs of a particular decision and then make a recommendation to me where I say, I agree with that completely.

That instills confidence. Now, it may fail, or it may be wildly successful. Either way, they looked at it, they analyzed it, they brought questions to me, so we’re in the decision together, even though it was their decision.

Then a CEO has to be careful to place blame. If someone tried something creative, and it didn’t work, you have to encourage at least the self-initiative. I had a boss once tell me, ‘It’s OK to make a mistake — just don’t make the same mistake over and over again.’

That allowed me the feeling of freedom to try things. If it didn’t work, do something different the next time. Just don’t keep trying the same thing. I think it was Einstein that said, ‘Insanity is doing the same thing over and over and hoping for a different result.’

Address personnel issues. Recognize when someone is going to be more successful in a different company because they’ve lost the passion for the business. You hurt your own business by waiting to outplace someone too long.

It’s a delicate balance. What I look for is when does that person stop trying? I will give people a lot of opportunity to be successful as long as I see they’re continually trying to get it done.

HOW TO REACH: Smart Document Solutions, (800) 367-1500 or www.sdshealth.com or HealthPort, (800) 999-0788 or www.healthport.com

Wednesday, 26 December 2007 19:00

Ron Clarke

Ron Clarke has a simple formula for getting quality work and time efficiency out of his 800 employees at FleetCor — he makes sure they’re doing the right work, and he gives them short deadline cycles. The combination of making sure they work on the most valuable tasks and reviewing the employees frequently keeps productivity and progress high at this fuel card processing company. Smart Business spoke with Clarke, chairman and CEO of FleetCor, about how he keeps employees focused on the job at hand and why reviews are critical to producing useful work.

Know your job. My job is to make sure the attention and energy of every single human being that touches my company is working on the right work. Every second that I lose is leakage, which means I lost valuable energy of people to things that aren’t important. Leaders that minimize leakage win.

If you know what the right work is and you can get them to work with 5 percent leakage, you’ll beat, every time, the competitor that has the same amount of resources but isn’t on the right agenda, and he’s got 50 percent leakage.

Determine the agenda. Great leaders figure out how to spend the most valuable resource in the world, which is time. Agenda is job one, and it’s job one every day because if you don’t know, how can the company perform well?

Reverse-engineer the financial statements. The report card of businesses is numbers. If I look at the report card of your company, I can quickly figure out what needs to be worked on. Is there a growth problem? A margin problem? A product mix problem? A cost-competitiveness problem? You can see the smoke signs of what needs to be focused on first in the financials.

Once you’ve looked at the report card, then get outside of your company. The game is in the marketplace, so it’s getting out and getting clear on your customers and prospects and competitors and figuring out where you are, there would be the second place.

Then go through the entire executive team next and reverse-engineer their agendas. Call them all in and [say], ‘Tell me the top three things you’re working on.’ Consolidate those 30 responses, and in a short period of time, you can figure out the gap of what’s being worked on in a company versus what should be worked on in a company, and they’re never right.

Document and clarify expectations. The great thing about blue-collared work was the work was definable. You put a widget in something. White-collar work is incredibly ambiguous, and if you don’t take enormous steps to clarify with somebody and get agreement on exactly what you want to have produced, think about the impact of that as you move down the organization.

If my 10 or 12 guys don’t get it right, then think of their 10 guys and their 10 guys. You want to talk about the world getting less clear.

Specify the work in advance. Maybe I’ll make you say it back to me, and you’ll say, ‘OK, Ron, I got it. Leave me alone. I’m clear now.’ Taking that clarity exercise almost to an extreme has tremendous return.

There’s nothing as useful as documenting things that people can go back and look at what their commitments are. Getting it written down and then reviewing it is important so people would be able to measure how they’re progressing as the year rolls on.

Establish strict deadlines. Tie it to financials. If you have a new product you’re supposed to launch on July 1, and we think we can sell $1 million a month, I spend my entire life telling you, ‘$6 million. Don’t miss, you got to get it. You got to find $6 million in ’07,’ and I make you sweat with me to deliver the number.

The only way you can deliver the number is to get started on time because if you wait an extra quarter, you’ll be at $3 million, not at $6 [million]. If you didn’t have deadlines, who knows when they’d actually start doing the work?

The only way you can be sure that people are doing the right work and producing useful work is to review it. I’ll review you to death so that you don’t have a chance to not work.

Read people. As we start to interact, you can see what’s working with people. It’s the old take an action and observe. See what the reaction is, and you’ll get a sense pretty quickly what works for people.

Some people completely get frazzled with deadlines, and others rise to the occasion on them. Pick a course, try it and look and see what you’re getting back.

There’s no science there — you just keep modifying. It’s relatively easy to sense how the relationship is going — not much different than your at-home relationship — what works with your other half. If you want to talk him into going to the movies, and he hates the movies, or you want to go to the museum and he hates the museum, you find the ways that work for that person, and it’s no different for me.

Hire winners. If you’re more than 22 years old, you’ve had to have actually done something. The first thing that I’ll get into is, ‘Have you accomplished anything?’ Most people do interviews and ask people about what they’ve done. I only want to know what did you deliver.

No. 2, I want people that want the ball. If it’s fourth-and-goal from the 1, and you go back into the huddle, and the whole game is on the line, and I say, ‘Do you want the ball?’ and you say, ‘I want the ball,’ and I say, ‘It’s all on the line,’ and you say, ‘Give me the ball,’ I want people who want the ball and aren’t afraid.

Make good decisions. In my mind, I sort them like clothes into small, medium and large. On the big ones that matter, make no decision before its time. They say about fine wine, drink no fine wine before its time.

If the decision doesn’t need to be made today, I wake up tomorrow. If it doesn’t need to be made tomorrow, I wake up the next day. Then there’s a funny thing that happens, and it settles in, and I feel like I’ve got the right decision — there’s a day that I wake up and I go, ‘I got it. Here’s what I’m going to do.’

HOW TO REACH: FleetCor, www.fleetcor.com or (800) 877-9019

Sunday, 25 November 2007 19:00

Setting the table

Last year, the Cleveland Foodbank faced a challenge: How could it get people in Northeast Ohio to realize that its Harvest for Hunger campaign was more than simply a food drive without diminishing the community’s already strong support? Enter Liggett Stashower, a branding, advertising and public relations firm.

Led by CEO Mark Nylander, President and Executive Creative Director David Moore, Chief Operating Officer Steve Veres and Executive Vice President Marilyn Chase, Liggett Stashower helped the food bank create a campaign to raise money for the organization in addition to its food donations. The firm launched a “What will you bring to the table?” campaign that centered around several forms of advertising as well as static clings for vending machines, so people would think about the topic when they themselves were hungry.

Through various forms of media, public service announcements, posters and online advertising, Nylander’s team worked to educate people how far their financial donations to the food bank could go because of the resources it had to economically buy food to feed many people.

Additionally, it launched a Brown Bag Day campaign, encouraging people to pack their lunches and donate the money they saved from not eating out to the Cleveland Foodbank.

Liggett Stashower’s campaign worked. Cash donations increased by more than $400,000 — 20 percent — from 2005 to 2006 and raised a total of $2.4 million to feed families in Northeast Ohio. The campaign grew again this year, reaching $2.6 million and Brown Bag Day is now an annual component of the Harvest for Hunger drive.

Liggett Stashower didn’t stop there either. On top of the Cleveland Foodbank, it also provided pro bono and financial resources for the American Diabetes Association, Community Care Network, Community Shares, Friends of Paraiso, Habitat for Humanity, Hospice of the Western Reserve, Junior Achievement, Prevent Blindness Ohio, the Ronald McDonald House of Cleveland and the United Way of Greater Cleveland. Additionally, employees have volunteered their time with more than 17 local organizations, proving that both time and money can help, as long as people are doing what they enjoy and what they do best.

HOW TO REACH: Liggett Stashower, (216) 348-8500 or www.liggett.com

Sunday, 25 November 2007 19:00

Preflight checks

Tom Marano says that if you’ve grown your company to $150 million, the hardest part might be behind you.

Marano is a man who knows a little something about growth as he and his business partner, Frank Argenbright Jr., took AHL Services from $100 million to $1 billion in four years, and now, he has taken Air Serv Corp. from nothing in 2002 to $141 million and 7,000 employees in 2006. But as Marano says, it’s the early growth that’s the toughest.

“I would say that we’re very good at taking a company from $150 [million] to $1 billion, but it’s much harder to go from zero to $150 [million] than it is from $150 [million] to $1 billion because you have limited capital, you don’t have reputation, you don’t have the scale, and you don’t have a management overhead structure in many cases, so you work real hard,” he says.

Marano, Air Serv’s CEO, says that to grow, you have to be a builder.

“Builders are folks who can conceptualize a vision, develop a strategy to execute it, secure the capital after the strategy is designed to sell that to investors, and then recruit the management team that can deliver on that,” he says. “That’s a builder.”

If you spend the time and effort upfront focusing on quality people and systems, then you will have laid the foundation for growth.

“Build it better, and you will get bigger,” Marano says. “Don’t just try to create growth for growth’s sake. Surround yourself with the right people who are committed to the vision, and it becomes a fun thing to do, but it’s a lot of work.”

Here’s how Marano has built his company to handle the rigors of rapid growth.

Create a vision and strategy

Marano says there are two ways to create a vision for your company.

“You can look at market opportunity, sitting back and looking at the structure of the company and the rates of growth — where it’s at in its S-curve of development — is it a growth-oriented industry or a declining industry, where there may still be opportunity, and you can deal with it strategically,” Marano says. “Or you can start with clients’ requirements and say, ‘What gaps do you have today, and is there a service requirement that you have that’s unfulfilled, and if we were able to develop a solution for you, is that something that would work for you?’”

Marano has primarily grown Air Serv, which provides services ranging from passenger transportation to baggage handling for the airlines, by talking to clients.

“You interview the CEOs and senior operators to see where there are gaps,” he says.

Marano says to look at the core competencies and value proposition of your business and use those to develop a strategy.

“By understanding where you create value and how you build a management team to deliver that value, if you can create client satisfaction, then you have a high level of retention on these contracts, and then your performance creates preference for your solution, and you grow with your clients,” he says.

Marano also looks at the current state, anticipated future state and then the gaps in between the two. He and his team then create a plan to close those gaps. He then takes the management team off-site each year to talk about the initiatives the company wants to accomplish, the changes in the industry and environment, and what they have to do to meet Air Serv’s financial objectives, as well.

“Lay out specific objectives with the strategies to make that work,” he says. “Build a business plan.”

Build a team

A company can’t successfully grow if it doesn’t have the people to get the job done, so it’s important to build a strong management team.

“It’s a combination of looking at what the strategy is of the company at that time, what skills are required and defining development plans to ensure that your best people are grown to those levels,” Marano says.

He spends about 80 percent of his time out of the office, and being in the field allows him to see how well people execute programs. Those results help him identify the best people.

The chief operating officer also gives Marano quarterly results so he can see what people have accomplished against their goals, objectives and budgets.

“We’re able to see and move people around and give them different developmental assignments,” Marano says.

He also has five of the most promising people work with him on strategy committees to help broaden their skills and understanding of the company.

“You have to really learn how to lead and motivate people and give them recognition as employees so that you maintain that work force,” Marano says. “If they’re satisfied, then you retain them, and if you retain them, you retain your clients, and if you retain your clients, you have a great platform for future growth.”

On top of giving performers better opportunities, you also have to look outside sometimes and bring in great talent to complement them.

“You balance between the development of your very best people and the recruitment of outsiders that have additional skills so you have a more balanced team,” Marano says.

Instead of hiring a lot of people for his team, Marano instead subscribes to the theory that less is more. He employs fewer people so he can pay them more, which ensures he can recruit only the best. He relies on his direct reports as well as the 30 other senior managers out in the field to help him get the best.

They first review resumes and profile them against the specific job requirements of the position to see whether or not each applicant has what looks like the experiences and results needed for that position. Then of the ones that look promising, they interview them.

He and his team first look for intelligence and then at leadership capabilities. He says it’s important for people to be able to develop relationships with both their clients as well as with the team that’s underneath them. He also looks for flexibility and a willingness to roll up their sleeves and dig into a task.

“It’s a question of looking at experience and potential,” Marano says. “Some have it because they’ve demonstrated it, and you can, through your interview structure, solicit the kind of questions that allow you to validate those competencies. ... You can deal with questions on, if you were in this type of situation, how would you address this kind of requirement? How would you solve this kind of problem? Give me examples of situations you were in in your past assignment, whether you had to do this kind of activity, so very targeted interviewing where you can identify upfront the competencies you look to recruit for and then you validate.”

After interviewing, the applicants go through a recommendation process, and those that are recommended go to the chief operating officer, who then recommends someone to Marano. He then does a final confirming interview.

“I don’t think you can leave it to the recruiters,” Marano says. “You really have to have an aligned organization that’s not bureaucratic and has a cultural value that one more good person makes an incredible difference in the organization. If you’re not involved in the recruitment and development of your people as a CEO, you’re going to fail because you can’t build a great team.”

Get buy-in

Another key to growth is execution, and the only way your people will do that effectively is if they buy in to your vision and strategy.

“In our culture, if you can’t perform and you can’t buy in, then you’re not going to be here very long,” Marano says.

He says you have to include people in the planning process to create buy-in.

“You go out and work with them in preliminary meetings to secure their input to the issues that we’re facing and the strategic framework that we have,” Marano says.

Then management meetings become important to lay out the specifics of what must be executed, and then lastly, you have to measure and review.

“Each month we’re seeing them and seeing how we execute, so there’s a real good dialogue,” Marano says.

Sometimes people are slower to buy in to a growth strategy though, and it’s important to distinguish between those who are slower and those who just outright resist.

“You can see it in their absolute monthly performance,” Marano says.

He also points out that some people may perform well but not buy-in. For example, some people who were part of Air Serv early on believed in an experience-based company, which Marano says works well if you’re a $5 million company. But when you grow to $150 million, you have to rely on processes and a more disciplined approach.

“If they can’t make the journey, they may still produce operating results, but they won’t be able to grow their team into the new world, and there will be gaps,” he says.

When he has situations like that, he sits down with those people and explains to them what their job requirements mean and what the company’s values mean. His main objective is to help people get on the same page with him.

“We’re pretty patient as long as you’re performing,” he says. “We’re not a ‘shoot the wounded’ corporation like some of these out there. We understand the value of good people. We’re not Judge Roy Bean, where they’re guilty until proven innocent.”

By communicating and trying to understand their personal and professional objectives, you can help employees get on the same page with you. He says it’s also important that management be there as support.

“Everybody that we recruit into the organization ... I’m here to help you succeed,” Marano says. “I’m not here to help you fail.”

If performance isn’t there and they’re not able to grow in their roles as the company grows, it’s time to let them go.

“You quickly understand who’s doing it and not doing it, and so you attempt to bring them along, but if you couldn’t, you have to exit them,” Marano says.

When you have an organization full of talented people who buy in to the vision you’ve created, then you’re setting yourself up to successfully grow your business, but it all starts at the top.

“I think it’s an attitude,” Marano says. “It’s the attitude of the people, and it’s the alignment of individual goals with the corporate goals ... but the leaders have to walk the talk and acknowledge that they are a growth company, and then they’ve got to be out making it work.”

HOW TO REACH: Air Serv Corp., (404) 926-4200 or www.airservcorp.com

Sunday, 25 November 2007 19:00

Worldwide celebration

As Prentke Romich Co. prepared to celebrate its 40th anniversary in 2006, President Dave Moffatt and founder Barry Romich pondered the best way to celebrate the milestone. While most companies would throw an expensive and elaborate party to mark the occasion, they decided that PRC could, and should, do more.

Since its founding, PRC’s mission has been to enable communication without limitations, fitting for a company that develops augmentative and alternative communication speech output devices, computer access products and other assistive technology for people unable to speak as a result of autism, cerebral palsy, Down syndrome, Parkinson’s disease, stroke and other conditions. To fit with that mission, Moffatt decided to give people in need something to celebrate as PRC celebrated, so he created the 40-for-40 program.

The program was designed as a year-long giveaway of 40 PRC devices to individuals around the world who wouldn’t otherwise be able to afford or have access to the devices. He worked with the company’s major vendors, who helped by donating their products and services. He and his team invited speech language pathologists to nominate their clients, and he also had the application materials translated into Spanish so more people were able to apply.

PRC received hundreds of applications from around the world, and by the end of the year, more than $350,000 in devices and accessories were given to 40 children, teens and adults in the United States, Germany, the United Kingdom, South Africa and five other countries. One recipient was an 11-year-old boy who lost his speech abilities after a heart attack and another was an autistic teen who had waited eight years for a communication aide.

The program generated many heartfelt thanks and increased awareness around the world about how these communication devices can help people otherwise unable to express themselves. On top of the awareness and the people directly affected by the donations, it helped PRC celebrate in accordance with its mission. For his leadership efforts in the project, Moffatt also received the company’s highest employee honor, the PRC Mission Award, from Romich.

HOW TO REACH: Prentke Romich Co., (800) 262-1984 or www.prentrom.com

Friday, 26 October 2007 20:00

Growing with purpose

When Ed Burke decided to grow a part of Informatics Inc.’s business from $26 million to $100 million in four years, employees could have easily freaked out at the rapid growth rate. But instead, the goal focused them on really getting better.

“It really stretched us to think about how we were going to do that,” Burke says. “Whereas, if it’s incremental growth, ‘Well, we can up this a little bit, this a little bit, and all those little bits will probably get us there,’ but this other way makes us focus a lot more on what we’re really looking for.”

As president and CEO of Informatics, he maintains a growth mentality for the $41 million company, which provides bar code technology for small and medium-sized businesses.

Smart Business spoke with Burke about he ensures his company maintains a competitive advantage to keep his company growing.

Q: What’s the key to growing your company?

The first part is delivering the products and services the customer really needs and understanding your competitive advantage in that. You’ve got to understand what the customer wants and be able to deliver it better than anybody else.

Spend time talking to the customer. That’s one of the big, often overlooked aspects of business.

We get going in our offices, and we think we know it, or we get too busy with the internal stuff and never talk to the customer.

Q: How do you understand your competitive advantage?

If you don’t really think you have some, look hard because you probably do. Oftentimes, I don’t think companies do, and it’s hard to grow because their offer isn’t that compelling to the customer.

Make sure you do, and then quarterly have a competitive advantage review. Are we really designed for the customer? Are we offering some sort of differentiating product or service to our customers? If not, you’re going to lose them.

Q: How do you communicate with customers?

Part of it is just putting it on the calendar. Devote some time every week to make some of those calls. Even if it’s just one call every week, make it. You have to have the discipline.

Keep it brief. Don’t go into 25 questions. We have basically four questions that we ask, and it takes literally a few minutes if they just want to answer the questions and not go into the editorial response.

Keep it simple. Everybody’s busy. You can call them up, ‘If you can just give me two minutes, I just have a couple questions for you.’ They’ll say, ‘OK, I can handle a couple minutes,’ and you hold to it so you don’t violate that confidence. If you have it distilled down to what you’re interested in, you can usually do it pretty quickly.

Q: How do you hire as you grow?

We do a good job of isolating what we’re specifically trying to look for in each individual job. There’s a big difference in what you look for in a salesman versus a software developer. The personalities are dramatically different. Make sure you’ve defined what you’re looking for in each position.

Then we have a personality test that we give every applicant. Then we do team-based behavioral interviewing of those candidates.

As an individual trying to do all that myself, I can’t read the personalities effectively in an hour meeting or interview. Sometimes you’re looking for something, and you may be looking too hard to find it or too hard the other way not to find it, so the team-based [interview] works well.

We’ll do the interview and immediately sit down and compare notes. We grade each on a scale of one to 10 — then we have more of an objective measure. Let’s say I gave them a nine and someone gave them a seven, we say, ‘OK, it’s got to be within one point,’ so we compare notes and, ‘OK, I’ll lower mine to an eight,’ or if I say, ‘No, he’s really a nine,’ and he says, ‘He’s really a seven,’ we throw out that question.

Q: How do you prepare for growth?

You have to have a vision for growth. There are so many businesses out there that are just happy rocking along. They have a good process, and they deliver plus or minus 5 percent growth every year. You have to have that ‘big hairy audacious goal’ mentality.

Do you want to grow? And if you do want to grow, then you have to set something ambitious and get it on everybody. That lessens a culture shock kind of thing of, ‘Man, are we really going to do that?’ That’s part one.

Then part two is to say, ‘Where are our best opportunities for growth?’ We have different modes of going to market and different products we can deliver. What’s going to be our biggest bang for the buck?’ We just started working through that. It’s always that constant thing in the back of our mind.

HOW TO REACH: Informatics Inc., (972) 881-5500 or www.informatics-inc.com

Friday, 26 October 2007 20:00

Driving force

Richard Morrison and his management team headed out for a retreat at Peek’n Peak Resort in western New York a few years ago, thinking it would be just another management meeting. But during this particular get-together, he realized that Molded Fiber Glass Cos. was in need of change.

It had traditionally operated as many companies do — raising prices when it raised wages — but as it grew globally and competition picked up, this became ineffective.

“We realized that if we didn’t have a cultural way of genuinely getting better that we wouldn’t survive,” says Morrison, president and CEO of Molded Fiber Glass. “Up to that point, there were different programs ... but they were a little bit of an event-oriented scenario — they would go in, work on something, and they would make improvement, but once you turned your back on it, it didn’t stick, and you had backsliding, so you had to generally have a culture that was different.”

He thought if his people could eliminate waste in the company, which manufactures fiberglass reinforced products for a variety of industries, it would help them become culturally better for the long haul. He hired an outside consultant to help him and his team work on it, and they combined aspects of both Six Sigma and lean manufacturing, implementing them throughout the business.

“It was difficult,” Morrison says. “People weren’t used to it. The biggest challenge was to change it from an event-oriented phenomenon to a cultural phenomenon. It’s a process.”

Implementing major changes requires having an environment of trust, engaging people and dealing with opposition. Even with all these elements though, no change will succeed if you just talk about it.

“I think the delta or the gap between the good ideas is not in the fact that there is a shortage of good ideas,” Morrison says. “The delta is in that you actually do it. It’s the actual execution. We have in our six core values, walk the talk. You can say anything, but do you really do it? Do you really believe it? That’s not rocket science. That’s just hard work. That’s just being diligent.”

Creating the right environment

Nothing can happen in your organization if you don’t have the right environment to aid changes, and that starts with trust.

“That’s a major component of change. You have to trust your leaders. If you don’t trust your leaders, then it’s a tough go,” Morrison says.

Establishing trust and a rapport with employees doesn’t always come as an easy task though. The key is treating them like family.

“While you’re here, this is extended family,” Morrison says. “For some people, it may be their only family. To feel wealthy, you must have friends and family. It’s a great social need people have, so we try to provide an environment that’s extended family.

“When people trust their leadership, they’ll do what they have to,” Morrison says. “That takes time. That’s being honest. That’s spending time with them, asking how they feel and getting back to people when they have a problem. It’s about treating them fairly and with compassion. That takes time, and you have to earn it. People watch what you do. They don’t expect perfection, but they look for consistency. When you screw up, just say, ‘Look, we screwed up. May I have your forgiveness?’ Life without forgiveness is impossible.”

If you operate in that manner, over a period of time, people will come to trust you more, but you have to realize that a title doesn’t garner trust automatically.

“Spend time with people,” Morrison says. “You don’t lie to them. It is not bestowed upon you by birthright or anything else. You earn it.”

Once you reach that point, it becomes easier to get people to do what you need them to do, and it doesn’t require as much time to get them buying in to changes and engaged in the process.

The other benefit of treating people like family is it helps people perform better.

“They key is peer pressure, where you want someone to say, ‘Hey, you’re kind of screwing up,’” Morrison says. “One of the best places for that to come is from a peer because it’s like your sister or your cousin or your friend telling you you’re really screwing up here rather than your mother.”

He says that when a peer is telling you what’s wrong, that puts pressure on someone horizontally, so they don’t feel like they’re getting in trouble like they do when the pressure comes vertically.

“The [Cleveland] Indians have a players-only meeting,” Morrison says. “Well, what are they doing? They’re putting pressure on each other. Without the hierarchy, you’re able to say what’s on your mind.”

When Morrison announced that MFG would institute elements of Six Sigma and lean manufacturing, three of his better employees came to him concerned about losing their jobs.

“I said, ‘No, you’ll be concerned with losing your jobs if we don’t get better, and I hope you will trust me on that,’” Morrison says.

He went on to explain to them that instead of actually operating the line, they would be controlling the robots on the line, and that they would be trained to do new things that would probably be more interesting to them and more beneficial to their careers. That honesty helped them understand the importance of making changes.

“People are suspicious that while you’re ‘leaning out’ that you’re going to fire everybody,” Morrison says. “That’s not the idea. The idea is to make what you have far more productive through the waste elimination process. People understand what waste is. They see it all the time. They know what it is, and they understand quality and quality problems, so if you explain it to them in those terms, they relate to it.”

You can’t just say it once either — you have to keep communicating.

“We moved down the road because we insisted on it, and we spread the message, ‘This is not to make more money; this is to survive,’” Morrison says. “You just keep beating the message in. What you want to be able to do eventually is have enough people believe it who are engaged in the process that you can now start to shift from event-oriented to a culture, and that takes a lot of work.”

Engaging your people

For any change to be successful, it can’t be you doing everything. Others have to be involved and engaged in the process.

“For people to think all they can do is, ‘The CEO says, “do this, and make it work,”’ that doesn’t happen,” Morrison says.

After communicating changes, piggyback off of the zealous employees who get on board right away. He says when you speak to someone, if that person has passion for what he or she is doing, then that employee is interested and engaged.

“You can just sense it,” Morrison says. “Their body language, the way they speak up, the way they participate — you look for it.”

When you can pull out these employees and use them to help lead the efforts, it makes changes more successful. One of the big proponents of instituting lean was a general manager in North Carolina who bought in to lean and convinced everyone the company could do it, so Morrison used him to help lead others and educate others because he was passionate about it.

“Leadership is not just in the domain of senior management,” Morrison says. “Leadership is throughout. A good vision and judgment and inspiring trust and confidence can be anybody.”

It’s also important to teach people so they get more involved in the process.

“You can’t get excited about something you don’t understand,” Morrison says.

Molded Fiber Glass employees regularly convene for learning sessions in the company’s learning room, which has a scarlet and gray, Ohio State theme. As more engage in these sessions, others hop on the bandwagon.

“It’s slow at first, but now we have people saying, ‘I want to be a green belt,’ because they think, ‘Wow, that’s interesting. That looks kind of fun,’ and then they sort of think in the backs of their minds, ‘Yeah, and it’s good for my career, too,’” Morrison says. “That’s OK. People should have self-interest that aligns with the interest of the company.”

It’s important to reward people as well so they can see how they benefit when the company benefits. MFG offers monthly cash profit sharing for employees, which also gets people on board. As more people get into the process, it aligns the company so everyone is working the same way, and that’s important to succeeding.

“People understand how to read the playbook and what’s expected,” Morrison says.

Dealing with resistance

With any change, despite your best intentions, people are going to oppose you, and you can’t force them to buy in to what you’re doing.

“You’re not running a military or anything,” Morrison says. “People are free to come and go here as they choose. All you can do is influence them by convincing them that it’s good for them and they’re going to have more fun being on the train than alongside the track.”

No matter how much you communicate, you’ll have some people who still question your message and are leery to get involved.

“You’ll have people that jump on board right away, and then you’ll have some that are against it,” Morrison says. “I think the majority are going to sit there and wait and say, ‘How long is this going to last before they decide?’

“If you study history, that’s the way it was in the American Revolution — people for it, people against it and a group in the middle that didn’t know which way to go because they didn’t know who was going to be the winner, and they didn’t want to be on the wrong side because they thought they might get hanged. In a change process, you have a block in the middle that’s just watching to see what happens. That’s why you have to have very strong, active champions over here and have some successes so people say, ‘This is really what’s going to happen — I better jump on.’ That takes time because you have a lot of people that say, ‘Well, here’s the latest gig. We’ll wait this one out.’ Not that they’ll oppose it, but they’re not gung-ho about it.”

Morrison says it’s easy to identify the people that buy in to the changes, but he says it’s harder to tell who’s on the fence, so you have to keep communicating with everyone.

“You have a constant message, which is sincere so that they will eventually believe that you mean what you say,” he says.

Others will put up a front but are really working against you. Morrison says it’s important for the management team to be unified and know how to talk and effectively disagree and work out those disagreements to be able to pinpoint these issues.

“You need to consult with others you trust and have an environment where they can disagree with you,” Morrison says. “I think disagreement is a good thing if it’s sincere and it’s not disagreeable. Disagree but don’t be disagreeable. You have to learn the art of disagreeing so one disagreement doesn’t lead to a larger one, and that leads to a larger one, and you have a nuclear war.”

Morrison has an executive team of seven people who discuss the company’s progress, potential problems and problem people in the organization.

“An individual can fool one or two people, but ... I think it’s pretty hard to fool all seven,” Morrison says.

Despite your best efforts, some people are never going to engage and align with the company. While you can make suggestions and coach people to help them buy in, sometimes you just have to go a step further and tell them what’s going to happen when asking them to change doesn’t happen.

“Some points you ask people, and at some point, you might have to say, ‘Well, we have to have this done, otherwise we have to make a change,’” Morrison says.

There have been a couple people that Morrison let go because he could clearly tell they weren’t interested and weren’t going to become interested in what was happening. In doing so, he told them they’d be better off going to a company where they wanted to participate.

“You need to get on the train and enjoy the ride even though there’s good times and bad times,” Morrison says. “Get engaged; participate. What a way to go through life not caring about anything except when the weekend is.”

The way to pinpoint problems and problem people is to be down in the trenches with them. If you stay isolated in your office, you won’t know the real issues facing your company.

“You try to increase the probability that you’re correct, and you increase the probability that you’re correct in business by standing as close to reality as you can, and sometimes the reality is painful, so you have to have the environment where people say, ‘We’re not doing this very well,’ and not take it personally but take it as an opportunity to get better,” he says.

He says the only way to get better is to have people making suggestions and critiquing you and your actions, and you can’t bite their heads off if they say something you disagree with or that questions your plans.

“You don’t want to intimidate people because intimidation only gives you minimal performance, and they’re only going to do what’s asked of them and no more because they don’t want to make mistakes,” Morrison says.

To avoid coming off as intimidating, you have to visit employees so they see you’re a real person like them and not just some mythical creature hiding in an office somewhere.

“You can’t get the pulse of people by talking on the phone,” Morrison says. “The majority of communication is nonverbal anyways. You have to go there and get a much better sense of what’s going on than sending somebody out.”

Because of this, Morrison travels to all nine states he has facilities in as well as MFG’s facility in Mexico. Making himself visible, getting feedback and uniting the people in the company has helped him lead MFG on to greater successes in recent years, ending fiscal 2006 with $250 million in revenue.

Changing the culture to focus on reducing waste has resulted in approximately $10 million in savings.

“We do not think we can survive without this kind of initiative and its successful execution,” Morrison says.

Despite his successes, he knows he can’t get too cocky, so he maintains a healthy paranoia about the company’s future.

“What keeps an individual from running down the street with no clothes on?” Morrison says. “It’s the shame he would feel, and that’s a good thing. It’s the same thing in business. You have to think that your existence is not guaranteed and not forever.”

With that mentality, he continues to look for ways MFG can adjust to stay competitive.

“We have to make adjustments and you see it in professional sports,” Morrison says. “Why does one team get beat up in the first half and come out and win in the second half? The reason is they made adjustments and figured it out. There’s other stuff they’re going to throw at you, but you have to be flexible and make adjustments. That doesn’t mean you throw away your ethics and values, but your tactics may have to change.”

He also reminds himself that he can never have it perfect and can’t predict the future, but it’s important to at least look in that direction and not stay stuck in the past.

“A lot of people have written about change, and just realize that change is going to occur whether you like it or not, so the question is, are you going to participate?”

HOW TO REACH: Molded Fiber Glass Cos., (440) 997-5851 or www.moldedfiberglass.com

Tuesday, 25 September 2007 20:00

Taking flight

Running a business is often like navigating through a “Choose Your Own Adventure” book — there are constant decisions and changes, and you’re hoping you’re making the right choice.

Throughout his career at HAWK Corp., Ronald E. Weinberg has faced many decisions in his adventure. In the last two decades, Weinberg, chairman and CEO, has done a lot with his business — from focusing on high growth through a series of acquisitions, resulting in years of 30 to 40 percent revenue growth throughout the 1990s, to adding product lines to going public and multinational. He even got HAWK successfully through the aftermath of the Sept. 11 attacks by focusing on cash flow. Most recently, he decided to sell off the powdered metal division of the company and focus on friction products. Additionally, he faced the challenge of moving one of HAWK’s plants from Brook Park, Ohio, to Tulsa, Okla., which also meant making management changes. No matter the obstacle, he maintains a long-term focus of what’s best for the company.

“Great companies don’t get built by taking a ruler and a graph and building straight up,” Weinberg says. “You’re going to have some variation. It’s just an overall statement that we’re building toward a longer-term value.”

Despite all the twists and turns during his business adventure, Weinberg has succeeded in growing HAWK from $24.6 million in 1992 to $212 million in net sales last year, which was a 16 percent increase over 2005.

Unlike the actual adventure books, where you can peek ahead to see where each decision may take you, you don’t have that option in business, so Weinberg shared some of the strategies that have helped him successfully mold HAWK into the business it is today.

Move people to the right spots

Sometimes it can be tough to change people around in your organization, but it’s important to evaluate if people are in the right spots for the company to be the most effective it can be.

Weinberg says that switching people into different positions in your company can benefit not only the business in getting strengths in the right areas, but it also helps develop your people and makes them stronger employees.

“I think people benefit from internal change and moving people around within a company to give them different functional capabilities and giving them different levels of experience,” Weinberg says. “I think that’s particularly attractive to people younger in their career. Everybody starts somewhere, and it’s the only way you avoid management getting labeled, ‘Well, he’s a sales guy,’ or, ‘He’s just a shop-floor guy.’ The more you move them around, the more experienced they are, so the best salesmen could well be the guys who were engineers or manufacturing guys.”

When employees gain experience in multiple areas of the business, it helps them improve the company, as well.

“Taking a controller and moving them into some other function, they really understand the numbers,” Weinberg says. “If you find people that have the flexibility and depth of talent and motivation to do that, you can get some real winners, so we try to do that.”

During the process of moving its Brook Park plant to Tulsa, Weinberg had to make personnel moves that he called “Project Castle.”

While it may sound to some like a top-secret spy mission, Project Castle was actually a crucial part of ensuring the Tulsa plant succeeded by moving a few leaders into different positions.

“If you’re a chess player, when you castle, you’re moving the rook over here and the king over there,” Weinberg says. “That’s what we did. We moved two people. We executed Project Castle, and that was putting two business leaders in their best spots for what the business needed.”

Weinberg looked at where the company was at this time last year, and he looked at two leaders of his businesses and saw what he thought the Tulsa plant needed.

“It was my belief that the business in Tulsa really needed a very detailed operational focus,” Weinberg says. “The other business, which was running nicely, would benefit from someone who had strategic vision and execute the vision and provide great leadership.”

When he looked at the people he had, he didn’t have to do long, in-depth interviews for the positions or study in great detail whether the switch he wanted to make would be effective. He just knew it would be.

“I know them,” Weinberg says. “I work with them every day. That’s part of my job. When you work with people, you know them well. You really do. You see how they make the most important decisions in their life. Next to their family, there’s nothing else as important as their business decisions, seeing their style, what do they deliver in terms of results, and it’s a judgment based on those things. When you know someone well and see them every day, it’s not as mysterious as it may sound.”

It was easy for Weinberg to get upper management buy-in for this decision because he included them in the discussion.

“Frankly, it was just a candid, open discussion,” he says. “I believe in just being open. I think that openness is an important part of management, and when managements trust each other and can be open with each other and know they’re not being BSed — when I say something, and you know I’m not trying to cover up for something else — that builds the kind of trust that lets the CEO make things happen.”

It was a challenging situation because each executive was well-liked and respected in the areas he oversaw, so when the switch was made, people questioned the decision, but Weinberg had faith that the two would easily settle in with their new people.

“When you take two great people, each one was liked by the ones he left, people that were liked where they were, chances are they’re going to be liked when they settle in, and that’s what happened,” Weinberg says.

Hire correctly

If you want to grow a company, you are going to need a talented team of people you can trust.

It may be easier to delegate things like hiring to others, but Weinberg says it’s important to not only be involved in the process, but to take your time to make sure you hire the right person to fit with your organization.

“You can never be sure,” Weinberg says. “There are no guarantees when it comes to people, but people are important to us — it’s one of our core values, so we spend a lot of time personally interviewing people at surprisingly entry-level-type positions.”

For example, when the company decided to hire a summer intern, Weinberg wanted to meet the potential candidate so he could try to gauge her character and give himself an idea of how well HAWK’s hiring process was working.

“Is she really going to be good, and is she motivated?” Weinberg says. “I interviewed her just as a litmus test or touch point in how well our hiring is going.”

In addition to getting to know people in the interview process, HAWK uses other forms of testing to gain insights into a candidate’s emotional intelligence and leadership maturity.

“To me, one of the most important attributes of all is motivation,” Weinberg says. “Someone who really wants to succeed and be competitive and win, chances are they will.”

Weinberg says to look at someone’s past track record to see if they’re competitive and have that will to win.

“Someone who succeeded in school or was a competitive athlete, it’s not like we recruit like a coach, but it’s surprising how many of our people did play competitive sports of some sort, ranging from just high school stuff to we have an Olympic silver medalist,” Weinberg says. “Those are gauges. You talk to people, you can see — do they really want to win?”

Often people hire employees they think will make their business team succeed and soon find out otherwise. When those situations arise, Weinberg says you have to recognize them and address the problem instead of ignoring it.

“So often, one of the mistakes businesses make is not being willing to accept the fact that someone is not performing,” he says. “You have to identify that and what can the business help them do to perform. Maybe they’re in the wrong spot, and maybe someone’s really not suited to sales, if that’s where they’re at.

“We have six core values that we work from, and the first one is integrity, and with integrity, it also means intellectual integrity — not kidding yourself. ‘Wait a minute — it wasn’t the weather that caused that business to do bad last year — it wasn’t delivering. What do we have to change?’”

Use caution with acquisitions

Acquisitions provide one avenue to growing your business, and with more than 10 acquisitions under his belt, Weinberg has learned his way through buying and integrating companies, but it’s important to maintain perspective when going through that process.

“It’s easy to get caught up in the excitement of the moment if you’re a buyer, and we tend to be careful about that because the idea that we’re so smart and we’re going to go in and make every business that much better is a bit misleading,” Weinberg says.

The key is focusing, and Weinberg has criteria he looks for and doesn’t just buy anything that’s up for sale. He conducts market research and compiles a database of all the companies he thinks HAWK may be interested in purchasing. Then he pulls out the magnifying glass to look at those businesses a bit closer.

“Especially right now, is it a fit?” he says. “It should be related to something we’re doing or interested in — friction-related or related to our customer base — so we’re not going to buy a furniture manufacturer. It has to have some fit to the segment we’re in.”

If an acquisition fits with the core of your company, then you have to next look at the company closer.

“Does it have a reason for being?” Weinberg says. “Does it have a proprietary position? Does it have good management? Do they have good know-how? What makes it different than a company that’s just going to get beaten up in the marketplace?”

Additionally, he looks at the company’s financial reporting and the quality of their equipment. The combination of looking at several aspects of the business helps him make an informed and intelligent decision of whether or not to buy.

“There’s no one formula,” Weinberg says. “If there were, every acquisition would be great.”

Communicate to remove fear

Whether you’re going through acquisitions, instituting a minor change or not doing anything differently from the status quo, communication is crucial to the growth of the organization.

“People are always wary when there is an acquisition,” Weinberg says. “Even if nothing is intended to change, it’s a tense time, and our goal is to make it as smooth and easy as possible. Communicate, be realistic, be open with them.”

Whether or not changes are being made, you have to tell people of the plans or lack thereof.

“If you did have plans to relocate, you tell them,” Weinberg says. “If you don’t, you tell them that, too. You’re never going to stop somebody until they get to know you and you prove out what you say, but our intention would be just to be open with them.”

The communication factor is important to remove the fear of the unknown.

“The biggest thing that frightens people about change is the fear that they don’t know what’s really happening or what’s going to happen,” Weinberg says. “If there’s communication, I think that’s the best way. Not every change is going to be welcomed by every person because that’s difficult for people, but if it’s communicated and there’s a sense of teamwork in making it happen, those are the two keys.”

To make sure people really understand what you’re telling them, you have to repeat the message.

“(They need) a lot of it — and candor, and not assuming that just because you put out a notice and it’s on a bulletin board somewhere, whether electronic or physical, that that’s all it takes,” Weinberg says. “People want a chance to ask questions, and they want a chance to really understand it, and I think those are the keys.”

Weinberg and all the managers at various levels have meetings to give people those opportunities to better understand changes and the processes behind them. Weinberg also has what he calls “skip meetings” where he skips certain levels of management and goes to lower levels of people and meets with about 10 of them at a time so they can ask questions and give their feedback.

“You get a lot of good ideas that way, too,” he says. “The notion that everything from on top and directed down, some of the best ideas, especially when it comes to making changes about what the business is all about, comes from the people closest to it. The salesman knows best what the customer wants. The guy on the shop floor will have the best ideas of how you can be more efficient.”

Weinberg says if you’re not asking them questions and letting them ask questions of you, then you’re never going to know the problems facing them and the concerns they have.

Beyond gaining valuable feedback and ensuring they understand changes, it makes employees feel valued, which gains their buy-in to the company and its adventure.

Says Weinberg: “It’s a good feeling to be heard, and they genuinely do give good ideas.”

HOW TO REACH: HAWK Corp., (216) 861-3553 or www.hawkcorp.com

Thursday, 27 September 2007 20:00

Back talk

Even before Infor Global Solutions was formed, Jim Schaper was listening to customers so he could ensure that the software company he wanted to create would be the best.

“We looked at the buying characteristics of [potential] customers ... that acquire the products we now sell,” Schaper says.

When he looked at software companies, he saw larger players that had a wide range of products but lacked the depth many customers wanted. He also saw smaller, niche players that offered the depth but lacked the range that others needed.

Schaper realized that customers needed a company that offered both the width of products and also one that deeply penetrated those markets to meet their individualized needs.

“We looked at the opportunities to fill a void from a customer’s perspective, and that’s how we made the fundamental decision that this was the market that was ripe for consolidation and really provided us the ability to quickly build a different and better software company,” Schaper says.

It was customer focus that created Infor, and it’s customer focus that drives its growth. The company had $38 million in revenue in 2002 and has since gone on to complete 30 acquisitions, which helped Infor post revenue of $2.1 billion last year.

Schaper, who serves as chairman and CEO, maintains a strict focus on his growth strategy through focusing on customers by getting their feedback, evaluating their ideas and nurturing an internal customer-centric culture.

Getting feedback

Last September, between 7,000 and 8,000 of Infor’s users converged in Las Vegas, but they weren’t there to simply hit the slots. They were guests at Infor’s annual user conference.

“That is really focused on their education and our education,” Schaper says. “Their education in terms of what products and services we have and other things, and then our education process in terms of what we’re not doing right and what we need to do better and what they expect from us.”

The user conference is just one of many ways that Infor reaches out to its customers, and it is those relationships that make or break the company’s growth initiatives.

“We value the relationships that we have with them,” he says. “It doesn’t mean that we do everything they want us to do, but they clearly know that we’re trying to do the best that we can for them.”

Schaper and his team spend about six weeks at the end of every year traversing the globe to conduct focus sessions with their customers’ C-level reps. This initiative touches about 350 to 400 executives each year and provides Infor with more feedback about what products its customers need and the problems facing them. On top of that, customers can also submit ideas and problems electronically to Infor.

The other major way to gain feedback about what your customers need or want is to talk to your employees who have direct contact with them.

“We have 9,200 employees, the vast majority of those touch our customers every single day, so if you listen to your employees, in essence, especially the individual contributors where there’s nothing filtered, you’re going to listen to your customers as a byproduct of that, so I view that you have to do both,” Schaper says.

He also gains feedback from partners and looks at data, such as Infor’s wins and losses in the market, trends and industry regulations, and standards that customers may need to adapt to.

The best part about talking to customers is it’s not hard. Schaper doesn’t have to bribe them or entice them to speak up. They simply like to be involved because their future also depends on what products they get.

“As you might suspect, they’re very vocal in telling you what you’re not doing right,” Schaper says.

As simple as it may sound, the key is just listening and then communicating back with them.

“I’ve seen a lot of companies fall into a trap. They have forums to listen, and they listen, and they walk away and say, ‘That’s just not right,’” Schaper says. “You have to listen, and then you have to act. It doesn’t mean you’re going to do everything that a customer wants, nor do I expect that they think you should. But if you’re going to listen, and they have a credible argument, you better be taking notes, and then you better act, and you better act relatively quickly if you’re going to act at all. If you’re not going to act, you have to go back and tell them why.”

Evaluating customer needs

Wading through all the feedback that’s gathered requires having a defined system for review and imposing a series of checks and balances.

“The way I look at it is like a large funnel,” Schaper says. “At the top of that funnel is the data that comes from our customers. The second component, if you go down the funnel, would be the product user groups.”

User groups center around a specific market or product, and then the funnel gets more specific at the next level by pushing all the suggestions through to the special interest groups, which are specific to an industry or a subset of an industry.

After going through those groups, it then goes back to the people at Infor.

“The next slice in the funnel would be our product management group,” he says.

That group reviews all of the feedback, and after that, they then go back to the user groups and ask them to rank the products and services in terms of most important to least important, so Infor can focus on what’s most crucial for the customers. This is crucial to maintaining focus and not getting caught running down every side path that arises. But even still, Infor isn’t ready to make a rash decision. It has more people to go through.

“Once we have that enhancement list completed by product or platform, then it will run through product marketing — one last gut check in product management,” Schaper says. “They evaluate them and bless them, and then it goes to the one committee we have — product investment review.”

The committee runs the numbers and determines how long it would take to build, the financial components, and if there is a broad market or if it’s just an enhancement.

If it’s not broad-based enough, then Infor will try helping that customer meet its needs in other ways without the investments.

If there is a market for the product, it then determines if it should be added as an enhancement to current offerings or if there needs to be a whole new product built. In some cases, there may already be a product on the market that would solve the problem. This determination then drives Infor’s growth strategy.

“Our acquisition strategy is clearly driven by the company, but our customers have a strong voice in what applications they would like to see us buy,” Schaper says. “They have a very strong voice in our long-term product direction because they’re the ones that are actually utilizing the technology to run their businesses that we provide.”

When acquisitions occur, Schaper spends a lot of time with the people in the new companies, and there’s one thing in particular he hears over and over again from those employees.

“Man, you guys talk about your customers a lot.” “It’s amazing to me most of the companies that we’ve acquired and many that we look at, the customer is simply a byproduct of the organization,” Schaper says. “We have a tendency to look at it differently. Our organization is a byproduct of what our customers have allowed us to build.”

Holding fast to that value is easier when you’re a smaller company, but with 9,200 employees, Schaper has to ensure that every one of them understands this principle and embraces it every day in their duties. His key is repetitiveness.

“Every time we talk about our company internally and externally, (customers) always have to be the focus,” he says. “Being so repetitive has a tendency to stick.”

He also makes customers the center of employee awards. Employees receive awards for putting the customer first and going above and beyond to meet their needs. He also recognizes MVPs, and the criteria for that recognition is also centered around customers.

“If you keep talking about it enough, and you keep driving the company to and recognizing your employees for customer-related activities, and we celebrate enough about our customer, it’s just repetitive,” he says. “It starts at the top and has to stay constant.”

Future customers

Acquisitions will continue driving Infor’s growth, but with experience under Schaper’s belt, he knows what to do to make sure customers are always at the forefront.

“If I underestimated anything, I underestimated the amount of time that has to be spent outside of my office,” Schaper says.

“The last time I checked, nobody buys our products inside our building, so consequently, there is a ton of commitment required to grow. It’s a lot easier to run a business that isn’t growing. It’s very time-consuming, and there is no substitute for showing up both at your customer’s site as well as where your employees are.”

He also notes that it’s important for you to know that you can’t do everything right all the time when you’re growing rapidly.

“Perfection is the evil of progress,” Schaper says. “Ninety percent is good enough except when it comes to our financials. We’ve gotten, I wouldn’t call it ahead of ourselves, but we’re clearly, in some cases, changing the tires on the car while we’re driving 100 mph down the expressway.”

Know which 90 percent needs tending to immediately and which 10 percent can wait until you have time to catch up. Identify those things for your company based on your values. Infor tends to things that keep it out of dangerous situations: cash, not hiring ahead of the curve and not buying expensive projects that may take years to yield a return.

“We were not willing to sacrifice the window of opportunity we believed we had to build a different kind of software company, and that window is going to be over in the not too distant future. ... We will then, at that particular point in time, go back and clean up that remaining 10 percent in some areas. Where we know we have problems, they’re not fatal, and they don’t inhibit our ability to grow or service our customers, and they’re much more internal in nature.”

That down-to-earth perspective on growth combined with his focus on customers has looked kindly on the software company. Schaper says it has helped Infor have the highest customer retention rates, which allows him to sell additional products to existing customers, which, in turn, increases demand for their professional services.

“We get the benefit of not only acquired growth but also organic growth based around specific customer or market requirements,” says Schaper.

HOW TO REACH: Infor Global Solutions, (678) 319-8000 or www.infor.com