SBN Staff

Monday, 26 March 2007 20:00

Letting go to grow

Just as parents struggle to let go of their children as they enter adulthood, Nina G. Vaca struggled with letting other hands work on her business as it grew.

“I brought in almost every customer myself, and then I needed to leverage and hand off those relationships to other people in the firm for scalability because one person can’t do everything,” says Vaca, chairwoman, founder and CEO of Pinnacle Technical Resources Inc., a custom information technology solutions company. “If they tell you that they can, they’re probably lying.”

By learning how to successfully bring others into her company and then relying on them to get the job done, Vaca has grown the company to about $60 million in revenue, a 50 percent increase from the $40 million posted in 2005.

Smart Business spoke with Vaca about how she stepped back to see the forest instead of focusing on the trees.

Q: How do you let go of responsibility?

Understand what your strengths are and what your weaknesses are and embrace them. Don’t think you have to do everything yourself. As a leader individually, oftentimes we try to do everything ourselves. Just understand what your strengths are. Do what you’re awesome at and hire what you’re not at.

When you start something from scratch and it is your baby, it is hard. Always be constant of the overall mission. The old saying is, don’t lose sight of the forest for the trees. Sometimes it’s really easy to focus on the trees, and sometimes you’ve just got to pull back and focus on the forest.

I handed off the day-to-day responsibilities of client management to work on the business — our strategic focus, our client focus — to work on bigger, more visionary things.

If you’re trying to do everything yourself, your company will only grow to be as good as you personally are. A group of people is better than just one person.

Q: What are the keys to successful growth?

The way you grow is you provide value for your clients. Make certain you have a service or product that is going to be of value to someone. If you lose your focus and start growing so much that you stop delivering for your clients — you’re focusing on things other than delivering for your client, maybe how many sites you have — you’re headed for disaster.

If you don’t have the right people at the helm, you’re headed for disaster because they’ll drive the organization in a different way, which will ultimately not be in the best interest of the firm. The key to growing a business is making sure you have the right people in place for scale.

Communication is one of the most important things within the company. If you’re not constantly communicating to people what’s going on, and certainly while you’re growing, something may be going on at one end of the business that would be helpful to the other end of the business. At the end of the day, if you all get in a room and communicate, you’re going to be that much more knowledgeable and powerful as a corporation.

Q: What do you look for in employees?

Above the obvious, which is their educational discipline, their expertise and their years of experience, one of the things I look for is attitude — a positive one. I look for people that are self-starters and are entrepreneurial in nature. Our company is a very entrepreneurial environment and that means you have to be a self-starter and consider this your own and want to see the company succeed.

Have people that understand the environment that they’re working in. Change is expected. Everybody knows that our company will not look like this in the next 12 months. They know that, they understand that, they embrace that.

People are willing to wear different hats. People are willing to work extra hours. People are willing to see those changes and embrace those changes because they know it’s for the best of the company.

Q: How do you integrate new people into the company?

Allow a competitive, fair work environment. That means that this environment is open to anyone who wants to come in and do a good job.

Tenure is not an issue. Seniority is not an issue. You have to be consistent and create an environment where anybody can succeed.

Q: How do you create that environment?

It’s a variety of things. Work with your level managers to make sure there are metrics available and that people have attainable goals, understand their goals, and that you follow up on those goals.

Create a good working environment, where someone who’s been here five years versus someone who’s come in a year, each have the same financial threshold they can attain, assuming they meet their goals.

HOW TO REACH: Pinnacle Technical Resources Inc., (214) 740-2424 or www.pinnacle1.com


Beads of sweat roll down a young runner’s forehead, while his mind wills his aching body forward, stride after stride, as he continues on his grueling run. Some miles prove easier than others, but even during those less strenuous ones, he pushes himself to perform better than he previously has and prepares himself for the more difficult, uphill miles he knows lurk around the bend.

While his fatigued body wants to collapse as the miles slowly go by, he cannot stop — there’s work to do, and athletes are always looking to improve.

This same mentality has driven Arthur Blank’s career and created his success as co-founder of The Home Depot (he retired from the home improvement retailer in 2001) and now as owner and CEO of the National Football League’s Atlanta Falcons. Just as athletes have regimens of exercises they practice to improve and succeed, so does Blank. He adheres to a handful of simple philosophies that create and sustain success when continuously practiced. “The whole notion that there is no finish line, which is a life philosophy of mine, reflects in the way you run a business, as well,” Blank says. “The day you think you kind of got it all figured out in any business is the day you’re going to get in trouble.”

Hire the best

When the Home Depot’s sales approached the $1 billion mark, Blank and his partner had lunch with a senior partner at Goldman Sachs, who told them that they’d need to change strategies when the company reached that magical milestone.

That didn’t sit well with Blank, who decided that if they continued hiring and promoting people who “bled orange” and bought into the culture, then the company could, indeed, sustain itself. “We didn’t let people get in the game, as we grew the company, that were just good at getting things done as opposed to good at living who we are,” he says.

Instead of hiring many hourly workers at lower wages, Blank went after the best and paid them more because their knowledge and skills would benefit the customers. But he also held them accountable for creating sales and customer relationships. “They are reflected on the operating statement as a payroll expense, but I’ve always viewed them more as an investment,” Blank says. “We’ve always had the mentality that if we invested in the very best people, not only would they produce the best re-sults for us in the near term but would have capacity for growth and decision-making as any of the businesses have grown.”

Listen

When Blank bought the Falcons in 2002, the Georgia Dome, the team’s home stadium, sat about 40 percent empty on game days, and empty seats don’t help propel athletes to victory or generate revenue. To find a way to fill them, he talked to people who didn’t attend the games. He knew he’d hear complaints, but it was the only way to pinpoint the issues and find ways to fix them. “A lot of leaders, they listen, but they don’t really want to hear the results to the answers and when the answers come, they find a way to reinterpret them based on their original perspective of what they think the answers should be,” Blank says. “They might give you their honest opinion of what they think you’ve got to do to improve your business, but then you put it through your own filter and look at it through your own rose-colored glasses, and you choose not to see it that way. You say, ‘That’s not really what they meant. They meant some other things,’ and you just believe what you want to believe.”

Blank says there are bright people throughout an organization, and leaders need to hear them out, as well.

“You don’t have to be a genius to do it — you have to be bright,” Blank says. “Anybody can be bright. Anybody can listen and understand that there are lot of great ideas out there. ... There are a lot of folk out there that don’t have titles that have an awful lot of good ideas.”

And when senior leaders effectively communicate with those nontitled people, businesses grow stronger. After speaking with fans, Blank identified ticket prices and parking as prime concerns. So he lowered ticket prices on 30 percent of the Georgia Dome’s seats and secured parking — including space to tailgate — for season-ticket-holders. As a result, 30,000 empty seats were transformed into a waiting list 60,000 deep for season tickets.

Forbes estimates the team’s 2006 revenue at $170 million, up from $120 million in 2002.

“It’s very dangerous in any business for a minute when you put yourself above the customer or above the fan or above your associate,” Blank says. “There’s an awful lot of bright folks out there, and they can lead you down the yellow brick road if you’re willing to follow, but you have to be willing to follow.”

Look to the next level

While at The Home Depot, Blank often brought in outside people to meetings, which sparked conversation afterward.

“That first meeting was weird,” the visitor would say to Blank.

“Why was it weird?” he’d ask.

“It sounded like the company was really in trouble. You guys were talking about all the things you were doing wrong.”

Despite The Home Depot’s successful track record, Blank always led with a sense of urgency, continuously pushing forward.

“The best executives that I’ve ever worked with have always had a lot of confidence and a lot of security, but a lot of insecurity at the same time,” Blank says. “They’re always concerned with what happens if the market changes. ... They spend time thinking about all the what-ifs as opposed to just what’s happening today.”

Leaders constantly have to assess if their team also thinks that way and can move to the next level. In the early 1980s, Blank had lunch with Charles Lazarus, who was running Toys “R” Us. “Give me a lesson,” Blank asked Lazarus. “Tell me what we’re going to have to do.” “I have to look at my company as we grow every year ... and challenge myself,” Lazarus said. “Can the people you have around you take you to the next billion? Those are going to be the most difficult decisions you’ll have to make.”

Blank has found truth in that as he’s often concluded that people who worked their tails off and got down in the trenches simply didn’t have the skills to move the business to the next level. “You constantly are pruning the tree around your senior management, making sure the folks that are still part of the tree are thinking in a similar way,” Blank says. “You constantly ask every year, ‘The people that have gotten me to this level, can they get me to the next level, or are there issues I need to deal with?’”

Blank says that when issues arise, look for a niche within the company where that person would succeed at the next level. If that person isn’t willing to change, then he or she may need to find opportunities elsewhere. “That’s your last resort, not your first resort,” Blank says. “You have a big investment in that person. They work their tail off and, typically, they’ve produced at a very high level.”

Lead by example

In the early days of The Home Depot, Blank had every person in his senior management learn the business from the ground up.

“The first three months, you’re going to be working in the stores,” Blank told the first legal counsel he hired.

“I’m an attorney,” the man told Blank, looking at him like he was crazy. “Why would you want me to spend three months in the store?”

“You’re not going to understand the legal issues that are going to come across your bow or the environment they were created in or be able to talk effectively to our associates about what happened in stores unless you actually have some of that experience,” Blank said.

And Blank himself didn’t have immunity. He spent up to 50 percent of his time walking around the stores, working with customers and talking to associates. When he returned and sat in meetings, Blank could communicate problems and issues from the front line that nobody else knew about.

He did the same thing when he acquired the Falcons, living in the dormitories with players during training camp so he could see first-hand the issues facing larger men. Then he took those problems into account when he built their new training facility.

To solve the parking woes identified by fans, he and his team spent five hours walking all the lots within a quarter-mile of the stadium searching for inefficiencies. “Great leaders have a lot of integrity, and they do what they say they’re going to do and they mean what they say,” Blank says. “They don’t feel like all the wisdom resides in their office and they’re happy to get out amongst real people and do real work and find out what the world is thinking about the company and the organization and what they’re doing.”

Give back

Under Blank’s leadership, the Atlanta Fal-cons Youth Foundation has given $6.4 million in grants to 194 nonprofit organizations across Georgia since 2002. And, Home Depot employees annually log tens of thousands of hours volunteering in their communities. “Part of a piece of fabric, in a general sense, you’re woven into the life of the fabric, and when a company weaves its way into the life of a community, it becomes part of the fabric of that community,” Blank says. “It becomes very hard to tear it out of the community, and you don’t want to tear it out of the community. It’s part of what makes the community unique.”

Beyond helping others, service creates employee loyalty and buy-in because they know their employer is a part of something more than financial reports. “They feel the company has not only a brain but has a heart and has a soul to it,” Blank says. “They end up going home, instead of feeling they were at a job all day, that this was not a job — this is part of their life experience,” Blank says. “This is part of what I am as a person — the company I’m associated with. “When you get to that point with an associate, it’s a very powerful place to be because without asking, without telling — and there aren’t enough hours in the day to tell and ask associates to do everything that you want them to do — they do it out of themselves for the right reasons. That’s a perfect environment.”

But leaders have to genuinely care about a commitment to service and view it as an opportunity instead of a responsibility.

“If you have a responsibility to do something, sometimes you do it, you’re not happy about doing it, but you do it,” Blank says. “If you have an opportunity to do it, and you still do it, that means you didn’t have to do it, but you did it for all the right reasons.”

Just as running plays correctly and cohesively allows a team to win, when an organization combines all of these business plays, it creates a financial victory. “Our philosophy has always been on doing the right thing and having the right kinds of standards, and that by doing that, we’d produce the financial performance that was important to the organization,” Blank says. “It wasn’t based on first producing financial results. It was based on a set of values — living those values, supporting those values.”

HOW TO REACH: Atlanta Falcons, (770) 965-3115 or www.atlantafalcons.com

Wednesday, 28 February 2007 19:00

King of the hill

In 1993, Steve McDermott felt content with his company’s success, but thought maybe he should do more. He hired a PR firm to see if Hill Physicians Medical Group, an HMO with 3,000 physicians serving more than 350,000 patients, should have any marketing work done.

The firm started by surveying the physicians who comprised the group, and the results were surprising.

“They don’t feel very good about you,” the firm told him.

McDermott, CEO, wanted to find out why, and what he could do to change the situation, so he surveyed the doctors to gauge their likes and dislikes and to see exactly what he needed to do to make them happier. When he tallied up the results, he found that only about 57 percent of the doctors were satisfied.

“We had nowhere to go but up,” McDermott says.

The low rating indicated physicians were frustrated with certain procedures, and improvements needed to be made. Happy doctors mean better efficiency and more satisfied patients, so McDermott set out to change the company to increase its satisfaction rating.

“You look at the surveys, and you look at what they say, and you start to pick apart what you need to do to improve,” he says. “It’s right there in front of you, and you get to work on it.”

Building a team
McDermott saw great possibilities for the group to build on its success and help the doctors become more satisfied, but he also saw a clear barrier, one that stuck out like a blinking neon sign. “There was so much more that we needed to do, and to take it to the next level, it was too much,” he says. “It was more than I could consider pulling off. I realized I had to build a team to do it.”

The team he had at the time was too narrowly defined and too narrow in scope to succeed, so he built a new team, growing it from just him and two others to a team of eight, all of whom have their own teams, making the organization geometric in shape. He also hired people to balance out the organization and to create a different perspective for the business. And he brought in outside people to administer personality testing to make sure the company had a good mix of people and styles.

And he made the tough decision to let go of someone who wasn’t fitting in and instead brought on people who didn’t have any experience in health care. “We wanted a different orientation — outside perspective and a more strict business orientation,” McDermott says. “Our view was, health care was too narrow-minded, and one of the problems in health care and one of the reasons it’s stuck is that it’s not applying good, solid business principles.”

Once he got people with more of a business mentality, he then needed to ensure that they had a healthy, nurturing culture to operate and flourish in. “It’s creating an environment where they feel they can thrive and do their own thing and be accountable for their effort but simultaneously be a part of a team, something larger,” McDermott says. “Each of the folks feels like they’re running their own show, but they are simultaneously conscientious that they’re part of a team and part of something larger, and all the parts need to work together to make it effective.”

Part of that empowerment is encouraging creative thinking and challenging people to innovate and dream up new ideas to improve the business. “Be supportive,” McDermott says. “Encourage risk. Be open to new ideas and, conversely, don’t be dogmatic. I don’t like, ‘If it’s not broken, don’t fix it.’ I don’t believe there’s any one way to do anything. Try to steer away from those kinds of dogmas, so atmospherically, what you do is try to create a very open, stylistically, environment.”

To do so, McDermott starts with how people address him and the image he portrays to his employees to make them see him more as a normal person rather than as a CEO. “I’m Steve; I’m not mister,” he says. “I go see them. I walk the farm. I deliberately dress down and am in casual mode. It helps to drive an old car. I’m just a regular person. I allow myself to be used for comical relief, and that’s easy to do with me.”

He encourages casual dress to make people feel more at home and also celebrates holidays to add fun and excitement to the office. He wants people to enjoy the warmer weather in the summer, so he and his management team give employees an abbreviated schedule on Fridays. He also encourages a family-friendly environment, so the company offers flex time and telecommuting. On top of that, he makes chocolate chip cookies with his children to bring in to the office and share with his fellow team members. “The thing about it is, it’s one thing to do it when you start it up, but it’s to keep it and nourish that and not lose it,” McDermott says. “You have to work at it and stay with it.”

He says the key to retaining a fun work culture is to retain a sense of fun, even as the company grows and becomes busier. McDermott says his wife is a big football fan, and while they watched a game one week, he saw a story of a young quarterback who had been in the league about five years and who was coming off a rough period. When asked what caused his poor performance, the young athlete said he was working too hard at it and had lost the fun and enjoyment of the game.

“When he started paying more attention to having more fun and the pleasure he took from the game, he started being better again,” McDermott says. “I don’t know that that’s the only thing, but particularly if you’re in it for the long run, it’s really important to enjoy it. And if you enjoy it, it’s infectious.”

Open to change
It was just another day of business in 1980 for Steve McDermott when, as he prepared to chair a board meeting, he received a phone call that forever changed him. It was the woman he was in a close relationship with, calling with a quick message. “Just so you know, when you get home tonight, I’m not going to be here,” she said.

She wasn’t just going out with girlfriends for dinner and drinks — she was leaving him. Frantic, he ran in and out of his board meeting, calling her and trying to convince her not to leave, while the board wondered why he kept hopping in and out of the room. And true to her word, he was greeted with the silence of an empty home that evening. “I was, frankly, devastated. It caught me short,” McDermott says. “OK, what is life? Is life just work?”

That experience propelled McDermott to advocate for work-life balance, both in his own life and in the lives of his employees. But work-life balance extends beyond the boundaries of the group’s offices. McDermott decided to try something a bit nutty — he decided to promote work-life balance with the physicians that comprise the group to help ease the stress in their lives and improve their sentiments toward the group.

“You’re trying to create an environment where innovation and new ideas can be tried out, and sometimes it works, and sometimes it doesn’t,” he says. “This one seemed a little bit far out.”

He and his team arranged a weekend retreat for physicians and their significant others, where they learned about meditation and how to create a balanced life despite their hectic schedules. “When I saw it, I said, ‘This is New Age stuff that the docs will never go for,’” he says.

Despite his reservations, the retreat sold out, and the doctors even requested that he and the team create a similar program for their office staffs.

The doctors’ retreat was just another example of how innovative thinking can create a more positive work environment, but McDermott hasn’t stopped there. He and his team also created a data warehouse to help physicians better track patients. It allows them to see which patients are at risk, and notices are sent to doctors communicating when patients need tests done, so that doctors can contact patients and conduct preventative health care instead of treating the outcome of letting diseases go unmonitored. “We didn’t think doctors would like us looking over their shoulders like that, but with a couple exceptions, they really liked the help and asked for more of it,” McDermott says. “It helps the docs be more effective with their patients.”

He and his team also successfully instituted initiatives to reduce emergency room visits. Additionally, they’ve created groups for patients to participate in, where they work with a doctor in a group setting to discuss problems with their disease, which have allowed patients to heal more than they had been able to on their own. “They started to help and empower and enable each other,” McDermott says. “It was more the context than the content — the context, the environment was such that they could hear the content for the first time.”

That theory holds true for communicating with employees, as well. When the environment is right, people are more receptive to the message, so McDermott operates with a transparency mentality. Employees can access an an intranet site that gives them a gauge of how they are doing compared to the goals for the year. It also shows them how their annual bonuses will fare, based on the company’s progress toward reaching its goals at that given point. “It’s very hard to engage people and be committed to something if you are closed, but if you are open and you have belief in what you’re doing, then that transparency provides an opportunity for people to become committed and engaged in the same effort,” he says. “We’re not trying to hide anything here. Here’s how we’re doing, good bad and whatnot. That helps back to the innovation. It’s not just about us up here — ‘We’re going to make all the decisions, and you just do your job.’”

The sum of the efforts of McDermott and his team is a higher satisfaction score among the physicians in the group — 92 percent, up from 57 percent just over a decade ago. The company is growing each year and in 2005 posted $414 million in revenue, a 26 percent increase over 2004, and McDermott credits his team, employees and the physicians with making Hill Physicians Medical Group successful. He says that when he sees them succeed, he feels he has succeeded, as well. “We had an outside speaker, and we had a couple hundred doctors in the room, and he made an anti-managed care joke, and nobody laughed,” McDermott says. “He said, ‘Wait a second — aren’t I in a room full of physicians?’ One of them stood up and said, ‘Yeah, but we like managed care.’ Then another said, ‘I practice better medicine because of Hill Physicians.’ “Whoa, man, that made me feel good.”

HOW TO REACH: Hill Physicians Medical Group, www.hillphysicians.com or (800) 445-5747

Wednesday, 31 January 2007 19:00

Merrill Dubrow

Merrill Dubrow thinks his basic cell phone is smarter than his multifunctional BlackBerry because when he changes time zones, it automatically updates the time, while the BlackBerry doesn’t.

It’s just a small detail, but it’s in the minutia that Dubrow finds opportunities and generates ideas as president and CEO of M/A/R/C Research, his 91-person market research company.

Smart Business spoke with Dubrow about how he skates to where the puck will be in order to improve the business.

Q: How do you lead change?

Same old, same old means you’re going out of business. There has to be change, additional strategy, new blood. The team that gets you into a pickle isn’t the team that gets you out of a pickle.

When I got here, the average tenure was 14 years. They’re almost allergic to change.

Effectively communicate the vision and the strategy — what’s going on, when it’s going on. To have people buy in to change, it’s integrity, communication and being honest.

Q: How do you effectively communicate to get buy-in?

Be realistic. You’re not going to get everybody to buy in to it. I liken it to this: In this world, 20 percent of the people are gorgeous, who are Richard Gere and Julia Roberts. Twenty percent of the people should probably put a bag over their head, who aren’t really attractive. Then there are 60 percent of people, like myself, who are just average.

When I talk to the entire company, it’s the same percentage, 20-60-20, only the labels are a little different. Twenty percent are going to love it. It doesn’t matter what I say, how I say it, they’re going to love it. Twenty percent of the people no matter what, it’s not getting through — ‘I don’t care what he says. I’m tuned out. I’m gonna doodle.’

What I’m trying to do is reach that 60 percent. Get through to them. The way you do that is you lay out and communicate the plan. Everybody likes to communicate a different way.

You may want to communicate via e-mail. She may like in-person. I may like the phone. Continue to reinforce what’s important so they keep hearing that song over and over.

If you do that, you stand a good chance of a high percentage of people getting it, understanding it, desiring it, buying in to it, and ultimately delivering additional time and effort that drops to the bottom line.

When you make a mistake, raise your hand and say, ‘I made a mistake. Here was the thought process, and here was the mistake.’ One of the most important words in the English language is a 14-letter word — accountability.

A lot of CEOs don’t have it. If they fail, they spin it. They have nothing to do with it. It was this, it was that.

Q: How do you create a vision?

Keep in mind where the industry is headed in the next two, three, four years. Be there a little quicker. There’s a famous quote that Wayne Gretzky said, and that’s skate to where the puck is going, not to where it is.

Anticipate where the market is going, where you’re trying to get your company, where someone’s going to be in two or three years or where you want someone to be in two or three years. You’ve got to have great anticipation skills, and that’s difficult to do.

It’s a tough skill to teach, but paying attention to details and everything you notice out there helps in the decision-making process.

Q: What do you look for when hiring?

I look for people whose name on the front of their jersey is more important than the name on the back. The name on the back is usually their own, and the name on the front is usually the emblem or team you play for.

Are they involved with the industry organizations? ...When you’re involved, it shows that you want to give back and that you can multitask and achieve a lot of goals at once.

Look for people who are hungry, work hard, work smart, and go above and beyond.

HOW TO REACH: M/A/R/C Research, (800) 884-MARC or www.marcresearch.com

Wednesday, 31 January 2007 19:00

Josef Mandelbaum

As the ping-pong ball bounces back and forth across the table, Josef Mandelbaum focuses not only on the game he’s playing but also on the mental challenge he’s putting a job candidate through during the game. Through ping-pong, Mandelbaum sees how potential employees adapt to and react in a situation requiring mental and physical focus. It helps ensure that he gets great people to help lead AG Interactive, a $90 million division of American Greetings’ AG Intellectual Properties. Smart Business spoke with the president and CEO of AG Intellectual Properties about why employees have his trust from Day One and why he empowers people and gets out of their way.

Involve your people in decisions. That probably gets annoying to people because decisions are slower than giving finite answers, but I like to look at strategy and operational decisions from a 360-degree angle.

I’ll often argue both sides of the argument to make sure that we are doing ourselves justice in making the right decisions and challenging the people to do that and try to get consensus from my team before we make decisions.

It’s pushing down to empower people to do their jobs. We do consensus and setting the strategy. Once we do that, we try as best as possible to empower the next one to two levels down to make their own decisions and tell them mistakes will happen, and that’s OK. If mistakes didn’t happen, we’re probably not learning.

I always tell everybody they’ll never lose as much money for the company as I have, so they shouldn’t worry that much about making a mistake.

Communicate employees’ roles to them. The biggest impediment to empowerment is people just don’t feel they’re empowered.

A lot of that is due to lack of clarity — is this my role? Your role? Who has the decision? Who is the influencer, and who has to be informed?

Some, you want to inform them because your decision will impact them, but they don’t have to be part of the decision, they just have to be informed. There are people that influence decisions, so you want their input, but they don’t make the final decision.

Then there are people actually responsible for the final decision. Make sure the people understand what their role is — are they an influencer, someone who has to be informed, or are they a decision-maker?

If you’re a decision-maker, make sure they know that, and make sure other people know that, so when a decision is made, it can actually be executed. A big risk is someone thinks they made a decision, [only] to find out it was never executed upon because other people didn’t think they had the right to make that decision.

Trust people. If you don’t trust the individuals to make decisions, either they’ll act like robots and they lose all ability to think, which means your company isn’t doing a good job because they’re not going to have any ideas.

Or you just drive them out because they get so demotivated because they try new things and nobody listens to them — you don’t respect their opinion and you don’t trust them to make decisions.

You have my trust from Day 1. You [could] lose it, but you don’t have to earn it. To trust people to make decisions, you hire the right people. Raise the bar and make sure the people you hire are talented, smart, and they come in and learn.

Nobody comes in and knows everything at once. Over time, through working with other people or mentors or learning through experience, ultimately you trust their instincts and talents. If you can’t trust the people working for you, then you don’t have a solid company.

Hire good people. We want the person to be smart, bright and [have] the ability to operate and think independently. Things move and change quickly, so we need people that can hit the ground running — if we put them in the deep water with a life jacket, that they can make sure they don’t sink.

No. 2 is adaptability. We change a lot. Strategies change a lot. You have to be someone who can roll with the punches and be flexible. No. 3 is innovation and risk tolerance. If you’re not willing to make mistakes and try stuff new, you’re not someone who’s going to help us raise the bar on ourselves and grow the business. We need people who aren’t afraid of taking calculated risks.

I don’t want people who are just going off without thinking and saying, ‘Hey let’s do this, and we’ll see what happens,’ and all of a sudden, $10 million later, you say, ‘What the hell happened?’

We want people who aren’t afraid of trying new things and doing it smartly, so we want people who are creative and analytical.

Ask tough questions when interviewing. I ask a lot of black and white questions that people don’t like to answer. For example, would you rather get up on a desk and inspire 25 people, or sit down in a room and have a meaningful impact on one person’s career. Obviously we’d like both, but I don’t give you that choice. You have to pick one or the other and explain why. Those are the types of questions that you never know what I want to hear, so the interviewee is confused.

Answer what you want to do, and it gives us an indication of the type of person or manager you would be. It’s a lot of black and white questions to the extreme that, in reality, almost never happen, but it helps give you a sense of what the person’s taste and predilections would be.

Have a personal touch with employees. I know everybody by name, and I know something about them, and I encourage my senior team to do the same — just personal connections so they know we’re trying our best, and we’re not perfect. We never pretend to be, and people see that.

They may not always like our decisions, but they respect us and understand that we’re trying to do what’s best. People relate to that, and there’s a tolerance for making mistakes. We just learn from them and move forward.

It’s engraining that in people whenever we have the opportunity. Whether it’s at quarterly reviews, annual events or just a one-on-one basis, saying, ‘Hey, glad you tried this out. It didn’t work out — what’d you learn from it? What’s the next thing you’re going to try?’ HOW

TO REACH: AG Interactive, (216) 889-5000 or www.interactive.ag.com

Wednesday, 31 January 2007 19:00

Great expectations

As Ted Glahn worked in his office filled with framed photographs of his family, one of his managers came to him with a problem.

As president of Solarcom Holdings Inc., Glahn had written the compensation plan for a particular salesperson, but the way it read cheated that person out of a hefty commission.

“Ted, this happened, and here’s the way it reads, but that doesn’t seem fair because of this and this,” the manager said to Glahn while he reviewed the plan.

Glahn realized that the way he wrote it didn’t express his intent, creating a discrepancy.

“You’re right,” Glahn said to him. “That’s really not what I meant. I didn’t think of that issue that could impact it, and I think we owe him the money.”

Glahn paid that sales rep almost $22,000 more than he originally received because it was the right thing to do, and it’s an example of how he operates.

The son of an immigrant truck driver, Glahn grew up ingrained with values prioritizing family and integrity. His blue-collar upbringing and ideas have propelled his success as he’s moved up in the white-collar business world and cultivated an environment at the technology solutions company that’s focused on customers and employees. But all that work can be destroyed if anyone has a lapse in integrity, so Glahn embarks on a daily quest to lead by example.

He believes that when you build relationships based on integrity, growth will follow.

“If you set the example, then managers follow,” Glahn says. “You maintain integrity by making sure that you always use integrity and good judgment, and they learn that you expect them to do the same thing. It’s not an option — it’s a requirement.”

Focusing on customers
Glahn met a major client for dinner and during their conversation told the man, “I don’t have a widget. I don’t have a product that comes out of a warehouse that I manufacture that answers all your problems. What I sell is a relationship. What I sell is customer service. What I sell is a partnership and not a vendor relationship.”

That approach helped Glahn grow Solarcom to $400 million in revenue last year.

“Nobody spends money simply because they have nothing to do on Friday,” Glahn says. “They have a problem. They have a business issue they need solved, and that’s what you really need to do. From a business perspective, that’s how you make money. ... Put yourself in a position to be a partner and not a vendor because vendors are a dime a dozen — they come out of the Yellow Pages. You have to provide service.”

Glahn starts with pricing. He has no qualms about making money, but he knows the difference between making a profit and ripping people off.

“It’s more important to me to have a long-term relationship with our customer than try to gouge somebody and try to find new customers every year,” Glahn says.

He uses old-fashioned rules like returning phone calls and e-mails within 24 hours to nurture customer relationships. But creating solid customer relationships extends beyond their inquiries. Employees call and ask customers everyday questions simply to touch base. “When people spend a lot of money with you, the only contact they hear from you shouldn’t be, ‘What are you going to order this week?’” Glahn says. “Every once in awhile, it’s nice to get a call from someone and say, ‘How are you doing? How’s the weather? Did you go skiing?’”

His executives also periodically visit customers and they never talk about selling. Instead, they listen to the customers’ problems and help them find solutions, even if that solution doesn’t benefit Solarcom. “I would rather promote a concept to someone that saves them money and literally costs me money than try to oversell to make money, because when I do that, I’m going to stand out among my competitors, and they’re going to do business with me next year and the year after and the year after,” Glahn says. “We’ve been here 30 years. I want to be here a lot longer, so we look at everything as a long-term relationship instead of a short-term gain.”

Nurturing relationships extends beyond just the good news. Glahn says it’s important to share bad news immediately to maintain credibility and integrity.

“Bad news doesn’t get better with time,” Glahn says. “If you have some bad news, you need to do it. We’re definitely not perfect. We make mistakes. The real issue is how you respond to those mistakes.

“We want to do business on the basis that I’m not perfect. I can’t promise to be perfect, but I can promise to always plan to do the best I can to be perfect, and if I do something wrong, I’ll fix it, and I’ll fix it at my expense, not yours.”

A team based on integrity
These approaches to customer service sound great at the top, but it requires a lot of effort to ensure that Glahn’s 350 employees live up to them as well.

And that starts with hiring like-minded people. Glahn takes a long time when hiring and has lost potential candidates because they grew frustrated with the interview pace.

“I’d rather lose some than hire some that were a bad fit and didn’t take the time,” he says.

He looks for people who will uphold integrity and model it for others to emulate.

“You have to get up in the morning and look in the mirror, and if you look in the mirror and don’t like what you see, then what do you got?” he says. “That’s a terrible way to live. I’m not going there.”

Potential hires may talk to as many as seven managers during interviews — even those they wouldn’t be working for — because Glahn wants everyone’s opinion. The final interview is with him, and he doesn’t look at resumes — that’s for the managers to evaluate.

Instead, he wants to get to know candidates as people, which often starts with how they respond to his office, where one can’t look anywhere and not see a family member’s photo. He uses his family as a talking point to see if candidates value time outside of the office, or if they have more of a churn-and-burn style. “I’m very clear to our people — I want you to work hard,” Glahn says. “But your job’s not more important than your family. If your job comes before your family, eventually you’re going to be an unhappy person, and if you’re an unhappy person, that’s going to show up in your work. “You work so that you can take care of your family. You didn’t have a family because you had a job. Life’s kind of short, and there are so many things out there that just make you a better person when you have something you look at and that’s what drives you to work. Heck, I’d rather lay under a coconut tree and drink margaritas. The reality is, I use these pictures around my office as a motivator.”

Glahn encourages his employees to be motivated in similar ways.

“I want them to go home,” he says. “I don’t want them to work 10 hours a day. If you’re doing that, you’re probably not working smart. You may be working hard, but you’re probably not working smart.

“You need to go home. You need to see your wife, your kids, your boyfriend, your girlfriend, your partner. You need to take care of that because if you don’t, you’re not going to be a complete person.”

As he hires people receptive to that environment, they grow with the current employees, bonded by common ideals.

“It’s no different than a relationship with your spouse or significant other,” Glahn says. “When you first met, it wasn’t the same as it was two years later, right? They just start melding together, working together, and start respecting each other.”

And if employees respect each other and customers, they don’t need the shelves full of procedure manuals that most businesses have. It all boils down to doing the right thing.

“If you follow that one rule, you could save 3,000 trees,” Glahn says. “You don’t need all that junk because it all brings you back to one sentence — do the right thing. Sometimes the right thing may not be the right thing for your pocketbook.

“People come in here with what they think are complicated issues. I look at them and say, ‘Well, what’s the right thing to do?’ ... It’s not that complicated. People get used to following that kind of protocol.”

And when people uphold integrity and perform well, he makes sure to communicate that.

“The tap on the shoulder — hey, you’re doing a great job, or that was a good presentation — sometimes that’s worth more than money, and sometimes companies take that for granted,” Glahn says. “They forget that people are just people, no matter how tough on the surface they are or how professional they are or how advanced they are in terms of their success.

“I don’t care who they are. They could be Lee Iacocca or President Bush, it doesn’t matter. Occasionally, it’s nice for someone to say good job, and good job doesn’t come in terms of a check.”

The company also rewards top performers with incentives. Last year, it thanked them for their work by taking 85 couples to Costa Rica for vacation. Whether it’s a pat on the back or an exotic vacation, it all starts with caring about people. “Focus is the key not only for (business) but for the culture,” Glahn says. “Culture and the way people act is something that has to be reinforced literally every day. If I go to the coffee machine and it’s running low, I make coffee. ... You have to do things like that and set examples. “You have to focus on not only the business of making money but the business of taking care of people. It’s the business of leadership, and leadership has a lot more to do with people than it has to do with money.”

HOW TO REACH: Solarcom Holdings Inc., (888) 786-3282 or www.solarcom.com

Sunday, 31 December 2006 19:00

Cathy Baron Tamraz

Cathy Baron Tamraz has spent 26 years with Business Wire, and she works hard to make it a place where her employees will want to spend a long time, too. Offering perks such as a company condo in Hawaii that employees can use creates an environment that people want to be part of. Tamraz figures that if she takes care of her 500 employees, they’ll take care of the $130 million commercial news distribution company. Smart Business spoke with Tamraz, president and CEO of Business Wire, about the secret to retaining employees. Understand people.
I’m all about the people that work here and that I deal with outside, as well. It’s a relationship business — they all are. Understanding psychology, that’s always helpful because knowing what motivates people and how to get them to work for you and feel good about the company, themselves — it all flows together.

Make work a home away from home.
A lot of what we do is about longevity, so it’s an encouragement to stay with the company.

Coming to our organization, we want you to find a home here, and we try to match skill sets and promote and reward. Obviously money is important. Beyond that, it’s feeling appreciated and noticed.

We don’t have a lot of layers here — we’ve got about 500 employees, so your work is recognized and acknowledged. It’s pretty simple: You work hard, you get rewarded, and if there’s other opportunities, we’ll look from within first to promote.

Hire employees with multiple skills.
There’s not one prototype, but you want someone who wants to stick around awhile and learn and is open. Well-rounded works better than someone who has a particularly strong skill set in one area.

We’re in a really fast-paced environment, so you’ve got to be on your toes and be able to multitask. You need good computer skills, good communication skills.

Rely on your managers.
I tend to want to control everything, and not in a bad way, but just know about everything, because ultimately, if the buck’s going to stop with me, I need to know about it. I’ve gotten better in trusting people because we’ve got so many talented people to own different segments of the business and get it done.

Select some key managers that have a particular skill set that can get it done. Empower them to make decisions and go out there and do the research and then execute.

It’s about the team. Nobody does this alone. You have to have a really great team around you and work closely together, and there’s that whole trust. Sure, one of us is going to stumble once in awhile, but we pick each other up and keep going.

Prioritize employees and watch the bottom line.
We’re a no-debt company. If we don’t have the money, we don’t do it.

Our motto was proven right in the tech-wreck. Many of those companies were trying to grow by press release, and they were overex-tended. We had a lot of technology companies that use Business Wire, and we felt a trickle-down effect, but we didn’t have any layoffs — not one — during that time.

We said, ‘These people we hired to be with us and grow with us, and we’re going to find something else for them to do until we recover,’ and we did. It speaks to the fact that we weren’t overextended.

The people that work here, that’s how they stay. We have good benefits, but more than that, there is that care. You spend a lot time with everybody in your office. They become like your family. If we take care of our people, they’re going to take care of us, of our clients, which is what it’s all about.

Address problems as they arise.
Sometimes you have to course-correct. We hate to do it, but there are requirements, and we’re an aggressive company, so we might have to change the manager or salesperson.

There might be a good reason for that. An industry might be lagging, so we might have to ride that for a while, and maybe they’ll have to look at some other ways of selling. They might need to be retrained in some area.

Most of the time, you’re going to find out you’ve got the wrong person in the job. Someone might be good at one thing, but they’re not that good at something else. They’d be better off in a different position. It’s matching up skill sets. They’re not happy, either. It’s kind of refreshing when the person says, ‘I’m feeling stressed out — this is a relief to hear.’ It’s identifying it early and communicating.

Learn from mistakes.
You’re always going to keep learning. I don’t think anyone should ever get so cocky to think you’ve got it all figured it out because nobody does.

It humbles you a little bit. Always keep a little grace for other people, and hopefully you’ll get the same when you need it.

Be tough.
I have a little newspaper clipping headline on my PC, and it says, ‘Nerves of steel.’ It’s stressful. Lots of things happen, and you have to be prepared, but you can’t anticipate everything that’s going to happen on a given day.

You’ve got to be flexible, and you need to be able to take that deep breath and think about it rationally before reacting. Then you address the issue head-on, you deal with it straight up, and you move on. The one thing I do is, we have a problem, immediately communicate. That takes a lot of the sting out of the problem.

You take your lumps and you fix your problems and you just move on. That kind of attitude serves everybody well.

Have strong values.
Keep it simple. It’s like the old values are the good values, and if you live your life that way in business and [in your] personal life, you pretty much can’t go wrong. Hard work and being focused and being passionate about what you do — if you don’t have that, I don’t think anything really happens.

HOW TO REACH: Business Wire, www.businesswire.com

Sunday, 31 December 2006 19:00

Growing from pain

When John P. Hayes took over HomeVestors of America Inc. in early 2005, it was to fulfill the company founder’s dying wish.

Hayes switched careers from consultant to president and CEO, and began nurturing the real estate company’s culture while creating a focus on growing profits. He convinced his 80 employees and 250 franchisees that the company would grow and, true to his word, 2006 revenue grew 17 percent over the previous year to a projected $38 million, and the number of employees doubled.

Smart Business spoke with Hayes about how giving away gas cards and going to Texas Rangers games help foster an environment that makes employees want to stay.

Q: How do you communicate change to employees?

[Support] didn’t happen by me sitting in the ivory tower sending out e-mails or letters. I get in front of them, and I speak very frankly with them.

I’m not going to tell them something I don’t believe to be true or know that is true. They respect that, and that’s a lesson I’ve learned through the years from my clients, that when there’s trouble in paradise, don’t run away from it — get out there and face it.

We also have opportunities to meet throughout the year with all of our employees and in our weekly staff meetings. The vision, mission and our code of values are discussed frequently.

Employees rank-order our code of values and how well we’re living up to our code of values. The bottom two that don’t fare, we make a concentrated effort in the next 90 days to improve our ability of that value that seems to be lacking.

Q: How does establishing those values help the company?

When they see that we don’t only talk about the code of values, but we live up to the code of values, then that creates an environment important to growth because you need to keep these employees — they’re your internal customers.

We need to develop a relationship of trust with them, so when we tell them something, they know we’re not just fooling them or lying to them. We’re telling the truth. We have a value that says we communicate honestly, and that helps keep walls from building.

We also have a value that says we ask for clarification when we don’t understand. That’s huge because if I ask you to do something, and you think you know what I mean, but you’re not sure, and you go away and do it and come back, and I blow up, that doesn’t help anybody.

If you’re getting direction, seek to understand what it is. That eliminates many of the stresses.

I was a consultant for most of my life to franchise companies. I would see a founder or CEO knew what he was trying to accomplish or what she wanted to do, but the 22 people working for them had 22 different ideas of what they wanted to do.

That retards growth, and that’s the first step, assuming you have a great company with a concept that produces results. Make sure that every internal customer or employee understands this is what we’re trying to achieve, and this is how we do it, and these are the standards we’re trying to live up to, and if you don’t like our standards, or you don’t want to fulfill our vision or help us do that, we’ll be happy to help you find a job somewhere else, but you can’t work here.

Q: How do you maintain the culture?

Focus on fun, which a lot of companies don’t do. We sent five of our employees and their guests to the American Idol tour concert. Several times in the last year, we’ve said, ‘The cost of gas is outrageous, and you have to get to the office, so here’s a gas card. You don’t have to win it or qualify for it — it’s on us.’

We took the entire office to a Texas Rangers game and rented a skybox. It’s costly to us, but these are our customers and important people to us, so we need to help them and take care of them. We do things where we make them feel like this isn’t just a place to work, it’s a place to stay for a long time.

We believe in continually enhancing our knowledge and skills. We’ve established a reading room that’s stacked with books and magazines and really comfortable chairs.

We encourage people. If you want to learn more about marketing or finance or real estate, we have the materials for you, so borrow these CDs or books.

I don’t like to compare it to a family because that’s more sacred and personal, but we spend more time here than with our families, so it’s a culture in which they feel comfortable and know they can have fun, and there are not barriers.

HOW TO REACH: HomeVestors of America Inc., www.homevestors.com

Sunday, 31 December 2006 19:00

Robert B. Weltman

When Robert B. Weltman attends conferences, he doesn’t go for the chit-chat and friendly banter. He’s there to learn, to listen and figure out what the new issues and needs are so that he can convert what he learns into a creative business plan for Weltman, Weinberg & Reis Co. LPA, the 950-employee, $68 million creditors’ rights law firm of which he is senior partner. Smart Business spoke with Weltman about the need for speed in implementing ideas and why it’s important to set a good example for employees.

Delegate. Learn to delegate by having confidence in the people that you delegate the responsibilities to. Lead and guide them where they need assistance. Measure them by how creative and original they are with the ideas they come back with.

I will also measure it by how quickly you’ll get back to me with the first round of responses, and I’d rather have a person pushing me for feedback than me constantly going to them asking for the status.

Look for people that are very busy. If a busy person agrees to take on a responsibility, you know that they’ll complete the task. I like people that ask a lot of questions. I like people that understand, by their body motions and their actions, what the task is about.

I like people that listen and understand the concept of what I’m trying to delegate instead of scribbling down a lot of notes.

Communicate your vision. It’s more difficult to retain the No. 1 spot than to achieve the No. 1 spot.

When somebody is ahead of you, you know what you have to do to pass them by, but when you’re No. 1, you have no one to look up to as to what your goals are. You’re fighting against the invisible giant that is out there.

Continue to do well at what you’re doing, but also realize that others are attempting to achieve what you’re doing. You have to come up with new and better and more creative ways to complete the job that have not been touched upon by other organizations or people.

Implement ideas quickly. Sit down with your most trusted employees or leaders, kick the idea around and weigh out a schedule of what you want to do and how you want to accomplish it.

You have to get started right away. You can’t just sit there and let it linger. Be proactive in addressing whatever it may be. Ideas tend to become stale, and too many people like to say, ‘I’ll get to it when I have a chance.’

To be best at what you do, you must address the idea immediately rather than let it just drift along. Too many people like to procrastinate and put things off.

Don’t let it become a stale idea.

Set the example. I’m not the kind of person that comes in late while the employees are working. I’m not the kind of person that leaves early and lets the employees work.

I get here early and I work longer and harder hours, so I set an example by the way I conduct myself in the office and in the workplace. Being a good leader requires you to do everything, if not more than, what your employees are doing, so they can see that you’re a contributing member of the team.

Don’t rest on your laurels. If you did a good job on something, that was yesterday’s news, so what are you going to do for me tomorrow?

Too many people, when they achieve some level of success, become stagnant and hope that the idea that they’ve created will last indefinitely. Once you create an idea and a product, immediately focus your attention on the next idea or product that you’re going to come up with.

Listen and learn first. When you start at a place, start at the beginning. If it’s a warehouse, work in the warehouse. If it’s an office, do the initial grunt work.

When I started at the firm, I was the lowest employee. I picked up the mail. I put files away. I pulled files, and I did it until it became second nature.

Like any athlete, the way you become good is to constantly do it over and over

again so it becomes second nature. The quicker you learn basics, the faster you can go to the next level.

Be patient, keep your eyes and ears open, and master every part of the job that you’ve been delegated. Know your customers. Know your industry. Know your field. Become a important part of what you’re doing.

Don’t just jump in and say, ‘This is a great idea,’ and have a schedule of when you want to achieve success.

Give a professional product. Too many people are too negative on their ability to accomplish. That’s one of the reasons I’m so sour on the Cleveland Indians — not because they’re losing, but because professional athletes should not perform the way that they’re performing. For the kind of money they’re getting paid and the kind of money we’re paying to support them, we’re entitled to a much more professional product.

I’m the same way in my practice. My clients are coming to me for help. They’re paying me good money to give them help, and I have a sense of responsibility because somebody has come to me and asked for help. I owe it to them to come up with a creative solution for their problem.

Go the distance. Too many people aren’t equipped to run the marathon. They like to run the dashes, and they like to run the relays, but very few of them are prepared to dedicate themselves to be the best at what they do.

The best athletes don’t just wake up in the morning and perform at that level. They work hundreds and thousands of hours behind the scenes refining their skills. If you went to a basketball game, before and after the game, Larry Bird and Magic Johnson and Michael Jordan would be out there practicing.

You say, ‘Why do they have to practice? They’re the best.’ The reason is simple. You can’t be good at what you do unless you’re ready to give the job all of your time and attention to be the very best at what you do.

HOW TO REACH: Weltman, Weinberg & Reis Co. LPA, www.weltman.com

Friday, 24 November 2006 19:00

Rocking the boat

Throughout his management career, Kirk Rothrock rarely understood the meanings of all the buzzwords and catch phrases that make up corporate mission statements, much less how they affected him.

“It appeared that my job was completely unrelated to what these sayings on the wall were,” Rothrock says. “It seemed to me that there should be a connection that if you’re going to make some statements about what you are as a company and what you’re going to be, your employees should be connected to that.”

He vowed that if he ever ran a company, he would create values that employees actually understood and related to their jobs.

Today, as chairman, president and CEO of CompBenefits Corp., Rothrock is doing just that. He joined the employee benefits company in 2003 after its revenue had declined 18 percent in two years. Coming in, he saw employees who were too inwardly focused and caught up in doing their jobs without much regard to customers or how their jobs affected customers.

If he could get employees out of their silos and understanding how their responsibilities impacted other departments and customers, the company could grow again, but that meant overhauling the corporate culture. He thought it would be a quick and simple process but slowly learned that an effective cultural shake-up takes a lot of time and repetition.

“In three weeks I could have gotten the (values) list that somebody came up with in their office — that’s the kind that I used to work for,” Rothrock says. “And I’d say, ‘Who thought these things up? Did we talk to anybody? This is out of a book somewhere. Sense of urgency? Customer focus? Well, what does it mean?’

“No one could describe them for you. That’s why I said, ‘Let’s do this right. Let’s take some time. Let’s engage our people and get it right the first time,’ and we have.”

Finding a focus
Rothrock wasted no time in making changes. He brought in outside people he had worked with in the past and whom he trusted to develop values rooted in the employees.

To get buy-in, the changes needed to include the employees, and over an eight-month period, this team spoke with about 60 percent of the 750 employees.

“The culture wasn’t what I wanted it to be when I got here, but still we had good people,” Rothrock says. “Generally, there were good people who were trying, so we started there and evaluated where we were today and offered up some different kinds of values and beliefs and tried them out on people. “They didn’t come in with a textbook answer and say, ‘These are the kinds of things your company should be like. This is what you should emulate,’ with no relation to what was already embedded in some of the folks in the organization.”

Rothrock made sure everyone knew how they related to the new values.

“We spent the time to describe that clearly, so that when people read the poster on the wall, they had a pretty good sense of what it was,” Rothrock says. “We followed up and continue to follow up to this day with providing context — ‘Let me describe what I mean when I say this. Let me describe what that means to our customers. Let me describe what that means to my expectations of you. Let me describe how it impacts what you do every day.’”

Employees are taking it to heart. One data entry employee, who corrects problem claims, views her job as a daily opportunity to demonstrate the company’s dedication to its customers. She puts herself on the spot to show other workers how to fix problems so that they aren’t repeated.

She acknowledges that customers come to CompBenefits expecting a high level of service, so by showing others how to do better, she helps them better meet customers’ service expectations so that the customers stay with the company.

Creating buy-in
With any change, it takes a continual effort to get people on board and moving with you.

“It’d be nice to say I sent a memo out one day, and the next day the entire organization was behaving differently,” Rothrock says. “That’s not the case. It has taken years. I’m surprised. ... It has been, in a word, repetition.”

He started by setting an example — leading meetings, explaining business plans and connecting the dots between decisions and values so that employees understood the changes.

“When we succeeded, we pointed back to where in the culture this fit in,” Rothrock says. “When we failed, we were able to show that we were undertaking actions that didn’t line up with any of these kinds of things.”

It wasn’t enough for employees to nod and smile during the evolution, either. They needed to really understand how they affected other departments and to care about how those other departments performed, as well.

“They could be a bad citizen as long as the work got done one way, shape or form,” Rothrock says. “Part of all this is understanding the entire process and understanding that what we do affects our customers.”

To shatter this silo approach, Rothrock explained to employees that for the company to truly focus on customers, every person had to focus on correctly completing responsibilities the first time. The company maintains a 99 percent accuracy rate in claims completion, but that 1 percent of inaccuracy equates to about 20,000 mistakes a year.

“Loyalty, or our measure of persistency, is key,” Rothrock says. “When you make a sale, initially you’re making a promise. You’re saying, ‘Buy from us, and everything you want, we’ll do. You’ll be happy with what we do for you. I promise you.’ “That’s easy. It’s during the course of the year when all 750 employees have to make good on that promise — have to actually send out a bill that’s right, have to pay a claim correctly, have to answer the phones and provide a high level of service. The real measure of success is this loyalty factor. At the end of the year, when the employer says, ‘Do I renew with CompBenefits ... or do I walk away because they didn’t fulfill my promises ... I’ve been able to bring back to our employees and say, ‘Every one of you have an impact on whether these customers stay with us.’”

 

As with any change, some people didn’t like it and left. Turnover was higher during that initial transition period, but Rothrock didn’t let the anxiety of losing employees and managers permeate the company. “Every opening was a new opportunity to go out and recruit the kind of people that did fit, that did want to be aligned with our culture, that did want to be aligned with our beliefs,” Rothrock says.

He focused on getting new people with commitment and energy to knock naysayers off the fence.

“Being surrounded with more people that believed and were encouraging, we clearly had a lot of converts, if you will,” Rothrock says. “A lot of people that were initially on the fence ... when they saw new people come in, they said, ‘Hey, I’m going to jump on that bandwagon. I’m going to buy in to this. I can see where we’re headed as an organization.’”

Changing habits
Getting people excited about new possibilities is one thing but ensuring they don’t revert to their old habits is another story. To combat this, Rothrock overhauled management reviews to make them less dependent on numbers and more focused on how managers engage with employees.

“If people weren’t quite sure that we were serious about this, the first time they were reviewed under the new framework and format for annual reviews, the first time they saw those, they got religion, if you will,” Rothrock says. “No longer was it good enough just to get your job done and turn in the production numbers.”

 

Employees also completed quarterly satisfaction surveys about how well they felt their managers did in providing them with training, tools and understanding the values.

Any manager who scored below a set standard received six months of remedial training and tools to become a better manager. After every manager consistently met that standard, Rothrock raised the bar and worked with the bottom five performers, no matter their score, to increase their effectiveness.

“Now you have more managers who are spending more time with their people, making sure their people are doing the right things, are motivated, enthused and working with other departments,” Rothrock says.

Rothrock didn’t want to ignore the frontline employees, either. He wanted to better engage them so they would have a higher level of job satisfaction and stick with the company, creating a sense of comfort for customers.

He instituted product training programs that, once voluntarily completed, allow employees to field calls regarding the product they trained for. Employees can train for several products, allowing them to have a more interesting day by fielding calls on several topics instead of one. They also receive a slight pay bump for each program.

The programs give employees some control over their job responsibilities and pay scale, and CompBenefits benefits, as well, as its turnover rate has fallen by half since it instituted the program.

“People haven’t changed jobs,” Rothrock says. “They’re not demanding to be promoted. They’re not saying, ‘I’m bored. I need to quit and go somewhere else.’ The job satisfaction has increased dramatically.”

Paying off
Although slow starting, Rothrock now sees the fruits of his labor. Revenue has grown 17 percent over 2003, as CompBenefits hit $323.8 million last year and expects to post $347.5 million for 2006.

“Revenue is the measure of how valuable customers think you are,” Rothrock says. “Are they willing to pay you to do what it is you do for them? Do they see value in it? Did they spend a dollar with you? Did they get enough value back that they were happy to spend that dollar, and they’d spend it again?”

And as CompBenefits continues to grow, it maintains its focus on teaching employees about the values any time decisions are made. Continuing education and training, combined with positive reinforcement, have created a culture of happier employees who are working harder to ensure that the current error rate of 1 percent is reduced so they are rewarded with customer loyalty.

“When we serve them the way they want to be served, they reward us with their loyalty,” Rothrock says. “They don’t go to a competitor, and we build our business that way by having a customer stay loyal to us and begin to build a customer base.”

Rothrock has learned to have patience and stay the course, even if progress can’t be immediately seen along the tumultuous journey because eventually, the rewards will appear. He’s finally reaping his rewards, as the company just earned its largest contract ever, a contract he says it wouldn’t have earned two years ago because of how different the culture was.

“The bottom line is it’s not just nice talk and having people with smiles on their face, but there is a business result that comes from this,” Rothrock says. “I really think that our success and the growth that we’ve had the last year or so is directly attributable to having an organization that is aligned behind a common set of organizational beliefs and a common goal.”

HOW TO REACH:CompBenefits Corp., www.compbenefits.com