If you had any doubt about the recession being in the rearview mirror, consider this tidbit from the ERC/Smart Business Workplace Practices Survey. In the last 14 years, only two years — 2009 and 2010 — have returned results with Northeast Ohio companies reporting the poor economy as their toughest challenge. For the 11th year, companies in 2013 are reporting that their biggest challenge has been hiring and retaining talent.
The survey, which has been a collaborative effort between ERC and Smart Business since 2001, is aimed to let you know what companies in Northeast Ohio are doing to drive their businesses forward.
This year in particular showed an overwhelming amount of companies, 49.5 percent, listing hiring and retaining talent as their No. 1 challenge.
The other concern many Northeast Ohio workplaces have includes health care costs and the uncertainty of the Affordable Care Act (ACA). The good news is that a mere 5 percent of companies named economic conditions as the toughest challenge.
“Hiring continues to be strong,” says SueAnn Naso, president of Staffing Solutions Enterprises. “We see more and more companies adding recruiting talent, and it’s getting much more competitive to find those people, which is a good sign.”
Companies in Northeast Ohio are ramping up their recruiting efforts with 84.2 percent utilizing Internet job boards, and 50 percent utilizing social media to recruit talent.
“On the hiring side, you see a lot more LinkedIn activity,” says Lauren Rudman, president of the Cleveland Society for Human Resource Management (SHRM). “LinkedIn is still the No. 1 way to go, but I’ve also seen job opportunities pop up on Twitter and Facebook.
“Word of mouth is still a great way to go if your company has a referral program. Between social media, specifically LinkedIn, and word of mouth, those are still the No. 1 and No. 2 ways that work for recruiters and talent acquisition teams.”
While companies are finding ways to recruit more talent, they are also very focused on retaining that top talent once they have it.
“We’ve seen a continued emphasis on things like workplace flexibility and investing in training and development as ways to retain employees,” Naso says. “They’re focusing on keeping their turnover numbers as low as possible.”
According to the survey, 77.7 percent of companies provide financial assistance to employees to upgrade their skills through advanced education or job-related training. In addition, 28.6 percent offer a mentoring program.
“Training and development is a big one, especially for some of the millennials (Generation Y),” Naso says. “They really are focused on learning and growing, so I’ve seen a lot more hiring of people that do training and development, creating leadership training programs and having a leadership track so these young professionals see a career path and aren’t looking outside the company for growth.”
Today, there are more training and development programs than there were in the recent past and there are a couple of things that factor into that.
“One is the economy,” Rudman says. “Unfortunately, when things go bad, training and development is the first thing to get cut. As the economy continues to get better, those will either come back into play or grow.
“Another big part of it, too, is Generation Y in the workplace. Generation Y wants development, training and to know how they’re doing. Companies need to recognize that in order to retain top talent they have to provide these resources like mentoring, coaching and development opportunities because they want it more than some of the generations in the past.”
According to the companies that responded to the survey, roughly 75 hours of training are provided to new-hires in their first 90 days. Another way more companies are incentivizing employees to stay at their current company is through workplace flexibility.
“That has been a huge trend,” Naso says. “There has been a study that mentioned that about 78 percent of U.S. workers are looking at workplace flexibility as a primary reason why they’re either staying where they’re at or making a move. That is as important to them as compensation.”
According to the 2013 survey, 44.3 percent of companies in Northeast Ohio are offering flextime, 14.8 percent are offering compressed workweeks, 17.2 percent offer telecommuting and 32 percent offer a work-from-home option.
“It’s interesting because workplace flexibility tends to be something a little different to each person,” Naso says. “We’re seeing companies trying to put things in place that provide a variety of options for employees. It depends on the type of job or their focus and how they can create that flexibility.”
While hiring and retaining employees remains the top challenge, the upcoming ACA and its pending changes to health care costs have companies anxious about what the result will be.
“One trend we are seeing that was published recently in one of the staffing industry magazines is that temporary staffing jobs hit a record high in May as companies are trying to lighten the burden of the whole Obamacare regulation,” Naso says. “Instead of adding staff, they are using contingent labor to manage some of that.”
In fact, according to the survey, the average percentage of the workforce that was temporary of the companies polled was 3.6 percent, the highest since 2006. The percentage of contingent workers in 2013 was 8.6 percent.
“In preparation (for the ACA), a lot of companies are attending conferences and meetings,” Naso says. “However, I haven’t seen any hard and fast actions yet. I haven’t seen companies that have actually reduced their part-time staff from 35 hours to 28 hours or anything like that. They’re all in that wait and see mode.”
Due to the uncertainty of the ACA, a lot of employers and companies are being proactive.
“We’re seeing companies bringing in wellness coaches, reimbursing employees for gym memberships and bringing healthy food into their organizations via vending machines or fresh produce stands,” Rudman says.
“Biometric screening is another big one. You see a lot of those efforts happening, which down the road can hopefully impact and decline health care costs for those companies, as well as employee’s out-of-pocket costs.”
The biggest decision looming for companies is whether they will “play” or “pay” with the ACA.
“Pay means that the company is not going to offer health care and they will pay the penalty, which is $2,000 per employee, and then those employees will be a part of the health care exchange that the government is offering,” Naso says.
“Play means a company will provide a health insurance plan that meets all the new government standards. Even companies that currently offer insurance could be affected because their current plan may not meet those requirements anymore.”
One of the requirements is that health care doesn’t cost an employee more than 9.5 percent of their salary. There is also a minimum coverage.
“Companies that currently have a plan could have increased expense because they may have to pay more of the premium or increase the amount of coverage, which increases the cost of the premium,” she says. “At the moment I have heard that more companies are going to play than pay. But it’s still a huge unknown.”
Despite what may result from the ACA, there is no doubt that companies in Northeast Ohio are once again flourishing and waving goodbye to the recession. Smart Business thanks ERC and those companies that participated in this year’s Workplace Practices Survey.
“A Pat Catan’s Company” reads the sign in the lobby of Darice Inc. where Michael Catanzarite greets his guests. Catanzarite, or Catan for short, is the son of Pat Catan and is CEO of Darice Inc., a premier wholesale distributor in the craft industry.
That lobby sign is a symbol of the company Catanzarite’s father started in 1954 with $200, basically creating the craft industry.
“It’s a unique story because how the hell would you get into the craft business?” Catanzarite says.
Pat Catan was a pilot instructor during World War II. When he returned from service the only place to get a job in Cleveland was at NASA. As a new guy living in Cleveland walking around, he saw a need for supplying decorations for decorators of store window displays.
“Back then, department stores’ biggest form of advertising was the window decoration itself,” Catanzarite says. “He started supplying products for that. It evolved into material for making your own flowers for displays and floral arrangements for your house and grew from that point.”
In 1954 Pat Catan’s was just one single store. By the mid-’70s, the company had six or seven stores.
“He was a pioneer in the industry, because there really was no craft industry,” Catanzarite says. “In the early’70s, we came up with the name Darice. Darice is our wholesale name and that’s the majority of our business. If you go into any big box store like Wal-Mart, Target or Michael’s, you would see the Darice brand in there.”
The wholesale division started in the 1970s. Catanzarite entered the family business following his graduation from high school in 1976.
Catanzarite knows the ins and outs of Darice. He knows the names of virtually every employee and can quote his father’s sayings and other inspiring messages that line the walls of the Darice office.
But what else would you expect from a man who has worked at the company for his entire life?
“My dad was my idol, my hero,” Catanzarite says. “I enjoyed being with him and I enjoyed working with him. Why did I come into the family business? I hated school.”
Catanzarite has been CEO for nearly 20 years, but he isn’t the only family member working at Darice. In fact, there are 22 family members who work full time in the business. His office contains nearly 100 photos of family and items like his dad’s old briefcase and jacket, which help motivate him and serve as a symbol of who started the business.
From 1954 to today there have been a lot of changes within Darice and the craft industry itself.
“The difference between today and yesterday is the speed to market and the speed of business,” Catanzarite says. “You better be at the wheel every day and have your foot on the gas 100 percent or you’re going to be left behind.
“Today, we are fortunate because of our employees and their hard work, we’re the largest in the industry at what we do. Being the largest has its challenges in that you’re always a target for competition.”
Here’s how Catanzarite keeps a family feel at Darice while also pushing the company to remain an industry leader.
Fight the competitive forces
Darice Inc. today has 1,800 employees and is one of the top privately held companies in Ohio. The company supplies craft product lines such as craft basics, jewelry making, paper crafting, bridal, floral design, fine art supplies, kid’s crafts and licensed products to retailers such as Wal-Mart, Target and Michaels.
“We’ve made it a priority in our company that we are going to be product-first people and product-innovation focused,” Catanzarite says. “That’s our business: creativity and products. When we do that, everybody in this building understands that our goal is to find the next best product to make sure we’re to market quick and can respond to a call from Target or customer X to have a presentation done in a week.”
Anything that Catanzarite does to be successful is a result of the company’s mission statement and that his employees work on it every day. It requires the right kind of people to live the company’s mission.
“Do we have the right people and the free thinkers for that?” Catanzarite says. “That’s how we take something from concept to reality. In any company, if you just talk about stuff and you don’t make it a priority with the facility and the people, you’re not going to get anywhere.
“If you say you’re going to do something, but all you have is an idea on a piece of paper, well, what the hell good is that? You’ve got to give it substance.”
Catanzarite spends a lot of his day motivating and counseling employees and trying to figure out what areas Darice needs to improve.
“You’re constantly changing and trying to upgrade, but not because the people are bad, successful companies merge new ideas in with the old ideas,” he says. “We never really focus on the competition. We just try to be as good as we can be.”
Part of making the company better is continuing to get products to market quicker than anyone else.
“Here, we do things quickly,” Catanzarite says. “We get stuff to market in half the time of our competition. We react to our customer faster than anybody. That’s the only way you’re going to beat the competition because everything is so fast and everybody is trying to increase their margin to go around you.
“Today, you better be the best at everything or you’re going to get run over. We’re focusing on how we do that.”
A big reason for Darice’s success is due to its employees and the culture Catanzarite has helped foster over the years.
“The people part of the business, which a lot of people shy away from, is really the most important part of the business,” he says. “It’s what’s driving the company. You have to motivate them to do what’s next.”
Catanzarite fosters this kind of culture through commitment, consistency, being honest with his organization and devoting the time to it.
“I always compare it to being a parent,” he says. “The biggest component to being a parent is that children need your time. There’s nothing, as you raise your children, that’s more important than time. Your employees are the same way.
“If your boss came in today, sat with you, had a cup of coffee, and was nice to you, that would make your day. But a lot of people are just so busy going to the next meeting that they don’t carve out that time.
“You’ve got to spend time on relationships. That’s how you get the trust. My goal is for people to do good because they want a paycheck, but also because they like me and they don’t want to fail me.”
Eliminate family politics
In a family business, it’s easy for family members to develop office politics and destructive habits that can destroy a company. Darice and the Catanzarite family follow a simple motto to squash any of those possibilities.
“Faith, family and friends is our motto,” Catanzarite says. “We live by it. There’s nothing more important than faith, which drives our family. Once you’re my friend, I’ll never get rid of you. We have 22 full-time family members that derive their full-time income from working at Darice. How do we deal with that? We try to eliminate politics.”
If a family member wants to come to work at Darice, the most important thing Catanzarite does is find the right job for that person.
“Are you going to make a guy who’s good with his hands and likes working on cars a salesman at Wal-Mart?” Catanzarite says. “You may, but his chance at failure is much greater.”
Catanzarite’s family members let him have the ability to place them where he thinks they’re best served within the company.
“So far everybody still comes over on Christmas,” he says. “But with 22 family members, if somebody gets mad, they go home and tell their spouse and they tell her mom who might be my sister, so you have to have the openness and honesty.”
Not every family member works full time inside the company. There are others who play outside roles.
“Even if you’re not internally in the building, most everybody else is in the business,” Catanzarite says. “The guys that are outside play such an integral part that if I lost them, it would be like I’m losing somebody internally. It’s good the way we mesh that.”
To keep the family atmosphere in a company that has gone from three employees to 50, 50 to 100 and 100 to 1,800, it takes openness and transparency. Most importantly, someone needs to take charge.
“There are a lot of families that have trouble even sitting in the same room to meet,” he says. “As a company you need a plan and unfortunately there could be five to 20 relatives in there, so you need a boss.
“There has to be a single leader in the family and the family has to be committed to supporting that, otherwise you’re going to fail,” he says.
Darice is currently undergoing a succession planning process so that it is prepared for the future. The company has also brought in people from outside the family for integral leadership roles.
“A lot of family businesses struggle to bring in professionals in executive positions,” Catanzarite says. “We were the opposite. Our president is a non-family member. Our CFO is a non-family member. Our IT director is a non-family member. Our head of marketing is a non-family member.
“Long term, one of our decisions will be that we always want an outside president and CFO. In family businesses, it’s tough for people to do that sometimes. They say, ‘I’ve been doing this forever; I know everything.’ I may know more about crafts than anybody, but I don’t know more about selling to Wal-Mart and Amazon. I’m not an expert in distribution.
“Bring those people in and allow them that ability. Having those outside positions in a family business helps the rest of your employees too, because they see that it’s not just Catanzarite’s running the company.”
Every decision Catanzarite makes about the future of Darice is done so with his family and employees in mind and how that decision is going to make everybody feel.
“My focus is on continuing to grow this business to be a premier company in what we do and taking it to the next level and seeing the employees flourish,” Catanzarite says. “I’m driven by the goal that my dad wanted a great company for his family, and if I don’t finish that, I failed. I’m not going to fail. You’ve never met a guy so driven to make something successful for the benefit of his family.”
How to reach: Darice Inc., (440) 238-9150 or www.darice.com
Jim Kudis and a partner started Allegheny Petroleum Products Co. for the same reason many people start a business — they loved what they did and saw a niche that their company could exploit.
While the company, a manufacturer of industrial lubricants and additives, was seeing annual growth of 20 percent in its early years, Kudis and his partner struggled with money and didn’t take a salary for the first year or two.
“Most small businesses are generally undercapitalized, which we were,” says Kudis, president. “We lived off whatever money we had, which definitely helped because it cut back on the expenses and some of the money going out the door.”
Starting a business is 24 hours a day, seven days a week. You have to live it and love it. You have to roll up your sleeves and do anything you have to do to run that business.
“If you don’t want it that bad, don’t do it,” Kudis says.
The company’s focus in the beginning was providing industrial lubricants to the various manufacturers in the Pittsburgh area. Back then the major oil companies were retreating from the marketplace, becoming very big and going through distributors. Most of the distributors didn’t have the technical know-how of what the lubricants do and how they work.
So Kudis saw a void in what the major companies used to be strong at and what the distributors couldn’t do and that ended up being the niche that Allegheny Petroleum jumped into.
“That was the big advantage to going into the manufacturing part of the business,” Kudis says.
Last August, Kudis and Allegheny Petroleum Products Co. celebrated 25 years in business. In December 2012, Kudis bought out his partner to become the sole owner of the 85-employee company, which saw 2012 revenue north of $110 million.
Here’s how Kudis has grown Allegheny Petroleum Products Co. from a start-up into a successful organization.
Bring in the right talent
While Kudis and Allegheny Petroleum struggled with capital early on, the turning point for the company came around its fifth or sixth year in business.
“We were supplying one of the plants in Cleveland and we made a proposal to do what was a new concept at the time, fluid management,” Kudis says. “We had to put in 125 bulk tanks, which are carbon steel, 500-gallon tanks that ran about $1,500 each.
“So we had to make a more than $200,000 investment to put these tanks in and put in consigned inventory, which ran us another couple of hundred thousand dollars. So we were about $400,000 into this.”
A year later the global buyer for that company called Kudis and told him what a great job Allegheny Petroleum was doing managing their Cleveland plant. He offered Kudis the contract to manage the company’s remaining 70 plants.
“So off it went and today they are my largest customer,” he says.
From that point on, the business has had to function much differently and required new skill sets to keep the company growing.
“My biggest focus today is making sure my managers have all the tools and things they need to do their job, whereas 20 years ago I was doing it myself,” he says. “Now it’s managing people, keeping them excited, making sure they have ownership in the things that they’re doing, and have the tools to do the job that they need.”
Allegheny Petroleum has five fairly distinct areas and Kudis is in touch with each one of the people that manage those areas.
“I’m not trying to do their job, but I’m trying to help them so they can do their job and that’s the key thing,” he says. “It’s all about people.”
To find the right leaders for his business, Kudis chased those executives down and drafted them all.
“I handpicked them and coerced them into coming to work for the company,” he says. “I chose them because I saw the qualities they had. I saw a real desire in each one of them to do well, and that’s where my attention started.
“What I saw in my interaction with them was that they could handle themselves well and present themselves well in front of people. They were knowledgeable and wanted to be more knowledgeable.”
The first thing Kudis looked for in the people he brought in was whether they were good quality people and good solid citizens.
“That’s probably the common thread through most of the people who work here,” Kudis says. “Talent would be second after that — they can manage people and enjoy the ownership of their part of the business. They embrace it and treat what they’re doing like their own.
“It’s just looking in someone’s eye and seeing that they have a desire to do well, not only for themselves, but for the company too. A lot of people want to punch in, get a paycheck, punch out and go home, and that’s not the kind of people I want managing.”
Kudis gives his team the autonomy to do things on their own, which means they have the power to make decisions.
“I give them a free hand to do what makes sense,” he says. “My motto is to make the decision on your own and if you don’t think it’s your decision, then come to me. As long as you have an explanation about why you made that decision, you’re never wrong. You’ve got to be in the game and engage and make decisions.”
Decide how to grow your business
Making decisions is a very important aspect of running a business, especially when it regards growing your company to the next level. Kudis has had to make countless decisions over 25 years and each one helps the company continue its growth. Now those decisions rest on the shoulders of his managers.
“That’s what I expect from the people in a management role,” Kudis says. “In the dealings they have, there comes a point where maybe it’s beyond where they should make a decision on something. In involving putting part of the company at risk or something of that nature, every one of them knows where that line is, where that decision should not be theirs.
“All the other decisions whether they are small, large or whatever, I expect them to make it. It’s really easy to say three or four days later that you made a wrong decision, but to be in the game and make the decision right there, to me that’s important as long as they have an answer why they made a certain decision.”
Every month or every other month Allegheny Petroleum has what it calls a What’s Up Meeting to check in on the different areas of the business.
“I grab each of the managers and we sit down for about two hours and we go around the table while everyone exchanges what they’re doing,” he says. “You get so focused on the part of the business that you’re in and sometimes you have two different groups sort of working on the same things, or maybe they’re doing something that somebody in another group has worked on and knows the answers to help them out. So those meetings have been very beneficial.”
One of the biggest decisions Kudis has made for Allegheny Petroleum was to give the company a global presence. However, global business carries many challenges along with it.
“Learning how to deal financially in different countries has been a challenge,” Kudis says. “One thing you have to learn is what the tax implications are. Each country is different. You should do business with an accounting firm or law firm that can find out answers for you. That really makes it easy.”
Allegheny Petroleum didn’t utilize those resources in the beginning on the first two countries where the company launched its efforts and there were snags.
“Had I used our law firm or our accounting firm, it would have been a lot easier,” Kudis says. “Make sure you understand what it takes to do business in a foreign country before you start doing business there.”
Another big decision that has streamlined business for the company was using a global pricing index with its major direct customers.
“We now move our pricing quarterly as these prices move,” he says. “In the past every time there was an increase you had to go in and present everything to your customer and sit and argue about the pricing. Now that it’s indexed at the end of the quarter, it’s just a matter of how the pricing has moved and that has really streamlined the pricing.
“Our customers feel very good because they know it’s indexed to something that they can see. I feel good because as my raw material costs rise or drop it keeps my profits pretty steady. It really makes it easy to not worry about the pricing side of your business as much.”
Now that Allegheny Petroleum has streamlined business, entered into global markets and become a substantial player in its industry, Kudis is excited to find where the next level is.
“My vision is how do I double and triple the business,” he says. “Everything had been done organic and we might look at doing some acquisitions. The next level will also mean being more global.
“You have to think down the road and get out of the box to think about things that maybe you haven’t thought about in the past, because once you stop growing you’re done.”
How to reach: Allegheny Petroleum Products Co., (412) 829-1990 or www.oils.com
Find the right talent for your leadership team.
Give the leadership team the autonomy to make decisions.
Constantly look at how to keep growing your business.
The Kudis File
Allegheny Petroleum Products Co.
Born: Homestead, Pa.
Education: Graduated from Penn State and received a bachelor’s degree in business logistics.
What was the very first job that you had and what did you learn from it?
I worked in a steel mill. I was a laborer so I drove a high lift and moved different things around. My dad worked there and he said, ‘This man is going to pay you, so you better work so that you make sure you earn every dollar you get.’ I still live by that today.
Who is someone that you looked up to?
My grade-school basketball coach. If we played bad we would come back and practice until 11 o’clock at night to make sure we did things right. We won the state championship that year. Hard work eventually pays off.
What Allegheny Petroleum product are you most proud of?
We make what’s called a backup bearing oil for the steel mills, which is called a Morgoil. When steel mills roll steel it goes between these rolls and on the end of these rolls there are bearings. They are huge bearings that get very hot. The oil goes through to lubricate the bearings and they also cool the bearings on the outside with water to keep them from getting too hot.
So the oil has to be able to accept water and kick out the water as it goes back to the tank and it gets circulated back through the bearings. You don’t want water lubricating your bearings, so our oil kicks out the water pretty good. That’s one of our hallmark products.
If you could speak with one person, whether from the past or present, with whom would you want to speak to?
Joe Paterno. I admired the way he ran the football program at Penn State. I’m not in total agreement with what happened at the end of his career. All through the history of what he did, he represented a class act. He was very well-respected. I enjoyed watching him and what he represented for the school.
“A ship in port is safe, but that’s not what ships were built for,” is a quote that hangs in Brig Sorber’s office at Two Men and a Truck in Lansing, Mich. Sorber uses that quote to define the new direction in which his company has been moving.
“I love that quote because this ship, Two Men and a Truck, has been in port for too long,” says Sorber, CEO. “We’ve got to get this into deep blue water. There are a lot of challenges out there and a lot more risk, but that’s where business is done. We need to start moving forward and accept the challenges.”
Sorber and his brother, Jon, started Two Men and a Truck International Inc., a moving company, in the early ’80s as a way to earn money using their ’67 Ford pickup. Today, the business has x4,500 employees, more than x1,400 trucks, more than x200 franchises in x34 states, Canada, the U.K. and Ireland, and 2012 revenue of x$361 million.
“We did it to make beer and book money for college,” Sorber says. “We really never thought that it would get to this point.”
However, in getting to this point, the company had neglected to make necessary changes in order to keep the operation aligned and running well.
“One of the challenges we have had is going from a mom-and-pop-type business to having to grow up and become more corporate,” Sorber says. “We needed to bring in newer and stronger skill sets.”
Here’s how Sorber has helped Two Men and a Truck grow up.
Two Men and a Truck incorporated its first business in Lansing, Mich., in 1985 and began franchising in 1989. The company at this time was run by Sorber’s mom since he and his brother were in college.
Upon graduation, Sorber worked as an insurance agent and also operated his own Two Men and a Truck franchise. He returned to the company in the mid-’90s, became its president in 2007 and CEO, the title he carries today, in 2009. In that time the company had grown significantly, but it wasn’t running as well as it could be. Starting in 2007, Sorber’s job was to help restructure the business.
“We had to take a look at ourselves internally,” Sorber says. “There came a time that I just knew things were broken here.”
Because the company was growing so fast there was no organization chart. It was very loose on who reported to whom. It wasn’t that people weren’t working hard, but things were not getting measured.
“I had an epiphany that something had to change big time,” he says. “I made up something that resembled an org chart on a big piece of paper in my office. I brought in five people that I greatly trusted and had confidence in and gave them three markers — green, which meant that person or that job was important; yellow, which meant I didn’t have an opinion either way about this person or about this job; and red, which meant that this job makes no sense.”
Sorber used that as a starting point to help him identify where the company could restructure and cut costs.
“I wanted to give big bonuses to everyone at the end of the year and share the winnings, but we had to prime the pump first,” he says. “We went from 78 employees down to 51 employees after I went through that chart.
“That wasn’t because we were losing money. It was because by the time we realigned everything, there were some people here who weren’t doing anything.”
To avoid issues such as this, you have to have metrics that you measure to make sure whether you’re doing well or not.
“My metrics are No. 1, customer satisfaction,” Sorber says. “Find out how every one of your customers feels about their service. No. 2 is trucks and driveways. We want to put more trucks in more driveways every year.
“No. 3 is franchisees. Make sure your franchisees are profitable and have the tools to grow. No. 4 is giving back to the community.”
Metrics are a crucial aspect of success, but so is a mission statement that helps employees and customers know what the business is about. It also makes your decisions as a CEO simple.
“If your mission statement is strong, it should be limitless,” he says. “For us, we had our mission statement when we had 25 franchises, and now we’re well over 200 and it still applies. You also need core values that comprise what’s important to your company. Once you have those, you have to stay within the confines of your core values.
“When I was a younger executive I thought that was stuff you say to be nice. It’s something that’s serious. You can’t go into work and keep turning the wheel and expect better things to happen. You’ve got to maintain your mission statement, core values, measure what you’re doing, and then you have to look for ways to make things better.”
Bring in key people
As Two Men and a Truck went through these necessary changes, new employees and executives had to be brought in to give the company the right skill sets to continue growing.
“Sometimes we hold onto our executives too long, and we get comfortable with them,” Sorber says. “They may not question what you’re doing. Not all of them, but many of them can be fine with the status quo and as the world is changing they’re not forcing you as a CEO to question what you’re doing.”
You can’t settle for the people who are in your key positions. You need to find people with the right skill sets and make sure they stay within your mission statement and core values.
“Bringing in new individuals is kind of like working on an old house,” he says. “You think if you put new windows on the house it’s good, but then the siding looks really bad. The same thing happens in business when you get somebody that’s great in a department. You start to think, ‘What if I had someone like that in marketing?’”
Sorber brought in executives to fill his company’s voids, and they began offering all kinds of new ideas for the business.
“When I started bringing in these key executives, they wore my carpet out because they have fresh eyes for the business,” he says. “They asked why we did this or that. Many of the things we were doing were the right things, but it’s good for you to make your point about why you do it.
“The new executives will say, ‘That makes sense’ or ‘That’s different.’ Other times they’ll say, ‘OK, but did you ever think about doing this?’”
That is how your business goes through an evolution, and it starts bringing in more modern thinking and different approaches. A business will have a life cycle of only so long, and you need to continually reinvent it because your customer is changing. If you bring in new people they may bring the great ideas you need.
“It’s really important as a president or CEO to hire people who are smarter than you in their specific fields,” Sorber says. “Our job as president or CEO is to look more strategically at where we want the business, make sure the executives play nice together, ensure there’s harmony in the business and keep an eye on those important metrics.”
During the course of the past six years, Sorber has been able to successfully do all those things within Two Men and a Truck. Randy Shacka became the company’s first non-family member to serve as president in 2012. Now, Sorber and Shacka are looking at the future outlook of the business.
“We think we will be a $1 billion company by the year 2020,” he says. “In the last few years we’ve been doing a lot of internal work on fixing where we are broken and getting the right people in here. Now we want to be more than just a moving company. We want to be a company for change.”
How to reach: Two Men and a Truck, (800) 345-1070 or www.twomenandatruck.com
Wells Fargo Advisors has announced that Jeremy Baynes, CFP has joined the Hudson, Ohio office as associate vice president of investments. Baynes joins the firm from Edward Jones. He holds a B.B.A. in finance from Kent State University and has nearly 11 years of experience as a financial advisor.
Alliance Solutions Group, a full-service staffing and recruitment agency, and NSL Analytical Services Inc., an independent commercial testing laboratory, have been named 2013 Leading EDGE Award winners. The two companies are among 101 midsize companies in Northeast Ohio recognized for demonstrating exceptional business growth and contributing to the local economy.
The Entrepreneurs EDGE is a non-profit organization that drives growth for Northeast Ohio companies by serving as a strategic resource for CEOs and their leadership teams. EDGE focuses on the creation of programs, services and events for current and future midsize companies ($5 million to $1 billion in revenue) that sell some of their products or services outside Northeast Ohio.
As Ernst & Young’s 2012 Northeast Ohio and National Entrepreneur Of The Year winner for manufacturing and distribution, Magnus International Group founder, Eric Lofquist is also a local judge for the 2013 awards program. Additionally, he has been selected to help officiate the national EOY competition from 2014 to 2016.
Considered the world’s most prestigious business award, Entrepreneur Of The Year has been celebrating extraordinary performance since 1986. Today, the competition has expanded to more than 140 cities in more than 50 countries.
Brouse McDowell, a leading regional business law firm, is pleased to announce that Heather M. Barnes has been named chair of the intellectual property practice group. Barnes is a partner in the firm’s Akron office and is a registered patent attorney. Her practice includes the domestic and international prosecution of patents, trademarks and copyrights, as well as litigation research pertaining to all areas of intellectual property.
Taft Stettinius & Hollister LLP recently announced that two of its attorney’s, William Phillips and David Wallace, were recognized as “Leaders in their Field” in the 2013 edition of Chambers USA.
In addition, Taft is once again “Top Ranked” in its Ohio Labor & Employment practice. The firm is recognized as a “Leading Firm” in 11 practice areas.
Diebold Inc. announced its board of directors has named Andy W. Mattes as the company’s new president and CEO. Mattes was also named a board director. In addition, Henry D.G. Wallace, Diebold executive chairman of the board, will assume the non-executive chairman role effective August 15.
Mattes, 52, has a strong record of driving growth and improving profitability in large, global businesses. He has more than 25 years of experience in the information technology and telecommunications industries - primarily with Hewlett-Packard Co. and Siemens AG.
Mattes most recently was senior vice president, global strategic partnerships at Violin Memory, a manufacturer of flash memory computer storage systems. He will remain with Violin in an advisory role.
Diebold Inc. is a global leader in providing integrated self-service delivery and security systems and services.
Over and over again, Lorry Wagner has heard Northeast Ohio business and government officials asking, “Why offshore wind and why Ohio?” Wagner and his team at Lake Erie Energy Development Corp. are asking those people, “Why not?”
Lake Erie Energy Development Corp. or LEEDCo, is a regional non-profit and economic development organization building an offshore wind energy industry in Ohio. Offshore wind refers to the construction of wind farms in bodies of water to generate electricity. Wagner, a seasoned wind energy engineer and a longstanding member of the Great Lakes Energy Development Task Force, is president of Cleveland-based LEEDCo, a position he assumed in May 2010.
“The Cleveland Foundation had been looking at expanding their role in the community through economic development and they identified energy as one of the areas that made sense for them to support,” Wagner says. “The particular aspect of the energy industry that fit our skill set the best was offshore wind.”
From 2004 until 2009 when LEEDCo was formed, Cuyahoga County and Lorain County officials were involved in an energy task force to explore whether or not this idea made sense. They concluded that there was no reason not to develop offshore wind in the region.
“LEEDCo was an outgrowth of the task force because they realized they needed a business to push this forward,” Wagner says.
Now Wagner and his team are fighting for federal funding as well as the support of local officials to help people realize the benefits of offshore wind to the Northeast Ohio region.
One of the biggest obstacles standing in the way of LEEDCo’s efforts is the standoffish attitude of some key people who could help bring offshore wind to the region.
“The biggest challenge is that many people around here think that if we just work harder and the economy comes back, life will be like it used to be,” Wagner says. “In 1950, we had 914,000 people in Cleveland. Today we’ve got 393,000 and we went from No. 7 to No. 47 in the country because of that thinking.
“We just keep skating where the puck is instead of skating to where the puck is going to be.” That’s the biggest challenge facing LEEDCo — the attitude of people who refuse to see the benefit of a new energy source that is booming in places like Europe.
“We’re trying to do something that’s a $200 billion business around the world,” he says. “Wouldn’t you think that somebody would say, ‘It’s a $200 billion business and all these major companies around the world are doing it, shouldn’t we try it and see if it works?’”
Offshore wind energy is a matter of doing something that this region is going to benefit from.
“It is a proven job generation engine,” he says. “Over 50,000 jobs in Europe have been created and given the pathway Europe is on now, it will probably create upward of 200,000 jobs. If it can be competitive, there is no doubt it will create jobs.”
The kind of jobs offshore wind would create is mostly in the services industry. They are good paying jobs that can’t be outsourced.
“Once you develop the jobs in a region, they stay there,” Wagner says.
Offshore wind energy is also renewable, cleans up the environment, has a stable price for 20 years, and doesn’t have a fuel cost. It’s a game changer in the utility industry.
“It certainly isn’t the earth-shaking industry that the Internet has been, but look at what’s happened to all of the traditional companies who ruled the world 20 years ago,” Wagner says. “Many of those have changed. We’re in a similar situation when it comes to energy, because the major utilities are used to being a monopoly and running the show. That is shifting.”
According to Wagner, most people under the age of 40 understand offshore wind energy and support the idea. Many retired people do as well.
“The challenge is getting people 40 to 65 to do something different and if I had the answer to that, I’d be king of the world,” he says.
To help push their effort forward, LEEDCo has been on a mission to receive federal funding.
“Right now we have about 12 partners working on the first phase of a federal grant,” Wagner says. “Out of 60-some applicants, seven projects were chosen for Department of Energy funding. We were one of those projects and the only one in the Great Lakes.”
LEEDCo has a target of February 12, 2014 to submit its next proposal to the Department of Energy.
“We compete against six other teams for the final round of funding and three projects will be funded,” he says. “That’s what we are focused on.”
How to reach: Lake Erie Energy Development Corp., (216) 241-9201 or www.leedco.org
For Philip Rielly and Eric Hill, the past five years have been a very different experience compared to most others in the business world during that time. While many companies were hunkering down, cutting back and fighting to stay in business, Rielly and Hill were nurturing the healthy growth of a young company.
In fact, in just the past three years they have seen their company’s employment and revenue double. Rielly and Hill are co-founders of BioRx LLC, a more than 200-employee national provider and distributor of specialty pharmaceuticals they started in 2004.
Hill, who is vice president, is located in North Carolina, while Rielly, who is president, is in Cincinnati where BioRx is headquartered. The company, now nine years old, has been exceeding expectations, and there are no signs of it slowing down anytime soon.
“Since 2010 we have continued our strong growth trajectory as we hoped that we would,” Rielly says. “We finished this past year north of $100 million in sales. We’ve been fortunate to launch a number of new semi-exclusive products with some of the different manufacturers.”
Since 2010, BioRx has become a prominent player in the Hereditary Angioedema space and a major player in the Alpha-1 antitrypsin deficiencies space.
“Some of the other changes since 2010 are we announced that we were going to be a semi-exclusive distribution partner for a firm out of New Jersey called NPS Pharmaceuticals and we opened three new regional pharmacy and distribution centers,” Hill says. “Those are in Boston, Scottsdale, Ariz., and San Diego, Calif. Those are three large investments for us.”
Needless to say BioRx has been doing the right things to remain on a growth track. Now Rielly and Hill have to keep it going.
Here’s how they have grown the company through strategic planning and developing the right partnerships.
Take advantage of growth drivers
When Rielly and Hill first started BioRx, they had a different idea behind specialty pharmaceuticals than most other national companies. While others were switching to a less personalized mail order model, Rielly and Hill saw an opportunity to offer a higher care model and focus on the patient.
Since seeing that opportunity they have been aggressively pushing the company forward.
“We’ve taken a bullish approach from day one when we set the company up, and we’ve been very aggressive with respect to adding new geographies and new regions,” Rielly says. “We’ve certainly added quite a few new account managers in the field, so we really focus our market on the four P’s in the pharmaceutical space with respect to customers.
“In the physician marketplace, we’ve expanded the number of representatives calling on the physicians across the country to open new geographies to where we’re now truly a national company.”
The biggest driver for BioRx at this point has been developing relationships with the different biotech companies and manufacturers.
“They’ve entrusted us with some of their new therapies,” he says. “In many cases we are just one of a handful of companies in the world who has access to selling these drugs. We’ve been very fortunate to be able to get those relationships.”
When a company is growing at the rate BioRx has, it is often easy to focus on one big area of growth and forget about other areas. That has not been the case with BioRx.
“This hasn’t been a one-trick growth pony,” Hill says. “We’ve purposefully and carefully invested in multiple strategies that have the opportunity to provide us growth. We’ve executed pretty well on all of them, but the key thing to take away is that we haven’t put all of our eggs in one basket in terms of our strategy to provide continued and sustainable growth for the company. It’s been a measured approach across many fronts.”
Over the course of the business as it has scaled, Rielly and Hill have continued to reinvest in it.
“We’ve taken every dime of free cash that we can find and judiciously invested that into both infrastructure to allow us to grow, but most importantly into infrastructure that provides that growth such as opening new markets, hiring sales people, adding new product lines and adding infrastructure,” Hill says.
“At the same time, we have to ensure that we’re not getting ahead of the company’s ability to finance it so we can maintain a robust and strong balance sheet, which is a business killer for a lot of small companies.”
While maintaining a strong balance sheet is one challenge of a growing company, there are many other obstacles that come along with growth. One challenge is hiring.
“Even with the unemployment rate at what it is, I would say that we still have a challenge finding and recruiting some of the very best people,” Rielly says. “We set a very high bar for the quality of folks that we hire. We’ve really had very little turnover, but with the continuous growth we’ve enjoyed, it is a challenge to continue to grab those folks.”
One strategy that BioRx has implemented is hiring people for an associate-level sales position and having them train with more senior employees to learn the ropes.
“It eliminates some of the risk down the road of having a bad hire,” he says. “We’re also working closely with some of the local universities. That way we have an in on recruiting down the road, and it’s a good way for us to give back.”
Another way the company stays on top of hiring challenges is to be on the lookout for great candidates all the time.
“It may not be today, but it may be three months or six months from now that we’ll need talent,” Hill says. “When the opportunity to hire somebody comes along, we need to already have a portfolio of folks we’ve been talking to. That dialogue helps gets those jobs filled quicker and with better talent.”
Most of BioRx’s growth to this point has been organic growth. However, Rielly and Hill are always looking for the next partnership that will benefit the company and its patients. Last year the company made an acquisition to help it reach new customers.
“Coagulife Pharmacy is the only acquisition that we have done to date,” Rielly says. “Our strategy from day one has always been through internal growth and continuing to reinvest in new talent and organic growth. But Coagulife presented itself. That situation was a unique opportunity for us to add a different skill set.”
Coagulife deals specifically in the hemophilia space. Many hemophilia patients have target joint bleeds and what ends up happening is many of them require an orthopedic procedure down the road. Many of those can be avoided or helped with some type of aggressive physical therapy, which is what Coagulife offers.
“So we’re rolling out a national program that is very specific to physical therapy and exercise regimens,” he says.
A large part of BioRx’s ability to find strategic partners and develop those relationships is because the company makes it a priority to plan for those kinds of things.
“You have to have a plan, but also the wherewithal to follow through on a plan without respect to different challenges that come up,” Rielly says. “Whatever the long-term plan is you have to stick with it and keep going forward even when it doesn’t feel comfortable from time to time.”
BioRx thinks of strategic planning in the two-to-five-year range.
“The easiest thing for us to plan is organic, new market openings and sales infrastructure growth by prioritizing the markets we believe have opportunity in each of our business units,” Hill says. “Then it’s just budgeting out the velocity with which we can deploy capital and money to put those people in place to enter and burst into new markets for us.”
Rielly and Hill constantly talk about the next five markets the company is going to crack into with a new therapy or a sales rep to put an operating unit in place.
“We’ve done a good job of sticking to that,” he says. “We kind of know where our next five, six, seven, or eight investments are going to be and in which business units we want to be plunking those bets down.”
During the strategic planning process you have to be willing to think about some far-fetched goals while also being reasonable about what can be achieved in your plan’s window of time.
“Dream big and shoot for the stars, but be realistic with respect to what it’s going to take to achieve those goals,” Rielly says. “Be realistic with how much capital it’s going to require to get from point A to point B. But don’t be afraid to dream big and swing for the fences.”
The key to achieving goals set forth in a strategic plan is having a great team around you.
“If we have done anything, we have hired a fantastic management team and our bench strength is pretty deep,” Hill says. “I think either one of us could get hit by a bus tomorrow and the company wouldn’t have a whole lot of issues. We have managers and operators that we turn loose to let them earn their stripes. Those guys know where our next bets need to be.”
How to reach: BioRx LLC, (866) 442-4679 or www.biorx.net
Determine your growth factors.
Develop strategic partnerships to help expand.
Have a planning process for the future.
The Rielly and Hill File
President and Co-founder
Vice President and Co-founder
Rielly: Born in Cincinnati
Rielly: Education: Graduated from Spring Hill College in Mobile, Ala., with a BS in business communications.
Hill: Born in Bassett, Va.
Hill: Education: Graduated from Wake Forest University with a degree in psychology.
How did you first meet each other? And why did you start BioRx?
We both met working for another national company. We saw the trend of many national companies going to a mail order model with less personalized care, and we felt that we could create a market by going with a higher care model.
What has been your favorite thing about growing BioRx?
Rielly: The most rewarding part is building a team and watching the team grow. We’re making a very positive impact on the lives of each of the patients in which we touch and there’s not a week that goes by that we don’t get a patient testimonial about the ways our team members went above and beyond. I find that extraordinarily rewarding.
Hill: It is awfully refreshing to wake up every day knowing that we get to set the direction. It’s a lot of fun being in an entrepreneurial environment and getting to spread that spirit around the organization.
What excites you both about the future of BioRx?
Hill: I’m excited about the fact that sooner than later we are going to be a $200 million company. We also have a new drug launch happening and it has the opportunity to be a significant sea change in both the lives of the patients that we’re treating and the marketplace for one of our operating units in a way that’s transformative.
Rielly: In the last few months, we’ve aggressively hired and opened new geographical territories and I’m excited to see the initial successes. We have the best team in place that we’ve ever had and I’m excited for them to achieve their personal goals.
Since January 2006, when Jim Weddle first took over the managing partner position at Edward Jones, he has kept a keen focus on growing the investment firm to new heights. In 2007 he and his team laid out a five-year plan that they updated in 2010, but that was a mere steppingstone to the vision the firm rolled out last year.
In January 2012, Weddle unleashed what Edward Jones is calling its Vision for 2020. Focusing on growing the firm in three key areas — financial advisers, assets under care and households deeply served — Weddle’s vision won’t just have Edward Jones reaching new heights, it might just be soaring.
“Today, in a lot of markets, we are not the top-of-mind choice,” Weddle says. “We don’t have the presence that we need. It’s going to take us several years to get there, but we think we’ve got the way to do so.”
Edward Jones is a leader in the financial services industry that serves nearly 7 million clients with the help of 12,500 financial advisers and more than 34,000 total employees. The firm reported 2012 revenue of $4.96 billion, a mere fraction of what is planned for the years ahead.
“There is a huge demographic opportunity, and we need to better position ourselves,” Weddle says. “We’ve put a lot of tools in place. We’ve put additional products and services in place to enhance the client’s experience and to enable us and position us to do an even better job for them.”
Here is how Weddle formulated Edward Jones’ long-term vision and is beginning to make it a reality.
Create your strategy
In January 2012, Weddle made a big deal of explaining the long-term vision to the team at Edward Jones, not just what the vision was but why it was needed.
“Laying out a long-term vision provides the opportunity and the potential to get everybody aligned,” Weddle says.
The early success Edward Jones has seen with its plan is due to a thorough self-analysis the company performed when it first decided to create this vision.
“When we worked on our five-year plan we did so with the guidance and assistance of two gentlemen, one being Jim Collins who wrote, ‘From Good to Great,’” Weddle says. “One of the things that he suggests is that you ask yourself three questions.
“The first one is, ‘What do you do better than anybody else?’ The second is, ‘What are you most passionate about?, And third is, ‘What’s your economic driver?’”
Weddle says that Edward Jones’ business model makes the firm the better than anybody else in the investment process.
The firm is most passionate about helping its current and potential individual investors live a better life.
And lastly, its economic driver is its financial advisers.
“It’s not easy to get your arms around the answers to those questions,” Weddle says. “We had a lot of answers before we got it right.”
The second adviser that Edward Jones used in its planning process is Michael Porter, a world renowned expert on strategy, who preaches that strategy is all about a sustainable difference.
“It’s about doing things differently or doing different things than your competition and making trade-offs,” Weddle says. “It’s about making decisions as to what you’re going to offer and what you’re not. Who you’re going to serve and who you’re not. How you run your business comes down to the choices that you make.”
Those two things, the three questions and the tradeoffs, are the core of Edward Jones’ long-term plan.
“If you haven’t gone through the process of thinking those things through, good luck,” he says. “I don’t think you understand who you are or what business you’re in, which means it’s going to be very hard to optimize your results. That’s the value of the planning process for us. Yes, it does bring alignment, but it also brings focus.”
Identify your objectives
In order to better serve existing clients as well as to land many more clients by the year 2020, Weddle needed to set reachable goals for the staff.
“We have identified three peaks, three objectives related to that vision,” Weddle says. “First is growth of financial advisers, the number and our presence in the marketplace.”
Edward Jones currently has more than 7 million client accounts and 4 million households. However, the firm has identified about 40 million U.S. and Canada households that look like Edward Jones’ best clients.
“There’s no way that we can possibly serve even a fraction of that number of folks without increasing our presence in the market,” he says. “You might think, ‘Holy cow, how can you possibly to do that?’ Well, by growing 5-6 percent a year gets you there.”
Edward Jones has grown by more than that rate in the past, and Weddle believes the firm can reach this goal with the help of a new talent acquisition organization that was put in place, revamped FA compensation and significantly updated training and support programs.
“We anticipate supporting a good number of new folks that will be joining us each year,” Weddle says. “We’ve got amazingly strong pipelines right now. We think we’ll grow this year by 700 financial advisers in the U.S. and 80 in Canada and that will be a good start on that 2020 vision.”
The second objective of the 2020 vision is the firm’s assets under care. When the vision was first laid out, the firm had about $600 billion. In 2012 it had about $660 billion-$670 billion.
“By the end of 2020 we’d like to see those assets under care be $1 trillion,” he says. “You get there by growing 10 percent a year. We added about $34 billion of net new assets last year, which exceeded our objective of $30 billion.”
The third objective for the firm surrounds its deeply served households. Of those 4 million households Edward Jones currently serves, it identified 1 million households that the firm has a current deep relationship with. The firm wants to increase this number.
“We want to drive our deeply served households from the 1 million we had a year ago when we rolled out our vision to 4 million deeply served households in 2020. That’s a 15 percent compound annual increase and we’re ahead of where we need to be on that. I know 15 percent sounds high when we’re growing our FA’s by 5 percent and our assets by 10 percent.
“The reason we have set it at that level is because so many of our existing households can be moved to what we have defined as deeply served. It’s not just new households, but it’s going deeper with the folks that we already have a relationship with.”
Drive your plan forward
Now that Edward Jones had gone through the self-analysis and identified its objectives, the next step was to begin to roll out the vision and communicate how the business’ various departments and segments are going to have to contribute to meet those goals.
“One of the outcomes of the roll out of the long-term vision was to then say to every division of the firm, ‘We need you to look at the work you do and bring a critical eye to it and identify those things that need to be increased or put in place that will help us to achieve the 2020 vision. We also need you to identify the legacy work that we’re real comfortable with and we do really well, but maybe doesn’t add the value that it used to,’” Weddle says.
“You outgrow some things. You can’t just add on and add on and add on. You’ve got to also abandon things that no longer deliver value to your chosen client.
Every division of the company has got to come up with its business plan for reaching goals of the vision.
“We challenge each other, but it also allows me, if I’m in operations, to understand what the service side is doing,” he says. “It creates alignment and synergies and often times opportunities for working in a highly coordinated way that eliminates some cost and enhances productivity all driven by the vision.”
The No. 1 key to making a strategy implementation successful is having the right people driving results.
“Your results will be no better than the quality of the individuals who make up your organization,” he says. “You have to be brutally honest. At times you will outgrow some individuals.”
Sharing the business plans, challenging each other and making sure that everyone is working on the same priorities and holding people accountable is crucial to success.
“One area is dependent upon progress being made in another,” Weddle says. “We just need to make sure that we’re doing an absolutely terrific job for each one of those individual investors that we help to reach their financial goals. If we can stay focused on that we’re going to have a lot of success.” •
- Answer important questions about your business and its future.
- Develop objectives to reach in a long-term plan.
- Implement your plan with the right people and measures.
The Weddle File
Name: Jim Weddle
Title: Managing partner
Company: Edward Jones
Born: Elgin, Ill. He grew up in Naperville, Ill.
Education: Attended DePauw University and received a double major in psychology and business. He also got a MBA with a major in finance from Washington University in St. Louis.
What was your very first job, and what did you learn from it? I had a summer job in 7th grade where I worked Monday through Friday from 8 a.m. until noon for a gentleman who was a retired banker. He had a large property and I drove a tractor, cut the grass, pulled the weeds, painted the house and the barn and worked every day doing that. I learned that you make your own luck if you aspire to do or to have, there’s a way that you can go about making that a reality.
What is the best business advice someone has given you? I had interned here at Edward Jones, and I went out to Indiana where I established a new office and built it up. I had a mentor who was a very senior individual in our firm at the time named Jack. I remember confiding in Jack and he said, ‘What is your concern?’ And I said, ‘Jack, my concern is I’m 23 years old, and I look even younger. I’m afraid people won’t take me seriously.’ He said, ‘People will treat you the way that you act. If you act like a professional, they will treat you like a professional. If you act like you’re 23, they will treat you like you’re 23.’ He also said, ‘Prepare for every day, but do it the day before.’
Who is someone that you’ve admired? One was an accounting professor who had a huge impact on me. For his class he said, ‘You need to show up to class prepared or I suggest you don’t show up at all.’ He was teaching us how to be ready for the rest of our lives.
The second guy was a business adviser named Peter Drucker. We worked with Peter for 20 years. He helped us to understand very clearly who our customer was, what our value is, and the purpose of our work.
HOW TO REACH: Edward Jones, (314) 515-2000 or www.edwardjones.com
When Flemming Bjøernslev took over as president and CEO of Lanxess Corp. and head of the North American region, he gave himself 100 days to get to know the company and the people. This January, the time was up — and by then, Bjøernslev had visited all 14 major sites in the United States and Canada.
“In my first couple days, I went out and took the pulse of the company to assess where we stood in order for me to prepare myself and the employees to take the company to the next level,” Bjøernslev says. “As an international corporation, we have global targets and the board at headquarters expects us to contribute to that target.”
He felt strongly about getting to rub elbows with the 1,500 employees of Lanxess Corp., the North American division of Lanxess, an $11 billion leading manufacturer of more than 3,000 products in the areas of rubber, plastics, intermediates (such as alcohols, acids and higher olefins) and specialty chemicals.
Bjøernslev came to Pittsburgh after serving as CEO of Lanxess Central Eastern Europe in Slovakia and now has the task of taking the learnings from his prior CEO role and transferring them to Lanxess’ North American business to continue to push the company forward.
Bjøernslev is optimistic about the current opportunities in the U.S. and how that will contribute to Lanxess’ business domestically.
“We are seeing a lot of manufacturing returning to the U.S.,” Bjøernslev says. “That gives me great comfort that the U.S. industries are moving forward to a better, brighter future, especially in the areas of mobility, urbanization, agriculture and water.”
Lanxess caters to all those areas and the current outlook has Bjøernslev excited that the business in North America will pick up rapidly, helping get Lanxess on the path to the next level.
Here is how Bjøernslev has come into a new role and put himself and Lanxess in a better position to succeed.
Take first steps
While Bjøernslev isn’t new to the CEO role by any means, he was still entering a new geography and new division of Lanxess when he came to Pittsburgh in October 2012. In his initial three-plus months, he had to familiarize himself with the business.
“In those first 100 days, I had to get to know the company and the people here in North America, which is Pittsburgh and our other sites,” Bjøernslev says.
He started with a couple of town-hall meetings and round-table discussions held department by department to interact on a more individual level with employees.
“I consider that extremely valuable to get to know the individuals and for them to get to know me and listen to what my vision is as we move forward,” he says. “I also visited all the major sites we have in North America. Again, we did a mix of town-hall meetings and round table discussions.”
Bjøernslev had a two-fold approach to his new CEO role, both internally and externally.
“The internal approach best practice for me has always been to sit down with the people and have them present their roles and responsibilities within the company in order for me to assess where we stand from a corporate point of view,” he says.
“The external part is presenting Lanxess to the outside world — customers, business partners and other relevant organizations we interact with.”
It is crucial that a new CEO put himself or herself out in front of the company’s stakeholders and offer the chance to get to know and understand one another.
“The key is to just take the hurdle of getting out there, getting to know the people, introducing yourself, introducing the company, introducing the target and tell a little bit about yourself,” Bjøernslev says. “That has been the focal point, and it is the best practice based on my experiences in previous jobs.”
Bjøernslev has learned that listening to the people who help drive the business every day is vital to understanding what direction to go in next.
“You have to listen to the people you are going to work with in the new position,” he says. “You have to watch the environment very closely and most importantly, listen to your gut feeling and be daring as you move along and make decisions.”
The worst thing a new CEO can do is hesitate in making those crucial decisions.
“We are all human beings and when you make a decision, you normally base it on experiences,” he says. “If you’re somewhat uncertain, human beings have a tendency to avoid making a decision. If you want to move forward in a new position, you have to make a decision, because avoiding a decision is not going to get the job done.”
Get to the next level
Lanxess is driven by innovation and technology paired with people excellence, both globally and locally. What Bjøernslev has found is that the company’s production and product base is extremely quick with regards to innovation, technology and the right ideas to make new products that will propel the company.
“At the end of the day if you take the people excellence, the topic of safety and blend that with the innovation and technology driven culture we have here at Lanxess, those are the keystones in order to create success that will take Lanxess North America to the next level,” Bjøernslev says.
When looking at what opportunities existed in North America, Bjøernslev saw the automobile market as a crucial player in Lanxess’ future with the ability to offer new products in rubber and plastics.
“The U.S. market is still the biggest market in the world for miles per person driven,” he says. “What I have realized over here is that Americans love cars. With our product portfolio within plastics and the fact that we are the leading manufacturer of synthetic rubber in the world, more than 50 percent of our turnover is generated in the automotive and tire manufacturing industry.”
Lanxess currently has an initiative it calls Green Mobility. Green Mobility relates to two major areas — lightweight construction of automobiles and green tires — which Lanxess hopes will drive the growth of the business and improve the auto industry at the same time.
“Car manufacturers are continuously focusing and forced to focus on reducing CO2 emission, reducing fuel consumption and that’s why they have to reduce the weight of the cars,” Bjøernslev says. “By using our high-performance plastics, you can reduce the weight of a car up to 30 percent. That is something that the Motor City is very interested in.”
The second area of interest for Lanxess is what it calls the green tire. The company has been supporting an initiative within the European Union, Brazil and Korea surrounding tire labeling.
“There is a requirement to label your tire as a producer based on three factors: rolling resistance, noise reduction, and wet-grip capabilities,” Bjøernslev says. “We are convinced that Americans who love to have a choice will be embarking on this tire labeling issue because so far in the U.S. you have never had the chance to decide what kind of tire you would like under your Cadillac, Ford or Chevy.
“We’re convinced this will be a topic for the U.S. industry in the future and we will support that.”
Bjøernslev hasn’t wasted any time in making decisions about where to focus the company moving forward. That decisiveness has been a result of listening to what is happening around Lanxess globally.
“First and foremost, you have to listen to your customers,” he says. “Secondly, make sure that you assess the entire value chain. You want to make sure that you reach out and listen to the customers of your customers. You want to make sure that you’re integrated in the right manner in order to cost-effectively and profit-effectively cater your products to the market.
“You have to make sure that you read the signs of your time, meaning the trends in the marketplace. You have to live in a global world. Today, it would be very risky to only focus on the U.S. or North American market.
“You have to take into consideration what the drivers are internationally, in Asia and in Europe, because although we sell a lot of products here in the U.S., we export to other parts of the world and vice versa.”
Bjøernslev says as time goes on, he plans to continue to focus on having the right set up in the company to get Lanxess to that next level of growth.
“We are cautiously optimistic as to future development,” he says. “What we have to do now is make sure we have the right organizational set up in order to cater our products to the market.
“What I found here was an excellent foundation. What we want to do is capitalize on that and make sure that we participate in the new market dynamics within the North American chemical industry and beyond … with the advancement of our products.”
How to reach: Lanxess Corp., (800) 526-9377 or www.lanxess.us
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The Bjøernslev File
President and CEO
Education: Bachelor’s degree in international management, FOM University of Applied Sciences, Essen, Germany
What was your very first job, and what did you learn from that experience?
I was a shop assistant at a green grocer. It taught me that hard work and dedication pays off.
What is the best advice you’ve ever received?
Never tell yourself that the target has been reached, because there is a big risk that you turn complacent.
You mentioned you are a car guy, what is your favorite car?
I am the proud owner of a 1969 Porsche coupe. I’m a Porsche guy but old Porsches.
Who is someone in business that you look up to?
I’m a great admirer of a man named Ferdinand Piëch. He is the head of the supervisory board of Volkswagen. Volkswagen is currently No. 3 in the world and the target is to be the No. 1 car producer. First with Porsche, then Audi, then Volkswagen, Piëch has continuously been building Volkswagen to be one of the leading car producers in the world and that’s been done with innovation and technology. I find it fascinating the consistency he has had in achieving the position Volkswagen is in today.
What has been your favorite country you have spent time in?
I have a bunch of favorite countries, but my takeaway lesson from traveling the world has been that the key is the language. I speak four languages fluently: Danish, German, English and Spanish. I speak half Slovak because my fiancé is from Slovakia. I have a couple of favorite cities: Vienna, Austria; Buenos Aires, Argentina; and I’m increasingly starting to like Pittsburgh, because it’s not a major city like New York, but it’s also not a village. It’s the right size and it has a lot of culture.
Staffed with beautiful servers in sexy plaid kilts and matching plaid tops, Tilted Kilt Pub & Eatery has its roots deep in the tradition of Scottish, Irish and English pubs. Originally coming to life in Las Vegas, the contemporary, Celtic-themed sports pub is headquartered in Tempe, Ariz., and has been doubling in size for the past couple of years. Today, it has 3,500 employees, revenue of $240 million and locations across the country.
While many patrons may come to Tilted Kilt to view the attractive servers, President Ron Lynch wants to make sure the brand is seen for much more than that. To help him get a better view inside the restaurant chain’s stores and get a firsthand account of how its employees were performing, Lynch went undercover on CBS-TV’s “Undercover Boss” in 2012.
“Going undercover made me realize that we really employ a lot of young people,” Lynch says. “Human resources are always a challenge and more so in our brand because we do hire so many young people. For some of them, it’s their first job. Some haven’t even been employed as servers or kitchen help or bartenders for that long of a period of time.”
One of the biggest lessons Lynch learned from his time under wraps was that Tilted Kilt and some of its younger staff could greatly benefit from a mentoring program. In addition, he discovered that there were a number of superstar employees going unnoticed.
Here is how Lynch took his undercover findings and translated them to make Tilted Kilt a better place for patrons and employees alike.
Educate through mentoring
Many young people looking for some early work experience will often find jobs at an area restaurant. Tilted Kilt is no exception, and that led Lynch to launch a mentoring program to improve the Tilted Kilt experience.
“We assumed at the store level that the management/young-employee relationship was enough, but they talk more along the lines of taking care of the guests, providing good product, being upbeat and entertaining people,” Lynch says. “A mentor relationship can be more of a personal thing for them.”
The idea for a mentoring program surfaced because of the actions of one Tilted Kilt server in particular who appeared on “Undercover Boss”with Lynch. She was seen telling off-color jokes and using language that wasn’t acceptable.
“That doesn’t represent our brand,” Lynch says. “A mentoring program for those young people allows a more experienced server to talk to them and give advice. Coaching in these areas is for their own good.
“This isn’t just our brand. It could apply for any brand that hires young people. Sometimes they need a little bit of coaching when those young people are in the adult world.”
The mentoring program allows Tilted Kilt’s young employees, like the one seen on the show, to speak with more experienced members of the staff.
“The mentor program is set up so that they have monthly meetings and talk for a period of time,” he says. “We want to enroll all the 18-, 19- and 20-year-olds before they are legally adults at 21. That’s where we have started.”
What Lynch has found so far in the company’s mentoring efforts is that you have to be persistent at getting involvement in the program.
“No. 1 is you have to persevere at it because your young people are going to be resistant to it,” he says. “They don’t think they need it. That’s the hardest part. We may need to rename the program something like Big Sister, Big Brother program — anything other than the mentoring program.
“At that younger age, they think they know everything, and so they think they don’t need it, and that’s the difficulty we are having with it. We need to put a different face on it and call it something different but have it accomplish the same thing.”
Lynch and his team are putting their heads together because so far the mentors and mentees are getting together, but they feel obligated to meet instead of wanting to meet with a mentor. That’s a problem Lynch is looking to fix.
“It takes time, but it’s also the approach that our servers take,” he says. “Rather than them coming up to that person and saying, ‘Hi, I’m your mentor, and we need to meet,’ and they go, ‘Why?’ Maybe there is a better approach.”
Seek out superstars
Much like with the mentoring program, Lynch found out that Tilted Kilt had some real hidden gems inside its restaurants during his experience undercover, which made him realize the company needed a better way to find these employees and recognize them.
“Another thing I noticed was that we have some fabulous people in the field that are going unnoticed,” Lynch says. “I would have never actually seen some of these people without going undercover. So our operations people and I are going to spend more time, particularly in the kitchen.”
Tilted Kilt needed a way to find those superstars within its system and make sure they prosper.
“I’ve challenged our operations people to go beyond that and get into the kitchens,” Lynch says. “Observe and talk to the kitchen people, maybe work on the line a little and assist them where you can. Then a great way to meet the servers is to offer to help run the food with them. That will help get feedback as to who those superstars are.”
To find those employees who are high achievers but might be going unnoticed, you have to challenge your staff to dig in deep.
“I know it’s uncomfortable and you’re in a restaurant that you don’t work in every day, but you have to pick out those roles that you can function in and dig in. You have to help them run and help them prep food and meet those people who are actually doing the job for us rather than just the owners and managers,” he says.
Finding great talent already in your business is one thing. Having the ability to hire those high achievers from the beginning is another. Lynch is also devoting time and resources to improving the hiring process.
Tilted Kilt uses a hiring process called HOST, which stands for hiring only spectacular talent. It’s a process that takes a minimum of 30 to 45 minutes to do.
“We have that potential bartender or potential server role-play with us,” Lynch says. “One of the common scenarios is I play the customer and the new person is the server. We want to know if they will communicate with us and connect. Are they a people person? Will they smile at the customer? That’s very, very key to us in the hiring process, and we spend a lot of time on it.”
You have to make sure that if you have one person in charge of a hiring process that he or she doesn’t get complacent and tired of it.
“It’s an interruption in their busy day, which is wrong, because that is the most important thing — getting the right people,” he says. “The hiring process is the No. 1 priority and the No. 1 priority that they do it right. If you have one person in charge of that hiring process, that one person will do it over and over and get really good at it and have the experience of knowing what makes the best employees.”
How to reach: Tilted Kilt Pub & Eatery, (480) 456-5458 or www.tiltedkilt.com