Bruce Leon needed leaders ready to tackle any challenge that Tandem HR might face

Bruce Leon, president, Tandem HR

Bruce Leon, president, Tandem HR

Bruce Leon has seen managers who work 12 to 13 hours every day who are not shy about telling others how overworked they are in their job. He’s also looked deeper into the way some of those managers spend their day.

“When you really dive into it, they are doing the same things all the time,” says Leon, president at Tandem HR. “They are dealing with the same sorts of customer issues and complaints.”

Leon tries to encourage managers who find themselves in this predicament to analyze their workday with the goal of getting to the root cause of the problem and coming up with a solution.

“I push them to find the core reason why it’s happening and see if they can get as much done, if not more, and have a regular eight-hour day,” Leon says. “Some of them can’t do it or they are unwilling to admit that there is a better way. They just think it’s a fact of life that they are overwhelmed with work.”

Those who are unwilling to adapt become a big problem for Leon in an industry that is changing by leaps and bounds.

“You can’t make a five-year business plan today with any real comfort that those will be the issues you’ll be dealing with over the next five years,” Leon says. “For many of us, that’s a scary thing not to be able to plan out that far ahead. But I think the critical thing is if you’re able to keep up with those changes, you can have a much better opportunity with customers than those companies that aren’t keeping up with the market.”

And so the key to being one of those companies that can keep up is having leaders who aren’t afraid of change and who see the opportunity in every challenge.

“Are they leaders or are they managers?” Leon says. “I want to know their ability to innovate and I’m really looking to see how much they are proactively looking at change and how much they are reactively looking at change.”

Find your problem solvers

One of the first things Leon wants to see when he’s appraising a leader is proof that he or she is a leader who can get things done.

“You try to find people who have been successful in many aspects of their lives,” Leon says.

“Family, extracurricular activities, philanthropy. What is their involvement? There is no fail-safe method and if there were, we’d all have an easier time of it. But one of the best things you can find is people who can communicate very specifically about how they’ve done leadership things in the past and how they were successful at them. I want specifics and even people I can call to verify it.”

When you’re assessing current leaders, observe how they behave in various situations.

“When a problem arises, they just look for issues where they will perceive to be involved and then quickly exonerate themselves at the expense of throwing other people under the bus,” Leon says. “You see managers who will not let some of their good talent go to other departments, even if it means a promotion to an area where the company really could use them. People who refuse to engage in cross-training and documentation of all the processes they do.”

It takes an effort on your part to get a good read on a person, but it helps you understand which employees you can count on in a tough situation and who doesn’t have what it takes.

“We’re trying to put the right people in place so that we can scale with only having to add lower-level people to build up for the growth,” Leon says. “But I do think the people who are running your company at 30 employees are not always the same people who are going to run it at 130.”

Some of the skills that you look for are a desire to grow, the ability to be self-critical and a willingness to accept constructive criticism.

“It’s the ability to not be threatened by hiring strong people beneath them,” Leon says. “Leaders also have a strong customer service aptitude. They really have a passion for what they do. It’s not a job.”

The ideal leader you are looking for is similar to the manager at Tandem HR who was feeling swamped by his workload and was willing to take an introspective look at what he and his team were doing.

“The ones who are good can step away, get their teams together and go over the core reasons for the problem,” Leon says.

“I had one of them that came up with a call center that has been solving 93 percent of 12 customer issues they were having. It previously took multiple phone calls and voice messages and now we solve issues in eight seconds through the call center. It came about from a manager taking his group out and looking at every customer issue that was coming in and figuring out how they could streamline it.”

Don’t allow silos

Silos are another pitfall for managers. Leaders who feel insecure about their place in the organization often create them.

“People artificially create silos in a way to build their own inner security system or to build a moat around their work,” Leon says. “I think it has to do with egos and peoples’ inability to be open, transparent and willing to share. It’s the perception people feel that if they are the only ones who can do something, they will have job security.”

Having insecure managers in your company is obviously not a good thing. But the bigger problem is created when you have a situation where a leader leaves the company or is unavailable for some reason to deal with an issue related to their department.

“Everybody has to imagine what their job would be like if tomorrow, they were hit by a car and someone else had to step in and do their job for them,” Leon says.

This is not just a mind exercise for Leon, however. He wants a real action plan in place in case such an unfortunate scenario happens.

“I want to see that documented,” Leon says. “I want to see that really existing. I want to see the results of it.”

One of the ways to prevent silos from forming is to occasionally move people around to different areas of your business.

“We switch around a lot of the administrative people in different departments so nobody gets locked into one unit,” Leon says. “It forces people to be cross-trained and it prevents that natural us-versus-them attitude in the company.”

Another step that isn’t always an option for some companies is to put more people under one roof. This was an option at Tandem HR as the company is in the process of consolidating from seven to two locations. The prevention of silos was not the main reason for the move, but it will be one of the benefits when the transition is complete.

“It’s building people to be more non-siloed and building recognition between the family of companies that we have,” Leon says. “We can also streamline shared services. We hope to save a fair amount of money on shared services with the relocation.”

Going forward at Tandem HR, new employees will be given the chance to spend time in different parts of the business.

“Even if they have been brought in as a benefits specialist, they are going to spend some time in payroll or HR or 401(k) or with risk,” Leon says. “They are going to have to learn those units as a new employee.”

The cross training is part of a six-month program where employees learn about other positions as they get up to speed on the job for which they were hired.

“We do monitor their level of competency by their performance,” Leon says. “They take tests along the way as they are learning just so we can gauge how they comprehend the material.”

Check your own ego

As much as Leon works on appraising the leaders in his company, he strongly believes that he needs to fall under the same microscope in terms of how he performs his job as president.

“Many a bad business decision and many a bad leadership decision came from unchecked ego,” Leon says. “Sometimes you have to put people in place, but that can also be you. Every CEO needs their own check.”

The person or people that you ask to judge your performance need to be able to do so with honesty and without concern that negative feedback will be met with hostility.

“Without that, the likelihood that you make ego-related bad decisions or you make bad personnel decisions or you get yourself involved in activities that hurt the company is too great,” Leon says. “It’s a critical point for me personally and one I try to share with CEOs.”

Fortunately for Leon, he seems to have a pretty effective team of leaders, including himself. The company hit $355 million in revenue in 2012 and Leon feels good about the future. But he’s not one to take a lot of the credit for making it happen.

“You have to be thankful every day for having the opportunity you have,” Leon says. “It could change very dramatically tomorrow.”

How to reach: Tandem HR, (630) 928-0510 or
www.tandemhr.com

The Leon File

Bruce Leon

President

Tandem HR

What is the best business lesson you ever learned? Always hire ahead of the curve, both in terms of numbers and talent. There’s more than a 50 percent difference between a $100,000 employee and a $150,000 employee.

As you grow, you need to get better talent and go outside of your budget to get it ahead of time. It’s very difficult to do it after the fact. You often make bad hiring decisions because you’re pressured and then people walk into a situation that’s like a house on fire, which is not a good way to start.

By hiring ahead of the growth curve, it gives you a chance to find the right people, get them trained and not to have the house-on-fire first day. A lot of business people, myself included, say I’m going to wait until I hit those targets or until we get the revenue or our profits are up before we hire that senior level person. Sometimes, it’s too late.

What traits or skills are essential for a leader? Everybody has different leadership styles. For me, my leadership style is that I am very transparent. I admit my mistakes very quickly with my senior executives and let them know they will never get fired here for making a mistake. But they will get fired for withholding information and for not admitting when the mistake happened. I try to lead by example with that all the time.

What’s your definition of success? It’s to know at the end of the day that I did all I could to further the values of this company, and I was able to make an impact in the industry that I serve.

Takeaways

Study your current leaders.

Promote inclusive leadership.

Let people judge your perfromance.

How Lyndon Faulkner repositioned his team at Pelican Products for a new opportunity

Lyndon Faulkner, president and CEO, Pelican Products Inc.

Lyndon Faulkner, president and CEO, Pelican Products Inc.

As one company after another made dramatic spending cuts in response to the recession five years ago, Pelican Products Inc. found itself headed in the opposite direction.

It was December 2008 and Pelican had acquired its nearest competitor, Hardigg Industries, doubling its size to become the largest manufacturer of equipment protection cases in the world. Life was good at Pelican, but Lyndon Faulkner knew it couldn’t last.

“We always expected the growth rate to moderate because you couldn’t keep growing at those figures every year,” says Faulkner, the 1,300-employee company’s president and CEO.

The moderation began about two years later and unfolded more quickly than anyone had expected.

Government and military spending was a big part of Pelican’s business and a key factor in the company’s dramatic growth. It was obviously great news from a human perspective that the U.S. began to scale down its involvement in Iraq and Afghanistan. But it was trouble for Pelican’s military business, which was shrinking fast.

“It was happening bigger than we ever thought it would and over a longer sustained period than we thought it would,” Faulkner says. “These were things that instead of being in control of them, we would have to react to them.”

Faulkner gathered his leadership team to come up with an appropriate response.

“Managing the implications of a big portion of business going into decline behind five years of growth was something we had to work on with management and leadership,” Faulkner says. “It’s everything associated with that. It’s the emotion and management of those dynamics within a business that affects everybody.”

The effort to diversify the business was to some degree already underway. But as the decline in military spending continued to accelerate, the urgency to achieve more diversity became that much greater.

Develop an action plan

Faulkner gathered his leadership team and opened a frank discussion to get everyone on the same page with both the problem and the options the company had to fix it.

“You have to get what’s happening to the company out on the table to its fullest so you’re able to recognize the impact of the problem,” Faulkner says.

“It was nobody’s fault. It wasn’t a bad plan or something that we were doing badly from an implementation perspective. It was something nobody could have done anything about.”

You can prepare and hold meetings and draw up strategic roadmaps every week. But the reality is at some point, you’re going to face a situation that you didn’t see coming.

“Things are going to happen,” Faulkner says. “Being in control of the things you can be is all fine, well and good. But you need to make sure you are doing all the preparation you can around the things in your control and make sure that you are reacting properly to things that are not in your control.”

When it comes to dealing with things not in your control, such as what had transpired at Pelican, you need to make sure your people view these issues as opportunities filled with potential rather than challenges fraught with risk.

“You just sit down and discuss the problem and you discuss the impact of the problem versus just burying your head in the sand about it,” Faulkner says. “Find the opportunity. I wouldn’t say give up on the business because it was still a very important business stream to us. But accelerate your thinking on how we could offset the decline in that business.”

The pursuit of new product segments was clearly the way to go.

But Faulkner needed to bring structure to the conversation so that his team didn’t stray from what Pelican does best. This can become a challenge for companies as you try to toe the line between branching out into new areas and reaching beyond your ability to do it well.

“We understand our protective cases are used in the transportation of things in the military and with first responders, things of that nature,” Faulkner says. “But then we look at things like medical devices. We realize in the medical device business, they are shipping products that could easily have been converted to Pelican-type products because we have a better product for moving their devices around and the transportation of them.”

Another potential market to expand into was consumer electronics. There was great opportunity, but also great risk for Pelican in this space.

“We were able to bring out a product for the iPhone 5 that has all the DNA of Pelican,” Faulkner says. “It carries protection, it looks good, it’s well-known, it’s well-made. You can drop a product with it, and it’s going to protect the product. That would be true to our brand and that’s what people expect from us.

“However, bringing out a protective case with a million shiny beads on it or something with ‘Hello Kitty’ would not be true to our brand and would not be what Pelican is all about. So in that scenario, that’s a classic way we drew the line.”

Pelican understood that its customers look to the company for protective products, not ones with lots of bling.

Lend a helping hand

The next step in the Pelican transition was the people side of the business. When you’ve been doing one thing and you’ve done it well, it’s not always easy to put a stop to it and tell those people that they now need to start doing something else.

“A lot of the people who were working on the military stuff did not have the skill set or muscles for the consumer market,” Faulkner says. “So what we’ve done there is we were able to move some of the military guys to the commercial space, industrial and things like that.

“Safety markets and first responders were not an issue for them. But as it relates to starting the new businesses up, we had to do that with a lot of new people or people who we brought on board from the business sector. They just speak a different language.”

It’s a clear illustration of why so much thought needs to go into making changes in your business. You can sit in your office and think about how easy it would be to start selling this widget when you’ve already been making that one. But it’s usually not as easy to make the change in actual practice.

“We’re finding the work we have to do for the consumer business — marketing, selling, product development, bringing products to market — it does have a very different clock speed and language than what Pelican has had before,” Faulkner says.

When you decide you want to expand your business in a certain direction, it’s your responsibility to get people the training they need.

“That’s part of your schedule,” Faulkner says. “I don’t think you’re busy and then you have to do that on top. Part of your busy schedule is to make sure you’re working with people so they are developing themselves. That’s just a basic fundamental of what I’m here to do and recognize if they don’t have the runway for that growth.”

At Pelican, this meant creating shadowing opportunities for people who wanted to be part of the new organization.

“So we had sales people, people who sold to the military extensively who have now gone out and shadowed people in the commercial space,” Faulkner says. “Most people have learned their trade by going to work with somebody in the other divisions.”

Strive to be the best

One of the lessons learned going forward was the need to hire individuals with more diverse skill sets and to make sure training is ongoing to develop more skills in the people already onboard at Pelican.

“If I’m a guy and all I’ve been doing my whole life is building products that can be dropped out of a helicopter and now I’m being told I’ve got to build great products, but they don’t have to be dropped out of helicopters anymore,” Faulkner says. “and if I make a case for that market that is made to be dropped out of a helicopter, it won’t sell.

“It’s something you have to instill and educate and teach because it’s not the way they’ve been working. It doesn’t mean that they can’t work that way. It just means they haven’t been asked to work that way.”

Regardless of what Pelican does, Faulkner says his expectation will never change. He wants it to be the best.

“People say what sort of company are you,” Faulkner says. “Are you a product company? Are you a sales company? Are you a marketing company? Are you a technology company? Are you driven more by operations, technology or finance? When we look at the different disciplines of the business, we charge our guys, the heads of each department, with being world class in everything.

“If we’re good in sales and product and marketing, we don’t expect our operations guy to just be there for the ride,” Faulkner says. “We expect our operations guy to have his own plans for being best in class in operations. What you’re doing is building the best in breed in everything. That’s what really floats the performance of the company.”

How to reach: Pelican Products Inc., (800) 473-5422 or www.pelican.com

The Faulkner File

Born: Newport, Wales. I was born at the Celtic Manor Resort, which is where they played the last Ryder Cup.

What was your very first job?

My very first jobs were a paper route and milk rounds. They used to deliver milk in those days in the U.K. and you would earn extra money by helping the milkman deliver milk. My first real job was coming out of school when I worked on construction in the summer months. It was making tea, doing errands and driving the dump truck around. But it was primarily making coffee and tea for everybody.

Who has been your biggest influence?

It starts at home with your parenting and your upbringing. I had parents and brothers and sisters who were very aspirational in trying to do better and do more. I had parents that instilled hard work in us all. None of us were frightened of going out and working hard and making things happen for ourselves instead of hoping things would happen.

How does competitiveness in sports compare to business?

In team sports, you have to have everybody pulling together and you can’t have a lot of people pulling in the wrong direction or in a different direction. That goes with attitude as well. You want everybody of a similar attitude and a similar style working with each other to help each other out. That’s a style I like to see instilled in a business. That breeds success.

Takeaways:

Focus on the opportunity.

Give people the right tools.

Always strive to be the best.

Andrew Liveris leads Dow Chemical by finding and developing talent that can achieve both short-term and long-term goals

Andrew Liveris, chairman, president and CEO, The Dow Chemical Co.

Andrew Liveris, chairman, president and CEO, The Dow Chemical Co.

This past November, Andrew Liveris went to the White House for a meeting with the president. That in and of itself is a pretty significant life event, but in Liveris’ case, it was as much about the journey as the destination.

Liveris is the chairman, president and CEO of The Dow Chemical Co. A native of Australia, he’s held numerous positions at Dow over the span of nearly 40 years — roles that have taken him to places such as Hong Kong and Thailand, before eventually moving to Dow’s Midland, Mich., corporate headquarters, where he became CEO in 2004 and chairman in 2006.

As the head of a $57 billion corporate giant, Liveris was among a group of influential CEOs invited to the White House to take part in a meeting on jumpstarting American business with President Barack Obama.

The Australian who came to America by way of Asia now sat in a room with the leader of the free world, among those tasked with helping to chart a course to rebuild key economic drivers as the country — and world — continues to recover from the recession.

“The conversation we had, with a dozen CEOs across various business sectors, it felt like a different meeting than any previous we have had,” says Liveris, who spoke as part of a presentation at the 2012 Ernst & Young Strategic Growth Forum.

“The president has had a lot of things written and said, and he takes it pretty personally when he hears that he doesn’t know business. Frankly, the evidence over the past 3½ years is that he doesn’t work with business and doesn’t know business.

“So in this meeting, he didn’t talk all that much,” Liveris says. “He let us give it to him, and we let him know what it would take to create a growing America again.”

For Liveris, it was an opportunity to step back, reflect on where his company had been over the past few years, and where it was headed —  and what steps he and other influential business leaders would need to take to ensure that their companies, and the whole of American business, would remain strong into the future.

Understand the landscape

By his own admission, Liveris was kind of naïve in his first couple of years as a CEO, particularly when it came to the business community’s relationship with government.

“I thought I would go to Washington, talk about the things that matter to my company, then I would leave and something would happen,” Liveris says. “That clearly did not work.”

After a number of trips to Washington with little progress in developing the business-government relationship to the point that it produced results, Liveris realized that no one on either side truly had a grasp of the game they were playing.

“I remember when I was watching TV and hearing about how American manufacturing had to die, how it had to move overseas because of labor costs,” he says. “That’s when I realized that absolutely no one was getting this.

“No one understood innovation, technology, or how one invents. No one understood the business models of creation, of new wonderful things that help humanity, things that are an American right.

“We have done this for over 200 years and yet we’re saying we should no longer manufacture, and we should just be a service economy,” he says. “If you want to be a service economy, go to the U.K. and see how it worked for them.”

Liveris says Silicon Valley is a hub of innovation, in large part because it is full of big companies who try to maintain a small-company mindset. If you can marry the resources of a major corporation with the flexibility and creativity of a smaller enterprise, you can hit an innovative sweet spot. It’s a position Liveris has tried to assume at Dow.

“Silicon Valley is an intersection of incredible academic institutions and entrepreneurs inventing, innovating and allowing startups,” he says. “That’s what I do. I have $1.7 billion in R&D, and I’m doing that every day. I’m innovating and trying to scale up. That is manufacturing.”

Liveris wants Dow to set a tone for innovation throughout the country. He wants companies, both large and small, to think in terms of innovation and developing ideas.

“This country needs dozens of Silicon Valleys,” he says. “It needs innovation hubs throughout the country. That was recommendation No. 1 from the meeting with the president. The president will give legs to an advanced manufacturing partnership, within which we have identified 11 technologies that America can win on a global basis.

“We have picked the technologies where America can win, not by creating winners and losers among companies, but by designing an innovation hub so the best minds in America can participate, including entrepreneurs, big companies and some government money to stimulate creativity and scale things.”

Invest in human capital

Innovation needs fertile ground. It needs companies that invest in the resources that enable innovation. It needs executives and managers that sustain a culture capable of promoting innovation. You need programs that reward and promote innovative thinking.

But those factors alone won’t drive an innovative mindset. You need to recruit the talent to innovate.

Even if you don’t budget for R&D the way Dow does, Liveris says innovation-minded talent is a must for any organization that wants to grow and evolve.

“I am a great believer that rigor mortis sets in unless you create a burning platform,” Liveris says. “People get comfortable and complacent quickly, especially the larger you get as an organization. You have to change things.”

When Liveris was named CEO of Dow, he called up a number of successful CEOs who had succeeded in driving large-scale change throughout major enterprises, asking for advice on preventing complacency and enabling innovation.

“One of them gave me this great piece of advice,” he says. “It had to do with the phases of change that cause the human pipeline, the talent pool, to respond and be its very best.

“It’s about the moon shot, the mission. If I can be inspired by the mission, be energized by that, that’s the key. I have to create that dynamic inside the top and middle ranks of the organization, and more importantly, the front line people.”

To Liveris, leaders get elected every day. Each day is an opportunity to create buy-in throughout the organization, an opportunity to inspire employees to follow the path blazed by leadership.

“You lead change,” he says. “You build a team around change. You have to do it with the long vision in mind, but with the idea that the short-term needs have to be met. We all suffer from ADD.

“We have become an ADD society where everything is breaking news, so the dynamic around a company — particularly a public company — can kill the long vision. You have to deliver in both the short-term and the long-term, and if you live those two paradigms, you need a unique type of human talent.”

Liveris calls it “living intersections” — finding and developing talent that can achieve both short-term and long-term goals.

“No longer do we do single-lane highways,” Liveris says. “We’re living intersections all the time. The intersections between the short-term and long-term require a unique type of talent — sometimes we call that change manager a change leader but that’s too high level.”

The managers you bring in to help spur change and formulate a vision for the future while delivering short-term results have another important set of opposite-end factors to master: They must understand the business from a global level, while still grasping the effect of the vision and goals of the organization on individuals working at ground level.

“You do still have to get down to the three-foot level,” Liveris says. “What does it mean to the person on the floor? What does it mean to the R&D leader? What does it mean to the salesperson?”

And no matter what position a given person fills, that person’s talent will only reach its potential if you can tie their individual and department goals to the overall goals of the organization, and then reinforce innovation-centered values that emphasize a willingness to create, experiment and learn from mistakes.

“You can’t box people into something and say, ‘Go invent,’” Liveris says. “You have to give them a chance to fail. You have to let them be a part of the entrepreneurial activity. You need to motivate them to see how their project, their work, can change humanity.”

How to reach: The Dow Chemical Co., (989) 636-1000 or www.dow.com

The Liveris File

Liveris on Dow’s history of success: We’re actually one of nine companies that are still around from the inception of the New York Stock Exchange. There are only eight others who were there since the beginning. We’re not afraid of change. I didn’t get this gray hair easily; it came hard. We have in our DNA the willingness to face reality and take the change and bet the company. To be companies of size, that’s a lot of heavy lifting. I’d like to say we’re in the seventh inning … from a portfolio point of view. We have the technologies. We have the weapons but we’re in the second or third inning from a cultural point of view.

Culture is every person in the company, and Dow has a value proposition at the personal level. As a young chemical engineer, I had a lot of offers, but I chose to leave my great country of Australia to live in this great country, not because I think you’re greater but the company called Dow has a better value proposition to a human being. I was attracted by the people.

Liveris on sustainability: One day Dow Chemical won’t be known as Dow Chemical; it will be known as Dow. Dow sticks to the brand of the diamond (logo). The brand will stand for … our commitment to sustainability, but not sustainability as a noun, sustainable as an adjective. Sustainable business, sustainable profits, sustainable planet are the same things. How you actually marry the intersection between environment, economy, society, business, government, society.

Takeaways

Understand your industry.

Value innovation.

Find and retain great talent.

Kailesh Karavadra is focusing on culture and talent to deliver outstanding results at EY San Jose

Kailesh Karavadra, managing principal, EY San Jose

Kailesh Karavadra, managing principal, EY San Jose

Kailesh Karavadra didn’t always want to be an accountant. In school he studied electronic engineering and later decided he wanted to try his hand at accounting. He fell in love with the profession and first joined EY in the U.K.

A few years later, the $24 billion accounting firm asked Karavadra if he’d be interested in moving to Silicon Valley.

“With my background in engineering and computers and business background in accounting, it made a lot of sense with what the Valley was going through in the early ’90s,” says Karavadra, managing principal of EY’s San Jose office. “So I came here, and I loved it, and have been here ever since.”

Karavadra has been with EY for more than 20 years, but it was in early 2012 that he was named managing principal for the 750-employee San Jose office, an announcement that coincided with the firm’s 50th anniversary of its presence in Silicon Valley.

“When we wake up every day and we put on our EY uniform and we come to work, our heart and soul is in building a better working world,” Karavadra says. “Over the past year I’ve had the chance to talk to almost every one of our employees, from our partners to our staff, and connect with them and listen to what’s on their minds and understand some of the complexities and challenges we work with.”

Karavadra has been focused on continuing to foster a strong culture at EY as well as continuing to recruit and retain top talent that will help the firm in its goal to build a better working world.

Here’s how Karavadra is making sure EY San Jose is prepared for the future.

Start with culture

Karavadra has been with EY for 23 years. He’s been with the firm for so long that when he speaks with young professionals today they’ll say, ‘Twenty-three years! Aren’t you bored?’

“I laugh because I have never had a single boring day,” Karavadra says. “The one differentiator is our culture and our people value that a lot.”

EY has been named to Fortune’s best companies to work for list for 15 consecutive years.

“That comes from our inclusiveness and flexibility and that we really empower our people,” he says. “For our employees, every day they show up for work it’s about choices. What we try to do is cultivate a culture that empowers them to make the right decisions, leverage the information that’s available in our culture and have diverse thinking to do the right things when serving our clients and our firm.”

Karavadra and the San Jose office encourage and empower employees to drive their own bus. “There are so many opportunities within our firm to drive their careers, to learn so many things, to be able to experience many things, and that’s the culture we want them to be able to feel,” he says. “Our employees are excited, they’re energized, they’re enthusiastic, and they’re passionate about what we do.”

One of the things that EY is very proud of is inclusiveness and that is something that Karavadra heard loud and clear from his people as something they value.

“This isn’t just about ethnicity and gender and those things that many organizations like ours do a great job around, but it’s the diversity of thought,” he says. “We encourage our people to bring that diversity of thought, to bring the different thinking and look at the problems we’re trying to solve for our clients and the value we’re trying to add to our clients in different ways.”

Developing a culture such as what Karavadra has in San Jose and what EY has bred around the globe hasn’t happened overnight.

“There’s a great saying out there that I personally believe in, which is, ‘People don’t care what you know until they know you care,’” he says. “At the foundation of our culture is the caring. We treat ourselves as family.

“One way we foster that culture is through our alumni and our retired partners. We did several events last year where we bring our retired partners back, and it’s amazing to me the pride, passion and excitement they have for our firm. We have almost 1 million alumni that have gone through the EY culture. During these events we invite our alumni to reconnect with each other, as well as reconnect with current employees.”

Another way Karavadra helps foster EY’s culture and helps to build a better working world is through five things that he constantly talks about with his team.

“No. 1 is that we really do contribute to the success of the capital market,” he says. “No. 2 is that we truly help and improve as well as grow businesses. The third is we support entrepreneurs. Fourth is we are incubators for leaders. Fifth is giving back to the community.”

Find and retain top talent

Those five things are important aspects of the EY culture, but they also help drive why employees love to work for the firm and why potential employees are attracted to working there as well.

“There’s a saying by John F. Kennedy Jr., ‘Some people see the world the way it is and say why, others see it differently and say why not,’” Karavadra says. “When we go on campuses we see a lot of very young, talented people who want to make a difference, who want to contribute and have a sense of belonging.”

Karavadra makes sure to talk a lot about the firm’s family culture, team atmosphere and sense of empowerment.

“We also bring our current employees because we want them to be the voice and they will shoot from the hip and give an honest view and opinion of what it’s like working here,” he says.

Karavadra also goes on these campus visits to speak with potential hires. He wants to make sure he understands what those candidates are looking for in a company and in a job.

“What they tell me is they want to work in a dynamic environment,” he says. “They love the innovation, entrepreneurial spirit and the teaming aspect of an organization.”

Focusing on recruiting strong talent is important, but all that energy is wasted if you don’t also focus on retaining those great candidates once you have them.

“It’s not only important to hire good talent and keep them here, but for our clients in the markets at-large it means that when people have energy, enthusiasm and they believe that we’re doing the right thing, they’re going to provide exceptional client service,” Karavadra says.

“They’re going to be a part of the highest performing teams and when you add our global strength and structure to the local empowerment in our local offices, that’s a real strong recipe for people to have a successful career.”

Karavadra believes that above all else, trust is one of the biggest factors for retaining talent in an organization.

“I truly believe in my DNA, that trust is at the heart of it,” he says. “Young people these days are incredibly smart, incredibly connected and talented.

“But when we’re out there talking to people, the most important thing that I share, whether it’s for recruiting or with employees, there is nothing more important than making sure you hold the ethics, reputation and integrity of yourself and our firm at the highest level. Nothing should compromise that.”

Whether you’re on campus recruiting or trying to attract experienced hires, establishing trust is the most important thing.

“They need to feel that this is an organization with honesty, trust, integrity and teaming. Where employees feel there are common goals and we work together,” he says.

While trust is a big reason employees will remain with a company, a second big reason is training and the ability to develop new skill sets.

“We put in 2.7 million hours of training last year for our people,” Karavadra says. “We really want our people to be the very best they can be. It is important for us to make sure we provide all of the latest and relevant insights to them, whether it’s classroom training, industry training or leveraging our web-based technology tools. The San Jose office is the global technology center, so we have a lot of our thought leadership around the world that we develop right here for our technology clients.”

Training at EY is not the only formal training team members get, they also get to take advantage of the firm’s apprenticeship model.

“What I learned when I started as a staff member 23 years ago is that I looked at people around me and there were mentors and coaches who took an interest in me and cared about me,” he says. “They would take me aside and say, ‘You just did this inventory account, this cash reconciliation, and looked at this tax document. Here’s why it’s important for us, why it’s valuable to the client and the impact it could have.’

“Right away from the first day, the training climatizes you to understanding the importance and the accountability that we have on the work that we do. It’s not just showing up every day to put in your number of hours and then we clock out. There’s a real importance to that training.”

How to reach: EY San Jose, (408) 947-5500 or www.ey.com

 

Takeaways

Work on establishing a culture that is attractive to employees.

Devote time to recruiting the best talent for your organization.

Provide training resources to help retain your best talent.

 

The Karavadra File

Kailesh Karavadra

Managing principal

EY San Jose

Born: Kampala, Uganda

Education: He studied electronic engineering and received a master’s degree in engineering from University College of North Wales in Bangor.

What was the first job you had and what did you learn from it?

I delivered newspapers. I used to get up at 5:30 a.m. before school and do it again after school. So it was twice a day, six days a week. I was always inspired by working hard and taking my responsibilities seriously, because you’re accountable for the things you are doing. Hard work will always get you a reward.

Who do you look up to?

I have five mentors that I am in constant connection with who are across five different continents. That has happened because of the years of experience here and the networking. I can call them anytime and pick their brains and they try and make sure they support what I am doing.

If you could speak with anyone from the past or present, with whom would you want to speak with?

The one person who has shaped me more than others is Mahatma Gandhi. I have always been incredibly inspired by the willpower he had. He was someone who realized that something needed to change and he was willing to take the first step.

Michael Catanzarite combines competitiveness and a family atmosphere to keep Darice atop the craft industry

Michael Catanzarite, CEO, Darice Inc.

Michael Catanzarite, CEO, Darice Inc.

“A Pat Catan’s Company” reads the sign in the lobby of Darice Inc. where Michael Catanzarite greets his guests. Catanzarite, or Catan for short, is the son of Pat Catan and is CEO of Darice Inc., a premier wholesale distributor in the craft industry.

That lobby sign is a symbol of the company Catanzarite’s father started in 1954 with $200, basically creating the craft industry.

“It’s a unique story because how the hell would you get into the craft business?” Catanzarite says.

Pat Catan was a pilot instructor during World War II. When he returned from service the only place to get a job in Cleveland was at NASA. As a new guy living in Cleveland walking around, he saw a need for supplying decorations for decorators of store window displays.

“Back then, department stores’ biggest form of advertising was the window decoration itself,” Catanzarite says. “He started supplying products for that. It evolved into material for making your own flowers for displays and floral arrangements for your house and grew from that point.”

In 1954 Pat Catan’s was just one single store. By the mid-’70s, the company had six or seven stores.

“He was a pioneer in the industry, because there really was no craft industry,” Catanzarite says. “In the early’70s, we came up with the name Darice. Darice is our wholesale name and that’s the majority of our business. If you go into any big box store like Wal-Mart, Target or Michael’s, you would see the Darice brand in there.”

The wholesale division started in the 1970s. Catanzarite entered the family business following his graduation from high school in 1976.

Catanzarite knows the ins and outs of Darice. He knows the names of virtually every employee and can quote his father’s sayings and other inspiring messages that line the walls of the Darice office.

But what else would you expect from a man who has worked at the company for his entire life?

“My dad was my idol, my hero,” Catanzarite says. “I enjoyed being with him and I enjoyed working with him. Why did I come into the family business? I hated school.”

Catanzarite has been CEO for nearly 20 years, but he isn’t the only family member working at Darice. In fact, there are 22 family members who work full time in the business. His office contains nearly 100 photos of family and items like his dad’s old briefcase and jacket, which help motivate him and serve as a symbol of who started the business.

From 1954 to today there have been a lot of changes within Darice and the craft industry itself.

“The difference between today and yesterday is the speed to market and the speed of business,” Catanzarite says. “You better be at the wheel every day and have your foot on the gas 100 percent or you’re going to be left behind.

“Today, we are fortunate because of our employees and their hard work, we’re the largest in the industry at what we do. Being the largest has its challenges in that you’re always a target for competition.”

Here’s how Catanzarite keeps a family feel at Darice while also pushing the company to remain an industry leader.

Fight the competitive forces

Darice Inc. today has 1,800 employees and is one of the top privately held companies in Ohio. The company supplies craft product lines such as craft basics, jewelry making, paper crafting, bridal, floral design, fine art supplies, kid’s crafts and licensed products to retailers such as Wal-Mart, Target and Michaels.

“We’ve made it a priority in our company that we are going to be product-first people and product-innovation focused,” Catanzarite says. “That’s our business: creativity and products. When we do that, everybody in this building understands that our goal is to find the next best product to make sure we’re to market quick and can respond to a call from Target or customer X to have a presentation done in a week.”

Anything that Catanzarite does to be successful is a result of the company’s mission statement and that his employees work on it every day. It requires the right kind of people to live the company’s mission.

“Do we have the right people and the free thinkers for that?” Catanzarite says. “That’s how we take something from concept to reality. In any company, if you just talk about stuff and you don’t make it a priority with the facility and the people, you’re not going to get anywhere.

“If you say you’re going to do something, but all you have is an idea on a piece of paper, well, what the hell good is that? You’ve got to give it substance.”

Catanzarite spends a lot of his day motivating and counseling employees and trying to figure out what areas Darice needs to improve.

“You’re constantly changing and trying to upgrade, but not because the people are bad, successful companies merge new ideas in with the old ideas,” he says. “We never really focus on the competition. We just try to be as good as we can be.”

Part of making the company better is continuing to get products to market quicker than anyone else.

“Here, we do things quickly,” Catanzarite says. “We get stuff to market in half the time of our competition. We react to our customer faster than anybody. That’s the only way you’re going to beat the competition because everything is so fast and everybody is trying to increase their margin to go around you.

“Today, you better be the best at everything or you’re going to get run over. We’re focusing on how we do that.”

A big reason for Darice’s success is due to its employees and the culture Catanzarite has helped foster over the years.

“The people part of the business, which a lot of people shy away from, is really the most important part of the business,” he says. “It’s what’s driving the company. You have to motivate them to do what’s next.”

Catanzarite fosters this kind of culture through commitment, consistency, being honest with his organization and devoting the time to it.

“I always compare it to being a parent,” he says. “The biggest component to being a parent is that children need your time. There’s nothing, as you raise your children, that’s more important than time. Your employees are the same way.

“If your boss came in today, sat with you, had a cup of coffee, and was nice to you, that would make your day. But a lot of people are just so busy going to the next meeting that they don’t carve out that time.

“You’ve got to spend time on relationships. That’s how you get the trust. My goal is for people to do good because they want a paycheck, but also because they like me and they don’t want to fail me.”

Eliminate family politics

In a family business, it’s easy for family members to develop office politics and destructive habits that can destroy a company. Darice and the Catanzarite family follow a simple motto to squash any of those possibilities.

“Faith, family and friends is our motto,” Catanzarite says. “We live by it. There’s nothing more important than faith, which drives our family. Once you’re my friend, I’ll never get rid of you. We have 22 full-time family members that derive their full-time income from working at Darice. How do we deal with that? We try to eliminate politics.”

If a family member wants to come to work at Darice, the most important thing Catanzarite does is find the right job for that person.

“Are you going to make a guy who’s good with his hands and likes working on cars a salesman at Wal-Mart?” Catanzarite says. “You may, but his chance at failure is much greater.”

Catanzarite’s family members let him have the ability to place them where he thinks they’re best served within the company.

“So far everybody still comes over on Christmas,” he says. “But with 22 family members, if somebody gets mad, they go home and tell their spouse and they tell her mom who might be my sister, so you have to have the openness and honesty.”

Not every family member works full time inside the company. There are others who play outside roles.

“Even if you’re not internally in the building, most everybody else is in the business,” Catanzarite says. “The guys that are outside play such an integral part that if I lost them, it would be like I’m losing somebody internally. It’s good the way we mesh that.”

To keep the family atmosphere in a company that has gone from three employees to 50, 50 to 100 and 100 to 1,800, it takes openness and transparency. Most importantly, someone needs to take charge.

“There are a lot of families that have trouble even sitting in the same room to meet,” he says. “As a company you need a plan and unfortunately there could be five to 20 relatives in there, so you need a boss.

“There has to be a single leader in the family and the family has to be committed to supporting that, otherwise you’re going to fail,” he says.

Darice is currently undergoing a succession planning process so that it is prepared for the future. The company has also brought in people from outside the family for integral leadership roles.

“A lot of family businesses struggle to bring in professionals in executive positions,” Catanzarite says. “We were the opposite. Our president is a non-family member. Our CFO is a non-family member. Our IT director is a non-family member. Our head of marketing is a non-family member.

“Long term, one of our decisions will be that we always want an outside president and CFO. In family businesses, it’s tough for people to do that sometimes. They say, ‘I’ve been doing this forever; I know everything.’ I may know more about crafts than anybody, but I don’t know more about selling to Wal-Mart and Amazon. I’m not an expert in distribution.

“Bring those people in and allow them that ability. Having those outside positions in a family business helps the rest of your employees too, because they see that it’s not just Catanzarite’s running the company.”

Every decision Catanzarite makes about the future of Darice is done so with his family and employees in mind and how that decision is going to make everybody feel.

“My focus is on continuing to grow this business to be a premier company in what we do and taking it to the next level and seeing the employees flourish,” Catanzarite says. “I’m driven by the goal that my dad wanted a great company for his family, and if I don’t finish that, I failed. I’m not going to fail. You’ve never met a guy so driven to make something successful for the benefit of his family.”

How to reach: Darice Inc., (440) 238-9150 or www.darice.com

Bill Byham and Development Dimensions International have no lack of good ideas for the R&D process

Bill Byham, chairman and CEO, Development Dimensions International Inc.

Bill Byham, chairman and CEO, Development Dimensions International Inc.

Bill Byham holds a doctorate in industrial/organizational psychology — but that’s not the only way to define him. While he is not only considered an expert in the scientific study of employees, workplaces and organizations, he was one of the first in the world to use a groundbreaking hiring technique called assessment centers.

Some 35 years ago, Byham worked for J.C. Penney Co. when he began using simulated on-the-job techniques to find the most qualified potential employees.

“Assessment centers are a way of evaluating people by putting them through simulations where the people can show what they can do rather than just conducting an interview,” Byham says. “It’s like picking a basketball player — you wouldn’t interview them, you would put them out on the basketball court to see what they could do.”

Byham had great success with these assessment centers at J.C. Penney and wrote an article in the Harvard Business Review that made him famous, gaining the interest of many big companies looking to use this technique.

It wasn’t long until an entrepreneurial opportunity was born. He partnered with Doug Bray of AT&T and started Development Dimensions International Inc., which today is a leader in talent management, leadership development, hiring and talent acquisition.

“We help companies make the most of their employees,” says Byham, chairman and CEO. “We help organizations be more successful in hiring people by teaching interviewing skills. We are very big in the training business, particularly at the supervisory level, where we train more than 500,000 people a year.

“We also have a big business to help companies determine who will be their fast trackers and how to develop them for higher-level jobs.”

Since Byham started DDI, a 1,100-employee, $200 million organization, the company has trained upwards of 20 million people. Today, his focus is on the continued R&D of products in training and development techniques.

Here’s how Byham goes about R&D to keep DDI in front of its customers and on the cutting edge of its industry.

Generate ideas

DDI places a great deal of energy into its R&D process. As a global company, DDI offers its products in as many as 20 languages. Rolling out changes to an existing product or developing a completely new one is a big cost. Costs and language aside, however, to remain an industry leader, you need to have plenty of ideas, and good ones.

“We do so much R&D here,” Byham says. “A problem that we do not have is a lack of good ideas. We have more good ideas than we know what to do with.

“So the first problem is trying to slim down the list of projects because all the projects are in the multimillion dollar range.”

In order to develop all these good ideas that DDI brings to the table, the company fosters a sense of empowerment among its employees.

“The whole company is built on empowerment — that is to empower people to own their job and feel responsible to make decisions,” Byham says. “If you treat your employees so that they feel empowered and they treat their job like they own it, then people will always want to improve and come up with ideas.”

In addition to a sense of empowerment, DDI prides itself on having a management team that is very open to new ideas and has a willingness to make changes.

“That’s one of our big problems — we make so many changes all the time because people come up with new ideas,” he says.

The management team works to narrow down the options.

“We have a series of meetings to cut them out and usually it’s not hard to get it down to eight,” he says. “But then to get it down to two or three new projects is tougher. R&D to us is brand new, game-changing products, or a big change in what we’re doing.”

DDI’s biggest product is called Interaction Management, which is a supervisory training program that is among the best-selling of its kind in the world.

“We try to update it every six or seven years,” Byham says. “That essentially becomes a new product.”

DDI recently finished a new middle management training program. The concept rethinks how middle managers get trained, including what they get trained on and how their skills are developed and what happens after that in the company to make sure they really learn it and apply those new skills.

“It’s not just coming up with a new idea,” he says. “It’s coming up with the whole pathway to learning and change, which starts out with a better understanding of their needs.”

Focus your R&D efforts

Part of having a strong R&D process is being able to not only take suggestions from your customers for products and develop those, but also being able to develop products out in front of what your clients want before they know they want it.

“You have to look at R&D in that sense as a 50/50 balance,” Byham says. “We do a lot of customer surveys. We’re out with our customers a lot and they’ll say, ‘We want a training program on this.’ However, I think it was Steve Jobs who said, ‘If you only give your customers what they ask for, you’ll always be behind.’

“What I’ve always noticed is you have to be out in front of the customer because sometimes it takes us several years to develop these things. If you just try to keep up with that hot topic, we won’t get it out until it is no longer a hot topic. So we have to anticipate needs and then be ahead of that.”

DDI has had instances where it was ahead of customers on products. Just a few years ago DDI developed a product to help companies prepare for retirements and how to handle an older workforce.

“We’ve been way ahead of our contemporaries and competitors on that,” he says. “The bad side is the whole thing is built on the assumption there is going to be a huge amount of retirements. With the economy being what it was until recently, a whole lot of people who were going to retire decided not to. We’re still ahead of the tide there a little bit.”

The R&D process isn’t just about finding the next new product, but also devoting some effort to keeping well-performing, existing products up-to-date.

“The more products you have, the more it costs you to keep the old products good,” he says. “The ratio for us is around 60 to 70 percent old products and 40 to 30 percent new. You have to look at the sales of the old product. If you’re still going up with the old product, you will want to keep investing in it.”

Byham likens it to Tide for Procter & Gamble. There have been 20 new versions of Tide and they’re still making money on it. They’re going to keep that product and put it in front of customers.

“If you really have an excellent old product, like we have with Interaction Management, you would not want to let that go, but you still want to be out looking for new things,” Byham says.

Plan for the future

Byham’s biggest focus may be on R&D, but another forward-thinking area he is keeping in mind is succession planning. Byham is 76, and very aware of his age. He knows that anything could happen at any time requiring someone else to lead the company.

“There’s never been a company more ready for retirements because the whole company is so dedicated to growing our own leaders,” Byham says. “We practice what we preach.”

One of the keys to succession planning that DDI lives by is that you can’t develop everyone for high-level jobs.

“If you try to spread your money out evenly across people, you don’t have any effect by it,” he says. “The first big thing is to define who are the people who have the most raw talent to be developed. Then you have to look at how you accelerate their development.

“You keep on developing everybody and you keep on promoting people, but there are certain people you promote faster who are being accelerated up the ladder.”

DDI also believes that you don’t aim people at high-level jobs. You aim people at a level of jobs, like the C-level, but you don’t name the job specifically because companies today are too dynamic.

“We preach that companies should do away with the old succession plan, which was to take an organizational chart and move people up who are next in line,” Byham says. “We have done all kinds of research that proved that did not work.

“Instead you should get a pool of people who are the most talented and get them to aim at a level within the organization rather than a particular job. Then when the job is open, you choose from that pool.”

How to reach: Development Dimensions International Inc., (412) 257-0600 or www.ddiworld.com

 

Takeaways

Foster an environment that breeds idea generation.

Focus R&D on a mix of customer demands and brand new ideas.

Think about the future of your company and who’s going to lead it.

 

The Byham File

Bill Byham

Chairman and CEO

Development Dimensions International Inc.

Born: Parkersburg, W.Va.

Education: He received his bachelor’s and master’s degrees from Ohio University and a doctorate from Purdue University.

What was your first job and what did you learn from that experience?

My family was in the undertaking business. If you work in a funeral home, there’s a lot of work to do. My early job experiences taught me the importance of good interpersonal skills.

How would you describe your work habits?

I value creativity a lot, but at the same time, I have a strong scientific orientation of proving it and challenging and doing research. I’m pretty good about coming up with new ideas, but I’m also very good about punching holes in new ideas and doing research to make sure they really work.

Who is someone you look up to in business?

I looked up to my father. He was an entrepreneur and owned his own company.

What is your favorite DDI product?

It would have to be our supervisory training program called Interaction Management. We have trained millions and millions of supervisors.

Rick Bennet and CCA Global Partners have strength in numbers

Rick Bennet, co-CEO, CCA Global Partners Inc.

Rick Bennet, co-CEO, CCA Global Partners Inc.

With more than 2,700 locations and 800 independent retailers, Rick Bennet oversees a cooperative that has significant strength in numbers. In fact, CCA Global Partners Inc. has more purchasing power in its floor covering business than Home Depot.

Founded by two independent retailers in the floor covering business in 1984, Howard Brodsky and Alan Greenberg, CCA Global Partners’ primary business is Carpet One Flooring & Home. CCA is a cooperative of 14 independent brands in the home improvement industry with more than $10 billion in aggregate gross sales and more than 100 consecutive quarters of profitability. Its retail floor covering stores and its non-floor covering businesses each see annual revenue of about $5 billion.

“These people have come together with our management and our infrastructure and are able to bring scale to their business and compete with big box and other large retailers by banding all of their purchases and resources together,” says Bennet, co-CEO at CCA.

Despite that ability to band together, the downturn in the housing market had an impact on CCA and its independent retailers.

“We entered the downturn early and I would suggest that we’re coming back out of it later,” says Bennet, who was formerly president and CEO of Kauffman’s and vice chairman at May Department Stores. “These guys are small independents and so they have been really rocked. The biggest challenge we continue to face is just keeping people up and moving ahead.”

Bennet has had the task of helping his retailers cope with the downturn, push through it and now move forward.

“We are not exclusively floor covering, but it is at the core of our business,” Bennet says. “Many of the things that we have opened up are things like cabinets or lighting, but they are all home improvement, so we are closely tied to the housing business and the economy has been tough out there and housing has been the worst of it.”

Here’s how Bennet and CCA Global Partners Inc. have helped independent retailers through a tough time and as a result, repositioned them for the future.

Face the facts

In a tough economy it is very hard to have to start rationalizing business and look at cutting costs. When times get tough it comes down to basic math, and you can’t spend what you don’t have.

“You do what you’ve got to do,” Bennet says. “The tougher challenge has really been the emotional one. When you go through five or six years of downturn and you’re waiting for things to bounce back, the drag on people’s patience and emotions is really tough and much more problematic than just the cost cutting that had to happen a couple years ago.”

During those years Bennet often found himself on the phone with owners of their business facing such challenges as having to fire a friend or relative.

“I get calls from guys saying, ‘I need your advice. We’re under a cash flow press and I’ve shed all the workers that I can and I’m now down to family and I’m facing firing my brother-in-law. What do I do?’” he says.

At that point, tough business decisions have to be made.

“You have to save the business first, because if the business is saved and things get better then you can re-employ,” he says. “If the business dies, then you’ve got no chance.”

One of the biggest problems CCA deals with is assuring its independent retailers that it’s OK to ask for help.

“If you’re in trouble as a small business, the best thing you can do is ask for help earlier, because then there’s time to do some of the tough decisions and save the business,” he says. “If you wait until your balance sheet is totally upside down and you’re facing bankruptcy there’s very little that can be done.”

The other challenge CCA faced was market attrition. About a third of the independent retailers in CCA’s space have shut down over the last eight years.

“Our store count is down only fractionally,” Bennet says. “Now that the pendulum is starting to swing, people actually get under more cash flow pressure because they’ve got to invest in buying product as the business starts to turn up.”

Today, business is starting to turn around for CCA and its retailers. Some of them, however, are hesitant to invest in the business, to rehire people and spend money on advertising and marketing.

“It’s tough to cross that line because you’re worried about the next customer that’s going to come in the door or when the next downturn is going to be,” he says, “and you’re nervous about launching a new ad or hiring a new person.”

But that’s where CCA’s decades of experience come in. CCA tries to provide incentives, coaching and a sounding board for people who need to make those tough decisions. The message — the time is now to switch to offense.

“Their brain tells them, yes I should, but their heart tells them, I’ve just been beaten up so badly I’m not sure I can make that investment,” he says. “The market has definitely shrunk, but it’s time to start investing in the business and get market share and it’s hard for an independent guy to step across that line.”

Reinvest and branch out

The first step in getting CCA’s independent retailers back on track following the downturn was to have them reinvest in their businesses to take advantage of new opportunities in the market.

“You first start with people whose basic business is in pretty good shape,” Bennet says. “If somebody still hasn’t made the tough decisions, then you’ve got to make the right business adjustments to your expense model before you go making investments.

“If you’re dealing with a small business that has operated with some discipline, made those cuts and their basic business is in good shape, then you have to start investing in people and advertising to move forward. If the business is growing, then it might be time to push them into the next step, which is to open an adjacent business. If they’re even stronger, then you may suggest that they open a branch.”

CCA itself made similar moves to advance its brands over the years. CCA was originally Carpet Co-op of America. The first strategic change for the company was to move from a carpet co-operative to a floor covering business. What was originally the Carpet One business became Carpet One Floor & Home.

Today, CCA is making the next strategic shift, which is to spread out beyond floor covering into all aspects of the home improvement field, as opposed to filling only one part of it.

“We’ve moved into the kitchen and bath business with cabinets,” Bennet says. “We have a lighting business, and we continue to contemplate other additions to that. We’ll try to engage in anything that involves home improvement so we provide synergies and leads to our dealers, as well as synergies with the customer.”

When looking to break into new markets you have to ask yourself, what’s the value that you’re providing? As you answer that question you determine where you can add on.

“For us it’s a service equation,” Bennet says. “We’re in the customer’s home and we’re providing the service. What other products can you add to that? It’s the question of what do you do well and how do you do more of it rather than trying to add stuff that’s irrelevant to your business.”

Even CCA had to learn the hard way that going too far outside your core area is a difficult undertaking. A number of years ago it tried its hand at tuxedo rentals.

“It was out of our space,” he says. “You get out of your sweet spot and you’re operating a little bit more in the blind, and you bring less expertise and value. It taught us to stay close to home.”

It comes back to that core question of, where do you add value and what are you good at. You have to make sure you get honest answers to that question.

“When you go into a new business, make sure you’re leveraging things that might work for you,” he says. “Whenever it came to standing something up that was brand new because you thought it might fit, you have to second guess it. You can dream up things that you might add to any of those business structures, but if it’s outside of the core of what you do, you have to be careful.”

CCA keeps asking the question, ‘What do we do well and how do we add to that?’

“If it’s small business, it has to do with the home and we can provide scale, then it’s an open place for us to work and we’re always looking for those places,” Bennet says.

“The world of housing has gone through a lot of attrition, so as that bounces back we’re in a terrific position to pick up a lot of share, and being able to bolt on these different extensions of what we do is a lot of fun to work on. We feel better today than we have in five or six years.”

How to reach: CCA Global Partners Inc., (800) 466-6984 or www.ccaglobalpartners.com

 

Takeaways

Don’t be afraid to ask for help in a tough situation.

Make the necessary efforts to save the business.

When good times return, be ready to invest for the future.

 

The Bennet File

Rick Bennet

Co-CEO

CCA Global Partners Inc.

Born: St. Louis

Education: He has a degree in business from University of Central Missouri and a MBA from Washington University.

What was your first job and what did you take away from it?

I was a short-order cook for a little drive-in restaurant called Carl’s in St. Louis. I started working for Carl himself at 90 cents an hour. It was all about good relations with the customers.

What is the best business advice that you’ve ever received?

I had a mentor once say to me, ‘If it is to be, it is up to me.’ That stuck in my head very strongly, and I really believe in the power of self-determination. I try to impress that in our company. If you’re going to spend time trying to figure out how somebody else screwed it up, you’re not going to get anything done.

The second one is Peter Drucker’s advice, which was managing your strengths. So many people spend all of their time trying to correct their weaknesses. You have to know what you’re good at and what you love to do and leverage that. I try to live by that.

If you could speak with someone from the past or present, with whom would you want to speak with?

Abraham Lincoln.

If you were going to redo some flooring in your house, what product would you use?

This new product line of New Zealand wool is exceptional. It’s beautiful. I got out ahead of the launch and put some of it into my home, which we just remodeled. The brand name of it is Just Shorn, as in shearing a sheep. I love the distinctiveness of wool and the softness and warmth under your foot. It’s an exciting addition to what we do, and it’s a terrific product.

Dr. ‘Tim’ Stover sees Akron General’s well-care model as the way to shape up a sick-care industry

Dr. 'Tim' Stover, CEO, Akron General Health System

Dr. ‘Tim’ Stover, CEO, Akron General Health System

Dr. Thomas “Tim” Stover admits it hasn’t been easy paddling upstream, and he’s been doing it for years in the health care industry. Stover has been trying to convince hospital staff, doctors and the public that the solution to the health care crisis isn’t to spend less to treat sick people but to help them not to get sick in the first place.

Stover, president and CEO of the 5,200-employee Akron General Health System, has spent considerable time, effort and money trying to change its mission to a different side of the health care continuum — the prevention and wellness side.

“When you talk about trying to cut the costs or bending the cost curve in health care or in the sick-care model, the only real way to do that is to change it to a well-care model,” Stover says.

By Stover’s accounting, he and his team have spent about $100 million over the years to basically keep people out of the hospital.

“That’s not what most CEOs and hospitals are supposed to do,” he says. “The way we are paid right now is to fill the place up. We are dealing in a volume-sensitive industry, and we are trying to do everything we can to decrease the volume, but the sick-care model really incentivizes you to get sick or stay sick,” Stover says. “I think that is totally upside down. It is the wrong message to send to our community.”

The recently enacted Affordable Care Act has been turning the examination light on the health care system more than ever. While the ACA is designed to make health insurance coverage more affordable for Americans and reduce the overall costs of health care, confusion and anxiety have arisen over the interpretations of the law, and many critics are not convinced the measure will save expenses.

Here’s how Stover and Akron General Health System are taking a concept that goes against the grain — and gives the customer what he wants and needs.

Find a better way

Keeping expenses in line is a fundamental of basic economics. You have to judge whether your expenses are too high in light of your sales.

But Stover’s education and experience were telling him that there had to be a different and better way for the health system, which had revenues of $600 million last year.

As he saw it, the only way to cut costs or to bend the cost curve in the sick-care model is to change it to a well-care model. The next step was to consider what patients really need. There will always be a need for the sick-care model. But the well-care model is the wave of the future.

“In this area, the expectation for excellence in Northeast Ohio is a given by people who use our services,” Stover says. “So when people walk into any of our institutions, the first thing they expect is that they are going to get the best care that you can get in the country and pretty much they do.”

While researching the demand for treatment, the ability to analyze cause and effect brings dividends. Stover saw that the ax was falling on what government was going to pay for. Reimbursement was seemingly dropping on a daily basis.

“This effects how services are delivered because the demand is for you to deliver excellence on a daily basis. You’re getting measured on that and fined if you don’t do it [under the Affordable Care Act],” Stover says.

Drilling down even deeper into the challenge you face may expose some other realities. Stover saw the dilemma he was in and the frustration it caused.

“At the same time as you are trying to deliver that level of quality which is an expectation in Northeast Ohio, you’ve got to do it for a price that is less than everybody else’s,” he says.

Be creative about the buy-in

If you have decided to go in a direction that may rub people the wrong way, you are going to ruffle some feathers. You may have to convert everyone from the bottom up to follow your new idea.

Stover and his team use a “white coat program,” which involves shadowing a doctor. For instance, one of the local community board members will spend a day with a doctor to see first-hand what it takes to meet the challenges of 24 hours.

The experience was particularly successful with one board member who criticized how expensive it was to deliver health care.

“It seemed to him to be very easy to take cost out because there appeared to be a lot of redundancy with everybody checking everybody else multiple times to make sure everything was right,” Stover says.

The board member spent a day with a cardiovascular surgeon and observed a heart operation.

“He was fascinated by the fact that he said my nose was 6 inches from that woman’s heart,” Stover says. “He said, ‘The thing I realized that day was I looked around the room and there were 17 people taking care of that one patient. I also realized that you can’t outsource that business or that cost to China’ — which is what he did when he was operating his company.”

Another high-level hold-out was a physician who was the chairman of medicine, who was an infectious disease doctor. It took Stover four years to turn around the doctor’s approach.

“He said, ‘You are crazy,’ and, ‘This will never work,’” Stover says. “I made it a personal endeavor to convert him.”

To bring him around, Stover kept him engaged in the effort and showed him the results it was bringing. A particularly effective method was to add the doctor to a medical advisory board of 12 physicians that the health system had in place.

“I wanted him to hear what we were doing,” Stover says. “We were deciding about the programs we were going to put into our facilities, the equipment we were going to buy, why we were using one type over another type of program.

“Those were decisions he never given input on before; over time, what we were trying to do sunk in for him.”

Stover says when the doctor retired, he was one of the biggest cheerleaders for the health system.

“He said the best things that ever happened to Akron General were the health and wellness centers,” he says.

Have skin in the game

If people don’t think they have any skin in the game, whether it is tangible or intangible, there is no reason for them not to do just whatever they want to do, suffer the consequences of that and let someone else pay for them getting back in a state of wellness, Stover says.

So he narrowed his focus.

“This is not about the success of the Akron General Health System, but this is about the wellness of our Akron community,” he says. “The entity that should be doing that should be taking care of you when you are sick. It’s just that most health care systems don’t do that.”

By establishing wellness facilities that offer exercise equipment, physical therapists and rehabilitation nurses — and charging a fee to encourage commitment — outpatient services are blended with the lifestyle change service.

“We don’t charge a lot for the memberships,” Stover says. “Our Health & Wellness Center — West (Montrose) facility is full. It has 9,000 members. Of the members, 285 are doctors.”

While Stover has been CEO and president for 1½ years, he has been with Akron General since 1993.

“I just knew years ago that we needed to take health care to the patient — we should not make the patient come to us,” he says. “I think that’s arrogant. So I knew that was right. I had practiced for 30 years, and I was not from this system. I was from the other system so there was an immediate distrust of me for the first five years.”
However, the old adage that persistence pays off rang true.

“I just kept saying the same thing over and over again: ‘We’ve got to keep doing the right thing. We shouldn’t be afraid of this. We need to embrace this concept.’

At some point, people will start to listen, Stover says.

Unexpected benefits may be the reward for your persistence. Stover has been getting interest in the well-care program from all over the world.

“We can show them our model, show them the success that all of these facilities basically break even before year three; usage of all the facilities usually more than doubles, sometimes triples in the first six months because people have a choice where to go for therapy — and they choose us because it is convenient,” he says.

A for-profit partnership has been formed between Akron General Health System and a local developer that not only finances but builds facilities for other parties.

“We have business leads all over the country and actually at some point, we will be going to China because the developer has business leads in China,” he says.

“They are seeing the same thing. Their hospitals are full of sick folks. And they have to figure out how to keep them out.”

How to reach: Akron General Health System, (330) 344-6000 or www.akrongeneral.org

Takeaways

Look for and focus on a better way to do business.

Be creative about the buy-in once you have a plan.

Have skin in the game to ensure involvement.

 

The Stover File

Thomas “Tim” Stover, M.D.
President and CEO
Akron General Health System

Born: I was born in Wheeling, W. Va. I practiced medicine in Wheeling before moving to Akron in 1981.

Education: Bachelor of science and doctor of medicine degrees from West Virginia University. Stover completed internship and residency in obstetrics and gynecology in 1976 at Akron City Hospital. He completed business courses at The Weatherhead School of Management at Case Western Reserve University and at the Wharton School of Management before completing his MBA at the University of Tennessee in Knoxville.

What was your first job and what did you learn from it?

My first job was actually working for my dad, Harl ‘Ben’ Stover. He was a small-business man in the small town that I grew up in of less than 600 people. He ran a general store, and he worked on cars. What I learned from him was that he took care of the family with that business. If he wasn’t working, and doing the right thing by the customer, the people could drive to the big city and otherwise could get what they wanted. He taught me a lot about working hard. He knew the basics of business which were first to treat the customer right and then they will come back. That’s the way I feel about patients too.

Who do you admire in business?

The system that I admire, because I was a patient there, was the Mayo Clinic. It is an enormous system but when you interact with the system, it actually feels small. The staff pays incredible attention to detail. I had to go there for a very serious illness. The reason that it is successful is not just because of the medical expertise and the research, but it was how the clinic delivers service. The first thing that hit me was that they were nice people first, and then they were really smart. But they didn’t try to impress you with the fact that they were really smart first. They try to impress you with the fact that you actually meant something to them and that they were treating you the way that they would want to be treated.

What’s the best business advice you have ever received?

I heard a great line the other day: ‘Cash is king and profit is an opinion.’ I love that, so I’m going to remember it. I know exactly where that pertains. I know there is a way we take care of patients clinically, and then there’s a way that we get paid, and somehow they don’t connect but the chairman of my department when I was a resident told me if you take great care of patients, both clinically and with your personality, people will be able to pick that up and they will come back. If you are bringing your ticked-off personality with you to work, the patient senses it and the customer definitely gets it, and you really just need to leave that at home.

What is your definition of business success?

When I took this job as a doctor I thought I would be paying attention to the finances as much as I would be to the patient. Well, I was wrong about that. I am paying attention to the finances. But I still think that the proof of the fact that you’re doing it right is the ability to be sustainable. I think the measurement of success to me is that actually people come back.

 

 

Philip Rielly and Eric Hill give BioRx a shot in the arm to keep the company on a strong growth trajectory

Philip Rielly, Co-Founder and President, BioRx LLC

Philip Rielly, Co-Founder and President, BioRx LLC

For Philip Rielly and Eric Hill, the past five years have been a very different experience compared to most others in the business world during that time. While many companies were hunkering down, cutting back and fighting to stay in business, Rielly and Hill were nurturing the healthy growth of a young company.

In fact, in just the past three years they have seen their company’s employment and revenue double. Rielly and Hill are co-founders of BioRx LLC, a more than 200-employee national provider and distributor of specialty pharmaceuticals they started in 2004.

Hill, who is vice president, is located in North Carolina, while Rielly, who is president, is in Cincinnati where BioRx is headquartered. The company, now nine years old, has been exceeding expectations, and there are no signs of it slowing down anytime soon.

“Since 2010 we have continued our strong growth trajectory as we hoped that we would,” Rielly says. “We finished this past year north of $100 million in sales. We’ve been fortunate to launch a number of new semi-exclusive products with some of the different manufacturers.”

Eric Hill, Co-Founder and Vice President, BioRx LLC

Eric Hill, Co-Founder and Vice President, BioRx LLC

Since 2010, BioRx has become a prominent player in the Hereditary Angioedema space and a major player in the Alpha-1 antitrypsin deficiencies space.

“Some of the other changes since 2010 are we announced that we were going to be a semi-exclusive distribution partner for a firm out of New Jersey called NPS Pharmaceuticals and we opened three new regional pharmacy and distribution centers,” Hill says. “Those are in Boston, Scottsdale, Ariz., and San Diego, Calif. Those are three large investments for us.”

Needless to say BioRx has been doing the right things to remain on a growth track. Now Rielly and Hill have to keep it going.

Here’s how they have grown the company through strategic planning and developing the right partnerships.

Take advantage of growth drivers

When Rielly and Hill first started BioRx, they had a different idea behind specialty pharmaceuticals than most other national companies. While others were switching to a less personalized mail order model, Rielly and Hill saw an opportunity to offer a higher care model and focus on the patient.

Since seeing that opportunity they have been aggressively pushing the company forward.

“We’ve taken a bullish approach from day one when we set the company up, and we’ve been very aggressive with respect to adding new geographies and new regions,” Rielly says. “We’ve certainly added quite a few new account managers in the field, so we really focus our market on the four P’s in the pharmaceutical space with respect to customers.

“In the physician marketplace, we’ve expanded the number of representatives calling on the physicians across the country to open new geographies to where we’re now truly a national company.”

The biggest driver for BioRx at this point has been developing relationships with the different biotech companies and manufacturers.

“They’ve entrusted us with some of their new therapies,” he says. “In many cases we are just one of a handful of companies in the world who has access to selling these drugs. We’ve been very fortunate to be able to get those relationships.”

When a company is growing at the rate BioRx has, it is often easy to focus on one big area of growth and forget about other areas. That has not been the case with BioRx.

“This hasn’t been a one-trick growth pony,” Hill says. “We’ve purposefully and carefully invested in multiple strategies that have the opportunity to provide us growth. We’ve executed pretty well on all of them, but the key thing to take away is that we haven’t put all of our eggs in one basket in terms of our strategy to provide continued and sustainable growth for the company. It’s been a measured approach across many fronts.”

Over the course of the business as it has scaled, Rielly and Hill have continued to reinvest in it.

“We’ve taken every dime of free cash that we can find and judiciously invested that into both infrastructure to allow us to grow, but most importantly into infrastructure that provides that growth such as opening new markets, hiring sales people, adding new product lines and adding infrastructure,” Hill says.

“At the same time, we have to ensure that we’re not getting ahead of the company’s ability to finance it so we can maintain a robust and strong balance sheet, which is a business killer for a lot of small companies.”

While maintaining a strong balance sheet is one challenge of a growing company, there are many other obstacles that come along with growth. One challenge is hiring.

“Even with the unemployment rate at what it is, I would say that we still have a challenge finding and recruiting some of the very best people,” Rielly says. “We set a very high bar for the quality of folks that we hire. We’ve really had very little turnover, but with the continuous growth we’ve enjoyed, it is a challenge to continue to grab those folks.”

One strategy that BioRx has implemented is hiring people for an associate-level sales position and having them train with more senior employees to learn the ropes.

“It eliminates some of the risk down the road of having a bad hire,” he says. “We’re also working closely with some of the local universities. That way we have an in on recruiting down the road, and it’s a good way for us to give back.”

Another way the company stays on top of hiring challenges is to be on the lookout for great candidates all the time.

“It may not be today, but it may be three months or six months from now that we’ll need talent,” Hill says. “When the opportunity to hire somebody comes along, we need to already have a portfolio of folks we’ve been talking to. That dialogue helps gets those jobs filled quicker and with better talent.”

Develop strategies

Most of BioRx’s growth to this point has been organic growth. However, Rielly and Hill are always looking for the next partnership that will benefit the company and its patients. Last year the company made an acquisition to help it reach new customers.

“Coagulife Pharmacy is the only acquisition that we have done to date,” Rielly says. “Our strategy from day one has always been through internal growth and continuing to reinvest in new talent and organic growth. But Coagulife presented itself. That situation was a unique opportunity for us to add a different skill set.”

Coagulife deals specifically in the hemophilia space. Many hemophilia patients have target joint bleeds and what ends up happening is many of them require an orthopedic procedure down the road. Many of those can be avoided or helped with some type of aggressive physical therapy, which is what Coagulife offers.

“So we’re rolling out a national program that is very specific to physical therapy and exercise regimens,” he says.

A large part of BioRx’s ability to find strategic partners and develop those relationships is because the company makes it a priority to plan for those kinds of things.

“You have to have a plan, but also the wherewithal to follow through on a plan without respect to different challenges that come up,” Rielly says. “Whatever the long-term plan is you have to stick with it and keep going forward even when it doesn’t feel comfortable from time to time.”

BioRx thinks of strategic planning in the two-to-five-year range.

“The easiest thing for us to plan is organic, new market openings and sales infrastructure growth by prioritizing the markets we believe have opportunity in each of our business units,” Hill says. “Then it’s just budgeting out the velocity with which we can deploy capital and money to put those people in place to enter and burst into new markets for us.”

Rielly and Hill constantly talk about the next five markets the company is going to crack into with a new therapy or a sales rep to put an operating unit in place.

“We’ve done a good job of sticking to that,” he says. “We kind of know where our next five, six, seven, or eight investments are going to be and in which business units we want to be plunking those bets down.”

During the strategic planning process you have to be willing to think about some far-fetched goals while also being reasonable about what can be achieved in your plan’s window of time.

“Dream big and shoot for the stars, but be realistic with respect to what it’s going to take to achieve those goals,” Rielly says. “Be realistic with how much capital it’s going to require to get from point A to point B. But don’t be afraid to dream big and swing for the fences.”

The key to achieving goals set forth in a strategic plan is having a great team around you.

“If we have done anything, we have hired a fantastic management team and our bench strength is pretty deep,” Hill says. “I think either one of us could get hit by a bus tomorrow and the company wouldn’t have a whole lot of issues. We have managers and operators that we turn loose to let them earn their stripes. Those guys know where our next bets need to be.”

How to reach: BioRx LLC, (866) 442-4679 or www.biorx.net

Takeaways

Determine your growth factors.

Develop strategic partnerships to help expand.

Have a planning process for the future.

 

The Rielly and Hill File

 

Philip Rielly

President and Co-founder

BioRx LLC

 

Eric Hill

Vice President and Co-founder

BioRx LLC

 

Rielly: Born in Cincinnati

Rielly: Education: Graduated from Spring Hill College in Mobile, Ala., with a BS in business communications.

Hill: Born in Bassett, Va.

Hill: Education: Graduated from Wake Forest University with a degree in psychology.

How did you first meet each other? And why did you start BioRx?

We both met working for another national company. We saw the trend of many national companies going to a mail order model with less personalized care, and we felt that we could create a market by going with a higher care model.

What has been your favorite thing about growing BioRx?

Rielly: The most rewarding part is building a team and watching the team grow. We’re making a very positive impact on the lives of each of the patients in which we touch and there’s not a week that goes by that we don’t get a patient testimonial about the ways our team members went above and beyond. I find that extraordinarily rewarding.

Hill: It is awfully refreshing to wake up every day knowing that we get to set the direction. It’s a lot of fun being in an entrepreneurial environment and getting to spread that spirit around the organization.

What excites you both about the future of BioRx?

Hill: I’m excited about the fact that sooner than later we are going to be a $200 million company. We also have a new drug launch happening and it has the opportunity to be a significant sea change in both the lives of the patients that we’re treating and the marketplace for one of our operating units in a way that’s transformative.

Rielly: In the last few months, we’ve aggressively hired and opened new geographical territories and I’m excited to see the initial successes. We have the best team in place that we’ve ever had and I’m excited for them to achieve their personal goals.

Tim Smith faced a big challenge at Verizon PA/DE, but he had the confidence and track record to win over the skeptics

Tim Smith, region president, consumer and mass business markets, Verizon PA/DE

Tim Smith, region president, consumer and mass business markets, Verizon PA/DE

When Tim Smith arrived to lead Verizon’s Pennsylvania/Delaware Operations, he found a group that thought it was performing quite well both from a metrics perspective and in the way it served its customers.

Unfortunately, the data Smith had reviewed painted a different picture of what was happening in the PA/DE region of the $115.8 billion broadband and telecommunications company.

“The challenge I had was taking a group of individuals that had a lot of tenure, with most of them having been in their positions for more than 10 years, and convincing them that they really weren’t as good as they thought they were,” Smith says. “We had a long way to go to provide a compelling service experience.”

Smith was in the midst of a transition from Verizon’s vice president of operations in Florida and Texas to his current position in Pennsylvania/Delaware.

“I had come from an environment in Florida and Texas where, when I left, the operations budget was $4.5 million under budget,” Smith says. “When I came to Pennsylvania/Delaware, they were $7.8 million over budget.”

These numbers were clear evidence of a problem. But when Smith met with operations directors and later with his sales directors in the 3,100-employee region, he sensed very little energy to get things turned around.

“I said, ‘Do you believe that you can get better?’” Smith says. “And they said, ‘Well, yeah, but we’re No. 1 on this and No. 1 on that.’ I looked at the numbers and said, ‘You may be comparing yourself to a certain part of the region. But if you look at this team nationally, you’re not No. 1. That may come as a surprise to you, but you’re not.’ At that point, you could see the expression on their faces change a little bit.”

It was becoming clear to Smith that he had a tough job ahead of him.

Get people actively engaged

As Smith emerged from his first meeting with regional leaders, he felt he had to take immediate action.

“The first thing I wanted to put in place was for them to work with a sense of urgency,” Smith says. “The numbers were decent, but they weren’t where they needed to be or where they could be.

“I talked to them about how they needed to work with a sense of urgency and mapped out where I thought we could be both on the service side and on the expense side and then eventually on the revenue side so we could turn the margin picture of Pennsylvania/Delaware around.”

With that initial message conveyed, Smith then wanted to speak to everyone who worked in the PA/DE region and make sure they understood what he was trying to do.

“I wasn’t just dealing with my direct reports,” Smith says. “I had to make sure the messaging that I wanted filtered down into the organization and got down to the technician level so that they really understood what was going on.”

To get that message across the way he wanted, Smith gathered the directors to develop a new mission statement that had proven effective for him in the Florida/Texas region.

“I changed just a little bit of it so that it fit exactly what was going on in Pennsylvania/Delaware,” Smith says. “I worked with the directors because my philosophy around how I lead is I want to make sure that the team is involved in everything I do. I don’t just create something and throw it out there and see if it sticks and then move forward.”

Smith didn’t want it to be his mission statement. He wanted the directors to take ownership and feel like it was a mission statement that spoke for the entire group.

“I brought in the directors, gave it to them and said, ‘How can we change this to make sure it really fits what we’re going after?’” Smith says. “‘What are our goals? What do we want to do? Do we want to be best in class? If we want to be best in class, how are we going to do that? How innovative is this team? How innovative have we been?’”

Smith talked about innovation, culture, competition and revenue. He wanted to drive home the message that eventually, complacency would lead to bigger problems.

As a means of continuous reinforcement of the mission statement, Smith made sure the statement was always visible to his team.

“I put together a mission statement that I wanted everyone to put in their cubicle, their office and in their garages,” Smith says. “I sensed that if my direct reports were complacent, then there was no question the rest of the team would be that way as well.”

Making the tough call

Smith had offered some tough feedback to directors in the region about their performance. But it was about to get even tougher when he came to the realization that the team needed an overhaul.

“I came in and within the first 30 days that I was here, we reduced almost 400 technicians and a director,” Smith says. “We called it an ISP offering, an income security plan. It allows individuals in the business to elect to leave the business if they so choose. We sweetened it with a pretty good chunk of money. Not only did they get their years of service, but they also got a huge stipend to leave the business.”

It was obviously a difficult decision to make, but Smith felt it was the right call to get things turned around in the PA/DE region. It also made it clear that the status quo was not going to be acceptable.

“I had to be really self-confident in the decisions I was making when I came into this job,” Smith says. “And that had to be really consistent with my values and my belief system. You need to trust that gut instinct that you have to make the right decisions. I didn’t have a whole lot of folks that were cheering for me to do the things I did or make the decisions I made.”

If he did not produce any results, Smith would face a lot worse than the lack of cheering and he understood that. But that confidence he had in his leadership abilities, and the knowledge that he had done it before and succeeded, kept him moving forward.

“I had to show them I could get results and I had to show them I could do it in a relatively short period of time,” Smith says.

Implementing change

Smith’s goals were to cut expenses, improve customer experience and energize employees to work as hard as they could for the company and its customers.

One of the key metrics Verizon looks at is the meantime to restore high-speed Internet due to outages from weather, equipment malfunctions or other problems.

When Smith arrived, he was coming from the best-run operations region in the nation. “We were running in Texas and Florida right around 30 hours for restoral,” Smith says. “In Pennsylvania/Delaware, it was around 56.”

There were other metrics in which PA/DE was way behind as well. And Smith set out to create a sense of accountability at every level of the region.

“I taught them how to look at what I would consider the numbers or the metrics and put together action plans that really drove those numbers where we wanted to go,” Smith says.

As he looked at the team and who knew how to do what, he discovered that some people weren’t trained in all that they needed to know.

“They had groups of individuals that just focused on one piece of the install,” Smith says. “I said, ‘We can’t do that. We need everyone to be accountable for every install every time.’ So we changed our philosophy.”

The key to making this type of improvement work is listening to your team and working with them to bring everyone up to the desired level.

“I have a call with my directors and second-line managers every Friday,” Smith says. “It’s not a call I beat people up on. It’s a call where I hold them accountable and we talk about the actions they had taken the previous week and how those actions either helped them or didn’t help them.

“If it didn’t help them, now I’ve got the team on the call to help them so they can improve the next week. Leaders need to excel at giving feedback and it has to be quantitative feedback.”

Smith says the efforts of the team have paid off in a big way for the company, the region and its customers. The budget has been trimmed, everybody has clearer goals and the end result is actually less work that now needs to be done.

“When I came in here, the amount of work we had every day was more than double what we have today,” Smith says. “Once we reduced it down, we were able to provide a more compelling service experience for our customers. We improved our business meantime restore by 49 percent over the past two years and reduced our overtime by 31 percent. So it speaks to the quality of life our employees now have.”

How to reach: Verizon,  www.verizon.com

Tim Smith

region president, consumer and mass business markets

Verizon’s Pennsylvania/Delaware Operations

Born: Fort Wayne, Ind.

Education: Bachelor’s degree in business administration, Indiana Wesleyan University.

What was your very first job and what did you learn? Danny’s Pizza Shop. I was making $1.25 an hour. I didn’t live close to the pizza shop, so I had to get up and catch the bus because I wasn’t of age to drive. It taught me discipline. I wanted to sleep in, and I couldn’t sleep in because I had to catch the bus. If I missed the bus, there was nobody at home to take me to work.

Who has been the biggest influence on your life?  My parents always instilled in me a good work ethic. I watched my dad work, and I can’t remember my dad not being at work through the week, other than vacations. Even a few hours on Sunday, he would go in. My mom was the same way. I watched them do the best they could to make ends meet for our family.

What one person would you like to have met? Martin Luther King Jr. It is not because he’s an African-American, but it’s the vision he had for America. Most people have a hard time creating a vision for their own life or household. When I look at my job here at Verizon, I want to make sure I have a vision for not only growing revenue, margins going up and expenses going down, but there are more than 4,000 individuals that count on me to make the right decision. I don’t take that lightly. Meeting a person like Martin Luther King Jr. would just help me even today to solidify the vision that I not only have personally, but it would also help me in business as well.

Takeaways:

Be confident in yourself.

Think before you act.

Instill accountability.