Erik Cassano

Wednesday, 26 August 2009 20:00

Recovery room

From the start, Patricia Maryland knew it was going to take a team effort.

In early 2008, several months into her tenure as president and CEO of St. John Health System, Maryland and her leadership team had crunched the numbers, taken a long look at the downward trend of the Michigan economy and arrived at a hard-to-swallow conclusion.

“I had to launch a transformational effort almost immediately,” Maryland says. “Specifically, I had to trim about $85 million in operating expenses in order to move the organization to a reasonable operating margin.”

It was a problem without a simple solution. Expenses needed to be reduced, which would require the elimination of some jobs, but Maryland and her management team also needed to develop creative ways to increase revenue.

At the center was Maryland, who was charged with uniting the entire St. John organization and keeping its nearly 17,000 employees focused on the health system’s core mission of patient care — and do it all as the system underwent a metamorphosis, becoming leaner and more able to weather the oncoming economic storm.

“Believe it or not, out of the challenge came major opportunities,” she says. “I was able to bring together the leadership team and management at all levels of the organization and look at some things we could do differently to address our needs. We put together teams of individuals that we felt had the talent to think outside the box a little bit and who weren’t uncomfortable with looking at their own operation from a different viewpoint.”

Maryland needed to form a new mindset, she needed people throughout the organization to embrace that mindset, and she needed new ideas on how to improve the system’s budget.

Maryland wasn’t just facing a budgetary issue. She knew that to truly make the health system run more efficiently and effectively, she needed to perform a cultural shift.

Plan, then take action

To help reach the goal of $85 million in cost savings, Maryland and her management team identified 22 areas that presented opportunities for savings.

The number of areas was important, but not as important as the fact that most of the areas in question were on the corporate side of the organization.

“Focusing on our core business of patient care was fundamental as to how we moved forward,” Maryland says. “So we took a look at how we were managing our corporate functions on the shared services side. Much of this transformation involved looking at the overhead, looking at the nonclinical areas first.”

In order to gain support for the developing program, Maryland wanted to find ways to assure employees at the hospital and facility levels that their ability to do their jobs would not be compromised or hindered in any way. If anything, Maryland’s organizational transformation was aimed at giving medical staff more freedom to serve patients.

“We said at the start that our goal was to reduce the burden on our hospitals, on those individuals who were providing direct patient care,” she says. “We wanted to free up resources and dollars to reinvest in our patient care. That was a component in helping to sell the concept of why this transformation was so important.”

Transformations like the one undertaken at St. John are rooted in the dollars-and-cents reality of a faltering economy, but that’s not necessarily the way employees will digest it. Employees will see the staff cuts and increased burden placed on them before they’ll see the financial ramifications to the company.

Cutbacks might be first and foremost a financial issue to you and your top management team, but it will become a cultural issue to your employees. If they start to believe that you aren’t enabling them to do their jobs, you will damage morale. If they get the feeling that you aren’t living your mission statement and culture, it will damage your credibility.

To help give your company room to react to whatever the economy throws at you, Maryland says you need to become vigilant about scenario planning.

“As you think about the future of your organization, you have to do scenario planning,” she says. “You need to come up with best-case, most-probable-case and worst-case scenarios. You need to be able to anticipate and stay ahead of the curve. Leaders need to do that all the time.

“As of now, it looks like our most-probable-case scenario will actually fall closer to our worst-case scenario. So going forward, we’ve already started to do our scenario planning for the next year. We’re going to work with the state leadership to get some ideas from them in terms of their forecast. We have all of the data that we’ve compiled through our scenario planning and have anticipated what it might do for us in terms of overall buy-in and the potential increase of uninsured patients we might expect.”

Engage and cascade

In a time of transition, Maryland says you should tell everyone in your organization as much as you can, starting with your leadership team and cascade messages throughout the organization.

It’s the approach Maryland uses to communicate her messages at St. John.

“It’s clear that we had to engage all the leaders first and foremost and we had to explain some of the data,” she says. “I’m very data-driven as a leader, so that’s how I approached it. I told them ‘Here are the facts; here is what the implications are.’ So I started with the leaders, engaged them, and we provided open and honest communication with all of our employees.”

Managers at St. John must meet frequently with their staffs to keep information flowing. Maryland holds her managers accountable for communication by setting an example and performing regular check-ins.

“Consistency of communication is very important,” she says. “And part of that is encouraging and holding accountable the executive team. I schedule time to meet with them and ask them to do the same with their teams. We call it ‘straight talks,’ and I ask them if they’re making time to schedule those meetings with their teams. In addition, I make time to attend those meetings so I can hear what people are saying.”

Transparency from management is another key component in building trust among all levels of your organization. The time might come when you have to deliver some bad news to your work force, and if it’s unavoidable, the best course of action is honesty and full disclosure.

“Transparency is critical to this process,” Maryland says. “You want people to be a part of the solution, and if you’re honest with them and you’re sharing the data, it helps create a sense that we are in this together. It helps employees realize that management needs the minds and efforts of everyone in the organization to help you with this challenge that might be very significant.”

Along with communication that cascades downward, you need to develop channels through which communication can bubble up from the lower rungs of your organization. Feedback avenues are another component in showing employees that they have a collective voice in your company, and that their input and opinions have the ability to influence the direction of the organization.

“You need to create a safe environment within each of your departments to allow employees to be able to share their concerns,” Maryland says. “It could be something a little bit controversial that they have to share, but you want your leaders to continue to empower their associates.

“Creating that safe space that allows employees to freely share their concerns and ideas is what empowers them. Through our associate feedback channels, anyone can communicate directly to me. I follow up with them. I have to reply to all their questions and give them honest responses — and they can have that contact with me through phone or e-mail or personal contact when it’s possible.”

Recognition is another ingredient in soliciting feedback and involving employees in shaping the direction of the organization. Employees value the gratitude of management, whether or not management can ultimately implement the idea.

“We give credit to the associate that came up with the idea,” Maryland says. “We acknowledge and recognize the person appropriately as we track the results of the idea. Another thing we’re doing is encouraging our managers to empower their associates to implement their ideas. If they’re straightforward and easier to implement, it doesn’t need to go all the way up the ladder for approval. One simple example is that one of our associates suggested that we could save money by printing pages double-sided. That is now something we have implemented across the entire organization.”

As an additional step, St. John has composed a transformational group charged with taking employee ideas, researching and examining them for their potential to enhance the organization.

“It goes back to the idea that our transformational effort has been a cultural change that we created,” Maryland says. “It wasn’t one-time, one-shot, reduce the cost, improve the revenue base and just get everything better for this year. It was that we are culturally changing the organization, and it’s an ongoing process.”

Develop new leaders

St. John is now positioned well to weather the current economic downturn. Maryland and her staff have succeeded in realizing about $70 million of the $85 million they sought to trim from the budget last year. The health system reported revenue of $1.9 billion in 2008.

But in order to keep this kind of momentum rolling, you need to keep developing leaders to carry your culture and policy of fiscal responsibility into the coming years. That means both recruiting and developing high-potential employees.

You can help your cause by developing the kind of organization for which people want to work.

“It starts with, No. 1, the person,” Maryland says. “Your interview process has to be such that you can screen individuals for some of those qualities. But you also need to set the tone for the organization, set the tone for what your expectations are.

“People can choose to come to your organization or not based on how consistent you are with the expectations you have of your leaders. If you bring people in and find behaviors that are not consistent with the expectations you have set, you need to deal with those individuals quickly. If they don’t change, they shouldn’t be in your organization. In the end, it’s what you are willing to tolerate in your organization. That is why you need to deal quickly with individuals who exhibit behaviors that are inconsistent with your values.

“You are not defining the organization around the needs of any one individual. You’re defining the organization around the needs of the people you serve. In our case, that is our patients. You’re also defining the organization around its long-term financial viability. People and culture comprise your mission.”

How to reach: St. John Health System, (586) 753-1155 or www.stjohn.org

Wednesday, 26 August 2009 20:00

The right hire

One business lesson that Steven Bock has learned to live by is you are only as good as the team you’ve put together to help you lead.

Bock, the co-owner, president and CEO of Rotobrush International LLC, seeks up-and-coming businesspeople who don’t just perform their daily tasks but do so with a team-oriented mindset that helps bolster the culture that Bock has cultivated at Rotobrush.

It’s an approach that has helped Bock grow the indoor air quality solutions provider to 60 employees and eight figures in annual revenue — though the company does not publish specific revenue numbers.

“What I believe is that if a team buys in to the vision and goals, they’ll be more motivated and work harder to accomplish the goals,” Bock says. “I also operate as a mentor, a teacher and motivator. I encourage my team. I give them the tools and support that they need to succeed.”

Smart Business spoke with Bock about how you can hire and develop leaders in your company.

Find the right people. If you find the right person, you work with them to develop their skill sets. Finding the right person is a subject that gets into a number of areas. Some of it is personality-driven, that they’ll fit culturally into the organization. You need team players, people who are open, supportive and respectful of their co-workers. Conversely, if someone is very smart and talented but a poor team player, that is someone you probably wouldn’t want to have in the organization.

No. 2 is looking specifically at experience. I look much harder at not what someone has done but where they’ve been. You can have some nice names on your resume and very narrow experience or take credit for a lot of things that you really weren’t a very integral part of. By contrast, you can have great experience, accomplished a lot of things and added responsibility. You really find all that out through discussion. In the interview process, have a very engaged discussion and get specific about what a person’s experience has been.

The third part is what a person’s goals are, what they want to accomplish, where they want to be down the road. In a company like ours, there is a premium on people who are very ambitious for themselves and for their careers, who are willing to take on responsibility and make things happen and get things done. In other organizations, you might be able to get away with being a more passive player; in a smaller company, you need everyone to be engaged and be a player on the team.

Know what questions to ask. There are some specific questions that you do want to ask during interviews because you do need to get an understanding of people’s backgrounds, where they came from. One thing you can do is go through someone’s career from A to Z. What did they do when they were in school? Did they work? You could be looking for someone who has a lot of work experience at an early age or someone who had to work their way through school. You might be looking for signs of a good work ethic, which is very important. Some of it is just basic conversation, just talking to someone, getting to know who they are and what makes them tick.

It is good to have multiple perspectives, especially when you’re interviewing for key positions in the company. It’s good to have multiple people interview a candidate and share their impressions back and forth. One person might notice something that someone else won’t.

From there, you can sit down one on one with the other people who are in the process. Then you can sit down as a group to see if there are some common things that people are feeling. Sometimes answers given to multiple people don’t really match. Sometimes when you look at a career trajectory, there are some disconnects in there, so you can get into some of those. Sometimes if you can notice those things and home in on them, you can figure some things out about somebody and about their career and how it unfolded. You can find out if someone really does have a good work ethic, if they really did the things they said they did.

Train, but don’t micromanage. You need to provide support and training, but it can be easy to overmanage the process, as well. Especially at the senior level, you’re bringing people in because they’re smart, creative and aggressive, [and] you don’t want to unduly constrain that. You want to set the parameters, but you don’t want to constrain those talents.

Getting an idea of how much structure someone needs is something that really depends on the area for which you are hiring. There are quantitative and qualitative ways to measure that. If you take marketing for example, there are certain metrics to look at. You look at how effective the marketing is. In a business like ours, which is largely a direct marketing business, you look at how long it takes to develop leads, how well those leads convert into customers.

When you get into things in marketing that are more qualitative, you have to judge the results of what those things are and the success those programs are having. Then you also look at the creation of new programs, starting and testing new programs, and the combination of creativity and discipline that goes into that.

In sales, you can also measure results with some specific metrics. In some other areas like IT and finance, it has to do with accuracy, timeliness of reporting, how well your systems are operating, how efficiently information is provided and those kinds of things. So it is very specific to the department. Some of it is really based on measurements, and some of it is really based on feel.

How to reach: Rotobrush International LLC, (817) 310-2300 or www.rotobrush.com

Sunday, 26 July 2009 20:00

Circuitbreaker

When Peter Leparulo took over at Novatel Wireless Inc. in 2003, the wireless broadband access solutions provider was doing nothing right.

Novatel had just one customer, poorly managed distribution channels and dozens of new products in the research and development phase with no plan for implementing them. Financially, Novatel’s stock had traded for 11 cents — the lowest price in the company’s history.

“We had no cash whatsoever, our engineers were developing 42 new products, and nobody had any idea of what these products were going to do, nobody had accountability for whether these products were going to be successful,” says Leparulo, the company’s chairman and CEO. “It was basically throw it against the wall and see if it sticks.”

On top of that, the company was managed by what Leparulo described as a “very strange set of bewildering alliances” throughout the various levels of the company. The management system — or what passed for it — greatly decentralized authority in the company, creating roadblocks in the decision-making process.

“Responsibility was very dispersed,” he says. “Responsibility was decoupled from the resources needed to achieve any results.”

Leparulo needed to rebuild the business. But in order to rebuild it, he needed to eradicate a flawed culture that had grown deep roots within the company. To make it happen, it would take persistent communication around a new culture and vision for Novatel — and a willingness to part ways with anyone who chose to cling to the old culture.

Break down walls

Before Leparulo could turn around Novatel, he had to turn around its culture. That meant breaking down the old culture and the alliances that held it in place. Leparulo needed to reorganize the power structure of the company around the centralized authority of himself and his management team.

“We centralized decision-making down to an autocratic level and then that decision-making would radiate out as a web over the entire company,” he says.

To begin the process, Leparulo gave a series of speeches that reached everyone in the company. Through those speeches, he quickly set the ground rules of how he would lead the company in the future.

“I went around and told everyone that the company was not going to be led by committee,” he says. “I told everyone that we would go out with a clearly defined vision upfront, unleash that vision, communicate it to everybody and persuade people that was the right vision. Then we’d move to giving feedback and instilling more of a task-based culture, rather than a person-based culture.”

Leparulo says task-based cultures are driven by accomplishing goals, by putting the right people in the right places to get the job done. A person-based culture places individual agendas ahead of organizational goals.

Once employees at Novatel were given authority based on their ability to do their jobs instead of who they knew, the new culture began to take root.

“When we started giving authority based on someone’s expertise at solving a given problem, instead of having a culture where people were superior to the organization, that started to break down the barriers where people were not working cross-functionally,” Leparulo says. “And we very much focused the top management group on showing that to everyone in the company. Whatever we were asking of employees, we were asking of top management first. That greatly helped in breaking down the divides among people and ensured that people were allowed to make decisions based on their expertise.

“In the end, you need to tie results to the people who have the responsibility and authority to achieve those results. In our organization, those had been decoupled.”

Even though Leparulo made it very clear from the outset that the new culture was here to stay, focusing a company of hundreds in a new direction is a difficult task. Leparulo and his leadership team did meet some resistance, and in some cases, they needed to part ways with dissenters.

“We did need to use some sacrificial lambs, so to speak, to show that we meant business and we were not going to tolerate the old politics,” Leparulo says. “But we did give everyone a chance to get on board. For individuals who didn’t get on board right away, we set up a series of goals for them; then we’d communicate how those goals were going to be measured. We then would revisit them, and if someone wasn’t hitting their goals, either the goal was unachievable or we might be asking something of someone that they simply aren’t able to do. As the leader, your job is to either change the person or change the goal.”

Leparulo and his leadership team also set the pace for change by setting an example with their actions.

“When we were performing the turnaround, we also asked employees to take pay cuts, but we as a management team took pay cuts first. Management was first in the office each morning and last to leave the office each evening. On every level, we wanted every person in the company to see that there was commitment to this new culture all the way to the top level.”

The commitment can’t start in any other place. If employees don’t see the commitment from management to live the new culture, it will never take root.

“When you’re trying to change things in such a transformative way and do it very quickly, people generally look at the landscape around them, see how things are around the company, how people are interacting,” Leparulo says. “Then, they generally model what the top management is doing.

“When you have to move a company very quickly and do it from apex to base, management has to be the first to commit to the change, the first to give others in the company the confidence to believe in this new direction. It allows you to persuade individuals to want to be led in this direction, while still operating in an entrepreneurial environment.”

Stay in front

After initially laying the foundation for Novatel’s new culture, Leparulo needed to keep the culture in front of the company, making those principles something that each person lived each workday.

To keep the new culture relevant, Leparulo needed to shift roles, from an architect charged with helping to design and build a new culture to a groundskeeper charged with maintaining and improving what had already been constructed.

“It comes down to day-to-day communication and doing it companywide,” Leparulo says. “It comes down to defining milestones for success, measuring them and announcing whether you achieved them or not.

“I went around to all our offices, presented our strategy and let that bake into the company. I talked to all of our employees in terms of ‘Here are our companywide initiatives that we are doing.’ Then, I would leave it to the managers of each of our functional groups to define the tactical items that needed to be done to achieve the strategic objectives. Every quarter, we’d measure it all, and we were very public with the information.”

By keeping employees in the know, you are showing that you respect their ability to grasp the situation and understand how they fit into the company’s plans. If you keep your employees in the dark and assume that they don’t want to know the nuts and bolts of your company goals and vision, you can begin to kill morale throughout your company.

“We have a lot of smart people around here, so one thing we needed to do was maintain their intellectual respect of management,” Leparulo says. “That was the currency to get the employees to buy in to the direction in which we wanted to go. In order to do that, you need to show them what your vision is and the progress you’re making in getting there. If you keep them informed, you can get them to respect that you are moving the company in the right direction.”

Leparulo also earned the respect of his employees by building accountability into management’s communication. If there was a miscommunication of any kind, the burden fell on the communicator to straighten things out, not the person receiving the communication.

“If there is a miscommunication, you treat that as the fault of the communicator,” he says. “It’s my fault as the leader if I’m not communicating correctly. It’s not the fault of the person on the other end of the communication. That is part of communicating with actions. I follow a saying that says a leader communicates at all times and sometimes uses words. You need to communicate with your own behavior and your own commitment to what you are undertaking.”

Execute your plan

The new culture built by Leparulo and his management team has helped pull Novatel back from the brink. Novatel is now growing, and its culture is scaling along with it as the company continues to evolve to better serve its customers.

Novatel now employs about 300 people. The company’s revenue has grown from $28 million in 2003 to $321 million in 2008.

Leparulo’s experiences at Novatel have helped give him perspective when talking to other business leaders about performing turnarounds and implementing a new culture.

“When I talk to other CEOs, I asked what their biggest concern is,” Leparulo says. “Most of the time, they say it’s execution. I can’t underestimate the value of making sure the shared values within a company impact the million little decisions you have to make. No manager can be there shoulder to shoulder with every person in the company when those decisions are being made. But those million little decisions made on the lower levels impact how well you execute and do impact what your tangible results will be.”

At the end of the day, Leparulo says you need to remember four steps when it comes to implementing a new culture.

“First, create an environment where the individuals work toward a group effort,” he says. “Second, display top management’s commitment to the effort. Third, enable and empower people as much as you can. Fourth, terminate people or events that would prevent all of the above from happening.”

“I used to dismiss corporate statements and mission statements. I used to think those were sort of irrelevant. But fairly early in this process, I learned that to the people in an organization who have to go through the changes you are implementing, there are still these unspoken rules about change and how it gets done. Corporate culture shapes behavior when you can’t be there. As hands-on as you might want to be, you can’t be there for every decision made at the lowest level of the company.”

How to reach: Novatel Wireless Inc. (858) 812-3400 or www.nvtl.com

Sunday, 26 July 2009 20:00

Aiming high

It hasn’t been difficult to find bad news in the past year if you’re leading a business. Whether reading the paper, scanning the Internet or watching TV, the state of the faltering economy has been more than evident.

You can’t help the state of the economy, but Ryan Stephens says you can help the mentality with which you and your employees approach it. The co-founder, president and CEO of Perpetual Technologies Inc. says the spiraling economy presents definite challenges, but it also presents opportunities for a well-positioned business.

“One challenge during this economy is avoiding the temptation to be driven by fear,” Stephens says. “Instead of pressing forward, holding back. A lot of companies are doing that. It’s been a chain reaction.”

A proactive approach has helped Stephens continue growing Perpetual Technologies in spite of the economy. The company of nearly 100 people generated $10.2 million in revenue in 2008.

Smart Business spoke with Stephens about how you can position your business to persevere in the current economy.

Stay aggressive. Now is the time to change. If any company can effectively change during this economy — find a way to step up and be a leader — I think that company stands a better chance of success in this economy.

This is a time when many businesses start pulling back into more of a defensive mode. We’ve seen that to some degree, but what we’re trying to do is not pull back too far, not be driven by fear and to go forward full steam ahead within reason. Since we’re a technology company, we need to stay on the edge of technology, be proactive and be diligent. That will allow us to make wiser decisions for ourselves and for our clients. Most of all, we need to adapt our business model and our services to better support our clients during these downtimes, which will help us build stronger relationships with our clients.

This is a time of opportunity, even though times are hard. You can choose to be more proactive and go into an offensive mode. Obviously, you have to sharpen your pencil in a degrading economy, and there may be many ways to do that beyond cutting costs, such as refocusing your business, streamlining operations and maximizing resources that you have on the inside.

For example, we don’t plan to cut any positions. We plan to refocus and better utilize our staff so that everybody is working toward a common goal and everybody’s job somehow affects the bottom line. It’s all about staying focused on the customer and adapting to what their needs are, getting down to that routine of having it be the way you always do business.

Inform your employees. You watch the news at night, and it’s like a doomsday report. All you hear about all day is companies closing, salaries being cut, layoffs left and right. There are multiple announcements every day, and that’s just in Indianapolis. I know that’s what is going on all over the country.

One thing you have to do is manage that fear. You need to manage that fear yourself as the owner or manager of your business, but you also have to manage the fear of your people. The last thing you want are good employees left in the dark wondering what will happen. I read a survey recently, and I believe it was 85 percent of employees in this survey felt they would be working with a different employer in 2009. That number is extremely high, and it represents the fear in uncertain times. Certainly times are not good, but we can’t afford to lose people because of fear. You have to manage that fear through communication and trying to keep your people as busy as possible and reassuring them whenever you can that things are good. We try to reassure our people that we are financially stable, that we have a plan and are moving forward with it.

Let them know what you are doing to combat the struggling economy. We let them know that we are being proactive, we are financially sound, that we are looking ahead, and instead of making cuts, we’re looking to make investments in the business. Now is the time to make investments. If you have money, now is the time to invest in your business if you believe in your business and it is strong enough for you to do so. We’re letting our people know that we plan to be in this for the long run.

Measure your progress. One thing you can’t lose or sacrifice is trying to put quantifiable benchmarks in place for people so they can clearly see what their goals are, what is expected of them and the company, so they can be effectively and objectively measured.

We’re putting stricter guidelines in place and measurements, so at the end of the year, we and the employee can look back and see what was achieved and at what level.

But the constant focus on the goals is what we really want. You can measure results, you can refocus jobs and define missions, but if you get people in the first place who share the same philosophy in teamwork and customer service, that’s something they’re going to do naturally. The goals make sure that everybody stays focused and everybody is growing in the same direction, so that we can get through the storm.

How to reach: Perpetual Technologies Inc., (800) 538-0453 or www.perptech.com

Sunday, 26 July 2009 20:00

Bouncing back

In the late 1990s, growth was good at Meadowbrook Insurance Group Inc.

At that point, Bob Cubbin was the president and COO and in charge of managing the company’s day-to-day operations. The short-term outlook was rosy as the insurance provider glided toward the start of the 21st century, and the company was in the process of branching into new noncore business areas, attempting to increase the breadth of its product offerings.

But then, the situation rapidly changed.

Fast growth coupled with a period of low pricing in the insurance industry led to financial strain at Meadowbrook. The company could no longer adequately support its growth, which caused profits to drop and, in turn, industry ratings agencies to downgrade Meadowbrook’s standing.

“This was all caused by a drive to grow too fast, particularly at a time when pricing in the insurance business was at a low,” says Cubbin, now Meadowbrook’s president and CEO. “Our company really deviated from the business plan, and on top of that, it really wasn’t a favorable environment (for rapid growth).”

The company’s financial situation was stabilized by what Cubbin calls a “get back to basics” approach. It required a willingness on the part of the management team to pull together, evaluate the state of Meadowbrook, reaffirm the vision and mission to the entire company, and refocus everyone on the building blocks that helped construct the company in the first place.

What Cubbin and his leadership team learned then are lessons that last a career. The principles that drove Meadowbrook’s turnaround a decade ago are also helping the company weather the current economic storm.

This is what Cubbin learned then and how it’s still helping Meadowbrook now.

Communicate early and often

The first steps Cubbin and the rest of Meadowbrook’s leadership team took in facilitating the company’s late-’90s turnaround are the first steps your organization can take to remain stable in the current economy: identify the areas on which you want to focus, develop a plan of attack and keep everyone companywide in the loop through constant communication.

It’s a process that needs to start at the top.

“For starters, we sat down with everybody on the executive team, talked through their specific areas of expertise, identified the things that were working and weren’t working, and determined what we needed to do to get back into a profitable mode,” Cubbin says. “Our plan ended up centering on our effort to exit the businesses that we had veered off into and were not profitable or consistent with our traditional game plan. Then we had to take advantage of and work to generate more profits from the businesses that had remained profitable through the tough economic times.”

The plan was to refocus Meadowbrook, which had $457 million in gross written premiums last year, on what had built the company — primarily risk management services to self-insured groups, agent-based insurance services and insurance for groups. It might seem easy to grasp, but implementing it required a mentality shift for 950 employees in multiple locations.

It was an example of the often-used business analogy of turning a battleship. And the only way to make the lengthy pivot move is through extensive communication.

Cubbin says the first thing you need to remember about communicating throughout your organization in tough times is to keep your messages simple and effective.

“Employees want to know that you have a game plan, that you have a strategy and vision for the business,” Cubbin says. “They want to know that what they’re doing is consistent with the company’s strategy and with the business plan. They want to hear what your thoughts are, what is happening in the market, and what you are doing to grow the business and make it successful.”

In the initial phase of the turnaround, Meadowbrook’s leaders traveled to each of the company’s locations for in-person engagement of employees. It’s a practice Cubbin continues today, through multiple communication avenues.

As your company grows, you can’t let communication break down. Particularly in a challenging economy, you might feel that employees need to hear news straight from the top. But even if you can’t engage them in person as often as you would like, you cannot let your communication lag.

Cubbin relies on multiple methods of communication to keep the organization focused.

“We have over 20 offices throughout the country, and I do try to have a number of in-person meetings,” he says. “But you can’t be out there all the time. I rely on my management team, which has been great with communicating to both our customers and our employees.

“We try to keep a steady flow of information coming from the home office, and on a quarterly basis, we report on the state of the entire company. In the interim, we stay connected through conference calls, including monthly conference calls with our branch managers. Through setting up multiple means of communication with different areas of the company, you find out what is happening in the marketplace, what strategies are working or not working in certain segments of the business, and others hear it, as well. You want everybody on the same page, hearing what is successful or isn’t successful in other parts of the company. That approach has been very effective for us.”

How you communicate in challenging times is only part of the battle. To get your employees on board with your plans and maintain their confidence in management, you also have to know what to communicate.

A straightforward, blunt answer is sometimes the toughest to give, but Cubbin says it is the right path to choose. When negative news is inundating the senses of your employees, spawning anxiety and rumors, they want the unvarnished truth from management before they want anything else.

“You have to communicate often, but when you do, you can’t be afraid to deliver bad news,” Cubbin says. “People start to fear the worst if they’re kept in the dark. If all they’re doing is watching CNBC or reading the newspapers in this environment, then all they’re hearing about is companies laying workers off and cutting salaries.

“People are going to feel the way they’re going to feel when they’re away from the office. But when they’re at the office, we just want to give them a steady stream of information. We try to have our financial statements available to them, but go beyond that and try to explain what is behind the financial statements and what is going to drive our profitability.

“If you’re going to talk to people and be in front of them in times like these, that is some important information that you can give them. If you withhold information from employees, people start to worry about the company’s balance sheet and whether their jobs are stable. That is a very common fear among employees at companies where information from senior management is lacking.”

Manage risk

In much the same way that Meadowbrook spread itself too thin a decade ago, companies that are feeling the sting of the current recession are, in many cases, suffering a backlash from accelerated growth when times were better.

Risk is an inherent part of leading a business, and some situations call for taking a calculated risk, such as branching into a new market. But when you decide to take a risk, make sure that you manage it and always wonder about the consequences if the economy falters and revenue starts to dry up.

“Companies that got into trouble during the current economy were overleveraged,” Cubbin says. “They were taking far more risks than they could afford. And if we didn’t learn from our past here at Meadowbrook, we might have been doomed to make the same mistakes all over again. The lessons we learned from the past helped us stick to the basics, stick to our core values in the company, and we’re not taking undue risk.”

Risk management starts with maintaining discipline during good economic times. It was a challenge for Meadowbrook’s leaders to renew the company’s focus on its core businesses during the turnaround, when the company’s future was at stake. But perhaps an even more critical test is keeping your company focused on risk management when times are good and employees don’t fear for their jobs.

If you prepare for bad times during good times, you can develop risk-management skills in your employees before the economy forces them to do it on short notice.

Preparation comes back to communicating the financial status of your business to employees and seeing to it that you always keep your finger on the pulse of profits and expenses.

“It’s really all about measuring and metrics,” Cubbin says. “If you’re measuring something, it gets looked at. If you look at the metrics of your business, you see variances from what your expectations are. Then, you can take steps to change those things.

“The second tip is to not anticipate growth and new business when putting your expense structure together. If you build your budget around a status quo or even factoring in a little erosion in your business, you’re going to build discipline with regard to looking at expenses. If you are able to achieve new business and grow revenues without adding expenses, that is when your margins are going to expand.

“At the end of the day, you need to always look at your business expenses as if times are always tough. Then, if you have to shrink, you have an expense structure that can support a smaller revenue base.”

Build on success

When the economy is struggling, victories for your business can become smaller and less frequent. But they can still occur, and when they do, you need to leverage them to build momentum and confidence throughout your organization.

“You have to celebrate those little wins along the way, so that people understand that things are working out,” Cubbin says.

When an employee secures an account, makes a key sale or achieves anything of note, he or she should be rewarded. At Meadowbrook, Cubbin has helped institute an incentive program to reward employees who help create wins for the company, no matter how big or small the win might be.

“As we moved through some of the more difficult times, we would reward people in small incremental improvements,” he says. “You have to put in a bonus and incentive plan that rewards the right things. That’s basic management, but you have to do it immediately: give spot bonuses, send e-mail messages, anything to reward good performance. It goes a long, long way with employees.

“We have been fortunate enough to have bonuses and create incentive plans that are positive for our employees. But most importantly, we’ve been able to build a steady, stable company with a strong balance sheet and strong liquidity. That gives employees the confidence and comfort that they and their families are going to continue to have a source of income.

“All of these things build a company: If you’re consistent with communication, if you’re finding ways to grow the business, increasing your profitability and rewarding people through an incentive system — if you do that, you’re going to continue to have well-motivated and happy employees.”

How to reach: Meadowbrook Insurance Group Inc., (248) 358-1100 or www.meadowbrook.com

Thursday, 25 June 2009 20:00

Motivation in motion

There was a time when Memo Kahan believed that payday was the day that mattered most to employees.

“I used to be a guy who believed that getting your paycheck was all that there should be. You signed a deal or you get paid for doing a task,” says Kahan, the president and founder of PromoShop Inc., a promotions and marketing services company that generated $33 million in 2008 revenue.

But his management team thought otherwise and, eventually, made Kahan see the light.

“What our management team did was they tried to convince me that there was more to coming to work than a paycheck,” he says. “Fortunately, I was open-minded enough to try anything. Our management team put new programs in, and I found that the effect has been pretty amazing.”

Kahan’s realization has helped create a culture at PromoShop that is focused on employee motivation through competition and recognition.

Smart Business spoke with Kahan about how you can place an emphasis on motivation at your company.

Value recognition. Recognition doesn’t have to come in the form of tangible cash recognition, but it has to recognize that someone is going above and beyond in their job. It can be a letter, it can be a speech, it can be a pat on the back, but recognition is so important these days because we are all reading the paper too much and we are all so enthralled with layoffs and what is going on out there in the business climate. Your people need to be recognized and valued, not just because they get a paycheck, but let them know that they belong and are an integral piece of the operation.

We recognize our people in front of their peers. We are a sales organization, and we always have incentives for our salespeople, but sometimes we forget the operation is the backbone to our company. Without our operations people, our salespeople wouldn’t be able to sell anything. With that in mind, we have a program called the ‘five star.’ Anytime someone goes above or beyond, or does something that is not part of their day-to-day operation, we’ve set up a Web site where salespeople and fellow operations people can recognize their peers. On a monthly basis, we read out the employees that are recognized. Some people are recognized five or six times a month for doing things that are above or beyond their normal scope of work. On a quarterly basis, we name a five-star winner who was most recognized over the quarter, and we give two big awards on a yearly basis, as well.

Promote constructive competition. About six years ago, we did the first sales contest, which also included the operations team. The salespeople would always come in saying, ‘I’ve got an order.’ But then, during the contest, their behavior pattern would change, and they’d come in and say, ‘I’ve got a contest order.’ They’re making enough money that the gifts they could win in the contest are things they could buy anyway, but it is all about winning the contest, not making the money.

That taught me some amazing lessons, and these contests have evolved into quarterly contests and monthly competitions. It’s really powerful.

If you engage employees like this, you will become a believer, too. The investment of time, resources and money that you put into an endeavor like this is the best money you can spend.

However, implementing a program to reward and motivate employees is a little bit of trial and error, based on the culture throughout your company. Different people are motivated by different things. Through trial and error, sooner than later you will recognize people’s patterns and people’s desires and fears, which will help you round out whatever program you’re looking to implement.

Put the team first. Even when competing with each other, you need to instill as part of your culture that if your neighbor wins, we all win. We play as a team and we win as a team. If we win as a team, everyone’s successes really allow the company to foster a winning attitude and will foster more success.

I’ve worked in environments before where people locked their doors and hid their Rolodexes for fear that their neighbor would come in and steal their opportunities. Very early on, we decided that was something we would not tolerate in our organization. Besides the accounting door, we keep every office opened; nothing is ever locked. We truly believe that fosters a team spirit that is a means to success. We share information. We share situations, knowledge and experiences. Everyone in the company is willing to help their neighbor, even though everyone is going after the same audience. But there is enough to go around where, if you do it for the right reasons, it works really well. It’s not something that you necessarily preach; it’s something that you just have to do.

Open-mindedness on your part is the beginning of forming a team-first mentality. It’s a willingness to take criticism; it’s the understanding that we’re all on the same team and working toward the same means and ends. It’s the sharing of information and engaging of people. As leaders, we don’t have all the answers, and we don’t sit down and tell our people how it needs to be. We just express what our experiences have been.

Thursday, 25 June 2009 20:00

One for the team

There is no “I” in team. But there is a heck of a lot more.

Todd Lazenby, the founder and managing partner of Victory Partners LLC, has been building teams in large and small business settings throughout his executive career. He’s seen the qualities that exist on a good business team — among them, an ability to focus on a uniform set of goals, a willingness on the part of individuals to put the best interests of the team first and an open-minded approach to problem-solving.

“If you build a team to be kind of a utility team, where you’re cross-training that team even at the senior management levels, then you get better cross-functionality, better cross-pollination of ideas,” Lazenby says. “For middle-market companies and larger companies, I’ve always found that to be the very best approach.”

Effective team-building is one of the main reasons Lazenby has been able to continually grow Victory, a firm that generated $10 million in 2008 revenue.

Smart Business spoke with Lazenby about how you can build effective teams at your company.

Form a process. The first thing you have to do is have everybody check their ego at the door. In our situation, we’re hiring many people with master’s level degrees, so everybody is coming with a certain level of ego. We kind of follow a ‘forming, norming, storming, performing’ model. First, you put the team together, and a lot of that rests on you hiring good people.

Another part of the equation is to hire people who come from very diverse backgrounds. One of the things we do not do is we do not bring in people who have homogenous skills. We want very diverse skill sets. Then we literally force them to start working together. So you have some of that storming going on in the beginning. You, as the CEO, help to affect that storming by mitigating it, pointing out when people are being unfair to one another or are taking things personally, letting their egos creep in.

I find that by managing the team that way, they start to become cohesive at a much faster rate, and most importantly, because they’re playing different roles, I show them how their overall role effects the overall organization, how the role they play impacts both the revenue and the bottom line.

Recruit team builders. The mentoring begins in the recruiting process. It takes us about four months to recruit somebody, and we have a very strict recruiting methodology where they have to go through five layers, and they have to pass the fitness test in terms of fitting in with the culture, but they also have to go through and indicate that they have demonstrable skills that will work in our industry.

We put them in situations where they actually have to demonstrate in a real-world situation that they can handle what it is they’re signing up to do. They are mentored through that process. For every level, we give them feedback on how they performed; we give them feedback on our culture and what they can do to continue to improve as they go through the process.

Once they’re on board, we assign a mentor to them. I get feedback from each of the mentors regarding how that new hire is progressing, and I take the time to spend one on one with each of the individuals and find how they’re doing. Everybody has a steep learning curve, so I want to know how they’re finding their learning curve, do they feel like they have the resources available to them to assist them in achieving what they need to achieve. If not, we ask them for their suggestions on additional resources we can provide.

Address problems. First, you have to understand what their motivations are. Spend time with that person and spend time mentoring them. What I mean by that is, if you show up as a mentor, you show that you have that person’s best interests at heart and you start asking the right questions, then you can get down to what their motivators are. Are they motivated by recognition, by money, by some form of significance within the team? Are they motivated by external notoriety? Then, once you understand what they’re motivated by, then you can outline how some of their actions are making it more difficult for them to achieve what they’re trying to accomplish and how those actions are certainly not in the best interest of the company.

The way I do that is, first, I sit down with the person who is having the issue with letting go and talk to them about why it is important to place this in the right hands. Two, I reinforce and encourage their strengths by telling them that you have a great job of stewarding it to this point and that your value is in this sector or industry, where you’re going to come in and play the same role. You show them that they’re going to be recognized for what they have done and will do.

If the behavior continues, then you have to make a decision about whether this is somebody we want to continue to try to work with, because nobody is indispensable. But to start with, you want to find out what those key motivators are, because that becomes critical to working with that employee.

I have someone who is actually starting to slow up the process of closing a transaction on a partnership we’re putting together, because he wants to be perceived as the relationship builder. Quite frankly, he doesn’t have as much of the subject matter expertise as another person in our firm, and so we’re now having to make the transition to another person to not only effectively get this deal closed but get it closed properly and put it in the right hands.

Tuesday, 26 May 2009 20:00

Education in branding

The past couple of years have taught Michael Victor that it’s never too late to roll out a new branding strategy.

Victor became the president of Lake Erie College in 2006, more than 20 years after the Painesville school became coeducational, admitting male students in 1985 after 129 years as a women’s college.

The trouble was that the transition occurred without a long-term strategic plan, which created problems that still lingered when Victor assumed the presidency.

“The college had lost its brand and its focus,” Victor says. “So the biggest challenge was to restore our brand and become fully coeducational. What that meant was I had to move quickly and I had to make dramatic changes quickly.”

Victor needed to define Lake Erie College — and its approximately $20 million in revenue — as a coeducational school. But, to do that, he had to define a new brand.

Smart Business spoke with Victor about how you can set a new course for your company through branding.

Q. How do you identify what should define your brand?

To identify and build those areas that define your organization and your brand, you have to find your strengths. You have to be who you are. Lake Erie had been a traditional, four-year college for women but was now a coeducational institution. We had to turn that traditional academic program into a coeducational institution and then exploit it.

As a leadership team, we sat down and put together a strategic vision of where we needed to be five and 10 years from now. And through that strategic vision, we pulled together these key areas that had to occur.

First of all, to deal with the coeducational questions, I started a football team. Nothing gets you coeducational quicker than having 150 male athletes on campus. Second of all, students today are very visual, so what we did was we started a capital campaign to restore our existing buildings and build new buildings. In 31 months, we raised $17 million.

The third part was we started a massive marketing campaign to get everyone to know our brand. The fourth thing was we raised our admissions standards. We simply would not let people in who were not academically qualified. Also, very critical, we challenged our faculty to come up with new, innovative niche majors. They created majors like sports business, human resources and entrepreneurship. Doing all of these things at once propelled us forward very quickly.

Q. How do you create buy-in for a new branding initiative?

Anytime you have a win, first and foremost, you need to celebrate it with the people who helped you win. When we received the largest gift in the school’s history of $4 million, we immediately gathered together the faculty, staff and students into our largest auditorium to announce the win. We helped create the win together, and we helped celebrate it together.

Let everyone know about your wins. Publicize it, go out and give talks about your organization. I do the Rotary circuit and the Kiwanis circuit. The more you spread the good news, the more it gets out there and the more it builds momentum. On top of that, thank everyone. Give praise to everyone in your organization who helped you get the win. You need to praise them and thank them.

What I do is when anyone has an accomplishment of any type, I will send them a note or thank them in person, and many times, I’ll do both. We’ll put it on our Web site so that everyone can celebrate our win. It doesn’t have to be something big in order for you to celebrate it. Many times, it’s the little things; the little thank-yous that let people know they are appreciated.

Q. How do you continue to push an initiative long term?

Some of it is an innate sense of being humanistic. You have to understand how human beings respond to praise and pushing. You need to be open and honest, and you need to look for what the people in front of you need and balance that with the needs and goals of the organization. It’s a fine balance.

A lot of it is in how you communicate. I believe in transparency. With employees, you have to show them the good and the bad. If you are transparent and tell them what is going on, you empower them.

You also need to have a consistent message and keep it simple and focused. People will also be looking to see if you’re leading by example. If they see you working very hard and setting the bar, they’ll do it.

It’s even the little, subtle things. For example, if I’m walking around and I see some litter, I’ll pick it up and put it in the garbage can. It’s a subtle point, but if people see the president doing that, they’ll know what is expected of them.

How to reach: Lake Erie College, (440) 296-1856 or www.lec.edu

Saturday, 25 April 2009 20:00

Rock solid

Eldorado Stone is a case study in the domino effect of an economic downturn. And Murphy Lents has had a front-row seat to watch the fallout.

Eldorado Stone Operations LLC makes stone veneer used primarily in housing construction, so when the economy sags, fewer people buy houses, which means fewer housing starts, which means fewer projects for Eldorado, a business with a nationwide customer base.

“In 2006, housing starts were approaching 2 million,” says Lents, the company’s president. “This year, they were forecasting somewhere around 550 (thousand) to 800 (thousand). It’s significantly off the peak. As a nationwide business, we have a pretty good view of what is going on across the entire U.S. What is happening in the building products industry is a direct reflection of what is going on in the housing markets.”

The company has been hit by cutbacks and layoffs, though Lents declined to discuss the specifics of Eldorado’s revenue and staff reduction. Hoovers.com lists Eldorado’s 2007 sales at $171.9 million and its employee count at 1,700.

While navigating the murky waters of an uncertain economic climate, Lents had still been charged with painting a clear picture of his company’s situation for his employees — and he’s had to do that while cultivating a positive, achievement-oriented mindset throughout the company.

“You still have to have an upbeat, positive attitude,” Lents says. “Our business, like most businesses, is about selling things. To sell things, you have to be upbeat and have a smile on your face when you see a customer. You have to be enthusiastic about your product and life in general.”

Lents won’t deny the current state of the economy and the effect it has had on his business. But when it comes to his employees, he can’t let bad news drag them down. It’s a mentality he’s had to tirelessly communicate and cultivate as the economy has worsened.

Communicate frequently

In times of uncertainty, the worst place you can keep your employees is in the dark.

If your company is forced to undergo cutbacks or downsizing, remember that your employees might not like the news, and you might take some heat for it, but the consequences of clamming up are potentially far more severe.

“You really need to make sure everybody on the team understands the situation,” Lents says. “Just as it’s important to keep your employees informed when things are going well, it’s important to do the same when things are not going well. When everybody understands the facts, if you have good people working for you, most people will understand why your decisions are being made, even though they might be difficult decisions.

“If everyone understands the reasons why you are doing what you are doing, it helps everyone have a good attitude. Uncertainty is the real attitude killer. It’s very dangerous to have people who are scared every day.”

Don’t dance around the subject when talking about layoffs. Layoffs and cutbacks are a negative development no matter how you slice it, but downsizing with an explained reason is always better than downsizing with silence from the top levels of the company.

“Nobody wants to be subjected to an arbitrary process,” Lents says. “But everyone understands that in a bad market, you have to do some things to stay healthy. That’s why we work hard to make sure that everyone has a good view of reality.”

However, a rational approach is often not enough, especially when it comes to layoffs, which are often an emotionally draining time in a company. Employees need to know the logic behind the decision, but they also want to see that you’re not just mechanically performing cutbacks.

Lents says you can’t manufacture sympathy or emotional appeal. It either comes from the heart or it looks phony.

“If you truly care about your people and care about the hardships that layoffs cause, they know. And if you don’t care, they’ll know that, as well,” he says. “That caring aspect isn’t just something in a leader; it’s something innate in the organization. It’s not just a business thing.

“That’s not the kind of news you want to send out in an e-mail. Whenever we have had to deal with work force reduction, we’ll have our senior people go out in the field, explain why this is happening and get all the facts on the table. If you have a good team spirit and a group of people that care about each other and the business, when times get tough, they’ll still care about the other folks on the team, even though you might have to make some changes on the team.”

As the economy sinks, your personal contact with your employees needs to rise. They need to see and hear more from you, even if you think you’re repeating the same messages over and over. Lents says repetition and reassurance from the top is essential to salvaging the morale of your work force.

“In situations like this economy, it’s more important than ever to have personal, one-on-one conversations with your team,” he says. “There really is no substitute for direct conversations, especially when things aren’t going well. That means you need to have a positive attitude yourself, and remember that even in a bad environment, there are still things going right. Even if you make the decision to close a plant, it can be done in a fair way and done well.

“When you talk openly about it, you get people involved in the decision, which means those decisions aren’t just being forced down through the organization from the top.”

It’s easy to get wrapped up in the day-to-day challenges presented to your company. The challenges become magnified in an economic downturn. But you can’t let that get in the way of interacting with your employees and keeping them in the loop.

There is no secret formula to staying engaged. You have to make time for it. If that means blocking off time on your calendar for communication, you need to do that.

“Especially at the senior level, it is so easy to get wrapped up in the corporate-type things, which really don’t have to do with the business of making and selling your products,” Lents says. “That is really one of the big challenges, how to stay engaged at the operating level and not let other priorities stop that. That does happen, and you have to make sure you watch out. When you see that you’re starting to push communication down on your list, you need to pull the plug on some of those other activities and get out in the field.

“Those other activities not focused on your people are not the most important things on your plate. Sometimes they are the most pressing things but rarely are they the most important things. Sometimes you simply have to stop doing those things for a while. Like most things, it can almost always wait.”

React readily

The mindset to weather bad economic times must be forged during good times. It must be part of your overall approach to conducting business — an approach that you teach to your employees.

Lents says you shouldn’t lull yourself into a secure feeling when the economy is on the upswing. Always prepare for what might lie ahead, because six months later, the situation surrounding your business might have changed drastically.

“It’s difficult to prepare for a downswing because what you are used to preparing for and dealing with is explosive growth,” he says. “That’s what we had been dealing with in coming off such a large period of prosperity in the building products business. But within a six-month time fr ame, your serious questions can go from how are you going to grow fast enough to keep up with your customer base to suddenly dealing with the opposite: How can I shrink the company fast enough so that we can remain profitable even though sales are half of what they used to be?

“It’s difficult to predict. But you have to prepare for it, and when you see it start to happen, you need to be responsive. Six months is a very long time in business today. You have to react quickly. That reaction speed is really the key.”

You can prepare and maintain an ability to react quickly by revisiting your strategic plan at regular intervals.

“Looking back over the past 10 or 11 years that I’ve been in the building materials business, even when times were good, we would make some revisions to our strategy as often as every 60 to 90 days,” Lents says. “That’s pretty quick when you’re talking about strategic things. I think you have to, over time, build that reactivity into everyone’s thinking. You can’t get too wrapped up in the way you did things yesterday, you always have to look at new ways of doing things. If you can get everybody in that mindset, it’s just as important when things are good as when things are bad.”

You coach your employees to have a forward-thinking, ready-to-react mindset by constantly reinforcing it through multiple communication channels. Whether you are walking the halls, conducting the meeting or sending out a company e-mail, each opportunity provides you with a chance to reinforce your message.

“You have to talk about it a lot,” Lents says. “We talk about it quite a bit. I don’t know how many times over the years I’ve told people to not expect things to stay the same. Nothing ever stays the same, so don’t try to make it stay the same. It’s important to keep saying that to your employees.”

Communication must also move laterally. Your company will remain more adaptable and able to react if employees frequently work together on projects in cross-functional teams. Lents says cross-functional teams help maintain a flat organizational structure and will give employees a complete view of the challenges your company is facing.

“When we talk about marketing, for example, we like to get someone from manufacturing in the room, and vice versa,” Lents says. “Having that inclusive and different point of view really helps the decision-making of the whole group. Business is a 360-degree process. You can be great at manufacturing, but it doesn’t help you if you can’t sell. If you’re great at selling, it won’t help you if your manufacturing cost is too high. That’s why the more people you can have on a team who can see the entire process, the better off you are and the better decisions you’ll be able to make.

“You have to maintain a good relationship between your staff. If you don’t keep that relationship reasonably well, ultimately everyone is going to suffer. It’s a challenge in a falling market to do that and have all the moving parts fit together. But it can be done.”

How to reach: Eldorado Stone Operations LLC, www.eldoradostone.com

Thursday, 26 March 2009 20:00

Accomplishing the mission

When Paul Johnson took the reins of Kelley Blue Book Co. Inc. as president and CEO in 2000, he was the company’s first leader from outside the Kelley family.

But despite his outsider status, he faced the task of refocusing the 500-employee automotive valuation company on the meaning of the Kelley name. That required sharpening the long-term vision and mission statement of the company through communication with employees at all levels.

A company won’t be able to adequately carry out its mission or achieve its goals without a work force that is focused on those goals.

Smart Business spoke with Johnson about how to get your employees focused on your company’s mission and goals.

Q. How do you get employees to embrace a mission statement?

How you get people a part of the vision and mission is to establish a clear vision and a clear mission statement that people remember but that are also powerful enough to guide actions.

The core values and the leadership principles, you know they’re taking root and being embraced when you hear them being quoted in meetings and they become part of the fabric of what the company is and part of the nomenclature as you’re working through difficult decisions and strategic alternatives.

What I’ve done is build on a core of six values and how they translate into how we operate on a daily basis. So the next step in the core values is we created a set of fairly granular leadership principles that really focus around three things. Those are developing people, execution and performance, and achieving results.

I put those in place as I was building the leadership team here to really establish my expectations of what the company’s leaders were, but maybe even more importantly, to establish what employees should be expecting from their leaders. These are working documents and things for which I hold my leadership accountable.

Q. What are some of the keys to communicating core values?

It’s consistency in message, it’s being repetitive, and it’s also the fact that your actions need to speak much louder than your words. One of the things I’ve had to learn as a leader is that everything you do is being observed and is part of your communication. Whether it’s passing someone in the hall and how you greet them, interaction in the coffee room, your body language, people are looking to you for the signals you’re sending and how you are reacting to different situations.

For the culture I’m trying to build and cultivate, I tend to try to listen more than I do talk. I tend to try and show empathy toward our people and listen and learn about the challenges they are facing. By doing that, I find people are very open, and you can learn a tremendous amount just by asking some good questions or asking for their suggestions.

But that effort needs to be sincere. People will recognize if you’re just going through the motions, so sincerity is important.

As the leader, you also need to show confidence and conviction and passion for the vision and mission and what is being accomplished by individuals in the company.

You also need to get people involved in shaping the vision by dialoguing. What I encourage is positive conflict. I want to hear the diversity of ideas.

I encourage people, regardless of their position in the company, to share their ideas. I want to give people license to state ideas that might be contrary to my own or to popular consensus.

Q. Is simplicity of message a part of communicating core values?

It has to be very simple. It has to be intuitive and as black and white as you can get. The more complicated it gets, the more open to interpretation it gets. Our goals are centered on six terms, and the six terms we’ve used to describe our culture are fairly self-explanatory.

We can often talk about what those terms mean to us and to our partners. But if it becomes open to interpretation, it becomes a gray area, and when you’re holding people accountable to live up to those core values, the last thing you want to have is a debate on whether or not they’re living up to those expectations.

Our values have become simply stated through our communication, through part of our nomenclature and the way we talk. One validation of that is that we do an employee survey to understand how our employees view the organization so that we know what is important to them and know how we are communicating the core values.

But in some manner, you have to find out whether you are clearly communicating those core values.

How to reach: Kelley Blue Book Co. Inc., (949) 770-7704 or www.kbb.com