Five years ago, Michael Gerster realized the old business model at WIKA Instrument Corp. had clearly expired. It was losing market share to Chinese manufacturers, was failing to efficiently meet customer demands and was wasting money with large amounts of obsolete inventory.
“The Chinese and other low cost manufacturers ... are eating our lunch and the bag it comes in,” says Gerster, president of the company.
He clearly needed to make some changes if his company wanted to compete. His prior company had been in the process of exploring lean manufacturing, so when he left in 1998 to come to WIKA, a pressure and temperature instrumentation manufacturer, he brought a basic curiosity about it with him. Upon starting at the company’s U.S. headquarters in Atlanta, he started sending his people to lean manufacturing seminars, but they always came back with the same response.
“I don’t know what’s in it for us, Michael.”
But in 2001, that finally changed. WIKA worked with one particular company that was able to really explain the benefits it would experience from going lean.
“The results were so earth-rocking that everybody was instantly convinced that this is going to be the future for us, and the way we wanted to do business,” Gerster says.
So he and management began working with the outside company to make changes, but even with people on board, implementation is much more difficult. The entire plant was rearranged so everybody had to do things differently and embrace a different thought process.
“Two or three years followed where we moved the furniture,” Gerster says. “We broke all of these departments a-part and created manufacturing cells.”
But after all of that, he realized the new layout wasn’t very efficient, so af-ter 18 months, they finished moving everything again to optimize efficiency.
His patience and persistence have paid off. As a result of all the changes that have taken place during last five years, productivity increased by double digits, market share doubled, and they’ve saved 20 to 30 percent of space. WIKA’s lead time has also dropped from about six weeks to just five to 10 days. That all yields real results the U.S. headquarters’ profits and revenue doubled in the last five years, bringing the entire global revenue to $480 million and the Atlanta plant’s revenue to $100 million last year.
“We are well-conditioned for the future,” Gerster says. “There are things that are under our control and there are things that are not under our control, and even the things that are not under our control, we have a level of agility that we can react to those real quick.”
Making major changes in a company requires a lot of planning, communication and work to succeed. Here’s how Gerster conquered some of the challenges of driving change through an organization.
The first stage of any change is having a reason to do so, which starts with knowing how your company competes.
“Clearly understand the value proposition to the customer,” Gerster says. “When you compete in a batch world with other customers, same lead times, same quality service, etc., the only thing you have to differentiate yourself is price. Then if you have a competitor coming through globalization that brutally undercuts you in price, you lose your value proposition to your customer.”
He spends about one-third of his time with customers and says to ask questions, “then shut up and let him talk” to learn their needs.
Gerster asks about what challenges they face, their biggest expenses, how WIKA can help their profitability beyond lowering price, and what they expect from suppliers.
While these questions help surface spoken demands, sometimes you have to dive deeper to find needs they don’t even think about.
“If you ask the right questions, you’re going to find, hopefully, unarticulated demands that the customer would have never told or asked you to do,” Gerster says. “If you offer that to the customer, all of a sudden the light bulb goes on and they say, ‘Yeah, that would be important for us.’”
After listening, WIKA made some changes. To start, it changed its methodology in pricing to be customer-friendly.
“If you tell a customer, ‘Here’s a price for five pieces, and here’s a price for 50 pieces, and here’s a price for 500 pieces,’ you are enticing the customer to do the wrong thing because he’s going to have one eye on the low price,” Gerster says. “Then he’s buying more than he actually needs and puts the rest in his inventory.”
Inventory costs a company a lot of money to maintain, often negating the lower price it paid, so whether a customer needs five pieces or 500, WIKA charges the same price. WIKA also realized it could save customers time, money and manpower by monitoring their inventories for them by linking their IT systems and automatically shipping when a product was low.
None of this would have happened if Gerster hadn’t tried to create a true partnership, which he says many companies don’t understand.
“Nobody ever really understood what partnership means,” Gerster says. “In the past, it was who had the lowest price. If there’s no dependency between the customer and the supplier, and the supplier and the customer, then you don’t have a relationship.”
Real relationships are key to a successful business. “The customer must, at some level, depend on WIKA in a good sense, not in a blackmailing sense to meet their goals while leveraging the capabilities of an agile supplier,” Gerster says. “That creates a dependency, and that dependency cannot be thrown out or competed with just because somebody walks in there with a lower price because we offer more than a lower price.”
When making changes within an org-anization, leaders must get buy-in from everyone in the company, otherwise the changes won’t yield success.
“The top management support is the oxygen that is blown into the candle all the time to keep it alive,” Gerster says. “At the same time, the whole organization has to become more self-sustained. In other words, the employees have to pick up the DNA and the way we want to do business.”
Doing that is pretty straightforward. “You must be honest, and you must give people a reason why change is imminent,” Gerster says. “In order to do that, you should have some urgency.”
But that’s not enough. Top management has to follow up with the low-level employees. He attributes Toyota’s success to this.
“Those guys know what they are talking about because they know what’s going on, on the shop floor, and they make sure things are right on the shop floor,” Gerster says. “If you make sure things are right on the shop floor, everything else will fall together. Don’t start at the top start at the bottom.”
It’s also important to keep the senior team excited and focused. That will filter down the organization and help employees buy in to changes.
“People on the shop floor have seen many different programs over the years, and they know, management says yeah, yeah, yeah, and then six months later, nobody talks about it anymore,” Gerster says. “It needs constant nurturing through top management, and top management needs to be excited about it, and they should be because it brings you the results you’re looking for, but they don’t trust it, and they let it go too quick.”
Leaders need to get and keep everyone on board through continuous training and mentoring, and if they don’t like those activities, let them go. He also keeps them in the loop by standing in front of everyone each quarter and giving a state of the company address. He both looks back at what the company has accomplished and also spells out the top five issues needing work as they move forward.
“That’s a certain set of information that I repeat over and over again,” he says. “Then you just need to engage with people. You need to tell people that while they are changing, mistakes are going to happen, and it is OK to fail.”
Most people have had a moment where they look at a policy or procedure and say, “That’s complete nonsense. Why do we do it that way?”
Around WIKA, Gerster rewards people for asking that question because it shows they’re paying attention and looking for improvement. He calls it the “Utter nonsense” award, and it comes with a $100 reward. It’s a way of getting people to continuously improve the company.
“Sometimes you set up business processes and never look at them again until they kick you in your rear end,” Gerster says. “What we’re trying to do is set up a process that looks at everything and anything continuously and try to capture opportunities for im-provement.”
Offering incentives to those who choose to get involved and offer ideas motivates and ignites enthusiasm. For example, Gerster’s lean transition completely re-energized his people and propelled WIKA forward.
“It’s an employee-driven process, and it puts people on steroids,” he says. “The morale is totally different than what it was years ago. Give the people responsibility. ... Just trust them, and they will deliver for you.”
It’s also crucial to watch what you reward. “Often, people get a bonus for increasing sales or increasing profitability, but they only measure the sales or only measure the profitability, so at the end, you either have it or you don’t, or you’re somewhere in between,” Gerster says. “You need to focus on the internal activities that drive sales and drive profit, so you know much earlier if you are on track or not.
“If you focus on these activities, you don’t worry about sales or profitability because you know it’s going to come together anyway, because you’re doing the right thing. You’re looking through the wind-shield and not through the rear mirror.”
WIKA also sets benchmarks for employees by averaging the previous two years’ performances and then raising that number slightly. If they hit the new goal, the company splits its profits 50-50 with employees, so they reap the benefits of their hard work.
“You need to define an expected outcome for a certain business process, and you need to make sure you raise the expectation every now and then in order to push the limit and start people thinking, ‘How do I do better?’” he says.
When they get a cut, they’ll look at how to be more efficient to increase their share of the prize.
“If people want to make more money here, it’s not about working harder, it’s about working smarter,” Gerster says. “You can’t get it done if you work harder. You need to do it differently.”
While change can often seem slow and people can be skeptical, Gerster says to plunge forward and let success get people on board.
“If the changes work, and they see that it works, and they get a share of it, why would they get frustrated with it?” Gerster says. “They must be part of the success, and we make them part of that success.”
HOW TO REACH: WIKA Instrument Corp., (888) WIKA-USA or www.wika.com
Len Pagon Jr. founded Brulant Inc., then called NewMedia, as a 23-year-old in the spare bedroom of his house back in 1989. Throughout the 1990s, he went through different company transformations but also propelled the company through rapid growth, being named to the Inc. 500 list three times. But sometimes good things don’t last, and by the end of 2000, the dot-com bubble had burst.
Pagon made a tough decision to restructure his company in order to survive, so he sold off three branches of the business and had to make layoffs. By the end of 2000, a merger had been planned, but by March 2002, things had fallen through and the merger was abandoned. About half of his employees, including the CEO Pagon hired, left to join the company it was supposed to have merged with.
Pagon bought back controlling interest in the company, and in doing so, he inherited a company with an upside-down balance sheet, negative equity and no cash. He took charge of the 26 employees that were left. He hired an entirely new senior management staff and started over.
The information technology services market was also changing, so he decided it was time to take the company in a different direction. He positioned it beyond a consulting firm that primarily implemented e-business solutions to a full-service strategy, information technology, and digital business consulting and integration firm to serve global clients. At this time the company was renamed to its current Brulant Inc., and it was this repositioning that fueled Brulant’s explosive growth during the last few years, culminating in more than 100 percent growth in 2006.
Pagon, president and CEO of Brulant, defines a great company as one that is doing something different, that has built a different brand, that has deep technology expertise and has a core of talented employees. These attributes have helped him reposition the company and will continue to help it succeed in the future.
HOW TO REACH: Brulant Inc., www.brulant.com or (216) 896-8900
Jerry Stallard just thought the letters GTS sounded good together when he started GTS Communications from his one-bedroom apartment in Olmsted Falls back in 1996 during his last year in the U.S. Coast Guard Reserve.
As president and founder, he didn’t exactly know much about installing telephones when he started the company, but he knew he had an interest in it. His first installation was for his brother, but he used troubleshooting techniques that he learned during his coast guard experience and received additional training to fill in his knowledge gaps. Finding clients was initially difficult to balance along with answering calls and serving as the technician, so his wife entered the picture to answer those calls while working at another job. This allowed him to focus on his craft, as he thought his overall work would be the best advertisement for GTS.
Those letters that sounded good have translated into a telecommunications business that’s still doing great 11 years later, as it’s never experienced a year with negative revenue growth. Additionally, first quarter 2007 sales have increased 26 percent.
Stallard takes an innovative approach to business by building his company as an alternative to a larger competitor and created a niche in installing Nortel phones, which are commonly installed by larger competitors.
Stallard also strives to maintain a family culture at the Strongsville-based GTS headquarters. With just 10 employees, he is dedicated to providing gift bags for them on holidays as well as hosting company outings and dinners at his residence.
As Stallard pushes his business to continue growing, he maintains a down-to-earth attitude and dedication to working hard. He leads growth without getting ahead of himself, and with that mentality, he will open a second GTS office in Orlando, Fla. in August.
GTS is on the fast track for future success with an average expansion of approximately 25 percent in both sales and employment growth.
HOW TO REACH: GTS Communications, (877) 487-8866 or www.gtscommunications.com
Steve Ciuni has taken some risks during his career. Back in 1992, he and three other colleagues purchased the assets of Drake Construction Co. from the original founders, but three years later, Ciuni made one of the biggest financial risks of his life by purchasing the shares of one of the other owners who had decided to leave the company. Nine years later, Drake Construction’s president decided to retire, so Ciuni stepped up to the plate. At this junction in the business, he decided again to take a risk and change the company’s business focus.
While the construction company had previously focused on work in the open-bid market, he decided to focus on negotiated, client-relationship-based work. This strategy would allow the business to work with quality sub-contractors and focus on providing the highest level of quality to its customers, but the strategy also proved challenging as it limited the company’s client base in the Cleveland area, which wasn’t expanding. However, Ciuni was determined to build a business based on trust, honesty and strong relationships.
He also had to explain to his partners and employees that the new approach was risky and would take nearly two years to recognize the benefits.
Ciuni first met with every employee to explain the new philosophy that every person he or she interacts with as an employee of Drake Construction must be treated the way that person wanted to be treated. He also never wanted to hear the phrase, “It’s not personal it’s just business,” as he wouldn’t accept that mentality, and it wouldn’t help the business in its new direction.
Three years later, he’s seeing real results and the risks Ciuni took throughout the years have certainly paid off for Drake Construction.
“The strategy has paid off in what we do,”
Ciuni says. “Today, we do not have any outstanding receivables, our old debts are paid off, our repeat business has increased, and we are receiving projects on a referral basis.”
HOW TO REACH: Drake Construction Co., (216) 664-6500 or www.drakeconstructionco.com
It was closing day, and it seemed promising. Charles W. Walton was supposed to wrap up a big acquisition, but this next leg of Wastequip Inc.’s growth journey would be delayed.
“I can’t sell,” the seller told Walton that day, despite having already signed the definitive agreement. “I know you own my company, but I can’t work there. My grandfather started it, and I just can’t sell it.”
“Well, I don’t want the company then, so put the agreement in your desk drawer,” Walton told the man. “When you’re ready, call me.”
Two years later, the man finally called, and they completed the deal. Now that company is one of Wastequip’s major divisions.
This type of patience and persistence has taken the waste-handling equipment manufacturer from one employee in 1989 to 1,800 employees today. Walton, who serves as chairman, has led the company through more than 20 acquisitions in 18 years, and it now generates about $500 million in annual revenue.
That growth has been facilitated by thinking big from the beginning.
“I used (accounting firm Ernst & Young) right from the start,” he says. “I obviously didn’t need E&Y, but I knew that if I grew as rapidly as I planned to, then I was going to need a big-time accounting firm.”
He enlisted the services of a large law firm for the same reason, but to get Wastequip to where it actually needed to use the services of large outside firms, he had to get going quickly, and acquisitions were the quickest path to growth.
But at the same time, he didn’t want to bully any owner into selling just to benefit his company. So over the course of more than 20 deals, he has perfected the art of the acquisition and continued to take those pieces and put them together, creating a unified, forward-moving company.
Here’s how Walton has conquered some of the challenges of making acquisitions to fuel growth.
Know what you are looking for
When choosing acquisitions as a means of growing, leaders need to first have criteria so they know what to buy.
“When I would look for a potential acquisition candidate, not only did I look for companies that were in geographic markets that we wished to penetrate but also companies that had a complementary product line that we wanted to add,” Walton says.
When determining where he wanted Wastequip to have a presence, he didn’t just take a map of the country and throw darts at it. Instead, he looked at what his company was trying to be and where it needed to be to do that.
“It’s people and industrial activity that generate waste, and if you’re making equipment to collect, process and transport waste materials, you want to be in the markets where waste is generated,” he says.
In addition to geographic area, he looks to buy companies with solid people who can contribute to the combined company.
“I would also look for companies that had what I felt were superior staff that would stay on because we did not have anyone at the corporate level to step in and run these companies,” Walton says.
He first evaluated if the people would mesh with Wastequip. To do that, he would look at a company’s overall performance as an indicator of how good its people are.
“If they had grown rapidly or profitably and were the market leader in their area, that was an indication that they had good staff,” Walton says.
But that’s just a surface indicator. He says it’s also important to form personal relationships with people to determine whether they’ll jive with your company. He does this by golfing or dining with people from the potential acquisition to get a feel of whether there’s compatibility.
He also suggests talking to other employees of the company to get a feel for what they think about the deal, and have others from your company talk to them, as well.
Beyond the people, the actual products are crucial, too. In terms of product lines, Walton looked for companies that had similar manufacturing processes to Wastequip’s and that used similar materials, which you can leverage when purchasing the material.
“It’s always good to stay in an area where you have some experience and some advantage in terms of knowing the processing techniques and not get too far up field,” he says.
Know the seller
Potential acquisitions also need to be approached in a delicate, friendly way. Walton made many initial contacts with potential sellers by attending trade shows. If one stuck out to him, he would do more research and then contact the owner and ask to talk.
“I always used to say to them, ‘It doesn’t cost anything to talk,’” Walton says. “‘You might as well see how your business would be valued.”
When meeting with people about selling their businesses, he says it’s important to understand their backgrounds and situations because it helps you better gauge how likely or unlikely someone is to sell. For example, if an owner has four children and is close to retiring, he may choose to sell his business because it’s easier to split money from the sale among four children than it is to turn the company over to the one or two who are actively involved in it while excluding the others.
“Our biggest competitor was not another company that wanted to acquire the company but the owner or potential seller who had to make a decision — was he better off keeping the business or selling?” Walton says. “My job was to convince him he was better off selling it.”
One way he did so was by providing names and contact information of other companies that Wastequip had acquired. As it completed more acquisitions, that Rolodex grew and became a strong chain of references to convince companies that Wastequip had their best interests in mind.
“I said, ‘Call any of these people and ask them if we did what we said we were going to do, and if they’ve enjoyed working at Wastequip,’” he says. “‘Ask them anything.’ That’s a good reference.”
Another tactic he used was to throw out scenarios about how the market could turn.
“They’d say, ‘Gee, if I kept the business, I’m taking X dollars out every year, and if I keep the business another five years, I’ll have as much money as you’ve offered me now, and then I can sell it,’” he says. “I’d say, ‘Yeah, that’s if everything goes well. What if there’s a recession?’ It’s a question of risk-reward.”
A couple of times he made fair offers to two of his major competitors, but both declined. A few years later, Wastequip acquired both for 10 percent less than the original offers, proving that sometimes it’s better to sell early.
While Walton obviously negotiates with Wastequip’s best interests in mind, he doesn’t bully or push people into a wrong deal, and he’s just now in the final stages of an acquisition he first contacted back in 1992.
By contrast, some acquisitions can take as few as three or four months from initial contact to completion. Either way, he says, the key is maintaining patience and maintaining contact by visiting with the owners at trade shows and staying in touch in between.
Integrate new employees
Buying a company is just the first step. Once the paperwork is completed, you have to start integrating the new people into your culture to keep everyone working toward common goals.
The key is to start with knowing what you want overall for the future, and Walton knew what he wanted.
“The culture was work hard, have fun, make money, be an industry leader,” he says. “I wanted Wastequip to be a place where people wanted to work.”
Start by appealing to the material needs of employees from the acquired company to make sure they stick around.
“Provide them with a very attractive incentive program where, in addition to their salary, which has to be industry competitive, if they meet certain financial targets, they will be handsomely rewarded,” says Walton.
New employees outside the management ranks had to know what was going on, too, so he, and eventually his management team, would explain why they needn’t worry about their jobs.
“We’ve never closed a plant, so that should provide them with some security,” he says.
Beyond simply communicating the company’s track record, he says it’s important to give employees from the acquired company resources and help them get to know other colleagues. He charges facility leaders with creating opportunities for employees to get to know each other better, and they do this through holiday parties, softball teams and other social activities throughout the year.
“If you put together a company that’s growing largely through acquisitions, it’s very important that, early on, you get the people to interact with each other,” Walton says. “Everybody’s pulling for the same goals. It just won’t work if you don’t do that.”
While it’s important to build camaraderie at the local level, it also has to exist at a management level. After three or four acquisitions, he formed a president’s counsel to help leaders get to know each other and other senior managers from corporate headquarters. He also encouraged them to get out of their plants to meet other leaders.
“We encourage people who recently joined our companies to go around and visit our other plants because they’ll learn something from that,” he says.
It helps the new leaders feel like part of the overall team and understand the company better. Getting to know their peers also gives them the confidence to call someone and ask how to do something better or to talk to them about problems.
He and his team also take a best-practices approach and prefer to implement whatever the new acquisition does best into all its facilities, so this open dialogue helps with implementing new techniques as well.
“You always learn something new from each acquisition,” he says. “Someone always does something a little better than the rest.”
Learn to delegate
While making one of his earlier acquisitions, Walton met with a man four or five times. Each time, he was baffled that the man didn’t have any papers or files on his desk — only a copy of The Wall Street Journal. It made him curious.
“Where do you spend most of your time?” Walton asked. “Are you involved with marketing? Sales? Manufacturing?”
“I only have one job, and that’s to put the right people in the right place,” the man responded.
It’s something Walton has taken to heart, and he says is key to sustaining growth. When the right people are in the right spots, it makes delegating easier.
“If you have a good operations officer and a good financial officer, then you feel comfortable delegating,” says Walton.
Of the current management team, about 60 percent came with the companies he bought, but 40 percent he brought in from the outside. Many of the businesses Wastequip acquired were small, so often the people didn’t have the experience in human resources, environmental issues, finance and law that he needed for scaled growth. He evaluated whether the skills he needed were inside the company already, and when they weren’t, he looked outside.
When interviewing, he finds it important to talk to people inside the office and in more casual settings. He’s looking for someone who not only has technical skills but who will also fit with the culture he’s built.
“In the office, you get a good sense of the professional and technical capabilities of the individual,” Walton says. “On the golf course or at dinner, you get an idea of whether you’re going to be a good team working together.”
Create a clear plan
Filling holes with the correct people ensures he has the resources to fulfill his overall strategy, but that’s only part of the solution. You also have to have a clear plan for those people to follow.
“Look at how the economy, in general and the industry in which you operate, is changing,” Walton says. “Are you gaining market share or losing market share? If you’re losing market share, you have to sit back and say, ‘Why is that happening?’ Is it because we are not cost-competitive anymore, or is it because there are new products being introduced that we don’t have? And if we don’t have them, can we develop them internally, or do we need to go outside and acquire those products?’”
When leaders discuss these issues, it helps them create a solid plan for the company, but at the same time, Walton says it’s important to not be too set in one’s ways.
“Have a strategy, but don’t be a slave to that strategy,” he says. “If it’s not working, don’t be afraid to adapt it.”
Having accurate, current data is crucial in determining if a strategy is working.
“You’ve got to make sure you have the data flow and the ability to get the data, and you have the right data to let you assess the business in a sense that you can and will know when it’s getting away from you,” Walton says.
To keep Wastequip in check, Walton gets a simple report each week that shows each company’s bookings, backlog and sales, monthly sales estimate, next month’s budget, and previous year comparison.
“When you get that, it’s pretty simple,” Walton says. “There’s nothing fancy about it. When you start to see that your backlog is declining, or you start to see that the estimate for that month is starting to be lowered by the people running that particular unit and it’s falling behind the plan for the year, that’s an early warning sign that something’s going wrong.”
When leaders see those early flags, they need to get their team together and ask some blunt questions.
“What’s the problem here?” he says. “What are we doing wrong, or what aren’t we doing that we should be doing?”
Finding the answers to those questions often requires getting out of the boardroom and talking to someone closer to the problem.
“You have to talk to the guy responsible for that division and ask him why he’s lowered his estimate,” Walton says. “He may say, ‘My competitor is lowering his price,’ or, ‘The market is weak.’ Based on his response, that would indicate different strategies to address that issue.”
Communicate and motivate
In a growing organization, leaders may have to make small changes, but rapid growth sometimes brings intense change. No matter how big or small the changes, Walton says it’s always important to have strong communication.
To ensure people get the message, he has monthly telephone conferences for all the group presidents, sales managers and group controllers. A smaller management group meets once a quarter, and he also has an annual meeting. All of these meetings facilitate dialogue about the business and keep people focused.
Part of keeping people focused is motivating them, Walton says. While he strives to have both financial and bonus compensation that make employees feel valued, he also motivates them in how he plans the annual conference.
“If the company makes its annual plan, we have our annual management conference in a nice, warm place, and they can bring their wives,” Walton says. “If we don’t make our plan, then we have it in Cleveland in February — and no girls.
“If we meet the goals and go to a nice, warm place, we have two or three hours of meetings and play golf. If we go to Cleveland, we have eight hours of meetings a day.”
He uses these meetings, no matter the length, to recognize his people, although some recognition is aimed at motivating the bottom tier.
“Peer pressure is important,” Walton says. “When we have those meetings, we show who met their budget, who’s ahead of their budget and who’s behind the budget. People don’t like to be the laggards. When they come back next year, they want to be one of the leaders.”
Hire positive people. Frankly, I work too much to have a group of people around me who aren’t fun and positive.
No. 1, without any hesitation, is the attitude. You can tell a lot about the technical skills from their resume. You can test for it. But there’s no replacement for a good attitude. You either have a good attitude a can-do attitude, a positive approach to life, a positive approach to interactions with other human beings or you don’t. I don’t think that can be trained.
Look for physiology. Is it an open physiology or closed? How do they respond? Are the answers canned or not canned? If you present them with a problem in the interview process, is their approach to solving the problem one that they come after with a positive or a negative slant?
By asking the right types of questions, you get an idea fairly quickly as to whether or not people are genuinely upbeat or have a genuine approach to their business versus those that don’t. Ask them about describing difficult situations and how they’ve gotten through those situations.
I love to play the what-if game. Use what-if to put them into a situation where there are different paths and approaches that they can take. The path and approach will indicate whether it’s being approached positively or negatively.
Focus on people. Have constant reminders everywhere you can. Each year, we have a leadership survey where the associates evaluate the managers in areas related to communication, goal-setting, involvement all things that we talk about focusing on the people as opposed to the process.
We do a monthly bulletin to our team and celebrate those people that demonstrate those great characteristics of leadership. The biggest award for any associate is called the Leadership Award, and we celebrate it to the 10th degree.
If we can create that kind of environment where we’re focusing on them, letting them do their jobs as opposed to making them do their job a certain way, you get better buy-in and a better result.
There’ve been times when I’ve had people come to me and say, ‘You’re preaching this, but you’re doing this,’ and help me get corrected. I think it’s only possible because it’s so prevalent in our culture, so people see it, recognize it and can relate to it, and remind us when we get off path.
Identify leaders. We, as a senior management team, reach out and evaluate the talent in the organization. We evaluate things like results but also the intangibles of how they relate to others in the organization below them, at their level, above them, what their organizational influence is, what their intellectual capacity is, what their desires for growth might include.
We’re trying to help them become better leaders. We hope that by identifying and investing in them, they will ultimately be able to apply what they have learned to benefit FOCUS Brands, and even if not, it’s still not a bad thing.
Whether they’re going to be a coach, a parent, a friend, at some point in time, they’ll be leaders in life. I can’t tell you how many times I’ve found helpful leadership in my life that didn’t come from work, so it certainly doesn’t have to be in just a managerial situation.
Have one personality. At the end of the day, I make sure there’s no distinction between how I live my life at home and how I live my life at work. I look at business as just another part of life.
I spend a lot of time with business, and instead of trying to have one persona at work and one elsewhere, it’s a heck of a lot easier to be yourself and treat business the same way you treat people outside of business.
Stay true to your values. We talk about the difference between leadership and principle leadership, and the distinction there is in injecting into leadership the Golden Rule and making sure that while becoming a leader, you’re also staying true to a moral compass that you can be proud of. That goes back to the whole notion of not separating how you act at work with how you act at home.
It is a matter of discipline, transparency and of inclusion. If you are open as these issues come up, and you have to solve them as a team, it’s a lot harder to get a group of 25 people to all agree to do something bad.
Assign a great deal of value to things that may not be financially driven. If someone makes a decision that may appear to be in conflict with the company’s interest financially but is the right thing to do from a human standpoint, you should point those out when they happen and celebrate them. Let everyone else know that you don’t have to compromise to be successful, at least in this organization.
Show instead of just telling. In our culture definition, it says something about guest service. One of the managers of our restaurant got a call from one of the guests and she said, ‘I ordered my sandwich with olives, and they put jalapenos on it.’
He said, ‘Don’t worry I’ll fix it,’ hung up the phone, made a new sandwich and then drove the sandwich to her place of work. What we were able to do was highlight this person’s behavior in the subsequent leadership bulletin, not just to recognize what he did but also to tie that experience directly back to the exact words that relate to it in our culture definition.
Tie the actual activity or behavior with the written word to bring it together for people, so they could see culture in action and better relate to it. They can have real-time, real-life examples of what it means. Being able to see that is probably the best training they could ever get.
HOW TO REACH: FOCUS Brands Inc., (404) 255-3250 or www.focusbrands.com
Lead by example. You have to show people. People follow leaders that are actually doing something.
During the summer, I like having Friday afternoon off to go play golf, so I made a new rule that everybody gets Friday afternoon off. If I left every Friday at noon, I would expect everybody else to do it.
If you want people here at 8 o’clock, you’ve got to be here at 8 o’clock. You want people to work over the weekend, you’ve got to be willing to work over the weekend.
Don’t just tell people to do it. The people that come up here and work on the weekends, if they didn’t see me up here, by about the third weekend they’d go, ‘Well, if it’s not that important to him, why’s it important to blow my weekend?’ Be willing to do it yourself. If you’re not, then you’re just not the leader.
Empower people. I hire smart people and count on them to get the job done. I have what I call the big-boy and big-girl rule. Everybody’s a big boy and big girl when they come to work here.
I hired an executive vice president, and I said, ‘We’ve got a meeting in San Francisco, and he started in ‘What flight are you on? When are you leaving? Who’s going to pick you up? Where do we go when we get there?’ I said, ‘No, no, no, big boy. The meeting is at 3 o’clock in San Francisco. Here’s the address. I assume you can get there.’ Everybody’s a big boy [or] big girl. They can figure it out.
It gives them a freedom to get it done. They feel like they’re in control. Nobody’s dictating to them how to get it done. Just say, ‘Here’s what we need to accomplish,’ and you show them the mountain and hope they get to the top through their own devices.
If I have to go do it, why did I hire them? If I really have to do it, then we have to talk about splitting your salary with me. That gets their attention.
Lead people away from micromanaging. Back off don’t micromanage. Let people do the job you hired them to do.
Everyone here is an intelligent person. If they weren’t, we wouldn’t have hired them, and if they’re not intelligent enough to get the job done, we don’t need them anyway.
We have some people that still are dead set on micromanaging and making sure everybody knows exactly every step they need to do to accomplish a goal. Forget it. Keep working on them because people who are micromanagers, it’s in their DNA.
It’s not something you cure overnight by any stretch. It’s just how they are, so keep reminding them to back off. We don’t do training on micromanaging. You can’t train them. It’s just a style. Hope they pick it up by watching.
Define the vision. Be very clear, concise and specific. You cannot be vague. The vision itself is, by the very nature, vague, but then you have to take the next step.
What does that mean, and what do we have to accomplish to achieve the vision? You have to be extremely specific.
Let them ask as many questions as they want to. I try not to speak to them too long without, ‘Stop me anytime if you have a question, you don’t understand or there’s something that’s not very clear.’
Overcome cultural barriers in international business. The challenge is communicating enough, communicating the right message and in the right form.
When you communicate, don’t make references that people around the whole world have no idea what you’re speaking of. You can’t use references like, ‘We want to get the ball over the goal.’ They don’t quite get that in Beijing. I started talking to people face to face, and they’d look at me like I was from Mars. It gave me a little hint that they don’t have a clue what I’m talking about.
It also changes your jokes. Every time I went to Europe, the employees would say, ‘OK, you’re not in the U.S. anymore. We don’t think the way Americans do.’
You just have to force yourself. When you get to a new country, go along with them. I always have them take me out to dinner and give me a tour. Just keep a smile on your face, and go look at churches. I’ve seen a lot of churches especially old churches.
Own your ideas. I started a company called 800-FLOWERS years ago. I got the phone number, went out and raised a bunch of money.
The guys that I raised the money from decided I was too young to be the CEO. They told me I had to go hire a CEO, so we did. I brought this guy in, and he immediately ran the company into the ground.
If it’s your dream, your vision, you can’t pass that on to somebody else. You cannot translate that. You have to go with your own gut. The guy who cares most about it is the guy whose idea it is, so when somebody comes to me in the company and says, ‘Here’s an idea for a new product,’ I turn around and say, ‘Perfect idea it’s yours. You go make it happen’ because nobody cares more than the person that has the vision and the idea.
You cannot go hire emotion. You can’t hire drive. If it’s your vision, your idea, you have to go do it.
HOW TO REACH: Pegasus Solutions Inc., (214) 234-4000 or www.pegs.com
At this time a few years ago, the industrial economy, like many others, had declined after the Sept. 11 terrorist attacks, so the company was distressed and contemplating how to make ends meet during the downturn.
As Demetriou listened to the debate about the merits of entering the chicken manure recycling business, he couldn’t help but think of what he was doing at his own company, Noveon Inc., which was also in a downturn in the chemical industry. Instead of entering silly markets, he was focusing his management team on cutting costs and restructuring, so he could tell these guys were severely distracted.
“Rather than the management team coming together and focusing on, ‘Let’s cut costs and let’s sell some underperforming assets and let’s restructure in a downturn,’ they got distracted,” Demetriou says. “They started getting creative ideas of, ‘Well the aluminum business isn’t attractive, let’s go into other markets and other businesses,’ and they started exploring really ridiculous initiatives like recycling chicken manure.”
After the sale of Noveon, he and a core team brought Commonwealth and IMCO Recycling Inc. together in 2004 to form Aleris International Inc. Immediately upon doing so, Demetriou, who became chairman and CEO of the combined entities, shut down all the noncore activities, including the chicken manure initiatives, and made his purpose clear.
“We’re an aluminum company, and whether the market is down or positive, this is our long-term business, and we’re going to strengthen it.”
Upon creating a strong focus, the organization heaved a collective sigh of relief.
“The whole organization was like a sponge because everybody was waiting for leadership and focus and clear direction, and when you get that, everybody bands together from the bottom of the organization to the top much better than if everybody’s wondering why the heck the CEO is spending his time in chicken manure,” says Demetriou.
With a refocusing of the company on its core strengths, Demetriou and his team set to grow the organization by creating a top leadership team, clearly stating goals and finding acquisitions that seamlessly integrate into the company.
Creating a top leadership team
To grow Aleris, Demetriou has assembled the best team possible and empowered its members to empower others so that everyone can move the company forward.
Demetriou insists on everyone having a wide span of control. Instead of having just a few senior people, he chooses to have 17 direct reports, each with a similar chain of command below them.
“If I have 17 people reporting to me, then they have to be 17 great people,” Demetriou says. “If not, then I’d need three or four people in between them to cover their gaps. Leadership at the top — true leadership — it’s understanding that it’s not just being financially savvy and technological. It’s being communicative, and empowering and motivating the people.”
Demetriou talks to them regularly and wants them to clearly tell him what they have done to communicate, empower and motivate their team.
“Show me how you not only empower your people but how you motivate the organization — people get excited by working for you,” Demetriou says. “You could be the smartest guy in the world and have the most understanding of the technical aspects of the product or business, but if you demotivate your organization, you’re going to have lousy results.”
Demetriou says if leaders don’t correct problems on their leadership team quickly, it stunts the organization’s growth.
“We’re all human,” he says. “We all care about people. We all want to give second and third chances, but it’s usually when an issue surfaces that a functional or business leader, part of the management team, is not getting the job done. Most of the time, six to nine months later, you still feel the same way, and you’ve lost all that time if you don’t act decisively, and it’s not in their interest or the company’s interest to drag that process on.”
He says that although it’s hard to let people go, doing so gives the company the opportunity to get an executive who better meshes with the organization’s growth goals and vision.
“You want a common vision and culture, and you go create that,” Demetriou says. “The barrier usually is you want to get there, but you don’t make that decisive move to clean out a couple of spots that open up the opportunity to bring in a couple new people and bring that cohesive team together.”
Demetriou looks for senior managers who will complement his current team and who exemplify the characteristics necessary to empower and motivate.
“At the top levels, the critical success factors are accountability, motivation, communication, vision and strategy,” he says. “As you get deeper into the organization ... that’s where you want deep experience and technical capability, but those people, in order to do their jobs correctly and win, have to have at the top level an understanding of what the vision and strategy is.
“They have to be motivated. They have to come to work and be excited. They have to know what type of goals they’re trying to achieve and be held accountable.”
When he’s hiring or consolidating leadership between companies, he listens to what and how a person communicates with him to get a good read on whether that person would be a good fit with Aleris.
“Do they know their numbers, and do they have passion?” Demetriou says. “If they’re motivating me, then I’m thinking, ‘OK, they’re motivating their people.’ If they’re on top of their numbers, they know about accountability. If they’re sitting there and I ask about their numbers, and they really don’t know their numbers, and they’re boring and demotivating or arrogant, it becomes pretty clear.”
With the right leadership team, a culture of growth can be created.
“It’s all around culture when you get to the top level because if you don’t have the right culture, vision and the strategy and accountability in the company, it doesn’t matter how smart all the 9,000 people are in the company,” he says. “Dysfunction, demotivation and a lack of accountability will kill even a structurally sound company because it’s not cohesive.”
It doesn’t do an organization much good to have excellent leadership if those visionaries don’t communicate and work together. When Demetriou formed Aleris, he brought with him a core group of people who had been accustomed to his style, so when he began holding business review meetings, they jumped right in. As new people became part of the team, they got excited about the positive things they heard about in the meetings from the core management team.
The meetings occur every month over the course of two days, with at least an hour dedicated to each facet of the business. Employees and management discuss goals and plans, as well as how the previous month went and the challenges facing them in the upcoming months. It’s not a performance review or a time to hammer people for not making numbers; instead, it’s a positive experience about how to remove barriers and succeed in creating growth.
“It creates an opportunity for sitting around, dialogue, and communicating and integrating,” Demetriou says. “Throughout the year, if everyone is wondering what everybody is doing, it’s very tough to get cultural integration.”
In addition to communication, Demetriou uses these meetings as an opportunity to get buy-in on the company’s goals because he does-n’t close the meetings to any employees. Instead, he encourages anyone to come, and employees outside of Cleveland are encouraged to conference call in.
“A lot of people complain, ‘Oh, there’s a managers-only meeting, and I’m not included,’ so there’s an inclusiveness that, to me, is powerful,” Demetriou says. “When I was lower in the organization earlier in my career, these are meetings I wanted to be in, and now everyone here has the opportunity to do that.”
When people sit in and hear the discussion and thought processes behind decisions, it creates buy-in for changes and plans in the company.
“I’m sitting in the board room, either with people or people on the phone, at all levels, and they hear the questions, and they hear the answers from myself and some of the other people on the management team, and so it makes it a lot easier for everyone to understand and adopt the culture,” Demetriou says.
Beyond simply allowing them to attend the meetings, he solicits employees for their feedback and ideas, and encourages them to speak up during meetings, so it becomes a participatory event as opposed to management wheeling and dealing, with a gallery of onlookers watching the spectacle.
“This is an opportunity to create something special and personally get known, and people complain a lot of times that they don’t have opportunities in companies,” Demetriou says. “Well, here’s an opportunity to show yourself on a monthly basis that you don’t normally get.”
Besides getting buy-in and creating cohesiveness on a management team, monthly meetings also allow the management team to foresee problems and stay on top of them before they fester and permeate throughout the organization.
“In many companies, you can make decisions, but sometimes it takes months for them to surface and then months more for people to march into headquarters and make a big presentation,” Demetriou says. “Here, we like to say that almost every month, we’re on top of the business, and we can surface these issues instantly and make quick decisions. It gets rid of frustration that can develop in the organization from a lack of decisiveness.”
Acquisitions and integration
Both Demetriou’s standards for leaders and monthly meetings merge in the express lane for Aleris’ growth — acquisitions. Four acquisitions in 2005 doubled Aleris’ revenue to $2.4 billion, and the company posted $4.8 billion in revenue for 2006.
When looking to make acquisitions, Demetriou says it’s important to focus on buying complementary companies and then consolidating them. “In all those acquisitions, the primary driver was consolidation, and when I say consolidation, it was the opportunity to gain cost and productivity synergies by getting rid of the redundancies of the two companies that you bring together,” Demetriou says.
When leaders focus first on companies that will add to their core, they’re off in the right direction and have a higher chance of succeeding.
“When you look at most of the stuff you read around businesses, there’s a lot of hype on mergers and acquisitions, but most of them fail,” he says. “We sort of set that right up in front of everybody that we’re going to be a company that bucks that trend, and a lot of that starts with cultural integration and then proving it financially.”
The integration process starts with eliminating redundancies, which typically starts with people. When he ends up with two CEOs, two presidents and so on down the ranks, Demetriou has to look for the qualities he wants so he can effectively evaluate who stays, who can be used in other areas and who has to go.
“Unlike most companies, we don’t necessarily have a bias toward our own people,” Demetriou says. “I don’t want to say that negatively, because obviously we do, but we’re open-minded to say, in some cases, some of the best people may be on the other side.” When Aleris bought one company, its president ended up heading the combined recycling business for Aleris, whose head eventually left. This openness on staffing helps Aleris when it’s competing for a sale.
“That information gets around, and when we make the next acquisition, that’s actually one of the benefits we bring,” Demetriou says.
“We try to convince them to let us buy them instead of somebody else because there’s truly opportunity here for your people. We don’t have a bias, and we want to do the right thing.”
Consolidation and doing an accurate and honest review process are also important in terms of facilities. In one acquisition, Demetriou and his team initially thought that if and when they bought a particular business, they would shut its Virginia facility and integrate it with Aleris’ California and Ohio operations.
But once they did the due diligence, they realized that their own California facility was the weak end, so they bought the company and kept its facility open, closing the California plant instead.
“That sets a culture of, ‘Look at what Aleris is doing,’” Demetriou says. “They’re not just being that 1,000-pound gorilla and going in and shutting everybody down. They’re putting the right pieces together and not having the bias of, ‘We’re the best, and nobody does it like we do.’”
To get into that mentality of losing the sacred cows, Demetriou emphasizes the importance of having solid, up-to-date data, and that if other leaders use accurate data, it makes decisions much easier. He said that once he saw the cold, hard data, shutting down his own facility was much easier to do.
It’s also important for Demetriou to involve his people in integrating a new acquisition into Aleris, and to do this, he forms acquisition teams for each functional area, such as purchasing, manufacturing and administrative.
He assigns someone from within the leadership team as the head of the acquisition team and then forms a group below that person. In addition to these leader’s everyday responsibilities, they are also charged with collectively evaluating opportunities to create synergies with the new company and tracking and measuring progress toward attaining those goals.
If the goal is to create $10 million in synergies, then the team finds ways to create tens of millions in case some parts of the the plan don’t pan out. Demetriou holds the teams accountable for achieving these goals by requiring them to report back to the company during the monthly business review meeting.
“When I think about a lot of the failed big mergers that you read about, for me, what happens is everybody gets excited about the opportunity to do a deal,” Demetriou says. “Everybody works hard to get that deal done. Everybody celebrates the results of the deal, and then everybody moves on to the next one and forgets that most of the work now just starts. That’s what we really have to focus on.
“OK, the deal’s done, but now, for the next two years, we’re going to be obsessed with delivering the synergies, and people are accountable for them, so we don’t lose track while we move on to the next deal.”
His process has paid off. With the initial merger that formed Aleris, his team’s goal was $25 million in synergies after two years. At the two-year point, they had tripled that number. The company is also already above target for all four of the acquisitions it made in 2005.
“Redundancies can be handed to you because of your scale, or you make conscious decisions that I don’t need one plus one to run two here,” Demetriou says. “I just need one plus a half, so let’s get the best one-and-a-half from the combined companies.”
Keeping everyone focused on the future and holding them all together through monthly meetings also helps keep Aleris grounded and prevents it from stumbling into ventures such as recycling chicken manure.
“There’s going to be great periods in the markets, and there’s going to be lousy days where the economy is down or the particular market is suffering for whatever reason,” Demetriou says. “But at the end of the day, over the long term, people need aluminum, and they need everything else, and the only way you’re going to win is to be the best in your class, not by getting excited over the short term about another market that’s doing better.”
His formula of leadership, communication and acquisitions has helped grow the company. When Demetriou formed Aleris in 2004, the two component companies, Commonwealth Industries and IMCO Recycling, each had share prices in the $5 to $7 range, but when he sold it in December (Demetriou remains as chairman and CEO of Aleris), the share price sat at $52.50, creating more than $1 billion in equity.
“What I’ve just shown you is a story that shows that getting more efficient with some scale is a lot more long-term successful than starting small in something you don’t really know, you don’t have the scale, you don’t have the efficiency, you’re not the best because others have been doing it for years, but it sounds sexy because that market is doing well. You have to stay the course.”
HOW TO REACH: Aleris International Inc., (216) 910-3400 or www.aleris.com
Manage growth effectively. I don’t want to be written on my tombstone, ‘He couldn’t manage what he built.’ When I started the company, I was the only corporate employee.
We have scaled up the corporate staff and the support staff to now a staff of nearly three dozen people. We have the ability to grow. We have the ability to manage growth and to scale the organization.
We spent a lot of time trying to anticipate, stay out in front of problems, talk about what the different scenarios are that could happen and try to have a plan for each of those scenarios and try to guide the company down the course that is the most likely one.
Invest in acquisitions. We look to acquire businesses that are underperforming or have not reached their long-term potential in either top-line revenue or bottom-line margin maximization, so we try to find underperforming assets, pay an appropriate price and then invest the necessary human and capital resources to build the business into a more competitive position.
We don’t overpay for acquisitions, so we don’t have to cut corners in the way we operate. It all starts with investing in the business and investing time in the community.
Get involved in the acquisition process. It is important to be personally involved in the diligence process and not outsource it completely to an accounting or law firm.
I have visited every acquisition that we have made, and I have interviewed the managers and spent time in the community before we have signed a purchase agreement to acquire that business. It’s important to see for yourself where the challenges are, where is the opportunity, where’s the weak underbelly, where is investment required immediately and over the long term.
Not only do you need to articulate that to your board and outside investors as to why you’re deploying capital in this particular instance, but you need to be able to, in your own mind, establish the benchmarks for performance of gauging the development of that acquisition over time.
Integrate acquisitions immediately. The first thing we do is attempt to integrate a new acquisition from a financial control financial systems, sales reporting, basically put all of our financial systems and sales and revenue recognition systems in place. I need apples-to-apples financial information if I’m going to benchmark this acquisition against others.
We spend a lot of time and effort at the front making sure the accounting, the billing and the revenue and sales, and all of those tracking systems are on a common platform, a common chart of accounts, so we know the information we’re getting is comparable to the information we get from every other property. That is key. That is also the quickest way to introduce the employees of the new station to our way of doing business.
Make it clear that there’s a new sheriff in town. Leave no doubt that this is a takeover by another company, that things are changing. Many times, we will also bring in a new general manager or market manager that has either been promoted from within or has been trained in our way of doing business, so they can be our eyes and ears as we try to get a good start but also evangelize our business practices throughout the building.
We literally have a five-, six-person acquisition SWAT team that will go in at the time that an acquisition is consummated, train people on our systems, help install, help convert old historic information into our database, so we not only have accurate information going forward, but that it’s compared for the prior period on an apples-to-apples basis. It’s a lot of labor-intensive, people-intensive work, but it eliminates all of the language barriers, if you will, at the time of acquisition because the information flow starts from a common place. And that helps people not only as they’re learning, but if they have a problem as they’re learning, they can call 29 other peers in the company and say, ‘Help me out with this.’
It doesn’t always have to come from the corporate office. It helps them feel a part of the community of the businesses by realizing they’re on the same platform being measured and graded the same way out of the gate.
Give up control. We have diversified our management team and that has removed me from a certain level of involvement, but that is also important for entrepreneurs. They are going to have to give up some level of detail and some level of control if they want to scale a business, and it’s hard but it has to be done if you’re going to be successful.
There was a time when I knew the name of every department head in the company, visited each of the properties several times a year. You just can’t do that anymore.
You have to decide what you want to do, what you want to be. If we want to be a Top 10 broadcast group, I need to revert to what I do best, which is to surface, identify and negotiate good business opportunities, find key management talent to run these businesses and then repeat the process. I have delegated responsibility and authority in operations and finance.
I attempt to stay current with what’s going on, but I can’t micromanage that will stunt our growth. I don’t want to be the bottleneck to decisions being made to opportunities being acted on. Hire good people, give them the guardrails and then send them down the road.
HOW TO REACH: Nexstar Broadcasting Group Inc., (972) 373-8800 or www.nexstar.tv
Strive to learn. You have to be willing to reinvent yourself and make things that were not your core strength and force them onto your plate. I don’t like lima beans, but I’ve got to eat them.
If you come to a point of leadership where you think you hold all the answers, then you’re probably ready to retire because if you have all the answers, then you’re not growing, because the world is changing so quickly. There are things that each of us address daily in business that a year ago weren’t even part of the agenda.
Hire the best. ‘A’ leaders surround themselves with ‘A’ players, and ‘B’ leaders surround themselves with ‘C’ players. A leader has to decide that they’re not afraid to have people that are smarter than them or have talent or skills that are different than them. Get the best talent, and augment your own skills.
If I’m a visionary, intuition leader, I need to have someone standing next to me who has more sense of procedure or is data-driven because then our team is stronger because you get my instinct and vision and their data-driven process that allows us to have the most solid decision.
Put together a team that complements one another and has a lot of diversity. Diversity includes all the things that we think about in diversity — race, religion, gender and sexual orientation — but also diversity in style and performance and the way you come to a job.
Hire performers. You know when an employee is coming to a job, and you know when an employee is coming to something that they feel purposefully driven to do, and it’s a part of what they want to be about. You see that in their performance.
The real difference between ‘A’ players and ‘B’ players may not be a difference of talent, smarts or intelligence, it may be a difference of, ‘Am I in a job that I have passion about? Am I in a job that I have bought in to the vision?’
Look for performance. Look for that little bit more than what was on the job description.
Ask better interview questions. It’s asking really good behavioral-based questions — not what would you do or what do you think, but what have you done? Can you show me? Can you demonstrate?
Even if they don’t have a lot of work experience, they have life experience that they should be able to draw on to answer behavioral-based questions.
Hire achievers. I have to have a sense of excellence — that they are committed to a personal sense of performance excellence. Being average is not part of their vocabulary; they want to achieve. That is important in the team that they have a sense of urgency of we need to get our work done — this has to happen.
They’re committed to doing the best job possible, and they’re committed to doing that best job today, not tomorrow. Those are the things you can’t teach people necessarily. They come to the table with that, and then they have a sense of openness to learning. If they have a sense of openness to learning, then we can do anything.
Let underachievers go. Make sure that people who are not able to perform to the standards of your organization are not part of your organization ongoing. It damages your entire team for them to have to carry people because of a manager’s inability to deal with that difficult task of letting someone go.
A good manager is someone who’s addressed issues often enough that there are no surprises. Somebody shouldn’t be surprised that they’re losing their job. Work with people to help coach them to help them find that this isn’t the right fit for them and help them find the right thing. I regularly say, ‘It’s OK with me if this isn’t a right fit for you, or you don’t like it. Please come to me and let me help you find a new job before you fail.’
It’s easier to help them with a recommendation when you’re both working on getting a job for them somewhere else than it is after you have said to them, ‘You have to go.’ Once you’ve fired them, you’re not a good reference.
Create buy-in. If you’ve hired people that have great talent, it’s your job to get out of the way. I think of my job as the person who removes barriers and brings resources to their initiative that helps us fulfill the mission.
I’m here as a resource as opposed to a micromanager. Empower people by making sure they all have clear expectations of the outcomes you’re seeking.
Communicate it regularly and often. They need to see it in print. It has to be visual. It has to be something that they hear and see. It has to be something that you show in demonstration.
Support your human capital. Companies die because of a lack of innovation and productivity. They die because their human capital has a lack of ability to meet whatever those strategic initiatives are.
Companies die by the actions of people. If you give your human capital the resources that they need to learn and grow, they will be more productive and innovative. Productivity and innovation are the lifeblood of economic growth. None of that happens without a human being.
Ask questions regularly, especially if you’re a fast-growing business. Are these the people for the business today, and do they have the talent? If these are my right people — they’re loyal, they have the values and the work ethic — how do I help them get that extra skill that will push them to the top?
Make the financial investment to get folks up to speed — close the talent gap. Make sure they have the tools, and invest in your work force to help them reach those goals.
HOW TO REACH: Corporate College, (216) 987-5875 or www.corporatecollege.com