The term “green building” can be used to describe various aspects of a building, says Norm Bertke, managing director of asset services for CB Richard Ellis.
“Aspects of green buildings can include items such as the site that is chosen, the construction materials selected and the design of the asset’s infrastructure,” he explains.
Smart Business spoke with Bertke about green buildings, the financial benefits that can be achieved with them and how to get started in locating a suitable property.
Why are green buildings gaining popularity in the corporate world?
One reason green buildings are gaining popularity is simply the cost savings that can be associated with operating an efficient building. Efficient building systems result in lower consumption of utilities and, therefore, cost savings.
There is also data that suggests that because green buildings are often constructed to mitigate dust and other allergens in the indoor air and efficiently utilize natural light, the occupants are often healthier and happier than the occupants of non-green buildings. This leads to cost efficiencies for the occupants because of improved recruiting, reduced sick time and less turnover.
Finally, many corporations simply think that being green is the right thing to do and as long as it is at least cost-neutral, these corporations prefer to be green.
What are some of the financial benefits that can be realized from using a green building?
Green buildings often leverage the use of efficient systems to save on utilities. Variable-frequency drives offer an improved ability of the operator to control the heating and air-conditioning system. Flushless urinals mitigate the use of water. New light bulb technology allows the lights to burn more efficiently and last longer. Occupant sensors allow lights to turn off when the rooms are not in use. All of these items reduce utility consumption and lower costs.
However, the cost implications of lower turnover and reduced sick days can be much more significant. Many buildings operate at approximately $2 per square foot for utilities. It is reasonable to assume that it costs an employer $200 per square foot for personnel-related costs and that some sales professionals generate $20,000 per square foot occupied in revenue. If an employer can execute tactics via a green building to keep their employees on the job, the payback could be huge.
How do the costs of a green building compare to that of a traditional building?
This is a function of how green do you want to be and what kind of green? A certified building (one certified by the U.S. Green Building Council) can have almost no incremental cost if a green strategy is implemented from the conceptual phase. However, if the goal of being as green as possible is executed without factoring costs, the incremental costs can be significant. In other words, the technology exists, at a price, to build extremely efficient, environmentally friendly buildings, but there is a point of diminishing returns as it relates to a monetary payback.
How much can be saved on energy bills?
If an existing building is already efficient, sometimes there is little to no additional savings to realize. However, many buildings can achieve energy savings in the 10 percent to 30 percent range. In many cases, older buildings can be ‘recommissioned’ or set back to operate within their original design parameters to capture savings and the capital investment associated with new infrastructure investments is not necessary.
How has energy-saving technology improved over the past decade or so?
There have been technological improvements in the way HVAC systems operate. Variable frequency drives allow the operator to turn up or down the rate at which the systems run. Economizers allow building equipment to adjust their use of the environment by more efficiently using outside air to control interior temperatures. Lighting technology has also improved dramatically with the advent of low-mercury bulbs, electronic lighting ballasts and occupancy sensors that turn lights on and off automatically. In the realm of plumbing, low-flow, auto-flush valves and aerators allow building operators to decrease their use of water.
NORM BERTKE is managing director of asset services for CB Richard Ellis. Reach him at email@example.com or (614) 430-5069.
Place of birth: Long Island, N.Y.
Education: Georgetown University, liberal arts and business, MBA First job: Foreign service officer with the U.S. Foreign Service
What are your favorite business publications?
I find that the most powerful thing for me is looking at the Financial Times, which does a tremendous job capturing global ideas and events.
Whom do you admire most in business and why?
I admire the folks that work here and in other companies without the celebration of their deeds but just show up every day, do the right thing for the company and care deeply about their company. They’re not the celebrities, but in the end, they enable our success.
What are the most important qualities a CEO should possess?
A great sense of what’s right. Fairness and humility are critical. The ability to be courageous and to act when it’s pretty lonely at the top, the willingness to make a decision, as opposed to punt or send for more information, and a high level of energy and curiosity.
How would you describe your leadership style?
Hands-on. It’s probably pretty deep into the facts and issues, but in the end you want people to succeed because they want to please themselves and please others, not because they’re afraid of you or even afraid to fail. I give feedback on the spot privately when I see an area where they’ve done well or they’ve not done well. You can’t get better when you discourage people from telling you when they think you’re off course or they have a different opinion.
Marty Betagole loves a challenge, and that’s exactly what she got when she assumed her role as president of Mike Albert Leasing Inc. Mike Albert is one of the top 12 vehicle fleet managers in the country, with more than 20,000 vehicles leased throughout the United States and Canada and more than 8,000 vehicles sold each year in the used car market.
Betagole’s great-uncle, Mike Albert, started the company in the 1920s as a used car lot, and in the 1950s, her father, Robert Betagole the current CEO of Mike Albert Leasing suggested the company begin leasing vehicles as a way to generate used cars to sell. “If you look up entrepreneur in the dictionary, my father’s picture could be there,” Betagole says.
And while she says her father’s management style is directive, she herself uses a highly collaborative approach.
“It’s a double-edged sword,” she says. “Being collaborative means you gather more ideas. However, it takes more time and patience to execute.”
Smart Business spoke with Betagole about why patience, confidence and an ability to listen are critical to growing a company.
Q: How do you manage change?
Change and leadership are unavoidably linked. If you do not change to meet the times, you disappear. Likewise, if you change too much and you lose sight of what you are all about, you may also disappear.
This quote sums it up nicely: ‘Preserve order amid change and preserve change amid order.’ That is what I try to do.
My change management style is to take a collaborative approach. There are two ways to listen, and each is equally important. You must listen internally and remember that good ideas abound in your organization.
Do you want an engaged staff who embraces change? Pay attention to their thoughts. You must also listen externally to what your customers are saying and what your competitors are offering.
Change is scary. You may feel the fear, but as a leader, it is essential to maintain your composure and reassure the troops, especially during uncertain times of change.
Q: How do you communicate your vision and message to staff?
I don’t, really, because they are part of building it. People more naturally support that which they create.
One tactic I use is to plant seeds of ideas. I sometimes perceive when we need to shift directions or change our approach. I may subtly suggest ideas in conversations with staff, so that they gradually adopt them.
This is not meant to be manipulative; it is a smart strategy for building buy-in and support.
Q: What are the key skills of a great leader?
There are many skills needed, but these three come to mind immediately.
Confidence. You must stand by your convictions and trust your intuition. You are in a position of visibility and scrutiny. All of your decisions won’t be popular. Great leaders cannot be oversensitive.
Patience. While I don’t have patience with myself, I try to be tolerant and understanding of others ... to a point.
Ability to listen. The most effective leaders know it is more important to listen than to roar.
Effective leaders are also not afraid to break the mold and be daring.
Q: How do you grow your company?
By investing in it, employing quality people and identifying customer needs, then filling them.
We have invested significantly in our company so that we are prepared for the future. This is an easy area to neglect, and we have been guilty of this.
Keeping up with technology is essential, especially in a mature industry like ours. It is one way to differentiate yourself in the market. Moving forward, we will strive to stay ahead of the curve.
I’ve learned some lessons about employing quality people over the years. For example, we used to hire sales professionals with a background in the leasing business. The logic was they could bring customers with them.
Now, we focus more on evaluating the skills the individual brings to the table. The best person is not necessarily one with a background in leasing.
When it comes to serving customers, flexibility is the name of the game. I have my personal opinions as to which type of lease arrangement makes the most sense. But the more important priority is to consult with your customer or prospect and suggest the best arrangement for their particular situation.
HOW TO REACH: Mike Albert Leasing Inc., (800) 98LEASE or www.mikealbert.com
Patty Brisben’s career in adult relationship enhancers began in 1983 when she saw a show about women who sold the products through home parties.
Brisben, a divorced mother of four, was so intrigued with the concept that she quit her job as a medical assistant to pursue this new career.
During her first year selling for Fun Parties, she was named top salesperson out of 3,000 consultants.
“I knew from the start that this was the perfect position for me,” Brisben says. “I did my homework and carefully observed the women attending the home shows. They represented all walks of life but had one thing in common a genuine desire to learn more about intimacy and their own bodies. I knew the home party settings provided the ideal forum.”
Ten years later, Fun Parties folded, and Brisben opened the doors to Slumber Parties, which she later rebranded as Pure Romance Inc. “I decided (Slumber Parties) did not represent what we were about,” Brisben says. “It left the impression of a bunch of girls instead of mature women. The company name is a critical first impression.”
The company had retail sales of more than $60 million last year.
Smart Business spoke with Brisben about why training is vital and the importance of surrounding yourself with good people.
Q: How important is training to growing a business?
Successful businesses go below the surface and do not simply sell a product. It is about the entire experience, which involved more than sales. Uneducated consultants can do a lot of harm to our business, so we focus on training.
Untrained consultants can easily make the buyers uncomfortable, which is the last thing we want to do. Training is a challenge but not one we can afford to shortchange.
Q: How important is it to consult with others?
Owning a company does not mean you must have all the answers. It’s wise to maintain close ties with experts and really listen to them. I have advisers at many levels, including medical doctors and experts on the trends that affect our business.
Don’t be afraid to surround yourself with great people.
Q: What qualities do you look for when hiring?
There has to be a shared vision. We consider negative stories about former employers to be a big red flag.
We look for hungry, ambitious employees who are passionate about what our company stands for. They have done their homework and truly believe in the concept of promoting women’s sexual health and knowledge.
Q: What can bring a company down and/or prevent growth?
It starts at the top. I never underestimate the impact my passion and vision have through the entire operation. I am always positive and continually work with the company’s president and other key managers on where we are moving next. They need to grow along with me because I will one day pass the torch to them.
CEOs need to believe in their dreams, take risks and delegate. They also need to get their hands dirty. I am by no means an expert at every aspect of the business, but I have been exposed to each function. I have ordered products, packed them and shipped them.
There are times when every leader becomes discouraged and experiences a dip in confidence, along with sleepless nights. The key is to push through these low times and remind yourself that your company is making a positive difference.
Q: How do you measure success?
Your employees need to be growing and maintaining their enthusiasm and commitment in your product at all times. That is one indicator of success. It cannot be defined solely in material terms.
I consider one of my greatest accomplishments to be empowering women to be more successful both professionally and in their personal lives. Giving back to the community needs to be part of the success formula.
HOW TO REACH: Pure Romance Inc., (866) ROMANCE or www.pureromance.com
Forget alarm systems. The most potentially dangerous intruders already know the codes. When employee dishonesty penetrates a company, the consequences can be incredibly damaging.
“Financial losses from employee dishonesty do happen,” says Ralph Cummings, fidelity underwriter at Westfield Insurance. “We see them every day. “The results can be devastating not only financially but also psychologically. The guilty employee often is a trusted, long-time member of the business. The hurt that comes from the breach of trust adds to the loss.”
Smart Business spoke with Cummings about the issue of employee dishonesty and how to prevent it.
How do dishonest employees steal from their companies?
Small-scale theft happens with the loss of relatively low-cost materials and supplies. Large-scale theft usually results from taking expensive property or accessing the company’s bank account.
At one truck dealership, an individual in the parts department took expensive truck parts with him over a long period of time. He would make excuses, such as he was taking the items for a delivery, when in fact he was taking them for his own profit. Another unfortunate loss happened with a contractor whose bookkeeper took money from the company over a period of seven years. The loss exceeded $1 million and cost the owner his business and his relationship with his sister, who was the bookkeeper.
The business community often isn’t aware of these dangers and situations because the affected companies don’t want to publicize the loss. But the truth is that employee theft does happen, particularly when employees are trying to support expensive bad habits, and businesses need to guard against it.
How does employee dishonesty affect businesses’ insurance expenses?
Insurance is a mechanism for spreading losses among policyholders. Protection against a large, uncertain loss (an embezzlement) is traded for a small, certain loss (the premium). As a company’s losses grow in size and amount, the premiums to pay for them will increase.
How can companies create a culture of honesty and integrity?
Every company should closely examine the way it deals with its customers and employees. Does the company deal fairly with others, or does it often take advantage of them? If employees are encouraged or permitted to deal dishonestly with customers, how can they be expected to deal with integrity with their employer? A culture of honesty and fair dealing must start with upper management. Treating employees fairly and respectfully is also very important. Showing an interest in each employee, and making each feel that his job is important can foster employee satisfaction. But beyond that, an employer must demonstrate that cheating, dishonesty and unfair business practices will not be tolerated.
What controls can help prevent employee dishonesty?
Over the years, I have seen many employee dishonesty losses. There is one method that seems to recur most often and seems to result in very large losses.
Every insured company has a bank account. At least one employee is responsible for reconciling the monthly bank statements against the employer’s records. That person is the most likely to detect any discrepancy between the two. Very large losses happen when this person is also permitted to handle bank deposits or to have access to blank checks.
For example, if an employee is given a deposit to take to the bank but decides to keep it for himself, the bank statement will show no deposits for that particular day. An impartial bookkeeper would catch this discrepancy in the records. However, if the person reconciling the bank statement is also the person who should have made the deposit, he will obviously not let management know about his theft. With no unusual records and no checks on the behavior, the employee is free to continue this activity indefinitely.
Likewise, if the person who reconciles the bank statements also has access to unissued checks, he could use the employer’s checks to pay his personal bills, make purchases, or simply make checks payable to himself. Even if this individual does not have check-signing authority, he could forge a signature. Banks generally just pay the checks and rely on the customer to let them know of any discrepancies. It is not uncommon for losses of this type to continue for years and reach very high amounts.
One of the biggest keys to preventing employee dishonesty is to have the bank accounts reconciled by someone who does not handle the bank deposits and who does not have access to unissued checks.
RALPH CUMMINGS is a fidelity underwriter. Reach him at (330) 887-0544 or firstname.lastname@example.org. In business for more than 157 years, Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of protection is supported by a commitment to service excellence. For more information, visit www.westfieldinsurance.com.
Dave Reder found out the hard way that moving your business to a new location is never easy, but it was worth the effort. When Reder recently moved his company, OKI Systems Inc., into a larger facility, it created a hectic environment in the short-term, but he says the investment will pay off in the long-term. In addition to the company’s physical location, he also invests in his workers the 400-employee company has 173 service technicians, all of whom are coached by an organizational development director. The materials handling company had 2005 revenue of $80 million and is poised for further growth at its new facility. Smart Business spoke with Reder, president and CEO of OKI Systems, about how he helps his employees improve themselves and gets them more involved in the business.
Hire leaders and delegate to them. I have a hands-off style; I’m definitely not a micro-manager. What I try to do is hire good people, train them and get out of their way.
You get a lot more done that way, and people develop a lot quicker because they are making decisions and learning from their mistakes. Plus, you attract good people because good people don’t want to be micromanaged. They want to have the freedom to be creative and try different things.
CEOs have to be aware of what’s going on and have a pulse on what’s going on, but I don’t think they need to be involved in day-to-day happenings. We look at trends, and if we start seeing any trends going the wrong way, we may have to get involved more than we were. But if things are going as they should, a leader doesn’t need to be involved on a day-to-day basis in-depth.
Delegation is something anybody can use. Business is business; it doesn’t matter what business you’re in.
Look for employees with a strong work ethic.
The two things I look at most, one is attitude and the other is work ethic. If you have a good attitude and a strong work ethic, you can be successful at anything you do.
We can teach you the business, but if you don’t have a work ethic, or you don’t want to work toward it, or you don’t have a good attitude toward it, you don’t have a chance.
Focus on training. Training is critical. You have a lot of people who want to grow in an organization, but they’re not sure how to do it or what they lack. What our organizational development director does is say, ‘Here’s where you are, here’s where you want to go, here’s the things we need to do.’
Some of the things they help them with, you need to do on your own. But you find out quick who really wants to grow and who just talks about it, because there is some effort involved on the individual’s part as well as the company if they want to grow.
Training and development can’t just be something you do when you have time. It has to be a constant focus for somebody. That’s why the organizational development director has been phenomenal for us. People are excited that they have an opportunity to grow.
They sit down with him and say, ‘Here’s where I am, and that’s what I want to be. Help me get the things I need to get there.’
Lead with integrity. Don’t be afraid to make the tough decisions. I think a CEO can learn how to do that. You don’t want to take too long to learn it, but it is learnable.
Integrity is the most important thing you can have. If you don’t have integrity, you will never be successful as a CEO or in many other places, especially with what’s going on today. If your employees don’t have confidence in you and the way you’re leading the company, you’re not going to be able to get the good people we’re talking about. And without the good people, you’re not going to be able to grow or sustain the business.
People do not want to work for someone who doesn’t have high integrity.
Show employees they’re important. We’ve implemented a gain-sharing program, so if the company does well, the employees share in the successes. It keeps everybody involved and a part of the business, and shows what they can do to have an impact on the business.
It’s about trying to show them how they’re important to the company. I meet with employees in open forum, no agendas. We talk about what’s on their mind and what concerns they have. People really feel good about the fact that I sit down with them hear what they have to say.
Then we’ll do what we can to address their concerns, so they feel like they have a voice on what goes on at the company.
Look within your existing customer base for growth. Try to look at areas where you can grow business without a lot of additional overhead or resources. We’ve tried to figure out how you can cross-sell or leverage a relationship in one area to gain business in another area.
We’re trying to cross-sell where we already have a relationship. We try to go in and sell everything we can do for them, because it’s a lot easier to sell to an existing customer than develop a brand-new customer. We try to do a lot of cross-selling in accounts where we may be doing business with them in one area and try to round out that account to do business with them in all the areas we can.
For CEOs in other industries, it would depend a bit on product mix. One of the things you do when talking about growth is look what areas they could grow into, and it might be areas that they can cross-pollinate if that opportunity doesn’t already exist in their company.
They can find things to do that are in their customers’ plans that could tag along with what they are already doing and leverage those relationships.
HOW TO REACH: OKI Systems Inc., (513) 874-2600 or www.okisys.com
For many people, the first images of Earth sent from space in the late 1960s ushered in a global awareness that has only intensified with the advent of TV, the Internet and cell phones. Suddenly, the world has become smaller and there’s a greater feeling that “we’re all in this together.” The global economy and global awareness have left many businesses more conscious of the environment and the impact that individual actions can have on the rest of the world.
As a result, today’s employers are seeking employees who are more than just “task-masters” who are globally aware and willing to give back to society in some way, according to Sister Mary Bookser, the coordinator of service learning at the College of Mount St. Joseph, and Liz Seager, the college’s career development coordinator.
Smart Business spoke with Bookser and Seager about the ways that colleges are preparing students to work in the global economy and how employers benefit from this trend.
How can an employer benefit from hiring employees who are more globally aware?
Seager: In order to function globally, students need the skill sets that liberal arts colleges offer, and employers have started to value such an education. Employers can teach employees the ins and outs of their business, but employees who bring a global awareness and skills such as the adaptability to change, critical thinking, problem solving and recognition of the importance of diversity generally make for successful employees.
Sister Bookser: Obviously, multinational companies benefit from hiring employees who have an understanding and appreciation of different cultures and world views. These companies, in particular, need employees who are willing to travel, learn the culture, learn simple greetings in the local language, and possibly even live far away from home.
How are colleges preparing students to work in the global economy?
Sister Bookser: Many colleges have seen the need for students to get out of their own local way of thinking and get a more global perspective through culture-and service-immersion courses where students get experience with, and exposure to, other cultures. Some colleges provide opportunities for students to earn course credits while studying abroad for a semester.
Seager: Colleges often include cultural awareness and diversity as a part of their mission, so that filters down into the curriculum. Whether you’re taking a psychology, a basic career development or even a business class, each learning objective will include a global component.
What should an employer that is seeking a globally aware work force look for when interviewing and hiring?
Seager: I recommend that employers be on the lookout for a breadth and depth of experience, including co-ops or internships. Employers can also look for students who have had an opportunity to travel abroad or participate in an alternative spring break, during which they performed community service. These experiences demonstrate adaptability, flexibility and a willingness to try new things. When looking at volunteer experience, employers should look for those who were willing to push themselves out of their comfort zone by working with groups of people who are different from their peers.
Sister Bookser: It’s also important to look for prospective employees who have had some kind of service learning experience where they had an opportunity to participate in a community-based service that tied into their coursework. This shows an awareness of the importance of civic engagement and a desire to integrate life, their beliefs and values, and their learning.
How can employers best use their globally aware employees?
Sister Bookser: The desire to give back to the community has become an important part of many businesses, whether or not they consider themselves to be global companies, so hiring employees who share this interest helps them to further that part of their business mission. Many companies are recognizing that not only is it the right thing to do, but it also makes good business sense to be a good corporate citizen.
Seager: Globally aware employees are looking for a lot of stimulation. Even companies with a purely local customer base should find out where their employees’ strengths are. And if they’re globally aware, don’t chain them to their desks. Give them service projects to coordinate. The globally aware employee is constantly looking for the next challenge and the next way to use his or her strengths. It’s important to keep those employees engaged and give them the opportunity to try new things and be challenged.
SISTER MARY BOOKSER is the coordinator of service learning at the College of Mount St. Joseph. Reach her at (513) 244-4634 or email@example.com.
LIZ SEAGER is the career development coordinator at the College of Mount St. Joseph. Reach her at (513) 244-4484 or firstname.lastname@example.org.
Like snowflakes, no two integrations are quite the same. Just ask Jill McGruder.
McGruder, president and CEO of IFS Financial Services Inc., a division of Western & Southern Financial Group, has shepherded her $3 billion company through two integrations, each with its own set of circumstances and challenges.
McGruder says that a stumble in folding either or both of the two companies into IFS Financial Services could have risked the parent companies’ reputation for service and rigorous financial management. “The biggest thing for us would have been the reputation risk,” McGruder says. “We’re a 118-year-old company that has very much a service culture with strong financial discipline.”
And with a stumble, any plans McGruder had to build IFS Financial Services with additional acquisitions might have gone unsatisfied, as the parent company might have opted to turn off the cash for more expansions in the wake of a poor integration effort.
McGruder had to integrate two types of businesses, each with its own unique challenges. And the integrations had to be done quickly and with minimal disruption to IFS and the acquired company.
Fixing an ailing company
In the first case, McGruder wanted a mutual fund business to expand IFS’ portfolio of investment products, but along with the mutual fund company acquired in 1999 came a services company. “We really bought the company because, strategically, it served us very well because the Western & Southern Financial Group is trying to grow its fee-based businesses and its investment management businesses, and we also have a great reputation for services,” McGruder says. “So we bought it for the money management business, but with it came this servicing company. “Would we have struck out and bought a servicing company on a stand-alone basis? Probably not, but this servicing company was so much a part of the mutual fund business, because it’s your back office operations, that it made sense to buy it, both to keep the funds operating efficiently and strategically, to get into more fee-based businesses, again, as part of our strategic plan. “We knew it had issues, to be quite honest. It needed investments in people and technology. There was no question about that, and they were at a crossroads strategically when they said, ‘How much more are we going to continue to invest in this business?’”
McGruder says the growth of the business had outrun its capability to serve clients, as billions of dollars poured into the markets during the technology boom of the late 1990s. And it was its own technology lag that was strangling the company’s ability to carry on. “They had a client that had a huge run-up in business assets, and they didn’t have an infrastructure that was capable of supporting a fund that went from a couple hundred-million-dollars in assets to $7 billion in assets, literally in no more than six months,” McGruder says.
You can’t know everything required to get a business on track, McGruder says, so it’s critical to have a team that has the resources to solve the problem. “The first thing is to get the best heads together at the table, the brightest minds, the most experienced people you can because you can’t do anything in a vacuum,” McGruder says. “I knew I didn’t know enough to fix the business, so I had to surround myself with people who did know what to do. That’s the key, putting that team together who did know what to do.”
The team was an entirely new one that understood the business, the technology and what it would take to turn things around. “It worked out very well because you had to let that team that I brought in, you had to let them do what they know how to,” McGruder says.
While she allowed the team to operate independently, McGruder kept close tabs on their progress throughout the process. “Because this is a very technical business, it wasn’t difficult to track what was going on, but again, regular meetings, regular updates reviewing each functional area, what progress was being made, from a staffing perspective, from establishing controls” all were critical, McGruder says.
In the case of an ailing company like this acquisition was, it is important to focus in the early stages first on the functional improvements rather than strictly on financial performance. “While there are a number of objectives behind the decision to integrate, including financial, the ramp-up itself is very process-driven, so the measures have more to do with monitoring timelines, effectuating knowledge transfer, process mapping, staffing and so forth,” McGruder says. “Once the integration is complete, attention turns to whether the financial objectives of the integration are, in fact, being achieved.”
She says she had to recognize that there were things she didn’t know, and in this case, technology was a key area where her knowledge was limited. Making decisions about which technology to invest in, for instance, was based on the scorecard measures that the company uses to guide the business. For McGruder, it was a matter of determining, with the help of the technology team’s recommendations, whether a particular technology solution met needs of the business. “When you bring me the business case, you tell me which of the scorecard measures this investment will drive and how it will drive it, how far it will drive it and, what it will take away from, because after all, there’s a trade-off,” McGruder says.
Changing a culture
In the other integration, an acquired annuities company located in another city operated independently for several years before it was integrated into IFS Financial Services. In this instance, McGruder faced cultural and organizational challenges. “We let it run independently for five or six years before we integrated it, and the issue was truly, how do you transform from one cultural mindset to another,” says McGruder of the company, which was acquired in 2000 but not integrated until 2005. “It was an organization that was very, very top-down driven. The CEO said, ‘Here’s what we’re going to do, here’s the plan,’ everyone rallied around it, and people didn’t ask a lot of questions about why are we doing it this way, is this the best way to do it. “When we integrated the business, we didn’t really run the business that way. We run the business here very quantitatively, on facts and financials. We use scorecards, but everybody participates in the development of their scorecard, the measures embodied in their scorecard. It’s much more participative. So trying to convert that group from a top-down model to a much more participative, quantitative model was a whole different kind of challenge.”
To facilitate the integration, McGruder enlisted an internal group at Western & Southern to help the integration team. “We have a group here that focuses on process re-engineering, looking for cost efficiencies, expense reduction, and that works across our entire Western & Southern Financial Group,” McGruder says. “We brought the proper people on, and they really drove the integration team.”
McGruder discovered that it wasn’t easy to change the company from a top-down model to one based on accountability. “The first step in changing the culture to one focused on measures and results was to make certain that those being asked to adapt to an accountability-based culture understood the benefits of the change to both the organization and to them as individual stakeholders,” McGruder says. “Honestly, it wasn’t easy for some people to see the benefits of the change through the pain of the change. So the best tactic I could use was to constantly showcase the results of other businesses and individuals who had successfully navigated the same kind of cultural transformation and were proudly producing phenomenal results.”
McGruder says that tactic seems to have worked, as the financial results, despite the integration, were improved over the prior year’s performance. Sales increased by $210 million, or 32 percent, and the bottom line has improved 39 percent compared to the prior year.
The second challenge was integrating the people into the larger organization, moving those who decided to relocate to Cincinnati and hiring new people to fill the jobs left vacant. “What we did was mapped every job, every function that was being performed in that company to our company here,” McGruder says. “As you might imagine, we had 310 people, and it wasn’t easy to do it in the time frame we had, but that’s how we did it, with job-mapping to get the other organization aligned with ours, to get it as close as we possibly could to get the integration started. We learned a lot about the business by doing that, and it made the integration a smoother process than it might have been.”
While the two integrations were different in terms of what each acquired company needed to make it successful, McGruder says they share some important characteristics. “Once the decision to integrate is announced, my experience indicates it is best to act quickly,” McGruder says. “One should be patient in assessing the decision to integrate or not, but once the decision is made and announced, it is important for the continuity of the business to act quickly, even if mistakes are made.”
And it’s necessary to solicit input from all parties and not make assumptions based on previous experiences. “Hear everyone out, to the extent humanly possible,” McGruder says. “Never presume that the way things have been done in the past by either the integrator or integratee is the right way. In all likelihood, the combined organizations will not operate the same way, either, operated on a stand-alone basis.”
McGruder says building effective leadership teams can be accomplished by the CEO putting the team together or by allowing the managers to choose their own teams. Either method can work; the difference is in deciding when the CEO needs to take direct control and when he or she needs to delegate it. “I have selected leaders for newly acquired organizations and let them build their own teams, but I have also helped managers build their teams,” McGruder says. “I think the role of the CEO is to know when to jump in and when to let go.”
And once the integration is complete, it’s critical that financial discipline is instilled across the organization.
Says McGruder: “You always expect the CFO to have a good handle on every line on that income statement, every revenue line, every expense line, how it drives your results. But you really have to get that embedded in the management team so that they think of that as their own business. “That’s the key to getting all these companies on the growth curve that they’re on.”
HOW TO REACH: Western & Southern Financial Group, www.westernsouthern.com
“I became a lawyer as a single parent with two small children,” says the partner in charge at Thompson Hine. “I interviewed with a number of firms after graduating. What attracted me to Thompson Hine was the positive culture and clear respect for and acceptance of women in the workplace.”
Smitson joined the law firm in 1993 and was named partner in charge in 2001. The Cincinnati branch of the firm has 140 employees and is the second-largest Thompson Hine location in the United States.
Smitson sees herself as someone who not only does the paperwork, but who also makes a difference to her clients.
“I see myself as a business partner,” she says. “We are not just drafting documents for clients. We add a depth of service by truly understanding the client’s problem at hand, along with their overall business goals.”
Smart Business spoke with Smitson about how she keeps herself and her staff fired up, and how she measures success.
How would you describe your leadership style?
No doubt about it the team approach works best. I focus on building consensus and generating a sense of ownership among attorneys, paralegals and administrative staff.
For example, two years ago I was in charge of a critical strategic planning endeavor. I could have done this several ways, including dictating the direction.
I chose to select 10 partners to work together for several weeks on developing a recommendation. They did so and then rolled it out to the other partners, solicited their input and fine-tuned the plan.
It was then introduced to the associates, who added their thoughts. This is how good leaders build a collegial culture.
Celebrating successes is essential also. We have weekly partner meetings in which we take the time to share good news. Being able to share positive information means that the leader must be plugged in to what is happening. This involves ongoing dialogue with staff and customers.
Sure, it takes effort. But this is a sure way to build momentum and remind people how much they are appreciated.
How do you identify business opportunities?
The party on the other side of the table can be a future client. Even though it can be a meeting under adversarial circumstances, they are watching. When the opposing party is seeking an excellent litigator, we want them to think of us.
Another aspect of seeking opportunities is taking a close look at the organization and deciding how we want to be positioned. What services do we want to offer? What training do we need to do? Or should we hire those who already have the expertise?
I also believe in active involvement in the community. This goes beyond business; it is simply the right thing to do. However, doing the right thing often opens up doors of opportunity. Leaders of every organization have a responsibility to be part of the life of the city.
How do you achieve balance?
I think that is somewhat of a myth. If you are at the top of your game, you cannot have balance at least not on a daily basis. It is more realistic to look at balance in bigger chunks of time, such as a week or month.
There are times you have to be fully dedicated to the job, and there is little time for anything else. Other times, your family needs your time and attention, and the job gets less attention.
Over the long run, if you can juggle your priorities and meet your responsibilities in a way that brings personal satisfaction, you have balance.
How do you define and measure success?
There are several aspects to success. They are equally important. If one is lacking, the others will suffer.
Are our clients satisfied with our services? We constantly seek feedback in this area. If you ask your customers, they will tell you how you are measuring up.
Are we attracting good people, and are they sticking around? Our attorneys have worked hard to get their degrees. They want challenging and complex work. We are successful from a personnel standpoint if we are providing that for them.
Are we exceeding our revenue projections and sticking to our budget? The bottom line is, the bottom line matters.
What key skills must a leader possess?
Good leaders take the job seriously, but recognize it is not life or death. There is room for humor and fun.
There are the obvious traits, such as honesty, sincerity and being willing to work hard. But the reality is, the organization is not about the leader. It is about the business and the many people who are part of it.
Leaders help set the vision and motivate their co-workers to accept the strategy and build a successful organization.
HOW TO REACH: Thompson Hine, (513) 352-6700) or www.thompsonhine.com
While just about everyone breathed a sigh of relief when clocks ticked over to 2000 without a ripple, for some companies in the IT hardware, it was the beginning of a real threat.
“Pre-Y2K, demand exceeded supply, but post-Y2K, supply exceeded demand, and you really have to go find the business,” says Pomeroy, president and CEO of Pomeroy IT Solutions Inc. “It’s not going to be announced, it’s not going to fall in your lap, and you need to understand the customer’s business and what their initiatives and their challenges are and what they’re trying to accomplish and take an unsolicited proposal to them.”
All the Y2K upgrades meant plenty of businesses already had the latest and greatest hardware and software, and the easy money for hardware sellers had pretty much evaporated.
Adding to the challenge was the fact that equipment manufacturers were under a lot of pressure to take their business directly to end-users rather than getting it to them through a business partner like Pomeroy. Hardware margins and prices were dropping dramatically, and companies weren’t necessarily buying all of the latest bells and whistles anymore all trends in the wrong direction for a company like Pomeroy that derived most of its revenue from hardware sales.
Competitors were going out of business or getting scooped up at bargain-basement prices. And by 2003, Pomeroy realized his company needed to make changes or risk its demise.
“We were going to have to change our business model,” Pomeroy says. “We were basically perceived as a regional company at that point.”
Remaining a regional company would limit its growth, and landing large, national customers wouldn’t be likely without a more complete suite of service offerings.
“We basically formed a strategic steering committee that was made up of management from the field, as well as senior management, and we started to meet regularly in late 2003 and 2004,” Pomeroy says. “The first thing we started with was analyzing our current business model, the pros and cons of that business model, and having discussions whether or not we were properly positioned for a change.”
The analysis revealed that to survive, the company would have to adopt a model that included services as well as hardware and software sales. And to land and serve large national customers, it would have to establish a national presence.
“The customer has perceived you in a certain light for a couple of decades, so to go in and change that perception, it’s not going to happen overnight,” says Pomeroy. “For us to really make the shift, we had to change some things within our legacy organization, and we had to go out and make the acquisition of a company that was a pure services organization.”
And while that conclusion was perfectly clear to Pomeroy, there was no immediate consensus within the company that it was the right path to take.
“When some of the people do not have a service delivery background most of their background was in hardware you can’t expect them just to say, ‘Wow, that’s a great idea, and let’s get after it,’” Pomeroy says. “You can’t just have one meeting with your staff and the people in the field and get their buy-in when you’ve been doing business the same way for a couple of decades. It’s something that happens over time.
“We started the discussions back in 2003, so they need constant reinforcement in terms of why we need to do this. They need to feel like it’s not being dictated to them, that they are a part of the solution and they have equity in it, that it’s a collaborative effort.”
He says the key to breaking the resistance was to start talking about the need for change early and to cover all of the implications of both changing and of continuing on the same business path.
“We started these discussions with a lot of key people going back into 2003 and really didn’t pull the trigger for about a year,” Pomeroy says. “So a lot of the discussion was around the current business model, what the new business model needed to look like, how we’re going to get there, the investment, the pros and cons of the of the old model and the new model, talking about challenges we felt like we were going to have in the execution.”
To complete the service portion, Pomeroy IT Solutions acquired Alternative Resources Corp. It offered Pomeroy an attractive client base, good relationships with some OEMs and a stable of help-desk customers.
“We think that acquisition really solidified us as a national player and filled in some white space in the Northeast as well as on the West Coast,” says Pomeroy. “Again, we were perceived as more of a Southeast and Midwest company. I think that went a long way in terms of changing that perception, because now we had a technical work force north of 2,000 people, and that’s a good-sized, mid-tier national firm.”
A challenging transition
While the purchase of Alternative Resources offered Pomeroy IT Solutions the opportunity to gain a more profitable national presence, it wasn’t without its challenges.
“They had three CEOs in as many years, so that creates a little bit of a dysfunctional environment, and I think because they were a troubled company, they had a heavy debt load, and so they needed to pursue some options,” Pomeroy says. “When you’re a bit of a distressed company, you’re going to react a lot differently internally and externally than when you’re not.”
Pomeroy spent a lot of time meeting with the management and employees of Alternative Resources, assuring them that the union of the two companies was going to be a benefit to both.
“I think we just tried to lay out as best we could what the combined strengths of the company would be and that each of the entities brought something to the table that would fill in the voids,” says Pomeroy. “We didn’t try to make it an adversarial thing: ‘You’re a distressed company, we’re a company that’s had a good track record.’ We tried to realize and show that we both bring something of value to the table.”
Pomeroy says building a leadership team that knows the business was critical, and that meant bringing in new talent. Putting that team together required some upheaval and making substantial changes high up in the organization. He says it can hurt the company if you wait too long to make those changes.
“In some cases, you have to go out and recruit people and we did that have a specific experience that maybe you don’t have in-house, and you can’t be afraid to make some changes,” says Pomeroy. “You may like people, but you can’t be afraid to say that while that person might have been good in this position in the past, going forward, it’s a different company. So you need to educate yourself on what you need and, in some cases, you need to find them and make some changes.”
Consistent with its plan to build Pomeroy into a national company that could deliver services as well as hardware to its clients, Pomeroy recruited individuals with the commensurate skills and experience for several key positions.
“We brought in an individual to head up service delivery who’s been working for companies that have delivered service on a national basis for a long time,” says Pomeroy. “We felt like, even with the acquisition, we didn’t have that expertise in-house at that time. We also felt like we needed to bring in a CIO that had a service background and has worked with national companies, and we brought that person on earlier this year.
“And we also made a change in CFO, someone who had a good background with companies that have gone through change, gone from a decentralized environment to more of a national centralized environment, so we had to make some significant changes to the team.”
Pomeroy says a CEO has to spend time in the field to make sure that the integration process is working effectively, not sit behind his or her desk and wait for reports to come in.
“That’s where you’re going to get the feedback from your employees and your customers in terms of what’s working well and why, and what’s not working well and why,” says Pomeroy. “No one’s going to bring it to you. You need to go to it. That’s how you inspect your expectations.”
He says the process requires the CEO’s constant attention. Pomeroy had a conference call with his team once a week for the first nine months after the acquisition to keep tabs on the progress of the integration and make sure it was headed in the right direction.
Says Pomeroy: “You can’t assume anything; you can’t take anything for granted and assume it’s getting done. You can’t just come in and tick things off and everybody’s going to go off and they completely understand. You’ve got to circle back on a regular basis.”
While the results of the changes weren’t directly reflected in the company’s net revenue of $715 million for fiscal 2005, Pomeroy says there is evidence that the changes are having an effect. The more profitable services side of the business accounted for a larger share of its net revenue in fiscal 2005 than in prior years 27 percent versus 19 percent in fiscal 2003, for example.
Pomeroy says the acquisition has created synergies that weren’t there when the two companies were operating independently, and some of the business the company has collared recently would have slipped through its hands before the acquisition.
“Some of the contracts we’ve been awarded over the last 18 months as a result of the combined companies, I don’t think either company would have won them on their own,” says Pomeroy.
And, he says, it’s important to recognize that any change a company makes, no matter how major, won’t be its last if it expects to survive.
Says Pomeroy: “Because you’re always changing and you’re growing with your customers, that’s not just a one-time-and-you’re-done kind of thing. I think you’re constantly looking in the mirror and saying, ‘How can I lead this company and guide the company and manage the business to respond to the changes in the industry?’ It’s always changing; the industry is grow or die.”
How to reach: Pomeroy IT Solutions Inc., www.pomeroy.com