“We’re in that generation that is now caring for our parents,” says Gilmartin, president and CEO of Sunrise, Fla.-based Interim HealthCare Inc., the nation’s oldest health care franchisor. “And I see the technology driving a lot of care that will be. You’ve got this whole surge of baby boomers that are going to demand more [health] care at home…They’re going to be driving a lot of policy and insurers by being incented and motivated to do more care at home.”
Health care can now be delivered in the home easier than ever before, thanks to advancing technology and a growing demand for health care services. But the rise in the demand for home health care also places significant pressure on home care providers such as Interim HealthCare, which must continually adapt on both fronts in order to stay competitive and effectively serve a new generation of clients with diverse needs.
“The challenge over the last four years is the speed of change,” Gilmartin says. “We’re in an industry that is changing very quickly — home care, personal care, hospice and health care staffing. Pick one. There have certainly been changes in any one of those areas of our business.
“It puts a lot more on providers to accelerate what they’re doing. It isn’t a time to say, ‘We’re just fine the way we are.’ It’s going to be a case of, ‘We’ve got to do more and probably do it at a faster clip.’”
Since rejoining Interim HealthCare in 2008 — she first left the company when split off from a larger health care entity in 1997 — Gilmartin has worked on positioning the company and its network of 300 franchised locations in 43 states at the forefront of the home care evolution. Here’s how she is doing it.
Avoid ‘vision creep’
When Gilmartin came on as CEO in 2008, Interim HealthCare was in the process of transitioning to a 100 percent franchised company. The change came as company leaders looked for a way to streamline the focus on supporting franchises. Eventually, that meant doing away with all of the company-owned locations.
Founded in 1966, Interim HealthCare is the only home care franchisor with a model that delivers health care services from personal care and support to hospice services. This involves a broad spectrum of business areas. So as the company shifted to a 100 percent franchised model, Gilmartin also discovered a number of business lines that no longer made sense under the new model.
“It’s not unusual when you have companies that have close to 50 years of history that they start out and they grow, and as they grow, things get a little bit more complex and spread out,” Gilmartin says.
“You think that you’re focused on something, but you don’t realize that other things have sort of grown up inside of that. Sometimes they’re on the periphery. Sometimes they’ve been there so long that you get a scotoma, where you just don’t see what’s right in front of you. You have a blind spot to it.”
Gilmartin calls this “the vision creep.” What begins as a small investment gradually takes up more and more support, resources or time. Over years or decades, it may even start to take away resources from critical areas of business.
Innovation, while beneficial, can be one of the biggest culprits of vision creep. The same muscles that lead you to innovate can send you in directions that cause your company to stray from its core strengths. For example, investing in innovation led Interim HealthCare to develop its own IT system and a technology platform geared specifically for delivering home health care services. But Gilmartin and the company’s leaders soon found that an IT operation was an unjustified cost.
“We don’t have the DNA of being an IT company,” Gilmartin says. “We have the DNA of providing health care services in the home and providing health care personnel to facilities that need them.”
Instead of funding a whole division to support its IT platform, Gilmartin and her team decided it was a better investment to find a partner to handle its IT. In 2011, the company handed off the division to health care IT firm Procura for continued development.
“That care and feeding is probably being sacrificed from something else,” Gilmartin says. “So you always have to be sure that you look yourself in the eye and say, ‘This is our primary focus. This is what we do best. This is what we want to be doing for our constituents and stakeholders.’ Anything that doesn’t fit in that picture you have to be willing to say the time has come.”
The same went for the other “clutter” accumulated under the old model. Before long, Gilmartin was able to find homes for all of the business lines that weren’t synergistic with the 100 percent franchised structure.
One way to spot vision creep is by constantly asking, “Am I getting the best output in all areas?” or, “Are we getting the results we want?” If you’re not hitting on all cylinders, you need to step back and do some mining with your management team, board and equity partners, Gilmartin says.
When you are able to have those difficult conversations and to look objectively at each area of your business, you free yourself to bring even more leverage to your core competencies.
“You suddenly have this renewed energy, and you feel like, ‘Oh my goodness, we have more resources than we thought because some were being diverted or distracted getting these projects done,” Gilmartin says.
“It was being able to take the clutter out of the picture so that you see very clearly who you are, what your mission and purpose is and what is ultimately our ‘hedgehog,’ which [for us] is knowing that we want to be the most successful ‘continuum of care’ franchisor.”
Lay down a path
In most industries, it’s not enough anymore to respond to the market. Leaders of great companies don’t just evaluate change; they are in a regular cycle of changing all the time, always asking “What’s coming next?”
However, the key to driving proactive change across a large organization — Interim HealthCare employs more than 40,000 health care workers — is to balance the urgency of wanting to see change happen with the patience of recognizing that some changes take time to spread and be adopted by employees.
“Like a Rubik’s Cube — it would be one of those mental challenges of how do you keep the moving pieces and how do you get them to be at the right place at the right time?” Gilmartin says.
“Do franchisees have the information? Are we training them? Do they have the support? When I think of what makes this business tick and be successful, it’s people, but it’s people across a number of moving pieces.”
Essentially, the nature of care at home is that it’s a very personal service. Yet much has changed in the way that service is delivered. Ten years ago, there was no automation. But today, health care providers use point-of-care devices such as tablets, laptops and smartphones to capture patient interactions and electronic data in real time. This emerging technology is also a valuable tool for leaders such as Gilmartin to help drive change at all levels of their organizations.
In addition to traveling year-round to visit different franchise locations, which includes home care visits with nurses and meetings at the franchise and regional level, Gilmartin utilizes technology to stay connected and to find out what staff and management need to be successful, whether it’s training, support or technology resources.
“Every stakeholder has a nugget of wisdom or inspiration that leaders need to constantly be gathering,” Gilmartin says. “I sometimes look at our key leader group or key franchise group and think that the loudest and the biggest have it all right. But what I’ve done a better job of, and every leader can do better, is to communicate more and use lots of media in how you communicate … using the technologies of email and Skype and FaceTime but also including more voices that help shape the future rather than fewer voices.”
Once you have a clear destination in mind, making progress comes down to working closely with members of your team to get there.
“Some groups may have been doing certain pieces of health care for 20 years, but they recognize now that they have patients who require services that they haven’t done and would like to,” Gilmartin says. “We will train them in that and bring them through all the additional certification, training, hiring and actual management of how to do that business … so they can do it just as well as they’ve done all the other parts of the franchise.
“If you’re true to what the core of your company is, you’ll always be innovating better processes, better programs and, in our case, go to the next level of care delivery,” Gilmartin says. “That’s what has to be continually inspired and perspired, because there is a lot of sweat that goes with change.”
Helping its franchises continually adapt and grow has continued to pay off for Interim HealthCare. In 2011, the company generated $740 million of network revenue while maintaining one of the highest employee retention records in the industry — its average employee tenure is 18 years.
“People often think of return on investment first as financial, but there are also stakeholders of our patients and our caregivers and our management team — all of the people who work in our individual franchises,” Gilmartin says. “It’s taking those three circles, and if you bring those together, you can crystallize where those overlap and that keeps you focused. It keeps you rooted in, ‘Is every initiative we’re doing helping reinforce that?’ And success is the result.” ?
How to reach: Interim Healthcare Inc., (800) 338-7786 or www.interimhealthcare.com
The Gilmartin File
President and CEO
Interim Healthcare Inc.
Born: Buffalo, N.Y.
Education: D’Youville College
What do traits you look for in an employee?
There are many things you can overcome with training and knowledge, but if people don’t have the right caring and have a leaning to ‘I want to be in this business because I like health care and I choose health care to apply my business skills to’ — it’s not a right fit for everybody. I can tell you from new franchise development we’ve had franchise prospects come in and they are genuinely nice people. By the time we’re meeting them we’ve had a phone relationship, they’ve gone through initial screening, they’ve done homework; but there are times where we have the discovery day to meet us … they don’t necessarily recognize that caring for people is a 24/7 commitment. It includes holidays. It includes vacations.
What’s next for Interim HealthCare?
I see us being in a real growth mode because we’ve clarified we’re 100 percent franchised. We’ve got new franchises that we’re back selling and starting and feeding the forest in places where we haven’t had franchises. We have some very, very large franchises that have been building their infrastructure and working on management and succession planning because the business is getting bigger and more complex. I think home care has come of age.
If you could have dinner with one person you’ve never met, who would it be and why?
That’s easy, Bill Gates. He spent three decades creating products and services at Microsoft that changed how we operate businesses and manage our lives. Then he put his creativity and capital to work to eradicate disease in Africa and other parts of the globe. It would be a fascinating dinner to pick his brain and learn what makes him tick.
What do you to regroup on a tough day?
In any leadership role you have incredibly high days and rock bottom low days. The key is to keep the mental snapshots of the great days front and center so you don’t lose focus or faith on the bad days. The bookcase in my office also has photos I love of my family and friends to remind me not to take myself too seriously.
When Tariq Farid founded Edible Arrangements in 1999, he viewed the idea of edible fruit arrangements as an opportunity to combine his experience in technology and retail with an untapped market space with little competition.
Leaving the floral business, Farid started Edible Arrangements as a 600-square-foot store.
“Most of the people told us that it may be difficult because if it was something that was successful, if it was something that was going to be very popular, others would have done it,” Farid says.
But Farid wasn’t listening to the naysayers.
“I think all the stars were aligned for a small store,” he says. “Not necessarily a great company. But, that small store turned into a great company.”
In its first year, the company made $190,000. Farid reinvested the revenue to open a second store. It didn’t take long before the idea blossomed, and Faird began franchising the concept. Today, there are more than 1,000 stores throughout United States, Canada, Puerto Rico, United Kingdom and United Arab Emirates.
Smart Business sat down with Faird to discuss strategy and relationships.
Q: When you started franchising, how did you identify people who you believed were capable of taking your idea and making it their own?
If you put your processes and operations together properly, and if you lay the tracks down properly and you’ve tested it out, then whoever you find is only the starting point. You’re going to have to tolerate, grow or nurture.
And, if you’ve done those things right, most of them, the ones who are very motivated, will grasp on and be successful. And the ones who struggle? Because your systems are good and your franchisees are going to have the tools to be successful, you’ve put them in a good position, too.
So it became about giving the successful ones tools, systems and things that they had never thought of while, at the same time, for the ones who were struggling, providing a lot of hand-holding and one-on-one attention. They became successful, as well.
Systems are very important. You can’t just go out there and say we’re going to build stores without understanding how, what it will take, and how all these new elements and new ways of doing business apply to your business. It was out with the old at that time.
Q: What about relationships? How do you approach relationships with your customers and vendors?
The first thing I saw when I was about 15 years old and starting my first part-time job was that the customer is king. I grasped onto customer service from the beginning. Even now, our focus is always on the customer.
We go with the most important, working our way down after that. Our most important customer may be the customer who is buying our product. After that, our most important customer is going to be our franchisee. We will make sure they are all serviced properly, and that the products are something that they will relate to very easily.
You don’t just say “great customer service,” you practice it more and let the customer say how great it was. I actually go out to my people and say, ‘I don’t want you to tell me how many complaints you have. I want to know now many compliments you got.’
You have to work on getting compliments. If you are forced to focus on compliments, you will never have any complaints.
How to reach: Edible Arrangements, www.ediblearrangements.com
Interviewed by Dustin S. Klein / Story by Jessica Hanna
Phillip Keiser is a bit of a traditionalist when it comes to dessert. If, after his double cheeseburger with the works, he’s still inclined for custard, he goes for a plain vanilla cone. And it should taste the same whether he’s at the Culver’s restaurant near his office in Prairie du Sac, Wis., or the one in Elkhart, Ind., closer to his hometown. As president and COO of Culver Franchising System Inc., a chain known for its ButterBurgers and frozen custard, Keiser’s job is making sure everything, down to dessert, is consistent everywhere.
But he can’t be in all 435 locations at once.
“How do we keep brand standards going?” Keiser says. “One of our critical success factors is our franchise operators and their commitment to the brand.”
Because he takes extra care to bring in committed franchisees, Keiser doesn’t have to manage details too closely.
“The only way the brand grows is if we’re all in this together,” he says. “So our training program is more extensive than most. Our interview and selection process is more extensive than most. Our core values surrounding what type of franchisee we look for are more extensive than most.”
These days, those core values are stronger and clearer than before, thanks to Culver’s new “Welcome to Delicious” campaign that reinforces the chain’s reputation for good food, family values and great service. Founder Craig Culver is very involved in the campaign, telling stories about Culver’s ingredients and relationships.
So Keiser has to make sure those stories and values radiate throughout the Culver’s system. That starts with attracting and developing franchise partners who are committed to them.
1. Identify committed franchisees
When Keiser joined the company in 1996, Culver’s operated 44 locations. Now, nearly 400 restaurants later, he still hasn’t advertised a single franchise.
“They’re all sold by word-of-mouth,” he says. “Most of the folks have discovered us through a friend or relative or as a guest in our restaurant.”
Attracting interest, then, isn’t the challenge — it’s identifying the right candidates. The first filter is financial. Even though the restaurant business can be expensive, Keiser’s not interested in investors because investors don’t operate restaurants.
“The first thing is: They’ve got to be somebody that wants to run a restaurant day-to-day,” he says. “We require that in each one of our restaurants, we have an operating partner who needs to own either 25 percent of the operating entity and (25 percent of) the real estate or 50 percent of the operating entity. They’ve got to (be financially qualified) if they want to own the real estate.”
He runs background checks to verify financial standing, but validating the ability to run a restaurant takes more than paperwork.
“Many franchise organizations would do a Discovery Day, where they would come in and interview the franchisor,” Keiser says. “We have what we call Discovery Week, where they come on their own nickel. They need to buy uniforms and work six 10-hour days in our restaurant.
“Basically, during the week they’ll work every station in the restaurant. Can they figure out how to work the grill, how to make the custard? They get there early in the morning and work with our porters mopping the floors, scrubbing the fryers. They basically experience a little flavor of the day-to-day life of a team member working in our restaurant.”
Why subject potential franchise owners to entry-level work? Believe it or not, Keiser’s not testing prior restaurant experience.
“We really want them to do a gut check on themselves, is this right for them,” he says. “If you work in a kitchen, you get hot and you get some of the kitchen odors in your clothing. Are they OK with that, or do they think it’s gross? Are they OK wearing the uniform and seeing their friends? They’ve got to be comfortable with the environment.”
Not only the work but also the hours can weed out candidates.
“If they come from a traditional 8-to-5 type of Monday-through-Friday work environment, do they understand we do as much business after 4 o’clock as we do before 4 o’clock, and the weekends are big days for us?” Keiser says. “You won’t be successful with a Monday-through-Friday mindset.”
While Keiser is looking for applicants to be comfortable with the environment, he’s not hung up on kitchen skills just yet.
“We’re really looking for people that have leadership skills, communication skills, critical thinking skills, team-building skills,” he says.
In the mornings during Discovery Week, applicants further reveal those skill sets through the Wonderlic Cognitive Ability Test, personality tests and a GED equivalency test measuring math and verbal skills. While Keiser considers these results, he doesn’t put too much weight on them.
“We’ve had people that have scored off the charts that haven’t done real well working in the restaurants,” he says. “But it does give us an insight in terms of how that person is wired.”
To really understand what makes applicants tick, Keiser and other executives — including Craig Culver — interview them at the end of Discovery Week.
“Try to understand: What are their goals or objectives?” he says. “Most of them have some motivation to get into this. And if their motivations aren’t aligned with what we know it takes to be successful in this business, that’s probably a deal-breaker.”
Because the right motivation requires a lot of commitment, Keiser wants to make sure candidates are sincerely willing and able to make necessary sacrifices. Would their family support relocation? What if their July Fourth tradition at the lake couldn’t happen on July Fourth?
He also tries to read current employees’ interactions with applicants. Now that they’ve worked together a week, Keiser observes how well they mesh.
“You can tell sometimes by the body language of our team members, and you can see by the interaction of people, what they talk about,” he says. “The team member, if they’re leaving the shift, do they come over and say goodbye (to the applicant), or do they just leave because maybe they won’t see this person ever again? Are there hugs, or is it just pleasantries? There’s a lot of collective input from people that goes into this.”
To gather all that input, Keiser brings together everyone who interacted with the applicant on the following Monday. It’s crucial that opinions are kept quiet — especially from the top — until decision time.
“We don’t talk about the candidates during the week when they’re here,” Keiser says. “Myself or for Craig — if we met with somebody and said, ‘We really think they’re great,’ or, ‘Boy, I don’t think they’re very good,’ — because of our positions, we would taint somebody else’s insight.”
But come Monday, there’s no holding back. By engaging several team members around the decision, he gets a better-rounded view of applicants. Plus, by this point, he’s given applicants plenty opportunities to self-select themselves.
2. Train and develop your team
Discovery Week is just the appetizer for new franchisees. Once they’re on board, they dive into an intensive 16-week training course. The first 12 weeks are spent at the restaurants around Culver’s headquarters in Prairie du Sac — about two and a half of those in a classroom.
“Some of that would be dedicated to food safety, then everything from how to conduct training, how to use the training tools, how to conduct local marketing, to accounting practices, payroll, labor laws and presentation skills,” he says.
Franchisees spend the rest of the time mastering each workstation in the restaurant, not just learning what happens but also why.
“The product and techniques have to be followed,” Keiser says. “But part of the burden for us is to ensure that we have a policy or a procedure or a product or an ingredient that makes sense, that we can actually back it up and make a business case for it. When we do a good job with those decisions, we make it easier for the franchisee, that they aren’t thinking of doing it a different way.”
Throughout the program, trainers test franchisees and even reward the highest scores. Like school, they have to maintain passing grades to advance.
“If they aren’t cutting it in one area or another, then they have to go back and revisit it,” Keiser says. “A few times, we’ve actually had to extend the training a few days because they weren’t getting their arms around some aspect of the business. There’s a lot of testing, measuring and follow-up that goes into it.”
The ultimate test comes in the last four weeks, when new franchisees open two restaurants, facilitating a week of training and a week of opening for each.
“That’s where the dynamics really change, because when they’re working in our restaurants, the team members basically know their jobs,” Keiser says. “But now, they have to become the expert. Now, the people ask them questions. Now, they’ve got to help inexperienced team members overcome challenges of getting the job done.
“If they’ve never been through an opening before, they’re kind of standing there wide-eyed like, ‘What the heck’s going on here?’ The second time they do it, they really start to understand the challenges they’re going to face when they do the same process in their very own Culver’s restaurant.”
But it can’t be all work all the time. Most training programs at Culver’s include a cookout at Craig and Lea Culver’s home, or there’s a patio at the office that makes a perfect casual spot for serving beer and appetizers.
“You’ve got to look for some of these social times to get to know people on an individual basis and not make it all just about the business,” Keiser says.
3. Stay present and engaged
When you take time during training to get to know franchisees individually, you start the relationship with a good sense of alignment. But it takes constant effort to stay aligned.
One of the ways Culver’s does it is through a network of franchise business partners (FBPs) that acts as a field team to support the franchise community. Each FBP has about 20 restaurants to visit and measure against standards. They’re also on-call to help franchisees solve any business issues, from profitability to developing their teams.
But Keiser doesn’t use that network as an excuse not to get out in the field himself. Both he and Craig Culver visit restaurants throughout the system.
“I once had a guy tell me that as you advance, it becomes more and more difficult to get out of the office and into the restaurants,” Keiser says. “I always thought that was a little bit of bull, but I’ll tell you what — I can’t get out as often as I’d like to.”
At a minimum, he grabs lunch at a nearby Culver’s almost daily and tries to get out of Prairie du Sac for a couple of days each month to visit other restaurants.
The main goal of visits is shaking hands and saying hello. But he was a restaurant manager, too, once, and he still observes through those eyes.
“When I walk in the restaurants, I’m not the president of the company anymore,” he says. “I’m basically the restaurant manager, looking at the things I looked at when I last ran a restaurant in 1981: What’s the sense, what’s the feel? Do they have their act together? Do they have the right amount of products? Are the team members smiling at each other? Do they say please and thank you? They can’t fake that stuff.”
Even if they behave while you’re there, how do you know they don’t play while you’re away? The key is not drawing all your conclusions from one visit.
“You don’t just use one snapshot to tell the story,” Keiser says. “You use the collection of all the things you see happening at a restaurant: What are their patterns for growing sales, what are their patterns for growing people, what is their community involvement, how does that match up with the reports and what the other folks are doing?”
That big-picture mindset is important because you’re not just visiting a restaurant, you’re assessing how the local leadership is managing that operation.
“I not only have to see how the restaurants are doing, I have to evaluate how the rest of our leadership team is evaluating standards,” Keiser says. “You may go from one FBP’s region to another FBP’s region and you start to understand, OK, this guy or gal has a blind spot or that’s their hot button and they’re really pushing that aspect of the business. When I go out, I really try to look at it and say, ‘What are my directors of operations and my VPs talking about when they’re out there?’”
While tucking observations into his broader evaluation of the network, Keiser takes note of details, too.
“Ours is a very detailed business,” he says. “We measure our success in terms of penny profit on our menu items. We measure our success in terms of seconds in speed of service. There are a lot of details that go into it — not that I can get into all the details in my job — but [it’s important] to have enough of an awareness that when you do dig into a certain topic, you can get down to brass tacks and understand it.”
But tread carefully when dealing with details in the field.
“If you see a critical detail that’s being missed, you’ve got to be conscious (of the situation),” he says. “I have to remember that, for me, I’m just walking into another restaurant. For them, they’re getting visited by the president today, and that makes some people uptight.
“But when you see stuff that is on standard, you try to reinforce it. And if there’s a coachable moment, well, you do a little coaching, too.”
The main objective is just letting employees know you’re there and you care about what they’re doing. The more you do that, the better equipped you’ll be when issues need attention.
“If you have some things that aren’t quite to standard, it’s much easier to have some of those difficult conversations if there’s a relationship based on trust and mutual respect,” he says. “If they only hear from you when they did something wrong and they’re in trouble, so to speak, then that doesn’t work very good. … You’ve got to get together with people and get face-to-face as much as you can.”
How to reach Culver Franchising System Inc.:
Phone: (608) 643-7980
The Keiser File
Name: Phillip Keiser
Title: President and COO
Company: Culver Franchising System Inc.
Headquarters: Prairie du Sac, Wis.
Locations: 435 in 19 states (from 44 when Keiser came on board)
Hometown: Nappanee, Ind.
Education: Bachelor’s degree in business from Manchester College
Previous jobs: various management positions with Burger Chef and Hardee’s
What was the last book you read? The owner’s manual for my car. Have you seen those new manuals? I mean, come on, they’re like books! And I still don’t know how to work all the stuff on the radio. But seriously, the last book I did read was ‘Decision Points’ by George (W.) Bush.
If you could have dinner with any three people, living or not, who would you choose and why? I’d like to have a conversation with Vince Lombardi because he was a Packer but also because I think he also had a lot of insight on how to motivate people and get things done and be disciplined.
In our industry, the person that I think would be a real hoot to talk to would be Col. Sanders. He basically started selling chicken out of his car and using a recipe as a business plan to become, now, one of largest restaurant companies in the world. From some of the folks I’ve met through our industry that actually have worked with the Colonel, I get the impression he was a pretty colorful character.
And then I think any former United States president. I’ve had a few opportunities over the years to hear a couple of them speak, and when they go off script and they start telling stories, OK, at that point, if walls could speak, there would just be a whole bunch of interesting things to get from any of them, regardless of how you view them from a political standpoint.
If your company had a theme song, what would it be? There could be a couple of them: I think the theme song from ‘Rocky.’ We’re not the big guy, but we’re always trying to grow. We’re always a little bit of the underdog and trying to make things happen, but we always believe in ourselves and we aren’t afraid to take on the challenge of the fight to get out there.
One of the other ones would be ‘We Are Family.’ We talk a lot about a spirit of family; we actually call our annual convention The Reunion. It’s the spirit we like to have at our gatherings with our franchise community and our team members.
What’s your favorite stress relief? I’m a landscape gardener. I live out in the country, and I have a woods and a perennial garden. So after all we do all week, then I just go out there with the plants and the trees and the grass, always cutting something, pruning something. I wouldn’t call it mindless work, but I can get out there and have some me-time and work up a sweat and get some sore muscles, too.
Charley Shin did have a moment when he wondered if Charley’s Grilled Subs was going to make it. It was actually a very long moment, one that lasted about 10 years, as he recalls.
“I underestimated the time and the cost of the growth that would take place,” Shin says. “I started out with a business plan that we would break even when we had about 20 stores. When we hit the 20 stores, we were still losing money.”
Shin kept revising his goal to finally become profitable for 30 stores, then 50 stores and then 70 stores. At each step, he was still losing money.
“It wasn’t until we had about 100 stores that we were breaking even and making some money,” Shin says. “It was over about a 10-year period. It was a very intense, grueling, excruciating 10 years.”
There was also the fact that his mother had let him borrow from her life savings to start this business. That only added to the stress Shin was feeling about his business.
“I wanted to give up,” Shin says. “I really did want to quit. But I come from a Christian background. I just knew this was something I have to do even though I wanted to quit.”
It’s that kind of persistence and commitment that helped Shin stick with it through the tough times and enabled him to finally reap the fruits of all his labor. Today, Charley’s has more than 400 units in 44 states and 15 countries around the world.
Shin says the key to getting through tough times, whether you’re just starting a business or trying to manage an established company through a challenge, is your mindset and the way you present yourself to your people.
“I don’t think I ever gave an indication that I was going to quit,” says Shin, the 5,500-employee company’s founder, president and CEO. “Think about the reason why you’re doing it. Each person may have a different reason.”
Shin’s reason was to build a successful business that provided a great product to customers and provided a great and fulfilling place to work for employees.
“We have people who are investing their life savings believing in us and believing that this concept will do well,” Shin says. “In order to fulfill our promise, we just have to continually invest within our infrastructure and with our personnel and increase our expertise. It was a really trying and difficult 10 years. But looking back, I don’t believe I’d be where I am without those 10 precious years that put us through the fire and gave us a ton of experience.”
Charley’s, which is legally known as GOSH Enterprises Inc., took in $220 million in 2009 revenue. That’s a long way from his take at that very first store on the campus of The Ohio State University back in 1986. As he has grown the company, Shin has learned how to find the right people and how to help them get through that inevitable first hurdle.
Find the right people
Shin has interviewed a lot of people over the years to assess their ability to lead one of his franchise locations. He’s learned that you can learn a lot about the attributes and personality traits of an individual from your first impression.
“Most people do not come in with a disguise,” Shin says. “Even someone who comes in with that intent, after a while, it all becomes disclosed.”
In other words, don’t make an interview harder than it needs to be.
“Our interview usually lasts a whole hour,” Shin says. “As we sit in the room, we tend to have a pretty good gauge on what type of person that is. We’ll just ask questions as to their background. What you have done before? Tell me about your background and your family. Why are you here? How do you like to spend your time? Through asking those questions, we get a fairly good read on the person, and we can tell if they’re just looking for a get-rich-quick scheme or they are genuine and really a hardworking person.”
If the person is more interested in the financials than your values and philosophies in leading a business, that should definitely be a red flag.
But it’s not only this person’s skills and personality that you’re measuring. You should also be thinking about how this person would fit in your company and how he or she would handle leading one of your business units.
This becomes particularly important for Shin when he’s assessing someone’s ability to be a franchisee in his company.
“It’s their business, but they are not in business for themselves,” Shin says. “They are in business with our brand. They are an extension of our brand and they have to represent us. We have a fairly clear expectation of what it is that they need to do.”
When you have that expectation in mind at the start and know what a good candidate looks like, you’ll have a lot more success judging whether someone is right for your business.
“Don’t get blinded by money,” Shin says. “Don’t focus on growth at all. I really do believe the business will grow out of healthiness rather than growth per se. Pick the right people because the people are going to be 80 percent of what’s going to bring you success.”
So what if you get into a situation where you just can’t seem to find the right person to fill the position? Shin says resist the urge to just plug anyone in and wait it out.
“I would really focus on picking the right people even though there may be fewer of them,” says the man who waited 10 years for his business to really take off like he wanted it to. “I don’t want to be a leader where I look at everyone and say, ‘This is the way to go. Let’s go together.’ Each of them has their own job to do or their assignment to accomplish and that’s how we’re going to grow.”
You need someone who offers examples of projects they’ve led from the start and talks about how they overcame challenges to make that project a success. Otherwise, you’ll constantly have to be holding their hand.
“Our franchisee has to be a person who is committed to serve people,” Shin says. “They have to be outgoing and have a good nature about themselves. A very critical success criteria is people who are courageous and bold and who will step out of their comfort zone. If I believe the person has that quality of wanting to serve and is a bold and courageous type, that is really my person of choice.”
It’s a level of patience to find this type of person that has helped Shin successfully grow his business.
“I’m really upfront with them,” Shin says. “I tell them, ‘I think we have a great concept and we’re going to be successful. I don’t know that 100 percent, but we have a very good chance and God willing, we will be successful and we’ll all reap the benefit.’ That’s the underlying premise.”
Don’t focus on the details
When Shin is working with a new franchisee, the first thing he teaches them is not how to make a Philly Cheesesteak, an order of Cheddar, Ranch & Bacon Fries or a kiwi lemonade.
“That will come, but that is not the most important thing,” Shin says. “We want to teach them about why you are in business. I think a story works better than anything else. We just share how we do our daily business or our daily life. We tell them how we operate and how we work.”
You should be working with the leaders of your business units to develop their skills managing the people they’ll be hiring to lead.
If you’re worrying about whether the person can handle some aspect of what your business does, whether it’s making a sandwich or producing a part in the machine shop, you probably haven’t chosen the right person.
“What I need to do is start training the basics of my philosophy,” Shin says. “Why is it important to serve people? Why is it important to bring your employees in as part of the family? We just start teaching from there.”
You need to make sure this person can handle problems on his or her team. You also need to have confidence that this team will be led in a way similar to how you would do it if you were there running things on your own. It’s why you focus so much on the person and his or her personality in the interview process.
“That’s where the expectation really needs to come,” Shin says. “Without a clear set of guidelines of what it is they need to do and ... the jobs they need to perform, just the feeling of love and family doesn’t cut it.”
A leader’s skills at managing people are just as important, if not more important than his or her skill at whatever it is your company does.
“Facing a problem is just one of those things that makes a leader a leader,” Shin says.
Make sure you’ve communicated your expectations to the individual about all the job entails and given him or her an opportunity to express concerns or ask questions. If you’re having trouble with a leader at this stage, it’s probably another sign you made a bad choice.
“I don’t believe we can change a person,” Shin says. “They come as they are. I think I could have a great impact changing people, but I don’t want to fool myself. If they have certain traits, that’s the way they are going to be.”
Expect a few problems
Shin likes the leadership training program he has developed over the years for Charley’s. He takes the approach that training gradually is the best way to go.
“If we’re trying to download a lot of information in a short period of time, the brain only has so much capability for what it can absorb,” Shin says. “It will absorb a certain amount of data and the rest will just stray.”
Perhaps that explains why even great leaders typically have a few hiccups along the road to that greatness.
“Real expertise will not really come until they are fully spending lots of time at the store,” Shin says. “Then they start to get a better grasp. … People forget what they are taught in the training time. It’s not rare to see our team go into a franchise store to give them a shot in the arm.”
You’re fighting human nature and that’s a pretty tough opponent to defeat. Most people, especially the ones with the leadership gene, like to believe that they can do it on their own. It doesn’t really matter what the “it” is.
“Struggling franchisees typically think they can do something better than they are taught,” Shin says. “They are trying to find their way of solving the problem or they start to deviate from the protocol. When the systems are not fully utilized, a problem starts to crop up. I think it’s just human nature by some people.”
So how do you work through the problem quickly? Start out by sharing examples of how doing things the way they were taught lead to successful outcomes.
“They just have to see the standards and how much better the standard is,” Shin says.
And you just have to remain patient.
“I am here not for my own good only, but I’m here for the good of the person in front of me,” Shin says. “That has to be conveyed.”
How to reach: Charley’s Grilled Subs, (800) 437-8325 or www.charleys.com
The Shin file
founder, president and CEO
Charley's Grilled Subs
Born: Seoul, South Korea.
Education: Business degree, The Ohio State University
What was your first job?
Washing dishes at a Japanese steakhouse when I was 14. It was good, but when I quit that job, I knew I didn’t want to be a dishwasher for the rest of my life. I didn’t want people to tell me what to do all day.
Whom do you admire most in business?
Truett Cathy, the founder of Chick-fil-A. He is a phenomenal businessman and such a strong, principle-driven man. I admire him a lot.
What’s the best advice anyone has ever given you?
Keep your books straight. There will be a lot of temptation because you deal with cash. Keep your books straight and just pay your taxes and everything will be OK.
How Charley’s Grilled Subs came to be: Charley was taking a family vacation when a missed exit brought him to South Philadelphia. His first encounter with a local delicacy, a Philly Cheesesteak, was love at first bite. Totally hooked, he brought his findings back home to Columbus and began testing recipes on his college buddies.
After perfecting the recipe, Charley’s fortune took another turn for the best. His mother let him borrow from her life savings to open the first Charley’s on The Ohio State University campus. The 450-square-foot, 16-seat restaurant featuring Philly steak subs, gourmet fries and natural lemonade was an instant hit.
To keep up with customer demand, Charley began franchising in 1991. Locations began popping up all over the world, including mall food courts, strip centers, airports, and even Army and Air Force bases. The company now has more than 400 locations around the world.
If you work for Joe Schumacher, introductions are the appetizer at lunch.
When Schumacher gathers his employees together for a lunch meeting at Goddard Systems Inc., he makes sure that accountants sit with operations people, his legal staffers sit with marketers, and so on. It’s one of the most effective ways he encourages communication and prevents silos at the franchisor of The Goddard School for Early Childhood Development, where Schumacher serves as CEO.
“We want people from different departments at the same table,” he says. “One of the great pieces of feedback we’ve gotten is that everyone seems to like that. They had an opportunity to talk to other people that they normally wouldn’t have talked to.”
Schumacher oversees 115 direct employees and must set uniform standards for 368 franchised schools around the country, employing between 20 and 25 people each. Therefore, this means that promoting good communication and reinforcing the organizational direction of Goddard Systems are daily tasks for Schumacher.
He follows through on these tasks by facilitating an ongoing dialogue between levels and locations within the organization. Whether it’s corporate leadership speaking with a franchisee or different franchisees in different states speaking with each other, Schumacher wants the exchange of words and ideas to become an everyday occurrence underneath the Goddard umbrella.
“It’s really the biggest challenge for any franchise company, aligning the franchisees and the corporation as to the direction you’re heading,” Schumacher says. “The economy has certainly made everybody focus more on the core issues facing the company and the values of the company. The way to answer the challenge is to ensure that everyone has a voice in the approach that the company is taking. That includes franchisees and employees and making sure that everyone has a chance to be heard.”
Reach out to your people
From the time they sign the contract to run a Goddard School, franchisees are taught that communication is a major priority within the organization. When possible, Schumacher meets with each new franchisee personally and emphasizes the need for an open dialogue among all areas and levels of the Goddard system.
Schumacher and his staff also employ liaisons to help franchisees with their transition into the system, offering new additions a resource on how the organization does business as well as a sounding board for any issues the new franchisee might encounter.
“We do a lot to ensure that both our franchisees and our employees have methods for communication and understand that we have an overarching philosophy that encourages communication,” Schumacher says. “When a brand-new franchisee comes into our training class, I tell them that we are focused on communicating back and forth. We might not always agree on every issue, but I promise your voice will be heard.
“As part of that, we have a pre-opening process manager, and that person’s job is just to deal with people from the time they sign as franchisees. Then we have a franchisee liaison to act as an independent sounding board, someone who is not related to any department, who reports directly to me and can talk to franchisees about any issue the franchisee feels is important.”
Once new franchisees receive their initial training, they are encouraged to maintain contact with corporate management whenever they have an idea or issue to address.
“Franchisees are encouraged to call or e-mail anyone internal in the organization, up to and including me, on any issue,” Schumacher says. “We don’t want you to have to go through seven layers of management to reach us. So franchisees will regularly call me about both good things that are happening and things they might have some concerns about. Our policy is that calls and e-mails are answered within 24 hours, even if we might not have an exact response. I might not always have the answer of a more complicated problem, but I will connect with you and tell you on the matter.”
Turning a communication strategy into reality takes good execution from the upper levels of management. You need to be able to set the example from the top. But before you get to the blocking and tackling of rolling out a strategy, putting the priority in front of your people with words and messages can go a long way toward setting the ground rules of communication.
“The most important thing is making sure all of the constituencies understand that this is a priority for the company,” Schumacher says. “I regularly tell both franchisees and employees that I need to hear from you. This is my job as CEO, and this communication is the most important part of my job. Overall, whoever your constituencies are, you need to be making sure they understand that communication is important to the company, whatever they say won’t be taken personally by management, and they’ll be able to identify issues without fearing retaliation.”
From there, you need to have people in place who can help maintain your strategy’s momentum. That is the role of Schumacher’s franchisee liaisons. At your company, it might be your human resources department or corporate communications specialist. But someone in your organizational hierarchy needs to be trained on greasing the cogs of communication on a daily basis.
“Those two liaisons give people a specific point of contact,” he says. “If they don’t know who to talk to, they can go to those people and be directed to the right person.”
Make a lateral pass
Corporate management plays a vital role in communicating with your people in the field, ensuring that they stay focused on your organizational objectives and feel empowered to carry them out. But that is only a part of the communication equation.
Your dialogue needs to be lateral. Your salesperson in one part of the country needs to develop a working relationship with salespeople in other parts of the country, allowing them to share ideas and get a better grasp of what is and isn’t working among the company ranks.
At Goddard Systems, Schumacher has taken the step of formalizing peer communication among his franchisees. As part of a systemwide mentoring program, more experienced franchisees are given the opportunity to coach new franchisees on being a part of the Goddard organization.
“It’s somebody else they can call or e-mail to talk about issues,” Schumacher says. “We do the same things for our schools’ education directors, with a mentoring program in which more experienced directors get mentors, as well.”
Franchisees with high-performing Goddard locations are selected as mentors for the program. In recent years, more than 40 new franchisees have been mentored in the program. Schumacher estimates that about 20 franchisees received mentoring in 2010, due to a drop in the establishment of new franchises.
If you operate a business with multiple people in the same market, it is often advantageous if you can connect those people and allow them to find common goals. Even if you have locations or salespeople who might be competing with each other in a given market, if they are finding common areas of motivation, it will serve to strengthen your company overall.
Schumacher has encouraged Goddard franchisees in individual markets to find common ground in the marketing of the Goddard concept to the surrounding community. Some local schools have unified on creative marketing concepts.
“Our Denver market decided they wanted to sponsor the children’s play area at the Colorado Rockies baseball stadium, so they unified on that initiative,” Schumacher says. “They’d have things like ice cream socials and open houses to attract enrollment in their areas, so they tried to do that as a unified force, as well. There are 13 schools in the Denver area, so they tried to do the open house and socials on the same week.”
Schumacher wants his franchisees to take any opportunity to get together and talk shop, whether it be a formalized meeting or a less formal interaction.
“We put on an excellent business and social program, but even if they were just OK, the best part about any meeting is when you have franchisees coming together and talking with other franchisees about common issues,” he says.”
Know your role
As the person in the top spot of your company, your job is one of support and motivation when it comes to your team.
You can speak about having an open-door policy, about the standards you want for your company, how you want your employees to represent the company and the resources you’re willing to provide for them, but as you’ve been taught since grade school, actions speak far louder than words. Which means it is imperative that your actions follow your statements and employees don’t get the sense that you’ll say one thing and do another.
“A lot of your job is to set the tone,” Schumacher says. “It is important that the entire company, whether employees or franchisees, know that communication and adhering to the mission of the organization is key. That’s why living what you say is important. If I bloviate about the importance of communication but don’t tell people things or tell them to come back later, it becomes apparent that what I’m saying is just words, that I don’t take it very seriously.”
You need to realize the difference between leadership and management. You have elements of both in your role. You are a supervisor who manages others and a leader who seeks out new opportunities and charts a course to reach them. But you can’t let your supervisory role cast a shadow over your role as leader. If you try to control too much from a process standpoint, you run the risk of micromanaging, which can be detrimental to the trust factor in an organization.
If an employee has an idea and wants to run with it, accept it or decline it. If you decline it, explain why. If you accept it, give the employee resources and benchmarks, but let him or her take the creative lead.
“It’s often a criticism of upper-management types that they’ll sort of steal people’s ideas,” Schumacher says. “I try to make sure that if somebody gives me or the company an idea about something, they get recognized for it. Whether it’s in a meeting or communication or wherever, I try to make sure our managers understand it’s a better sign if a manager celebrates people and allows them to be recognized for the contributions, as opposed to the manager taking the credit.”
Recognition is one last vital part of the communication process. It stimulates ideas and encourages employees to come forward with new ideas in the future. It helps reinforce a unified, goal-focused company. And there is a difference between putting a bonus plan in place and actively recognizing someone. Both forms have their place, but neither is a catchall.
“Everybody, if not needs, then certainly wants recognition,” Schumacher says. “It’s easy in any company to feel like you’re laboring in the dark and that nobody really knows what you’re doing or how important it is to the company.
“That’s why monetary and nonmonetary recognition serves different roles. I think a simple recognition, intermittent and unexpected, often goes a lot further than money. But the two have to work together. You’re not going to have people happy about a gift card or a pat on the back if they’re not getting paid well enough or they’re not able to make bonus. That’s why it’s probably better if the money stuff is basic and expected, while the nonmonetary stuff is more unexpected and intermittent.”
How to reach: Goddard Systems Inc., (610) 265-8510 or www.goddardschool.com
The Schumacher file
The Goddard School for Early Childhood Development
Born: Queens, New York City
Education: Psychology degree from St. Francis University, Loretto, Pa.; law degree from Widener University School of Law
First job: I was a janitor at some kind of warehouse. I don’t even remember what it was. I think I was about 14 at the time.
What is the best business lesson you’ve learned?
Transparency is the best business lesson I’ve learned. Be straight with people, and when news isn’t good, just deal with it. If you hide or avoid things, it just makes them more difficult to deal with.
What traits or skills are essential for a business leader?
Commitment and dedication. People need to understand that you are committed to the enterprise and committed to what it takes to make it work. You also need to be sensitive to people’s thoughts and ideas.
What is your definition of success?
Setting appropriate goals and then achieving them. It’s also important to have some fun along the way. We aren’t running an amusement park, but overall, your work should be something you enjoy. And, of course, profitability is an important element of success, as well.
When Patrick J. Pitrone took over as president of USA Insulation Franchise Corp. seven years ago, he had to overcome the hurdle of being the founder’s son.
He made sure he did every aspect of the insulation business himself so that he never asked someone to do something that he didn’t know how to do or wasn’t willing to do himself. As a result, he earned the respect of the company’s 135 employees.
Four years ago, he started turning the organization toward growth by transforming it into a franchisor. There weren’t any insulation franchise businesses, so the field was wide open.
Smart Business spoke with Pitrone about how he led the business into this new endeavor.
How did you start franchising your business?
It did take some hard knocks and learning initially. We knew our business very well, but we didn’t know the franchise business — how to take our model and carbon copy it across the country. We learned a lot about ourselves, and we found out that we’ve learned a lot about our business, but we never took the time to put it all down and hand it over to somebody. We had to go back to the drawing board and bring some consultants on board to frame out a system to put in place and put everything out on the table and give them a launch process and how we can help them operate.
The key to that area was bringing people on board who knew the franchise business and could mold it with the existing insulation process and be able to craft a system that can make people successful in this business.
How did you select consultants to help you?
We had some referrals of people who had done this before. There’s nobody in the insulation franchising business, so that was out the window, so we had to look for people who had similar service businesses or folks we met at the International Franchise Association’s annual meeting. It was bringing people on board who knew franchise businesses and molding it with ours.
In choosing a consultant, we made a mistake. Initially, we hired someone who was a fair amount of money, and you don’t know what you don’t know starting out, and we thought we had the right company there.
What tips would you give for hiring a consultant?
Spend time with them to get a sense of the people they were. [Ask] questions to get to where you felt comfortable with them.
I wanted to find out initially how they took companies from ground zero up to 10,000 feet or so. I wanted to find out not only if they did but what they did to bring companies that have been doing one particular thing in one location for X amount of time, and how did they build that business? How did they take a company and build their manuals, build their jump systems for new locations, how did they build the marketing and legal pieces? … Initially we didn’t know what questions to ask, so we had to make a couple of mistakes in the beginning — they were costly mistakes, but they helped us choose that next consultant, the one that has really gotten us to where we are now. So knowing what questions to ask initially was a pretty big thing, and we had to learn the hard way of asking the wrong ones first and learning the second time the right ones to ask.
What are some good questions to ask?
One question that I have asked before is, ‘Give me a reason why I would hire you and a reason why I wouldn’t.’ They’re sort of behavioral-based questions. Give me examples of times and things you’ve done. The closed questions won’t get as many answers.
The best questions are to ask the folks they’ve worked with and the referrals. I’ve actually been a referral now for this consultant, and people talk to me for a half hour at a time. They wanted to do their due diligence. … Those questions can be — the expectations that were set, did they meet your expectations, was the price that you paid the right amount of money for the services you got, or what are the biggest weaknesses that they’ve had in the first six months of getting started? Presentations are presentations. You can have consultants come and go through the front door, but unless you talk to the folks they work with, it’s difficult to get a sense of what they’re all about.
What have you learned from this process?
It takes longer than you think, and it takes more work than you think and you don’t always see progress when you want to see it. But it’s funny, the longer you do it, the more people from the outside looking in give you some perspective on how far you’ve come. It’s been [more than] three years now and we have 17 locations and that’s more than I thought I’d have right now. It’s interesting to see the growth of our company. It’s fun.
How to reach: USA Insulation Franchise Corp., (866) 602-4107 or www.usainsulation.net