When Tom Murdough sold Little Tikes to Rubbermaid in 1984, then left the company five years later, many thought he was done with industry.
But Murdough wasn’t ready for retirement just yet. He had new ideas and plans to start another business — one that would go a step beyond what he did as founder and president of Little Tikes.
In 1991, he started Step2 Co., a consumer products company that now competes directly with his former firm.
The company’s name signifies Murdough’s second entrepreneurial venture, as well as an everyday reminder that he wants to take Step2 a step beyond the competition.
“There were a number of folks who encouraged me to move ahead, and I thought of the opportunities to take the processes that we had developed at Little Tikes a step beyond what we had done there,” says Murdough, who serves as CEO. “Lots of new ideas came to mind. It was a desire to do things better.”
Step2’s revenue grew to more than $100 million in 2005, and it employs about 800 people. But Murdough has even bigger goals for the company, including his aim of growing it to become No. 1 in the industry. He plans to do that by using innovation to beat the competition.
To get innovative products, Murdough has implemented the right culture to inspire employees to be creative, yet still focus on product quality.
“Any viable business has to grow to develop,” says Murdough. “In order to grow, one has to come out with exciting, innovative, new products, in our case, exciting, innovative, new products that are characterized by quality, value and an unparalleled commitment to service.”
Do it right
Murdough conveys his message to his employees with one simple phrase.
“We don’t have any books or long-winded explanations of our philosophy. It is very simple: Do it right,” says Murdough. “Do it right for the customer. Do it right for our employees. Do it right for our shareholders. If you do things in that order and you do them well, it becomes the foundation for a strong company.”
The first step in getting your employees to do it right is to make them feel like they are an important part of the company so that they are motivated to do their best.
“Every day when our people come to work, whether it is in this (Steetsboro) plant, our Perrysville plant or our Fort Valley, Ga., plant, they need to feel a commitment to being a part of a company who is going a step beyond, doing things better and is committed to becoming No. 1 in their industry,” says Murdough. “I think there is a lot of pride that goes with that.
Management holds quarterly plant meetings as well as bimonthly office meetings to communicate the company’s direction and get feedback from employees. Murdough talks about things that were good and things that need to be improved, and about upcoming challenges.
“By keeping them informed on what the issues are that are influencing our success and failure, they are motivated to deal with those issues,” Murdough says. “When everybody is on the same page, it is much easier to understand why we are suggesting doing things this way or that way. When you don’t have communication and there is an edict that comes down and says, ‘Do this or do that,’ you inspire a distrust or lack of commitment.”
Murdough uses these meetings to personally explain to his employees why it is important to do something a certain way. Once they understand the reason, they are more likely to do it right and feel like an important part of the company. These meetings have helped the company overcome many of its challenges, he says.
“A year like 2005 is a great example of how we, as a company, have come through it very well, despite unbelievable challenges — the challenges of selling to a mass market that is very demanding,” says Murdough. “I’m talking about Target, Walmart, Toys ‘R’ Us, Home Depot or Lowe’s, all of whom are major customers of ours, at a time when material costs are going through the roof as a result of the dramatic increase in energy prices.”
Although Murdough doesn’t think a company can ever totally overcome the challenges of selling to a mass market, he credits new, innovative products with helping Step2 through this tough time. Rising energy prices are also a concern, something the company has offset by being more efficient in its manufacturing operations. But ultimately, it comes back to Step2’s employees and their desire to do their best to make the company more efficient and use their creativity to develop new products.
“At the end of the day, it’s our people, through their commitment to our company, that allow us to progress as we have,” says Murdough. “There is a tremendous amount of synergy amongst our employees. There is a very relaxed work atmosphere here.”
Murdough creates that relaxed atmosphere by showing employees that management has faith and confidence in them to do their jobs without being prodded and without someone looking over their shoulders or constantly checking up on their progress.
“The R & D department is in a separate building, and those policies that exist in our main office don’t apply there and never have,” says Murdough. “When that group was brought in, it was done with the understanding that they have a different environment there. Their dress code, their hours and their work practices are their own.
“If someone wants to work on a project at home, they do it. The key issue is, are we getting the new product development that we want to get? And we do.”
Murdough believes that by creating a culture of trust and comfort, he is getting better products. Step2 comes out with about 25 new products each year, many of which were developed with no input from management.
“Artists and designers don’t respond well to a rigid atmosphere,” says Murdough. “They do respond well to a trusting atmosphere that allows them to pursue their own ideas in a way that is without structure. They do it on their own timeframe as the inspiration comes to them. I don’t doubt for a minute that some of our designers are working at 9 or 10 at night. They may not be inspired at 9 in the morning. If they have an idea and they feel strongly about it, we allow them to pursue it on their own and then present it.”
Although some employees don’t work well under this approach, Murdough believes it is effective.
“When the gun is to our head, we are hopeful that they will shoulder the load and respond — and they do,” says Murdough. “It’s a simple matter of trusting one another.”
However, building a culture of trust isn’t easy when you are growing and constantly hiring.
“As we bring new employees in, in this day and time, it’s more challenging than ever to get commitments from your employees,” Murdough says. “But once they have been here for six months to a year and have experienced the environment, they become believers and they feel like part of a team that they are proud of.”
Murdough helps new employees feel comfortable and at home by showing them good work practices and good processing techniques and by encouraging long-time employees to be helpful. New employees spend their first few days on the job with a trainer, who introduces them to the processes.
“There’s a lot of consideration given to them when they first come in to gradually get them up to speed, get them to understand the safety procedures, the efficiency steps we take and the other things that we do that contribute to them being efficient and effective employees,” says Murdough.
Still, not everyone can handle the hard work that Murdough requires.
“We have a number of employees who think they want to work for us and they come in and look at what has to be done and they leave,” says Murdough. “Some of them leave the first day. But those are people who don’t want to work.”
And those are people that Step2 can do without. Murdough expects a lot from his employees, but he also rewards them for their hard work.
“When it is possible for them to take time off, we are happy for them to take it,” says Murdough. “A very big component of our approach to our employees is a bonus program that pays them — historically, it has been double-digit — returns on their annual income at Christmas time.”
The bonus program is based on Step2’s earnings, and bonuses average between 10 percent and 17 percent of an employee’s annual earnings. This program is an added incentive for employees to do it right.
Murdough puts a lot of responsibility on his employees to continue to come up with new products and grow the company, yet at the same time, he knows the drawbacks of growing too fast.
“It happens when the marketing team gets out in front of manufacturing, and perhaps product development gets out in front of manufacturing and puts too great a demand from a timing standpoint and from a complexity standpoint on the manufacturing operations,” says Murdough. “Then all of a sudden, problems can develop. You miss shipping dates, quality can suffer, there might be mechanical issues or product issues that may not have been given as much consideration as they need to be given.”
Murdough is taking extra care not to grow too fast and damage his company’s reputation for quality. He plans to grow Step2 at a rate of 15 percent or more every year and do so in a way that allows it to maintain the integrity of its processes and operations.
One way Murdough plans to do this is by moving into new product categories. Which ones? For now, he is keeping that a secret, but he is confident that his future plans for the company will lead it to growth without compromising quality, because he has created a culture that will accept no other result.
HOW TO REACH: Step2, (800) 347-8372 or www.step2.com
Sharp became interested in entering the logistics field when his customer at a huge glass manufacturer said he was impressed with Sharp’s service. When the company put the job of managing all of its freight up for bid, Sharp jumped at the opportunity.
It came down to Sharp’s trucking company and a multibillion-dollar third-party logistics firm, and Sharp won. How did he set himself apart from the competition?
“We were asked how we were going to approach rate increases,” says Sharp. “I said, ‘We will open our books to you every quarter and show you exactly how much we make. We’ll set a reasonable margin 1.5 percent to 2 percent. If we exceed that, we will return the money to you.’”
From that promise, Magnum Logistics was born, and today, providing value to his customers remains Sharp’s top priority.
Smart Business spoke with Sharp about how he grows his company in a soft economy.
How did you continue expanding your company while the trucking industry was suffering?
The answer is great service. The biggest client for our trucking company is Lowe’s. They require 99.5 percent on-time delivery.
They have a specific delivery time for each store. They have a crew that is set up to unload that trailer when it arrives at that store because they want it on the shelves as quick as they can get it.
We told them we would put our money where our mouth is. If we failed to deliver on time, they don’t pay for the work. We made that offer five years ago.
They challenged the other companies that serve them about 140 others to step up and do the same thing, yet no one has stepped up.
How has your original business plan contributed to growth in down times?
When I wrote the original business plan, it was my idea that there is a seven-year economic cycle to trucking. ... I thought, ‘How do you create a trucking company that does great in the bad part of that economical cycle?’
When the economy begins to slow down, the first thing that happens is all of those manufacturers say to themselves, ‘How do we get our overhead down and improve our operating costs? We have to cut inventory. We have to get out of public warehousing and close distribution centers. We have to go direct to the customer.’
When they start going direct to the customer is when they have to have great service. And not everybody can do that. I thought that if we focus on never being late and create a culture in our company that says that anything other than on time is unacceptable, then we can be successful even when it’s slow.
They’re not necessarily going to use the lowest price carrier. They’re not going to use the biggest truck line. They are going to use whoever can get it there on time.
It doesn’t take long for your name to get around the industry if you are really timely.
How do you attract and retain employees who will carry out that plan?
A lot of it is the culture in your company where people are appreciated, where people’s efforts are recognized. Family is very important here. We want people to have a home life.
What do you get when you do that? You get happier people who are more stable. And when they are at work, they can focus more on their work.
There are no politics here. You are free to speak your mind. It’s not going to jeopardize your job, and we try to make that go through the ranks of management. I don’t care who you are, how smart you think you are, nobody does this by themselves, and nobody has all of the answers.
If you can’t have someone who is going to say, ‘Why are we doing this? I think this is a bad idea’ because they are too worried they’re going to be in hot water, then you aren’t going to get the best out of people.
If two heads are better than one, 30 heads are better than two. Everybody has something to contribute. You can get a great idea from someone, but if the boss is so insecure that they can’t stand to have someone make a suggestion or offer criticism, you’re not going to have a successful company.
You have to be willing to hire people who are smarter and better than you are.
HOW TO REACH: Magnum Logistics, www.gomagnum.com
Dorfman wanted to create a quality meat supplier that was partner-oriented, so when he founded CMA in 1990, he crafted a mission statement focused on creating partnerships and relationships with his customers, suppliers and employees.
“We want to be the preferred supplier to all of our customers, a preferred customer to our strategic suppliers and a model employer in the industry, so that everybody wants to buy from us, wants to sell to us and wants to work for us,” says Dorfman, CMA’s president and CEO.
This mission statement is the driving force behind CMA, which has grown from $6 million at its founding to $75 million in 2005.
Smart Business spoke with Dorfman about how good relationships, communication and the right infrastructure help his company grow.
How do you create good relationships with customers, suppliers and employees?
If we are not the right person for the employee, supplier or customer, then it is our responsibility to say, ‘This is not going to be a win-win for us. It’s not going to be a win-win for you. If either one of us feels like we are losing in the bargain, then that is bad for both of us. Let’s be conscious of that going in. Let’s make sure that we understand what we are talking about.’
Nothing is easy, but if we commit to being open and commit to being conscious, we will tell you if we are the right people or not, and we will live up to our commitments. We will expect you to live up to your commitments as well, whether you are an employee, customer or supplier.
How has having fewer layers of management contributed to your success?
I have six direct reports. Those six direct reports are responsible for divisions or responsible for certain roles. They have all of the power and authority they need to get their job done, but they all report to me. There are about 330 employees here, and all of them report to one of the six direct reports of mine.
We are constantly making sure that our goals and objectives are aligned so that we are all pulling in the same direction. As we have grown, team-building is something that we have really had to focus on.
How do you make sure you work as a team?
We do a minimum of four off-sites a year, where we go off-site and do a lot of team-building to keep communication. We are very big on communication here, and that is not just amongst ourselves, that is with our customers and suppliers, as well.
We are constantly making sure that our commitments are met and that we inspire respect, confidence and trust from each other, as well as ourselves.
We have an office that is very conducive to interaction. Everybody’s performance measurements are geared to make sure that they are all aligned as a team.
How does your new headquarters fit into your growth plans?
As we grew, we grew into three offices with stairs in between. We had people separated by physical space.
Now we have one floor, where administrative, management and sales staff are in one office building ... attached to the plant. Now everyone is in one linear, continuous space.
It’s very open. We hired an excellent design architect to build it with that in mind. Part of the plans that we executed are a 2,000-square-foot recreation room that everyone is free to use. We put about $25,000 worth of exercise equipment in there.
We also put a pool table in there, a foosball table, an entertainment pit with a television and radio, so that people can go back and chat about their lives, their days, their goals, their ambitions communication is really the key.
How does treating your employees well help your company succeed?
We believe that by having the right employees, we can ask them to perform for us. If we can perform for them, then we can have them perform for us.
We can say, ‘Here is what we need you to perform at. We need to be a preferred supplier to all of our customers, and how are you fulfilling that role? We need you to make sure that we’re a preferred customer to our strategic suppliers, and how are you performing in that role?’
We want to be in a situation where everyone wants to work here, so we have the pick of the best people, so morale is high, performance is high and turnover is low.
HOW TO REACH: Chicago Meat Authority, www.chicagomeat.com
Ron Shahani experienced that firsthand when he quit his job at Ford Motor Co. to found staffing firm Acro Service Corp. in 1982. While working to find ways for Ford to break even as sales declined, Shahani realized companies could cut costs by hiring contract workers rather than full-time employees.
That premise became the basis for Acro, but first he had to convince prospective employees and clients that his company would be a profitable alternative.
“In the early ’80s in Michigan, the concept of using contract engineers or programmers was a very novel idea,” says Shahani, president and CEO of Acro. “Nobody had used engineers and programmers on a temporary basis.”
Initially, the company catered to the automotive industry, but Shahani quickly realized it was risky to rely on just one industry. He created a diversification plan and now has clients from industries including engineering, information technology and government, and has grown his company to $99 million in revenue.
Smart Business spoke with Shahani about how he overcame the challenges of starting Acro Service Corp. and how he diversified his client base.
How were you able to attract employees to work in a new industry?
At the time, this was such a new commodity for the auto companies from an acquisition perspective that we pretty much had free reign in working out the arrangements with the using manager. We were able to persuade them to give us adequate budgets so that we could attract people who had permanent jobs (and convince them) to quit those jobs and take a contract position with us.
We paid very well and offered great benefits. We tried to emulate a permanent job as much as possible. Most people who knew the auto industry, after they saw what we were offering, were savvy enough to know that if they got hired on for a project, let’s say to design the braking system for a car that is coming out in three years, their job is good for at least three years.
We were able to convince people that this was a good way to go. Since you are not a part of the company, you don’t have to get involved with the politics of the organization. You just do your work, and you are highly paid for it.
How did you establish credibility in the marketplace?
I packaged my growing business (as having) something much more expensive than what it might look like at first glance. My understanding of the processes within the auto industry helped me leverage what we were offering.
Knowing the culture was the biggest advantage, like how to package the marketing material, the resumes, what they look for and how they tend to make their decisions and how to collect money from a large company and make sure you get paid on time.
How did you develop a diversification plan to expand your customer base?
A diversification plan is particularly important being in metro Detroit because of the dominance of the auto industry. It is easy to rely on them, but at the same time, it is too dangerous.
From Day 1, when my first client was General Motors, I have made a considerate effort to branch out and diversify as much as possible. This had allowed Acro to grow in spite of the twists and turns of one industry.
The commitment has to be persistent to achieve an equitable amount of diversity. Making diversification a priority and communicating it throughout the organization is the key. It is not particularly difficult to look to other industries, but it must be done in an organized manner.
It is important to note that diversification should not be at the expense of a beneficial industry. The goal we have is to grow our total business, inside and outside the auto industry.
How did you attract other industries to Acro?
We leveraged our experience in the auto industry. For example, we won a contract with the federal government. They were looking for large numbers of computer scientists and other types of engineering scientists. We have extensive experience servicing the auto industry providing exactly the same type of skill sets.
The government checked the references we provided, and we got very good reviews. And the pricing and proposal we put together to service them was something that we were very pleased with. That, along with the good references we had, helped us win some contracts outside of the auto industry.
Once we had those contracts, we could leverage them, provided we did an outstanding job. We wanted to build a portfolio of loyal customers. Satisfied customers are not good enough nowadays and they never have been.
We want to exceed customer expectations so we retain loyal customers who will do business with us year after year. To our credit, we have never lost a client.
HOW TO REACH: Acro Service Corp., (800) 844-2276 or www.acrocorp.com
Shah, president of SkyBridge Global, started the company in 1999 with no partners, no clients and no venture capitalists, and has grown it to more than $10 million in revenue and 200 employees. Shah says he has built his business by developing relationships with clients and employees, and he acquired Meridian Systems Consulting, a huge contributor to SkyBridge Global’s growth, after he developed a relationship with one of the company’s founders.
Developing and maintaining those strong relationships has worked SkyBridge Global has experienced a 40 percent growth rate over the past two years and is on track to continue that growth.
Smart Business spoke with Shah about overcoming the challenges that come with a fast-growth company.
How did you grow SkyBridge Global to $10 million in revenue in five years?
We started as a very small consulting company where it was completely based on relationships. I had relationships with several customers and because of relationships, we started with one customer, we did an excellent job and got great references. And we got a second customer based on references and word of mouth.
We were putting small teams, like one or two people, on projects. Gradually, probably with in two to three years, our name started getting around because of our quality and excellent customer satisfaction. Then we started taking on full-blown projects where we used full teams. We started with just one focus area initially, and then gradually started diversifying into several products.
We started consulting in PeopleSoft. I had several years of PeopleSoft experience. I started as a consultant myself on a project, billing full time and generating revenue. That’s how I grew my relationships with the customers.
What challenges have you faced as the company has grown?
The biggest challenges were how to support the growth. As we were expanding, we were getting new opportunities and had to find people to support the growth. The way I grew my company is I tried to hire people that I had already worked with in the past or through networking.
I wanted to find the right people, people who were quality and I knew that they had done some excellent work.
We hire experienced employees people who have been in the field for three to five years at least, so they are up and running from Day One. We cannot hire people right out of college or people without any experience because our company is a second-tier consulting company, and when we get customers, they are not willing to have employees train on the job.
The next biggest challenge was cash flow. Trying to support that kind of growth is very difficult. I have grown this company without venture capitalists, without any debt, and I have no partners. I financed the whole business.
How did you overcome the cash flow problem?
My first year, we kept the overhead to a minimum. We hired one person to manage everything. We were able to generate a lot of cash and put that cash back in the business.
I was able to hire more people. Revenue started to go up, and I tried to keep my costs minimal. We didn’t have an office. Everybody was working remotely. Finally, last year we purchased an office building in Marietta. We moved there because it was becoming too difficult with so many people.
How was the acquisition of Meridian Systems Consulting Inc. important to your growth?
That was a very strategic acquisition for us, and it has worked out very well. We were looking for some company to help us grow. They have been a tremendous asset for us. It has been a year since we acquired that company, and it has generated a lot of new revenue and new customers for us.
One of the principles of Meridian Systems Consulting, Todd Murphy, is now managing our whole sales team. Most of the employees from Meridian are still working for us. We are very happy with them.
How did you decide that Meridian would make a good acquisition?
When I spoke with Todd, I realized he was exactly the type of person who matched the core values we believe in, which is integrity, honesty and fairness. He came off as a person with very high integrity, a straight-shooter.
When he came on board, it was very easy because that is what our company is based on. Obviously, he was running his organization with the same values.
It was a perfect match. We never had any cultural issues.
HOW TO REACH: SkyBridge Global, (770) 373-2300 or www.skybridgeglobal.com
“The employees are the soul of our firm, the patient is why we exist, and the philosophy is if you are not serving the patient, you should be serving someone who is,” he says.
Strauss’ employees come first in his vision because in order for his patients to be cared for, he needs to care for his employees first.
What Strauss has discovered in his six years as president and CEO of Summa Health System is that when employees are truly engaged in their work and genuinely care about the organization they work for, patients receive the best care possible and the organization is going to succeed.
And Summa Health System has had its share of success. It has been ranked by U.S. News & World Report as one of the best hospitals in America for eight consecutive years, and it won the NorthCoast 99 award for being one of the 99 best places to work in Northeast Ohio. In addition, NorthCoast 99 named Summa the 2005 Communication Award Winner because of its well-informed staff.
Keeping 6,000 employees from janitors to brain surgeons informed can be a challenge. And Strauss stresses that every employee is important, regardless of his or her role in the organization.
“One of the things that drives me crazy is hierarchy, and if you’re not a manager, then I don’t talk to you kind of thing,” Strauss says. “One of the things we really strive for here is that every level position is important. We really try to show that in the way we respond to people in the hallway, talk to people, have interactions. You can never know everybody, but when you are open to that it, really makes a difference.”
Strauss recognizes that his employees are what makes his organization great. And he empowers them, and therefore his organization, by giving them constant communication and support.
Strauss says that communication is essential to every aspect of his organization. He makes a point to tell his employees what their roles are and how those roles contribute to Summa’s success.
Strauss begins the process of communicating to employees from their first day at orientation.
“We talk about [how] people have the opportunity to be someone’s hero every day in the way they treat them,” he says. “One of the things I do is (give a presentation) to every new employee, and I give them a card that says, ‘You are this hospital.’ It talks about what you say and what you do is critical in our success.”
Strauss says employees only have 15 seconds to make an impression on a patient or a family member. He calls those first 15 seconds the moment of truth.
“Those 15 seconds represent our success or failure,” says Strauss. “I tell our employees that they are empowered to take whatever steps are necessary to satisfy that patient, family member or volunteer, because if they do, then we will be successful. But if they are too busy, if they feel it is not their job or if they are not empowered to take those steps, then we will fail.”
Strauss spends a lot of time communicating his vision for Summa to his employees, but it is just as important for him to get feedback from them. One way he does that is through a lunch every month called Talk with Tom that allows employees to voice comments and concerns directly to Strauss in an open and safe environment. No managers are allowed, and employees are encouraged to say whatever is on their minds without fear of punishment.
“It’s listening to those problems and kind of unlocking the ability to solve problems for people so that they can do their jobs,” Strauss says.
If employees don’t feel comfortable speaking their minds in a room full of people, they have an opportunity to share their opinions on paper through an annual survey. The questions used in the survey come from the book “First, Break All the Rules,” by Marcus Buckingham and Curt Coffman.
“It’s a Gallup Poll interview of 80,000 managers across the country,” says Strauss. “It includes the 12 most important questions you can ask your employees to create a healthy environment: In the last seven days, have you received praise about the work you do in the organization? Do I have a best friend at work? Does my boss care about me as a person?
“It’s very different from the traditional command and control environment that many of us grew up with. It’s that kind of philosophy that we are trying to create here in the organization.”
If a department gets a poor score in a certain area, Strauss has the human resources department facilitate a meeting in that department. Following the meeting, an action plan is developed to improve upon the problems.
“Every manager is educated on how to follow up with those scores so that each organization has a process they are to follow in order to get better from the results of the opinion survey,” Strauss says. “Every year that we have done that for about the past six years, the responses have gotten better.”
Supporting his employees
Strauss says that beyond communicating with his employees, he must empower them to do the best job possible. He describes this process as servant leadership.
“(Servant leadership) basically puts the patient at the top of the organizational chart and I am at the bottom,” says Strauss. “It is my job to support people at the bedside who come in between.”
Strauss learns how to support his employees through the feedback that he receives from them. For example, he learned that his employees wanted to have more of a say in the organization. He now gives them a way to do that.
“We had an effort where people wanted to have an area where they could give us ideas,” says Strauss. “So we created a program two years ago called Rewarding Innovation.”
The program encourages employees to submit ideas they have to better Summa either by making the organization more efficient, improving financial performance or improving patient care. Employees with great ideas are then recognized for their innovation.
“Depending on the extent of improvement, we allowed our employees to get some cash rewards for that innovation they brought to us,” Strauss says.
Meghan Shaw is one employee who reaped the rewards of this program she won an Alaskan cruise for her idea to eliminate the third copy of a lab request form. By taking Shaw’s advice, Summa saved approximately $12,000. And although the program has only been in effect for two years, Summa has already saved $1.2 million as a result of employee ideas.
To ensure that all employees are committed to the success of Summa, Strauss came up with another way to let everyone share in the organization’s success.
“We put together a bonus program for employees based on our financial performance, our improvement and patient satisfaction,” says Strauss. “If we do those things, we are able to share with our employees our success by giving all employees a bonus. Last year, we gave everybody a 1 percent bonus, and our hope is that this year it is going to be bigger than that. It is a chance for us to say thank you.”
Another way Strauss empowers his employees is through Summa’s Leadership Institute. The Leadership Institute is way to ensure that all managers have the proper training, support and knowledge before they enter a leadership position, and potential leaders must complete a series of courses before they can become managers.
“It teaches them how to treat employees the way they would want to be treated and gives them tools and skills,” says Strauss.
One course is called the Philosophy of Summa. The course is four hours long and focuses on the mission, vision and values of Summa.
“We break each value down and have a video clip from a movie that we think either reflects that value or doesn’t reflect that value,” says Strauss. “And then we have an interview from a manager inside the organization about what that value means to them.”
Following the video is a conversation in which employees discuss whether the value featured in the video is working and talk about examples of other organizations where it is working better or worse.
“That has turned out to be a wonderful conversation that I teach for the managers that really gets them engaged in our mission, vision and values,” Strauss says.
And having engaged employees is one of Strauss’ main goals for Summa.
“We do all these things because we believe that if you have an engaged work force, a work force that really loves what they do, a work force that really believes in the vision of the organization and the mission, that they will give better care to their patients and that will result in a ‘raving fan,’ as we like to call it, which is a patient who experiences our organization and sees something different,” he says.
“When they experience that difference, that translates into preference, and then they will tell 10 or 20 of their friends and family about the unbelievable care they’ve had. That is why having an engaged employee makes such a difference.”
HOW TO REACH: Summa Health System, www.summahealth.org
“I worked for a couple of companies that were bought out for millions of dollars, and my accountant said to me, ‘Stop making other people rich and go do it yourself,’” says Sarowitz. “And that’s what I did.”
However, starting a business wasn’t easy. Sarowitz invested $70,000 of his savings and worked without pay for nearly a year.
Today, he no longer needs to worry about money. Ameripay, a payroll processing firm, is expected to reach more $10 million in revenue in 2005, a $4 million increase over 2003 revenue. Sarowitz believes the rapid growth will continue and hopes to triple his revenue in the next five years.
For now, he’s focused on dealing with the problems that come with fast growth. It’s a struggle, but something Sarowitz is confident can be overcome.
“We have a great story to tell, in that we are a two-time Inc. 500 company that is privately held, virtually debt-free and profitable,” says Sarowitz, president of the firm.
Smart Business talked with Sarowitz about how he finds good employees and why he is improving the structure of Ameripay.
You recently hired an HR manager to help manage the challenges of fast growth. What impact has this had on Ameripay?
We had some issues with turnover last year. We have always had relatively low turnover throughout our whole existence. If you look at our management team, we still have relatively low turnover.
Last year, we had high turnover for the very first time. A lot of it was just poor hiring procedures.
How have you improved your hiring practices?
We had one employee, for example, that we didn’t do a background check on. We found out after the fact that he never attended the college he said he graduated from. He also had a pending legal case with his prior employer.
These are things that we didn’t check out prior to hiring him. We didn’t do our due diligence. That one employee probably cost us five more employees.
What we learned is that you have to screen people up front. Also, we not only have an HR manager but also a recruiter. We have a really good staff. We have a lot of people who contribute to our company’s success. What we realized the hard way is that one bad hire can cost you a lot, so we want to be more careful in our hiring.
How are you attracting and retaining better employees?
One thing we thought we were weak on was giving our middle managers training. As we grew, we hired people who were competent, and we took those people who were competent and promoted them into management positions.
And that doesn’t necessarily make them good managers or experienced managers. What our head of internal training asked for is to give people more support in becoming better managers.
When we had our first consultant in to talk to us about training our middle managers, he started asking us about our mission statement, business statement, all of the structural things that we need as a senior management team in order to help our junior management team. We realized that we needed help.
We are doing really well and have been extremely successful, but we are hitting the next level. We are investing a lot in the process to make sure that we have a structure in place so that people can have a career here not just a job but a career. Over the next year, we are going to be instituting training for our middle management team fitting into what our mission and vision are and what our goals are.
It’s putting more structure in place. That will help retain good people, because they will have a pathway to success and they will have more structure so they will know what they need to do.
How will you attract good employees?
Part of our problem with recruiting over the years is we are a busy, growing company, so each manager was also their own hiring person which is good in that they know what they want, but we weren’t spending enough time really making sure that we looked thoroughly every time we had an open spot.
Right now, we have a couple open sales spots. What we would have done before is ask anyone here if they know any good salespeople and maybe have done a little recruiting.
The bottom line is our sales managers are too busy selling to really worry about heavy-duty recruiting. Now they’re using a recruiter, and we are on all the Web sites, we’re going to a sales career fair and we are just looking in different places.
We are also honing our presentation to candidates. We haven’t always properly told candidates how good a company we are. We are upgrading our image.
HOW TO REACH: Ameripay, (866) 304-3800 or www.ameripay.com
Although the founder and CEO of Greenway Medical Technologies had to wait three years before his company made any revenue, it is now growing rapidly revenue increased from $8.8 million in 2004 to $17.6 million in 2005.
Green started the company in 1998 but didn’t see any revenue until 2001 because it took that long to build the product software solutions for the health care industry. The goal is to integrate business and clinical functions to enable physicians to better serve their patients, more efficiently manage their practice and increase profitability.
Greenway Medical Technologies isn’t Green’s first business endeavor he started check imaging company Greenway Corp. in 1994, but sold it in 1998 to focus on Greenway Medical Technologies.
Smart Business spoke with Green about being a pioneer in a growing field and how he got the word out about his company.
Why is there a growing need for the medical technology that your company provides?
The biggest reason is because it saves lives. Depending on whose research you want to adopt, we’re losing a minimum of 44,000 to a maximum of 98,000 lives a year in this country due to medical mistakes. The majority of those can be prevented with IT systems.
Most people will tell you that health care is broken in this country and dramatic improvements need to be made. But no industry can be improved until you can measure it.
Medicare talks about wanting to pay for performance pay [more to] the doctors who have better results. Well, until you can get medical results out of the paper folders and put them into databases, like a relational database, you can’t really measure it.
What challenges did you face as a pioneer in the field and how did you overcome them?
The No. 1 challenge any software development company has is ... if you get half way there and run out of money, then you don’t make it successfully. Greenway has raised more than enough funds. We raised in excess of $72 million to build this product. Being sure that you have the resources to complete the trip you start is the biggest challenge.
The second thing is to manage growth. Once you have built a product, you need to manage the growth so you are sure you can deploy and support the product at a high level of customer satisfaction. If you’re a doctor and I sell you a product and you have a room full of patients, but you can’t see them because your electronic health record is down, you are probably not going to be a happy camper.
How do you get the word out about Greenway’s new technology to expand your client base?
That’s a big challenge. We do that four ways. We have a direct sales force of 24 and that is all they do.
Secondly, we have an indirect sales force of our partners that has over 800 salesmen calling on physicians’ offices. The third thing we do is attend exhibits and health care shows and conferences.
The fourth and the most important is we take extreme care to have a satisfied client base. We back that up with proof from the Klas report. They rate all the systems out there, and we are the highest-rated electronic health record in the two fields that we play in. [Practices with one to five physicians and those with six to 25 physicians].
Clients’ references are huge. If you don’t have a good client base, it is very hard to increase your client base.
You provide clients with a free return-on-investment analysis. How has this helped you grow?
It has helped us retain customers, but I think that even more, it has helped us to get new customers.
President Bush said last year in his State of the Union address that we have to move our citizens to an electronic health record. It is one thing to say, ‘OK, do that,’ and it’s quite another to get the doctor to want to pay for it.
But if I can show you that a practice, which is a similar size to your practice, paid $200,000 for the product and is now doing two things, saving expenses and increasing revenue opportunities let’s say the two of those together are $225,000 annually then you made a pretty good investment and you are pleased with that.
The ROI proves that you did make a good investment, and it is a great sales tool for practices that are considering making that investment.
How do you plan to continue your growth?
If we continue to have significant revenue increases every year, we will keep doing what we’re currently doing, which is just trying to stay focused and offer the best product in the industry.
HOW TO REACH: Greenway Medical Technologies, www.greenwaymedical.com
However, when he became fed up with the way he and other employees were being treated at the exhibit house he worked for, Silvio was convinced by a co-worker to start his own business. With the help of friends and co-workers, he developed a vision for a company that would treat employees with respect.
“We looked at all of the things that were bad at the other company, and whatever we did here, we tried to correct what was creating issues there,” Silvio says.
In 1979, Silvio turned his vision into Exhibit Works. And while he has achieved his goal a company with low employee turnover that has retained many of its original employees he has also created one of the nation’s largest exhibit and event marketing companies. Silvio has grown Exhibit Works from $1.3 million in sales in its first year to $150 million in sales today. The company employs more than 300 people and has offices in Chicago and Los Angeles, in addition to its headquarters in Livonia.
One way that Silvio shows his employees that they are valued is through the Exhibit Works Employee Stock Ownership Program, in which he gives employees shares of company stock each year. That way, as Exhibit Works grows, they feel they have a stake in the company. Shares are held in ESOP accounts, which are accessible to employees upon retirement, and employees now own 15 percent of Exhibit Works.
Silvio also gives employees the opportunity to move up in the company, regardless of job title or previous experience.
“Dominic likes to advance people from within,” says Matt Hubbard, corporate director, marketing and communications at Exhibit Works. “He really grows his business by giving people within here opportunities. So, starting out as a secretary or a shop worker, the person knows that they are not boxed in by that job description. There’s going to be opportunities for him or her here.”
Smart Business spoke with Silvio about his vision for Exhibit Works and the challenges of starting a company.
What was your vision when you founded Exhibit Works?
No. 1 was employees and how to treat them with the respect that they deserve. We’ve continued that throughout the years. That is our No. 1 priority.
We feel that if we treat the employees well, they, in turn, will treat the clients well. It has worked to everyone’s advantage.
I had no idea that we were going to grow as big as we have. My ultimate goal when I got into business was to be a salesman, and a successful salesman. To suddenly have this company and then to have it start to grow was way beyond my expectations. It’s been a nice ride.
It’s been good for our employees who are now ESOP members (and have) employee ownership. It’s been a good experience for the employees and for us.
How do you make Exhibit Works a great place to work?
We try to have company meetings to let (employees) know what is going on. I have an open-door policy. I walk through and talk to employees just to get their temperature. I think they sense and feel the respect we have for them.
How did your ESOP program come about and how does it benefit employees?
We’ve been in business since 1979. In the early ’80s, I was visiting a lawyer who was working on an ESOP program and I learned a lot about it. My interest was also originally (piqued) by a seminar that Comerica Bank put on. They had a speaker who talked about trust, ESOP and a lot of things about running a business.
We’ve been in the ESOP program for probably nine or 10 years. The idea is I want employees to become a part of our growth. Right now, they own (15 percent) of the business and I own the other (85 percent). I give them the stock. I’m not selling them the stock. I give them the stock every year.
There will be a point in time when we will probably stop doing that when there’s too much stock out there. But as they retire, they sell stock back to us and use it as a retirement fund. They get the money pretax. It’s a great deal for them besides having a matching 401(k), they also get the ESOP program.
What challenges did you face starting your own company?
Mainly finances. I had no financial background and we put together a financial proforma. Once we got into trouble, then I had to borrow money from my family my father.
I remortgaged his house and mortgaged mine. And then I borrowed money from him to keep the business going.
How have you grown your company?
It has been in the face of the worst of times when we have grown. We figured out that a lot of people pull in the horns when times get bad. What we’ve done is go right at it.
Newspapers love to have a story about how bad things are and make it bigger than it is. Our goal was (to find out) what can we do to level ourselves off and get through the recession. We’ve grown through recessions. We’ve spent money and increased our efforts during the worst of times.
How have you been able to do that?
I’m just a stubborn Italian. I think it is an attitude thing.
People love to hear (something positive). To sit back and say, ‘We are in trouble and we have to do this and we have to do that’ is a very negative thing. It’s the last thing employees want to hear.
It’s almost like being on the walls of the Alamo. You can give up and walk out there and raise your hands or you can fight until you can’t fight any more. That is the attitude not to give up.
I think that is probably what has kept us in business. We have grown dramatically because of that.
What obstacles have you had to overcome as your company has grown so quickly?
Training people and getting the people who started out with our company into a whole new dimension. Carpenters became executives. Secretaries became assistants and ran projects.
It was not only getting the business but the infrastructure of the business and building it up so it can perform in such a way that customers would want to come back.
To what do you attribute your success?
I’m not able to give up. My father was very ill with multiple sclerosis for 30 years, and he never gave up. That lesson I saw with him and I borrowed the money from him, so I was not going to fail that probably affected me more than anything.
When someone is giving you support like that, you have to perform. If I had to do it on my own, I don’t know if I would have the strength of character that I was pushed into.
HOW TO REACH: Exhibit Works, (734) 525-9010 or www.exhibitworks.com
“I just always knew I wanted to be involved in construction,” says the founder and CEO of Krusinski Construction Co. “I was very fortunate to have construction in my blood, so to speak, and was able to work in the field as a pretty young guy with my dad.”
In 1973, Krusinski turned his love for construction into a fast-growing business and a place of employment for his two brothers and three of his four children. But he doesn’t give his family special treatment in the workplace in fact, he treats all of his employees like family and encourages the entire staff to give input. In addition, despite industry recessions the past few years, Krusinski avoids layoffs because he believes it is important that his employees have a sense of security.
And he hopes they think of Krusinski Construction as a career, not just a job.
His efforts to make his company a good place to work have not gone unnoticed. In 2004, he was nominated as a Best Boss by the Chicagoland Chamber of Commerce. In 2003, the chamber and Right Management Consultants presented the company with The Right Award for Workplace Excellence, which recognizes companies that demonstrate a connection between innovative people practices and business success.
And there is no doubt that Krusinski Construction Co. has been successful. Its 2004, revenue was more than $60 million an increase of about 10 percent over 2003.
Smart Business talked with Krusinski about his unique business philosophy and how he allows employees to have a say in the company.
How has treating employees like family contributed to your company’s growth?
We try to create a very open-book environment. But we made it clear that we first have to be a successful business and then we can be a successful family business. That allows for career development, growth of opportunity and training for everyone family and nonfamily business members.
That way, it is easier to attract good management, to sustain them and to give them career opportunities for longevity of the business. Good people are what allow you to grow your company. Obviously, one person can only do so much, but 10 can do a lot more.
That open-book style of management and knowing that we can’t treat people differently because they’re family members is certainly a key factor in the growth of any business.
How does management share leadership with the entire staff?
We have a strategic planning committee that is made up of at least one person from every department plus our key management people. They are very involved in our strategy and the tactics that help us grow our company.
We meet every month. And quarterly, we have a half-day session. It is the responsibility and obligation of those individuals in those strategic planning meetings to then take the action items to their individual departments and to the entire staff. It’s a very much open-book kind of management philosophy so that they understand what our objectives are and where we need to improve.
It’s not a top-down mandate. It’s more of a bottom-up kind of thing, where individuals in the company really take on leadership and take on responsibility to drive and direct our company in a successful and profitable way.
Why is that important as the company grows?
People spend a lot of time at their jobs. We like to think of this as more than a job that it is a career. It is security for their families. We each have responsibility to each other that we will be a viable company.
It’s not just about growth, although growth is a nice thing to have. Companies also have to be sustainable. In our industry, there have been three or four major recessions over the last 35 years. Companies have to sustain themselves through those periods.
We are not a hire-and-fire company. We have always kept our nucleus of people together through the good times and bad. I think that’s very important that people are involved in securitizing their future, and that means securitizing the company. I see that as a very important part of everyone’s obligation.
How do you make sure you go above and beyond for your clients the same way you do for your employees?
We are very concerned about customer service. We do a survey and we actually make it a part of our construction contract. At the completion of a project, our client has to fill out a survey that rates every component of our organization as to how they like doing business with us.
People’s actual bonuses are predicated on the success of those evaluations. It helps people understand that it is our clients that sign our paychecks.
It’s all part of that client satisfaction that helps us not only do a good job for them, but it endears the clients to us so they won’t think of anyone else when their next building opportunity arises.
HOW TO REACH: Krusinski Construction Co., (630) 573-7700 or www.krusinski.com