Joe Carrabba has always been in his element in a team environment. Growing up as a football player and wrestler, he always enjoyed the spirit of competition and the atmosphere surrounding a team. But he didn’t realize that those elements he appreciated as a youngster would affect his career as chairman, president and CEO of Cliffs Natural Resources Inc., a mining and natural resources company.
“When I went into the mining business, you work in some pretty remote spots, and you deal with some very difficult environmental effects around you, and in a mine, you don’t call for assistance or help down the road,” Carrabba says. “You have to rely on that group of people or that team to get the product out and get the production for the day. That atmosphere is built very heavily in the mining business, and it’s pretty easy to see how those values carry forward. The world just moves too fast to work in a silo. You’ve got to open up and work in a team atmosphere.”
That’s just one thing that Carrabba has tried to instill at Cliffs, and doing so has helped him successfully lead the company through the difficult economic environment. While many businesses have struggled during the past couple of years, Cliffs saw its revenue from product sales and services grow from $1.9 billion in 2006 to $3.6 billion in 2008, before dropping in 2009. While revenue was down 43 percent through the first three quarters of 2009, the company was still profitable and reduced expenses from $41 million in the third quarter last year to $28 million in the third quarter this year, and it is starting to see a steadily improving demand for its products.
He says the key to his success in the downturn was building that team atmosphere during the good times by creating a great place to work, hiring the right people, communicating and setting goals.
“You’ve got to treat people well in the good times, so you can get their dedication and respect in the bad times,” he says. “We have that kind of team here. Prior to this financial meltdown, we had three or four spectacular years. The commodities business is very cyclical, and you’re going to have very highs and you’re going to have very lows. And you have to plan your business and people have to understand that and then you have to treat everyone equally, fairly and the right way, and that’s what brings the team around.”
Build a great environment
It was one of those first blustery, frigid days in a Cleveland winter. You know the ones — after it’s been relatively warm and then, suddenly, it’s as if Mother Nature turns the hot knob off while leaving the cold running at full blast, making you want to call in sick so as to not leave the warmth of your home and feel the cold creeping through your bones. Well, since most can’t call in sick, Carrabba decided to help his employees out by having an impromptu pizza lunch party so they at least wouldn’t have to go out for lunch and face the wind and cold.
It’s one example of building a better working environment.
“It’s just the way you treat people and the way you want to be treated,” he says. “It really is just as simple as that.
“You’ve got to start with people. That’s really what the business is. You’ve got to have respect for people and their work ethic they put out.”
Your goal is for people to enjoy coming in to your business every day.
“It’s got to be fun for people to come to work, and you’ve got to leave that opportunity in a business when you come in,” he says. “It’s got to be pretty easygoing. The tone at the top has to set that, and it can’t be a stiff organization.”
He says you have to do that if you want people intermingling and working as a team.
“You’ve got to have open doors, and you can have some fun, too,” Carrabba says. “It’s OK. It really is.”
Aside from impromptu pizza parties, he also tries to build fun around college football games, the company’s United Way goals and accomplishments, and some good, old-fashioned humor.
“You start by making fun of yourself, and from there, everything can loosen up a little bit,” he says.
You might think that with the economy the way it is that you don’t have time to have fun or you don’t have the money to spend on anything fun, but Carrabba would advise you to think twice.
“Life’s too short,” he says. “It’s as simple as that. You make your own environment. Nobody else makes it for you, so you can choose to work in a very good environment or a very bad environment. Nobody does that other than the people that are working on this floor or these two floors we have here, so why not make it a conducive place to work?”
Hire the right people
Carrabba doesn’t have to do a lot of advertising to draw potential employees to Cliffs these days. With good morals and ethics throughout the company, people know that and want to be a part of that.
“You don’t have to advertise that on a billboard if you attract those kinds of people who come in,” he says. “On a people side, success begets success. The better you treat people, the more you’re going to get that kind of person to work here.”
But it’s not as if he snaps his fingers and the perfect employees stand out above the others seeking him out — it still takes some work to make sure you hire the right people. Start by focusing on the right things.
“I really leave the technical aspects of the interview to the other folks and their respective departments,” Carrabba says. “My sense is really around team chemistry. That has to be first. You could be the smartest person in the world, but if you don’t have the chemistry like we’re talking about to fit into the group, it won’t work for the individual interviewing, and it certainly won’t work for us. … Dwell on team chemistry and get a sense for where the person wants to go, how they like to operate, how they like to manage their time both personally and professionally.”
He says to ask about life experiences from organizations that they’ve been a part of during their career but also about leadership experiences going back as far as high school and college. Ask if they’ve been involved in team sports at any level and see what types of work they do on the charitable side of business.
“All of those build team types of quality and experiences,” Carrabba says. “You go through the highs when you’re winning and the lows when you’re losing when you’re a team player, so you really have to look for those.”
It’s also important to use the interview process as a chance to show who your company is and not just what it does. This is the time to get people who will buy in to your values.
“It starts at the very beginning of the interview and making sure that they know what kind of company they’re coming to work for and what the values of the company are so there aren’t any surprises when they come here,” Carrabba says.
Also involve several people in the process to make sure you get the right people for your organization because different people will pick up on different things about a person. For example, he’ll involve a ma
nager, but he’ll also involve someone from human resources.
“They’re not in the department, so they can give me an external view, if you will, and that’s what they’re trained in the business to do,” he says.
Then there would also be some peers and lateral people who are at that same level as the person who would be coming in.
“Again, that team chemistry has to work, and they have to have a good feel for the selection that’s going to come into the department,” Carrabba says. “Everybody picks up on different things.”
With employees as far away as Perth, Australia, Carrabba spends a fair share of his time trying to communicate with his people. But it’s a twofold reason for doing so: One reason is to get the company’s goals out to people, but it’s also so he can help address problems and issues in their lives.
“The senior team has always taken the temperature check, if you will, on people throughout the organization and how hard they’re working,” he says. “Do they need some time off? What are their stress levels?”
People work really hard, and sometimes certain projects can absorb their time, so you need to have that communication with them to be able to recognize the stress.
“It’s humanistic and knowing your people and knowing what kind of day they’re having or if they have some personal things, that we all go through based on our life,” he says. “We’re pretty passionate about that it’s family first and job second. We’ll work around the job, but you’ve got to take care of the home first.”
Recognizing stresses in people’s lives comes back to communicating with them on an individual level and communicating with your managers, as well.
“Spend time with them,” he says. “Walk around. Have lunch with each individual. Keep your door open. Office hours are for me to talk to people. I’ll do the work side of things after hours.”
You have to make people comfortable talking to and opening up with you.
“A little humor goes a long way,” Carrabba says. “A little lightheartedness — not everything has to be done on a PowerPoint or communicated on a spreadsheet. If you just start with respect of people’s minds and what they can develop and create in an organization, I think that transmits through, and it’s easy to have a two-way conversation.”
Once you get to know someone a little bit, you’ll start to recognize his or her nuances.
“It’s just [like] reading someone who’s close to you or your family members,” he says. “We all know what our routine or normal actions are in a day, and if people are acting a little out of sorts or having a down day, I think they can pick up pretty easy and help take a little load off of them so they can deal with whatever it is they have to deal with.”
But also respect that some employees may want to keep their communication with you strictly professional.
“Some people want to solve their own problems,” Carrabba says. “Some people are closed and personal, and that’s OK. You have to respect that, and some people just sometimes want somebody to lean on, and you’ve just got to have that style of adaptability to do that.”
Beyond personal-level communication, you also need to communicate the high-level corporate happenings that employees should be aware of.
“I keep a running tablet going throughout the period of time [between meetings],” he says. “As we go through the weekly, daily, monthly events, as it leads up to [the next meeting], I don’t sit down and craft a speech or anything like that, but I think the bullet points throughout the quarter are important to ring on.”
Or sometimes he and his team will pick a theme to focus on during a certain meeting. For example, recently they wanted to make sure that people were aware of the company values, so they focused on the core values during that particular period.
No matter how much you communicate, be sure to get feedback from employees, too.
“Answer as many questions as you possibly can, either on a spontaneous basis or on a planned basis, which we do both,” Carrabba says. “You’ve got to spend time with your folks and vice versa. Communication is a two-way street, and people won’t feel comfortable with you, particularly on bad news days. … You can only fix bad news if you hear about it. That’s just a comfort zone people have with you.”
And there’s always going to be questions — even if nobody asks them.
“I get a lot of feedback from individuals who don’t want to speak at the meetings,” Carrabba says. “We’re now asking people in advance by e-mail what questions would you like to ask but you don’t want to stand up and ask a question. We’re encouraging. It can be anonymous questions and usually they’re all on people’s minds, but somebody from the group doesn’t ask, so we’re trying very hard to encourage people to ask what’s on their mind. I can’t address them unless I know what it is.”
Whether it’s corporate objectives or personal problems, there’s one common theme to the communications: You need to work at it.
“You have to really think through a communication plan,” he says. “It can’t be haphazard. It’s nice, and you’ve spent a lot of time with the spontaneous discussions that pop in your head, but you have to have a pretty solid communication plan to make sure you can roll out the vision of the company and the goals and objectives so people know where we’re going and they can align themselves with business goals as they go through with it.
“People want to hear what the business results are for all the work they’ve put in. It’s important that all that feedback is communicated through. Everybody has ideas and suggestions. It’s spending the time explaining to a person as to why you are or aren’t going to do something so at least they feel their voice is heard, and taking that feedback to get the great ideas that are sitting out there.”
Every sports team has its ultimate goal — win the championship — but it has things it has to do to get there, such as win the division, improve scoring, decrease errors and so on. And every company is no different, so you must first know your strategy.
“Leave yourself plenty of time,” Carrabba says. “It takes a lot of time to build your base strategy. ... I would say, use fact-based data, not emotion or 30-year ‘isms’ of a company. Challenge the facts and make sure you have them right, and then you do your competitive analysis and move your strategy based on those building blocks.”
Once you know your strategy, then you can start filling in the steps to achieve it by setting goals.
“Build the goals and objectives to align with the strategy,” Carrabba says. “Those goals and objectives come down from the departments themselves.”
He has an executive committee that reports directly to him.
“They cascade the strategy downward through their organizations, and they talk about the goals and objectives they need to achieve so that we can achieve the strategy of the company,” he says.
He has four or five iterations of getting the goals down on paper, and then the goals are published.
“Everybody, here’s the strategy, here’s the large goals and objectives, and then off of that, people h
ave a performance scorecard that has to align with that and has solid metrics, and that alignment goes right down to the front-line supervisors around the world and organization,” Carrabba says.
Supervisors share that scorecard with their employees at the beginning of the year, and each party agrees to it so there are no surprises later on. Then that person is measured on their progress in meeting those goals twice a year, and benefits and compensation are often tied back to that.
“It goes back to the basic premise of you hire smart people, you set the frameworks — the goals, the objectives, the core values of the company — and it’s up to them to perform within those frameworks by building their own scorecard to align and deliver the business goals,” he says.
By doing all of these things, Carrabba has created a strong team environment that has allowed Cliffs to succeed and position itself for the future.
“It’s just strengthened everything,” he says. “If anybody had any doubt, and there’s no reason why they should, the textbook types of things that we’re doing that I described, that you could read in any business manual, we’ve actually applied those in difficult times, and the formula works. They’ve been battle-tested, if you will. We’ve come through them very well and have a very bright future.”
How to reach: Cliffs Natural Resources Inc., (216) 694-5700 or www.cliffsnaturalresources.com
When Timothy I. Still joined Accumetrics Inc. as president and CEO, he was in a tough spot, because the founder had been the acting chairman and CEO.
“Whenever you have a situation where the founder is still with the company, it’s a very delicate situation,” he says.
The board had decided to bring in a seasoned executive to build the company, which develops, manufactures and markets tests for the assessment of platelet response to antiplatelet therapies.
Immediately, Still had to establish credibility with the 80 employees, let them know that there was going to be a more accountable culture and then take swift action in changing the company and building his management team.
“Literally, in the first 90 days, there was a significant amount of change,” he says. “That sets the proper tone and proper culture that change is in the air.”
Smart Business spoke with Still about how he effectively led the company through change.
Have a clear vision. First, there needs to be clarity of vision, clarity of where the new CEO wants to take the company.
To have a clear vision and a clear strategy, frankly, it starts with strong leadership. People need to feel convinced that the leaders really know where they want to take the company and know what they want to do. You need to have measurable goals associated with that. You need to have teamwork, and you have to have people buy in and engage them. You have to open things up that if they don’t believe in the vision, to be vocal about it, and that all ties in to having the right culture at the company, one that people feel engaged in and feel heard. It’s clearly something that starts at the top. Even though it’s important to have a strong CEO, all of the functional heads need to be just as strong.
Create a sense of urgency. After you work on forming that vision, what’s equally as important is the sense of urgency and passion to fulfill that.
Make sure that people realize that the market waits for no one. The company needs to operate with a sense of urgency in building a business and really delivering products and solutions to customers. You can’t have a laissez-faire type of attitude. If you don’t take care of the customer, someone else will, so it’s really a sense of urgency as far as building the business and certainly looking at the goals that are out in front of us but not only driving to that goal but possibly through it and really exceeding customer and financial expectations.
Know how fast to move. I’ve made changes within a week of joining a company, but realistically, the first 90 days are crucial. I don’t think it’s logical to come into a situation and just make changes right out of the gate.
Even though you might have the answer and know where you need to take the company, a company of a certain size is only able to process change to a given degree, and you have to be sensitive to that. There will be times when maybe I acted too swiftly. In the end, we were able to catch up, but it can foster a couple weeks of helter-skelter there.
Assess the situation for a while, but if that assessment period takes too long, you tend to fall back into the culture that was there previously. Take action and set the tone of what the vision and what the culture is going to be.
That’s the delicate balance and that’s where effective leadership comes in. In areas you’re more comfortable with, you can probably push a little harder. Areas you’re not, you need to lean on your folks a little more.
Spend time with people. You’ve got to have the right team. As a CEO, probably 70 to 75 percent of your time is spent on people and the team that you have, and you really got to have fine-tuned people skills and knowing if the people on your team are going to fit within your culture or not.
It’s an awful lot of people assessment. Although experience is obviously important, I tend to look for more general qualities. First of all, is desire and passion to be at the company and believing in the vision. That has to be at the top of the list. Wanting to build a company and having the sense of urgency would be just as important. People need to want to make things happen and want to be engaged and not just getting a paycheck or waiting for a transaction to happen.
[They] need to feel comfortable in an accountable culture. We will have measurable goals and everybody will know what those goals are. Some people are comfortable with that visibility and clarity. Some people aren’t.
I would say also the ability for an employee to focus. That probably sounds simple, but we need to have the ability to sort through all of the mundane tasks every day and stay prioritized on what’s important and will drive the company. That’s a skill set that gets overlooked quite a lot.
Set up accountability systems. Lastly, it’s building a culture that’s going to drive success. That’s a culture that needs to be fun, accountable, but it has to be a culture that rewards success.
I’m a believer in a compensation philosophy that has both corporate as well as individual goals. Everybody in the company should be focused on what the corporate goals are for the quarter or for the year as well as the individual goals. We’ll have an all-employee meeting once a quarter. We’ll share everything as far as the financial performance of the company, all of the major goals we’re looking to achieve, and we’re very transparent with sharing that information. That’s something that the company didn’t use to do.
By doing that, you get an awful lot of buy-in, and they feel they know what’s going on with the company, and they feel comfortable being able to communicate up through all levels of management. People know, on a corporate level, every quarter, what our goals are, and then at the end of the year, we measure how they’re doing personally.
How to reach: Accumetrics Inc., (888) 919-9333 or www.accumetrics.com
Adecade ago, Barney & Barney LLC was kind of flat and morale wasn’t strong. So the ownership group made some difficult decisions that favored employees, and things started to change. The insurance provider went from about $16 million in revenue in 2000 to more than $70 million this year.
“We sort of took off like a rocket when we faced some tough issues and made some good decisions,” says Paul Hering, Barney & Barney’s managing principal and CEO. “That was a moment when it convinced me that you don’t want to compromise on who you are as a company, your character, your culture, and when you really stand by what you believe in, you have the opportunity to accomplish amazing things.”
In keeping with this philosophy, Hering and his team have continued, despite the economy, to do the things that have made the company a great place to work.
Smart Business spoke with Hering about how to create and maintain a great company culture.
Make employees feel valuable. It’s critical that your people feel engaged and connected and part of something, so they’re motivated, happy to be there, successful and productive. That requires leadership to take the time to really get to know people and get engaged with them and be authentic and really share with them what you’re all about and what the company’s all about.
We now have close to 350 people in the organization. I meet with every single new associate that comes into the company, and we spend a half hour together getting to know each other. It’s very informal, not really structured, but it’s a way to get acquainted and a way for me to share my vision of the company and what we’re all about and what’s important to us.
Time management is a huge challenge. It’s a matter of making it a priority. It would be easy for me to say, ‘I’m too busy — I have too many things both inside the company and outside the company that are making demands on my time that I’m just going to let this effort fall by the wayside.’ That would be the wrong thing to let happen. If I were to discontinue it, it would send an interesting message that would be 100 percent counter to the corporate culture I was talking about.
Have balance. You have to rely on your people. One of the things I talk about with all of the new people in the organization is my belief in work-life balance. I know that sounds like a cliché, but it’s something that I’ve always believed in.
Leaders have to lead by example in this category. It’s difficult for a leader to talk about work-life balance and then be in the office 14, 15, 16 hours a day because they’re modeling a behavior that’s different than what they support. Be a good manager of time and set priorities well, and it’s modeling the behavior that you’re trying to institute amongst all of your people. I have three children that are growing older now, and I’ve always made the time to be the little league coach and never miss a dance recital or volleyball match or something going on in the lives of my kids.
I tell people here, and sometimes they look at me aghast because, coming from the CEO, it’s not something that they’re used to hearing: ‘When you’re here at work, I want you to do your job, do it well and make sure you get it done, but I don’t want to see you working late on weeknights, and I certainly don’t want to see you in the office on the weekends. I want you to make time for those things that are important in your life and more important than, frankly, Barney & Barney.’
It’s kind of like that fish-tank analogy, where the fish will get as big as its tank — if you put it in a bigger tank, it will find a way to get bigger. There’s a correlation between your workday. If you know you’ll be working 12 hours a day, you’ll find a way to get the same amount of work done as you would in an eight-hour day if you were operating a little more efficiently and staying focused.
What happens is people feel empowered and maybe knowing that that’s one of our core values, they work a little more efficiently and make sure they can get things done so they can do those things in their life, whether it’s family or spirituality or social life or working out.
Think long term. Don’t let short-term challenges affect your ability to see long-term objectives. Sometimes you need to make a decision that’s a difficult decision — and maybe is counter to what short-term results and numbers are suggesting to you — because that decision ends up being good for the long haul.
Sometimes we make decisions where someone on the outside might think that’s not a good decision given these economic conditions, but we think it’s right from a long-term standpoint and associate morale standpoint.
To give you an example, this year, we offered salary increases to our support staff at a time when a lot of companies are realizing staff or payroll reductions. We felt like, ‘Hey, this is something we can do. It may mean less money going to the owners of the company, but we think it’s the right thing to do at a time when we want our people to know they’re valued and appreciated, and we want them to stay here.’ We paid year-end bonuses last year. We had six different divisional holiday parties. We paid a special holiday bonus to all of our people.
Those were things that were happening that were completely counter to what people are seeing on the news at night and reading about in the newspaper each day. It was a wonderful message. You talk about an impact on morale and a commitment by the people to our company to continue to want to perform well and continue to drive a good result.
How to reach: Barney & Barney LLC, (800) 321-4696 or www.barneyandbarney.com
When Mark Laret stepped in as UCSF Medical Center’s new CEO in April 2000, it was just two weeks after the health care system had ended a bad three-year relationship.
The center had merged with Stanford Health Services to become UCSF Stanford Health Care in 1997, and everything seemed so promising. But three years later, a culture war was still raging within the combined organizations, and recognizing that the merger was a major mistake, the two centers separated.
“There were a couple of years of work to bring the organizations together, but when they decided to split, it happened in a matter of months,” Laret says.
The quick break left the organization reeling.
“It was a fairly grim situation on a number of fronts,” he says. “First, and the most obvious thing, was just how distressed the employees were.”
They had been promised certain benefits that weren’t fulfilled, and they were angry that all of this effort had gone on the past few years and hadn’t benefited anybody in any way. They were also mad that management had focused so much on the merger that quality of care had dropped.
Then there were the financial challenges, as the hospital was losing $1.25 million a week. “We were running out of cash, so there was some urgency to act,” he says.
On top of those two issues, operations were a mess. Many functions, such as payroll, were still housed at Stanford, so UCSF had to ask Stanford to do its first payroll checks after the split. Laret also had consultants in pretty much every major role in the hospital.
“There was no chief operating officer, no chief financial officer, no chief anything, no chief information officer, nobody running ambulatory care, so it was a big set of holes here,” he says.
Seeing all of this, he knew the hospital was on life support, but he also thought it could one day breathe on its own again if he could re-engage the employees, build a management team and control the finances — but it all had to be done simultaneously.
“It wasn’t a pleasant set of circumstances, but on the other hand, I knew that the fundamentals here were strong, and that was what we really built on over the next several years.”Re-engage employees
One of the first three things Laret had to attack was rebuilding confidence with his employees.
“First, and I think most important, was to re-engage the work force here and get them focused on what we could do together to develop a positive attitude about the future, to have confidence in a vision of the future,” Laret says.
He started by writing weekly e-mails to the whole staff, telling stories about patients and the great things done at the hospital.
“The first thing I needed to do was remind them of what kind of organization we are,” he says. “We had gone through a trauma, but fundamentally, we were still one of the great medical centers in this country. We needed to get back and focus on those issues related to what we’re really about as an academic medical center and spend less time talking about the trauma.”
He also spent between one-third and one-half of his time talking with employees at brown-bag lunch sessions and departmental meetings and listening to their complaints and problems.
“As much as anything, giving them a sense that management was listening to them probably did more to re-establish confidence,” he says. “ … That is a key ingredient. People need to feel that management is there and is accessible and is respectful.”
He heard many problems, such as the hospital didn’t have linens and that the gases used to power their lasers were no longer being delivered.
“We needed to go back through and sort out where we were on our accounts payable — how do we manage this?” Laret says. “It was dealing with issues one at a time, from the bottom up, but with the idea that you ultimately get there.”
He also had to prioritize these problems, so he first dealt with anything related to patient care.
“That’s more important than the budget and more important than any of the other things we need to deal with,” he says. “That actually provided some clarity to the organization — ‘OK, we’ll take care of patients first and foremost.’”
After patient care, anything that could cripple the business if not solved got precedence, so he cleaned up some audit and other issues. Everything else could wait.
Next, he revisited the hospitals mission and values.
“Historically, they had these statements, but they were in a book, and nobody knew what they were,” he says. “They weren’t really guidelines for daily decision-making or strategic planning or anything else.”
So Laret started rethinking these things. He asked his management team to talk about concepts for a mission. Then he talked to different leaders and department chairs. Out of that came something short and easy to remember — caring, healing, teaching, discovering.
Through that process, he also developed values to lead people in their daily activity — professionalism, respect, integrity, diversity and excellence, or PRIDE. To get people embracing these values, he started by communicating them in every new employee session. He asked employees to give examples of behavior that both exemplified and didn’t exemplify each value. He put it on internal materials to hammer it home and would ask employees about them during luncheons, round-table meetings and any other opportunity he got.
“They all knew I was going to ask about this, so everybody kind of learned it,” he says.
He also started giving out five PRIDE awards a month to employees nominated by their peers as best exemplifying the values. Emphasizing UCSF’s new mission and values helped heal the employees.
“You need to turn all those employees into advocates, allies, supporters, believers, if you will, in the new vision,” Laret says. “ … Get them on board with it, and if you can do that, then I think all these other things, it’s easier to solve them. If you have an employee work force that is not on board with management, it’s going to be very tough.”Build your management team
While employee re-engagement was going on, Laret also had to work to build a team of senior managers to replace the consultants that UCSF had in those jobs. But given the state of the hospital, it wasn’t easy.
“I had a lot of selling to do because people knew this was a place that was in bad circumstances after the de-merger — after the divorce,” he says.
He told candidates that UCSF was going to be great and the potential was fantastic, but he was also honest and said it wasn’t a place for the faint of heart.
“This is not a place where you’re going to be able to phone it in,” he says. “You’re really going to have to be energized by this challenge.”
He also needed people with good values.
“When I looked for all my lead people, I was looking for people who had a track record of success in demonstrating those good values in other organizations,” Laret says. “I needed the right people reporting to me, and then I charged them with making sure they had the right people reporting to them.”
He used search firms to hel p him and says he interviewed scads of people.
“I wish I had some great questions, but as much as anything, I asked people to talk to me about what their greatest accomplishments were and obviously about their failures and circumstances they felt didn’t go well,” Laret says.
He listened about what they had contributed and what they felt to be fundamentals of success or, on the other end, fundamentals that led to setbacks. He also asked about what they learned from those circumstances. This entire process took him close to a year to accomplish.
“I wasn’t interested in people coming in and telling me how great they were and all the fabulous things they had done, and when I asked about problems, it was they worked too hard,” he says. “I was looking for people who had another level of insight into themselves and had a level of confidence in themselves about how to lead in these kinds of circumstances. That would be what I’m still looking for today.”Control finances
While Laret was starting to heal the emotional pains and filling vacancies, he also had to work on healing the financial pains.
“As we started to calm the place down, to move people off the trauma and into the present and thinking about the future, we knew our future was going to depend on getting stronger financially,” he says. “You can’t achieve much if you’re losing money.”
It starts with figuring out where the money was being spent.
“The first thing is, you want to find out who has the checkbook and who has access to your bank account,” Laret says.
In the university setting, departments often submitted recharges against each other, so he implemented actions to control who could submit recharges and in what circumstances they could do so.
He also increased efforts to make sure that the hospital was billing and collecting everything that it was owed to increase the money coming in.
Growth needed to be top of mind, so he started by doing an analysis of where the organization was losing money, where it was making money and what service lines contributed to both of those.
“In a place like this, there are probably 100 different service lines, and you need to look at each one of them and see what’s contributing and what’s not,” Laret says. “Which ones can you grow without too much difficulty? Which ones can you shrink without too much difficulty?”
For example, one of the big problems was the amount of patients coming in on Medicare and Medicaid. Many staffers didn’t realize that the hospital loses a little money on every Medicare patient, a lot of money on every Medicaid patient, and it depends on the commercially insured to make up for those losses.
Laret likens the experience to being Robin Hood in Sherwood Forest, “Because we’re trying to get enough rich people coming through the forest to cover the cost of the poor here, a lot of our leaders didn’t fully understand those economic issues,” he says.
Laret also looked at available benchmarks to see what other hospitals were doing.
“If Stanford Hospital or Cleveland Clinic or New York Presbyterian can provide this service at this cost with these goods and services, why aren’t we doing that?” he says. “ … Benchmarking is obviously important, but customize it to your specific circumstances.”
UCSF is mostly a referral hospital, so it ramped up marketing efforts to increase its referrals by sending staff to educate doctors across the region about its strengths in organ transplants and how it is the leading brain tumor center in the region. He also worked with health plans to make sure that when doctors did refer patients to UCSF, the patient would be covered.
It’s one thing to get more people coming through the doors, but he saw another problem that would affect growth — service.
“You tend to treat people in a fairly consistent way,” Laret says. “And if you tend to treat them in a sloppy way, with mediocre customer service, you’re going to do that for everybody. Maybe you’ll improve for someone really important coming through, but in general, you kind of do things in a consistent way.”
He implemented a patient concierge program to help make the experience more pleasant.
“What has happened, over time, is as we start to treat more and more patients like they’re special, that has become the norm in more areas,” Laret says. “We’re not No. 1 in patient satisfaction in the country, but we’ve come a long way from the bottom quartile to almost the top quartile in patient satisfaction, and that’s really this effort of really focusing on service.”
On top of increases in patient satisfaction, as a result of his efforts, business has grown, as well, and what started as an approximately $60 million loss the year Laret joined became a $70 million gain within five years. Today, the organization is not only breathing on its own, but it’s also running, jumping and enjoying its health as a profitable operation with nearly $1.5 billion in total operating revenue. It’s now also consistently recognized as one of the nation’s top 10 hospitals by U.S. News & World Report — and all of this success is the result of lots of little things adding up to a large change.
“Lo and behold, those things, after awhile, they really start to work,” he says. “Our business in volume has grown over 30 percent in the last nine years. I think it’s fundamentally a result of those kinds of initiatives.”
How to reach: UCSF Medical Center, (415) 476-1000 or www.ucsfhealth.org
When Primus Builders Inc. started growing, Richard O’Connell faced the difficult challenge of transitioning the design-build engineering and construction firm from a small business, where he could do everything himself, into a larger organization. For the first time, he had to come to terms with the fact that other people would do things differently than himself, but their way could still be successful.
“I’m satisfied with the results, but everyone has different processes to get a task done,” the president and founding partner says. “That’s been tough, because the company for the first two or three years was just a handful of people, and it doubled and tripled and quadrupled, so obviously you just can’t do everything and be everything to everybody.”
O’Connell has adapted, and today, he has 36 employees whom he’s learned to trust, and the team collectively has made the firm a roughly $65 million business.
Smart Business spoke with O’Connell about the principles that have helped him successfully grow his business.
Focus on your customers. It is important how you deliver a project and how you service your customer and the quality product that you put out. There were some expectations along the way to meet standards, so it wasn’t a total hand-off-the-wheel approach of just get it done on this date and under budget and we’re satisfied. We place a high emphasis on our customers. One of our strengths is we seldom or rarely ever lose a customer and that’s been a big key of our growth.
We’ve developed these customers over the years and it’s our job to make sure they’re getting exactly what they expected and getting the level of service they’re expecting.
Don’t take the customers for granted. Be your customer’s advocate inside your office. It’s easy for people to get off track in what’s important for the customer. It doesn’t hurt to go out and take them to lunch once a month. You’re in the area, you’re making a sales call, so you’ll say, ‘Hey, I’m in the neighborhood — do you mind if I come by and I take you out to lunch?’ Be there when they don’t have projects going on, as well. Just don’t take it for granted. Communication is key. We just want to always be providing a service.
Create accountability with employees. You need to make people accountable. If you’re going to assign a task, you need to hold them to deadlines and get that implementation done. If you let it hang out there, it usually just hangs out there, and there’s no follow-up on it, and it’ll be frustrating. We struggle at times with it, but I think holding people to deadlines is crucial. People don’t want to fail — they’ll find a way to succeed because we’re always too busy in the day to day to do anything outside of what we do day to day.
You can take their paycheck away, but that doesn’t work. The ultimate goal is you want everybody to feel like they’re a partner in the business and they’re a part of something and their contributions are recognized and rewarded — and that if they do the job, they can make a true difference, and it’s not just getting bundled up and somebody else taking all the credit. We try to pass the credit where it’s appropriate, and I think most people do not want to fail. As long as they have the tools and they can see the reward and get that job satisfaction, I think they’re going to be somewhat accountable for their actions and for the end results.
Have a family atmosphere. People work hard, and they’re recognized for it. I try to run it that way but the bigger you get, it does get harder to keep that family atmosphere.
A couple years ago, one of the fellows turned 50. We had a surprise birthday party for him in Wilmington, N.C. We took the whole company to Wilmington. We’ve had Labor Day lobster festivals at the lake houses. The Christmas party, we’ve had it at my house the last two years, and we invite outside vendors and customers. We just hold them in high regard because they’re going to make a difference for us.
Don’t take your people for granted. We’re selling a service, and it’s our people. If you take people for granted, it just becomes a job to them, and they’re punching a clock. I called my employees at Thanksgiving — I called every one of them and wished them a happy Thanksgiving. Some years, I call on Christmas Day or Christmas Eve, but I like to reach out to them and let them know I’m thinking about them and I appreciate all their hard work.
Get buy-in for goals. If you keep pushing the theme, you start to see people buy in to it by actions. Actions speak louder than words. We’ve pushed a couple of agendas recently with getting LEED certification, and we’ve got several people moving in that direction. We had to incorporate new software, and one of the operations managers took point on that, and that was a little painful because people were used to doing things one way, and they had to learn a new system, but we felt like in the long run it would be best for the company. I’ve had to take point on certain agendas I’ve wanted to promote and they were tasked with pushing it through and getting people to buy in and execute for that plan.
We haven’t done a lot to get people excited about it. These are tools we need to adapt to be more successful in our business — that’s how I promoted it. That’s just what we need to do, and for the most part, it’s worked OK.
When Ron Hall became the estimating manager for McCarthy Building Cos. Inc. in the early 1990s, he faced a new situation he hadn’t yet encountered at the construction firm.
“Suddenly, I’m not only in charge of the work, but I have eight people whose work I’m responsible for,” Hall says. “It doesn’t take long, once you reach that point, to realize that my success is tied directly to their success. My success is their success.”
It was a simple realization, but as he has moved up the ranks at the company, it continued to hold true. Today, he oversees the nearly $80 million Southern California division of the $3.5 billion company, and he knows that his division won’t succeed without having top-notch people helping him out.
Smart Business spoke with Hall about how to hire the best people to fit with your organization so you can get the results you want.
Engage with them. Obviously, you have to talk about the normal stuff — their education, the technical background — but I try to engage them in regular conversation so during the course of the interview, some of their true personality comes through.
Most people want to talk about themselves — most people that have balance in their life. They might come into an interview prepared to present an image. Their natural personality, if they’re well-balanced, it overrides the strategy that they might have had.
Ask them about their past experiences, and you delve into some of the stories that they start telling, and you ask them more about it. Inevitably, their personality compels them to speak.
The flip side is if they won’t talk about it, it’s also an indication of the behavior or the personalities that you’re dealing with. If they’re hesitant and guarded and won’t tell you much about themselves, then it’s not a promising sign. One of the most important aspects in leading my company is we have a lot of transparency in terms of what are our business goals and what are our financial results and what is our plan. We try to share that with employees at all levels of the organization so that they’re empowered and understand the big picture. Consequently, it’s important that if they’re going to succeed in our organization, it’s important that they themselves adhere to that same philosophy, and they’re willing to be open and honest and willing to trust others and put our trust in their partners.
Draw out their personality. As an interviewer, you have got to create an environment for them that makes them comfortable. If you’re sitting rigidly across the table from them with a stuffed tie and an arms-crossed posture, then you’re not going to get there. You need to allow them to see some of who you are. I try to make it a point to let my own personality show through in the first 10 minutes of an interview so they get a sense for that openness. Set that tone at the beginning of the interview to encourage them to follow suit.
[It’s] really just being genuine. I won’t hesitate to tell a personal story about how I got here or why am I in this position at McCarthy or why am I the guy that they’re sitting across the table from. There’s lots of stories. The plain old, ‘I worked hard, I was successful on this project and then I got assigned this project’ — the methodical, technical reprise of how I got here isn’t really interesting to anyone, but the notion of some of the mishaps I’ve had along the way and some of the change of philosophy and impact it had on me are more compelling for people, so I try to share some insight on my personal professional development.
Dig deeper. I seldom make any decision off of the first interview. I don’t like to do a 30-minute interview. I like to talk to the person for an hour or so, then I usually make it a point to tell them to go home and consider what we’ve talked about and sleep on it. I kind of want to do the same because how I feel at that moment might be a little different the next morning when I wake up or a week later, so I like to let that first interview settle in.
Then have a second interview. In the second interview, hopefully, you’re starting a little more advanced. In the first interview, the first 30 minutes is trying to relax. The second one, you get more to the personal issues quicker. … Some of the things that you have a better chance of getting done in the second interview is kind of peeling back some layers of the onion, if you will, of business philosophy.
Some of the things you can get to are flexibility. How adaptable are they going to be to the systems we operate versus the ones they’ve been doing in their other past jobs? How adaptable are they going to be to our personnel? We do a lot of stuff (from) a teamwork approach. It’s never just one person doing something. We usually have two sets of eyes on every activity, so it’s important that people can interact and work well with different personalities. On one job, it may be personality X, and then the next job of dealing with two people, it’s personalities Y and Z. Their flexibility and adaptability on interpersonal skills is important. I don’t think I get much of that in the first interview. You get a better sense of their interpersonal skill sets because you’re deeper into the conversation.
It’s a reactive thing. I don’t have a set of standard questions, but if they want to talk about their particular approach on how to deal with this certain aspect of the job they’re interviewing for, you can react to what they’re focused on and you can dig into it a little deeper. It all has to stem from a unique approach to that individual. You have to listen to what they’re saying, and from that, you can kind of see where they’re thinking, and that steers you in the appropriate areas to steer a dialogue to try to get deeper.
How to reach: McCarthy Building Cos. Inc., (858) 784-0347 or www.mccarthy.com
Dan Kim believes in the power of a brand.
As founder, president and CEO of Red Mango Inc., he says you have to have a strong brand, and you can’t deviate it from that if you want to be successful in business.
“If you constantly change who you want to become, the strength of your brand goes away,” he says. “If you try to do too much and address too many things, you stretch yourself too thin and really can’t accomplish anything.”
Kim says you have to know who you are as a brand, and then you have to keep your ideas and people focused on that. This helps him keep his 800 people across 55 frozen yogurt stores moving the company forward.
“It’s discipline, it’s focus, and it’s appreciating the brand at all times and understanding that the success of the company is not going to be determined by short-term wins but really how well we position ourselves as a brand,” he says.Know yourself
What do you want to be when you grow up? It’s not just a question for a young child or a student entering his or her college years. Instead, it’s a question that Kim says you should be asking yourself about your business.
“We always start with, ‘Who do we want to be when we grow up and who are we as a brand?’” he says. “We always keep that top of mind in terms of everything we do.”
Kim wants Red Mango to be the leading retailer of healthy and delicious treats, using frozen yogurt as the first platform to do that.
“So now you know what you want to become,” Kim says. “How are you going to get there? What are the values that are important to us? What are the values that are important to our customers?”
Identifying your company’s values may seem like a tedious process, but it boils down to what you believe in.
“It really depends on who you are and what’s important to you and your company and your managers and your founders as a team,” he says.
For example, if you’re in the computer industry, maybe being environmentally friendly is important to you or maybe it’s building the smallest computer. Neither one is wrong.
“But if you start wavering between the two, you start losing your own focus and start losing the focus of your management team and your resources,” Kim says. “Most importantly, your consumers get confused as to who you are.”
Identify what you’re most passionate about so that you stick with those values.
“Make sure you’re passionate about them, and the reason why you want to be passionate about them is actually so you don’t waver back and forth between the different passions,” he says. “When you’re passionate about something, that keeps you on track.”
Kim created a brand trifecta that says that Red Mango is a convergence of health, taste and style, so anything Kim does should support those things. He also created a “MangoFesto,” which is a two-page document that outlines what the company stands for, its values, objectives and goals. He’s taken that document and made it into a poster for each store so that the employees know what the goals are and to make sure that every decision is consistent with that brand philosophy.
This may sound all well and good, but how do you create your own version of the MangoFesto?
“Writing one is very important, but I guess the question is how to go about writing one,” he says. “For me, it’s keeping it very simple. Some people will have 10 or 15 objectives — we have three.”
His three objectives are get people to try the product, get them to know it’s good for them and give them a great in-store experience. He could have added other things like make sure your floors are clean or make sure you train people properly, but instead, he looked at the bigger picture.
“At the end of the day, kind of boil it down to what are the three most important things that you need to do that will enable everything else that you want to do and make those possible,” Kim says.
Then the objectives you come up with will naturally encompass the other things you want to accomplish. For example, if you make sure your floors are clean, it’s going to help the customer have a good in-store experience.
“The thing that you can do that’s not cool is you write it once, and you never come back to it, and it gets lost,” Kim says. “You have to make that part of the cultural fabric of your organization.”Keep ideas focused
When a franchisee wanted to sell frozen yogurt cones at his store, Kim had to do some evaluating based on what he’s established the company to be.
“Once the idea comes to me, I’ll have them explain why they need it, why they think it will work or help improve their store, and then why they’re so passionate about it,” he says.
In this case, the owner said he wanted to be able to sell to more people and operate at a lower price point and give people a reason to come to his store instead of places like McDonald’s.
With some reasoning behind the idea, then Kim and his team assess it using a few guides.
“One, does it make sense to the brand and will it not deteriorate what the brand stands for?” he says. “No. 2, if I were to do this and the test was successful, could I really roll it out nationally or regionally because consistency and repeatability are important to us? Then I look at the variables, like cost. How much is this going to cost to execute and promote?”
By putting the cone idea through these filters, he concluded that it wasn’t a good idea and said no.
“We’re not ice cream, and we don’t want to do anything that reminds people that we’re ice cream, …” he says. “We don’t compete with McDonald’s. You’re not going to make incremental revenue by selling cones, because you’re selling them at a lower price point, and it doesn’t promote the core product.”
But on the opposite end, when an owner in Hawaii proposed serving papaya at his store as a topping, Kim ran the same filters and came to a different conclusion than the cone idea and told him to go for it.
“Papaya is really cheap in Hawaii,” Kim says. “Hawaiians love papaya like strawberries are to the rest of the country, and it fit with the brand — papayas are healthy, delicious fruit that can be served fresh and went well with our yogurt.”
It all goes back to evaluating ideas based on what’s important to you and your company.
“It goes back to analyzing it with regard to our brand trifecta and making sure that it makes sense for the brand and makes sense from an economic perspective and make sure it makes sense for the business,” he says.
Having a process like this helps you maintain your focus and not get distracted by ideas that seem great but in reality aren’t.
“I’m a big believer in brands and the power of brands,” he says. “The way I exercise my leadership is to constantly stay dedicated to not redefining who we are for the wrong reasons — especially if it has to deal with short-term ways to overcome obstacles.”
This can’t be a once-a-quarter or once-a-year thing either — instead it should be constant.
“When new things come up that you haven’t thought of or it wasn’t there last week or it gets proposed to you, always go back and assess it,” Kim says. “ … Make sure that resonates well.”Keep people focused
What are your company’s blue chips — the things that are most important to your business?
“You can have all the chips in the world, but you want to keep the blue ones,” he says.
To stay focused on the blue chips, Kim has a mandatory weekly Wednesday meeting for him and his top 10 people. All 10 staff members prepare a report that addresses the following: What they’re working on this week, things they’ll be working on next week, things that are on the back burner, and things that they wish they were working on but don’t have time for.
“It kind of annoys them because they have to do it every week, but I find it very, very effective in helping them manage their time and helping me understand what they’re working on and helping other people understand what their colleagues are working on,” he says.
This also helps him know if his team is working on the best things to move Red Mango forward.
“There are two levels of decision-making,” he says. “If you break it down to the micro level of an individual — what are the things that I as a CEO want him working on? It’s a delicate balance — are the things that he’s working on consistent with what the company as a whole needs to do, and then do we have the money or the budget to execute that?”
This is helpful in knowing both your time limits and monetary limits.
“A lot of times when you work with a lot of ambitious people, they want to do more than they can,” he says. “That’s the first filter I put it through — does it align with the company, does it have the right resources to do what he needs to be doing and is he doing too much?”
Knowing these answers helps you say no to others who may want you to do more. For example, if Kim says that he’s going to open up X number of stores, with an average unit volume of Y and he’s going to recruit Z number of franchisees, everyone knows those are his top goals. Then when someone asks him to do something else, he can say he’s not able to because the money and people need to be used on the first three goals instead of the fourth, fifth or sixth thing they want done.
“It’s really having a budget in place and a well-thought-out plan that gets you to where you need to get to because if you don’t have that, and you have a lot of outsiders or board members or executive managers who don’t understand how the strategy is executed in regards to having the right resources, then you’re in a situation where you just constantly want to do more and more things without people understanding why you can’t do them,” he says.
You may have everyone else on track and moving forward, but lastly, you have to keep yourself focused, as well.
“Every week you’re doing something,” he says. “Assess what you’re doing against those goals or your brand mission.”
Do this for everything you have on your schedule, and you’ll keep yourself — and ultimately your business — on track.
“Even if I’m traveling to Seattle to meet with a customer or going to New York to meet with a supplier — is that meeting in and of itself consistent with the brand mission and brand values?” Kim says. “Always ask yourself that because if you don’t, you’re just going to get caught up in a very busy schedule doing stuff that you think is important. Again, people’s time and money are limited, so you have to constantly assess.”
How to reach: Red Mango Inc., (214) 302-5910 or www.redmangousa.com
A few years ago, Bendix Commercial Vehicle Systems LLC was bought by a German company, and in that transaction, Joe McAleese, who serves as Bendix’s president and CEO, had to shift his company’s focus from a quarterly, profit-driven mentality to a long-term, double-digit revenue growth outlook. It changed the game for the business, which develops air brake charging and control systems for trucks, trailers, buses and tractors, and he was now focusing on things that he never focused on before.
As a result, business boomed, the company doubled its size between 2002 and 2006, and he was seeing a pipeline of more growth opportunities awaiting him. At the time, it was the biggest challenge he had faced, but it was exciting to see the company change and even more thrilling to see all of its potential. But then everything changed.
“Before the recession started, we started being impacted with the housing starts slowing down and declining,” McAleese says. “Our customers have been in a prolonged freight recession for three years, so they don’t have a need for trucks, so the truck companies don’t need to build trucks, so it’s been a difficult time for our industry.”
McAleese had to change the game — again — to adapt with both the industry and the economy.
“For us, the challenge is in how do you manage through that?” he says. “We’re used to managing through very big cycles. Our industry is normally very cyclical — we go about from the top of the cycle to the bottom of the cycle 50 percent. That’s normal for us. We’re used to dealing with that kind of cyclicality. This time it’s 75 percent. We’re not used to dealing with that. We’re not used to the aftermarket business slowing down at the same time.”
To keep the company moving forward during the tough time, McAleese and his team took a processed approach to changing Bendix by getting all of their options on the table, making the right decisions, communicating with employees and then moving forward.
Know your options
When his human resources department sent him a memo saying that another company had cut executive pay by 10 percent, McAleese vividly remembers thinking it was the stupidest idea in the world.
“I said, ‘Well, that’s a dumb idea. That’s not a very good idea. We’re not going to do that,’” he says.
Coming to terms with your emotions is the first step in putting all of your options on the table.
“You need to get everybody willing to discuss the items, which means that you have to personally get there, too,” he says. “This is not just about managing other people’s emotions. It’s managing your own.”
Seeing his own emotions helped him start the process.
“You have to recognize your personal reaction to those things because these things are very personal,” McAleese says. “They’re very personal for you as an individual, and they’re going to be very personal for all of your employees if you go and decide to do those things.”
You have to know what’s going on in your industry and with the economy.
“You see one person out there doing something like that, you go, ‘That’s not a very good idea,’” he says. “You see two, you go, ‘Well, OK.’ When you see five or six or seven, you say, ‘OK, if other people are doing it, they’re going through the same set of issues we’re going through and they’re looking at the same set of facts, and they’re concluding that that’s a good option.’ I may not initially like it, but that has to be on the list of items we need to discuss.”
While his initial reaction to lowering executive pay was that it was out of the question, he eventually softened, which allowed him to think with an open mind.
“It’s the whole leadership team managing their emotional reactions to that,” McAleese says. “Until we can come to grips with it, we can’t go out and communicate it and execute it properly, so it’s getting us past that emotional hurdle that it’s an acceptable option for the short term — not the long term but for the short term.”
And that’s the key. Things such as pay cuts and furloughs or layoffs weren’t in his line of vision a year ago.
“Those were not things we’d even consider, but when you get in the depth of the economic crisis that our industry is in right now, you have to make sure you have the whole range of options in front of you, so that’s the first thing — making sure you have the whole range of options in front of you.”
Make good decisions
McAleese wants to double the size of the company from what it was in 2006 before things started to go downhill. This may seem silly, impossible or maybe even frivolous given the economy now, but it’s actually quite relevant to the second step in leading a company through hard times: making good decisions within the options you’ve laid out.
“You have to start with what’s your long-term vision,” he says. “Where do you want to be in the long term? Whatever decisions you’re making, you can’t sacrifice that. You’ve got to keep that out there in front of you of where you’re trying to go with the business. You can’t let yourself get carried away with the current situation and not recognize the context of the long term.”
Look at what fuels that as well as the roadblocks.
“You have to identify what the biggest issues are,” he says. “If you’re going to be successful this year, why are you going to be successful? What are those couple of items that you absolutely have to do to be successful, and if you’re going to fail this year, what are those couple of things that will cause you to fail? Then make sure you manage around those things.”
Knowing where you want to be down the road makes it easier to look at your options objectively.
“Then you have to really evaluate what’s the impact on the organization of taking each of these steps,” McAleese says. “What’s the impact of our strategic long-term, strategic intent? What’s the impact on the people in our organization? These are very painful and difficult decisions, not just for the leadership team but for the organization because we’re impacting people’s lives.”
Have other people help you in that process so you can overcome your own preconceived notions. McAleese engages his HR team so he can have a better idea of how people will react. He also has a team of about 15 to 20 senior people help him in making big decisions.
“You can’t have 50 people in the conversation, but if you do it with three or four, I think you’re making a mistake,” he says. “You need to have a good cross section that you get different inputs and points of view.”
The kind of people you involve in making decisions is crucial.
“You have to surround yourself with people who have an opinion and are in touch with the organization and that are willing to voice their opinion and are willing to disagree with you,” he says. “You have to be able to have this fruitful discussion, and it can’t just be a rubber stamp of something or a recommendation that comes into the meeting — not in these times. You have to really have good viable discussion on each of those items.”
During those discussions, be careful not to put your opinion out there too early because it can shut down the conversation. It’s also helpful to vocalize both sides of the argument.
“I have to play devil’s advocate sometimes on some things I don’t support,” he says. “I’ve got to be engaged in the conversation, but I’ve got to be willing to take both sides of an issue. I’ve got to be willing to take the side that I don’t really believe in and ask questions around that so that I try to balance the discussion because I can shut the discussion down by just asking all the questions on one side of the issue.
“ … As a leadership trait, the ability to ask questions and ask the right questions is critically important.”
Then make sure you work through all of the ideas and suggestions.
“You’re making decisions to get to an objective, and you can’t get hung up on one item,” McAleese says. “You can’t get hung up that this is the right answer. You have to be willing to explore all of them. You have a solution you need to get to, and there are multiple ways of getting there.”
Going through this process helps ensure that you don’t make rash decisions too quickly. For example, a lot of times when business gets tough, management first turns to cutting people, but that’s not always the best solution. Instead, McAleese said that was the last thing he wanted to do, so instead Bendix instituted a hiring freeze, lowered both executive and employee pay, discontinued its tuition reimbursement program, and trimmed other benefits. Additionally, the company put management processes in place to react to issues the business and industry were facing.
After doing those things and realizing that he was going to have to let people go after all, he first evaluated every salaried position in the company — about 800 of the 2,000 people.
He looked at which positions could be eliminated permanently, and those people would be let go. Then he looked at positions the company needed for the long term but could do without for the short term and what projects could be delayed, and all of those people were to be furloughed.
“People rush to conclusion on that stuff way too quickly,” he says. “We had that at the end of our decision-making process. That was the last thing that we implemented.”
The town-hall meeting in which McAleese was going to communicate his decisions — the next step in leading your business during tough times — honestly wasn’t going to differ from how he had communicated all along.
Even in the good times, he always had five structured town-hall meetings each year to outline what’s happening in the world economy, how it’s impacting Bendix’s industry, how it’s impacting the company and what leadership is doing about those things.
During those meetings, he also shared with his employees the monthly scorecards that he used to monitor each of the initiatives in the company’s goals for that year.
“You need to decide which items that you’re going to communicate on a regular basis, …” McAleese says. “People who haven’t started it can be fearful of it because they complicate it. It’s a very simple thing. Communicating is at the core of our management system. It’s at the core of what’s important. It’s not a tremendous amount of preparation or a tremendous amount of work. You just have to get started.”
Keep your message to no more than an hour. Then give employees about a half an hour to ask questions.
“Once you get past that, people get antsy,” he says. “You got to get them out of there in an hour and a half.”
After each meeting, employees fill out a short survey about how effective and valuable they thought it was and their opinions on company matters, and meeting length was something that came up when he’d go too long.
“When you get into bad times, yeah, you need to communicate, and it’s more important than ever that you communicate in those bad times, but it’s a lot easier process if you started the communication process in the good times,” he says.
When times started to get tough, McAleese then shifted his message from talking about the scorecards half of the time to talking about the economy 80 percent of the time. As he and his team identified options for adapting to the hard times, he would share those with his employees so they knew what could happen in the future. As they made decisions, they communicated those openly in these forums, as well.
“During this time, it’s even more important that we communicate with them and explain where we’re going and what we might do, so we’re very transparent on the range of options, and we’ve tried to continuously communicate to them what’s the economy doing, how that impacts our industry, how the industry impacts our business and what we’re doing,” McAleese says.
He also made sure to talk about how the company was still being successful though.
“It’s very easy to get into these negative thoughts and negative spiral, but we have to recognize that there’s a lot of great things going on in the business,” he says.
So when McAleese and his team needed to lay off some employees and furlough others until the end of the year, he told them in the town hall.
“We had two options — you rush out and eliminate positions and impact people and then in the town hall tell people about it — that’s an option,” he says. “Or do you tell people about it in a town hall — what you’re doing, how you’re doing it, the magnitude of what you’re doing, and then you go and execute it?”
He chose the latter, so he told them what was happening and how many people it would affect — but not who. After the meeting, management spent the next day and a half communicating with the affected individuals. The downside is that it leaves employees in limbo for a day or so, but McAleese says he’d rather do that than not tell people upfront, and then have rumors flying once he started meeting with people because nobody knows what’s going on.
This process happened on a Tuesday and Wednesday, and employees were informed that Friday would be their last day.
“We didn’t march them out of the building when we told them,” he says. “We told them, ‘Friday is your last day, and now it’s up to you what you want to do. If you want to go home now and not come back, that’s fine with us. If you want to go home now, come back tomorrow or Friday to say goodbye to people, that’s fine with us. If you want to stay for the two and a half days, that’s fine with us.’ We let them manage their exit in their own way. I think that added dignity to how they left.”
After you have those conversations, though, there’s still more communication to be had.
“Whenever you go through that, there’s a lot of emotions in the organization — the people that are making the decisions, the people delivering the news, the people that are leaving the organization and then the people who are left behind,” he says. “You have to manage the emotions on all those levels.”
Immediately after those conversations, McAleese walked around to talk to people who had been furloughed and reinforce that he hopes to bring them back in the future.
“As a leader, you need to go out and be visible in the organization,” he says. “You need to walk around and talk to people. It’s not a time to go hide in your office.”
Keep your message consistent with what you’ve already told them. Most people he spoke with were not angry, and while they were disappointed and sad, they understood.
“You have to be willing to be out there and be visible and accept the consequences of the decisions that you made and be out there and talk to people and understand how they’re feeling,” McAleese says.
As Bendix moves forward, McAleese is now in the fourth phase of this process.
“That’s the first three parts, and then the fourth phase is, OK, when you do the range of things you have to do, you’re going to cause some harm to the relationship between you and the employees, so we have to recover that,” he says.
That, too, comes down to communication and consistency.
“We have to do that by telling people what we’re going to do and then going and doing it, so demonstrating that we’re still credible, we’re still the same people we were before,” he says. “When we were telling you what we were doing on the upside, we did it. We’re telling you on the downside, and we’re going to go back into growth mode.”
McAleese anxiously awaits the day when he can call people back and once again focus on doubling the business. But knowing when that time has arrived is hard, especially when every day you read headlines and hear stories along the lines of “Economy bottomed; recession end nears.” He says you have to look at leading indicators for your industry and then at your actual business.
“This is not an economic climate where you can forecast that, in six months, things are going to be better,” McAleese says. “You can’t work off that kind of forecast. You have to wait until you see it in the incoming orders from your customers.”
Once he sees that, then he’ll begin adding things back as the company can afford them and can once again focus on growth instead of cuts.
“Our business has a great future,” he says. “Our business is really down, but in the end, all of the goods and services move on trucks, so when the economy gets rolling again, the trucks will then get rolling again, and our business is going to go right back to the size it was before then. This is just kind of a reset phase to get our business positioned to go flourish again in the future.”
How to reach: Bendix Commercial Vehicle Systems LLC, (800) 247-2725 or www.bendix.com
At his previous position at a billion-dollar company, he oversaw more than 18,000 employees and led nine global acquisitions and joint venture operations in two years.
Nandy, who is now CEO of Aricent Inc., a global technology and services company that focuses exclusively on communications, says the key to driving growth is to have a good blend of what you know and ambiguity tolerance — the things you don’t know because you haven’t seen them in the past and others haven’t either.
“In a growth market, it’s always new things that drive growth, and new things mean it’s uncharted territory. So one of the critical things to have is that tolerance in a growth market and having a good understanding of what we know and also knowing what we don’t know,” says Nandy, who is pushing his 8,000 employees at Aricent to work closely with customers, take risks and to move forward in trying new things to take the company to the next level.
Work with customers
It’s so easy to make your customer into nothing more than a data field in your spreadsheet, but to drive growth, see them as people. The mantra that Aricent uses is “co-develop, co-design and co-innovate” so that they’re actually working with the customer to find solutions.
“Most companies have a map … so you know the route to take,” Nandy says. “We say we don’t have a map — we have a compass. We know which is north and south, but we don’t know the route. We’ll work the route together with the customer — that’s co-creation. … If you have a map, you won’t change the game. If you have a compass, you probably can make a new road and change the game.”
If you want to lead with a compass, then you can’t come off as a know-it-all to your customer.
“The compass thing happens in the area when you don’t know and the customer doesn’t know,” he says. “Both of you have an idea, but you have to start working in those areas of, ‘What next? What next year? What for the segment?’ It’s a way of self-discovery with the customer.”
The only way you can figure out which way the compass is pointing is to get in front of your customer and the competition.
“Typically you have to go to your customers and you have to go to your customers’ customer yourself, and then decide, with in-depth interviews and observations of what they’re doing,” he says. “You collect and come back and think them through, and you analyze, and through the analysis, you get your own insights and the implication of what’s true in your market or what’s true in your subsegment and so on.”
For example, by observing customers’ customers, Aricent noticed that people in their 30s and 40s, when asked to push a doorbell, would use their forefinger; however, people in their teens and 20s, who text message more prevalently, tended to use their thumbs.
“Those observations are what make you design things in a different way,” Nandy says. “That comes through observation, and you have to do that kind of thing, and it makes it very important.”
When you meet with people though, it’s important to get in front of the right audience.
“It’s not an issue of what you discuss, but it’s equally important who you start the conversation with,” Nandy says. “When you’re doing a discussion on what new features to add on, which would make your product gain market share, it’s probably with a product management team … but if it’s what new products to launch, what new services to offer, what new end users to address, it is probably a C-level — a CEO or chief marketing officer that you’re addressing.”
By talking to the right people at your customers and competitors, you’ll start to get a picture of what’s needed and the things that can help move your business forward.
“We get insights, insights lead to ideas, ideas lead to very interesting conversations with our customers, [and] customers come up with good ideas,” he says.
But with so many ideas coming in as a result of the conversations and research, how do you know which ones may be viable? Nandy says that you have to go back to your customers and explain what you’re seeing and present possible problems, solutions and ideas to them.
“Say, ‘Have you thought of doing this for your customers, or have you thought about launching this kind of product or service?’” he says. “They sit up, they clear their desk, and they call their team. They say, ‘Here’s some interesting discussion,’ so you stimulate that. If you get that reaction, you know you’re on the right track.”
When it comes to the HIV crisis in South Africa, you wouldn’t think that there’s much to be done aside from educating people about safe sex practices. However, Aricent teamed up with other organizations, and after doing their own analysis, they found that the larger problem was the social stigma that went with simply getting tested for the disease.
They also realized that about 85 percent of the population had wireless phones, so they worked with these other organizations to create a system where a citizen could send a text message to receive information on getting a testing kit. Citizens could then have the kit sent to them, do the test, send it back in and be notified by text again when the results came back. The program launched a year ago, and within the first three months, the number of people being tested for AIDS quadrupled.
“It’s not a money-making proposition, but you know there’s a problem available, people are trying to solve it, and if you have an approach to discuss, sometimes people will say, ‘OK, let’s try it out,’ and it becomes a case about how technology … can really solve a problem,” Nandy says.
This testing system is just one example of how you have to try out ideas when you see problems. Sometimes ideas will be successful, as it was for this case, but sometimes they’ll fail. Either way, you have to be willing to implement new ideas if you want your business to grow.
“There are some times you fail, but that’s the other important thing,” Nandy says. “For a growth industry, you have to be not scared to fail. You have to embrace uncertainty, and you have to be someone who is aggressive in seeking new experiences, and you realize that even if you fail, you have to believe that you have broadened your repertoire, you have enhanced your knowledge base, enhanced your experience base. That’s the approach you have to take.”
The problem is that so many people are opposed to risk, especially in a down economy, as the leader, you have to show them that it’s OK.
“Reward people who have taken good risks and do not penalize people who have taken a risk,” he says. “It takes some building because people are generally risk-averse.”
But Nandy also cautions that you need to balance risk taking.
“It should not be experiment and risk run amok,” he says. “So it’s a nice balance between making people comfortable with taking risks and, at the same time, have a finance team that isn’t really a team of accountants but a team of strategic finance, who understand that it’s a percentage game.”
For example, they should u
nderstand that you may fund 10 projects, and maybe you succeed in three or four, but the success of those three or four will more than pay for the other six or seven that failed. Doing this gives people room to try new things, but it also helps move your company forward because you’re not relying on one home run but instead a series of singles and doubles.
“I think I would be adverse to take one bet of a particular side of $10 million,” Nandy says. “I would rather take 10 bets of $1 million each. Each company needs to choose where its comfort zone lies.”
Once you decide which ideas to move forward with, then you have to act quickly.
“Move on that and make those bets quickly and cut through the process,” Nandy says. “Then, what happens is, you succeed or fail very quickly, right? Then you can build on that quickly. Otherwise, as the whole thing lingers, your success is delayed, and so is your failure, which is sucking in more money from your kitty to do that kind of thing.”
First, create ways to measure your progress so you know if you’re succeeding or failing.
“It is not that you discuss with your customer only at the end, at one point in time,” he says. “You have multiple checkpoints. We intend to go back. There are checkpoints for different things. You define, maybe depending on how long the project is, 10 proof points or five proof points — whatever you define.”
The key to creating proof points is that they should be done before you start working on the project and be there to help show you if you’re on track or not.
“Ask the people who are doing it themselves to say, ‘At what point of time do you think you have failed?’ because you have to ask those questions before the start of the project because once you start the project, you slowly grow and you’re not objective anymore,” he says. “You’re part of the problem, so defining at what point to pull the plug on a project is something that you do before with the team so people are a little more sane and less married to the idea so they can make objective calls at that point in time.”
Some of the proof points may be technology-related, while others may be financial, and some may be related to your customers.
“Whatever assumptions or insights you had before you started the project, are they still valid or has something else come in the meantime to change the market or has something happened where people’s ideas have changed or have some technology come about that makes the whole thing obsolete and changes the whole idea?” Nandy says. “So it’s important to define those proof points and have a set of people who are external who help you assess it.”
It’s also important, as you move forward, to knock down the barriers to success that may exist, which include approving budgets and resources as well as simplifying processes. For example, if getting an approval for a customer takes seven days, find a way to cut it back to three. If it takes 72 days to hire someone and get him or her on board, cut it back to 62. By looking to simplify processes for your people, it increases their creativity and moves everyone forward in growth mode.
“Bureaucracy busting should be a constant exercise because it’s a human thing,” Nandy says. “We build it up trying to allocate work in the right way, so constantly looking at that is a critical component for having a company that’s growing and growing in innovative ways and doing things for customers that customers just love.”
How to reach: Aricent Inc., (650) 391-1088 or www.aricent.com
Chuck Gummer has been working for Comerica Bank for 39 years. These days, it’s a rarity to see someone with the same company for that length of time, but then again, that’s what his company is all about.
The banking giant has been around for 160 years, and it attributes the majority of its successful growth to having long-tenured employees who are able to grow and develop within the business.
So it’s no surprise that Gummer started with the bank in Michigan, and when it moved into the Texas region 20 years ago, he was on board with that and now is president of the bank’s Texas market, which consists of overseeing 1,500 employees in the Metroplex, Houston and Austin.
In order to see that both the Texas region and the bank as a whole continue growing, Gummer focuses on recruiting the best people to the organization and then working to develop them within the business.
“You have to have a perspective on your company and where you want it to be over time,” he says. “If you want it to be around a long time and you want it to have a truly life of its own, then having a stewardship approach of people and developing leaders is very important to doing that.”
Get the right people
Your business won’t get anywhere without having quality people in place. You not only have to hire the best people, but you also have to know what you’re looking for in both job skills and personal characteristics.
“We start off by saying, ‘What’s the ideal profile of this person?’” Gummer says. “List all that out, and then as we interview people, compare what the traits and qualities of that particular person is compared to our template or profile, and make sure there’s a good fit here.”
If it’s a job that somebody has already been in, you can use that person’s traits — or lack thereof — to guide you in forming that list, but if it’s a new position, lean on your colleagues to help you develop the list.
“Start with a job description so you know what you want,” he says. “Then you have to go through and identify what are the educational experiences, the business experiences, maybe the life experiences that are good for a person to be successful in that job.”
While the job skills may change between positions, some of the values that Gummer is looking for do not. For example, because Comerica has been around for 160 years and in Texas for 20, he wants people who want to be with the organization for a long time. Comerica also has a commitment to serving the community, so he also looks for people who care about that. Focusing on your organization’s values will ensure that you get someone who meshes well with your business.
Once you know what you’re looking for in a candidate, then you can begin searching for the right person.
“Another thing that’s real important to understand is academic achievement does not assure business success,” Gummer says. “By that, I mean you can be very smart and well-educated, but do you really have what it takes to be successful?”
Instead of focusing on where people went to school or what they achieved while they were there, Gummer follows the GE method of evaluating people on four E’s: energy, enthusiasm, edge and execution.
“Those are four things that you don’t necessarily get in your education, but you have to evaluate that on the people that you’re interviewing if you want to pick people who will be successful,” he says.
But first, you have to check candidates out on paper first.
“First thing you do is study and evaluate the resume of the person,” he says. “If they’ve had a lot of jobs over a short period of time without good reason, there may be a question there.”
He also looks for signs of community involvement, such as charity work or church activities, on their resumes.
“Are people involved in the community and the nonprofit world and have they provided leadership in that area?” Gummer says. “I think that’s a tell-tale sign of what kind of person you may be getting.”
Once you’ve found some people who look good on paper, then bring them in for interviews.
“Have more than one interview,” Gummer says. “I don’t know how you can evaluate somebody and make a decision based on one one-hour interview. I think having interviews in multiple venues is important.”
He says the type of venue isn’t as important as recognizing the need to get to other venues aside from your office.
“From the office to a cup of coffee someplace, to whatever else might fit in, there’s nothing special about a particular place, but I think getting off-site is important,” he says. “It tends to relax everybody a little bit more.”
As you’re meeting with people, then it’s important to ask questions that get to the heart of those values and skills you made on the list. If you had any red flags, such as the multiple jobs in a short time frame, you need to drill down into those, as well. One way to do that is to ask them very broad, personal questions.
“You just got to ask that person to share their life story and the challenges that they’ve met and they’ve overcome,” Gummer says.
Taking this approach ensures that you get people that fit well with both your job description and your organization as a whole.
“Know what your values are, and then ask the questions around those values,” Gummer says. “Clearly, as much as we’ve tried to put science behind the hiring, there’s an art to it, and that art is identifying all the right questions and getting the answers that you think are appropriate and spending enough time so you think the person is sincere.”
Evaluate employees regularly
You may get the most amazing people coming into your organization, but if you don’t set expectations and measure their progress, then they, like your organization, aren’t going to grow.
“Put together a performance plan before they come on board so they already know what the clear expectations of the job are,” Gummer says. “Once you have that, you can evaluate folks as you go along.”
He says to evaluate your new people at least monthly. Once people prove themselves and get acclimated to the job, then you can relax that to quarterly or semiannual reviews. With any evaluation, whether it’s a brand-new hire or a seasoned employee, you have to ask a lot of questions though.
“Part of that evaluation is what’s going right?” he says. “What do we need to do differently? How can we help you be successful? The success of the person, as much as it needs to be driven by our colleagues, the manager has to take responsibility in their successes and wants to do what they can to help them be successful.”
In addition to simply asking those questions and reviewing their performance, it’s also important to create action steps to move the employee forward in their job and career.
“Any performance plan that we have here has a development plan as well — what can we do to help that person as we move along?” Gummer says. “[How can we] make sure they’re taking advantage of the training we have here and make sure they’re taking advantage of workin
g with other colleagues that we have here and putting together different programs to help them be successful?”
Remember to keep both the end goal and action steps to get there in mind when putting together a development plan.
“It has to be results-based and efforts-based,” he says. “That is, we have to get results if we’re going to continue to be successful overall, but we have to know what gets to those results, and those are certain effort goals. You need to measure both of them, but the ultimate measure tool is the result.”
Besides simply measuring employee performance, you also need to identify their skills and desires and those who have the capacity to move into leadership roles in the future.
“Evaluate them on leadership qualities — what they desire to do, what they would like to do within the company over time and where we see them headed — and then create opportunities or experiences to help them get that recognition that they need in order to be considered for other positions in the future,” Gummer says.
This process of molding people into leadership roles can take years.
“It starts off, you take care of the immediate needs and to make sure they can be successful today, but you have to have an eye to the future as to where that person might be and be willing to put in some additional training,” he says.
That may mean sending them to an outside coach or having them attend internal programs. Other times it may mean sending them to external programs and conferences around the country that are available to them.
“Part of it may be moving people to different positions within your company for different periods of time and getting them to have those various experiences as you see them move up in the organization,” Gummer says. “If you think that they’re going to continue to want to move up in the hierarchy, they have to have a variety of experiences. They can’t be one-dimensional.”
The last piece of this though is to make sure you stay in touch with your employees’ needs and desires and aren’t trying to force people into leadership roles who don’t want them. Instead of having a preset group of people who are identified as “leaders” and get all the special attention, Gummer and his team instead identify every person’s needs and desires and focus on giving more to those who want it.
“People change what they want to do over time,” he says. “To slot somebody or predestine them to something is not what we’re about. We’re about, ‘Does this person want to move upward in the company? Do we see their performance as supporting that?’”
It’s also important to touch base with people in those regular reviews to see if their goals or desires have changed at all. Oftentimes, someone may have wanted to climb the corporate ladder, but if he or she is now starting a family or caring for an ill relative, that person may not want the additional responsibilities that he or she desired in the past.
“That’s why we need to have constant communication so we’re not trying to get them to be something they don’t want to be,” Gummer says. “We have to stay focused on the employees’ needs as well as our own, and if there’s change, we have to take another avenue.”
If you’re able to take these approaches with your people in developing them, then, like Comerica, you’re likely to see long-term growth and success.
“If you want to be able to have a company that’s successful over a long period of time, leadership development is an absolute must,” Gummer says. “Sitting down with your folks and knowing what they want and discussing with them what you believe their potential is and getting them to agree to a development plan and executing on a development plan is what’s going to assure that that person is growing in the company as the company grows.
“If you don’t do that, you’re probably destined for a very short tenure in your company, whether that’s selling out someday or just closing up someday. If you have a desire to make your company an enterprise and not just a small business and have long life, then leadership development is very important to do that.”
How to reach: Comerica Bank, (800) 589-1400 or www.comerica.com