Kevin Kelly isn’t a know-it-all. It would be easy to assume that Kelly, CEO for senior-level executive search and leadership consulting services firm Heidrick & Struggles International Inc., could tell you some intricate strategy about running just about any business. After all, he spent a good portion of his career as a senior executive overseas, he wrote a book on being a CEO, and he makes a living talking with some of the world’s most important people about who they should hire.
Despite all that, Kelly likes to keep things pretty simple. He does-n’t want to hit you too hard with numbers or strategy. Instead, he often shares stories about some of the gaps in hiring, retaining and growing senior talent that people just don’t think about. He has one story about the importance of knowing what your senior employees want.
“I was working in recruiting in investment banking,” Kelly says, “and there was a head of a hedge fund business who resigned, and when he resigned, his managing director said, ‘Why are you resigning?’ He said, ‘I wanted to be head of the desk, and I’m nominally head of the desk, but I’m not the real head of the desk,’ and the manager said, ‘Well, we can make you the real head of the desk,’ but it was too late. This other firm had already offered this other position, and a week later, they found themselves without an $85 million business, which is a huge gap to have.”
Kelly thinks about stories like that all the time — both for external customers of the executive search industry firm and his own direct reports. So while he probably could have come up with some mind-boggling strategies when he transitioned from president of Asia Pacific and Europe to CEO in 2006, a year Heidrick & Struggles did nearly $502 million in revenue, he instead focused on the blocking and tackling so many companies ignore. Rather than trying to give daily help to all 1,800 employees, his strategy was about touch points he could hit to influence the whole company, doing more work on recruiting and hiring senior talent, and creating processes to build a company culture that understood and satiated those employees to ensure that he never had any first-person, $85 million gap horror stories.
Explain the job
The first simple step in building up a company culture starts with you focusing on the people you bring in.
“It’s critical during the recruitment process that culturally and through a thorough process of referencing you find individuals that will continue to thrive in an organization that has the same values,” he says. “There is a fascinating statistic that 40 percent of senior executives leave organizations or are fired or pushed out within 18 months. It’s not because they’re dumb; it’s because a lot of times culturally they may not fit in with the organization or it’s not clearly articulated to them as they joined.”
At Heidrick & Struggles, Kelly makes it a point to help with the recruiting and hiring process of any senior employee.
“For me, bringing the right people into the organization is critical,” he says. “I probably spend 30 percent of my time on that.”
That doesn’t mean you need to sit down in HR all day and wait for people to come in for job interviews or spend your Fridays at college job fairs. A large part of what Kelly does is about articulating the company’s goals. So while he continues to let the normal chains of command vet candidates, he does the interview where the candidate can get a full view of the company’s expectations.
“I can articulate what we want to do as a firm, how we can become a breath of fresh air in a stale industry and how we want to differentiate ourselves,” he says. “Being able to articulate that is critical in getting the right talent in place.”
Kelly notes that more than half of his direct reports have worked with him for more than five years, so it’s not that he micromanages or overturns their hiring decisions. But he takes time with candidates because it sets an example about how important the process is, and he likes to get involved when it comes to making sure a candidate can fit in.
“It’s only for getting people over the line, if you will, or talking about company culture, talking about what we’re doing, that I’ll step in,” he says. “I can’t interview all 1,800 [employees], but if they are significant hires, then I’ll step in and do that. It’s about having a great team, and you’ve probably heard this a 100 times, but it’s amazing how many organizations don’t actually do it. One of the things I learned early on is it’s critical to have the right people in place to create a unified stance in where the organization is going.”
Give attention to direct reports
Once he helps get the right people at the top of Heidrick & Struggles, Kelly knows that part of his job is to keep them there so they can build the business. The touch to keeping people happy is both art and science.
“There are a lot of individuals out there across the globe who are extremely intelligent,” he says. “But in today’s world, particularly as a CEO or an executive, if you don’t have the emotional side of the equation, then you’re not going to bring people along with you.”
That requires what Kelly has termed “cultural quotient,” which is about understanding how important company culture is to success. The first part that most CEOs don’t get is you have to realize your direct reports don’t feel like you’re giving them enough credit.
“Usually, the biggest mistakes people make are not appreciating their employees — which leads to retention issues — and how simple it is just to convey to people that you appreciate what they’re doing,” he says. “(That effort) is more important than money and will keep an individual from having a situation where a key employee resigns, they have a hole, and it takes three to six months to fill that hole so they’re missing that opportunity in the market.”
Kelly says letting things get to that point would be silly, because it’s easy, and often free, to show your appreciation.
“It’s as simple as a handwritten note,” he says. “It’s communicating to them that they’re important to the firm, articulating to those individuals that they potentially have a career path if they’re happy in what they’re doing. It’s taking time to assess them and asking how they want to develop their career. I’ve had a number of experiences where I’ve talked to executives or executive teams and just having a third-party dialogue about what they’re interested in doing, how they see their career and how they can develop has gone a long way.
“This younger generation, they crave feedback, and you need to be direct. Feedback is one thing that most organizations aren’t very good at, and lack of feedback, just telling people you’re doing this right or this wrong, can lead to an individual leaving. Not giving appropriate feedback can hurt the organization in terms of morale and culture.”
Putting too much fluff in your comments can also take you away from important jobs like having those conversations with people about their aspirations.
“I found that I’d have conversations with people and I’d say, ‘Have you ever looked at this way or maybe you want to think about this next time?’ and nothing changed, and then I’d try it again and nothing changed,” Kelly says. “So what got frustrating is it took me three times as long to convey a message to somebody before they got it, because I wasn’t direct, and in today’s world, and this is one thing I know from spending a lot of time with CEOs, we all want more time. So it’s going to save you a hell of a lot of time if you can give direct feedback.”
Give employees room to grow
There’s one final step beyond just talking with and giving feedback to people about their career aspirations: using that to give them room to grow.
“There are three critical components to any job,” Kelly says. “First and foremost is interest in what you’re doing, second is compensation — and when I talk about compensation it’s being treated fairly — statistics show only 30 percent of people leave for higher compensation. The third and the most important is learning.”
Kelly has people come to the firm all the time looking for a new job, but they don’t realize it’s not their job that’s bothering them, it’s their stalled learning process.
“Individuals come to us at the senior level, when their learning curve flattens out, and they’re bored,” he says. “They usually blame the company, so they move jobs, and they find it’s great for six months, but then they’re doing the exact same thing. So how do you create a learning culture in an organization and how do you continue to push people’s intellect to have them nurture that piece of the equation?”
The answer is taking a proactive approach to the problem by adding new learning pieces to people’s existing roles.
“We implemented a training and development organization, which focuses on development,” Kelly says. “We assess people, we give them new opportunities for moving around the globe, we take some of our best people and put them around the globe to continue with their learning curve.”
That has given several people at the company a new lease on their careers.
“We just sent three people to Asia Pacific to capture the market there, and they helped carry the baton in terms of corporate culture,” he says. “They develop themselves as individuals, plus the cultural component that I talked about because they get a chance to show they could be future leaders in the firm.”
That international element works at Heidrick & Struggles, but not every company has that capability. Kelly’s main point is that, as CEO, you have to figure out what new elements people can add to their job by taking points from those conversations on what they want to do to give them a bit of growth. Those little extras can help drive retention, set a management example and grow your company.
Heidrick & Struggles has certainly seen the boom from having happy employees, pushing revenue to more than $648 million in 2007, up more than $146 million from 2006. And, again, Kelly’s not being a know-it-all, but he thinks his company culture played a role in that.
“Culture is critical to the success of an organization, particularly a culture where you want to have fun and learning, and statistics show that organizations where corporate culture is high are 20 percent more productive than their direct competitors,” he says. “So there’s a correlation between having a great corporate culture and revenue and profit, and that’s why I’m a huge advocate of it.”
HOW TO REACH: Heidrick & Struggles International Inc., (312) 496-1200 or www.heidrick.com
You might think that Mory Ejabat has too many jobs to pay attention to all the details.
After all, Ejabat is co-founder, chairman, president and CEO of Zhone Technologies Inc. And while those titles imply a lot of responsibilities, Ejabat still makes it his top priority to always know what’s going on at Zhone, a global provider of advanced telecommunications equipment.
But keeping on top of the details doesn’t mean that Ejabat is constantly breathing down the neck of his 450 employees. Instead, he makes it a point to let managers handle their own departments and day-to-day activities, and then checks in regularly on the goals that he has set with them. As a result, Zhone which posted 2007 revenue of $174.5 million is a place where people feel empowered while the leadership team has been able to instill a strong sense of accountability.
Smart Business spoke with Ejabat about how you can pay attention without micromanaging and why you need to listen to employee ideas to empower people.
Pay attention to the details without micromanaging. Something that has worked for me is really paying attention to details, because the details sometimes come back and bite you if you don’t pay attention. You have to be fully organized, and you have to know exactly what’s going on and what’s happening.
But paying attention to the details and micromanagement are two different views. You should pay attention to the details so you can ask the right questions, but if you want to micromanage, then your organization won’t work. You should let the day-to-day management happen through the managers of the people. But you have to know enough details about everything to ask the right questions.
(Our managers) focus on the market that we are in, how we are doing, how we are paying attention to every detail of our day-to-day job and what opportunities come across our table. Then, you do the work to understand the project well and establish checkpoints for yourself on where you want to be.
You need to understand the project or the scope of work, and then ask the questions that are related to your plans for the long-term outcome of the job rather than what is going on today.
Create clear goals before giving accountability. You must establish the goal with them, ensure they understand it and buy in to it before you make them accountable. You have to make sure everybody understands what the goal line is, and based on what the goal line is, you’ve got to start giving them tools and the capability to make that goal line.
It depends [on] what organizations (you are) looking at, but some have to have weekly metrics that they have to meet, some organizations have schedules that they meet and they are quarterly, so it’s a mix of the two based on how regularly you can get the data. It’s either based on your financial performance or the quality of the job you’re doing, so based on those two, you can set the goal line.
It is something that you should set with your direct reports so they understand it and know what line they have to hit and when. And then you come in with accountability of what they have to do. Then you have to make sure you give people the responsibility and the tools they need to get to their goals and achieve what the company wants them to achieve.
Establish employee empowerment by listening to people’s ideas. You have to be open to their suggestion, and if their suggestion makes sense, you have got to be able to do that and not to stick with your own ideas. Make it a cooperative project.
You have to have enough openness to hear what they want to say, and if that’s the right thing to do, you go ahead and do it. Otherwise, you have to be present to convince them that what they’re saying is not the right thing.
You have to give them the ability to make some innovation in respect to their products or projects so everybody should be able to be creative. You have to make sure people have enough creativity to do projects that give them an edge in the industry and they feel like they’re doing that every day.
It depends where the opportunity comes from. It might be a product opportunity, it might be a sales opportunity, or it might be a financial opportunity. But when that opportunity comes up, you have to be able to be there to discuss it with your people, see if there’s a way to take advantage of it and listen to their thoughts on it.
We do town-hall meetings where I meet with different organizations in an open setting and discuss issues. We also do all kinds of e-mails and webcasts, too, but most of the time, face-to-face meetings with customers and people are much better than the other ways. You have to do that take time to talk to people.
They have to be confident enough to know they can come talk to me easily without having any precautions.
Then, when you can make a personal appearance, you can see their body language and adjust to them and ask the right questions when you see their body language change. Then they feel like they are needed, their job is important, and they have a way of communicating their thoughts.
HOW TO REACH: Zhone Technologies Inc., (877) Zhone-20 or www.zhone.com
In one of the first meetings Howard A. Kahn sat in on after being named CEO in 2001, he noticed after every question he asked there was a long silence in the room.
“When I asked questions, nobody would say anything at all, and they all looked toward their manager to speak first,” Kahn says.
That moment of silence was symbolic of a problem rife within L.A. Care Health Plan.
“The management team meetings were totally noninteractive,” Kahn says. “The organizational culture was, ‘Don’t speak up to leadership in the presence of your own manager. Let those above you do the talking — it’s safer.’ ... That’s just a deadly way of thinking.”
The more Kahn tried to get information out of people, the more he realized that the culture of L.A. Care wasn’t conducive to clear communications. In fact, the community accountable health plan that serves nearly 800,000 Los Angeles residents had a history of problems because people didn’t speak up or they didn’t fully understand the often-clouded mission of the company.
“Before my arrival at L.A. Care, the staff was buffeted by a number of surprises by managers, leadership and the board,” he says. “A culture of secrecy was developing. It was a young organization, but felt old — old style and old attitudes.”
It didn’t take Kahn long to come to the realization that, without taking some bold moves, this was going to be the company culture that he had to live with.
“I said, ‘You know what, everything I hear here is going to be filtered unless I change that,’” he says. “So I started popping in around the different departments and said, ‘If I start having these smaller group informal communications, the word would get out.’”
And so Kahn started getting the word out about having employees speak up and speak more clearly. He wasn’t just trying to get chatter going, he knew he and his employees believed in the mission of the $1 billion plan, the largest public health plan in America, and he wanted the company to use that passion to get feedback from people.
So Kahn took some symbolic actions and did some daily things to change his company culture, setting a clear tone for more straightforward communications from his office and then encouraging his more than 350 employees to speak candidly in different forums.
Set the tone
In order to clear up communications and stop filtering things coming up the line, you need top management to quit sugarcoating truths and using jargon where the plain truth would do. At L.A. Care, Kahn decided he’d first take symbolic, companywide measures to show how the culture was going to be moving forward.
Kahn went to his employees and asked them to help cut down the company’s bulky 64-word mission statement and the packets given at board meetings because both were thick, antiquated representations of how heavy company communications had become.
“If it takes you 20 pages to explain it, you’re probably not giving the message directly,” he says of cutting the board books. “So there’s a directness of communication that I put in place. I said to the staff, ‘That’s how I want to communicate with you. That’s how I want you to communicate with the board.’”
And after that process was over, Kahn showed a little flair for the dramatic.
“At the end of my first year, I came to the board and I did something that was kind of a gimmick, but [it] sent a message,” he says. “I weighed the board book from the first meeting when I came here and weighed the board book a year later, and I congratulated the board on having lost over half a pound.”
Doing things in the public eye like that may seem, as Kahn puts it, gimmicky, but when you’re trying to build a company culture around something, you need to make a point of emphasis to begin rallying people.
Of course, you have to do the daily parts, too. At L.A. Care, Kahn began making it a point to communicate very directly with his people. He took that to his direct reports and had them do the same with their people. To get people putting out messages more clearly, he says start by cutting the euphemisms.
“I think it’s fair to say that the staff here feels like they have no confusion over what I mean,” he says. “I am — I hope — fairly kind but very direct, and when there is a problem, I believe in calling it a problem, not a challenge, because I don’t want people to have to interpret what we’re saying to each other.”
That’s doesn’t just mean using the thesaurus to find the most brutal word for your message, it means that you give people a chance to hear where they and the company stand, and you address that process very honestly. It’s no surprise that L.A. Care has biannual reviews, but Kahn says the focus is on letting employees know exactly where they stand and what help they can get to improve.
“If you have an employee that’s having a problem, they shouldn’t be surprised by their supervisor coming to them and saying, ‘You can’t do this job anymore; you’re being fired,’” he says. “They should have lots of warning and opportunity and support for improving their situation. We do annual and midyear reviews, and that way you avoid having any sort of confusion about levels of performance.”
You also need to show that effort daily. Whenever Kahn was in front of his people he was willing to directly answer any question they put before him. If you want people to have clearer communications, you have to answer every question you get from employees with honesty and without any hostility.
“You can’t be afraid to answer the tough questions with honest answers,” he says. “If you’re in a defensive mode, you’ll sound harsh.
“When you’re not direct, people have the sense — whether you are or not — that you’re hiding something and if you want
everybody to buy in, they’ve got to be able to understand it and they’ve got to be able to repeat it, like the mission statement.”
So many businesses worry about protecting feelings, but they don’t realize that people get mixed up in a game of protect the intent, and they don’t actually understand that they need to change their work habits or go in a completely different direction with a project. Kahn believes L.A. Care’s mission is too important for things to slow down because people can’t fully judge what others mean.
“You have to tell people why that’s important,” he says. “They have to understand it’s important because it will take us less time to do the same thing; if it takes us less time to do the same thing, given that we have important things to do, it will give us more time to do the important things.”
Create expectations for feedback
While Kahn wanted to encourage direct communications, he didn’t want them all to come from him. In a company where bad surprises pop up because people are reluctant to speak, you need to encourage people from every level to speak up.
“One of the things that I had said to our staff when I got here is I don’t want to be surprised by something that happens inside this organization, and I don’t want our board to be surprised by something we’ve done that they should have known about,” Kahn says.
So again he did something symbolic: He asked everyone to call him Howard instead of the dreary Mr. Kahn name that was commonplace. It was just a small move to soften his persona, but Kahn says you need to make simple moves everyone can see to get employees comfortable with the idea of talking to leaders.
“I started asking everyone to call me Howard because I said, ‘When we’re working together, I want to call you by your first name,’” he says. “‘And you’re working here, so you deserve as much respect for the time and effort that you put in here as I do.’”
Kahn then began a program where he had breakfast with small groups of people from the company. There was no special mode to selecting the group — except that he insisted on having employees from different levels of the company present.
“We invited small groups of people to come up and have a breakfast and coffee and just sit for an hour,” he says. “And I would tend to make about five minutes worth of points at the beginning, and then we would just open it up and let folks just talk about what they’ve got going, and I purposely designed it to include all the staff so that people would communicate across levels within the organization.”
While he believes in being direct, Kahn was willing to let these informal conversations flow at will to help break the ice. “I figure you have to have a conversation before you get the information,” he says. “When I got here I felt that I had to bring discipline to the organization and focus and a strategic direction. So when you’re trying to do all of those things, it can be viewed as overly directive and heavy-handed if you don’t at the same time say to people, ‘But I want to hear how you think it’s going.’”
Of course, when you have more than 350 employees you can’t have coffee with all of them — and even if you could, some still wouldn’t voice their ideas and issues — so L.A. Care also began a process of using an outside company to survey all of its employees anonymously on issues like compensation, work environment, management support and so on. Once the results were in, they were reported with actionable responses to the entire company.
“We said we’re going to take that and set up programs and report back to you on how we’re going to improve,” Kahn says. “So one of the areas we heard about from the staff, because we’re a medium-sized organization of 350 people, the opportunities for advancement some of the people felt were limited. So we set up a training program to help people prepare for management positions and to help people look toward what their next position would be to describe their career ladder.”
When you’re trying to knock out a culture of people reluctant to speak their mind, enriching people’s careers by showing that you are actually listening to their concerns goes, according to Kahn, further than money.
“People do not work just for the money — people work for a sense of mission, a sense of enjoyment of the people they work with and a sense of empowerment,” he says. “And so a leader taking on the role of saying, ‘I recognize these things are important to you,’ is very effective and is essential.”
In taking the time to proactively and directly respond to those issues brought up by employees, Kahn has been able to build credibility at L.A. Care. As a result, the company is moving forward with a culture where people are communicating up and down the leadership ladder with clarity and focus. And what does Kahn think would have happened had they failed to implement those changes at L.A. Care?
“We would have a less informed and committed staff,” he says. “A staff that doesn’t understand why it’s moving in a certain direction cannot self-direct. They would have no context for making decisions on their own.”
HOW TO REACH: L.A. Care Health Plan, (888) 452-2273 or www.lacare.org
The two leaders were at Merrill Lynch & Co. Inc. when he first arrived at the wealth management, capital market and advisory company, and they helped him get his career straight.
While they both became well-known business leaders, the thing Graham remembers most is the way they helped him in life.
“(Komansky) would see you and he’d come over and say, ‘Hey, Graham, how are you doing?’” he says. “And I always thought, ‘Wow, here’s a guy who went on to be the chairman and he never lost that consistent behavior and demeanor, even though jobs changed and life changed and his wealth had changed. He could still connect with people.’ And it’s something that people should keep in mind; it impacts people more than you realize.”
And so, that became something that Graham kept in mind as he advanced through the ranks at Merrill Lynch, which was recently acquired by Bank of America. Today, as regional managing director for the Illinois-Wisconsin and Northern Indiana region, he constantly thinks about what he can do to have that same motivating impact on his more than 1,000 people to help their careers and to keep good people with the company.
“It’s very important that you find out what makes people tick, what’s their motivation,” he says. “It’s not mandating what I want to do, it’s really participating in supporting what their passion is. If you do that, you come across genuine, sincere and as consistent. You’ll create an environment and a culture where you recognize people and support where they’re coming from, and that environment perpetuates.”
So while Graham may have plenty of conversations about the roughly $71 billion in client assets in his region, he spends even more time working on ways that he can use his culture to motivate people. The process isn’t easy, but his system is fairly basic: He knocks down walls by breaking the ice, gets some help from people who show they are willing to be advocates, and then he makes it a point to be consistent every day.
Break the ice
The first step in getting to know people is finding a simple way to break the ice to show you want to have a conversation. At Merrill Lynch, Graham makes it a point to attend the many community events the firm supports as well as any other after-work program going on.
“When we have recognitions for the client associates, I may host,” he says. “I’ll always be there so that I’m seen. I don’t just come out of an ivory tower, show up, and then disappear.”
And even though he has more than 1,000 employees, Graham does his best to personally welcome every new staff member. Every time his group has 10 new employees, he takes them out to lunch for a casual conversation at a local hamburger place.
“I just want to sit down and talk about them, what they’re expecting, what we expect, how we operate,” he says.
If you’re trying to get to know your people, Graham says that beyond hamburgers and personal appearances, you’ll need to spend a good bit of time focusing on an employee’s big picture to start figuring out what he or she wants.
“My style is, if I sat down with you, the first thing I’m going to ask is, ‘How can I help your business and your personal life? Boom, let’s go from there,’” he says. “And I do include the personal life because I think that’s very, very important.
“If I ask you about you and how I can help you, you’re going to talk. My job, as I view it, is to be a partner to my employees to help develop them personally and professionally to find solutions. And I engage them as partners in that process so they’re not feeling like there’s someone behind the curtain making all the decisions.”
It’s not the endgame, but Graham says that by making the effort to engage employees in nonwork conversations, you’ll make up some ground.
“I’ll be standing in the café downstairs, having a cup of coffee, and they all talk with me,” he says. “It’s not as if they’re like, ‘Oh, we can’t go over there.’ It disarms them in the fact that they can have a conversation. There’s no scripting, there’s no PowerPoint. We talk about things that usually don’t get mentioned on the balance sheet but matter to employees.”
That doesn’t mean you should create a system where employees come to the senior leaders with every little problem. Instead, you draw a line by showing them that senior leadership is willing to talk about their lives and overall career path to empower them while their managers handle the day to day.
“They do have to have an understanding and respect for protocol, they can’t go around their direct supervisor,” he says. “But, you know what, when they have access, they don’t abuse it by any stretch. They feel empowered that they have a relationship with the regional managing director. They can go out into their marketplace and say, ‘I had lunch with Bob Graham.’ I’m not saying that with an ego, by the way, I just think it’s important for people to know that they’re part of an organization that cares and what they say is evaluated and taken seriously.”
OK, so you’ve broken the ice a bit and employees feel comfortable around you. But, if you’re like Graham, you can’t spend all hours of every day chatting with employees. So, while you want to establish that you care about every employee, you have to learn to pick the individuals with whom you spend your extra time.
“You can’t be all things to everybody,” Graham says. “However, you have to recognize there are key people in every location that have key people attached to them.”
Graham says those people tend to show themselves to you. If you take the occasion to spend time with everybody at a location, you can see who is passionate about and accurate with the mission. By mixing that with the knowledge of who your high performers are, you’ll have an idea of the opinion leaders who can help you drive ideas.
“Identifying who they are goes a long way in extending who you are,” he says. “I can’t spend all time with everybody, but I do spend more time with larger producers and certain pockets of people.”
As you identify those people, they can act as your testimonial. At those hamburger lunches that Graham hosts, for example, he often brings a few of those people with him to help break down the barriers with younger employees beyond just that day.
“I usually have people in there that kind of bridge a generation gap,” he says. “I would have a handful of people that have been with me for a year, two years, someone that can give a perspective on that.
“Having testimonial, having other people around and engaging head on that, ‘Hey, I’m taking you out to lunch as a new employee and want to make sure you have the ability to indicate to me issues of concern and ways that we can get better.’ So people know that they can approach me, and if they still don’t, they just have to check with someone who’s been here to find out that it’s OK.”
The more effort you make to improve your relationships with employees, the more of these advocates you’ll have.
“I have a whole cadre of people who are turning 40 and celebrating their 15th anniversary, and I hired them,” he says. “So these are folks that have impact, have loyalty, they’re advocates, and they’re out there validating or diffusing perceptions.”
And the more of those people you get, the easier it is to move the company in a new direction or take on a bigger challenge.
“Everything we do is touching people and having, hopefully, an impact on people,” Graham says. “So they become advocates and not saboteurs. The more advocates you have, the more they can be disciples conveying whatever the message is that we want to permeate and also sustain.”
Be consistent and genuine
The final part to building a culture meant to motivate employees is probably the most tiring: You have to take your own temperature every single day.
If you’re trying to create a culture that emphasizes caring about employees and helping them grow, you can’t be Mr./Ms. Nice Guy/Gal one day and Mr./Ms. Sour Grapes the next.
“People need to have a certain comfort on consistency,” Graham says. “With that consistency, people get a good handle on where you are and who you are”
Therefore, Graham takes the time to think about what kind of things he can say to employees the next time he sees them to help improve relationships.
“You’re always testing your impact, how you’re engaging people,” he says. “I think about people all the time. They may not know it, but I’m thinking about them. And when I do think about people, I’m always thinking about that one thing that, when I see them, I can touch them. And it’s usually not a business thing, it’s a personal thing — something that means something to them and their families. The business conversation is easy, it’s the other things that people need to feel part of a greater environment, that they have a worth.”
That consistency also comes from your ability to handle people ad hoc. Remember, if you’ve been encouraging people to come to you, you better show that you appreciate it when they show up at your door.
“It has to be genuine,” Graham says. “You don’t look up and say, ‘What are you doing?’
“If they think you’re not sincere or you’re an empty suit, the next time you engage they’re going to have less trust or believability in your delivery.”
Treating people with consistency does-n’t cost the company anything, but Graham believes a little bit of empathy goes a long way to motivate people for their willingness to open up and helps them become advocates that will move you forward.
“Sometimes they’re shocked someone in the corner office is going to do that,” he says. “But if you bring it down to a level where they feel comfortable, they become advocates.”
Even in a culture meant to help employees succeed, you’ll have to make tough decisions, but you’ll gain a lot more credibility if you treat people right consistently and follow through on things you say.
“If you do what you say you’re going to do and treat people the way you want to be treated, they will respect you,” he says. “Now, they might not all like you, but they’ll respect you ... and they’ll want to be part of it, and they’ll share that with people.”
In Graham’s group, that policy has kept his number of advocates growing. In his nearly two decades of management in the Chicago area, he’s never had a first or second quintile performer quit. And while the other benefits don’t always pop up on the balance sheet, he says you’ll see how much impact a fulfilled employee can make.
“In order to drive a culture, you have to have the stability of good people,” he says. “[Low] turnover is one benefit, enhanced productivity is another. Getting more employees engaged and involved in things is yet another. They also become recruiters to your culture. So there are a lot of things that you can tangibly capture if you’re attentive. Monetarily, it’s not as easy. But, overall, there are a lot of metrics that you can look at and say, ‘Because of stability, because of consistency, because of respect for the individual, because of engagement, these are byproducts of that.’”
HOW TO REACH: Merrill Lynch & Co. Inc., (312) 869-6200 or www.ml.com
Andrew F. Puzder knows what everyone expected when he took over CKE Restaurants Inc.
“I wasn’t a restaurant guy,” he says. “I had been a lawyer, and everybody thought they brought me in to take the company into bankruptcy.”
Puzder doesn’t mince words about why that thinking was justified when he first took over Hardee’s and then became president and CEO of the entire CKE family in September 2000.
“The stock had been at $42; it was at $2,” he says. “We had $600 million in debt, the banks were threatening to foreclose, and Hardee’s was the worst fast-food company in America.
“The first day I got a sales report, and sales were down 12 percent and transactions were down 19 percent. I’m sitting at my desk thinking, ‘What the hell am I doing?’”
CKE, through its franchisees, subsidiaries and licensees, currently includes more than 3,000 Hardee’s, Carl’s Jr., Green Burrito and Red Burrito restaurants. But with 13 major banks circling the company like sharks, it appeared everything was falling apart.
Though other portions of the business were profitable, Hardee’s was losing more money than the then-$1.78 billion CKE could recover. In fiscal 2001, CKE had a net loss of $194.1 million.
Puzder knew that the quick-service industry was a profitable one you can drive down any main road to see examples of that but he had to get to the front lines of the business to fix the restaurants.
“As CEO of a company like this, I could put my feet up on the desk and answer e-mails and call in my direct reports and have them let me know what’s going on,” he says. “But if you don’t go in the restaurants, you don’t really know what’s going on.”
Even though he thought that was priority No. 1, he couldn’t just leave the company in limbo to go on a restaurant tour. So the turnaround began with Puzder changing top personnel to get Hardee’s working on finding its niche. Once those people were in place, he delegated to his new talent and went to visit his 32,000 employees to find the solutions that would put the company back on the path to growth.
Avoid Generic Executive X
The first step in a turnaround is to bring innovation and energy back, so Puzder didn’t wait long to make his first move.
“On the way to the office, not even there, I met the head of marketing for Hardee’s and fired him,” he says.
The idea was twofold. First, he knew that the company’s marketing was broken. Instead of having a distinct name in the business, Hardee’s menu had fried chicken, generic hamburgers, roast beef anything its competitors offered was simply tacked on to its own menu, resulting in a hodgepodge menu that was trying to be all things to all people. Second, he also wanted everyone to know one thing: He was looking for innovation and personal responsibility. He continued that in hiring a replacement.
“I interviewed about 15 people, and they were all kind of the same person,” he says. “They had all worked at the same places, had the same titles, it was like you just had this merry-go-round of marketing people that went through these different companies and came in and nothing ever changed.”
So Puzder called everyone in the business until he found and hired the person that had been the head of marketing for Jack in the Box Inc. in the ’90s. That food franchise had a deadly outbreak of the E. coli virus in 1993 and had been able to come back strong. Puzder knew that instead of hiring “Generic Executive X,” he had someone who had faced uncharted territories in the business.
To Puzder, the problem with most stalled companies is that the parts that make it up no longer understand how to identify a way to separate your business in the market. Finding people who will add innovation is key to your ability to delegate responsibilities, so he looks for people with energy and something to prove.
“I want people that are very dedicated to what they are doing and are enthusiastic about it not just knowledgeable but sort of burned out and just looking for a place to spend the rest of their career,” Puzder says. “I don’t want somebody that’s too bureaucratic, somebody that’s been in a large organization and is used to things being done by committee as opposed to making decisions.
“If you’re bumping them up a little bit, you’re probably going to end up with a more enthusiastic employee somebody trying to show that they can climb this next mountain. If you are hiring somebody that’s done this at three other companies, there’s probably a reason they’ve done it at three other companies.”
Let your people fix the problem
With a company in turmoil, Puzder says you have to quickly become comfortable with letting go of many problems.
“You need to hire good people, and then you need to let them do their job,” he says. “You need to let them do their job and realize they’re not going to do it perfectly and go from there.”
Letting go isn’t always easy, but if you want to take an organization in a new direction, you need to focus on your biggest problem.
“I realized early on you could get a lot more done if you had five people doing it for you, or with you, than you could if you were trying to do all of the work yourself or expecting it to be perfect,” Puzder says.
In so doing, you’ll create a lesson in empowerment across the company.
“They see what you’re doing and the fact that maybe you’re getting a lot more done with a lot less effort, and a smart person is going to pick up on that pretty quick,” he says. “The other part is just direct them to do it, say, ‘Hey, look, don’t do that. Let Jeff do it because I don’t want you wasting your time on that. I want you to do X; you let Jeff do Y, and don’t worry about it.’ It’s teaching and example.”
As he was bringing in unique talent at CKE, Puzder doled out duties accordingly.
“I really delegated responsibility,” he says. “I took (Chief Administrative Officer, Executive Vice President of Franchising and General Counsel) Mike Murphy and put him in charge of refranchising restaurants at Hardee’s. We sold a large number of markets to franchisees and used that money to pay down the debt. I brought our marketing head in and said, ‘Here’s the problems we’re facing; here’s what I think we need to do. Now, you need to figure out what we need to do from a marketing perspective.’”
With new personnel focused on sparking the company, Puzder felt comfortable letting these duties go so he could work on the front lines. An added bonus was the energy inserted into the organization.
“Once I came in, and people felt like we had a direction and we had a plan, morale kind of took care of itself,” Puzder says. “Things began happening, and when things begin happening, people get excited about it.”
Study the front lines
With his focus solely on the front lines, it didn’t take Puzder long to see why Hardee’s was such a drain. Still an unknown to most employees his first year, he regularly visited the order counter and was met by a worker who basically started a staring contest.
“I may not have been a restaurant guy,” he says. “But I thought they ought to say something like, ‘Welcome to Hardee’s; may I help you?’”
So Puzder and a senior executive wrote a script that said just that to help alleviate the rude reputation. A week after writing the script, Puzder visited another Hardee’s and a staring contest ensued. This time he politely introduced himself and asked the now red-faced employee an important question.
“I asked her, ‘Do you know who the most important person in this restaurant is?’ And she said, ‘Yeah, you.’ And I said, ‘No, it’s you because all the millions of dollars we spend are to bring a person to stand right here and look at you. And if you smile, Hardee’s smiles; if you frown, Hardee’s frowns.’ You do that about 20 times, and it really starts to catch on pretty quick.”
There is often a general indifference to basic business guidelines at a stalled company, and Puzder quickly realized most Hardee’s hadn’t touched up on the basic principles in years. He remembers visiting store after store that had windows that were just too clean.
“There are french fries on the floor, people have food on their shirts, the tables are dirty, but they’re always cleaning windows,” he says. “My theory was they were cleaning the windows so people could see how bad it was inside and wouldn’t come in.”
Puzder laughs now, but when he looked into the problem he found his restaurants all had an antiquated 4-inch thick how-to cleaning manual covered in dust.
“I went to school for 19 years; I wasn’t going to read that,” he says. “I had guys running this restaurant, I was lucky if they had graduated from high school; they’re not going to read it.”
His remedy was a 10-page, 10-point book that simplified cleaning so there would be more accountability to it. And, according to Puzder, “The last thing on the list was cleaning the damn windows.”
Beyond checking to see where the basic guidelines are outdated or ignored, constant connection with your front lines can also be a sounding board for consumers and employees. Puzder met with both daily to introduce himself and plainly asked what ideas they had to improve the company.
“Sometimes, they’ll say something that will make you say, ‘Wow, I wish I’d have thought of that,’” he says of filtering through things you hear. “Even then, I’ll run it up the chain of command to make sure that it isn’t something we’ve already discussed.
“The other thing is if you hear the same thing a lot. You go in different restaurants and you hear it from different employees who obviously haven’t spoken to each other. If you see comment cards from consumers that are consistent, then you start to feel that you’ve got a problem here or that somebody has come up with a good idea upon which you should execute.”
Though Puzder is careful to address issues through the proper chain of command, he says some issues like a dirty restroom require instant attention and then a follow-up with supervisors.
With a new focus on running a good restaurant, Hardee’s lost its reputation for dirty units and rude service, which stopped the bleeding. The ensuing rise in business bought the time to make bigger changes, like adjusting the Hardee’s menu to include the mammoth and unique “Thickburgers.”
In turn, CKE had net income of $31.1 million on $1.53 billion in total revenue in fiscal 2008, compared to a net loss of $194 million in 2001. As for Hardee’s, the average store unit made $954,000 in 2008 the average in 2001 had been less than $800,000.
“If you’re going to fix something, you need to fix it where the rubber meets the road, and that’s where the customer is handing you his dollar,” he says. “If things are OK there, they are going to be OK the rest of the way. We were fixing the inherent problems in the way Hardee’s had been run. If your instinct is to cut back on general administrative expenses, you won’t fix a company. If you’re Ford, you have to fix your cars and the way you sell them. In our industry, you have to fix your service, the way you clean your restaurants and then your food.
“We were able to distinguish ourselves, and without doing the first steps in the restaurants to get us back on track, we would not have succeeded.”
HOW TO REACH: CKE Restaurants Inc., (877) 799-STAR or www.ckr.com
Anne Sweeney likes to think about how taking a risk on a cartoon mouse can turn into a $35.5 billion entertainment juggernaut.
That keeps Sweeney, co-chair of Disney Media Networks and president, Disney-ABC Television Group, from getting a big head about how Disney and ABC programs like “Hannah Montana” and “Grey’s Anatomy” have taken over the television world. Instead, she focuses on how The Walt Disney Co. was created by a man with the ingenuity to borrow $500 to start a company in his uncle’s garage with nothing but a few drawings.
“That’s really how the company started was with great risk and seizing opportunity, being experimental,” Sweeney says. “You have to look back at Walt Disney and think, why did he believe that theme parks for families would work, why did he believe that these little animated films that starred a mouse would captivate people? Everyone that signs up to work for Disney has signed up to be an innovator and has signed up to explore new tasks.”
So Sweeney, who is responsible for the entirety of Disney’s global entertainment and news television properties — which includes, among other things, the ABC Television Network family — has pushed the envelope by growing through innovation. Disney has stayed ahead of the consumer curve, creating outlets for its programming through high-tech toys, like iTunes and its own Web content, while also expanding franchising capabilities.
“I decided a long time ago that not only is change good, but I’m not afraid to change,” she says. “I think the greater danger for companies and human beings is not making the changes and maintaining the status quo.” Refusing the status quo has kept Disney surging forward. Since Sweeney took her role in 2004, her group has exploded, growing from $11.2 billion in ’04 to more than $15 billion in ’07, equaling roughly 42 percent of Disney’s overall revenue.
Keeping the momentum behind that much growth isn’t easy, so Sweeney is constantly pushing new angles for fresh ideas on what consumers want next. Here are a few strategies Sweeney uses to keep that mentality.
Make employees tinker with toys
Don’t feel intimidated by the fact that Sweeney is on Forbes’ and Fortune’s short lists for the most powerful women in business, you still want to work for her — especially if you want to play with the world’s latest toys.
That’s because Sweeney keeps employees thinking fresh by sending them home with the latest technology and asking them to apply it to their business.
“It really has been a great thing for our team to make sure that they have technology in their hands and are using it as it comes out,” she says. “This dates back to when TiVo and (ReplayTV) came out, I distributed them to my [executive] team and said, ‘Take them home, play with them, understand what the technology is and does, and think about it in the context of your business,’ and since then, they’ve taken home PSP [PlayStation Portable] players, and I think they were the first kids on the block with both the video iPod and the iPhone.”
The result from giving employees the latest business technology creates an interesting cycle.
“The initial reaction is, ‘Wow this is great,’” Sweeney says. “Then they take them home and, by the next weekly staff meeting, the ideas are absolutely flowing and it’s, ‘OK, can we do this,’ or, ‘What if we did that.’”
When Sweeney passed iPhones out to her top people before they became a national sensation they instantly came back with ideas on how to get Disney in on the innovation. “Now, you can get the ABC News widgets on your iPhone, and that really came out of people taking the phone, falling in love with it, using it and thinking about their business,” she says.
Not every business can use technology as fun as an iPhone, but Sweeney’s point remains: Putting the industry’s latest technology in the hands of your decision-makers and asking them how it can fit your business creates an advantage in your evolution. “It’s an absolute game changer,” she says. “To finally hold it and tinker with it is the thing that really gets people thinking. I look back on the countless meetings and conversations I had about the digital future of television as recently as three years ago, and all we ever did was talk about it, and suddenly, iTunes happened to us, and we were the first company in there with‘Lost’ and ‘Desperate Housewives.’ It really changed the culture of our company, and we were living that change. We weren’t just talking about it; we were figuring it out.
“I see how excited people are by the opportunity that new technologies have given us as outlets, and the great lesson and the thing people talk about the most is, what’s going on with our viewers. That’s the greatest opportunity for everybody here.”
Update your grassroots communications
Sweeney has another interesting take on technology: It can be added to old-fashioned forms of communication to spark growth.
She likes brainstorming sessions with small groups of people and personal connections, but therein lies the rub: When every group under her charge is in production, she has roughly 15,000 employees. So she has to pepper in improving communication outlets in her goals.
“You need your culture to be fully informed on what’s going on,” Sweeney says. “That’s the reason our company is growing as fast as it is. “My favorite thing to do is make sure people are educated, and my approach is really very grassroots, it is to bring people together in small and large groups, to walk the halls. We have a little series called ‘Coffee with Anne,’ and I pulled together 20 to 25 people.”
Those smaller groups started out as educational opportunities, but Sweeney quickly found that conversations about what was happening led people to throw out additional ideas. Now, whenever she’s traveling, they double as brainstorming sessions. She then gives every idea a chance by sharing the thoughts from one session with other groups and knows there’s life to one when she sees instant interest.
“I’ve actually funded some of the projects that have come out of that,” she says. “It’s promoted a lot of good cross-divisional work and ideas, some people have actually moved from division to division because they were inspired by someone they met at the coffee or someone they heard or something they wanted to work on next.”
Sweeney also keeps an open e-mail box where any employee can shoot an idea her way. Some ideas will fall flat when she brings them up to others, but to keep generating creativity, technological and personal outlets have to be available.
“It’s my job to start the conversation,” Sweeney says. “We don’t have a culture where people are punished when things don’t work out; we have a culture where experimentation is highly encouraged and celebrated. “I do something every day; it could be eating lunch in the commissary, it can be picking up the phone and calling a few people into my office to discuss a new idea.”
Sweeney spreads this agenda continuously to make a large company feel a bit smaller. She regularly puts videos of her presentations up on Disney’s internal Web site and hosts town-hall meetings when she travels. Each time she communicates Disney’s energy in a smaller setting, she is giving employees who might be reti-cent to speak more encouragement to come forward with ideas.
“It’s about making yourself available,” she says. “It’s about engaging them in larger conversations so they begin to learn what the company’s about, so they begin to understand the goals in a real way. It’s leaving the door open so they can wander in and say, ‘I have this huge idea, but I don’t know if it’s right for us.’ And it’s really developing a relationship where that idea can be on the table, rolled around, and, whether we end up doing it or not, everyone leaves feeling, ‘Well, that was great for the floor,’ and maybe that’s something that resurfaces a few months later, and its time has come. It’s encouraging a high level of communication and making sure people are constantly being educated about what our successes are, where our failures have been, where we are in our different business and what our expectations for growth are.”
Make sure you have a life
While you may want to work in a culture that generates ideas the way Disney does, Sweeney may not want you — unless you have a life.
“While I want to work with smart, innovative people in every single division and every single field that we touch in this company, I also want to work with people who have a life, who have interests outside of work,” she says. “We are a company that touches so many consumers in so many different ways; we really want to work with people who are a part of that, people who are living in their world, who have interests, who have hobbies and who are different from each other.”
Sweeney takes this philosophy into interviewing. When the standards for the position are met, the thing that will separate the creative employee is vigor for life.
“Yes, I want them passionate about Disney, absolutely,” she says. “But I also want them passionate about their own lives. “You can just talk about why are you here, here’s the job, here are the responsibilities and, sometimes, it’s as simple as, ‘What is your passion?’”
Sweeney remembers an early conversation with one of her key executives where he mentioned how passionate he and his future wife were about wine. Subsequently, he came out with his own wine.
“What do wine and television have to do with each other?” Sweeney says. “At the end of the day, I have a very creative, driven, passionate executive here who is driving our success for ABC and prime time.”
Pushing that drive for a life is something that has to come from the top. If employees see Sweeney working 80-hour weeks, many will follow suit.
“I have to take vacations; I can’t just tell people to take vacations,” she says. “I have to be judicious about sending e-mails out on weekends. I do have a fair amount of insomnia, and I’d get up at 3 in the morning and turn on my computer and go through my e-mails, and people were waking up at 6 and having an e-mail from me at 3 a.m. Then I started to see that I was getting responses back at 3:30, 3:45, and I realized that I was the problem, I was now giving people insomnia. Unless it’s terribly urgent, I now save those things as drafts in my mailbox and send them out at a more appropriate hour.”
Sweeney has found that creativity at Disney isn’t sparked by overtime but by people who have a work-life balance.
“The important thing that I’ve learned is that when you have a life, and you’ve truly encouraged your team to have a life, the results for your company are much stronger than if you ask them to give you 24-7, and the work becomes a grind,” she says. “I find that we have real surges in creativity when people have been able to get out in the world and step out of the zone that we’re in Monday through Friday. They come back refreshed with a million ideas. My favorite day with every employee is the first day back from vacation, where you can just feel that every light bulb is lit, and they’re fired up, and they’re just ready to go.”
HOW TO REACH: The Walt Disney Co., (818) 460-7477 or www.disney.go.com
Stephen H. Hoffman would go broke without consensus.
As president of the Jewish Community Federation of Cleveland, Hoffman is constantly working to ensure that donors are heard because each has three unique votes in every decision the organization makes.
Donors who are members of the board first vote for or against a decision, and then they vote with their wallets, deciding whether to financially support a decision. Last, they can vote with their feet, deciding to walk out if their opinions aren’t heard.
Throughout the years, Hoffman has become an expert in building a consensus to capitalize on the $90 million grant budget at the nonprofit organization that supports the Jewish and general communities of Cleveland. Learning to hear every point of view and find common ground among people who think they are on different planets, Hoffman pushes the organization forward by getting both volunteers and his 130-person staff behind the bigger vision.
Smart Business spoke with Hoffman about understanding the team dynamic and how to learn to delegate before your hair gets too gray.
Guide the team dynamic to build consensus. In group work, there are two parallel dynamics operating at the same time. One is the actual work, the topics that are being discussed and the decisions that you have to make.
The other side is the process that’s being followed to make decisions and achieve consensus. There you focus on trying to include all members of the group in the discussion, trying to listen to what different people are saying, trying to see if there’s common ground in the different views expressed and trying to understand where different people are coming from to move toward a consensus.
And you want to do so not by a 5-4 vote, but where everybody says, ‘OK, I think that’s where I could go and support.’
Now, that doesn’t mean you have to get everybody to agree, but you have to make everybody feel they had a chance to participate and a chance to be heard and respected. It’s very important that it be an authentic process and that people perceive it that way so their participation matters. And they may not prevail because the majority of the group is in a different place, but if we find that the decision is split too narrowly, we generally won’t move forward; we wait until we are able to muster a much larger consensus.
Help employees own their work.
People have to own their work and their decisions and make things happen. So you introduce them to what your standards are, and you enculturate them to your expectations.
You expose them to what your values are, you expose them to your processes, and then, as one of my mentors is fond of telling me, you delegate authority, but you don’t abdicate responsibility. In other words, you can’t say, ‘Well, I delegated that to Sara, and I checked out.’ That’s not acceptable.
I go through a monthly meeting with each of our department heads where we discuss the issues on the table. I keep a list of things I want to talk about, but the more important list are the issues that they bring in.
The obvious thing is not to solve people’s problems but to ask them to propose solutions. The more that they have to propose, the more thought they’re going to give and the more they’re going to own it.
Then, through the conversation back and forth, you engage in the measurement of the issue versus the culture of the organization and the vision.
Keep your staff members interested by changing their roles. After people have mastered a particular job, we might move them to a situation where they are not necessarily logically prepared but where we think they can make a difference and let them get new skills. What we’re learning with the younger generation is that the money and benefits are kind of taken for granted. What they’re really looking for is an organization that is going to help them grow personally, and we’ve been giving a lot more attention to that aspect. We look to see first if they have an interest. Then we look to see if they have some fundamental skills, so when we add in knowledge, they can make the leap.
Our confederation has a history that goes back 60 years to changing people’s assignments and helping them grow and gain better breadth, and that helps individuals both for their growth and for motivation within the organization. It’s a two-way street.
Do the things only you can do.
When I was younger, I did it all. As my hair turns gray, I’ve begun to focus much more intensely on downloading responsibilities and decisions to my team, and I’ve become much more conscious of working through others.
I had to learn to put my focus on things that, in theory, only I can do at the moment, and where others can step up and do something to give it to them. To delegate and to trust and follow up, that’s become a huge thing.
It was a huge struggle — it’s always tempting to do it yourself, think about it yourself and write the report. Of course, what you find is you do a great job, you just don’t do enough. As your staff grows, you have to develop different lines of supervision and delegation, and you are ultimately faced with choices because your time is not infinite.
HOW TO REACH: Jewish Community Federation of Cleveland, (888) 467-1125 or www.jewishcleveland.org
In 2006, everything should have fallen apart at the engineering and construction firm that provides services in transportation, environmental and civil engineering, and construction management. Three of the firm’s financial officers, including the chief financial officer, pleaded guilty to an elaborate embezzlement scheme of more than $35 million, rocking the firm’s core.
“It challenged every aspect of the firm, our culture, our character and our reputation in the marketplace,” Kenner, the company’s president and chief operating officer, says of the scandal.
Though it very well could have meant the end of any relationship between executives and employees, PBS&J had taken a preemptive strike in that matter, having switched over to a culture focused on employee happiness several years earlier. From that momentum change, there were avenues for segments of PBS&J’s nearly 11,000 employees to sit in on board meetings and have regular sessions with other senior leaders. That policy wasn’t enough to stop the embezzlement, but it certainly stopped the bleeding thereafter.
“I will tell you that if we didn’t have that cultural connection, we would have never survived,” Kenner says. “If we didn’t have those relationships, even though we challenged each other over the last two years, I don’t think we would have ever gotten through it. The adversity we faced as a result of that was the most difficult thing I’ve ever had to go through.”
But the benefit of the culture was that Kenner and the employees at the $573 million firm didn’t have to go it alone. With the avenues created by the company culture, employees were able to sit in front of senior leaders and see the steps being taken to fix the damage.
“If that wasn’t already present, it would have had a dramatically different impact,” Kenner says. “It’s easier to get together and deal with problems when there is a relationship connection. When there isn’t, the end result is, ‘Hey, I don’t want to deal with this, I feel somewhat alone, and I’m out of here.’”
The process behind that cultural change dated back nearly a decade. It started with convincing senior leaders to believe in the fact that a better culture would equal a better company and followed with figuring out ways to meet employee expectations of personal growth. From there, it was a matter of continuing to make culture a priority on a daily basis.
Change your cultural focus
If you tell someone a new product can make you more money, you can show them data projections. If you tell them that spending more time and energy on culture will create a better company, you better have a heck of a sales pitch. Kenner says that in the late ’90s the first conversations about culture at PBS&J were as much about faith as business.
“It took a leap of faith,” he says. “It’s difficult to draw some direct correlation between investing in people and bottom-line performance. You just have to believe that if you create an environment where people are inspired, and they feel recognized and like the company is investing in them to not only improve themselves but their work in the firm, that the end result will be the firm will do better. And for some of us, it’s not a major leap but for others it is.”
So in 1997, when PBS&J’s chairman decided to collapse the firm’s nine operating companies into one corporation, there was a focus on pushing a better culture for the first time. The firm was realizing more and more that there was a bigger fight for talent brewing the number of science and engineering positions has risen at four times the national rate since 1980 according to the National Science Foundation and they needed to make a push for retention in other areas beyond compensation. The main thing that helped leaders in the company make that leap of faith was to emphasize the forthcoming business imperative of the change.
“In our business, we’ve clearly recognized that people are our greatest asset,” Kenner says. “Our people provide our services and without them we have nothing to offer our clients. In our industry, there is a virtual talent war. So as the opportunities have increased, it’s simple supply and demand.”
Another of the strongest selling points in those top-end conversations about a culture focused on your people is to talk about how building relationships with employees will help build bridges in the company that will send messages both ways.
“It’s continuity and sustainability,” Kenner says. “Whenever you can build long-lasting relationships, and that builds trust and confidence, obviously that leads to greater performance, and we have seen a dramatic decrease in our turnover throughout this period.”
Though the initial sell was a little tough, soon enough there was even some of that hard data that board members like so much: PBS&J, which has had turnover numbers as high as 18 percent, has seen those figures drop to near 10 percent during its focus on culture.
Involve your employees
By 2002, the movement to change the culture at PBS&J was no longer just a small push, it was one of the company’s three strategic plans. As senior leaders realized they had to help make the strategy a success, they worked to increase communications from the top level to the rest of the employees to figure out what employees wanted in a new culture. One of the simple ways that Kenner has built on the process is by simply making meeting employees a must on his travel schedule.
“When I’m in one of our offices and traveling, I have a period of time with no agenda,” Kenner says. “I’m just walking around and saying hello to folks and talking and conveying to them what they mean to us. No matter what reason there is in my travel, I spend quality time with my employees.”
In conversations that Kenner and other senior leaders had, they realized that employees had expectations that the firm would provide them with growth opportunities
“There’s an expectation that our professionals have: They expect the firm to invest in them professionally and help develop their careers,” he says. “Not just provide them great projects and opportunities, but elevate their skills so they can take on more responsibilities as they grow and develop.”
In response to that, PBS&J worked to create avenues that allowed employees to take ownership of new projects and build up their skills. PBS&J University was created for employees who wanted more training and employees were given the opportunity to volunteer to head up initiative committees on the biggest issues and they could air those issues in front of the board.
“They report directly to the board, so they have a direct conduit and a voice with our board of directors,” Kenner says. “And they really kind of set out a work plan on an annual basis and focus on specific areas where they are going to review and make recommendations for and set forth actions that the board can implement to have a firmwide impact.”
For each major area of interest for employees areas like recruitment, retention, compensation, diversity and so on those who felt most passionate about the issue formed an employee committee. In turn, each of those committees is teamed up with one board member and has its chance to appear before the board with studies and recommendations on what can be done to improve the company. The benefit to the board is a wealth of inside knowledge.
“They do a lot better job than the board could ever do,” Kenner says of the committees. “They are closer to the issues, they understand the issues, and they live them every day, where the board has awareness but not that direct involvement.”
Moreover, the bridge from employee to top decision-makers fulfills the growth opportunities employees crave. They can see how company decisions are made and feel like a part of the process.
“We can talk all we want about opportunities,” Kenner says. “But when they see a real example, they see someone they can aspire to and know it’s possible, it’s going to be real.”
Make a daily commitment
Even when you start to see the positive change that an employee-friendly culture can bring, Kenner says you have to keep rein-vesting in it. Today, after pushing through the embezzlement fiasco, PBS&J still has company culture as one of its key strategic initiatives and focuses on updating its internal training programs and employee committees. The main thing is not to just call it a strategic focus but to give it the same attention you would your other key business plans.
“It’s just something you live with every day,” Kenner says. “Again, it comes back to understanding that without great people all the rest will never take place.”
That commitment can’t just be all about today, either. To keep PBS&J ready for the evolution of the business, Kenner makes sure that different ages are represented on the board and that new talent is given the opportunity to form culture committees that can bring forth new issues. The goal is to keep from letting one generation control the company’s way of thinking.
“It’s all about creating a sustainable future and a sustainable organization,” Kenner says. “And if we don’t feed in that young talent, you’re obviously not going to have much of a future. Furthermore, with our focus on our culture and that cultural connectivity, the only way that can live on is if we develop that and build an awareness and strength to that with young folks that eventually are going to lead the organization. You have to feed it and mature it and develop it and continually cycle it through.”
Another piece to keeping that daily commitment is an emphasis on the little things that drive communication at PBS&J. It’s very easy to make senior leaders seem as if they are some farand-away power that just sends e-mails and memos, so Kenner wants to put the face and personality of the leadership team in front of employees as much as possible. That means practices like no e-mail Friday, where instead of sending people in your same office an e-mail, you have to physically go talk to them or pick up the phone and have a conversation.
“Our conversations take on a whole different tone in e-mail than if we were face to face,” Kenner says. “I don’t think it’s doing any major thing, it’s doing a lot of small, simple things every day. All too often, we just don’t pick up the phone anymore. One of our greatest challenges with the cultural connectivity is our technology. E-mail and Blackberry have almost been contrary or worked against the relationship building. It’s a lot easier to just e-mail somebody than to walk down the hall, so it’s really not allowing technology to work against building relationships, and it takes a lot of focus.”
Of course, the other piece to that is a lot of energy spent on these daily communication tasks. Nonetheless, Kenner says that commitment will make or break your attempt to build a better culture.
“For some of us, it takes a lot of travel,” he says. “No matter how large we get, we do not want to lose that connection we have with our folks. We want to make sure they know we’re just human beings like they are, committed to building the organization, and we’re all working together. The only way you can do that is through face-to-face communication and working together on strategic issues.” <<
HOW TO REACH: PBS&J Corp., (813) 282-7275 or www.pbsj.com
Robbie Anderson had to fight a lot of naysayers when he arrived in Cleveland nearly three years ago.
As senior director of the Cleveland hub for Continental Airlines Inc., he had to knock out rumors both internally and externally that the airline was taking the next flight out of town. For Anderson, the best cure was calmly repeating a message that combined reality — Continental committed millions to improving the hub — with his sense of humor, telling people if they knew something he didn’t, they should tell him before he settled in. Building that cool confidence is part of being a leader to Anderson because he believes he sets the tone for his people and needs to be cognitive of that. That means he is constantly looking for ways to instill a positive feel into the company and help his 2,200-plus employees grow.
Smart Business spoke with Anderson about how important it is to be positive and why you need to know the aspirations of your leadership team.
Listen to where your leadership team wants to go. One of the most rewarding aspects of leadership is watching people grow and helping them succeed.
When I first arrived, I sat down with each member of my leadership team and spent time talking to them and asking what their goals and aspirations are. I asked them about their backgrounds and experiences, and I said, ‘Where do you want to go, what do you want to do, and how can I help you get there?’
Using some of Zig Ziglar’s thoughts, you can get anything out of life if you help other people get what they want. That’s really a motivating factor with people, somebody who takes the time to listen and really cares about them as far as both their personal and professional aspirations.
Help employees move toward their aspirations. One of the things we do to help employees who want to advance is we give them a mock interview. We know the skills and attributes it takes to be successful and we apply that to the process, so we’ll sit down and say, ‘Let’s do a gap analysis; let’s see where you are versus where you need to be.’ And we do that, and we give them feedback. We say, ‘You’re lacking experience on ... ’ We give them tangible feedback and then develop a plan of action tailored to their needs. We say, ‘Let’s give you that experience; let’s help you walk through that.’
That helps tremendously. When you look to your past, you can find a few people that took time to be a mentor and that really helped foster your personal growth. It goes back to the old saying, ‘People don’t care how much you know until they know how much you care,’ and this really shows that you do take a genuine interest in who they are and what they’re about.
Have an open discussion with your staff. One of the ways I communicate is a round-table discussion. I’ll go out to the break rooms and just have an open-door session where I give them a company update, then I open it up to a Q&A.
Employees are very quick to let you know if something is not going right, so then we sit down and say, ‘Tell me why you think that.’ So we’ll go through the analysis and either go through the authorization to do what they need or explain why we can’t.
That’s critical; it’s part of having credibility with your team. They may not like the answer, but they know that you are at least going to give them an answer and explain why.
The other thing is you have to make sure with the open-door policy you guard against not using the proper chain of command. Usually one of the first things I ask is, ‘Have you talked to your supervisor about it?’ because I don’t want to undermine what they’re about because they’re supposed to be the credible leader for the agent to be able to get the resources needed to do their job.
Be a positive influence. Something that you constantly have to be aware of is what attitude you have. We have a concept here called ‘shadow of the leader.’ It’s just being cognitive that you are always casting a shadow, and the biggest thing you can do as a leader is encourage the employees and give them reason to have their mood elevator go up.
We all make better decisions when we’re happy versus angry or concerned about our future, so I do a self-check with my employees where if they see that I’m concerned, then I’m casting the wrong shadow.
You can always find negatives in life, and you can always find positives. We always have opportunity to improve, and we never want to take our eye off the ball, but let’s not focus on the negative, let’s focus on the positive.
Be willing to say you don’t know. You get listening thrown out a lot as lip service, but I’ve found that I don’t always have to have all the answers if I ask a lot of questions and really listen to what my employees or customers have to say.
At the end of the day, it’s really my employees and customers that best understand what’s going on.
You can only go through so many years of college and training, and one of the best ways to learn is through other’s experiences. So if you don’t know, don’t be afraid to ask. And don’t be afraid to say, ‘I don’t know.’
HOW TO REACH: Continental Airlines Inc., (800) 523-FARE or www.continental.com
When Clark Construction Group LLC came to the West Coast 14 years ago, Richard M. Heim’s goal was simply to survive.
Though the construction services juggernaut had been very successful on the East Coast, Heim was suddenly 3,000 miles from the home office with a new territory and new challenges.
To build up the business, there was one thing Heim, president of Clark’s western region, decided would grow the new region with the same success as the old his people. When the company was ready to move forward, he always looked within his existing people to find the next leader.
“We can be as big as we want to be on the West Coast,” Heim says. “But you have to have some controlled growth, you can only grow as fast as you’ve got good people. We want growth not for its own sake but controlled growth as necessary, given the caveat that we can’t grow beyond our ability to take care of each customer, and we can’t grow beyond our ability to have good people.”
As the western region became a bigger and bigger part of the $2 billion company building San Diego Padres PETCO Park and starting construction on LAX’s Tom Bradley terminal tower improvements and it became time to grow into two new western markets, Las Vegas and San Diego, Heim again turned to his existing staff to push forward. Not only did his staff members have knowledge from previous construction ventures, but he knew he was also providing them a growth outlet, keeping them loyal to the company.
By allowing his existing employees to grow, while aggressively recruiting and assimilating new employees into that loyal culture, Heim has been able to push employee numbers to more than 250 without losing momentum. And with those new employees starting to fit in, Clark has been able to push projected revenue for 2007 beyond $800 million in the western region after topping out at $600 million in 2006.
Build on what you have
Heim knows one thing about his leadership style: He does not wish to be an inch high and a mile wide. With projects across the West Coast in 22 different cities, Heim says that Clark has to grow leaders to keep growing the company. And the best place to find those leaders is in your own backyard.
“Try to promote from within, that’s your first primary purpose,” he says. “That way you are getting a known entity, you know what you’re dealing with, and you are also providing growth opportunities for your own people. Rarely do we hire officers outside of the company, probably 95 percent of them are homegrown.”
In order to promote from within, he goes through a talent evaluation process that touches on every employee by going to different leaders and talking about expectations and potential.
“I sit down with the officers probably three times a year, and we go through every employee we’ve got and talk about them, where are they in their development, where are they in their excitement, how they fit with the synergy of where the company is going,” Heim says.
From there, he says you need to give the talented ones a chance to take on more responsibility so they can see where leadership is going and how they might fit in to that. By letting people grow into new positions, Heim says they will also be more inclined to stay with the company because they find it easier to buy in to a leader’s growth plans.
“They have to believe in the leadership because it costs an awful lot to replace that person once you’ve invested three years or five years or 10 years into that person,” he says. “Each employee is an investment, and it’s just like a diamond, you have to polish it to give it more value and make it shine more brightly.”
Clark teams future leaders up with current leaders in a mentor-ship program that lets the new leader see what he or she will be doing.
“We are very interested in promoting the new guard, so we have set up a program in some of the new markets where we have a younger person shadowing an older one, so there is a smooth transition to that leadership.”
The idea is that someone on the leadership track can learn a lot by spending a few months seeing how a current leader works his or her daily plan into the Clark vision. Not only does it give the future leader a good base and help give Heim more leaders he can immediately call upon if needed but Heim notes there has been a side benefit he didn’t expect: The seasoned leaders enjoy the process.
“We don’t have any hiccups; that’s beneficial not only to the young person, but the older, more seasoned leaders tend to enjoy the mentoring,” Heim says. “Our operations could never rise and fall with one person, and you need to have that wide-based leadership to do that.”
Recruit young talent
Even though it’s nice to move existing employees up when a company grows, you still have to fill in holes at the entry level. Heim’s phone is always ringing with employment agencies trying to sell him on a new candidate, but he has a better plan in mind. Instead of just looking at the existing market, Clark heavily recruits from a group of local colleges and returning military personnel.
“If you go out to the open market right now, employment services are calling daily with candidates that they are pushing,” Heim says. “But the market has been picked over pretty hard in terms of who is out there, and you need to be very careful.”
Clark employs a full-time college recruiter to scout the colleges with degree programs that fit in to the company’s mold, and the company also works to make a good impression with the students by providing speakers for ceremonies and regularly contributing financial donations. Clark also sponsors a graduate-level construction competition.
“It gives us the opportunity to meet and interact with the best students produced from the various colleges of construction throughout the nation,” Heim says.
From there, Clark also lets several of the more impressive candidates get their foot in the door with a large internship program.
“At any given time, we have 20 to 30 interns from a variety of different colleges,” Heim says. “It gives us a chance to look at them and gives them a chance to look at us.”
Beyond giving talented college recruits a chance to find an interest in Clark before they go into the open market, Clark also actively recruits military men and women, finding that those trained in the armed services are much better qualified than the average candidate off the street. In the last two years, Heim’s region has had to hire 100 new employees, and he estimates 20 percent of them have come from the military. For many entry-level positions, the immediate benefit of that background will help push a company.
“They have good work ethics, they understand chain of command, they understand teamwork,” he says of military hires.
“When you take somebody right out of school, it takes a couple of years for them to sort of gain the experience and those types of life experiences where their efficiency gets to a certain point. The military people are obviously more mature in age, they are focused, they are looking for careers, many of them have families, and we looked upon that as an opportunity, and it’s been very successful.”
Assimilate new talent
When you hire more than 100 employees over a two-year span, there is more of a challenge to continuing growth than just bringing in new talent. Assimilation is job No. 1 after a new hire is made.
“The challenge is how fast you can assimilate those employees not only to where they are productive, but they are also brought in to our culture,” Heim says.
This challenge is really a threefold process of getting employees involved with each level of the company. The initial challenge rests heavily on middle management, which has to make it a goal to continue to move existing employees forward while blending in training for the new team members.
That means making things that are the normal parts of the day also act as educational tools. Meetings where senior staff members are going over projects can include younger employees to give them some background on what they are doing.
“If you are on a specific project, staff meetings where that staff sits down weekly and goes through all aspects of the project, these new employees get significant knowledge and info, and it’s very much a learning process for them if you include them,” he says.
Beyond the middle management taking time to include new employees in the loop, Heim makes it a point for higher management to make a connection with new hires to help them blend in. Today’s employee needs more feedback, and that is best served from the top.
“I sit down at least once a year with all of our new employees, and I have dinner with them just me and them,” he says. “I talk about our way of doing business, what’s important, and I look for feedback from them because they are an important part of our employee set.
“Performance evaluations are extremely important to our employees that have been with us one to five years, they want to know what they are doing right and where they need to improve on, so the timeliness and genuineness of those is very important. The new group of employees call it the millennia group, if you will is looking for that feedback almost on a continual basis. There are all kinds of ways of giving feedback on performance, but nothing replaces that one hour of quiet time where you’re giving the employee time to speak and you talk about what they are doing right, some areas they can grow. That is extremely important because it shows that in all the hubbub and whirligig of everyone being busy, we’re going to carve out some time and talk about you and what your contribution is to the puzzle, and that openness with them lets them feel free to give you feedback.”
Beyond working with different levels of management, Heim says the third step in assimilation is blending new employees with experienced nonmanagement staff. Clark has a program that takes a group of young employees and let’s them meet informally with an elder employee for an hour or so to talk about how the new job is going. New employees are also offered training through Clark University, which is a program with classes taught by senior employees.
The idea is to work with new employees on all three levels to communicate where they fit in to the company and what the expectations are.
“You have got to be in touch with an effective, candid, crisp communication channel with your employees at all levels,” Heim says. “Communication is probably 50 percent of your success. How well do you articulate, how well do you encourage feedback, how well you follow on the feedback, how you filter that feedback, your communication skills in terms of listening and expressing yourself are extremely important.”
HOW TO REACH: Clark Construction Group LLC, (714) 429-9779 or www.clarkconstruction.com