We’ve all had days where we would rather not open the newspaper, turn on the TV or pick up the phone for the fear of learning about more bad news.
Unfortunately, there have been a lot more of those days for all of us lately.
The stock market is going through extreme ups and downs, capital has dried up, and key customers are cutting back. You start to wonder where the sales are going to come from to enable you to make this quarter’s budget. If things don’t turn around soon, you’ll have to consider drastic cutbacks yourself.
In times like these, what’s a CEO to do? The answer: Get back to basics. Focus on the things you do best and do them as efficiently as you can. Use your strengths to exploit your competitors’ weaknesses and outhustle them.
It’s often the simple things that made you a success in the first place, and it will be the simple things that keep you afloat during the economic storm.
With that in mind, we’ve assembled the best pieces of advice garnered from Chicago’s top leaders from throughout the year. We think you’ll find some great ideas to help you improve your business within these pages, and we encourage you to keep this issue as an ongoing reference to help you find your way through the trying times that lie ahead.
Swing for the fences
Selim A. Bassoul, chairman and CEO, The Middleby Corp.
You probably don’t want to listen to anything that Selim A. Bassoul has to say.
Sure, sure, the guy has a great story to tell. And nobody sums up the turnaround by The Middleby Corp. in 1999 better than Bassoul.
“We had very limited resources and capital, we were running out of cash, we were very highly reliant on three customers that generated more than 60 percent of the sales,” he says. “We lacked innovation, and the products we were generating or creating were very me-too products. ... Roughly 30 percent of the orders were not shipped on time, so we had a case study of a lousy company.”
But the turnaround that Bassoul, Middleby’s chairman and CEO, made is a lot to handle. He completely refocused his company almost overnight, slashing nearly 30 percent of Middleby’s sales to focus on new directions.
The key mindset needed to change like that? The willingness to find one or two market differentiators and take a big swing.
At the core of this process is a willingness to pick up on things beyond what people are complaining about by listening to the current state of their business. At Middleby, for example, Bassoul sat constantly with people who bought his competitors’ products and listened to their take on the market. He heard two things in restaurants that might not seem directly related to his business. One, restaurants were cutting back on costs; two, the trend of casual dining out was growing every day.
So Bassoul decided to build the brand up around more casual dining — going so far as to make that brand global — and put all of Middleby’s engineering focus on the innovation required to make energy-efficient ovens.
Both moves were completely different than anything that Middleby’s competitors were doing — and that’s exactly the point.
“When you look at our competitors, they are still trying to change knobs,” Bassoul says. “... We’re working on huge disruptive technology, we’re working on plasma TV versus tube TV.”
As a result, Middleby has been growing its international business by double digits annually, and customers have been pretty interested in the more efficient equipment, as it has helped push the company beyond $500 million in net sales.
Make the tough decisions
Daniel Hamburger, president and CEO, DeVry Inc.
Daniel Hamburger and DeVry Inc. had never hit a bump before the holding company for DeVry University suddenly slipped from net income of $52 million in fiscal 2004 to $18 million in 2005. When it came time to address what had caused the bump, Hamburger put everyone into full turnaround mode and led growth initiatives. Part of that process meant that Hamburger had some tough personnel decisions to make about whether people were still the right fit for the company and its new growth.
“There are situations where somebody did a pretty good job, but they are really not the right person for the challenges going forward, so maybe there’s a better role for them,” he says. “Those can be a little bit challenging for all of us as leaders because it’s easier when the person is a poor performer or if they are pretty good but in some way they didn’t live the values of the organization or just did something wrong. But the tough one is you know they are doing some things really well, but, hand on your heart, they’re really not the fit. If that job was open, and they were one of the candidates, you wouldn’t hire them even though they’ve been around for a long time.”
Hamburger doesn’t profess that his heart-check method is unique to him, but it was adapted by his team at DeVry to make sure the staff was ready for growth.
“I’ve used that many times to challenge people where they’ve been struggling,” he says. “And you just kind of see their body language and they just go, ‘You’re right, you nailed it, I wouldn’t hire this person if it were open. So you say, ‘OK, now we know where we need to go to help that person make a transition.’”
Working through tough decisions like that, DeVry improved to $76 million in net income on $934 million in revenue in fiscal 2007.
Trimming the fat
Selim A. Bassoul, chairman and CEO, The Middleby Corp.
It’s never easy letting people go, but it’s worse to let a bad person bring your company down. In his push to take Middleby Corp. from its $100 million plateau to more than $500 million in sales, Selim A. Bassoul addressed those tough personnel decisions honestly and fairly to help his company turn around.
With all due respect to Jack Welch, Bassoul went beyond just looking to cut his bottom 10 percent.
“Most people talk about, ‘Oh this person is not performing; we take out 10 percent of the nonperformers,’” he says. “Of course, if they’re not performing, you should take them out, but it’s tougher to take out people who are performing, but they are whiners.”
So whom do you take out besides the nonperformers? Four personalities Bassoul describes as the whiner, the sniper, the passive-aggressive and the contaminator. Fittingly, the names of all four tell you what you’re looking for.
“The whiner is the person who every day whines about everything,” Bassoul says. “‘The weather isn’t good; the coffee isn’t good.’ The sniper is the person who snipes at everybody else. ‘I can’t do my job because accounting didn’t give me that’ — they have to go. The passive-aggressive can tell you everything you want to hear, and then a month later, they’ve done nothing. And then the contaminator: Those people have a history in the company. They are smart, but they use that to build arguments to prove you’re wrong instead of working to make it successful.”
Cutting those people will leave you with only employees that Bassoul refers to as game-changers and plug-and-play people — employees that are autonomous and self-driven. But that still might not take away the sting from managers who have to deliver the bad news. At Middleby, Bassoul helped take the burden off his leaders by padding the company’s severance package. Today, the company gives people one month of severance pay for each year they worked at the company.
“It took me a long time to convince my board that (good severance pay) needs to occur because then you free people to take people out,” he says. “A lot of people expect managers to fire people and give them one week per year. You know what, nobody is going to do much unless they are forced to because they feel guilty.”
Bob Graham, regional managing director, Merrill Lynch & Co. Inc.
Bob Graham understands that it’s all about his people. But when you have a lot of people — and in his role as regional managing director for the Illinois-Wisconsin and Northern Indiana region of Merrill Lynch & Co. Inc., he has more than 1,000 employees — it can be hard to have time to talk with all of them.
“You can’t be all things to everybody,” Graham says. “However, you have to recognize there are key people in every location that have key people attached to them.”
Graham says those people tend to show themselves to you. If you take the occasion to spend time with everybody at a location, you can see who is passionate about and accurate with the mission.
“Identifying who they are goes a long way in extending who you are,” he says. “I can’t spend all time with everybody, but I do spend more time with larger producers and certain pockets of people.”
As you identify those people, they can act as your testimonial. And the more effort you make to improve your relationships with employees, the more of these advocates you’ll have.
“I have a whole cadre of people who are turning 40 and celebrating their 15th anniversary, and I hired them,” he says. “So these are folks that have impact, have loyalty. They’re advocates, and they’re out there validating or diffusing perceptions.”
Hire team players
Ted Phillips, CEO, Chicago Bears Football Club Inc.
The cover of a football team’s press guide may be a picture of a quarterback, but the daily blocking and tackling of everybody on the field is what makes the team successful. Chicago Bears Football Club Inc. CEO Ted Phillips looks at his team on the inside the same way. And that starts with scouting the right team members.
“Everyone always talks about the right fit, and you want people who can check their ego at the door and be truly team players,” he says. “... That makes your team more cohesive and better in the long run.”
The key to finding talented people who can check their ego at the door is in letting them tell their story. Bring them in and ask them to talk about their accomplishments. As they talk, hear what they are saying to see if they’re interested in moving forward the daily tasks of the team or if they are a needy, me-first wide receiver.
“Some of it is how they answer questions during interviews,” Phillips says. “As they are talking, are they using the I language about everything that they did or are they talking about how they added to the efficiency or the overall good of the company or the department that they were working in previously.”
You can’t do all the hiring yourself, of course, so make sure that this hearing test is being administered by your direct reports as they hire.
“I try to instill that in my direct reports when they’re hiring people,”
Phillips says. “You tell them to be alert for red flags that go up in someone’s personality. Are they being arrogant; are they talking too much about themselves?”