ICW Group was walking backward when Kevin Prior took over.
Six years ago, before Prior assumed the president and CEO’s role at the personal and business insurance provider, the company was focused primarily on technology. Though technology is an element in the success of most businesses, Prior felt that ICW Group’s pursuit of technological efficiency was placing other, more important priorities on the back burner — namely, the company’s employees.
“When I took over, our order of importance was technology, process and then people,” Prior says. “We figured out what technology we would need to be successful, then focus on the processes and people needed to execute on that.
“I thought we were doing that backwards. We needed to start with the people necessary for success. Through your people is where you get the business requirements, the competitive needs. Then, once you have the people describe what the business requirements are, you can give ownership to the people to develop the products necessary to achieve your goals. Thirdly, you build the technology to meet those needs. So we were essentially doing things backwards.”
To reverse the priorities at ICW Group, Prior needed to spearhead a large cultural shift. The goal was to create a culture that focused first and foremost on engaging employees, leveraging their skills and talents, and giving them a voice in how the company did business.
It was a process that required everyone in the company, from top management on down, to develop a new mentality — and, in some cases, hire and develop new people. It required the development of a new, stronger mission and brand identity. Above all, it required relentless communication from Prior and his management team, coupled with a willingness to listen to their employees.
Form a plan
The first step in shifting the culture at ICW Group was to refocus the company on its vision and core values. Prior started to reform the company vision by constructing it around the stated goal of rebuilding the culture.
“You start something like this with the realization that it needs to occur, which we made part of our vision,” Prior says. “When I took over, the company didn’t have a strong mission and there wasn’t a lot of clarity around the core values. So we started with something that really represented our vision, an acronym called ‘FACT.’ It stands for ‘finance, advisers, culture and transformation.’”
To rebuild a culture, you need to first identify what you want your new-look culture to emphasize. Prior and his leadership team settled on those four areas, around which they would rally the entire company.
“With finance, we started talking about how we wanted to use leading indicators to drive real-time decisions,” Prior says. “We wanted to look forward, not backward. With advisers, we wanted to develop a brand position that dealt with not just enhancing the relationship with the agent but enhancing the relationship the agent has with the insurer. The culture aspect was aimed at creating a self-sustaining culture, meaning that we wanted to memorialize the activities that made us successful. The technology part was more about sitting down with people and asking them how we can make it a part of the new culture.”
After rolling out the initial principles upon which the new culture would be based, Prior wanted to begin recruiting and developing change-minded people who could help transition the company.
To change your culture, you need to find people who are willing to take the initiative and make change happen. Prior wanted to find employees — both outside recruits and in-house talent — who wanted to do more than just follow orders. Prior says it was a difficult task in some respects, largely because he was swimming upstream against a childhood’s worth of socializing in each employee.
“When you’re undertaking something like this, you’re going to move away from employees who are just looking for direction and orders,” he says. “You’re going to start looking more for employees who like to engage in the process themselves. It’s a different skill set, and one that is tough to find in business.
“As we can all appreciate, in the first 16 or so years of our lives, when the bell rings, we’re told to sit down and be quiet. Now you’re sitting down with people and asking them to stand up, think about what is right and have a say in how you run the company. It’s a completely different mentality than how we’re socialized to be as children. You are looking for the people who thrive in that kind of environment, and then place them in key positions in the company.”
To address the issue, Prior and his staff had to both recruit for change and develop a change mindset in as many current employees as possible. On the recruitment front, it required a balancing act. You need new employees to possess business skills, but if the candidate doesn’t mesh with your culture, it will be a tough fit.
Finding the right employees to help promote a culture begins with developing and promoting a strong brand identity. More of the right kinds of people will find their way to your door if they know what your company is all about before they inquire about the job.
“It’s easy to find who fits and who doesn’t fit if you have a strong brand identity to begin with,” Prior says. “If you start with that, you’re probably getting more people who tend to fit at the outset. From there, during the interview process, they’re not just meeting one person. They need to meet several members of the team so that you can develop different touch points and try to understand the applicant.
“We always try to explain to the applicant that it is in their best interest to work in this culture and have it as a place where they can embrace it and thrive in it. That goes back to having a strong brand identity, so that people know what they’re getting when they walk in your door.”
Internally, Prior’s executive team members met frequently with each other to develop a plan for communicating the reasons behind the cultural shift, and then they began conducting quarterly meetings with ICW Group’s entire management team.
The communication throughout the upper tiers of the organization helped allow the culture to take root at the ground level.
“We spent a lot of time with the managers in those quarterly meetings, telling them that their attendance in the meeting was twofold: One, to bring ideas to that meeting to help us succeed, but number two, to be responsible for pushing down what is shared to the front-line employees. You really need to put that kind of process in place where the communication is pushed out.
“If you want to be a company that values ideas and has the business departments created by your people, you need to find out who can be engaged and execute at that level.”
Maintain the pace
To create a culture that endures over the long haul, you need to get your employees to buy in over the long haul. To make that happen, you need to continually spell it out for them in three letters:
“Why,” Prior says. “You need to start talking about the ‘why.’ Why is the culture important, and how can you, as an employee, impact that?”
Employees won’t continue to embrace and perpetuate a new culture if they don’t see concrete benefits in their daily or weekly work lives. Recognition is among the key benefits that an employee-centered culture should offer em ployees.
“Everybody that we have hired, we want to show them that they can exhibit passion and value achievement,” Prior says. “We want to develop and maintain quality reward recognition systems that reflect the company’s strategic imperative. We talk about our top performers on the top story on our Web site, but we also do it through financial incentives and through nonfinancial product incentives. We also reinforce the culture through word-of-mouth.”
The key to that is keeping the message simple. Write a new mission statement in the form of a bite-sized verbal morsel. No matter what you are communicating, if you want to take root with your employees, simply stated and quick-hitting is the way to go.
“Keep it simple enough that it’s repeatable and understandable,” Prior says. “You can’t have a two-page mission statement, and I would even take that a step further. You can’t even have a paragraph mission statement. You are looking for ideas that can be encapsulated in a few words. For example, our mission statement is ‘Powering our customers’ success.’ If I tried to convert that to a paragraph, when I stop someone in the hallway and ask them what our mission statement is, they wouldn’t have the ability to repeat that. As a result, their actions might not be in accordance with our mission. If your culture-related messages are too complex, people will either not get it or they will reprioritize all the points you’re trying to make into what they think it should be.”
Communicating a culture boils down to taking the long-range, long-term concepts formulated by you and your management team and converting it into something relevant to the employees who are focused on completing the work on their desks each week. You might be able to get some of your employees to think and rationalize according to the big picture, but chances are you’ll have much more success if you can take big-picture concepts and relate them to your employees.
“Your front-line employees are dealing with executing today,” Prior says. “The executive team is future-based and future-looking, and your employees are thinking about working today, executing today and how they can get the work off their desks by Friday. You have to be cognizant of that disconnect so that you can address it. You stop and celebrate successes. You show them how their actions support the community of the company. You give them the tools and show them that their input does provide value.
“You always have to be ready to answer the ‘What’s in it for me?’ question. Any change manager has to answer that question or you won’t get engagement.”
Five years after Prior and his management team began the cultural shift at ICW, the company is progressing well, with 717 employees and $368 million in 2008 revenue, numbers that are both significantly up over the course of the decade. In 2002, before Prior’s arrival, ICW Group had a work force of 460 and generated $234 million in revenue.
“Everything gets back to having a strong culture and brand identity,” Prior says. “If everyone is pulling on the rope in the same direction, it’s easier to pull someone off the rope who isn’t pulling in that direction. That is why we talk about memorializing our processes, so that when we have a new employee come on board, what they need to know isn’t located in someone’s head, it’s embedded in our processes. We’ve taken the art of what we do and turned it into a science.”
How to reach: ICW Group, (800) 877-1111 or www.icwgroup.com
When it comes to building a culture of collaboration and teamwork, keeping things simple can sometimes become a complicated task.
As principal of architectural and interior design firm Vocon Inc., Debbie Donley has built trust and confidence in her employees by adhering to a few simple rules seek employee input, maintain a flat organizational structure and treat your employees like the adults they are.
Adhering to those principles has helped Donley minimize turnover and keep the company which generated $15 million in 2008 revenue both culturally and financially sound in a faltering economy.
Smart Business spoke with Donley about how you can build an employee-oriented culture at your business.
Q. How do you develop a culture of collaboration?
It’s not what you say, it’s what you do. Your actions have to give everybody permission to participate in that kind of culture. If you say you’re inclusive but then turn around and make decisions on your own, it’s not going to work. It has to be a grassroots kind of effort in order to have that leadership style.
Q. How do you develop an organization to remain flat?
One of the challenges of building an organization is keeping it flat while still having accountability matrices in place. It’s always an uncomfortable conversation when you’re saying to your management team in our case, studio directors that you want to be casual and inclusive and democratic but still telling them they’re accountable for the profitability of their groups. But you can balance it. It’s not a free for all otherwise we wouldn’t be financially stable like we are, even with a slowing economy.
Q. How do you build accountability into an organization?
It’s really just communicating what your expectations are. You have to make that clear, because when you don’t know what your expectations are, it confuses everyone around you. That’s why we’ve really worked as a management team to become better communicators, not just with our internal management group but with the entire firm.
Honesty and trust are the keys to good communication. Like a lot of companies, we have been forced to make some tough decisions in terms of layoffs the first time we’ve had to do that in 21 years of running the firm. We laid off a group of folks, and afterward, it was really tough to stand up in front of everyone and explain why, but you just have to be honest.
That is what we’ve tried to be along the way, because if you lose the trust in employee relationships, everything just kind of spirals backward and it becomes really difficult to correct. So it just comes back to being honest. We have good things that happen and we share those, and sometimes we have setbacks and we share those. It’s better than just letting everyone be surprised about what is around the corner. So try to be as transparent as you possibly can about your situation.
Q. How do you keep employees engaged in building the company going forward?
People get motivated when they’re a part of the solution. You have to try to build that kind of can-do atmosphere. There is no secret as to where the economy is going. Most major corporations are hurting right now, so if I stood up at our state of the firm speech and said, ‘Everything is great, guys,’ that would be silly. So our people know that every hour they can spend doing something productive with their time will help Vocon.
The key to that is spending the time and taking the time, not brushing someone off if they approach your desk when you’re in the middle of something. If it’s a silly question or a personal question, you just have to be in the moment.
There are days where it does get in the way to have that approach; I’m not going to lie. You have deadlines; you have things to do. But you just have to make it a priority. If you’re accountable to your business and an active part of the leadership team, you should be accountable for the communication part of things. At Vocon, you won’t survive here if you don’t. We have hardly any turnover, but those who have gone, in many cases, it came down to not fitting in with our culture.
Q. What are some other keys to building employee trust and confidence?
I go back to the line, ‘It’s not what you say; it’s what you do.’ It’s one thing to get up and preach about the economy or preach about efficiency, preach about hard work, it’s another to actually demonstrate it, to put your money where your mouth is.
For example, we have flextime here at Vocon, and one of the reasons is that being a mom is a huge priority to me, and that flexibility is important to a lot of parents here. That’s just the bottom line, and we don’t want to do it any other way. As a result, when people walk out of here at the end of the day, you’re not hearing whispers that they had to blow something off on their schedule or anything.
People are accountable for their own schedules. The bottom line isn’t if you put in your 40 hours, or however long, it’s did you get your job done. It comes back to the fact that your people are adults, so you should treat them like adults. You need to promote adult-to-adult relationships in an organization, not relationships that are more like adult-child. That’s something we’ve worked really hard at doing.
How to reach: Vocon Inc., (216) 588-0800 or www.vocon.com
Does it sound contradictory? It really isn’t.
Since 2007, Steiner has been the chairman of Gamesa USA, which oversees the U.S. operations of Spanish company Gamesa Technology Corp. The company focuses on developing renewable energy sources, particularly in the field of wind power, and Steiner led its wind power operations for the $4 billion company in generating $4 billion in worldwide revenue in 2008.
While the U.S. operations are expanding and Steiner and his leadership team need to focus on new potential technologies and growth avenues, he prefers going back to the basics to make sure that happens. Throughout Steiner’s business and law career, he has found that by focusing on the time-tested methods of communication and culture building, he can make more progress.
So in order to get Gamesa’s more than 1,100 U.S. employees moving forward with him, he focuses on these two facets of leadership. Here are his keys to successfully communicating and building your culture.
Make communication a priority
Steiner’s company is decidedly high-tech, but in many ways, his communication style is low-tech. He emphasizes face-to-face communication, engaging employees on the shop floor and listening to feedback through multiple avenues.
Steiner’s first lesson in communication: Be a leader, not a salesman.
“I don’t get people to buy in,” Steiner says. “That sort of implies that we sold them something. What we try to do is lead by example, and we do that by respecting the people that we employ.”
Part of that comes through interaction. Engaging employees by walking around is a communication style that is as effective now as it was before e-mail and cell phones arrived on the scene. There is simply no substitute for putting your shoes on the floor, and it’s something that Steiner fits into his schedule as often as he can.
“One-on-one, face-to-face communication is simply the most effective method,” he says. “And in order to accomplish that, you have to manage by walking around. It is an old-fashioned idea, but it really works.
“I do it by getting into the plant, walking around on the production floor and talking to the people. I do it by talking to someone in the parking lot or in our home offices.”
You might find that you often communicate with employees only when you have something to tell them. But casual conversations about day-to-day subjects — even subjects that aren’t work-related — can also help build the all-important bridge between the employees on the ground level and management.
“If there isn’t anything that needs to be communicated concerning changes, issues or problems, the communication can be much more casual,” Steiner says. “But even then, I always pick up a lot of very useful information about what is going on, what types of problems people are having, things I would not have known about if not for those encounters.”
Steiner says one of the keys to developing an effective internal communication strategy is to know what communication is right for what situation. Informal communication helps build trust and a sense of familiarity between employees and management. But while personal, ground-level communication has its time and place, it needs to be a part of a larger communication strategy that you can scale to reach a given number of employees and managers with a message.
When Steiner needs a message to reach employees throughout Gamesa’s U.S. footprint, he relies on large-scale planning and the involvement of his managers to ensure that the message stays consistent from his desk to the bottom rungs of the organization.
“If you need to communicate something that is very specific, you need to have a more strategic approach to getting the word out,” Steiner says. “It might involve briefing the management team on what the issue is and what the context of the communication should be. Then you have to build a strategic approach to making sure they get that information out to their teams.
“In our case, we might put something out through a paycheck insert or a handout or bulletin-board posting. There are a lot of different ways to communicate strategically, but the bottom line is that strategic communication is something that is planned and calibrated.”
Once you have disseminated the initial message, you and your management team must keep the message in front of employees. If you communicate a message once and drop it, the message — and your communication strategy — loses a lot of its potency.
“You need to consider follow-ups, as well,” Steiner says. “Many times, people have questions, and I’ve seen the leaders at companies do an unsatisfactory job of answering those questions effectively. They sometimes feel that once the communication is out, that’s the end of the communication process. But the reality is that you probably have to tell people at least three times that something is important. The communication has to have some substance behind it in order for it to be effective.”
At Gamesa, a companywide announcement, such as a change to the benefits plan, is communicated to the line managers first. The line managers will then have meetings with their teams to communicate the message verbally throughout the company. A week later, Steiner’s corporate management team will send out a written communication as a form of reinforcement.
“Then, we follow that up with additional meetings to answer questions, because by that time, employees have absorbed enough information to begin to understand what the message is all about and how it affects them,” Steiner says. “Employees will always have questions, so it’s important to have that follow-up.”
You need to solicit feedback when following up. Employees will have questions, comments and concerns on any message of importance, so you need to provide them with avenues for reaching management, beyond group meetings in which some employees might be intimidated by the idea of speaking up.
“In our case, we do monthly surveys, and another way we get feedback is our monthly meetings with union representatives,” Steiner says. “They hear a lot of things concerning what we do and how we’re doing it — things that we don’t always hear ourselves. They get it in a little bit of a different context, and sharing that helps us to see a bit more clearly what we look like as an organization. It’s critical to get those different perspectives, because none of us in leadership roles can really see ourselves as others see us.”
Once you’ve identified and established avenues for feedback, you need to do something with the information you receive. If you do not react to what employees are telling you, your credibility will suffer.
“You do need to think about what employees are telling you and consider it carefully,” Steiner says. “You have to have a mindset that this kind of input is important and you need to remind yourself that there are people out there in your company who know more than you do. I have found that to be true in every work setting.
“Listening is a very useful skill, but it’s difficult for a lot of people to do. We’re all wrapped up in our own stuff and we have so much information buzzing around our heads that it’s hard to really and carefully listen to what other people are telling us. Unfortunately, that can be true in all of our relationships, workplace or elsewhere.”
Live your culture
The idea of living your culture each day is a broad topic that you might find diff
icult to completely define. Living your culture might mean embracing good ethical practices, demonstrating desired behavior through the examples you set or a number of other interpretations.
That’s why, much like he does with his communication, Steiner takes a strategic approach to building the culture and maintenance of that culture.
“One of the ways you can live a culture is certainly by doing it strategically,” he says. “You need to make sure you develop a plan where it’s clear, where people know that you’re going to do what you say you’ll do. A great culture doesn’t happen by virtue of an immaculate conception, so you really need to have that plan, have a calendar of tasks and actions that will support the mission, vision and values of the company.”
In addition, you need to get your employees excited about the job they are performing each day by showing them how their daily tasks contribute to the overall mission of the company. At Gamesa, Steiner wants to cultivate employees who are eager to further the cause of renewable energy.
“That’s one of the main things we communicate with regard to culture — our belief that we have an amazing place to work because we are transforming the world through creating technology and sustainable energy,” Steiner says. “We focus our employees on that idea that, at this company, they have an opportunity to better the world through their work each day.”
Your hiring practices also affect your ability to build and sustain your culture. Though the task of making hires might fall on the shoulders of your human resources staff, your company’s philosophy on hiring and how it affects your culture begins at your desk.
Gamesa’s human resources staff attempts to find cultural matches through the interview process. A willingness to embrace Gamesa’s cultural principles is one of the primary criteria upon which each job candidate is judged.
“We do attempt to evaluate candidates along those lines during the hiring process,” Steiner says. “We want to gain a picture of the attributes they are bringing with them from other work experiences, attributes that would indicate a higher probability of success in the Gamesa culture.
“One of the keys to the hiring process from a cultural standpoint is to see if the people you are looking to hire are excited about working at your company. Just like the people we already have in-house, we want to know that the people we are going to hire are excited about working in this sector. We want people who are going to be excited about the field of renewable energy, excited about how we’re contributing to the issue of fighting global warming and carbon emission problems.
“That’s what you’re trying to find out during the interview process: if they have a passion for what you are doing as a company.”
Once your culture has taken root, you need to tie it back in to your communication strategy by continuing to make yourself accessible to your employees on a daily basis. Employees need to continue to see you demonstrating your company’s cultural values and hear you talking about them.
“Simply put, if you lead by example, your communication strategy and your culture will work,” Steiner says. “If you have a lot of policies but don’t walk the talk, what you say is going to be meaningless.”
How to reach: Gamesa USA, (215) 710-3100 or www.gamesacorp.com
The story of John Soroko’s leadership at Duane Morris LLP actually begins years before he took over as chairman and CEO of the law firm in January 2008.
For nearly a decade before Soroko assumed the firm’s top post, Duane Morris had been transitioning from a local Philadelphia law firm with a centralized base of lawyers and clients into a national firm with offices in most major markets throughout the U.S.
By the time Soroko took over, Duane Morris employed 650 lawyers and 1,400 total employees, reporting $375 million in 2007 revenue.
Soroko needed to continue growing Duane Morris, and he needed to do it with a firm that had vastly increased its locations, its employee numbers and, perhaps most dauntingly, the miles in between.
“That was my big challenge, to keep that [growth] going, to move on to the next plateau and do it all while maintaining the culture that we very much value, a culture of collegiality and cooperation,” Soroko says. “Then, just to make things a little more complicated, do it all in an economic environment that is far from ideal.”
To make it happen, Soroko has placed an increased emphasis on hiring people who fit the culture, utilizing feedback to fuel growth and staying accessible.
It’s been a complicated process involving risk, but as with any business, the consequences of inaction are potentially more severe.
“The thought process was that if we stuck with the former, the best that could come out of that would be a fairly moribund institution,” Soroko says. “Therefore, it was a good gamble to take. We felt we could leverage our existing firm and culture to attract outstanding lawyers to help us build offices everywhere from San Diego to New York to Miami.”
Hire people who fit your culture
When searching for new players for your team, you need to find people who will fit your culture. At Duane Morris, the cultural fit is the most important fit for a newly recruited lawyer.
“If the cultural fit is there, then we’ll delve into the economic issues of how that lawyer joining us would affect his or her practice,” Soroko says. “We certainly won’t sacrifice the cultural fit in pursuit of a business fit.”
Finding the right cultural fit for your business can take some time, particularly when hiring for the management level. You need to formulate a hiring process in which multiple people in your company get to know a job candidate over the course of a series of interviews.
Soroko has potential new attorneys at Duane Morris interview with executives both in the markets they will serve and at the headquarters in Philadelphia.
“We have a process where if we’re talking about hiring for an office outside of Philadelphia, a potential candidate will be reviewed by a partner or the head of the office in that market, then come back and meet with a hiring committee within that market,” Soroko says. “Ultimately, that person will come to Philadelphia for a day of interviews and all of our reactions to that person will be carefully considered.
“At the end of the day, you’re getting a reaction from an awful lot of people involved in the day-to-day operations, and the track record in evaluating the candidates is usually pretty good. It’s something in which we’ve done very well.”
At Duane Morris, the firm’s leaders are looking for lawyers and staffers who are, above all, client-focused, open to collaboration and teamwork, and against the creation of internal territories and fiefdoms.
Culturally, you need to know what you want in a job candidate. But you also need to know what candidates want from the culture of their workplace.
Soroko says that one of the most important aspects of a work environment from an employee standpoint is the knowledge that he or she can speak up, voice concerns and share his or her ideas.
Listening is a critical leadership skill. As the head of your company, you are always obligated to keep yourself in the loop with regard to what your employees and customers are saying about your company.
“One of the things I stressed upon taking over the firm as chairman was my realization that, even though I have spent my entire career at the firm, the biggest mistake I could make was to not listen to the ideas, insights and perspectives that our partners have,” he says. “That includes partners who were newly arrived at the firm.”
But it’s not just you. Anyone in a management position in your company needs to listen. They need to hear what their subordinates are saying and what your customers are thinking. If those channels of communication wither, your company could stagnate.
Listening is not something that simply happens with employees, clients or customers. It has to be a conscious decision on your part.
“I decided to be a good listener,” Soroko says. “I’ve communicated that openness to our partnership, and there has been a largely positive response. To have meaningful client relationships in business, you have to realize that this is too big of a job for yourself alone. In this business, the key for me is, ‘Will my partners come through for me and treat my clients like their own in terms of giving them the most outstanding service they can?’ That’s the best story I can hear as the chairman, that a client is raving about the service from a new lawyer. Then, I know our relationship with that client will be stronger than ever because of the teamwork we exhibited.”
After Soroko took over the top post at Duane Morris, he and his leadership team began to formulate a plan for collecting feedback from clients, then using that feedback to improve the way the firm does business.
“We decided that this had to be attacked in a way that is more systematic than simply waiting until we got anecdotal evidence of client satisfaction or dissatisfaction,” Soroko says. “We decided that what we needed to do was reach out to clients by sending a team out to visit them. That team would then help us assess what we were doing right or wrong.”
Many companies distribute client satisfaction surveys. Duane Morris took it a step further, with the surveys taking the form of in-person interviews, conducted on the client’s home turf whenever possible.
“It’s been a great learning tool,” Soroko says. “We’ve found out much about our clients’ needs for the services we provide and their relationship with our firm.”
The feedback is then disseminated throughout the firm so lawyers can take the information that is relevant to their practices and use it to improve their client service. They might even get some ideas for new services to offer.
During the in-person survey interviews, clients have expressed a need for other legal services, helping Duane Morris increase the span of its service.
Soroko says you must take the good with the bad when seeking feedback. Customers might criticize parts of your business that need improvement, but you might also find new ways to serve your customers.
“It’s one of the most interesting things that we’re learning from those interviews,” he says. “Areas in which clients are indicating a need for legal service, areas the clients are not currently having addressed by Duane Morris. In many instances, we could be the answer for a client’s needs.
“For instance, we might have a client for which we were largely doing construction law. But the client satisfaction survey might indicate a pressing legal need in another area, possibly an area in which the partner we have serving the client was too busy and really hadn’t inquired with the client about it. That’s how this client survey interview process has been an excellent way for us to assess the needs of our clients on more of a 360-degree basis. It’s really been a win-win situation.”
Flying around to visit each one of your customers might not be practical in every case, but the need to gather feedback in some form and use it to improve your business is constant and something about which you should be vigilant.
Employees won’t be able to help your business grow if you don’t give them a platform to communicate with your company’s decision-makers. You can have formal methods of interaction, such as monthly or quarterly meetings. But communication in any form is a step toward building and maintaining a culture in which employees feel involved and valued.
At Duane Morris, Soroko likes to walk the halls whenever possible — but when walking the halls doesn’t cover enough distance, he relies on technology to bridge the distance. Many CEOs dislike the absence of personal engagement when communicating by e-mail. Soroko says that while e-mail can’t sustain a communication strategy alone, its ability to reach many people in a short period of time and its ability to allow people to reach you just as fast shouldn’t be overlooked. E-mail can’t substitute for in-person communication, but it can fill the space until you are available to meet in person.
“I am a walk-the-halls kind of person, but in a law firm that has almost 700 lawyers, 200 of which are in Philadelphia, you have to walk the halls in a cyber method,” Soroko says. “I send a lot of notes to people. I use e-mail a lot. When I read about a partner in our San Diego office having published a very timely client alert, I’ll stick it in my briefcase, read it, give the person an attaboy or attagirl and add some comments.
“In the aggregate, it has had a very positive effect in two ways: I get a good sense of what our partners are doing, and they get a good sense that I’m following it all.”
But electronic communication only works as a supplement to communicating in person. Soroko visits all of the Duane Morris offices on a rolling basis. As with the in-person client interviews, it’s a time commitment, but if you want to make yourself into a good communicator, it’s time you have to mark on your calendar.
“It’s simply about prioritizing,” he says. “Communicating is at the top of my list. It might mean that you sacrifice some time or attention for other functions, but you have to make up your mind that your people are important enough that you are willing to do that.
“When I first addressed our partners as the newly installed chairman last year, I stressed that if there was one thing I understood very clearly, it’s that I did not then and would not over time have all the answers. I was relying on them to give me input, suggestions, complaints and feedback about what steps we could take to make Duane Morris the strongest firm possible.
“If you have that openness to the ideas of others while at the same time having a good vision in your own mind about how you are going to lead, that will prove to be a winning combination. But if you think you have all the answers, and it’s a matter of you leading and people scrambling to follow you, that is a far less successful approach.”
In January 2004, Mike Duggan took over the Detroit Medical Center, a health care system that had lost $500 million during the previous six years, including $130 million in 2003. The available time to turn the system around was growing short. “We basically had about six months to get the place turned around,” Duggan says. “The projection I was handed the day I started was that DMC would be entirely out of cash by May 31 of 2004. That was the very first thing our finance people handed me.” Turnarounds are nothing new to Duggan, the system’s president and CEO. The veteran Detroit-area business leader has been helping perform them for more than 20 years. But saving one of the largest hospital systems in southeast Michigan is something above and beyond what even Duggan normally encounters.
In the months prior to Duggan’s arrival, DMC had announced plans to close the receiving wing of Hutzel Women’s Hospital, which receives around 80,000 patients a year.
“A large number of them are poor, and Hutzel delivers 4,000 babies a year, many of them high-risk pregnancies,” he says. “So the effect on the community would have been catastrophic.”
On top of the financial problems, the system’s talent base had been depleted. Most of DMC’s upper and middle managers had left the organization, leaving it without a clear sense of direction or purpose.
Duggan needed to develop a plan to save DMC, find and cultivate resources to make the plan happen, and along the way, get an organization of nearly 12,000 people on board with the new vision.
Form a plan
Duggan has three basic rules for executing a turnaround. One, talk to your people and involve them in formulating the go-forward strategy. Two, find a major win early in the process to build confidence in the plan throughout the organization. Three, get everyone focused on the go-forward strategy — and as part of that, do not tolerate bickering among your employees.
“If you do those three things, good things will happen,” Duggan says.
Involving your employees from the beginning is crucial. Employees who are left in the dark during a time of transition will begin to form their own conclusions, which is how rumors start. Above all else, you need to make sure you are crystal clear on where your employees stand with regard to job security. In a time of change, that is likely the first concern that will cross every employee’s mind.
Duggan met with groups of employees more than 100 times in the first year of DMC’s turnaround. In those meetings, he consistently relayed the same message.
“When you’re in a turnaround, all you’re going to get asked all day is, ‘Are you going to save my job?’” Duggan says. “I’d tell every employee the same thing: ‘I can’t save your job; nobody can save your job except satisfied patients. If satisfied patients come here and tell their friends and family, we’ll be hiring a lot of employees. If people have bad experiences, there is nothing I can do to help you.’
“‘The turnaround starts with you.’ That’s the message I delivered day and night for the first year.”
Duggan heightened the entire organization’s awareness of patient service in the first year, and used that renewed focus to help roll out a plan designed to create a market differentiator for DMC — and in the process, gain the all-too-critical first comeback win around which he could rally the organization.
“In May of 2004, we launched a 29-minute emergency room guarantee,” he says. “One of our competitors had done a 30-minute guarantee, and I was trying to instill an ethic that we’re not going to be as good as the other guys, we’re going to be better.”
The plan involved streamlining the emergency room process, reducing the time between when a patient arrived at a DMC emergency room and when the patient saw a doctor to 29 minutes or less.
Duggan says it was a matter of identifying one of the primary areas in which his business receives customers and formulating a plan to improve customer service and, by extension, customer loyalty.
“An emergency room isn’t necessarily where a hospital makes its profits, but there are two ways we get patients,” he says. “Nobody comes to the hospital and says, ‘Hey, I need gallbladder surgery today.’ Patients either come in through the emergency room or they are referred by a doctor.
“When I looked at it, it was clear to me that the doctor referral path takes some time. I needed to turn the cash situation around immediately. If you cut your hand open, you decide which emergency room you’re going to that day. So it seemed clear to me that the fastest way for us to conduct a turnaround was in the emergency room.”
From there, Duggan continued to focus on communicating the idea to his employees and selling the idea of the 29-minute guarantee as a path to follow, along with removing roadblocks to the plan’s ultimate success.
“I’m pretty good at laying out a case, but I did have one hospital vice president who disagreed with me on the 29-minute campaign,” Duggan says. “He did not think it was a worthwhile exercise, and I fired him. I did it in a friendly way, but I told him that this is the direction we’re going and you’re either with the program or you’re not.
“He was the only one I had to fire. When we made it clear that you were going to follow central strategy or go somewhere else, and the central strategy worked, you put those two pieces together and most people are going to follow because they believe in it. But you also have to be willing to remove roadblocks, otherwise you’re not going to get to where you want to go. And by roadblocks, I mean people.”
Enable your employees.
As the turnaround gained momentum, Duggan could begin focusing on the types of employees he wanted his staff to recruit and retain as DMC moved forward.
Duggan says talent is only part of the equation when it comes to building a staff. You must also inspire your employees to follow your vision and enable them to best utilize their skill sets.
Getting employees on board with a new plan when the company is in a state of crisis is easy compared to keeping that level of buyin once the situation has stabilized and upper management is no longer speaking in terms of survival.
“In many ways, it’s a lot easier to get people focused when you’re in trouble than when you’re doing well,” Duggan says. “When they’re in trouble, they’re paying attention to you. When things are going well, people are busy patting themselves on the back. So in that first year or so, I had an advantage in that everyone was paying attention to me.”
For his plan to achieve long-term success, Duggan needed to take the big-picture goal of saving the organization and drive it down to the personal level. Individual doctors, nurses and staff members wouldn’t be able to effectively implement a 29-minute emergency room guarantee if each person didn’t know how his or her specific role played in to making the guarantee a reality for patients.
Throughout the organization, Duggan had his managers construct individual goals for many staff members. Each individual set of goals had to play in to turning around the entire organization.
Setting goals helped DMC employees think in terms of the big-picture turnaround and also helped foster a culture of accountability.
“Everybody has a role in the turnaround and is precisely measured on what their role is,” Duggan says. “If you start to make excuses while others are making their targets, you quickly realize excuses aren’t going to work. If you put those kinds of goals and measurements in place and hold people accountable, I’d say 90 percent of the people who can’t get the job done will leave voluntarily.”
Employees thrive when their roles are defined. When Duggan arrived at DMC, many employees either didn’t have a solid grasp of their roles within the organization or were miscast in roles that did not suit their talents and skills.
Improperly leveraged talent can become a major hindrance to a turnaround, and it’s something Duggan addressed in his meetings and conversations with employees soon after he started.
“We had a lot of people here who I was told were poor employees, but they excelled when they were told what their roles were and how they fit in,” he says. “A number of people did extremely well and had been waiting for years for someone to give them a program in which they would succeed.
“That’s the most fun part of the job for me, to watch people who had been beaten down in a job for years come back to become great. We’ve had that happen many times.”
Experience and intuition can help a leader identify how to best leverage talent. But even more important is the willingness to observe and listen to your employees.
“You have to create an environment where people achieve more than they ever thought they could,” Duggan says. “Every employee has individual strengths and weaknesses. The key is to put each person in a position that maximizes his/her individual talents and then set goals that push the employee to reach that potential. You have to evaluate the progress each week and make one of four assessments: One, the employee is meeting the goals or making measurable progress in that direction; two, the employee is not meeting the goals because of barriers outside of the employee’s control (in which case management must act timely to remove those barriers); three, the employee is not meeting the goals due to work ethic, attitude or personal problems (in which case you need to either motivate or remove the employee); or four, the employee is not talented enough to meet the goals and you put him/her in the wrong position in the first place.
“If you’re closely and objectively monitoring performance, it’s pretty easy to figure out which of the four it is. The problem most managers have is the lack of courage or commitment needed to act immediately to correct the problems and assure that you’re getting strong performance from every position.”
If you create an environment where talent is properly leveraged, you will maximize your company’s productivity and increase your employees’ sense of fulfillment in their jobs. That has been one of the biggest keys to the success of DMC’s turnaround. The health system is once again profitable, with $2 billion in revenue in 2008.
“I’ve seen cases where people are failing in customer service jobs, but they understand the statistics and trends of the business,” Duggan says. “So we’d put that person in charge of pulling together reports, and put someone with interpersonal skills out front. All of a sudden, that person is thriving, and it’s not that he didn’t care about his old job, it’s not that he didn’t want to be a good employee, it’s that you weren’t using his talents the right way.
“The leaders I love are the ones who talk in terms of salvageables. The people who I consider to be the greatest leaders are the people who take an employee who isn’t doing well and can salvage them in a different role. There is a great deal of pride on the part of managers when they take an employee who was said to be a bad apple and allows that person to succeed by putting them in the right job.”
HOW TO REACH: Detroit Medical Center, www.dmc.org
Kennedy Health System. But circling a date on the calendar was only the beginning. In the months leading up to his May 31 retirement, Murray, who took the top spot back in 1992, has helped lead a massive transitional effort that has included identifying potential successors, assisting the board of directors in the hiring process as needed and, most importantly, helping the entire 3,600-employee health care system make the transition to his successor. “There has to be a date where the new person takes over,” Murray says. “But by the same token, to make that transition successful, I do think you need a transition period. All companies and corporations have separate cultures and ways of doing things, some of which is on paper and some of which is not on paper. Some of the hardest transitions occur not on the technicalities of the job but because of the unwritten culture of the organization.”
When you do decide to step down, your successor might be an internal promotion or an external hire. The person might have
been selected by you, by your board of directors or by a vote of shareholders. No matter how you find your successor, Murray says he or she is going to need the support of the people in the company. That starts with the transition process.
Make the best hire
The transition process formally began in September 2007 when Murray announced his retirement to the board. Following his initial announcement, Murray appointed a succession planning committee composed of members of the board of directors and himself.
“I wanted to make sure that there was sufficient time for the organization to quietly and systematically go about the process of selecting its next CEO,” Murray says.
In order to identify the best candidates and make the best hire, Murray says you have to take your assumptions and preconceived notions out of the equation.
To aid in that, the leadership at Kennedy Health brought an independent consultant on board. Murray says consultants can help a company’s leaders take a wide-angle view by removing personal bias from the decision-making process. Consultants can also put metrics in place to help you better weigh the positives and negatives of the decision you are about to make.
“Our consultant evaluated each of the candidates using various testing methodologies,” Murray says. “There was personality profiling, written and electronic exams, and different testing protocols that typical search firms use to evaluate candidates and make good matches for their clients. It allowed us to really take objective measures in the testing of our internal candidates and see how they might stack up against the best talent that might be out there across the region and the country.
“When we went through this process, we recognized that the first decision we’d have to make would be whether we had someone in-house who is the best candidate for us or whether we’d have to engage in a nationwide search. When we brought in (our COO), that was the result of an extensive search, and we were willing to go through that again if need be.”
As part of removing himself from the decision-making equation, Murray says he made it a point to take a backseat to the board of directors.
“I acted as sole counsel to the board, and when asked, I gave my opinion on the suitability of a candidate,” he says. “But really it was just consultative. This was the board’s decision on who to hire, and I tried to be very careful not to overstep my position or to try to influence the decision in any way. In our case, the board has to live with the decision they make, and it’s certainly their role and authority to make the call.”
After an internal search by the succession planning committee whittled the search down to several internal candidates, last year the board elected to hire Martin Bieber as Kennedy Health’s new president and CEO, effective June 1. Bieber had been hired as the COO in 2006 and is now the system’s executive vice president. Murray says he had prior CEO experience from a previous career stop, making him a natural fit for the role.
“Marty Bieber was the logical internal choice, being the COO, but we had two other senior executives who have a great deal of experience and who, under normal circumstances, would be considered potential candidates,” Murray says.
Keep your people informed
Shortly after announcing his retirement to the Kennedy Health board, Murray made his announcement to the entire system.
When a major change is forthcoming in an organization, the quickest way to start rumors and spread anxiety is to remain tight-lipped on the reasons behind the decision. Murray made it a point to communicate as transparently as possible about his retirement.
“There are normal anxieties whenever there is a change in leadership,” he says. “Part of that, in our case, is that even without a major change in leadership, the health care industry in New Jersey is under a lot of strain. We’ve seen many of the hospitals in New Jersey close, and there are more in bankruptcy.
“There are questions about stability, questions about change, is there going to be a new direction, will there be a tailing off of productivity and success.”
Murray announced his retirement through a letter sent directly to the homes of all Kennedy Health employees and kept employees informed on the progress of the successor search through internal mass-communications, including e-mail and the companywide newsletter.
Murray also relied on in-person communication facilitated in large part by those in upper-level management.
“An organization with between 3,000 and 4,000 people is a large organization, so we have regular meetings with various groups to make sure information is communicated upward and downward,” he says. “I have a corporate officers group of four senior vice presidents. I meet with them regularly to discuss our progress and changes. They each meet with the people that report to them.”
It might seem obvious that open communication helps a company remain able to adapt. But Murray says you need a detailed plan for how to approach communication during a transition at the top, and see to it that the plan is cascaded to all areas of the organization. If you don’t, you’ll risk losing people in the shuffle.
“Good managers and good leaders know that the success of an organization depends on its people,” he says. “People have to naturally adapt to a changing environment. From a managerial point of view, it’s establishing regular sets of goals and objectives, then holding people accountable. You also have to have the right level of communication with the various levels of the organization so that change can be brought to the forefront and acted upon in a reasonable period of time.
“It’s not brain surgery. It’s just the sound principles of managing and, more than anything, maintaining the lines of communication. It’s having a style that incorporates participatory management that allows for an organization to adapt to things that come down the pipe.”
Manage the change
Murray tries to stay ahead of the curve with regard to change, and that includes his own tenure. He says change is inevitable in any business, and when the need for change becomes apparent, you should adapt, not resist.
“I’ve been very sensitive to staying at the party too long,” he says.
“I’ve been around a long time; I’ve been very much involved in the major health care associations. So I’ve known a lot of people in the state, and I’ve seen CEOs come and go over the years. But the one thing I’ve been sensitive to is getting out at the right time.
“This was not a spur of the moment decision. I’ve been thinking about this for some time, and I told select members of the board several years ago that this was generally the time frame I had in mind.”
Your responsibility as the leader of the company is to set the stage so that a management transition is ultimately a positive experience for employees at all levels of the company.
“Well-trained, committed and cared-for associates recognize that change is necessary, and that the most important thing is to manage that change so that it is successfully accomplished,” he says. “What I mean by managing change is that I think change has to occur for good reasons, not just for the sake of change. It has to be clearly spelled out why things are changing so that people understand it and embrace it.”
In the end, succession management is change management. You might only retire once in your career, but you’ve been learning the lessons of how to bridge the gap between you and your successor for most of your career. Interacting with your people to get a feel for what they can tolerate with regard to change is one of the essential steps in change management.
“Part of managing change is to have a good grip on where your people are and what they’re capable of taking at any one point in time,” Murray says. “Change will come, and when it does, you have to parcel it out and prioritize what is important. If you try to jam in too much change at one time, it can demoralize your personnel and weaken the company, and it leaves you with a very bad result.
“Even without any dramatic changes, there are newfound requirements — certainly in health care, and I know in other industries, as well. Life is more complicated today, the bar has been raised and associates are being asked to do more with less. That’s part of business even without adding on layers of major change. There are a lot of pressures and responsibilities day to day.
“That’s the role understood by good management and good leadership, to evaluate change and understand how much is appropriate to overlay at any one point in time.”
HOW TO REACH: Kennedy Health System, (856) 566-5200 or www.kennedyhealth.org
Carl Gerhardt’s story is not unlike the stories of a lot of company leaders in Michigan. Facing the double-barrel assault of a shrinking economy and a stagnant industry, he still has to grow his business and produce profits. For Gerhardt, that means figuring out ways to grow Allegra Network LLC in the consolidating print and graphic communications industry, where growth opportunities are far from plentiful. “We’re not in an industry that has a lot of natural growth in it,” says Gerhardt, president and CEO of Allegra. “Second to that, we’re a fairly mature franchise. We’ve been around for about 25 years. In an area like that, your challenges are a bit different than if you’re in a high-growth industry and starting out with a new franchise concept.” For Allegra’s leaders, seeking growth opportunities has meant taking a creative approach to external expansion. Since becoming the company’s president in 2004, Gerhardt has helped spur initiatives aimed at finding new franchisees and new companies for prospective franchisees to buy.
To make it happen, Gerhardt and his leadership team have kept close contact with what is happening at the ground level, keeping franchisees and employees on the front lines abreast of the company’s direction and relying on information and feedback from the people who have direct contact with Allegra’s customers.
It’s an approach that has grown Allegra from $264 million in revenue in 2004 to $371 million last year, a rise of about 40 percent in four years — including the major acquisition of Bradenton, Fla.-based Signs Now Corp. in 2005, which allowed Allegra to add sign-making to its array of services.
Be a matchmaker
Gerhardt says Allegra is the eHarmony of the graphic arts business. While Allegra can’t find you true love, if you’re an independent printing company, there is a good chance Allegra’s matchmaker program can find you a buyer.
The program, started shortly after Gerhardt became the company’s president in 2004, is aimed at finding new franchises and franchisees to operate under the Allegra umbrella. The company’s leaders started the program because, in a nutshell, it’s easier to purchase franchises than to start them from scratch.
“Since this is a mature industry, rather than opening up franchises in new markets, we needed to look for a way to acquire independent print setters into our system,” Gerhardt says. “We tried to do that by having them join our franchise, but that was not successful because they basically didn’t want to pay us royalties.
“So what we did was come up with another concept to bring in a buyer from corporate America looking to buy a business, match them up with an independent printer to buy, convert it into Allegra, then take our systems and put them into place.”
From its testing phase in 2004 and 2005, the program has now become the company’s primary external growth engine, bringing approximately 40 independent printers into the Allegra system since the program’s inception.
To find independent printing companies looking to sell, Allegra began a marketing strategy that includes direct mailings, telemarketing and acquisition development managers — staff members who take leads from the company’s marketing department, screen them and attempt to find buyer matches in the independent printing company’s local market.
The matchmaker program has required an increased commitment to franchise development from Allegra. The company’s development department now employs eight. Four years ago, the company employed two acquisition development managers. But Gerhardt says that when the company can acquire an established printer with an instant revenue stream, the investment pays off.
The investment also pays off in the form of a heightened reputation.
“Because of this, we’ve become somewhat known in our industry for this (matchmaker program) now,” Gerhardt says. “If you’re an independent printer looking for an exit strategy, you probably now know that Allegra Network can provide you with that exit strategy.”
Allegra’s matchmaker program has become a sustained success due to the company’s ability to stay close to the markets it serves. Gerhardt says that for any growth initiative to take root, your company has to stay close to the market.
“It’s critical that you understand the dynamics of the market you are playing in,” he says. “We had to understand that this is a maturing and consolidating industry. In that case, if you try to grow by adding new franchises as we did in our earlier years, you will not be successful. So you need to gain an understanding of the industry you are in, then create a strategic plan that fits your industry.”
Understanding your industry also means understanding your own best practices that will maximize your growth potential. Allegra has created a program called “profit mastery.” The program teaches franchisees to run their franchises for maximum profitability, but as part of the program, about 60 percent of the company’s franchisees participate in performance groups twice a year. The peer groups are composed of about six owners who meet twice a year. In the meetings, the franchisees bounce ideas off of each other and inform management as to what is going on in their markets.
“They basically serve as each other’s board of directors,” Gerhardt says. “Our staff members facilitate those meetings, and it becomes a very important source of input as to what is succeeding and what is not succeeding in the marketplace. From there, we kind of bubble it up through the corporate staff. That helps us stay really close to what is working and what is not working with our franchise members.”
To paint an accurate overall picture of what is happening in the markets and the best places in which to seek growth, Gerhardt and his management team combine the information received from the performance groups with what they learn during industry conventions and regional meetings.
Look for external growth
Gerhardt says you must look both inside and outside your organization to plan a growth strategy.
“What we do is we look at those centers that are growing, then figure out what they’re doing to grow,” he says. “Then we match that to the talk we’re hearing in the industry about what is working.
“One example of that is one of our franchise owners who decided to diversify into the sign business. The technology between the sign business and the print business is merging. So this franchisee in one of our performance groups made it known to us that he was very successful at that. That led to our acquisition of Signs Now, which was a big growth step for us.”
When vetting a potential franchise acquisition candidate, connection to the market is among the criteria Allegra’s leaders use to assess the company. An acquisition should not only mesh well with your business model, it should help further your long-term vision.
“We’re looking for printers that have a similar profile to our existing franchisees,” Gerhardt says. “We know that market segment and can support it well.”
He says staying focused and knowing what you want out of a growth opportunity is essential to success. It’s easy to fall in love with an acquisition or any chance for growth. But it has to be the right opportunity. Developing that mindset takes discipline.
“It’s easy to get acquisition fever,” he says. “It’s like, ‘I want this car. I have to have this car.’ We’ve all been there, right?
“But when you make these acquisition decisions, you’re almost in a sense betting the farm. You’re usually taking on substantial debt. It was a several-million-dollar deal for us to take on Signs Now. So we had to acknowledge that we had to be very careful about this, that we don’t acquire something that is not right, so we have to do our due diligence right. You have to look inside it, and if you find something that isn’t right, don’t go there.”
To profile independent printers looking for a buyer, Allegra gets basic information in writing. Gerhardt and his staff look at three primary criteria: product sales, equipment and technology. Those three areas are key indicators in determining whether the acquisition candidate is operating in the same markets as Allegra.
“We look at that profile to make sure they have the right technology fit and are playing in the right segment of the market,” he says. “After that, we require them to provide their financial statements to see if they’re profitable. If they’re not, they aren’t going to be much of a fit for us.”
If a company’s vital statistics look favorable and Allegra’s leaders feel like it’s the right opportunity for the company, they’ll get the independent printer’s owner involved in aiding the transition to an Allegra franchisee. They do so by requiring that the selling owner remain financially vested in the company.
“We want the selling owner to stay on for 30, 60, 90 days or even up to six months to help in the transition,” Gerhardt says. “We also ask that the selling owner carry back part of the financing of the business. We want them to have some skin in the game, so to speak, so they’ll be less prone to misrepresent what they’re selling.”
On the franchisee side, new owners are educated in Allegra’s business through an orientation program. It might be months before Allegra finds a franchise to sell to the new franchisee, but Gerhardt wants new franchisees to have a thorough background in how Allegra does business before any deals are signed.
Once a franchise is found, Allegra puts the franchisee slated to make the purchase through an additional two-and-a-half-week training class that gives them a soup-to-nuts overview on how to run an Allegra franchise.
New franchisees are also assigned a support manager who helps the franchisee form a business plan and aids in every phase of the transition. Allegra has two staff members who concentrate solely on helping new franchises ramp onto the Allegra platform.
As part of the transition support, Allegra counsels new franchisees on dealing with employee matters. Acquisitions can lead to a period of uncertainty for the employees of the acquired company. Gerhardt says most employees want to know about their job security and the future of the company — in that order.
“Employees are vitally important in the transition process,” he says. “You have to keep those employees satisfied and in place. So we give our buyers information on how to do that with human resources tools. In some cases, we might require an employment agreement with some of the key employees.
“The employment agreement does two things: It gives the employee some security that we want them to stay on board. We would also include a noncompete clause in it. Then, if they leave the company, they can’t take any accounts with them. So it’s basically done to ensure that transition. We have some comfort, and they have some comfort.”
The process of acquiring 40 printer franchises in the past four-plus years has taught Gerhardt that slow and steady is the way to go in any type of growth.
“The key with anything like this is you have to start small, do a bit of testing and ramp up,” he says. “The first year we had this matchmaker program we did three of them and learned from the process. The second year, we did six or eight. Last year, we did 20. So we’re scaling up as we go, and we’ve refined our processes a great deal in that time period.
“These are very complex deals to work. It’s very different than starting a ground-zero franchise, where you do the site selection, send the equipment in, train the people and open it up. When you’re making a match and doing a deal like this, it’s a totally different animal.”
HOW TO REACH: Allegra Network LLC, (248) 596-8600 or www.allegranetwork.com
When Vince Donnelly took the reins at PMA Capital Corp. in late 2003, the insurance provider was limping along, dragging its reinsurance business around like a damaged limb.
The first thing Donnelly had to do as president and CEO was to stabilize the present to ensure that PMA Capital would have a future.
“At the time, we basically had two operating segments or subsidiaries,” he says. “One was our insurance business, which I was running at the time, and the other was our reinsurance business. At the end of 2003, our reinsurance business had experienced some pretty significant financial difficulties. The result was we closed that operation down.”
But that didn’t stop the fallout from hitting PMA Capital hard. The CEO to which Donnelly reported resigned, and perhaps most damaging, one of PMA Capital’s most important industry ratings was downgraded.
“Having our rating downgraded from an A-minus to a B-plus-plus was certainly an inhibitor in operating on an ongoing basis as an insurance company,” Donnelly says. “You really need to have rating with a letter ‘A’ in it to move forward.”
In addition to the mechanics of restructuring the business and attempting to regain an A-level rating, Donnelly had to oversee the far-reaching challenge of restoring faith in the company among employees, customers and shareholders.
It’s something that tested Donnelly’s leadership skills before he even had a chance to get settled into his new role. Before he could continue to grow PMA Capital, first he had to stabilize and repair it.
Take stock of the situation
To this day, Donnelly keeps in his office a reminder of his first days on the job. It’s a box of Domino sugar.
“It’s how I described this situation to many of my employees,” he says. “In life, sometimes you get faced with a challenge, sort of like having lemons, but our goal was to make lemonade and have something positive come out of this.
“So after I said that, one of my employees sent me a box of Domino sugar, which I still have in my office, along with a note she wrote that said, ‘Let’s just make sure the lemonade is sweet, so I’m sending you some sugar.’”
But in order to turn lemons into lemonade, Donnelly had to gauge just how sour his employees were on the situation. To make any go-forward plan work, he needed buy-in from as many employees as possible, but they weren’t going to buy in without assurance from management that their trust would be rewarded.
“You can imagine that in a time like that, there are lots of different emotions with your employee base and probably with your customer base,” he says. “Emotions like anger, anxiety, wondering what is going to happen with the company, is it going to fall apart, all of those things. We needed to deal with a variety of those emotions and keep everyone focused on what needed to be done. Also, I guess in many ways I thought of myself as a cheerleader, getting everyone to believe in us, that we had a plan. One of our constraints was time, and our customer base was looking to see how long it was going to take for us to execute our plan and so forth.”
PMA Capital’s leaders were working with legal counsel, financial managers and other groups to begin formulating the initial steps in the company’s rebound, but employees who aren’t directly involved in that process aren’t going to be as concerned with the nuts and bolts of the situation. They’re going to be concerned with knowing that the company will remain healthy enough to keep them employed.
That is where trust comes in, and that is where communication becomes one of a leader’s most important jobs.
In a time of crisis, or any time of uncertainty, Donnelly says you should lean on your ability to communicate.
“In the absence of information, people will fill in the blanks,” he says. “When people don’t have a sense that leadership is telling them what is going on, people standing at the coffee machine or the watercooler start filling it in, and that’s how rumors start. Nothing good comes out of that. I challenge everyone constantly to say that we do not manage by rumors — you know what happens when you assume — and people need to ask questions.”
One of the key components in Donnelly’s communication strategy has been videoconferences. In the first months of his tenure, with his company adrift in choppy waters, it was an effective way to reach many employees at once. PMA has between 300 and 400 people working at their head office in Blue Bell, but it also has nearly 20 additional offices in the field.
The videoconferences augmented Donnelly’s opportunities to travel and make face-to-face contact with his people, allowing him a chance to not just speak but also listen.
“As videoconferencing technology continues to evolve, it allows us to touch in a somewhat personal way,” he says. “But I also went out and visited with our employees in our offices and e-mailed them. I found many ways to stay in touch and tell people what was going on. The videoconferences also were an open forum to ask questions, and I’d say employees asked some tough questions.”
Communication cannot be a one-way street. When employees have concerns, you need to develop a platform to allow them to express those concerns to the right people.
Donnelly says the most effective method of remaining accessible to your employees, your customers and your shareholders isn’t the product of the latest technological advancement. It can be aided by something far more low-tech: a comfortable pair of walking shoes.
“When I want to see somebody, I go see them,” he says. “I’m always walking around the building all the time, stopping and talking to people, asking them what’s going on. My style is not that of someone who sits in their ivory tower, in their corner office, calling people in and out. I think it’s symbolic to let people know that the style of the company is an open style.”
Donnelly says a leader needs, above all, passion and honesty to become a good communicator in a time of change. Everyone around you needs to see that you believe in the direction in which you are taking the company and that you enthusiastically promote it. Then, they have to see that you aren’t putting up any smokescreens with regard to the company’s situation.
“Passion comes down to the fact that you have to want to be a leader,” he says. “Part of that, admittedly, is something to do with ego. But not in terms of titles and positions. It’s that you want that responsibility. I used to be a schoolteacher, and in addition to that, I coached basketball. Being a leader means you want to be the one to take the last shot in the game.
“As far as honesty, people see through whether you are BS-ing or not. It’s a lesson I learned from my mom. She told me that there are some people in life who are two-faced. When things are going well, they act one way, but when things aren’t going well, they’re going to act a different way. People are looking for that honesty and consistency from you as a person. An effective leader is someone who is respected not just for their title but is respected as a person.”
Look to the future
About a year after Donnelly assumed control of the company, PMA Capital recovered its A-minus rating, which did a great deal to help ease the sense of uncertainty surrounding the business.
With the company’s present stable, he was able to focus more of his time on the future. PMA Capital developed a fee-based insurance business and performed several acquisitions that helped bolster the company.
“After we got our rating back, we took the opportunity to evaluate the strengths and weaknesses of the company and set the strategy going forward,” he says. “We certainly built our strategy based on the company’s strengths. We’ve been in business for 93 years, and despite the challenges we faced, our workers’ comp business has been there a long time. So there is a lot of strength in our franchise.”
The acquisitions the company made were the first two in its history, and Donnelly points to them as a sign of the evolution of PMA Capital, which earned $456 million in total consolidated revenue in 2007.
“Successful companies are constantly challenging themselves,” Donnelly says. “We charted a course to expand into the fee-based business. But I think that whether you make a new hire, open a new facility or enter a new territory, you have to ask how this fits in to what you do. Does it make you better or is it just something to do? Some companies change for change’s sake. We don’t do that.”
Even after you’ve successfully piloted your company out of a period of turmoil or change, the planning doesn’t stop. If you want to keep your companies growing, then learn how to analyze and adjust.
“We’re constantly making plans, readjusting the plans as to what we think is happening,” Donnelly says. “So we’re constantly looking out a number of years. In successful companies, you don’t just want to be viable for everybody, for shareholders, customers and employees, you want to build something that is sustainable and expandable. So we challenge ourselves to think about that. You’re constantly looking ahead and re-evaluating where you are going because there are going to be bends in the road. You have to adjust.”
Donnelly says a good leader controls what can be controlled and manages what can’t be controlled. You won’t be able to control every obstacle your company encounters, but you can control the collective attitude with which your company meets those obstacles.
“Back when I first became CEO, I remember saying to my employees that it’s critical to keep our customers while we manage through this, and customers are going to have confidence or not have confidence in our company based on the attitude of our employees and the level of our service,” Donnelly says. “If you let the service go, the business will go, and it becomes a kind of self-fulfilling prophecy.
“The employees did a great job, and I let them know they did. Our head of human resources has been on board with us for a couple of years now. One of the reasons this person came to work for us was how we had a ratings challenge, but the employees kept the service level high. It became apparent to someone we hired from the outside that we have a great culture and that people believed in the company.
“I’ve shared that with my employees, how proud I am of their performance. I get goose bumps when I think about it.”
HOW TO REACH: PMA Capital Corp., (800) 222-2749 or www.pmagroup.com
You also need to show your employees that communication is a two-way street — that they can access you as easily as you can access them, says the president and CEO of United Way of Central Indiana.
Clarity and accessibility are crucial themes for Annala at her $58 million community service organization as she works to keep internal staff and external volunteers following the same path toward the same over-arching goals.
“There are a lot of relationships, so there are a lot of nuances to what we do,” she says “I think it’s really important for me to not just be an external person but be accessible and involved internally.”
Smart Business spoke with Annala about how to use good communication practices to keep your organization focused.
Set the tone. It starts with the CEO. The CEO has to have clarity of vision and priority and has to regularly communicate that. The CEO is the first teacher of the organizational priorities.
Secondly, you can’t leave communication to chance. We do a lot of training here with our managers and others on supervisory skills and relationships. You have to structure in communication. I remember reading an article about one CEO who has a five-minute meeting every single morning. It’s a stand-up meeting. People don’t sit down, but they come in and learn what is happening today.
I think that’s the kind of structure you want, where you’re very cognizant of giving people the tools and information they want.
We opened up a new portal on our Web site that is just for staff. We thought that as much as we work on communication, there is still just basic access to information, so we wanted to increase the access for them.
The third thing I would say is that the organization needs to be very clear on providing communication tools. We provide a basic communication guide so that everybody is on message. For us, it’s not just employees; it’s also volunteers. So we provide a communication guide that helps get everybody on message.
The fourth one is to make sure opportunities are structured in for two-way communication. I’ll get an e-mail from the receptionist if the receptionist thinks there is something important that I need to know.
A fifth point would be having fun. It’s not all formal. There have to be opportunities for that informal and fun exchange, whether it’s a company picnic or a holiday party or a birthday lunch, there needs to be some time where you can be with people and be on a more human level.
Get others involved. If you have an employee who feels fully engaged and has a sense of ownership, who embraces the mission and feels fully engaged in the work, they are going to see things that management won’t see. They’re going to have ideas that management won’t have, because you are going to have a lot of people on the front line.
Management, policymakers and decision-makers have to have the benefit of their insight. You ultimately have a better organization. Sometimes, it’s small things, and sometimes, it’s really big things. If you want to be the best and you want to be a market leader in your field, you really need the wisdom of everybody who makes the whole team work.
You also find out at times, when you have good communication, you find out the skills and abilities that staff members have, things that could enhance work of the organization.
When you see some of your staff team members function, you start to see members who have some leadership abilities that you didn’t know. That can position them well for promotions or for other responsibilities. That’s happened several times for us, where people have had an opportunity to kind of demonstrate what they can do in one of their extracurricular activities here.
Make time for engagement. Having time for face-to-face communication is not easy. That is why you have to schedule it. My calendar is very full, as most executives have very full calendars.
One of the things I told my assistant was to schedule in walking-around time. Get it on the calendar because I live by the calendar. The other thing I try to do is with every new employee is just have a 15-minute, get-acquainted time, so that they come into the president’s office, and it’s not this mysterious place.
That way, I have an opportunity to find out if they have some family, where they grew up, and it’s with no agenda. It’s just a chance to get acquainted. At that point, I try to share with them a couple of key values that I have for the organization.
I don’t do it as often as I’d like, but a lot of it is just the old-fashioned walking around, trying to just have that connection. One of the things I do that may sound simple is I try to take employees out on a birthday lunch once a month. Whoever has a birthday that month, I invite them to lunch.
If no other way, that gives me an opportunity to have a face-to-face hour with people in the organization and get to know people on a more personal level.
HOW TO REACH: United Way of Central Indiana, (317) 923-1466 or www.uwci.org
Years ago, Anne Taylor gained an appreciation for just how challenging it can be to hire the right people.
Taylor was in her mid-20s and a partner in a small business.
“I was interviewing people, and one of the other partners in the business said he thought I was making a mistake on some of the people,” she says. “He told me that I wasn’t looking for people better than me. He said, ‘You ought to only be looking for people better than you are.’”
As a young person in the world of business, that didn’t compute for Taylor.
“I found that to be rather a concern for me,” she says. “First of all — having no humility at that age — could I find someone better than me? But I thought that if I did find someone better than me, it would be threatening to me in some fashion.”
Taylor, who is now the managing principal for the 4,800-employee mid-America region of financial advisory services firm Deloitte LLP, says time and experience showed her that personal pride must always take a backseat to the good of the company when hiring. Hiring someone who is better than you doesn’t necessarily mean you need to hire someone who is an all-around superior person. It means that you must recognize your own shortcomings and the shortcomings in the collective skill set of your employees, and then hire to strengthen those weaknesses.
“They might not be better in every way, but they might be better in certain ways,” Taylor says. “That piece of advice is still true. When I look for new recruits, they might bring something that I, even with more than 25 years of experience, might not bring to the table. There might be a knowledge of technology, an energy or just something in their breadth of experience.
“I still always look for that, how are they going to be better than I am, better than we are collectively as a group.”
Here’s how Taylor leveraged that experience to help her find and keep the best people at Deloitte.
Create a good environment
The wants and needs of a good job candidate would seem to follow logic. It’s what just about every worker wants: competitive pay, solid benefits, a healthy work environment, and a chance for raises and promotions.
But the best job candidates look for something else, and Taylor says it’s the first thing you should offer them. The best candidates want assignments and responsibilities that match their talent and experience.
As the leader, it’s your responsibility to find those challenges and keep them coming.
“You want to match what they can do but also stretch them,” she says. “That’s what most people who come to Deloitte are looking for, but we have to continue to find those opportunities. It might be fairly early opportunities to lead teams or opportunities to look at more than one client at a time or new industries. That’s what makes for a great environment.”
Taylor has also emphasized the need to develop mentoring opportunities for new employees. At Deloitte, management tries to custom fit the opportunities at the financial service firm to the career path each employee would like to follow.
“Employees are looking for mentoring and interest in them, interest in their careers,” Taylor says. “One of the things we’re focused on is how do we customize what they want from a career experience to fit their current needs. Everybody has different phases in both life and work experience, and we look at how we can match their energy, interest, developmental needs and abilities to what we can offer.”
Deloitte developed the concept on a large scale in the 1990s with the rollout of the company’s women’s initiative, a program that focused on what Deloitte would need to attract and retain female employees.
Taylor wasn’t a big fan of the initiative when it was first introduced in 1993.
“I was already a partner, and my first reaction was, ‘Oh, please don’t single out the women,’” she says. “The last thing I wanted to be was more visible. At the time, I had twins who were about 2 years old, so I felt kind of visible already, and I didn’t want any more highlighting of the challenges that might be out there. I had gone to engineering school, so it wasn’t new to me to be one of the few women.”
But as Taylor and other executives at Deloitte looked into the subject, they found the company needed to make some changes in how it addressed the needs of female employees.
“We were hiring much like other companies, women at a 50 percent rate of our total hiring for over 10 years,” she says. “It’s the same amount of time it takes to get into the partnership, and women were less than 5 percent of the population of partners.
“So I had thought that women hadn’t been in the work force for as many years on a consistent basis to advance. But what we found out was that most women who left us were not leaving the work force. There were a lot of myths about what was happening. The end result was that there were a lot of programs and initiatives created at that time that changed our culture and made it a much better place for both men and women, more family-friendly and more flexibility, more focused on personal choices around career demands.”
The results of the women’s initiative helped Deloitte’s leaders shape a more well-rounded approach to meeting employee needs.
“Our female workers loved serving clients and the work we did, but we just didn’t have some of the other things they were looking for in a work environment, so they were going other places where they saw more women advancing.”
Become a motivator
Taylor calls it the “eternal quest” facing presidents and CEOs everywhere: how to get the most out of your employees, taking their talent and brainpower, and putting it to the most effective use for your business. It’s a critical element in attracting and retaining employees who want new challenges.
At the center of the quest is communication. But it has to go in two directions — speaking and listening. And not always in that order.
“The first thing you want to do is motivate,” Taylor says. “You want to find out what makes someone else tick. I learned awhile ago that the best way to do that is to ask. That’s also part of our idea of customizing our approach to our employees.
“I think we’ve gone along far too long in assuming that everybody ticks in the same way. But now we have different people coming from different backgrounds, more women in the work force, more people of different generations, whatever it might be. And to find out what motivates them, you have to ask them.”
At Deloitte, each assignment given to an employee is an opportunity to teach. Even assignments that an employee might view as routine or mundane are opportunities to provide employees with a new challenge and a chance for self-analysis.
Taylor says you must always find ways to go deeper with your employees.
“After you’ve motivated, listened and asked, you have to help your people figure out what they can learn from every assignment,” Taylor says. “There are always assignments that seem mundane or repetitive, and the challenge I have is to ask them every day to figure out what they’re going to learn from this assignment.
“Maybe it’s not technical knowledge on this one, maybe it’s better interpersonal skills. Or maybe you need to learn something about communication skills. But every assignment creates an opportunity to learn. That kind of environment is what keeps people coming back to the same employer.”
Individual and collective assessment has been a common theme throughout Deloitte’s Houston operations in the past months as southeast Texas continues to recover from the destruction brought on by Hurricane Ike.
The fallout from Ike has put Deloitte into a uniquely innovative position, thinking of ways to help out both clients and each other.
“I think almost everybody in Houston has thought of one thing they’d do differently — they’d probably buy more batteries next time,” Taylor says. “But from a Deloitte perspective and a personal perspective, I’ve unfortunately been involved with many emergency situations in our firm. Each one is different, but each one is the same. We focus first on our people, then on our clients.”
Deloitte’s leaders quickly found out that the biggest hurdle preventing Deloitte employees from returning to work wasn’t property damage or a lack of electricity. It was a lack of child care. If an employee ran out of child care options and it was practical to do so, Taylor and her leadership allowed parents to temporarily bring their children to work.
Deloitte’s offices maintained power after the storm, allowing another unique opportunity to serve clients.
“We had clients who were working in our offices since we were fortunate enough to maintain power,” Taylor says. “We had people, as many organizations did, who had devastating loss and people who had minor inconveniences. But our people recognized how they could help each other out. It’s a perfect example of rethinking and improving for next time.”
Mission statements and strategic plans tend to take a back-seat in the aftermath of a natural disaster, when restoring the normalcy of everyday life becomes the most important goal. But even in the wake of Hurricane Ike, Taylor saw a chance to both educate and motivate her employees to come up with new ideas.
“It’s exactly the notion that we’re proud but never satisfied,” she says. “We work very hard to assess ourselves internally, and we’re pretty much our toughest critic. But we also get with our clients and ask them to assess our work. How did we do? Did we get the people we are looking for? If not, why not?”
Find a balance
Taylor believes the only way to measure the effectiveness of a leader is by noting the extent to which he or she is followed. And the way you gain followers is by empowering them.
It’s a difficult balance to achieve. She says you must give employees both freedom and structure in their jobs.
“The most successful way is to make sure you are giving them the right amount of support,” she says. “You can overem-power them, and they’ll just flounder. So you have to balance that lever of support and freedom. That, I think, is the art of leadership. It’s balancing the degree to which you support someone versus how you give them rope and let them run free.”
As with finding what motivates your employees, you need feedback to get a read on whether you are meeting their needs, both in terms of support and empowerment.
But to get the right feedback, you need to set the right boundaries and ask the right questions.
“The question to ask is, what is the end result we’re trying to achieve?” she says. “If there is a magic question you should ask, that’s it. Sometimes you get caught up in the minutiae along the way, but it’s that end result that you’re looking for.
“As leaders, we can get caught up in thinking too much. We make assumptions. But asking the right questions is really important. If we ask the right questions, we get great information.”
HOW TO REACH: Deloitte LLP, www.deloitte.com