It is amazing to me what gets measured in this world. Just say, Guinness World Records and you are now conjuring up outrageous tales of the biggest, fastest, most random anything.
What about when you need helpful measurements? It is interesting to me where measurements and metrics can go wrong. If you are thoughtful about your objectives when measuring data about your workforce, you will no longer look at all that human resource stuff as being the soft stuff.
Your people expenses are often your largest expenses. The metrics and workforce analytics are also the numbers attached to your only assets with self-awareness. Thus the asset and the numbers associated with them need to be managed even more carefully and in context than your more established management metrics.
Why first … then what
If we understand the goals for the organizations and the struggles the leaders are having, then we can start assessing what information would be helpful toward solving those problems. These conversations require a real dialog to get the best results.
Can you remember when you were a kid and were told to clean your room and you asked, “Why?” The result and motivation were very different if you got the annoyed parental, “Because!” Then if it was explained that Grandma was coming and she was staying in your room overnight, the latter answer received much more care to the details. The same is true when needing to understand why the organization or individual is seeking information.
The right ‘what’
After understanding the goals of your organization, you can design the proper information content and put it into context. Take a look at this real example:
A finance director is concerned about productivity and asks HR for the number of employees in each department. He runs his numbers and produces a cost and profit per employee and compares it to industry standards and his predecessor’s numbers.
He thinks he has the right picture of productivity, but there were several problems in this scenario. The finance director asked for the number of employees, and that is what he received.
However, the data didn’t include the differentiation between full-time and part-time employees, so his number was skewed. He didn’t include the number of contract workers being used in each department, thus he missed 8 percent of his workforce.
He also didn’t get a picture of the trends over time on this number; he just received a single data point. This is a problem because the snapshot in time was right after the busiest part of the season was over, and the student workers were no longer on the payroll, so his numbers couldn’t measure the busy season’s productivity.
How successful do you think his recommendations are going to be based on these numbers? Without context of the information and proper comparisons to the historical data, his analysis is going to be significantly flawed. He was focused on his HR metrics and didn’t focus on the dynamics of the organization’s workforce.
It is critical that the human resource department participate in the analysis of any details involving the workforce. It is also critical that managers and human resources are educated on how to interpret and design their reports. This will make a big difference in your decision-making.
Lois Melbourne is co-founder and CEO of Aquire, a workforce planning and analytic solution company based in Irving, Texas. Visit www.aquire.com for more information.
Operating in the network storage space, the biggest challenge for Michael Klayko hasn’t been growing his company, but growing it fast enough to keep up with customer demand.
“I’ve gone to pretty much every country in the world, every vertical segment, any type of industry and asked the question, ‘Whose information isn’t growing at triple digits?’” says Klayko, CEO of Brocade Communications Systems Inc. “I haven’t had anybody raise their hand and say, ‘Me.’ No matter where I go, it’s ubiquitous. It’s an issue around the world.
“Just around managing information in a company, there are 8,000 laws around the world on how do you manage, protect information, and now that varies between different industries. … When you look at it from that standpoint, I think opportunities become unlimited — you know, how do you solve very specific issues? Because the issues supply customers face, which is the [Forbes] Global 2,000 companies, are daunting. They are just absolutely daunting. You talk to some of the CIOs and some of the business owners, and they’re scratching their heads going, ‘How can I get ahead?’ They’re trying to just catch up.”
Having grown up in the networking space and data storage, Klayko saw when joining the company in 2003 that the $2.1 billion company was in the position to be the challenging brand — as long as it could adapt fast enough to changing technology and increasing consumer demand for the newest products.
“Fifteen years ago we were four guys, a dog, were a very prototypical Silicon Valley startup,” Klayko says. “And now, today, we’re roughly in every country — about 160 countries in the world, a little more than 5,000 people — and growing quite nicely, frankly because networking storage continues to grow.
“A lot of this has to do with the fact that there’s been one very large networking company, and they didn’t have to innovate. What they had to do was provide features and functionality, and it was good enough. Today, it’s not good enough.”
Klayko has kept Brocade on track for growth by ensuring innovation is paramount in the minds of employees. By nurturing a culture of innovation, Klayko has continued to strengthen Brocade’s foothold in the crowded IT and data storage marketplace.
His strategy for building this culture begins with setting performance-based innovation metrics that keep his employees thinking one step ahead. When you are a company with competitors ten and 20 times your size and revenue, you have to be able to offer customers the newest and latest products. To give Brocade the edge with customers, Klayko knows Brocade needs to make those products readily available on an ongoing basis.
“There’s only one weight class in networking — it’s heavyweight,” he says. “There are no different weight classes. There’s one weight class. So we have to compete like that. And one way we do this on innovation is we constantly like to stay anywhere from 12 to 18 months ahead of our competitors. We have to. That’s how we are actually not just surviving but growing.
“I think every company, when you go back the last couple years, is trying to figure out not how to grow, but how to survive and stay alive. We’re fortunate. … We happen to be in a segment where information, traffic and data traffic is growing triple digits.”
Klayko uses metrics to track the company’s quarterly percentage of innovation. The benefit is two-sided. For one, having innovation metrics gives your employees a benchmark to aim for in terms of continuous improvement, but also, your ability to meet these goals signals to customers you can consistently provide them with the newest products.
“No one wants to sit around and say, ‘Yeah, I don’t innovate, I just kind of collect money,’” Klayko says. “Everybody is innovative. But we do it a little bit differently in terms of we have the innovation metric. How do you measure it? Ours is we want 60 to 80 percent of all of our current revenue to come from products introduced in the previous six quarters. So if you think about that, I have to reinvent myself every two years.
“Now that sounds like a lot. The reason it’s not is that any one point in time about 2/3 of my customer base is going through an acquisition, a consolidation. They’re actually getting rid of a company or so forth. So their data centers and their information requirements are evolving and changing. Everybody wants the shiny new product, and so if you have the shiny new product at that point in time, you will be considered.”
Look for the disconnect
When you are in a rapidly advancing industry, keeping innovation steady at 60 to 80 percent can be a huge advantage in staying ahead of competition. But continually innovating doesn’t mean you are placing your bets on anything that’s new and different either. It’s important to take calculated risks so you don’t bet too big on an area that never takes off.
“Our biggest challenge sometimes is where do we go, how do we put scarce resources, because if you make a bet on a certain area or a certain vertical and another one grows faster, your competitor can actually grow faster than you, even though you are growing, because you made that wrong decision,” Klayko says.
But how do you find those areas for employees to innovate in ways that add new value for customers yet haven’t yet been exploited by your competition? Klayko does it by asking them to look for a disconnect or a contrasting position.
“By 2020, there’s going to be 35 billion devices connected to the Internet, I think, to 6 or 7 billion humans,” Klayko says. “So every time someone comes out with a smartphone or a new iPad or anything that creates digital data, it just more and more burden on that network that needs to get bigger pipes, faster, larger.
“You’ve got network traffic growing at 100 percent, data traffic growing at 100 percent. Budgets aren’t growing at 100 percent. So there is a huge disconnect going on. Whenever there’s that big of a disconnect, there’s an opportunity.”
By identifying contrasting market positions on common issues, beliefs, pieces of technology and so forth, your team can visualize new ways to solve emerging problems as an industry evolves and customer needs change.
“If you go back, how we originally started with this is the contrasting position that’s around simplicity,” Klayko says. “The last couple years, the recession really affected the data centers in terms of personnel. They were the first people to go in many companies, and so they would continue to buy the equipment but the human beings to run the equipment were released. So costs were really disconnected again. We just said, let’s focus on simplicity. What if we could actually have equipment go into a network and self-discover, self-manage, self-heal if it broke? What a contrasting position.
“We always look for an area where we can provide contrasting positions. Anybody that goes into a market says, ‘Oh, I’m a lower cost or I’m a little bit faster,’ — in my business, technology is always improving. You’re always getting better price performance. So you need a relatively different way to approach the market. We said from a contrasting position, ‘What are the real issues?’”
Lead the vision
Setting a culture of innovation involves a lot of decision-making on the part of a CEO. You have to get the right people on board and give them the resources they need to innovate. But once the culture is set up as an idea-making machine, it’s your job to grease the wheels. To get people thinking creatively about new opportunities, you first need to get them excited about what that innovation means and the effect it has on driving your company’s vision.
One way to do that is by engaging your key creative people in new projects or areas of potential growth. For example, when recently bringing a new category to market, Klayko made sure he assigned his long-term engineers to the project. The piece of technology, called Ethernet Fabrics, was 15 years in the making for Brocade.
“We actually made a big bet that this technology was going to be the future of the company and so we just redirected the people from some of our core businesses into this new technology,” Klayko says. “Then we backfilled our core business with new people who were brought into the company.
“That’s what gets engineers excited, working on the new project and so forth. So there was accommodation and new folks that we brought into the company, but primarily we repositioned a lot of folks that were in the company and gave them the opportunity to work on this project.”
Building an innovative culture starts with leadership. In the end, it’s largely your call on what risks the company takes and which it doesn’t. You also set the precedent for areas such as accountability, performance, entrepreneurial thinking and of course innovation, which is why Klayko doesn’t just have metrics for his team’s performance, he has them for himself.
“You have to lead from the front,” he says. “I do a thing in the company called a performance contract. I list top six areas that are going to be a focus to me. I put my metrics down, and every quarter, I do a broadcast to all 5,000 people and I give myself a report card. I give myself a public appraisal every quarter, but when I walk to see you, I expect you to do the same thing. It’s all about accountability and setting the culture.
“We have a lot of bright people, and there’s a myth that CEOs create strategies. What they do is they participate in the creation with very smart people. So my job is to ask a lot of Socratic questions and push and say, ‘Is this the right thing to do?’… I have to be the chief cheerleader when times are good and times are bad. When times are good, I have to tell people, ‘Don’t get complacent.’”
In the end, while successful innovation probably involves a little luck, good marketing, the right timing and other factors, it all starts with setting a culture where people are inspired to compete and improve their industry and company every day.
In fact, while achieving first quarter year-over-year revenue growth, this year Brocade was also named one of Fortune’s 100 Best Companies to Work for in 2011.
“I ask a question on our employee survey every year that tells the truth about the health of the company: ‘Would you ask your best friend to quit their perfectly good job and come work with you at Brocade?’” Klayko says. “When I first came in, that number was at 8 percent. In fact, I answered it no, which was a telltale sign. … That number is 91 percent right now. So we’ve obviously focused on the right things.”
How to reach: Brocade Communications Systems Inc., (408) 333-8000 or www.brocade.com
The Klayko File
Brocade Communications Systems Inc.
Education: Bachelor’s of Science in Electrical Engineering from the Ohio Institute of Technology
Affiliations: Klayko currently serves on the Boards of the Silicon Valley Leadership Group and The Tech Museum of Innovation
On his decision to join Brocade: One of the inherent issues of storage area networking is you just built these flat networks and we saw an opportunity to route between different networks. There was no product in that space. We got a bunch of smart people together. We had about 100 people together when we ended up selling the company to Brocade. We built the routing technology that is now the industry standard. That was the impetus is we found that there was a huge opportunity with nobody looking at it, and we went, ‘Wow, why is nobody going after this? It’s possible.’ And so that’s what we focus on.
On transforming the networking space: We’re taking those principles, applying it into the IP site, which is the Ethernet, and your Internet connections and so forth. By applying that knowhow and that technology, we’re bringing a new category to market, which is going to challenge all of the incumbents.
We took 15 years of heritage and created a new product and a new category called Ethernet Fabrics, and where it’s going to apply in the data center. And by the way, what we’re addressing in this market is measured in the tens of billions of dollars. So there’s a big opportunity and frankly, there hasn’t been a large piece of innovation or significant piece of innovation in the networking space for a decade.
Paul Furiga can get the attention of a business-to-business company’s CEO with a pretty alluring deal.
“I can get you to your 100 customers more often, more efficiently and with more fresh dialogue using social media than using any tool you can possibly imagine,” says the president and CEO of WordWrite Communications LLC, a Pittsburgh public relations agency. “How could they say no?”
Surprisingly, they do; the B2B market seems slow to embrace social media. Sure, business is moving online, acquainting corporate America with platforms from Facebook and Twitter to Yelp! and Foursquare. But when the best social media strategies and case studies seem to come from big consumer companies (ahem, Zappos), where do smaller B2B companies look for their social media guideposts?
Of course, some strategies are successful despite your structure, so mimicking some proven approaches from the big boys is a start. But the inherent differences between B2B and business-to-consumer companies necessitate that you tailor your strategy for your customers and goals.
“A $10 million B2C company, the average transaction size might be $100, so they are going to have 10,000 customers,” Furiga says. “The average $10 million B2B company might have 10 to 50 customers who are spending a heck of a lot more money on their average sale. For a B2C company, it’s all about how many followers you have and how much activity you get. For a B2B company, it’s not about quantity; it’s about quality — does your social media directly drive business results?”
Social media equips you with practically free tools to connect with each customer — and when you have 50 customers to their 10,000 consumers, that’s a definite advantage.
“B2B companies should be — and actually are, although you don’t see the trend yet — having much more success in social media,” Furiga says.
And here’s how.
Start with a hypothesis
Your first concern is probably something like, “Are business customers even using social media?”
It’s a valid question, and it’s the launch pad to creating your social media strategy.
“The first step is understanding: Are your customers there? Are they participating in those channels?” says Jennifer Horton, best practice consultant in the customer success and strategy group at Eloqua.
Eloqua, based in Vienna, Va., develops marketing automation and demand generation software to help companies “measure the digital body language of their buyer,” Horton says. The first step in that process is the same as any campaign.
“If you’re just getting started and you’re trying to understand, then let’s pick a hypothesis, i.e., ‘I think our customers are on Facebook,’” Horton says. “Then let’s prove that out or disprove it. We’ll get our Facebook page created, start to develop our fan base and use it to promote thought leadership content or upcoming events.”
To build that hypothesis, some of Eloqua’s clients use website analytics to identify which sources drive traffic to them. If they see significant volume through Facebook — which Eloqua found to be the top-referring social source of website traffic in a study of their entire client base — they dig deeper.
To prove a hypothesis, just like in a science experiment, you need research. Here, that comes from tracking what’s happening. Start with baby steps: Look at quantity before delving into quality.
“One of the places that a lot of people start is just understanding the total number of fans that they have or the total number of followers on a Twitter handle or the number of members that have signed up to receive e-mail updates,” Horton says. “Understanding your reach is definitely first and foremost. It gives you a good understanding of your potential to drive opportunities out of this group of people.”
Maybe people are already buzzing about your company, giving you a head start in building a fan base. But don’t forget about current customers on other platforms. Bring them with you, from newsletter subscriptions, e-mail opt-in lists and direct mail databases to the social space.
Then find ways to inject yourself into conversations, positioning your product or service as the answer to a question.
“Listening would be the first part of that, listening and understanding the topics that are being discussed, who’s participating in those conversations, and then identifying the appropriate response,” Horton says.
If they’re not talking about your specific company yet, back up and see what they’re saying about your industry or service. For example, Horton was on a Salesforce.com user group one morning when someone asked for a recommendation of an e-mail tool. Knowing Eloqua’s software would be a good fit, Horton alerted a sales rep for follow up.
“The companies that are doing (social media) well are … looking at ways of identifying where in the conversation in those social channels it makes sense for them to insert themselves and … providing a relevant and compelling offer to get them to continue the conversation that maybe started in a social community,” she says.
Continuing the conversation
When it comes to executing your social media strategy, forget what you know about marketing.
“For a lot of marketing conversations, there’s only one appropriate answer to the communication — and that is, ‘Buy,’” Furiga says. “The difference with social media is that it’s more about the conversations and the community. That’s why it’s cool for social media managers of consumer companies to just create an environment for people to hang out in. They are trying to keep people in the conversation, knowing that if they stay in the conversation, sooner or later they’ll buy.”
B2B companies, especially, have to strike a balance of building a community and directing it toward a sale. These goals go hand in hand, but different types of content point toward different ends.
Horton can’t jump in trying to sell Eloqua if people aren’t familiar with it. First, she must make Eloqua relevant to the conversation.
“If you think of ‘top of the funnel’ or brand awareness, we create content like infographics that are quick and interesting,” she says. “An infographic on the history of social media is enough to bring you into that Eloqua conversation.
“Now, for us to actually convince you why marketing automation software is a really powerful part of that story, it requires a different set of content: Why marketing automation? Why Eloqua versus our competition? A different type of content is used when the buyer is closer to purchase.”
Furiga goes even further to break down an effective content strategy encompassing industry generalities and company specifics alike. He calls it the rule of thirds.
“There’s a general guideline in social media, and that is: To have success in just about any channel, one-third — and no more than one-third — of your content is promotional,” he says. “One-third is news information (from your industry). Then the last third is the conversation — having a real dialogue with prospects and clients who have chosen to participate in your community.”
Generally, the overall social conversation leans toward sales and marketing. But you can’t just push yourself in front of prospects like an advertisement. Most B2B prospects are looking to social media for a demonstration of your expertise.
“B2B companies most often use social media to give potential customers a peek into what it’s like to work with them,” he says. “What do you know? What do you have to teach me? How can you help me? That’s where the whitepapers and the blogs and the free tools come from. More often than not, B2B companies are selling solutions, and the way you demonstrate your problem-solving capabilities is by having great supporting social media content.”
Educational tools like whitepapers, blogs, webinars and LinkedIn subject matter groups are effective for B2B prospecting. But those can be just as fun and engaging as consumer campaigns focused on games and viral videos.
Just look at Isilon Systems, an enterprise data storage company in Seattle. It brought in a magician to prank the IT department and created a video of him cutting a live Ethernet cord in the data center. Then, the company drove traffic back to their website by revealing there how the magician performed the trick.
“For both B2C and B2B companies, the ultimate goal is to have a continuing conversation,” Furiga says. “The difference is B2C social media can be all about hanging out online playing games, and that would be an OK ROI. For a B2B company, the fun is much more often directly connected to the business purpose. So a B2B social media strategy is going to focus on sharing intellectual capital, engaging prospects and pulling them deeper into a conversation that most often results in big dollar sales.”
Isilon’s videos engaged audiences with a magician’s secrets, but they also pointed to the business by urging viewers to safeguard their IT departments with the company’s solutions.
Content should be fun and creative if you want to grab attention in the fast-paced, sound bite based social environment. But for an offer to have any staying power, the content should also be relevant. You achieve this by taking the position of the problem solver.
“Social magnifies the basic rules of Marketing 101,” Horton says. “The No. 1 ‘do’ is to be helpful. So if someone’s asking a question, provide a relevant answer. Connect them with another person that might be able to answer their question. Social is online, but it’s definitely a human-to-human sort of relationship experience. Building relationships and developing conversations is what really, I think, drives the highest level of engagement in different social channels.”
[See more social media tips from Furiga's presentation, "Beyond Your Zappos Case Study: B2B Social Media for the Rest of Us," featured at the 2011 Public Relations Society of America Digital Impact Conference.]
Focus on conversions
To pinpoint what separates top social performers from the pack, Eloqua recently benchmarked its entire client base.
“Clients that are in the top-performing category are doing a very good job of tracking those things they put out in their social communities so they can understand which social sources are driving interested buyers back to their website,” Horton says.
Still, people have trouble uttering “social media” and “metrics” in the same sentence. How can you turn conversations into measurable conversions? It gets a little “squishy,” to use Furiga’s words.
“ROI in social media is like Jell-O for some people,” he says. “They can pick it up but they can’t really hold it. If that’s happening, then you’re not measuring the right things in your social media.
“It’s not just the number of followers or likes that you have; it’s the quality of the relationships that you create. Each company needs to determine its own metrics to define quality. It’s almost never how many followers you have; it’s almost always about driving toward something that you can count that affects the success of your business — it could be number of sales, number of whitepaper downloads, how many people comment on your Facebook page.”
Sure, you start with basics like number of followers. But now that you’ve given them content as bait, it’s time to find out who’s biting and why.
Start by identifying correlations. As your overall number of social followers increases, look for other trends on the upswing: How many visitors came to your website? How many of them opted in to your e-mail database or registered for your webinar?
“It may not necessarily be cause and effect — if we get 100,000 fans, we’re going to have X amount of leads,” Horton says. “But a lot of companies are starting to see that positive correlation: When we see an increase in the volume and the reach of our social channels, we have a correlating increase in how many Web form submissions we’re getting or how many qualified leads we’re passing over to sales.”
Once you understand general trends and how they’re related, take a closer look at conversions or who took the next step in your sales cycle — whether that’s downloading a whitepaper or contacting a sales rep.
“Of those opportunities where I placed a link back to my website, how many of those people took that next level of action?” she says. “Look at which social sources are driving the highest level of conversion, because that can give you a good indicator of how qualified those audience members are. You can have a very active social group with people that are highly interested but with no intent to purchase. If you can track it down to that point of conversion, you’ll get a better understanding of how close these people are to purchasing.”
For example, Horton helped a client track pay-per-click advertising across several keyword categories by setting up unique landing pages for each. By tracking form submissions, they identified two categories with the highest conversion rates. Then they realized that prospects searching one category converted to qualified sales opportunities within two weeks; the other took two months.
“That helped them inform how they should engage with those buyers,” Horton says. “People that were searching on that term actually had a line item in their budget, so they were a lot closer to purchase. Those were low-hanging fruit.
“The other category was taking a lot longer to convert. That allowed them to say, ‘Maybe we need a nurturing strategy with these individuals. Maybe we need to give them some more content to help them go through that evaluation process.’ Tracking that beyond the point of conversion starts to influence how you can communicate and engage with those buyers, based on where they are in their purchase process.”
Pinpointing buyers’ positions in the sales cycle can tell you when to leverage which social tools to lead them to a decision.
Maybe you’re still wary, convinced that the risks of social media outweigh the benefits. You think your customers aren’t on Twitter or worry that employees will post something inflammatory. Whatever your excuse, Furiga will tell you you’re wrong.
“Companies that don’t participate in the conversation are not stopping the conversation,” he says. “The conversation is out there. All you’re doing by not being part of it is making sure that your viewpoint is not represented. If you’re not part of the conversation, you can’t protect your reputation.
“I’m not going to say that every B2B company needs to be on every social media channel, but you shouldn’t reject it out of hand. You have to know what’s being said about your industry and your company. And if you’re willing to try one social media channel at a time, I believe you’ll be surprised at the success you can have.”
But wait — there's more. Read on for the sidebar section: How B2B customers use social media.
SIDEBAR: How B2B customers use social media
Before you purchase a new cell phone, you probably head online to inform your decision with reviews from fellow consumers. Business buyers are now doing the same; but with purchases of $100,000 instead of $100, the research is more thorough. Everyone involved in committee decisions is digging — many outside the sandbox of traditional information.
“If I work for a B2B industrial company and somebody approaches me about a new way to machine metal, and I try to explain to my boss how cool this is, eh, whatever. Maybe it works, maybe it doesn’t,” says Paul Furiga, president and CEO of WordWrite Communications LLC. “But if this company has a YouTube channel and they can literally show the difference, and I send my boss and all the other decision-makers the video, wow, is that powerful.”
James Rogers, vice president of marketing at Hoover’s Inc. in Austin, Texas, realized buyers were starting to layer social media with the business data they gathered from Hoover’s Dun & Bradstreet-powered website.
“We had a number of customers that were telling us they go to Hoover’s for the traditional business information like company, industry, people, size of the company, financials, news alerts, all those things,” he says. “Oftentimes, what they would do is alt-tab over to LinkedIn and then … try to identify the contacts and look up some of the information that we traditionally don’t capture within Hoover’s, such as their history and their subject matter expertise and areas of interest.”
After LinkedIn started hearing the same thing from its customers, the two companies entered a partnership in March to integrate their functionalities. Now, below Hoover’s traditional business information, you’ll find social media panes — attributed as such — offering more information on people and companies.
“Whether it’s (preparing for) a sales call, identifying leads, doing industry research, … customers are looking to purpose that information within their daily work streams,” Rogers says. “People want to view the social information in context with the more traditional business information.”
This partnership showcases the trend that, even in strictly business settings, social media is proving to be an important tool in purchasing decisions. In Rogers’ words, it’s gone mainstream.
“A lot of sales professionals are now recognizing that social media is not just about your family community or your personal interests,” he says. “Social media has information that’s relevant to business information, and there is value in correlating the social media content to business information. This social content has different context, so you have to give it the appropriate attribution.”
That context varies by buyer — social content can be more timely and relevant, but it’s also subjective because it’s not validated.
Furiga looks at the broad differences between traditional and social media information:
- Speed: “Thanks to social media, I can get nearly instantaneous information on any person or any company in the world.”
- Scope: “I just said ‘in the world’ — The Internet breaks barriers in terms of geography. In the old days, if I was a B2B company, I could only see as far as my geography would take me — meaning as far as a salesperson was willing to drive or as often as I was willing to go to a trade show. Now, I can literally search the world to make decisions.”
- Transparency: “Most of us use a consumer ratings site to make restaurant or movie decisions. Now, I can get all kinds of great, transparent information about companies I might want to do business with, including testimonials.”
Ralph Scozzafava had just walked off the plane, but he already knew Furniture Brands International Inc. had a safety problem at one of its factories in Mississippi.
“The guy that picked me up at the airport had some dried blood on his pants from one of our key associates on the production line that had just cut their finger and been brought to the hospital,” Scozzafava says.
Unfortunately, safety wasn’t the only concern for Furniture Brands when Scozzafava arrived in early 2008.
“We were low on cash and we had a pretty big debt balance and really some liquidity questions and concerns,” says Scozzafava, the company’s chairman and CEO. “We also had declining margins and increasing administrative costs to the point where our operating margins were approaching zero and ended up negative very quickly. There were a lot of things happening at the same time, all taking us to a very difficult place.”
But before he could address any of those concerns, he had to get people in the company to realize that there was, in fact, a problem that needed to be addressed. The furniture retailer has 6,500 employees in the United States and 2,000 more employees abroad.
“A lot of folks just thought, ‘Hey, we’re going through a bit of a rough patch,’” Scozzafava says. “If we don’t tell people where we are, in a lot of cases, they just don’t know. So it’s informing. We have a problem here. It’s an issue. We have to change, and we have to change intelligently and quickly.”
It was time for Scozzafava to start talking and get everyone moving on the changes that needed to be made.
Start a dialogue
One of Scozzafava’s most pressing concerns, in addition to making the company safer for employees, was that he needed to generate some cash for Furniture Brands. The company was losing a lot of money.
“We had over $300 million in debt, we had $27 million in cash, and we were losing money on the operating line,” Scozzafava says. “You don’t last long with a business of our scale if you’re doing that. So the big thing for us was to generate cash.”
In this type of situation, you can’t just go to your people and say, ‘Hey, we need to generate more cash.’ You need to show them what they can do as an individual or as a group to help you solve your problem.
“If they don’t have line of sight, ‘What do I need to do to help?’ you’re not going to get the full engagement that you really want to get,” Scozzafava says.
In other words, spare the corporate lingo and Wall Street clichés when you’re speaking to your employees.
“Use words you would use with your family,” Scozzafava says. “Relate some interesting stories. Try to make things sticky if you can. The state of the union address as told with your best formal English doesn’t help. If you use every business cliché in the book, you’re not sincere. If they feel like you’re not sincere, if it feels packaged, they’re not going to listen. It’s not going to be compelling.”
Scozzafava needed to get his employees engaged in coming up with a solution for the company’s cash concerns.
“I tell our folks, ‘I’m going to tell you everything I can as fully and clearly as I can as many times as I need to so you fully understand,’” Scozzafava says. “And then I’m going to ask lots of questions so you can do the same with me. If you have that kind of dialogue, there’s really nothing up anybody’s sleeve.”
It has to be a dialogue, meaning two-way communication, and the best way to achieve that is to get out of your office.
“You’ve got to penetrate the organization,” Scozzafava says. “My direct reports will feed me info that is good, informative and interesting. But if I want to know about the supply chain, I’m going to go down on the factory floor and talk to a lot of people. If I want to know how our retail stores are doing, I’m going to go to retail and I’m going to ask a lot of questions and visit 10 stores.”
And if you want to know about a possible safety concern, you’re going to go visit one of your factories.
“I went on the factory floor and saw what we were doing and how we were operating the equipment and I knew we had a safety problem,” Scozzafava says.
Scozzafava discovered that multiple factors were leading to the cash issues. Safety problems were caused by improper use of equipment and were affecting product quality. This was affecting the margins and ultimately leading to the problem with the cash.
It’s the kind of information that you can only get when you approach your research with an open mind.
“The temptation is I want to bucket things,” Scozzafava says. “I’ve been doing this for 30 years and I’ve observed a situation and the knee-jerk reaction is to say, ‘Oh, that’s just like …’ and name a situation, something you’ve gone through before. When you do that, sometimes you miss it all together. Most of the time, you get it close, but you miss the nuance and you really can’t get a good clear assessment.”
As you begin to generate dialogue and ideas to make your company better, you need to create accountability to make sure that the ideas are investigated and implemented if they turn out to be viable.
Safety was one of Scozzafava’s biggest worries with his business.
“What are the safety ideas?” Scozzafava says. “We’ll put them on a bulletin board. Those ideas have initials next to them. Who gave us the idea? They have a date of when we’re going to evaluate it and get it solved and when we’re going to implement it.”
An idea was raised to install sewing tables in one of the factories that could be raised or lowered to help eliminate repetitive motion injuries.
“When are we getting the tables in?” Scozzafava says. “When is it getting installed? When is it finished? It’s about the idea, evaluating the idea and putting people in place who are accountable. Put their names next to the task and then finish the job.”
When you create ideas or metrics for employees to live by, they need to be ideas that are objective in nature like the sewing tables.
“There are certain things that you can measure very well,” Scozzafava says. “Those are very data-oriented things that you should use as the core of what you measure. The things that become matters of opinion, if you make that a focal point of what you’re doing and lots of people give their points of view, you’re going to struggle. Cut-and-dried measures are always the best.”
Work with each department on what it specializes in and help the department come up with measurable goals that help the company.
“So for example, 2008, we’re here to generate cash,” Scozzafava says. “But we’re also going to work on building our brands, and that’s the work the marketing people will do. We’re also going to work on getting more efficient in our factories. That’s the work the supply chain people will do. You can go down the road. The finance team has to centralize finance and accounting and accounts receivable and accounts payable and credit. That’s the work they have to do. So there’s the singular big goal we’re all working on and then there are pieces within the company that individual groups do to make us better.”
You have to keep pushing the importance of initiatives and making sure accountability is part of all of them.
“You think you’re saying it enough, because you’re thinking about it all the time and you’re talking to your direct reports or your executive team about the same subject all the time,” Scozzafava says. “So that repetition is something you just assume is going through the organization. And it’s not. One of the things I’ve learned is you have to tell them, you have to tell them again, you have to tell them what you told them, you have to ask if they understand it, tell them again, have them repeat it, quiz them.”
So if you think you’ve delivered your message enough after all that, you might want to do it just one more time to be sure.
When you ask employees to help make your company better and they step up and do just that, you need to show them that you appreciate their efforts. By doing so, you increase the odds that others will follow their lead.
“Good people want to do well,” Scozzafava says. “They want to be part of a winning team. If they see their peers somewhere else within the company performing very well and being recognized and rewarded for that performance, they typically not only want to mirror that, they want to do better. If you get the right people and treat them right and tell them what they need to do and listen to the ideas they have, it’s powerful.”
You can show your appreciation in a number of ways. There are the gift cards and cash bonuses that all employees are grateful to receive. But your ability to show appreciation and gratitude can also go a long way toward helping your business be successful.
“When you have the title, until they meet you, there is always going to be some kind of trepidation,” Scozzafava says. “People want to get it right or they want to make a good impression. If they see you as a regular person, if you get information and you do something positive with it and you’re not looking around trying to zap somebody or catch somebody, pretty soon they understand what your intention is. If it’s a positive intent, they’re going to share more and more with you.”
Scozzafava’s ability to get people to buy in to his effort to turn things around at Furniture Brands is showing some signs of success. While net sales dropped from $1.7 billion in 2008 to $1.2 billion in 2009, the steady loss of cash seems to have been stopped. And safety on the job is better than it’s ever been before.
“It all goes back to the build, win, deliver, grow strategy,” Scozzafava says. “[Employees] know that’s what has taken us from losing $400 million in 2008 to losing over $100 million in 2009 to making money through the first three quarters of . They know if we stick to that strategy, if we’re aggressive and prudent about how we change, differentiate and do things better, we’re making the problem go away.”
The key is to stay focused on helping your employees help you.
“If you expend your energy and feel spent, you’re probably not doing enough within the organization to drive the kind of morale and camaraderie and high-performance culture you want to create,” Scozzafava says.
How to reach: Furniture Brands International Inc., (314) 863-1100 or www.furniturebrands.com
The Scozzafava file
Chairman and CEO
Furniture Brands International Inc.
Born: Danbury, Conn.
What was your first job?
I worked for my dad; he was in the refrigeration business. One guy, one truck. Probably from age 6 to 7, I knew all the tools in the toolbox. I could wire things, run pipes, weld, I could do a lot of stuff. I haven’t done it recently. But give me the stuff, I’m sure it would come back.
What is the best advice you’ve ever received?
Hard work and common sense. My uncle said if you can just master those two things, you’ll be successful in anything. He was an entrepreneur who did very well and had no education and those were the two pieces.
If you could sit down with anyone in the world, past or present, who would it be and why?
I’d like to have dinner with my dad.
Scozzafava on public speaking: I’m real big on bullet points. I’ll have slides without many words on them. I may have a little scrap of paper in my hand that may have 6 or 7 thought starters on it. Each message that I’m trying to get across, I try to have an accompanying story.
I try to make it engaging. I draw people out of the audience a lot. I’ll call people by name and I’ll ask them to stand up and talk about things so that the message is what I’m going to call multi-medium. Part of it’s on the screen, part of it’s in a video, part of it’s a story from Ralph, part of it’s a story from the audience. You have a lot of different stimuli coming at you.
If Kobe Bryant played for Greg Ashlock’s team, the star wouldn’t get much coaching about the fundamentals of basketball. Nor would he need it.
Ashlock knows that key players don’t need specifics about how to play the game. As the market manager and president of Clear Channel Radio Los Angeles, Ashlock has learned how important it is not to micromanage his 400 employees.
“You still need a coach to direct that a little bit … and think more strategically,” Ashlock says. “But as far as the day-to-day activity is concerned, I don’t really need to manage that in the same way Phil Jackson doesn’t really need to manage how Kobe’s going to get to the basket and score. He needs to orchestrate some of the plays. He needs to orchestrate the strategy on how they’re going to play against the Celtics.
“However, from a tactical level, they’re performers. They’ve proven to be performers and they don’t need somebody overseeing their minute-by-minute or hour-by-hour decisions.”
Ashlock has adopted that hands-off philosophy across the eight radio stations in the L.A. market of Clear Channel Communications Inc. By staying out of the way of his employees, he unlocks their creativity and makes the company stronger with their innovation.
A recent success story comes from Dan Granger, an account executive in Ashlock’s market who broke the radio mold to make his clients more successful. He took some tactics that have been popular in Internet advertising, applied them to radio and created what he calls audiolytics — radio ad campaigns founded on transparency, accountability and analytics.
Granger will be the first to tell you it’s not just about taking the ball and running — it’s about the result.
“All the creative ideas in the world don’t matter,” Granger says. “It doesn’t matter how much buzz you create. It doesn’t matter how many people laugh at your ad and are entertained by it if nobody’s buying your product. This economy is reminding people that we should be as accountable as we can be for the results we produce.”
Clear Channel encourages autonomy, but don’t assume employees just do whatever they want whenever they want.
“If you want that kind of freedom, then you have to have the successes to warrant that,” Ashlock says. “That autonomy’s not granted to everyone. You really do have to earn the right to get that autonomy.”
Employees have to prove themselves capable of the responsibility. It starts with bringing people on board who are already autonomous.
“It’s critical that you hire the right people, because if you’re going to grant autonomy to somebody, they have to be competent,” Ashlock says.
He looks for candidates who exhibit initiative and have some success to show for it. You have to dig to find that.
“The way you’re going to know somebody’s a self-starter is based on past experience,” Ashlock says. “Whether it’s the work they’ve done or through the people that you talk to that they’ve worked for, there’s no better example or backup for somebody on whether or not they take initiative.”
Start by asking candidates to elaborate on what they’ve done. But they can say anything. The real test is what their former bosses say, so check references heavily.
“I would never rely solely on an interview,” Ashlock says. “It’s going to be based on past work, reputation, past employers and what they have to say.”
Ideally, the reference will say the employee didn’t come to them with problems but solutions. Look for indicators that candidates are driven by results for the sake of personal achievement, not just to please a boss. When Granger talks about his project, for example, he’s so vested he’ll tell you he’s spending his money, not Ashlock’s.
“Some people crave freedoms, but they know that they’ve got to produce results to maintain that,” Granger says. “Those people put more pressure on themselves than you could ever put on them. For one, they don’t want to fail themselves, but they also don’t want to fail the people who have given them those freedoms and those opportunities.”
Once you hire self-starters, they should prove their ability to drive results before you loosen the reins. Don’t set new employees loose until they have credibility.
“Once you know they’re going to make good decisions, then granting them autonomy and freedom’s not a stretch,” Ashlock says. “Managers that don’t grant the autonomy means they don’t have a lot of confidence in the people below them.”
Once you have employees with initiative, you have to give them opportunities to innovate.
“The biggest thing is, at the top, you have to be willing to take some risks,” Ashlock says. “If you’re willing to take some risks, it actually encourages stepping outside the box and entrepreneurship. If you’re only willing to play it by the game and nobody is able to add their creativity or anything outside of the norm, then that becomes a stagnant culture.”
It’s a balance of encouraging innovation while emphasizing the expected result.
“Everybody knows that it’s a place where they can thrive on creativity and pushing the envelope,” he says. “I don’t mean you push the envelope without vetting the process out a little bit. You do it with a good idea of how and what the result’s going to be.”
In order to vet ideas, you need background. Set the expectation that employees do homework to make their case. Fortunately, self-starters tend to do that without urging.
“It started with just trying to answer the question: What works?” Granger says of his idea. “So many people spend money on radio and walk away and say, ‘Radio didn’t work.’ I wanted to find out why they would end up feeling that way when I knew that there was a way to make it work. So it came from a frustration, and it drove me to just start picking up books.”
Granger dug into “Tested Advertising Methods” by John Caples and “Confessions of an Advertising Man” by David Ogilvy, to learn how industry predecessors produced results. That research taught him about direct-response advertising and provided case studies for proving his idea to management.
“What it really required is just, No. 1, reading anything and everything that provides case studies — whether that’s from a recent online company that posts information about what they find or it’s reading a book from 85 years ago about what was done,” he says. “We’re all trying to accomplish the same goal, which is sell products for businesses. And it occurred to me that we could take all the same principles that are used in any form of advertising and apply them to our industry.”
Employees should have a plan for translating their case studies into your industry and your company specifically. To do that, they need a keen understanding of your core and future goals.
“We’re here to innovate, have fun and, at the end of the day, move product,” Ashlock tells managers. “And the way we move product is through the innovation and the encouragement of taking educated risk.”
Granger can recite the vision Clear Channel has had since it first began strategically purchasing radio stations in Texas to reach decision-makers in industrial regions — it’s about reaching advertisers and helping them sell. And he could tie that to his new model of tracking results to optimize advertising success.
“Dan, over time, took a very big-picture approach to not just getting an order on the air but, ‘How do I move somebody’s business?’ which is always the right way to approach any client,” Ashlock says.
Because Granger’s idea aligned with the corporate goal and he could illustrate how it would improve a service he already provided, Ashlock’s decision was easy.
“If it’s part of their core business model and they’ve come up with a plan to help with that, then nine times out of 10 they’re dead-on because they know their business so well,” Ashlock says. “If it’s an area that they’re looking to branch out into — maybe it’s something in the digital space that’s not as much part of their core business at this point — I’ll bring in other people more knowledgeable in that area for us to vet out some of the possibilities and some of the concerns.”
Once the pros and cons are on the table, it’s an evaluation of risk versus reward. Think of it as a seesaw where you want to maximize the reward — whether in terms of revenue or customer satisfaction — long-term while reducing risk.
“If the risk that they’re wanting to take is not going to reap that much of a reward, then (we say), ‘Hey, go back and revise your plan a little bit where there’s a stronger chance for us to benefit greater, whether it’s from a ratings standpoint or revenue standpoint,” Ashlock says.
The key here, from Granger’s perspective, is that managers don’t bluntly turn down ideas. Give employees a chance to make them better.
Then consider whether the idea lines up with your core. Ashlock relies on customers for that barometer.
“If there’s some kind of huge revenue potential, but it would damage a brand, I wouldn’t do it,” he says. “If it’s going to compromise our integrity, if it’s not going to resonate with the listener, then we won’t do it. There’s plenty of things that we’ve decided not to do, because they don’t fit what the station’s about and it would seem like a sell-out or a disconnect with our listener.”
A great idea could have all the potential in the world, but that has to actually materialize.
“It’s not autonomy without some kind of measurement,” Ashlock says. “That autonomy … would be short-lived — and when I say short-lived, not a month or two (but) over a nine-month period — if there weren’t successes attached to it. Successes back up that autonomy.”
Ashlock gave Granger’s idea a thumbs up along with a timeline. When you give approval, you also give checkpoints that must be met to validate the proposal.
Those milestones will differ with each project, but obviously you’re looking for growth and improvement — whether that’s with your revenue or customer satisfaction.
“It really had to do with new and repeat business,” Ashlock says. “Are you able to sustain clients better under this model? Are you able to bring more new business on? [It’s] quite frankly talking to the clients and asking them about their experience. Is (the service) better than what they’ve had in the past? Are they getting better results? Are they moving more product? Is their return on investment better?”
When he got emphatic yeses across the board, Ashlock considered the model a proven success. That was easy to back up with facts because, due to the nature of audiolytics, Granger had built-in metrics. Along with a team of three others, he sets up unique phone numbers, landing pages and discount codes to track responses to clients’ ads. They also look at before-and-after trends, such as increases in overall Web traffic.
Legalzoom.com, for example, launched a pilot program with Granger in 2004. There was skepticism from an online company trying radio for the first time, but thanks to the success it has seen through audiolytics, it has grown to be the largest advertiser on the largest news/talk station in the country.
Now, Granger’s team grosses nearly $4 million annually in local radio spot sales.
He couldn’t have done it without an environment that supports innovation while stressing results.
“The biggest indicator whether something is working is if the client comes back,” Granger says. “There’s so much money wasted in the name of creativity, it makes me sick, when this is about performance. At the end of the day, if you perform, if you make (clients) profitable through their investment, they’ll give you more money.”
The Ashlock file
Market manager and president
Clear Channel Radio Los Angeles
Education: Undergraduate degree from Northwestern State University, La., and USC-Annenberg, for graduate school
What was your very first job, and what did you learn from it?
L.A. Dodgers PR department. It’s important to love what you do, and that still holds true today. As I look at business peers across multiple industries, those that are excited to go to work each day are the ones that are performing the best.
What’s the best business advice you’ve ever received?
‘Failing to prepare is preparing to fail.’ John Wooden
Describe your favorite radio station to listen to.
Hot 92.3 (old school and R&B). It just doesn’t get any better than Luther Vandross and Marvin Gaye when you’re looking to kick back and unwind.
What’s your favorite stress relief?
Hanging out with the kids, either in the pool, in the game room on the Wii or playing cards on the patio.
Companies worldwide are struggling to find and retain the caliber of leaders their businesses need. The increased market intensity and demand for top-shelf, experienced leaders arrive at a time when our population of potential leaders is declining. Stagnant hiring in the early 1980s has resulted in fewer experienced leaders available. On top of that, U.S. census data indicates that the population of potential leaders is shrinking.
In short, we have a challenging business environment and fewer experienced leaders to navigate it.
These challenges represent opportunities to fundamentally change and measurably improve how talent is managed. We must treat talent management as a business imperative and bring it to the strategic planning table — where it belongs.
Whether starting new companies or preparing the leaders of tomorrow, the most successful companies hire great talent, make sure that talent is aligned with the company’s strategy and culture, develop that talent aggressively and reward that talent well, in alignment with their desired culture and future strategy.
To manage talent strategically, organizations must do three things:
Align business and talent strategies.
Every aspect of the talent strategy should link directly to the business strategy and its execution. Anything not directly linked is probably working against the core strategy by consuming time and resources and confusing managers about what is most important. Once the business plan is formulated, the first question to ask is, “Are the current people processes ready to hire, develop and manage leaders to support this business plan for the next three to five years?” Make sure that the competencies for which you are hiring match the skills that leaders will need to execute the business plan. Ensure that leadership development is based upon values that support where the company is headed.
Look ahead, not behind.
Develop tomorrow’s leaders for tomorrow’s challenges. Talent management should be based on where the company is going, not where it has been. Most performance management effort is oriented toward evaluating past performance. While understanding how a person has just performed against current expectations is important, it is equally important to ensure that leaders are assessed against the future demands of the business — three to five years down the road — not just the challenges being faced today.
Track the talent profile.
Talent metrics should be established, tracked and acted upon as part of the business portfolio. They should garner the same attention as other bottom-line metrics. Talent metrics are not second-class measures — they are a vital part of your business portfolio and the best indicator of your future capacity to execute.
Ignoring or ascribing second-class status to talent metrics is a good way to be caught off-guard in midstream. Decision-makers should have a “talent scorecard” to monitor the quality of available talent and track gaps in key talent pools. These data can be used to adjust hiring and development practices and to drive individual accountability for enabling the business strategy.
No matter how brilliant the strategy, it takes people to execute it. It is too easy to be captivated by plans to secure additional market share or tap new markets but fail to ask, “Do we have the people to get the job done?” and “What will it take to ensure we have the talent we need?” Require each business in the enterprise to provide a talent strategy commensurate with the operating plan for executing their business strategy. Without an equivalent talent plan, the business strategy becomes a false promise. Do not approve business plans that fail to address finding, developing and managing talent to execute the strategy.
Leslie W. Braksick, Ph.D., is co-founder of CLG Inc. (www.clg.com) and author of “Preparing CEOs for Success: What I Wish I Knew” and “Unlock Behavior, Unleash Profits.” Braksick consults with top executives and their boards on issues of executive leadership succession and effectiveness and strategy execution, including merger integration. Reach her at email@example.com.
As a child, Lois Melbourne watched her mother run her business with a focus on people.
That lesson stays with her as an adult at her own business, Aquire Inc., a work force planning and management solutions company. As co-founder and CEO of the 64-person company, she uses those people skills to help business owners develop succession plans and work through mergers and reorganizations.
Smart Business spoke with Melbourne about how to effectively manage your talent.
How do you create metrics for talent management?
Every organization has different drivers, but looking at the measurement, some of them are subjective, yet they still need to be ranked — like readiness for another position. It has to still be a human intervention to say, ‘Is an individual ready for a particular role?’ But that decision is also hopefully based on measurements that have been going on throughout the year or throughout someone’s career as you look at what experience have they been through, what value have they brought to the organization, do they have the necessary training or hands-on experience with components in the company? Then, sometimes it’s very easy to check off the list and say maybe they’ve been to a university or they haven’t, they’ve gotten a certain certification or they haven’t. Those kinds of things are often part of the measurements, as well.
How do you prevent bias from creeping in with subjective measurements?
An important part of avoiding bias is there isn’t one individual making a decision about another person’s career. … Organizations will put in 360-degree reviews. That kind of quantification is there, and it gets a lot easier in a business to avoid bias if the organization is driven by results, and the goals are set for any given individual or position or department, so you can measure if someone has actually met the goal.
Let’s say a goal is 80 percent of the employees will have been through a global training experience in two years, because we want them to either do a global job or to have been through certain types of classes about global awareness. If that’s a departmental or corporate goal, then you start driving the goals down to the individual, so then it’s less subjective — that HR person who was in charge of getting people properly trained, did they do a good job? Well, did they reach the goal? Was the goal properly established? Those types of things help take out the bias.
How do you set goals that are challenging but achievable?
Part of it is looking at historical data. What has been done in the past? We’ll use the previous example — let’s say the goal is, ‘We want 80 percent of the people to go through training in two years,’ but we never could reach more than 50 percent. So why would we, this year, crank it up 15 percent? Look at some of the historical factors and see what’s been achievable in the past. Come up with a logical number for the future, as well.
How do you know when you need to lower a goal versus it’s a performance issue?
It requires a discussion with sometimes a lot of people — the stakeholders, the individuals involved — to figure out why have we not been reaching this goal? Is it because of the performance of individuals, or is it because of budget constraints? Why did we set the goal at 80 percent to begin with? Was that wishful thinking? Did we have to have that many for some reason, like compliance issues?
It’s finding out why the goal was set and finding out is there a consensus on why the goal hasn’t been reached. Are there conflicts as to why the goal hasn’t been reached? Is there finger-pointing? … It might have been something out of their control, and that might need to be notated.
If we have a goal of watching what kind of turnover we have in our employee base and we lose a whole lot of people, why does that happen? Did we lose people because we stopped a benefits program, and people had to leave because they needed to find health insurance? That insurance impact then affects other goals. Get down to why did we miss the target.
How to reach: Aquire Inc., (888) 674-2427 or www.aquire.com