When she finished speaking, she invited anyone who wanted to sign up for the new plan to head back to the office and sign their name on the common area wall under the strategy. When you walk through that area, hundreds of signatures adorn the walls.
“You can have a strategy and set out goals and set out metrics, but if you don’t have accountability to hitting those goals and people truly taking ownership of their area, then it’s never going to come to fruition,” says Albanese, president and CEO of the company, which specializes in shipping critical freight.
The first step to getting people on board with your goals is to communicate the end destination.
“Think of it as going on a journey,” Albanese says. “If we say we’re going to go to Rome, then we all know we’re going to Rome — we can all plan to go to Rome, we can all pack for Rome, and we can all figure out how to get there. If we said Europe, and some people think we were going to Rome, and some people think we were going to England, and some people think we’re going to France, we’ve got people going in different directions. The idea is to get everyone to realize that we’re going to Rome, and that’s the destination in mind.”
Even when you communicate what the goal is, you’re going to encounter resistance to that plan. Albanese likes to include those people in the process and tries to get them “unhooking from the past and looking to the future.”
“To me, it’s involving people — showing them why it’s a great idea to go to Rome, and that England wasn’t a good place to go this time,” she says. “Show them what’s in it for them — that’s really important.”
After you’ve spoken with those people, if they still don’t want to get on board, recognize that it’s OK and part ways. With those who are left, you have to empower them to get there.
“If you can paint a picture of the future for people, and you can give them a good focal point on the destination in mind, then you don’t have to keep telling people what to do,” Albanese says. “They get it, so ... I don’t need to tell people how we’re going to get there — whether it’s by a car, by a truck, by a plane, by a boat. If they know where they’re going, people can figure that out.”
To make sure people know where they’re heading, Albanese encourages employees to boil the strategy down to what she calls the 30-second, elevator speech, meaning if someone asked about it in an elevator, you could tell them in that short time period what it meant to you.
“The only way you can really know is by asking people to talk about the strategy,” she says. “Tell me, what do you think the strategy means? What does it mean to you? How are you going to live it? What are you going to do within your job to help the strategy? If they can verbalize back to you what they’re going to do or what it means to them, then I believe they got it. If they can’t, that’s a problem, and we have to look at other ways to communicate it, or we haven’t been clear, and we have to find those things out.”
To make sure everyone can internalize the strategy, Albanese uses a variety of communication strategies.
“You have to communicate in many different ways,” she says. “My undergraduate degree is in education, and one of the things I learned a long time ago is some people learn by reading things, some by hearing things, some by seeing things.”
Albanese uses large meetings, small meetings, a magazine, weekly video messages and monthly sit-downs with a handful of employees, called “Visits with Virg.” Continuous communication helps educate employees, makes them feel part of the process and moves the company forward.
“When people don’t understand, and they haven’t had the communication, that’s where I see people going off the path and doing their own thing or becoming disengaged, and the longer you keep people in the loop, people want to be in the know. They want to know what’s going on, and they want to feel a part of it.”
HOW TO REACH: FedEx Custom Critical, customcritical.fedex.com
Michael B. Romano realizes it’s not enough to simply know where you’re heading in business.
As president and CEO of Associated Material Handling Industries Inc., he’s learned that everyone working under him also needs to know that direction because if everyone understands the ultimate goals, then they can work collectively to achieve them. He equates it to a basketball team where everyone plays a different position, but if everyone plays their position well, then the team wins.
To ensure equal playing time for his employees, he works with members of his management team to create a vision for the organization and then allows them to develop ways to achieve it. He says that if he mandated everything, nobody would care about those things. But by creating solutions themselves, employees are more inclined to get things done at the material handling storage company, which posted 2007 revenue of $117 million.
Smart Business spoke with Romano about how to effectively create a vision for your organization and get everyone playing on the same page.
Create a vision. You first have to look at what is the purpose of your organization. The vision should answer, ‘What is the need an organization is trying to address? How is your organization differentiated? What makes it unique?’ Then you should consider and address, ‘Who are the beneficiaries of what you do?’
There should be a purpose statement, which basically says what the organization seeks to accomplish, why does it exist, and then there should be an activity description — what exactly is the business? Many companies get sidetracked and get involved in unproductive activities because they’re working outside their core competencies because they haven’t truly defined what their business activity is.
Then, beyond that, the mission and vision should include and consider the cultural values that you find important and that you would like the organization to hold in common and endeavor to practice. That would begin to establish your culture.
The vision can be categorized in those three areas — the purpose, the business and the values. If someone thinks in terms of those three areas and answers some questions in those three areas, that’s when they start getting their hands around their future vision.
Revisit that vision. I and our organization must embrace our strategic planning process. It starts with setting a vision and mission for the organization. It then goes through evaluating the environment in which we operate, both internally and externally.
We do this every year, and then, based on opportunities that we feel we have in the marketplace or possible shortcomings, we develop initiatives that drive individual departments to develop their own goals and strategies to fulfill those.
Visit that every year and challenge it. We may tweak our mission statement based on things that we’re trying to stress. That’s actually done at the beginning of our planning process because we want to make sure that the plans we then develop the following year are allowing us to constantly work toward that vision that we’ve established.
Get buy-in. It’s not only my vision but the vision of executive management, and, if we’ve done it right, the vision shared by all employees.
The key is to make sure that everyone in the organization, from technician to general manager, are in the process, so they’re bought in to the process, they feel they have contributed to the development of the plan, and they fully understand their role in the execution and the success of the plan. That is fundamental to the whole empowerment.
We bring the planning process all the way down to the individual through the performance review process. The employee is reviewed every year on how they perform relative to their contribution to their department’s plan.
Every employee within a department knows not only the department plan but their role in it. At the end of the year, that’s ultimately how they’re judged.
It goes back to the buy-in. These are not top-driven. The vision is top-driven, but the rest of the plan, all the way down to the department level, is developed by those people, so that’s the key — their involvement.
Review employees. The employee performance review is simply an embodiment of that department’s goals and strategies, so when an employee looks at their review form, they see their department’s goals and strategies.
A manager is supposed to review all of those with them and agree as to what areas they’re going to be involved in. What is their role? Those areas are then marked as applicable, and that’s what the employee gets reviewed on the following year.
That employee review process is what creates the employee traction with the planning process because it forces the manager to review the goals and strategies for their department and to make sure the employee knows their role in the execution of the plan. You then let a good employee, who has the basic skills and capabilities, go out and do the job and make decisions and receive coaching and mentoring when they need it. ...
If they understand what they do [and] ... what their department contributes to the overall organization, all of a sudden, they feel a part of this. That’s what it’s all about — creating that inclusion-ary environment.HOW TO REACH: Associated Material Handling Industries Inc., www.associated-allied.net or (877) 628-9705.
Pam Sessions has been an entrepreneur and enjoyed working from an early age.
As a 7-year-old, she hosted mini carnivals, and by age 12, she was ordering candy as if she had a real store. She says she loved working and felt she was wired to do so because she enjoyed making people happy and providing them with something that they wanted and for which they were willing to pay.
That love for work and an entrepreneurial flare stayed with her as she and her husband, Don Donnelly, founded home-building company Hedgewood Properties in 1985. In 2006, the 70-employee company posted revenue of more than $100 million, and Sessions’ leadership as co-owner and president is being tested as the company faces the steep housing recession.
Smart Business spoke with Sessions about how to alleviate uncertainty when your company is facing tough economic times.
Communicate. What people fear the most is uncertainly. There’s such an important need to keep strong and consistent interaction and communication, so you don’t have uncertainty lead to rumors, lead to fear, lead to who knows what from there.
It’s humbling, and it’s important to be completely honest. Although we can’t give them certainty as to what the market will do, we can let them know the strategies, the effects and the impact, and not just talk at them but include them and get their feedback and opinions.
At the heart of how everyone listens is, ‘How does this affect me?’ Be sure that you’re speaking to them and you’re able to walk in their shoes and understand what their concerns are, what their uncertainties are and be confident. It’s so critical to be confident, to be courageous.
If you have self-confidence, you can instill it in others. It’s building partnerships and maximizing the energy. In times of uncertainty, leadership is even more important, so it’s not having all the answers and needing their input to make good decisions but still exhibiting confidence.
Hire great people. It’s times like these that highlight the quality and spirit of our people. You see clearly what your culture is about and the character of your company. It’s all about your people. It sounds trite, but it absolutely is the difference.
We look for more than just the job skills. It’s important to hire people with positive attitudes and creative thinkers.
We have a testing process that is behavior-driven for compatibility of that job and to help us understand how to bring out the best in that employee. We like to meet people’s family, if possible, because a job isn’t just a one-person factor it affects the whole family.
Then it’s just a matter of asking the questions that matter to you most and getting people to talk to you. ... Ask open-ended questions that enable people to open up.
When you hire people that share your philosophy, passions and principles, you are working within a trusting environment, and when you are in a respectful environment, all ships rise. Everyone learns that respect for each other is part of the culture. It definitely can provide a more trusting atmosphere.
Be in it for the long term. Make the commitment to a long vision. The decisions that are made short term are not always the most impactful.
Think about where you want to get and all the smaller impacts that are necessary to get you there. You have to hone down, refine and make as efficient as possible everything that you are today just to survive.
It’s important to not fall into the trap of being myopic. You have to stay in the broader world and be aware of what’s happening, changing trends, changing demographics, population trends everything that influences tipping points and social changes.
It’s not just about your business. Your business is interconnected with everything else that’s going on in the world, so it’s looking at that for logistical reasons but also for inspirational reasons.
Having a long-term focus helps you get through the day to day.
Solicit input. When you work in a participatory style, you’re working together, you’re communicating, and everyone has an important role in the process.
Don’t call a meeting to discuss things. You’re just out amongst your people all the time. You’re talking, and it’s casual and comfortable, so it’s not intimidating because you’re doing it all the time.
People still look to you, as the leader, to be the decision-maker, but they know their voice matters. They continue to give good advice and good consult because they know it does matter. They see that you’re taking in their input and understanding that perspective, and your decisions are influenced by that.
Do what’s right. Make those sound decisions to do what you believe to be right all the time, even in times of conflict, even times of temptation. Take that high road, do what is right and make good, sound decisions in that spirit. Just do right by people.
Leadership is over time I don’t think anyone is an instant leader. Over time, it’s those little pieces one happy customer, one great partnership, or one loyal employee, all of those things where you make decisions and little rewards add up to a successful business.
It’s that same commitment, even when there’s apparently nothing in it for you.
HOW TO REACH: Hedgewood Properties, (770) 889-3667 or www.hedgewood.com
“Despite being well-to-do and all that, the reason I admired him was he embodied the people focus of the business,” Choate says.
When Choate was 12, he began cutting Smith’s massive lawn. Some days he got more than a sweat-filled workout when Smith would come home for lunch and he and his wife would sit and talk with Choate.
“They would take time out of their day to talk to a 12-year-old kid, and then going forward with advice, with coaching and showed an interest,” Choate says. “I’ve never forgotten that.”
The care the couple showed made Choate continue working for them through his teenage years.
“I enjoyed learning from them,” Choate says. “He was a very successful businessperson who didn’t let it go to their head. So many people let it go to their head, and egos run amok. If you can be successful and yet keep grounded in what got you there and the people that got you there and faith in God, I think that’s what I admire most.”
Now as founder and president of Choate Construction Co., he tries to emulate the behavior he witnessed as a child and the care he experienced as a teen with his own people. He says that people are critical to success, so if he doesn’t get the right ones and then motivate them and respectfully help them improve, then they’ll become complacent. If that happens, then his business stops growing, so it’s crucial to maintain that people focus.
“Our No. 1 production units are human beings, our professionals,” Choate says. “You have to stay close to it.”
Hire the right people
Choate evaluates potential employees on a few characteristics. He obviously wants people with integrity, but he also wants candidates with solid people skills.
“Everyone is basically in sales because everyone is trying to get someone to do what they want them to do,” he says. “How good are they at persuasion? How good are they at getting people to want to help them?”
He also looks for people who have the ability to eventually make good decisions on their own and exude intelligence.
“Basic, innate intelligence means the capacity,” Choate says. “That doesn’t mean experience right off the bat, but intelligence is the capacity to learn and develop.”
On top of those, he wants people with experience. Despite knowing what he wants, actually evaluating these attributes can prove difficult.
“Anybody can look good in an interview,” Choate says. “They key is to just ask. We try to develop some intuitive questions that we can ask people and gauge their response.”
For example, he may ask questions surrounding personal ethics or those of the company, such as what the person would do upon receiving confidential information not intended for him or her or if he or she received a payment greater than necessary.
He also asks about hobbies, interests and passions to gauge the intensity of the response and the candidate’s verbal expression skills.
“After all, 90 percent of our success comes from the ability to communicate one’s message, need or request,” Choate says.
Despite background checks, psychological analysis and having multiple people interview, in the end, he says, it simply comes down to those little voices speaking to you in your head.
Once, when Choate was interviewing people for an assistant position, he thought one candidate was energetic, sharp and just excellent all around. Despite all this, something just seemed a little off with either the person’s character or sophistication level. Whatever that something was, he brushed it aside and told himself it was trivial.
“I brought the person on and wish I had given the little indication more credence than I did because it turned out to be true,” Choate says.
He says that many people brush off their gut instincts, but those are some of the most important feelings you should use when hiring people.
“Trust your instincts, and don’t just gloss over what seems an insignificant indication really analyze that and explore that a little further before you make that final decision,” Choate says.
If you truly can’t make a decision about how important a vibe is, have one or two other people also interview that person and get their input.
Throughout interviewing and the feelings you get about different candidates, Choate also advises to not move too quickly. By hiring the assistant he had a red flag about without fully exploring it, it cost him time in needing to hire someone else.
“Typically, a manager is looking to bring someone on because we’ve grown or are expanding, and we have a definite need, and, usually, that need is now,” Choate says. “The temptation is almost to want to subconsciously have that candidate be successful because that takes care of the immediate need. ... Don’t let that be the overriding influence. Even though it makes sense now, in the long haul, it’ll cost you.”
Motivate your team
When one of Choate’s managers came to him expressing that he was in a rut and needed to be invigorated, Choate knew he had to recommit to motivating his people to ignite the sparks in them.
“You have to keep people enthused and pumped up,” Choate says. “Otherwise you’re not going to get the maximum return.”
Enthusiasm starts with you. Choate passes along his excitement for his people by calling each of his 450 employees on their birthdays to wish them a good day.
While time-consuming, he says it’s an investment in them and sets an example for his managers.
“Show people what they have to do,” Choate says. “Enthusiasm is infectious. I’m a type A, and I like to go after things with as much gusto as I can, and I like my managers to do the same thing. You meet with people and talk to them, and they’re all different characters and personalities, so not everyone is going to be overtly excited and running through the walls. There’s quiet personalities, but even quiet personalities, in their own way, get pumped up and enthusiastic.”
One way to get people excited is to give them control of part of their destiny by providing a base salary and making part of their income tied to their performance. This incentivizes them to work harder to reach those additional financial rewards and shows them how their work affects the business.
“People realize their position, and they realize they’re of value to the company, and above all, that they’re proud of what they’re doing,” Choate says.
Beyond financial rewards, strive to create a family atmosphere. Instead of working to build one large team environment, Choate instead promotes smaller groups so that people can become closer and feel more connected to the people they’re around most.
“That develops a person-to-person relationship and just helps promote a sense of family,” Choate says.
Then these close-knit groups can plan social events or form recreational sports teams.
“That helps build teamwork and build relationships internally,” Choate says.
The more teamwork you have, the more productive your company will be.
Push for performance
Even with the best and most enthusiastic people, sometimes employees do things wrong, so it’s important to help them improve.
“If a person is a keeper, you want to help them develop and improve and excel,” Choate says. “Some of our best people, by far, are ones who may have, at one point in time in their development, struggled or hit a flat spot. By demonstrating our commitment that we want them to be successful, it’s amazing how it motivates them, inspires them, and now they’re some of our best production people. It’s really a people skill and an investment.”
Having metrics in place that are important to your business are a given. Beyond that, you have to know your employees.
“A manager simply has to invest time in that person, has to get to know that person,” Choate says. “Go to lunch with that person or visit them in the field. Spend time with that person. Talk to them. What do they like to do? ‘What did you do this weekend? What’s your pet peeve on a project or job or position? How do you see things? What do you think we can do better?’”
Knowing your employees helps you communicate with them in the most effective manner.
“Everyone has to be treated very specially,” Choate says. “Everyone has to be treated on a custom basis and addressed on a custom basis because which buttons you push or how you do it can be very productive or extremely counterproductive if it’s not done the right way. It just all depends on the individual. There’s no magic there. You just got to know the person.”
While people respond in different ways, one thing that shouldn’t be different from person to person is how you communicate your message.
Choate was once alarmed to overhear a manager speaking in a demeaning tone to a subcontractor on the phone.
“I told our manager, ‘This guy isn’t going to make it. He has to realize that whoever he’s talking to isn’t going to be motivated to make a change or please this guy,’” Choate says. “It’s important that you do it in a proper way so people understand the benefits of it, and you don’t alienate the person and their push back is not there.”
When communicating problems, speak firmly, yet calmly and clearly, and avoid raising your voice. Doing this ensures you don’t speak down to someone.
“Address deficiencies straightforward and without any reticence,” Choate says. “You can hone any knife sharper, so there’s always ways to improve yourself as well as others, so when someone is not performing, you address it clearly, you outline it, you structure it. Say, ‘Here was the expectation, the requirement. Here is where it didn’t occur, and here are the results of the nonperformance or the noncompliance.’ Then you illustrate what that does, whether it’s an economic loss or a reputation loss or whatever the impact was.”
Doing these things to help employees improve helps them buy in to your ideas and trust you as a leader.
“Treat that person with respect and that transfers,” Choate says. “In any leadership position, there has to be an inherent sense of humility. I think anybody that thinks, ‘I got here all because of what I did,’ is a person pretty much delusional or misled. Anyone has been successful because he helped put together a team, but the team as a group is what made the group successful, so humility is very important.”
Choate keeps that humility and team focus at the forefront of his thoughts. Despite starting the company himself from his basement 19 years ago, Choate is quick to note his team has gotten him to the $675 million in 2006 revenue and the projected $850 million in revenue for 2007. And as long as they collectively stay motivated and maintain a sense of urgency by not settling for the status quo, those numbers will continue
“You can spend all the money you want on computers and back-hoes and systems, but if you don’t have people out there leading the charge, you’re not going to be successful.”
HOW TO REACH: Choate Construction Co., (678) 892-1200 or www.choateco.com
When Mike Hislop’s famous guitarist friend wanted to celebrate one night, Hislop offered to make him a reservation at the restaurant where he was working. The guitarist said that was fine as long as Hislop got him seated in a certain server’s section. He said that the server was teaching him about cabernets, and he didn’t want to upset the man by sitting in another section. The multimillionaire’s loyalty to a restaurant server made an impression on Hislop, and today, as CEO of Corner Bakery Cafe a $200 million fast-casual restaurant chain he seeks to earn that same kind of loyalty.
Smart Business spoke with Hislop about how he finds the right personalities for the job and how to get employees to embrace change.
Hire great people. The way you grow is people. Have the right people. We have the economic model. We have the concept. Now we can be choosy about who we’re going to bring in, in the future.
When you end up losing managers, you usually end up losing employees.
So how do we hire the right managers? When you’re going through the interview and looking at the kind of experience that they’ve had, do they enjoy working with people? It’s real easy to get at the core of an individual in an interview.
You ask them certain questions. Do they have fun? When you’re asking them to describe their personality and style, you can find out real quick. Are they going to come in dressed and ready to go? Are they smiling? They go through three of those interviews. They start with the assistant manager, move to the manager and then get to the general manager. By then you have a real good idea, and you can tell them a lot about what the expectations are.
Empower managers to hire good people. We have the best manuals and training programs, but you really need to have that personality, starting with management to make sure they’re going to hire the right people. Once you get a person who can smile and really does honestly care about people, it’s real easy to train them.
When you get the right personality it really meshes together. You will see the sales grow.
We’re training our managers exactly what to look for not just questionnaires. We’re looking for personalities. When they come in, do they naturally smile? Do they naturally have that caring attitude that we have? We talk to them about building relationships how are you going to be able to build those relationships?
If someone is coming back every day, how do they like their coffee? Trying to remember their names. People love to be recognized when they come in. When they build the relationships, they’re going to come back more often, and that’s what drives the economic model and allows everyone to make money and grow together within the culture.
Embrace change. It’s making sure you have a culture around and that senior management realizes that, ‘Hey, part of our culture is we’re going to evolve this brand and make sure that we’re going to be on top of research to make that happen every year.’
Go out and talk to your people. If you have a culture that’s been doing it the same way forever, and maybe it’s been good and maybe it’s been OK, you’ve got to go out and just meet with them. Start with your senior management and get buy-in that, ‘Hey, this is how we’ve been doing it, and I think these are some changes.’
You have to be a good listener. As a leader, go out and ask the tough questions, and then really listen to the answers. Some of the people, you’d think they would be afraid to talk to the CEO they’re not afraid to talk to you at all.
Encourage new ideas. Create a culture where people aren’t afraid to speak up respectively and then leave that meeting and all be on the same page. Create an atmosphere where people aren’t afraid to ask questions.
Say, ‘That is a great question, and I don’t know why we do it that way. Maybe we can do it a little bit better.’ There’s nothing worse than being ‘yes’-ed in a middle of a meeting. Some leaders might like that, but I definitely do not. I don’t think you can be successful unless you can create an environment where people aren’t afraid to speak up and let you know some of their ideas.
Be ready to try a few things. You can’t say, ‘This is it.’ You have to go out there and test out some new ideas. You want your leaders, whether it’s general managers or corporate support, to be thinking of ways to make this brand better and knowing if they get a good idea that it’ll be something that we go out and try.
When I was at Il Fornaio [which acquired Corner Bakery in 2005], we had a couple of guys who thought the bar needed some change. The older people said no, but we ended up putting in a whole new bar, and the bar’s doing about 40 percent sales versus about 25. We go back to that guy and said, ‘You nailed it on this one. It was a brilliant idea.’
HOW TO REACH: Corner Bakery Cafe, (800) 309-4642 or www.cornerbakerycafe.com
In the early part of the decade, the senior leaders at Novelis Corp. weren’t occupied with brainstorming creative approaches to manufacturing in their aluminum rolled products and aluminum can recycling business. Instead, they were focused on environmental, health and safety initiatives, and continuous improvement based on lean Six Sigma. Despite this focus on other initiatives, one of their other focal points — value-based management — gave them a reason to spend more time brainstorming creativity in their manufacturing processes.
Without any best practices in place, Novelis had the opportunity to address and correct the problems that prevented innovation. Among the issues was not knowing who was responsible for innovation beyond the research and development and marketing departments. It also lacked structure for collecting ideas and a reward system for the ideas it did find. Novelis also didn’t have a review process for ideas or any resources to go to.
To tackle these issues, the company developed an innovation council. The council, which meets quarterly, consisted of the president/chief operating officer, business group presidents and designees, and leaders in corporate marketing, research and technology, and business planning.
Michael Thomas, director of global technology and R&D, and Roy Stever, vice president, global strategic marketing, then became the architects of an innovative management and execution system that could input data, capture information, update action plans, communicate and measure progress on projects, and review ideas. This new system, which was implemented by Novelis North America President Kevin Greenawalt, has helped keep everyone internally engaged and up to date. Additionally, a year ago, it launched a center designed to specifically promote creativity throughout the organization.
On top of these new programs, Novelis has clearly defined that each of its nearly 13,000 employees is responsible for innovation. Leadership has created a formal recognition process for creativity by adding an innovation category to its annual awards program.
With formal programs and processes now in place, Novelis continues to strive for more innovative approaches to operating. With ongoing communication and a constant focus, this $9.8 billion company is sure to reach even higher heights in the years to come.
HOW TO REACH: Novelis Corp., www.novelis.com or (440) 423-6600
When Greg Boyd’s ERGEnterprise Resource Group merged with MIS Group in 2006, he became president of the rapidly growing combined group, going from 55 employees to 163. With that kind of growth, it’s easy to become overwhelmed and frustrated, but Boyd has successfully managed the growth at the $17 million software and information technology services provider.
Smart Business spoke with Boyd about how he uses communication to eliminate surprises and how he gets buyin at a company in flux.
Q: How do you successfully lead changes in an organization?
Change really revolves around people, process and technology. It’s setting the right expectations. Set the communication in place so everybody is on the same page to understand that. As long as they know what’s coming without surprises, I think you can manage change a lot better. It’s the surprises that people don’t like.
Some things happen that are unexpected, and obviously, you can’t control everything, but try to set those expectations as far ahead of time as you can, and prepare people that these things are happening. In our case, we did four acquisitions last year, so it’s a matter of communicating with the organization, ‘Look, these things are happening.
These things are going to happen in the future. It’s part of who we are as a company. It’s part of our growth strategy that there will be acquisitions, so that means there will be new people coming and there will be processes that are changing as a result of that.’
There’s always some chaos involved with change, so setting that expectation upfront is critical so that people aren’t just blind-sided by what’s going on. If you weren’t sharing those things ahead of time, then all of a sudden, out of the blue, you come in and say, ‘We just picked up 100 more people, and this is what’s going to happen to your job tomorrow.’ That catches people more off guard than being able to say, ‘This is coming; this is what’s happening.’ You can kind of be prepared for it, attitudewise, to deal with it.
Q: You mentioned that processes change, as well. How do you deal with those changes?
Each year, it’s like you’re a new company. That can frustrate people that aren’t expecting that, but when you’re an organization of 10 versus an organization of 50 versus an organization of 200, there’s just different systems and different processes that have to be in place to accommodate scaling an organization to the next level.
Sometimes, those things are almost harder because people are like, ‘This is how I do my job; this is how the system works,’ but when you have system changes going on continually to support the efforts and methodologies of the companies, those are hard things. All these changes are happening, and it’s affecting everyone, and trying to keep the airplane flying with the wings on fire. You’re trying to change the wings but keep the plane in the air so it doesn’t crash.
Q: How do you get buy-in for those changes and make sure people really understand them?
Communicate calmly and often. Communication and expectations are two big things to be focused on. It’s just setting the expectations so they know what’s coming, and if you’re going to miss deadlines or dates, make sure you communicate those so people at least have an idea what’s going on.
One of the things we started working on is, what are the top three things we should be working on? That starts at the top and works all the way through the organization, so everyone can stay focused on those things. Sometimes those priorities change depending on the direction we’re going. Sometimes crises do come up, and you have to change those priorities in the process.
There has to be communication all the way down to the employee level on a regular basis. Coaching is a big part of that and having metrics for everybody and objectives so they know what to expect How am I being measured on my performance, and how am I performing? And being able to talk about those things on a regular basis.
That’s the time when you’re having those discussions and you’re talking about the vision, and how does what I’m doing as an employee really impact the vision overall and this is what my contribution is to the organization. Once they make that tie-in, it goes from just being ‘in one ear, out the other’ to, ‘I’m really making a difference in the company.’
Ultimately, it gets down to communicating those things and having that collaboration and dialogue all the way down to the team level so people know their expectations and, ‘Have I met those expectations, what are my future expectations going to be, and how am I making a difference in the company?’
HOW TO REACH: MIS Group, www.misgroupusa.com (800) 454-0993
Even with 330,000 customers, Christopher Faulkner doesn’t rely on an assistant to answer his e-mails he still answers them himself. With the rapid growth of C I Host revenue grew from nearly $78 million in 2005 to $92.5 million in 2006 the founder, chairman, president and CEO of C I Host focuses on changing his business to keep up with his customers’ needs.
Smart Business spoke with Faulkner about how to keep the roller coaster that is your business from nose-diving straight to the bottom of the hill.
Q: How do you know when it’s time to make changes at a growing company?
Look for any flattened sales or any growth percentage that slows down or plateaus. It’s the roller-coaster effect you get to the top of the hill and the car starts going down; that’s too late to start change. That’s already going straight to the bottom. Be able to forecast while you’re going up the hill, before you get to the top, what is that time frame looking like, and what else can we do.
Figure out in your plan where that hill continues to increase and where you think it’s going to plateau, so always be looking for complementary services that you can bring to your portfolio that make sense for your particular segment of customer.
Drill down into your base and find out what else they need and what else drives them. Most customers, if you have a provider already selling you goods or services, nine times out of 10, they would love to buy more from you because they already have an ongoing relationship.
Q: How do you embrace change?
Realize that what you did last year or five years ago isn’t necessarily what you’re going to do today or tomorrow. Every good business model has to change multiple times along the way if you’re going to be in business any length of time.
Some have a great idea and launch a product, and it takes people by storm for the first five years, but at some point that’s going to age and come to end of life. I would be hard-pressed to find any industry where a company has been successful for five to 10 years and hasn’t changed their model at all.
Q: How do you connect with customers?
My customers are the ones paying my salary and keeping the doors open. If we didn’t have them, we wouldn’t be in business, so they’re it. They’re the ones I have to bow down to.
Every week, we have two things going on. One is my CEO chat. I log into a chat room and customers, press people, prospects can chat with me. The other is every day; every employee is required to make 10 calls to customers. Every day 2,500 [customers] get a call out of the blue to say, ‘Are you happy? We’re just calling to say thanks, and if you have feedback, we’d like to hear it,’ and they’re floored. That is the holy grail of the business.
As CEOs, there shouldn’t be an ivory tower behind a closed door. If customers call, take their call and speak with them. It’s the most frustrating thing a person can do to have an issue with your company and call, and you say, ‘Take a message’ and not return their call or e-mail. It’s a slap in the face.
That’s the biggest factor that a customer will leave a company over, if the executives are too busy to take care of them. It leaves you with such a bad taste in your mouth, and for months, that person is going to be mad and tell 100 people how bad you are versus telling one or two how great you are.
Q: How do you best serve customers?
Everything you do in the business, every idea that you’ve got and every decision that you make you have to apply that thought pattern to, ‘Would the customer want this, and is this in the best interest of the customer?’ A lot of times you find yourself saying no.
A lot of times CEOs say, ‘Well, whatever,’ or, Too bad I’ve got to cut costs,’ and you lose sight of what the customer wants. The customer either gets what he wants, or he goes down the road to someone else. You serve the customer, or someone else will.
For example, should I buy the $200,000 router or the $50,000 router that’s going to cause outages? Most would say the $50,000, but is the cheaper one in the best interest for the customer? No. That’s the litmus test that I use.
It’s a very easy application but not the easy decision to make. You might see short-term profit because you cut costs, but, at the end of the day, if service starts sliding and customers start leaving, that profit quickly turns into a loss. It’s big-picture mentality.
HOW TO REACH: C I Host, (817) 868-9931 or www.cihost.com
Mark Tuchmann measures success by the happiness of his customers, his team and their spouses. As founder and CEO of BeavEx Inc., a $110 million courier service operating in 30 states and Washington, D.C., Tuchmann knows that success depends on his team getting everything perfect every time, and because customers rely on his team getting things to them quickly and safely, Tuchmann ensures that happens by hiring the best people and keeping them around. Smart Business spoke with Tuchmann about how to be a shepherd.
Be a shepherd. It’s all about the people. If you treat people with respect and let them build themselves and everything out, you get a lot more out of them instead of coming down with the hard stick and whacking them to get them to do things.
One person said to me, ‘You can be a shepherd or a sheepherder.’ The shepherd holds out his stick and people follow. The sheepherder goes and whacks them and pushes them along.
I’ve always tried to be the leader and have people look at me and really want to do it, not that they have to do it. They see the energy that I try to portray or do, and it’s really easy for them to get on board to that.
Trust people. You can’t do it all yourself. Most entrepreneurs start their own business, and they strangle it and never give it a chance to grow because they feel like they can’t trust anyone else. Let go. Trust.
You definitely have to surround yourself with some really good people that have that same vision, but it’s hard. I don’t think I have enough hands to count how many times I’ve been burned, but the opposite of that is our company has grown from $100,000 in sales in 1989, and we’ll probably do $135 [million] or $140 million in sales this year, so obviously, there’s a lot more positives that came out of that than negatives.
You have to trust your people and give them the authority and the leeway, and before that, you have to find the right people. And you’ll never know that until they’re either producing or they’re not.
Hire good people. It really comes down to intuition. I’m looking for someone who can multitask, and they don’t take themselves too seriously. They have a good sense of humor, and you can tell that they have a good common sense.
You look at the degrees and at all the other things they may look at in HR, and I kind of discount that. I would take a guy who went to a community college who has common sense, a good heart and a fun-loving attitude over a Dartmouth or Yale grad.
We give them a personality test, and it’s uncanny how many times that it’s right on. Tools like that really steer us in the right direction.
It’s really just, how’s that person going to operate in the real environment? My gut can, maybe seven out of 10, get it right. I don’t think anyone out there can get 10 out of 10, but it’s like a batting average if you can hit .300, you’re doing good, and that’s only hitting three out of 10.
Retain employees with positive reinforcement. People need to feel good about themselves and their place in the company. If they feel like they’re part of it and the growth and success of the company, that’s more important than money. That’s probably the No. 1 thing.
They need to look at the senior management and align with that whole process. If they don’t respect and think that the senior people are doing things right, then they’re more apt to get disgruntled, and then you have a bad situation on your hands. It all flows from the top down. The top has got to mirror the bottom, and that’s not always the case.
Give them the opportunity to succeed. It’s really hard, as the company grows, to keep everybody happy about where they’re going in the company and what they’re doing. They need the positive reinforcement, and in that fast-paced environment, managers aren’t given that. When they’re not given that, then people don’t think they’re appreciated, and when people don’t feel appreciated, then all the rest of the things start happening.
Just keep bringing it to the front of their mind this is important that you’re on time, you did this, you did that, but don’t forget the people that made that all happen.
Don’t be afraid to fire people. If someone hasn’t worked out, you owe it to them and to yourself to cut the cord. That’s the hard part, so if I have to fire somebody it’s really bad.
I usually give everybody the benefit of the doubt, and if they’re not making it in that position, I’m looking for something else for them to do. The last resort is letting somebody go.
Sometimes I use the analogy of a boyfriend and a girlfriend you know it’s not going to work, but you feel bad, and you don’t want to hurt someone’s feelings, and sometimes you drag it on too long. Every situation has a different time length. You really have to look at it, and look at that person’s abilities, what they can do, their personality and all the rest.
It’s like the three-strike rule, where you can coach and teach them, but if they’re at two strikes and they haven’t got it, they’re probably not going to get it. Give people the two chances, and if they can’t get it, then you want to cut the cord.
That’s a lot easier said than done. You try to rationalize it, and you look at it and go, ‘Well, we were going through this and this, and this person wouldn’t have done this if they knew enough,’ and you go around and around about that. People have to make decisions and act right then. It’s hard because people like to think about things and they want to analyze it. In our business, that analysis equals paralysis. You’ve got to look at the situation and make a decision. Good, bad, indifferent make the decision.
HOW TO REACH: BeavEx Inc., (800) 403-7738 or www.beavex.com
When Iain MacKenzie started at SMART Modular Technologies in 1997, he didn’t exactly get warm, fuzzy vibes from many of his colleagues. The company, which manufactures computer memory and liquid crystal display solutions, was successful, but its leadership regularly threw words at each other, swearing and yelling for all to hear.
“You did that wrong!”
These outbursts happened inside and outside the boardroom, and nobody cared who heard.
“It was ruthless, and as much as that feedback would happen immediately and openly, no matter whom was hearing, it would happen in front of my direct reports, so it was undermining the authority, and it’s a little bit belittling,” MacKenzie says.
As a Scotsman, MacKenzie came from an old-school background of respect and courtesy, so when he got the reins as president in 2002 and then also CEO in 2005, he knew he needed to change the culture and eliminate the dictatorship strategy if SMART Modular was going to succeed as it expanded globally.
“In a start-up environment when there’s no culture, no standard and there’s one person as the old hub in the middle of the spokes of wheels, you can be very successful in directing the traffic,” MacKenzie says. “When that runs out of steam, a global operation and a global business with multiple connections needs to live and sleep and breathe on its own.”
If MacKenzie was going to dismantle the company’s ruthless, centralized command structure and create an independent structure that would be more efficient in today’s market, then he was going to need a new team, a new vision and a new culture.
Creating a team
MacKenzie needed to get himself out of the hub of the operations, getting people to focus their attention outward rather than inward. He didn’t want everyone coming to him for answers, so he needed to push decision-making down through the organization, but that requires a team you can trust.
“The first thing is to find the people and set the guidelines,” he says.
He started by looking for people who can brainstorm, problem solve, communicate, and are trusted and respected. He also looks at how someone performs in a bad situation and if they solicit multiple inputs instead of relying on one person’s opinions.
“It’s a lot of questioning of how do you do that? How do you behave?” MacKenzie says. “It’s not asking what have you done and why were you successful. It’s more saying what would you do in these circumstances and how do you deal with these situations.”
He says the key is taking your time and not hiring too fast. Once you have the right people in place, then you can start setting guidelines and expectations for how they should perform.
MacKenzie emphasizes their decision-making authority to make sure his reports are clear on what they need to be doing.
“You have the ability to make any decision you like, but you just need to stand by that decision upon measurement,” he says. “Typically, because of time differences [SMART has 11 locations across the globe], you cannot ask me on a daily basis. The worst thing to do is to not make the decision, so you have to make the local decision.
“You know your rules, and you have the lead. You have the A-plus. You have the job. You have my trust and respect it’s yours to lose. That puts a huge ownership and responsibility and accountability onto the person on the other side.”
Setting and selling a vision
MacKenzie needed a new vision for the company that would serve as the guiding principles for all the managers. The key to creating a vision that everyone can get excited about is getting everyone involved.
He shows his team the goals they should hit based on growth expectations and asks them to brainstorm ways to achieve those numbers. They then research those ideas and ultimately choose the top 10 ways to get there, including how everyone will be rewarded.
“It’s almost like an acquisition you think about the amount of work people put into acquisitions and diligence and what’s the direction and the market, what’s the IP, what’s the differentiator, why would you be successful, and what price point could you sell that at,” MacKenzie says.
The goals are reviewed and tweaked each quarter, but the larger goals guide daily decisions.
“It’s pushing and jiving on a daily basis,” MacKenzie says. “In any one week, I’ll say, ‘This is the goal; does that help us get there, or is it inconsequential?’ It’s just constant focus, and every manager making that decision on, ‘Is this helping us get to our goal, or is this noise, or do I need that?’ That assessment just keeps it driven.”
It’s also important to welcome feedback from employees about decisions and progress.
“You want to be clear and clinically clean on your goals, but you want to keep listening and be careful because a dictatorship does-n’t welcome input,” MacKenzie says. “When the style is all trust, respect, soft empowerment, open door ... that sets it open to get the feedback ‘I thought you said this, but it doesn’t look like we’re going that direction,’ so there are tentacles out there to get the communication to come back.
“If someone can get on board and believe that where you’re painting the picture of where you want to go is a good thing, and we believe that’s success, then watch everyone get aligned. You don’t have to define the road to within 2 inches. You define, ‘We’ll go northeast. It’s on the hill over there. Let’s go.’ You don’t have to control the exact how you do something. You don’t have to say, ‘Don’t make that step to the side; make that step forward.’ If you don’t focus on the little pieces, the people know that they can do the little pieces on their own.”
Despite your best efforts, some will still resist, and MacKenzie says you have to set parameters for changes and address people who aren’t working within them.
“If there are real negative influences, you draw it to their attention, you ask for repair,” he says. “If that can’t fix it, then you need to agree to part.”
MacKenzie says you can’t wait forever for people to get on board. Someone may have a ton of great attributes, but if they can’t improve the things that are holding them and the team back, and it’s been more than a year, then you have to remove them.
“If the goal is for 10 people to run a 400-yard relay, and the team who wins is the team that gets all 10 across the line, what happens if one person dawdles and says, ‘I don’t care if we win or not.’” MacKenzie says. “The other nine can work as hard as they like, but if that one person doesn’t run, they lose the game.
“It’s so disappointing for the nine who ran that whole race in 10 seconds, and one person is wandering along eating a banana and says, ‘I don’t care.’ How would you get the nine people to run the next race without taking the one person out and saying, ‘Look, you’re not part of the race; I’m going to replace you.’ So for the good of the nine, you have to move forward.”
Building a new culture
MacKenzie wanted to get rid of the old oppressive environment and create a culture where people were excited to come to work every day.
“We must be successful, we must meet the business goals that’s the business piece,” MacKenzie says. “We must communicate and be open and have a style ... and get everyone on board, but there must be a reason not to wake up in the morning and go, ‘Ugh, I just don’t want to go to work.”
MacKenzie put in pool tables, ping pong tables and dart boards for people to use, and one day he bought 60 pizzas and let employees challenge him in table tennis. Having an environment that promotes fun helps people feel excited to achieve goals.
“You don’t have to pay as much attention to the smaller items,” MacKenzie says. “It makes people more motivated to succeed and less sidetracked to whine and moan to each other in the corridor. More of the engagement will be about what we need to do and what we need to fix as opposed to misery loves company and isn’t this terrible ... It focuses people better toward the goals and keeps them on track.”
As part of fixing the overall cultural tone, MacKenzie also evaluates people not just on completing their tasks but also their attitude.
“It has to be measured,” MacKenzie says. “It’s a very strange thing to give a goal to say, ‘OK, your goal is you must have fun,’ and it’s difficult to say, ‘You must smile today,’ but it cannot be HR’s responsibility. It has to be something that you want to create and is enjoyable.”
You must reward people based on those expectations in order for them to be effective.
“The management team first of all has to agree that they’re going to concentrate on it, and it’s going to be part of the measurement system,” MacKenzie says. “Where all of it fails is if you pay 100 percent of your reward for meeting the goal. ‘The goal was 10; you made 10. You get 100 percent, but, by the way, I didn’t like how you did this.’ That will fail.
“You met the job. You got a 10. That was excellent. You now have a score of seven because you messed up those people because you’ve given them no respect, no regard and you were a grump. That’s more important, so you’ve got to set it, as a management system, something that’s meaningful, and it has to be rewarded upon.”
You also need to take the time to show employees that you really care about them. You can take all the time hiring, creating a plan and getting buy-in, but if you don’t build relationships with employees, it’s hard to succeed.
“The relationship is deep, and relationships and motivation and the fun and the engagement and knowledge of people is important,” MacKenzie says. “I’m interested in people. It’s getting all the aspects of being a friend, a confidant, a decision-maker it’s that fairness measure that really gives us a base of trust and respect that they can do a good job.”
MacKenzie requires his managers to report to him what’s going on with people.
“My managers are programmed I must know about births, deaths, marriages, affairs, new houses, new cars ... It’s important,” MacKenzie says. “I get irked if someone has had an illness or something major in their life, and I don’t know about it. It’s not a pretend management style, I physically feel irked, and I reach out to that person.”
When one employee was battling tongue cancer, MacKenzie’s team continuously phoned him and checked on his family. He recently received a letter from the man thanking him for his support.
It’s all part of the new culture that will help the company become a more efficient global organization.
MacKenzie says if he hadn’t created a better culture at SMART, not only would his managers probably have had heart attacks, but he would not have been able to grow SMART’s net sales to $707.4 million in fiscal 2006, a 16 percent increase from fiscal 2005, and the company is projecting at least $823 million for fiscal 2007.
“It was fairly aggressive, fairly dictatorial, fairly centralized decision-making management when I took over, and I think now it would be measured as each person has to pull their own weight,” MacKenzie says. “They have the responsibility to do the job. They know they have an ear. We can change direction, and it is trusted and respected.”
HOW TO REACH: SMART Modular Technologies, (510) 623-1231 or www.smartmodular.com