Back on track

When Charles Swinburn became CEO of RailAmerica Inc. in August 2004, he set out to tackle three problems impeding the short line railroad’s efficiency and ability to serve customers. Those concerns – safety, rising fuel prices and increased congestion on the railways – were having a negative impact on the company’s ability to grow and on its bottom line.

“We were having a spate of bad luck on the safety side,” Swinburn says. “We had too many derailments and some personal injuries across our railroad systems. My most immediate focus was safety.”

Every derailment cost the company thousands of dollars, and injuries have a direct effect on casualty expenses and insurance costs. So Swinburn began revamping the way the company approached injuries and derailments.

“On the track side, we made ourselves a lot smarter in our capital investments in track,” he says. “We spend, round numbers, $55 million to $60 million a year on track maintenance.”

It’s a matter of assessing 7,800 miles of track and prioritizing problem areas.

“We put in place a risk analysis — a determination where on our railroads there was or is the highest risk of a train coming off the track by virtue of curves, grades, condition of the track, etc.,” he says. “We began to focus on those areas and make investments at those locations.”

If the company is to continue to lower its costs, Swinburn says, employees must be better trained on how to identify those problem areas. The training budget was increased from $80,000 to $160,000 to show employees the company’s management is committed to safety, even if it means decreasing production rates.

“We put in a training program for all our train operators and conductors — the people that actually run the trains – on how they can spot places on the tracks that are not in good shape or are vulnerable to future derailments and report them so the engineering people can get out and fix them,” Swinburn says.

But safety isn’t just about the condition of the tracks. It’s also about the culture of the company. You can’t mandate safety.

“On both sides — the injury side and the derailment side — we have also taken major steps to try and change the culture,” Swinburn says. “Particularly on the injury side, there is a cultural thing. People have to believe that the organization is committed to safety and have to commit themselves to safety.

“It’s not intuitive. They have to make a conscious decision that they’re going to be safe, that they’re going to follow all the rules and that they are going to work with each other to ensure a safe workplace.”

RailAmerica can’t mandate safety. What Swinburn does instead is ensure is that management’s concern for safety is clearly communicated. One week every month, Swinburn and his vice president of operations visit one of the company’s railroads, meeting with its management team.

“As part of that, we stress safety,” Swinburn says. “We stress it at the beginning, in the middle and at the end of those meetings. We’ve had a very good response. We are successful at convincing those people that we care about safety, that they should never sacrifice safety just to get the job done quicker.

“The way we characterize it is, ‘You don’t put operating considerations ahead of rules compliance.’”

The emphasis on safety and investment in new training programs has paid off. During the first quarter of 2006, derailments caused by track decreased 62.5 percent, reportable injuries during the same period dropped from 16 to seven, and RailAmerica’s injury ratio was less than half the national short line average.

Fuel prices
Like safety issues, rising fuel prices have a direct impact on RailAmerica’s bottom line.

“It was in the spring of ’04 when fuel prices really began to skyrocket,” Swinburn says. “We’re an energy user, a pretty significant one.”

Since then, RailAmerica has adopted a number of strategies designed to recover as much of those increases as possible.

“It is still an issue, but we feel better about it than we did a year to a year-and-a-half ago,” Swinburn says.

At the beginning of 2005, RailAmerica was able to recover, at most, 50 percent of any rise in fuel prices.

“We were quite vulnerable to increases,” Swinburn says. “We put in as many fuel-saving measures as we could across all our railroads.”

Swinburn set out a series of best practices rules to help save the company money. For example, the industry practice is to leave diesel engines running while cars are being loaded or unloaded or during shift changes. At RailAmerica, those engines are shut down. During the winter, the company now uses small generators to keep fluids from freezing in northern climes, a practice that is far less expensive than leaving engines running.

Swinburn has also put a greater emphasis on making sure the right equipment is assigned to the right job.

Not one to settle for saving only what he has direct control over, Swinburn pursued the transcontinental railroads, known as Class I railroads in the industry, to see if they could help with the issue. RailAmerica’s railroads interchange traffic with the Class I’s.

“We’re independent companies, but in certain ways we’re their agents in dealing at the local level with customers,” says Swinburn.

“You’ve got to convince the larger partner that doing something differently is in that partner’s interest, as well as your own interest.”

To get the Class I’s to share the fuel charges, Swinburn had to convince them RailAmerica couldn’t absorb the impact of sudden fuel-cost increases and still maintain customer service levels to their mutual clients.

Once the Class I’s understood that, passing on a portion of the surcharge was a logical solution to maintaining customer service levels.

“One way or another, you’ve got to be able to carry that argument and convince them it’s in their interest to do it,” says Swinburn. “They’re not going to do it if it’s simply a charitable endeavor.”

And they are not going to have that conversation if you haven’t been doing everything you can to help them.

“A lot of it is living up to your responsibilities,” he says. “They’re not even going to have that conversation about sharing with you unless they believe that you have been doing what you should be doing under the partnership-type relationship all along.”

The result of these negotiations is that fuel price increases no longer cut into the company’s profits as deeply as they once did. RailAmerica can now recover about two-thirds of any fuel price increase.

Railroads are limited in their efficiency by the amount of track available to run their trains on, and congestion is a major issue.

“There’s just not enough track to allow trains to run as freely and efficiently as possible,” Swinburn says.

And it’s not just a matter of congestion on RailAmerica’s tracks. The Class I’s that RailAmerica is interchanging traffic with have the same problem.

The industry measures efficiency based on how many days it takes for a car to make a complete cycle from a shipper’s dock to a receiver’s dock and back to the shipper’s dock. RailAmerica averages eight days across its 42 railroads.

“There is too much traffic on the system for that move to be 100 percent efficient or anywhere even close to that,” Swinburn says. “The result of that is things move slower than everybody would like, and shippers cannot get their goods moved as much as they would like.”

When this happens, RailAmerica loses business as freight is shifted to trucks.

“The answer is not to put more cars or locomotives on the system because that will probably compound the problem,” says Swinburn. “They’ll just get in each other’s way more than the existing cars and locomotives are getting in each other’s way because there’s not enough track out there.”

There are several components to system congestion affecting RailAmerica, only some of which the company has direct control over. But just because the company can’t control Class I traffic, for example, doesn’t mean it is ignoring the situation. As with any company that must sometimes play by another’s rules, Swinburn has kept an open dialogue. And that dialogue is bringing results.

Class I’s are giving shippers incentives to load and unload cars on weekends so the car doesn’t sit still for two days.

The goal is to drop the average cycle half a day during each of the next two years. Swinburn plans to also do that at RailAmerica through improved technology and by learning from the Class I’s.

“We’re doing those same things ourselves,” he says. “We’re talking to our shippers to encourage more efficient utilization by them of the cars to cut down the amount of time the car sits there. We are applying IT resources to our control of cars.

“We have gone, in the last two years, from only knowing where the cars were on a several-day delay basis because everything was being reported manually on paper … to now where it is all computerized. I can sit at my desk when I come in in the morning and look across 42 railroads and find out where the cars are by car number, by individual car if necessary, as of midnight the night before.”

RailAmerica has used that information to increase the charges shippers pay for cars that are sitting at their businesses and ultimately improve overall efficiency.

“Normally they get one or two free days, and then they have to start paying,” says Swinburn. “The point there is not to collect more money; the point is to give them the incentive to turn those cars quicker.”

Maximizing efficiency
With the three biggest problems under control, Swinburn is looking to focus on maximizing efficiency throughout the organization. His blueprint is a five-year strategic plan that he drafted and then got input from the heads of all 42 railroads that comprise the network.

“You’ve got to get the people who do it involved in it, help them structure it, challenge them and coordinate things,” Swinburn says. “You can’t just bring in a consultant from outside and do the classic time and motion study and end up with results that people are going to willingly participate in.”

Swinburn took suggestions and redrafted the plan before issuing a final version with a long memo explaining why some suggestions were accepted and others rejected.

“Every quarter we’re going to review our progress toward the elements of our strategic plan,” he says. “Managers at all levels have as part of their 2006 goals and objectives, agreed to pieces of the plan that should be implemented this year. At the end of the year, their performance evaluations will be based on how well they’ve done against those objectives.”

Swinburn’s strategies appear to be working. RailAmerica posted nearly $423.7 million in operating revenue in 2005 compared to $369.4 million in 2004. In addition, it had income from continuing operations of $30.8 million last year, compared with a loss of $23.1 million in 2004.

Swinburn plans to continue working on new strategies to grow the company. His philosophy was perhaps best summed up when he quoted Will Rogers in last year’s annual report.

“Even if you are on the right track, you’ll get run over if you just sit there.”

HOW TO REACH: RailAmerica, (561) 994-6015 or

Foreign development

For more than two decades Edgardo Defortuna has built a company by finding the right people and carefully moving into international markets.

“Surround yourself with the right people and try to not overextend yourself because the temptation in the market today is to go big really quickly and to try to have the homerun the first time at bat,” says Defortuna, president of Fortune International. “It’s really a potential recipe for disaster. If you’re hardworking and surround yourself with the right co-workers and the right people, the market and the overall business in South Florida is very good and bound to succeed.”

The 49-year-old native of Argentina started his company 23 years ago as a real estate brokerage but has since added construction, equity, sales and marketing to his offerings. But it is the development division that has really taken off.

For more than a decade Defortuna nurtured his real estate brokerage company, specializing in luxury residences. As he did so, he worked with developers, watching and learning, until about 10 years ago when he decided it was time to get into the act himself.

“When we were working with developers on the marketing and sales of property, sometimes they listened to our advice and sometimes they didn’t,” Defortuna says. “After I saw what they were doing, I said I could probably do this better.”

Finding and keeping the right people
Spending so much time observing taught Defortuna more than just how to get into the development business; it also taught him who to bring along. Defortuna found a site for a first development in South Florida and put together a team of developers, financial experts and construction specialists.

“The experience of being in the real estate market for so long gave me an inkling to who the good people were from the architectural design, execution and construction,” Defortuna says. “I watched some of those most important buildings being built while I was in the brokerage business. It wasn’t that difficult to identify those people.

“To be able to convince them to join the team and convince them to stay is somewhat more challenging and requires a uniform front and the right chemistry.”

In other words, it is one thing to get them; it’s another all together to keep them.

“There is a lot of competition,” Defortuna says. “I would be foolish to think my people don’t get offers all the time. You have to be reasonable and generous with the overall compensation. In addition to that, it’s how well they feel about the environment where they work and the potential continuity of the company.”

Defortuna talks with his employees about the importance of stability and keeps them involved.

“We try to have continuity,” he says. “We try to keep people very informed about what we’re doing to keep prospects for the future. They understand and know that we’re here to stay, and they will always have, as far as I can manage it, continuity in their work and work environment.

“One of the biggest assets that we have presently in the company is that everybody comes to work happy, and we’re all pulling toward the same goal. It’s one of the characteristics that makes our company different.”

The relationship between co-workers is so good that many of the development company’s employees go on vacations together. Of course, it doesn’t hurt that Defortuna pays for the trips. Recently, he paid for about 75 employees in the development office to spend five days in Las Vegas. And it was not a work trip disguised as a vacation.

“This has been a tradition for the last four or five years,” Defortuna says. “The atmosphere and the chemistry that exists here is unique in the industry. We’ve been to Buenos Aries. We’ve been to Orlando. We went to New York last year. We went to Key West. We have dinners together, then there is an event program for Saturday night where we have a club that we reserve for ourselves, so we’re going to have fun there. There is no work-related agenda.”

The best way to develop a team like the one at Fortune International is to start at the very beginning.

“It begins with the interview process,” Defortuna says. “Nobody hires anybody without a concerted approval process from the heads of many of the departments that are going to be involved with that particular individual. Not only the qualifications of that person are important, but his or her personality is very important to us because it’s key the relationship and the chemistry is kept.

“By now, I and many of my coworkers have become pretty good readers of (how well) people will adapt to our system. That’s something I stress. We go on a trip once a year, but we have meetings all the time. On Fridays, there is lunch for everybody in the company. We try to get together and share not only work experiences but also share personal experiences. That’s what makes it a very upbeat environment and a very happy environment.”

That environment has helped the company grow — last year, Fortune had $750 million worth of projects.

International expansion
Defortuna realized early on that the beauty and climate of South Florida appeal to more than just Northerners tired of cold, gray winters.

“When we were doing marketing and sales for developers, we figured out that a lot of the clientele that came through the sales center were foreigners,” Defortuna says. “When more and more projects came online, we felt that it was necessary to go to those countries, specifically at that time to go to Latin America, and get the customer educated on and informed about our product and the way that you buy in the U.S. before they get here, because there are too many (differences).”

Defortuna started developing relationships in those countries with the most demand at the time: Colombia, Brazil and Argentina.

“We first established alliances with local brokers there that would specialize in marketing and sales of our products here in Miami,” he says. “Later, in some of the cases, we opened our own offices in conjunction with those same brokers but under the Fortune umbrella, so they could represent exclusively the products that we develop or sell here in South Florida.”

It was a learning experience.

“It’s key that they’re local and they understand,” Defortuna says. “We went through growing pains. We figured out that sometimes the bigger offices or the bigger brokers are not necessarily the best choice to align with. You have to find somebody that is really committed to sell a Miami product. If they sell in their countries and their countries are doing OK, Miami takes a second position.”

Defortuna found that often, the smaller companies were better suited for the tight relationship he needed.

“The most important factor is to have knowledge of the local conditions,” says Fortuna. “They must be knowledgeable from a political and economical situation. For instance, in Argentina, Fortune International has a longstanding reputation. The people know us and trust us.

“One of the most important principles in real estate is to stick to what you know. Don’t take unnecessary risks. We wouldn’t go into a market that we don’t know. In addition, we look at new markets in order to stay diversified and, in turn, create new opportunities.”

Whether it’s through foreigners visiting South Florida and expressing an interest in his projects or Fortune International employees exploring other countries, Defortuna is able to begin understanding those off-shore opportunities. He further develops that understanding by partnering with individuals and offices already in those markets.

The ability to cover a wider area and do projects in multiple countries is key.

“It is another factor that makes Fortune very attractive when developers are looking to sell their projects,” he says. “You cannot do it for a single project because the infrastructure and the amount of effort would be tremendous. But when you have 20 or 30 projects that we have at the present time — between the ones that we’re developing and that we’re marketing ourselves — it allows you to be in every international fair, do an event and educate people on how easy it is to buy real estate here.”

One thing that makes his practice so successful is the ability to adapt and focus on different foreign markets, depending on the situation.

“We can put an emphasis in different countries according to their economic and political situation,” Defortuna says. “All through the years, the priority country has been changing on a constant basis. In the beginning, it was Argentina and Brazil. Then Colombia got real hot.”

In the last three or four years Defortuna has switched his attention to Europe. Europeans, he says, are attracted to South Florida not only for its natural beauty but also because of the strong economic and financial climate. With his constant assessment not only of the South Florida market but also of other countries, Defortuna is able to take advantage of the constant change in world real estate.

“Because of the strength of the euro, they think this is relatively inexpensive in comparison to what they can buy in their own country,” he says.

No matter where in the world he takes his company, the key is making the decision and then delivering whatever is necessary to get the job done.

“People, money, time — obviously, whatever it takes,” Defortuna says. “If you’re going to make a jump, you have to allocate resources. (We) must be ready to make a full commitment — especially when developing or selling in a new country.”

Defortuna has taken Fortune International beyond just marketing and selling to those on foreign soil. The company has also started developing its own projects in other countries.

Defortuna has once again found a way to leverage the relationships he has with foreign real estate offices. While those offices in Argentina continue to help sell Fortune’s South Florida properties, they are now able to promote the developments the company has in that country, as well.

Defortuna will continue to look at international opportunities and in other markets around the United States, but for now, his primary focus is on where it all started.

“The company grew, but (was) also fueled by the Miami market, which the last few years has been tremendous,” he says. “And with our position and knowledge in the market, we were able to achieve the success that we have today.”

HOW TO REACH: Fortune International (305) 351-1000 or

Cleaning up

When Ted Elliott joined Coverall Cleaning Concepts in 1987, he helped grow the janitorial franchise company to more than 3,500 franchisees.

Then he left in 1995 after disagreements with the owner about the direction of the company.

“I wanted to go to the next level,” says Elliott. “The corporate office at that time was in Chicago. The owner and founder were in San Diego — just different ideas of what to do. After I left, they put the company up for sale.”

But Elliott’s ideas on what to do with the company were far from dead.

After being approached by a franchise owner about returning to the company, Elliott became part of a leveraged buyout of Coverall and was named president in 2002 and CEO in 2004.

“I came back to the company in 1998, and was really free to start implementing some of the things I’d wanted to do prior to that,” Elliott says.

Elliott established a growth strategy for Coverall that focused on building a national footprint, supporting existing franchisees to drive organic growth and laying the groundwork for an international expansion.

A national footprint
Elliott knew that to really tap into Coverall’s potential, he had to be able to service large national accounts, where one contract might yield several hundred locations that needed his company’s cleaning services.

He increased the number of franchise owners to 8,500 through recruitment and through acquisitions of smaller players, many of whom weren’t on the radar screens of his larger competitors.

“In our business, acquisitions come into play,” he says. “There are a tremendous number of small cleaning companies that really don’t have an exit (strategy). The larger companies are really not going to go down to a $100,000 deal somewhere. We have the capacity to pick the accounts up and roll them right into our existing franchise base.”

The dedication to covering the country with franchises has paid off. The company has landed a number of national clients, including FedEx and Sprint, and the Sprint account alone brought in more than 800 locations that Coverall franchisees clean. The corporate office handles the billing and support of the account, but local franchises clean the offices in their areas.

Elliott expects 10 percent of Coverall’s future growth to come from national accounts and another 5 percent from acquisitions, but that hinges on his ability to support and train his franchisees.

Providing support and training
The development and expansion of the company’s regional service centers has made the company’s national footprint easier to advance. The 90 service centers, located in the United States and around the world, provide training, conduct some billing and find new clients for individual franchise owners. All the franchise owners have to do is clean.

Many of the more than 8,500 franchise owners do not have college degrees, and some have full-time jobs and want to supplement their incomes. But doing a good job takes more than handing over a cleaning contract to a new franchisee with a mop and a bucket.

“Our best and biggest asset is human,” Elliott says. “That requires investment in training and development. We’re not working with Harvard graduates. A lot of these people have high school educations. Some of them might not even have that — not to say that we don’t have college educated (people). But even our own (corporate) employees, I’m a staunch believer in training and development — continual and constant.”

Elliott knows that the company is only as good as its frontline representatives.

“We’re in a people business, and they have to have the customer service skills, and they have to have the training to deliver a quality product,” Elliott says.

That’s where the regional service centers come in. Each center has an employee solely responsible for training and developing franchise owners.

“Investing in that franchise training director was a huge investment for the company because that means we’re putting 90 employees on the payroll,” Elliott says.

It’s an investment that Elliott recognizes will take time to pay off.

“He invests his whole day into making them good small business owners,” Elliott says. “It takes awhile because these people have to develop in the industry. They have to learn business. They have to learn sales. They have to learn cleaning. They have to learn management.”

One example of how the support centers further Coverall’s growth strategy is in the health care field. With about 30 percent of the company’s $272 million annual revenue coming from health care facilities, the regional support centers deliver specialized training in things such as blood-borne pathogens so he can continue to grow that area of the business.

The overall training program teaches franchise owners to work smarter, why it is important to invest in equipment and how to use the right chemicals.

“Production rate is everything for us,” Elliott says. “If you’re out trying to clean a 20,000-square-foot warehouse with a 24-inch broom versus an auto scrubber, you’re going to be there forever. We can show them, if you buy the auto scrubber, it pays for itself in two months.”

In addition to increased productivity, that investment in franchisee support has shown an unexpected benefit.

Franchisees “started referring their friends, and they started referring their family,” Elliott says. “They felt better about the company; they were more profitable.”

Last year, about 50 percent of the company’s new franchise owners came from referrals from franchisees.

“That has been a key strategy for us over the last five to six years,” Elliott says. “It’s added some sales that we weren’t focused on before. We were really seeing new franchise owners via other sources — business opportunity, entrepreneur or local newspapers, and we really weren’t farming and asking for that from existing franchise owners.”

Elliott uses this referral of potential franchisees as a measure of how successfully his company is meeting the needs of existing franchisees. Many franchise owners start with the company part-time, with just a few accounts. How those people are treated has a lot to do with the success of the system.

“It’s the investment in the franchise owner, the training and being accessible to them when they have issues and questions,” says Elliott. “By having a local office every place we do business, the communication is wide open. We also survey them. Every month we have a thing called franchise appreciation day at each one of the local centers. We’re constantly polling and looking for the feedback from the franchise base.”

Coverall uses that information to enhance the offerings it provides franchisees. Satisfied franchise owners are more likely to stay with the company and expand their own operations. It’s another way for the company to cover more territory and position it for even more national accounts.

International efforts
Elliott expects to add more than 1,000 franchise owners a year, and many of those will be overseas.

Coverall first went international within a few years of its 1985 inception, but Elliott says the company made some mistakes early on. It has since gained more insight into those markets and become more selective.

For example, although its initial foray into France was successful, a lack of understanding of the working culture led to trouble.

The company easily transformed its policies and procedures to accommodate French laws, and the Coverall concept, operated by an French company, took off.

“The company that bought the master license for France was a huge billion-dollar company that held and owned numerous other companies in France, including other cleaning companies,” Elliott says. “Coverall Cleaning Concepts took off like a rocket because there are a lot of people in France who want to be entrepreneurs and they want to be business owners and they don’t mind working hard. It was actually so successful, it started getting a lot of press. The unions that were entrenched in the other holdings of this company basically said, ‘You’ve got to close that company or we’re going on strike.’”

“Essentially, the company closed the Coverall office and took about a $1 million loss. We collected our fees for it, but they closed down a very thriving operation because of the culture of the French.”

Coverall, which has 10 service centers on foreign soil, had a similar experience in Spain. “They’re just not as capitalistic over there,” he says. “Unions have tremendous influence over business.”

Based on those early experiences, Elliott decided to stay out of Europe and try the Asian market. There are challenges there, as well, but Elliott says Coverall can navigate through the initial difficulties.

“The issue in dealing with the Asian market, we need to have patience,” he says. “They just don’t do things as fast as we do here in the States. They’re not in any great hurry. In Asia, they will implement exactly the plan and the program. It took them four to five years to get to where we might have an office operating at in the U.S. within a one-year period. However, once they’re done with it, they have replicated it exactly, and in some cases, probably executed better than we do.”

Elliott is looking into the Chinese market, but is in no hurry to rush in.

“When you’re in markets where people are working for $1 a day or $2 a day, that’s just a very small royalty stream coming out of that market,” he says. “Entrance fees are very important because it will take a long time before that builds to any real revenue base.”

Because of its limited earning power in China, the company will need to enter the market with a large presence to make it worthwhile.

“We will go to China,” Elliot says. “It’s a developing market. You don’t have to be first in there to be successful. We have a strong enough brand name that when we do go, we’ll go big.”

Until then, Elliott remains focused on the fragmented U.S. market.

“You just have to look back to the U.S.,” says Elliott. “We’re much better served investing in market penetration in the U.S. than some international markets.

“In other words, it’s all about training people to do the job right and giving them the tools to manage and run their businesses.”

HOW TO REACH: Coverall Cleaning Concepts (800) 537-3371 or

Healthy restart

When Andrew Eckert spoke with the Eclipsys Corp. board of directors during the CEO recruitment phase, he emphasized his dedication to management process. It was apparently a good sell, because Eckert was named president and CEO late last year and immediately stamped his philosophy on the $383 million company.

Two weeks into his new role at the health care information technology company, Eckert called a senior management meeting that would set a foundation from which the company could build toward its new goal.

“This is a very diverse group of people; they had not worked together all that long, many of them,” Eckert says. “Everybody has strong opinions on what to do and what not to do.”

Eckert recognized he had an opportunity to make an impact early on. And he wanted to change the company’s values and focus immediately. From that meeting came a set of tasks that would become the company’s new strategic plan.

Eckert emphasized a new mission statement, along with strategic values, a regular calendar based on the quarterly business cycle and a new set of customer-focused objectives. He had one goal in mind with the changes — to make Eclipsys the world leader for client satisfaction in health care information technology.

“That was a direct offshoot of our senior management meeting where we went through a very interesting process to get consensus on what the big challenges facing the company were,” Eckert says. “They were mostly around client satisfaction. We feel like our products are world-class; we feel delivering the value of that outstanding technology has been a challenge. It’s a very complicated implementation.

“Every company in the industry has challenges getting the change management deployments correct and winning at the customer sites. This was an area we felt we could, by really focusing on it, become different than the balance of the people in the industry.”

Core values
Eckert’s first change was to develop new core values for the company.

“A lot of people could consider these run-of-the-mill, but for us, they were put in order of what we think is important,” Eckert says. “One was client focus — we anticipate understanding the focus on our clients’ needs and make those needs our first priority.

While it may sound simple, this was a change from the old approach, which was much more internally focused.”

Other values include integrity, a commitment to excellence, open communication and teamwork.

“We’re not just trying to get through the day,” Eckert says. “We commit to operational excellence and continuous improvement in all that we do. The culture wasn’t one where sharing and communication was prioritized. We’ve tried to improve that.”

The new task became delivering the values to Eclipsys’ more than 2,000 employees. The process begins at the top and requires nonstop emphasis.

“In any big meeting, I tend to be the first speaker, whether it is a sales meeting or a planning meeting or a company meeting,” Eckert says. “I try to finish my PowerPoint with a few slides on the mission and values of the company.”

While it is rare for him to get together with the whole company, Eckert does meet frequently with the top 50 to 75 managers. And he continually drives those values through them. To reach the rest of the company, he uses technology.

“We’re using a lot of virtual conferencing, Web conferencing and telephones,” Eckert says.

He reinforces values with a companywide Web meeting every quarter after the earnings call to discuss strategic accomplishments and how the company will move forward.

Eckert has even established a blog on the company Web site.

“There’s no perfect way,” Eckert says. “The sales force gets together more frequently than the balance of the company, given their roles. There is no substitute for in-person communication. But given the size and dissemination of this organization, those aren’t frequent enough, so you have to make them worthwhile.”

Eckert says that measuring concepts such as respect and integrity can be difficult, and for now, he is relying on anecdotal information. Later this year, Eclipsys will conduct a companywide survey, which should provide more formal data on the progress of those objectives.

All these values tie back to the company’s mission to deliver client satisfaction.

“We built the company quite a bit on development the last several years, which was the right and necessary thing to do, but now we need to leverage all that investment,” Eckert says. “And the best way the organization as a whole feels to do that is to drive client support.”

Setting the calendar
Eckert’s also had to re-emphasize the importance of the business calendar.

“Our quarterly system is a positive for us in general in this country,” Eckert says. “You have to adapt to it.

“I’m a big believer that businesses run in quarterly cycles, and we have to have a pretty diligent cadence to our business. Things that may seem self-evident — a weekly staff meeting, a quarterly sales meeting, a quarterly planning meeting — these are things that many companies just don’t make a priority. “

Eckert wanted a calendar that clearly illustrated when people would be getting together to achieve various goals. At Eclipsys, the first month of the quarter is designated as the time to find out what happened during the previous quarter.

“You have a sales meeting so you get direct information from the sales force as to the dynamics in the marketplace and competitive actions that affect you,” Eckert says. “And you understand what the business outlook is directly from the sales force and not filtered through several layers. You report on the results to your board of directors, your shareholders and the company from the prior quarter.”

The second month of the quarter is dedicated to planning.

“We update the plans we have,” Eckert says. “We take a look at the company from top to bottom. We start with a financial forecast and work through all the major projects in the company to make sure we’re in alignment.

“We’re a smaller company in this industry, so we really have to have people as aligned as possible to compete effectively. That also allows us to react. If there is an exotic event of some sort — a new product, a governmental decree or something that has changed the market — it allows us to turn the company quickly as opposed to waiting a year until the next major planning meeting.”

The final month of the quarter is all about selling.

“We try to get out and close business,” Eckert says. “I’m a big believer that the senior management should be out with clients quite a bit.”

The system allows Eckert to keep tabs on the business and make sure the company holds true to its new values. But it takes more than regular sales meetings to understand how well Eclipsys is doing.

Every Friday, the company has a virtual meeting run by members of the client support team. They get on the phone and go through the metrics of the week.

“We look at all parts of the company — implementations that are going on, post implementations, performance, how we’re doing with clients, any survey results we might have and then topics of special interest,” Eckert says. “That is a meeting that really helps us bring this client satisfaction objective into real life. My hope is that everybody in the company has their finger to the pulse of what’s going on in the customer base.

“It’s not something that just customer support people do, but rather something that everybody should be thinking about.”

The last thing to come out of Eckert’s original senior-management meeting was the creation of key objectives for 2006.

“We set up a list of three objectives and several subparts that are critical to the company’s success this year,” Eckert says. “Through the quarterly planning process, we are driving those objectives down through the organization in an effort to align people as carefully as possible.”

Eckert deliberately limited the number of objectives so the company would have a better chance to deliver on a few strategic ones. Too many objectives could become a muddled mess, leaving employees without focus.

“The vital few objectives versus the worthless many, it’s an important concept,” Eckert says.

The three objectives are to become the recognized leader in health care information technology client satisfaction; to be one culture, one team, one company in 2006; and to drive operational excellence and innovation.

Delivering those objectives may be the job of the frontline employees, but it all starts at the top.

“The first step is to get the management in line,” Eckert says. “That’s the step we’re at right now, getting the management to understand the process and the objectives and drive them, and from there, encouraging them to make this part of their weekly management process and get it out to the people that work for them that I would have a difficult time touching directly.

“What’s key is to get the management in sync and encourage them and hopefully, over time, set up processes that really verify the message is really getting out to employees.”

The last step is to tie employees’ compensation directly back to their success in meeting the company’s goals.

“The key is to set up plans,” Eckert says. “Each quarter, when we do the planning meeting, the first part of every person who stands up and presents their plan is to review how they did last quarter. There is a closed loop corrective action process that forces folks to say, ‘Here’s how I did.’ The key is to make the objectives as quantifiable and metric-driven as possible so you can take a look to see if we’re reaching our goals.”

And he creates the environment that allows that to happen.

“We promote an environment of teamwork in which the sharing of knowledge, ideas and opinions is expected of everyone,” Eckert says. “We demonstrate passion in all that we do for our clients and employees.”

HOW TO REACH: Eclipsys, (561) 322-4321 or

Coastal cowboy

If Tom Murphy Jr. never signed another contract, he’d still have $650 million in business to put in place. And that is on top of the $450 million in projects at various stages his company is working on now.

But that wasn’t always the case.

A decade ago Murphy, CEO of Coastal Construction Group, happily ran the company as a $20 million lifestyle business.

Then he decided it was time to grow.

It was the moment that began a series of difficult decisions, including getting rid of some long-time employees, learning how to develop a vision for the company and then figuring out how to stay on course — things not easy for a self-confessed entrepreneurial gunslinger who had to learn how not to shoot from the hip.

Murphy began the transformation by adopting some of the corporate mindset he had learned at Turner Construction Co. After Murphy had worked on joint ventures with Turner for five years, Turner bought one of Murphy’s earlier enterprises, Monroe County-based Seaboard Construction Inc. After the sale, Murphy stayed with the company for about a year before he could no longer stomach the corporate lifestyle. Even so, he learned a lot.

“There were a lot of disciplines that you have to have in a company that size, just in order to manage the company, that you don’t have to have in a small shop where you can run out and see every job every other day,” Murphy says. “You have to be much more disciplined. I took a lot of discipline away with me mentally, as far as reporting and some internal controls that we obviously lacked.”

Murphy applied that newfound appreciation for structure when he founded Coastal, but only made it a major point of emphasis when growth became the main goal.

“We are very disciplined in all of our reporting,” he says. “We are very disciplined in certain meetings that we have at all levels of the company. There are five operating companies, so they’re all managed a little differently, but they have the same philosophy, the same culture. We have the same job-site meetings on a $1 million interior build-out as we do on $150 million, 55-story high-rise. We go through the same processes each month.

“It’s not having a meeting when we feel like having a meeting. Most of the meetings in our company, especially the ones with the management committee, are scheduled a year ahead of time. There’s no such thing as us missing a management meeting. It just doesn’t happen.”

Murphy’s next move was one of his most difficult. More-experienced advisers told Murphy that growing his organization meant leaving some loyal employees behind.

“If you are going to grow a business – it’s all about the people,” he says. “Nobody does it by himself. The advice I got was, ‘Most of the people that have been with you for 15 years, they’re not going to be able to stay with you.’ The reason they were there was because they liked that family atmosphere. They liked that it wasn’t so disciplined and rigid, that it was more a good-old-boy attitude toward everything.”

The new approach to business had some older employees feeling left out.

“Those people, especially those in the field, don’t want to be reporting to somebody they don’t know and having to make this meeting every Thursday and this thing on a Wednesday, this report’s due in writing on that day, and you have to do this,” Murphy says. “Only a couple of people made it. I had to make that decision, and it’s good advice for anybody that’s really going to grow a company.

“If you’ve had a business of a small size for many years, the people with you probably aren’t going to be able to make it because you’re not going to have the same kind of culture when you become so much more disciplined.”

Murphy was so dedicated to change that he went ahead over the objections of his brother, a part owner of the company.

“We’ve been together our whole lives, (and he) didn’t like it,” Murphy says. “Some people would say it’s more like a corporate environment now. It’s not Wall Street, but it’s much more corporate than it was. He didn’t love it. We’re still together, but he didn’t want to be in the midst of the size company we’ve become.

“He made a decision that he wanted to stay on a job or two and be removed from what was happening. He liked it for the company, for his stock, but that’s not the way he wanted to live his life.”

Much of the turnover was self-selecting. Both Murphy and the employees realized the changes meant they no longer fit. But he still tried to find the right spots for people.

“It was obvious to them and to us that it wasn’t working for us and them,” he says. “A lot of them we kept trying different positions. The few that ended up working out were single-project guys and were probably the least affected in the transition.

“That was probably the toughest decision I had to make leading the company. I knew there were going to be some close people and some good friends that probably weren’t going to make this transition. But I made it with my eyes open. We talked about it amongst one another. I talked about it with them. I told them it’s probably going to be difficult on both of us, but this is the way we want to do things now.”

Getting rid of people who no longer fit was only half the battle; Murphy needed to replace them with the right people.

“There was a huge investment I had to make in ourselves, in the business,” Murphy says. “To build the platform, build the structure, you’ve got to have the right people, the right organization before we would go out and take on work. We’ve spent a lot of money in the last couple of years selecting and going after certain people. We identify somebody we know in a market and try to get them.

“We spent a whole bunch of time and money and made a lot less profit in a lot of years in order to get the people on board and build.”

In the case of Coastal’s president, it took five years. It was Murphy’s first and, perhaps, most important personnel change.

Dan Whiteman joined Coastal’s board of advisers in 1992 after he was courted by Murphy. Murphy had heard about Whiteman from sources including his son, who was taking classes from Whiteman. Murphy and Whiteman began meeting for lunches and eventually, Coastal’s leader asked the academic to join his five-person board.

“We shared a lot of the same philosophy and values,” Murphy says. “We thought we would compliment each other very well. Dan came to work with me, and we made a decision to go out and grow the business.”

Developing a strategy
With Whiteman’s help and the right people in place, Murphy was able to build the company to about $100 million in revenue. Then 9/11 happened, and Murphy saw three jobs cancelled in 30 days.

That’s when he called FMI, the country’s largest provider of management consulting and investment banking for the construction industry. Murphy had used FMI for seminars and training purposes, but following the terrorist attacks, he engaged the company on a whole new level.

“I immediately called FMI and said, ‘I want to talk to you. I want to go through this business top to bottom, inside out,” Murphy says. “They brought three guys in and spent the better part of a couple of weeks here.

“We did a strategic plan with them, the first one I ever did and the only one in my life. We spent three days – it was the toughest thing I’ve ever done in business in my life to spend three days from 7 in the morning (through) dinner, probably, 8 o’clock at night, locked in a room with 10 of us to form a diagram for the future.

“We came out with a strategic plan that was probably 2 inches thick with all the action plans. It was a huge volume of work. We met on some parts of it weekly and did a review of the whole plan. We’ve been doing that for four years. We still stay on top of it. We set financial goals — never tried to make giant volume a goal.

“We set a benchmark where we thought we should be, how we were going to get at it — everything from the organizational structure of our business.”

In addition to the strategic plan, Murphy asked the consultants at FMI to tell him more about his company.

“I told them, ‘Look in our shorts. Look up our dress. Find out everything,’” Murphy says. “They went through accounting; they went through estimating; they went through everything we do. They did probably 50 employee interviews. We tried to get the best cross section so we didn’t cheat ourselves. They came back and told us all about ourselves.”

The results were not what Murphy expected.

“What we thought we were the best at came out as absolutely the worst,” he says. “That was really an unbelievable experience. I wanted them to tell us all about our business. And a lot of things came out. Employees thought we were the worst at communicating with them. We thought we were the greatest communicators who ever lived. It was a total shock.”

Murphy immediately began a newsletter along with regular companywide emails. Instead of holding company meetings around Christmas and for an occasional picnic, he now brings all of the nearly 300 employees together six times a year, and he and other managers provide a state of the company address.

In 2005, Murphy brought FMI back to do a complete assessment. Three consultants interviewed an entirely new group of Coastal employees.

“They come back and benchmarked us against best-in-class,” Murphy says. “It took them six weeks to do the whole thing. It was a tremendous experience. We took the results of that and we gave the highlights — whether they were good or bad — to the whole company. We told them where we stood. We’re going to benchmark ourselves in all the major categories yearly at this point.”

Murphy says it is sometimes hard to quantify the benefit of having an organization like FMI come in. He will say that the company went from $100 million in revenue in 2002 to what he expects to be about $450 million in revenue this year.

“What this process does is keep us focused with our eye on the ball,” he says. “A whole group of people can be keeping their eyes on the ball – you can get the input of eight people in a company our size, you can convince yourselves that you’re doing what you’re supposed to be doing. It’s easy to get off track.

“It doesn’t mean that they walk on water. We don’t agree with and we don’t do everything they suggest we do, that’s for sure. We’ll argue it out. It’s somebody that understands the business we’re in and gets what we do every day and sees a lot of different ways to tackle certain situations and gives you a third-party opinion.”

Once a quarter, Murphy brings FMI consultants back in to assess the company’s direction. Between FMI’s fees and the time invested by his managers, Murphy estimates those meetings cost about $150,000 a year.

“We won’t stop doing that,” he says. “That gives us a third-party review every single quarter. I’m a big believer in that forest for the trees — you’re so close to it you don’t see the overall picture sometimes. You set the plan, you’ve got all these initiatives, then you’ve got to make sure you’re doing them.

“We work on trying to stay on the course. We work on that real hard.”

HOW TO REACH: Coastal Construction (305) 559-4900 or

Business convert

In 1999, Miguel Poyastro completed what he thought was a one-time project converting apartments into condominiums in Miami Lakes.

Little did he know the venture would turn into a $365 million enterprise in just seven years.

When Poyastro finished that initial project, he and his partners decided that similar conversion opportunities were too good to turn away, so they created GREC Conversions Ltd., with Poyastro serving as managing partner. Their biggest challenge wasn’t converting South Florida apartment buildings into condominiums — it was building a business from scratch.

With a fledgling business, Poyastro kept things manageable in the first three years, limiting the company to one project each year. By 2002, GREC Conversions was working on two projects simultaneously, and the company was on its way to rapid growth.

But along with that growth, Poyastro has had to deal with a number of challenges, including finding the right people, developing an infrastructure and fighting for space in an increasingly competitive market.

Finding people
With three conversions completed in the first three years of operation, Poyastro had a better understanding of what his people could do and what skills were required to successfully complete a project.

Poyastro limited the company’s growth because it takes a special skill to manage a condo conversion project. When GREC began operations, there were few companies in the conversion field, which meant that experienced project managers who could handle more than one project at a time were hard to come by.

“It is very hard to hire a manager from the outside,” Poyastro says. “Somebody that can hit the ground running is very hard to find. That may not be so in the future; the environment has become very competitive. For us, and it continues to be, the only way is to hire from within.”

That is a slow process, and it has limited the company’s growth. But as GREC continues to grow, its talent pool grows with it.

“In the early days, when I was a de facto project manager for everything, (project managers) worked with me closely and knew what I wanted,” Poyastro says. “They have a lot of experience, and now it is they who are passing on this knowledge from their experience working with me to our onsite managers. Only through experience and trial and error are they going to develop into having the potential to be regional managers and move to other markets. It’s been hands-on training.”

Because he’s handed off the mentor role, Poyastro looks to his replacements to find future leaders.

“I depend on them to tell me who has talent and which people have the potential to be given more responsibility,” he says. “I always tell them, ‘The better the people you have around you, the easier your job is going to be, the better you’re going to look.’”

The business at all levels is about finding the right people and keeping them.

“Growth means that you’re doing great and people feel safe in their jobs,” Poyastro says. “There’s security. There’s also something to be said for being part of a winner, being part of an operation that everybody knows.”

Developing a foundation
With experienced individuals in place, Poyastro turned his attention to other areas of running and growing the business. As the company grew from 10 employees to 140, he recognized it needed more formal policies and procedures, things he wasn’t able to provide. He addressed those problems by hiring a chief financial officer and a human resources manager.

“It simply got too big for me, financially, to properly manage the company,” Poyastro says.

With a CFO, he can now focus on acting on financial data rather than on gathering it.

“It’s just not the best use of my time,” he says. “We’re just too big. We needed her two years ago.”

Poyastro also realized the need for a formal human resources department.

“Business is definitely all about people,” Poyastro says. “In order to attract the right people, you have to create a certain atmosphere of job security and continuity. We found that, over time, just paying people more wasn’t sufficient. People like a certain compensation package that includes certain benefits.

“We needed the human resources department, which is very important, and a CFO, who is still going through our operations and procedures and setting more formal procedures and deadlines so that we can manage the business a little more formally due to our geographical distance between sites.”

These new positions are key to keeping the company stable as it continues to grow.

“Retention of employees and keeping the right people become important,” Poyastro says. “We started paying attention to those issues. That’s how we decided we needed a human resources department. It tends to be underemphasized, but when you have as many employees as we do, there is something going on every day. There are questions. There are concerns. They need to have somebody to talk to. People don’t understand how important human resources really are in managing employees’ questions and expectations.

“The clearer everything is for all our employees, the happier they are. Uncertainty brings a little distrust and unhappiness.”

Dealing with the competition
The industry’s rapid growth has not gone unnoticed. A number of new players have forced Poyastro to look at GREC’s position in the marketplace and reassess the way the company does business. It has also meant getting back to the basics as competition increases.

“There are many situations in which not just us but a lot of people sold half the project in the first day,” says Poyastro. “Now they have to go back to doing their proper presentations and their follow-up — real sales, real marketing.”

Poyastro makes sure that his sales staff focuses on those fundamentals by discussing them during individual sales meetings, and he attends some sales presentations to make sure he knows the issues and concerns of consumers.

For example, financing has become a concern for buyers as interest rates increase, and Poyastro works with lenders to make sure consumers can get the financing they need to buy.

The increased competition also means putting more emphasis on marketing initiatives.

“We look at the advertising budget that has been (neglected),” he says. “We hadn’t had to advertise or market as much as other times. We’re going to have to spend those monies and get creative again and court the broker community.”

Competition gives consumers more options, so Poyastro has searched for ways to differentiate his company.

“We like to be the low-cost provider,” he says. “We focus on that end of the market. Since 2003, we’ve focused on garden-style apartments.”

Instead of offering a 1,100-square-foot apartment that must be sold for about $250,000, Poyastro converts a building down the street with 975-square-foot units with similar amenities that can be sold at $195,000.

“There are more buyers at that level, and as we move into a market that is more difficult, the absolute lower selling price is going to be critical,” he says. “Affordability is the question right now. We like to be the low-price leader. We know how to market. We know how to get people financed. We do very well there.”

Competition is also forcing Poyastro to look to other areas of the country to pursue condo conversions.

“Our profit margins have been squeezed,” Poyastro says. “There’s no doubt about it. We’re looking for markets where the competition for the buildings to be converted is not as aggress
ive as it is in Florida.”

In addition to exploring other areas, Poyastro says the company must work very quickly to continue growing but has to be cautious to ensure continued success.

“We never (evaluate a project) pro forma for more than the current pricing in the marketplace,” says Poyastro. “The deal has to make sense today. We have to be able to compete today.”

HOW TO REACH: GREC Conversions Ltd., (305) 225-7522

Calling for change

When John Hall took over PRC as CEO in early 2005, the relationship between the company and its clients was changing. Clients were more sophisticated than they once were and were demanding more from firms like PRC that provide them with outsourced customer management solutions.

Hall knew that to continue to grow the $337 million company, he would have to provide the strategic solutions customers were asking for.

“We did a classic deep-dive analysis of the business processing outsource industry — the different segments within it,” Hall says. “We evaluated our competitors, both domestic and international. We relied upon publicly available information from SEC disclosure and analyst reports. We did do firsthand research in terms of interviews and surveys.

“We evaluated what the market opportunity was for a domestic-based provider of customer relationship management services. We evaluated where each of our competitors was moving strategically. We evaluated what their reputation was in the marketplace, and we evaluated all those things for ourselves and developed a strategy that we began implementing in 2005.”

The company’s new path involved integrating two subsidiaries into the PRC brand while aligning its operations into a business-to-business division and a business-to-consumer division.

It was Hall’s job to transform the company and realign its more than 10,000 employees at its Fort Lauderdale headquarters and in call centers around the world while delivering new opportunities for his business and those of his clients.

Developing the structure
Instead of three separate companies, PRC is now one brand with a B2B and a B2C division. This realignment was the best way to meet clients’ changing strategic needs by giving each division a practice management group that focuses on understanding clients’ industries.

“Their responsibility is to have a thorough understanding of what our client’s industry is, the client’s industry prospects, what our client’s strategy is, what our client’s goals are and how we can support our client’s growth through the strategic application of a contact center solution,” says Hall.

The new structure enhances the relationship between PRC and its clients.

“The reason clients have become increasingly comfortable with us and demanding of us for strategic solutions is that we have the interactions with their customers and we can provide them with the voice of their customer,” Hall says.

PRC, an operating unit of IAC/InterActiveCorp, provides outsourced customer solutions, so a company needing customer service phone support could contract with it to provide that service. But PRC has to do more than just answer the phones; it has to actively help its clients come up with ways to better manage those customers.

“We can (no longer) just do the execution work of interacting and managing of customer relationships (for our clients),” says Hall. “We can translate that for them into actionable plans to help them grow their business. That’s where the strategic aspect comes in.”

The B2B and B2C divisions are what Hall calls the customer-facing part of the company, and he reorganized operations to support those entities. But one of the biggest challenges he faced was educating clients as to what the new PRC could provide them.

“The opportunity and the nature of what we call a winning business challenge is not so much against our competition as it is in some ways educating our prospective clients how we can provide even more to them than they think of us providing today,” says Hall.

Hall utilized PRC’s business development group to work with clients and help them understand the new structure’s benefits. And because many of the people in the business development group have a background in the industries they call on, they are better able to explain to customers how PRC can help them.

“Because they come out of those industries, they have not just more knowledge but more of a strategic understanding of how a business in that industry grows,” Hall says. “So what we’re combining here is the expertise of outsourcing with the knowledge of industry and how it grows to capitalize on leveraging a strategic solution for a contact center against a business growth opportunity.

“Very frequently, when we articulate our ability to help, it is a broader scope than our prospective clients might have conceived of from an outsourcer. It’s good news, but it also takes a little bit of an adjustment in terms of how we work together.”

The new approach gives PRC a number of ways to help clients communicate and understand their customers’ needs on a more sophisticated level. For example, a company may have a target list of new clients, and instead of simply calling on them, PRC may take a a sample from that list and approach those companies in a certain way.

From that sampling, it measures the results, makes modifications and puts into action a program that can be applied against the rest of the target list in a more effective manner, generating a much higher return on investment for the client.

“That differs from history, where it would have been, particularly on the B2C side, a much more homogenous approach toward every customer, with a more consistent offer that didn’t necessarily provide feedback with the voice of the customer to find its way into the program until the list had been completely contacted,” he says. “They’re providing a more refined approach to the sales process overall. Through a contact center solution, we can provide a targeting, prospecting and pipeline provisioning solution so that the field sales force only goes after qualified opportunities and spends all of their time closing and negotiating, as opposed to prospecting.”

Mining new business
PRC’s restructuring not only gives it new ways to serve customers, it has also led to a new approach in the way it finds new business.

In the 1990s, a prospective client would send a request for proposal to dozens of service providers, which had little interaction with the client in submitting a response.

“That’s not at all what we have an interest in working on any longer,” Hall says. “If we don’t have some ability to spend some time with the client to understand their strategy, their goals, their business, and articulate how we can favorably impact that, then that tells us we’re probably not going to be able to truly impact their business the way we know we can. That’s probably not going to be a good fit as a client.

“We haven’t experienced much of that since changing direction in early 2005. We found that prospective clients have been very receptive and in some ways, saying with their attitudes, not their words, ‘Where have you been hiding?’”

Now, PRC utilizes a marketing group and a business development team, a structure much like a professional services model, where Hall uses existing client relationships to leverage for referrals.

“Members of our business development team have helped some of our clients shift a significant portion of their investment in customer acquisition away from field sales forces and into a contact center, which is much less expensive and can generate a much higher return,” Halls says. “In many ways, it is freeing our business development teams from having to work in the confines of a request for proposal and allowing them to have a business conversation with the client.”

Although he won’t share the percentage of growth he attributes to the changes, Hall says the restructuring and new approach to doing business have definitely contributed to the company’s bottom line. And as with most anything that is done well and succeeds, the company now has imitators.

“We do have some competitors who are trying to follow this model, and we do have some competitors that do have business-to-business and business-to-consumer divisions, but we’re confident that our approach to the business and very strategic focus on how we assist our clients in growing their business does differentiate us,” Hall says. “We see still in the marketplace competitors that are looking to, in many ways, do what the client tells them to do. It’s easier; it’s more straightforward.

“It’s easier to find talent in the industry that can execute against that than it is to find talent that can execute against the strategic thought process of how does a client grow his business and how do we support that.”

The process also changes the way PRC interacts with clients.

“We are working with the clients much earlier in the process, determining what are we going to do for them so we can, together, identify what data we want to capture, how we’re going to capture it and what we’re going to do with it afterward,” Hall says. “Previously, there was a great deal of data captured but without a predetermined notion of what, exactly, was going to be done with that data and what any analytics on that data would be used for.

“We are taking a much more methodical approach toward articulating ahead of time the data we need to capture for the client, translating the voice of the customer into quantified actionable data and providing that feedback with recommendations to the clients for continuing to grow the customer relationship.”

It’s that strategic approach that separates the company from its competition and will allow it to grow differently than it did a decade ago.

“PRC grew very rapidly, like most other businesses in this industry in the 1990s, but the growth in the current period is going to be very directed, and it’s going to be much more strategic,” Hall says.

That strategy is already paying off. In 2005, PRC posted a $22.6 million profit, an increase from $17.1 million the year before.

“This shift has been critical in winning valuable client relationships in 2005 and, coupled with our new organizational alignment, will enable us to compete effectively for new business while continuing to deliver a positive return on our clients’ investment in their customers,” Hall says. “We clearly would not have grown so quickly. We would not be as profitable as we are today. And we would not be as focused on where we are taking the business as much as being opportunistic about simply where a client relationship might take us.”

HOW TO REACH: PRC, (954) 693-3700 or

Team builder

“We’re about building relationships — with our people, our customers, with everybody. If the people can’t do that, then generally they don’t stay around that long.”

Warren Zinn, president, Warren Henry Automobiles

“You can’t have that customer experience if you don’t have the right people.”

Warren Zinn, president, Warren Henry Automobiles

“Some people may do a job very well, but they aren’t that great with people, and we try to smooth them out as much as we can.”

Warren Zinn, president, Warren Henry Automobiles

Warren Henry Zinn learned about the automobile business at his father’s feet — from the time he was 10 years old, he worked at his father’s Miami-based Toyota dealership at a time when Vietnam veterans were bringing home watches and cameras with foreign-sounding names.

“People didn’t know the difference between a Toyota, a Seiko and a Nikon,” says Zinn, president of Warren Henry Automobiles. “That was just one of those Japanese products coming in. Nobody knew what they were.”

Zinn’s father had to separate himself from the competition, and to get his name and that of his unknown product into the consciousness of consumers.

Zinn learned that lesson well. He didn’t have to introduce a new brand, but he did have to learn how to differentiate his dealerships from the competition by finding the right people, giving them proper guidance and making sure they stick around to deliver his style of customer service.

Now a 30-year veteran of the industry with seven dealerships that produced a combined $320 million in revenue last year, Zinn knows that the key to success lies with people.

“We work hard on trying to find the right people, Zinn says. “Certainly, that is very difficult. When we feel we’ve found them and they’ve found us, we stay together for a long period of time.”

Zinn has used formal hiring practices in the past but finds that the most effective way to bring new people into the fold is with another time-honored technique — it’s all in who you know.

“(We find people) in many walks of life,” Zinn says. “Mostly from referral — people may work in other dealerships, they may be in other business. They may be kids that we got right out of school.

“Most people get here on a reference basis. We’re much more successful with that than we are with ads that we may have run.”

A successful employee isn’t just someone who knows cars or fancy sales practices. Zinn wants people who can develop relationships with consumers. Even though he sells high-end automobiles — Jaguars, Land Rovers, Infinitis and Volvos — there are plenty of other dealerships his customers could go to.

“We have to evaluate realistically, are we willing to (put up with someone who knows) the job real well but doesn’t get the feeling — the warmth — across that we’re trying to achieve, the relationship,” Zinn says. “We’re about building relationships — with our people, our customers, with everybody. If the people can’t do that, then generally they don’t stay around that long.”

That approach is what Zinn says differentiates his dealerships, which sell between 700 and 800 cars a month, from others. More important than a potential employee’s knowledge is his or her communication skills.

“I like to see the way they talk to people,” Zinn says. “Is (a customer) going to get a good feeling about dealing with this person or not? Some people may do a job very well, but they aren’t that great with people, and we try to smooth them out as much as we can.”

One way Zinn does that is by having all new team members shadow a more experienced salesperson.

“There’s a lot of watching and mentoring,” says Zinn who is opening an eighth dealership in Weston. “We do have meetings with all the employees in the different stores to talk about our customer satisfaction pluses and minuses. We talk about how customers feel, how (employees) would feel if they were the customers.”

And Zinn knows that it is not just the salesperson who influences the sales process. Anyone interacting with the consumer, from the person answering the phone to the parts and service department, can enhance or diminish the customer experience.

“We reward all our people the same amount of money on our customer satisfaction,” he says. “An individual who is moving cars, answering the telephone or a sales manager — everyone gets the same amount. Any one of them can cause any of the others a problem. We build this together.

“If people are causing other people a problem, the peer pressure that is put on by the other employees makes it uncomfortable for those people. After a point in time, they’re not here anymore.”

Zinn uses one simple method to measure the effectiveness of his sales team: Do customers come back to buy their next car or sign a new lease?

“We have people that have dealt with people’s grandfathers, fathers and now their kids. We’ve been dealing with three generations of people here,” says Zinn.

To maintain that consistency, Zinn works to make sure the people who work for him choose to stay. The company turned 30 last month, and the average employee tenure is 12-plus years; several have been there for more than 25 years, Zinn says

“We have many success stories here,” he says. “I have a young — he’s not so young anymore — kid that was my lot boy working here that is now my service manager at the Volvo (dealership). He’s gone from minimum wage to making in excess of six figures. I have a woman here, she was answering phones out of high school. She’s my service manager at the Infiniti store. We have many success stories like that here.”

One way Zinn shows his appreciation for his employees is a company picnic around Christmastime every year for the families of his 315 employees. More than 1,400 people attended last year. But he knows breeding loyalty takes more than just a party.

“We have them involved in as much as we can get them involved in — improving our processes, customer handling and the way we go about doing things,” he says. “We try our very best to make people feel comfortable. We still have the ability to make this a big family.

“I know that sounds corny, but that is still the case. There’s still an owner working on the premises who has an open-door policy, and that seems to work pretty well.”

In addition to listening to the daily patter, Zinn meets with employees at least once every two months to get feedback. They eat dinner at the dealership while they discuss the issues that concern them, and when there is a need, changes are made.

“We changed the way people pick up their car when their cars are done for service,” Zinn says. “We’ve changed so many things that make things easier for everybody to get their jobs done.”

Zinn cares about more than just his employees’ work lives. His open-door policy gives him insight into their personal lives, which can affect their job performance.

“We know if somebody is having a problem … with one of their kids, somebody’s sick, somebody’s getting divorced, somebody passed away,” Zinn says. “If people’s personal issues are affecting them in the workplace, they know they have somebody to come and talk to about the problems. It’s not only me. It’s their department heads. We see what we can do about helping them for however long we can do it for.

Many things have changed since Zinn opened that first Volvo dealership at the age of 22. The stores are bigger and technology has improved, but it is still the relationship, the human touch that Zinn fosters and encourages.

“You can’t have that customer experience if you don’t have the right people,” he says. “If the people that work here aren’t happy, your customers are never going to be happy.” HOW TO REACH: Warren Henry Automobiles (305) 652-6511 or

Increasing traffic

“We do everything based on what’s good for the customer, not what’s good for us or our employees. We figure if we do that, the customer will reward us.”

Rick Case, co-owner, Rick Case Automotive Group

“We have about 40 to 50 people a month get married at the dealership.”

Rick Case, co-owner, Rick Case Automotive Group

“All cars are the same, but the dealer can make the difference.”

Rita Case, co-owner, Rick Case Automotive Group

iPod-ready autos. Built-in global positioning systems: Every year, automakers add new features to their latest models in an effort to attract buyers.

Those new cars are then shipped to dealers — dealers who make their living by convincing consumers they can’t get a better deal or receive better service anywhere else.

Rick and Rita Case, owners of Rick Case Automotive Group, know that anybody who walks into one of their dealerships can just as easily buy the same car at another dealer down the street willing to match any advertised price. So they must not only find ways to draw people into their showrooms but also make them happy, keep them satisfied and, perhaps most important, keep them coming back for all their automotive needs.

The Cases, whose Honda, Mitsubishi, Acura, Hyundai and Mazda stores are located in three states, are among the best at finding unique ways to differentiate themselves from the competition. It’s something Rick Case has been doing since he opened his first car dealership 44 years ago, and it’s what the husband-and-wife team attributes their success to.

“All cars are the same, but the dealer can make the difference,” says Rita Case. “If the dealership is a generic name, it’s not a person, a personality — it’s not what people can sink their teeth into.”

And while it is an art not yet perfected, the Cases — who met at a Honda auto convention in 1977 — may have come as close to the ideal as anybody.

“I can’t think of any other person, any other two people, that have built a car company as fast as we have,” Rita Case says. “In 20 years, we have opened and are operating 12 car dealerships and a motorcycle dealership that we own 100 percent. There’s no one else that’s done that.”

Rita Case attributes much of that success to her husband’s marketing talents.

“The success of the business would have been impossible without his marketing genius and his ability to market these brands, create customer traffic and grow this business,” she says.

Last year, the auto empire posted revenue of about $500 million. And it all starts with bringing customers through the front door.

Twenty years ago, when the Cases opened their first Atlanta and Florida dealerships, the Hyundai and Acura names were unknown to American car buyers.

It wasn’t hard to differentiate a brand no one knew anything about; the challenge was getting people to come see cars they had never heard of at a dealership they didn’t know.

“It is more difficult,” Rita Case says of opening a store with an unfamiliar product. “Pioneering Hyundai in 1986, when no Korean car had ever been sold in the United States before, (we) had to explain that Korean cars could have quality, (and) we had to introduce a whole new name that people couldn’t even pronounce. There were seven different ways people were saying the name of the product.”

The Cases used a solution Rick had first tried decades earlier when Hondas came on the American scene.

“I bought a Volkswagen, a Toyota, a Datsun (now Nissan), a Ford and a Chevy and had them at the dealership for people,” Rick Case says. “I asked people to come in and compare them. They’re all here for them to compare and drive. I’ve done that at all the dealerships. When we opened Acura, we got a Mercedes and a BMW and had those for them to compare to the Acura. That works great.”

The Cases continue to give consumers the opportunity to drive competitors’ cars. Allowing them to compare gives them confidence in the model and helps build trust in the dealer.

In addition to trust, the Cases want to give customers a nice place to look at the cars. The Honda dealership in Davie, Fla., that they opened in 2002 is a far cry from Rick Case’s original used car lot in Akron, Ohio, where he paid $25 a month in rent.

“The Honda store has several unique things about it,” Rick Case says. “First of all, it is the world’s largest car dealership, over half a million square feet. We’ve got 1,500 cars inside. We have an eight-pump gas station. A year-and-a-half ago when I saw gas prices were going to go crazy, I put in a huge gas station.”

The Cases tie discounted gasoline to a rewards card that offers deals for repeated use.

“Every time they buy something, they get points, and they use those points to get discounts on purchases, services, parts, new cars, used cars, whatever,” Rick Case says. “They can also use that card to go through the car wash as many times as they want for free. They put their Rick Case Rewards Card in, and they buy gas at cost. We’re anywhere from five to 25 cents less than anybody else in the area.

“We get 1,000 people a day to come to that dealership. Probably 500 to 600 of them are for gas.”

Every time someone visits the dealership, that person is exposed to the brand and the products and services offered. Never satisfied, the Cases continue to look for new ways to draw attention to their enterprise.

“We have a clerk of courts office (at the Davie Honda store) so people can come to the dealership, pay their speeding tickets, get their driver’s licenses checked on,” Rick Case says. “They can also get a marriage license, and we actually have a chapel there where they can get married. We have about 40 to 50 people a month get married at the dealership. They come in, get their marriage license from the clerk of courts, and the clerk of courts takes them to the room right next door … and they get married.”

A clerk of courts office may have no direct link to selling cars, but it certainly helps people remember the Rick Case name, and it brings more people through the doors.

That dealership also serves as a voting precinct for two districts, and during the last presidential election, 3,800 people walked through the showroom on their way to the cast their ballots.

The Cases also work outside the dealership to get the name known in the community.

“To brand Rick Case, we do lots of charity work,” Rita Case says. “We have our own Rick Case Foundation. We have our own Rick Case Bikes for Kids. We started the year we opened (in Florida).”

Community service was already a long tradition in Ohio, where Rick Case got his start selling used cars and Honda motorcycles.

“We are very visible in the community for our Rick and Rita Case Boys and Girls Club,” Rita Case says. “We do quite a bit of charity that also brands us. We have an emergency response team that we put together for helping the police. We have a relief fund when something happens to someone and (the family) can’t afford the funeral. Those kinds of things get the Rick Case name out.”

And it doesn’t hurt when you are the largest dealer in the world, a distinction the Cases hold for their Davie Honda dealership.

“When you are the largest of something, that also brands you,” Rita Case says. “We merchandise that, and we let the public know that we are the largest.”

Name recognition helps get people in the door, but getting them to buy and keep coming back is something else.

Rick Case is not just the owner of the company; his name is intertwined with every dealership and every car sold. And it’s not a matter of ego — the Cases want people to know who the ultimate authority is.

“Nobody knows who to go to (if the name is not on the dealership),” he says. “It’s personal now. It’s us; it’s a person. The buck stops here. They know when they get to Rick Case, he can’t say, ‘Well I’ve got to talk to the manager.’ The whole idea is so people know who the owner is.”

The Cases also want to make the sales process easier — and very low-pressure.

“Salespeople are not allowed to hang around by the front door out on the lot and jump on customers when they come in,” Rick Case says. “Our policy is a manager greets the customers and asks them to please let him know when they want someone to help them.”

Within each of the stores, the sales team is dressed in the same blue, Rick Case-logoed shirts, while the managers, including, Rick and Rita, sport white, long-sleeved shirts.

“We do that because we want the customer, if they’re not happy with something, to know they can go to a manager,” Rick Case says. “It’s easy to spot them because they’ve got the white shirt on.”

It’s all part of the differentiation strategy that infuses unique branding with best-in-class customer service. And if there is a problem, the Cases make it easy to go straight to the top.

Rick and Rita Case give every customer a card with their home and cell phone numbers. Case says he receives four to eight calls a week from customers, sometimes to complain, sometimes to praise and often just to find out if it really is the guy whose name graces the dealership.

While they are accessible by phone, and they visit each dealership at least once a quarter, the Cases know that it’s the salespeople who have a direct line of contact with customers. With that in, mind Rick Case makes sure the people he brings in to work in his stores share his customer-focused philosophy.

“We don’t hire people that have sold cars before,” he says. “We hire based on personality; we want people who are outgoing, and then we train them in our way. Our way is different than the regular car business. Our motto is, ‘Treat every customer like our best friend.’ That’s why we have the five-day, money-back guarantee, and our salespeople call their customers once a month — not to sell them a car, just to see if they can help them in any way.”

And every customer gets the salesperson’s home and cell phone numbers.

“We say we’re available to our customers 24 hours a day,” Rick Case says. “We do everything based on what’s good for the customer, not what’s good for us or our employees. We figure if we do that, the customer will reward us.”

Keeping track of how well they are doing is very important.

“We measure ourselves based on the industry standard of customer satisfaction,” Rita Case says. “Each of the different manufacturers has a different term for what they call customer satisfaction. But it is all measuring the results of what the customer says about us.”

The regular phone calls provide anecdotal evidence, and surveys provide a more scientific approach.

“Rick and I measure our company’s performance — volume as it relates to the market, customer satisfaction as it relates to our district, national and regional standards and employee turnover,” Rita Case says. “If we can retain employees, then we’re going to have happy employees. And if we have happy employees, we’re going to have happy, satisfied customers.

“If we have happy, satisfied customers and we do good marketing and provide state-of-the-art facilities, we are going to have high volume and be successful.”

HOW TO REACH: Rick Case Automotive Group, (800) 834-3965 or

Selling Europe

Taking over a continent isn’t easy, but with North America already firmly in their grasp, sisters Bonnie and Marla Schaefer have taken on the challenge of conquering Europe.

The sisters share chairman and CEO duties at Pembroke Pines-based Claire’s Stores Inc., which sells costume jewelry and accessories targeted at teens and young adults. To achieve the same level of success in Europe as they have in North America, the sisters are overcoming a number of challenges, including finding the right locations, getting the right products and hiring the best people.

“Right now in the U.S., we’re everywhere we want to be,” says Bonnie Schaefer. “As new developments open, new malls, new lifestyle centers, as new opportunities come up, we grab them. It’s not like it used to be when we were opening stores fast and furiously. Things have slowed down quite a bit in that respect. Europe is like the next frontier. It’s open for the taking. It’s exciting.”

At the end of October, 3,048 stores carried the Claire’s banner, including 1,688 in North America and 750 in Europe. With the North American market saturated, the European market is appealing. It will serve as a growth engine for the company, which posted fiscal 2006 revenue of $1.37 billion and increased its net income from nearly $65 million at the start of 2001 to more than $143 million at the start of 2005.

The sisters are looking to add to their success by building their European expansion with a combination of acquisitions and organic growth.

Creating a footprint
Claire’s established a beachhead in Europe with a blitz of acquisitions that netted a significant number of stores in a short time.

The company entered the United Kingdom in 1996 with the purchase of the 48-store chain Bow Bangles, one of three acquisitions it made that year. Austria, Switzerland and Germany joined the Claire’s family in 1998 with the $13 million acquisition of 53-store chain Bijoux One.

“One of the biggest advantages of doing it through acquisition, you acquire 40 or 50 stores and overnight, you have your brand out there,” says Marla Schaefer. “When you do it yourself organically, it’s one store, then two stores … it takes a little longer to establish your brand.”

Two years later, the sisters introduced Claire’s to France with the acquisition of 42-store chain Cleopatre.

“We did the same thing we did with every other country,” Bonnie Schaefer says. “We acquired them and proceeded to retrofit. As the opportunity for remodel came up, we transplanted our prototype Claire’s store over there. So far, we have found it to be very, very successful everywhere.”

The Schaefers change the acquired stores as soon as possible to the Claire’s name to keep the brand consistent, except with a location they don’t want to keep. In those cases, they let the store close under the acquired brand name so it doesn’t appear that a Claire’s store is going out of business.

“We decided if we’re truly going to be a global brand, we need to be consistent,” Bonnie Schaefer says. “Consistency is very important. We want every store to basically look the same. We want every customer to have the same experience, and we want to offer the same type of value and merchandise in every store around the world. To that end, we needed to call it Claire’s.

“Having all these different names was confusing. It seems to work now that we’re called Claire’s across the board.”

In places where an acquisition is not possible, Claire’s expands by opening its own stores, as it did in Spain and Holland.

Every year, Bonnie Schaefer attends a large real estate convention in Europe to stay current with the latest real estate trends so that the company can identify the best locations.

“We see what’s new in the form of malls, where other retailers are going and what’s really hot, what countries are really on fire,” she says. “We’ve wanted to go into Spain. As there was no acquisition, we decided to (open stores) ourselves.

“We stomped around Madrid. In three days, we looked at 35 locations. Out of 35 locations, we picked five. It was based on what I know we need. We need to be in areas that are very, very well traveled — a lot of foot traffic because we’re not a destination, we’re an impulse type of shop.”

Foot traffic is key, but the Schaefers must consider all the factors that go into establishing a new store and what return they’ll get for their efforts.

“If a 15 percent return doesn’t work for us based on cost, construction, payroll, what have you, then we go back to the drawing board,” Bonnie Schaefer says. “So, even if somebody else is picking out the location and it is excellent, if it’s too expensive for our needs, we either have to rework it or walk away from it. But, for the most part, we can rework it and deal with it. If we can’t do 15 percent, we have no business being there anyway.”

Once the locations are open, the company adjusts the product offerings to fit the country

“We have historically kept the (merchandise) mix pretty much consistent with the United States with what we call just a little bit of a layer of the domestic buys indigenous to that country,” Bonnie Schaefer says.

The stock ratio is about 70 percent U.S. merchandise and 30 percent local, although that can be as low as 15 percent.

“We have found, for the most part, with cable TV and the Internet, where fashion used to begin in Europe and six months later translate to the States, it all seems to hit at once,” Bonnie Schaefer says. “The rock stars that are big in the United States are big over there, and vice versa. The trends seem to all be hitting at the same time in everything — not just accessories and jewelry but also outerwear.”

Finding employees
Claire’s brand recognition and growing footprint have helped it attract a talented staff.

“If we were just starting out with a chain of stores, it probably would be a bigger problem because you don’t have your best practices, policies and procedures nailed down as well as you do when you’re mature and you’ve made mistakes,” says Marla Schaefer. “We know what we’re looking for. We hire exactly what we’re looking for, and we have certain standards that everybody in this company has to come up to. If they don’t, they can’t really be here.”

The challenge with any growth is finding enough talented people to not just work the registers and walk the floor but also to serve as managers.

“We have a culture that has started in the United States that we are translating overseas,” Bonnie Schaefer says. “We have brought new hires to the United States to train, and we have also exported some of our key people to Europe to live and, in the process, to train people.

“Our employees, especially our long-term employees, find that they have an opportunity to actually see the world — kind of like joining the service, except it’s better. They get to see the world, they get to travel and they get to do something they enjoy, which is working. We only send our very best people over there. If we have an opening in another country, I can guarantee you we’re going to have a great pool to pick from.”

And once they have great employees, the Schaefers work hard at making their stores places where those workers want to stay.

“We try to make doing business fun,” Bonnie Schaefer says. “Somebody in our company put it very succinctly. ‘If you don’t like what you do, you have no business doing it.’ For the most part, the kids that we hire in these stores love what they do. They love coming to work. They love the new stuff and the excitement of it all. We make it worth their while.”

Much of the talent arrives by conventional methods, through networking and advertising. And the company has never had a problem finding qualified people.

“It’s almost, ‘If we build it, they will come,’” Bonnie Schaefer says.

Of course, once they arrive, they must learn how to do things the Claire’s way. Best practices are conveyed throughout the company in the various meetings, training sessions and at Claire’s Stores University, the organization’s Chicago-based training program.

“They’re trained in every aspect of store operations, visual loss prevention, human resources,” Bonnie Schaefer says. “Whatever they need to learn, they do learn.”

However, translating that to other cultures isn’t easy.

“Every country has its own unique set of laws,” Bonnie Schaefer says. “Each country has its own human resource person. They interface with our people in the United States, but we have to comply with (local) laws. French law is different than Spanish law, which is different than Swiss law.”

For example, when a person leaves a job in the United States, it is customary to give two weeks’ notice.

“In Switzerland, they have to give six months’ notice,” Bonnie Schaefer says. “In Spain, the stores close from noon to three o’clock. It varies from country to country, yet we’re able to adapt and work with everybody. When I first developed Puerto Rico, I was dumbfounded because they have 26 national holidays. We don’t have anywhere near that. In Europe, people can take four weeks at a time off; I was really struck by that.”

Whatever the differences, Claire’s adapts. In France, for example, the answer is more employees on the payroll, even if it is on a part-time basis, to ensure that the stores are adequately staffed.

That may affect profitability, and the company is aware of how labor and other costs affect existing stores and the launching of new operations. All of these costs are taken into account when preparing pro forma assumptions about how individual stores might perform. And while labor costs are higher in Europe, sales per square foot are much higher as well.

With a keen understanding of the nuances that make each country unique, a strategy to draw the best and the brightest employees to the fold, an understanding of the real estate requirements and a strategy for growth, Claire’s is prepared to take over Europe.

“I wish we could go everywhere. It’s just not possible to explode all over the globe all at once. If it were possible, I’d do it,” Bonnie Schaefer says. “We definitely don’t rest on our laurels. We go every place and anyplace we can, and we don’t stop. It’s always going to be a work in progress for us.

“When will I be comfortable? I really don’t know because I don’t think I could even begin to become comfortable until I had at least 3,000 stores in Europe. I can’t tell you how long that will take.”

HOW TO REACH: Claire’s Stores, or (954) 433-3900