It wasn’t your typical corporate relocation when Cartridge World Inc. moved its North American headquarters from California to Illinois in 2011.
For starters, most of the employees who had worked at the Emeryville, Calif., headquarters were not making the trip to the new offices in Spring Grove, Ill.
“Institutional knowledge disappeared if it wasn’t retained in the system,” says William D. Swanson, CFO of the global ink and toner printer cartridge retailer and CEO of North American operations.
“Even then, it might be in the system, but it’s not in the minds, hearts and thoughts of the people coming on board. So that was interesting. It was one of the most difficult challenges to overcome when we came here.”
It was difficult, but it was a challenge that Swanson and the leadership team at Cartridge World felt needed to be tackled. The company had slumped during the recession and found itself struggling to get back on its game.
“We ended up in a situation where as a company, we had significantly more expenses than were sustainable based upon our revenue stream,” Swanson says. “So it was really taking a company that was stuck and creating negative cash flow and then creating positive cash flow and, more importantly, value for its constituents.”
Making the situation even more interesting for Swanson was the fact that he, too, was new to Cartridge World, which is owned by Wolseley Private Equity in Australia. He joined the company in May 2011 as global CFO and didn’t become North American CEO until July 2012.
So the task was rather daunting.
Swanson needed to get himself up to speed with what the company was all about while at the same time, he worked to integrate new employees into a new culture in its new home that would enable the company to generate better financial results. He also had to engage franchisees at the company’s 650 stores across North America. The company has about 2,275 store employees in North America and 50 corporate employees.
Fortunately, Swanson brought a lot of confidence to this seemingly difficult mission.
“If you have good, compelling arguments and a good, solid vision that people can buy in to and understand, you get people to move forward in that direction,” Swanson says.
Build your team
The move to Illinois wasn’t just about rejuvenating the business. It would put Cartridge World in a more central location with which to work with its franchisees since two-thirds of its U.S. locations were east of the Mississippi River. It would also provide closer proximity to the company’s technology partner.
But those are physical details. The act of building a new culture from the ground up that would help the company start growing again wasn’t going to be as easy.
“You don’t know what you don’t know,” Swanson says. “That can be a very difficult place if you’re going down fat, drunk and stupid and you don’t know where you’re going. Any road will take you there. You better get clarity and you better help the new team understand that clarity.”
Swanson looks for three things to help determine if someone can be a strong member of his team.
“First of all, I make sure everybody has a consistent view of what success looks like,” he says. “Where are we trying to go? What does success look like both tangibly and intangibly? Paint that picture. Create specific numbers and reinforce that. Ask them to repeat it so that I can gauge their understanding.”
The next is one-on-one time with the person talking about his or her place in the company.
“I have a formal one-on-one session with my direct reports on a weekly basis, but informally, we meet and chat in the morning or sometimes we’ll be here late,” Swanson says. “It really is making sure I can gauge how they view their responsibilities, the tasks they are working on and the judgment they are exercising as they make decisions and take action.”
Finally, Swanson wants to know what kind of initiative they have to get things done and make things happen.
“Some people might see opportunities and others wait for those opportunities to be pointed out to them,” Swanson says. “Some take action and some wait for action to be assigned. When we have a company where staff has been reduced by 50 percent, I need people who can take an initiative and exercise good judgment moving in the direction that we need to move in.”
The goal is exactly the opposite of creating drones who will follow his every word. He wants people who see success the way he does and have the desire and energy to achieve it. But he has no problem if they have a different way of making it happen.
“They are more likely to achieve success when they get to choose the path that they are going to go down, as long as it’s consistent with the vision, and I know they can exercise good judgment,” Swanson says. “If they try to go down my path, they are not going to completely understand it, and they’re probably never going to do it exactly like me, so I’m not going to be thrilled by it.”
As important as it was to get his leadership team on board with his plan, Swanson very much needed to have a good relationship with his franchisees if Cartridge World was to succeed.
The key to a good relationship with any group of people is to be respected.
“When you’re dealing with franchisees, what you have to know is a lot of them put up their life savings to be in this, and they’ve committed their financial resources to the success of the business,” Swanson says. “That has to be understood. They have to know that you respect them and what they’re doing and how they are going about it.”
You owe it to them to listen to what they have to say when they have opinions about how the business should be run.
“It doesn’t mean I’m going to agree with them,” Swanson says. “I may, I may not. If I disagree, I’ll present it in a way that maintains their esteem and doesn’t put them down but rather presents another issue. I like to think of it as though we’re all businesspeople around the table. The issue is on the table; it’s not with any of us around the table.”
When you establish that foundation of respect, you can then move more easily into addressing some of the things that may be holding your business back.
“If you see things that are happening in the business that aren’t consistent with what it is you as a business are trying to accomplish, then you have to say, ‘Why are we doing these things?’” Swanson says. “What might seem like a good idea in the short term because maybe you had some high-priced consultants or you had something that convinced you as a company that this is the direction you want to go in, maybe it just wasn’t a well-thought-out idea. Those things happen. They happen everywhere.”
When you jump right into a decision without gaining the understanding of what your people are seeing and experiencing and any other pertinent variables, you run the risk of making a big mistake.
“Stephen Covey said it in one of his seven habits,” Swanson says. “‘Seek first to understand before being understood.’ I’m not sure all leaders do that. It can be a struggle to not jump in and say, ‘No, do it this way.’ Now certainly, if you’re going off a cliff, you’re going to stop that from happening.”
Cartridge World was struggling, but it wasn’t going off any cliffs. So Swanson took the patient approach.
“It’s constantly learning and taking a look at what you did yesterday,” Swanson says. “What went well and what didn’t go well? What did we learn from it? How do we take yesterday’s or today’s experiences and use that to shape what we’re going to do tomorrow?”
One thing Swanson does not do as he is guiding the company is step on the toes of people who hold leadership positions at Cartridge World.
“I have an open door, and if anyone ever wants to talk to me, they’re always welcome to talk to me,” Swanson says. “But I’m not going to go around my leadership team if I don’t need to. I respect them and what they’re doing.”
The results of recent changes have begun to pay off. With a redefined sense of roles and responsibilities, the company is back on a growth trajectory. In 2012, it launched Cartridge World Express, a mobile business that offers more than 400 ink and toner products for every major brand of printer, copier, fax and postage machine. It also expands the company’s mission of recycling to keep printer cartridges out of landfills.
“You have to be firmly committed to the direction you’re going and why you’re going in this direction and you can’t be short on communicating the vision and direction and the reasons why decisions were made,” Swanson says. “That has served us well.” ?
How to reach: Cartridge World Inc., (815) 321-4400 or www.cartridgeworld.com
The Swanson File
Name: Bill Swanson,
Title: CEO, North America
Company: Cartridge World Inc.
Education: Bachelor’s degree, accounting and business administration; CPA, Augustana College, Rock Island, Ill. I’m also certified in cash management.
What was your very first job as a kid?
My first job was caddying. I went to the golf course and the caddy master said, ‘Well you’re a little too small. Why don’t you come back next year?’ I came back the next week. He said, ‘Weren’t you here before?’ I said, ‘Yeah, I was. You told me I was too short. But I think I can do it, and I’d like the opportunity to show you.’ So I did and I was able to caddy for a couple years before I turned 16 and could get a real job.
Who has been your biggest influence?
I was in public accounting and then I left and worked in private industry for three brothers for around 20 years. One of the brothers, Arnold Miller, was just fantastic. That’s where I developed the way I think about business, running a business and the values that I have that are very important to me.
Who would like to meet and why?
Warren Buffett or Sam Walton; both of them for their purity in running a business and saying, ‘What is it we’re trying to accomplish? Keep all the self-serving stuff out of the way.’ Both of them are very successful in understanding what it is they are trying to accomplish and then to be able to do it by focusing on the fundamentals that it takes to get done. Not on wishes, not chasing rainbows, but truly understanding the fundamentals of what it is you’re trying to do. Work utilizing those fundamentals. If you do that, good things will happen.
Know what you’ve got.
Always show respect.
Never stop learning.
It looked to be another great year for Republic Steel.
Coming off its 2005 acquisition by Industrias CH, S.A de C.V. (ICH) — a fast-growing steel producer and processor based in Mexico City — the company had cleared up all its previous debt, the steel industry was flush with opportunity, and as the new
was laser-focused on building a strong team and investing in best-in-class facilities to position the 125-year-old steelmaker for growth.
And that, of course, is when everything went south.
“After October 2008, the whole world changed for the industry,” says Vigil, who joined the Canton, Ohio-based steel company in 2005. “The recession threw us a curveball that we were not planning. I don’t think we were looking ahead. We had really relied on intelligence based just on market view.”
As the largest maker and supplier of special bar quality (SBQ) steel in North America, Republic produces steel for applications such as automotive and energy. It has been developing its steelmaking practices for more than a century. But even a company with annual sales of more than $1 billion wasn’t immune to the shock of the 2008 financial downturn.
Declining demand and struggling customers, who were urgently looking for ways to cut costs and scale back, hit the company hard. Almost overnight, Republic Steel saw its volume of business nosedive.
Streamline your structure
Not yet knowing the full scope of the downturn, Vigil knew that Republic Steel — like its customers — needed to cut costs to minimize the financial fallout. So the first step was to look for ways the company could streamline plant operations.
“At that point, the volume with the plants that we had had a lot of fixed costs,” Vigil says. “We were forced to shrink our footprint to be able to manage our costs and have a profitable business.”
Increasing efficiency without sacrificing quality can be tricky. You need to examine the profitability of every segment of operations thoroughly. First, identify the areas that have the most efficient costs, and second, identify where costs overlap. This process allows you to consolidate the most efficient operations and shut down equipment and functions that no longer make sense.
By making these changes, Republic Steel was able to shrink its footprint to that of a much smaller company in a short time period.
“That was a very different situation for us from 2005, but it was also a very good experience for us to try to model our business for the future,” Vigil says. “It allowed us to look at things in more detail and understand our business and our cost and the opportunities that we had to be more efficient.”
Taking cost out of operations not only allowed the company to produce SBQ steel more efficiently, but it also freed up resources, which Vigil reallocated to enhance the company’s quality, delivery and range of products in its SBQ steel business to provide more value to customers.
“We have to be right there with them making a product that suits their needs,” Vigil says. “Our No. 1 qualification or differentiation in the market is our ability to work with technicians of our customers to develop the products that fit their needs and then produce them consistently with a low cost and high quality and delivering them on time.”
When you’re not making a commodity, you need to be more focused on quality and continuously improving your products to stay competitive, Vigil says. The key to staying relevant was investing in the company’s strengths, such as its years of experience in the steel industry. The fact that the company’s Canton plant was the first-ever producer of SBQ steel provides it with a strong competitive advantage.
“Our brand has good recognition, and we continue to build on that by making our customers really comfortable in the long run that they have a true partner with Republic Steel, a company that knows what it wants and that can adapt to the changing market as needed,” Vigil says.
“With more than 125 years of know-how, you get a very good result. You can continuously provide the same quality that your customers are used to with more efficiency. It allows you first to be more competitive in the marketplace and maintain and improve your quality in the product.”
Since 2005, Republic Steel has reinvested close to $130 million in new equipment and new processes into its core Northeast Ohio facilities, which include plants in Canton, Lorain and Massillon, Ohio. In 2012, the company also announced that it would invest more than $87 million in a new electric arc furnace and equipment at the company’s Lorain, Ohio, steelmaking facility — a move that is adding approximately 450 employees.
The company chose the Lorain plant for the investment because of its close proximity to the existing customer base and to other Republic Steel facilities. Having a smaller physical footprint allows you to allocate resources to growing areas more easily to develop strong teams, while delivering a consistent experience for customers.
“We see a strengthening automotive industry as well as a lot of growth in the energy sector side through the gas horizontal drilling process,” Vigil says. “We see ourselves in a very good position to serve those markets in the long term.
“It gives us an opportunity to serve our customers with more product and a very solid footprint in the long run. Our customers have a supplier that has no debt and that is investing in its business. So we feel that our customers see us as a long-term partner, and they can stick with us for years to come.”
Look to your core
When your company is facing market volatility, past plans and strategies may get tossed out the window rather quickly. To ensure that Republic Steel didn’t lose sight of its identity in the chaos, Vigil used the company’s core values to guide the strategy — specifically two values passed down from its parent company, ICH.
The first was carrying a debt-free balance sheet.
“When we acquired the company in 2005, we inherited some debt from the previous administration,” Vigil says. “We worked very hard to pay it off with our own resources and some support from the parent company.”
Even when the company was losing volume during the recession, Vigil wasn’t willing to take on debt in favor of gaining more financial flexibility. In fact, he says borrowing money often results in the opposite outcome for companies by stifling their spending. Carrying zero debt allows you to make decisions without dealing with banks or lenders.
“Some companies have different opinions about debt, and in certain cases, it allows companies to be flexible and grow faster when an opportunity comes, but we still have that flexibility because having no debt makes us attractive to banks,” Vigil says.
“The recession has been the best proof of the strategy. We tested it through this downturn, and we were able to manage through the recession a lot better than some other companies who have big debt or a lot of interest to pay.”
As a result, the company has been debt-free since March 2006, operating as a true cash-flow company.
“It makes us a stronger company, and it allows us to keep reinvesting even in the downturn because the money that we generate is really for us and not to cover any debt obligations that we have,” Vigil says.
The second core value that helped guide the company through the recession was having a diversified mix of sales. Carrying a wide range of products makes the company a one-stop shop for many customers. So even in the downturn, Vigil continued to make investments to expand Republic Steel’s capabilities in emerging markets, such as natural gas and energy.
“The volatility in our customers’ industries continues to be something that we’re monitoring very closely,” Vigil says. “The economic situation worldwide, starting with Europe being so volatile, continues to have a big effect on our customers’ ability to project their levels of operations.
“Having a more diversified mix of sales allows us to not have all of our eggs in one basket and participate in different industries, and we’re able to better ride the cycles. We, as a company, believe that if we stick with those two values — remaining debt-free and continuing to have a diverse mix of sales — we can deal with the volatility in different markets.
“We’ve prepared our company to be better geared to react now than we were in 2008. Through these changing circumstances, we’ve created a more flexible company with the investments that we’re making, allowing us to grow our strength faster.” ?
How to reach: Republic Steel, (800) 232-7157 or www.republicsteel.com
1. Find ways to cut cost by shrinking your footprint.
2. Allocate resources to growth areas.
3. Guide your strategies with core values.
The Vigil file
President and CEO
Born: Mexico City
Education: Universidad Anahuac in Mexico City
What is one part of your daily routine that you wouldn’t change?
I like running every morning before going to work; it really makes a difference helping me start every day with great energy and a clear head ready for business.
Best piece of business advice:
I’ve benefited a lot from the experience that my team brings to my decision-making process. That saying that more heads are better than one — that does apply in practice. It’s particularly important in soft science to surround yourself with good members willing to openly give their take on problems so that together you come up with the best solutions.
What do you do for fun?
There is no better way for me to spend my time when I’m not at work than with my wife and kids. From training for a marathon with my wife, to being attacked with toy swords by my three and four year old boys … it’s the best time of my day!
When Al Crawford visits Disney theme parks, he’s thrilled by the rides, the theatrics and the entertainment. But what really leaves him in awe are the park’s employees.
“I’m absolutely amazed by an organization like Disney,” says Crawford, chairman and CEO of the Southwest Ranches, Fla.-based Bankers Healthcare Group Inc. “I’ll walk through their parks and I’ll ask, ‘How do they handle this? How do they control everything?’ … For just one park, you wonder how do you get the right people being responsible?”
At the time they founded BHG in 2001, Crawford and his partners didn’t have to worry about any of these questions. Among the three of them, they had all the skills they needed to launch a successful venture on their own.
As president, Robert “Bobby” Castro, was “the guy who brings the business in” and “makes it rain.” His brother Eric Castro —BHG’s COO and the “glue” between the three founding partners — put the systems in place to help the company scale. Then there was Crawford, who handled finances and built the balance sheet for the company, which provides financial services to medical professionals.
“One of the unique things about the company was that you didn’t have to go out there and hire people to do things that you didn’t know how to do, because the original three owners had expertise and experience in really all areas,” Crawford says. “So you didn’t rely on anybody else. You knew that you had the experience and that your partners had brought a tremendous amount to the table to get the job done and to grow the company.”
But as growth accelerated, so did the demands on the three partners. Soon enough, the notion of doing it all was feeling more like a burden than a joy. Like the Disney parks, they needed to assemble a team of people who could run the organization’s day-to-day operations and could be trusted to make decisions and take care of customer needs independently, so that the owners could focus on expansion. Yet this was easier said than done.
“When you’re doing everything yourself, you know there’s accountability,” Crawford says.
“As we grew, one of the challenges has been letting go of those reins and finding people who had the passion and dedication that we did in all three areas.”
Recognize when you need help
Flash back to 2005, the three owners were drowning in the responsibilities of day-to-day business. They no longer had the time and resources to run the company on their own. But when you’ve been handling certain parts of your business independently for years, it’s hard to recognize when it’s time to delegate some of your job to other people.
One way to gauge whether you need to reallocate some responsibility is by asking, “Can I take a vacation?” For instance, whenever partner Bobby Castro was out of town, it showed up in the bottom line.
“It was where you just couldn’t handle it all by yourself, and the fact that you were trying to handle it all by yourself was actually hurting the company,” Crawford says.
“I could tell you when Bobby was on vacation because there would be a drop in originations, which is unacceptable when you’re looking at $15 million of small ticket $100,000 loans on a monthly basis. All of a sudden Bob’s on vacation so we do $7 million that month because he was gone for 10 days. We can’t have that. We’ve got to have other people that, though maybe not as good as Bobby, are close.”
Another question to consider is how many hours are you working? Working nights and weekends may be necessary when starting out, but 60-hour workweeks may not be the best use of time for the CEO of a growing business.
As the head of finance, Crawford found himself struggling to juggle too many tasks while also trying to finance business growth. COO Eric Castro faced a similar dilemma.
“Eric was close behind me in saying I can’t build all of these systems myself,” Crawford says. “I need to hire people, and we need to grow proportionately.
“So I had to grow my section — I can’t run around talking to banks for the rest of my life, because I’m also trying to handle accounting. We’re trying to handle legal. And I need to be a little more grounded. Consequently, I need some people who can do what I’m doing and do it just as well and not drop the ball.”
In the end, each of the partners felt the strain differently and independently. But acknowledging that they needed to let go of the reins was a critical step in preparing the company for the next stage of growth.
“As your plate starts to grow beyond an average of eight to 10 hours a day and you truly to see growth from a P&L standpoint — you’re making money and you’re becoming more profitable — you need to put the money out and start to mentor somebody,” Crawford says.”
“From a real microeconomics look, as the tasks become so vast that you find yourself just about getting to none of your to-do list, it’s time to find somebody who can start to take some of those tasks.”
Reset your priorities
Delegating responsibility to other people is a relief for some leaders, but incredibly difficult for others. Either way, it helps to start small.
As Crawford and his partners began unloading some of their mounting job responsibilities, they handed off their lowest priority items first.
“If I made a list of everything I had to do today, there’s probably a bottom 10, 15 or 20 percent that somebody else could do,” Crawford says. “And they could do it just as efficiently as me. If I’m just running around in circles and constantly trying to catch up, constantly not getting to things, I’d be better off and more efficient doing the bigger things better and allowing somebody else to do that bottom 20 percent.”
Instead, take that bottom 20 percent and give it to a new employee, who can give it his or her utmost attention.
“Give it to the person who is looking to ride something in that department and let them make it their top priority, so all of the stuff on your list is always getting high priority,” Crawford says. “You’re getting effective representation if it’s customer service stuff. Your customers are being serviced better.”
If it’s taking you two or three days to get back to a client or customer, ask yourself if there’s an employee who could take the task of following up on phone calls or even an entire account. A new person will also be excited and eager to get back to them, Crawford says.
“Maybe they are not dealing with you, but that’s OK,” he says. “Because dealing with you is really hurting the relationship because you haven’t gotten back to them in three days. That type of delegation makes the whole organization better, when you can take a look at your list and say, ‘What am I not doing well here?’
“Delegate that to someone who’s anxious, who’s looking to climb, looking to grow within your organization, and they make it No. 1 through 5 on their list, so it gets done extremely well.”
Help new people learn the job by staying close to them — literally. As Crawford began delegating to new leaders, he frequently had them in his office or next to his office to shadow and learn from him. He also confesses that finding the right people tends to be a process of trial and error.
“It’s no different than a professional baseball team or a football team,” Crawford says. “They can go out there and they can literally go after what they think is going to be the best quarterback in the country. And he can be a flop.
And just because someone has pedigree or experience doesn’t mean that he or she is going to be a success.
“We’ve had people who we’ve hired that have been tremendous,” he says. “We’ve had people that we’ve hired who we thought were going to be tremendous who were horrible. And then we’ve had people who we hired that we cultivated, homegrown and have become superstars.
“It’s finding the right candidate with the right degree, the right experience and the right attitude that you bring in and put in close proximity to you. You look for them to just really absorb everything you’re doing. You try to share what you’re doing, and you look to grow them into your spot, honestly, so they could replace you.”
Find people like you
Since 2001, BHG has grown from its original three partners to 150 people. And as a result, Crawford doesn’t see the “young, aggressive, talented person” anymore. Instead, most of the hiring decisions are pushed down to different department heads, who are given the freedom to hire, fire and mentor the people who work within their area.
“We use that model where you’re counting on people who you’ve trained, people who are moving up the corporate ladder, and they have earned the respect of their peers, earned the respect of the owners,” Crawford says. “Now they’re making the same decisions that you were making two or three years ago, and they’re looking to grow that department by implementing the same type of strategy.
“So they’re going to find that person. They’re going to find a person that fits with them, and they’re going to mentor that person in the same way.”
As people become more independent, they’ll take on larger roles in the company and eventually their own disciples. This tiered mentoring ensures that new leaders are continually being developed at all levels of the organization.
“It’s important for me, Bobby and Eric that people within your department respect you and they look up to you, and your personal traits and business traits appeal to them,” Crawford says. “If we can get that out of the individuals that work for our department heads, it’s a home run because they’re the people that have to do the entire day’s work with their peers.”
Furthermore, managers in the company can be more effective because they’re able to surround themselves with people who share their working style, whether it’s fun and laid-back like the BHG marketing department or more structured like in accounting. For example, the company’s lead treasurer, Angela, is always one of the first to get to work and last to leave, so she looks for this work ethic from everyone in her department.
“I can guarantee that she’s going to surround herself with people who are like her,” Crawford says. “It’s going to run in straight contradiction to her if you’re coming in at 9 a.m. and you’re leaving at 5 p.m. You’re taking an hour and a half for lunch ... It’s just not going to work. Angela probably works longer hours than I do. So if you’re in her department, you’re probably going to log some hours. And she’s got to hire. She’s got to fire.”
Hiring and mentoring people who share your values is important, but it doesn’t mean you want to fill your company with a bunch of “yes-men” either. That’s why Crawford always abides by the rule to hire intelligent people who are passionate about keeping the business innovative and thinking for themselves.
By developing and mentoring new leaders for the company, the partners grew BHG to $155 million in revenue in 2011, making the company a staple on Inc.’s list of fastest-growing companies, with six appearances in the last seven years. The company also received the Ernst & Young Entrepreneur of the Year 2012 Award in the Financial Services category in Florida — evidence that the new generation of leaders is carrying on the vision of its owners.
“We love to hire people that are smarter than us, that can bring ideas that we’re not bringing and that can just really push the envelope,” Crawford says. “In the future, we have the right people in place to challenge us daily, to come up with new products, to bring better solutions to the customer. And with those solutions, you’ll see a growth in business.” <<
How to reach: Bankers Healthcare Group Inc., (866) 297-4664 or www.bhg-inc.com
- Recognize when you need to transfer responsibilities
- Delegate some duties to a new employee
- Encourage managers to hire and mentor people like them
The Crawford file
Chairman and CEO
Bankers Healthcare Group Inc.
Born: Troy, NY
Education: BA from Gettysburg College, 1984
On being a worry wart:
I’ve been told that, ‘Geez Al, you worry a lot’; and it’s interesting, because Bobby [Castro] – he doesn’t worry. He’s so type A. The glass isn’t half full with Bobby. The glass is 7/8 full. And so that’s been a real help for me, because I’m a positive person. But a positive person can still worry about what’s coming around the corner.
What’s the best piece of business advice you’d give to another leader?
I don’t think it’s bad to worry and to be concerned that the world changes daily now. You have to be concerned. There are so many things that don’t last forever. For me it’s been a trait of always looking over my shoulder to see what might be coming at us from behind us and worrying about that, yet still not dwelling on that.
You’ve got to be positive. You’ve got to be thinking outside of the box. And I think the two traits go well together, where you’re willing to push on your people and willing to push on yourself…because nobody wins the Super Bowl every year.
On trusting your partners:
It’s trust in what they’re bringing to the table to the company. I’m dealing with two brothers who are 66 percent. People say to me, are you ever concerned about that? Could you be voted out? It’s not even a thought. They trust my opinion. They respect my opinion when it comes to growing the company, being the CEO of the company. And I feel the same exact way about them as individuals.
On loving what you do:
We’ve never been interested in even looking at a sale of the company because to sell the company and then have a non-compete clause and have to do something else – we like what we’re doing. To a point that might be not a good thing because maybe there’s a time where every company should be sold, but for us, it’s kind of like; well, what else would we want to do?
Your intellect may be confused, but your emotions will never lie to you.
? Roger Ebert, film critic
The 2012 State of St. Louis Workforce Report says that the No. 1 shortcoming of recent hires is the “lack of communication or interpersonal skills.” Also in the top 10 were a “lack of teamwork and collaboration” and “lack of willingness and ability to learn.”
Commissioned by Workforce Solutions Group of St. Louis Community College and conducted in partnership with the Missouri Economic Research and Information Center, the report seems to suggest that elements of what we often call emotional intelligence are valued but lacking in recent hires.
Why is this important to leaders? There are several reasons.
First, it should give us pause to examine how well we as leaders stack up. Are we exhibiting the qualities we deem lacking in others?
Secondly, it suggests that we should seriously think about whether or not these are the talent deficits we see in our business. If these are the deficits, what will we do about them? How do our attraction efforts need to change? How do our employee development initiatives need to change?
What is emotional intelligence?
In “Primal Leadership: Learning to Lead with Emotional Intelligence” by Daniel Goleman, Richard Boyatzis and Annie McKee, the authors’ definition of “how leaders handle themselves and their relationships” is expanded through the explanation of four domains of emotional intelligence and their associated competencies.
At this point, some leaders may think that while this is interesting, they still just need to hire smart leaders who want to work hard.
Fair enough, as we certainly need to do that. But, the authors suggest that emotional intelligence “contributes 80 to 90 percent of the competencies that distinguish outstanding from average leaders — and sometimes more.”
They admit that this is a “rule of thumb” and a precise measure is dependent on many factors. But we know, as leaders, that we’ve seen great ideas flounder or die because advocates weren’t aware of how they were coming across or hadn’t built up the people capital necessary to support the idea.
Regardless of the ratios involved, the authors are onto something: Emotional intelligence is a significant aspect of leadership.
So, how does one incorporate recognition of the importance of emotional intelligence into leadership development efforts? If a leader needs to develop an aspect of emotional intelligence, is it even possible for that person to change?
What are emotional styles?
Dr. Richard J. Davidson and Sharon Begley, authors of “The Emotional Life of Your Brain: How Its Unique Patterns Affect the Way You Think, Feel, and Live — and How You Can Change Them,” suggest that it is possible for people to adapt certain emotional patterns.
Using his 30 years of research in affective neuroscience, Davidson has identified six “emotional styles.”
Resilience: How rapidly or slowly does one recover from adversity?
Outlook: How long does positive emotion persist following a joyful event?
Social Intuition: How accurate is one in detecting the non-verbal social cues of others?
Context: How well do you regulate your emotions to take your context into account?
Self-Awareness: How aware are you of bodily signals that constitute emotion?
Attention: How focused are you?
Even a cursory review of the six emotional styles will lead one to see connections to important dimensions of emotional intelligence. What if you could help your team members bounce back more quickly from setbacks? What if you could keep a positive attitude that helps keep the troops motivated and promotes creativity? How could you become either more focused or less single-minded? Each point should have relevance to you. Would that be worth some time and effort for you to explore?
Andy Kanefield is the founder of Dialect Inc. and co-author of “Uncommon Sense: One CEO’s Tale of Getting in Sync.” Dialect helps organizations improve alignment and translation of organizational identity. To explore how to use the principles of neuroscience to promote better organizational alignment, you may reach Andy at (314) 863-4400 or email@example.com.
Adam Miller could not afford to waste any more time at Cornerstone OnDemand Inc. He had just become a father, and if he was going to spend time away from his first child, he decided that it had better be time well spent.
“I realized while I was out with the baby that we could keep trudging along or we could try to make this into something meaningful,” says Miller, the company’s founder, president and CEO. “It was at that point that I decided we were going to try to really grow the business and not just limp along.”
Cornerstone was launched in 1999 as a technology company and now provides cloud-based talent management software solutions to users in 180 countries. The company grew gross revenue from $10.9 million in 2007 to $75.5 million in 2011.
It’s been a success story, going from 150,000 subscribers to 8.2 million. But it took the birth of Miller’s son in 2005 to get him to realize that, up to that point, his company had not lived up to its full potential.
“You have to say you’re either going to do this or you’re not going to do this,” Miller says. “It was pretty severe. We made a lot of changes to the business in that year. We kept the same basic format of what we were doing and we kept the same product, but we made a lot of organizational changes, and those are things that we would not have done had this not happened.”
One of the biggest changes was a complete replacement of the company’s sales team.
“It was just the wrong people for what we were trying to sell,” Miller says. “We realized to be effective, we needed to be doing solution-selling, and we didn’t have the right skills or people to do that kind of solution-selling.”
So what’s the key to taking the big idea and the significant changes that you have in your head and making them a reality in your business? Miller says it comes down to making sure you don’t blindside your people, even when you’re doing something as big as replacing your entire sales team.
“If you suddenly come in one day and you start acting completely differently and you start making all these changes without conveying why you’re doing it or how it’s happening, all you’re going to do is create massive confusion and create essentially a culture of fear,” Miller says. “People won’t know what’s going on or why it’s happening. You don’t want to do that. You want people to be supportive of what you’re doing.”
Here are some of the things Miller did to get people to support his plan and help take Cornerstone to greater heights than it had ever achieved.
Don’t take shortcuts
It may seem like it takes too much time to sit down and talk with people about your ideas, especially when you’re so charged up to put those ideas in place to see how they work out. But it’s something you’ve got to make the time to do if you want a cohesive team.
“A big part of leadership is taking the time to get the buy-in to support your objectives, even when you don’t have a lot of time and it seems like perhaps a waste of your time or an inefficient use of your time,” Miller says. “In the long run, it’s an excellent use of your time. If you take shortcuts at the beginning of that kind of change or strategic reorganization or reprioritization, you’re going to pay for it over the long term. If you take the time, you get the benefit over the long term.”
That doesn’t mean you have to talk to every last person in your organization. If you have a smaller business and that’s possible, go for it. But if not, focus on the key people who hold positions of influence in your company in the areas you’re looking to affect change.
“Those could be the direct reports to the CEO or those could be people much further down in the organization who have pivotal positions or are somehow critical to the organization, but it’s incredibly important to take the time to get buy-in from all of the key players,” Miller says.
“That is typically the critical mistake people make. They don’t take the time to get buy-in and people don’t understand why changes are being made or feel like the management team is being arbitrary and that leads to lack of support, lack of focus and ultimately lack of execution, which causes the strategies to fail.”
When you sit down with people, don’t just make it about whether or not they like your plan. Talk to them about how it might affect them and use the opportunity to gauge how they feel about their role in the company at that point in time.
“You have to know enough about the person to understand how to have that conversation,” Miller says. “You have to know, what are their personal interests in what you’re talking about? What are their career aspirations? How does what they want connect to what you’re talking about? How does what you’re working on connect to what they’re working on? How do they fit into this model that you’re proposing?”
You’ve got to take the time to show employees what’s in it for them. Don’t just make it about the company and how your idea is going to help your company make more money. Even if you try to have a culture in which it’s not your company, but it’s their company, you’ve still got to make it personal for your people.
“You need to understand the employee’s motivations,” Miller says. “Why would they support the idea? How does it impact them? Does it mean that they have to work harder or less hard? Does it mean they’ll be able to move closer to their career aspiration? Or does it take them further away from that? If you’re talking about reorganization, did one of their peers get promoted and they did not. Do they view that as something good for another person or bad for them?
“There are a lot of different and often competing motivations and perceptions that people will have about something. Trying to walk in their shoes and understand how it’s going to really impact them helps you to better present what you are proposing.”
It was more of a symbolic move than anything else, but it did send just the right message to his employees. As Miller embarked on his big change plan for Cornerstone, he began by firing himself as CEO.
“I came in one day and said, ‘Let’s pretend that I’m the new CEO,’ even though I was also the old CEO,” Miller says. “But I started thinking about the business as if it was my first day on the job with no preconceived notions, loyalties, expectations, anything. At that point, I was able to really transform the business because everything was up for grabs.”
Miller didn’t want the perception to be out there that he was blaming his employees for the company’s complacency. He wanted them to know that he held himself as responsible as anyone for what the company had failed to achieve.
So his move to fire himself drove home the message of Miller admitting his faults and looking for a second chance to succeed. And it helped make him more approachable in the eyes of his people.
“You need the organization to support what you’re doing or you won’t be successful,” Miller says. “There are some organizations that succeed in spite of their leader. But a true leader is able to get buy-in and commitment to achieve their vision.”
That commitment is achieved when you take steps to make people feel more comfortable about coming up to you and talking to you about their jobs or the business as a whole.
So if you request a meeting with an employee, don’t be mysterious about what you want to talk to them about.
“If you IM somebody to come into your office, it’s like getting called to the principal’s office,” Miller says. “It creates panic. Explain in the IM why you’re asking them to come to your office.
“Spend the time to get to know your people and also listen. Hear the feedback. Understand what other people think about things.
“Some of buy-in is letting them participate in the strategy and participate in the tactics and objectives of what you’re trying to do. At the end of the day, no company is run by a single person.”
You’ll also go a long way toward earning support from your employees if you follow up with them and show that their meeting with you wasn’t just for show, but that it actually meant something to you.
“Follow up,” Miller says. “Check in. Sometimes a check-in can be very quick and simple: a quick email or a phone call or drop by in person just to ensure that the people are still committed and to answer any questions or get any feedback on ideas.”
If you take the mindset that your people are there to help you and your business and that they have talents that can help you, you’ll be a lot better off.
“Everybody, regardless of their position, can have good ideas and have creative suggestions that can be very useful,” Miller says. “So everybody’s input is important. Just because somebody is in a junior role doesn’t mean they don’t understand the business or the strategy or can’t contribute to the business or the strategy. A lot of it is just about respect.”
As much as you focus on respect, you’ve also got to bring your enthusiasm to the office every day.
“It’s impossible to be an entrepreneur and not be an optimist,” Miller says. “So you have to remember the reason you started the business and the reason you’ve had the success you’ve had is because you’ve been able to maintain discipline and stay positive, even when things looked a little more difficult or even when everyone else says no.
“Being able to stay positive is a key factor of success because not only do you have to stay positive, but you have to keep your people positive. If you’re going to have doubts, you should have those doubts in private. Keep people focused on the potential for success.”
Hopefully, those setbacks are few and you have more opportunities to demonstrate enthusiasm and use that positive energy to sell your plan.
“Persuasiveness is an incredibly important job of a leader, to get people to buy in to the strategy and buy in to the tactics to get it done,” Miller says. “I just view that as fundamental to leadership — being able to paint a vision for people and getting them to support that vision.” <<
How to reach: Cornerstone OnDemand Inc., (888) 365-2763 or www.cornerstoneondemand.com
The Miller File
Adam Miller, co-founder, president and CEO, Cornerstone OnDemand Inc.
Born: New York
Education: Bachelor of science degree, Wharton School; Bachelor of arts degree, University of Pennsylvania; juris doctorate degree, UCLA School of Law; MBA, Anderson School of Business; certified public accountant
What was your very first job and what did you learn from it?
I was a stock boy at A&P, the grocery store. I was 16. The summer before I went to college, my dad was a controller at a steel company. He had me work in the steel factory so that I knew what would happen if I didn’t do well in school.
It was a very interesting experience. I got really involved on the labor side and became a big advocate for the workers in the factory. I thought that was a really interesting experience. That taught me a lot about everybody being important to the organization.
Who has been the biggest influence on you?
I would probably say my parents, but I haven’t had a single mentor the way I think some people do. My parents have always been extremely supportive and that’s given me both the sense of optimism that is important in being an entrepreneur and the willingness to take risks.
What would you say has been the best part of being a father?
I love being a father. I have three kids, two boys and a girl. My favorite part is watching them learn and being a part of their learning and experience.
Don’t be afraid to make dramatic changes.
Get feedback on your plan.
Make sure your people know where they stand.
When leaders reach the C-suite, they focus on competencies that drive business outcomes. Leaders believe they add the most value through their work on concepts such as visioning, strategic execution, global mindset and change management.
They would be right — and wrong.
Some C-suite leaders have not mastered basic core competencies, such as effective interpersonal skills, relationship building, collaboration and even something as straightforward as mutual respect.
Any inappropriate behaviors or lapses in focus in these core competencies can derail the leader and foster a toxic environment as well as unhealthy relationships systemwide.
In contrast, if a leader pays continual attention to mastering and executing these core competencies, he or she can set a tone in the culture that helps the organization to flourish in the long term.
Let’s look at mutual respect, for example. It is human nature to want to feel valued, included and recognized as having a place of significance. It is here where engagement and commitment are at their highest. When individuals feel devalued and disconnected, they compensate with a focus more on themselves than the success of the community.
Psychologist Alfred Adler emphasized these ideas almost 90 years ago. Yet, today, many organizations tend to misunderstand and misuse these concepts.
One aspect of mutual respect is inclusion. Many leaders make all major company decisions behind closed doors and justify this through the idea that confidentiality protects the company’s competitive advantage. Or at a minimum, that it minimizes resistance or conflict.
However, it is well documented that diversity of opinions leads to better outcomes. One example is in Jeff Howe’s seminal 2009 work “Crowdsourcing: Why the Power of the Crowd is Driving the Future of Business,” which highlighted the collective power of a diverse group to enhance business decisions. Employees often feel disconnected from the company even though they are the closest to the customers and might have a clear sense of needs and business opportunities.
Employers often impose goals on employees because of broader corporate strategy. Employees might react with discouragement if the goals are unrealistic and if they hear month after month that they must do better.
Also, employees may even see company leaders apply arbitrary rules or give incentives to some groups while other groups are excluded from the opportunity. In Daniel Pink’s 2009 book “Drive: The Surprising Truth About What Motivates Us,” he discussed doing away with incentives altogether. Instead, Pink emphasized giving employees a real choice, allowing them to continue to improve in areas that really matter and to have a sense of purpose by focusing on something larger than themselves.
Employees must feel respected and included to clearly understand where the organization is heading. They also must know what role they can play in its ultimate success. Leaders would do well to consider more transparency and engage employees as true partners.
When employees don’t feel respected, they justify their personal strivings. This adds substantial risks, including an exodus of talent and/or intellectual capital from the organization, increased ethical lapses, dissatisfied customers and transformational efforts that fall flat.
Mutual respect starts with truly listening to employees and engaging them as valued partners. It also requires the competency of facilitation, which goes well beyond running meetings to true inclusion.
Mastering core competencies means continually applying them, especially after assuming a C-suite role. Leaders would do well to add metrics to ensure that they actively practice and model these skills.
Jay Colker, DM, MBA, MA, is core faculty for the master’s in counseling and organizational psychology program at the Adler School of Professional Psychology. Dr. Colker also maintains a human capital consulting practice and may be reached at firstname.lastname@example.org or at (312) 213-3421.
Tony DiBenedetto will never forget “the watercooler incident.”
“We were in our very first office building, and at that time everybody was bringing in their own bottled water,” says DiBenedetto, who is the co-founder, chairman and CEO of the national IT services provider. “We wound up having this meeting to talk about what we were going to do about the water.”
He and the other two principals sat down to deliberate the issue: Would they use bottled water or filtered? What about enlisting a water service? The meeting ended two hours later.
“At the end of that meeting, I looked at my two partners and said, ‘Guys — we’re never doing this again,” DiBenedetto says. “This is insane.’”
Seeing the inefficiency around decision-making, the partners agreed that something needed to change. With Tribridge still in its infancy, they understood that the way they handled decisions in the beginning years would set the precedent for the company’s future.
“What it led to was an acknowledgement that we all three did not need to be included in decisions,” DiBenedetto says. “In partnerships, a lot of times everybody feels the need to vote on every single issue and talk about every issue, and it doesn’t allow you to grow very fast.”
What the watercooler incident demonstrated is the age old problem of “too many cooks in the kitchen” combined with the mistake of bringing in the wrong cooks. When there are too many people involved in a decision, it’s hard for people to accomplish anything quickly or efficiently.
And if people are also participating in decisions that don’t concern them, they won’t have time to handle the issues that do.
What DiBenedetto and his partners realized early on was that most people at Tribridge, themselves included, didn’t really know what decisions were and weren’t their responsibility. They needed to divide the decision-making so that each person and department had clear areas of decision-making authority.
Today, each of the company’s partners has specific items that fall under his decision-making jurisdiction. For example, anything involving strategy lands within DiBenedetto’s arena, and sometimes, all three of the partners.
“I feel like my role here is to drive strategy, so if we’re going to stray from the strategy that is a decision I would want to be involved in,” DiBenedetto says.
Not all decisions in the company should be pushed down the ranks either. When it comes to large financial transactions, debt, M&A or strategy, you definitely want your top leaders to take the lead. As CEO, DiBenedetto still offers his input if there is a major decision that people want feedback on or when it’s a hire or fire decision where his expertise may help.
At the customer level, however, he’s rarely involved in decision-making. When the company opened its first office in Dallas, for example, DiBenedetto told Managing Director Bobby Priestley that he was charged with making all the decisions concerning Dallas — and not just some of them, but all of them.
“People closest to the decision make better decisions,” he says. “We have consultants in the field and 3,500 customers. They’re out there making decisions for a customer. They are in the best position to make the decision. They understand the customer’s needs. They understand what the firm can do.
“So to have them elevate that through a series of management layers is ridiculous.”
Rarely if ever has DiBenedetto seen a good decision that satisfied a customer but impacted the company negatively. That’s because the customer feedback loop can typically tell you whether or not employees are on the right track with their decision-making.
“We’ve got a nice built-in check and balance there — where if decisions are good for the customer, they’re good for Tribridge,” DiBenedetto says.
“In my 14 years at Tribridge, I’ve never felt like, ‘Oh my gosh, this person is such a rogue decision-maker, and I have to reel them in.’ I’ve never felt that at all — zero.”
Say what you need to say
When you have a lot of people making decisions every day, effective internal communication becomes much more critical. If communication breaks down, and decision-making becomes siloed, your company invites conflict within departments and across them.
“We probably have 100,000 decisions made a day, and the way our business works, we have 450 people making those decisions every day,” DiBenedetto says.
“A lot of times we make decisions but we don’t tell somebody either why we made it or even that we made a decision. So you might do something for a customer and not tell them, or you might do something internally and not tell somebody. Being able to communicate the decision is another lesson learned.”
One way to keep everyone apprised of important organizational changes or information while preserving decision-making autonomy is to have set meetings to share updates, talk strategy and discuss progress on goals.
At Tribridge, the company currently holds a monthly meeting for its national leadership team in Tampa as well as an all-company meeting each February, where more than 400 employees meet in-person at a chosen location. In addition, it conducts an all-employee phone call once a month.
Regular meetings are a great opportunity for people to bring topics to the table, submit questions and voice any issues or concerns that could require outside attention. But a two-hour meeting about bottled water? Absolutely not, DiBenedetto says.
In the case of the watercooler incident, it wasn’t the meeting itself that caused inefficiency. Rather, inefficiency occurred because the people in the meeting didn’t need to be there. So instead of vilifying meetings, which can contribute to productive, creative and helpful communication, the company does the opposite — it encourages them.
“One of the culture points for us is the very open communication process,” DiBenedetto says. “Most people here are very comfortable raising topics. So anybody can call a meeting. Titles are not involved. We don’t put titles on our business cards. It’s an open culture where people can call a meeting if they need to.”
However, another rule at Tribridge is that if anyone ever feels like they are in a meeting that they don’t need to be in, they are completely free to excuse themselves.
“They can say, ‘Hey listen, I’m not going to contribute to this meeting, so I don’t need to be here,’” DiBenedetto says. “It’s not looked upon as a bad thing. The culture of the company is not just to meet for meeting’s sake.”
The bottom line is that you don’t want to shackle people with endless meetings or ask them to check in constantly about their progress. This defeats the purpose of pushing out decisions in the first place. Once you give people power over decisions, you also need to give them the freedom to succeed or fail.
“I can’t come back later and constantly start micromanaging,” he says. “So part of it is a leadership point that you’ve got to allow the decision and the success or failure to happen. If it doesn’t happen, then nobody learns from it.”
So after any big decision is made at Tribridge, whatever group that is involved in that area of the business, whether it is a client, a region or the entire company, is also involved in a debriefing process. This step reinforces that every decision, good or bad, is a learning experience for your business and your employees and the key to continuous improvement.
If the decision was good, ask why was it good? How could an OK decision have been better? And what went wrong with the bad ones?
“You have to be able to keep learning from it,” DiBenedetto says. “It’s a skill set. So you get better at making decisions the more decisions you make. The fact that we have these hundreds of thousands decisions being made every day means our people are better decision-makers than if they worked somewhere else.”
Empower the right people
In the tech business, where you’ve got to be rapidly changing and adapting your business all the time, you can’t afford to have a culture that puts individuals on pedestals, DiBenedetto says. When you trust people to make important decisions that impact your customers, you need to feel confident they’re focused on helping the customers, not themselves.
That’s why DiBenedetto prioritizes a person’s cultural fit over his or her resume when he hires someone for a position of authority at Tribridge. Specifically, he looks for whether the person has the trait of “entrepreneurism.”
“The first thing we tell people who come to work here is that when we say ‘think like an entrepreneur,’ there are two elements of that,” DiBenedetto says. “One, keep improving Tribridge; two, really on an everyday basis when you’re working for a customer, pretend that you’re one of their shareholders. When you’re thinking like a shareholder for them, you’re making the best decision in their interest.”
Hiring for entrepreneurism doesn’t mean you only want people who plan to start their own companies or create new products. Instead, it defines a person’s willingness to take risks, make changes confidently, and guide the decisions based on how he or she thinks the customer’s business is going to go, DiBenedetto says.
“Culturally, it’s looking for people who have an entrepreneur’s mindset, who are comfortable making decisions in risky situations,” DiBenedetto says. “The easy decisions aren’t the ones that you are worried about. It’s the tough decisions where you want somebody who has more of an entrepreneur’s mindset making them.”
To get a feel for this trait when hiring, the company’s recruiters first ask job candidates to provide broad situational examples, such as a time when they used teamwork or faced a tough challenge. Then they use “critical behavioral interviewing” techniques to analyze the candidate’s behavior in those different situations. What they did when they made a mistake or when they had to give negative feedback?
“We’re looking at how they handled it, not the answer to the question,” DiBenedetto says.
“You’re not asking them about being honest. You’re asking them about teamwork or something else; and they start telling you the story. And you keep drilling down until you get to a situation where you have witnessed through their story what their behavior was. So it’s a crafty way of doing it.”
In behavioral interviewing, recruiters also look at the way people phrase statements and the subtleties of what they say. This can help you identify red flags in a person’s cultural fit. Big egos, for instance, don’t bode well when you’re making decisions for a team.
“Sometimes you’ll ask somebody, ‘Tell me what someone else on the team does,’ and they’ll answer the question by telling you what they did,” DiBenedetto says.
People who are new to an organization with decentralized decision-making may not feel confident making lots of big decisions right away. But by hiring people that fit well with the culture, demonstrate entrepreneurism, and are team players, DiBenedetto finds that most people can succeed in this kind of empowering environment.
“When you surround employees with people who help them all the time, that aren’t in it for themselves, that plan a team environment, and they are empowered to make decisions, they tend to like it,” he says.
“It translates into better decision-making, faster decision-making and therefore things happen quicker here. There’s a sense of urgency to get things done as a result of that, and that leads to growth.”
While DiBenedetto had some initial reservations about using a decentralized decision-making structure, today he can’t imagine doing things differently at Tribridge. From 2006 to 2009, the company grew its revenues 272 percent, generating $65 million in 2011.
“We’ve grown dramatically over a 10-year period,” DiBenedetto says. “We’ve had 9/11, multiple wars — we’ve had a tech bust, a real estate bust, a credit crunch. Yet our company continues to grow organically pretty quickly, and it’s because we have decentralized decision-making.”
How to reach: Tribridge, (877) 744-1360 or www.tribridge.com
- Give people clear responsibilities.
- Make meetings more efficient.
- Hire people who can make decisions.
The DiBenedetto File
Co-founder, chairman and CEO
Born: Brooklyn, NY
Education: Florida State University
What was your first job?
A paper route
What is one part of your daily routine that you wouldn’t change?
Waking up my daughter
What would your friends be surprised to find out about you?
I write a lot, especially poetry.
What’s the biggest challenge in the future growth of Tribridge?
The strategy for us to get to the next level has been built around something we call ‘Concerto,’ which conceptually is the brand that we’ve coined for the business we’ve moved to the cloud. If you think about Tribridge, we do services for customers and we use a lot of different technology. We’ve built a private cloud and we’re offering this technology that’s some Tribridge intellectual property as well as Microsoft’s applications. We’ve integrated that and offered it to our customers. … The next five years if I look at tremendous growth — that is it. With that come some opportunities and challenges. One is where are the next 500 consultants going to come from? We’ve got to find the next 500 team members.
What trait does a leader need to be successful in today’s business environment?
With the really turbulent economic times we’ve had the last 10 years, we’re lacking the thinking big — blind confidence. We’re lacking the ability for our leaders to think bigger. Because it’s humbling to know that things are unpredictable, we all get stifled in our decision-making. Thinking bigger is something I see as an attribute that allows people to fight through the stifling news that you get from watching or reading the news. We’ve got to ignore that, keep thinking big, expect more. Expecting more is really about how can I make this better? How can I keep getting better? So if I’m thinking big and expecting more at the same time, that’s just driving success.
It was a dream that made absolutely no sense to Michael Landau. But this was his sister and he loved her very much and so he set out to help her make it happen.
“I not only knew nothing about the hair and beauty business when this started, I also have no hair,” Landau says. “I’m completely bald and I didn’t understand why women would want a [professional] blowout, why they needed a blowout or why they would pay someone else to get a blowout.”
Landau’s sister, Alli Webb, had launched a small mobile hair blowout business in Los Angeles and it really took off. It was so successful that she couldn’t keep up with the demand, so Landau decided to step in and try to take the concept to the next level.
“I lent her the money to do her first store,” Landau says.
The response was staggering.
“We had an eight-chair shop in Brentwood,” Landau says. “When you’re in the restaurant business, sometimes it’s a good problem to have when you can’t get a reservation because you seem hot. For us, our clients were getting so annoyed that they couldn’t get in.”
Landau and Webb quickly opened three more stores and they were just as jammed with business. This new company named Drybar simply could not grow fast enough. Waiting lists were 40 and 50 people deep on the weekends and customers were driving from all over the city to get their hair blown out.
“It was fast and furious,” Landau says. “For the first year, it was all hands on deck, chaotic, working around the clock 24 hours just to keep the door open and everything happening the way it should.”
The company has grown in a little more than two years to more than 850 employees who do about 24,000 blowouts each month. A dozen new locations are expected to open this year, doubling the size of Drybar.
“It was just amazing how people were coming from what felt like all walks of life and they were traveling an hour or an hour and a half from different cities all over L.A.,” Webb says. “It was really amazing and humbling and gave us the fuel to keep going.”
So what’s the key to succeeding when your business grows infinitely faster than you ever imagined it could? Landau says it all comes back to satisfying your customers, even if that means chasing them out the door, following them down the street and buying them a cup of coffee to make them happy.
Keep your customers content
If you asked Webb about the moment her brother chased a disgruntled customer out the door at Drybar, she might tell you Michael had it coming. It was his zeal, after all, that often left the store bursting at the seams.
“In those very early days, Michael would be in the shop sitting in the back answering the phone and telling anybody, ‘Yeah, come in, come over!’” Webb says. “I was like, ‘No, stop, because we had a line out the door.’ We didn’t have enough stylists, but Michael couldn’t say no because he was just so happy and excited to have all the interest.”
But back to the unhappy customer. She saw a sign that said walk-ins were welcome and came in, but quickly discovered it was going to be a long time until she was serviced. Then she had a bad experience with a cashier and that just made things worse.
“I witnessed this whole thing,” Landau says. “I watched the woman leave the store so upset. So I followed her out and ran down the street because I was determined to not let this person leave so upset.”
He brought gift certificates and tried to give them to her as a peace offering. She wouldn’t accept it and continued walking and Landau thought he had indeed lost her. But then he decided to give it one more shot.
“It was in front of a Starbucks and I said, ‘It’s going to ruin my week if I can’t apologize properly to you. Can I buy you a cup of coffee?’” Landau says. “She actually got a kick out of it and we went inside, and I bought her a cup of coffee and I started talking to her.
“The bottom line is this woman ended up not only becoming such a great client, but she told so many of her friends about that story and how the owner did this and did that.
“We learned early on that you can take a negative situation and really turn it into a positive. It’s one thing when people just like you. But it’s another thing when a leader is put to the test in terms of dealing with a negative situation or a problem. That’s where you can show your true colors and turn a customer around and keep them for life.”
When you have a business that is really taking off, that’s obviously a great thing. But there’s also the potential to create hard feelings if someone doesn’t get to experience your business because of the high volume. You won’t please everyone, but you’ve got to try.
“We’re dealing with a high volume of customers and sometimes, things go wrong,” Webb says. “Michael and I established early on that we care so much about the customer and the customer experience and we want everybody to be happy and we don’t want to let even one person leave unhappy. You see that with our girls and all our people in the shop how they bend over backward for the customers.”
In an attempt to ease the chaos in the stores, and reduce the risk of another disgruntled customer storming out of the store, Landau and Webb decided to move the act of taking reservations to an off-site location.
“We hired and trained very quickly a call receptionist who could work from home and just plug in the Internet phone to the computer and we could route our phone calls to them,” Landau says. “It was such a breath of fresh air because now our customers were calling and it was a quiet place where they could have a conversation, the client could hear us and we could hear them. That really took the pressure off in one certain aspect in a major way.”
Manage your culture
In the styling business, it’s obviously critical that you have people who can do great things with their hands. But if their personality is abrasive, you may not get much return business.
“We’ve come across great stylists who are amazing at hair, but they are just not all that friendly or personable,” Webb says. “To us, that’s not a winning combination and that’s not what we look for. Unfortunately I’ve had to let stylists go who were fantastic at hair, but they were divas or they didn’t share our over-the-top customer service. That is definitely a challenge.”
Landau learned just how much people value great customer service and a welcoming personality when he finally gave into his sister and let a stylist go who had great skills, but not a lot of personal skills.
“Alli really wanted to get rid of her and I was so scared because she had such a following and so many people coming to her,” Landau says. “We debated ad nauseam over it and Alli won and we got rid of her. I have to tell you she was so right. The whole attitude in the shop changed. There was such a change in the energy and the vibe of the shop in terms of the other stylists and how they got along.”
Webb says you can’t underestimate the value of having team players who your employees and customers like being around.
“If you’re causing problems with the staff and the stylists and bringing things down, it’s just not a good fit,” Webb says. “It’s not going to work.”
Landau says Drybar has found success by developing leaders and grooming them for more responsibility in the company.
“As we grew and became more sophisticated organizationally, we tried to bring in more experienced managers,” Landau says. “It didn’t work as well. They didn’t have the respect of their co-workers. For us, it just works so much better when we bring people from within that we’ve had a chance to get to know and we’ve nurtured.”
You need to share with people what your vision and culture is all about and make sure they understand it so they can live it with your customers.
“There’s a lot of training that we do, but I think it’s more philosophical,” Landau says. “We’ve worked on defining and articulating what our core values are as an organization and making sure our key managers have an active part in that.
“That way, there can be broad-based buy-in for that, and you’re making sure you’re building a foundation where people really understand what the vision is. They can become leaders within their individual organizations and kind of extend that.”
Get good people
When a business is growing as fast as Drybar, there can often be a lot of pressure when it comes to hiring. You need people fast and you may be tempted to skip a few steps just to get people out on the floor faster.
It would be a mistake. But there are ways you can learn more quickly whether a person is a good fit for your organization.
At least for me personally, I feel like I can tell when I’m interviewing somebody if they’ve done their homework on Drybar,” Webb says. “They know a lot about us. Our website is pretty extensive and they come in with that hunger and excitement saying, ‘Oh, I’ve been looking for something like this. I love styling hair and I really want to be part of it.’
“You can get that as opposed to the person who comes in and says, ‘Oh, you guys don’t do haircuts?’ That person hasn’t taken the time or the interest to really see who we are. That would create a huge red flag for me. You haven’t even checked out our website.”
If a prospective employee is more concerned about their own future, that’s not always a good thing. You want people who want to grow as individuals, but in an interview, you want people who are excited about what you do.
“You really have to dig deeper,” Landau says. “We would rather have somebody who is so passionate about what we’re doing and our brand and about what’s going on and who really wants to be here because that person, we can teach certain stuff. But you can’t teach that passion. You can see that attitude.”
Webb says she always has her eyes open for people who show the ability to be a leader so that she can provide encouragement and get them to show even more.
“We’re always looking at people and we’re always even encouraging stylists who are showing more leadership capability and tremendous enthusiasm and passion for the brand and the company to consider management,” Webb says. “We put a bug in their ear and that starts it.”
How to reach: Drybar, (877) 379-2279 or www.thedrybar.com
The Webb and Landau Files
Born: We were both born in Long Island, N.Y., but grew up in Boca Raton, Fla.
Education: For 25 years, our family had a retail clothing store that both Alli and I grew up in, sweeping the floors. It’s where we really learned many of our philosophies on customer service. We come from a family that is a fourth-generation retailer.
It was just what all the kids in our family did.
Webb on working with her parents: I feel like I learned so much early on. My first job was actually in retail because that’s all I knew and that’s what my parents did. But I remember so well being young and treating wherever I worked like I owned it because that’s what my parents did.
I feel so incredibly grateful for how much of those values we got from our parents without even really knowing it. A lot of that comes through in our business now and it helps us to be successful.
Who has been the biggest influence on Landau?
Seth Godin. I speak to him or e-mail him on a daily basis and he’s just been a mentor of mine. His philosophies on marketing have shaped everything that I do and I definitely, without being overly dramatic, wouldn’t be who I am today without Seth.
Who has been the biggest influence on Webb?
Michael thinks it’s Michael. He has taught me a lot, even in Drybar, with more of the business side. I still kid him that I’ve taught him about the hair side. But I think if I had to pick, it’s probably mostly my parents.
Keep your customers happy.
You can’t cover up a bad attitude.
Encourage people who show leadership.
In today’s work environment, your employees need to understand how much they are appreciated and how important they are to business success. The right culture can create a great environment for productivity, innovation and commitment. At Clark-Reliance, we have maintained the philosophy that employees are our greatest asset, which has yielded a long-term commitment from employees, with many having life-long careers at the company.
In order to do this successfully, incorporate the following cultural building blocks:
Make sure that you offer your employees continuing education and the opportunity to build their skill set.
Lifetime employment is difficult for any company to guarantee but you can help your employees build lifetime employable skills. In order to keep your employee’s skills sharp, it is necessary to motivate them to keep current on education, trends and opportunities. Our community is blessed with many formal academic options. A sound tuition reimbursement program for undergraduate and graduate level degrees combined with professional associations, seminars and online offerings like webinars, creates a great foundation for employee learning. Your on-boarding process for new employees should focus on these formal options as well as the on the job training that your company provides. We established Clark-Reliance University, which is a series of online interactive programs with specific courses ranging from leadership to tooling instruction. Learning and improving have to become a way of life in your company.
Make technology and employee involvement a priority at your company. With all of the social media, blogs, Internet and changing technology, it is important to make sure that your employees are kept current and given the tools to stay at the forefront of technological offerings. Using technology is important to any business as not only a way of communicating, but as a way for your business to grow and to stay current both domestically and internationally. Younger employees love technology and have an interest in it, so it is wise to embrace it and build it into the everyday practice for your organization.
While technology may spawn ideas, it is important to have an open-door policy and a formal program for employees to approach upper management on ideas to improve the company. Many of our best ideas have been from employees. For example, our current recycling program was from employees. This program now recycles more than 519,000 pounds of material, which generated $79,957 that was applied back to employee activities. We have a program, IDEAS, which formally documents employee suggestions and provides feedback on implementation.
Create a charitable nature
Employees like an environment where they can make a difference. Getting a team behind a charity is a really good way to build camaraderie among employees while helping the community. Blood drives, holiday giving, sustainable programs and environmental causes are all team-building programs that help create a culture of caring and giving. Our main focus over the past two years was the National Kidney Foundation and more than 200 employees walked together and helped make the walk the fourth largest in the country.
Reward hard work and promote a work-life balance
Showing appreciation for employees is important in employee satisfaction and retention. Rewards can be shown in many ways: financial, simple praise, or fun programs at work. Some examples of programs that have been successful for Clark-Reliance are bowling teams, fishing charters, corporate runs, doughnut days, a Halloween party and an outing for families at Cedar Point, but the list certainly does not end there. Any program that shows appreciation and respect for commitment will be well received.
Work-life balance is best created by promoting the “family” environment at work and demonstrating family values through your management’s actions. Working hard but having fun will help make your work environment productive and enjoyable.
Matthew P. Figgie is chairman of Clark-Reliance, a global, multi-divisional manufacturing company with sales in over 80 countries, serving the power generation petroleum, refining and chemical processing industries. He is also chairman of Figgie Capital and the Figgie Foundation.
Rick Solon is president and CEO of Clark-Reliance and has over 35 years of experience in manufacturing and operating companies.
Asked to take the managing partner position of Ernst & Young’s Cincinnati office in November 2008 with the recession looming was both good and bad timing for Julia Poston. On one hand, she quickly realized the amount of challenges and drastic changes that the firm would need to cope with, but on the other hand, she could utilize personal strengths and take the firm to levels of business it hadn’t been before.
It didn’t take long for the effects of the recession to cause clients of the accounting firm’s 300-employee Cincinnati office to begin to pull back and shelve projects. Poston had to look for alternative ways to keep clients and customers satisfied while also making sure the employees of the firm understood what was needed of them moving forward.
“We were pressed to figure out how to manage our business a little differently with our revenue dropping as clients shelved things. Trying to manage the business with a smaller revenue base just meant that you had to be more frugal,” Poston says. “We really looked closely at where we could drive some of the costs out of our business without impacting the services to our clients. There were people challenges too, because people were just really worried about the recession and what it was going to mean and they felt vulnerable.”
Luckily for Poston and the firm, those were things that played to her strengths as a leader. She had to drive transparency and openness with her employees as the firm dealt with the changes of a recession.
“It caused us to have to ask them to do more with less and we had a chance to really see who the leaders were during those tougher times,” she says.
Here is how Poston took the negatives of doing business in a recession and turned them into game-changing initiatives for Ernst & Young.
Communicate in tough times
As the recession began to take effect and some of the early signs of change crept into the firm, Poston had to be upfront and clear about what this meant for employees.
“We really looked to people to come to us with ideas about how we could do things differently and challenge things that we once did,” Poston says. “What we tried to do was say to our people, ‘Hey guys, we’re in the midst of a recession and we need you guys to act like you own this firm too. Tell us how we’re going to manage through this. Rather than feeling that things aren’t as great as they once were, tell us what you would do if you were running this business.’”
In order for this approach to work, everyone in the firm had to understand that changes were inevitable and they had to embrace that fact.
“Change happens in every business,” she says. “You can either try to manage around it or you can take it and say, ‘All right, how do we need to continue to transform what we do, how we serve our clients, how we behave internally as an office given this change and react to it?’”
To get people to step up with ideas and have the urge to be engaged in helping the firm forward, Poston was open and transparent.
“If you want everybody to own the goals of your business or your practice and not just have their own personal individual goals … you have to be very transparent with them,” she says. “You have to co-develop the goals with them and then build in the accountability with all levels. The only way to do that is with transparency. Just kind of barking that out and setting those goals and telling everybody that everyone has to own those goals doesn’t work if people don’t feel that they’ve got all the right information and transparency into the process.”
Poston and her other partners took the recession as an opportunity to engage all of the firm’s employees in new ways to run the practice.
“We need to approach our work and our client services differently coming out of this recession,” she says. “We need to have far greater diversity of thought. We need to make sure that we bring, not just our partners to the table to help make decisions as it relates to our client’s business issues, but we need to invite our younger people to the table to think about how we come up with solutions and creative ways to help our clients deal with their business issues. We really have had a big emphasis on connecting everyone from partners to staff both in horizontal and vertical teamwork. We’ve really changed the culture to challenge people to speak up and share their ideas no matter what level they are in the firm.”
Through the process of communicating what it would take to get through the recession and getting employees engaged, it became evident who the leaders in the firm were.
“The people who stepped up and said, ‘We can manage through this change,’ are the ones who are most vital to our business and largely have been the ones who have been most successful coming out of the recession,” Poston says. “The ones who were kind of paralyzed by the recession and didn’t show an ability to adapt to change and doing things differently, they didn’t show great strength. They showed a resistance to change and wanted to harken back to the old days, which the old days aren’t back again.”
Discover new leadership styles
Poston wanted everyone to challenge the old ways of thinking and doing business at Ernst & Young.
“One of the things that’s been a game changer for us was we took our partner group and did something different in terms of challenging leadership styles and creating an environment of teamwork in a really different way than we had ever done before,” Poston says. “One of the things that we did was we had an off-site, three-day, two-evening event out at Camp Joy, which is a camp that has a lot of those outdoor activities like ropes courses and those physically challenging things. We called it the partner leadership challenge and it was a combination of those activities outdoors along with facilitated classroom on leadership challenge. Everyone had to attend and it was a huge game changer for us because there became an element of trust and partnership that we thought we had before, but we didn’t have any idea just how far we could take that.”
The leadership challenge and classroom part of it was started with a 360-feedback process that all the partners needed to do with at least 10 people — people above them, at their same level and below them.
“We really openly dived into all of the feedback that each of us had gotten and set goals for ourselves and buddied up to help drive that accountability,” she says. “We all got a lot of lift from one another by doing this, and that’s the kind of culture we want here — a culture of LIFT. LIFT stands for leveraging insights from teamwork with the idea being that if we team and trust in it in an extraordinary manner, we will be able to leverage each other’s insights and do an even better job serving our clients and taking care of our people here.”
The partners took it upon themselves to make sure they were acting as the best leaders they could and made sure they didn’t just talk about it, but demonstrated it.
“We identified what we thought were the five key practices of good leaders and really honed in on those,” she says. “Do we model the way? Do we actually walk the talk? Do we inspire a vision for our people and communicate that? Do we challenge processes? Do we enable others to act? Lastly, do we encourage the heart? Do we really let people get into what they’re doing? We took those five practices of leadership and we discuss those in each of our partner meetings and remind each other that we have to model the way.”
Keep your clients close
Poston understood that it wasn’t just her firm and the accounting industry struggling to get through the recession. The firm took advantage of the situation by getting closer to clients and helping them achieve better ways of doing business as well.
“When times are good and companies are growing and earnings are growing, sometimes there’s not really a burning platform for them to be interested in hearing our observations of how other businesses are tackling different issues,” Poston says. “When you’re in a recession and everybody is really struggling, we found our clients were far more interested in hearing our ideas on how they could approach the recession. They welcomed other thoughts and ideas and observations from others and they might not have as much previously. When things are good, you’re not concerned about best practices.”
It’s easy to relax and allow business relationships to just carry on when things are running smoothly. However, it’s when times are tough and those relationships are put to the test that you have to really deliver on the promises of service and support.
“If we had this come again, we would do the same thing in terms of investing more and more with our clients and spending more time with them and building those relationships so that you can help them and be a partner with them,” she says. “When the economy starts to turn, you’ve positioned yourself far better as a trusted business adviser to them. Spend more time with your clients when they are struggling and have bigger business issues, not less.”
Competition in the accounting industry is fierce, so it is crucial that Ernst & Young find ways to differentiate itself to clients.
“We’re in a really competitive business,” Poston says. “We’ve really coached our people to not take any client interaction for granted and always be at our best. A differentiator between Ernst & Young and our competitors is over the course of the last year and a half, we have really globalized our firm. We have the same methodology for client service and delivery, the same metrics, the same type of communications across the entire globe. The reason that that’s important is that it’s a pretty big benefit to our clients that have a global footprint. Our project teams, our integrated solutions are very consistent across the globe. That consistency that we have in our firm across every location is a huge plus. That’s not necessarily the structure for other firms.”
While the changes in thinking, communication and leadership have been a huge help to getting the Cincinnati office through the recession, the top priority and most helpful aspect of those changes were the clients.
“Make client service the No. 1 thing you do,” Poston says. “If you approach your business from what would be best for your clients, chances are you’ll probably be doing the right thing. And then, just really invest in your people. Take care of them and give them challenging things to do and let them be a part of the decision-making and treat them like the great young professionals that they are and they’ll deliver. You’ll have great retention and have really satisfied clients.”
HOW TO REACH: Ernst & Young Cincinnati office, (513) 612-1400 or www.ey.com
- Communicate your challenges and changes to get employees engaged.
- Challenge the old ways of doing things.
- When times are tough make the best of client and customer relationships.
The Poston File
Ernst & Young Cincinnati
Born: Boston, Mass.
Education: Attended Miami University and received a B.S. in accounting
What was your first job and what did you learn from that experience?
I worked in a restaurant when I was 16 years old, and it was a really great job because you work really hard, but you learn all kinds of valuable things: how to operate with equipment, how to deal with customers and handle money. That’s when I started liking accounting because I enjoyed interacting with customers and the financial end of it as well. It was a great starting place to learn some valuable skills.
What is the best business advice that someone has given you?
My dad used to tell me that business was so unethical. I didn’t agree with him, but I’ll never forget that because, as a business leader, we have a responsibility to be good corporate citizens.
What is one of the most stressful things about tax season?
Right now, given the political environment, there is an awful lot of chatter and proposals of how our tax system might change. One of the things that we try hard to do is understand what these proposals are and talk to our clients about them so that if any of these come to be, we will be able to help our clients think about them and respond to them.
If you could speak with anyone either from the past or present, who would you speak with?
From a business standpoint, there are some incredible business leaders that I admire. A.G. Lafley was an incredible CEO at P&G, and I find those kinds of people inspiring.