Kristy J. OHara
When Stephen Newlin arrived at PolyOne Corp. more than five years ago, the biggest challenge he faced was the company’s culture.
“The morale wasn’t good, and the people didn’t seem to feel like they were winning or had a road map toward success, and the company had been in a state of decline for a long enough time that people were frustrated, and a lot of talent had left,” the chairman, president and CEO says. “The biggest challenge was trying to find a way to instill confidence and give them hope for the future and get them to believe in the future.”
He started this daunting task with a classic leadership principle.
“One of the first things you do is assess what you have and assess the situation,” Newlin says. “People tend to try to find a project that they think they have a good chance of winning and make it high profile. When you hit on that, it spreads throughout the organization, and it helps build the confidence that’s so important and lets people realize, ‘OK, we did have a common cause, we got together for it, and we feel good about it.’”
Newlin thought the case was simple. He has an engineering background, and he started in sales engineering dealing with customers, so he approaches business from a customer-centric standpoint. He was fortunate when he started that PolyOne had just done a customer satisfaction survey.
“I was pleased that we had done that, but what we hadn’t done was really acted on it, so I went through it and talked to some of the people that were around — what did you learn from this?” he says.
What he learned was they were about the same as their competition. PolyOne’s delivery rates were 81 percent, and the competition’s were between 81 and 82 percent.
“The incumbent management team at the time said, ‘Let’s not worry about this because we’re about the same as the competition,’ where I viewed it as an opportunity to differentiate,” Newlin says. “I said, ‘Listen, we can do a lot better than this. I know we can from past experience.’”
He had worked in industries somewhat similar to PolyOne, a provider of specialized polymer materials, services and solutions. At one of his previous stops, his company had an on-time delivery rate at 95 percent or above.
So he decided that in the course of the next 18 months, they were going to rise from 81 percent to 95 percent.
“If the competition wants to follow, that’s fine,” he says. “If not, we’re going to separate from them.”
He suspected that if they could spring out in front of the competition that the company would not only have better customer service and get stronger, but that people would likely feel like they make a difference and that the company is going somewhere.
He says, “It was a way to energize people, to get them to come together toward a common cause and to begin to see things differently at our company in these early phases.”
Get the right people
He started the process by assigning someone internally to be in charge of making sure PolyOne hit this mark, so every day when that person came in, that was his or her primary task. But it wasn’t an easy task. If a customer called that morning and wanted an order by the afternoon, even though it wasn’t possible to get it to the customer that quickly, PolyOne considered it a strike against the person’s score because the company wasn’t able to meet the customer’s need.
“That’s how you get things done,” Newlin says. “Our company suffered from a lack of accountability. It was something our board recognized. It was something I recognized on day one. I felt we needed a person whose job it is to make this happen, and I’m going to support them and the officers are going to support them.”
Even though only one person was tasked with making sure he or she hit this goal, the entire management team had to buy in to the strategy. While Newlin had the overall state of the company working against him when he came in, he also had some things working for him to get that crucial buy-in.
“Working for me were people that were ready to embrace change, that were tired of the declines in bonuses and not getting salary increases and not seeing the stock price appreciate and just sort of frustrated with where we were going,” he says. “They were working hard, and they weren’t seeing any real benefits, so they were eager to embrace change. … They didn’t know if what I was saying was right or not. They didn’t necessarily buy in to everything I said, but they did buy in to the concept of significant change.”
Major change and incentive aside, he worked on trying to convince them to buy in.
“If you’re selling to the customer or you’re buying or selling a business, you have to understand people’s motives because we all have things that make us tick and cause us to behave in certain ways,” he says. “Then I think you have to appeal to those motives, so you have to put things in a language that’s meaningful to them. Then you have to start with the right ingredients — the right people.”
But how can you tell who the right people are?
“You have to have people who are open-minded, who understand in business today, the rate of change is very brisk, and if you’re not prepared to move quickly, somebody’s going to run right by you,” he says. “Those things are the starting points. Then you get into talking their language and helping them understand what’s in it for them, and that doesn’t always have to be materialistic or money. It could be recognition or a sense of fulfillment or achievement, but appealing to them on a very human basis — here’s why we have to do this, here are the alternatives — and selling them.”
The right people rapidly become apparent because not everyone signed up. Newlin says he could see pretty quickly who was just nodding their head to agree and who actually had the heart for it, so he made massive changes at the management level, overturning two-thirds of the officer corps of the company. He didn’t start right away, but within six months, he started making changes.
“You try to give people a chance and sell them and motivate and inspire them, but in the end, if you can’t change the people, you have to sort of change the people, so we had to do some of both,” he says.
That continued for about a year. As people left, Newlin hired people from leading companies that bought in to what he was trying to do already. In doing so, they, in turn, cascaded that process down. Someone would come in who bought in, and about six months later, he or she would start cleaning out and augmenting his or her team to get people who bought in.
“It takes two or three years to get those players in place at the right levels in the organization,” he says. “That doesn’t mean you wait until then to make things happen, but when things really start to gel like they are for us now, and they’re harmonized, I think it’s about three years.”
Stay on task
As each quarter went by, that on-time delivery rate inched up, and after five quarters — and ahead of schedule — PolyOne reached 95 percent.
“They felt really good about getting a victory,” Newlin says. “It wasn’t a victory in terms of earnings per share, but it helped them understand that with some direction, and with a strategic plan and a focus, they could begin to do things that felt successful. It’s a small victory, but it’s not insignificant in terms of transforming the culture at the time.”
With one small victory under his belt, Newlin was beginning to think bigger. In late 2007, he did something many would deem crazy: He publicly rolled out all of PolyOne’s goals that he wanted to achieve by the end of 2012.
“It was risky, and we said, ‘Here’s what our financial objectives are, here’s what our innovation objectives are, here’s what our globalization objectives are,’ and we published them,” he says. “It might have been foolish, but it was one of the best things we ever did because it put the pressure on us. It said to the organization that I and my team will be held accountable.”
This was something that the employees needed to see. They often snickered and joked about different initiatives being the flavor of the quarter because leadership would start down a path with something, and if they didn’t see results in a quarter, they typically abandoned them.
But while the employees liked seeing this, investors weren’t as optimistic. At one point, he remembers doing this in Chicago and could see the investors shaking their heads in disbelief at how ridiculous they thought it was.
“There’s no question they were skeptical, but I just laid it out — ‘This is not going to be a cost-cutting exercise. This is going to be a specialization strategy, a differentiation strategy, and it’s going to take us time. If you’re the type of investor who wants to turn your portfolio every quarter or two, you’re not going to be happy,’” he says.
He and his team worked harder to pursue longer term investors who really understood the story and rationale behind it. Some people believed in it, and others didn’t, but he continued pushing PolyOne forward.
Demonstrate your value to customers
As PolyOne moved forward, the company was now meeting its on-time delivery rate goals, which was a great improvement to customer service, but it now needed to show the customer why they had to pay for this type of service.
“I think we used to think we were customer-oriented whenever we would drop price to keep an account, even if it meant losing money on an account,” he says. “That’s not the kind of customer you can have an ongoing relationship with. This is not the Red Cross. This is a business. This is a public company, and we’re expected by our shareholders to earn a reasonable return and profit on that.”
Oftentimes, customers would somewhat bully PolyOne by saying their competitor will give it to them at a certain price, so they need to get to that level too, or they’re gone. While before, the company often caved and lowered the price, the new PolyOne won’t.
“We usually at that point say, ‘We can’t and here’s why,’” Newlin says. “Here’s what we think we’re doing for you, and if you don’t agree with that, by all rights you should make the change.”
And if a customer decides to leave for a competitor, instead of holding a grudge against them, Newlin views it as a failure on he and his team’s part that they haven’t convinced that customer of their worth.
He needed to align with the kinds of customers who appreciated what they were doing and would pay them for the service and the uniqueness they provided.
They developed a proprietary tool for their sales force that would map the competitor’s program and cost with PolyOne’s by looking at scrap rate, production, electricity costs, speed the machines could run, cost savings for the organization, and time it takes to change over the machine from one to another. By laying out this information, it was easier to show why the premium the customer paid to PolyOne made sense because it would, in fact, save it more in the long run if the company looked at all these other factors.
“We have to be competitive, and we understand that, but at the same time, we can get a premium for the great quality, service and differentiation we have,” Newlin says. “We’re investing almost 3 percent of sales in R&D — that’s the highest we know of in our industry and it’s pretty substantial.”
Showing customers the worth PolyOne brings to the table has been helpful in rationalizing the company’s commitment to not give away its product for prices that aren’t fair anymore.
“We want our customers to use our service, that’s what we’re all about, but they have to pay us a fair price,” he says. “They can’t pay us a price they pay someone else that doesn’t provide that and expect it to all work out.”
While Newlin has been able to take a stronger stance with customers and demonstrate the company’s worth with data, that’s not enough to continue driving PolyOne forward.
“You can’t keep having the old, antiquated, me-too products and expect to get any kind of a premium,” he says.
Because of that, Newlin wanted to focus on innovation. One of the goals he set in those to achieve by 2012 was a vitality index — what percentage of products sold were five years old or newer. In 2006, PolyOne had about 11 percent of its products in that category with a goal of getting that number between 35 and 40 percent.
One way innovation gets emphasized throughout the organization is through the company’s innovation centers. At these centers, customers can come in and view innovative products that have been made by other companies using PolyOne’s products and technologies. Some examples include the soft plastic grips on some razors and tools, metallic-looking plastic parts for some popular car brands, certain colored or scented products for personal hygiene products and BPA-free materials used for sippy cups and water bottles. It helps them see the possibilities instead of just looking at the product strictly by itself in its original form and not for its possibilities. They can also test ideas, and PolyOne provides office space for those who are in town for a few days who need a place to work and collaborate.
Another way Newlin drove innovation was by inspiring his employees to think about it. Earlier this year, he challenged employees to submit innovative ways to use PolyOne’s plastics know-how, formulating know-how or any other expertise customers tell them about. The top three would be rewarded, and anybody could make suggestions.
He thought he and the team would get 150 to 200 ideas, but they received 657. His head of marketing and head of R&D pulled some all-nighters going through all of them, and they determined that 165 of those were viable. The top idea came from an HR person locally, and the second- and third-place ideas came from employees in China.
To reward employees, everyone who submitted an idea got a small reward, and then the top three winners received innovative prizes, made by innovative companies, to reward their innovative ideas. The top prize was a Samsung 3-D television. The other two prizes were an Apple iPad and a Sony Reader.
The top three ideas are in the process of being patented and implemented right now, and the other 162 ideas were divided up.
“They’re not sitting around,” Newlin says. “The businesses have been prioritizing them. One business got 30 of these, and they can’t possibly work on 30 at once, so they’re saying, ‘We’ll do this one first, or we might outsource that one if it’s not a proprietary.’”
It’s created a new problem, but its one he’d much rather have than the polar opposite.
He says that’s how you get the process started — taking what your company knows how to do and then finding exciting and meaningful uses for it for your customers. Then you have to take it a step further and start anticipating the future by asking them questions to understand their needs and try to recognize potential pain points they may not realize they have or will have.
“At the speed at which business flies today, you can’t wait until your customer discovers they have a need,” he says. “You get a lot of that, but you have to get out past them and look ahead and anticipate emerging trends, regulatory driven changes that are going to impact your customers, things that are going to influence their outcomes, and you have to start working on that generation in advance of when the customer even realizes they need it. Then, the moment that it’s there or ahead of time when you develop this, you can take it to them, and they can be the first mover and get a big gain in the market.”
He’s extremely pleased with the progress made — the 2010 vitality index was at 40 percent. He’s also excited to see how much more innovation comes out of the company in the next year as a result of all of these ideas slowly getting implemented.
“We’re not Apple, we’re not Google, but we’re not the old PolyOne either,” he says. “In the context of our industry, we’re very forward-looking.”
With a little over a year left to achieve the goals laid out in 2007, Newlin is confident in PolyOne’s ability to reach those, because he sees a company that has changed tremendously since he took over.
“It’s really a lot of fun now,” he says. “The early years were very challenging. They were very frustrating. I felt like you had to do a lot of work that wouldn’t even be visible to employees or shareholders, but you knew you had to do it, and some of it was difficult work.”
The original culture has long since disappeared, and he now has an engaged culture that is poised to grow the $2.6 billion company.
“Now we’re having a lot of fun at PolyOne,” Newlin says. “The attitude of our employees is very different. It’s a fun place to work, and we work hard. There’s a sense of responsibility, and there’s a great sense of commitment, but people are having fun and getting a lot of rewards and a lot bigger sense of fulfillment than they have in the history of the PolyOne organization. … People feel good about our company, they feel good about where we’re going, and they feel like we have a lot of potential and a lot of room to grow as we rev this thing up.”
How to reach: PolyOne Corp., (440) 930-1000 or www.polyone.com
By the end of 2008, Tom Sanderson had grown weary from his board
meetings — or lack thereof — at Transplace.
The third-party logistics company had gone from four on-site board meetings a year to two onsite and two via phone. But in reality, it had evolved to a point where there was only one board member he could get to regularly attend the two on-site meetings, so everything was really just done over the phone.
“That’s not a good situation as a CEO to have a board that isn’t really engaged in giving you advice and challenging your assumptions and helping you think through the best way to grow the business,” says Sanderson, president and CEO.
To make matters worse, the board consisted of members of the ownership group, which was four different companies, each of whom competed against each other but also competed against Transplace, to an extent.
“That wasn’t a terribly healthy situation,” he says. “Those companies did not have a good, long-term, strategic interest in our business and weren’t engaged in our business, and the board wasn’t engaged in our business.”
This was made clear by the topics of the phone conversations.
“We didn’t really focus on the issues that were of importance to the business in terms of how to grow it and expand it,” Sanderson says. “It was more just sharing of information than trying to solve problems and make improvements.”
So at the end of 2008, he had had enough and decided that something had to give if Transplace was going to be able to grow and improve.
“We really needed to have a change in ownership of the company, and we needed to get a board of directors who would be far more engaged in our business and be able to challenge and help the executive team grow the business.”
Find the right buyer
Initially, Sanderson approached the companies that owned Transplace to see if they would even be willing to sell, and they had a consensus: If the price was adequate, they’d be willing to sell.
With that as the main criteria, he had a lot of leeway, and while the recession was in full swing in early 2009 and he recognized it may not be easy, he also thought it could present a good opportunity.
“Sometimes when you get into a challenging situation like that, it can really create the best opportunity to get a good deal done, because everyone is not out chasing around all kinds of deals,” he says. “They can focus on the ones that really make sense.”
He looked across the industry, and while some companies were interested in absorbing Transplace into their organization, Sanderson wanted the company to have the opportunity to grow independently.
He also wanted a company that would be a good cultural match.
“Make sure there’s a good cultural fit between the two companies, because if you’re not in sync with your financial partners, it’s not going to be a very good experience for anybody,” he says.
Additionally, he needed to make sure that the buyer was the appropriate size for Transplace.
“It’s very important to have a good size match between your company and the company that’s buying,” Sanderson says. … “If you’re a real small company, you don’t want a huge financial backer because you just won’t be relevant, and on the other hand, if you’re bigger, you don’t want someone who’s too small because they won’t have the capital or expertise to help you grow your business.”
In the spring of 2009, a colleague he had known for more than 20 years called him up and said he’d like for him to meet some guys at CI Capital Partners out of New York City simply because he thought that they would be good people for Sanderson to know. The colleague wasn’t even aware that Sanderson was trying to sell the company.
Sanderson hadn’t had impressive experiences with VC firms. He was used to getting squeezed in for meetings the next time he was in town, and even had one meeting where the guy put his feet up on the conference table, leaned back, snapped his finger and said, “OK, let’s go, let’s hear the pitch.”
Despite that, he called CI Capital, and something impressed him in the first conversation: One principal said he wanted to come to Dallas and get to know his business and team.
That principal visited Dallas in May for an initial meeting, and Sanderson was clear about his expectations for how they would work together and for what he wanted in board members.
The meeting went well, and shortly thereafter, CI Capital came back to Dallas, this time with more people, and Transplace also brought more of its top people to these meetings. They also took time to have dinner together and socialize.
“It’s important to have a little time to socialize outside of just the meetings,” Sanderson says. “[Before] our board meetings, we have dinner because it gives you a chance outside the business environment to get to know people and see what they’re like. Those things are important in due diligence — you can tell a lot about a person about how they treat the waiter.”
Another good sign was when CI Capital’s leadership offered up the names, office numbers and cell phone numbers of other CEOs in its portfolio and told Sanderson to call them. He took them up on that offer and asked what they were like as partners, when things went wrong, when things were good, how board meetings went and about their true personalities.
“That is very important to have good reference checks,” Sanderson says.
By July, he knew that CI Capital was the company for Transplace: It had the resources to grow the business and its executives wanted to be involved after the deal.
Move forward together
Once Sanderson and CI Capital decided to move forward, Sanderson then faced the challenge of getting all four ownership groups to actually sell.
“That was a tremendous challenge because they had multiple law firms involved along with the companies themselves and their interests weren’t all exactly the same, so it was a huge challenge,” he says.
In fact, some were far more interested in selling than others. The variety of motives and people he was dealing with got frustrating at times.
“You just have to persevere and just keep a level head and keep working the deal and not let it get emotional when problems come up,” he says.
It’s important to understand what their problems are.
“Make sure you’ve asked a lot of questions,” Sanderson says. “Don’t jump in with the answer until you’ve made sure you understood the issue. Know what you can be flexible on and what you can’t be flexible on.”
If you see areas that are really important to one party but not to another, those are typically the areas you can have that flexibility in. It’s being prepared to give a little bit to get a little bit. But you also have to know when to say no.
“You have to be prepared to walk away,” he says. “There were a couple of points where we said, ‘We can’t go on like this,’ and that has a way of getting people back to the table, as well.”
As he moved closer to closing, he continued watching CI Capital to make sure the decision he made was the right one.
“You also have to be alert, observe, listen and watch as you’re going through that due diligence process,” he says.
The challenges you face leading up the final paperwork can reveal a lot and either give you the go-ahead or give you a reason to hold off.
For example, with all the challenges he faced with the multiple owners, CI Capital was a great source of help and support instead of taking an attitude of indifference or passivity.
“Some things in the due diligence are going to be smooth, and you’ll hit a few bumps in the road, and the way that private equity company works with you to overcome those obstacles says a lot for how they’re going to work with you about the speed bumps you’re going to hit in the ordinary course of business,” Sanderson says.
As they approached the closing, he also made it clear to CI Capital that any of their people who would serve on the board had to be available for day-long, in-person meetings and be willing to invest their own personal money into Transplace — not just the firm’s — because he felt they’d be more interested if their own money was on the line.
“Making sure that those expectations are known upfront is very important,” he says.
Around Christmas, the deal closed, and Transplace got to unwrap a huge gift of new ownership heading into 2010.
Create a strong board
With new ownership firmly in place, a new board was also being created.
“A strong board is tremendously important,” he says. “You can’t underestimate that. Some CEOs like to get a board that’s sort of their cronies that will rubber stamp what they want to do and is sort of a yes-man, yes-woman type of approach, and pat them on the back and congratulate them for doing a good job.
“It’s far more helpful to have a board that you can bounce ideas off of and will challenge your thinking about things. You don’t want a board that thinks they know your business better than you know it as CEO. They can’t know your business as well as you do as CEO — you don’t want them to tell you how to run your company, but you do want them to challenge the way you’re thinking about your business and get you to think creatively and question the way you’re doing things.”
In addition to Sanderson, three of CI Capital’s people were going to serve on the board — including its president, which was a huge vote of confidence.
They then asked Sanderson who else he would recommend to be on the board. He made two recommendations to them, and they interviewed them.
“I wanted people who really understood our industry so that their advice would be relevant but also that had a little bit different experience than I had so they would bring a different perspective to the business than I bring,” he says.
One was a former president of one of Transplace’s major competitors. He had been in the business for 35 years and had experience with logistics technology, third-party logistics and the trucking industry, so Sanderson liked the amount of industry knowledge he could bring to the table.
The second was a former colleague of Sanderson’s when he had worked at a consulting company. This person had been a very senior executive there, so he was very strong on planning and corporate governance and could bring a lot to the table as well.
In addition to the experience you want to bring on, look at the time people have to give, as well.
“It’s probably a good idea to find somebody who’s not acting as CEO or CFO for another company, because people who are running companies, there’s not much time left in the day,” Sanderson says.
The benefit of these two particular board choices was that they were what he likes to call semi-retired.
“If they were running their own companies today, they couldn’t spend as much time on our business as they do,” he says. “I call it semi-retired — not someone who’s retired who’s looking for a chance to shoot the breeze and have a nice lunch or dinner but someone who is semi-retired who does not have the day-to-day challenge of leading a business but is still actively engaged in business enterprises is, to me, ideal.”
On top of that, Sanderson wanted opinionated people who could speak up and also had good experience and data to back it all up with.
“You want a healthy dialogue and debate about the things that are important to the business, so no wallflowers,” he says.
After the interviews, CI Capital accepted both of Sanderson’s board recommendations, and today, he couldn’t be happier with the dynamics of the group.
They have quarterly meetings and every board member is there in person every time, and they get together for dinner the night before to have a chance to enjoy each other’s company and socialize. The meeting discussion has also changed. Instead of simply looking at quarterly results, they dive into those numbers and really pause and ask why and what they can do about it if anything has dipped.
For example, they had one customer they weren’t sure would stay in business, so it caused a long discussion about Transplace’s credit policy, which led to a change to eliminate risk to the company. In the end, the customer was OK, but now Transplace is better poised should that situation arise again in the future.
One or two times a year, they also have separate strategy meetings to focus on a particular topic that’s of interest to the board, such as HR strategy and looking at employee turnover and how to develop future leaders.
Sanderson believes he now has the right ownership and board to grow the $900 million company to the next level of success.
“Now our board meetings have just changed tremendously,” he says.
“There’s pretty healthy discussion.”
How to reach: Transplace, (866) 413-9266 or www.transplace.com
Tom Sanderson, President and CEO, Transplace
As a child, what did you want to be when you grew up?
I wanted to be a baseball player. I loved baseball. I grew up as a Cubs fan — I was born in Illinois — but after 1969, they folded against the Mets, and in ’71 we moved to Boston, and I’ve been a Red Sox fan since 1971.
What was your first job ever as a child?
I had a number of jobs as a child but probably the first one I ever got paid for was working for my grandfather. He baled hay and straw in Illinois. He would let me work on his baler crew stacking hay bales. I was also a paperboy and sold greeting cards. It was Christmas cards or whatever, and you had a catalog and you would go door to door. I think I was in seventh grade maybe.
What did you learn from those experiences that still apply?
I think it’s important to know that when you’re out there working, nobody owes you a paycheck. You have to do a good job, and if you do a good job, it’s going to come with financial reward, but you have to earn it. If you’re selling greeting cards, if you didn’t get the order, it’s like today, there’s no salary — it’s all commission.
What’s the best advice you’ve ever received?
I think it’s more of a role model. My dad worked at IBM and Digital Equipment Corp., and I was always struck by the fact that the people who worked for him really trusted him — he had a lot of integrity. I think that message as a leader and a manager was you’ve got to earn the respect of the people who work for you. Treat them fairly, have high expectations of them, and I think I do too of the people that work for me. Have that integrity, earn the respect of the people that work for you. It was unspoken advice but something he showed by example.
It’s not a secret that every company wants to grow. It’s the corporate trophy that says you’re winning and on the right track. So when Darrell O. Grimes started as president and COO at MAG Mutual Insurance Co. in 2008, he initiated a new, five-year strategic plan to improve and grow the company, and he is already seeing the fruits of his labor. In 2008, the company had $1.45 billion in total assets, and in 2009, that number moved up to $1.54 billion — not necessarily an easy task in the economy these past few years.
The plan he initially created focused on three main areas: make it easy for customers to do business with the company, diversify the company’s risks and take care of his employees.
Grimes knew that if his team focused on these areas, it would mean good things for the company, and just a few years later, those numbers proved he was correct in his thinking. As he moves forward with completing that five-year plan, he’s confident his team will continue to succeed.
“We have a focus, and we have a lot of people pulling in the right direction,” Grimes says of the $312 million company.
Here are the keys to how Grimes successfully led MAG Mutual’s growth.
Create a plan
Before Grimes could do anything to grow the company, he had to know what he was trying to accomplish, so he started with a strategic plan.
Grimes and his team created a five-year plan, and they started by taking the senior staff off-site for a three-day meeting to work on it. The team started with a blank slate.
“Believe it or not, you have to almost start with a white page, to a certain degree, because it’s a changing environment, and you have to be resilient,” he says. “We had to be flexible and resilient and respond.”
They talked about the issues they’re affected by — health care, interest rates, inflation, the economy, the environment, frequency of losses, state issues, torte reform and so on — to see how things were changing and how their new plan needed to look to stay with the times.
“Make sure you focus on things that you can control,” Grimes says. “In other words, you can’t control, and I can’t control, interest rates. You and I can’t control health care reform. You and I can’t control tsunamis and earthquakes that are actually affecting us today. Focus on those things that you can control, but remain flexible and keep your options open, but have a mission and reason for being.”
Following the off-site meeting, Grimes and his team took the planning back to the office and continued to work on the plan there. Then they had an all-day meeting with the board of directors off-site to go through it. After that, they went back and revised and modified it a bit more, and then they made a final, formal presentation to the board, where it was approved. The entire process took about 90 days.
“You just have to talk it through,” he says. “You just talk it through until you finally say, ‘Yes, that’s the best course of action,’ but you have to remain flexible because the future may surprise you.”
It’s also important to keep the future in mind. While some people create plans and proceed to ignore them, Grimes says you have to come back to your plan each year.
“Even though it’s a five-year plan, we meet every year, and we go through the five-year plan,” he says. “It can be tweaked and modified and get new goals and have goals eliminated, which is very typical, so it keeps getting refined — not substantially but modified.”
Focus on your customers
Without your customer, you’d be hard-pressed to do anything in business, so you have to focus on them, which is the second key to growth.
At MAG Mutual, when a customer calls in, the company’s customer relationship management system displays not just the phone number coming in but details about that particular customer, too, such as the products and services he or she has with the company.
“It’s important to have a CRM system that can give us the one-view of the customer, so that we know how many products they have with us, what products they don’t have with us and what we can cross-sell to provide more services to our policyholders,” Grimes says.
When the call is answered, the conversation starts with a simple question — why are you calling? From there, the caller’s needs are met, but after the problem is solved, the representative may ask him or her about what other products and services he or she may need.
“It’s all focused on the customer,” he says. “Solve their problem, and see if there’s any other products that they need that most of the time they may not even know that we provide, or they don’t know we have the product at all. That’s important.”
It’s a common problem. Because the company is seen predominantly as a professional liability company, many customers may not understand that they also sell automobile insurance, homeowner’s insurance, business officer insurance, workers’ compensation and other products. By educating customers, it opens the door to better serve their needs and helps MAG Mutual grow.
In addition to the service they provide when customers call in, Grimes and his team also get out to talk to customers to find out what’s going on in their medical community. He says there’s a lot of differences in the delivery of medicine based on where you are, so it’s critical that they understand the issues facing their different clients.
“We want to understand what’s going on where they are, and that helps us to understand the issues a little bit better,” Grimes says. … “If you don’t get out and talk to your customers, you won’t know what’s going on, and you may not hear it from your staff.”
Grimes says the key is to listen — plain and simple. He and his team do this through larger meetings with customers and also by taking them to dinner.
“That’s probably the only tip I’ve got, because I don’t think a lot of them really listen,” he says. “My insurance company doesn’t really listen to me. When was the last time your insurance company took you out to dinner? That’s what we do. We’re not the same. We go above and beyond.”
Focus on your employees
The third key to Grimes’ success has been to make sure he listens to and takes care of his employees.
“If you take care of your employees, they will take care of your customer,” he says.
Grimes says his employees are a large part of MAG Mutual’s success, and to make sure that continues, he makes sure to communicate with them what his plan is and how they play a role in it. Sometimes it’s easy for employees to get lost in the overarching company strategy, but Grimes makes sure that’s not the case. He has shared-goal meetings where he and his team take a half a day and look at different goals and decide who will own that. From there, they look at who supports that goal.
“We always assign the goal to one individual so they are the primary individual responsible for the success of that goal, but they also know who’s in support of that goal, and then those are passed down to their support staff and their ultimate staff, as well,” he says.
This results in alignment to the corporate strategy. He wants employees to care about the strategy and its goals, so if the corporation hits its goal, then they get a bonus based upon how they met their individual goals.
And it’s not as if employees are blindly working and have no idea where they’re at. One of the big things Grimes communicates with them about is the company’s financial performance.
“It’s important that they understand that we’re all in the same boat and we’re all rowing in the same direction — that when times are good, they all get bonuses, and when times are not so good, we may get a smaller bonus or no bonus at all,” Grimes says. “If we don’t all pull together and understand what the financial results are, we will not do as well as a company, and we won’t service the clients the way we want to be serviced. It’s an open-book policy.”
In addition to talking about the numbers at monthly meetings with employees, he also makes sure to talk about the industry’s results and how MAG Mutual compares to it. He provides visual presentations and graphics to illustrate the numbers he talks about and aims to educate employees so they better understand how their contributions matter.
On top of these efforts, Grimes also encourages innovation throughout the organization and celebrates when employees suggest new ideas.
“I listen because no one person has all of the ideas,” he says. “It’s a collaborative environment.”
But his support for employees’ ideas goes beyond just listening. He also encourages them to try them out.
“We understand that most ideas may fail, but I’d rather have somebody that tries with an idea and have it fail then have somebody who doesn’t provide any ideas at all,” Grimes says.
If an idea doesn’t work, he doesn’t penalize that employee for it failing.
“You can provide all the ideas you want,” he says. “All you have to do is come up with one good one that we act on, and you will be recognized and you will be celebrated in front of your peers and appreciated, but you will not be penalized for something that doesn’t work.”
This attitude isn’t just a façade either. He says that in private conversations, the executives don’t gossip about or chastise employees for failed ideas — and that isn’t tolerated.
“Don’t cast down somebody who doesn’t have a good idea,” he says. “We’re happy that they provided an idea. … We don’t have politics.”
And employees know that. While many companies may reward employees who produce results, no matter how they got them, MAG Mutual doesn’t do that. They reward employees who focus on the customer and not on themselves.
“So many people are trying to move up in an organization and step over someone else to get up the corporate ladder,” Grimes says. “Just focus on the company and just focus on the customer, and you’ll find that all those other problems go away. … Forget trying to beat the guy down the hall. I think there’s too much of that. If people will do that, they’ll see how much easier it is to move up the corporate ladder without doing it. Just do the right thing.”
How to reach: MAG Mutual Insurance Co., (800) 282-4882 or www.magmutual.com.
Darrell O. Grimes
President and COO
MAG Mutual Insurance Co.
Education: Georgia State University
What was your first job as a child?
Really my first job was just a paperboy — a 10-year-old kid delivering papers in the neighborhood, getting up at 4:30 in the morning, riding the little bicycle to Sandy Springs, Ga., and getting papers and riding them back in my neighborhood, throwing them out. That’s my first job. It was fun. There were three of us that did three neighborhoods together.
What’d you learn from that job that still applies?
Hard work pays off. That was hard work being a 10-year-old kid doing that. You ever seen the Sunday paper in Atlanta? Throw about 52 of those on my bicycle and try to ride uphill at 4:30 in the morning in the dark. It was harder work than you think. You worked hard, and by 6:30 or 7:00 in the morning, you were done, and we were on the swim team and we went swimming in the morning. Same thing — you work hard, play hard.
As a child, what did you want to be when you grew up?
I hate to sound like an oxymoron a little bit — I’m supporting physicians today — but in my family, I have four generations of doctors in my family. I’m the first one who’s not a doctor. So maybe that’s why I’m here today. That’s what I really thought about being. I was just really better with numbers, to be honest with you, and that’s why I followed through and got my CPA certificate. That’s what I was really better at.
Somehow I ended up in a professional liability company defending physicians. My grandfather was what we called them back then, a general practitioner. He used to do visits at home in a horse and buggy, and they would call him up, and he would come over in his horse and buggy and provide medical services, whatever you needed.
What’s the best advice you’ve ever received?
Don’t worry about those things you can’t control. Just try to manage through them. I see a lot of people worrying about things, but it’s just more stress in your life. Manage what you can control. Prepare for the worst, accept the rest. Don’t worry too much about what you can’t control. I think that’s important advice.
While many businesses have used the economy as an excuse to pile work on employees the past few years, Fleet Response didn’t buy in to that thinking. Despite the tough economic times, the company, which provides fleet management services, takes time to make sure its people aren’t buried. As a result, Fleet Response grew during the downturn from $47.4 million in revenue in 2008 to $58.4 million last year and earned a spot on the Weatherhead 100 list of fastest-growing companies in Northeast Ohio this year while also celebrating its 25th anniversary.
“In our marketplace is the fact that we’re at the highest level of service, and if our employees are burnt out or experiencing too heavy a workload, that performance will show up in their ability to keep up in the quality in their work,” says Scott Mawaka, president and COO.
One of the biggest keys to growth has been making sure employees don’t get loaded down with too much work. It can be challenging to figure out work loads, but Fleet Response has built systems around performance metrics to gauge employee activity levels and determine what’s manageable and what’s not. Allison Lanzilotta is the vice president of business development, and one of the big tasks she does daily is analyzing the activity by looking at data to make sound decisions.
“There’s a lot of information you can get and a lot of different ways you can look at it,” she says. “Start somewhere. Look at it every week, every month, and chart things out, and you’ll see what makes sense and what the right numbers should be. … You can’t look at every single number at the beginning. You’ve got to focus in on a few key things and go from there, otherwise you’ll be overwhelmed with all the information.”
For example, on the call center side of the business, two numbers she gauges are how many calls each representative is taking and the length of hold times. In the claims department, she looks at the total number of claims employees have in their portfolios versus the optimum number they’ve determined for peak service.
Beyond just the numbers, Mawaka also gauges workloads by walking around to ask employees how they’re doing.
“Are they able to keep up with their work load?” Mawaka says. “Are they excited about a new client? If they’re terribly busy, you will get their opinions delivered to you, and it’s something where you can talk to the other people involved with them to understand if it’s just a point in time where work was above the norm or if it’s a routine that we need to address [with an] increase to employment.”
As volumes pick up, it’s important to communicate your intentions with employees and thank them for their extra efforts.
“You put a lot on your employees, and you want more and more, and, ‘Oh, here’s another client — and another.’” Lanzilotta says. “It’s great, but you want to appreciate all the work they’re doing and let everyone understand that we’re doing well, we’re growing, and we’re going to keep motivating people by letting them know we’re not going to bury them. We’re going to get the right staffing and reward them appropriately.”
Those rewards come in the form of midyear and year-end bonuses and sometimes additional time off, but beyond that it’s many little things throughout the year too, such as hosting lunches, company outings and parties.
“Your employees are the lifeblood of the organization from day to day and a reflection of how we’re doing,” Lanzilotta says. “It’s very important that we don’t just keep piling things on our employees but we stop and appreciate some of the successes as they come along.”
And if your employees can’t work effectively, your business won’t grow.
“It’s all about the people,” Mawaka says. “It’s what matters most in the world. Medicine, manufacturing or service — it’s all about two people working together to succeed.”
How to reach: Fleet Response, (216) 525-3870 or www.fleetresponse.com
Focusing on clients
Fleet Response's people focus the past few years hasn’t been limited to employees.
“Everything starts with people — that’s both internal and external,” says Scott Mawaka, president and COO.
To grow, the company has also made clients a major priority because they’re experiencing stress just as much as employees are.
“They’re wearing more and more hats,” says Allison Lanzilotta, vice president of business development. “The more that we’ve been able to provide them flexible service and accommodate administratively, [the more that] we’ve been able to bring on new clients.”
Providing flexible services starts with building stronger relationships. Initially, Mawaka approached its largest clients to offer discounts in exchange for extending contracts in order to ensure revenues for Fleet Response and familiarity and savings for clients.
Fleet Response people also went to clients’ offices and vice versa to ask what has challenged them and what they need help with.
“Often, they know right off hand some things that take a bunch of their time that they’d love to get off their plate,” Lanzilotta says. “It’s really keeping that communication line open, not just via e-mail but face to face and phone, if that’s the only option.”
As clients talk about problems they have, customize your services and offerings to help meet those needs.
Mawaka says, “That was probably one of the key facets of growth for us over the past few years was just exploring new angles with our clients and communicating with them about challenges they had internally.”
Cedar Brook Financial Partners LLC elected Azim Nakhooda as the firm’s managing principal. He previously served as the chief investment officer. He co-founded the wealth management firm after serving as director of investments for Cleveland Financial Group. There, he managed investment processes for a $1 billion private client group. He also previously worked for Fidelity Investments in Boston.
Cedar Brook also promoted Peter Franz to chief investment officer.
KeyCorp hired Johnni Beckel as its chief human resources officer. Beckel has 25 years of human resources experience in the health care, financial services and hospitality industries. Beckel will be a member of Key’s executive team, management committee and executive council, and she will lead the human resources organization for Key’s 15,300 employees. She comes to Key from Cardinal Health Inc., where she was senior vice president, talent management and total rewards, accountable for the company's enterprisewide human resources strategies and core processes.
Moen Inc. promoted Mike Bauer to the newly created position of president, U.S. businesses. In Bauer’s new position, he will assume responsibility for Moen’s U.S. business units including wholesale, retail, commercial, bath accessories and bath safety. Prior to this position, Bauer served as Moen’s senior director of wholesale marketing, where he led the development and execution of the Wholesale Business Unit’s product, brand and channel strategies.
Moen also promoted Steve Janas to vice president and general manager of its retail business unit. In his new role, Janas will lead the strategic vision and development of products for Moen’s national retail partners. He joined Moen in 2007 as vice president of retail sales.
Additionally, Moen promoted Tim McDonough to vice president, global brand marketing. McDonough has been with Moen for more than 13 years, most recently serving as vice president of wholesale marketing and brand development for Moen Canada.
Rebecca O. Bagley, president and CEO of NorTech, was appointed to the U.S. Department of Commerce Innovation Advisory Board by Commerce Secretary Gary Locke. The new board will guide a study of U.S. economic competitiveness and innovation to help inform national policies at the heart of U.S. job creation, competitiveness and global strength.
Roetzel & Andress LPA hired Sarah J. Moore as a partner. Moore previously worked with Britton, Smith, Peters & Kalail Co. LPA.
Please send your executive-level promotions to email@example.com.
While 2009 was a tough year for Tom O’Shea at Wasp Barcode Technologies, 2010 was a different story. The company, which manufactures barcode software and solutions, saw 12 percent growth in revenue last year.
“We target sub-100-employee companies with our products and design them for that customer set,” the general manager says. “I think, coming out of the economic crisis that we had, small businesses were looking for things to improve productivity. They weren’t ready to hire a bunch of people back, so they found value in the products we had to offer.”
O’Shea saw this opportunity and worked to capitalize on it by focusing on these customers and engaging his 50 employees to do the same.
“We want to have a laser focus on the customer,” he says. “Make it a clear message — ‘What we’re trying to achieve is this,’ this year, and not have four or five or six different things, so everybody can get behind it.”
Smart Business spoke with O’Shea about how he focused on customers to continue growing the business.
How do you get in touch with customers in order to spur growth?
Talk to your customers and find out what they are looking for. We try to talk to customers a lot in terms of surveys, follow-up calls, that type of thing. What features do they like? What features do we need to add? We constantly ask them where are they buying software-related products from, so we understand where do we need to be. Where do we need to spend our marketing advertising dollars?
Also, talk internally. Your employees have some great ideas in terms of what the customers are asking for. We have an internal discussion forum where whenever someone is talking, they get an idea on the product.
How do you stay focused on your customers?
One of the things we try to do is challenge our value proposition to our customers. Almost annually in our planning, we’ll put that slide up there and say, ‘Are these the right things that we should be doing, and what are we missing here?’ Continuing to try to challenge and grow and expand the value proposition you have is a real important step.
Listen to the customer. Do voice-of-the-customer studies. Get out and talk to the customers. Survey them. Ask them questions. A lot of times customers are more than willing to give you feedback on what they like and what they don’t like, and listen to them on that side of things.
That was one of the keys that we came up with a free training offering. Customers were saying, ‘We need to be able to use your products quickly and easily, and if you had some training for us, that would be valuable.’ So we put that together and launched that, and it’s been very successful.
How do you determine things you can work on or add and things you can’t?
We’re a small company, too, so we can’t handle everything. We try to look at what we feel will give the most differentiation out there in our customer space. We’ll try to gauge what seems to be the most popular feature-set request for our products.
If someone continues to ask for a certain thing, that boils to the top, and we need to get that in the next time. There’s no real science to doing that — it’s more of trying to understand what the customers are asking for the most. We try to make things not too complicated, so a lot of times, we’ll shy away from things that will overcomplicate the product. In our experience with the small businesses, if it’s overcomplicated, and if it’s going to take a lot of time to use, then it may not be utilized. They want to get something installed and move on to the next thing because they have problem after problem after problem, so if it’s going to take a long time to learn or install or change their processes a lot, they tend to shy away from that.
How to reach: Wasp Barcode Technologies, (866) 547-9277 or www.waspbarcode.com
In the first 30 to 60 days after Phil Rykhoek announced that his company, Denbury Resources Inc., would be buying Encore Acquisition Co., his phone rang constantly. On the other end were angry shareholders who didn’t understand why he was doing the acquisition.
“You just have to work through it, and you have to see what their concern is and focus on their concern,” the CEO says. “Many of the phone calls, particularly there in the first couple months, would go for an hour and a half, two hours, because you had to walk through the whole thing.”
He had one-on-one phone calls. He had had road trips with senior management. He had conference calls. It wasn’t fun most of the time, but he knew this was the right choice for the oil and gas company.
“There were days when it was kind of difficult, but we all believed that this would be a good deal for Denbury, and it would turn out to be a long-term, very strategic, profitable acquisition. That’s the message we had to get back to shareholders,” Rykhoek says. “We tend to be a longer-term-focused management team in that we try to make decisions that were going to help us long term. Unfortunately, Wall Street is a bit more short-term-focused. It was a little bit of a disconnect there. We had to convince them this was going to make sense in the long term.”
Add to the stress of trying to convince shareholders from both companies of the merits of the acquisition, but he also had to deal with moving both companies to a new, combined headquarters and the normal responsibilities of carrying out an acquisition.
“It was just a lot of extra work that comes from putting two companies together that puts a strain on everybody, and in the meantime, you have to keep the company operating, so the day-to-day work didn’t go away.”
Get employee buy-in
While Rykhoek fielded angry shareholder calls, he and his team also had to convince employees at both companies that this was a good thing.
“We tried to be very upfront with employees right away,” he says. “We had several group meetings and employee meetings right after we announced the deal and talked to them about our plans and how this was going to benefit the combined companies.”
When you present news like this to employees, be prepared for not everyone to see it how you do.
“You always get a mixed reaction,” he says. “Some people love it — the ones that are more aggressive and wanting to grow and get excited by the change. Those people love it, but a lot of employees don’t adapt to change as well, and those are the ones that will resist it.”
It’s critical to get everyone to buy-in. First, he wanted to make sure his current employees knew where Denbury was going and how the acquisition plays into that.
“You try to, one, point out how important this is to Denbury and how it’s going to benefit the future growth, and that’s the reason you came into this acquisition,” he says. “You try to get that message out, and then you try to give existing Denbury employees assurance that this is not going to hurt them — this is going to help them. The company’s growing — it presents new opportunities and presents opportunities for growth in different areas, so you try to present that side.”
But it’s not just your current employees that are affected. Rykhoek also knew he and his team needed to communicate well with the Encore employees, as well.
“The new employees from Encore are harder because they’ve just had their company sold out from under them, so to speak, so we spent a lot of time letting them get acquainted with us and spend time with management and spend time with HR in the different areas and see we’re not a bunch of bad guys, and it’s a fun place to work,” he says.
It was important for them to point out the fun aspects of Denbury to the new employees and tell them about the culture and how the company has extremely low turnover because employees are generally happy. He also explained how the compensation strategy is team-based.
“We all get paid based on how well the company does, and we really try to reinforce the team concept rather than disjointed, free-for-all, where people try to point out individual performance or, ‘I did this, I did that,’” he says.
As such, to get people excited about the acquisition, they told employees that they would increase their target bonus by 25 percent, and that would be evaluated based on how well the transition went.
He hoped that sharing the benefits of a team-based culture would get them excited about the new combined organization.
“Basically, sell the company to them,” he says.
Create a team
Once he had repeatedly and effectively communicated the reasons behind the acquisition to both sides, Rykhoek had to work on merging both sides into one team.
“When you’re trying to integrate, you of course want to present that culture to them, but you want to get them into the team as fast as possible,” he says.
This required a couple different approaches, starting with face time between the two sides. They rented out a place and had a food and music get-together event after work in Fort Worth, where Encore was headquartered.
“We took a load of Denbury people over and gave them a chance to interact and meet one another,” he says.
The bus also went both ways — they brought Encore employees over to the Denbury headquarters in Plano.
“We brought the Encore folks over in different batches by department or by discipline and gave them tours of our office and had several of the managers spend time with them,” he says. “They could answer their questions and get acquainted and get a feel for what Denbury is like. … It was just trying to get face time, if you will, between Denbury employees — in particular the managers — with the Encore employees.”
In addition to getting both sides comfortable with each other, he had to also physically merge them into one location. While many acquisitions bring layoffs, this wasn’t the case with the Denbury-Encore acquisition. While there were a few isolated cases where some people weren’t needed, for the most part, all employees were invited to come on board. Despite that invitation, only about half of the Encore people did.
“It wasn’t like there was a big dislike of Denbury,” Rykhoek says. “It turned into a geographical issue. The corporate headquarters are about 45 miles apart, so depending on where you lived, in some cases, it was impractical for them to commute to Plano.”
Because of that, they wanted to make it easier for employees and offered them a relocation package to move closer, but still many didn’t accept it because they didn’t want to uproot their families.
Rykhoek and his team also did something many would see as crazy — they paid out severance packages to anyone who didn’t want to come over.
“One of the criteria in most severance plans is if you have to go more than X miles to the new company, you could leave for good reason and get severance,” he says. “In their severance plan, the criteria was 50 miles — we were less than 50 miles. In theory, we could have been a little bit more hard line and said, ‘Tough, you need to come work for us, or we’re not going to pay you,’ but we chose not to take that approach.”
They told employees that they understood it’s a tough commute and asked them to at least stay on to help with the transition. They put a time limit on the transition period so employees had an end in sight, and then they rewarded those who stayed to help.
“We said that if they would stay with us until we could transition that we would pay them all the normal severance that they would have gotten, so we gave them an economic incentive to stay,” he says. “People were cooperative with that, so that helps us.”
Merge your systems
With people on board and his employees merging, one of the other key steps Rykhoek needed to do was get the systems merged between both companies. This is one of the many areas that Rykhoek depended largely on his team to effectively complete.
“Generally, the CEO’s role is overview, strategy, direction,” he says. “I do quite a bit of communicating with shareholders, and as part of the negotiations, I was pretty heavily involved in the negotiations to acquire Encore. … But the day-to-day decision of which software package to use, most that I had very little input, if any, because that was handled by the experts in those areas.”
Instead of having a team at the top decide which systems to use, he charged the people in each department to make those decisions for themselves.
“People are aware of using the different software packages in the industry and in their area,” he says. “If you’re an engineer, you know what the options are. If you’re an accountant, you know what the options are.”
He gave them very loose guidelines so as to not micromanage and ensure the best decisions were made.
“The guidelines were just, ‘Figure out which has the better system, and let’s go with that,’” he says.
It was critical that both sides worked together to come to a conclusion to avoid the us-versus-them mentality when they started using the systems side by side. Encore people took the time to explain their systems and how they worked, and the Denbury people listened. If both were similar and there wasn’t evidence heavily leaning in either direction, then there was a tie-breaker.
“If it got to be that close, if it was a real tough decision … then we probably kept the Denbury system because Denbury was slightly bigger, and if you look at the transition and the conversion, it would have been more difficult to convert Denbury to Encore than vice versa.”
These decisions were made within several months, but some of the conversions took almost a year. Most of the operational and technical systems could be integrated more quickly, but they also had to consider Sarbanes-Oxley and didn’t want to do anything that could disrupt that, so the accounting system didn’t move over until Jan. 1.
The acquisition was complete in March 2010, and now Rykhoek is seeing real benefits.
“Most people got better with it as time went on,” he says. “The Encore people got more comfortable with Denbury and vice versa.”
He’s amazed at how well his people responded throughout the process. The employees made a huge difference, and, as a result, those target bonuses that were increased by 25 percent if the integration went well were paid out at the full 25 percent as a reward for the extra efforts.
“There was a lot of overtime and a lot of extra effort put into it, and we couldn’t have done it without everybody’s help,” he says. “It’s just wonderful to have a group of dedicated employees that put forth the extra effort when you ask them.”
The acquisition also took Denbury from $889 million in total revenues in 2009 to $1.9 billion in 2010. Looking into the future, Rykhoek is excited about Denbury’s future.
“We have a much larger company, our leverage is good, our balance sheet is very strong,” he says. “We’re an oil-focused company, and obviously oil is doing very well in today’s market, and we have a lot of potential, so we think we have a great future.”
And Rykhoek’s phone has stopped ringing as much as it was because even the shareholders are now happy about the deal.
“Now, they look back at it and say, ‘This made sense,’ because what we did was we took Encore, we kept the core assets we were interested in and sold the rest to pay for the deal,” he says. “That all went smooth, we got good prices, it happened very quickly. In a period of a year, we got our leverage back down to where it was pre-acquisition. Now the shareholders look back on it and say, ‘That was not such a bad plan.”
How to reach: Denbury Resources Inc., (972) 673-2000 or www.denbury.com
Phil Rykhoek, CEO, Denbury Resources Inc.
Born: I grew up on a farm in Iowa, and I didn’t want to be a farmer so there wasn’t anything to keep me there.
Education: Degree in accounting and management with a minor in economics from Evangel University in Springfield, Mo.
What was your first job, and what did you learn that still applies?
The first real job, other than trying to sell things that kids sell, was I was working construction. I built grain bins.
I don’t know if it’s specifically on that job, but if you look back at my past, we were taught as kids to work hard, and I think that’s some of the culture you get being a farm boy. You’re put out, at a very early age, in the fields and doing chores and you had responsibilities at a pretty young age. We were taught to be responsible and taught to work hard, and that carried through my whole career. We worked very hard in construction, too. It was hard work.
As a child, what did you want to be when you grew up?
I didn’t want to be a farmer. I really didn’t know until I got into at least early college that I wanted to go into accounting and finance. As a kid, I didn’t know. Some of the work outside got to be quite hot and nasty and dirty, and I decided early on that I didn’t want to be a farmer. I remember, I unloaded the oats into the storage facility, and it was hot and nasty, and I don’t know if you’ve ever been around oats, but it’s real chaffy, and it gets all over your shirt and itches and it drives you crazy. I said, ‘There’s got to be a better life.’ Of course, I have to admit, today, the farmers have got it a little bit better for them, and now a lot of the tractors have air-conditioned cabs and climate-controlled cabs, so it’s not as bad as it used to be, but it’s still very hard work.
What’s the bed advice you’ve ever received?
Work hard and do things with integrity. We try to run the company — all four of us operate this way — with integrity. Do things right, do things the correct way, and when doing business deals, we try to do things that are win-win situations and that pays off in the long run.
When Chuck Wade worked as a narcotics officer, he seized more than $25,000 in drugs 11 times, and every operation didn’t start with shady people in sketchy alleys — they began undercover in a company, where he would, inevitably, end up arresting the No. 1 drug dealer in that business.
“I saw firsthand the problems (drugs) were causing with productivity and absenteeism and tardiness and leaving the worksite without permission, and it was truly destroying a company from within,” says Wade, president and CEO of The Council on Alcohol and Drugs Inc. and state director for Drugs Don’t Work in Georgia. “Quite often, upper-level management wasn’t even aware it was happening until it was too late and the company was suffering and they were bleeding red ink, and they began to realize there was a problem there.”
But often, management wasn’t aware that drugs were the issue, which is why creating a certified drug-free workplace can help prevent problems from even forming. On top of reducing problems, there’s a financial incentive, as well. Twelve states in the country, including Georgia, have a state-mandated discount on workers’ compensation insurance for certain state-certified drug-free workplaces. The discounts range, but Georgia has the highest with a 7.5 percent discount, which means savings of a few hundred dollars a year if you’re a smaller business, all the way up to as much as $100,000 for some large companies.
If these numbers have caught your attention, then the first step to becoming a certified drug-free workplace is to put a substance-abuse policy in place.
“If a company does not have a substance-abuse policy in place, then the company has put themselves in a precarious legal position,” Wade says. … “Every company, regardless of size, needs to have a substance-abuse policy.”
If you don’t have anything in place, the simplest way to get started is to contact Wade, who can e-mail you a fill-in-the-blank policy that was created by the organization’s attorney, who has more than 25 years of labor law experience and specialized in workplace law.
“He wrote the law on drug-free workplace here in Georgia, and he wrote the law on substance-abuse policy,” Wade says. “It’s the most legally sound substance-abuse policy a company can have.”
The policy is written in a way that it can be customized to any size business, and it’s absolutely free.
Once you have a policy in place, then the second step is to do drug testing. On average, a drug test costs $25 if it’s processed externally.
“All companies need to be doing drug testing, primarily because they don’t want to inadvertently hire a drug user,” Wade says. “One drug-using employee can single-handedly destroy a company from within, and I’ve seen that happen many times.”
In addition to applicant drug testing, participants are required to do post-accident testing. Not only does it increase safety in the workplace, but it protects the employer. For example, Georgia law states that if an employee tests positive for drugs within eight hours of an accident or for alcohol within four hours, the employee will not win a workers’ comp claim against the company. On average, it costs about $75,000 to treat a back injury, so if one of your employees gets hurt, and your insurance provider has to pay that much, your rates will go up.
“There are companies that have gone out of business for one reason and one reason only, and that’s because their workers’ comp rates got so high because there were so many claims filed against them they couldn’t afford workers’ comp insurance anymore, and they were forced out of business,” Wade says.
In addition to these two types of testing, participants are required to do reasonable suspicion testing and post-treatment/rehabilitation testing.
After testing, the third step to becoming a certified drug-free workplace is drug education. This is critical because Wade says 77 percent of drug users are employed, so education in the workplace is the most effective way to reduce demand.
Education can be through guest speakers, DVDs or newsletters. Most companies opt for the newsletter option, which costs $150 a year, as it doesn’t require employees losing productivity to sit through a speaker or DVD. Newsletters are often more effective than the other options, because employees can refer back to them and share the information with family, too. Additionally, Wade says research shows that employees will retain only 9 percent of the information they hear in a presentation.
The fourth step is supervisor training, which can also be done through the same three ways as employee education. The supervisor newsletters cost a company $110 a year, and the training helps teach supervisors to recognize warning signs of drug use.
Then the last step is to provide either an employee assistance program or a list of treatment counseling centers to give employees if they test positive, so they know where to get help.
Overall, it costs $35 a year to apply for certification, which goes to the state. Other than that, the only costs are for the newsletters and drug testing, but given the payoffs that creating a drug-free workplace can provide, it’s cost-efficient.
“For more than 20 years now, all the Fortune 500 companies have been drug-free workplaces — not because of the workers’ comp discount,” Wade says. “The reasons these big boys and girls have done this — and this is one of the reasons they became the big boys and girls to begin with — is because they do the right things right. And they know with a drug-free workplace, you increase productivity, reduce your absenteeism and your tardiness, cut workers’ comp claims in half, reduce medical costs by up to 300 percent, increase overall workplace morale, cut turnover rate, reduce death and crime in the workplace, and all of that positive affects the bottom line.”
How to reach: The Council on Alcohol and Drugs Inc., (404) 223-2480 or www.livedrugfree.org
The halls and rooms that comprise Turner Enterprises Inc. are more than simply office space for the entity that runs famed businessman Ted Turner’s operations. They’re partially a tribute to Turner, chairman of the organization, featuring photos and awards depicting his success, but they’re also part museum, with memorabilia and paintings decorating conference rooms and foyers that show his passions ranging from the Civil War to sailing.
Enter Turner’s assistant’s office and you’ll see more than 100 magazine covers featuring Turner from over the years adorning the walls. And from there, enter Turner’s own office — dim, as the lights are off to conserve energy — and you can’t help but notice the wall full of honorary degrees behind his desk and further evidence of his achievements and interests.
It’s all a legacy of a life of entrepreneurship and innovation by the man who pioneered 24-hour news by founding CNN and has been involved in many different business ventures over the years, including starting the Ted’s Montana Grill restaurant chain. Beyond his business achievements, he’s won 180 sailing trophies and is one the largest individual landowners in the United States with approximately 2 million acres of personal and ranch land. He’s also passionate about furthering clean-energy initiatives, and he gave a $1 billion gift to the United Nations through the United Nations Foundation, which he created to support goals and objectives of the U.N.
Turner’s accomplishments could take up pages, but constrained by word counts, simply put: Ted Turner is a legend most business owners would do just about anything to sit down and talk to, but when it comes down to it, he can summarize his success in just a few main keys.
“One common thread is hard work, and another is careful consideration and thinking through what it was that I wanted to do and going through the mental exercises of what could go wrong and being prepared for that as much as possible,” Turner says. “You can’t predict completely what’s going to happen, but you can have a plan and think it through as carefully as you can, and then once you make the decision, after very careful thought — or this is the way I did it — when I did decide to move forward, then move forward with great speed.”
Think through an idea
When Turner first thought about the concept of 24-hour news, like most great ideas, it was because he had a problem.
“I wouldn’t have done it if I wasn’t convinced I was right, and the reason was I never got to see television news because I got home after 7 o’clock when the news went off at 7,” Turner says.
He also went to bed before 11 o’clock when the news came back on, so he had to read the newspaper to keep up with current events. Twenty-four-hour radio was already successful, so he thought if 24-hour radio news could work, why couldn’t 24-hour television news?
“People came home, and it was 8 o’clock at night, and they already missed the early news, and it was three hours away from the late news, so why wouldn’t it be something some people would want to watch?” Turner says. “Maybe a lot of people would want to watch sit-coms and the talk shows, but there probably would be some people who would like to see the news and not waste their time with entertainment.”
But, like many often do, he didn’t initially do anything about it.
“The easiest thing is to do nothing, and then you’ll never get in trouble — and you’ll never get anywhere either, but doing nothing is an option, and that’s an option that most people avail themselves of in life,” Turner says. “They do as little as they can, and they don’t realize what they could have done because they didn’t do anything. That’s most people. It’s just too hard, and it is hard. It’s extremely hard, and you’ve got to be — there’s an old expression I heard somewhere — smarter than a tree full of owls to do anything like create a Microsoft or a Google or a CNN.”
He says you have to be like Yogi Bear — smarter than your average bear — and that’s exactly how Turner was as he thought through this seemingly crazy idea of 24-hour news.
“At the beginning, when I first thought that, I never thought that it would be me that did it, because I didn’t have two nickels to rub together, and I knew it was going to cost a fortune to do,” he says. “So for the first three years, I sat there and watched and nothing happened. I figured CBS or NBC or ABC would do it, or all three of them at the same time, but they didn’t. They made the choice to fight cable rather than embrace it and try to keep things the way they were with three channels.”
Create a distinctive plan
When Turner realized he would have to be the one to start 24-hour news, he made sure to think through what it would take and the possible problems.
“Let’s face it: 90 percent of all new businesses fail, so the odds are way against you to start, but that’s how you really break through,” Turner says. “You have to come through.
To really break through, you have to come up with some kind of plan that’s a little bit distinctive and hopefully a little bit different than what your competitors are doing — if there are competitors. Usually there are.”
He’s seen both — when he started Ted’s Montana Grill, there were tens of thousands of other restaurants he would be competing against but very little barriers to entry. On the other hand, with CNN, the barriers to entry for delivering 24-hour news were huge.
“They were costly, and there were limited satellite distribution capabilities at that time, and there was not very much distribution — certainly not enough,” Turner says. “There was no way CNN could be profitable with cable penetration at 14 percent, which is approximately what it was when we started.”
Instead, he recognized that it needed to be at 50 percent.
“In order to get my television channels in to people’s homes, we had to get the rest of the people in America to subscribe to cable, and cable wasn’t even in front of over half the homes,” he says.
Recognizing what he thought was the threshold for success was an important part of creating that plan.
“You make your own metrics for what success is,” Turner says. “You set up criteria and write down what you think would make you feel successful. Each person would do it differently. What success is for one person wouldn’t be success to another. If one guy said, ‘If I made $1 million, I’d be a success,’ but to another, ‘I wouldn’t be a success unless I made $1 billion.’ They’d be off by a factor of 1,000 to one.”
Sometimes you may start in with your idea and then realize you’re not going to make it unless you reach certain thresholds.
“To grow a business successfully, you have to have a successful business or have an idea of how to make the business successful if you grow it a little bit more,” Turner says. “Some businesses are a little too small and would have to reach a certain tipping point of size to where they tip in the right direction.”
When it comes down to it, you may simply not know what it will take to be successful.
“You just have to estimate it,” he says.
Turner says that comes down to judgment and using your mind.
“It’s pretty tricky, but some people know how to do it,” he says.
Turner says it’s important to stretch your mind and its capacity as much as possible.
“It helps to be born with it, I guess, because basic intelligence is inherited,” he says. “It’s an inherited trait as much as anything else, but you can develop it. Your mind is, to a large degree, a muscle like the other muscles in your body, and the more you use it, the sharper it gets, just like your body. You can take a skinny little kid and turn him into a marathon runner if they’ll train hard enough and are motivated to train hard enough, and basically my success in business and in life, it was due, to large part, I just wanted to do it and wasn’t afraid.”
When he made the decision to go forward with 24-hour news, he didn’t lollygag.
“I moved as quickly as I could, for instance, to get CNN on the air because I wanted to pre-empt CBS, NBC and ABC because once we announced that we were going to do it, it was going to make them think about it and revisit it more, and all three of them had everything they needed to start.
“They already had bureaus. They had news organizations. They had news anchors that were underutilized — they were doing two hours of news a day, and they were spending $200 million a year to do two hours of news a day, and I was going to do 24 hours of news for about $30 million.”
He planned to get CNN on the air within 10 months because he anticipated it would actually take longer, and he wanted it on in 11. Along the planning road, most things went according to plan, but he did have his share of anxieties. While he thought through most of the worst-case scenarios, he was completely caught off guard, for instance, when their satellite disappeared and they lost their satellite signal less than four months before CNN was set to air.
“It never occurred to me because I wasn’t in the satellite business — what do you mean the satellite disappeared?” Turner says. “That was my reaction. Well, that’s what it did. They never found it. It just blew up, and it’s out there floating around in space. There was a TV series called ‘Lost in Space’ and our satellite was lost in space.”
Luckily, there was a clause in the contract that anticipated this possibility, so they were able to negotiate a deal to gain access to another satellite in time for the launch. CNN launched in 11 months — as Turner had anticipated with his one-month, built-in cushion.
While he moves full-speed ahead in business, he recognizes sometimes it doesn’t work.
“We went full blast with the AOL merger right into disaster, just like the Germans when they invaded Russia,” Turner says. “They were going fast, but they were headed straight for catastrophe — they were headed for Stalingrad. So going fast can be reckless and very foolish, but you’ve got to be sure you’re right, then go ahead. But that’s not easy to do always. It’s not always easy. Not everybody can see the future with accuracy, and there are the things that happen along the way that sometimes aren’t anticipated, no matter how good you’ve done, and then you’re in real trouble.”
He says there are all kinds of ways to get into trouble in both business and life, and sometimes you won’t know right away.
“A lot of times you have to wait and see, and only history will tell if you’re right or wrong,” he says.
While Turner may have made some mistakes along the way and had his share of challenges, he’s had more success than anything, and he says it comes back to those main keys.
He says, “Those are the main things that in starting a voyage or a venture, those three things would be very carefully think through what you’re going to do, then what could go wrong — take a look at what could go wrong and anticipate that in advance and be prepared — and the third thing is when you do decide to go forward, move rapidly.”
How to reach: Turner Enterprises Inc., www.tedturner.com
On a mission
If you look in the parking lot at Turner Enterprises Inc., you’ll see solar panels, which Ted Turner installed as an energy source.
“Anyone can do that, and the technology already exists, and it works,” Turner says. “This building is going to be powered by those solar panels.”
Turner is passionate about environmental causes and encourages other business leaders to follow suit.
“They can put solar panels on a fence post — electrify your fence and keep out people that you don’t want to come in. Keep your cattle in or your bison for that matter,” he says. “We use solar electric power fences on a ranch. If you have a house, you can have a solar hot water heater.”
If you’re not quite sure if solar power is the way to go for your business, Turner suggests at least seeking outside help to identify ways for your business to make a difference.
“Hire an environmental consultant to come up with recommendations specific to your company and business for how you can cut down your carbon footprint and use less energy,” Turner says.
Beyond the big things, he points out there’s also myriad small things you can do. For example, when you walk into Turner’s office, it’s dim. He keeps the lights off to save energy and only turns them on when he needs them. Additionally, he uses low wattage bulbs. He also suggests looking around you for the obvious.“As you walk down the street, if you see piece of trash, you can bend over, pick it up and carry it to the next closest wastebasket,” he says. “Making the world a better place is as easy as picking up a piece of paper.”
In 2008, The Progressive Corp. began looking at ways it could make the 3,500 vehicles in its company fleet more environmentally friendly.
You’ve probably seen the white vehicles with blue lettering around, or maybe you’ve even had to deal with one for an accident you were involved in. Either way, about 3,000 of those 3,500 vehicles are used by the company’s claims department and are constantly out and about. And in the past, many of those vehicles were six-cylinder Ford Explorers — large vehicles that use a lot of gas.
“When it comes to our fleet, this was an opportunity for us to look at what do we really need as a business as far as a vehicle and look at our costs and then look at emissions,” says Wanda Shippy, Progressive’s social responsibility manager.
Progressive's fleet operations team started looking at more fuel-efficient alternatives, and they discovered the four-cylinder Ford Escape, which is a less-expensive vehicle and is more environmentally friendly, so they decided to replace the Explorers with Escapes.
“The way that it happens is when those leases come up for renewal or replacement, we then make the transition from the six-cylinder to the four-cylinder,” Shippy says. “It’s a gradual process.”
By the end of 2008, Progressive had transitioned 9 percent of its vehicles. By 2009, it was at 28 percent, and by the end of 2010, it was around 41 percent.
The organization has embraced the efforts, but even though people wanted to make the change, it didn’t come without its share of challenges — the largest being how to identify realistic goals and how to move forward on those.
“It starts with understanding your business and knowing, based on the type of business that you are, where can you be socially responsible?” Shippy says.
Kathy Schulz is Progressive’s manager of travel and fleet operations, and she says it’s important to really look at your business closely before you make any major decisions regarding your fleet and sustainability initiatives.
“It’s important to understand your business, and every business is different, and they use their vehicles differently,” Schulz says.
She says they look at how much their vehicles are used and how exactly employees use them.
“There are opportunities, so not only could you reduce your carbon emissions by buying more environmentally friendly vehicles, but also, if you’re not utilizing to full capacity, reduce the number,” Schulz says. “That’s the greatest reduction in emissions by having less vehicles out there.”
To do that, Schulz says she looks at the costs and usage of all its vehicles, and she also looks at rental vehicle usage combined with fleet usage. While these numbers are important, they also have to keep the customers in mind.
“It’s a balancing act,” Shippy says. “You have to look at how many vehicles do you need in order to provide the service you promised when people purchased your (product), and then how can you do that by using them efficiently and having the usage high on the vehicles you have. [Look at] how many vehicles do you need to do that, and that can fluctuate as the business changes.”
It also comes down to weighing the initiatives against some of the organization’s core values, as well.
“We always want to focus on one of our main core values, which is the Golden Rule — to treat others as you would like to be treated,” Shippy says. “Our CEO constantly says just do the right thing. We make a decision that we think is right for the business and right for those that we serve every day.”
How to reach: The Progressive Corp., (440) 461-5000 or www.progressive.com
Find a plan that fits you
By Mark Scott
You can make a difference in the environment even if your business does not have a fleet of thousands of vehicles taking the road each day. That’s the message from Jason Mathers, project manager for the Environmental Defense Fund. The nonprofit organization helps businesses find solutions to environmental challenges.
“Anything an employee is doing for the company on behalf of the company, the emissions associated with that are part of the environmental footprint,” Mathers says. “Just because you’re not able to easily track something doesn’t mean it doesn’t exist.”
Figure out what impact your company does have in terms of the number of vehicles you put on the road and how much they are used. Encourage your employees to be better drivers by not speeding, idling or hauling unnecessary weight in their vehicles.
“You’re talking about vehicle efficiency and routing, driver behavior and all these things that have a very significant return on investment,” Mathers says.
If you do have fleets, look at the vehicles you have and whether a more fuel-efficient model could do the same job.
“If you can take a modest step over your entire fleet, that can add up to a significant impact,” Mathers says.
How to reach: Environmental Defense Fund, (617) 406-1806 or www.edf.org/greenfleet