“The question is how do you get anything done when you have a large board of type-A, very wealthy people who all want to be in control, and they all have their own opinion,” Nelson says. “The leadership challenges I faced there were very real.”
While some may say, “I’m in charge, so just do what I say,” Nelson knew that this kind of approach wouldn’t go over well and would create animosity. Instead, he listened to the other members and continuously reminded them what the ultimate objective was. In the end, he hired two world-class people to fill the vacancies and had full board support.
“I really do believe that if I had taken an autocratic imperialistic view that I would have alienated donors at the end,” he says. “Even though I could have hired high talent, I wouldn’t have had a base of support for them when they got here.”
This kind of approach to leadership isn’t just reserved for high-powered boards. Instead, Nelson also applies it with his 1,400 people each day at financial services giant Deloitte LLP, where he serves as office managing partner for North Texas, Oklahoma and Arkansas.
“This might be controversial, but I think imperialistic or autocratic leadership styles are a lazy form of leadership,” he says. “It’s much easier to just operate on a command and control, ‘I’m in charge; you do what I say,’ type of leadership. A much harder form of leadership, but ultimately, at the end of the day, that’s more effective … is leading through influence.”
To be effective in this leadership style, you have to be able to effectively communicate and then also be able to inspire the people who work for you.
“Leaders who possess those qualities and characteristics … will be much more effective,” Nelson says. “They’ll attract better talent, be able to get the most out of their talent, and they will run and operate more effective organizations in a diverse environment.”
One of the first things you have to do in order to be a more effective leader is know how to communicate with people, but no matter how you choose to communicate, you have to do it with enthusiasm.
“The leader has to communicate it with a certain level of personal passion,” he says.
The best way for people to see your passion is to actually get out of your office.
“You have to get out there and have some personal contact with the people you’re leading,” Nelson says. “They have to know you and get a feel for what kind of leader you are and whether, in fact, your passion is real because sometimes passion doesn’t come across electronically.”
When you’re out among your people, you absolutely have to be listening to them, and not in a covert type of way but instead in real conversations.
“A leader who is going to lead through influence is going to have to have great listening skills,” he says. “They have to be willing to listen rather than always going out to your people with an attitude that, ‘I need to tell them what to do.’ Sometimes you have to go out to your people and listen and hear their questions.”
For example, the national CEO of Deloitte recently came to the Dallas office and sat with 300 staff members in a room and took their questions and answered them. A lot of people were concerned with the economy and its effect on the firm, and those concerns came out in their questions, and he was able to better understand them.
“There was a lot of understanding that comes through just the process of hearing their questions,” Nelson says.
But sometimes as we listen, we tend to tune out the parts we don’t want to hear or interpret things how we want them to sound.
“There’s no question that we all probably possess our own opinions and thoughts on things, but a good leader is going to be intellectually curious, and they’re going to be curious enough that they actually really value and kind of hunger and thirst to really know what other people think about things,” Nelson says.
The other benefit to getting to know your people is you’ll know what they expect.
“You have to think about the many ways in which you can deliver your message,” he says. “Clearly, it’s still fundamental and critically important that the message be clear, that it is presented in an articulated fashion, and that it actually rings with practicality and logic to its audience, to the people that you’re communicating to.”
For instance, Deloitte’s people are highly educated and intelligent people, so he knows that factors into how he communicates with them.
“Communicating with this kind of work force is one where you have to be very logical and clear because they will quickly see through a veiled attempt at intellectualism,” he says.
Lastly, communication is completely reliant on your personal integrity.
“Communication always has to involve credibility at the source, so the integrity of the communicator is critical and important,” he says.
If you can have integrity, then your people will be more likely to listen to what you have to say.
“Integrity is more than just honesty,” Nelson says. “In some respects, honesty is just table stakes. We’re all expected to be honest to be in business, but real integrity, I believe, is when you always do the right thing.”
One of Nelson’s favorite movies is “Braveheart” but not because of the awesome battle scenes — well maybe that’s one of the reasons — but more importantly, he loves the scene when Mel Gibson’s character is trying to motivate the peasants and farmers to fight — when they felt like fighting would earn nothing but more land and riches for the noblemen. His character told them to forget the noblemen because what was in it for them was freedom and the opportunity to tell their grandchildren what they did.
“I was really struck by the character that Mel Gibson played, William Wallace,” Nelson says. “I was struck by his leadership skills and how he was able to motivate people to put their life on the line. He personalized it.”
While you may be good at communicating your message to people, it’s not enough to just simply pass along the information. You also have to be able to inspire and empower your people and bring them along with you, just as Gibson’s character did in “Braveheart.”
“I’ve heard it said that, at the end of the day, there are only two ways to get them to do what you need them to do,” Nelson says. “One is to force them, which doesn’t work particularly well. Particularly, it doesn’t work well on a long-term basis, and the only other way is to seduce them, to motivate them, to inspire them.”
In order to bring your people along with you, you have to first recognize that there is no one universal way to motivate and inspire your people.
“Different people are motivated by different things,” Nelson says. “Some are more motivated by money, some more by advancement, some
are perhaps motivated by other things, but you have to define the business that you’re in, and everyone has to be committed to being part of that business.”
For instance, at Deloitte, everything is focused on serving the client, so no matter what else motivates employees, they still have to be motivated by the baseline idea that the client is the most important part of the business. If people want to move up at Deloitte, they have to demonstrate a commitment to clients.
“In order to be advanced and given a reward and recognition that people want, they have to be successful at serving clients and doing it within the framework of our values,” he says.
When people demonstrate their commitment to the company’s goals, you have to reward and recognize them for doing so. If you can do this, it helps people be motivated and inspired, but also recognize that money isn’t the only factor in the equation.
“At some point in time, money is not a motivator,” Nelson says. “It can be a sustainer to some degree, but there have to be other rewards in business to motivate. Those rewards are just the challenge of doing one’s job and being successful but also being recognized for that, which comes with advancement and promotion.”
Nelson says it’s absolutely critical, especially in today’s economy, to make sure that you hug your keepers and dissuade their concerns.
“It’s human nature that when an employee feels appreciated, they feel valued,” he says. “When they feel acknowledged and feel empowered, that is a motivating factor for them.”
One way to make people feel appreciated is to spend time with them.
“You do have to sometimes pull yourself away from your computer screen and your keyboard where you’re trying to stay connected 24-7 and return all those e-mails and sometimes get out and just walk amongst your work force,” Nelson says. “The more that leaders actually touch their people and connect with them in a more real way, the better off they are. I read it once … that high tech is no substitute for high touch.”
As you recognize and reward people and also spend time with them, then people will most likely feel more inclined to want to follow you, so it will be easier to bring them along in your goals.
“The first thing you have to remember as the leader is that followership is not an entitlement of leadership,” he says. “Followership has to be earned. There are too many leaders that view followership as an entitlement — that just because they have been given a position or given some responsibility or given a title, that they are entitled to followership. It is not an entitlement. It has to be earned.”
If you can master both communication and empowering and inspiring your people, then you will be a leader through influence, and that ultimately will keep your keepers and help your business grow.
“Our culture is such that if you don’t win their hearts and minds, they’ll go do something else,” Nelson says. “How do you do that? It goes to your values; it goes to your integrity and how you treat them. It goes to the quality and to your skill as a communicator, and I think it goes, in some respects, of how well you make your case — how practical, how logical and how well it’s communicated.”
How to reach: Deloitte LLP, www.deloitte.com
Over the past 10 years, Gena C. Lovett has had many turnaround assignments, and while each has been different, one common string connects them all.
“I’ve found the ability to walk into a facility or situation and envision or conceptualize how I’d like to see it as opposed to how it is currently has always held me in good state,” she says.
Creating a vision is one of the most important things for Lovett, who is the plant manager at Alcoa Cleveland Works. And to create that vision for an organization, the first thing you have to have is some faith that it can happen.
“The first thing is, in creating a vision for my organization, it is essential that I believe that we can achieve it, and in doing so, I’m able to bring the right amount of passion, commitment and focus that’s required in this delivery,” Lovett says.
Once you believe that things can change, then look at what specifically you need to do.
“Quickly take stock of its current state and understand that and see it, because the worst thing you can do is come into a new organization and immediately start changing things,” she says. “Understand what’s working well and doesn’t need to be changed, and then focus on the opportunities of where they currently rest and where you’d like to see them.”
Once you know where you’re going, then you have to involve your people in the process by communicating with them. Instead of simply cascading information downward, Lovett uses what she calls a catch-ball process.
“Cascading is really a descent of information downwards,” she says. “You really don’t get anything. You don’t know if it’s hit a brick wall. You don’t know if it’s been received. You don’t know if you have buy-in. Catch-ball allows me to share the information and receive feedback.”
She meets with people herself and allows them to ask questions so that they fully understand everything that’s going on and how their specific roles fit in to the vision.
“Realize that our people really and truly are the most valuable asset,” Lovett says. “Share that vision. Use that catch-ball process. Seek their help. Ask for their help and be willing to act on the things you hear from them and communicate back what you’ve learned.”
Getting your people involved and attaining their buy-in is crucial to success.
“If you’re out there and your vision, you believe it’s great, and you don’t elicit feedback from the people you need to help you implement it, then the vision is just yours,” she says. “Someone told me a few years ago that if you’re leading and no one is behind you, then you’re really just walking. You’re just taking a walk. People are not following.”
Once you’ve got buy-in from your employees, you also need to set up metrics to know how you’re doing in achieving your vision.
“Set up systems such that you know whether or not your vision is being achieved, and for the pieces that aren’t, quickly regroup, understand root cause, what worked, what didn’t work, and don’t be afraid to make the adjustment,” she says.
You’ll have to run tests to find solutions to problems.
“You run a controlled experiment,” Lovett says. “It depends on the situation, but 30 days statistically gives you an idea of where you need to be. In this controlled experiment, if it’s continually going the wrong way, then you have to make a change.”
Sometimes though, you may have to make changes more quickly. For example, one metric at Alcoa is safety, so one accident or near-accident would be enough to change course.
“You don’t wait 30 days,” she says. “It’s really monitoring your indicators and understanding what needs to be changed immediately versus what you can afford to experiment with.”
As you move along, remember to stop and celebrate your successes along the way with your team, whether it’s a simple thank you, a happy hour, an appreciation dinner or an award. This was an aha moment for Lovett when one of her mentors shared this with her.
“I was just so focused on, ‘We’re here, and we need to get here,’ but along the way, really stop to celebrate,” she says. “You can’t get so caught up in the execution of that vision that you don’t step back and make sure that you celebrate those successes.”
How to reach: Alcoa Cleveland Works, www.alcoa.com
John Varel has started and grown 12 companies during his career. It hasn’t always been easy, and sometimes, he really had to fight his way to find growth. His most recent company is no exception. As founder, chairman and CEO of FusionStorm, a technology solutions provider, he successfully grew the company to $120 million in revenue in just five years. When the company took a hit and dropped to $12 million, he could have just given up. Venture capitalists and board members walked away, recommending he file for bankruptcy. Instead, he took the business back to nearly $500 million in revenue during the last six years, and despite the tough economy, Varel says that more growth is still attainable.
“You have to weather the pain,” he says. “If you want to be a leader, you really have got to do anything and everything that you’d ask one of your people to do, and do it in the worst of times.”
He says that there are basic tenets essential for growth that apply in all economic conditions — communication, collaboration and empowerment.
“We have to communicate more effectively,” Varel says. “We have to collaborate across groups and teams and practices. Then we have to remember that even though we all seem to think we can be all-knowing, we have to let the individual teams be empowered and let them make mistakes and move on and learn from them.”
When Varel started one of his offices, the guy he hired had a bigger vision that required more people and money than Varel envisioned. Despite reservations, he agreed to let him have the resources to do the job his way.
“As soon as I said yes, I knew I made the wrong decision,” he says. “And then I never communicated it for three or four months.”
Now he has a budget in that office twice as large as it should be, and he realized that if he had just communicated the problem upfront, he could have avoided the issue altogether.
“Wherever I have failed in a simple act of trying to achieve success within a company or business, I can take it back to I wasn’t clear upfront what I expected from that individual,” he says.
The lesson is, if you want to grow your organization, you must learn to communicate.
“First, it starts with the leader of the company,” Varel says. “I don’t mean manager of the company. I mean leader. There are plenty of effective managers in the world, but none of them will be leaders. A leader ... is someone who would crawl across cut glass to get the goal that they need done. I have to have in my execution of being the CEO a very clear, simple, direct vision that I am passionate about and that I communicate that consistently and regularly and repetitively.”
For example, if he says his vision could be that he wants FusionStorm to be a $1 billion company by 2010. He says it’s an easy vision — there isn’t a word in there that somebody would-n’t understand. The problem comes with helping people see how they fit in to it. If someone runs just a $20 million division, he or she may worry that he or she can’t contribute to $1 billion. Varel says his role is to make people realize that even a $40,000 contribution gets the team closer to $1 billion than nothing at all.
“The simpler you make it, the better off you are,” he says. Start planning early and involve people. He and his team have a financial planning session in August or September every year for the following year.
“The first thing I lay out is, ‘What would have to be true for us to keep our exponential growth continuing?’” he says.
Sometimes people will say that they don’t think the company can continue at the current rate, but he reiterates that that’s not the question.
“I don’t want to hear the word ‘can’t,’” he says. “I said, ‘What would have to be true for us to keep that kind of growth going?’ It takes the people out of the mindset of being an incremental gain manager, which a lot of people have. I mean, anybody can hit whatever the industry average is that you’re in.”
Instead you have to communicate bigger goals to each other.
“What I’m looking for are people who answer that question in a constructive way,” Varel says. “Then it becomes a dialogue and the communication opens back up again. We as leaders have to ask the right open-ended questions that allow the individuals to think beyond the parameters of what is the norm. Otherwise, you will have the norm.”
When Varel was a child and his mother caught him fighting with his siblings, she didn’t just send him to his room or make him sit in timeout. Instead, he had to do the unbearable — stand there — often with a bloody nose — hugging his enemy sibling for 30 minutes.
Despite how much he hated it, it taught him to play nicely with others, and that’s a lesson that helps him today as he grows his company.
For example, Varel has an amazing employee who does the work of three people — and does it well. The problem is the person isn’t a team player and won’t communicate — he isn’t playing nice in the corporate sandbox, and it’s burning bridges with his co-workers.
That employee has to go because if you don’t take action, people will see you putting up with an ego for the sake of performance.
When other employees see this, it creates issues that prevent you from growing and moving forward.
“You see it in sports all the time,” he says. “There’s always this maverick basketball or football player who’s got such a strong ego that he’s the reason the team is successful. There in lies a cancer for collaboration. Nobody wants to work with him then ... they don’t want to play nice in the same sandbox. Sorry. This is the sandbox we’re in, and we all have to play nice.”
In order to nurture more collaboration in your organization, you have to first get to know your people.
“Start off, No. 1, by being involved in every meeting and session you could as a listener because you don’t know who your people are,” Varel says. “You don’t know who the ego-maniacs are. You don’t know who the individuals are who will be ‘me’ versus ‘team.’ You don’t know who has personal agendas. You don’t know the personal phobias.”
Part of getting to know people happens outside of the conference room though. Varel calls each of his 400 employees to wish them a happy birthday, but he also asks them other questions, like how are things going, what they see right, what they see wrong, why they like working at FusionStorm and about their family.
“Ask the open-ended questions, and then shut up and listen because your leaders will come to the surface,” he says.
The next step to fostering collaboration is to recognize the laws of nature.
“When you have two individuals, you have two different ideas already,” Varel says.
With this issue, remind people that their differences are OK, but they need to work past them. Varel has a statement on the wall that reads, “You can disagree emphatically in this meeting, but when you get out of this room, you agree with one another emphatically on execution.” For that to actually happen, watch how people respond both verbally and physically.
“If someone shrugs their shoulders or nods their head, you know they’re not 100 percent on board,” Varel says. “Then you ask, ‘Are you sure? What else is bothering you?’ That’s all you can do.”
While he’s been burned before, at least asking these questions on the front end creates more buy-in and collaboration later.
“Open discussions prior to that are acceptable, but after that, they’ve got to be agreeing and having each other’s backs, so to speak,” he says. “Otherwise, empowerment will fail.”
Varel doesn’t live in San Francisco. He doesn’t live in California. He doesn’t even live in the continental United States. Instead, he has a home in Maui, and every other week, he visits a different FusionStorm office.
The fact that he doesn’t have to watch over the shoulders of all his people is a testament to how much he trusts them to get their jobs done themselves, and that empowerment is the third ingredient to successful growth.
“The first word that comes to mind is the word ‘trust,’” Varel says. “You said you were going to do it, you said you can do it, you said you will do it, so I trust you. But if you stumble, I can be your worst enemy or your strongest supporter, depending how you stumble, and if you fail because of that, then we’re both mutually responsible.”
If you want to have that same attitude, you first have to throw your employees a line.
“I give them enough rope that they’re either going to show their true colors and hang themselves, or they’re going to execute beyond my wildest expectations,” Varel says.
He says that another major part of empowerment is to keep your mouth closed and your ears wide open.
“Secondly, I’m listening while they tell me what their plan is,” he says. “Most managers want their ideas heard. They’re intelligent people — they’ve grown through the ranks. Young or old, they have some basis for believing that they are right in what they want to say, and then I let them talk that through.”
While he doesn’t always do everything that his people suggest, he says that allowing them to present their ideas helps them feel that they can contribute to your vision.
“After they’ve had the opportunity to execute on their own plans and see them succeed or fail, they grow stronger as a manager and/or leader and have earned the right for that empowerment,” Varel says.
But it all comes back to the first two parts that Varel has hit on.
“It’s in not doing the first two — communicating or collaborating across groups, they’re going to fail at empowerment,” he says. “They can’t operate within their own island. They’ve got to have the first two down in my opinion.”
Lastly, he says that as the leader, you have to be careful that while you sit in on meetings, you don’t dominate the meetings. By empowering his people instead of micro-managing them, it has created a culture that people want to be in, and numbers talk — FusionStorm’s turnover is less than 5 percent, which is about one-third of the industry average.
“I could very easily sit in and spend my day sitting in on all of these calls, but then we wouldn’t be a company that’s growing at 70 percent annual compounded growth,” Varel says. “We wouldn’t have gotten out of that fire we were in in 2002 to grow from ($12 million) to a half a billion [dollars]. If I were micro-managing, I wouldn’t have had any leaders that were capable of doing anything because I would be doing it all. You can’t scale that way.”
HOW TO REACH: FusionStorm, (415) 623-2626 or www.fusionstorm.com
But as the industry collapsed, Guardian Mortgage Co. Inc. has remained standing asa result of that decision. Sonow, instead of focusing onsurvival as many other companies are doing, Phillips and her61 employees are able to focuson their customer service.
“We were looking like wewere just sticking to our old-fashioned ways and gotlaughed at a bit,” says thecompany’s president and CEO.“It was a challenge to stay thecourse, but it paid off for usbecause we’re not in any trouble now.”
Smart Business spoke withCross about how to knowwhen to change and when tostick with what you’re doing.
Q. How do you know when tochange your business model?
One of the greatest businesschallenges over changingtimes is to know when tokeep doing things the way wehave and when to makechanges. I probably knowmore about how not to leadchange.
The most recent examplewas not following in the footsteps of everybody else in thebusiness. Some of those companies let the sales functionssteer the company rather thandoing what we try to do —maintain a hands-on of whatreally works and what’s thebusiness practice for the company and for our customers.
Q. How do you make sureyou don’t let the sales sidesteer the company?
By making sure that everybody keeps in mind what ourgoal is, and our goal is to takegood care of the customers.Therefore, you can’t let the salesfunction drive it to that extent.
Obviously, if there are goodideas, you go ahead and adoptthem. If you remember whatyour goal is — to serve thecustomers, to end up with agood product, a good loan,you keep that in mind.
Q. How do youdetermine if an idea issomething you shouldadopt or not?
Keep to common sense.
Keep it simple. Is this anidea that can be understood — is it a good product, an option, is it goodfor customers, is it useful? If it’s useful, then it’san idea worth considering and changing.
We look for our approach and our growth to be something that’s going to last. We don’t just go after it forgrowth sake. For example, in the late ’70s, we sawthat our home state ofMichigan had a mature marketand that homeownershipgrowth was going gangbustersin other places like Texas, sowe expanded to Texas andthen, over the next five or sixyears, moved most of ouroperations to the Dallas area.
A lot of our competitorschased growth all over thecountry. We didn’t do that. Westuck with the product in theareas that we were familiarwith and also in small enoughareas that we could continueto have a personal relationshipwith our customers.
Q. What is the key todeveloping relationshipswith customers?
I don’t like surprises, so I thinkone of the things that we do ismake sure that everyone thatworks with you knows what toexpect and not to let thingscome up and bite you, and thentry to apply that same philosophy all throughout the company.
Put yourself in your client’sshoes and act as an adviser foryour client. Be honest and fair,and be as direct and honest asyou can. Always rememberthat your customer’s interest isin the company’s interest.
Q. How can other leadersbetter take care of theircustomers?
It’s not easy, and it’s gottenharder and harder as it’s gottenmore mechanical. The mechanical things help a lot, but it takesaway the personal aspect.
Strive to keep as much personal aspect as you can withyour customers. It might costa little more money, but it’swell worth it.
We’re probably a little slow toadd mechanical elements. Wearen’t open 24 hours a day.We’re not a major force — ourcustomer knows they can reachus, and we continue to let themknow that. We’re trying to get asmuch up-to-date information aswe can so we can reach out tothem. We are communicatingwith our customer as the environment changes.
Q. How do you communicatewith customers?
That really depends on thecustomer. You really have to listen, and it is hard to understandwhat they’re saying sometimes.People ask a question that youhave to be able to see throughand see what their real questionis behind it. That’s why personalservice is so important.
[For example,] people gettheir deeds of trust mixed up allthe time. People will call andask a question about their deedwhen they mean their mortgageinstrument as opposed to thetitle for their home. There’soften confusion where wordscoming out of their mouth arenot what they mean.
HOW TO REACH: Guardian Mortgage Co. Inc., (800) 331-4799 or www.guardianmortgageonline.com
Throughout his 16 years as chief financial officer with Interface Inc., Dan Hendrix worked hard growing the flooring company through a series of acquisitions, some of which nearly doubled the company’s size. But after taking over as president and CEO in 2001, he realized he needed to get rid of nearly everything he had built.
The company had traditionally provided modular carpet tiles and other flooring to the office market, but when that market went down about 35 percent in 30 months, he knew he was facing a problem.
“We had a lot of internal things going on that were positive, but we had an outside marketplace that had turned almost into a depression,” Hendrix says.
Interface had net sales of more than $1 billion in 2000, but Hendrix saw that number drop the following year, and it would hit a nadir in 2002 at $745 million. What once was a profitable company turned in increasing losses, sinking to an $87 million loss in 2002.
“When the office market turned down, it really exposed that we had some businesses that were not even going to earn their cost of capital, and we were highly leveraged,” he says. “We had $550 million in debt, so it was almost that you really knew you had to get out of these businesses because they were not going to return their cost of capital, and you had to reduce your debt.”
With that kind of a situation, he realized that Interface needed to change if it was going to survive this downturn. He set out to create a new strategy, get the right people to help him with that and then move everybody forward to calmer waters.
Hendrix says, “Once you have the right strategy, you create the right milestones and the right people and the right tools, then it’s really about execution.”
Create a strategy
The first step for Hendrix was creating a new strategy, so he and his team had a three-day strategy session off site, and he hired an outside consultant to help them come up with a plan.
“If you’re trying to have a change-management approach, a lot of times you can come up with the ideas internally, but you really have to get buy-in with your people,” Hendrix says. “A lot of times, a consulting firm can confirm where you’re trying to go and help get buy-in with your people because it’s just another outside endorsement of the strategy you have embraced.”
As they looked at the various businesses that composed Interface, they saw that many were declining, but Hendrix and his team also saw that the core — modular carpet tile — had continued to perform.
“It was the most profitable part of our business, and it had always grown pretty much through the cycles,” Hendrix says. “It had not seen the downturns the other businesses had.”
Seeing that, it was an easy decision for the company to invest in that area instead of the businesses that weren’t even returning their cost of capital. Despite that decision, it also meant getting rid of areas that accounted for more than half of the company’s business, which would also cut half of the company’s 8,000 employees. It was an emotional decision, but with his financial background, it was easier for Hendrix to make that tough choice by focusing solely on the numbers.
If Interface was going to focus on the modular carpet tile business, he next needed to expand where they sold it. Because the office market had gone into such a great downturn, he knew that the company needed to reduce its dependence on that market and instead expand into other areas, including residential, health care facilities and educational institutions. By focusing on the core and then segmenting that into other areas besides the office market, Hendrix felt this would help deliver the company and eliminate its debt.
“Our direction at the time was to diversify and integrate worldwide in the commercial marketplace, and we changed that,” he says. “I changed that, along with our team, to the core modular business, and let’s do it across the vertical markets as well as geographically.”
With a strategy in place, he also had to create benchmarks for progress and performance.
“You have to say, ‘These are the milestones that we have to have,’” Hendrix says. ‘“This is our one-year milestone, this is our three-year milestone, and this is our 10-year vision of where we’re taking the business,’ and you have to communicate those milestones.”
When creating milestones, it’s critical to know what is and isn’t possible by researching the market and measuring how you do against the market.
“You have to get in the weeds a little bit,” he says. “You have to understand the market and do a lot of market research. You have to understand where you have competitive advantages against your competition, and you have to have a vision and get buy-in and get your people energized around that vision.”
Find strong people
In addition to a solid strategy and benchmarks, Hendrix also needed strong people to help him transform the company. It meant bringing in new people, shifting duties and, for some, letting them go.
“Put the right people on the right seats on the bus,” he says. “It was probably one of the toughest things to do. You lose people along the way that you respect, and they’re almost part of your family, but you have to make some of those calls to move the business forward.”
When he looked at his team, he particularly noticed two people that he needed to utilize more. One was the president of the Americas division who understood the segmentation concept. The other was a top modular carpet designer, who also grasped the concept, so Hendrix relied on him to develop new products geared toward the new business segments Interface was chasing.
While he had to have these and other “right” people in place, he also had to look and see who wasn’t a fit and couldn’t help him get to the next stage.
“Have certain things you’re measuring,” he says. “You know if it’s a cultural fit and if he or she is performing to the milestones you’ve created or the benchmarks you’ve created for the business. If they’re underperforming in those areas, you pretty much know when someone has reached Peter Principle.”
When you have to let people go, you then have to bring in new people who have better skills and better fit with where you’re trying to take the organization.
“You look for someone who’s creative, innovative, somebody who’s a team player and someone who can bring an organization and lead it,” Hendrix says.
He says to gauge if job candidates will be a good fit, you have to get to the heart of how they worked in their previous experiences.
“You’re looking for how they view talent and how they view their organization they’ve managed before,” he says. “Are they servant leaders or not? Are they about developing their people and developing the talent of their people? Culturally, are they a fit?”
He says that the key to ensuring that you bring in the right people is how you approach the interview process.
“You spend enough time with them, and you look at what they’ve done in their previous line of work, and you do some talent assessments,” he says. “We do some talent assessments through Gallup and so forth, which gives you some empirical data, and then you make a gut choice at the very end if they’re going to be a fit or not and if they can move the organization where you’re trying to move it.”
At Interface, sustainability has been a major focus for nearly 15 years now, so Hendrix really wanted to make sure he got people that were focused on the environment and how to reduce their footprint. This not only provided him with something to gauge candidates by, but it also drew people to the organization, despite the problems Interface was facing.
“It was already incorporated in our DNA,” he says. “It allowed us to retain and recruit some really good people in that time frame when the commercial office market was really almost in a depression.”
Move forward together
In the first two years of his plan, Hendrix sold the majority of the businesses he needed to, which generated $600 million in cash for Interface. Then, last year, he sold off the fabrics business, which was more difficult for him because it had grown so much, but that growth was tied to the office market. Despite how hard it was, the sale generated $100 million in cash to reduce the debt.
“In looking back, thank goodness we did,” he says. “With the credit crisis going on today, we’re in a much better place today by divesting that business.”
While major changes like this could get employees down, you have to continue to show people why changes are good for them.
For example, by choosing to focus on other markets besides the office industry, the sales force had to change how and who it sold to. While the salespeople may not have liked it originally, once they saw the opportunity in the other segments, they understood how it would help them.
“Our sales force was 100 percent commission-based in the United States, and they had a certain standard of living they were used to when the office market turned down,” Hendrix says. “They were very accepting of change, saying, ‘There’s a bigger opportunity in the nonoffice piece to go after,’ so it was a perfect storm.”
He also provided incentives along the way to help them come over to his side quicker by rewarding sales into nonoffice segments more heavily than those in office areas.
“You have to incent hitting milestones,” he says. “Your pay for performance has to really pay for the behavior you’re trying to drive in the organization.”
It was also important for Hendrix to recognize when something wasn’t working.
“You have to be willing to adjust as you go based on the successes that you’re having,” he says.
For example, as he and his team looked at segmenting their European business, where they previously had an 80 percent dependence on the office business, they made some mistakes.
“One thing we learned was it’s not Pan-European,” Hendrix says. “It’s very specific to each country.”
What worked in the United Kingdom, wasn’t necessarily working in France or Scandinavia. Similarly, they thought what worked in France would work in Germany. Interface had to readjust by tailoring the business for each country individually.
Hendrix has seen Interface do a 180 since he took over. Net sales have since grown to $1.08 billion in 2007, and the loss has been reduced to just $10.8 million. Hendrix prefers not to think of what Interface would be like had it not undergone the changes it did, but now that it’s successful again, he’s excited to think about a strong future full of more growth.
“From a growth horizon standpoint, we’ve got 10 years that we can still grow this business without acquiring anything new,” Hendrix says. “It’s just staying to our strategy of putting carpet tile on any floor out there.”
HOW TO REACH: Interface Inc., www.interfaceinc.com or (770) 437-6800
One of the most important positions at The Beryl Cos. is the “queen of fun and laughter,” but that wasn’t something CEO Paul Spiegelman anticipated when he and his brothers founded the company more than 20 years ago.
“At some point along the road, we realized that the kind of environment that we created for our people made a huge difference in terms of the productivity and success of the business,” he says.
The culture he has created has garnered the $30 million company which provides outsourced telephone and Web-based communications recognition as one of the best places to work last year by the Society for Human Resource Management.
Smart Business spoke with Spiegelman about how to create a strong culture to make your company a top place to work.
Q. How do you create a strong culture?
It starts at the top. You have to have leadership that believes in improving or changing their culture. It’s not like you can just create a great culture overnight.
It takes years to do, but if you don’t have a management team that believes there’s a connection between a positive culture and business success, it’s going to be difficult to get there.
My suggestion for other leaders, whether you’re the leader of a company or a department within a company, is to start small and make sure you have the basics in place. Things like salaries, benefits and 401(k) those are the basics of employment. If you don’t have that, and you say, ‘Let’s go out and have some fun events,’ it can look to be disingenuous.
The other is, don’t push down the culture. Create the culture from within. Get people involved in creating the ideas and programs. We have a committee. They meet every month. Their job is to not only plan events, but they deal with on-boarding issues and orientation, and they’re the ear to the company morale.
They alert us in senior management as to what people are thinking or feeling so we can react to that. You want the ideas to come from within and not from you.
Empower other people to own it. They know that it starts with me, and I need to set a good example, but peer recognition is very powerful. Our recognition program is called PRIDE, which is Peers Recognizing Individual Deeds of Excellence. While they would certainly like to get a note from me, we concentrate on people recognizing each other for a job well done, so that’s where the ownership comes from.
Q. How do you keep the culture intact as the company grows?
Naturally, as a company grows, you build more structure and process. We tell them that while anything can change in the company our products, our customer base, how we do business one thing that won’t is our culture and the core values that we live by.
Having a set of core values that become institutionalized is one way to make sure that the culture remains intact. It’s very easy that something that’s taken years to build up could be gone overnight if, based on an event or some situation, people feel like, ‘Wow, this just isn’t the place it used to be.’ Once you commit to a culture like this, you have to keep it going, and that’s where you get loyalty from your people because they know you’re being genuine about it.
Q. How do you create values to stand by?
I used to be very cynical about mission statements and all that stuff. We never really had any of that, but it was probably seven or eight years ago that we sat down with a much larger group of people probably 30 people and we did this together.
Don’t come up with them and say, ‘This is what our values are going to be.’ Ask your team, ‘What are the code of ethics that we’ll live by?’
It’s never too late to start to make it inclusive of the group. And make sure that once you commit, that those are repeated often, and that people could recite them at any point.
Q. How do you make sure people know the values?
The easiest thing is simply in the repeated communication and the examples of adherence to those values. For example, if I want to recognize someone in another department, my job is to write down what they did to support one or more of the core values [passion for customer service, always doing the right thing, never sacrificing quality and spirit of camaraderie].
Then we have four parking spaces, and each one is one of the core values. If someone did something in a particular month to exemplify that core value, they get to park in that space that month. These aren’t on a plaque they’re painted on the wall for everyone to see.
Lastly, incorporate them into your meetings. We don’t start any meeting small or large without talking about the values. When I have a town hall, the first thing I do is test the employees. I say, ‘Let’s recite the four core values’ so they know how much it means to me.
People will follow if they know how important it is. It’s just repeated exposure.
HOW TO REACH: The Beryl Cos., (817) 355-5040 or www.beryl.net
When Sondra Lehman joined the North
America group of LSG Sky Chefs as its chief
financial officer in 2005, she was walking into
one of the worst times in the industry’s and
“After 9/11 the company lost 40 percent of
its revenue pretty much overnight,” Lehman
says. “It had stayed in that state and continued to lose revenue when I joined.”
Following the Sept. 11 attacks, the previous
management had tried restructuring LSG Sky
Chefs, an airline catering company that is
part of LSG Lufthansa Service Holding AG.
“If you were not boarding the aircraft
with product or getting the product there,
your job was at risk,” Lehman says. “They
took out some of the brains of the organization. Instead of working smarter, they
were muscling through.”
They cut about 40 percent of employees,
but this proved ineffective, and Lehman
recognized it in the company’s numbers.
“We were losing $1 million a week,” she
says. “As CFO, each week I needed $1 million funding just to make payroll. That’s
how dramatic of a situation I walked into.”
Lehman had to get the company back on
track financially. A year after joining, she
took the top reins as president and chief
operating officer, and through both positions she faced the challenge of turning
around a company severely off course.
“I do enjoy a challenge,” Lehman says.
“Maybe I underestimated how big this was
at times, but my biggest challenge was to
lead the company out of the industry’s
worst downturn in its 66-year history.”
Focus on efficiency
When the company was losing $1 million
a week, Lehman knew she needed to cut
out any excess, and unlike previous managers, she started with the executive team.
With 17 people on the team, she looked at
who had the skills needed in the current
business model and whose skills could
easily adapt if they altered their model.
“Identify the people who will take you to
where you want to go, where the vision is leading you, the people who can keep your
core business running and who are critical
to have to serve your customers,” Lehman
says. “Everything else, at that point, has to
She cut more than half of the team, and that
resonated throughout the company. Today,
she has just seven people on her team.
“It sent a huge sign to the organization
that we started at the top this time,” she
says. “It takes a lot of people in our
kitchens to make up an executive salary,
and people in the kitchen are serving our
customers, and I’m passionate about making sure we serve our customers.”
She wanted to start eliminating waste
throughout the organization, but she
needed someone with experience so she
spent a little money in the hopes of saving a lot more.
“One of the first things we did was find a
lean subject matter expert,” Lehman says.
She wanted someone not only trained in
lean concepts, but who had actually
applied them in a manufacturing world, so
she hired someone who had 20 years of
experience as a change agent at Delphi.
With an expert on board, LSG Sky Chefs
could move forward with cutting excess,
and just like with the executive layoffs, she
wasn’t about to start small.
“You don’t start with a kitchen that has 20
employees,” she says. “You start where you
have 600 or 700 employees.”
With 50 locations across the continent,
Lehman took the 20 largest and made them
showcase units. She used these units to
start developing a continuous improvement mindset in her 8,000 employees.
“That doesn’t happen overnight,” she
says. “Lean is about two things: It’s about
leadership and knowledge. I believe 110
percent that the leaders have to support it
and drive it, and it’s about the knowledge
that our employees hold and getting that
Her team performed 75 process improvement events in the showcase kitchens each
year. If there was an event in Dallas, any kitchen staff members that had a similar
customer base or was geographically close
to Dallas was invited to come and work the
event, so they could learn and apply those
lessons in their own kitchen.
“With the mindset of continuous improvement, it’s not change for change sake,”
Lehman says. “If it doesn’t improve anything,
whether it’s the ergonomics or the efficiency
or the quality of products, don’t do it.”
It’s also important to not tell employees
exactly what to do, but instead encourage
them to use their own observations to
make things better.
“Give the people some tools, and they’ll
figure out a better way,” Lehman says. “... It’s
not management doing it or the supervisor
saying, ‘You must do it this way.’ It’s the
employees that developed that fire inside
them to make their workplace the best.”
Those same employees were the ones that
also saw 40 percent of their friends lose
their jobs when airlines began taking food
off planes, so when you’re implementing big
changes like this, be aware that not everyone
will be as excited as you are initially.
“It’s a journey,” Lehman says. “It doesn’t
happen overnight. It’s almost like a culture
change, and those take years to develop.
Our employees, there are some that are
skeptical when you go in. Once you make
an improvement that they thought of,
there’s a certain amount of ownership.”
As employees attended these events,
applied them to their own kitchens and
worked to improve, LSG Sky Chefs got
leaner. For instance, in the Denver kitchen,
employees have 200,000 square feet of
space, and when they started the process,
employees wore pedometers to see how
far they walked each day — one walked 12
miles each day. After implementing lean
principles and rearranging the layout, that
employee is down to three miles a day.
“That still sounds like a lot, but 12 is nearly half a marathon,” Lehman says.
In the Phoenix location, employees took
up two buildings. By refocusing on how
they loaded airplane soda drawers, they freed up an entire building.
“The more you do, the more you see,” she
says. “At that point, you can’t stop.”
Even as LSG Sky Chefs’ kitchens
improved, Lehman didn’t let people rest.
“Our tagline is we want to be better today
than we were yesterday, we want to be better this month over last month, and we
want to be better this year over last year,”
Lehman says. “If you develop that mindset,
and it’s part of the fabric of every employee’s DNA, that’s how you change it.”
Diversify your customer base
With more time and more space now
available, it was time for Lehman to take
the next step and look for ways to use that
time and space.
“I stepped back and said, ‘What is this
company really good at?’” Lehman says. “I
didn’t have 20 years with the company saying, ‘We’re airline catering, and we’re
always going to be in airline catering.’”
Instead, she took a different approach.
“I said, ‘Wow, since 2001, we really only
feed the person in first class, so there are
about 16 people up there, and there’s 150 in
the back we’re not serving, and I look out the
window, and I see hundreds of thousands of
people in Dallas-Fort Worth that we’re not
feeding unless they happen to go first class.”
She looked at the business and its core
competency — catering — and an idea
“If we can do that for an airline at a certain
time, taking a step back, we can do it for any
convenience store or hospital or school
around our metropolitan areas,” she says.
She realized that LSG Sky Chefs’ kitchens
were within 150 miles of every major populated metropolitan area in the country,
and the aroma of opportunity began to
waft onto her radar.
“You have to take the blinders off,” Lehman
says. “Look at what you’re doing and how it
could be used in a very different way. If you
look at what your core competency is and
see how it could apply to a very different market or industry, a lot of them are obvious.”
She realized that she had executive chefs,
culinary experience, and the knowledge of
quality and hygiene specifications required
by the Food and Drug Administration, so
she decided to take those assets and apply
them to other catering initiatives beyond
just the airlines. She went after convenience stores, hospitals and theme parks,
and won much of their business. Now one
of LSG Sky Chefs’ top 10 customers is not
an airline, and the company provides
55,000 sandwiches a day for it.
“No airline is putting 55,000 sandwiches
on a plane in the southern Florida market,”
Lehman says. “It’s just a way that our building and facilities were not fully utilized.”
She’s also looked at other ways to diversify her service to the airlines. She realized
that many times it wasn’t economical for
them to seek out fresh food, but frozen
food was something they could keep and
simply heat when needed.
“The next step will be, ‘Who else wants
my frozen foods?’” Lehman says. “Can I do
a frozen breakfast meal and market it to
schools for children who need to eat breakfast at the school? Instead of having just a
cereal, could they have a scrambled egg
with protein to start their day?”
Diversification also is a major change for
employees, so you have to help them
through that transition.
“As leadership, we had to transition,”
Lehman says. “We have 8,000 people in our
region that believe we’re an airline caterer.
There has been resistance in our rank and
file and in our kitchen of saying, ‘We’re an
airline caterer — we really don’t want to
serve convenient stores, even if they make
55,000 sandwiches a day.’”
When you take on a diversification initiative, you have to help people see the benefit.
“You have a few quick wins and a few
quick successes, but it also provides the
employees with a more stable environment,” she says. “Convenient stores are
here to stay. Grocery stores are here to
stay. Theme parks are here to stay. Airlines
will be here — it’s always a question of
which ones with the rounds of mergers.”
With so many airlines merging or going
bankrupt, Lehman says it’s heartbreaking,
but her job isn’t to lament how the industry
“I have a responsibility to make sure this
company can sustain itself well after
Sondra Lehman is gone,” she says. “I want
to build a team and a company where, will
there be challenges? Absolutely, but I
believe that adding on this kind of diversifying our revenue base makes me a
stronger competitor and a better performer for my airlines. And it gives my
employees a place where they can stay and
have a career.”
While it’s taken the last three years to transition the company into using lean concepts
and diversifying its business, the result isn’t
just survival, but also leadership. LSG Sky
Chefs now owns 41 percent of the market
share in North America, it’s cash flow positive, and it’s not borrowing any money.
2007 marked the first year that it achieved
a revenue increase since 2001, earning
about 30 percent of the worldwide group’s
2.4 billion euros (about $3.4 billion).
“I came in at the bottom, which proved to be the bottom thankfully, and we inched
our way up, almost like a roller coaster,”
Now the organization is a lean catering
“If you told me I had to run 8,000 miles
today, I would flat out tell you I can’t do it,”
she says. “But if you told me that my organization had to run 8,000 miles, and I told
each person they had to run one, we could
probably get it done in about 15 minutes.
That’s the power of the LSG team.”
HOW TO REACH: LSG Sky Chefs, www.lsgskychefs.com
When Eddie Fadel came back to Ashworth Inc. as president in May 2007, he knew it wouldn’t be an afternoon stroll on the golf course.
“The company had kind of lost its way,” he says. “There was a reason they wanted me to come back.”
While Ashworth still brought in $209.6 million in revenue in fiscal 2006, its on-course golf business — by far the largest of its six golf apparel segments — was down 28 percent that year and was already down double digits in the first two quarters of fiscal 2007, as well.
“Don’t confuse activity for results,” he says. “You have to look at results. If the results aren’t what they’re supposed to be, and they aren’t meeting your expectations, you have to ask yourself why.”
Part of that answer was attributed to what the prior administration looked at.
“I think they were looking at the wrong [metrics],” Fadel says. “I don’t think they understood the industry. ... I think that everyone on that level is going to look at some kind of metrics. It’s just are they looking at the right ones? To me, the right ones are the ones that count and produce results.”
The company had also ventured into noncore apparel arenas to try to compete with athletic companies.
“A lot of athletic brands have gone into high-tech fabrics,” Fadel says. “They snag, and they smell, and they’re hot to wear, and it’s not who we are. We’re not an athletic brand. I never got caught up in it, but the prior administration got caught up in it. They were a me-too company. They lost their way. They were trying to be like everybody else. They thought they were doing the right thing, but they did the wrong thing.”
To get Ashworth’s golf segment back on track, he knew he needed to make changes, so he went back to the basics.
“I’m a simple guy,” Fadel says. “There’s three ingredients — it’s people, it’s product and it’s brand. You have to focus on all three.”
Build a team
The first part of getting back on track was getting the people part in place, so Fadel first talked to department heads about why they thought their performance was down and whether or not they could improve.
“Sometimes, people will tell you, ‘I don’t know what to do to make it better,’ or you have people who have given up who say, ‘Well, I can’t do it,’” he says. “Then I’m going to find somebody who can. It’s OK to tell me that you don’t how to because we can figure out a way, but when you give up, I need somebody who can try.”
If you have people who don’t want to try, then replace them with people who will. While Fadel says he moved at least 30 people in, out or around the company, one of the bigger moves he made was bringing founder John Ashworth back to lead product design and direction. Having people at the top who can provide that direction is key.
“If we take from the product point of view, it’s essential that you have a visionary,” he says. “He’s a catalyst — that attracts a different quality of people.”
When people see you making personnel changes, it sends a message that things will be different, which helps you bring in better people.
“Once you get the first few pieces in place, then they know somebody else, who knows somebody else,” Fadel says. “A lot of it is word-of-mouth. That’s infectious.”
As you make changes, keep a few keys in mind.
“You have to have people that have the energy and passion and they’re doing this because they love doing it — not because they have to,” he says.
Get to know people in your organization so you can gauge who’s passionate and energetic.
“You have to connect with everyone in your organization,” Fadel says. “You never know where you’re going to find the next great person. They may be there, but you’re not using them properly. The way you do that is through communication.”
Once you have energetic people willing to try their best, then you need to hold them accountable.
“You should constantly be evaluating performance and making sure people are suited to the position they’re in,” Fadel says. “You shouldn’t just assume that they are.”
You can’t evaluate your people if you don’t know what you’re measuring.
“You have to set up the proper measurements,” he says. “It’s essential. Performance is an arbitrary thing. The worst thing that can happen in an organization is people think they’re doing well, but they’re not meeting your expectations, so you’re not working on the same metrics as far as performance.”
Create metrics based on what’s important to getting the job done.
“We don’t want to muddle along with mindless bureaucracy and spreadsheets,” Fadel says. “Sometimes people believe there is a mathematical equation. The way to set up the proper metrics is you have to talk about it, but you have to identify the things that make it work.”
Sometimes these things may not be as concrete as a sales goal for a salesperson. In those situations you have to look at other factors, such as timelines for projects and if those deadlines are met or how well someone stays within their budget. Even if you’re measuring a salesperson’s performance, look at other factors beyond just sales goals. Typically, customer satisfaction is important, so Fadel says to look at how often salespeople touch the customer with phone calls and meetings and then look at the results — the quality of sales and the product mix they sell.
“You set goals, and you work to achieve those goals, and then you monitor them along the way,” he says.
Build your product
Fadel’s first job was working as a caddy and then in the shop at a golf course in his Ohio hometown at age 15. One day, Sammy, the course pro, had to give a lesson when the IZOD rep was coming to fill the shop’s annual order, so he told Fadel to just order the same thing as last year.
When the rep arrived, he was annoyed that the pro wasn’t there, but Fadel told him he’d handle it and to bring in the line. Instead of ordering the same thing, he specifically picked everything. Over that next year, business improved, so when the rep came back the next year, he instead asked for Fadel, and Sammy eventually turned the whole shop over to him.
“I was the one in the shop selling the product to the members, so I knew what they liked,” Fadel says.
By offering better products, he was able to improve business then, and he knew that same concept would be key to freeing Ashworth’s customers from the state of polyester that they, the company and the industry were all frozen in.
“All industry experts will agree that the only way you’re going to make business better is through improved products — innovation,” Fadel says. “You have to have innovation. You have to have improved products. You can’t fake that. You can’t do it with hype. There’s plenty of product out there, so you have to have products that are better than your competition. You have to differentiate yourself.”
Ashworth traditionally had been a cotton house, and he had an inkling that they should refocus on cotton, but he needed to do some research first.
“Your customers tell you what you do best,” he says. “The results show.”
Fadel says to go out with your team on sales calls to talk to customers.
“Don’t just stay in your ivory tower and do it from spreadsheets,” he says. “Go and actually mix with the people that are part of that group.”
He says that the most successful companies have open communication.
“You may not like everything they say, and you may not agree, but still listen,” he says.
Listening is sometimes a challenge, and Fadel says that he’s a headlines guy, so he’ll often pinch himself to keep focused on everything the person is saying instead of waiting for the headline.
“Be patient,” he says. “Let people finish their thought. Don’t interject until they finish their thought. Quick to listen, slow to speak. Just let them talk and take your time.”
Also, ask questions, but do so without making them feel like it’s an interrogation.
“If it’s too forceful on the questions, it’s interrogation,” Fadel says. “Once you get them talking, you should ask questions that are led from the conversation. They may mention a fact about their business or something, and you can ask, ‘What do you mean by that?’ and you get more information on the areas that will be more meaningful in understanding their business.”
Once you get feedback and input from people, you have to figure out what to listen to and what to pass on.
“Write down some bullet points,” Fadel says. “You always start out with the end in mind. What is it that you’re trying to accomplish, and what information do you have that you think is beneficial to helping you accomplish your mission?”
Also look at why you do what you’re doing. If you ask why something is the way it is, and the response is, “Well, we always did it this way,” then you need to dig deeper.
“That leads me to believe that we don’t know why we’re doing it, so why do we think we did it before?” he says. “When you get to a point where no one knows, then you might have to change.”
After going through this process of talking to people, it confirmed Fadel’s gut feeling that Ashworth needed to deviate from the pack and refocus on cotton.
“There’s always people saying, ‘You ought to do this; you ought to do that,’ but you can’t do everything everybody wants you to,” Fadel says. “There’s a reason there’s chocolate and vanilla — you’re never going to please everybody.”
Improve your brand
By getting a better team of people in place and refocusing on its core cotton products, Ashworth turned the corner and drastically improved the third part of Fadel’s recipe for success — its brand image.
“The positive impact is they’re saying, ‘Ashworth is back,’ but it takes time,” he says. “We’ve improved perception. The new product line is exciting to them. The product line we’ve gotten on people’s backs, they can tell a difference, so that’s the positive.”
The numbers also confirm that. After stopping the bleeding and breaking even in the golf segment’s fiscal 2007 third quarter, the next three quarters all went up.
“To be up three consecutive quarters, shooting for the fourth, shows some consistency and sustainability, and I feel more confidence today than I did before,” Fadel says. “We’re a product company again. We’ve really elevated our brand and separated ourselves from our competitors.”
With yearlong product cycles, Fadel is finally seeing the seasonal lines with his signature on them, and he’s already looking to build on what he’s already improved.
“Don’t stand still,” he says. “You have to constantly elevate. Every season, say, ‘What are we doing better than we did six months or a year ago?’ I can tell you, there are a lot of things we’re doing better today, but there’s still a lot of room for improvement.
“You’re never done, and you’re always trying to get better. It’s like a golfer — if you shot in the 90s, once you shoot in the 80s, then you try to shoot in the 70s. Once you shoot in the 70s, you try shooting in the 60s. You’re always trying to get better.”
HOW TO REACH: Ashworth Inc., www.ashworthinc.com
Luiz Carvalho’s passport is decorated with a lot of stamps, thanks to the time he’s spent traversing the globe to visit clients and employees.
As CEO of Proudfoot Consulting, he recognizes that people are the lifeblood of his $160 million organization and maintains his focus on them.
“We don’t have any assets other than people,” he says. “There are no machines. There is no equipment. We don’t own any buildings. People is all we have. ... It’s so important to spend time with people.”
Besides traveling, Carvalho also keeps in touch with his assets through his CEO advisory panel. Four times a year, he brings about 20 people from Proudfoot’s offices in 14 countries to one destination so he can pick their brains for two days.
Smart Business spoke with Carvalho about how he conducts these forums and how he makes decisions about which ideas to implement and which to put on the back burner.
Conduct forums. We make an effort listening, probing and asking more questions. They will talk for two days about different ideas, ways of doing business and functions.
They advise me on what they see out in the marketplace, what they hear from clients, what they hear from our people, suggestions, views, complaints. There’s absolutely no rule other than the fact that I’m supposed to listen. I go in with an empty yellow pad and just listen and make notes.
The gathering of that data gets spread out amongst the people that work for me presidents, heads of functions and we’ll look at some of the ideas. Some we’ll take on and do something about, and some we’ll put on the back burner for next year, and some we just dismiss.
We fit back into the people in our regional local meetings. I’ll brief the group in terms of what we decided to take on from the panel. We don’t try to justify the ones that we didn’t. If you see 20 people for two days, you end up with a huge list of things.
Decide what’s feasible. If the ideas are good, and we believe there’s a reason to try them out, then we will do something.
Our clients are priority zero, one, two and three. Anything that has a positive effect in terms of our ability of delivering to our clients, we’ll take an in-depth look at.
The second would be our people. Things that we can do or ideas we have to improve recruitment, retention, development, succession planning or so forth, we’re also going to take an in-depth look at.
By doing those first two, we’re creating value for our shareholders. Anything that has to do with clients or people will take a priority view. This is really all we have.
If it wasn’t for our clients and our people, we’d be out of business. It’s, in essence, the survival and the growth of the business.
Be a good listener. It’s questioning. A good listener is a person who questions what they’ve been told. I’ve learned to never take the first answer as a given.
It doesn’t mean people lie it just means the more you probe, the more you understand and the more of a good listener you are. If you just listen to what people are telling you and take it, how much did you really get?
The best question I can ever ask anybody is to understand why certain things are what they are. It’s very useful because you try to get behind a person’s view.
I learn a lot if you just try to understand why certain things are the way they are and why people think the way they do. The Socratical method is pretty amazing, actually.
Hire good people. Our ability to work with our clients and get them to do what’s required is what makes us successful. To do that, you do have to handle people and establish relationships.
You have to embrace their concerns, empathize with them and work with them. The ability to deal with people and handle people is the biggest requirement from a broad recruitment perspective.
The other is character honesty, integrity because we are so spread out and our people are primarily by themselves or in small groups delivering to clients all over the world. It’s impossible to manage them on-site you don’t have executive management in every project. They’re out there, so when you do get a call, you do read a report, you do get feedback, it needs to be accurate, upfront, open and honest. If you have those two characteristics, we try to work out the rest.
Have a hiring process. If I visit and I’m going to spend four days in the unit, they’re setting me up with four or five interviews that they wanted to hire, so I try and I want my management to do the same to spend the time interviewing as many people as you can at different levels. The more people you get to see a candidate, the more different views you have.
I always try to put on a sort of tough, managerial, naysayer view to interview people I’m recruiting. Different views are very appropriate.
It’s just not a process of interviews. We have interviews, then most people come in for what we call an assessment center. They’ll be in the office for a day, and they have multiple interviews and have to build case studies and present. They get challenged, and they present to a panel, and then they’re ranked amongst all of them so we get the best. Then there’s perhaps a last interview that’s required. It’s a complex process, which has been very helpful.
HOW TO REACH: Proudfoot Consulting, (404) 260-0600 or www.proudfootconsulting.com
John W. Rogers Jr. hasn’t yet overcome his greatest challenge.
As founder, chairman and CEO of Ariel Investments LLC, he’s facing the challenge of dealing with an inhospitable stock market as his firm focuses on investing in high-quality companies and avoids the more volatile commodities sector.
“What we’re doing is staying the course,” Rogers says. “The worst thing you can do when your style is out of favor is go chase what worked yesterday. This is a game that’s won by people who see the future and not by those who follow the past.”
In leading his 99 employees, he works to help them build better relationships with people at the companies they hope to work with because he believes relationships are the key to growing any business.
Smart Business spoke with Rogers about how he trains his employees to be like investigative reporters in order to better build those key business relationships.
Focus on the future. It takes some discipline, and you have to read, study and meet with management teams and experts who understand the economy and the various industry sectors.
It’s about gathering as much information as possible. We tell people internally not just to focus on the people you know at the companies you invest in ... but to develop relationships deep in the company where people can give you a different insight than sometimes the top management will. Then you also need to develop relationships with your competitors, who often have great ideas and thoughts about the markets and maybe a different perspective.
Show up at the conferences and the trade shows. If you’re trying to see the future, you need as many people bringing all the diverse viewpoints to the table, and then you can make your final judgment after you’ve had a chance to study all of that.
Get better information. We’ve talked to investigative reporters to get tips on how they gather insights and information. We train young people how to gather information from places where people don’t want to give information. That’s what makes for good investigative work.
We’ve been using a company that helps you to be a better questioner. They also consult and guide you on how to determine whether the information you’re getting is truthful or not.
They teach you everything about how to read a press release more skeptically, how to read body language from people if you’re meeting them face to face, how to ask presumptive questions, and different ways to ask questions and follow up with a question to elicit information that people maybe wouldn’t be comfortable talking about.
Read between the lines. See whether people have terms that show a lack of conviction. They’ll say something like, ‘We hope to achieve this,’ or if you’re talking to someone they might say qualifiers, where people put something in front of the statement that minimizes the power of the statement. You have that in writing or verbally.
You’re looking for clusters of movements. They call it have an ‘anchor shift.’ They shift in their seat in a demonstrable way and maybe touch their face. They’ll be doing three or four things at once that give you a feeling that they’re very uncomfortable. They’re often a sign that people aren’t being candid.
Ask presumptive questions. If a company is in an industry where there’s big-time problems, you might try to talk to them first in a sympathetic way and say, ‘We understand that you’re facing gale-force winds, and it’s got to be tough for you, and in this environment, we’re guessing you’re probably going to earn $3.25 a share at best, down from the $4 estimates we had.’
Giving the presumption that they’re going to earn less than what they anticipated, you learn a lot by how they respond to that. They say, ‘Jeez, there’s no way we’re going to earn $3.25,’ or maybe they’ll say, ‘If things continue to be as tough as they are out here, maybe that will be an optimistic number we’re looking at.’
Make people comfortable. Get people warmed up that you’re not there as a confrontational Woodward and Bernstein investigative reporter and that you’re trying to develop some trust and serve shared perspective with the people you’re talking with.
Get people away from their offices. Meet with the management team if they’re in town and have a drink; go to lunch. ...
You develop a different kind of relationship when you get someone away from the office and the formalities of an interview and establish a real friendship that can be helpful.
Ask better questions. Do your homework beforehand. Be prepared to understand the key issues you want to talk about, so you can zero in on and follow up on the key point and not just ask a laundry list of 20 questions, and ask those 20 questions no matter how the conversation goes. Focus on what seems to be the key issue that drives long-term profitability for the business.
It’s trial by fire, by watching other people do it, and have a coach come in and help you hone your skills. When we go out to visit companies, we try to talk afterward about what were the good questions, the important questions, the questions that weren’t so good and help people be better at it. Hopefully, they learn by observing the way we do it.
HOW TO REACH: Ariel Investments LLC, (312) 726-0140 or www.arielinvestments.com