According to Jane Mason, the founder, president and CEO of software provider eMason Inc., being the leader of a fast-growth company means always having to re-evaluate your strengths and weaknesses, both in your business and in yourself.
“You have to leverage every ounce of leadership and management skills that you have to grow the company — from where we were to here, and from here to the next level,” Mason says.
As a pioneer in offering Web-based business automation services, eMason has achieved 1,702 percent growth over the past three years as well as doubled its work force to 100 employees in just 12 months.
Smart Business spoke with Mason about her strategy for adapting her leadership style to manage her company’s rapid growth and expand the $10.2 million business.
Lead though behavior. My leadership style is very hands on, but I also lead through motivation and by setting an example. From a good leadership perspective, having a clear vision that can be communicated regularly is very important, and I think the most important part is your behavior; leading by example. Our vision includes the words kindness and respect, and that permeates my leadership style. My style is more motivation than it is autocratic. The things that I’ve seen that don’t work are the aggressive, autocratic behaviors and not living up to what you say. I’m very clear and I’m very tuned into following up on what I’ve said I’m going to do, corporate strategywise and with people.
Set your priorities. As we’re growing, I’m modifying my behavior in how I interact with people. I’ve had to step back, and I can’t be involved in all of the day-to-day operational things, because that’s not healthy. That’s not good for our company. I have to keep my eye on the market, on the strategy and on the client delivery. Because there are so many things coming at us personally and through the business, I’ve learned to chunk it down into three pieces and try and accomplish those things each day.
Delegate tasks. Personally, instead of making something happen — I need to make this business development report — I go to the person whose job or role that is to create a business development report. I’ve moved myself away from the day-to-day operations through the hiring of consultants and other high-level, skilled people. I’m letting them do what they do best. It’s a personal struggle in some areas because it’s hard to let go, but through good hiring practices and motivating through kindness, I think we create a level of trust where people are holding themselves accountable and delivering.
Retool communication. The original group of people still meets with me personally, and I meet with the management group, but there are a lot of people now that work here that I don’t know and don’t really communicate with other than my corporate messaging. I do internal videos where I reach out to the company and tell them what are we doing, what are the successes or we’re having some workshops internally, so sign up. I keep them in tune. It’s kind of like an internal YouTube. It enables them to see me if they don’t see me because I travel quite a bit and I’m on a different side of the building now.
Hire people with initiative. We’re an entrepreneurial company at heart, so we want the people that come here to be the best that they can be and we want them to understand that we need them to help us grow and add structure to what we’re doing. Self-initiative and self-responsibility is really important for us. We’re looking for people that can say, ‘I have the skill set, but I’m also honest enough to know that I might not be able to do this job,’ or have the self-responsibility to say, ‘I don’t know how to do that, but I’m going to learn how to do it.’
Focus on your vision. Motivation has a lot to do with the passion we have for our product and what we’re doing. I think employees are motivated by the fact that they are responsible. They can see they are making a difference, and we talk about how they make a difference and how we as a company are making a difference; I think that jazzes people.
HOW TO REACH: eMason Inc., (727) 507- 3440 or www.emason.biz.
Dr. Steven G. Gabbe was aware that a lot of hours had been put in developing plans for a new cancer hospital on the campus of The Ohio State University. Gabbe was at OSU when the James Cancer Hospital first opened 20 years ago, and in 2008, he was back as CEO of The Ohio State University Medical Center.
He was excited that the project was moving forward but also aware that concern had been expressed about some of the plans that had been made.
“People wondered about the plan,” says Gabbe, who is also senior vice president for health sciences. “There was concern about the design of the hospital, which included two towers side by side with an atrium in the middle.”
This wasn’t the only concern and the uncertainty was great enough that university trustees wanted planners to take another look at the project.
“They challenged us to pause and go back and look carefully at those plans and then come back to the board of trustees and present to them our revised plans for the new hospital,” Gabbe says.
This opportunity excited Gabbe. He saw it as a great chance to go back to square one and get a clear understanding of the plan and its impact on the 16,000-employee OSU Medical Center.
“It was a billion-dollar project and most of the hospital was going to be paid for by our clinical revenues, as well as some philanthropy, but primarily by our clinical revenue,” Gabbe says.
It would have been completely natural for those who had put in a lot more time and effort on the project than Gabbe to be a little frustrated at the prospect of starting over.
“I’m sure some folks said, ‘Oh my gosh, now we have to go back and look at the plan again,’” Gabbe says. “But to everyone’s credit, no one was discouraged. No one looked at it as a burden. They all realized this was a chance to get to do this right.”
Get people excited
Gabbe began his effort to meet this important challenge by focusing on the opportunity he and his team were being given, rather than presenting it as a burden they would have to bear.
He focused on the fact that this new hospital would be built on a site that had previously been home to a tuberculosis hospital that was no longer needed.
“We now have effective means to prevent and cure tuberculosis,” Gabbe says. “And on this site, we hope to build a hospital that will provide care for cancer patients while at the same time, hoping there will be a day when this hospital won’t be needed anymore, because we’ll find cures for cancer.”
Gabbe focused on that opportunity, and then quickly moved into the challenges that were facing his team in making the opportunity a reality.
“Clearly describe the challenges you’re facing and why those challenges are important to everyone involved in the work group or in your company,” Gabbe says. “The project that you’re going to be working on impacts everybody’s position and the outcomes are going to impact everyone for years going forward.”
One of the keys to getting support on a big challenge is your ability to convey confidence and personal engagement. Your team needs to see that you’re not just passing all the work off of your plate.
“If you’re going to be leading an effort like this, you have to come in having done the work,” Gabbe says. “You have to have a vision for what you see that future will be. You have to understand the strategic priorities in the planning process. You have to be realistic about the challenges and about the difficulties. It’s going to be hard work. There are some understandings and some compromises we’re going to need to make.
“We’re going to make those together. You also have to make sure that people understand they need to be accountable for the decisions that are made and that those decisions need to be made together.”
Gabbe began by making sure that everything was put on the table at the beginning and nothing was left out. He began to ask questions, a lot of them, and had his team do the same.
“We kept asking the question, ‘Who else needs to be at the table?” Gabbe says. “What information do we need?’ One thing we did not want to do was create an elite planning group where people felt like it was being done behind closed doors, and they didn’t have a chance to influence the plan. This was too big and too important a project. Much to everyone’s credit, when we got done with the project, we did not have someone come up to us and say, ‘Well, you didn’t think about us.’ Or, ‘We weren’t involved.’ The group was very inclusive as we made the plans.”
There were more than 100 issues that were identified as requiring an answer with the cancer hospital project. Gabbe knew the team needed a method to track progress on resolving each of these items.
They came up with a color-coding system that used three colors everyone knows very well: red, yellow and green.
“We found the scorecard was very helpful in defining each of the tasks we had to complete for the project,” Gabbe says. “It was something we could look at and see red if we hadn’t solved the problem, yellow if we were getting there and green if it was fixed. It was a good reminder of where we were and what we had done and what we hadn’t done. Then we expected people to be ambassadors for the project and be willing to go out and talk to their constituencies and come back with objective feedback about what we were doing.”
Once again, reaching out to others is crucial in beginning to move toward solving your problems. The team asked the CFO to go back and confirm the medical center’s and OSU’s long-range financial plan to make sure financial projections were still accurate going forward.
“We had our architects go back and begin to look at design elements of the building and how they could be structured in a different way in a setting where there were smaller patient care units, space for education, space for research and space for families,” Gabbe says.
There was an analysis of parking and how far people would have to walk from their car to specific rooms. When concern was raised about the height of one of the hospital towers and how it might impact medical helicopters, the Federal Aviation Administration was contacted.
“We said we better make sure we talk to the FAA to make sure we’re not going to need to change where our helipad is,” Gabbe says.
But it wasn’t just problems Gabbe and his team had to address. They also needed to look at ideas that might not be able to be implemented for some reason, whether it be funding or the lack of availability of resources.
“We developed what we called ‘circuit breakers,’” Gabbe says. “If our long-range plan is not as positive as we had hoped, we need to come up with a list of parts of the building that we can hold back on.”
It’s easier to come up with these things in the beginning and easier when you have to make adjustments if that possibility is already stated at the beginning of the project. So develop a list that you can refer to in the event something unexpected happens. If it doesn’t, you haven’t lost anything for the effort.
“We presented that to the board that if things are not as good as we had hoped, we will defer the construction of this part of the hospital until things are better,” Gabbe says.
The fact that all this work was supposed to be completed in 100 days was never far from Gabbe’s mind and he made sure it was never far from his team’s mind either.
“You need to create an understanding of the overall importance of the project to the company or the work group and the sense of urgency about the time that’s allowed,” Gabbe says. “Provide a sense of what the timeline is and when this work must be done.”
Keep asking questions
As much effort as you make to work with your team and include others in a project, you still need to make sure everybody else knows what you’ve been up to. Whether that’s the rest of your employees or, in Gabbe’s case, the employees, students and faculty at OSU, you need to share your story with the masses.
And you need to do it before you’ve carved it all in stone.
“You want to do it at a point in time when the plan remains open to change,” Gabbe says. “This is going to be the largest building we’ve ever built at Ohio State and it’s going to be something they are going to pass by or be in every day. They need to feel they had the opportunity to be part of the planning. That was a key question. We wanted to have enough information so they could react to the plan. We wanted to have enough time so we can respond to their constructive criticism.”
Don’t just rely on one meeting to present and wrap everything up. People need an opportunity to hear about what you’re doing, mull it over, and then come back and raise their concerns or ask questions.
“We presented to them the overall design, but we also presented to them a number of different options we had for the hospital plan,” Gabbe says. “‘Here’s how we could do it. Which of these options do you prefer? Here’s how we could do that. Which of those options do you prefer?’ They could come and they could hear the plan and they could participate in the audience response, they could participate in a question-and-answer session, and they could send us their comments to a website so we could review those, as well.”
You should also let people know how they will be affected and be thorough and thinking about the impact of your project on the business, aside from the project itself.
“For example, we know the construction on our campus has disrupted traffic and we know it has made parking more difficult,” Gabbe says. “We tried to do everything we could to get out in front of those plans and let people know why we were doing what we were doing.”
If people have concerns, go out of your way to address them and give the person everything you can to either allay their fears or show that you’re addressing the issue.
“It’s what people don’t know that can be the risk,” Gabbe says. “People then begin to imagine or project. It’s always best when people understand what the finances look like. It’s just very important. There were no secrets. If people said something was wrong or something wasn’t right, we worked together until we were convinced we had the right projections for the future.”
Gabbe and his team worked through the multitude of issues that needed to be addressed and met the challenge. Work on the new James Cancer Hospital and Solove Research Institute is expected to be completed by 2014.
By 2015, the entire expansion to the OSU Medical Center is expected to add more than 10,000 full-time jobs in Ohio, in addition to the 5,000 construction jobs that will have been needed. The center takes in about $1.8 billion in operating revenue each year, but the expansion project is expected to create an additional economic impact of $1.7 billion by 2015.
“It was a great privilege and opportunity to be part of planning something that would make a difference in people’s lives every day for years and years to come,” Gabbe says.
He credits the openness and transparency of his team’s efforts for the successful outcome.
“The communication plan when you’re doing something as big and impactful as this is almost as important and maybe just as important as the plan for the new building itself,” Gabbe says.
How to reach: The Ohio State University Medical Center, (800) 293-5123 or http://medicalcenter.osu.edu.
Ohio State University Medical Center
Born: Newark, N.J.
Education: Bachelor of arts degree, Princeton University; medical degree, Weill Cornell Medical College
What was your very first job?
I was probably about 10 or 11 when I worked on a fishing boat off the New Jersey coast. I helped people bait their hooks and clean their fish, and I got a chance to do some fishing while I worked on the boat. I met a lot of people who got seasick.
Whom has been the biggest influence on who you are today?
Dr. Priscilla White. She was a pioneer at the Joslin [Diabetes Center] in Boston. I developed diabetes when I was a medical student. Dr. White took care of me when I was a resident in Boston. She was a pioneer in the field of diabetes in pregnancy. She began working with women not long after the discovery of insulin. I have dedicated most of my career to taking care of pregnant women with diabetes. She was a huge influence on my career.
What’s the best advice you’ve been given?
Do good, and don’t complain.
If you could sit down with anyone, past or present, whom would it be and why?
Hippocrates. I’d like to learn about the practice of healing as he thought of it in its very earliest stages. As physicians, we take the Hippocratic Oath. I would love to talk with him about how the Hippocratic Oath came to be formulated. It still influences our day-to-day practice of medicine.
By the time Tenet Healthcare acquired St. Mary’s Medical Center in 2001, the hospital had officially entered an identity crisis. In struggling to keep pace with industry changes, the West Palm Beach-based facility had floundered financially in its final years as a not-for-profit hospital. By the time Davide Carbone stepped in as CEO in 2006, St. Mary’s had become so unsure about how to move forward that it wasn’t moving at all.
“The hospital had a wonderful past and wonderful legacy and is a vital resource to the community, but it was treading water to figure out which direction to go in, in a world of constant change, especially in the health care universe,” Carbone says.
Despite coming in with a successful track record — Carbone spearheaded a major financial turnaround at Aventura Hospital and Medical Center as its former CEO — he had a big job ahead of him.
“The hospital had really not been advancing, had not been progressing, and people were concerned,” he says. “But they were also comfortable with what they were doing. One reason that the hospital wasn’t progressing or meeting the needs for growth was because they weren’t changing, and I became a change agent.”
Find an identity
To stabilize St. Mary’s financially, Carbone had to get its more than 1,600 employees and members of the community on board with some major changes needed to turn the hospital around. This was easier said than done.
“There was a large contingent in the community that easily wanted to see St. Mary’s go back to the old days that they remember fondly, but that was not practical,” Carbone says. “That’s not reality.”
Carbone needed to gain the support of the community and unite people around a new vision for St. Mary’s. The problem was that the hospital was perceived by community members in very different ways.
“This hospital had a glorious background and kind of fell into a trough and was having a hard time pulling itself out of it,” Carbone says. “It lives under the cloud of a lot of people’s impressions that we’re just a charity hospital or we’re just a trauma hospital or just a Catholic hospital.”
As a faith-based hospital, St. Mary’s is one of the highest providers of charity care in South Florida. It also functions as a level-one trauma center and a community hospital. Carbone wanted to show the community that St. Mary’s encompassed not one, but all of these things, and financially, it wasn’t a failing or destitute organization, but it had lots of potential and was still providing great services.
He decided the first step in re-establishing the hospital’s identity with the community was instituting a new logo that honored the legacy of the hospital while acting as a symbol for a fresh start.
“It seems trivial, but I think it gives people something to rally around,” Carbone says. “We all want to follow a leader. We want to follow success.
“In this case, it was just getting people motivated and getting them to see a vision of what could possibly be at St. Mary’s versus what had been at St. Mary’s.”
By getting the community excited about change and a new vision, people could start embracing change without feeling like they were abandoning the roots of St. Mary’s. Carbone refocused the hospital’s marketing and image-building efforts to generate excitement in the community about its goals.
He encouraged St. Mary’s staff to work proactively with the media. Giving the media more opportunities to learn about the hospital’s services and facilities, St. Mary’s began getting positive media attention instead of negative. This attention played a large part in renewing communication and building trust with community members, many of whom were Carbone’s biggest skeptics.
“Sometimes that criticism is legitimate and warranted, and sometimes it’s due to a lack of understanding,” Carbone says. “A lot of that is just communication.
“People have to see you as somebody they can trust and somebody you can believe in. As you develop that level of trust, people are much more willing to work with you and take risks with you.”
Getting the community on board with change was crucial. However, Carbone also had to make sure that employees were prepared for change at St. Mary’s. Having started in health care as a nurse’s aide and as an emergency medical technician, he knew how easy it is to get caught up in the hectic demands of the job and lose sight of the long-term vision. Many employees weren’t interested in changing the status quo, even with a negative company culture.
“It took a lot to convince some of the folks, especially on the medical staff, that change is a good thing,” Carbone says. “Change means change, but change also means progress and survival. You have to be a change agent, but you have to do it in the most positive way possible.”
In looking for ways to re-engage his employees, Carbone realized that one explanation for the alienation he saw was a lack of effective employee relations and recognition.
“One of the things I noticed right away was that we did very little in the world of employee relations,” he says. “We did very little communicating, very little celebration of our successes.”
Carbone had St. Mary’s human resources department bring on one person whose sole job would be handling employee relations and developing ways to call out the successes of employees and of the hospital.
With an employee relations department in place, St. Mary’s developed monthly employee newsletters, activities with employees and celebrations during the holidays. It started recognizing industry events, such as May’s hospital week, and being more active in charity events, including the Leukemia Walk and March of Dimes runs and walks.
The hospital has also developed awards for top employees and volunteers each quarter. By holding up these examples of success, Carbone hopes employees will see how each individual’s success benefits the hospital, which benefits everyone.
“You have to encourage people that it’s definitely teamwork,” Carbone says. “No one person, no one idea can save any facility. So you have to rally the leadership team. They have to rally the people that they work with to try to get on board and see we’re going in a new direction, and here’s the direction, and here’s why, and here’s what we need you to do to help us get there.”
Since Carbone stepped in as CEO, he hasn’t replaced one member of his senior leadership team at St. Mary’s, with the exception of a COO who left to become CEO of another hospital. By uniting the existing team to support change, he was able to build trust needed to move forward.
“Your job is to sell them your perspective, your vision and your goals and that you have the experience and wherewithal to make it happen if we can work as a team,” Carbone says.
Once you rally your people around change, you have to deliver it. Carbone was starting from scratch to develop a strategic plan that could turn St. Mary’s around financially and update it for the future. Before making any changes, he thought hard about St. Mary’s strengths, where it wanted to go, where it needed to be and how to get there.
“Those are all easy questions to ask but very difficult, especially in health care,” Carbone says. “There’s a lot of competition. Development of any service is very resource intensive, from equipment to supplies to personnel and to physicians. Changes are not easy to implement. Good ideas are not always easy to implement. So you have to prioritize what you think will have the biggest impact for the short-term and long-term success of the hospital.”
To grow, the hospital needed to maintain and enhance core programs, while developing others. That started with small steps, such as renovating and enhancing equipment and facilities. As Carbone examined opportunities to add new services, he looked at the services that St. Mary’s already offered and then considered how a new service could add to or enhance the existing services in a way that was successful for patients as well as the facility.
One way to do this was by providing people services locally that weren’t currently available. For instance, there was a lack of neurologists in the area willing to see patients in a hospital setting, and a lack of neurosurgeons willing to perform cranial surgery. Carbone worked to build a neuroscience team to supply these services at St. Mary’s.
He also led the drive to institute a pediatric open-heart cardiac surgery service and get it approved by the state. St. Mary’s is the first Florida hospital in 25 years to win approval for this cardiac service, which will be implemented this year.
St. Mary’s gets more than 3,000 transfers from other hospitals of people who are seeking its high-level services, so Carbone has dedicated much of his time to finding talented doctors and providing them with the resources needed to develop core services, such as pediatric, trauma, stroke and obstetrics.
“It’s very challenging for physicians in South Florida, but if we can provide them with the resources that they need and if they can see the same vision and opportunity that we do, then it’s a good match,” Carbone says. “If we can get them the right resources, they can build a successful program.”
Carbone brought on doctors to start a comprehensive stroke program, which opened in December 2008, and a physician to head a new limb orthopedic program, which brings in patients from around the world. He now constantly looks for ways to build out services that are not being met at all or not being met adequately to serve the community.
“All of our financial success has been built on building new programs, building better programs and making sure we’re meeting the needs of the patients that we serve,” Carbone says.
Build on success
By getting people to see how change benefits the community, the patients and the staff of St. Mary’s, Carbone has been able to transform the hospital into a growing and profitable facility. In 2010, St. Mary’s was elected business of the year by Palm Beach Chamber of Commerce and Carbone received South Florida Business Journal’s Healthcare Award for CEO of the Year. Each of its successes brings St. Mary’s closer to the next.
“Over time, as you build success stories and people see you are doing these changes for the right reasons, people get on board,” Carbone says. “Success breeds success. Bringing on good people brings on more good people. Having a successful service encourages others to take that same kind of risk to establish a new service.
“We’ve had major successes not only financially with the hospital, not only the development of services for our patients but also in the measurements of quality of the care we provide. Almost any measure you can measure, we’ve more than exceeded our goal.”
Infection rates have dramatically decreased in the last five years, and other core quality measures have improved. Financially, the hospital went from being in the red to being in the black. By building new programs and recruiting many new positions, St. Mary’s has increased its number of patients and employees, which has also benefited its local economy.
“A lot of skeptics in the community were taking a wait-and-see attitude to see where St. Mary’s was going to go,” Carbone says. “I think they’ve been pleasantly surprised that we’ve had a great deal of success in turning the facility around.
“That first year, year-and-a-half to two years is key to get a few success stories and get some energy into the facilities, environment and get people understanding that we are going to be moving in a new direction, but one that should be positive and beneficial to all of us. I think we’ve accomplished that, but you can’t sit back and be satisfied. You have to constantly be looking for the next opportunity.”
How to reach: St. Mary’s Medical Center, www.stmarysmc.com
The Carbone file
St. Mary’s Medical Center
Born: Boston area
Education: Bachelor’s degree in environmental biology from Clark University; master’s in health administration from Duke
What is your definition of success?
Being able to go home every day and feel you’ve done the best that you can for your facility or your employer and for your employees and to be proud of what you’ve achieved. … If you can go home at night and know you’ve done a good job, that’s probably the best measure of success. As long as you are gratified with the amount of effort that you put in and it’s actually leading to something that’s getting better and that you’ve hoped to achieve.
What do you like most about your current job?
The ability to make a change and make a difference in people’s lives, and that’s at every level, from the patients we serve, to our employees, to the folks out in the community.
If you weren’t doing your current job, what would you be doing?
There are lots of jobs I’d thought about early on through high school and in college, but I’m very happy doing what I’m doing and I can’t imagine doing anything else.
Before he founded Advantica EyeCare, Richard Sanchez spent more than 20 years working at Exxon Corp. He repeatedly filled out multipage documents and questionnaires designed to assess the performance of his employees. But when he retired to start his own company — now Advantica Dental and Vision Benefits, which is based in Clearwater — Sanchez decided that structured performance reviews were not how he wanted to determine whether he could trust an employee to do a good job. As the company’s president and CEO, Sanchez doesn’t use performance reviews and doesn’t ask his managers to either. Instead, he goes out in the field, constantly interacting and talking with his employees to verify their level of trust and commitment to the company.
Smart Business spoke with Sanchez about how to develop trust with employees by being flexible and supporting their needs.
Get face time daily. I try to have lunch every day with a client or somebody that’s touching our business, just to see how things are going. It may be a vendor; it may be a group of employees. I’m constantly in the field. My job is to cheerlead, to cheer them on, to communicate and tell them what I believe we are going to be faced with in the future. I will go to people’s offices, but I won’t intrude on them. I’ll chat a little bit. You really get a two-way conversation going, instead of sending out some e-mail saying, ‘Here’s our strategy for the next six months.’ (That’s) no way to have a conversation.
Reward spontaneously. When we see a champion, we celebrate. We make a big deal of it. We may give some dollars to the person. We may say, ‘Listen, for you and your wife, here’s a weekend. Fly down to Florida and spend the weekend.’ We kind of do it on the spot, so people aren’t trying to change their behavior to match a program. They’re just doing a good job. I’d rather have it more spontaneous. We might have five champions in one month, and the next month we might have zero. And it’s not necessarily a weekend in Florida, it’s just going up to the person and shaking their hand and saying, ‘You know what, you are doing a great job.’
Lend support. If there’s a really tough issue, a complex issue — it could be with a customer — instead of me saying, ‘Well, you’ve got to figure it out,’ I’m not scared of a situation. I think it’s good for me to go in and say, ‘Let me help you on this one. Let’s go see this person and iron this out.’ If I have to be the bad guy, I can be the bad guy. You can’t abandon your employees and say, ‘Well, you screwed that up, now you’ve got to figure it out.’ … I think the CEO has got to take on the tough issues.
Give people freedom. I grew up in an environment when work was everything. You missed your son’s birthday because of work. The world’s changed. The younger work force — they have friends. They have karate class at 6 o’clock, and by God, they aren’t going to miss karate class. I respect that. They have a life. What we really try to do at work is accommodate that. We tell them what we need to get done, and you know that they come in on the weekend, because they want to, not because they have to. I trust them to do that, and they can trust that we’re going to be flexible and they’re not going to have to be concerned if they are trying to improve their lifestyle or their health by coming in a little bit later.
Promote wellness. I noticed six months ago up in our Baltimore operations center … the vending machine had chocolate doughnuts and all that junk. We still have it in there, but we put stuff in the vending machine that costs nothing. We just said, ‘If you want to pay a dollar for the doughnut, that’s fine, but if you want a fruit bar or a granola bar, it’s nothing.’ We are really big on wellness here. We make sure every employee knows that they don’t have to show up here at 7 a.m. if they want to go to the gym and show up at 9:15 or 9:30 a.m., I’m all for that. We’re really into that at the company, because they’ll put a good day’s work in.
How to reach: Advantica Dental and Vision Benefits, www.advanticaeyecare.com
Dale White Sr. came to the United States in 1975 with nothing but a few dollars in his wallet and aspirations to become successful. After cutting his teeth at a construction company for 16 years, he founded D.A.G. Construction Co. Inc. in 1990.
Much the same way that White learned his trade before breaking out on his own, his company has grown through experience.
“Over the years, we partnered with larger construction companies to learn how they did their work,” says White, founder, president and CEO of D.A.G. “We mentored and grew, and now, we are trying to be a (mentor) for smaller companies to help them grow, too.”
Today, D.A.G. is one of the leading construction companies in the area and saw revenue of roughly $20 million in 2009.
Smart Business spoke to White about how honesty and communication grow a business.
What traits make a good leader?
Be honest with your clients, do a quality job and have open communication. When we start working with a client, we openly communicate with them. Sometimes we tell them the things they may not like to hear. We would rather be upfront and tell them, ‘This is what’s going to happen and this is how it happens,’ rather than them having surprises at a later date. Tell them the problems that exist right now — ‘Here’s a problem and here’s a solution.’ We give them the problem and the solution and being upfront with them shows them we have the characteristic of being honest and not trying to nickel and dime them.
How do you gain client trust?
If you want to build a clientele and you are a company that is growing, you want to show your clients that you care about them very much and that devotion may provide you recommendations to other companies. Personal touch goes a long way in promoting your business. It’s the cheapest way of advertisement for a company, word-of-mouth. Clients will say, ‘This guy came down here, and he’s the CEO. He came to the job site and met with me; he discussed the project with me and told me the problems and solutions and saved me so many dollars by doing this.’ This goes a long way in building that reputation.
How do you create working relationships?
Be open and communicative. Get them to tell you their problem — ‘Here’s my problem and here’s what I’m trying to do.’ How can you help them get through this? Unless I know you are having a problem, I can’t help you. That’s one way we try to get into their minds and try to give them advice. All we can tell them is how we solved that problem and then they build upon that.
How do you deal with tough competition?
The competition in the market has been extremely difficult. I look to grow my company by diversifying the business opportunities that I have. You have to get into other areas of your work and find a niche market and excel in that niche. You have to build a relationship with various clients. You have to be honest with your clients and tell them what it is that makes you different from your competition. You have to tell them why they should choose you and feel comfortable that they are not getting a raw deal. Give them that personal level of satisfaction that they are always trying to find. We try to be that extra arm for our clients and go beyond just being a contractor.
What is something that could prevent growth?
Not listening to your employees. Saying, ‘Let’s do this’ when you know you’re not capable of doing it. Growing too fast and not being structured. If you try to climb that ladder too quickly, you’ll come down real quick. You have to know the capacity of your company and what you can handle. Just because another company grew a certain way doesn’t mean you should.
How to reach: D.A.G. Construction Co. Inc., (513) 542-8597 or www.dag-cons.com
Singing from the same sheet. Following the same path. Reading from the same page.
No matter what idiom you want to use, Stan Johnson’s message is the same to everyone at Veteran’s Affairs San Diego Healthcare System: He wants everyone aligned on delivering the best possible experience to the system’s customers — its patients.
“That is really leading a culture change in terms of working with all staff, informing the staff of what it means to provide patient-centered care,” says Johnson, the director of the 2,400-employee, La Jolla-based health care provider within the U.S. Department of Veterans Affairs. “A lot of what we do was already patient-centered care. But it was really looking at redesigning our delivery of care so it is geared toward meeting and exceeding the patient’s expectations.”
Johnson says changing a culture can be challenging and exciting at the same time. You are excited to implement a new way of thinking among your team, but at the same time, there will be bumps in the road as you rebuild processes from the ground up and try to uproot habit-entrenched employees and attempt to show them that the new way is a better way. It can be much more easily said than done.
At the VA San Diego system, the leaders put a template in place by becoming an affiliate of the Planetree Alliance — a nonprofit partnership of health care organizations that advocates for care that is centered on an overall positive experience for the patient. The alignment with Planetree gave Johnson a path to follow when he assumed control of the health care system in 2009. But Johnson had to bring the plan to life every day and coach more than 2,000 employees to do the same.
He did it by involving as many people as possible in the decisions that would affect the system’s future. He sought out the opinions and ideas of not just his employees but patients, as well.
“You really need to look at your organization through your customers’ or patients’ eyes,” Johnson says. “What we’ve done with some of our system design groups is involve many of our patients, because you have to know firsthand what the expectations and needs of your customers are.”
Engage your employees
You’ve probably heard it countless times in your career: Your culture isn’t what you say it is; it’s what your employees believe it is. You can preach all you want on your organizational principles, but if you don’t follow those words with like actions, your culture is going to wither, and distrust will seep into the hierarchy of your company.
One of the actions you need to take is opening a dialogue with your employees. If you are preparing to point your company in a new direction or alter your defining principles in any way, your employees will need opportunities to speak with you in person.
Johnson and his leadership team create those opportunities by getting many people together for a few days off-site, free from workday distractions, where employees can feel enabled to speak up, offer feedback and share ideas.
“About 85 percent of our staff has been on a retreat where they begin to understand what patient care is,” Johnson says. “They begin to individually understand what they individually could look at to improve the patient experience. As a leader, you want to listen to their ideas and suggestions and start to implement things that come out of that, so that it starts to be driven by them instead of being driven by upper management.”
Of course, you can’t implement every employee idea in the name of strengthening or changing your culture. But you can offer feedback on all ideas that come your way, and you can implement the ideas that make the most sense for where your organization is at that point in time. If you don’t at least do that much, you can expect the dialogue, and the wellspring of ideas that comes with it, to dry up .
“You can ask and you can listen, but unless you actually implement some of those suggestions and react fairly quickly to their good ideas, that will dissipate or go away fairly quickly,” Johnson says. “People simply will not continue to give you good ideas and suggestions if you’re not listening to them and implementing some of them. So what you really want is a mechanism to allow your people to make some of those suggestions but also to follow through on your end with the action and implementation of providing feedback and recognition.”
Recognition is another key cog in achieving buy-in on any new initiative. If you want your employees to embrace new cultural principles, reward their good behavior and hold your high performers aloft as an example for everyone else.
It’s something that Johnson emphasizes on a regular basis throughout the San Diego VA system.
“Recently, our communications work group had a patient call center that is about 16 staff members who take a lot of calls, schedule appointments, and the wait time for those calls was longer than we what we liked,” he says. “So those individuals worked with our system redesign staff, flow-mapped the process to see if there were steps that didn’t really add any value to the process any longer, and they were able to make significant improvements in about a two-month time frame.
“Myself and our leaders in that area went to that work area and personally recognized them with an in-person thank you as well as a cash bonus. Many times, it’s a combination of the personal recognition and financial reward that really helps keep employees engaged on that level.”
Stay close to customers
As a business leader, it is imperative that you maintain close relationships with your customers. Without customers, you don’t generate revenue, you don’t turn a profit, your employees don’t keep their jobs and, eventually, you go out of business.
With that in mind, you need to develop avenues to build and maintain customer relationships. Johnson takes it a step further, utilizing the vast amount of military technical training that his organization’s patients have absorbed, by encouraging patients to get involved in various initiatives throughout the system.
“One of the system redesign efforts right now is focused on communication, and a subset of that talent is telecommunications,” Johnson says. “We have a couple of individuals who use the VA for their care, and they have an area of expertise in telecommunications. They’re kind enough to volunteer their time to work with our work group.”
If you always keep it front of mind that your customers are your reason for being, you will be much more apt to seek out their opinions and input on how you run your business from a service standpoint.
“That is the key, to have constant feedback from the people you take care of,” Johnson says. “That is what we’re here for. You have to make sure you’re meeting their needs. It’s not just what we think they’re asking us for, it’s finding out what they’re truly challenged by in using your system.”
As with any other aspect of your business, customer interaction needs leadership with an eye toward continuous improvement. No matter how good you think your system is, no matter how well you think you stay in touch with the people you serve, it can always be done better, and you and your leadership team should constantly seek ways to build a better customer service mousetrap.
“It’s like anything else when you’re in a leadership position,” Johnson says. “You continually work at it. You take nothing for granted. Just because you’re doing something well now doesn’t mean that you’re not continually looking for improvements, how you can be more efficient and effective with what you’re doing. Just because it’s working well now doesn’t mean it can’t be done better.”
Johnson takes the reins when it comes to driving that mentality throughout the organization, but ultimately, he wants all of his employees to become self-starters in delivering an exceptional patient experience.
“It is the responsibility of every single person on our staff,” he says. “We’re here to provide a service to veterans who have served our country. Each one of us, each individual who works with the VA San Diego Healthcare System, can make sure that the patient experience exceeds their expectations. That is what we’re trying to instill in our patient-centered care and affiliation with Planetree, to make sure all staff understand that and can individually make a difference. That is why we want everyone to view it as their responsibility, all the way up to me.”
Once you have systems in place to allow for engagement of both employees and customers, you need to keep watering the ground with frequent communication. Johnson views continual communication and cultural reinforcement as one of the biggest challenges before him each day.
The challenge of delivering good communication each day is complicated by the fact that you can’t be in all places at all times. You have to have a network of managers and electronic interface points that allow you to keep your messages in front of both employees and customers when you can’t be there in person.
“Communication is another one of those things that you’re always striving to do better,” Johnson says. “What we try to do is communicate in multiple ways. For instance, we have electronic message boards up in elevator lobbies at clinics. We use them to share updates on what is going on at the facility, new information that we want to share, whether it be patient satisfaction or how we did with a recent survey.
“You’re also getting that information out there through e-mail, social networking sites like Twitter and Facebook, many different ways. Different methods of communication work for different people, and you have to use them all to communicate your strategies and your benchmarks that you have set or that have been set for you.”
But even after you’ve rolled out a new direction for your company, even after the meetings and dialogues with employees and customers, communication remains a two-way street. Feedback from multiple channels is the only way you can ensure that your message is reaching the people you want it to reach and if they are buying in to the message.
“You’re always kind of surveying people, both formally and as you talk with people throughout the day,” Johnson says. “We think we might be doing a good job of communicating, but until you hear it from your customers, patients or staff, you probably haven’t done a good enough job yet.”
How to reach: Veterans Affairs San Diego Healthcare System, (858) 552-8585 or www.sandiego.va.gov
The Johnson file
Veteran’s Affairs San Diego Healthcare System
Born: Bloomfield, Iowa
History: I joined the Navy and came to San Diego in 1972. I did my boot camp here and served here. I was in the Navy for four years, and they were kind enough to support my education and training, so after that, I went back to Iowa and earned a bachelor’s degree in business administration and a master’s degree in health care administration from the University of Iowa.
What is the best business lesson you’ve learned?
Listen to the patient. Involve your staff and your customers in your improvement efforts.
What traits or skills are essential for a business leader?
The key is to develop good working relationships, be transparent and treat people fairly.
What is your definition of success?
For me, it boils down to hearing firsthand from our customers that we’ve done an outstanding job for them.
Ralph Scozzafava had just walked off the plane, but he already knew Furniture Brands International Inc. had a safety problem at one of its factories in Mississippi.
“The guy that picked me up at the airport had some dried blood on his pants from one of our key associates on the production line that had just cut their finger and been brought to the hospital,” Scozzafava says.
Unfortunately, safety wasn’t the only concern for Furniture Brands when Scozzafava arrived in early 2008.
“We were low on cash and we had a pretty big debt balance and really some liquidity questions and concerns,” says Scozzafava, the company’s chairman and CEO. “We also had declining margins and increasing administrative costs to the point where our operating margins were approaching zero and ended up negative very quickly. There were a lot of things happening at the same time, all taking us to a very difficult place.”
But before he could address any of those concerns, he had to get people in the company to realize that there was, in fact, a problem that needed to be addressed. The furniture retailer has 6,500 employees in the United States and 2,000 more employees abroad.
“A lot of folks just thought, ‘Hey, we’re going through a bit of a rough patch,’” Scozzafava says. “If we don’t tell people where we are, in a lot of cases, they just don’t know. So it’s informing. We have a problem here. It’s an issue. We have to change, and we have to change intelligently and quickly.”
It was time for Scozzafava to start talking and get everyone moving on the changes that needed to be made.
Start a dialogue
One of Scozzafava’s most pressing concerns, in addition to making the company safer for employees, was that he needed to generate some cash for Furniture Brands. The company was losing a lot of money.
“We had over $300 million in debt, we had $27 million in cash, and we were losing money on the operating line,” Scozzafava says. “You don’t last long with a business of our scale if you’re doing that. So the big thing for us was to generate cash.”
In this type of situation, you can’t just go to your people and say, ‘Hey, we need to generate more cash.’ You need to show them what they can do as an individual or as a group to help you solve your problem.
“If they don’t have line of sight, ‘What do I need to do to help?’ you’re not going to get the full engagement that you really want to get,” Scozzafava says.
In other words, spare the corporate lingo and Wall Street clichés when you’re speaking to your employees.
“Use words you would use with your family,” Scozzafava says. “Relate some interesting stories. Try to make things sticky if you can. The state of the union address as told with your best formal English doesn’t help. If you use every business cliché in the book, you’re not sincere. If they feel like you’re not sincere, if it feels packaged, they’re not going to listen. It’s not going to be compelling.”
Scozzafava needed to get his employees engaged in coming up with a solution for the company’s cash concerns.
“I tell our folks, ‘I’m going to tell you everything I can as fully and clearly as I can as many times as I need to so you fully understand,’” Scozzafava says. “And then I’m going to ask lots of questions so you can do the same with me. If you have that kind of dialogue, there’s really nothing up anybody’s sleeve.”
It has to be a dialogue, meaning two-way communication, and the best way to achieve that is to get out of your office.
“You’ve got to penetrate the organization,” Scozzafava says. “My direct reports will feed me info that is good, informative and interesting. But if I want to know about the supply chain, I’m going to go down on the factory floor and talk to a lot of people. If I want to know how our retail stores are doing, I’m going to go to retail and I’m going to ask a lot of questions and visit 10 stores.”
And if you want to know about a possible safety concern, you’re going to go visit one of your factories.
“I went on the factory floor and saw what we were doing and how we were operating the equipment and I knew we had a safety problem,” Scozzafava says.
Scozzafava discovered that multiple factors were leading to the cash issues. Safety problems were caused by improper use of equipment and were affecting product quality. This was affecting the margins and ultimately leading to the problem with the cash.
It’s the kind of information that you can only get when you approach your research with an open mind.
“The temptation is I want to bucket things,” Scozzafava says. “I’ve been doing this for 30 years and I’ve observed a situation and the knee-jerk reaction is to say, ‘Oh, that’s just like …’ and name a situation, something you’ve gone through before. When you do that, sometimes you miss it all together. Most of the time, you get it close, but you miss the nuance and you really can’t get a good clear assessment.”
As you begin to generate dialogue and ideas to make your company better, you need to create accountability to make sure that the ideas are investigated and implemented if they turn out to be viable.
Safety was one of Scozzafava’s biggest worries with his business.
“What are the safety ideas?” Scozzafava says. “We’ll put them on a bulletin board. Those ideas have initials next to them. Who gave us the idea? They have a date of when we’re going to evaluate it and get it solved and when we’re going to implement it.”
An idea was raised to install sewing tables in one of the factories that could be raised or lowered to help eliminate repetitive motion injuries.
“When are we getting the tables in?” Scozzafava says. “When is it getting installed? When is it finished? It’s about the idea, evaluating the idea and putting people in place who are accountable. Put their names next to the task and then finish the job.”
When you create ideas or metrics for employees to live by, they need to be ideas that are objective in nature like the sewing tables.
“There are certain things that you can measure very well,” Scozzafava says. “Those are very data-oriented things that you should use as the core of what you measure. The things that become matters of opinion, if you make that a focal point of what you’re doing and lots of people give their points of view, you’re going to struggle. Cut-and-dried measures are always the best.”
Work with each department on what it specializes in and help the department come up with measurable goals that help the company.
“So for example, 2008, we’re here to generate cash,” Scozzafava says. “But we’re also going to work on building our brands, and that’s the work the marketing people will do. We’re also going to work on getting more efficient in our factories. That’s the work the supply chain people will do. You can go down the road. The finance team has to centralize finance and accounting and accounts receivable and accounts payable and credit. That’s the work they have to do. So there’s the singular big goal we’re all working on and then there are pieces within the company that individual groups do to make us better.”
You have to keep pushing the importance of initiatives and making sure accountability is part of all of them.
“You think you’re saying it enough, because you’re thinking about it all the time and you’re talking to your direct reports or your executive team about the same subject all the time,” Scozzafava says. “So that repetition is something you just assume is going through the organization. And it’s not. One of the things I’ve learned is you have to tell them, you have to tell them again, you have to tell them what you told them, you have to ask if they understand it, tell them again, have them repeat it, quiz them.”
So if you think you’ve delivered your message enough after all that, you might want to do it just one more time to be sure.
When you ask employees to help make your company better and they step up and do just that, you need to show them that you appreciate their efforts. By doing so, you increase the odds that others will follow their lead.
“Good people want to do well,” Scozzafava says. “They want to be part of a winning team. If they see their peers somewhere else within the company performing very well and being recognized and rewarded for that performance, they typically not only want to mirror that, they want to do better. If you get the right people and treat them right and tell them what they need to do and listen to the ideas they have, it’s powerful.”
You can show your appreciation in a number of ways. There are the gift cards and cash bonuses that all employees are grateful to receive. But your ability to show appreciation and gratitude can also go a long way toward helping your business be successful.
“When you have the title, until they meet you, there is always going to be some kind of trepidation,” Scozzafava says. “People want to get it right or they want to make a good impression. If they see you as a regular person, if you get information and you do something positive with it and you’re not looking around trying to zap somebody or catch somebody, pretty soon they understand what your intention is. If it’s a positive intent, they’re going to share more and more with you.”
Scozzafava’s ability to get people to buy in to his effort to turn things around at Furniture Brands is showing some signs of success. While net sales dropped from $1.7 billion in 2008 to $1.2 billion in 2009, the steady loss of cash seems to have been stopped. And safety on the job is better than it’s ever been before.
“It all goes back to the build, win, deliver, grow strategy,” Scozzafava says. “[Employees] know that’s what has taken us from losing $400 million in 2008 to losing over $100 million in 2009 to making money through the first three quarters of . They know if we stick to that strategy, if we’re aggressive and prudent about how we change, differentiate and do things better, we’re making the problem go away.”
The key is to stay focused on helping your employees help you.
“If you expend your energy and feel spent, you’re probably not doing enough within the organization to drive the kind of morale and camaraderie and high-performance culture you want to create,” Scozzafava says.
How to reach: Furniture Brands International Inc., (314) 863-1100 or www.furniturebrands.com
The Scozzafava file
Chairman and CEO
Furniture Brands International Inc.
Born: Danbury, Conn.
What was your first job?
I worked for my dad; he was in the refrigeration business. One guy, one truck. Probably from age 6 to 7, I knew all the tools in the toolbox. I could wire things, run pipes, weld, I could do a lot of stuff. I haven’t done it recently. But give me the stuff, I’m sure it would come back.
What is the best advice you’ve ever received?
Hard work and common sense. My uncle said if you can just master those two things, you’ll be successful in anything. He was an entrepreneur who did very well and had no education and those were the two pieces.
If you could sit down with anyone in the world, past or present, who would it be and why?
I’d like to have dinner with my dad.
Scozzafava on public speaking: I’m real big on bullet points. I’ll have slides without many words on them. I may have a little scrap of paper in my hand that may have 6 or 7 thought starters on it. Each message that I’m trying to get across, I try to have an accompanying story.
I try to make it engaging. I draw people out of the audience a lot. I’ll call people by name and I’ll ask them to stand up and talk about things so that the message is what I’m going to call multi-medium. Part of it’s on the screen, part of it’s in a video, part of it’s a story from Ralph, part of it’s a story from the audience. You have a lot of different stimuli coming at you.
Randall Dearth knows that people are what make a business successful. That’s why his employees were the first priority on his list when Lanxess Corp. spun off from Bayer Corp. in 2003. Deciding to focus more on life sciences and high-performance materials, Bayer divested most of their chemical operations and some of their material science operations. Lanxess Corp. formed in 2004 as a new, independent entity of Bayer, which meant change had to occur.
“The first thing we had to deal with, and I had to especially deal with here in the U.S., was our people,” says Dearth, president and CEO of Lanxess Corp. “We had a lot of people that were very nervous about leaving Bayer. They didn’t want to go to this new company. So a lot of that was, ‘How do we deal with the people issues, how do we deal with making sure they feel comfortable in this new company but also make sure they had a future?’”
Dearth knew it would take a strong effort and a lot of communication to assure employees that Lanxess, a specialty chemicals company, was going to come out of this situation better than ever and that each employee would play a big part.
Communicate to employees
Having to start fresh with a new location, building and a new company direction, it was important for Dearth to make employees feel welcome.
“I came in with a very strong belief that we needed to set up policies for our employees so they can truly be a part of this new company,” Dearth says. “Our facility here in Pittsburgh went into a brand-new building where the walls were up but nothing else. We worked with our employees in designing the building and asked them what it is they wanted. They wanted a fitness center; they got a fitness center. I wanted to hear from each and every employee. We did a lot of communication, town-hall meetings and round-table meetings to really hear what their concerns were and to make it clear that as a new company, we had a future and we had a lot going for us in terms of our products and our positioning.”
Lanxess Corp. employs nearly 14,500 people globally, with about 1,000 employees here in the U.S. As Lanxess was finding its feet in the first few months, Dearth focused a lot of his time on communicating the company’s goals, vision and direction.
“Originally, we did a tremendous amount of town-hall meetings,” Dearth says. “Every month for the first year, we would get together in a town-hall forum and allow for questioning, talk about our vision, talk about our businesses and educate people about our challenges.”
Many companies discuss their goals, direction and successes in a town-hall forum or at a hotel meeting, but Dearth knew that those meetings alone wouldn’t be enough to communicate what he wanted the company to become.
“We did that not only in town-hall meetings, but then I took them to small groups of 10 to 20 employees where I would specifically ask them their concerns, their issues and what we could do differently,” he says.
In order to give employees an easy and constant way to remember company goals and vision, Dearth created what they call Formula X — a simple guide to help employees stay focused and maintain four basic principles: Seek solutions, not problems; keep it simple; take ownership; think new, and act fast.
“Formula X was how we wanted to run our businesses and how we want our employees to act,” Dearth says. “We’ve got to be quick. I expect from our employees great ideas. I challenge them in small round tables and I ask them what ideas they have that would make things even better, and we try to live these things through.”
As Lanxess started to come together and grow as a company, Dearth says that having a vision and communicating that vision constantly were the keys to making the company successful.
“You need to set a vision,” Dearth says. “Employees look at leadership to say where are we going? Is this really where I want to be? It is imperative that the CEO very clearly sets out, ‘This is the direction, these are the goals we are looking for, and this is what it’s going to look like once we get there,’ and they have to make that clear. Secondly, a good CEO needs to allow his employees the entrepreneurial freedom to do things on their own. Allow them to make mistakes but to also make themselves better. A CEO should encourage entrepreneurial spirit. Also explain cost-effectiveness. As a smaller chemical company, we didn’t have the big, deep pockets of a big multinational company like Bayer, so we had to instill in our employees how we spend our money, what we invest in and how we invested. You have to give a financial sense of the company to your employees.”
Putting a plan in motion
Getting your employees on board with your new company is step one in driving change. Once a company has the support of its employees, they begin forming ideas and plans. It is critical that those plans and ideas be implemented and put into effect throughout the company in order for them to take hold and be successful.
“Because we are a global German company, the tone is going to be set at the very top of our board,” Dearth says. “It is up to me and my management team to take that tone and that vision and where we are going and put it into terms that our employees can understand. I have senior manager and operating committee meetings frequently and talk to members of staff constantly. Anything that might appear as a problem or pushback is handled promptly and discussed. You have to use the tools you give employees. You have to be entrepreneurial, be focused, be quick, and that will allow employees to contribute what they can.”
Change in a company can create a lot of uneasiness among employees. Whether it is good or bad, change can be scary and CEOs and business owners must keep that in mind when implementing plans to move forward. Dearth says that communication and visibility are key things a CEO must do.
“No. 1 is to always communicate, communicate, communicate,” he says. “The worst thing a CEO can do in a period of change is to hibernate. You need to be out in front of the employees, be in front of stakeholders and communicate what’s going on. You have to be very visionary. If you’re bringing in change, you need to be able to make a very compelling case of what change looks like and why change is necessary. Change management also is accountability. As you change your culture and change the way you do things, every single employee is responsible for doing what they can within their responsibilities to make that happen. You will be held accountable, you will be compensated on that, and you will be disciplined on that.”
Build a brand
Another important aspect of change is developing the company brand. Never an easy task, a company’s brand is everything that a company stands for. It will tell employees, shareholders and customers what the company does, what it stands for and where it’s going in the future.
“The challenge we had globally, especially in the U.S., was how do you brand this new company?” Dearth says. “Everybody knows Bayer, but Lanxess, what’s a Lanxess? How do you spell it? How do you pronounce it? We had to spend a lot of time very early on creating a brand for not only our employees but also our customers, our communities and our shareholders. As a publicly traded company, albeit in Europe, shareholders need to know, ‘What is this company, and should I be investing in it?’
“I went out everywhere. I went to trade associations. I’m a member of the American Chemistry Council. … I wanted our local politicians and other companies here in Pittsburgh to know who Lanxess was. I gave tons of presentations and did tons of interviews, and I’m very active on nonprofit boards. I do all of that to let people know who we are.
“When you are creating a new entity, it is critical that you have a strong brand that distinguishes you from where you were and defines who you are and where you are going. To establish your brand, you need to align yourself with it and make sure that it is a consistent and very visible part of everything you do.”
Once a company is established and things are looking up, it is easy to let focus slip away. However, staying focused on goals, monitoring change and being prepared are very important to staying in a growing position.
“Maintaining momentum is very important,” Dearth says. “When we became a new company, employees were obviously excited about building a new company. How do you maintain that excitement when you’re not buying things and perhaps divesting things as we had to do? That was a challenge. The 2009 economy, that says it all right there. We lost 35 percent of our business overnight. How do you very, very quickly react to that? Not knowing how long that crisis was going to last, I had to get my management team in place, and we had to inform employees. This crisis has had a severe impact on Lanxess and things had to change. We had to change our benefits structure a little bit, and we had to take some bonuses away and a few other things, because we weren’t sure how long this was going to be.”
When companies start to grow, they can be faced with challenges at any time. It is critical that companies have programs or teams in place to handle or prepare for those challenges. Without these precautions, a company will only dig themselves into a bigger hole.
“As a chemical company, or as any company, you are constantly going to be faced with challenges and the CEO is responsible for making sure you’re prepared for crises,” Dearth says. “You have to have teams in place and make sure that everybody’s aware of the direction you’re going to fix the problem. Employees are the first thing you should look at. You need to make sure you have well-trained people in the right positions and that they are ready to take on growth and are in the right frame of mind. The CEO has control over that. If you don’t have the right people in the right places, then make changes. Make it so it works. If people aren’t on board with these things, you’re going to flounder. They need to understand why we are buying this, why we are bringing it in, what our growth strategy is and what the goal is for making it happen. You have to make sure that nobody gets too comfortable. When you work for a big company, sometimes it’s easy to get comfortable, because you’re in such a big company sometimes you’re hidden. I know pretty much everybody in this building. I know what their skill sets are. I know what their challenges are. I want to make sure that people are ready to go and focused on the right things.”
How to reach: Lanxess Corp., (800) 526-9377 or www.lanxess.us
The Dearth file
President and CEO
Born: Warren, Ohio
Education: Bachelor’s degree in chemistry, Hiram College; master’s degree in polymer science and engineering from Case Western Reserve University, Cleveland
What are traits of a good leader?
A focus on results, an ability to network, staying true to who you are. Treat people with respect and understanding. Diversify your experiences. Take a chance. Try something new. Surround yourself with great people.
What’s the most important thing a leader has to do?
Dearth on company culture: Last September, Lanxess was a corporate sponsor of a Pittsburgh Penguins preseason game, and Dearth immediately thought of his employees.
“By being a corporate sponsor, we received tickets to the game. We could have given those tickets all to customers or donated them, but I thought it would be a better idea to give each employee two tickets and they could bring their spouse, their significant other, or their kid or friend. I think 80 percent of our employees here in Pittsburgh came to the game, and we had T-shirts made for them and their guests, and we celebrated Lanxess, and we celebrated Pittsburgh, and the employees are still excited about that.
“Culture is extremely important. Fun is also important to culture. When employees come into work, yes we have work to do, yes we have our challenges, but I want them to also see a sense of fulfillment and fun that makes them feel like this is truly the place that I want to be. The CEO plays a big part of that.”
If you work for Joe Schumacher, introductions are the appetizer at lunch.
When Schumacher gathers his employees together for a lunch meeting at Goddard Systems Inc., he makes sure that accountants sit with operations people, his legal staffers sit with marketers, and so on. It’s one of the most effective ways he encourages communication and prevents silos at the franchisor of The Goddard School for Early Childhood Development, where Schumacher serves as CEO.
“We want people from different departments at the same table,” he says. “One of the great pieces of feedback we’ve gotten is that everyone seems to like that. They had an opportunity to talk to other people that they normally wouldn’t have talked to.”
Schumacher oversees 115 direct employees and must set uniform standards for 368 franchised schools around the country, employing between 20 and 25 people each. Therefore, this means that promoting good communication and reinforcing the organizational direction of Goddard Systems are daily tasks for Schumacher.
He follows through on these tasks by facilitating an ongoing dialogue between levels and locations within the organization. Whether it’s corporate leadership speaking with a franchisee or different franchisees in different states speaking with each other, Schumacher wants the exchange of words and ideas to become an everyday occurrence underneath the Goddard umbrella.
“It’s really the biggest challenge for any franchise company, aligning the franchisees and the corporation as to the direction you’re heading,” Schumacher says. “The economy has certainly made everybody focus more on the core issues facing the company and the values of the company. The way to answer the challenge is to ensure that everyone has a voice in the approach that the company is taking. That includes franchisees and employees and making sure that everyone has a chance to be heard.”
Reach out to your people
From the time they sign the contract to run a Goddard School, franchisees are taught that communication is a major priority within the organization. When possible, Schumacher meets with each new franchisee personally and emphasizes the need for an open dialogue among all areas and levels of the Goddard system.
Schumacher and his staff also employ liaisons to help franchisees with their transition into the system, offering new additions a resource on how the organization does business as well as a sounding board for any issues the new franchisee might encounter.
“We do a lot to ensure that both our franchisees and our employees have methods for communication and understand that we have an overarching philosophy that encourages communication,” Schumacher says. “When a brand-new franchisee comes into our training class, I tell them that we are focused on communicating back and forth. We might not always agree on every issue, but I promise your voice will be heard.
“As part of that, we have a pre-opening process manager, and that person’s job is just to deal with people from the time they sign as franchisees. Then we have a franchisee liaison to act as an independent sounding board, someone who is not related to any department, who reports directly to me and can talk to franchisees about any issue the franchisee feels is important.”
Once new franchisees receive their initial training, they are encouraged to maintain contact with corporate management whenever they have an idea or issue to address.
“Franchisees are encouraged to call or e-mail anyone internal in the organization, up to and including me, on any issue,” Schumacher says. “We don’t want you to have to go through seven layers of management to reach us. So franchisees will regularly call me about both good things that are happening and things they might have some concerns about. Our policy is that calls and e-mails are answered within 24 hours, even if we might not have an exact response. I might not always have the answer of a more complicated problem, but I will connect with you and tell you on the matter.”
Turning a communication strategy into reality takes good execution from the upper levels of management. You need to be able to set the example from the top. But before you get to the blocking and tackling of rolling out a strategy, putting the priority in front of your people with words and messages can go a long way toward setting the ground rules of communication.
“The most important thing is making sure all of the constituencies understand that this is a priority for the company,” Schumacher says. “I regularly tell both franchisees and employees that I need to hear from you. This is my job as CEO, and this communication is the most important part of my job. Overall, whoever your constituencies are, you need to be making sure they understand that communication is important to the company, whatever they say won’t be taken personally by management, and they’ll be able to identify issues without fearing retaliation.”
From there, you need to have people in place who can help maintain your strategy’s momentum. That is the role of Schumacher’s franchisee liaisons. At your company, it might be your human resources department or corporate communications specialist. But someone in your organizational hierarchy needs to be trained on greasing the cogs of communication on a daily basis.
“Those two liaisons give people a specific point of contact,” he says. “If they don’t know who to talk to, they can go to those people and be directed to the right person.”
Make a lateral pass
Corporate management plays a vital role in communicating with your people in the field, ensuring that they stay focused on your organizational objectives and feel empowered to carry them out. But that is only a part of the communication equation.
Your dialogue needs to be lateral. Your salesperson in one part of the country needs to develop a working relationship with salespeople in other parts of the country, allowing them to share ideas and get a better grasp of what is and isn’t working among the company ranks.
At Goddard Systems, Schumacher has taken the step of formalizing peer communication among his franchisees. As part of a systemwide mentoring program, more experienced franchisees are given the opportunity to coach new franchisees on being a part of the Goddard organization.
“It’s somebody else they can call or e-mail to talk about issues,” Schumacher says. “We do the same things for our schools’ education directors, with a mentoring program in which more experienced directors get mentors, as well.”
Franchisees with high-performing Goddard locations are selected as mentors for the program. In recent years, more than 40 new franchisees have been mentored in the program. Schumacher estimates that about 20 franchisees received mentoring in 2010, due to a drop in the establishment of new franchises.
If you operate a business with multiple people in the same market, it is often advantageous if you can connect those people and allow them to find common goals. Even if you have locations or salespeople who might be competing with each other in a given market, if they are finding common areas of motivation, it will serve to strengthen your company overall.
Schumacher has encouraged Goddard franchisees in individual markets to find common ground in the marketing of the Goddard concept to the surrounding community. Some local schools have unified on creative marketing concepts.
“Our Denver market decided they wanted to sponsor the children’s play area at the Colorado Rockies baseball stadium, so they unified on that initiative,” Schumacher says. “They’d have things like ice cream socials and open houses to attract enrollment in their areas, so they tried to do that as a unified force, as well. There are 13 schools in the Denver area, so they tried to do the open house and socials on the same week.”
Schumacher wants his franchisees to take any opportunity to get together and talk shop, whether it be a formalized meeting or a less formal interaction.
“We put on an excellent business and social program, but even if they were just OK, the best part about any meeting is when you have franchisees coming together and talking with other franchisees about common issues,” he says.”
Know your role
As the person in the top spot of your company, your job is one of support and motivation when it comes to your team.
You can speak about having an open-door policy, about the standards you want for your company, how you want your employees to represent the company and the resources you’re willing to provide for them, but as you’ve been taught since grade school, actions speak far louder than words. Which means it is imperative that your actions follow your statements and employees don’t get the sense that you’ll say one thing and do another.
“A lot of your job is to set the tone,” Schumacher says. “It is important that the entire company, whether employees or franchisees, know that communication and adhering to the mission of the organization is key. That’s why living what you say is important. If I bloviate about the importance of communication but don’t tell people things or tell them to come back later, it becomes apparent that what I’m saying is just words, that I don’t take it very seriously.”
You need to realize the difference between leadership and management. You have elements of both in your role. You are a supervisor who manages others and a leader who seeks out new opportunities and charts a course to reach them. But you can’t let your supervisory role cast a shadow over your role as leader. If you try to control too much from a process standpoint, you run the risk of micromanaging, which can be detrimental to the trust factor in an organization.
If an employee has an idea and wants to run with it, accept it or decline it. If you decline it, explain why. If you accept it, give the employee resources and benchmarks, but let him or her take the creative lead.
“It’s often a criticism of upper-management types that they’ll sort of steal people’s ideas,” Schumacher says. “I try to make sure that if somebody gives me or the company an idea about something, they get recognized for it. Whether it’s in a meeting or communication or wherever, I try to make sure our managers understand it’s a better sign if a manager celebrates people and allows them to be recognized for the contributions, as opposed to the manager taking the credit.”
Recognition is one last vital part of the communication process. It stimulates ideas and encourages employees to come forward with new ideas in the future. It helps reinforce a unified, goal-focused company. And there is a difference between putting a bonus plan in place and actively recognizing someone. Both forms have their place, but neither is a catchall.
“Everybody, if not needs, then certainly wants recognition,” Schumacher says. “It’s easy in any company to feel like you’re laboring in the dark and that nobody really knows what you’re doing or how important it is to the company.
“That’s why monetary and nonmonetary recognition serves different roles. I think a simple recognition, intermittent and unexpected, often goes a lot further than money. But the two have to work together. You’re not going to have people happy about a gift card or a pat on the back if they’re not getting paid well enough or they’re not able to make bonus. That’s why it’s probably better if the money stuff is basic and expected, while the nonmonetary stuff is more unexpected and intermittent.”
How to reach: Goddard Systems Inc., (610) 265-8510 or www.goddardschool.com
The Schumacher file
The Goddard School for Early Childhood Development
Born: Queens, New York City
Education: Psychology degree from St. Francis University, Loretto, Pa.; law degree from Widener University School of Law
First job: I was a janitor at some kind of warehouse. I don’t even remember what it was. I think I was about 14 at the time.
What is the best business lesson you’ve learned?
Transparency is the best business lesson I’ve learned. Be straight with people, and when news isn’t good, just deal with it. If you hide or avoid things, it just makes them more difficult to deal with.
What traits or skills are essential for a business leader?
Commitment and dedication. People need to understand that you are committed to the enterprise and committed to what it takes to make it work. You also need to be sensitive to people’s thoughts and ideas.
What is your definition of success?
Setting appropriate goals and then achieving them. It’s also important to have some fun along the way. We aren’t running an amusement park, but overall, your work should be something you enjoy. And, of course, profitability is an important element of success, as well.
It was early 2009 when Gregory Jackson realized he might have a ticking time bomb on his hands.
Jackson is the founder, president and CEO of Jackson Automotive Management. Two years ago, the company owned Ford, Toyota, Mercedes Benz, Scion and Saturn dealerships in Michigan and Florida. The dealerships generated $1 billion in sales in 2008 and employed about 550 people.
But over the span of about six months from late 2008 to early 2009, the dominoes started to fall. A series of violent shockwaves hit the American automotive industry as the economy sank into its worst recession since the 1930s. ? General Motors and Chrysler both filed for Chapter 11 bankruptcy protection and, subsequently, underwent reorganization and streamlining. GM committed to moving forward with the Cadillac, GMC, Buick and Chevrolet brands, leaving the corporation to either find new owners for the Saturn, Pontiac, Hummer and Saab brands or discontinue them.
Jackson owned five Saturn dealerships, comprising half of his work force, which spent half a year on edge waiting for a definite word on Saturn’s future. In the summer of 2009, after a deal between GM and Penske Automotive Group fell through, months of waiting and wondering culminated with the worst fears of Jackson and his staff realized: Saturn was done. All new production was halted in October 2009, and all retail franchises would be closed by the end of October 2010.
“I can’t sugarcoat it. It was stressful, and it was very disheartening,” Jackson says. “There is nothing worse than to know someone’s family, walk in and tell them that they don’t have a job anymore — particularly when these were successful, profitable businesses just yesterday. There was a lot of crying among people. It was very emotional, due to the loss of jobs and the financial hardship you knew people were going to be under, both employees and managers.”
The death of Saturn tested Jackson as a leader and a communicator. He had to pilot his business through a devastating blow to morale and five dealerships’ worth of lost revenue, which dropped his company’s 2009 sales to $600 million.
What the circumstances reinforced to him was the principles of good business leadership: Keep your employees informed and make wise financial decisions.
Keep information flowing
The hardest pill to swallow for the employees at Jackson’s Saturn dealer was the fact that Saturn was a moneymaker for Jackson’s company. The cars were selling and the brand was still popular. When viewed from the store level, there was no reason to believe the dealers should ever be in danger of closing.
But car dealers are caught in the middle, between the purchasing habits of consumers and the top-level decisions of the automakers that supply the product. If one or the other stops supporting the dealer, the business is in jeopardy.
In any business situation, you have to realize what you can and can’t control. You can’t control market fluctuations, but you can control how your business prepares for and reacts to the fluctuations.
At Jackson Automotive Management, Jackson and his leadership team couldn’t control what was happening at GM headquarters, but they could control the flow of information.
“When we were going through all of this with Saturn, what we did was share information on an almost daily basis,” Jackson says. “We were getting information almost daily, when Penske was going to buy Saturn and then all of that blew up after we thought it was a done deal. When GM first announced it was going to close Saturn, there was some question as to whether they were really going to do it.”
With many questions bouncing around the shop and showroom floor and with few answers evident, Jackson kept in contact with the general managers of his Saturn dealers, making sure they had the latest and most comprehensive information available to disseminate to employees.
“Almost daily, the general managers were walking around their stores, fielding questions from employees,” Jackson says. “It was not unusual for the general manager to walk through the service department and a couple of technicians would come up and ask about something they had heard floating around. Before you knew it, five or six technicians would be up there talking to the general manager.
“The general manager would say, ‘I have this e-mail. Here is the latest word I’ve heard; you know as much as I know.’ The employees were appreciative of that. They took all the information in, and then they’d go and tell the rest of the people in that department, so everyone was up to date. There was nothing for us to hide.”
It is difficult to be frank and deliver the unvarnished truth when the news could hurt your collective morale and possibly your bottom line. But if you don’t fill the need for information, your people will. The rumor mill will pick up steam as employees take bits and pieces of news and try to form conclusions. The end result is usually destructive.
“The reality is, we’re human beings, your workers are human beings and we’re emotional,” Jackson says. “They are affected by everything from talking to their neighbor over the back fence, to talking with the lady ahead of them in the grocery line, to talking with their buddy at the bar. All of these people are giving them different stories. So you want to stop the effects of that immediately.
“You might try to create a few distractions to keep people’s minds focused on something besides the bad news. We had an event where we took all employees to see a Red Wings hockey game. We had a big ‘Sex and the City’ movie premiere night. It was just trying to have a few fun things to reduce the outside distractions and keep people loyal to the business.”
An outing at a sporting event or a staff movie night can be beneficial for taking employees’ minds off of the problems that the business is facing. But if the time comes to deliver bad news, such as layoffs or cutbacks, Jackson says you should remember that all good communication is rooted in honesty. The bad news you deliver is still miles better than the bad news you don’t deliver or try to sugarcoat.
“I’d say you have to handle it delicately but directly,” he says. “Again, the worst thing you can do is to not be completely honest with people about what is going on. The news media, the rumor mill, it’s always going to be alive and active, and the worst thing you can do is to be less than honest and allow people to carry rumors with them. You lose a lot of faith and people are emotionally distraught. You don’t want them to do something unhealthy for them or for the business in a highly emotional time.”
Take a conservative approach
The loss of Saturn hurt Jackson Automotive Management with regard to morale, manpower and sales. But in spite of all the negative fallout, the business remained on solid financial footing. Jackson attributes the resilience to a conservative financial game plan in which he emphasized rainy-day planning.
To endure bad financial times, you need to lay the groundwork when times are more prosperous. Jackson lays the groundwork for future success by limiting the amount of debt his business shoulders.
“One of the good things about our business is that we’ve never had a lot of debt,” he says. “As a result, we did have some cash and were able to weather the storm. We didn’t come out unscathed, but we were still healthy. We’ve always run very tight with regard to our expense structure, so when a lot of people started dialing back their operations, we didn’t have to do a lot of dialing back. We were already efficient.”
With some cash available, Jackson was able to open a new Mitsubishi franchise in Florida, and transfer some of his Saturn employees there, helping to cushion the blow for at least some of his people.
To acquire financial flexibility when the economy goes sour, you need to refrain from overly aggressive spending when times are good and you have extra cash in the coffers. Just because you have the cash to spend on a new venture doesn’t mean you always have to do it. You have to know when to pounce on an opportunity that makes sense for your business and matches well with your business plan and when to hold back.
“My philosophy is that if you maintain a level of conservatism, then you never have to have a fire drill,” Jackson says. “A lot of businesses went into a fire-drill mentality, because they were overly aggressive and maybe even greedy. They may be full of what Warren Buffett calls irrational exuberance. But I think if you maintain a level of conservatism, while still being able to jump in and out of an aggressive mode when necessary, that’s a good balance. A certain level of conservatism breeds safety.”
If you are going to take a chance on a new business opportunity, make sure it makes sense for your situation and make sure you have performed detailed research on the market potential of the idea.
“Don’t leverage yourself too much from a debt standpoint,” Jackson says. “Be careful about building it and hoping they will come. Don’t go out and build without an absolute certainty that the market is there. That’s not what a lot of dealers did. A lot went in and overbuilt. They built buildings and leveraged themselves out with extreme debt. Then, as cash flow slowed down, they couldn’t make their payments. That happened to businesses as a whole, not just auto dealers. So you want to have more expense structure than you think you might need. I believe in running things more tightly as opposed to loose.”
The way you maintain that level of control is to measure your goals, your finances and your spending habits on an ongoing basis. At Jackson Automotive Management, each dealer communicates its projected needs for the coming year to Jackson and his corporate leadership team. Jackson wants his general managers to think along the lines of a CEO, taking a wide-angle view to the next year’s projected expenditures, so there are as few surprises as possible.
“If you’re anticipating needing extra personnel, giving them raises or bonuses, you plan that out, put it into your forecast and approval process,” Jackson says. “That’s as opposed to a random manager promising a raise to an employee and then you end up adding that overhead as you go. Or worse, promising a raise and then realizing you don’t have the financial ability to do it, and then you have a morale issue on your hands.
“You have to have good financial controls in place to pilot a business through a recession like this. You need to have those approval processes for capital expenditures and the adding of personnel. A lot of that involves good yearly planning, which ensures that you can maintain proper control over those types of things.”
How to reach: Jackson Automotive Management and Mercedes-Benz of St. Clair Shores, (586) 773-2369 or www.mercedesbenzofstclairshores.com
The Jackson file
founder, president and CEO
Jackson Automotive Management
Education: Bachelor of science degree, accounting, Morris Brown College; MBA, Clark Atlanta University Graduate School of Business
First job: When I was a kid, I used to work in the local stores in my neighborhood taking out garbage. I was the kid out there hauling two-by-fours when the men in the neighborhood were building something. Later on, I had a paper route.
What is the best business lesson you’ve learned?
Cash is king. Without it, you can’t run your business. A lot of businesses are around now because they had cash, and they’re now poised to be major players because the industry has shrunk.
What traits or skills are essential for a business leader?
You need to have a strong understanding of finance. You need to have good people skills and the ability to make hard decisions with the knowledge that people are going to get hurt. You have to understand how your decisions will impact people’s lives, and then work to minimize the hurt.
What is your definition of success?
Success for me is having good, strong children who have grown up to be productive citizens. It starts with family. On the professional side, it is to create jobs and opportunities for people, participate in the world economy and make a difference there.