Norman C. Chambers and his management team wanted to be ready for a rainy day at NCI Building Systems Inc. It was 2007, and the company had pretty much finished a successful growth strategy that began in 2003, and the company wanted to have plans in place just in case things went south.
“We developed and put together plans that would, first of all, try to give us some road signs about when we would start to see this and things we would try to do immediately,” says Chambers, chairman, president and CEO of the integrated manufacturers of metal products for the nonresidential building industry.
The group identified a mild recession as a 15 percent reduction in the level of activity in the marketplace, which is measured by square feet of new construction. A deeper recession would be a 30 percent reduction in such activity.
Chambers and his team could place the plans for each scenario on the shelf and dust them off if they ever needed them.
But why would they need the backup plans? In the third quarter of fiscal 2008, the company posted record numbers, and things looked good.
But that following quarter, signs started to creep in that things were going downhill. Net income and gross profit in the fourth quarter was less than the third quarter, which was very unusual.
“We hemmed and hawed as to the cause because other parts of our business were doing quite well,” he says. “It culminated with us really taking a step back by our fourth quarter of 2008, in that it was clear that while we are going to have a good (fourth) quarter, it was going to be less volume and less revenue and less profitability than our third quarter and that was the first time. So, we stepped back and said, ‘Why is this?’ and we started challenging some of our basic assumptions.”
Even though Chambers and his team prepared for the rainy day, they were met with a monsoon in the form of seeing most of the company’s business segments declining 62 percent. From November 2008 to April 2009, Chambers had to reduce NCI’s work force by nearly 40 percent and the number of plants in the United States was reduced by 25 percent.
“We went about that in part because we had planned for something that was bad and were facing something that was twice as bad,” he says. “While we had it about right, we had to totally re-engage in exactly looking at what we are doing.
“You then have a look and say the economy is falling off a cliff and your business is linked to economy. You can reduce costs and all those things, but it doesn’t ultimately change the bare facts that there’s going to be a whole lot less work for a period of time that seems to be quite extended.”
Don’t go it alone
Plain and simple, you can’t get your company through tough times on your own.
“Leadership isn’t just the CEO,” he says. “If it is, I don’t know how organizations can effectively do well.”
Since each business unit within NCI has its own president, those individuals were responsible for coming forth with a plan to reduce costs, as were those at the corporate level.
“What occurred was the presidents and their teams within our three business units are the ones who developed a plan based on the guidance we gave, which was a mild recession is a 15 percent hit and a deep recession is a 30 percent hit.”
You have to look at all aspects of your company to see where costs can be reduced.
“It’s across the board,” he says. “Those conversations were very open. We each came forward with our plans — What could get done, why, how fast, could we do more, what would be the consequence of doing more?
“It’s a conversation that is more than just a number or percentage. It’s about what’s behind those numbers. Where are we going to be with factories we have, with the people we have? How are we going to produce even half as much of the products that we produced in this year before?”
With your team, find forward indicators in your industry that can give you an idea of what is expected.
“One attempts to, in devising strategies for a company, try to get a range of possibilities and try to forecast downside cases as well as upside cases,” he says. “I would have argued that we did a pretty good job of doing that. But, I’ve got to tell you that, in retrospect, you can only say that we gravely missed the severity of the downturn.
“The fact that I’m in good company in terms of lots of people that did that doesn’t give me any comfort whatsoever. It gives me no comfort whatsoever the fact that many missed what has been probably the worst downturn since the Great Depression.”
You have to look at your volume reduction and talk to your team about how many people you need and how many locations you can keep open to keep producing.
“You have to work backward from some numeric goal in terms of some understanding of how much business you’re actually going to be able to produce to come up with what your cost structure needs to be,” he says.
While you may feel like many factors are out of your control, you have to control what you can, like costs, and keep everyone focused, while also depending on your team.
“I think that the notion of leadership is the ability to stay the course and continue to focus clearly on those things you can control and do your level best to make the right decisions with the colleagues that you surround yourself with as a leadership team,” he says. “It isn’t just one guy.”
Sure, people look to the leader to stay focused and to make good decisions, but they also want the leader to be open to suggestions and to value that input.
“Because it is, in fact, their commitment that is the only tool you have as a leader to weather a very challenging time,” he says. “It is the commitment of the people around you, of your colleagues and their ability to enroll people that work with them that is the difference, I think, between death and survival.”
Make cuts with compassion
By the second quarter of fiscal 2009, the company had to implement a third action plan for a 50 percent reduction in square feet of new construction.
To stay afloat, the company had pay freezes from top to bottom, cut bonuses and temporarily stopped contributing to employees’ 401(k)s. But none of that hit as hard as the closing of plants and having to let people go.
“As you make those hard decisions — and frankly shutting down plants is a hell of a lot easier decision to make than letting people go — you are letting people go from top to bottom. It’s not just a bottom deal. You are letting people go that you have worked with for 20 years, who depend on a job, who depend on benefits and depend on all aspects of what a company can provide.
“There is nothing that is easy for anybody in our organization to effect those changes. The only way you can is from the perspective of those who remain will be able to earn a living and take care of their families.”
You have to announce the cuts as fast as you can so it’s not hanging over the company. You also have to be honest and as detailed as possible when explaining to everyone why the decisions were made.
“I think that to the extent that you can communicate those steps that you are taking, the processes that you
are going through to be as frank and as open with your constituency, which are customers and suppliers and employees, is very important,” he says. “While you cannot ultimately allay fears, the knowledge that you can share with them and the behavior that they can see in you as the CEO and those that make up your team is critically important.”
You also have to sincerely do everything you can to keep the company steady, and you have to communicate that you and your team are doing all that you can.
“There is no limit to the amount of time you will spend, the hours you will spend, the days you will spend in making sure that the company not just can survive but can prosper,” he says.
While you made cuts in order to keep the company steady, you don’t want to communicate that message of prospering soon after making them.
“I think I’d be fibbing a little bit that you could combine both those messages at the same time,” he says. “I’m not sure that they could be heard. So, when you are doing those cuts, it’s to survive. Then you are proving your survivability by getting back to profitability.”
Much like you don’t make the plan on how to survive alone, you can’t communicate the message by yourself either. Of course, if you are the top executive, your voice has to be heard, but your managers have to spread the message throughout the organization, as well.
“It’s interesting because one often thinks that the CEO or the chairman kind of comes forward and speaks to the troops and kind of gets the message out, and to some extent, that’s true,” he says. “But I’ll tell you, it’s really the case of your leadership team and them being part of understanding the problems and the issues, being part of and creating the solution, being part of and being responsible for the future of the company, and then taking that message out and sharing that with people.”
Employees will react better to many voices saying the same thing than just you preaching the message.
“In a company like ours, the personal types of communications are much more important than some voice from the top of the tower,” he says. “They want to know the voices are singing the same tune and are aligned, that’s for sure. But it’s very important for that structure to be in place and for that leadership and responsibility to be carried by a lot of folks.”
Though making the cuts was hard, the moves, along with capital from a private equity firm, helped the company return to profitability for the third quarter of fiscal 2009. In addition, sales for the fourth quarter of that year were $244.4 million, up 2.5 percent from sales of $238.4 million in the third quarter of the same year.
“Returning to profitability, while being somewhat shallow to those who have lost their jobs, resonated pretty powerfully with those who remained in jobs,” he says.
Though improvements have been made at the $968 million company, Chambers isn’t naive enough to think everything is fixed.
“We certainly believe that the cuts that we have made, the reduction in plants clearly with the refinancing and a significant reduction in our debt, puts us in a position to do well in the future,” he says. “We say that realizing that probably next year will be no better than this year.”
While the economy may not rebound completely anytime soon, Chambers and NCI are ready to take their share of the current marketplace.
“We have to make sure that we get more than our share of that marketplace,” he says.
“The cost reductions and the plant reductions are in service to going there and kicking ass. It’s in service to continuing to be the most successful company in our industry.”
How to reach: NCI Building Systems Inc., (888) 624-8677 or www.ncilp.com
With about 2,000 employees, Vince Ruffolo has a large amount of employees to choose from for a promotion. The co-founder, chairman and CEO of A&R Security Services Inc. looks for employees who work hard and who are willing to go the extra mile for the security company, which posted more than $45 million in 2008 revenue.
“He or she is not a manager, but anytime you ask them to do something … the person is always willing to work and always willing to help the company out,” he says.
Smart Business spoke with Ruffolo about how to be a good leader and choose the best managers.
Q. What are the keys to being a good leader?
You have to be pretty good in picking people out. In other words, picking out the people that are eventually going to manage for you.
Myself and another guy started this business in 1967. We managed no one but ourselves. It’s easy to manage yourself. But, when you start hiring people, it’s a different story. You’ve got to treat everyone with respect. When it comes down to picking out those people that are going to be your managers I want to tell you, I’ve picked out winners and I’ve picked out some losers. Especially, that goes for sales.
But, for the most part, I’ve picked out winners. I guess what you need to do to be a good businessman and to be a good leader, you’ve got to realize that when you have made a mistake with a person in a management position, and you promoted somebody beyond his or her capabilities, you have to part company.
That is probably one of the biggest obstacles is keeping somebody on a job and you know they are just not able to do it. You are just hoping they’ll change and you are just hoping that it’s going to work out, and, in the end, it doesn’t work out and you are not doing that person a favor. You are certainly not doing anything for your business or anything for your company.
Q. How long do you give someone before letting him or her go?
I think it depends on how bad they are performing, but I would say a year. I’ve kept people on longer than that thinking they’d change and they didn’t. … Again, it depends on how badly they are screwing up. Sometimes it’s real clear-cut, and that is the easy decision.
Q. Would you demote someone before letting him or her go?
We certainly have reassigned people in many instances, and, of course, we have many different jobs here as a business group that we we’re able to do that. Some businesses you don’t have that luxury.
In many cases, we were able to take somebody who wasn’t really making it as a manager and find a job somewhere else in the company that was somewhat comparable in wages, etc. and the benefits were, of course, the same, and reassign them. That has worked many times, but sometimes you can’t do it.
Another thing that is important is when you do have a problem with somebody … and this doesn’t just apply to managers, when you criticize somebody you want to do it in a constructive way. I know this is all basic, but, believe it or not, I’ve seen owners of companies and managers that don’t understand this. You can’t tear a person down. It has to be constructive criticism that when he or she comes away from that meeting, they come away with a feeling that you still have confidence that they are going to be able to change and come around to your way of thinking.
Q. How do you handle a situation where someone makes a mistake?
You certainly don’t want to dress them down. You have the problem. They did whatever it was wrong. You go through it and (say), ‘In retrospect, Bob, what do you think you should have done? How do you think you should have handled this?’ The end of the meeting should always be on a positive note ‘Look, I have a lot of confidence in you. You wouldn’t have this job if we didn’t. You do a lot of good things here. I know you are going to be able to turn this around,’ and end it on a positive note.
Q. What overall advice would you have to hire and promote effectively?
One of the things is, watch out that you don’t pick out people that maybe have the same personality that you do in other words, you like them on a personal level. So, you have three people in front of you and, say, you like fishing and this person likes fishing.
You better really look long and hard at your experience with them, if they are working for you.
But, if it’s a candidate, look long and hard at that resume. Make sure that you are contacting as many of the previous employers as possible and watch out that you don’t pick somebody out that you kind of like personally, but you pass over somebody that might have been better for the job.
I’ve been doing this going on 43 years, but that’s one of the things that I found that I had to watch myself picking out somebody that I personally like. In reality and in retrospect, I would have been better off with the other person.
How to reach: A&R Security Services Inc., (708) 389-3830 or www.arsecurity.com
Finding people who want to work at System One Holdings LLC is pretty easy.
In fact, Troy Gregory normally doesn’t need to go looking for employees. The employees find him.
“I don’t say this to pound my chest, but I’ve always been able to draw a crowd,” he says. “For people to hear about the work environment at System One and for people to hear about how our leadership treats their people, we naturally find people are coming to us more and more each day.”
But not all of that positive buzz fell out of the sky. It’s generated because of the culture that System One, a provider of technical outsourcing solutions, fosters. Gregory, president and CEO, wants workers who look forward to coming to work, and who genuinely want to grow with the company. That culture starts at the top with the boss.
Gregory wants his employees to know how much he values all of them and that each one is equally important.
“The trick to life is being confident but being humble,” he says. “Humble is the magic word. I’ve always taught my people to be humble. Don’t forget where you came from. I don’t care if that person, if it’s their first job and they are calling you and they want to be the receptionist or they are the most important person in the world at the bank, you treat them the same.”
Gregory learned to show his employees appreciation because of the lack of support he received at some of his previous companies.
He recalls one time when a top executive of a company he worked for came to him and asked how he was doing. Gregory was both surprised and excited that the executive was taking the time to ask him that. But, before Gregory could answer, the executive asked him how his numbers were, which put Gregory back in his place.
“It’s about taking care of people and letting them know you genuinely do care,” he says.
Gregory is finding that the caring environment he’s established is helping his company go in the right direction. The company grew from $150 million in 2007 to almost $200 million in 2008. If System One didn’t have a supportive and open culture, the bottom line wouldn’t be nearly as good.
“I think it would stink,” Gregory says. “I’ve come from companies that don’t have that culture, and I think it’s just a matter of time before their gig is up.”
You can’t have a free and open culture if you are constantly watching over everyone who works for you. Yes, you don’t want to completely ignore what is going on, but watching when employees come and go can be stifling to their motivation and work ethic.
“My thoughts on this have always been to hire strong people and give them the tools to be successful and give them the freedom to go,” he says. “I don’t want to know when people are coming and going. I don’t want them to punch a clock in and out. I want to hire people and give them the tools to be successful and watch them blossom.”
And watching them blossom is the key in managing System One’s type of culture.
“With us, it’s all based on performance,” he says. “If you are getting your job done and you’re doing your job in a good way and the results are there, I have no problem. I always say to my people, ‘Hey, if you are going to be that successful and you’re going to do your job, I’d rather have someone like you for 20 hours a week than someone that can’t do it for 60 hours.’ So, it’s about the quality of the work. It’s about our clients being happy, our internal people being happy, and it’s about creating a very unique environment.”
You may not be able to pay the most on the block or hand out the best bonuses, but if you are giving employees freedom, you know that no one can compete with the quality of life at your company.
“If I have 150 internal employees and I had to watch each one and see what they are doing, it’s not the environment we want,” he says. “We are not about cracking the whip.”
Some bosses may think employees will get more work done if they are in the office all of the time. Gregory disagrees with that assessment. If you give your employees the freedom of having flexible hours, chances are they are working at home or outside of the typical 9-to-5 workday.
“We’re always working,” he says. “So it doesn’t mean that I need you in this office sitting next to me at all times.”
Be stern with resisters
You will never have a perfect culture because there will always be people in the organization who are not completely buying in to it.
Even worse, that resistance may be coming from one of your top financial performers.
Gregory once had a great producer who was helping the bottom line, but she was always complaining and causing trouble.
So, he took one step back in order to take 20 steps forward, and he fired her.
“We worked with her for months,” he says. “This is something that we really avoided doing. Not to mention we’d lose production, but she’d walk across the street to my competitor. It was a lose-lose. But, it became so disruptive. She just didn’t get it. It was everyone’s fault, and she complained about everyone. She was making my work-life miserable.”
It’s not the easiest decision, but it’s one you might have to make one day. Like Gregory, you want to at least attempt to work with the employee to see your point of view and explain how buying in to the culture will help that employee’s future.
“You need to try to get that person to relate to you,” he says. “(Tell them,) ‘Maybe you’ve seen a situation or maybe I used to be like that and I learned the hard way. You’re so talented, but you are going to be your own worst enemy. We take culture over your revenue, and we don’t want to lose you, but we aren’t going to lose my entire culture that I’ve built over the last how many years because you are a great producer.’”
There really is no timetable for getting that person to buy in. You should take each situation on a case-by-case basis.
“You really don’t want to pigeonhole yourself into set rules,” he says. “If you do that, you’re really going to hurt in the end. I think you need to leave yourself open, and you need to be ready to adjust to different situations.”
While it may hurt temporarily, firing a great producer who is a malcontent makes a great long-term statement to your company that everyone needs to be on the same page.
“It’s a great statement,” he says. “Nobody should have you, as a leader, in a corner where they can dictate to you.”
Not everyone works in positive corporate cultures. Some can be downright awful, and you have to remember that when bringing on new hires. Gregory had his eye on a worker at another company in which the culture was more strict but still successful.
When the worker eventually came over, Gregory knew he had to show that the culture was different and that the employees and leadership were genuine.
“I almost look at it as a relationship,” he says. “If you are dating somebody and they were in an ab
usive relationship, they’re not going to be so open with you. It’s going to take time. But soon enough, they are going to realize that you are a good person, you do care, and they are going to die for you.”
That new employee flourished in the new environment and ended up being a great producer. But he first had to start believing in the culture before moving ahead with nothing holding him back.
You can do little things to get newer employees who are coming from bad environments to buy in.
“Surprise them,” he says. “Be giving. The more you give, the more you shall receive.”
Because actions speak louder than words, Gregory really does surprise people to make new employees into believers as well as to remind longer-tenured employees that they are appreciated.
Gregory once took employees to Nemacolin Woodlands Resort but told them they were going there for a work conference. All of the employees had their notepads out ready to jot down important points from the meeting, when Gregory sprung the surprise. He told the group to get a massage, go horseback riding or find something they would enjoy doing for the day.
“It’s about being spontaneous and doing something different,” he says. “But you get a lot back from it.”
What you get back from it is how Gregory validates spending big money on such excursions.
“It’s morale,” he says. “It’s somebody wanting to go the extra mile to represent the company.
“The whole sales cycle in our company starts with the receptionist that answers the phone. If you are the receptionist and you are miserable, believe me, the experience from the client’s standpoint … is only going to go downhill from there. It is about people coming in and holding their head up high and feeling good about what they are doing.”
Though you might not be able to spend a lot of money on culture-building activities, there’s simple actions you can take to create camaraderie.
“There are a lot of things you can do because money is not everything,” he says. “We didn’t always have the ability to do those types of things. It’s getting up, it’s going over to your person, it’s putting your arm on their shoulder, and saying, ‘How are you doing? Everything going all right?’”
You can also do more affordable culture-building activities, such as closing the office early on a Friday or taking employees out to lunch.
“It’s those little things that you really create a unique work environment that can’t be competed with,” he says.
Outings like these are inexpensive and will give you opportunities to meet people and talk to some employees you haven’t spoken with in awhile.
“Most CEOs sit in their ivory towers,” he says. “They are locked away. They don’t want to get their hands dirty, and they only want to talk to a few layers. But, that is the opposite of what we’re about. These are very simple things, but people in my organization know that I am here, my door is open, and I am always saying, ‘Come to me.’”
While the culture has been a main driver of System One’s success, Gregory isn’t blind to the fact that there is always work to be done.
“This is the worst economy my parents’ parents have ever seen, and we’ve grown dramatically over the last two years,” he says. “We’ve seen tremendous amounts of success. Now I think if we were in a normal economy, I think that growth would have been even more. So, I think it’s all about that. I don’t think I’m done. I think I still have a ways to go with that culture. I think I still have to get all my people to always go to battle for us in a second.”
How to reach: System One Holdings LLC, (877) 505-7971 or www.systemoneservices.com
“It’s not dissatisfaction with the way it’s done,” says the acting president of the 75-employee company, which designs specialized dimensional tools that help companies sell. “I try to position it in a very positive way that I think we can do things better.”
Smart Business spoke with Hoff about leadership and getting the most out of your employees.
Q. What are the keys to good leadership?
Evaluation and assessment of the talent. As a leader you can communicate, you can have the passions, you can have the energy, but you also have to have the right people in place to bring it all together. I think you need to be constantly looking for talented people. You need to have talented people surrounding you people who can do the job better than I do it.
If I communicate the vision, I may not know all the ins and outs, but that’s what I need the people for. I need to tell them why and let them figure out the how.
Then, just kind of stand back and make sure it happens. Then, along with that evaluation and finding of talent, is making the changes when they need to be made.
Q. How do you find the best talent?
I network a lot. I look at our competitors in some cases. I look to people who are selling to me. I look within the company as well to see who I’ve got, what their skills are, and who’s got the drive and the passion to go to the next level. Who’s got that attitude?
But, I’m constantly looking around. I have the luxury of having a number of years of experience so I network with other people and I see what is going on at companies, and I look at their people and see if there are any opportunities that we have that I could tap into that.
Q. How do you monitor something without micromanaging?
You have to clearly communicate what it is you are trying to do what the timetable is, what the end result might look like in your mind, in your vision, and what resources we have at the outset.
Sit down with the person or the group or whoever is involved and just lay it all out. What do we need to get this done? Why are we doing it first of all, and then just lay out the timetable and make sure everyone buys upfront and agrees to it and address whatever issues you can address right there with the group.
Q. How do you handle a situation when expectations aren’t met when you delegate?
I go directly to the person that is handling the project and try to find out what some of the issues are. Why is it not happening? What roadblocks are you running into? If there is information or help you need from another source, is that not happening? Is it someone else’s plate is full and they cant get to it right now?
First off, we try to set some realistic timetables, and then, through regular, informal meetings, just touching base. [It] could just be stopping in their office every other day or so. ‘How’s it going? Let me know if there are any problems.’
If we are running into roadblocks or it’s being delayed, then I might pull the group together and say, ‘OK, what do we need to do to get moving here?’ I reassess things, and just emphasize from my perspective the urgency to get this done and marshal all the resources. Maybe we need to pull in more people to help out or someone’s got to work a little extra to get this done because they don’t quite see it with the same urgency.
Q. How do you get buy-in for your vision?
The buy-in comes from … ‘Here’s where we have to go, here’s where the industry is going, and here is where we need to go.’ We can’t totally change the culture. My analogy is, if we are Volkswagen, we can’t expect, without any changes, to go out and win the Indy 500.
We have to understand what our goal is. Maybe it’s not to win the Indy 500, but maybe it eventually is, and what do we have to do to get there? What things are a fit for us that fit our culture that we can handle without trying to bite off more than we can chew initially? Then constantly communicate that vision, have that passion and let people know that this is what we’re doing and why we’re doing it.
Everybody needs an understanding of where we’re going and why we are going there from the guy who fixes our equipment or maintains our equipment to our head sales guy.
They have to understand, and we all have to be pointed in the same direction, and I think that’s critical for any company, large or small. Communication is important so people are all on the same page constant communication, constant checking. Asking, ‘Do you understand what we are doing or why?’
Pretty soon, you see people [and] now they’re coming back to you with ideas. It’s not just following your vision. They’re coming back with ways they think they can make it happen either faster or better.
HOW TO REACH: American Slide Chart/Perrygraf, (800) 323-4433 or www.americanslidechart.com
To establish a culture, John Berger finds that actions speak louder than words.
“It spreads like wildfire within the company,” says the founder, chairman and CEO of Standard Renewable Energy LP.
“Even as geographically diverse as we are, you don’t need to get on a pedestal or an all-employees meeting or send out an e-mail and say those kinds of things.”
For example, the distributed energy services company installed a high-efficiency heater but found out after they installed it that it didn’t meet a municipal building code.
However, previous heaters somehow passed inspection even though they shouldn’t have. Berger could have looked the other way and saved the company, which posted $11 million in 2008 revenue, the money it would have cost to reinstall them. Instead, he had them all replaced.
“That set an example and people knew it, and you didn’t have to tell everybody about it,” he says.
Smart Business spoke with Berger about developing an open and honest culture.
Allow for mistakes. I was doing an interview yesterday with a gentleman who’s interviewing for a senior position and he asked me that question, ‘If I make a mistake, how do you treat it?’ Here, I expect you to make mistakes. If you’re not making mistakes, then you’re not trying hard enough. I make plenty of them.
I think that it’s proper in management you have to have guidelines, so we can’t have somebody in the company going out and signing up the company to a million-dollar liability and (saying), ‘Oh sorry, you messed that up.’ That’s not acceptable.
But pushing the envelope in the sense of cutting costs and trying to do what’s best for the customers etc. and something just didn’t work out … you have to say, ‘Look, it’s OK to fail, because if it’s not OK to fail, then you’re not pushing and you’re not improving. You’re not improving the company; you’re not improving yourself.’
So, I think it’s having the understanding out there within the culture, which obviously we do, that it’s OK to fail.
Leave your door open. Coming in and just griping about something is something I don’t tolerate. What I would like to see is, ‘This is what I view as wrong and this is what I would suggest to fix it.’ I’ve always set it up to where you should feel free to come in. I’m not going to hold you, nor will my other managers hold you, and say, ‘God, this person is just a troublemaker.’ If you do it every week, then, yeah, that’s a problem.
But you’re accepted. We may not agree with your viewpoints and we may say, ‘No, this is why we’re doing it, and we are going to continue to do it this way, and I expect you then to get in line to do the best job that you can with that decision. But it really is never held against you for bringing a constructive criticism up and with some other ideas how to fix that.’
So, it’s got to be open, and you cannot penalize people for not agreeing with you. If you demean them in a public way for not agreeing with you, that’s an issue.
Communicate openly. If you allow people to tell you all the good things but not the bad things, I think that leads to a significant amount of problems. There needs to be open communication within the organization itself, regardless of up and down the chain, so people can understand where each other is coming from and understand what each other is doing and why. It also leads to a large amount of both organization respect for the company but also individual respect amongst our team members.
So, it really matters in terms of how you treat people. You still have to hold everybody accountable, but at the same time, you need to make sure that individual viewpoints are listened to and respected. I also think that goes with making sure you have the right type of individuals in there. If you have people that are really not of the same ethics, guidelines or mandates that you’ve set in place in the company, then in both the personal life and the professional life that can lead to a rotting of the culture inside the company as well. Then lead to, ‘Well, if I don’t respect you on something over here, then why should I respect your opinion about something that has a high priority for the business.’
Give freedom but have structure. You have to set up processes. You have to set up whether it’s documentation and it’s probably both documentation and conversations over and over again. I’ve learned that you never can say the same thing too many times within an organization. Once you’ve set that mindset, the vision that’s probably No. 1, to set the vision. You have to have a common vision where are you going and why?
Once you’ve set that and set the processes in place and you communicate both the vision and the processes over and over again so that, as new people come in or people are reminded of it, then you have a common structure. That goes down to culture, your ethical guidelines of the culture and so forth. Everything goes within that.
But, at the same time, you put your organization in such a way and the type of people that you hire we hire a lot of entrepreneurs, we hire people that are capable of handling and going out there making their own decisions. So frankly, it’s a lot like the U.S. democratic system. There are rules and guidelines that the constitution set up, but everybody has a tremendous amount of freedom within those broad rules of lines and processes, and I don’t think running a company like ours is any different than that.
How to reach: Standard Renewable Energy LP, (713) 316-4990 or www.sre3.com
It’s been so long since Kathy Lehne had to do basically everything at her company that she can’t really recall if it was hard to let go of some of her power.
“We were growing,” says the founder, president and CEO of Sun Coast Resources Inc. “I just realized there are certain things you can’t do that you once did. You’ve got to trust someone else to do it.”
It may not have been a huge challenge for Lehne to delegate, but it was necessary. After all, who has the time to be making all the decisions in a company that now employs more than 500 people?
Certainly not someone who took a modest wholesale fuel and lubricants marketer founded in 1985 to revenue of more than $1 billion in 2008.
Lehne didn’t have an epiphany telling her she needed to begin delegating. It was just a gradual process when she began to see the need to share responsibility.
“Some of the things that you can delegate give you more time to think about the overall business than doing some of the day-to-day things that someone else should be doing,” she says.
Though she still admits to doing day-to-day tasks that maybe she shouldn’t, she realizes, as the leader, she needs to look at the overall picture of the organization.
“Delegation is one of the most important practices a CEO must adhere to in order to be successful,” she says. “Along with delegation comes accountability but not second guessing. In order to prosper, delegation must be the cornerstone of every growth strategy. Without delegation and support for their decisions, team members will not offer their insight and creativity in fear of retribution.”
Don’t hire alone
One area to start the delegation process is with hiring.
Lehne could overwork herself, do all the interviews alone and make the decisions, but that wouldn’t be productive.
In addition, having candidates meet with multiple employees in the beginning will help them in the end.
“By enlisting the support and perspectives from others, the candidate stands an improved chance of being accepted into the organization, compared to a situation where the CEO simply brings them on board without the prior blessing from other managers,” she says.
In the beginning, letting go of some of the hiring powers was a challenge, but it eventually paid off. You have to involve multiple people in an interview process to get other opinions besides just yours.
Lehne may have a potential hire interview with three people just to get different notes to compare.
“Many perspectives in the hiring process (are) important because the candidate will have to fit into the unique culture of the company and be able to work effectively with all the other members on the team,” she says. “All too often, companies hire candidates without proper questioning and scrutiny from others with whom they will work. That is prescription for failure.”
First, the process starts with the human resources, and then the candidate would meet the manager that was actually doing the hiring for that department. Finally, the candidate would complete a third interview with Lehne or one other person involved in the process.
“It’s more just to get a feel of the person because you have their resume or you have their history,” she says.
When all the discussions have concluded and a decision needs to be made, Lehne allows the human resources manager and the direct manager who the candidate will be working for to make the decision.
“At some point, you have to trust your managers,” she says. “That’s why you have the managers.”
While you may be tempted to make the decision for your managers, don’t do it. If you struggle with micromanaging, gradually work yourself into delegating things instead of just sharing responsibility all at once.
“Micromanaging can and often will act as an impediment to productivity and ingenuity,” she says. “The fastest way to kill teamwork is to second-guess and micromanage your department heads. CEOs reluctant to let go of the reins and delegate more should do so in small steps. Once they have done so and see the positive results, delegation will be embraced much easier.”
Don’t overstep boundaries
Delegation is a balancing act between allowing others to make decisions while still keeping tabs on what’s going on with the company.
“A president must be intimately involved in daily operations in order to make the proper decisions, which could dramatically impact the company’s future,” she says. “I believe those that stay behind closed doors and do not visit with their troops and customers are setting themselves up for failure. Many corporate insolvencies we have witnessed over the years are a direct result of CEOs not being aware of the detailed operations of their company, competitive initiatives in the marketplace or what it takes to keep their customers satisfied and loyal.”
Communication of expectations is the key to achieving goals while allowing managers to exercise authority.
“A CEO must set the guidelines and parameters upon which their executives will be judged,” Lehne says. “This must be communicated personally and embraced by each manager. Results management is the key here. There is no ‘best’ method for managing every department, so each department head needs to be able to utilize his/her own unique style. Nothing will kill the productivity and enthusiasm of company management faster than second-guessing or micromanaging. In fact, by so doing, the human resources placed in roles of extreme responsibility will not perform at an optimum level and, most likely, won’t tell their CEO when the train is about to fall off the tracks.”
While you want to stay in contact with employees after gearing your leadership style toward delegation, you want to be careful not to interfere when an issue arises.
“Typically, if there’s an issue with the middle manager, usually their direct supervisor ... would take care of the situation,” she says. “I may have some input in that, but I’d leave it up to them, because I don’t try to overstep them because that kind of devalues their position.”
While you want to allow the direct supervisors to make decisions, you don’t want them to forget to work as a team.
“They sometimes come to me or I come to them and say, ‘I understand, or hear this. What do you think about this? Have you thought about that?’ We bounce ideas off of each other and it’s just kind of a team effort I would say,” she says.
If you are working on a project with a middle manager, don’t feel guilty skipping over your executive team and speaking directly with the middle manager.
However, if there is an overall issue with a middle manager, Lehne lets the direct supervisor handle that.
That can be problematic because of the open-door policy Lehne stresses. Because her door is open, sometimes employees might come right to her with a problem.
“I’m in the office; my door is always open,” she says. “I don’t work behind a closed door. I’m right by dispatch where the drivers come and go. Other people are walking around, so it’s not that you have to have an appointment. People just come in, and if they have an issue, they just com
e in and talk about it.”
While you may want to try to solve the problem right away, don’t forget about that person’s direct supervisor.
“It depends on the topic,” she says. “I may say, ‘Have you discussed it with your manager?’ If not, I’ll say, ‘Well, let me talk with them about it and I’ll get back to you.’ I don’t usually make a lot of decisions without talking to the manager first because I’m not sure what they may have already discussed with the employee.”
To avoid uncomfortable situations where employees are skipping levels to come to you with a problem, you have to stress to a new hire that, while there is an open-door policy, there is chain of command.
“It’s understood when they are hired and with different meetings,” she says. “They are told, ‘The manager is the first point of contact. If you have an issue with that, please go to HR. If you have an issue with that, go to the owner.’
“It’s probably communicated some when they first get here, then through working here. I think a lot of that is pretty common sense. You go to your managers first.”
Another way Lehne keeps up with the details of her company while not getting in the way of her managers is by taking employees to lunch.
This allows formal and informal discussions to occur and also sets the precedent that you want strong communication in your organization. You can also use this opportunity to show them the appreciation you have for the work they are doing.
“Since the ultimate success of any company depends in large part on the hard work, ingenuity, productivity, enthusiasm, loyalty and teamwork of its valued staff, little things like taking them out to lunch, recognizing them for their years of service and extra special performance is very important — not only to the employees but also to our bottom line,” she says. “When employees feel like they are appreciated, their productivity increases. When they believe their opinion counts and are encouraged to participate in the management process, employees tend to offer all sorts of ideas to make things operate more efficiently and effectively.”
Lehne tries to take groups out to lunch about once a week. Of the 60 employees working in the main office, Lehne will rotate groups of three to eight people to make sure she stays in touch with all employees. Do the lunches in groups to avoid awkwardness with an employee who might be a little nervous talking to the boss.
Don’t make the lunches mandatory, and don’t come in with a set agenda. If something in particular needs to be addressed, have a meeting in the office.
“A lot of it is on a casual basis,” she says. “Sometimes we talk about things in the office ... but a lot of that I try to keep on a personal level just to make them more comfortable.”
In addition, mix up groups from time to time to build some cross communication between departments.
“We are always trying to build teamwork within our company,” she says. “We have our separate departments, but you are always wanting everybody to work as a team.”
Delegation is never easy, but just remember that nobody is perfect and be proud once you’ve taken the first step and actually delegated.
“I would encourage every CEO to delegate and make those who have been given the authority responsible for the performance,” she says. “The CEO must set the direction and mission statement; from there, management’s responsibility is to see that the goals and objectives are carried out.”
How to reach: Sun Coast Resources Inc., (713) 844-9600 or www.suncoastresources.com
Thirty years ago, it was much more command and control leadership where the management wasn’t very concerned with what the rank and file thought.
“Everyone had their org chart and everybody knew what box was what,” says Oates, a steel industry veteran who was president of Lukens Steel Co. and Connell Limited Partnership before becoming president and CEO of Universal Stainless & Alloy Products Inc. in January 2008.
Of course, over time, the business world changed, which resulted in a more engaged work force.
“I think what was happening is that management, senior management in particular, wanted more productivity out of the employees, more innovative thinking out of employees,” Oates says.
Universal Stainless has seen an increase in sales every year since 2004, and Oates is looking to continue that growth. But to do so will require the help of employees who are actively engaged in the organization and aren’t just punching in and punching out every day.
“People are looking for someone that they can trust in this day and age,” he says. “To build trust, I think you need to be accessible to people and be a good two-way communicator. I emphasize the two-way. It’s easy to talk and tell people what to do, but I think people today … are looking for somebody that’s going to listen to what they have going on, as well.”
Here’s how Oates is using his leadership strategies to form a trusting environment to drive growth at the $235 million steel manufacturer.
Oates doesn’t want to sound like he is complaining, but he expresses the truth when he talks about executive leaders being pulled in 100 different directions. Your time is needed for so many different things, you may lose track of a very important aspect of your job — visiting with your employees.
“I learn more about what’s going on in the company in the trenches, so to speak, by doing that than I do by reading any report,” he says.
Just like you schedule meetings with customers or make time to travel for business matters, you have to schedule a couple of hours to speak with employees.
“You have to be very disciplined about scheduling time to do nothing,” he says. “By nothing, I mean clear your calendar so you have time to walk around and talk to employees.”
While scheduling an appointment may be as easy as marking it in your calendar or entering it in your BlackBerry, you then have to follow through and actually make your rounds.
“You can get right down there and find out what’s going on,” he says. “Secondly, folks on the shop floor appreciate somebody who takes the time to come out and see how they are doing. That does give you a forum to speak directly, kind of eyeball to eyeball, with somebody about what’s going on in the business.”
When making the rounds, you also want to avoid doing it with a whole entourage. Instead, take a casual stroll around like Oates does when he just puts on his work boots and talks to the employees on the shop floor. You don’t need any tricks to break the ice. Just be yourself and listen to what they have to say.
“People are people and everybody is proud of what they do and like to talk about what they do,” he says. “If there is any trick, I don’t know if it’s a trick, it’s just common human interaction. ‘How are you doing today? What’s cooking? How are things working?’ That kind of stuff.
“Nine times out of 10, people will respond to that and after they realize you are not there to kick them in the tail — ‘Why aren’t you working harder?’ that kind of stuff, they tend to be very open.”
Oates also wants his middle managers to walk the floor more than he does, though he realizes they may run into the same time constraints as him.
“Sometimes, with all the changes in cost and all that, people who are responsible for manufacturing operations can let themselves get pulled into office duties, reporting production or doing payroll, that kind of stuff, and not spend enough time out in the shop floor,” he says.
At other companies Oates has been at, offices have been moved to the shop floor right in the middle of the action.
“Anything that you’re doing that’s putting a wall between you and employees is going to hurt you in the long run in my view,” he says. “It doesn’t do a lot of good if you are responsible for a manufacturing department on one side of the plant and your office is in the office with all the staff folks. That’s not a knock on staff folks; it’s just you should be out there, readily accessible and seeing what’s going on and knowing what’s going on in your department.”
When you are speaking with employees and they have a complaint or a suggestion, the worst thing in the world you could do is not follow up on it.
“It’s incumbent upon you, even though you may say it’s not part of your job, it’s incumbent upon you to make sure that it gets taken care of,” he says.
Oates was walking around a plant a few months ago when employees told him there was a quality problem with a product, which was causing more work for them. The workers knew what the problem was, showed it to Oates, and the problem was addressed.
“Typically, when you talk to somebody in a plant, they are going to know more about what’s going on day in and day out in that area more than anybody else,” he says. “They are going to know more about the quality of product they are processing from their equipment than anybody else.”
You have to be careful not to become the complaint center, but again, you have to help solve the problem.
“In a case like that, I would normally ask, ‘Who have you told about this?’ Sometimes you’ll find out, for one reason or another, he didn’t,” Oates says. “In this case, he had and hadn’t gotten the response from us that he thought it should have.
“I just happened to be walking past when a particularly bad piece showed up. So, it may have been something that was in the process of being fixed. It just got fixed a little quicker.”
A situation like this can also cause your management team to become self-conscious that you are undermining them. There may be a reasonable explanation to why the problem was taking a long time to be solved or why it can’t be solved, and the middle manager has that answer. So, check with him or her before making a definite statement.
“There have been times where, quite frankly, I run into an employee who says, ‘I’ve been bitching about this for the last five years and nobody did anything about it,’” he says. “There may be a reason why nothing has been done about it. In that case, you take a look at it and you agree that you shouldn’t do something about it or that it’s going to cost $20 million to fix it.”
It’s critical though that you go back to the employee and explain to him or her why nothing can be done about it.
“If you ignore them, that’s what irritates people, because I’m sure I get irritated when I get ignored,” he says.
If there isn’
;t a reasonable explanation why something wasn’t fixed, you might have to revaluate if that manager is right for the job.
In addition, if a manager is uncomfortable with you making rounds, you should look into why.
“I think it’s pretty obvious what I am doing,” he says. “It’s not done what the intent of undercutting anybody’s ‘authority’ and all that good stuff. But, I don’t have a lot of patience for that, because I think they should understand what I am doing and they should understand the positive effect of that in their operations.”
If employees are worried about speaking up about an issue in fear of retaliation from the manager, you, again, may need to investigate if that manager fits in the company.
You have to address that issue with the manager, and make sure he or she understands why that type of thinking from employees is not acceptable and doesn’t help the business.
“Part of the reason why some folks fail and others don’t is the tendency to procrastinate on tough decisions,” he says.
“A lot of time people will shy away from confrontation like that. That’s the kiss of death.”
A trusting environment doesn’t evolve from just interacting with employees and helping solve problems by communicating with managers. It also is a result of delegating.
When Oates arrived at Universal, he hired some new employees to complement some of the existing employees, and he didn’t want the two factions to become divided.
He avoided that problem by delegating and involving everyone in the process of running a business.
“In my mind, I look at it as, everything I do can be delegated except responsibility,” he says.
Oates can remember being pulled off his regular assignment as a 25-year-old up-and-comer and being given a special project with a six-person team.
After giving a report on the project, his boss walked in his office around 8 p.m. where Oates’ desk looked like a tornado hit it. After telling Oates he did a great job on the report, his boss told him he received an F from a leadership standpoint.
“He said, ‘I love the work you are doing, and there is no doubt in my mind you are going to deliver on this project that we gave you,’” Oates says. “‘But if someday you want to progress in your career, you better learn how to delegate better.’ He said, ‘By tomorrow, I would strongly urge you to take all this crap you’ve got on your desk and, when I come through here, I would hope that you would be smart enough to have all of this crap on somebody else’s desk.’”
While Oates wasn’t doing everything himself, he could have been more effective letting go of some tasks.
“When I’m doing something, I say, ‘Why am I doing this?’ I ask myself that all the time,” he says.
“Sometimes people are bright and have great work ethic, but it’s got to be their way. The only way they can ensure that is they do everything themselves. They never make the transition from good lower-level manager to a senior position in the company.”
The more you can delegate, the more time you have to be accessible to your employees.
“I look at delegation from a selfish, personal standpoint — that’s the way you leverage your time,” he says. “You can very easily get pulled into detail and never get your head above water. So, it’s critically important from a selfish, personal standpoint.
“From a productivity standpoint and from an organizational standpoint and an employee standpoint, it’s equally important because that’s how you get people involved in the process. So, the more I can delegate, the happier I am.”
How to reach: Universal Stainless & Alloy Products Inc. (412) 257-7600 or www.univstainless.com
Two words come to mind when Scott Graf is asked what it takes to be a good leader simplify constantly.
Not at an easy task sometimes, considering everyone has different agendas and every situation is different. But the president of BCD Meetings & Incentives, a 450-employee travel management company, says that is the main role of a leader.
“As much as you want to align people organizationally … situations are still complex,” Graf says. “My role, more than anything, is simplifying the situation, breaking it down, removing the complexities and saying, ‘How are we going to move forward?’”
Smart Business spoke with Graf about how to simplify things.
Q. How do you simplify things?
I can’t and should not be involved in everything. There are major initiatives, or whatever these issues might be, that come up day to day. It’s setting some boundaries, allowing some freedom in the middle, so to speak, for people to do their jobs. For me, it’s staying very disciplined and detailed on timelines.
My role is to poke and to prod on timelines. People will get busy and things get delayed. I poke and prod at people on, ‘Where are we with this issue?’ Then, I’ll hear the reasons why it’s so complex and why they can’t move on something. I’ll get involved to try to simplify the situation and say, ‘Let’s remove these barriers, get to the point of it, so we can take the next step forward.’
Q. How do you poke and prod without micromanaging?
I hope it starts with, it sounds cliché, but probably a basic company culture of we hold each other accountable but in a professional and almost gentle way. We will say to folks, ‘We’re not getting in your face and we’re not stepping on your toes, but everybody’s got a role, and my role is to make sure things move. So, when I do it, please don’t take it the wrong way. We’re not harboring ill feelings. This is not something that goes against you.’ It’s literally a culture that we’ve created that says, ‘It’s very fair to do that and very appropriate to do that.’ We all get busy. It’s just, ‘Let’s get on with it and get on to the next thing.’
Q. How could I approach an employee without stepping on their toes?
There’s nothing like just saying it. You can say it and you can talk the talk, but if you can walk it and walk that walk show by example that it is OK to be open with vulnerabilities. It’s OK to say that you can’t figure something out or you are not making the progress that you’d hope.
Saying, ‘I need your help or your guidance on how to get through this.’ The kicker is knowing that you aren’t going to be punished for it or thought less of for it. The only way to do that is to make sure, as a leader, that you don’t hold a grudge.
People will only see that. They will leave your office that first time and say, ‘I wonder if he will hold this against me?’ If you’re sure to never to bring it up again or move forward, it becomes very safe to have those types of conversations.
When people feel safe, it’s like a good athlete. When you are relaxed, you certainly perform better.
The other piece for me in my role is if I see other managers coming down on somebody, I won’t come down on them. But, very politely, I’ll say, ‘Be cautious for your interaction with this person. Remember how we like to accomplish things and the culture that we’ve created here.’ That’s all I need to say.
Again, I’m not holding any grudge. It just makes them rethink. What happens is they probably go back to that person and say, ‘I’m sorry. If it felt like I was coming down on you, I didn’t mean that. I was frustrated for this reason, but let’s move forward.’
Q. What happens when it is a big mistake?
It would be that direct conversation. Everybody makes mistakes. Everybody is owed second chances and maybe even third chances. You just have to say that, ‘This cost us a lot of money. Here’s what could have been done to prevent it. Here’s what you need to be cognizant and aware of in the future.’
But the truth is, depending on what level in the organization, you’d probably say to somebody (that) second and third chances are fine. You start moving beyond that on critical decisions that have cost the company money, and then you have to wonder, ‘Do I have the right person in this job?’
Q. Would you have this conversation with employees two levels below you, or would your managers handle that?
It’s a combination. My management style is very involved and very open with everybody at all levels of the organization. The combination comes in (when) I don’t want to supersede my direct reports’ authority and make them feel like, ‘Why am I here if you are going to fix all of these things?’
It is a combination where, if I am going to do that, I’d go to my direct report before going down a level or two and say, ‘In this case, I’d like to go talk to John or Mary personally. I want to let you know that I’m going to do it, unless you have a major problem. I think there will be a good effect on that person and residually in the organization.’
How to reach: BCD Meetings & Incentives, (312) 396-2000 or www.bcdmi.com
Though it wasn’t dominating the news as it is today, Dick Buell could see signs starting in the fourth quarter of 2007 that the economy would be taking a turn for the worse. Crude oil prices sharply increased and Buell knew that fact, coupled with other negative turns in his industry, would greatly influence consumer spending, which, in turn, would hurt the company’s clients.
“We concluded that we needed to prepare for a downturn even though our company had not yet seen that downturn,” says Buell, chairman and CEO of Catalina Marketing Corp., which posted more than $500 million in 2008 revenue. “My philosophy is customers dictate what your business is going to be like. If the people I sell products to, which are the consumer packaged goods industry and the pharmaceutical companies, who ultimately, in turn, sell to consumers — those both are people that can impact my business.
“If their businesses are doing well, my company will do well. If their businesses are not doing well, my company will not do well.”
Buell was also not naive enough to think that his clients would continue to spend money on marketing, which is often considered discretionary spending, if they were being hurt by the economy.
“As business managers, the economic facts in front of us, the industry trends, the customers’ actual performance and consumers, sort of dictated by retail spending and layoff factors, told us that there is a consistent message here that our business environment is not good, and it’s going to get worse in 2009,” he says.
So, in December 2008, the company’s top 75 executives gathered at the Hilton Hotel in St. Petersburg, Fla., to devise a plan to stay afloat in the rough waters Catalina could have to face in the future.
Here are a couple of ideas from Catalina’s plan on how to survive in this economy.
Monitor your customers
Systematically monitoring, investigating and discussing your customers’ business health and results is the most important thing you can do in deciding if the economic storm is going to hit you and, if it does, how you will get through it.
Buell and his team are tracking their top 20 pharmaceutical and consumer packaged goods companies as well as their top 20 retailers.
“If I picked a major consumer packaged goods company or a major pharmaceutical company or a major grocery retailer and I looked at their press releases and they’re quarterly earnings calls, they would be telling all shareholders and me what was most important to the future of their business,” he says.
“I don’t have to look at everything about a major grocery retailer. I’m going to listen to their quarterly earnings report and their press releases because I know they are going to tell the outside world the most important things. I don’t have to figure that out. They’ve figured that out already.”
While you want to pay special attention to your top 20 customers, don’t be shortsighted with whom you consider your top 20 customers by simply focusing on who can help you right now.
“It’s the best customers we have that are growing, that value our service and (we) can truly help their business, and then indirectly help our business again in 2009, 2010 and 2011,” he says. “That’s another good way to think about not just one year.
“It is the larger company that can continue to step up and invest in their business and, in turn, invest in our business. Secondly, it’s the high-growth businesses. There’s medium-sized companies that this economy fits their product or their positioning that can be great partners moving forward not only this year but in to the next two or three years.”
Aside from tracking public information to find out how your customers and clients are doing, you have to talk to your customers.
Buell took it upon himself to personally talk to between 15 and 20 CEOs of Catalina’s customers. While pleasantries are always nice, you should be direct and ask your customers about their business in all regards: past, present and future.
“Typically, (what) we were doing was asking them about their performance in 2007, actual performance in ’08 and, with varying degrees of specificity, their outlooks for 2009 and contrasting those three years,” he says. “Because we knew that ’07 was generally very good for everybody, and ’08 … in the businesses we deal with, in the first half of 2008, they did well, and in the second half, they did less well. That positioned them well to go into 2009, but with a high, high degree of uncertainty of what was going to happen.”
Asking the right questions will help you find out how the company is really doing and how it will impact your company.
“One thing I would ask them is, ‘In ’09, are you planning to grow at all?’” he says. “I’m going to learn from that, ‘Yes.’ The second question is, ‘Single digits or low single digits or mid single digits?’ It’s not going to be big double digits. They could tell me they aren’t growing at all, which would tell me they’re flat. They could tell me, ‘In fact, we’re going to work hard to try to get back to where we were last year.’ That means they’re down. I think there are three possible answers that I could learn overall to ‘Where’s your business outlook for ’09?’”
You can also ask the company if it thinks it is experiencing a 12-month problem for 2009, or does the company think its problems will extend into 2010.
“I would ask them (if) they are cutting things in ’09 and intentionally shoving them out into ’10 and ’11,” he says. “Whether it’s hiring new people, introducing new products, making new equipment investments, I would try to find out, are they pushing things out?”
Once you get those answers, then you can act on them.
“If somebody is growing, I want to make sure that I’m with them, helping them grow,” he says. “If there is somebody that is flat or slightly down, I need to be sensitive. That’s a guy that could potentially cut programs in 2009 and affect my top line. That’s exactly why I’m asking the question. Every question I ask will translate to whether or not my volume is going to change, my margins are going to change or my expenses are going to change.”
While asking the right questions will give you some information, some companies, especially private ones, will hold back information, so you should proceed with caution.
“In general, talking to private companies, I know I’m going to get less information. That’s by definition,” he says. “No. 2, the information they give me, they are going to sincerely try to be helpful because if they are helpful to me, I’m going to be more helpful to them. So, I believe in a positive approach. No. 3, I think if anything, they would probably not provide the greatest level of details about how well they’re doing, or how poorly they’re doing no matter which direction they were going. So, I’d be cautious about that.
“I don’t think they would lie, I don’t think they would misrepresent. … I think I need to be sensitive — they may buffer out good performance or poor performance. I may not know exactly how severe or how successful it is.”
Empower your work force
While keeping in touch with your customers will help you through a tough economy, you can’t lose contact with your employees. When you keep employees informed, you empower them to do a better job, which is crucial in tough times.
“Everybody loves to know what is going on in their company,” Buell says. “I believe people are intelligent, and I believe people are well informed and sensitive. Whether it’s good news or bad news, I think giving them a very complete picture of where the company stands in performance, how management is thinking about this difficult time, and how we’re going to prepare and continue to share that preparedness with all employees — I believe that is the way to bring the whole team along with us.”
Buell tries to communicate once a month to keep employees informed on how the company is prepared to handle the economy and to give insight on how management is thinking about the problem. Even if you think you are a strong communicator, you should step it up in downtimes.
In Catalina’s case, senior executives use e-mail and voice-mail communications more frequently, and the company has invested heavily in videoconferencing so Buell and his team can make the message available to all employees around the world in a personal way.
“What we are going to do there is people will get to see their executives more,” he says. “It will just be done in a more efficient way.”
It might not be face-to-face, but in stressful times, you need to be seen communicating the message in that more personal way.
“It’s people’s uncertainty and anxiety that exists when you don’t have information,” he says. “We always say bad information is better than no information because at least you know how to handle it and what to do about it. We don’t want any employee ... to not have an understanding how the company is doing, how our industry is behaving and how all of that will impact not only our company but them.”
When you are communicating, you shouldn’t only focus on what the company is doing to fight through the economic times but you should talk about how the work the employees are doing is helping the company and its clients.
“I want every employee to understand that our business model is, right now, helping consumers in a very difficult economy,” he says. “So, I am trying to get our employees to appreciate their company and the product we provide to the marketplace. It is a value to manufacturers, it’s a value to retailers, and more importantly, it’s a value to consumers.
“I want every person to personalize that. Not just generally about the company, but I want them to be motivated and inspired about what they are doing right now in a difficult time.”
Overall, full disclosure of what is going on, making sure employees are proud of what the company is doing, and keeping them motivated and inspired by reminding them of the good job they’re doing will help you empower employees.
“Those three things to me can be translated in every manager’s style and vocabulary,” he says. “If you do those three things, you’re doing everything you can to empower the people.”
HOW TO REACH: Catalina Marketing Corp., (888) 322-3814 or www.catalinamarketing.com
George Zimmer has one word to describe his culture at The Men’s Wearhouse Inc.: trust.
“That’s not to say every single person in our organization trusts the organization,” he says. “We have 17,000 overall employees. But the critical mass of our company does believe in the organization, trusts the organization, and in fact, the organization trusts its employees, and we both trust our customers. I think that’s where it starts.”
When Zimmer talks about trust, he doesn’t want to sound new age, because the word has a business application to it. One of the significant expenses in the retail business is called shrinkage, which includes theft by employees. Yet, the difference between shrinkage at Men’s Wearhouse and one other major retailer is 200 basis points a year.
“That’s a lot of money,” says the founder, chairman and CEO of the retailer, which posted $1.97 billion in 2008 sales. “So, trust is a significant leverage in your economic model.”
Because Zimmer was a child of the ’60s, he brought ideas from that generation with him to Men’s Wearhouse, including respecting people regardless of their position in a company.
“There can only be one manager of a store, but nonetheless, the manager has to have a relationship with the other people,” he says. “I think it was that type of thought that created the original foundations.”
Those foundations helped Men’s Wearhouse and its more than 1,200 stores again be named to Fortune magazine’s 2009 “100 Best Companies to Work For” list.
Aside from accolades, the culture helps Zimmer retain employees, but he hopes it will also help the company through this tough economy.
“Customer loyalty is harder to measure,” he says. “As we are in this recession, one way to measure this is that I believe when the recession ends, Men’s Wearhouse will have a higher market share than when the recession began. That will be because of our corporate culture, which will be the glue that holds the customer and the employee and the organization, the shareholder, holds it all together.”
Encourage feedback and ideas
One of the best ideas Zimmer ever received for the company came from an employee. About 10 years ago, Zimmer attended a training class for company employees, and an employee wanted to run an idea by him. The employee made a presentation to Zimmer during a meal about tuxedo rental and how it could benefit the company. The idea made sense to Zimmer and is now a valuable part of Men’s Wearhouse. But the lesson there isn’t in the value that the idea brought. It was the fact that if Zimmer wasn’t willing to listen to an employee’s idea, he would have never heard it.
To create that type of openness between manager and employee, the company has three key principles of interpersonal communication it teaches to managers.
One principle is to listen carefully.
“What we mean by that is try not to speak until the other person has said the last syllable of what they are saying,” he says.
It’s a simple concept. Waiting one second after your employee or colleague has said his or her last syllable will create a more communicative and trusting culture.
“You can actually change the tenor, not to mention the rhythm of any conversation by forcing each person to wait one second after the other person finishes before speaking,” he says. “In that one second, the human brain is able to have an enormous number of thoughts so you get a different dialogue because there’s been a larger universe considered.”
The second principle is to elevate the other person’s respect.
“That sometimes is difficult. The idea is to not take respect away from somebody in a dialogue,” he says. “You try to find something that the employee is either good at or has made good progress at. Start with that. And, then, this is where leadership is an art at the appropriate time and the appropriate way, move from that to the area you believe needs improvement.”
The third is to always ask the person who is being supervised for his or her suggestion as to how a problem might be solved. This eliminates waiting for a lower-level employee to come to you with an idea or question and instead allows you to open the door of communication.
“We’d say it like, ‘What do you think we ought to do about this?’ because it’s oftentimes a coaching conversation a store manager is having with somebody in his store,” he says.
Yet, even with the three principles, Zimmer still says there can be improvement, especially when it comes to employees who have a question or a concern.
So, along with the three principles, the company also has 10 employee representatives inside the company who have a certain number of stores for which they are responsible.
“When there is a problem that somebody has in one of our stores, it’s suggested if it can’t be resolved in store or by the regional manager, that they call the employee representative, who, although they are paid by the company, is told to represent the employee and think like the employee,” he says. “That doesn’t mean that we agree with the employee, but you’re allowed when you are an employee representative to understand the employee’s position differently than their regional manager might.”
While having a position dedicated to dealing with employee problems can be efficient, direct communication with you can also solve many problems.
Anybody in the company can e-mail Zimmer with a question or concern.
However, one hurdle Zimmer runs into with e-mail is some employees aren’t college graduates, and they don’t think they write well. That significantly reduces the feedback he hears directly from employees.
“I tell people I like primary information, as opposed to information sifted by various levels of management, but I only get five a day on average,” he says.
To try to increase that number, Zimmer reminds employees every time he speaks to them that he wants their feedback, and he wants e-mails.
You need to constantly communicate that message to improve the chances that employees will buy in to it and communicate with you. Then, once you get an e-mail regarding feedback or a question, you need to address it as soon as possible.
“I consider anything to do with employees or the stores to be my priority,” he says. “That’s one of the other things, I guess, when it comes back to trust and authenticity. That is my priority. I don’t say that, I don’t pay lip service to that. That is how I run this business and how I live my life. So, I think the people that work in our stores, know that.
“And there’s some sense of comfort they get there, I believe. Normally it’s the people that are in the ivory tower that are sort of getting the time of the CEO. It’s kind of in reverse here.”
Even if you don’t know the answer, reply to the employee that you received it and have someone working on getting the answer.
“If I don’t know the answer, I say, ‘Thanks for the question. I’ve sent it to so-and-so who will contact you.’ If I do know the answer, I give them the answer,” he says.
The fact that you are responding will go a long way in creating a culture of trust and responsibility.
“The lower you are in the company, the more shocked you are and the more impressed you are with George,” he says.
It’s hard enough for an employee to come forward to you with an idea or with a question, so the chances of them stepping up and admitting a mistake is even less likely to occur. That’s why you have to create a culture where employees aren’t afraid to own up to a mistake.
“One of the things that I’ve never actually understood and what I’ve heard a thousand times in my career is, ‘You should hold people accountable.’ I actually don’t know what that means,” he says. “It sounds to me like holding somebody accountable means when they make a mistake of a certain size, you terminate them. That’s not how I run the company.”
One way to make it easier for employees to come forward with a mistake is to put it in your mission statement.
“In our mission statement, it says we want to be a company where you can admit to your mistakes,” he says. “You wouldn’t be able to admit to your mistakes unless the company was prepared to not adversely impact your career because you admitted to it.
“I don’t have a lot of experience as an adult in other companies, but I would imagine that in many companies a mistake is made and somebody is afraid to admit it, so they try to cover it up. When it’s finally uncovered months later, it’s not traceable back to them, even if it cost the company a few bucks.
“At our company, we say, ‘Hey, don’t worry if you made a mistake. Nobody is going to adversely impact your career when you come forward right away, because it will make it easier to correct the mistake.’”
Much like someone coming to you with an idea, you need to constantly remind employees they can come to you with a mistake.
“I think that what people might be concerned about is having a supervisor somewhere along the line that just doesn’t like them because of their having taken the initiative to say something,” he says. “Knowing this, I speak about it every time I speak to our employees, and I remind everybody that I can protect their anonymity if that is what they want. I’d rather not. Part of the culture is that you have to learn to have somebody say something that’s not the nicest thing you’ve ever heard about yourself and be able to overcome your natural tendency to not like that person.”
Zimmer will fire an employee for stealing or not being able to meet job requirements, but he is more lenient if the person made a mistake trying to improve the company.
“We wouldn’t let somebody go under any conditions if they had the right intentions and made a mistake, regardless of the size of the mistakes,” he says
If you do have to confront somebody who made a mistake, avoid using anger when speaking with him or her.
“Sometimes the mistakes are on one-off things, in which case, it’s not that important that they fully understand the mistake,” he says. “But, if it’s something that is part of their routine, then of course it has to be corrected. What I’ve found is when you lean on people and are hard to people, particularly when they’ve made mistakes, you might get a temporary short-term burst out of fear, but it shortly erodes and you are left with less than you had.”
How to reach: Men’s Wearhouse, (800) 851-6744 or www.menswearhouse.com