As a child, Umberto P. Fedeli saw how compassionate people were when someone lost a loved one or faced a difficult situation. That unselfish mindset of giving combined with the examples set by Pope John Paul II and Mother Teresa today inspires Fedeli to continue in those philanthropic footsteps as president and CEO of The Fedeli Group, an insurance brokerage and consulting service. He often receives more than 100 requests a month for help, and while he can’t assist with every cause, he and his 125 employees choose as many as they are able. Smart Business spoke with Fedeli about why service is important in business and how companies can make more philanthropic efforts.
Love mankind. If you study what the word ‘philanthropy’ means, the Greek word means lover of mankind. Philanthropy is how you can help, in a small way, make someone’s life better.
It stems off the concept of servant leadership, and if you’re in leadership, your job is to serve. The higher up the ladder of leadership you are, the more service is expected and required.
Lead by example. You have to promote that by setting an example. People watch what you do, so do it by living it, not so much about talking about it, but by actually doing it and trying to make that part of what you’re about.
We have something called the toothpaste and deodorant theory. Somebody said, ‘Well, what does that mean?’ I asked them if they brushed their teeth this morning. They said yes. Did you put your deodorant on? They said yes. It becomes part of your routine, part of what you’re about not just something you try to do occasionally.
It’s something that you need to embrace as part of a lifelong commitment. It’s getting involved, setting an example and doing it, and not only doing it outwardly but making sure you have that same attitude of how you treat your associates.
Have guidelines for choosing causes. We have to balance between what’s important to our clients, what’s important to our community, and then getting involved with some things where we can make a difference in the cause.
That’s a challenge because the needs tend to be so great. Some things we do are tied to things that are important to our clients and our business. Then there are others that we say, this is important for our community from a civic standpoint and helps our greater community.
Then there’s another segment of things that maybe our help can be a catalyst or an area where some help can make a significant difference.
We also like to get involved with things where the people that are providing those services to others are doing it in a very compassionate and cost-effective manner. Some of these organizations may have very little payrolls because they have so many volunteers, or they have people that are doing it as a vocation more than an occupation. They’ve given their life to a certain cause.
For us to help raise some money or contribute is a lot easier than the amount of time they put into it.
Reap the benefits. If your intent is to do good and do things for the right reason, somehow, some way, they seem to eventually work. If people are looking for a quid pro quo, that’s the wrong approach, and they may be disappointed.
That doesn’t work, but if you take a macro approach by saying if our community is in good shape and the people in our community are doing better, and we’re doing our small part to participate, it’s ultimately good for everyone.
Take much more of a macro or altruistic approach. It would be like someone having an advertising program, and saying, ‘Hey, we’re going to advertise for three weeks in a row, and hey, it didn’t work stop the advertising.’
Have a long-term approach. If you do it altruistically, the more you give, the more you ultimately receive.
Balance service and business. (Employees) are able to participate, but on the same token, we have to be sensitive that we are running a business, and we do have to serve our customers and clients and our business.
We can’t be in a situation where we’re doing everything to support charities and ignoring the needs of our clients. If our business isn’t healthy and we’re not taking care of customers, we aren’t going to be in a position to do good for others.
It’s very difficult if you’re not in the position to help. You may want to help, but if you’re not in the position to financially or timewise, then you can’t. Businesses are successful if they’re in a position to do more.
Don’t forget your potential impact. As a child, we’re like sponges. You just see so many things, and you just observe. Sometimes we forget the major impact we all can have on somebody’s life.
We are called to do things for others. You have to balance that with having a successful business and a successful family life and personal life, as well. Everybody wants a piece of you, and in my case, that’s an awfully big piece because of my physical size, but it gets to a point where there are [only] so many hours in the day.
I find it difficult to say no. If you’re not healthy, if you’re not in a business that is succeeding or prosperous, then you’re not going to have the time, the resources and the ability.
Whatever business you’re in, you have customers the idea of serving your customers, serving your associates and serving your community. It’s like a three- or four-ring pretzel. If we all got involved and used whatever talents and abilities we have, we could make our community a much better, stronger place.
Cleveland is an extremely generous and giving community. There’s nothing better than setting the example.
HOW TO REACH: The Fedeli Group, www.thefedeligroup.com
Delegate and trust people.
You just have to pick your levels of expertise and what you’re going to be going into and the duties you need to perform, and perform those, and monitor and trust the other ones will be performed correctly. You don’t need to divorce yourself from everything you’re not handling, but you have to allow them to handle it.
You have to be prepared to delegate out responsibility and authority. That’s what separates the $2 million companies from the $100 million companies. Any entrepreneur can tell you, ‘I firmly believe I can do anything my employees can do as well or better than they, but I also realize I can’t do all of what they all do.’
You give them the authority to do that, and if you don’t, that’s fine, but you can only do, as a solo individual, $4 to 5 million a year. If you’re satisfied doing the $4 to 5 million a year, that’s fine.
One’s not right, and one’s not wrong. It just depends on what levels of delegation you’re prepared to let go with.
A, you Respect them. B, you give them the authority to make mistakes and have successes and have failures, and when they fail, you don’t necessarily chop their head off.
You’re not hiring a mouth and ears and nose and eyes you’re hiring a brain. You’ve got to let them grow and learn and take on responsibility. That’s how you succeed. You succeed by taking on more responsibility and handling it.
You don’t immediately take someone up and throw them out of an airplane, but you sit there and slowly encourage them to fly. And as they fly, you encourage them to go higher and higher. Then you’ve always got to properly compensate and reward them.
Know your costs.
If you don’t understand your costs, you don’t understand your products. Know what sector you’re in. You need to know what it is you’re trying to produce because some people are looking for the Taj Mahal, and you give them an outhouse.
Some people are looking for an outhouse, and you give them the Taj Mahal. Know what level people are expecting and why, so you can deliver. You have to know what product you’re going after and what they’re trying to accomplish and why, so you can better benefit your client.
You have to understand what it costs to produce what you’re trying to produce, both hard costs and soft costs. Once they understand that, set up a budget and live within that budget. The only deviation is one that is a conscious deviation that will make a long-time improvement to your efficiency and productivity to allow you to be more competitive and be more productive.
Understand your product and what scenarios could affect you and how you react to them. You need to be able to think on your feet because things are changing constantly. You need to be able to react to change, to see change coming and be ahead of it and be prepared, so things don’t shake you up and destroy you.
Something will happen. Something always happens. If you’re not prepared to change and move with it, you’re in a world of hurt.
Don’t be confrontational.
If you walk into things with a confrontational relationship Day One, as a general rule, people aren’t going to work with you. When all the fights are done, you may win, but fighting, you get beat up at some point along the line. Your entire attitude and how you deal with people in business is how you prepare for it.
Confrontation is not something that we ever look for, but the way you avoid it is doing your prep work up front. You can’t be afraid of confrontation. Go through and make sure everybody understands what their duties and responsibilities are, and you make sure they understand what happens if they don’t make their duties and responsibilities, so if the situation arises that they do not, it’s not a surprise to anybody that you have to take the actions that you have to take.
Don’t force growth.
You don’t manage growth. I had a business development guy from one of those big boys, and he came in and said, ‘We’re going to grow 10 percent next year, and that’s our goal.’ I said, ‘You’re wrong.’
Growth is a byproduct of efficiency and productivity improvements.
There are certain things you can control. Certain things you can’t control. If the business you’re in is heavily relying on the price of gas, and gas skyrockets and it hurts you. It doesn’t have anything to do with bad management except the fact that you based your business plan on this, and it wasn’t the right thing to do.
We continually improve. When we improve and make ourselves more efficient and more productive, it makes us a better company. It allows us to, A, be more competitive on our work, and B, make more money on our work.
Give back to the community.
Nobody, I don’t care who you are, nobody does it on their own. Bill Gates doesn’t do it on his own. Warren Buffett doesn’t do it on his own.
You do it with the help and following of the community and the employees and clients and vendors and subcontractors and everybody else you deal with. It’s all a part of a team. There’s always those less fortunate than you are, and you have to be cognizant of those and not be afraid to help them.
How to reach: Fortney & Weygandt Inc., www.fortneyweygandt.com
She continues to teach while also learning to delegate as president and CEO. Each day presents new opportunities for the growing the company, which hit $7.5 million in revenue last year and expects to grow more than 20 percent for 2006.
Smart Business spoke with Evans about how she manages growth and works with franchisees to improve the company.
How do you manage growth?
We project how many franchises we would like to sell in a year. How many can we train at one time? There isn’t a magic number, but if we were to grow and try to train 80 franchisees next year, it would hurt the entire system. It would be difficult to manage that many franchisees and still support the 100 we already have.
It’s one step at a time. It just goes back to your basics. Baby learns to walk just one step at a time.
We have a lot of resources that bring a lot of potential candidates to us. We’ll always continue that screening process. If it’s a good fit for the new franchisee as well as the existing franchisees and franchisor, then it all works for everyone. It hurts everyone if it doesn’t work.
How do you make it work?
There’s a lot of communication within the system. Everybody here is assigned a franchisee to work with. It could mean just a monthly phone call how are you? This is what we’re doing open communication on a regular basis.
It could be a weekly call. They may need that touch a little more, so keeping informed about what their needs are so we can assist them, but keeping them informed, too, of what we’re doing on a regular basis.
They like that because they’re part of it. They want to have their input for what direction we go in.
What do you look for in people?
The drive for success, and in that drive for success, knowing that it’s not just going to drop out of the sky, and a dedication to hard work and loyalty.
I want them to be excited about what they’re getting into. If they’re here saying, ‘Oh, it’s another thing I’m looking at,’ I’m not interested. They have to come with a great deal of passion, the wanting it.
It’s like that senior who can’t wait until that senior year, who doesn’t know that there’s college behind there. I had a senior last year, and he thought, ‘Oh yes, I can’t wait until senior year.’
And now his first year of college is hitting him and he says, ‘I don’t know why I was so excited to get here I’m still working hard.’ They’re constantly looking for the next thing.
What most inhibits a company’s growth?
If we get too excited and we start to grow too quickly. We have to harness it ourselves because we have so many strong candidates that want to be part of our franchise.
It’s hard to control that and say we can’t grow too quickly. We know what will happen. We have been caught in that before, and you learn from your previous mistakes. We have full potential of growing and going to where we want to go, but we have to be careful that we don’t too quickly or too slowly.
If we grow too slowly, then we’re not bringing in the revenue that we need in order to implement new programs.
What challenges have you faced in growing?
We all want to have total control. We can do it ourselves. That need to be filled, and I have the expertise, and I can do it all.
Being able to delegate and let others take responsibilities so I don’t have to, that’s one of the challenges that we all have because it comes from the entrepreneurship and the entrepreneurial thinking I can do it, and I can do it on my own without delegating.
We can’t grow as a company if one person is responsible for all departments, and a franchisee can’t grow, either. They can’t teach and market at the same time. I can’t, as president of the company, monitor and support the 100 franchisees that we have, and build partnerships and relationships that would better the system if I’m focusing all my attention on individuals.
What helps you grow the business?
I go visit other franchises because we can all learn from one another. No one has that magic answer, and I think it’s fun if companies can work together. There’s no reason why we can’t all grow.
Even people we consider competitors, we work closely with them. We all learn from one another. My franchisees, too they’ll work with a competitor for another program. Sometimes if you partner together, you both succeed, and it’s a win-win for everybody.
How to reach: COMPUTERTOTS/COMPUTER EXPLORERS, www.computertots.com
Improve other people’s communication skills.
A guy sometimes reacts out of emotion, and he says something he himself doesn’t really understand or mean. Watch him closely. You can tell if he’s in a selective listening mode we’re maybe disagreeing on something, you’re already creating an answer, and I’m not even finished talking.
Get him back out of it. Stop, at that point, and ask if he understands, and bring him back into line because people respond emotionally.
Be fully truthful with employees.
Man or woman can handle the truth, no matter how bad it is, as long as it’s factual and he has the whole story.
However, if you lie to him, or he lies to you if you leave him with half the truth or say it another way, you leave him to his own imagination he will end up torturing himself. The negative impact that he generates because of how he feels about things is great.
When you tell somebody an unpleasant truth where he may get very upset, many times he comes back and asks you for help because he knows you understand the problem. If you have a reputation of helping the person, then it becomes even better.
The negative impact of disciplining someone with simple truth is minimized.
Hire honest people.
You can modify short-term behavior for a while, but you will not change a person’s personality. You can show them where and how mistakes happen, future ramifications of it.
But you do run into people on the other side of the fence that just refuse to be honest. That’s my basic criteria before I can employ anybody.
I need to be able to trust them. We can make mistakes. We can fix those, but if you lie to me, I have a hard time wanting to fix that.
Mix facts with intuition.
I’m a person who listens a lot to my intuition and not just facts. It’s a study of facts, then sit back and say, ‘OK. Now I understand all the facts, what do I want to do and why?’
It’s important because if you go in nervous, reluctant, in spite of what all the facts are, you don’t have the passion to get the thing accomplished. Without the passion, you will have a difficult time being successful.
No matter what you think you know today, the only thing you really know is tomorrow is going to be different. You have to depend on your previous decisions and your ability to change directions quickly. It’s your intuition that tells you the future. Facts tell you the history.
Get buy-in when making changes.
You can order it done as a last resort, which doesn’t help a lot. You must take the time to explain the reasons for this change to the people that are going to implement these changes. Then take the time to really listen to what they have to say.
Prior to that, you have to generate an environment where you do listen to your employees. If you’ve got that environment, it opens up a fairly easy communication session.
They have a chance to have an opinion, to ask questions. They are now signed up and are part of the decision. It’s important that they feel that they are part of that decision.
Sometimes you don’t have the time to do those things, and you have to fire a shot. You do that, but you also tell them you’ve done that, and you give a reason, but you don’t make that a style. They understand those things have to happen.
Use other people’s methods.
If there are two ways of doing something your way and my way and I don’t see any difference in the results, we will do your way every time. That way, I don’t have motivation issues with you. I don’t even have to hardly manage it.
If it’s your idea, then you’re going to lead that. I have 600 people in the company. Most of these people are closer to the problem and solutions, and many times they have a better answer than I do.
A lot of managers don’t realize what is required to happen, and they become frustrated. They try to hang on to things that they do not need to hang on to.
Perfect your listening skills.
Listening is a technique in itself. I’ll keep quiet while you talk, and I will try to stay away from any selective listening. Then you keep quiet while I talk.
My first conversation, I will attempt to do nothing but make you understand I heard you. I will not agree or disagree with you. I have one objective, and that’s to convince you I heard you, so when you tell me that seven plus one equals 10, my first response will not be, ‘No, it’s not.’ My first response will be, ‘Do I understand that you just said that seven plus one equals 10?’ Inevitably, they’ll say, ‘Yeah, but I meant to the base eight.’ OK. I agree. There’s no argument.
If I had said, ‘No, it’s not, you idiot. Seven plus one equals eight,’ you now have a situation where listening becomes difficult. Spend the time and give the person the opportunity to respond. Then clearly convince them you heard them. It removes a lot of arguments.
HOW TO REACH: Monitronics International Inc., www.monitronics.com
Look for the most challenging situation you can find, and go in that direction. When I worked at the Philadelphia Eagles, they played in the worst building in the league, the business was not developed and (it was) an awful team. That was the opportunity.
We were able to see measurable results and success early on. When you’re at the bottom, the low-hanging fruit is there at the beginning, and people get excited. They say, ‘This can happen’ ... and that feeds upon itself. It continues to grow and to develop, and it sustains itself. Once you’ve had success, you want to have more. You like the feeling, you like the accomplishment, you see it as tangible.
If you talk to a mountain climber, they speak about the climb. When they get to the peak, they don’t set up camp there. They enjoy the success, and then they make their way back down for another climb.
It’s a journey. We’re all mountain climbers.
You have to make sure that if you do the right things, there is an inherent opportunity to succeed. There are businesses that could do all the right things a hundred times over and still not be successful.
Get good people to get good vision.
A lot of it revolves around the quality of people that you have. When you have a group of people that share similar values and have a desire to be the best, it’s easy to set a course for action. It’s a natural process as opposed to one that is forced or contrived or handed down from above it’s part of the DNA of everyone.
It revolves around passion. We look for people who are incredibly passionate. It’s the flame that burns eternal that will lead to our ultimate success. It becomes somewhat all-consuming.
Successful people find a way to succeed. We could all come up with excuses. But when you look at it, how many times are people presented with obstacles that are supposedly insurmountable, too many challenges to overcome?
You’ll find that successful people will find a way to break the situation down and find ways to overcome it and succeed at levels that weren’t even anticipated .
Have a common philosophy, core objectives, working in the one direction, and have a group of people who help create that. We’ve created an environment where people feel like they can develop and have ownership in terms of developing the roadmap of success for our organization.
They have a strong sense as to what they need to be successful and what is going to put them in a position to make sure that our organization can be successful. They’re given trust and latitude in terms of how they can make things happen.
We’re constantly amazed at how people can redefine our definition of success, working together and creating another level that we may not have necessarily imagined before.
Change is constant. The derivative of what’s going to lead that change is understanding everyone’s role in planning for that change in our quest to be the best. It’s all embodied in each and every person, so that change is emanating from the ground up as opposed to some dictum from on high.
When you have a situation when leadership is coming from throughout the organization, that’s when you can exponentially grow because it’s a group of people working together, leading and making things happen and creating change as opposed to one individual or a group of people waiting to hear what their next task is. It’s taking that paradigm and flipping it upside down.
Think beyond what is.
I had a great opportunity in Minnesota (with the NBA Timberwolves). We didn’t have a name, a team, a building. We didn’t even have letterhead. We started from scratch, and we weren’t restricted by past practices or the proverbial, ‘We’ve always done it this way.’
Dare to dream and dare to dream beyond what there was. When we talk about being the best in the industry, it is almost redefining what the best is. There’s another level of success out there beyond what even the best is. It’s just an insatiable drive and quest to be the best and looking at every nuance, every aspect, every detail and what the opportunity is associated with that.
Ignore the noise.
Know what the right thing is, and go after it. Be relentless in your pursuit of that. You’re going to have a lot of naysayers out there.
You have to be constant and firm in your vision. Envision what will be your success, and work your way toward that. Block out everything that could interfere with that, or run it over like a steamroller.
When you see athletes, that’s what they do. Ignore that noise, and bust through and make that happen. You certainly have opponents that are trying to stop you from doing that. Listen (to the negative) to understand it, to overcome it but if you start to buy into that, you’re defeated. You’re done.
Keep it simple.
People tend to make things more complex than what they are. I always like in ‘Bull Durham’ when the team was on a bad streak and (the manager) said, ‘This is a simple game. You throw the ball. You catch the ball. You hit the ball.’
If you have great people, great passion, that quest and desire to be the best, and that is shared from every aspect from ownership through everyone throughout the team, then the sky is the limit in terms of what can be accomplished.
HOW TO REACH: The Cleveland Cavaliers, www.cavs.com
Go with your gut.
It’s about instinct. It’s about what feels right inside. In the end, I go with my gut. Inside, when you do your passion, your heart tells you the truth, and I listen to that.
I don’t always take the advice of people that think they know better. If I don’t listen to it, and I take someone else’s advice, it’s usually wrong.
Hire and empower energetic people.
I hire fantastic people. I trust my instincts. I look for caring, giving people that like to do things for others, and when you have that kind of person, you know that you’ve developed a team that lifts you up every single day.
You can move forward because you have that kind of team that brings you to new levels, and on the same side of the coin, I have to do that for them, as well.
Be passionate about your goals.
I create a vision of what I want to happen for myself and for the company in general. Then I let the people that work here go for it. I give them the time and the energy that they need from me.
When you do that, you just keep growing. It is about getting those good people in place.
Be passionate about whatever it is you’re doing. Enthusiasm is like a magnet, and if you’re enthusiastic about what you do, people see it, and they’re drawn to it, and then you get the right people.
When you have a lot of physical movement in your life, it puts a lot of other movement in your life, as well. Whatever other things you’re doing, whether it’s in your personal life or your business, you’re not afraid to move forward in other avenues if you have physical activity in your everyday life
Prepare employees for change.
One of the biggest things that promotes growth is change, so we change a lot. We keep changing the program, the way we do business, the way we manage.
We give our people enough time to assimilate what they have to do and understand it, and then they begin slowly to make those changes. It’s always keeping them educated and fresh and knowing that they’re always going to be moving forward.
It keeps them excited. It’s terrible to do the same old thing over and over every day and never make any changes, because how boring that is.
Lead by example.
The people you have at the top have to talk the talk and walk the walk. I don’t ask anybody to do anything that I wouldn’t do myself and that I don’t believe in.
If you have leadership that does not have integrity, if you do not ask excellence of yourself as a leader, then you’re not going to be successful, because nobody else is going to ask that of themselves, either. It’s got to start at the top and go all the way down to wherever the bottom is.
It’s about integrity. It’s about excellence. It’s about accountability and quality and asking that of myself every day so that when I ask it of others, they understand it’s important and it makes the company strong.
Embrace new ideas.
Awards are fine, and it’s really nice to be recognized; however, they’re only as good as the plans you have right now for the future.
When you do your passion, it’s easy. When you’re really actively integrated into the meat, the body, the muscle, the bones and the skeleton of the company, you can’t help but always be coming up with great ideas. Your customers give them to you, and you’re active in that.
I have such a team of creativity here. They know that I want them to take a certain percentage of their day every day to think of fabulous ideas that are out of the box, that might even be a little crazy. We’re not afraid to tackle them.
Take calculated risks.
Don’t be afraid to take risks and make mistakes, but only if you can learn from the mistake and move forward in a better way and be better because of it. A leader has to also exhibit a sense of responsibility to the people you serve and care about them, and they have to understand that you do have that sense of responsibility.
That’s really important because then it trickles down not only to corporate employees, but it trickles right down to the customer, who is our whole basis for being.
Show you are part of the team.
I’m here as much of the day as I can be here working right with them. I make sure that they know that I’m in tune with whatever projects are going on, and I do the work.
If the warehouse has to be cleaned out, I’m not afraid of going down there and getting dirty and doing it. If we have to ship things, I’m down there collating stuff and making sure it all gets put in the right box. ... I’m just part of the team, and that’s what I want them to know.
Balance your life.
Awareness is really important. There’ll be signs and cues that tell you, ‘Oh, not spending enough time with my personal life’ or ‘Uh oh, spending too much time there and not enough with the business.’
The little things will go wrong. It’s important to tune into those little signs that make you aware, ‘OK the scale has tipped here. I better work on getting it back to the middle.’ That’s what’s difficult. It’s about being aware and making time for each end of it.
HOW TO REACH: Jazzercise, www.jazzercise.com
Look for street-fighters.
(I hire) people who don’t mind getting dirty, don’t mind rolling up their sleeves, have faced challenges before, that know what it means to fail but don’t want to fail again.
Watch how they handle themselves around the group. You may take them out to play golf, or you may have lunch with them to see if they spill food all over themselves. You just watch.
If you take them out to play golf and they just wander off, you can tell that their mind’s not very good, their focus isn’t very good, they can’t carry a general conversation about anything other than the name of their dog and where they ate last night.
Really get to know a potential employee.
Golf is an interesting spectrum because it gives you four to five hours of just one-on-one time that you wouldn’t get in a normal office interview. You learn a lot about a person in that environment versus someone walking in with a resume in hand and telling you all the things you want to hear.
You get into an office environment, and you feel somewhat restrictive about all the rules and regulations about talking about family and background. We want to know about family and background.
We want to know about a financial history of what we consider to be a partner coming into our business, who’s going to work at that level. You can get involved with a lot of questions about personal life where they came from, what they did, did they marry their high school sweetheart.
Have they been married 10 times? Are they Jack the Ripper?
Hire people who can produce from Day One.
They generally need to hit the street running. Either they bring skills with them for a specific job function, or we don’t have time to fool with them. When they come in, they know that.
There’s not a lot of warm and fuzzy, ‘Let me show you around the building, where the coffee is.’ It’s, ‘Here’s your desk. Here’s your phone. Let’s go to work and make something happen.’ Talented people don’t have any problem with that.
You can see the fear in the eyes of those who ask you about the six-week training period and you say, ‘No, we have a six-minute training period.’ It goes back to street fighting. If (you) can’t handle that challenge and don’t want that challenge, don’t show up.
We hire fast, we negotiate fast. We don’t have time, because of our growth rate and execution times, to sit around and do a lot of the warm and fuzzies that you would get at a much larger company that wants to do all the tap dance.
Go with your gut.
It’s more instinctive than it is factual. People say they do a lot of studies on the industries and all that kind of crap, but that’s not the way it works.
Generally speaking, things are brought to you or you see them. You see competitors that fail, and pieces of them become available to you, or you see people being successful, and you see why they’re successful, and you react to that quickly.
It’s not an overthought process. You just watch an industry, and you watch the movement up and down and you react to it.
Hire amazing people.
We overpay for the industry. You overpay because you work them harder.
When you pay someone at the top end of the scale and say, ‘Look, we’re different from any job you’ve ever had in your life. We’re not going to tell you what to do.
You’ve got to figure it all out by yourself, and if that means you’re here on Saturdays and Sundays, so be it. Be here on Saturdays and Sundays. Just get the job done.’
People react well to that.
Hire great people whenever you get a chance, even if you have to over hire. Hire people that have been in places where you’ve never been before in terms of management capabilities or size of company.
We constantly are on the lookout for people that have been operating a $500 million or $1 billion company because it’s two, three, four times as large as we are. They’ve already been through that warfare and seen the things that happened.
Hiring good people, even when you don’t need them, is absolutely critical if you’re going to be growing - and growing at a rate that’s abnormal. We try to stay one ring ahead in terms of managerial needs.
Get your ego out of the way.
People think they can micromanage every element of the business, regardless of size. It’s not physically or mentally possible.
The vast majority of companies that failed fail because some CEO thought he was a really smart guy and he was going to manage how many pencils got into the pencil sharpener on Thursday. And he got his ass handed to him because you can’t do that. You’ve got to trust your people and get out of the way.
Know when to push and when to stop.
Understand your people’s capabilities, both the downside and the upside. You can’t stretch the rubber band so tight that it breaks, but you’ve got to give them enough challenge that they really enjoy it. You’ve got to know that very fine balance of when to push and when not to push.
That is the sheer ingredient to success. Always understand your people’s capabilities.
Identify a market that works.
A lot of people like to identify a market that they like, and there’s a huge difference. Find those that work and understand why they work.
The first key element is step back. Don’t look at what you know, but find out what works and what you think you can be successful in. Once you understand that, then do a lot of study behind that, and then you attack it.
HOW TO REACH: Collegiate Pacific Inc., www.cpacsports.com
And the employees knew nothing about it.
“They thought the company had millions of dollars, and if someone flew first class or stayed in a hotel suite, it wasn’t a big deal,” Chaney says. “They had no perception of the reality of the company.”
Chaney, chairman and CEO, focused PreCash’s efforts on a core group of products and instilled in his nearly 200 employees that they should treat every dollar spent as if it were their own. That combination worked, as the company posted $22.5 million in revenue last year and is on track for $35 million this year.
Smart Business spoke with Chaney about how he led the turnaround.
How do you prepare for growth?
Hire the very best team of people that I can surround myself with that is capable of running a much larger organization. Rather than hiring a CFO that has run a $10 million company, I’ll try to get one that has been inside of a half-a-billion-dollar company and share with them the vision of where I’m trying to take the company, pay them the amount of money they need to be paid in many cases a higher compensation than I get to get that talent.
I’d rather hire above the job for the top positions rather than to the job, and that’s more expensive. It might be a factor of two times more expensive, and in small companies, that’s a big number. If I have a strong team around me, they have seen the battles of the past, they know what’s coming next and they’re able to prepare for that and get us through this growth curve.
How do you communicate your vision to employees?
Communication to employees needs to be brutally honest. I’ve seen several CEOs sugarcoat the prospects of the company or the outcome of bad news issues.
What I did was have biweekly meetings with all the employees to tell them the issues that we are facing and how we need to change the direction of the company, sharing financial results, sharing successes and failures of the subsequent two weeks, getting everyone to think and act alike and on the same path. That sets a culture for the organization that has remained in place today.
How do you get employees to buy into it?
It takes time. It takes consistency. It takes honesty. If you say what you’re going to do, and then you do what you said you are going to do, people will start to believe you.
In the first meeting I had with employees, in a room of 100 employees, 10 believed me and 90 didn’t, but after time, that ratio flipped because they saw consistent changes.
They saw they were important to the organization. They saw focusing all their energies and efforts manifested itself in additional revenue and helped the company move to the next stage. It takes consistent messaging to the employees to make that happen.
We would show progress every other week with employees, and it got a sense of reality around the issues and it mended the team together. It made it their own.
How do you motivate employees during growth periods?
Celebrate the successes but also reward the failures: You tried something. It didn’t work. Way to go. We worked hard on it together. There’s nothing wrong with that. Let’s try it again.
You’ve got to communicate the good and the bad and be upbeat and positive the entire time you’re doing that. Nobody should ever feel bad about working hard at the company, regardless of the outcome.
You want them to take risks and chances. You don’t want an employee saying, ‘This is my job. This is the box I work within, and I won’t go outside that box,’ because all of a sudden, you’ve stifled the growth of the company.
They’ve got to feel empowered to reach beyond their boundaries and know that if they do something great, they’ll be rewarded, and if it doesn’t work out, there won’t be a negative consequence.
How do you manage growth?
Five percent growth is very manageable, and big companies do that all the time. Fifty percent growth? One hundred percent growth?
The rules are breaking. What you did yesterday cannot be repeated a year from now because it won’t work because you’re twice as big.
Everybody has to go beyond the normal box that they say, ‘This is the job description I got when I got hired.’ That job description goes out the window at about month three, and you have to be able to constantly adapt to change. And in a growth organization culture, some people are better at that than others.
Some people like to dot the I’s and cross the T’s and know that they have 117 widgets to perform today. That doesn’t work well in a growth culture, and that employee will find it incredibly frustrating to work in a growth culture, and their teammates will find it very frustrating to work with them.
How to reach: PreCash Inc., www.precash.com
After knocking on more than 60 doors on Wall Street and with only 48 hours left to get a deal done, nobody wanted in. Finally, in the 11th hour, one investment bank took a chance on his dream. He closed the deal, and it proved to be one of the most successful for the company, which primarily provides restoration and rebuilding for commercial and residential buildings prone to damage from natural disasters.
“You have to experience failure to experience success,” says Fradella, chairman and CEO. “When you get hit with that baseball bat over the head, you don’t like that feeling, so you don’t do that anymore.”
Now the 483-person company has successfully completed five acquisitions and grew its revenue to $68 million last year, a 119 percent jump over 2004.
Smart Business spoke with Fradella about how he grows his company with the right acquisitions and the right people.
How do you decide which companies to acquire?
In the initial phases of how you execute your model, you can’t make a mistake because if you make a mistake, it’s like setting a foundation on weak pillars.
We weren’t in the market for fixer-up businesses. We focused on well-managed companies that had a lot of structure so we could build on that management team.
They had to have enough vision to match the vision that we had. Anyone can go buy a company and buy revenue. The real challenge of a successful business is your ability to grow internally, so we needed those managers to have the same growth objectives we had.
When we bought the five companies that we bought in the last three years, those business owners had to stay with the business because they, essentially, were the foundation of the company. Today, all the original sellers of the businesses are still active members of our management team.
How important are people?
You’ve got to first have the right people so it’s the right foundation. Find yourself a good management team and build yourself.
You’re going to get beat up a lot. You’ve got to get yourself a lot of human resources and surround yourself with the right folk. If you think it’s a one-horse battle, you’re going to lose because they have too many other people fighting against you.
The clear success of Home Solutions of America has been its people. I’m the lucky person that got to bring them on. I’ve been a good judge of people.
How do you do that?
It depends on the nature of what you want that person to do. If it’s finance, we look for some very professional people whose background, both educationally and experientially, exemplify that quality.
We have a lot of blood-and-guts operators that are street smart. They’re not book smart. You have to make sure the round pegs are the round-peg people and the square pegs are the square-peg people. It’s when you put the wrong pegs in the wrong hole that gets you into trouble.
How do you communicate your vision to the people at acquired companies?
We spend a lot of time together. We are a company that believes in low corporate overhead but at the same time, putting the appropriate controls in place. We manage the checkbook, for a lack of a better term.
We pass a lot of the management of those businesses to those operators. If you didn’t like the way they manage the business, you made a mistake in the first place why would you buy them?
We spend time talking and meeting amongst ourselves so everyone is clear on the strategy. While the company is focused, we don’t want anybody to stray outside the boundaries. If we stay within the guidelines of what we do well, we will do well.
How do you do that and continue to grow?
What happens to companies is when they step into some business they don’t know anything about, then all of a sudden they’re trying to figure it out, and it costs a lot of human resources. We spend a lot of time together communicating what’s going on in the business and what we want to be when we grow up.You need to possess some type of vision about what you want to be when you grow up.
Have the stick-to-itiveness of saying, ‘We’re going to stay within the confines of what we do well.’ Grow in something you know or that might be adjunctive, meaning it’s just another tool in the toolbox.
Our company is a provider of restoration, recovery and rebuilding services for commercial and residential customers. Probably wouldn’t make any sense if we went out and started building fences or selling vacuum cleaners tomorrow.
Getting outside the box is where you get yourself into trouble. If you stick to the basics of your program and execute your business model, you’ll do well.
How to reach: Home Solutions of America Inc., www.homcorp.com
Bits and pieces of them magically appear everywhere in your office, long after you opened that box. Solving the problem of this mess has been key to the success of Ranpak Corp.
The company makes paper products to precisely fill those gaps in boxes, without the mess, and its new FillPak Voidfill System is changing how companies think about packaging.
Before FillPak, employees usually gauged by eye how much packing material should be put in a box to fill the space and protect an item during shipping. With the FillPak and AccuFill system, a box moves on a conveyor through the AccuFill sensor.
The machine scans the package and calculates how much material is needed to fill the space. The box continues to the FillPak station, where the precise amount of paper is distributed into the box. It’s simple and quick, and companies usually reduce their material usages by 10 percent to 25 percent with the system, saving them money, as well.
The FillPak station also allows several 100-cubic-foot boxes of Ranpak fanfold paper to be set up in the machine at once, which covers several days of production. This high-volume load capacity saves employees valuable time because they don’t have to walk across warehouses to get more material and reload paper into the machine.
If companies want to get even more high-tech, they can purchase Ranpak’s AutoFill system, which also closes and tapes the boxes shut. This system can fill 17 boxes per minute, while an operator can fill about five boxes per minute.
In addition to these money-, material- and time-saving features, Ranpak goes the extra mile for its customers. If a company chooses, Ranpak can print the company name or logo onto its paper to increase product name awareness when that company’s clients open their packages. And Ranpak’s paper packaging is recyclable, unlike packing peanuts.
All of these features have earned Ranpak a reputation of being a cutting-edge leader in the packaging industry, and it will continue working to improve packaging efficiency for its customers worldwide.
How to reach: Ranpak Corp., www.ranpak.com