Joe Carrabba has always been in his element in a team environment. Growing up as a football player and wrestler, he always enjoyed the spirit of competition and the atmosphere surrounding a team. But he didn’t realize that those elements he appreciated as a youngster would affect his career as chairman, president and CEO of Cliffs Natural Resources Inc., a mining and natural resources company.
“When I went into the mining business, you work in some pretty remote spots, and you deal with some very difficult environmental effects around you, and in a mine, you don’t call for assistance or help down the road,” Carrabba says. “You have to rely on that group of people or that team to get the product out and get the production for the day. That atmosphere is built very heavily in the mining business, and it’s pretty easy to see how those values carry forward. The world just moves too fast to work in a silo. You’ve got to open up and work in a team atmosphere.”
That’s just one thing that Carrabba has tried to instill at Cliffs, and doing so has helped him successfully lead the company through the difficult economic environment. While many businesses have struggled during the past couple of years, Cliffs saw its revenue from product sales and services grow from $1.9 billion in 2006 to $3.6 billion in 2008, before dropping in 2009. While revenue was down 43 percent through the first three quarters of 2009, the company was still profitable and reduced expenses from $41 million in the third quarter last year to $28 million in the third quarter this year, and it is starting to see a steadily improving demand for its products.
He says the key to his success in the downturn was building that team atmosphere during the good times by creating a great place to work, hiring the right people, communicating and setting goals.
“You’ve got to treat people well in the good times, so you can get their dedication and respect in the bad times,” he says. “We have that kind of team here. Prior to this financial meltdown, we had three or four spectacular years. The commodities business is very cyclical, and you’re going to have very highs and you’re going to have very lows. And you have to plan your business and people have to understand that and then you have to treat everyone equally, fairly and the right way, and that’s what brings the team around.”
Build a great environment
It was one of those first blustery, frigid days in a Cleveland winter. You know the ones — after it’s been relatively warm and then, suddenly, it’s as if Mother Nature turns the hot knob off while leaving the cold running at full blast, making you want to call in sick so as to not leave the warmth of your home and feel the cold creeping through your bones. Well, since most can’t call in sick, Carrabba decided to help his employees out by having an impromptu pizza lunch party so they at least wouldn’t have to go out for lunch and face the wind and cold.
It’s one example of building a better working environment.
“It’s just the way you treat people and the way you want to be treated,” he says. “It really is just as simple as that.
“You’ve got to start with people. That’s really what the business is. You’ve got to have respect for people and their work ethic they put out.”
Your goal is for people to enjoy coming in to your business every day.
“It’s got to be fun for people to come to work, and you’ve got to leave that opportunity in a business when you come in,” he says. “It’s got to be pretty easygoing. The tone at the top has to set that, and it can’t be a stiff organization.”
He says you have to do that if you want people intermingling and working as a team.
“You’ve got to have open doors, and you can have some fun, too,” Carrabba says. “It’s OK. It really is.”
Aside from impromptu pizza parties, he also tries to build fun around college football games, the company’s United Way goals and accomplishments, and some good, old-fashioned humor.
“You start by making fun of yourself, and from there, everything can loosen up a little bit,” he says.
You might think that with the economy the way it is that you don’t have time to have fun or you don’t have the money to spend on anything fun, but Carrabba would advise you to think twice.
“Life’s too short,” he says. “It’s as simple as that. You make your own environment. Nobody else makes it for you, so you can choose to work in a very good environment or a very bad environment. Nobody does that other than the people that are working on this floor or these two floors we have here, so why not make it a conducive place to work?”
Hire the right people
Carrabba doesn’t have to do a lot of advertising to draw potential employees to Cliffs these days. With good morals and ethics throughout the company, people know that and want to be a part of that.
“You don’t have to advertise that on a billboard if you attract those kinds of people who come in,” he says. “On a people side, success begets success. The better you treat people, the more you’re going to get that kind of person to work here.”
But it’s not as if he snaps his fingers and the perfect employees stand out above the others seeking him out — it still takes some work to make sure you hire the right people. Start by focusing on the right things.
“I really leave the technical aspects of the interview to the other folks and their respective departments,” Carrabba says. “My sense is really around team chemistry. That has to be first. You could be the smartest person in the world, but if you don’t have the chemistry like we’re talking about to fit into the group, it won’t work for the individual interviewing, and it certainly won’t work for us. … Dwell on team chemistry and get a sense for where the person wants to go, how they like to operate, how they like to manage their time both personally and professionally.”
He says to ask about life experiences from organizations that they’ve been a part of during their career but also about leadership experiences going back as far as high school and college. Ask if they’ve been involved in team sports at any level and see what types of work they do on the charitable side of business.
“All of those build team types of quality and experiences,” Carrabba says. “You go through the highs when you’re winning and the lows when you’re losing when you’re a team player, so you really have to look for those.”
It’s also important to use the interview process as a chance to show who your company is and not just what it does. This is the time to get people who will buy in to your values.
“It starts at the very beginning of the interview and making sure that they know what kind of company they’re coming to work for and what the values of the company are so there aren’t any surprises when they come here,” Carrabba says.
Also involve several people in the process to make sure you get the right people for your organization because different people will pick up on different things about a person. For example, he’ll involve a ma
nager, but he’ll also involve someone from human resources.
“They’re not in the department, so they can give me an external view, if you will, and that’s what they’re trained in the business to do,” he says.
Then there would also be some peers and lateral people who are at that same level as the person who would be coming in.
“Again, that team chemistry has to work, and they have to have a good feel for the selection that’s going to come into the department,” Carrabba says. “Everybody picks up on different things.”
With employees as far away as Perth, Australia, Carrabba spends a fair share of his time trying to communicate with his people. But it’s a twofold reason for doing so: One reason is to get the company’s goals out to people, but it’s also so he can help address problems and issues in their lives.
“The senior team has always taken the temperature check, if you will, on people throughout the organization and how hard they’re working,” he says. “Do they need some time off? What are their stress levels?”
People work really hard, and sometimes certain projects can absorb their time, so you need to have that communication with them to be able to recognize the stress.
“It’s humanistic and knowing your people and knowing what kind of day they’re having or if they have some personal things, that we all go through based on our life,” he says. “We’re pretty passionate about that it’s family first and job second. We’ll work around the job, but you’ve got to take care of the home first.”
Recognizing stresses in people’s lives comes back to communicating with them on an individual level and communicating with your managers, as well.
“Spend time with them,” he says. “Walk around. Have lunch with each individual. Keep your door open. Office hours are for me to talk to people. I’ll do the work side of things after hours.”
You have to make people comfortable talking to and opening up with you.
“A little humor goes a long way,” Carrabba says. “A little lightheartedness — not everything has to be done on a PowerPoint or communicated on a spreadsheet. If you just start with respect of people’s minds and what they can develop and create in an organization, I think that transmits through, and it’s easy to have a two-way conversation.”
Once you get to know someone a little bit, you’ll start to recognize his or her nuances.
“It’s just [like] reading someone who’s close to you or your family members,” he says. “We all know what our routine or normal actions are in a day, and if people are acting a little out of sorts or having a down day, I think they can pick up pretty easy and help take a little load off of them so they can deal with whatever it is they have to deal with.”
But also respect that some employees may want to keep their communication with you strictly professional.
“Some people want to solve their own problems,” Carrabba says. “Some people are closed and personal, and that’s OK. You have to respect that, and some people just sometimes want somebody to lean on, and you’ve just got to have that style of adaptability to do that.”
Beyond personal-level communication, you also need to communicate the high-level corporate happenings that employees should be aware of.
“I keep a running tablet going throughout the period of time [between meetings],” he says. “As we go through the weekly, daily, monthly events, as it leads up to [the next meeting], I don’t sit down and craft a speech or anything like that, but I think the bullet points throughout the quarter are important to ring on.”
Or sometimes he and his team will pick a theme to focus on during a certain meeting. For example, recently they wanted to make sure that people were aware of the company values, so they focused on the core values during that particular period.
No matter how much you communicate, be sure to get feedback from employees, too.
“Answer as many questions as you possibly can, either on a spontaneous basis or on a planned basis, which we do both,” Carrabba says. “You’ve got to spend time with your folks and vice versa. Communication is a two-way street, and people won’t feel comfortable with you, particularly on bad news days. … You can only fix bad news if you hear about it. That’s just a comfort zone people have with you.”
And there’s always going to be questions — even if nobody asks them.
“I get a lot of feedback from individuals who don’t want to speak at the meetings,” Carrabba says. “We’re now asking people in advance by e-mail what questions would you like to ask but you don’t want to stand up and ask a question. We’re encouraging. It can be anonymous questions and usually they’re all on people’s minds, but somebody from the group doesn’t ask, so we’re trying very hard to encourage people to ask what’s on their mind. I can’t address them unless I know what it is.”
Whether it’s corporate objectives or personal problems, there’s one common theme to the communications: You need to work at it.
“You have to really think through a communication plan,” he says. “It can’t be haphazard. It’s nice, and you’ve spent a lot of time with the spontaneous discussions that pop in your head, but you have to have a pretty solid communication plan to make sure you can roll out the vision of the company and the goals and objectives so people know where we’re going and they can align themselves with business goals as they go through with it.
“People want to hear what the business results are for all the work they’ve put in. It’s important that all that feedback is communicated through. Everybody has ideas and suggestions. It’s spending the time explaining to a person as to why you are or aren’t going to do something so at least they feel their voice is heard, and taking that feedback to get the great ideas that are sitting out there.”
Every sports team has its ultimate goal — win the championship — but it has things it has to do to get there, such as win the division, improve scoring, decrease errors and so on. And every company is no different, so you must first know your strategy.
“Leave yourself plenty of time,” Carrabba says. “It takes a lot of time to build your base strategy. ... I would say, use fact-based data, not emotion or 30-year ‘isms’ of a company. Challenge the facts and make sure you have them right, and then you do your competitive analysis and move your strategy based on those building blocks.”
Once you know your strategy, then you can start filling in the steps to achieve it by setting goals.
“Build the goals and objectives to align with the strategy,” Carrabba says. “Those goals and objectives come down from the departments themselves.”
He has an executive committee that reports directly to him.
“They cascade the strategy downward through their organizations, and they talk about the goals and objectives they need to achieve so that we can achieve the strategy of the company,” he says.
He has four or five iterations of getting the goals down on paper, and then the goals are published.
“Everybody, here’s the strategy, here’s the large goals and objectives, and then off of that, people h
ave a performance scorecard that has to align with that and has solid metrics, and that alignment goes right down to the front-line supervisors around the world and organization,” Carrabba says.
Supervisors share that scorecard with their employees at the beginning of the year, and each party agrees to it so there are no surprises later on. Then that person is measured on their progress in meeting those goals twice a year, and benefits and compensation are often tied back to that.
“It goes back to the basic premise of you hire smart people, you set the frameworks — the goals, the objectives, the core values of the company — and it’s up to them to perform within those frameworks by building their own scorecard to align and deliver the business goals,” he says.
By doing all of these things, Carrabba has created a strong team environment that has allowed Cliffs to succeed and position itself for the future.
“It’s just strengthened everything,” he says. “If anybody had any doubt, and there’s no reason why they should, the textbook types of things that we’re doing that I described, that you could read in any business manual, we’ve actually applied those in difficult times, and the formula works. They’ve been battle-tested, if you will. We’ve come through them very well and have a very bright future.”
How to reach: Cliffs Natural Resources Inc., (216) 694-5700 or www.cliffsnaturalresources.com