Michael Glimcher had a lot to worry about in March 2009. The stock price for shares in Glimcher Realty Trust (NYSE: GRT) was hovering right around $1. The company had a massive pile of debt, and confidence in the real estate industry was slipping with every new foreclosure.
“We’re a capital-intensive business,” says Glimcher, the 552-employee company’s chairman and CEO. “When the banks were shut down and they didn’t want to lend money out and they just wanted to be paid back, it put us in the most precarious position that we’ve ever been in as a company in our 50-year history.”
Glimcher really needed to raise some cash and get rid of this debt that was strangling his business. But where was he going to find the money to get it done?
“How are you going to come up with $200 million?” Glimcher says.
This money wasn’t going to come from patrons at the malls and shopping centers that Glimcher managed. The economy had hit them hard, too. So he told his people not to spend time worrying about things over which they had no control.
“I basically told everyone here at the company, ‘If you want to pontificate about what’s going to happen to the overall economy and what’s going on in the outside world, you can do that all you want when you’re at home,’” Glimcher says. “But during the workday, if we can’t affect it, we’re not talking about it. It’s not an option.’
“We can control what our operating expenses are. We can control the morale within our organization. We can control how safe and clean our malls are and make sure they are great environments that people want to shop in. So there are a lot of things we can control.”
Glimcher felt that setting aside these uncontrollable factors would allow his team to get laser-focused on what could be done to get the $308 million company turned around.
Get people engaged
Glimcher needed $200 million. So the first thing he did was go to his people. He wasn’t looking for handouts to pay down the debt. Rather, Glimcher sought to assure employees that he was going to find a way to raise the money and pay off the massive debt.
“I made it real clear to everyone, ‘We’re going to win here,” Glimcher says. “‘We’re going to get through the issues we have to get through. Everyone who believes that we can get through it should be here. If there’s anyone who doesn’t believe we can get through these issues, you shouldn’t be here.’”
Glimcher wanted to express both confidence and resolve in his ability to turn the company around. But he was blunt about the steps it might take to accomplish this feat.
“Rather than giving people part of the story or half the story, we said, ‘Here’s exactly what’s going on,” Glimcher says. “‘We might be selling your mall.’ Frankly, we needed the help of the team to market the asset so we could get people excited about it. We had different potential investors coming through.”
So how do you get employees engaged in a battle to save a business when they may not even be part of that business when all the dust settles?
You get them doing whatever they can to make that move of last resort unnecessary. You get them focusing on the things in their world that they can control.
“The message is, if you do your job and if you do what you’re responsible for and you do it really well, it’s going to be a lot easier for us,” Glimcher says. “You need to instill confidence in the team.”
That begins with getting out of your office and becoming more visible with your employees. The more you hide, the more you raise suspicions.
“People are uncomfortable and nervous,” Glimcher says. “People want to be assured of what’s going on. I’d tell our company officers, ‘Get out of your office. Walk around. Meet with your department. Sit down and have a cup of coffee. Tell people what’s going on.’”
As you encourage your leaders to be more visible and more available, you should be working on getting the message out about the big picture.
“We called a state-of-the-company meeting and I outlined every issue we were dealing with and what we had to do to be a healthier company,” Glimcher says. “‘Here are the three or four most critical issues we have to correct. Here are the things we absolutely have to do, and when we do X, Y and Z, we’ll be in a much better place.’”
You’re not making promises that anyone’s job is untouchable. But you are engaging your employees in the effort to get things fixed and you’re showing them that you and your team is working right along side them in order to make things right.
“If you treat people nicely and you genuinely care about them and you’re incredibly honest with them about what’s going on, I think people really appreciate that,” Glimcher says.
Keep an open mind
If you’re truly seeking feedback from your employees that can help you work through a difficult time, you need to show them that their opinion has influence. So when someone brings Glimcher an idea, he tosses it right back in their lap.
“I try to never guide the decisions,” Glimcher says. “If someone presents something to me and they ask me, ‘Do you want to do A, B or C?’ I don’t answer them. I ask them, ‘What would you do? Why would you do it? Why would you recommend doing that?’ It’s empowering them to make the decision and make the recommendation. Guess what? I don’t always agree with it. But I want to know what someone thinks we should do.”
Glimcher recalls an asset financing deal where he did not see things the same way as his chief financial officer and his chief investment officer.
“I had made up my mind of what I wanted to do,” Glimcher says. “Our CFO and chief investment officer, they had a very different idea. And they were right and I deferred to them. I didn’t go in there and tell them, ‘Here is what we’re going to do.’ I actually went around the table and I got everyone else’s input and then I told them, ‘That’s not what I was planning on doing, but I think what you’re recommending makes sense and I think the reasons you’ve given me make sense, so I’m going to support it.’”
Glimcher had an opinion about how to pay down his company’s debt. But he respected the expertise of his leadership team to help him reach the best decisions to accomplish that goal.
“You have to rely on your people to play their position well,” Glimcher says. “Ultimately, I’m going to set the game plan, but I’m also going to set it with a lot of people’s input. There are some times where we come down to decision making and I feel very strongly. I believe this the right thing for the company and going in a different direction would be detrimental. I’ll override whoever I have to override.
“That’s how it goes. In the example I cited, I thought we would have been better off, but we’re not going to be hurt in any way by going in that direction. I’m not going to hurt the company just to make somebody happy. If everybody has input and we make a good quality decision, even if it’s not my decision, I’ll support it.”
One of the ways to help you judge if your people are making a smart decision, aside from gathering more feedback, is to make sure you know their history.
“Is this an area where they are really strong?” Glimcher says. “Is this an area where they are OK? Or is there an area where they are weak? If someone is passionate about something and you’ve seen through experience that that area is a weakness for them, you probably don’t listen to them as much. If it’s a strong area for them and they’re passionate about it, you probably better listen a little bit better.”
Glimcher knew it was going to take more than a good attitude and some elbow grease to erase his company’s debt. But as he pondered the big decisions that would have the most impact, he still wanted to show employees that their effort mattered.
So he began looking at the incentive program that was in place to help properties keep their tenants.
“We had an incentive program in place where if you renewed someone, say The Gap was in your mall and you got them to stay, you got a one-time commission,” Glimcher says. “If they were already there, the idea was it’s not that hard to renew someone. If no one was there and you got a new store to go in there, you got two times that amount of money. We put a higher value on new production versus keeping what we had. It was perceived to be a lot easier to keep what you had.”
But in the midst of a challenging economy that played a large role in the company’s debt predicament, Glimcher decided it was time to tweak this incentive program.
“In an environment where things were really tough, just keeping what you had was a big deal,” Glimcher says. “So we actually went in and we altered our compensation method. We said, you know what, renewing a deal is as valuable as getting a new deal. We’re going to pay the same amount for both. We knew No. 1, we wanted to keep the good salespeople working here. And No. 2, keeping the revenue we had was every bit as valuable. And frankly, that was what could be done in the environment.”
You need to take every opportunity in a stressful situation to show your people that you’re all marching toward the same goal. In your case, you need to show people that you are aware of any unique challenges they might be facing as they try to do their jobs.
“Do the goals of your incentive program match the goals of the organization?” Glimcher says. “If they do, it will probably work for you. If they are incongruent, they probably won’t work for you. We woke up one day and said, ‘You know what, the goals we set were fine for before. But they’re not fine for right now.’ As things get back to normal, it will probably go back. I think everybody respects that.”
The good news at Glimcher Realty Trust is that no mall properties had to be sold to erase the big debt. Revenue dropped to $275 million in 2010, but joint venture partnerships were arranged and a total of $300 million of equity was raised.
One of the biggest deals involved a joint venture purchase of Pearlridge Center in Hawaii.
“We’re going to be an 80/20 partner,” Glimcher says. “They’ll own 80 percent of it. We’ll own 20 percent, and we’ll operate the asset. Good things can come out of tough times. Now we’re growing with a partner when really we were contracting by bringing them into an asset. That worked out really nicely.”
Glimcher says the key in any tough situation is to keep your cool.
“When you’ve panicked in the past, has that been an effective mechanism for you?” Glimcher says. “If you yell at someone, are they going to feel good and want to do something for you? Ore are they going to feel kind of down and think you’re a jerk? People who are treated nicely usually wind up doing better things. If I thought people were going to be a lot happier and we were going to make a lot more money because I could go around yelling at everybody, maybe I’d start doing that. I don’t believe that’s true.”
How to reach: Glimcher Realty Trust, (614) 621-9000 or www.glimcher.com
The Glimcher File
Chairman and CEO
Glimcher Realty Trust
Born: Columbus, Ohio
Education: Bachelor of science in political science, Arizona State University
What was your very first job?
I did work at Youthland, which was a children’s clothing store. I worked there for a couple summers and part time over Christmas break. It was me and five women. I changed the light bulbs and I’d sit in the back room with the steamer and steam all these little miniature clothes. Anything that involved getting on a ladder and moving things around was my responsibility. I can still wrap a gift really nicely.
Who has had the biggest influence on you?
It’s probably a compilation of people. Obviously, I’ve spent a lot of time with and worked a lot with my dad, so he’s obviously had a huge amount of influence on me. You learn different things from different people’s management style. I’ve been fortunate to be exposed to a lot of pretty interesting people over the years.
What’s the best advice anyone has ever given you?
A great piece of advice I got was, ‘Put everyone else before yourself.’
If you could sit down with anyone, past or present, who would it be and why?
President Ronald Reagan. When you think about my style of relying on great people, delivering the right message, being positive and trying to inspire people, he certainly inspired me.