When Gary Taylor, chairman and founder of InfoCision Management, was approached by the University of Akron about contributing money to a new campus building, he said no.
"Building a building wasn't something I wanted to help do," he says.
But the solicitation piqued Taylor's interest. He wanted to contribute to the university but didn't know in what capacity. He proposed a scholarship fund, and the university came back with an even better offer -- a direct marketing institute.
The Taylor Institute for Direct Marketing opened in November 2004 to train students in direct marketing, with the goal of becoming an entrepreneurial incubator. Smart Business spoke with Taylor about the institute and its value to students and businesses.
Why do we need a direct marketing institute?
[Direct marketing] encompasses everything that is selling direct to the consumer -- telemarketing, direct mail, infomercials, direct response television and radio spots and that whole genre of communication direct to consumers.
It's interesting because direct marketing is a $2 trillion industry employing 27 million people, and there is not a single accredited, four-year degree program in direct marketing. That's what's really motivated me. And we're going to have the largest dedicated staff, the largest dedicated facility and the largest unique curriculum devoted specifically to direct marketing.
What do you see in the future for Institute graduates?
Direct marketing is actually very entrepreneurial because the barriers to starting your own business are very low. It's not capital-intensive. Students will have a focused skill set when they graduate.
That's how the Institute is modeled -- to help foster students actually doing direct marketing projects ... for clients. ... There's a call center, [so students will] actually implement telemarketing calls. They can implement marketing research studies. They're going to have a television lab where they can produce their own infomercial, so they'll actually be hands-on learning how to deal with it. And we are setting up internships.
Also, we're very excited about the cooperation we've had with the Direct Marketing Association. [It's] been very interested in partnering with the Institute to develop continuing education programs. Also, with those connections, we'll help the students have better insight into the industries and the job market.
-- By Amanda Wurzinger
But potential employees at Total Quality Logistics Inc., a Milford-based third-party logistics broker, must do both. Its hiring practices go above and beyond industry standards, but the tough practices are just another part of TQL's hard-working culture.
While TQL fosters a tough and competitive work place, it also treats its employees to great benefits and bonuses. After all, if it's going to go to great lengths to select top workers, it's only right that it go to great lengths to keep them. This attraction-retention policy has helped TQL set its sights on a projected $200 million in sales in 2005, a nearly 100 percent increase over 2004.
Finding good employees to help your company grow is always a challenge, and Ken Oaks, TQL president and CEO, created a five-phase hiring process at the 300-plus-employee company that he describes as "intense" to help find the people that fit into his company's growth culture.
"The first phase is really just looking over the resume," says Oaks. "The second phase is, based on the resume, we send [the applicant] a phase-two questionnaire, and based on the resume and the questionnaire, we schedule a phone interview with them."
Phase three, the phone interview, is when the interview process becomes less traditional.
"Depending on the position, we have [the candidate] answer questions and do something for us," Oaks says. "Like, for the sales position, they actually have to sell us something during that phone interview, and then we do a little back and forth interviewing."
After that, candidates are given an assignment to complete and bring with them when they move on to phase four -- a one-and-a-half hour in-person interview at TQL headquarters. It's during this phase that they begin to job shadow, and sometimes, audition. And that process continues during phase five, a three-and-a-half hour in-person interview.
"During both of those office interviews, [the applicants] spend time out on the floor, shadowing the people who are doing the job they'd actually be doing. ... Some of the positions, we actually have people calling, if it's something simple like calling carriers to find out where they have available equipment," Oaks says.
This audition gives the hiring team -- everyone from potential co-workers to managers and human resources representatives, and sometimes, even Oaks himself -- the opportunity to evaluate the candidate's ability to get the job done, giving them more information than a question-and-answer session alone could.
"We have a set list of things we want to find out," says Oaks. "If it's a salesperson, we want to ask questions geared toward finding out of they're aggressive, if they're confident, if they're motivated. Our sales position is very process-oriented, so we've got to make sure they can multitask and really think quick on their feet. So we'll give them a surprise here and there.
"I like to ask them kind of an off-the-wall question that stumps them. I don't care really about their answer -- how they handle it is important to me. If it shakes them up, then I know they're going to get shook up in an actual job setting."
Oaks also looks for prospective candidates who are prepared.
"We want them to be very enthusiastic and fired up, and we want them to know about the company," says Oaks. "We've got a lot of information on the Web site. If they haven't thoroughly gone through [it] and if they don't know a good amount of information about the company, we know that they're not really serious. We make sure of all that before we let them get into phase five."
The entire hiring process, complete with interviews, auditions and assignments, takes as long as the applicant wants it to, says Oaks, but the average time, from start to finish, is about two-and-a-half weeks for the applicants who decide to stick around. The challenging interview/audition combination was designed to help applicants decide whether they like the company as much as it was to help the company decide whether it likes the applicant.
"[The process] enables the candidate to gain a clear picture of the company, the business, the culture, the job responsibilities and basically get a good feeling of what's going to be expected of them," says Oaks. "And that really allows them to make an informed decision about whether or not they want to go further. Because, believe me, our company is definitely not for everybody.
"Candidates get the opportunity to ask any questions they may have and we encourage them to tell us of any apprehension they may have while they're gong through the process. For example, in the sales position, we tell them about the hours, that we expect them to be available 24 hours a day, seven days a week for the customers and carriers."
That kind of commitment can be daunting, says Oaks.
"We have more people weed themselves out of the process than we weed out," he says. "We're totally upfront with them on everything. We don't want them to be surprised. We're huge sticklers about turnover, and we don't want anybody to be surprised when they walk through that door the first day that they start."
This no-surprises attitude works. In the past year, the company has hired more than 180 people and doubled its sales, and has of a turnover rate below 10 percent for first-year employees, and below 4 percent for employees who have stayed more than a year.
Oaks says that is as much a result of the training as it is of the hiring process.
"Actually," he says, "it's all because of our human resources and training departments. They're the ones who are letting people get in here and letting them know what's going on. And then we properly train them so they can do their jobs really well."
The training process at TQL can be even more demanding than the hiring process. Members of the sales team spend their first six months as TQL employees-in-training.
"It's like being in school -- they have reading they have to do, tests they have to take," Oaks says. "That's another reason why [this company is] not good for everybody -- we want people who want a career, who want their career to be part of their lives, not just a job, a nine-to-five type of thing."
A growing environment
Because TQL demands so much from its employees, it makes every effort to provide a workplace that meets their needs.
From the beginning, employees are encouraged to voice their opinions about working at TQL. New employees are required to attend a new-hire focus group. After that, they have either weekly or monthly meetings with their managers to discuss problems or concerns. Employees are also sent monthly surveys, which can be returned anonymously, and the company has posted suggestion boxes in its offices.
"All management makes sure everybody knows that we're here for them," says Oaks. "We believe in an open-door policy, so employees are encouraged to share their thoughts, good or bad, about their experiences. We want to improve the company, so we need their feedback."
TQL uses that feedback to improve its policies. One example is its training program. Based on employee feedback, new employees now spend their first day on the job getting to know the company and their co-workers rather than jumping headfirst into training.
"Employees felt like the first day they were immediately immersed in the employee training program and after that it was just go, go, go," he says. "So what we do is, instead of the first day starting with the training program, the first day they'll be spending with the HR department, given a tour of the company and presented with all the things the company has to offer. So it's not as crazy as it used to be."
This willingness to listen to employees helps keep them around, as do ample opportunities for advancement. TQL operates on a strong hire-from-within policy -- 75 percent of sales managers were promoted to their current positions, and 100 percent of senior salespeople started as sales trainees.
"Six out of our top nine managers and almost all of middle management have been promoted to their current job from within the organization," says Oaks. "The fifth employee of the company is now the vice president of sales, the sixth is the sales operations manager. It just shows that the people that started with us in the beginning are the ones that are up at the higher levels now."
According to Oaks, this policy has been instrumental to TQL's success for three main reasons. First, it gives managers the operations experience they need to manage well -- they have first-hand experience in the jobs they're overseeing. That, in turn, gives them credibility with their staffs. And finally, promoting from within allows new employees to see their career path within the company and visualize where they might end up, which provides ample long-term motivation.
But for the short term, TQL turns to other tactics. First and foremost, after employees are trained, they're given the space they need to do their jobs. For Oaks, it's about trust.
"Our company is not big about management," he says. "We train them to do the job right and then we give them the freedom to go with it. And we offer them any support they could ever want, but we're not looking over their shoulder all the time."
Even if managers wanted to constantly monitor employees, it would be challenging -- employees are given the flexibility to work around their families' schedules, meaning that they aren't always working in the office.
"We're pretty flexible with hours, depending on the position," says Oaks. "Technology that we've implemented allows our employees to work from their home computer, giving them access so it's as if they're sitting at their computer in the office. So if they have to leave at 4 o'clock, they can get back on their computer at 9 o'clock at night and finish up what they had going on.
"We always let employees leave early if their kids have any functions. That's the No.1 thing for us -- we keep families in mind."
They also keep in mind the effect that traveling for work can have on family life.
"All managers that we send out of town on business -- I require them to take off extra time to spend with their families, either that week or the following week, to make up for time that they missed with their families. If they're out two days, I want them to take at least a half-day off; if they're out three, take at least a full day," Oaks says.
Oaks also rewards his employees' hard work with money, in the form of a no-cap commission policy for sales staff members and bonuses for other staff.
"Every position has goals they need to meet," Oaks says. "It depends on the position, but a lot of positions, if you get to 90 percent of your goal, you get this, if you get to 100 percent of your goal, you get that, if you get to 110 percent, you get something more."
The culture of hard work and excellent employee support at TQL has helped the company stand out among its competition. In 2004 alone, Total Quality Logistics received an honorable mention in the Better Business Bureau's Torch Awards for Marketplace Ethics, a Small Business of the Year Award from the Greater Cincinnati Chamber of Commerce and a spot on the Cincinnati Fast 50 and the Greater Cincinnati 100 lists.
Not surprising, giving Oaks' formula for success.
"We hire aggressive, competitive people, we train them to perform at a high level, and we reinforce and support their efforts."
How to reach: TQL, www.totalqualitylogistics.com or (513) 831-2600
And as the president of Abt Electronics, the largest single-store electronics and appliance dealer in the United States, besting the competition is his passion. From beating the big-box retailers on price to having an exceptional Web presence and creating an engaging in-store experience, Abt has used traditional and not-so-traditional techniques to draw customers in and keep them coming back.
Those efforts have paid off. In its 70 years of business, Abt Electronics has served more than a million customers, and last year, it posted $300 million in sales.
In retail, the easiest way to attract customers away from your competition is by offering the best price. That is achieved by purchasing in bulk, something that often challenges smaller operators.
Although Abt Electronics is only a single store, the company’s showroom covers 350,000 square feet, making it large enough to move inventory en masse and allowing it to buy in bulk and negotiate deals with vendors.
And while Abt can negotiate competitive deals as skillfully as his competition, he keeps prices below those of his peers’ by saving on operating and marketing costs.
“We have very little overhead compared to other people,” says Abt. “We spend under 1 percent advertising, and the average person in our industry is spending 7 percent advertising. So by us not having to advertise, just having good word of mouth, that’s (the) biggest savings we have. And we’re very efficient just having one store people drive to us, we don’t build stores where they are. That keeps our price down, too.”
In addition, the company has a DIY attitude toward maintenance and upkeep. Abt Electronics doesn’t outsource the care and maintenance of its delivery trucks, repair services on the products it sells or its own building maintenance. By doing it all on its own, the company saves money and passes those savings on to customers.
Besides keeping prices down, the company’s single-store format has proved beneficial in other areas namely, flexibility. By being relatively small, it is able to adapt to industry changes more quickly than its competitors can, and it’s also more willing to take risks.
“You’ve got to be aware, and spend on information and computers, go to shows and see what the new products are and be open to trying new things,” Abt says.
This openness to change and trying is what led Abt Electronics to venture onto the Internet and into the world of online sales. In 1996, it launched its first Web page featuring product information and the store’s address.
“We’re really into information and sharing, and we knew that in the old days, appliance people would go to books and look up specs,” says Abt. “We did it first just to get information to the salesmen so they could give it out to the customer. Then [outside] people came to it. We were one of the few appliance guides.”
Recognizing the site’s draw, in 1997 the company expanded from an online product information guide to a complete online appliances and electronics store.
One criticism of many consumer sites is that the shipping charges often cancel out any savings achieved by buying online. Abt has overcome that with a simple policy.
For customers purchasing appliances and electronics online, delivery to anywhere else California to Connecticut is the same flat fee.
“We just charge one rate,” Abt says. “We definitely lose money on some products, but it’s real simple $78 to buy one appliance and ship it. It just makes it easier for the customer. We’re [usually] making enough on the product that we can pay for the shipping. That’s not always the case, but it’s a simple way to shop. And we just don’t charge for things under $50.”
Today, the online store provides three distinct benefits to Abt Electronics. First, it allows it to reach consumers nationwide.
“By being one store, we want to do more online than we can than in-store,” says Abt. “That’s the only way we can grow we’re not building two stores. That’s one way to grow externally keeping one store and still doing business out-of-state.”
Second, the online store allows the company to sell more than it can display in-store. While the showroom is huge, there simply isn’t enough room to stock every available color or model of every product.
“A key part of being online is trying to integrate it into the store; whenever we can, we try to make things similar,” he says. “But there is product that we’ll only show online. In our store, there’s (thousands of) square feet of showroom, but you still can’t show everything, especially like little accessories and different colors small differentiations that you don’t want to show in the store you can put online, so you can see what a gray handle looks like if you’re only stocking the stainless steel.”
And third, the online store helps streamline shopping for customers. According to Abt, approximately 80 percent of Abt Electronics’ in-store shoppers visit the Web site before coming in to make a purchase.
But the online store’s success was never a given. While there was demand from customers to purchase online, Abt Electronics’ vendors weren’t so eager to have their products peddled over the Internet. And while many vendors have come around to the idea of Internet sales, some still have concerns.
“Everyone’s worried about bad information being out there online,” says Abt. “There (are) a lot of unauthorized dealers online you might not get a warranty if you buy from them and ... they don’t have a lot of good information on their Web site and their Web site’s slow. (Vendors) are just really hung up that people might get a negative experience of the product by it being on those Web sites.”
That concern, says Abt, can be assuaged by taking time with the vendors, explaining how the sales process works with Abt and showing them how the online store works, alleviating anxiety about quality control.
Another common worry is not so easy to relieve.
Vendors “were worried that, if something’s online, in one minute you can click and find the price at 50 different stores,” says Abt. “So they didn’t want it to just become a commodity. Especially the higher-end brands you have to sell and explain to customers why a Sub-Zero refrigerator is better. So even today, you cannot buy a Sub-Zero online, because they’re still nervous about the different markets and protecting the different dealers locally.”
In that case, says Abt, the only thing to do is to keep working with the vendors, let them see for themselves the quality of Abt Electronics’ online store and hope that they’ll change their mind.
The Abt experience
One of the most vital ways that Abt Electronics distinguishes itself from the competition is in the experience it provides customers.
Abt Electronics operates around the motto “The answer is yes to any reasonable request.” That means, says Abt, that if the customer wants something reasonable for example, if a stove is dented during delivery and the customer asks for a new one the company does it, no questions asked.
And to ensure that all reasonable requests are honored, Abt authorizes employees to make the decision themselves about whether to honor a request.
“We let all our new employees know that, ‘Hey, you don’t need to go ask a manager to see if you can help this customer make sure they get this TV out right away so they can have it for a birthday party,” says Abt. “Just go put it in a car and get it done. It’s hard to instill, because people aren’t used to making their own decisions, and you really need all your employees to have that attitude, not just the managers.
“A new employee may say, ‘Maybe we’re giving too much away. We’re going to lose money on this sale.’ We accept that on a short-term basis because we need to make people happy. We’re just one store, and they need to come back to us. So we never penalize anyone for doing too much. They get it, but it does take months to really understand it and believe it.”
In addition to the customer service experience, Abt has worked hard to ensure that customers have a positive shopping experience in the store. For example, he installed fun, interactive displays that have nothing to do with electronics or appliances, the showroom features a large courtyard with a fountain and kids can play with a large bubble machine or watch tropical fish in a 20-foot-long saltwater tank. It’s simple things like these, says Abt, that really help the company stand out.
“We’ve got a single store, so we enjoy the products, we enjoy all our exhibits ourselves,” says Abt. “It’s kind of like collecting art we just collect it in our business. It’s really priceless, because it makes us unique.”
And being unique is what it’s all about when it comes to Abt’s retail success. By taking steps to stand out from the crowd from setting the right price to creating a stellar experience the company has not only weathered the growth of big-box electronics chains but thrived alongside them.
“We want to enjoy our work, our business, and I think our customers benefit a lot from that, too,” says Abt. “We’re a serious customer, but we’re all about having a good experience for ourselves and our customers. We are one store, and people usually do have to drive from far away to get to us. But we’ve been successful for 70 years.”
HOW TO REACH: Abt Electronics, www.abtelectronics.com
Education: Trinity University, San Antonio, dual major in home building and business; MBA, Xavier University
First job: Growing up in a family business, when I was in the fifth grade, my sister and I cleaned our ‘world headquarters’ construction trailers. I’ve worked part-time in some capacity ever since then. When I graduated from Xavier in 1983, I started full time with the Drees organization as what we call an operations manager.
What has been your greatest business challenge?
The most exciting business challenge, the thing I learned the most from, was when we started up the Dallas operation. I moved down there with another guy who was my boss, and we started this business up from scratch. That was a learning experience in itself.
Everything in Cincinnati happens 10 years behind the times, but Dallas is the cutting edge of the homebuilding industry all the national players are down there. I learned so much about the industry from that experience. It was really exciting. And from the company standpoint, the company learned so much.
That’s really what catapulted us that knowledge catapulted us to become the largest homebuilder in Cincinnati.
What is the greatest business lesson you’ve learned?
My philosophy is, we’re in the people business. We can’t do what we do without having a thousand great employees. So we’ve got an organization dedicated toward recruiting and developing those employees to be the best they can.
We’re a very decentralized industry we rely on the talents and skills and motivation of the people at the local level. With the people in direct contact with the customer, nothing happens unless they make it happen.
Whom do you admire most in business and why?
My father, because he has unique skills. He’s obviously very entrepreneurial he was able to build this company from nothing but he also is a great leader. People trust him and respect him and want to follow him and admire his character.
But he’s not a control freak he’s a great delegator, too. A lot of entrepreneurs, they’re great at really controlling the show, but they can’t grow the show because they can’t let go. And although he has got some great detail skills, he let his managers grow and develop and be responsible. That’s what you’ve got to do if you want to grow in this business.
Desai, president, CEO and chairman of QLogic, an Aliso Viejo-based producer of storage network components, has developed a growth strategy built upon two relationship-centric practices: building partnerships and making acquisitions. With offices around the country and abroad, and more than 800 employees, the company’s two-pronged growth strategy is driving great success.
A collaborative effort
In the world of information technology, nothing is static. Today’s cutting-edge innovations are at the top of tomorrow’s old-and-outdated trash heap. To complicate matters, technology doesn’t function in a vacuum to remain competitive, IT products must be compatible with multiple vendors’ products, in addition to being scalable and updatable.
And that is why, says Desai, no company can do it all alone.
“If you want to continue growing in this business, you have to have partnerships,” says Desai. “You cannot do everything yourself. You cannot develop all the technologies, you don’t have enough resources, and sometimes if you have a technology and a product, you don’t have a sales channel as good as somebody else’s. So what we do is we work with a partner.”
QLogic’s partnerships are an example of the company’s dedication to customer service, as the partnerships often originate from requests from clients. Rather than set out to develop partnerships that may or may not be what customers actually need, QLogic listens to its customers and develops partnerships based on specific client requests.
“OEMs say, ‘I’ve got this problem here, and I need about two or three technology companies together,’” says Desai. “They say, ‘I need these solutions, and you guys don’t have it. You don’t have all the technology I need, the other guys don’t have it, so I want you to work with these partners and develop this.’”
And QLogic does. Rather than saying, “That’s not what we do,” or choosing to focus on other, less-demanding clients, QLogic makes an effort to meet the needs of those customers even if that means partnering with a competitor or developing a technology that only fits a very narrow specialty.
“We really help our customers solve their problems,” says Desai. “I think that we bring solutions to the customers which they could not have done with either of the partners, either of the suppliers [alone]. And when we work jointly to bring the solution to the customer, we solve two problems. We solve the customer’s problem, and we bring growth to both partners.”
And the opportunity for growth for both partners or some other benefit, such as increased market share or brand recognition is one the most important deciding factor that QLogic examines before entering into a partnership. If all of the partners and clients won’t see gains or improvements from the partnership’s efforts, then the project will fail.
“Whenever we work with a partner, I always tell the team it has to be a win-win situation,” says Desai. “And if it is not wa in-win situation, the partnership will never work.”
By carefully reviewing each opportunity, Desai says the company has never had a failed partnership.
Once QLogic executives have decided that a partnership is the right opportunity, the project leaders on QLogic’s side, the leaders are often marketing and engineering executives, and sometimes, Desai share ideas and develop a cohesive vision for the project. This step is one of the most important factors in the success of the project, second only to ensuring that everyone involved will benefit from the partnership.
Says Desai: “As long as the top-level management, either the CEO level or the executive level, whatever the partnership is, [they] have to agree on what they’re trying to do, and then they have to drive both organizations.”
Using phone and in-person meetings, the project’s leaders discuss their goals and thoughts on attaining them, then decide on a joint project goal and a system for attaining it. Desai says as long as the project’s leaders agree on goals and methods, it’s easy to gain employee buy-in and drive the partnership through the organization.
While solutions are often created based on the request of a single customer, the resulting product or system will usually work for many customers, current and potential. Marketing is needed to ensure that those customers are aware of the new product. Marketing people from both companies work together to figure out what technical knowledge is needed to use the products, then bring in the appropriate technical people from both companies to solve those issues.
Partnerships have proven to be a very successful growth avenue for QLogic. Not only do the collaborations feed into the company’s growth by helping it identify customer needs and develop new products, but collaborations also improve the company’s customer relations clients know that QLogic is willing to do whatever it can to meet their needs.
Desai also uses acquisitions as growth strategy to create long-term success.
And while the potential benefits of acquisitions are greater than those of partnerships, the challenges are also greater, something Desai learned first-hand. Of the five finalized and established acquisitions QLogic has completed in the past 10 years, four have been successful. The fifth acquired company closed after eight months.
“We figured out that it’s not the right culture and the right measures we thought about, so we said, ‘OK, take your losses and quickly get out,’” says Desai.
The company learned from its mistake, and now it only looks at acquisitions that meet three strict criteria.
The first is that acquisitions must be made for the company’s technology, never for the company’s market share alone. New markets can be developed at a relatively reasonable cost, and QLogic is a technology company if a company offers market share without a solid product at its foundation, the acquisition will never work.
The second criterion is that the company must ensure it doesn’t encroach on its customers’ space. After all, there are few bigger turn-offs than becoming a direct competitor to your customers.
And the third criterion is that the acquisition should help QLogic remain focused on its core business, help it expand its core business or help it move to an adjacent market.
An acquisition starts with QLogic’s three-year plan.
“[We say] this is our strategy for the next three years, and one of the strategies is, we want to expand in an existing market, for example, or we want to go and invest in the adjacent market,” says Desai. “Then the team can go and look at how they’re going to fulfill these strategies.”
The team then finds two or three companies that fit the three-year strategy and that meet the acquisition criteria, and presents the options to Desai and QLogic executives. After that, each potential acquisition is studied in-depth.
“The team of people it can be 10 to 12 people at engineering or marketing levels - go and look at the technology, where they have it, how far they are, what the technology is,” says Desai. “They look at culture, they look at the locations. They look at a lot of different criteria. Then they come back and give a presentation to the CFO and me, and say, ‘This is what we have to look at it ... this is how we looked at it, and these are the pluses and minuses.’ Then we jointly decide as a consensus which company we should go after.”
Once the best potential acquisition has been selected, Desai and QLogic’s CFO get involved and contact the company to begin talking.
To complete due diligence, QLogic has developed two processes a pre-acquisition process and a post-acquisition process to help ensure that every criterion is met and that everything gets done. Each process has a dedicated team, and each team has an evolving checklist that has to be completed, either before the acquisition can be completed or to ensure that the transition goes smoothly.
One important item on the pre-acquisition checklist is the acquired company’s culture. This is something Desai often looks at himself, to ensure that the two companies’ cultures will be a good fit.
“For example, the team environment [is important],” he says. “QLogic is very heavy into the team. We don’t like the silos. And we can figure that out pretty quickly whether these guys are going to match or not, talking to people.”
Once the acquisition and the checklists have been completed, the biggest acquisition challenges begin to emerge: How will the new acquisition operate? How will it be managed? Will all of the employees be integrated?
The answers are decided on a case-by-case basis, says Desai. In some cases, the owners want to cash out and leave the company, while others stay on to run the company.
And depending on the acquired company’s size, management team and structure whether it would function as its own business unit or as part of the larger QLogic unit QLogic’s acquisition management style ranges from very hands-on to very hands-off. But it always integrates support functions, such as finance and human resources, into the central structure, creating, at least in part, corporate unity.
This partner-and-acquire strategy is driving strong growth. QLogic’s net revenue has increased from $216.9 million in 2000 to $571.9 million in 2005, and it has continued to broaden product offerings. And given the strategy’s success, Desai doesn’t plan to change a thing.
“We want to continue the growth in our core business, we want to continue expanding, and we will continue looking at new markets, adjacent markets,” he says. “We’ve done extremely well.”
How to reach: QLogic, www.qlogic.com
Born: Los Angeles
Education: University of Arizona
First job: I worked at the Iron Gate Restaurant in Palm Desert, Calif., as a cook and waiter. I eventually became the manager.
What has been your greatest business challenge?
I would say that we’re facing it now, in the sense that, as we grow this company at 20 to 25 percent per year, we need to maintain its culture. It’s (got a) small company feel, yet that has to grow into a much larger organization.
What has been the greatest lesson you’ve learned?
I had the opportunity a few years ago to meet and have dinner with and develop a relationship with Coach John Wooden of UCLA.
A lot of people know who that is, but what they don’t realize is that not only he was a coach but he still is a coach, in terms of his life experience and the way he approaches life and the way he approaches team-building. He’s definitely the person I admire most in life, and it’s probably affected my way of doing things.
Strangely enough, as much as he is considered to be such a positive man and a very great coach, he’s also extremely direct. But he’s the kind of person who can be direct and you can come away thinking about what he said and not how he said it. It’s really powerful.
Lisowski: Maintaining the family atmosphere and the family values of AIT as we’ve grown. Back when I was growing up in Chicago, we had a bank called Continental Bank. Their symbol was a kangaroo with a baby kangaroo in its pouch, and their tagline was ‘We’re the big bank with the little bank inside.’
That’s always struck a cord with me and with AIT. We’re a large transportation company, but we want to be viewed by our customers as a small transportation company. We want to be able to give them all the products and services and great rates that a big company can, but yet we want to have that small feel so we know customers by name, we know employees by name, we have a one-on-one relationship with people.
Leturno: From more of a business challenge, ours is a very people-oriented business. Without good people, all of the values and all of the commitment to service that we’re about wouldn’t happen.
Hiring good people is always the real challenge because every individual has their limitations, and when you get to the size that we are now, it takes every employee, and a strong effort from them, to make the business what it is. If we attract better people, train them well, motivate them well and get them involved in the total process, we’ll be successful.
What has been the greatest business lesson you’ve learned?
Lisowski: I’m torn. It’s either treat everybody like we’d like to be treated ourselves with respect or, No. 1, we’ve got to take care of the customers, and No. 2, we’ve got to take care of our employees.
Leturno: Treating people a certain way and not losing sight of what is really important, which is taking care of the customers and taking care of the employees, is key. If you get a few basic things like that right, all you have to do is repeat that same process over and over again as you draw in more people.
If you just get the formula right and do it over and over again, you can continue growth in basically the same way you started when there were only two of you.
Whom do you admire most in business?
Lisowski: A lot of people have played a very important role in my business career. There’s not one to single out some of these mentors I’ve learned a lot of what to do, and some of these mentors I’ve learned what not to do, but there’s a lot of people that stand out in my mind.
Leturno: We’re competitors with a lot of great people out there. It’s hard to say we admire them. We may strive to keep up with them, but we don’t know the owners well enough to say that they were mentors.
We’ve had to do it on our own.
A good first impression can lead to a job offer; the right sense of humor can land an important contract. And a company’s culture can support and encourage growth, which is exactly how it is at AIT Worldwide Logistics, an Itasca-based third-party logistics company.
Steve Leturno and co-founder and co-owner Dan Lisowski started AIT in 1979 with just four employees the two of them and their wives. Twenty-six years later, the company has 720 employees and 2005 revenue of $300 million.
This success, the founders say, is a direct result of AIT’s focus on three people-centered things: communication, training and promoting from within.
At AIT, open communication begins at the top all employees are encouraged to share their ideas and concerns directly with the owners.
“With us, it starts with our accessibility,” says Lisowski. “We’ve had the luxury of growing the company from when it was just Dan and Steve to the company today. It started out with just the two of us, and it was easy in those days if you had a problem, if you had an issue or an idea, you came and you talked to Dan and Steve.”
Today, the founders encourage that same small-company openness in many ways. First, they share an office, just as they did in the beginning, so employees don’t need to track them down and arrange special meetings to speak with both of them.
In addition, they ensure that employees and managers aren’t hung up on the company hierarchy.
“It’s not the type of environment where if somebody goes over their supervisor, heads are going to roll for it,” Lisowski says. “We tell the supervisors that we don’t want to see that. Ideas start everywhere, so if somebody has an idea, somebody has an observation, let’s hear about it, let’s talk about it, let’s make the company better.”
The founders also ensure that employees have access to them by maintaining their presence in the company headquarters.
“We’re here every day,” says Lisowski. “I walk around the building a number of times a day just to say hello to people and see what’s going on so people know us and feel comfortable with us.”
Finally, the founders make sure that employees understand from their very first month with AIT that Lisowski and Leturno are open and available for chats by meeting with new employees to discuss company culture and history.
Beginning a new job is never easy besides dealing with new job responsibilities and new co-workers, there is also a new culture with its own quirks and nuances to learn. To help facilitate integration into the company, Lisowski and Leturno host monthly meetings for all new hires.
“We tell them the story of AIT and tell them that 26 years ago, we were just a couple guys from the Chicago suburbs, much like they might be, and we had an idea,” says Lisowski. “We wanted to serve our customers well, we wanted to treat our employees right and we wanted a business for ourselves. We really tell them the story of AIT and how we began, and I think that that really goes a long way.”
In addition, they take care to emphasize the importance of the individual employee within AIT.
“I think one of the things I like about our training is we try to make them aware that each and every one of them can make a difference,” says Leturno. “Our product is service. (There are) a number of steps that have to be carried out successfully in order for a shipment to be delivered on time. (If) any one step in the process that fails, we have a service failure that affects our customer.
“So every person, it doesn’t matter if you’re the first one to touch the shipment or the last one to touch the shipment, they have to do the job. And we try to stress that with the people right from the very beginning it doesn’t matter what your position or role within the company is, you affect the total quality product that we have.”
After their initial orientation, new hires are turned over to their managers for further training in a very informal process. Simply by working closely with their department and supervisors, new employees begin to absorb the culture and learn what is acceptable and not acceptable and what the company’s values and beliefs are.
This also helps develop and establish mentoring relationships throughout the company.
“Everything that we do is about mentoring, but it may not be a big formalized process,” says Leturno. “But that’s the way people learn in this business. There’s trial and error, but that’s costly to the customers.”
So new employees work closely with their supervisors for the first six to 12 months of their employment.
“Our industry is pretty straightforward you’re picking freight up and you’re delivering freight,” Leturno says. “But then there’s all these twists that are thrown into the process, and if you’ve never experienced it before, you don’t necessarily know what to do. That’s where these new employees can go to their supervisors, and (the supervisors) can mentor them to sort of get through that first-time experience without too many problems. It’s mentoring, and it’s on-the job training as well.”
There are also formal training programs. When new, large clients sign on, sometimes the company needs more employees to ensure the job is done right. That’s when Lisowski and Leturno open up AIT University.
“There’s been a time or two where we’re hiring groups of people, maybe five to 10 people at a time, where they go through an intensive two-week orientation/training process,” says Leturno. “Most of these people are from outside of our industry. We might get them through a college recruitment. It’s almost like it’s an AIT university course that we’re trying to offer them, so they not only learn the company, but they’re also given an overview of the various departments that are important in running a forwarding company.”
After orientation and training, the group of new employees is broken up into singles and pairs, and they rotate through departments. This not only gives new employees a hands-on understanding of what each department does and where it fits within AIT, it also gives supervisors a good understanding of where each employee’s talents lie.
After a month or two, the rotations end and each employee is assigned a permanent post. Not only does this help assimilate new employees into the culture and develop well-rounded employees, say the founders, it’s also led to many of the “students” becoming supervisors or managers within a very short time.
But once employees are up and running in their positions, training doesn’t end. At AIT, it’s continuous.
There is a section of the company’s intranet called AIT University that houses the answers to frequently asked questions and the solutions to common problems employees encounter. In addition, the co-founders are developing and considering implementing a program that would test employees’ knowledge on a monthly basis.
Once a month, each employee would receive an e-mail containing 10 questions relevant to his or her department and position. Employees would have to answer the questions and send them back. They would receive confirmation as to whether their answers were correct, and if they were incorrect, there would be an explanation about why the answer was incorrect and what the correct response was.
“Some people will say it’s kind of a testing,” says Leturno. “It is a testing, but it is more than that it’s an education process. ... All this is meant for us to identify weaknesses that we might have in servicing the customers. You tabulate those scores and you work this on a continual basis, and then what’s going to happen over the course of a year or two is you’re going to get an entire group of employees that will be more knowledgeable and better able to help our customers.”
Because AIT invests so much time and energy into training and educating its employees, it works hard to ensure that they stick with the company. Lisowski and Leturno attribute their low turnover rate 46 percent of employees have been with the company five years or more to one simple rule: Treat people like you want to be treated yourself. And that doesn’t mean just the best employees it means all employees.
“Not everybody that comes in is going to be a superstar, but you work with them,” says Lisowski. “You be honest and upfront with them, and you tell them what the positives and what the negatives are, and you do it in the right way. You really can turn people and develop some long-term employees just by being honest and upfront with them.”
Because of its well-trained and loyal employees, AIT has expanded over the years into the international market, serving more than 4,000 clients worldwide with more than 330 international service centers. Not bad for a company that started in a single sublet office.
And this growth has established a sort of circle of benefits for AIT. Company growth is made possible and supported by the employees, and the employees are, in turn, supported by the company’s growth.
“Because of this continual growth, there are opportunities,” says Leturno. “People want to know that if they do a good job, it’ll be recognized and it’ll be rewarded. And because Dan and I are so involved with the day-to-day goings on, people’s accomplishments are recognized, and the growth allows us to create additional opportunities within the company.”
Lisowski and Leturno have established a clear hire-from-within policy at AIT.
“We don’t go to the outside when a new job is created; I mean, we do on occasion, but we first look within, because we feel that promoting people from within is a very positive motivator and way of saying thank you for that job that you did,” says Leturno.
Together, these three people-centered culture components communication, training and promoting from within have helped AIT not just survive but thrive.
“When people work at a company, they want to know that they’re appreciated,” says Leturno. “They want to know that their ideas and opinions are appreciated and listened to and that they can actually make a difference. And that is really how we have grown (AIT), through the people. It’s a people business.”
How to reach: AIT Worldwide Logistics, www.aitworldwide.com or (800) 669-4248
Education: Bachelor of science degree, master of science degree, civil engineering, Purdue University
First job: Project superintendent, East and Co., for a division of U.S. Homes
What has been your greatest business challenge?
The first one was having the opportunity to start a business. I call this a family business in third generation, but the preceding company, which my father was head of, ceased operating on Dec. 31, 1981.
We formed this company on Jan. 1 of 1982, and I have been the CEO since the beginning. Having that opportunity at the age of 32 was tremendously exciting and is something that I take tremendous pride in.
Separately, what we’ve done in repositioning our company over the past few years and moving in a new direction and creating new opportunities like those that I had for the next group of 32-year-olds (has been a challenge).
What has been the greatest business lesson you’ve learned?
I think integrity we’re trying to have small successes, and every now and then, you have big successes, but we’re trying to do our job right. And integrity is No.1.
Not everything goes right, but if you work through problems, it really shows character, and people appreciate that a lot.
Whom do you admire most in business and why?
I’d have to say my father, for a couple of reasons. The company I first worked for was very production-oriented, and it wasn’t intentional, but production was prominent. And when I started working for my father, it was a totally different industry, but it was really focused on being thorough and complete and doing work correctly.
The second one is, growing up, I’d see him work every evening. He had a tremendous work ethic.
No. 3 was, he was an entrepreneur and wanted something a little more than he could get working for my grandfather, so he became interested in real estate, and he would bring those real estate opportunities to his brothers and my grandfather. He was the one that pushed them into real estate.
No. 4 is he has been very generous with his time and money. He would take a leadership role in the chamber of commerce or another organization and he would give of himself to do that. He would come away with two things: He would make the community better and he expanded his friendships.
It was no different at Cincinnati-based Messer Construction. While people were focused on meeting deadlines, building to specifications, complying with regulations and getting a project done, the bigger picture was being lost by both the employees and the clients they serve.
CEO Peter Strange and the company’s employee-owners began to realize that, while the company was great at focusing on project details, it was losing sight of what the client wanted and needed during the construction process. That needed to change.
“We get caught up in our own excitement, our relationships with all of the participants in the construction project, and the paying customer (doesn’t) get the position at the center of the circle that they deserve,” says Strange.
So in early 2003, Strange and his employees pulled together to develop a new plan for action, one that focused the company’s efforts on both the details and the big-picture impact of a construction project. Clients would be involved and excited about their project, and employees would be motivated by a better understanding of how the project would make a difference in the community.
They would create a new identity for Messer by changing the way it does business.
In analyzing the company’s priorities, Strange and the company partners Messer has an Employee Stock Ownership Plan, with 86 of its 300 employees qualifying as “partners” realized that the culture at Messer was very project-centered. It was focused on serving goals rather than on serving people, and while this brought satisfaction, it didn’t offer much in the way of personal growth.
Everyone thought it was important to create a culture that gives employees the opportunity to grow and to work on projects they find personally fulfilling.
“It’s the difference between digging a ditch and helping cure sick kids,” says Strange. “You can do either with a shovel in your hand. If you’re a craft worker and you’re working at Children’s Hospital on the new research tower, well, the ditch may need to be dug, but if it’s connected to the business plan, that just changes the game for everyone.”
The person digging the ditch needed to be better connected to a broader purpose so the work took on more meaning.
The company needed a structured way to illustrate how each project could help the community at large and establish a close working relationship between clients and employees to help all parties gain satisfaction from the project.
They began the process by identifying three key areas where Messer could improve its performance basic performance, reliable systems and connecting the project to a bigger picture for both employees and clients.
“The basics are the price to entry in any business,” says Strange. “The basics in construction are that you perform on cost, schedule, quality and safety. What we wanted to be is that next level up in terms of service and performance and professionalism.”
The next improvement was to build reliable systems in construction projects. The company had always employed buildings systems experts people who understand things such as heating and cooling systems but the focus was on completing the system rather than on completing the system to the client’s specifications.
Strange and his employees thought they should involve the client early in the building systems decision-making process, then hold themselves to concrete goals and measurements based on performance rather than on completion.
The third goal was to connect the project to the big picture, both for customers and for employees.
“Most exciting to me is this idea that construction, which is often the greatest or largest capital investment that many of our customers are going to make, be an energizing experience for the organization rather than an energy-sapping experience,” says Strange. “Too often, construction is associated with the distraction of arguments and litigation and fighting. Just having the absence of fighting is not energizing.”
After defining its three improvement goals, the next step for Messer was to figure out how to reach them.
The first attempt didn’t work out. A five-part program laid out all the necessary details, but it was too convoluted and loaded with confusing jargon.
So, the group reconsidered and developed ValuePath, a three-part program with more accessible language and clearer meaning.
The ValuePath program redefined Messer’s identity and how it would do business to reach the goals it identified as important.
The first part, WorkSmart, focuses on giving every person involved in a project, from the client to the electrician, a voice.
“It uses lean management processes to fully engage all of the project participants,” says Strange. “We’re going to measure that by the reliability of the promises that we make. We’re not just putting schedules on the wall and having them be static images. We’re measuring the reliability of commitments week by week on the project.”
The second part, WorkRight, focuses on helping owners have clear expectations and make informed decisions around building system performance before the project building starts.
WorkRight also focuses on ensuring all building systems are up to standard before the project is complete.
“If we say the humidity and the temperature is going to be at a certain level in a certain room, and we all agree that we’ve designed a system that is going to provide that, we don’t wait until the system is occupied to validate that that has happened,” says Strange. “We validate it from the first day.”
The third part of the ValuePath program is called WorkGuaranteed.
This focuses on giving the owner control of performance.
“Too often in construction, the construction industry is saying to the owner, ‘You need to step out of our way,’” says Strange. “We want to pull the owner in. The way we’re doing that is by sitting down with the owner’s leadership team and identifying their goals for the project, whether it is for the project not to disrupt the students when we’re working in an acting school or infection control when we’re inside a hospital.
“We put our fees at risk against the owner’s goals instead of just getting the building built, no matter how difficult the process. We’re having the owner’s goals be at the center of performance.”
While the new, three-step ValuePath has been in place internally for a while, it’s only recently been introduced to clients.
“We kind of have a bias for using things in our own lives before telling other people it’s good for them,” says Strange. “Because we perform both lump-sum and competitive, negotiated work, we’re able to test these processes when our dollars are at risk.
“So what we’ve done is we’ve adopted processes and started applying them, and then after we have them validated, (we) ramp up the communication process around them. We didn’t want to go out and push something on the sales side until we had measurement of the results on the performance side.”
Thus far, the results have been good.
While the project continues to evolve and Strange expects ValuePath to be the work of a lifetime, preliminary results are promising. In 2003, the company brought in revenue of $404 million; in 2005, it completed more than $500 million worth of commercial construction projects.
And maybe more important, the project has helped change the way Messer employees approach new projects. It has given the company an identity that focuses construction in the right direction.
“What this is really about is taking a circle that has traditionally faced inward, where construction people dealt only with construction people, and turning that circle and facing it outward,” says Strange. “[We have to make] sure that everywhere we can, our efforts are connected directly to the owner’s purpose. I’ll tell you what that has done for us we’re very proud of every project we do.
“We used to be in a trap of measuring progress by cubic yards you know, 1,000 cubic yards is better than 500. But small projects can have just as much an impact on the community and on the outcomes as large projects. We know that now.”
How to reach: Messer Construction Co., (513) 242-1541 or www.messer.com