When Terry Duffy, executive chairman, and Craig Donohue, CEO, joined the CME Group leadership team, the company was at a crossroads, facing a struggle between the historical focus on floor trading and the growing demand for electronic trading.
The company was facing increasing competition, and CME needed to break out of its historic mold, become more nimble and competitive, and think differently. Even though the company had an enviable track record of innovation, one of the biggest challenges Duffy and Donohue faced was to rally the exchange membership and gain consensus for radical change.
After months of heated debate, the duo convinced the company to embrace a new paradigm essential for its progress and success going forward. In 2002, CME became the first financial exchange in the U.S. to go public. Converting from a private, nonprofit membership organization to a public company required strong leadership and an intense change-management process. But it also fundamentally transformed the business, allowing CME Group to broaden its focus from serving the floor-based membership to providing efficient trading and clearing services to all of its global customers, which include some of the largest financial institutions in the world.
Duffy and Donohue believe that it is both a responsibility and a privilege to give back to the communities in which its members and employees live and do business. The company operates four charitable foundations that have collectively distributed tens of millions of dollars to worthwhile charities. It also has a matching gift program and a community outreach program whereby CME members and employees volunteer their time in the community.
Through these programs, the company is able to lend a hand to those who need it most.
For More Information: CME Group, www.cmegroup.com
Doug Waggoner, CEO of Echo Global Logistics, understands the intricacies of the antiquated transportation industry and recognized in Echo the next evolution in transportation management.
His knowledge and personal interest in technology were the foundation of the Echo business model: To marry the two markets and develop new transportation solutions for shippers. Waggoner’s leadership has led to the development of new and innovative solutions for age-old transportation problems through unique technology applications. Applying investments in innovative technology, combined with Echo’s procurement leverage and strategic service model, have proven a powerful combination.
When Waggoner took over leadership of Echo, the company served about 700 clients. Since then, the company has partnered with more than 10,000 clients, and by addressing the challenges of shippers through a proven business model, coupled with Waggoner’s dynamic leadership, Echo’s revenue has grown more than 623 percent.
Employee creativity and innovation are the foundation of Echo Global Logistics’ dramatic growth. The company creates a tailored transportation solution for each client, and Waggoner and his senior management team have created a culture of concentrated technology innovation that gives each team member significant creative latitude. As a result, the service and technology teams collaborate to create the most inventive solutions to solve clients’ business problems.
Like no other company in the transportation industry, Echo is focused on helping companies achieve best-in-class evolved transportation management processes.
The transportation industry is a $1.4 trillion marketplace, and Waggoner has established a vision for growth and built Echo’s infrastructure to handle the needs of a billion-dollar company. Its proprietary technology is scalable and flexible, and combined with Waggoner’s dedication to stay on top of the market, there is no ceiling for Echo’s growth.
For More Information: Echo Global Logistics, www.echo.com
For some time now, Dr. Richard L. Sandor has been taking care of the planet.
Long before going green was a buzzword used in every marketing campaign, Sandor was beginning his work as a hero for the environment.
Long considered to be the “father of financial futures” as he was dubbed after earning a reputation as the principal architect of the interest-rate futures market in the ’70s, Sandor founded Chicago Climate Exchange in 2002 around the concept of tying businesses to accountable market systems for legitimate emission reduction targets. CCX is North America’s only cap and trade system for all six greenhouse gases (GHGs), with global affiliates and projects worldwide. CCX emitting members make a voluntary but legally binding commitment to meet annual GHG emission reduction targets. Those who reduce below the targets have surplus allowances to sell or bank; those who emit above the targets comply by purchasing CCX Carbon Financial Instrument contracts. The result is a market where the CFI contracts, each of which represents 100 metric tons of CO2 equivalent, are a traded commodity in a system that looks to facilitate transparent trading and better institutional skills in the matter of cost-effectively managing GHGs.
In addition to his environmental work, Sandor has been involved in numerous civic and charitable activities. He is a member of the board of governors of The School of the Art Institute of Chicago and is also a member of the board of trustees of the International Center of Photography, New York. Sandor also finds time to keep a day job, so to speak, as he is a research professor at the Kellogg Graduate School of Management at Northwestern University and a member of the international advisory council of Guanghua School of Management at Peking University.
For More Information: Chicago Climate Exchange, www.chicagoclimateexchange.com
Dan Moceri and Greg Lernihan founded Convergint with the intent to grow three businesses: security, fire and life safety, and building automation.
But shortly after Sept. 11, 2001, the duo shifted their focus to becoming an industry leader in digital security technologies. This technology and the market for it did not gain acceptance for a few years, but they persisted in building out the capabilities.
Today, Convergint Technologies LLC is recognized as an industry leader, and its clients include Boeing, Dell, Capital One, Chevron, UnitedHealth Care Group and Valero.
Convergint faces two types of competitors: large, multinational companies and local integrators. Moceri and Lernihan were committed to building a company that leveraged the advantages of both large and small companies. Their vision was for Convergint to have the business acumen, financial capital and professionalism of a Fortune 500 company, with the nimbleness, customer focus and colleague-friendly atmosphere of a small business.
Their major challenge was building the infrastructure to support the number of people needed to generate the required revenue long term. Initially, they outsourced key elements of their business, so that they could focus all of their attention on attracting the right people, securing customers and executing the business.
The two leaders defied normal start-up processes and hired leadership before the company began earning revenue. They secured top product lines that had previously not been given to other companies without first proving sales. With those product lines secured, the key differentiator moving forward was excellent people with the belief that great people will follow great leaders.
For More Information: Convergint Technologies LLC, www.convergint.com
Chris Dalton, president and CEO of Acquity Group, co-founded his company after he saw that the evolving business environment demanded highly tailored, integrated solutions that were both creative and technologically sound. He led the company to meet this demand and helped develop the firm’s forward-thinking approach to integrating strategy, technology and design services to create comprehensive end-to-end digital solutions for clients.
Not many technology professionals would have started an IT consultancy in the immediate aftermath of the burst of the dot-com bubble, but Dalton and his partners felt it was the perfect moment.
“I had seen enough examples of what didn’t work and knew that if we put together the right kind of consultancy, based on what defunct dot-com firms had not done, we couldn’t lose,” says Dalton.
Eight years later, with a compound annual growth rate of 60 percent and nearly 300 employees, Dalton’s gut instinct is proving right on the money. Acquity Group has thrived in a competitive arena that averages a high failure rate and has been profitable since day one.
Dalton’s leadership and his focused vision have helped the firm build an impressive client list that includes Motorola, General Motors, Ritz Carlton, Kohl’s, Procter & Gamble and American Express. He is focused on helping these companies compete in today’s digital marketplace by implementing holistic, strategic solutions.
Dalton’s drive, determination and commitment to excellence and community carry through in his establishment of the Acquity Cares program, a public outreach initiative.
Also, in 2007, Dalton was inducted into the University of Illinois at Chicago’s Institute for Entrepreneurial studies Entrepreneurship Hall of Fame.
How to reach: Acquity Group, www.acquitygroup.com
Private Equity/Venture Capital
Ira Boots has spent the last 30 years working his way through the ranks at Berry Plastics Corp.
Now, as chairman and CEO, he’s focused on making sure Berry continues the success he’s contributed to through the years.
Working his way through the organization has given Boots a deep knowledge of the plastics packaging industry and allowed him to share his progressive business style. The result is a highly focused, knowledgeable and motivated management team.
His business concept of placing employee needs first, coupled with his engineering drive to be the low-cost manufacturer with highly innovative products, has been a formula for success.
Boots and his management team are well recognized in the plastics industry’s mergers and acquisitions arena as the result of the successful acquisition and integration of 28 companies in the last 20 years. His philosophy of absorbing the best practices of the new businesses, growing not just in size and reach but in skills, has contributed to the success of the mergers. Boots stresses the importance of fully integrating each acquisition by educating new companies in the Berry program and stressing the importance of looking for the best practices within acquired companies.
Through disciplined acquisitions and new product development, Berry has grown rapidly in the past decade. Long a well-respected name on Wall Street, Boots has been able to interface with top financial institutions and has leveraged top investors to help fuel large stages of growth. Boots has also built Berry’s marketplace reputation by offering top-of-the-line customer service and product quality as well as competitive pricing, which has given it a competitive advantage within the industry.
For More Information: Berry Plastics Corp., www.berryplastics.com
Daniel Arnold has forged his own path as an entrepreneur and is a true visionary.
Arnold, founder, owner and president of Road Ranger LLC, is rarely swayed by conventional thinking and often garners negative initial reactions from conservative business professionals, only to later have them acknowledge the genius in his foresight. He fears no decision other than that of making no decision, and he has a voracious appetite for attacking problems and adversity.
He originally founded Road Ranger with $5,000 in 1984, and for the next six years, he fought against stiff competition and put all of his resources at risk to take market share from established competitors. He gained notice, selling the operating assets of the company in 1990 to Phillips Petroleum. But his interest in mastering the industry didn’t go away, and he jumped back into the business in 1997, when it was struggling and began growing Road Ranger again.
Today, those who choose Road Ranger as an employer are people who are attracted to and fed by the entrepreneurial spirit that Arnold conveys in every interaction with employees.
He has a deep desire to lead and to be the first to market with new offerings at Road Ranger, which runs convenience stores. It is not enough for him to execute successfully on proven concepts; instead, he drives the company to offer products and value to the customer that it has not seen before.
In addition, Arnold has created a unique image with Road Ranger that the public recognizes and that sets it apart from its competitors. The company has gained regional name recognition and influence by selling Road Ranger proprietary coffee, drinks and fast-food items.
Going forward, Arnold is pushing Road Ranger toward national influence through continued expansion ideas and exciting new image presentations.
For More Information: Road Ranger, www.roadrangerusa.com
From a standing start, John Rutledge, founder, president and CEO of Oxford Capital Group LLC, has created a highly scalable and flexible business model.
That model allows him to remain lean at the corporate headquarters level while overseeing assets worth billions of dollars and employing thousands. It also allows him to lead, coordinate and employ hundreds of project-level people who work on his large-scale real estate developments without having to dramatically staff up at the corporate office. As a result, the efficiency, productivity and profitability per employee at Oxford are unusually high.
Rutledge has adapted his company for numerous opportunities as he developed momentum over the years. He started in Chicagoland, then expanded into a national footprint. He has continued to challenge himself and his team by taking on increasingly large-scale and complicated adaptive reuse projects, including converting high-rise office buildings and apartment buildings into hotels, as well as developing and investing across the spectrum, from the upper-midscale to luxury, branded to boutique and full-service to extended stay. In each case, he looks at the best way to optimize a piece of real estate, and he describes himself as commercially agnostic, priding himself on having no ego in terms of whether to develop or acquire a moderate or a higher-end product.
Oxford’s projects have become renowned for their visionary creativity in seeing opportunity where others see only obstacles for success and for executing complicated, multidimensional projects, frequently where other people fear to tread. Oxford has also gone green, opening its first LEED-certified hotel in Chicago.
Rutledge’s team is also known for its keen aesthetic eye and sense of detail, the quality level of the final physical product, and ultimately, for the service its guests experience from all of the operating team members and associates. He also believes that he and his team should be tough on the issues but soft on the people.
For More Information: Oxford Capital Group LLC, www.oxford-capital.com
In the current economy, businesses need every edge they can get to stay competitive and protect themselves from risks.
And when covering those risks, if they make a mistake in insurance coverage, it usually doesn’t surface until after a disaster or liability occurs.
To ensure that doesn’t happen, businesses need to make sure they’re covered by a reputable broker who will go above and beyond to make sure those kinds of potentially catastrophic and costly gaps in coverage aren’t overlooked, says Rob Wilson, president of Employco Group, a division of The Wilson Companies.
“You need to be sure that your broker/representative has the technical knowledge to cost-effectively arrange your insurance program so it properly protects your assets and earning power,” says Wilson. “If your insurance program is deficient, you could be out of business at the time of a major loss.”
Smart Business spoke with Wilson about what business owners should expect from their brokers regarding service, offerings and risk management tools.
What is the broker’s role in helping businesses achieve a competitive edge through risk management?
The broker’s role is to design a comprehensive insurance program that properly insures the assets and earning power of the business owner on a cost-effective basis.
The broker must be sure that he or she has provided all insurable alternatives to the business owner so the owner can reach a conclusion of how best to protect the business.
What can happen if a business is not properly covered?
In the event of a major fire or other catastrophe, you need to have an insurance program that will enable you to be in the same position after the loss as you were before the loss.
If your insurance program fails to meet your needs, you could lose your business.
How do business owners know when it’s time to look for another broker?
It’s time to look for a new broker when you never see your broker and he or she does not schedule regular meetings.
Another reason for change is when the broker does not conduct annual reviews with you to update your file and incorporate any changes in your insurance program. For example, an increase or reduction in your inventory, a new building addition or a major swing in your payroll would require changes in your insurance program.
In addition, it’s time for a change if your broker is rarely available to answer your questions.
What should business owners expect brokers to bring to the table?
Your broker should provide a detailed summary of your exposures and a set of insurance specifications designed for your business. He or she will review with you a summary of your insurance coverage and a detailed premium summary, along with quotes from alternate insurance companies.
How much should you expect your broker to know about your business or industry?
A broker may know little about your business at the time of your first meeting. However, he or she must spend the time with you and other key employees to understand your company and learn as much as possible about your business.
Your broker needs to know the why, where and what about your operations and exposures and should take the time to learn these things in order to serve you more effectively.
How can business owners make sure their broker is accountable?
There are commitments a broker should make to confirm what the client should expect in the future.
The broker should be able to provide you with a time line of the services that he or she will provide, and when they should be provided. For example, you should know when you should expect delivery of your new and renewal policies or when you should receive your binder, coverage changes and answers to your technical questions.
How can business owners find a good broker?
You can narrow the field by asking your CPA, your attorney and business associates for names of reputable brokers. In the interview process with several brokers, you should determine if the broker has professional designations, such as the CPCU or AAI designations. These would indicate that the brokers take their business seriously.
Ask for a few references, as well as the names of the insurance companies that they represent. You may want to visit their offices and meet the employees that will be handling your day-to-day work, such as certificates of insurance and coverage changes.
You should also inquire about technical skills and the ability to properly service your account.
Rob Wilson is president of Employco Group Inc., a division of The Wilson Companies, which handles human resources outsourcing, staffing and insurance for 400 small and medium-sized Midwest companies. Reach him at (630) 286-7345 or email@example.com.
Although most organizations have performance measurement processes in place, many don’t align those measurements with the goals of the organization. And incentives, which can be a good idea, too often encourage managers to make decisions that are for the best of the division over the best interests of the company as a whole.
Implementing a holistic performance measurement process can help you set goals, evaluate employees based on their adherence to those goals and ensure that the actions of your employees have the impact that you intend on your company.
By doing so, you can align individual goals with your company’s objectives, focus your training efforts where they are most needed and build a practical program for feedback on performance, says Harry Cendrowski, CPA, ABV, CFF, CFE, CVA, CFD, CFFA and managing member of Cendrowski Corporate Advisors LLC.
Smart Business spoke with Cendrowski about how to incentivize your employees in a way that benefits your entire organization.
What is a holistic performance measurement process?
A holistic performance measurement process is composed of the following primary components: strategic and operational goals set by the organization and a system to evaluate employees based on their adherence to these goals.
Many organizations have performance measurement processes in place for employees. These processes try to translate the overarching strategic and operational goals of the organization to employees through goal-setting processes.
When employees attain goals set for them, they are rewarded with merit pay or bonuses. However, a holistic performance measurement process will not only ensure that goal-setting processes are in place for employees, it will also make certain that employees are properly incentivized to the benefit of the entire organization.
For instance, many buyers in purchasing divisions today are measured on the amount they save on purchased parts year-over-year. A buyer measured on this metric may choose to award a contract to a new vendor on the basis of cost without considering the parent company’s relationship with established vendors, the quality of the goods received or the financial stability of the supplier.
Thus, while the buyer meets his goal — and improves the purchasing division’s performance — the parent company may suffer as a result of the improper incentives presented to the employee.
What kinds of organizations that often lack holistic metrics could benefit from them?
Large, bureaucratic organizations often have difficulty evaluating metrics from a holistic perspective. Divisions within these types of organizations frequently operate as autocratic entities with little to no interaction between other divisions. While this type of organizational structure may incentivize division-level managers to make decisions in the best interests of their division, they may not look out for the organization as a whole, simply because it is not in their best interest.
Organizations that lack a rigid bureaucratic structure are sometimes better at establishing holistic performance measurement processes because of their flat structure. Lacking discrete divisions, managers of such organizations are more likely to look out for the entire team, rather than their staff members. However, this is not always true, especially in small businesses.
Small businesses also have issues with establishing holistic performance measurement processes. However, the issues they possess generally relate to their lack of concrete strategic and operational goals. Many small businesses grow so fast that their owners sometimes forget to lay out future state plans. This creates issues for employees when they aren’t exactly sure what goal they are working toward.
At one small business, employees were told that the company was striving to become a high-quality, low-cost provider of services. However, when push came to shove, employees were confused about whether they should err on the side of high quality or low cost. The firm’s lack of a mission statement created significant issues for employees.
How can organizations avoid such practices in decision-making?
When incentivizing employees, it’s always important to remember the adage, ‘What gets measured gets done.’ If an employee’s merit pay is based on achieving a certain goal, he will generally try his best to achieve it — sometimes by any means necessary.
There are instances where plant managers of manufacturing operations were measured on the number of products they shipped each month. While this metric was well intentioned in that it incentivized managers to keep the production line moving, plant managers would purposefully order all goods shipped to retailers at the end of each month, irrespective of final quality inspection results.
Products that were produced midmonth with defects would be reworked prior to shipment if necessary; however, goods produced at the end of the month were often shipped to retailers with defects. One can imagine the harm this could cause the organization if retailers did not detect these defects before they sold the goods to customers.
When organizations wish to incentivize employees, they should be aware of adverse consequences that their metrics may cause. For instance, if the plant manager in the above example had been measured on both quality levels and the number of products shipped per month, he may have made different decisions.