Chris Blase never intended to go into the cleaning business as his career. It was something he decided to do with a couple buddies to supplement his full-time job.
Then he and his buddies lost their full-time jobs and the cleaning business suddenly became a lot more important.
“I thought it would be a pretty simple, straightforward business to start, and I found out it was a lot more difficult,” Blase says. “The biggest challenge by far was recruiting people that were motivated to do a good job. I hired and fired over 1,000 people over a five-year period.”
What followed was a time of stress, struggle and, ultimately, satisfaction as Blase learned what it took to find the right people and build a business that could thrive.?He says his first lesson was to stop trying to be all things to all people.
“I was getting to the point where it was not unusual for me to work straight through the night,” Blase says. “I was doing things like driving away from the gas station with the hose still in my car. And I walked out of my apartment one day and I hadn’t put my pants on.”
Blase was taking all comers as clients, no matter the size or location, and it was burning him out. After selling the business and working for a couple other companies that were suffering from the same problems, Blase decided to strike out on his own again. This time, however, he took a different approach.?He quit trying to do it all and focused on a specific segment, office buildings between 50,000 and 300,000 square feet.
Just as importantly, he made it a point to bring in motivated managers who could help him lead and grow his business. Buildingstars Inc. now provides cleaning services for more than 1,400 customers and took in $20 million in 2009.
“If you can find a way for your key managers to have a vested interest in the company, you’re going to get a totally different attitude toward work and just a totally different approach,” says Blase, the 48-employee franchise cleaning company’s founder and president. “Especially if you’re expanding on a large scale.”
Blase decided to get into franchising. And lest you think this story suddenly doesn’t apply to you anymore, Blase says, ‘Think again.’
“In theory, almost any business is franchiseable,” Blase says. “Companies are going to be faced with a decision where, ‘I’m happy here in St. Louis. I really don’t want to expand beyond this because I don’t want to make the investment and manage remotely.’ They should be asking the question: Would that make sense under a franchise model?”
Blase says franchising is a much more comfortable way to manage people.
“It’s like working with supporting partners versus managing employees,” Blase says.
So the next question is: How do you find people to fill these important roles of leading your franchise units?
“The key is not really looking to sell a franchise,” Blase says. “It’s more based on qualifying or recruiting a franchise owner that’s qualified. It’s not all about the initial investment. It’s more about the recruiting process. You should turn the process around and look at qualifying that person just as strong as you would when you’re bringing on a manager in your company.”
Blase says the difference in providing someone with equity and a stake in the business versus just being another employee in the company can be immense.
“I was able to attract a totally different type of individual that maybe wouldn’t normally go to work for a cleaning company,” Blase says. “It’s all about creating the right kind of management and development system for your key people.”
Put in the time
One of the first things Chris Blase does when he’s looking at a prospective franchisee is ask the person to put together a business plan.
“Have the prospective franchisee go through a very in-depth process to prove that they are competent or capable of managing that unit,” says Blase, founder and president at Buildingstars Inc. “The biggest mistake that companies make is they base the decision on that person’s ability to invest versus their ability to perform.”
The 48-employee franchise cleaning company has more than 1,700 customers and took in $20 million in 2009 revenue.?If you find that you’re not recruiting effective leaders for your business, assess your recruiting style and the questions that you’re asking.
“Am I identifying the same skills and using the same criteria that I would use in hiring a competent manager?” Blase says.
Set aside the investment aspect of franchising and focus on the basics of leadership skill and competence. Make it clear that you want to work with the person to help them grow.?At the same time, you need to stay in touch with customers to get their feedback on how your leader is doing.
“It’s important to be in touch with the perceptions of the customers and hear their positive viewpoints and negative viewpoints,” Blase says.
How to reach: Buildingstars Inc., (866) 991-3356 or www.buildingstars.com.
Wellness is everywhere these days. It’s in the home. It’s in the workplace. And it’s a topic of national conversation. But wellness means more than just staying healthy and eating right.
“When you look at wellness, you have to examine everything — your career well-being, your financial well-being, physical well-being, social well-being, community well-being and, ultimately, your spiritual well-being,” says Dr. Deepak Chopra, wellness guru and founder of the Chopra Center for Wellbeing.
Smart Business sat down with Chopra, who works with individuals, executives and companies to foster wellness in numerous forms and discussed the impact health and well-being can have on individuals and organizations.
Dr. Chopra, how important is wellness and can you put an actual economic number on that importance?
There is a lot of good data that shows how well-being correlates with economics, and there are huge implications of how one’s well-being affects the bottom line of a company.
It is currently estimated that 15 percent of the work force in the United States is ‘actively disengaged.’ These are unhappy people who go to work each day and make it their business to make other people unhappy. The cost of actively disengaged workers in the American work force is about $350 billion a year. There are another 57 percent of people who are not actively disengaged, but they’re disengaged, which means they’re just punching the clock. That leaves only about 28 percent of workers who are actively engaged.
I’m on the advisory board of the Gallup Organization, and we’ve studied this issue. What we’ve begun to find is that the economic implications of this are not only in the billions but probably in the trillions. What’s more, we don’t understand the relationship between physical and mental well-being and economics very well because medicine has not focused on this. But the fact is that new information shows that your physical well-being is linked to all these other things and there’s an enormous economic impact tied to wellness.
Can you give me an example of how this works?
If you are having an unhappy time at work, for example, such as if you’re not only disengaged but your supervisor ignores you, your likelihood of getting disengaged and ultimately becoming sick goes up by 44 percent. If, on the other hand, your supervisor doesn’t ignore you but criticizes you, your disengagement falls to 20 percent because you’d rather be criticized than ignored. That is because, when you’re ignored, you don’t exist. Finally, if your strengths are noticed by your supervisor or by your colleagues, your disengagement falls to less than 1 percent. That has huge economic implications, not just for a person’s well-being but also for their family.
Likewise, there is data on social well-being, community well-being and financial well-being. If you work for a firm that makes sure there is some safeguard for you not to get into debt, if you have a certain amount of savings taken care of through automated plans and if you can afford to pay your taxes comfortably, those have direct implications on your health and, therefore, on your productivity.
When you actually sit down and analyze it, you can come to the conclusion that, for companies, wellness and well-being may just be your biggest investment because it has huge returns for you economically. Think about it from this perspective: If you have happy employees and you’re happy yourself, you’re going to have happy customers. And if you have happy customers, you’re going to have a healthy company and happy investors.
So you’re saying that there’s a correlation between happiness, health and wellness, and prosperity?
Absolutely. We now know so much about happiness and workplace happiness and how that has direct effects on your neurophysiology, on your biology, on things like immunomodulators (the things that modulate the activity of your immune system), so no longer is the connection between emotions and wellness and well-being disputed.
If you’re a business leader, you need to consider whether you engage emotionally with your employees and even your customers, in order to improve and increase your business. This emotional engagement requires immense amounts of knowledge about what makes people emotionally intelligent.
For 40 years, we focused, as a medical profession, on the deleterious effects of stress. We now know that with people who are stressed, there is a direct correlation with addictive behavior, cardiovascular disease, infections and some types of cancer. But we hadn’t looked at the opposite: If stress could make you sick, could happiness make you better? And the evidence shows it can.
What can someone do to spark that happiness and, in turn, become healthier?
There is a lot of good data on happiness. Happy people see opportunities where others see problems. Happy people have ways of getting over the limiting beliefs that hold them back. Happy people have meaning and purpose in what they do. Happy people make other people happy. And they know the fastest way to be happy is to make someone else happy.
Here’s something worth thinking about: If you have a happy friend, your happiness level goes up 15 times. If your happy friend has a happy friend, it goes up another 10 percent. And if your happy friend has a happy friend who has a happy friend that you don’t even know, it goes up another 10 percent. Here’s why: Because when two people meet, it’s not just those two people meeting, it’s all the relationships and factors in that person’s life that influences their behavior.
These days, we are doing a lot of research on social networks and how they not only improve the quality of life but also the quality of well-being, economics, productivity in the workplace, engagement and even biochemical responses, such as your blood pressure level. It is all tied to wellness and well-being.
Wellness seems to be something everybody should be interested in pursuing, but it goes well beyond just eating healthy, exercising and trying to be happy. You’re talking about a complete behavioral change, correct?
That’s true. I work directly with companies and executives to provide training on leadership skills in this area. True leadership requires several strategies. It requires the ability to listen, but the ability to listen not only as a good observer but as an analytical listener, emotional listener and spiritual listener. Leadership also requires the ability to create a vision, the ability to engage emotionally with people and the ability to enhance your awareness to understand what people need — whether it is your customers, employees or investors.
Finally, leadership requires the ability to strategize and take action.
There is a whole section I call responsibility. When you talk about corporate or leadership responsibility, you talk about initiative, investing the right resources, risk management, values and establishing corporate missions. But what is missing for corporate leaders and leadership training is that as leaders we need to be healthy ourselves, physically and emotionally, and we need to make sure the people we work with we have at least some tools to ensure their health, wellness and happiness. That does require a different way of thinking, and yes, it is a behavioral change.
How do you get to that point? It’s a lot harder than simply waking up a little earlier and working out before going to work or eating that salad for lunch instead of a double cheeseburger.
If you motivate people through fear it usually doesn’t work. There’s a high dropoff rate, and furthermore, fear has its own consequences, such as stress. So many times, when people are motivated by fear, they end up worse than they were before. Instead, people have to be inspired and feel some type of joy in this transformative process. They also have to understand that if they take on this transformative process and take responsibility for their well-being, they’ll be much more productive. They’ll be able to accomplish more by doing less.
Take stress for example. When people are stressed out, they do things they shouldn’t, like drink to excess. If somebody has a hangover because they were stressed out and sought refuge by drinking too much, half the day is wasted just recovering from the hangover. And by the time you’ve recovered, then you’re ready to create another hangover.
So it’s very important for people to recognize that their energy level, their creativity, their ability to motivate others and their ability to produce more is directly related to how they’re feeling inside and their health.
What are some ways people can take to increase their wellness?
There are a few simple things that will help create well-being.
Get good sleep. The importance of sleep has been underestimated. There is an overwhelming percentage of the population of the United States that take sleeping pills to sleep. That doesn’t produce normal, rejuvenative sleep, which is necessary.
Engage in a minimum amount of exercise each day.
Be a little careful about your diet. Don’t be compulsive, but try not to eat anything that comes in a can or has a label.
Have healthy relationships.
Use some technique for stress management, even if it is 10 minutes for meditation, reflection or thinking about how you want your day to go, sitting quietly or strategizing around your priorities.
Build up on your relationships — both at home and in business.
You mentioned relationships. What’s the importance of personal relationships in wellness and well-being, and how can those directly impact one’s mood?
Emotions are contagious. If you’re feeling stressed, even if you don’t say or do anything that’s inappropriate, there’s a phenomenon called limbic resonance. People around you will start to feel stress, their blood pressure will go up and their heart rate will speed up even though they are not aware of it. All of this means that, as a social species, we are constantly monitoring, regulating and being regulated by the emotional state of others around us.
This emotional state not only affects our emotions but our physical state — blood pressure, heart rate, adrenaline levels. If you are emotionally fulfilled, happy, you affect other people not only by what you say or do but by your very presence.
And the opposite is true. If you’re stressed out, you affect people in a negative way, not only emotionally but physically, just by your presence.
So what can you do to keep this from negatively impacting your wellness along with the well-being of others?
There are techniques to change this. You can acknowledge other people’s strengths, help build teams and foster teamwork, and actually make sure that people work only in those areas where they can utilize their strengths.
We have identified 35 strengths where people fall into and found that even if people are really good and productive, if you put them in the wrong seat on the bus with regard to their strengths, they’re not going to be happy, and that’s going to affect their productivity. Therefore, team-building and putting together the right set of talents based on people’s strengths is imperative in the workplace. And, you must acknowledge people’s strengths. We don’t always do this.
We asked people in over 150 countries the same question: Do you like what you do every day?
Only 20 percent of people said yes. We also found out that more people die in the United States on Monday morning at 9 a.m. of a heart attack than any other time because they hate their jobs. These are facts that are immediate and alterable, and they all correspond to wellness.
How important is getting the right amount of sleep each night?
Sleep is very important. Restful sleep is the time when your body rejuvenates. There is a period during sleep, dream sleep, which is when you have some sort of detox activity, where the stress is removed. For many people, between six and eight hours of sleep makes sense.
So what should be the first thing people do to take responsibility in their own wellness and well-being?
Sit for five minutes with your eyes closed. Put your attention in your heart every morning and ask yourself, ‘Who am I? What do I want? And how do I want my day to go?’ If you start living that question, you will spontaneously know what your priorities are. And that will ultimately lead to a healthier, more productive and happier life.
How to reach: Chopra Center for Wellbeing, www.chopra.com
Lea Bailes saw great potential for Valerie Eaton to become a valuable leader at Guier Fence. The only person he needed to sell on developing this untapped talent was Valerie.
“She came into our organization as an associate doing material sales and not getting paid a whole lot to do that,” says Bailes, the 70-employee fence company’s president. “I saw a lot of potential in her to do a lot more than maybe she thought she was even capable of doing or that somebody would allow her to do. I started approaching her about changing roles.”
Bailes wanted Eaton to become involved with outside sales and residential sales, but she turned down his offer several times.
“One day, I guess something changed, and she came back and said, ‘Yes, I want to do it,’” Bailes says. “She ended up being our top residential salesperson for that year. After seeing her accelerate through that, we saw a whole different side of her. We saw this competitiveness and this drive come out.”
So what’s the key to discovering this kind of hidden talent in your organization?
It starts with a patient approach.
“You may see something and you may want something, but it may take time,” Bailes says. “You may be dealing with someone who has a totally different personality than you.”
If you see talent in one of your employees, you need to get that person to recognize it in themselves. You also need to see how committed they are to you and your company. So give the person a small challenge that takes him or her out of his or her comfort zone.
“Move their cheese a little bit and see how they respond,” Bailes says. “If they get upset and start throwing a fit, they’re probably not your most loyal employee. But if they move into the problem and move to what you’re trying to get them to do, they’re probably a very loyal employee.”
It may be as simple as just rearranging the person’s job responsibilities a bit or asking them to take on a small but important project. Whatever it is, the way you present it to the person can go a long way toward their acceptance of both that task and future assignments.
“The way I present it is, ‘This is the greatest area of need in the company; you have an opportunity to come in and be a hero and fulfill this need,’” Bailes says. “We try to portray it like they can ride in and save the day. Try to motivate them through the thought that they can do that. It’s not false. We’re not trying to trick them into doing anything. We really are trying to fill a need.”
If the person handles the project successfully, be vocal with your praise. But you need to go beyond a pat on the back to create true engagement. Show people how their effort helped your business.
“Appreciation motivates people, but so does a sense of getting a job done,” Bailes says. “Crossing something off a list or providing a certain result is something that really motivates people. Review the results with them. Tell them, ‘You did X, and this is exactly what you’ve accomplished, and you should be proud of that.’ Give them that feeling of accomplishment.”
Keep feeding the person challenges and increase the difficulty based on how well they perform.
“You have to be patient and look for those small daily changes,” Bailes says. “I’ve seen managers that weren’t patient and they just run good people off.”
It was through a patient approach that Bailes was able to groom Eaton into a leader who is now responsible for managing her own sales staff.
“Find someone who has an intense passion for what you’re doing and the company itself and then train them how to manage,” Bailes says. “Take the loyalty and instill the management skills.”
How to reach: Guier Fence, (888) 782-6508 or www.guierfence.com
Make your business interesting
Lea Bailes won’t try to convince you that his is the most exciting business in the world. But he will argue that Guier Fence is a lot more than just 70 employees who dig postholes in the ground.
“I struggled with this myself for a while dealing with telling people what my job was,” says Guier, the fence company’s president. “You have to figure out how to make what everybody is doing meaningful. For us, the meaning for what we do is we beautify people’s properties. We protect children and dogs. We keep people from falling into pools or falling off of balconies.”
If your employees feel a sense of purpose in their work, they’re more likely to stay loyal to your business.
“You have to look at it from a consumer perspective,” Bailes says. “There is a reason why someone is buying what we’re selling. If you start looking at your business too introspectively and you look at the day-to-day stuff that you grind through, we all have that. You have to get past all that and not get bogged down in what you don’t like and really look at it from the end perspective.”
David Hankin could pass for an entertainment executive as he sits in the courtyard of The Peninsula Beverly Hills hotel. Donning a sleek suit and squinting into the sun, he cracks jokes about which doctor he might portray on TV.
And when you hear his mantra, you’ll really think Hollywood.
“You have to take care of your talent,” he says.
Hankin does come from the entertainment industry, where he gleaned that piece of advice, but today, he serves as CEO of The Alfred E. Mann Foundation for Scientific Research. In fact, that mantra still guides him as he leads research and development of medical devices at the organization, which has produced cochlear implants for the deaf, retinal prostheses for the blind, and the pen-cap-sized device Hankin holds now — an implantable microstimulator that’s battery-powered to stimulate impaired neural and muscular functions.
Some would argue that those plots of intellectual property are a business’s most important assets. But when a moderator of a panel discussion on the topic once made that claim, Hankin was quick to refute it.
“I said, ‘With all due respect, in our business, intellectual property is not the most important asset that we have,’” he says. “‘The most important asset we have is people because that’s where it starts.’ You don’t have intellectual property if you don’t have great people.”
For Hankin, who also serves as president of The Alfred E. Mann Foundation for Biomedical Engineering, it really boils down to that mantra he borrowed from the entertainment world. It’s all about taking care of his 105 employees, who tend to be top decile graduates from prestigious technical schools with years of specialized experience. That caliber of talent presents a double-edged sword.
“The challenges, of course, are that you have to figure out how to channel that creativity and that brilliance so that it’s productive,” he says. “The rewards are spectacular, and you end up with devices like a microstimulator that holds the promise of reanimating paralyzed limbs. From a leadership point of view, it’s really channeling that brilliance and energy that (employees) have.”
Start with skill
Though the Mann Foundation is relatively small, with recent income around $24 million, it competes with giants like Boston Scientific and St. Jude’s.
To stay competitive when it comes to hiring, the foundation recruits heavily across several fields, from electrical and mechanical engineering to biosciences. Hankin keeps tabs on employment news so if a large defense contractor is shedding people because of a canceled program, for example, he reaches out to their human resources manager to connect the dots.
“Anytime a company with sufficient technical prowess is shedding people, we look at who they shed,” he says. “Just because somebody gets axed in this environment doesn’t mean they’re not a great person.”
Because about 80 percent of the positions at the Mann Foundation are technical in nature, Hankin considers technical skill the primary hiring factor.
“It’s a litmus test because, frankly, if you don’t have the right technical acumen, you’re not going to be able to hang in our group,” Hankin says. “If they don’t have the skill level and they can’t sit in meetings and contribute in our organization, then they’re not going to make it.”
Hankin often has prior working relationships with executives he brings in, partly thanks to his recruiting network. Beyond that, he assesses how candidates have proven themselves in the field.
“Some of it is based on past performance: What have they done in their career? What kinds of challenges have they undertaken?” he asks. “I’m not afraid of people who switch careers. Frequently when we see that, we see people who are able to make adjustments and also have to learn about new industries.”
Industry-hopping could also suggest a candidate is a natural learner who would fare well in ever-changing fields like health care and technology.
Use the interview to drill into candidates’ skills, even if that means turning it over to the experts. Hankin gets uncomfortable in interviews with his scientists, because they ask candidates such tough questions.
“It’s not, ‘What do you think your strengths and weaknesses are?’” he says. “They’re asking them how they would solve certain scientific and engineering problems. They want to know more about their approach than whether or not they come to the right answer.”
Give employees leeway
When you’re bringing in such technical people who have spent years specializing in their area, the key is really harvesting their abilities. If you’re like Hankin, you may feel clueless next to your people’s expertise. In that case, get out of their way.
“My management style tends to be more about hiring great people and letting them run, giving them the field,” Hankin says. “I’m not smart enough to micromanage these people, honestly. The technical breadth and diversity among the different technology areas that we have to cover … is staggering. I have to hire great people and really trust them.”
Their skills need the opportunity to shine. Give employees freedom to do what they do best.
“One, you have to have creative, challenging projects for them to work on,” Hankin says. “Two, you have to give people room to make mistakes and fail. We want people to take risks; that’s how we solve problems.”
Creating that safe environment starts with flexibility on your end. When you’re discussing the company’s approach to solving a problem, keep the table open to all ideas. If your employees are technical experts, this isn’t too hard to do because they’re the ones with the knowledge necessary to formulate answers.
“It’s not my role to talk,” says Hankin, who stays quiet during meetings. “If something comes up where there’s a partnership issue, those are things I’ll (talk) about. If there’s a debate on how to design a circuit sufficiently to perform a certain function, I’m probably not going to enter that debate.”
The good thing about this kind of environment is that even if Hankin did enter that debate, his perspective would merit consideration, too. He’s comfortable throwing out a “what if” in a meeting because an initial “Yeah, right” response may give way to, “Let’s try it.”
“We discuss different directions that we might take in addressing a problem,” he says. “We may pursue one or two or three or four avenues of addressing a particular technical problem, any of which may succeed or not. We’re willing to consider multiple paths.
“Maybe 90 percent of the conversation is about different technical approaches: ‘Well, have you tried this? Have you thought about that? I know someone who’s done this.’ This free flow of scientific ideas is something that we promote, and that’s how these kinds of problems get solved. They don’t get solved because some guy is holed up in a cube someplace running experiments.”
Rigorous testing — in many cases, required by national and international guidelines — later reveals the best solution. But to get there, Hankin has to remind people that speaking up is the only way for solutions to surface.
“From a management point of view, we tend to want to understand what the problems are so that we can help try to direct resources to hot problems,” he says. “Because we have a culture where you’re not going to get crushed if you fail, people tend to be more open about things that they’re seeking to solve. One of the things that I always tell people (is), ‘If there’s a problem that exists and I don’t know about it, there’s nothing I can do to help direct resources.’ I look at myself as the remover of roadblocks and also traffic cop of resources. If I can direct resources in the right way in the right place, we can solve almost anything.”
You generate an open discussion by focusing on the collective goal of solving problems. A new employee at The Alfred E. Mann Foundation, who came from a company where people were protective of information, was surprised by his first meeting. Afterward, he asked Hankin if people were usually that open.
“Here, people want to share information because they want to solve their problems,” Hankin told him. “They know there’s other people who have different experiences who come from different industries who have a potential contribution to solve their problem.”
Make your mission relevant
The microstimulator Hankin is pinching between his thumb and forefinger was a much bigger undertaking than its size suggests. It took 10 years to develop — two for the proprietary ceramic case alone. To get there, the foundation debuted at least half a dozen fresh innovations.
How does he keep employees motivated for projects that take that long to complete? Hankin says it’s not a huge hurdle, considering that “psychic value” is inherent with Mann’s mission of, basically, saving lives. When Hankin surveyed employees about their motivation a couple of years ago, they said they were there to help improve human health.
Your company’s mission may not be that mobilizing. But whether you’re saving lives or shipping parts, the key to motivating employees is showing them the relevance of what they do. Making your product or service real to them will keep them engaged for the life of the project — however long that may be.
“Because we take things to human trials, people get to see the effect on people,” Hankin says. “We also bring patients in who’ve experienced the benefit of a device, and we have them talk to our people. So we try to bring our people as close to the patient experience as they can get without having to go to the clinic themselves. This is the whole motivating factor— you get to see the benefit of the device you create.”
To get his employees close to the customer, Hankin will even send employees to watch the company’s devices being implanted through surgery.
The key is keeping that big picture in focus as employees tackle individual tasks. Frequent design reviews give Hankin’s team an opportunity to recap every aspect of a project’s progress and remind everyone about all the parts that must come together.
Getting big-picture buy-in goes back to giving employees challenging projects to work on. If you can pare down your teams to the point where each member carries a significant portion of a project’s weight, you automatically make each piece important. When Hankin came on board in 2007, he trimmed overlaps and “deadwood fat” to make the organization lean and each role relevant.
“Each person’s working on something that’s really meaty,” he says. “It’s not somebody who’s working on a piece of something that they can’t see any relevance to. Everybody in our place understands the relevance of exactly what they’re doing.”
A good leader educates employees about why their jobs matter, but a great leader actively matches up employees with jobs that matter to them personally.
By helping employees see all the necessary parts that make a whole, you’re inevitably unveiling other opportunities where their skills could make a difference. Have the flexibility to let them jump on different projects.
With five or six projects running at once, Hankin can reassign employees who have completed one task or just need a change.
“I try not to pigeonhole people,” he says. “If people want to try different things — subject, of course, to meeting our schedules and our budgets — we try to enable people to work on different projects. … We make adjustments from a career development focus. I may say, ‘Look, next available opportunity to do that, we’ll do that,’ but I keep my promises.”
That effort keeps employees engaged so they’ll make your company successful. By taking care of his talent, Hankin keeps his most valuable resources engaged through high-risk, high-reward projects with long, challenging life cycles.
“If somebody is working with you and they are unhappy and disgruntled, you’re not going to get their best work,” he says. “Part of the challenge is to get people to align with what their desires are.”
How to reach: The Alfred E. Mann Foundation for Scientific Research, (661) 702-6700 or www.aemf.org
Bill Ford Jr. never thought he’d see the day when Chrysler and General Motors would be forced into bankruptcy proceedings, when American automakers were in such peril that they had to look to the government for a bailout or when the entire auto industry was teetering on the brink of disaster.
Yet that’s exactly the depths to which the automotive industry sank over the past two years. As the worldwide economy slumped into a massive recession, the auto industry took one of the worst beatings of any area on the business landscape. Car sales slumped, auto component suppliers went bankrupt, Chrysler partnered with Fiat, and GM underwent a restructuring and downsizing that included the elimination of the Pontiac, Saturn and Hummer brands from its lineup.
As the executive chairman of Ford Motor Co., Ford — the great-grandson of company founder and American business icon Henry Ford — helps lead the one U.S. automaker that didn’t face bankruptcy proceedings or the humiliation of limping to Capitol Hill with its hands out. But that doesn’t mean Ford Motor Co. has emerged in 2011 unchanged or unchallenged by the events of the past two years.
In November, Ford gave a presentation at the Ernst & Young Strategic Growth Forum in Palm Desert, Calif., moderated by veteran journalist Charlie Rose. During the presentation, Ford talked about the recent past of the auto industry, where the industry is headed and what business leaders in other industries can learn from the lessons taught to automotive executives in the past couple of years.
“Every industry says they’re in a time of great change,” Ford says. “I suppose when you’re in it, you really feel like you are. But if you just look back a few years and look forward a few years, you’d be hard-pressed to find any era in any industry that will comprise more change.”
Do the right thing
When the other American automakers went to Washington seeking a federally funded lifeline, Ford figured his company would be at a disadvantage on the consumer sales front.
“We didn’t really know what a bankruptcy meant for us,” he says. “Would a customer buy a car or truck from a bankrupt company? What we didn’t realize at Ford was that it would resonate with the average person on the street that we didn’t take a bailout. We thought the average person would take the opposite stance, as in, ‘I have so much money wrapped up in this company, I’m going to buy their car or truck.’ We were worried that no one would buy from us, because they were now shareholders of sorts in GM and Chrysler.”
Instead, Ford received — and still receives — letters of support from small business owners and operators who admire Ford’s ability to get his company through the recession without the need for taxpayer dollars.
“The letters I got, and continue to get, are incredible,” Ford says. “Things like, ‘I’m a small business owner in Des Moines and no one would ever bail me out, and we’re really glad that you guys did it the right way.’ It really was heartwarming to see the response we got.”
But there was a cost for staying financially self-sufficient. Ford Motor Co. had to borrow against many of its assets to finance the research and development projects that allowed it to stay away from the jaws of bankruptcy and bailouts. The company amassed a large amount of debt, compared with GM and Chrysler, who emerged with clean balance sheets thanks to their sources of external funding.
But Ford believes a commitment to developing your business internally is one of the most reliable methods by which you can weather an economic storm. If you’re developing new products and services and finding other ways to enhance your business from within, you’ll become much more strategically diverse and self-sufficient as a company.
Ford’s emphasis on internal development is reflected in one of the first conversations he had with Alan Mulally, who succeeded Ford as the company’s president and CEO in 2006.
“One of the things I told Alan in our first meeting was, ‘There is no point in going through all of the pain we’re going to have to go through if we don’t keep investing in research and development and product development,’” Ford says. “He agreed completely. Now that we’re through and out the other side, most of our competitors, both domestic and foreign, slashed their spending during that period. Not only didn’t we do that, we actually accelerated some key areas. So when the clouds started to lift, we had the products, technology and features that made our vehicles very desirable.”
Ford and his leadership team set those wheels in motion even before Mulally came on board, working with bankers to get capital to pump back into the company’s development areas. From Mulally’s first day on the job, he began making the rounds to banks, trying to secure the loans necessary to make it all happen.
“It was a pretty dicey period,” Ford says. “You can imagine it was a pretty interesting conversation I had with the extended Ford family.”
To build the case to the other stakeholding members of his family, Ford needed to go back to the basics of good business communication from the executive level: Lay out your plan, be as forthcoming with information as possible, answer questions and seek feedback.
“I was very proud of the fact that, over the course of that discussion and over the next couple of years, when every day they’d pick up a paper that says, ‘Ford, GM and Chrysler aren’t going to make it,’ they all hung in there,” Ford says. “I had to continually sit down with them and say, ‘We do have a plan, you’re not seeing it yet, but it’s going to work.’ To their great credit, they all hung in there. And that really allowed the rest of the management team to not have to worry about the shareholders. They could focus on fixing the problem.”
The patience of the Ford family is being rewarded. Not only did the company emerge from the financial crisis without the need for federal money, but Ford says the company’s debt is being paid off much faster than either the company’s leaders or industry analysts anticipated.
“There was a disadvantage to doing it the way we did. But that disadvantage [of debt] is shrinking almost on a daily basis,” Ford says. “I wouldn’t trade places with anybody. I love where we are. I love our product, our direction and our freedom to operate without interference.”
Face the future
Before you can build something, Ford says you have to value it. You have to value the end product as a company and as a marketplace. The failure to adequately value the domestic manufacturing sector is something Ford believes the American business community will continue to face.
To increase the value of manufacturing businesses, Ford says it will take a combination of new, innovative ideas, intellectual partnerships, capital investment and an appreciation for how other countries handle their manufacturing bases.
“Manufacturing was kind of seen as yesterday’s news, brownfields, and we’re going to become a high-tech and service economy,” Ford says. “The problem is, the multiplier effects of those jobs versus manufacturing jobs is minuscule. To put it another way, every country that Ford does business in around the world will really do everything they can to help their manufacturing base. In our country, it was the opposite. The feeling in Washington, and even on Wall Street, was ‘Who cares? Shut your plants here, because we’re going to be a different kind of economy.’”
It’s taken the economic downfall of the past several years to increase awareness about the importance of maintaining a manufacturing base.
“Manufacturing has to change, and it is changing,” Ford says. “We’re making new things, high-tech things. The auto industry is one of the biggest users of high tech. We should now be building those high-tech components and clean energy components here in America. If anything good has come out of the last three years, it has been a recognition in Washington, and I think on Main Street, that manufacturing matters a lot, and we ought to have a strong manufacturing base. That recognition in and of itself is a great start.”
New avenues to maintaining the manufacturing base won’t be discovered without new ideas. And to that end, Ford sees a great deal of fertile soil in the nation’s universities. Whenever possible, the business sector needs to partner with and leverage the research capabilities of educational institutions.
“In terms of where we go forward, one of the great advantages we have in this country are our universities,” Ford says. “And we have great venture capital activity. We really need to take advantage of those great resources, both the venture capital mentality and the help that the universities can provide to all businesses in terms of R&D, partnering and I’m happy to say those are all vibrant pathways.”
But even with the external financial and intellectual avenues available to businesses, growth still boils down to what is going on under your own roof. You need to have the manpower and the brainpower to take advantage of the opportunities presented to you, which is why Ford promotes an innovative and entrepreneurial spirit among his employees.
“It’s something we struggle with every day,” Ford says. “I believe that now, we have the equation right at Ford. A few years ago, we didn’t. Part of it is you have to look at what the inhibitors are, because people really do want to be innovative. Most people want to try new things. But in our case, one of the things I did was do a deep dive into our product development system. We had a terrific R&D function, built with a couple of Nobel laureates. But somehow these great innovations weren’t making it into our vehicles.”
It demonstrated to Ford how a company’s leaders need to remove internal barriers to innovation — barriers that might exist within your company’s structure that you might not even realize.
“In our case, it was our finance system that created the barrier,” he says. “Whichever program it was — let’s say it was the new Explorer — wanted to adopt the new rear seat belt we just introduced. That program would have to take the cost of that entire innovation. So you wanted to be the second program to take the innovation, not the first.
“That is just one example of how you need to look at what the structural barriers to innovation are. People often blame the culture. People often say, ‘It’s a big company; nobody wants to take a risk.’ That can all be true, but there can also be structural inhibitors like the one that I just mentioned. You have to get those out of the way.”
The other critical component in building your business for the future is a motivated work force. You motivate employees by giving them avenues to pursue their ideas and removing roadblocks. But you also need to encourage the behaviors you want to see.
Ultimately, your internal culture needs to work in tandem with your outside resources. When a motivated work force can draw upon extensive financial and intellectual support, your company can have the tools to weather just about any circumstance that comes your way. There will still be adversity, but you’ll be prepared for it.
“You have to celebrate success,” Ford says. “That is a cultural thing. We do a lot of that, we have awards within the company for innovation. It’s great when you recognize externally. For instance, we’ve been the keynote at the consumer electronics show for the last three years. They never had an auto show up, much less give a keynote. We won the award last year for best in show. That is very reinforcing for our employees, when they’re recognized not just from an auto trade standpoint but something completely different that is seen as really cutting edge. That emboldens people to continually go further.”
How to reach: Ford Motor Co., (800) 392-3673 or www.ford.com
Ford Motor Co. Executive Chairman Bill Ford Jr. touched on a number of topics during his November presentation at the Ernst & Young Strategic Growth Forum. Here are some additional nuggets of information from one of the world’s leading automotive executives:
Ford on where the auto industry is headed: When you think about this industry, for 100 years, we had a changeable line. The Model T had an internal combustion engine and was sold through dealerships. But now we sit on the threshold of some very interesting technology coming into vehicles on the safety side, on the data management side, in terms of real-time road information, where traffic is, where the parking spaces are, all of that will be available very fast.
Ford on the future of electric cars: If you think of electric as we know it today, there are three types. There is the hybrid, there is the plug-in hybrid, and there is the pure electric. To me, the pure electric is great because it is totally clean depending on how the power is derived, which is a whole separate discussion.
If you live in San Francisco and just need to drive around town, that’s OK. But if you all of a sudden want to drive down to Los Angeles, that’s an issue. Plug-in really alleviates that. With the plug-in hybrid, you can drive on the electric motor for the first number of miles, but once the electric runs out, it will then run as a conventional engine. So that gives you a lot more versatility.
Then the current hybrids, which don’t require anything to be plugged in, we keep refining those so the batteries become more fuel-efficient. So really, it will be a three-pronged approach in terms of electric. You’ll have all three of those in the mix.
Ford on international growth: By the year 2020, there are going to be 9 billion people in this world. If you look 10 years beyond that, there are going to be 30 cities of 10 million or more. Most of those will not be in the U.S. or Western Europe, and they don’t have the infrastructure to start shoving cars into those cities. So mobility starts to become a big issue. How are people going to move in big urban areas? The answer is not going to be to put two cars in every garage. So how do we help countries and municipalities solve the urban mobility issue. That will require us to define ourselves not as a car and truck company but as a mobility company.
A few years ago, Tom Heinen found himself heading to Dick’s Sporting Goods to look for a last-minute Christmas gift on Dec. 23.
What the co-president of Heinen’s found when he got there was the best parking spaces were occupied by employee vehicles. But when he entered the store, there was no help to be found and the stock was sparse. Making his way to the checkout, there were two employees nearby, but neither seemed all that interested in helping him.
“Not either of those employees showed any sense of urgency to wait on me and get me out of the store,” he says. “I thought, ‘This is unbelievable.’”
Fast-forward one year. Once again, Heinen was at Dick’s for a last-minute gift. His first thought: “Great, here we go again.” But this time, things were different.
An employee immediately asked him if he could help him find something. Surprised, he said yes and told him he was looking for a baseball bat. The employee proceeded to tell him what aisle it was in and explain that the store had different types and if he didn’t find what he was looking for, to let him know.
Skeptical and scarred by too many bad retail experiences, he headed to the aforementioned aisle, and sure enough, it was right where the employee said. When he made his way to the checkout area, there were now two televisions showing CNN and there were two people at the register, both highly engaged, who quickly checked him out in half the time from the prior year.
While he was relieved to avoid a repeat of his prior negative experience, there was something disturbing about the rapid change.
The problem for Heinen was that he didn’t see Dick’s as being a customer-service-centered business, but in just a year, it had completely changed his experience.
“If Dick’s, who isn’t even focusing on this, can get there, we have to do something differently,” he says. “That’s when we started to make a decision to distinguish ourselves on customer service at an entirely different level.”
It’s not that customer service wasn’t always the focus of Heinen’s; in fact, it’s always been one of the grocery retailer’s primary differentiators. But what the Dick’s experience showed was that if even the big box retailers could deliver a positive customer experience, Heinen’s was going to have to take the service provided by its 2,500 people up another notch.
And this is proven by the store’s own customer surveys that indicate a satisfied customer isn’t really all that loyal but a highly satisfied customer is.
“The value of highly satisfied customers, statistically, is that they’re virtually guaranteed to come back within two weeks,” he says. “A satisfied customer, the number is like 62 percent, so there’s this huge difference between having a satisfied and highly satisfied customer.
“You want to have everybody in that top box — highly satisfied — because they’re very subject to defection if they’re not.”
The challenge is, how do you go from being good at customer service — yielding satisfied customers — to being great at customer service — yielding those coveted loyal, highly satisfied customers?
It’s not the cost of a can of green beans. It’s not the color scheme in the deli department. It’s not whether the box of stuffing is on the top shelf or the bottom.
“If you really want to have a successful company, you have to have highly satisfied associates, which leads to highly satisfied customers, which leads to profit, which allows you to continually reinvest in the company, which includes the people,” Heinen says.
Choose your destiny
If you drive down Detroit Road in the western suburb of Avon, you’ll eventually be faced with a grocery store dilemma: On one side of the street is the low-cost, no-frills Marc’s, while on the other side of the street is the service-first Heinen’s. Each provides groceries, and in a lot of cases, the exact same groceries. But the two couldn’t have a more divergent strategy. One is focused only on price, the other is focused more on service.
When Tom and his brother, Jeff, the other half of the co-president duo, took over the business after the death of their father, one of the first things they focused on was to determine what their overarching strategy should be.
When you look at how to differentiate your business, Heinen says you have to consider three different models — operational efficiency, product leadership or customer service. Operational efficiency is similar to the Wal-Mart approach of being everything to everyone or competing on price. Product leadership refers to competing on your products — whether it be quality or selection — and customer service is a focus on providing the best experience for the people with whom you do business.
“The first thing you have to do is find where do you want to excel,” he says.
For Heinen and his brother, the decision was easy: customer service. Heinen’s reputation had been built on people and service, so it was just a matter of building on this foundation.
“You have got to decide, first of all, if that’s where you want to be,” he says. “I think Marc’s is one of the best-run businesses in Northeast Ohio. It’s not one that I aspire to be like, and it’s not one that I’d be personally proud to be a part of, because it’s not what we believe in, but it’s a great business model.
“The category killer stores like Dick’s or Staples or OfficeMax, they’re helpful, but they’re not winning any customer service awards, and they don’t care,” he says. “That’s not their strategy, and that’s fine. They’re still in business, and they have a heck of a lot more stores than Heinen’s does, so how can you argue their success? And Marc’s? Marc’s makes more money than Heinen’s will ever dream about making.”
When you decide how you’re going to market, you also have to look at whether the market can support your model or not. Right now, Heinen’s has 17 stores, and the market can support that based on the desire for quality products and service. Each location is carefully chosen based on demographics that show an affinity toward choosing service over just price.
“If you can imagine that the market didn’t exist for people who cared about high-quality food and a great experience in the store, if there weren’t those people, we wouldn’t have 17 stores,” he says. “We’d have 15 stores or whatever the market could support, or we’d have to build a different type of experience for the customer.”
Marc’s doesn’t invest a lot in its people, and the service is reflective of that. But because Marc’s isn’t built on service, it’s irrelevant. Heinen’s has to invest in its people, because that’s the whole key to the strategy. If your people aren’t your first priority in a customer-service strategy, it’s not going to work.
Prioritize your people
If customer service is your chosen path to success, then start by laying out expectations at every level of the business.
Heinen uses a service pyramid to illustrate where he wants his employees to be. At the bottom of the pyramid is a category called “nice, respectful.” Just above that is “helpful.” Above that is “knowledgeable,” and above that, at the very tip and where he strives for all employees to be, is “invaluable.” But there’s no silver bullet to get there.
“When people say, ‘What’s your secret?’ — it’s not a program,” he says. “Customer service commitment isn’t a program. It has to be — no matter how many classes you do, no matter how much training you do — woven into the cultural fabric of your organization so that when people come to our organization, they understand.”
It starts with placing a strong emphasis on your people, who, in turn, have to live out that culture. One of the first things you have to do is make sure that you and your company managers are communicating and clarifying on an ongoing basis.
“You have to clarify what your expectations are, and you have to provide feedback,” he says. … “Surveys will tell you that people want to know what their job is and what’s expected of them. They want to know how they’re doing and most companies are bad at both.”
A lot of companies have jobs that aren’t glamorous but are essential to success. The people in them may aspire to greater things, so it’s important to help employees find the roles that are best suited for their personalities and interests.
“The first thing we do is we try to help determine what their passions are, so if they come into work and they’re a cashier and they decide they love the bakery, we’re going to put them in the bakery, because if people are passionate about their work, they’re happier.”
And even if a particular job may not generate passion from anyone, challenge people by keeping their jobs fresh by moving them around.
For example, someone may be a cashier 80 percent of the time, but he or she may take on an extra role of being a customer service facilitator the other 20 percent of the time. In that role, the person would work with both new and seasoned employees, one on one, to help them understand how they can be better at customer service specifically in their department. Or someone may also work as a demo coordinator, so in addition to his or her regular role, he or she would oversee all the demos that go on in the stores.
“It’s not a full-time job, but it’s a way that if someone is interested in doing something different, ‘OK, here’s a way,’” Heinen says. “It could break up the monotony.”
There’s also the tried-and-true method of motivating employees toward customer service: Pay them for it.
Heinen’s supports its employees through a gain-sharing program, which began about three years ago. Each store has set goals, including financial goals, but they’re balanced by overall customer satisfaction scores, known as O-Sat. If the stores meet their goals and their O-Sat score stays at or above their six-month average, they qualify for gain-sharing. If the company makes more than its budget, that money is put into gain-sharing, and the money is split relative to how the store performed compared to other stores — so stores that did better get more money to split among employees.
“Fundamentally, you have to incent the behaviors you want, so we incent the business side,” he says.
It’s possible for one store to make its goals, but that’s not enough — the company has to make its profit goals too.
About half of the time it’s been offered, the employees have reached the levels needed to earn gain-share.
“What it does is it creates a focus in the stores around, ‘What do we have to do?’” he says.
One store really rallied around creating a great customer experience, and it earned gain-share by recording 10 points higher than what it had ever done before, which was a huge accomplishment.
“It can have a significant impact, but at the end of the day, no matter what tools that you put in place, it’s the culture that drives the experience for the customer day-in and day-out,” he says.
Every CEO thinks he or she has an organization that provides great customer service, but there’s only one person that knows the truth (and is usually willing to share it): the customer.
Heinen’s uses a customer survey that focuses on three areas: overall satisfaction, likelihood to recommend and likelihood to return.
From there, it breaks down into specific departments, and then into product selection and helpfulness of staff.
“Again, product side, people side,” he says. “I’ve got to win on the product side; got to win on the people side.”
Spend time thinking through what belongs on your customer satisfaction survey. For instance, price questions don’t always yield useful results, because everyone always wants lower prices.
And don’t overload your customers with lengthy surveys.
“We want to keep it to five minutes, because if it’s more than five minutes, you aggravate the customer, and we don’t want to do that,” Heinen says.
To increase participation rates, the customer gets a certificate for 5 percent off an order of their choice within a given time period. But even customer service incentives are areas that might need some additional customer service attention. Initially, the discount was off the customer’s next order, which really irritated some when their next order was only $10. When they can use it within a given period, they can plan a larger trip and maximize their savings. Customers should be highly satisfied, even when it comes to giving feedback about customer service itself.
The goal is to get 60 surveys per month per store, and an outside company manages the process.
The results allow Heinen to compare not just how his stores are performing but also compare his whole company to other supermarket chains that the survey company has as clients. This helps him see how he’s doing in the industry as a whole, which happens to be very well — competitors are around 63 percent on overall satisfaction, while Heinen’s is at about 80 percent.
Driving these numbers up plays a key role in Heinen’s overall business strategy.
“This is so much part of how we run our business, whereas other companies that we know that have them, they’ll say, ‘OK, yeah, that’s information,’ but they don’t introduce it into running the business at all the way we do. And the associates, when you talk to them, they say, ‘Yeah, that’s some survey we do,’” Heinen says. “It’s a big difference.”
Walk into any Heinen’s store and ask what its O-Sat is, all of the leaders and most of the associates will likely know what it is and what it means.
Much like customers, every CEO thinks he or she has satisfied and engaged employees. But in a similar fashion, you have to take the time to ask them if they are happy and what would need to change to improve their outlook. Grumpy employees rarely deliver exceptional service.
The employee survey is administered about every 18 months, often with a shorter, “pulse” survey at the nine-month mark just to get a quick gauge. This survey focuses on whether employees would recommend Heinen’s as a place to work, if they would recommend it as a place to shop, and they rate themselves on a scale of 1 to 5 on how proud they are to work at Heinen’s.
Ninety percent of employees said they were satisfied or highly satisfied to work for the company. While it’s vital for customers to be in the “highly satisfied” category; for employees, “satisfied” is usually good enough. Why? Because customers have far more options and an easier time switching companies than an employee does, and most employees only leave a company when they are dissatisfied with how they are being treated.
The survey also delves into other issues related to employee satisfaction, such as how employees feel about their direct report, whether they feel valued, if they have the tools and equipment they need, does the manager accommodate their needs, how informed they are, how well their supervisor coaches them, how their manager values their opinion and how much clarity they have in their job.
“When we get these back, if we find out, for example, that we’re not doing a good job of coaching and that our managers aren’t communicating regularly, and they don’t understand coaching, then we say, ‘OK, this is an area we need to invest in,’” Heinen says. “It’s about taking the information and learning and applying it and putting it into place and really looking to get better. That process, we’re very married to.”
He says that as much as they want to improve things and make associates feel valued, if the store manager doesn’t get it and doesn’t want to improve, then nothing will happen.
“At the end of the day, it’s about the most important person in anyone’s life on all surveys, and that’s their direct report,” he says. “So whether you love or hate Jeff or Tom Heinen at Heinen’s, the truth is, the most important person is your department manager if you’re an associate. It’s building the relationships with them and coaching them with an effort to helping them get better, and it comes back to being as committed to their success as your own.”
Throughout all of this, Heinen has learned that it’s a long process to get improved results.
“If you strategically decide you’re going to differentiate yourself in the people arena, then that means that it’s all about, No. 1, believing and trusting in your people and then starting the journey that we started, and it takes a long time,” he says. “If you expect to see great results in a year, it’s not going to happen.
“You have to know what you’re trying to achieve, but I don’t think you ever get to the destination. You can take Nordstrom’s or any other really well recognized company for highly engaged associates, and I guarantee you that they never stop trying to get better, and they never think they’ve reached a destination. It’s just the nature of the beast.”
How to reach: Heinen’s, (216) 475-2300 or www.heinens.com.
The past few years have brought about the worst economic climate we have seen since the 1930s, and for Steve Cuntz, president and CEO of BlueStar Inc., the situation was no different.
However, Cuntz saw the economic downfall coming and prepared his company for the worst. His actions have helped BlueStar not only get through the downturn relatively unscathed but put it in a growing position and expanding globally.
“We have been successful beyond my wildest dreams,” Cuntz says. “I really anticipated more problems than we have experienced. Having been in the electronics industry long enough, the one thing you can guarantee is change.”
BlueStar is a national business-to-business distributor of point-of-sale and auto-ID products. Its ability to adapt to ever-changing conditions played a big part in its success through tough times and in its growth.
“Any time you’re growing, it’s anticipating the strain that scaling causes on an enterprise,” he says. “In any organization, your growth can put you in a position where the things you never would have dreamed of doing, now you’re going to have to do.”
BlueStar’s ability to adapt and keep its 370 employees hard at work through the downturn resulted in 2009 revenue of $365 million.
Here’s how Cuntz created a company that can weather tough economic times.
As a private company, BlueStar has sometimes had trouble getting suppliers to pay attention to it as a viable distributor.
“Since we are a privately held business, [suppliers] have a tendency to sometimes question your capability,” Cuntz says. “We manage to overcome it one supplier at a time. There’s nothing like performance that wins somebody over. It takes awhile for people to drink the tea, but once they get a taste of it, they understand what we are about. Usually in business, especially in distribution when you are doing order fulfillment and things like that, it’s just take the order and fill it. We go out and try to find new orders and try to develop new customers for our manufacturing partners, and over time, that has helped us create a major difference.”
During a time when a lot of companies were losing money and struggling to keep business, BlueStar was growing. The company used its position to help its customers, and in return, BlueStar gained valuable relationships.
“During the last recession, we bent over backward to extend credit terms and find ways of creating a business flow of capital that allowed our customers to live and keep their credit ratings while we continued to try and expand the marketplace,” Cuntz says. “That was a bit unusual, which may have had an impact to our suppliers, because during the recession, our sales actually went up. It’s ironic because a lot of what we sell is exactly what an enterprise needs to do to cut expense overhead.”
Cuntz didn’t think twice about stepping in and helping customers through their tough times. In fact, that kind of effort is a company philosophy.
“Going above and beyond is just part of our organization’s philosophy, which is ‘Give more than you receive,’” he says. “It provides a differentiator in so many ways. In the long term, it provides an advantage. Providing that extra value also provides you extra recognition, notoriety and opportunities that might not exist otherwise. You have to create a unique difference for yourself. Fill a need or a void that currently isn’t being filled. It depends on the business you’re in, but always be good for the money and always create a value-add difference for your business, and it will work.”
Hire strong employees
During the recession, companies like BlueStar had to keep people motivated by keeping them busy at work.
“It became very activity-based,” Cuntz says. “Call the customers up and let them know that if they have a deal, we want to help them close it. Call them up and tell them the good news that we’ve got extended credit. Call them up and tell them that we’ve got inventory. We didn’t cut our purchase orders, we stayed the course. We became one of the few distributors that actually had product available. They saw an immediate return on their investment because of increased activity. So it wasn’t hard to keep people motivated because they were writing orders as fast as they could.”
That motivation was also fueled by strong leadership and employees who were hired because they would grow within BlueStar and help the company succeed.
“We’ve got substantial managers in our organization,” Cuntz says. “Our philosophy is you can’t move up until you replace yourself with someone better. Our management team has continued to get better because we keep hiring better people than we are ourselves and after awhile that becomes attractive to talented people who look for a career path.
“You have to create an environment where you lead by example. Every day, people are watching you, and unless you have somebody better than you sitting behind you pushing, it’s easy to fall into that yes-man trap, and we haven’t had that. It’s very important in a growing company that you have people that want to grow.”
BlueStar’s challenge quickly changed from “How do we stay motivated?” to “How do we meet goals in this down economy?”
“You have to be honest and communicate with your employees,” Cuntz says. “You should tell them what you expect them to be doing. We use budgetary goal setting to discuss our future plans and growth. Sometimes we will use weekly meetings depending on what things are happening within the company. We have weekly meetings with our sales and marketing teams, and we communicate through terms of budgetary accomplishment and feedback loops and what we expect. Are we hitting our goals? Are we not hitting them? Why do you think that is? You have to ensure that employees are doing the things necessary to succeed. If you’re not meeting goals, then you need to communicate with staff and see what things need to be changed.”
Cuntz and BlueStar are also constantly combing for people who will bring drive and the desire to grow to the company.
“Hiring people is kind of like Glengarry Glen Ross with the ABCs of selling, ‘Always be closing,’” Cuntz says. “We use the term ‘Always be recruiting.’ I think you have to always be in the frame of mind when you see a talented person who expresses a desire to be a little bit more in life or has some desire to make a change; we just try to be sensitive to that and keep our ears open. Networking is critical. With the nature of our business, we are constantly at trade shows, and we work with hundreds of suppliers, so we are constantly networking with folks. We try to carefully define what we are looking to accomplish and what kind of skill sets and characteristics it’s going to take to fill that position. It’s not just a saying, ‘Always be recruiting.’ We are always thinking of that.”
Grow and invest
In the world of technology, the industry is never quiet. It is constantly changing and progressing forward, and it is crucial for companies like BlueStar to be able to grow, adapt and invest within those changes.
“The things that seem intuitively obvious with an enterprise package are not,” Cuntz says. “That was a real challenge for us, and it continues to be. We knew coming in that we will face change. How you change and how you succeed with that change is the real key. With a flexible mindset and a flexible business plan, you have to expect that it’s going to happen and you have to be willing to make the investments. You have to invest in change. I’m always thinking about what’s our next investment.
“You have to have some expectations of three things when you think about investing. First of all, you have to understand what the investment is thoroughly. I don’t care whether that’s stock of a Fortune 5 company or a small business. You need a real thorough understanding of who that company is and who the people that are managing the company are. The second thing is does the company have the capacity to do better than it’s currently doing? Look for the missing links. What could you do to bring about change that would help make this company or this investment more than it is? The third thing you should look at is does it fit with your culture? Also, is it attractively priced? If all those elements are in place, then you could probably move forward with that investment.”
In recent years, BlueStar has grown to a level where it has been looking to expand globally and make acquisitions that will augment and enhance its business. However, with global growth comes more changes and challenges.
“The one thing I didn’t plan on was the organizations’ cultures,” Cuntz says. “Different parts of the world have different customs, labor laws and things like that. The biggest challenge to us has been to understand not so much that the business appears to do the same kind of work that we do but to understand the underlying business development of that organization and what the thought process of those employees are. Those are the challenges of understanding if you bought a company that doesn’t match up philosophically with yours.
“You have to focus on companies that are in the core market of the kinds of products you sell. If you’re going to look for a merger or key acquisition, you have to look for key managers that are going to stay on that share your corporate philosophy. And you really have to know what it is you want to accomplish. You have to look for similarities where you don’t necessarily have to reinvent the wheel but where you can offer them something that they need that will help both of you grow.
“You have to understand the market you’re getting into and the culture of that market. Does the market have the potential to grow? What’s the economic climate? The U.S. is not the best benchmark for how most of the other parts of the world operate. You have to understand that there are other costs involved of managing foreign entities that we are not aware of. You have to have a team in those regions that can clearly explain to you what those costs are and what those opportunities are so you can make a valid decision whether that’s going to fit your business model.
“We can determine pretty quickly whether they’re of a like mindset or not. You have to sit down and say, ‘Here’s where we want to go, and here’s how far we have reached.’ And if they’re not in agreement with that, then sometimes you have to make a change. It’s going to come down to communication. Communication is not a quantifiable formula. It’s a skill set on both ends of the communication.”
If you’re the investor, it’s your job to make sure that you are being understood. And it’s your job to make sure that you understand what’s also implied or said or inferred in a relationship.
“It’s an art form, a skill set to make sure that you know your partners,” Cuntz says. “That’s something there is no formula for. You have to be completely unassuming. My method is I assume that I was not clearly understood and there’s the old saying, ‘Inspect what you expect.’ My first inclination is maybe I didn’t say it right, so I’m going to monitor the response to the communication to make sure that I’m seeing the results to the request. You have to be very, very specific.” <<
How to reach: BlueStar Inc., (866) 830-0140, or visit www.bluestarinc.com.
The Cuntz file
President and CEO
Education: Received a bachelor’s degree in accounting and a master’s degree in finance at Xavier University
What was your first job, and what did you learn from it?
My first job was as a night manager for a fast-food restaurant called Burger Chef. What I took away from that job was that I found out I didn’t have any ability to know I was making a correct hiring decision at the time I was making it. Some people interview well and wind up being terrible employees, and some people are terrible at being interviewed, but they make tremendous employees.
What is the best piece of business advice you’ve received?
Always spend less than what you make. The gentleman I heard that from was my loan officer, Bob Herman, who actually helped BlueStar get going when I became CEO. I asked him, ‘What advice do you have for me, because I don’t want to ever let you down?’ He said, ‘Steve, you’ve got to spend less than what you make and you got to set money aside for contingencies, and the businesses that fail to do that usually don’t make it.’
What do you enjoy most about your job and why?
I really enjoy setting budgets and goals and then hitting them. I’m a very goal-oriented person. It’s kind of an architectural thing. You put it up on the board, and you look at it and wonder if you can build that thing, and then you put together plans to achieve it.
If you could invite any three people, past or present to dinner, whom would you invite and why?
I would love to have George Washington, Albert Einstein and Lou Gehrig to dinner. I would be curious to know how Washington kept it together in the face of that kind of adversity. His skills and leadership just floored me.
Guys like Einstein, I’ve admired my entire life, because I wish I’d been a better science student. Einstein was able to take really complex ideas and make them really simple. I still don’t understand half of what Einstein talked about. And Lou Gehrig, to me, was an icon. He was a natural-born leader and had the respect of his teammates and was one of the first truly great athletes that also was a role model.
When Marty Field purchased a money-leaking Chicago packaging company about a decade ago, he didn’t want excuses. In early production meetings, he learned the company, which was operating at 42 percent efficiency, was late delivering to more than half of its customers — because that’s the way it’d always been.
That wasn’t going to cut it.
“If we could create a manufacturing facility that would always be on time and if we were to meet every customer’s request, that would be a wonderful way to create sales,” says Field, the president of what is now Field Packaging Group LLC. “We couldn’t do that because we didn’t have an efficient manufacturing facility. That’s when we created our efficiency bonus program.”
He told his 80 employees they could receive monthly performance bonuses for hitting certain ranges of labor cost and efficiency, as well as delivering on time at least 98 percent of the time. They’d earn $50 for reaching 70 percent efficiency and an extra $10 for every percent over that — minus any deductions for quality incidents.
But first, Field had to define efficiency.
“The key was to find a way to accurately measure efficiencies and then determine what reasonable industry standard is,” says Field, who purchased industry-specific software loaded with standard machine setup times and run speeds. “Then communicate to your employees what’s expected of them, monitor their performance and then, at the end of the month, communicate to them how they performed.”
For transparency, Field installed chalkboards on each machine to track efficiency. Now, if the previous day’s numbers aren’t posted by noon, employees come looking for reports.
Sure, that breeds some peer pressure, but Field sees it as motivation.
“An awful lot of the increased efficiency is created internally by [employees] themselves,” he says. “If a crew is waiting for the paper, the guy in charge of the paper has a lot of pressure on him through his fellow employees. Peer pressure has caused people to act as a team. They’re able to perform together and to perform a lot better.”
Field brings employees together once a month to recap performance and other influencing factors, like the economy and competition. They also go over quality issues, discussing improvement opportunities.
All employees — from the receptionist to the customer service rep — attend those meetings and participate in the incentive program. Employees need to understand the connectivity of how each role must seamlessly set up the next to achieve overall success.
“Without teamwork from everybody, we won’t be able to get the efficiency,” Field says. “If the order goes out to the factory and all the information is accurate and provided, that saves time from a crew having to try to figure out what they’re supposed to do. If the people who are supposed to provide the tooling are not efficient in what they do, then the crew is waiting for the tooling.
“Everybody in the whole company affects efficiency, and everybody in the whole company should be rewarded for it.”
The reward itself is motivation enough — with some employees earning monthly bonuses of $220 — but it’s also the concept. Employees know they have a hand in controlling not just their bonus but the company’s overall success. Employees took the reins and led Field Packaging to 2009 revenue of $40 million and are still improving efficiency.
“They really are self-motivated, and it’s not only for the bonus,” Field says. “They need to see that the company is successful, especially these days where there’s so much unemployment.
“They have a greater desire to perform better because we’re creating more business. The more business we have means more work for everybody. People have really bought in to it, because it’s good for the company and it’s good for them.”
How to reach: Field Packaging Group LLC, (708) 594-5260 or www.fieldpackaginggroup.com
Never say no again
There’s one word Marty Field doesn’t want to hear.
“If a customer calls and has an unreasonable request for a delivery, a customer service person is not allowed to say no,” says Field, president of Field Packaging Group LLC. “We have to find a way to get it done.”
It was bad enough that late deliveries were the norm when Field bought the company. He envisioned the other extreme where they’d not only be on time but meet any request.
There are a few exceptions, of course — like acts of God or unavailable tooling. Aside from those, Field never wants to be in a position where he has to say no.
“The more efficient we are, the more capacity we have,” he says. “The more capacity we have, the more flexibility we have to be able to take care of customers’ requests. The more customer requests we have, the more successful we’re going to be.”
One machine used to take a half-hour to set up and another hour to run. Now, because Field’s employees understand efficiency goals and use teamwork to achieve them, they’ve cut out dead time. They can set up the machine in five minutes and run it in 20.
“We have put ourselves in a position where we always will have more capacity than we have business,” Field says. “We should never be in a spot where we can’t say yes.”
Susan Johnson is clearly a cut above her workplace peers. Her ability to combine technical expertise and product knowledge with an innate gift for connecting with colleagues and clients is exceptional. What’s more is that as talented as Susan is, she is always asking people what they need and what they think, and she is hungry to listen and learn. Unfortunately, Susan is leaving her company. Why? It has been more than two years since a single executive has asked her what she needs.
A crucial part of navigating the turbulent waters of these economic times is to be sure you keep the right crew aboard to keep your ship afloat. Organizations tend to focus on those they can part ways with to cut overhead. However, this can often come at the expense of retaining the talented individuals most vital to future success. Here are five tips to be sure your high flyers are flying with you:
Determine the motivations of top talent
How do you do this? Ask. It is important to be specific and be sure that questions like the following are being answered by your top brass: Are you happy with where your career is headed? What would you like the next step in you career to be? How can I/we help you get there?
Exit interviews are not the time to determine these motivations. Find out what your future leaders need now and feed those who feed your machine. A pivotal point here is to follow through to confirm that what your future leaders say is being heard. You are better off not asking than not following up. Both are high risk.
Make individual meetings a standard
Another common fumble by companies is that they don’t make individual updates a cultural consistency. They do back flips for their clients, yet they don’t look inward and pay special attention to those who drive business and pump oxygen into their organization. Meeting with your folks individually recognizes their importance and provides a wonderful forum for discovering what they may not disclose in a group meeting. An added benefit is that trust, the baseline for all business opportunities, is much easier to build through one-on-one connections.
Delegate and give responsibility
One of the biggest challenges for executives is to let go. It’s tough because everything that happens under their jurisdiction is their responsibility. Remember that your emerging leaders want to be challenged and be given assignments that utilize their talent. This is how they learn. So let go. Prove that you can trust young talent and you will be surrounded with a higher-performing team that develops confidence while increasing performance results.
Become a teaching executive
Even the brightest executives have never been taught the fundamental rule of adult learning: Teaching hasn’t occurred until learning is confirmed. Telling isn’t teaching. Execs must know that even the brightest talent may process information differently than you do. Be sure you are patient and aligned as you develop and confirm that this understanding has happened. Most organizations that claim to be learning and teaching organizations do not live this as a core value. Teaching young talent must be a designated initiative, not a drive-by occurrence.
In the absence of feedback, people create their own, and it’s typically negative. Executives must keep their folks abreast of what’s going on, regularly. Provide knowledge, which is different from data. Data is merely “the what.” Knowledge is “the what, the why and the how they play a vital role to change and growth.” Keep your top talent informed and you will keep morale high and these key players passionate about sticking around.
Tired of answering business phone calls, checking e-mails or responding to text messages all hours of the day and night, on weekends and even when you’re on vacation? You might be surprised to learn that the person you see in the mirror could be to blame for those constant interruptions. And you don’t have to shut off your phone and unplug your computer to regain control of your life.
I’ve often been asked how I was able to balance my personal life and my work life while carrying the responsibilities that come with being a CEO in an industry as dynamic as automotive.
My answer: I made sure that I could comfortably delegate many of my responsibilities to my direct reports.
You can’t just go to work tomorrow and start delegating. The hard part is getting to the point where you really are comfortable delegating decisions to others while your superiors hold you accountable for the results.
I’ll explain what it took to get me to that point.
Let me start with something I learned after having been exposed to many different organizational structures, work teams, individual jobs and workplace situations. I consider this as gospel: All company employees, regardless of job level, have at least one thing in common. They want to feel valued for the skills and capabilities they bring to the company and want to be recognized for the contributions they make to the company’s success.
When this is the case, they will come to work every day engaged and motivated to help the company achieve its goals.
In my experience, nothing destroys that motivation faster than a supervisor who micromanages every situation, insisting on getting the work done his or her way and being involved in all decisions. The consequences of this — however well intentioned — can reach beyond simply slowing down the decision process, particularly if those exposed to this behavior have already achieved a level of success in the company.
In your role as coach, you need to begin by challenging staff members to think more deeply about how they should handle a certain situation, gradually allowing them more latitude to decide on a course of action. It will be difficult at times to resist telling them what you would do, but you must. You must also expect (and tolerate) the inevitable small mistakes they will make as their capabilities grow. Recognize, too, that some individuals will require more of your time than others, but in the end, this will prove to be time well spent.
I must caution you that taking on the role of coach does not mean that you must abdicate your position as the leader of the department or company. You must be very clear about the personal and organizational behaviors you expect, such as honesty, integrity, fairness and risk tolerance, and you need to model those behaviors in your daily work.
As you grow more comfortable and release the reins on your staff, they will assuredly do likewise with theirs, and the benefits to the company will become more and more apparent. Fewer and fewer unresolved problems will reach your level, decisions will be made more quickly making customers happier, and business results will improve at a faster rate because employees will feel more ownership in driving the results.
And, of course, you will be able to enjoy your life outside of work without being constantly interrupted by business phone calls, e-mails or text messages.
Try delegating. It may take some preparation, but I guarantee you’ll be glad you did.
George Perry has more than 40 years of experience in engineering, operations and executive management. He retired as president and CEO of Yazaki North America Inc. in December 2009.