Governor John R. Kasich announced that Western Reserve Partners LLC’s founder and managing partner, Ralph Della Ratta, has been appointed to serve as a member of the Kent State University Board of Trustees.
Della Ratta’s term began July 13, 2012, and will end May 16, 2021. Aside from his involvement with Kent State, Della Ratta is also active in numerous local and national organizations, including University Hospitals Cleveland Medical Center, Rainbow Babies and Children’s Hospital National Leadership Council, the Rock and Roll Hall of Fame and the 50 Club of Cleveland. He is also a board member of Olympic Steel Inc., MAI Wealth Advisors LLC and NDI Medical.
Western Reserve Partners LLC is also pleased to announce the hiring of Justin A. Wolfort as its vice president. Wolfort rejoins the firm after earning his MBA in finance from the Kelley School of Business at Indiana University.
He has seven years of investment banking experience, focusing primarily on middle-market M&A and capital-raising transactions in the industrial and real estate sectors. Prior to joining Western Reserve in 2004, Wolfort served as an analyst in the Real Estate Investment Banking & Public Equity Finance groups at McDonald Investments Inc. and KeyBanc Capital Markets. While at Kelley, he interned in the Corporate Strategy Group at Cummins Inc.
Capital Advisors Ltd. announces that the Cleveland Chapter of the Society of Financial Service Professionals’ (SFSP) has selected Neil R. Waxman, CFP, as its Financial Service Professional of the Year. The SFSP, founded in 1928, has more than 15,000 members nationally and is the pre-eminent, multidisciplinary organization for professionals who practice in the broad spectrum of wealth management.
The honoree for the Financial Service Professional of the Year Award must have practiced for 15 years and consistently exhibited core values such as support and commitment to professional advancement via continuing education, support of ethical awareness, development of collaborative relationships with colleagues, which enhance client service, and progressive practice management strategies.
Waxman is a managing director of Capital Advisors Ltd., a wealth management firm that provides wealth management services via the establishment and integration of investment, tax, estate, retirement and business succession planning.
Glenmede, a privately held and independent investment and wealth management firm, announced that Lawrence H. Hatch has been hired to serve as director of the firm’s Cleveland office. In this role, Hatch will oversee wealth advisory services for high-net-worth individuals and manage the day-to-day operations of the Ohio office. With 26 years of trust and estate industry experience, Hatch will lead a team of 20 individuals and supervise the office’s 184 relationships. The office’s former director, Frank I. Harding, will assume a senior advisory role, allowing him to focus solely on clients.
Prior to joining Glenmede, Hatch served as president, secretary and chief fiduciary officer of The Private Trust Co.
The Society for Vascular Surgery presented its prestigious Medal for Innovation in Vascular Surgery to Roy Greenberg, M.D., of the Cleveland Clinic during the June 6-8, 2012 Vascular Annual Meeting held at National Harbor, Maryland.
Dr. Greenberg is the director of endovascular research and the Cleveland Clinic Peripheral Vascular Core Laboratory. He holds more than 50 patents developing endovascular devices for aortic disease especially within the field of complex endograft repair.
Candidates for the SVS Medal for Innovation in Vascular Surgery must be individuals whose contribution has had a transforming impact on the practice or science of vascular surgery.
Bravo Wellness, an industry leader in results-based wellness incentive programs, announces the appointment of Michael O’Donnell to its newly formed advisory board. A noted authority in health promotion throughout the last three decades, O’Donnell brings critical knowledge and guidance in developing and managing health promotion programs based on integrating scientific findings with the dynamic realities of workplace and community environments.
O’Donnell has developed and managed health promotion programs for more than 50 workplace settings in addition to a broad range of clinical, community, government, foundation and insurance settings. He presents internationally on the health and financial impact of health promotion, integrating active living strategies into everyday life, strategic design of workplace health promotion programs, and integrating health promotion into national health policy. He is also the founder and editor-in-chief of the American Journal of Health Promotion, a peer reviewed research journal with subscribers in more than 40 countries, which focuses on the science of lifestyle change.
Dan Neyer entered the period of the past three years the same as anyone else running a business: uncertain what to expect moving forward. As president and CEO of Neyer Properties Inc., a commercial real estate company, he saw that his industry was greatly affected due to the economic downturn. While he didn’t have any secret weapons or information others didn’t, he did have something that kept his company pushing onward — a positive approach to a bad situation.
Rather than hunker down or look elsewhere for business, Neyer gathered his employees to explain the situation the economy had created and how the company needed to operate. If they could stick to the plan, the company would come out the other side ahead.
“One of the most important things is you have to look every employee in the eye and be very clear and don’t sugarcoat the facts,” Neyer says. “Just tell them the way it is. Tell them the challenges that will lie ahead and tell them what you’re planning to do.”
Neyer took a strategic approach to business during the recession buying key properties at attractive values and keeping his employees informed.
“I said, ‘Our existing legacy properties are going to go down in value. I know that, the market knows that, and that’s just reality. We’re going to position ourselves to buy undervalued assets, and that’s what we’re going to do to offset the decline in existing values of our existing portfolio,’” Neyer says. “That’s the mantra we have, aggressively pursuing real estate assets.”
Here’s how Neyer used to a dire business environment to create opportunities for growth.
When the downturn hit home for Neyer Properties no one tried to pretend as if the economy wasn’t going to have an effect on business. Neyer told his employees what they could expect to see and what the plan was for moving forward. Doing that proved to be very helpful.
“So many companies like to hide bad things or hide struggles and not inform the employees, and the employees know; they feel it and people are thinking what’s going to happen to me and what are we going to do,” Neyer says. “Just be honest and straight forward. It’s tough in our industry when everyone says, ‘Everything is bad, everything is miserable and the banks are going down.’ It’s hard to stay positive when you’re surrounded.”
Getting through a tough business environment relies heavily on being able to trust your employees and use small victories to build a positive outlook.
“We have a great nucleus of people who believe in what we’re doing, and seeing the results breeds the optimism so you can fight the negativity that may be around,” he says. “It starts with the people. I can’t do this alone, nor do I want to do this alone.”
To overcome uncertain times and difficult business obstacles, you have to have strong employees who believe in the direction you’re taking the company.
“It’s always best to surround yourself with the people who will help get you to that next level,” he says. “If that means changing people, you need to change people and don’t be afraid to do that because what’s best for the organization is always best for the organization. You have to invest in existing people, but if existing people are not functioning properly then you have to change.”
In both good times and bad, the key to remaining successful is being able to anticipate change to keep your business moving in the right direction.
“People say, ‘We embrace change,’” Neyer says. “Well, yeah, you’ve got to embrace change, but you’ve got to pursue change. Embrace means you’re accepting what is happening to you. Pursuing is much stronger. You’ve got to change before you have to change. You have to see around the corners before you come up to the corners and not react. If you’re waiting to react, you’re too late.”
Develop a plan
Instead of waiting for the economy to tell him where to steer his business, Neyer developed a strategy to take advantage of the business environment and real estate market. He focused on keeping things simple.
“I wanted to preserve, protect and position,” Neyer says. “‘Preserving’ was preserving our cash, preserving our existing tenants and the loans that we had. We had to protect our existing assets from too much decline. We’re going to invest in our assets so it doesn’t look like the properties are declining, and we’re going to protect our cash amount and hopefully have that grow with proper cash management.
“Then positioning, it’s really positioning with lenders, sellers, borrowers, banks and other organizations that take the properties back. So we’re going to position ourselves to work with those organizations to be able to acquire the properties. Was it a real long and complex plan? No, but when difficulties arise, you need to focus more and keep it simple.”
To form a plan for the business, Neyer first had to think about what he would want to accomplish if there were no hindering circumstances and then factor in any obstacles.
“You have to step back from your own situation and say to yourself and your team, ‘If there were no limitations, what would we be doing? If finances and personnel were not limited, what would you be doing?’” Neyer says.
“In our case we would be buying as many high-quality assets as we possibly could get our arms on. So step back and initially don’t burden yourself with the current restrictions or hurdles that the organization has. Come up with an approach that is in the best interest without the limitations.
“Then figure out how to pursue the desired results while you work on the restrictions. Don’t start with the restrictions because if you start with the obstacles and the hurdles and the difficulties, you’ll never get to the shining light that’s out there.”
In Neyer’s case the company had a premise that it needed to acquire $40 million to $50 million a year in real estate assets. The company had a plan, and it refused to waiver from it.
“Our MO for our equity is pretty clear: we’re going to pursue and purchase properties in the $1 million to $12 million range within a 100-mile radius at good locations, good accessibility and average about 50 percent of replacement value,” he says. “We stuck with that focus. We had opportunities to look at things outside that geographic range, but we stuck to our homegrown, homespun approach and maximized the potential within.”
In order for a plan to have the best results possible, communication is vitally important to remain aligned with goals.
“We went through our three main areas of focus: preserve, protect and position,” he says. “Then on a monthly basis we would bring everybody in and it would be like a report card — this is what we said, this is what we did, this is what we’re doing, this is what is working or not working, this is how we’re adjusting, and this is how we’re moving forward.
“You have to bring all those elements and people are generally empowered if they know they’re making a difference. It wasn’t easy at times because you always have difficulties, but if you align everybody’s interests you can move mountains.”
Stick to what you know
In difficult times, it’s very easy to stray from your intended plans and pursue different options. The key to success is to find the one path you want to go down and pursue only that path.
“There’s always more opportunities out there than one can ever accomplish,” Neyer says. “When we’re in uncertain times, sticking to your past success and narrowing your focus so you’re pinpoint laser-on is even more important. A lot of times companies that are suffering, whether it’s big or small, they say, ‘If this isn’t working, let’s try something else.’
“Whether that’s a different geographic market or a different product line or whatever the case is, they forget what got them to where they were in the first place and they try something else. I’ve seen too many companies try to do everything for all people and it just never works.”
Because Neyer Properties sticks to its strengths and is prepared to function in any business environment, it has seen its fastest growth periods during recessions.
“You have to be poised and positioned to excel when times are tough,” Neyer says. “You have to be careful when times are prolific that your tools are not sharpened and volume just comes and you don’t have to keep to your principles. You have to be consistent in the good times and the bad times. You have to hopefully excel in the tough times and when things are robust, you put the governor on and you’re careful not to grow too quick.”
Any tough times equals great opportunities and great results. When you make a decision you’ve got to go for it. You can’t be indecisive.
“We are one of the few Ohio commercial real estate companies that have been able to capitalize during the recession,” he says. “Our employment has been constant, but we have grown, and our real estate portfolio is now more than double the size that it was as of the end of 2008.
“Most real estate development companies cannot say that they’ve doubled the size of their business in the last three years. A lot of that is attributed to our conservative, strategic and long-term planning and also being strong stewards of proper financial measures and taking advantage of the opportunities that are out there.”
Over the past few years, Neyer made sure his company never waited for opportunities to arise. His team went out and found properties that best fit the company’s objectives.
“If you buy key properties at attractive values and are able to obtain financing with providing the right mix of equity, there is no better time to purchase real estate,” he says.
“I’ve looked at investing in other asset allocations other than real estate since I’m so heavily invested in real estate. I just have not found any other asset allocation that has the upside that real estate does.”
Since 2008 Neyer Properties real estate has doubled in portfolio size and its ROI has more than doubled in the last three years giving the company 2011 revenue of $55 million. This success is due to both increasing the occupancy level on existing legacy properties and purchasing assets in an aggressive mode.
“Fortunately, we’ve been able to acquire where most people are falling back because they have no choice,” he says. “They are too highly leveraged, they don’t have cash and they’re stuck. Our usual approach is buying things for 50 percent of replacement value and buying properties highly accessible and highly visible. If you have key properties at key locations and your base is much lower than your competition, even though the vacancy might be higher than you want, you win.”
How to Reach: Neyer Properties, (513) 563-7555 or www.neyer1.com
- Be honest with your employees.
- Develop a strategic plan to achieve your goals.
- Once you know your direction, stick to it.
The Neyer File
President and CEO
Neyer Properties Inc.
Education: Attended Miami University and received a degree in finance and accounting
What was your first job and what did you learn from that experience?
I worked as a bus boy at Perkins Restaurant in the early mornings, which made me realize I had to get up early and as soon as I arrived, I had to work hard. At times I had to work at breakneck speed because back in the ’70s. Perkins was the place to go.
What is the best business advice you have received?
Follow your passion and realize that if you work hard, good things will happen. People always say, ‘You’ve been really lucky.’ Well, I’ve been really fortunate, and I’ve had some good luck, but good planning almost always gives good results. You can call that whatever you want, but planning equals results, equals opportunities, equals luck. Stick with what you believe. Don’t deny your gut feeling.
Whom do you admire in business?
One is my father, who taught me the importance of detail. I also appreciate the creativity of somebody like a Steve Jobs. He created history by following what he believed was necessary even though he may have been the only one on earth that believed it. He made people believe the impossible.
What was the toughest thing about the recession for your company?
It was the uncertainty from the lending community. They were in a state of total chaos, and what were they going to do? They could have just pulled the plug (and some did) and found reasons to basically cause the total demise of commercial real estate because if you eliminate credit, you eliminate all value. Fortunately, for the most part, they kept their head on. They could have effectively wiped out the economy of the U.S.
What are you looking forward to in the future of real estate?
What I see on the horizon is great, valuable, long-term enduring real estate assets growing over the future. With the boom of natural gas in this country, I think you’re going to see a tremendous influx of investment in the U.S. because this place is still the biggest buying power. The cost to manufacture now is the same as it is in China because of their increasing inflation and cost to ship goods. So I see a tremendous upswing in the future of the U.S. in the next number of decades.
Bober Markey Fedorovich, a regional accounting and business advisory firm with offices in Akron and Cleveland, has expanded once again with a new IT/IS director and nine new associates.
Nancy Landry has joined BMF as the firm’s new director of information systems and technology. Landry has more than 17 years of experience in IT/IS and network administration, previously working for large national and regional public accounting and IT consulting firms.
Hitchcock Fleming & Associates Inc. (hfa), a full-service marketing and communications firm, has been named as one of the Top Workplaces 2012 Northeast Ohio by The Cleveland Plain Dealer.
Winners were chosen based on employee survey responses about employee workplace satisfaction to distinguish companies that possess an outstanding culture and promote a positive work environment. Survey categories included job satisfaction, confidence in the future of their company, trust in co-workers, management effectiveness, company culture, and compensation and benefits.
“We have fantastic associates, and it’s truly an honor to be recognized by all of them,” said Jack DeLeo, chairman and CEO of hfa. “At hfa, we are a family and take pride in the work ethic, quality and leadership of our associates.”
Paytime Integrated Payroll Solutions, an integrated payroll, human resources and business solutions company has announced that Mary Ann Shamis, CFO, has been honored with a 2012 Women of Note distinction from Crain’s Cleveland Business.
Shamis was recognized at a July 25 event for demonstrating exceptional business
knowledge, her leadership in helping to build one of Northeast Ohio’s top companies and the positive impact she’s had in the region.
Shamis is one of the original founders of Paytime and has more than 30 years of experience in payroll and business management.
Medical Mutual has announced Danielle Werner has been appointed to manager, Interactive eSolutions. Werner will be responsible for the technical oversight of MedMutual.com, the implementation of direct-to-consumer strategy, provider portal and the creation and execution of the company’s enterprise mobile strategy.
She has a proven record of achievement developing and executing comprehensive, customer-focused eCommerce strategies. Werner’s previous eCommerce experience with Lowe’s and Ally Financial Services will help bring fresh ideas and innovation to Medical Mutual while improving upon how the company engages customers electronically.
Medical Mutual also announced that Tom Dewey has joined the company as director of Financial Analysis and Cost & Budget.
Dewey will be responsible for reviewing the financial analysis for significant expenditures, coordinating the annual corporate administrative expense budget, directing cost accounting activities and overseeing the Life Group accounting and analysis.
With 13 years of experience in various accounting and assurance roles at Ernst & Young, his most recent experience was as Senior Manager in its Cincinnati office. Dewey’s clients included insurance companies, banks, manufacturers and private equity firms. He also worked on independent audits of Medical Mutual and its subsidiaries.
Moen Inc. has announced the promotion of Ji Kim to director of global design. In her new role, Kim will be responsible for providing design leadership and vision for the Global Design Team at Moen. She will set and drive strategy for product design in several countries for categories including faucets, showerheads, accessories and bath safety items. Kim will also ensure that her team follows Moen’s exceptional history of designing products that offer thoughtful designs and are on-trend but never trendy, all while aiding to the sustainment of Moen’s position as the No. 1 faucet brand in North America.
Prior to her new position, Kim served as the industrial design manager at Moen. In this role, she served as a strategic partner to the U.S. Retail Business Group, leading industrial design efforts for customers including The Home Depot, Lowe’s and Menards, among others.
This past March, the Cleveland Greater Partnership held its annual meeting to discuss issues the economic development organization has been working on the past year as well as new initiatives it is looking to support in the city. Among the issues discussed, the biggest focal points were United Airlines’ hub at Cleveland Hopkins International Airport and plans for developing Cleveland’s lakefront.
“Today, we see great things happening all around us,” says Christopher Connor, GCP chairman and chairman and CEO of The Sherwin Williams Co. “There is an absolute palpable energy and momentum in our region and I’m absolutely convinced that we are standing on the cusp of great decades to come. But it’s going to take a lot of hard work. This work requires much heavy lifting, but the rewards can best be described as transformational and truly game-changing.”
One of the most important issues expressed by GCP members and others in the community has been protecting Cleveland’s United hub at Hopkins International Airport. As one of about 20 cities in the country with hub service, Cleveland offers more than 70 nonstop destinations, nearly 250 daily departures and access to single-stop international travel.
“The airport and the hub provide more than $4 billion of economic activity to our region on an annual basis,” says former GCP Chairman William Christopher. “The hub is absolutely critical to retaining, growing, and attracting businesses to the region, but the dynamics of industry consolidation and profitability across the industry have put and continue to put pressure on the hub.”
Maintaining a hub in the region is at the top of GCP’s priority list. As a result, a task force has been created to work with the mayor and Director Ricky Smith to make sure the hub doesn’t leave Cleveland.
“The task force has … five major objectives: the first being to increase the size of the pod — the more people who travel out of Cleveland the more opportunity to have traffic for United,” Christopher says. “The second one is to make sure that United has profit. No. 3 is improving the cost effectiveness of the Cleveland hub. No. 4 is to provide advocacy on support of key United and Cleveland hub issues. No. 5 is to continue promoting our hub in other key swing markets.”
Since the task force was started, Jeff Smisek, president and CEO of United Continental Holdings Inc., has visited Cleveland three times to see what progress has been made.
“If I contrast how Jeff’s engagement with us was at that first meeting … to how he was at this last meeting, which was in October of this last year, the change has been dramatic,” he says. “We sold Jeff on the fact that we understand this, are willing to fight for it, and have strong fundamentals that are going to influence the size of the market here and their opportunity and ability to make money. Principally, that’s been around $9 billion of investment that’s going into the community. To be able to get Jeff to sit down with us for an hour now three times almost every six months tells you that he’s absolutely interested in making this a success.”
During this year’s meeting, William Christopher passed the chairman duties onto incoming chairman, Christopher Connor, who discussed one of the biggest game-changers the GCP is looking to support — further development of Cleveland’s lakefront.
“For years Cleveland has been shaped by the city’s location along the shores of Lake Erie, from our very first settlers to investments that are under way today,” Connor says. “Despite the historical utilization of this great natural aspect, we still have a disconnect, both physically and psychologically between our city and our waterfront, particularly along the downtown shoreline.”
The city’s latest plan utilizes about 90 acres between the west side of Cleveland Browns Stadium and the western end of Burke Lakefront Airport for potential development. The proposal places offices, residential, retail, dining and an entertainment component in order to enhance existing investments in the Rock Hall, the Science Center and the stadium.
“To address the connectivity issues that we have between the waterfront and downtown, the Group Planning Commission has advanced a plan that provides accessibility through the construction of an iconic pedestrian bridge connecting our mall to the harbor and enhancements to East Ninth Street from the northern edge of downtown to Voinovich Park and the provision of additional parking,” he says. “The Greater Cleveland Partnership will play our role both along Lake Erie and the Cuyahoga River. As part of our strategic planning process in 2011, waterfront development was identified as one of GCP’s priority initiatives by our board of directors.”
How to reach: The Greater Cleveland Partnership, (216) 621-3300 or www.gcpartnership.com
Over the course of the past few years, companies have had to cut back in numerous areas to survive the downturn. In 2012, companies are beginning to bring back initiatives, programs and, most importantly, talent as ways to once again improve the workplace.
While the economy is no longer placing immense pressure on companies, there are still plenty of challenges facing businesses in Northeast Ohio such as hiring and retaining strong talent, supporting health care and benefits costs and re-implementing training and development programs according to this year’s ERC/Smart Business Workplace Practices Survey.
As companies are once again focusing on growth efforts, hiring and retaining employees was overwhelmingly the biggest challenge Northeast Ohio businesses reported in 2012.
“Companies are still somewhat cautious in the market being an election year as well as health care reform, but they are definitely hiring,” says SueAnn Naso, president of The Cleveland Society for Human Resource Management, and president of Staffing Solutions Enterprises.
While companies are looking to hire, the process for finding the right employees has slowed down over years past.
“One of the things that we’ve been seeing recently as we are emerging from this recovery situation is that the hiring process remains lengthy,” says Cyndi McCabe, advisory chair for the Northeast Ohio Human Resources Planning Society, and a job placement coordinator at Lorain County Community College. “Employers are definitely taking their time in making their decisions.”
With more companies joining the employee search pool, a slower hiring process could actually hurt rather than help a business.
“It can hurt employers because what happens is if you’re looking for a certain type of talent and the person is in demand you might lose,” McCabe says. “If it takes too long they’re going to get snapped up by somebody else and the candidate can lose their enthusiasm for that particular organization. Sometimes this is because the organizations themselves are a little bit leaner so it could depend on who’s available to help with the hiring process. They may also be thinking, ‘Let’s have one more interview here. Let’s have them talk to this person and have them talk to that person. Let’s be a little cautious here.’”
While the survey doesn’t mention the speed at which hiring decisions are made, it does report that 7.7 percent of organizations, up from 2011 numbers, are using part-time and temporary workers until they fill positions permanently.
“Some positions are staying open longer so they’re getting creative for how they are filling those needs sometimes using contractors or temporary employees while they take their time doing their permanent search,” Naso says. “We also see them getting more creative around how they are screening passive candidates and utilizing social media is becoming much more of an important tool. Things like LinkedIn and Facebook.”
Social media use for hiring candidates made a big leap this year up to 51.5 percent compared to only 38.1percent in 2011. The use of online tools overall is moving in an upward direction.
“You’re hearing more about social media and there is more reference to checking someone out on LinkedIn and other tools,” McCabe says. “To a limited extent I’m hearing about the use of online job fairs as a way to attract some talent.”
Companies more than ever are looking for ways to streamline hiring efforts and ways to better communicate with potential candidates.
“They’re spending quite a bit of resources updating their websites so that they are compatible with mobile technology,” Naso says. “They are also trying to automate their whole recruiting process and utilizing technology for that — applicant tracking systems, onboarding systems and anyway to communicate with candidates faster and better.”
Businesses are also looking to improve and bring back benefits that were cut in order to do a better job of retaining the top talent they are attracting.
“On the retention side, during the downturn many companies executed salary freezes and now they have lifted those salary freezes,” Naso says. “The majority of companies did provide pay increases this year.”
In fact, the hourly rate paid to employees rebounded from 2011 and is $11.02, the highest amount reported for which there is data. Also, among organizations anticipating pay increases, the average base pay for hourly and salaried workers rose from last year to 3 percent and 3.1 percent, respectively.
“Companies are having to go back and re-evaluate and often increase their hourly rates and base salaries to stay competitive because the available talent is shrinking because people are getting back to work, especially in skilled areas like CNC welding, engineering or scientific positions, we are seeing those base salaries and hourly rates increase this year to stay competitive,” Naso says. “Those companies that are lagging behind or aren’t making those changes as swiftly as others are seeing higher turnover, they’re losing talent to other opportunities and are finding they’re having to replace talent more often.”
Another crucial area workplaces are trying to improve is health care and benefits. For the first time since 2008, these costs ranked in the top three challenges among Northeast Ohio companies.
“You’re hearing a lot about wellness incentives and more wellness programs,” McCabe says. “There is a lot of conversation and implementation around that.”
These wellness programs, as with hiring practices, are creative ways for companies to keep costs down. The survey reports that the average increase in health insurance premiums is 10.1 percent.
“What we have seen is an increased number of companies that are trying to come up with creative solutions to contain their costs but still provide this benefit,” Naso says. “They know they need to provide this benefit so there’s an increasing number of companies who have gone to a smoke-free environment where they won’t even hire smokers and they do tobacco testing because the insurance companies will give them a discount on their premium. We also see companies creating a tier system with their benefit costs that they will pick up a higher percentage of the benefit costs for their employees who participate in their wellness programs and do a specific kind of screening instead of automatically paying the same amount for every employee.”
Another way employers are keeping these costs down is by offering flexible work arrangements, which rose to 53 percent, the highest level in 12 years.
“One of the things we see is the trend of people taking part-time work,” McCabe says. “Organizations are rethinking whether they make a position full-time and maybe divide up a function, so instead of one full-time person you have two part-time people as a work around for benefits.”
When the recession hit home in Northeast Ohio, a majority of companies had to do away with employee training and development programs. These initiatives have started to make a rebound in 2012.
“We’re starting to see companies invest more in employee training and development again and they’re reinstating or starting new employee recognition programs to reward and recognize top talent,” Naso says. “During the downturn that was one of the first things they slashed. They laid-off all of their training staff and probably within the last 12 months we have seen companies start to reinvest in training. The training they’re focusing on is a lot of soft-skill training, supervisory training, leadership training and succession planning.”
While training is coming back more so than previous years, the type of training and how it’s administered is much different. Over the course of nine years, the use of Web-based training is at its second-highest level at 66.7 percent.
“You’re hearing the trend more and more that the traditional classroom training is not the only way to learn anymore,” McCabe says. “You’re hearing more about all of the e-learning, online learning or even blended learning where you’re doing things online and then coming together for a specific opportunity to practice what you’ve learned.”
The economic downturn is now in Northeast Ohio’s rearview mirror, but the effects of those few years have left businesses to approach workplace practices much differently than before and it will be interesting to see what next year’s survey reveals about the direction companies continue moving in.
Over the past couple years, Carmine Izzo has seen social media play an increasingly bigger role in how companies do business. One of the latest uses of social media is occurring inside human resource departments and how companies are researching candidates during the hiring and recruiting process.
Izzo, who is president of Amotec Inc., an executive search and staffing solutions firm, has seen firsthand a number of poor social media practices ruin job opportunities for qualified candidates. One that sticks out in his mind was a photo a girl posted on Facebook.
“There was a young lady that we placed at a large chemical company and she passed her pre-employment physical and was offered the job,” Izzo says. “Then they took a look at her Facebook page and there was a photo of her smoking marijuana on her Facebook page and they went back and withdrew her offer.”
Today, companies are embracing social media more and more and human resource professionals are researching potential job candidates on LinkedIn and Facebook to make sure that person is a good fit for their company.
“LinkedIn really jumped in and took a forefront from the professional side, and before any interview, you’re going to LinkedIn and you’re taking a look at people and seeing their social profiles,” Izzo says. “At the same time, Facebook has evolved to not just friends and families trying to keep in touch, but it’s a part of how we are recruiting and how hiring is being done.”
Smart Business spoke to Izzo about what companies and individuals should keep in mind when using social media to find a job or a potential employee.
If a company decides to use social media in the recruitment process, they’ve got to make sure that they’re doing it at the same point in the process every single time. If you don’t do that, there’s a chance that there’s some bias being brought into the interviewing and hiring process. We recommend that you talk to them and bring the candidates in first, interview them and then take a look on their social media site. Then there’s no bias in there and there’s nothing you can say one way or the other.
If you’re going to do it prior to (talking) then you’ve got to take a screen shot so people know what you looked at. You’ve got to assume that the majority of the candidates for these positions all have Facebook accounts, they all have LinkedIn accounts so it’s all on public domain. Each company should have their own social media policy in line to what the hiring practice should be.
Candidates have to make sure that the images that they are trying to portray are professional images. When I look at somebodies Facebook page or LinkedIn I’m looking at how they communicate in writing. We’re going to look at them and critique how they communicate with us. I’m going to look at, depending on what the position is, are they creative? What do they have on their page that says that they’re a good person? At the same time they shouldn’t have any pictures of themselves doing a beer bong, or pictures of themselves doing crazy stuff at a party.
If you’re embarrassed to let your mom, dad or grandparents see or read anything on your Facebook, LinkedIn or Twitter account, then you shouldn’t have that on it. That’s a pretty good rule of thumb for filtering out information that will tarnish your professional reputation. It’s the same for what people put up on their Facebook wall and how they post communications and links and you have to watch the photos that could possibly portray you in a poor light. If you’re out there aggressively looking for a job, you’ve got to maintain a professional presence at all times and if you’re working in a professional environment your page should be professional.
Make your social media page presentable
If you’re on LinkedIn, you should have a professional headshot. You’re LinkedIn page should almost be your resume sitting there. It gives you a spot to communicate what your successes are in your career so far and you can put in there what you’re looking for or if you’re open for opportunities. It is an electronic resume that you have on file and it should stay 100 percent professional at all times.
Facebook, on the other hand, is more social. Your friends are going to be on it and you’re going to be communicating. I would still keep that and maintain it, not necessarily a professional looking page because it’s supposed to be for when you’re off work, but it still has to be professional enough that you’re not seeing derogatory comments and pictures.
What makes a good Facebook page? It’s how it’s laid out. What they have on there. They’re not mad that they saw that Carmine went to a concert or Carmine went to Cedar Point, but if they see Carmine passed out drunk at the Cleveland Browns game and there’s crazy things going on around him, that’s not the image I would want anyone from my company to see on Facebook.
When I have these talks with high school students we talk about the dos and don’ts of social media. The dos are: express yourself, talk to your friends, but you have to keep a grasp on what’s out there and who’s reading it.
The don’ts are: don’t put anything on there that you wouldn’t want your mom or dad to see and don’t communicate in vulgar language. Remember this is public, so keep your personal business to yourself. Don’t complain on Facebook. I understand it’s an area that you want to vent, but post more successes rather than negative things. Anything you put on there electronically is there for life. You can delete it, but it’s still out there somewhere.
What we’re seeing is social media becoming the norm now in how we do business. If you learn to police yourself in a professional manner you’ll never have any issues. It’s important to remember you’re a brand and you represent yourself on Facebook and LinkedIn.
Michele Fabrizi has always had a philosophical difference with the way most advertising firms approach business and client relationships. Having worked on both the client and business side of the industry, she has become tired of continually seeing firms focus strictly on creating a strong ad with no regard for what the customer really wants and ignoring ideas because they came from a non-senior person, male or a female.
Fabrizi, who is president and CEO of MARC USA, a 280-employee, $300 million full-service advertising firm, was attracted to Marketing Advertising Research Consultants because the company did business the way she thought all firms should operate — with the client at the center of the business model.
In her first two years at the helm of MARC she oversaw 200 percent growth, much of it the result of her ability to get the firm to focus on the client’s needs.
“I am very much about building a business model that is centered on the clients and getting results for our clients,” Fabrizi says. “That DNA and some of the other philosophies such as it doesn’t matter who has a big idea whether they’re junior or senior, male or female, that idea is wrapped up, and we work to get it up and going. Those were very different from the experiences I had at larger shops and on the client side.”
With this philosophy driving the business and Fabrizi reinforcing it, MARC USA has been able to break barriers and foster innovation within the company, creating growth and client relationships that help transform brands.
“It’s been really exciting to build a company that is based on what’s right for the clients,” Fabrizi says. “It’s about breaking things and being innovative. We can do so much more for our clients and be more innovative and invest in the business which you couldn’t do in a public company.”
Here’s how Fabrizi keeps MARC USA client-focused while building relationships that foster growth and innovation.
Build a client relationship
Good business runs on developing and cultivating strong relationships. Simply having a good product or service no long assures repeat business or a place at the top of your industry. Look to make a lasting impression by playing to client needs.
“It sounds simple, but first of all you have to really have to want to hear and listen and get to know people,” Fabrizi says. “If you ultimately think either that’s not important, you’re not interested and it’s a waste of time, or you know more, then you can’t do it. If you think you know more about their business and you want to spend all the time talking, you can’t do it. It’s really about truly wanting to get to know someone on all levels, business and personal.”
Part of developing a deeper relationship lies in how you conduct your meetings, getting off site, and not just across the conference room table.
“Through those kinds of conversations, you can really get more insight, not just into the person but what’s really critical in their business that they feel is important that might not come up in the conference room,” she says.
“There’s a whole basic relationship management that really is critical in your client’s business at all levels. It’s really doing a relationship plan at all levels for all the key people you have to come in contact with. Making sure everybody has their ownership and accountability on that is the only way you’re going to be able to get the information and insight beyond what you can garner on your own to figure out how to help the client be ready for this big idea or the challenge that they’re facing.”
The best relationship people are the ones who really are very thoughtful and plan and study the business. Particularly in this day and age, everything is so fast. Everything is so 24/7 that it becomes very important for the high-touch part.
“Frankly, in our business, that’s very important to touch the consumer across all channels, online, in-store, word-of-mouth,” she says. “Having that kind of ability is important to us in our business in order to be effective communicators and it has to be integrated.”
To integrate better communication and high-touch capability, MARC focused on a team environment and training.
“Team is about behavioral modification, trust, and how to get people to talk,” Fabrizi says. “As part of our culture and our people and talent, we continue with team dynamic high-performance training at all levels, with my senior leaders all the way down. There’s nobody in the company that doesn’t get that training.
“If you’re training people how to work effectively among themselves, that transfers to their clients and relationships.”
To aid the culture of teamwork and a client relationship focus, MARC decided to move to one P&L statement. Instead of having each client listed under separate P&L statements, they combined them to make the overall environment more collaborative and team- oriented. The company wanted the best solutions for its clients and didn’t want people fighting over P&L.
“With the one P&L what we did was created a mindset shift in our employees, because you just can’t say, ‘Work together,’” Fabrizi says. “It won’t work. With that being freed up and the other training and tools that we give them, literally an integrated team gets together and will talk about the issues of a client and come up with ideas. It’s about breaking convention and being innovative.”
Get results through innovation
MARC USA has a heritage of doing things differently and bringing innovation to the industry. The company even created an off-the-wall word to describe its unique capabilities.
“We’re using breakthrough research techniques and new technologies to drive innovation every day,” Fabrizi says. “That’s what I’m about, what’s next? At MARC we say what we do is a word we made up because there is no word for what we do. It’s called ‘wezog’ and it’s how we think. It’s what we expect from our people. It’s a critical component of our long-term client relationships. It means doing things the way they haven’t been done before — thinking outside the box.”
The firm builds successful brands and drives sales through its creativity, insights and technology and the results are changing the game for clients.
“It’s a key reason why we have such strong, long-lasting client relationships,” she says. “It’s really about not doing things the way they’ve been done before, being highly collaborative with clients and finding ideas to break assumptions and challenge conventions. This is the kind of thinking that really helps brands strive in good times and in bad times.”
There are three words that clients use to describe MARC: passion, vision and collaboration. If you’re going to deliver on those three, you have to have the people power that’s going to do that.
“That’s how I’ve taken the company into the future, and it’s such a right thing for the business now,” she says. “It’s not about what’s nice and what the competitors are doing. People come in with ideas that are not founded.
“We do a lot of innovative techniques and strategic alliances on deep-seated emotions. Good enough is not good enough, particularly when you look at the business challenges that everyone’s facing.”
These days, consumers are more in charge than ever. They have more choices, they have more information and they have more ways to shop. It is up to firms to deliver something that is not a one-size-fits-all solution for clients.
“Sometimes our ideas are rethinking how they do business,” Fabrizi says. “Our initial ideas may not even be advertising ideas, but ideas that would protect their ROI and more along the lines of business solutions, but eventually could become advertising and marketing solutions.
“We have a very deep practice in behavioral science and behavioral economics so that we can really understand at a very deep, deep level. What we do is almost like brand therapy where we get the consumer to qualitatively express their conscious and subconscious thoughts so that we can really empower them to explore their thinking beyond the literal.”
To get those results you need to evolve and create tools and systems that help to provide new ways to connect with the consumer. In order to do this, you have to be up close and personal in your clients’ business.
“In any business today, whoever your clients are, if you’re not intimately involved, I don’t know how you’re going to survive,” she says. “You have to have trust so they’ll share data and the pain points, or you just can’t get the kind of revolutionary ideas that are going to get the kind of sea change results that are needed.”
Look for opportunities
In a business that constantly strives for new and innovative ideas, you have to reinforce what it is you’re trying to do within your company — and it’s the CEOs job to lead the charge.
“The secret is you have to get the senior leaders to buy in to it to make radical change,” Fabrizi says. “If you can’t do that, you will not be successful. If you want that type of environment then you need to keep saying it in every which way and reinforcing it and so do the leaders or it won’t happen.
“To me this is about transformation and how do you adjust your company in this day and age when you’ve got so many pressures. It’s really looking at your business and saying, ‘Why are we doing it this way? How do we do it differently?’”
In the world of advertising it’s all about being unique and having the ability to take advantage of opportunities when they arise. You have to plan for this in order to bring opportunity to fruition.
“Again, it’s thinking out of the box,” she says. “It’s not doing things normally. It takes time to do that, and it’s not a quick fix. What are the fundamental core things about the business that if nullified or changed or innovated, within a period of a year or two, could dramatically catapult the company forward so it’s not just parity?
“That’s what you’re seeing out there is a lot of parity, and you see a lot of tactics. You see very little really strong core business strategies. It’s very tactical and that’s short-term, so that means you’ll always be running, running to catch up because those things are very easy for competitors to emulate.”
Those strategies and plans are the responsibilities of the senior leadership. Those tactics have to be driven forward as the day-to-day business continues to function.
“That falls squarely with the CEO and the senior leadership and even the management level,” she says. “If they don’t think it’s important, they’re not adding those insights, they’re not worried about it, they’re not planning it and they’re not getting together to collaborate on it, you’re going to lose your way.”
The other key part is collaboration among your leadership in these processes.
“You have to have people who can help you make that idea happen,” she says. “If somebody within the organization has an amazing idea and I get hold of it, it’s like, ‘Oh my gosh — we’ve got to do it.’ I don’t care where it comes from. In this day and age we all have egos, but at the top you have to have less ego and more ability to know when you have to follow and listen, as opposed to constantly being the brilliant, fearless leader.”
How to reach: MARC USA, (412) 562-2000 or www.marcusa.com
- Get to know your clients on a business and personal level.
- Use client relationships to deliver results.
- Find opportunities to grow.
The Fabrizi File
President and CEO
Born: Pittsburgh, Pa.
Education: Received a bachelor of arts degree from Carlow University
What was your very first job and what did you take away from that experience?
My first job was helping out in my father’s music store. I saw how he took the time to listen to people and treat each student or customer as an individual. It was a very powerful lesson in many ways — how to develop people, how to deliver excellence in service, and how much you can learn about a customer’s needs if you pay attention to what they say and also what’s not said. He understood that emotions drive choices long before neuroscientists proved this.
Who is someone you admire in business?
Tena Clark — writer, musician, entrepreneur and head of DMI Music. She was one of the first people to understand that brands have a sound DNA and built a very successful company to deliver this vision. We’re very like-minded and that’s why MARC USA partners with DMI to use music to help brands forge strong emotional connections with their customers.
What are you most excited about for the future of your industry? Why?
Developments in brain science and technology are taking us in amazing new directions. While some people claim technology separates people, we’re using it to make stronger connections than ever and to deliver highly customized, personalized one-to-one experiences with brands.
If you could have a conversation with any one person from the past or present, to whom would you speak with and why?
Leonardo DaVinci — truly a visionary who also got things done. He combined left-brain and right-brain thinking to envision and then create things not even imagined by anyone else around at his time or for many years after.
When Michael Hilton looks at a soda bottle, he isn’t thinking about whether it tastes good or if it will quench his thirst. He is thinking about all the ways his company can incorporate better applications to make the bottle.
Historically, bottle labels were applied by rolling the bottle in a pot of glue, which would result in the adhesive dripping and covering areas of the bottle that didn’t need to be. The application Nordson Corp. developed was a pattern spray on the bottle. The leading edge of the label is placed on the bottle, it is wrapped around and receives a coating on the trailing edge, which saves 20 to 30 percent in adhesives.
“It’s a big seller for our customers,” Hilton says. “That’s one way to drive growth — create applications with technology.”
Driving growth is what his objective has been since being named president and CEO at the beginning of 2010. Nordson Corp., a more than 4,000-employee manufacturer of products and systems used for dispensing adhesives, coatings, sealants and biomaterials for several end markets, has been a strong company, even during the recession years. When Hilton arrived, he saw the company as an $800 million organization that could become a $2 billion or $3 billion business.
“If you step back, [Nordson] was surrounding the customer [with a] globally well-positioned [team], a talented team, and a team that executed,” he says. “That’s a very good foundation to build on.”
Globally, Nordson has a presence in more than 30 countries and has been well-established in locations such as China, India, Brazil, Europe and Japan for a long time.
“For a company our size, that’s a great global footprint to have to take advantage of opportunities for growth,” Hilton says.
To benefit from those opportunities he had to evaluate the business and understand the key areas that needed attention and resources.
Here is how Hilton is improving the operations and processes of a good company to make it a great one.
Cover all the bases
Coming into a company as its new president and CEO usually carries a lot of weight. Hilton didn’t want to just come in and make random changes. He had developed a relationship with his predecessor Ed Campbell, and he used that relationship to listen to any advice Campbell provided to understand the business.
“Initially, I spent the first couple of weeks largely with Ed getting a download on everything you would expect from the business to the customers to the investors to the organization, and he was pretty helpful in terms of his long history at Nordson,” Hilton says.
Hilton’s time with Campbell was short-lived, but impactful. The keys to the company soon belonged to Hilton and he had to now get out of the headquarters facility and visit the business around the world.
“As soon as I could I really looked to take the opportunity to travel and meet some customers, see our facilities globally and get a better handle on what we do day-to-day,” he says. “There is only so much research you can do from afar and only so many reports you can read, and until you have an opportunity to touch it and feel it, you don’t really have the same perspective.”
It was obvious to Hilton that Nordson was a very good company and performed very well in a difficult time. The company was fairly solid and there were strengths in its business model.
“If I step back and look at what were the key strengths that I found, one was how we surround and support the customer,” he says. “If you think about the underlying technology, the direct sales approach and really a service organization that is incredibly responsive to its customers, that’s as good as I have seen.”
Hilton has previously operated in a number of different businesses all with one major company, but six different business models.
“I think I have a pretty good operating field of different approaches in everything from commodity businesses to specialty businesses and high-performance businesses, and this is very high-performance, so it was a great foundation to inherit,” he says.
The biggest key for a new incoming CEO to understand what a business is about and how it operates is to listen.
“I didn’t rush to form any particular opinions,” Hilton says. “It’s a complicated business so you need some time to get to a level of understanding before you can sort through and think about what has to happen next and take the company forward.
“As somebody who’s been in the industry 30-plus years before I came here, you can have a tendency to feel like you know what needs to be done. You have to wait a little bit and make sure you have enough input. It’s a bit of drinking from the fire hose, but it does give you a good perspective of the day-to-day.”
While listening is crucial to a CEO’s understanding of the business, visiting different locations in person is also important.
“You have to get out to facilities so that you better understand what you do and how you win in the marketplace and there’s no substitute for that,” he says. “Also, you have to take time in the nonbusiness environment with folks, whether that’s on the weekends or at dinners just getting to know people in the organization.”
Those same things go for getting to know your leadership team. Demonstrating that you’re a regular guy is a crucial step to cementing relationships.
“It is really trying to put the leadership team at ease when you come in,” he says. “Particularly in the time when I was coming in we were just starting to come out of the recession and the best thing for the business was to figure out how we could win in the recovery phase and to win more than our fair share of the business.
“You need the team motivated to do that. I’m here to learn and I think I have some experience and value to offer, but I don’t want to come in with a preset agenda that said we have to do A, B and C, because I didn’t know enough.”
Take the next steps
Once Hilton had become comfortable and did his due diligence within the organization, it was time to take the things the company was good at and find ways to make them even better.
“If you look at what we’re really good at — the surround the customer piece, the global position and the execution — what else do we really need?” Hilton says. “I came down to focusing on three areas. No. 1 was, ‘What can we do from a strategic standpoint to take us to the next level?’ No. 2 was, ‘How can we create more leverage across the enterprise?’ No. 3 was talent development.”
The first thing that Hilton and Nordson performed was a rigorous review of the business.
“We have these businesses, what can they deliver over the next five years from a growth and performance standpoint?” he says. “Historically, the company grew organically at about 6 percent and historically added about 1 percentage point from M&A. We concluded that we ought to be able to take that 6 percent and make it 8 percent.
“If we continued to improve our bottom line performance, we’d have more cash to reinvest, so we should at least set a goal to add from an M&A perspective, not 1 percent, but at least 2 percent and maybe more. So how do we go from something that looks like 7 percent growth to 10 percent growth on a sustained basis?”
First, Nordson looked at ways to exploit emerging markets by improving technology and applications.
“If you think back from a strategy standpoint of how do we get more organic growth, emerging markets is a big play, using technology to create new applications, and using new technology to help our customers recapitalize are all very important,” he says. “So when I looked at what we’re spending on technology, I said, ‘Even though we’re the leader and absolutely have the best technology out there, we’re not spending enough on technology. We’re spending too much on supporting our existing products.’
“So we’re increasing the absolute amount we spend on technology and we are shifting more of our technology spend from supporting existing products to developing new.”
Another step Hilton took to drive growth was changing the strategy of how the company went about mergers and acquisitions.
“We had to add a couple of points organically,” he says. “How do we move from an opportunistic and episodic acquirer … to being a more consistent acquirer? We identified four areas of interest to us — medical devices, flexible packaging, cold materials and extending our test and inspection business. You have to use strategy to drive organic growth with technology. Use strategy to drive M&A activity in areas that make sense. We’ve made three acquisitions this year which added 4.5 to 5 percent to revenue.”
The next thing the organization focused on was what it could do across the company that would benefit each business.
“One of the assessments that I made when I traveled all around is we had done a really nice job of adopting lean technology, but it plateaued in terms of our performance results,” he says.
“Much of the company’s margin improvements from 2002 to 2007 came from the Lean initiative. We went from 12 to 13 percent operating margin to 17 percent. Last year we did 26 percent, so we’ve moved the bar quite a bit and we have more to go. We have kind of stalled out on the Lean activity.”
To drive the next wave of continuous improvement Hilton appointed a senior experienced operations employee to build a small team and give him direct reports on improvement.
“As part of that we’ve identified two things; one we’re in the middle of executing now is optimizing our global supply chain,” Hilton says. “That’s really to allow us to distribute things where the demand is and do that in the most efficient way. The second big area is around segmentation, which is understanding from a product and customer standpoint what we provide, what are our offerings, where are we making money and do we have too many products?”
The third piece of the puzzle for Hilton regarded the company’s talent. He was pleased when he traveled around the globe to see the quality of the talent Nordson had in the organization, particularly at the leader roles.
“The challenge for us, like many companies, is if you really want to grow substantially, you need to add resources and you need to do that across the globe,” he says. “To do that, we need to build up our management capability in all areas. We have good people, but just not enough to support our growth ambition.
“One of the key areas of focus is how do we enhance our overall talent development and management approach.”
When Hilton did the first review of succession planning in the organization, his direct reports went a couple of levels down and he noticed there were a lot of gaps. The company focused initially on how address that.
“We made a number of rotational moves to broaden people’s skill sets and capabilities,” he says. “Then we took a step back and said, ‘OK, for the folks that run the businesses and the functions that report to me, what kind of skill sets do we want those folks to have, both from a content or expertise standpoint and a leadership standpoint?
“Given those skill sets, what kind of positions below them would be good feeder positions that would help them develop those skill sets and capabilities and where is the key talent in the organization who could move into higher levels of leadership and management?’ We got more thoughtful in development moves and giving folks different experiences.”
Add to your strategy
Now that Hilton had spent the time understanding the business and identifying the areas where the company had the best opportunities to improve, he had to make those changes part of the company strategy.
“If you step back, these are the things that I think we need to do to help us move from that $800 million to a $2 or $3 billion company to give us 10-plus percent revenue growth and some additional leverage that gets us into teens earning growth and be a top-quartile performer,” he says.
“We had a Lean organization and one that hadn’t gone through a rigorous strategic planning approach in the past so some of the concepts were new. I brought some help in from the outside to help put some structure and discipline in and to add some resources that we didn’t really have.”
Those changes resulted in 2011 revenue of $1.2 billion. One of the keys to more organic growth was Hilton’s strong belief in leading the merger and acquisition activity in the market.
“If you can be the one out there driving the activity, you’re going to end up with a better set of deals to add to the portfolio,” he says. “If you’re driving it, you’re probably out there establishing relationships early on. It might be two, three, or four years until somebody decides they want to sell, but if you have a relationship it enhances your own knowledge of their business and therefore reduces the risk.
“It also gives you a first shot at business. The more knowledge you have, the more you understand what you’re going to do with it once you acquire it.”
For Nordson, the company looked at logical extensions of what it does today and what would fit its business model.
“We put a set of criteria together,” Hilton says. “For example, 40 to 45 percent of our business is recurring revenue through parts, services or consumables. We like that because it gives us a steady nature to our business. So when we look at things to buy, whether it has a recurring revenue component is an important area to check the box on.
“We look at whether the company is a technology leader. Is it a performance sale so that I can take advantage of my technical sales force? Is it regional, but I could take it global and use my infrastructure? We look at all those things and use a set of criteria that says this is a good deal for us.”
In June Nordson acquired two more companies, Entrusion Dies Industries and Xaloy, bringing the the total to five acquisitions in 2012. Hilton made certain these two companies fit the Nordson strategy.
Another thing Nordson is changing strategically about its M&A activity is how it manages the companies it acquires.
“Historically, we tried to buy good companies and leave them alone so we didn’t screw them up,” he says. “We like to still buy good companies but now we’re looking at what we can do to make them better, how we integrate them into the business that we have, and if it’s a new area, what else can we add to it down the road. You need to do that to deliver the performance, but also sustain the business.”
A key ingredient to sustaining the business is having top-level talent capable of keeping pace with the growth you want to see. That talent has to be intertwined with the strategy for everything to operate smoothly.
“There is no substitute for going out and spending time with your organization and making your own observations,” he says. “Talk, listen and see your folks in action. See them with a customer and then you’ll get an initial reaction, but then you have to test that with folks.”
By doing this analysis you are able to get a sense of the gaps in the organization and moving forward, it is easier to see where talent development and your strategy line up.
“If you’re doing the initial round of visits, you get a sense of what you have in the organization,” he says. “You get a sense of the skill sets and capability at a high level of one or two levels down from the folks that work directly for you so you get a sense of depth in the organization and breadth in capability. Then you weigh that up against what you’d like to do.”
The other thing Hilton did was seek out a few trusted advisors to help him while going through the talent process.
“Find one or two people that you feel pretty confident with who could be trusted advisors without any particular point of view and be objective to bounce ideas off of,” he says. “If you have that kind of open relationship, it ties into some of the other things in terms of how you gauge your own leadership.”
Most importantly, as you go through an evaluation process of your business, you have to be willing to put resources behind the things that need improvement if you truly want to create measurable results.
“Get help from outside your organization and put resources on it,” Hilton says. “It doesn’t happen without some resources on it to develop, and it doesn’t happen overnight.
“This is a really, really good company that I inherited. We’re making some positive changes. I think we can make it considerably larger and just as good in terms of the performance, if not better. I’m pretty pleased about where we’re at and about our prospects. The folks have risen to the occasion, but I don’t want to exhaust them because we have a long way to go.”
How to reach: Nordson Corp., (440) 892-1580 or www.nordson.com
Stephen Hightower hasn’t had to stress over challenges faced by many during the recession, but that’s not to say he doesn’t have business challenges. He is just facing challenges of a better kind — growing pains.
In the past three years, Hightowers Petroleum Co. has grown by more than 25 percent a year — and it’s still growing. As president and CEO of the $227 million petroleum distribution company, Hightower has had to decide how best to ensure the longevity of the organization.
“We’ve had exponential growth over the past four to five years where we’ve grown anywhere from $50 million to $60 million a year over the last three years and we’re anticipating that kind of growth again this year,” Hightower says. “That has obviously offered management challenges as well as organizational challenges to maintain the integrity and the quality of the day-to-day performance while absorbing the new additional business on a daily basis.”
What makes this growth and the decisions that come with it more challenging than usual is the fact that Hightowers Petroleum is a family-owned business. Decisions as to where to steer the company are not always easy to make.
“We started as and still are 100 percent family-owned,” Hightower says. “As a family-owned, three-generation company, that has its own set of unique issues as it relates to culture, keeping that family feel while growing into a corporate atmosphere is always thoroughly challenging.”
While the family certainly has a say in how the company grows, it is ultimately up to Hightower to make the final decision as the 100 percent stockowner and CEO. Here’s how he has positioned the company to reach the next level.
Keep up with growth
Gasoline is a fuel that has to be available to its users. It is crucial for Hightowers Petroleum to be able to keep up with customer demand. To do so, the company stays focused on its core business.
“Never take your focus off of the current business,” Hightower says. “Make sure as you grow and you do alternative activities that your core is well taken care of and not distracted. Add to your organizational support as you bring on new business without sacrificing the core because if you lose business as you gain business then you’re not going to grow.”
One key to the company’s ability to keep pace with its growth has been its decision to be ISO certified.
“When you first put a quality system in place, it literally is no more than a manual that someone has written,” he says. “It takes two or three years of being tested and actually being forced to utilize those processes or you’re not able to get recertified.
“If you utilize those processes then it becomes a part of your culture and once it becomes part of your culture, then your operations begin to change. It’s not automatic just because you have a quality system that you’re going to operate in a quality manner. It’s a gradual adaptation of your everyday natural life.”
Having those processes and systems in place allows you to bring on new employees without having to recreate anything.
“It’s all written, it’s all documented and it’s all practiced such that when you bring new people with new ideas and ways that they’ve done business at other organizations, it’s a lot easier for them to adapt to the new processes that we already have in place,” Hightower says.
With the pace at which Hightowers Petroleum has grown, the company’s success has relied on good employees.
“You have to measure when your people are at 110 percent to add that additional person in that particular department to support the accounting side of that growth as well as the execution of that business on the other side,” he says. “So it’s making sure that you continue to have quality individuals that know their job right up front. They may be trained to your system, but they are quality people walking in the door to be able to adapt to your business and your system and be able to become part of the team very, very quickly.”
Quick adaptation is key in maintaining fast-paced growth. Hightower makes sure he sets the pace of his organization.
“When you set the pace as a leader in terms of working hard, working long, working accurately and not having or accepting mediocrity in your organization, then the culture of your people falls into that same rhythm,” he says. “Once you’ve established the rhythm of your organization, it becomes pretty easy to identify individuals that cannot keep up with that pace. Either they stick out and they perform or the fellow employees support them and correct them or they are the ones who weed their own peers out of the system.”
Get in position
When growth is the primary focus of your business, it is important to plan how your company can best benefit from that growth.
“Succession planning has been a very key part of our future planning process,” Hightower says. “We elected an outside board of directors about a year ago. In doing that, part of the reasoning was from a succession-planning standpoint; those that would take over the business in the future would have to have an outside board. We felt that it was proper to begin to exercise and practice with a quality outside board so that if something were to happen to myself or if we were ready for a change, that process is already in place.”
To fill the board, Hightower brought in senior people from Shell, Marathon, Eli Lilly and other businesses of a similar size and nature to his own in order to take the company to new heights.
“If you’re a privately owned company, there’s typically a lot of fear of outside boards because there’s fear about giving up control,” he says. “There was a decision that we had to make whether or not we wanted an advisory board, or whether we wanted an actual board of directors.”
The decision to go with an outside board of directors proved to be the right one in the long-term.
“We’ve got some quality people and some expertise that will hopefully balance our growth as I go into water that I’ve not necessarily been into from a size standpoint,” he says. “When you’re trying to get to a billion dollars, you’re in territory you’ve never been before. Having that type of advice and support from an outside board that’s committed to the success of the organization has been a good experience for our company.”
Most privately held companies have family and friends as board members so they can remain in control of the organization. Hightower says it’s been advantageous having an outside viewpoint.
“Don’t be afraid to have people know more than you know, people who are smarter than you and people who can contribute to growth and not just be a yes man to you as a CEO,” he says. “The fear of someone being better, taking over, or learning something that you may think is proprietary is narrow-minded as it relates to long-term growth. If you don’t want to grow and you want to maintain a lifestyle business and just do enough to get by, that’s one thing.
“If you’re really committed to growth in your organization, then you need people better than you on top of you and people better than you below you and that may or may not be someone in your family. If it’s not someone in your family, get the best person for the job.”
Often, just giving up control in aspects of the business is the hardest thing for a family-owned company to come to grips with.
“Many people remind you of the horror stories of CEOs being fired by their board and being locked out by their board after they’ve ran a business and built a business and then their door locks are changed one day when they come in,” Hightower says. “That’s the worst case scenario, but yet one that was presented over and over again from a fear factor. As a CEO who is the leader of the organization, I had to overcome those fears not just myself, but for family members and others in the organization who do not have the same level of no fear.”
For the betterment of the business there has to be someone willing to take the chance and take the risk to push forward.
“As a leader you’ve got to be the one who pushes the organization in a way that’s good for the organization and overcome those fears in the process,” he says. “Having done that, one year later, all of those that were nervous and not necessarily for having a strong outside board have now come around to say, ‘It’s not that bad after all.’ They’ve begun to see the value in the selection that was made.”
Take advantage of opportunities
While bringing in an outside board to help the company reach higher levels was crucial, it has also been important that the company keep looking for opportunities. Hightower started with technology.
“In our distribution model early on we adapted technology and we also adapted procurement methods of managing the entire enterprise versus just managing a site,” Hightower says. “We developed a national strategy very early to be able to adapt to corporations when they began to have a single supplier supply the entire commodity versus having 10 suppliers managing that one commodity. By adapting to that procurement process a long time ago, we were able to move as corporations were changing how they purchased to be able to be the single supply chain manager for those corporations for the fuels area.”
Being privy to the changes in supplier thinking and the new opportunities those changes could create has contributed to the company’s success. Finding new areas for your business to expand into is crucial for exponential growth.
“There’s a concept similar to football were you say, ‘You go wide or you go deep,’” he says. “If I was going to go wide from fuel I think if I got into electrical and got into HVAC or started doing fasteners, that’s going wide. I suggest that you go deep. If you’re selling gasoline and diesel, you add monitoring and equipment in the gasoline and diesel area and you add lubricants and oils and then you do things that are complimentary to your industry so that you get deeper into your industry versus going wide and trying to get into other products that are not complimentary to your industry.”
When the company adapted technology it got into technology relative to fuels. When the business began to look at expanding the supply chain into freight and transportation, it was in the fuel-related area.
“Going deep versus going wide is one of the key focus areas that an entrepreneur should look at when expanding what they do next,” he says. “Make sure that what you do next deepens your position in that industry versus trying to start all over into a new industry sector. There’s very little benefit in going wide because you have to now become familiar and an expert in a whole new area and a whole new set of people and suppliers and buyers. You want to stay within your industry and add components that will deepen that industry.”
To take full advantage of the opportunities that can be presented to your business, you have to set goals for what you want your company to become.
“We want to become a billion dollar company,” Hightower says. “We said that when we were only doing $50 million and now we are doing a quarter of a billion dollars. You’ve got to want to grow your business. You’ve got to have a deliberate effort in growing your business to scale and size because it won’t happen by itself. If you’re not talking about it and not trying to get there, then you probably have no chance of succeeding.”
HOW TO REACH: Hightowers Petroleum Co., (513) 423-4272 or www.hightowerspetroleum.com
- Make sure your company is doing the right things to keep up with the pace of growth.
- Plan and position your company to best benefit from what growth can provide your business.
- As you continue to grow be on the lookout for areas of opportunity.
The Hightower File
President and CEO
Hightowers Petroleum Co.
Born: Middletown, OH
Education: Attended Wright State University and majored in management and communications.
What is the best business advice you have ever received?
Never stop pursuing your dream. There are many days and many times that it seems like tomorrow, but there is no tomorrow. You go to bed and you wake up and there is another day. Problems always get solved by waking up and meeting those challenges head on, regardless of how bad they are. Face your issues and never stop, because when you stop it’s over with.
Who is someone that you look up to in business?
The most important person in my business career has been my father. When I was a teenager I got to actually sit down in sales meetings and do sales calls with my father. That was probably the most impressionable. As I began to grow there were people like Bill Mays with Mays Chemical and Vernon Stansbury with SCSC and these were companies doing $300 and $400 million worth of business. I would see their boats and their 10-story office buildings and that’s what let me know it was possible for me to go out and have the same thing. If you don’t see that it’s possible for a young African American to have that size and scale of business, then you don’t know that it’s possible. It was seeing other African American CEOs that were young, aggressive and accomplished that I knew I could do the same thing.
What are you most looking forward to in your company and industry?
I’m looking forward to an event that will either take part of my company public allowing us to maintain majority ownership, but put me in a position where I can semi-retire from the organization and/or an event where I could sell the entire company.
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