Mark Rose has chalked up an almost dizzying array of accomplishments since becoming CEO of Grubb & Ellis Co. in March 2005.
The real estate company launched a new business and took it public, started a project management and a private capital investment group and sold 5 million shares of stock in a public offering. It beefed up its brokerage ranks by 10 percent and replaced the heads of four of its largest offices.
Add to that the development of a five-year strategic plan to revamp a company that had been rendered moribund by a previous management team that had fumbled while trying to transform it into a consulting business. That floundering had led to an exit by many of its valued personnel, the key asset in a business reliant on market savvy, seasoned professionals and sharp salesman-ship.
“They had a leader who was hired and came in and supposedly had all the answers on his way in the door, and that’s just never a way to build a successful company,” Rose says.
Rose has taken hold of the situation at Grubb & Ellis to revamp the company in a substantial way, but not in a manner that would cause the convulsions that can occur at public companies that fall into trouble and resort to quick fixes.
“It’s nine parts evolution, and there might be one part revolution,” Rose says.
That evolution started with Rose’s realization early on that the culture at Grubb & Ellis, which posted $490 million in revenue in fiscal 2006, was bruised but still retained a solid core of value that he could build on.
“Changing the culture was less important than not harming the culture and finding ways to augment and adjust and improve it,” Rose says. “The Grubb & Ellis Co. has been around for 48 years and has a great culture. It has a culture of collegiality. It has a culture of great client service. It has built a brand that many of the individuals that have been here a long time have fostered to make sure that the brand lives on and all of those positive attributes were there.
“But unfortunately, because of some missteps in the leadership positions and the management positions over time, there were things like the lack of some tool kits that might have been built to improve the clients’ services even further.”
Rose chose to revive the company not by transforming it into an image of his making, but by making the organization drive the change and by taking the best aspects of its culture and returning it to its historic corporate roots.
“What I wanted to do and what was a challenge to do was come in and reinforce the message that we want Grubb & Ellis’ culture to be Grubb & Ellis’ culture,” Rose says. “We wanted it to be credible that a CEO was not coming in with past experience working for a competitor for a long time and was going to turn it into that place. “But you do want to celebrate all the great parts of a culture, and you do want people to feel comfortable that you do understand it.”
Going into the field
Rose’s background includes a stint as as a CFO, but in the early months of his tenure, he spent more time immersing himself in the day-to-day activities of the business than he did looking at the company’s books. Before he got started, he wanted to get an authentic understanding and feel for both the business and the culture at Grubb & Ellis.
“First is assessment, and assessment of a culture is not sitting in your office,” he says. “It’s getting out there and meeting with people. This is a people business; it’s a high-performance professional sales organization. That’s what a real estate service organization is, so it’s about the people. I visited almost every office in the first year, and those visits were to assess and to listen.”
Rose didn’t limit his contacts to those within the company in that first year. He spent a lot of time with people outside the company who could give him a view of Grubb & Ellis that he couldn’t get inside, even if he ventured out of the executive suite. New to Grubb & Ellis, Rose tapped the expertise and experience of his predecessors to gain insights about the company.
“One of the first things that I did, I went out and sought out some of the prior CEOs of the company to hear what did they think of the company, what was the culture,” Rose says. “I went back to some of the leaders of the company 10, 15, 20 years to hear what this company was all about and what this place means to them that I could embrace and understand and build on that.”
And he quizzed the company’s customers and its competitors, two groups that he says are likely to give an unvarnished view of how you’re doing.
“I met with our clients to listen, and I actually met with our competitors to hear from them, and it’s a very interesting process because your competitors will tell you all the things that you’re doing wrong and they’re using against you in pitches, and they’re basically giving you the key to combatting them and how to be more successful,” Rose says. “I met with them and said, ‘Tell me, what are your views of Grubb & Ellis?’”
To gain a sense of how the company was conducting itself in the field, Rose even threw himself into the sales process, pitching some major pieces of business to clients.
Getting in the trenches was more than a tactical move. He says that by putting his hands on the organization to witness firsthand how it works, he sent a powerful message throughout the company.
“I will tell you that in the first six months or so, when several teams, both long-tenured and new folks, asked for help and I agreed to get on the plane to help them, I think it sent the right signal,” Rose says. “It’s a business where we can strategize until the cows come home, but you actually have to get out there and do it, and I think that was probably one of the earliest successes for this organization. The feedback I got was, ‘This guy was willing to get on a plane and come help us.’”
And while being involved in the nuts and bolts of the business can have its payoffs and rewards, Rose warns that it can have a downside if it’s taken too far.
“The one thing that you don’t want to do is get into micromanaging or build an organization where you’re hindering empowerment and just spending time focusing on accountability,” he says. “If your leadership is spending too much time sticking their hands into the empowerment side, you take the empowerment and accountability out of balance.”
Rose says that driving change can be a difficult process, and that there nearly always will be some resistance.
“Any time you need to make change, there will be those who are either protecting what they built, protecting their jobs, or protecting that they may not have an answer or that what is comfortable is the best, when in most cases, the success of most organizations comes when you push people out of their comfort zones.”
And while some will try to hinder change or won’t be able to meet its challenges, the key to overcoming resistance is not to force the change from the top but to give the organization the responsibility and empowerment to drive it.
“Different CEOs have their own version of unlocking the code, or the secret sauce,” Rose says. “But when you believe in getting your teams together and making them part of the solution and part of the changes and don’t come into the office and say, ‘Here, do this’ or ‘You’re going to do this’ or ‘This is a best practice,’ that’s very powerful.”
Instead, Rose puts much of the responsibility for coming up with strategy and determining the changes the company needs in the hands of his employees. Working on walls of white boards, Rose and his team base every change on a hypothesis that has been fleshed out based on factors such as what they’ve observed about the company, the marketplace, the latest technology and the competition.
In one case, the company came to the conclusion that it needed to reorganize how it delivered its four principal lines of business to clients. With its old structure, services were in two business silos and not readily offered or available to clients of one unit or the other.
The process of developing a hypothesis and working through it led the company to revamp the fundamental structure of its service delivery. Now, says Rose, Grubb & Ellis can serve fewer clients and derive more profit by offering a wider array of services that are available to all of them.
That kind of fundamental change comes when a company can tap its brainpower and bring ideas and change up through the organization.
“Building an organization that will think out loud and think for themselves and will have views, whether you implement them fully or at all, that process has been more sophisticated and very successful in helping us make the sheer number of changes we’ve made,” Rose says. “True, as a management team, you’re guiding somewhat, but what you’re guiding is a framework to get you to a place. But the content really needs to come from the gray matter, the brainpower of your organization and the team that you’re building. It’s been very successful in the early stages to include a diversity of opinion and the knowledge of many individuals to not only craft something that is good but something that is very, very sustainable.
“A few simple strategies and tactics to change a company instill empowerment and accountability, connect with everybody to understand why you’re doing it. We may know that we need to get to Z but the CEO can’t tell you how to go from A to Z. There needs to be a collaborative effort to get there.”
The company’s five-year strategic plan is still in its early stages, not at A but still a way to go to Z. However, Rose expresses optimism for a plan that was put together with input from a wide variety of people, both within and outside Grubb & Ellis. Critical to putting together such a plan is the willingness to listen to as many of those sources as possible.
Says Rose: “I don’t care whether it’s the company or it’s at home with your family ... you have to listen. So many great ideas come from folks other than yourself, and if you’re confident enough to embrace them, hopefully good things will happen. There are a lot of smart people out there.”
HOW TO REACH: Grubb & Ellis Co., www.grubb-ellis.com
While 55 percent of hiring managers say it was difficult finding qualified candidates a year ago, 81 percent say that it was just as difficult, or more so, today, according to this year’s Employment Dynamics and Growth Expectations (EDGE) Report. But while the balance of power has shifted to favor highly skilled workers, the majority of employees surveyed said they are still feeling cautious about the job market and not very willing to negotiate higher salaries.
The survey and report were developed by Robert Half International (RHI), the world’s largest specialized staffing firm, and CareerBuilder.com, the United States’ largest online job site. The survey, which included responses from more than 1,000 hiring managers and 3,000 workers, was conducted to determine which group has more clout in the current job market.
“There is an increasing talent shortage that hiring managers are keenly aware of, but that reality is not on the radar screen of job seekers,” says Steve Kass, president of the Great Plains District of Robert Half International in Chicago.
Smart Business spoke with Kass about this curious discrepancy, and what it means for both workers and employers.
Could you explain the reason for the talent shortage?
With unemployment rates at around 5 percent, the country is basically at full employment and there’s a more shallow talent pool to draw from. The talent shortage is particularly acute in the fields of accounting, finance and information technology.
There is an increased need for accounting, auditing and finance professionals because of the stricter corporate governance created by the Sarbanes-Oxley Act. These regulations have created accounting jobs that did not exist just five years ago, and has led to a demand by employers to find highly skilled employees to fill staff-level positions. In the information technology sector, companies are increasingly faced with a large number of baby boomers retiring and smaller generations of replacement workers entering the work force.
If jobs are plentiful, why are workers being cautious when taking a new job? And why are they hesitant to ask for more money?
Although the job market is currently in the employees’ favor, our report indicates that 74 percent of those surveyed are not looking for a new job. One reason is because the layoffs and workplace uncertainty from a few years ago are still fresh in people’s minds, and many employees are hesitant to test the job market when they have the security of a job. Another reason may be the perception of the economy.
If you look at the facts, you can see that the job market and the economy is strong. But if you turn on the news, there’s a lot of negativity and bad news. So, as a result, people make that leap and assume that the economy is bad. But it’s not. It fact, the economy is actually doing tremendously well.
What should workers do in this environment?
The survey showed that employees are hesitant to push for more money even when employers are open to paying more money. While 45 percent of the workers surveyed said their compensation had increased in the last year, only a small percentage are willing to ask for more money in the future. Job seekers with in-demand skills have much more leverage than they think they do, and they need to try and use that leverage to increase their compensation and benefits packages.
What does this all mean for companies that are hiring?
It means that the market is more competitive than it has been in the past. Businesses need to be more open to paying more money, particularly when they find the right candidate. They also need to focus on retention strategies. Employers are becoming worried about turnover, and it is important to step up retention efforts, especially since 21 percent of hiring managers in the survey reported that turnover was higher than last year at this time.
What are actions surveyed companies taking to increase staff retention rates?
Thirty percent of hiring managers reported their firms have put in place new policies and programs to increase staff retention rates in the last 12 months, up from 23 percent this time last year. The primary measures taken included offering pay raises, bonuses, better benefits and more flexible schedules. This is a wise step considering the competitive hiring environment at the moment. The key is for employers to make sure their employees feel valued.
STEVE KASS is the president of the Great Plains District of Robert Half International in Chicago. Reach Kass at (312) 616-8200 or firstname.lastname@example.org.
The size of the companies acquired was less problematic than the enmity between the management teams of the two competing companies that had festered over the years. For Schawk, president and CEO of the brand image solutions company, it was like putting lions and tigers in the same cage.
“What was particularly challenging was the fact that we acquired the two largest prepress companies in Europe,” says Schawk. “The scale of the acquisitions was a minor factor compared to the competitive cultures that had developed at these companies throughout the years. There was a deeply entrenched history between the two. To say that they were bitter rivals is not an overstatement.”
The bad blood made for bad business, and critical matters such as closing facilities that duplicated services dragged along with little progress.
“This made integrating the management at both companies a painful exercise,” says Schawk. “In the end, it just wasn’t possible because neither management team respected the other. My decision to allow the management teams the opportunity to try to work it out themselves was a mistake, given the bitter rivalry. If I had to do it all over again, I would have made a change at the top much sooner.
“While we strongly prefer to leave management in place when we acquire a new company to leverage all the positive results of what they’ve achieved, in this case, the negatives tipped the balance.”
After changing most of the senior management, including the top manager, Schawk says, the European operations are finally on the right track. It’s been accomplished by following a simple formula.
“We went back to the basics and what has worked for Schawk for 50-plus years: Make managing directors P&L responsible, create a team-building/working environment, set clear, measurable goals and reward exceptional performance,” Schawk says. “This brought immediate clarity, direction, accountability and motivation to the operation.”
Schawk’s experience with a knotty integration after acquiring the European firms highlights how difficult transactions can be, even for a company and a CEO with a lot of experience at it. The company has made more than 50 acquisitions since Schawk’s father, Clarence, now chairman, started the company in an aunt’s basement more than half a century ago.
Fortunately for Schawk, most of the acquisitions he’s made, including the company’s first international buy in 1996, have gone a lot smoother than the European episode.
A good thing, too, because Schawk has decided that the company’s strategy has to be a global one, that to sustain growth and service its clients, most of them multinational consumer products companies, it has to be close to those customers.
And Schawk Inc. has had a lot of practice at acquiring companies.
Evaluating the target
Schawk makes integrations go smoothly by carefully selecting acquisition targets, making sure that there is a neat cultural fit and evidence of strong future financial performance and, unlike with the case of the big European deals, he does everything he can to keep the management structure already in place essentially intact.
“How we’ve become successful was not moving a bunch of ex-pats around the globe and managing businesses,” says Schawk. “We basically move one ex-pat, have him be in charge and secure local managers to run the business for us.”
Making a good acquisition that fits your company means picking the right target, taking your time evaluating it and being realistic about its performance.
“We do a lot of evaluation, but the primary driver is, to be honest, the account base, what kinds of clients they have, do they have the same mix of clients that we can add to our portfolio,” Schawk says. “Once we’ve determined that they are, we start to do an evaluation of their culture and how and if they could fit in. The next step is obviously negotiations. We closed on a new company in Cincinnati, a design house. That took us six to eight months to come to an understanding of where we’re going.”
And knowing when to back away from a deal is just as important a skill as knowing when to pursue with a full head of steam. Schawk has walked away from several potential deals for a variety of reasons, but nearly always because of factors uncovered in the due diligence process something he isn’t about to hurry just so the deal can close.
“In some cases, the valuation got to where we believed it was too high,” says Schawk. “In others, our due diligence revealed that false data was being supplied, and in one case, we learned that the target’s largest client was planning on moving its business to a competitor. While we are exceptionally disciplined about evaluating potential acquisition targets to ensure that they meet all our acquisition criteria financial, strategic, cultural, and operational it takes a keen focus and persistence over many months to complete the due diligence process.
“It’s as much about energy as it is knowledge and experience.”
Close attention to the due diligence process means some deals never see the light of day because they don’t pass muster.
“Certainly, some of the best deals we ever made are deals we haven’t made,” Schawk says. “We do a lot of historical analysis. We are very stringent on high integrity, clean books, good management, valuation. Typical buyers look into the future, ‘Their revenues are going to increase 20 percent next year.’ We do a lot of historical analysis.”
Judging the success of an acquisition comes down simply to the numbers.
“Financial is really the only way,” says Schawk. “They’re a success when they fit in with us culturally and make us money and get our investment returned as quickly as possible.”
Schawk says ensuring a cultural fit is often simply a matter of getting familiar with the target company’s owner, who sets the tone for the company and whose attitudes and values usually trickle down into the rest of the organization.
“It’s spending time with the owners. Typically, the owner’s personality and business acumen are transmitted into the business. Those generally spread down and usually, the way he acts is the way the rest of the company acts.”
Leverage internal talent
Schawk says keeping the transition smooth means constant communication with the employees of the acquired company, leveraging their skills and keeping them involved directly in the integration process.
“Look for exceptional talent inside the acquired company and assign them a role in the integration process,” says Schawk. “Keep all employees informed as much as possible about changes being considered and made, and also about progress toward shared goals. It’s not possible to overcommunicate in these situations.
“It’s also important to make yourself as visible as possible during this time and available 24/7 to handle any critical issues that may come up.”
Keeping the right team in place at the acquired company is key to keeping the business running smoothly and retaining its clients.
“The biggest thing is keeping the same management team and keeping the same employees in place,” says Schawk. “We don’t go into deals thinking that we’ve got people waiting on the sidelines, ready to go in and manage the business.”
While Schawk tries to keep management teams intact, it’s not always possible keep companies or their personnel together. Some acquisitions, such as its purchase of Seven Worldwide Inc. in New York City, have required trimming operations to ensure profitability. Schawk had to consolidate some of the New York operations, moving the prepress operations into a single facility and eliminating some jobs.
The workers’ union took legal action against Schawk, but later dropped it when the company offered a settlement package for the separated workers. A potentially ugly situation was smoothed over by Schawk, which subsequently received a letter from the union praising the company for its fairness in the way it had handled the situation.
Schawk says the best outcomes in such situations arise from keeping employees apprised of what’s going on and keeping the lines of communication open.
“Especially with plant closures, if there’s consolidation going on, we certainly inform them personally, if not by me, then by the other senior leaders,” says Schawk. “We have a quarterly newsletter that gives them information about what the company’s doing, which direction we’re headed. We do it primarily through communications and make sure everyone knows what’s going on, whether it’s good news or bad news.
“I personally visited every office in Europe when we went through those changes. I met with all the employees, I gave them our game plan, I told them what we’re doing, how we’re going to do it and how we’re going to get there. Again, people want to know what’s going on, whether it’s bad news or good news, and that’s probably what we do best.”
For CEOs who are considering striking out on the acquisition trail, Schawk advises they have a carefully thought out strategy, exercising discipline and careful evaluation of target companies.
“My advice would be, have a game plan and stick to it, have measurement tools to measure your progress as far as the direction you’re heading and how you’re going to get there,” says Schawk.
Schawk uses a variety of tools, including EBITDA earnings before interest, taxes, depreciation and amortization and pretax profits to judge an acquisition target’s performance, but insists that it’s accretive to earnings the first year.
“Make sure you have the discipline of sticking to especially if you’re making acquisitions value,” Schawk says. “Don’t get caught up in the hype. Be realistic about it, and stick to your guns on the value metrics that you come up with, and those are different in every industry and every part of the world. And again, surround yourself with a great team. I couldn’t do this without my executive team working hard every day.”
And the bottom line in making successful acquisitions is, well, the bottom line.
“Never take your eye off the bottom line,” says Schawk. “Always maintain a strict focus on fiscal responsibility. It may not be glamorous, but earnings, cash flow and the proper leverage are critical to achieving success driving your growth plan forward.”
How to reach: Schawk Inc., www.schawk.com
Along with e-mail’s benefits, however, come increasing risks and responsibilities all focused on the actions of employees who create, send, forward or save electronic communications. For this reason, business concerns should establish a strict set of standards for all employees. Failure to adhere to those legal policies places both the company and the individual at risk for legal or financial liabilities not to mention potential public embarrassment.
“This area of law is in its infancy,” says Dan Albers, a partner in the Intellectual Property and Litigation departments at Barnes & Thornburg LLP. “The law is evolving because there’s not a lot of precedence.”
Smart Business asked Dan Albers about privileged correspondence and the admissibility of e-mails in court.
Legally, what is the purpose of labeling e-mails like ‘Attorney-Client Privileged,’ ‘Not Public Data’ and ‘Trade Secret’?
If you label an e-mail, it at least allows you to show the court your intent at the time, so you’ll have more of an argument. It’s also easier to find those e-mails and try to protect them when they’ve been labeled for purposes of litigation.
It’s very important that ‘Attorney-Client Privileged’ communications be labeled and be maintained in a privileged way meaning that people not responsible for legal decision-making do not receive those e-mails.
‘Not Public Data’ or ‘Trade Secret’ e-mails contain proprietary information. Most courts have said that, in order for something to be treated as proprietary (a trade secret) the company must have taken reasonable measures to protect it from public dissemination. One of the ways you do that is to have instructions that certain kinds of information will always be labeled, and the dissemination list would always be limited to those people who would be involved in using that information for a business purpose.
The absence of both these labels can also have the opposite effect. Opposing counsel might ask how the originator expected an e-mail to be treated in a confidential manner if it wasn’t properly labeled.
What is the value of maintaining e-files in their original form?
If you’re going to use them in any substantive way in litigation, you need to maintain them in their original form to get them into evidence. Just like any other document, you need to show the original or a copy that has not been changed in order to have a basic foundation for getting it into evidence. If you cannot make that showing, there may be an inference drawn against you that you’re liable.
What can corporations do to help prevent being taken to court for abuse or misuse of electronic-based communications?
The most important thing is to have a corporate policy in place and have it incorporated into your employee manual.
The company should have access to all e-mail and electronic communications for company purposes at any time.
Whenever the company believes that it is likely to be involved in litigation, there must be some form of memorandum to the appropriate people to maintain electronic files.
The most important thing is to not destroy what would or could be relevant electronic discovery. If it’s destroyed, any favorable information will be unavailable. And you would much rather be able to respond to the substance of an e-mail, because it’s almost impossible to disprove any inference that an e-mail was destroyed for no reason.
Finally, employees should not publish in e-mails their conclusions about relationships with other companies, or potential litigation such as patent infringement, copyright infringement or legal liability. Crafty lawyers will get those e-mails into evidence, and their effects will be almost impossible to overcome.
Is copyright protection an important legal issue when it comes to electronic communications?
It depends on what material is being used and what it’s being used for. If you want to cite particular portions of copyrighted material that you think are relevant with the source that’s probably fair use and not a copyright violation.
But when a person takes copyrighted material for example an article or product brochure and sends it out across an entire business for the uses of carrying on the business, that could be a violation. Because it’s not being transmitted publicly, though, the question is, how is the copyright owner going to know it happened?
Copyright protection should be on the alert list for people who are responsible for use of internal Web sites, and they should discourage full use of copyrighted materials.
DAN ALBERS is a partner in the Intellectual Property and Litigation departments at Barnes & Thornburg LLP. Reach him at (312) 214-8311 or email@example.com.
Get the big picture, but don’t get in the way.
You have to not only fly at 40,000 feet, it’s important to be able to swoop down from time to time and look at the veins on the leaves on the trees. Good leaders are able to have that 40,000-foot view, but they are also able to get down and look at the veins on the leaves on the trees but they are smart enough not to get stuck there.
That’s what I try to do. Sometimes we’re successful, but not always. You guide the company at a strategic level, giving people responsibility and making them accountable but not necessarily getting in the way.
You want to be able to look out over the hood and down the road, but you also want to see what’s right in front of you. It’s a balancing act; one of the ways you do it is having strong analytical tools in the organization.
Listen to your hunches, but also get the facts.
You have instincts and assumptions in business, and you go out and try to validate it with facts or try to prove those assumptions wrong.
You get a hunch, you go out and gather the facts, and based on that, you make your decision. Gathering the facts could be talking to your leadership team, it could be talking to a customer, or it could be research. We try to make fact-based decisions here that are outgrowths of our assumptions.
And you don’t always have all the facts. Sometimes you have to go to some degree with what your gut told you, but you try to get as much information as you can, depending on the speed you have to make the decision with.
We have a highly interactive decision-making process. At the end of the day, more often than not, there’s consensus. Probably more often than not, your gut’s going to be telling you the right thing, but you have to go out and validate it. You’ve got to ask questions, and you’ve got to get answers.
You’re going to make mistakes, but you want to correct those mistakes very quickly. Minimize your mistakes, maximize your successes, but move quickly in all cases.
Give your employees potential for growth.
We try to not only make it an exciting place to work but an opportunistic place to work, where people see future opportunity and associates feel there is enhanced opportunity for them down the road. It could be through promotions; it could be through challenging new projects.
Those coupled with a positive, uplifting culture are the most important things. Our people here are used to a high degree of stress, as a result of the pace of growth we’ve had.
We try to keep it busy, not stressful. Our associates are used to performing under pressure, because of the flexible, adaptable changing environment.
We’re in a constant state of change here, and people grow to be comfortable with that.
Set your goals, and communicate them.
Focus; don’t spread yourself out too far. Don’t try to have too many priorities. Listen, but be decisive.
Be inclusive from a knowledge-gathering standpoint. Align the organization with your priorities, and make sure everyone knows what the focus and the priorities are.
Sustaining the rate of growth is a challenge. You want to ensure that you are highly responsive to your customers, but you’ve got the cultural integration of multiple sites and new employees coming on, and all the challenges that go along with that.
We don’t necessarily change the culture; it’s more like merging the cultures over time. Culture is really about behavior and setting the expectations, and over time, people need to meet those expectations. Over time, we try to align our organizations’ behaviors.
We do that by establishing a clear mission, by organization and understanding what the vision of the company is. You’ve got to set goals and communicate expectations to individuals, and show them how they fit into the overall objectives of the organization.
Set the example for your employees.
Honesty and ethics and values play a major role. You try to have activities that are extracurricular that the organization can participate in. You want to be fair, but generous at same time.
You are setting an example every day. We try to set an example in community, whether that’s a local community or national. Our associates are very committed to both, and that’s a result of us being committed to both. Whether it’s sending a care package to troops in Iraq, or cleaning up litter in downtown Rockford, our associates have come through for us.
We’re a learning organization, which comes along with being adaptable and flexible. We’re not afraid to ask questions, not afraid to go out and learn new things. We don’t assume that we already know. That’s what comes first: A yearning for knowledge, trying to sort it out.
We are certainly driven to succeed. We want to be successful at what we do, and we want to serve our customers well and win new opportunities and perform well at those opportunities.
You have to do it as a unit, like a football team. It’s not any one individual that makes it happen, it’s the unit. That’s really what it’s been. It’s been a unit of associates executing for our customers, trying to bring efficiency and value to the process.
HOW TO REACH: SupplyCore Inc., (815) 964-7940 or www.supplycore.com
For example, private bankers can save their clients time by customizing personal or business loan structures, reducing turnaround times for products such as construction or bridge loans, and making it easier to meet crucial fiduciary deadlines. In effect, they become extensions of their clients’ businesses and families and their chief financial advisers as well.
Smart Business spoke with R. Scott Wolfsen of MB Financial Bank N.A to get some insight into the benefits of private banking and the reasons owners should consider it.
What is private banking?
It is a comprehensive, advisory approach to personal financial management that gives clients a single point of contact for all of their personal financial needs.
Private bankers work closely with their clients to provide customized credit and cash management services that typically include checking and money market accounts, certificates of deposit, lines of credit, and first and second home mortgages. They also act as the liaison between clients and the other specialized wealth management services within the bank such as investment management and personal trust.
Why do business owners establish relationships with private bankers?
While the initial contact between banker and client may be driven by a specific loan or deposit need, business owners quickly see the advantage of having an established, trusted adviser to mitigate the difficulties associated with the complex financial environment in which they operate today. From buying that vacation home to saving for retirement, private bankers will bring together a team of competent, experienced professionals all working toward the client’s long-term goals.
Can’t business owners get the same type of service from their commercial bankers?
The private banking relationship is a supplement to not a replacement for the commercial banking relationship. While the typical business owner’s personal finances are often closely tied to his or her business, the personal needs and solutions are unique. The private banker works closely with the commercial banker to ensure that all the client’s financial needs are met as conveniently and completely as possible.
How does private banking benefit business owners?
The private banker provides a single source for a vast array of wealth management services and finds solutions based on a comprehensive understanding of the business owner’s ultimate goals and objectives. Having an established, trusted relationship often means shorter response times, faster solutions and greater flexibility in meeting the client’s needs. Most institutions also have customized products for the private banking customer with preferred rates, structure, or fees based on the total relationship.
What criteria would a business owner use when selecting the private banking institution best suited to his or her needs?
While similar, each institution will approach the private banking business in its own unique way. The important thing is to find an organization where you are comfortable with the culture as well as the people. For business owners, this often means banking where the company banks. Using a single institution for both business and private banking services ensures that all of their financial advisers are working toward a common goal with the most comprehensive information available.
Are there minimum requirements clients must meet before seeking private banking services?
The qualifications for private banking will differ from institution to institution but will generally include parameters for income, net worth, investable assets, and/or loan amounts. Most banks look for clients with personal income over $250,000, assets available for investment of $500,000, or personal lending needs over $1 million. That said, commercial banking customers not meeting these standards individually will often qualify based on the commercial relationship with the bank.
Business owners interested in establishing a private banking relationship should speak with their commercial banker to see what services are available.
Is there anything intangible that contributes to a strong, long-term private banker-client relationship?
The most significant intangible factor that guides the relationship is communication. Private bankers recognized that each business owner is unique with respect to their goals and objectives, their resources, and their time frame. Private bankers learn as much as they can about their clients, from special family needs to business succession plans. By working together on an ongoing basis and communicating regularly, the banker can ensure that the business owner’s financial needs are met both today and in the future.
R. SCOTT WOLFSEN is first vice president with the Private Banking Division of MB Financial Bank N.A. Reach him at (847) 653-2154 or firstname.lastname@example.org.
Bachelor’s degree, chemical engineering, University of Michigan; MBA, University of Chicago
First job: Lot boy at a car dealership
Whom do you admire most in business and why?
My father. He spent 30 years at GE in human resources and he always provided great counsel to me. He told me to get a technical undergraduate degree, work for a few years, then go back to business school and get an MBA.
What is the most important business lesson you’ve learned?
You can never have enough good people.
What has been your toughest business challenge?
Changing perception of the public sector to accept for-profit educators as quality providers.
Describe your leadership style.
I think I’m very approachable. I occupy the corner office, but I’ve never thought of myself as any better than anyone else. I tend to hire people who take the results seriously but don’t take themselves seriously. I’ve always believed that you can have fun and make money.
"The idea that one person could run a company with 360,000 people like GE with all those businesses is silly to even think about," he says. "But getting great people there to do it, you get the reflected glory of all their work. So you're nothing but a product of how many good people you get."
Welch got plenty of good people. In fact, four of the Dow 30 companies are run by CEOs who once were Jack's guys: Home Depot's Bob Nardelli, 3M's Jim McNerney, Honeywell's David Cote and, of course, GE's Jeff Immelt. In addition, dozens of other major U.S. corporations are run by ex-GE executives steeped in the master's ways.
Since retiring, Welch has consulted with Fortune 500 companies and written the autobiographical "Jack: Straight from the Gut." Now, following years on the road conducting question-and-answer sessions with businesspeople around the world, he has penned "Winning" with his wife, Suzy Welch, a former Harvard Business Review editor.
Smart Business caught up with Welch during his book tour to talk about the new work and the management principles that brought him so much success at GE.
Why did you use "Winning" as the title for your new book?
It sort of gets you down to this philosophy I have that the glass is half full. It gets you focused on all the things that you can do about not being a victim. I don't like victimhood.
So what I've tried to do in chapter after chapter is to show ways that people can get out of wringing their hands as victims. Whether it's how to get a new job, how to do a budget, how to do strategy, how to work for a bad boss - any of these things -- my wife and I try to put into perspective how you can take charge of yourself.
You open "Winning" with a section called "Underneath It All," in which you talk about your business philosophy. What is that philosophy?
My philosophy is that candor does wonderful things for people. It speeds the process. Everyone knows where they stand. One of the problems I see in business is people don't know where they stand. Differentiation is letting the best know where they are. And letting the weakest understand what their shortcomings are and what they have to do about it, not surprising them someday by laying them off.
So differentiation is how you build great teams. You are constantly raising the bar. And I think business is a lot like sports: The team that fields the best players wins.
Voice and dignity are, in fact, part of demanding or requesting or pulling the best ideas from everybody. Everybody wants to have a voice. We went through a workout process at GE that spent years and tens of thousands of town meetings asking for ideas from any level. And we tried to get to the point where ideas came not based on the stripes on your shoulder but from the quality of your idea.
The same thing is true about dignity: Respecting people by telling them where they stand. Never let them be in the dark. Always explain what they can do to do better, and if they can't do it, send them on their way.
But don't come in some day and say, 'We're having a recession and we've got to lay off two people and Mary and Joe, you have to go.' And Mary and Joe say, 'Why us?' And you answer, 'Because you weren't doing that well.' 'But we've been here 15 years and nobody's ever said anything.' That happens all the time.
I definitely think everybody has to know where they stand. One guy in Louisville said to me, 'You've had my arms and legs for 25 years; you could have had my brain for nothing.' That's true. The people closest to the work know the work. You should ask them.
So all those things are part of a fundamental philosophy. When they know where they stand and they are willing to speak out openly because candor is a value that's rewarded and you give them respect, you will get the most out of people.
How did you develop your philosophy of candor?
I've been that way all my life. My mother was that way. I'm an only child of an Irish mother. We didn't have any money. My father was a conductor on the railroad. Union household.
But she always said you have to face reality. 'This is the way it is, Jack. Don't wish for something. This is the way it is. Now go do something about it.'
Do you think it is difficult for people to have that kind of candor?
I think so. I see too much lack of it. I find it alarming. If your company doesn't decide it's an important value or behavior, they won't get it. You get what you define as the behavior you want.
If I tell you that what I want from you is candor and I'll reward you for it -- you'll get promoted for it, you'll get paid for it -- you'll do it. If you get slapped every time you do it because you're speaking up to the boss, you won't do it at all. You get the behaviors you ask for and reward.
If you start promoting guys that aren't candid and you say candor is important, you won't get any of it.
How would you describe your leadership style?
Hopefully, energizing. Hopefully, one that always gets the best out of people. One that recognizes the value of having smart people around you, people who are smarter than you are.
Searching all the time for the brightest people you can get your hands on. Knowing that, as a leader, the quality of the people you get determines how good you are. Not you. You can't determine how good you are. You're not good enough.
How do you identify the right kind of talent?
I always had a formula that was pretty straightforward: Four Es and a P. Do they have energy? Do they energize others? Do they have edge? Yes or no, and not maybe. Can they execute? And do they have passion? Do they care more than the next person?
If I'm hiring somebody from the outside, I'd always ask one question: Why did you leave your last job? Tell me why you are willing to leave if I am recruiting you. And then I let them talk for a while and listen.
You find out what they are griping about, where they are, where their pay is wrong or their boss stinks or whether they just want more challenge and they want to grow and flourish.
How do you get people to buy into your vision?
You better have a clear rationale. You have to lay it out. And you better be willing to say it until you're ready to throw up. You say it so many times, the last time you say it you can barely get it out of your mouth.
You can't repeat yourself enough in business. You can't change the mission every 15 minutes. You've got to make the case, rally the troops and then excite them to want to do it and then reward them for getting there -- in their soul with the job and in their pocketbook for doing it.
What skills do you need to be a successful CEO?
An ability to get great people. To excite people. This is no different than a sports team. If you get lousy players, you are going to lose. If you get great players, you win.
When you chose people for your management team, what traits were you looking for?
You really want people that can turn people on. You assume people have high integrity; that's sort of a ticket to the game. But you really want to have an incredible team of high-energy people that want to win, are excited by it and will be able to excite armies of others to do the same thing.
How do you measure success?
By setting some goals, a vision and the degree to which you achieve it. For me, long ago, it stopped being about money. It's about the team winning.
The big kick for me for years has been how many others won. Watching others get stock options, watching others grow, watching them change their lives.
How do you build loyalty in an organization?
I don't think you build loyalty. I think you build excitement. Loyalty is not the right word you're looking for. How do you keep energized people energized? How do you keep people excited about the challenges? Do you reward? Do you celebrate? Do you do all those things?
Loyalty implies a certain contract that you'll stay with this company for life. You don't have loyalty. The loyalty is to your customer. Only customers can give jobs. Companies can't.
So when you start talking about building loyalty, I don't want to build loyalty. I want to build exciting people who are excited to stay and are ready to leave if things aren't right.
I don't want people hanging on with the rope to the mothership. Loyalty is the wrong implication. I like people who, if we don't get it right here, they'll go somewhere else. So every manager has to excite his people to keep them there.
What's the most important business lesson you've learned?
Let's take getting the best team for a given. I was in Chicago for a Q&A session, and this guy said, 'I have a problem, Mr. Welch, with this differentiation thing and evaluations. I've got 10 people reporting to me. Two of them are smarter than me. How do I appraise them?' I said, 'What the hell happened with the other eight?' That's the point. He should have 10 that are smarter than him. That's what he should be looking for every day.
My other lesson is that culture counts as much in an acquisition as the numbers do. That's why so many acquisitions fail. The culture is so different from your own, that while the numbers might look good on paper, getting it to work is harder. [GE made 933 acquisitions during Welch's tenure as CEO.]
What was your toughest challenge in running GE?
[Long pause.] I don't think I ever had one. Every day was exciting. I loved every minute of it. I never it saw it as tough challenges. The worst thing you do in life is take people out of a job.
The toughest challenge has been when somebody can't perform up to your expectations and you've had the discussions with them for a year or so and you finally have to walk in and say, 'We have to part ways.' It's obviously the ugliest thing you do in business.
HOW TO REACH: www.welchway.com
When Bentley’s Continental GT debuted last year as the luxury automaker’s “entry-level” coupe, the fastest and sexiest Bentley ever was the hottest car on the market. It quickly sold out of its first-year production run, leaving such luminaries as addled rocker Ozzy Osbourne scrambling to buy one.
Even as dealers continue to talk of getting premiums on the new 2005 model, Volkswagen-owned Bentley is raising the stakes with a super-luxe treatment from its Mulliner custom coachwork division.
The new Mulliner Driving Specification package which Bentley says was driven by customer demand for a sportier look includes 20-inch, two-piece alloy sports wheels; sportier treatments inside; indented hide for the roof headlining; diamond-quilted hides for the seats, doors and rear quarter panels; and a choice of piano black or dark-stained burr walnut veneer.
The Continental GT lists at $155,990; the Mulliner treatment adds a mere $11,000. Here’s a quick look at what else you get with the Continental GT.
Based on the VW Phaeton’s steel platform, the Continental weighs in at a hefty 5,358 pounds. Atop that frame sits a Bentley body like no other: a beautifully aerodynamic two-door that is thoroughly modern though retains Bentley styling cues from decades past. One look and you know wht they say you ride in a Rolls, but you drive a Bentley. This car screams, “Drive me!”
If the exterior has you fooled, just slip inside and you will know you are in a Bentley. With the Mulliner Driving Specification, the cockpit now features drilled alloy sport pedals and a new gear level featuring a Bentley-logo knob and aluminum surround. Exquisite leather also gets the full winged logo treatment, as well as the classic Bentley diamond-quilted hides found in the Arnage T.
The 6-liter, twin-turbo W-12 produces an impessive 551 horsepower at 6,100 rpm and 479 pound-feet of torque at a mere 1,600 rpm, more than enough to compensate for the car’s heft. If you want Ferrari-like acceleration look elsewhere; but if 0 to 60 in 4.7 seconds and a top speed of 198 mph is sufficient, then the Continental will get you where you need to be on time.
FOR MORE INFORMATION: www.bentleymotors.com
There are cries of alarm as manufacturing jobs are eliminated and service jobs are sent overseas. This makes for great headlines, but it doesn't give you the whole picture.
Rising productivity is the root cause of much of the ruckus, generating higher profits, lower inflation and a strong housing market, and increasing stock prices. But productivity generates wealth before jobs.
Earlier this year, consumer net worth hit a new peak of $45 trillion -- up 75 percent since 1995. Corporate profits as a share of national income are at an all-time high, and so is the net worth of many individuals. So what's all the negativity about the economy?
According to Business Week, offshoring isn't really a problem. Unlike in most previous business cycles, productivity has continued to grow at a fast pace right through the downturn and into the recovery.
One percentage point of productivity growth can eliminate up to 1.3 million jobs a year. With productivity growing at an annual rate of 3 percent to 3.5 percent rather than the expected 2 percent to 2.5 percent, the reason for the jobs shortfall becomes clear: Companies are using information technology to cut costs -- and that means less labor is needed.
Of the 3 million jobs lost over the past three years, only 300,000 have been because of outsourcing to another country, according to Forrester Research.
As for those 3 million jobs, that number comes from a Department of Labor survey of mainly larger companies. This figure can be somewhat misleading because the department measures job loss in several ways. One survey of workers showed a job gain of more than 750,000 between January 2001 and January 2004. So it is reasonable to conclude that there may be 3 million jobs lost, but most are coming from large corporations.
Smaller and mid-sized firms are adding these employees back to the work force and driving the economy forward. It is the smaller enterprise that is the job-growth engine that hires the people Fortune 1000 firms cast off.
Don't believe the hype. The economy isn't as bad as it's made out to be. If your business isn't performing, then start looking for productivity gains before you fall hopelessly behind.