When a major workers’ compensation insurance provider pulledout of Florida, George Bushong made some shrewd moves to protect his professional employer organization, AdministrativeConcepts Corp., from going out of business
In fact, the moves paid off so well, they created a whole differentkind of problem astronomical growth.
Because so many PEOs closed in Florida after the loss of workers’ compensation insurance, ACC gained customers from thecompanies that shut down.
From 2001 to 2002, ACC grew from $54 million to $104 million inrevenue, then climbed to $128 million in 2003 and $176 million in2004.
“That put a tremendous amount of pressure on us internally,”says Bushong, who serves as chairman. “We were in chaos for acouple of months. We had a tremendous amount of growth in ajust a short period of time. Quite frankly, we didn’t handle it well.
“We did the best we could, and we tried to keep the service levelas high as we could keep it, but we were falling short in a numberof areas. There was a wealth of people that had worked in leasingcompanies who were now out of business, and we were able topick up some of those people and it started to ease the pain.”
Now at more than $300 million, Bushong says the company’sgrowth would have stalled long ago without delegating responsibilities and building a culture of communication.
Here’s how Bushong distributed power and used an open cultureto manage his high-growth company.
In order to grow the company to $100 million, Bushong knew hewould have to delegate some of his responsibilities.
“That becomes obvious as you reach that level,” he says. “Youcannot possibly be hands-on in every area of the company likemy wife [Sarah Peel, who serves as president] and I were thefirst three or four years.”
Bushong said there wasn’t an exact moment when he realized heneeded to delegate more, but he started to notice he and two othervital employees became overwhelmed with the daily operationsand began to see the need for help.
“There was the three of us all shell-shocked working 12 to 14hours a day, and we were desperately looking for people to fillsome of these positions,” he says.
Bushong said he knew whom he could trust to delegate tothrough trial and error. He would delegate a number of responsibilities and see how much the person could handle. Those thatcould handle a heavy workload showed they bought in to the company’s growth strategy, allowing the employee to move up theranks.
“You have to allow people to do as much as they can do,” he says.“I think that the perfect scenario is, if you are overwhelmed, is tooverwhelm somebody else, and then sort out what you have totake away from them to make it bearable.
“That scenario can create a little bit of confusion for a few weeks,but it also gives a person a good idea of what they can do if theyhave to. It gives you an idea of just how far that person can go andwhat it is going to take to get them to the next step.”
While Bushong believes in pushing great workers to the limitto see what they are made of, it’s important that you keep an eye on them to know when they’ve become overwhelmed.
“Really good people will overwhelm themselves if you turn themloose on a job because they want to do as much as they can tokeep pushing themselves,” he says.
“I happen to be from Kentucky, so I know about horses. A thor-oughbred the reason it is a thoroughbred is because it will literally run itself to death. If those tracks were 10 miles instead ofone and a quarter, all horses would be dead by the time the raceis over.
“The thoroughbred human being will also run itself to the edge.It is up to a manager to be able to pull it back before the heartattack or nervous breakdown. But also, let a person expend themselves to the point where they realize what they can do.”
Bushong allowed the maximum amount of leeway he couldwhen it came to employee mistakes during growth, realizing errorsmight occur on a more consistent basis when a person’s workloadincreased from newly delegated responsibilities. In addition, it’shard to find experienced employees in his industry.
“If somebody has been with you a couple of years, we would goway over the line, be it personal problems, absenteeism, whatever the problem might be, we would go way, way over the line,” hesays. “But, there was a line that it just could not continue. But wewere not quick to get rid of people, nor are we today.”
Bushong says if he didn’t delegate responsibilities, the companywould have stalled way short of its potential.
“We would have been stuck at $50 million or $60 million and,every time we grew above that, if I was still doing everythingmyself, we would lose customers off the end because of the service model,” he says. “It certainly wouldn’t be anything like it wastoday. I don’t think we would have gone much past where we wereat $50 million or $60 million dollars.”
Walk, talk and listen
Because Bushong pushed employees to their limits, it was important he established a culture where workers could communicate ifthey became overwhelmed.
“The people that failed here were the people who wouldn’t askfor help,” he says. “They became overwhelmed and tried to hidethe overwhelmed mistake and would not ask for help. It gets to thepoint where a person just walks out the door, and they don’t wantto talk to you again because they don’t want to face you with someof the mistakes they have been making. There was always theopportunity to say, ‘I need help.’”
To build a culture where employees communicate with management, you need to keep in touch with employees by walkingaround and asking questions.
“I am, by nature, a communicator,” he says. “Some managers arenot. If a person is not, it is difficult to breed the kind of culture wehave here. It is painful for some people to just stop and say, ‘Hello’to an employee they don’t know well. You get friends in the company, but a lot of times the management is so aloof that the people,the ground troops if you will, that make the business run are sointimidated it is hard to develop any kind of rapport.
“I’ve also made myself available and was willing to hire any kindof help that was needed. I was willing to take work off people andplace it other places. But it was up to the employee to communicate.”
To maximize the benefits of communication, you can’t simply beseen around the office asking questions, but you must actually listen to the answers.
“Our office for years and years was casual,” he says. “I still like tothink it is, and I still know everyone in the building. I am not abovewalking back to our payroll department and seeing a girl that lookslike she is wired up and asking her, ‘You look like you are overwhelmed, are you having a bad day?’ It may be something personal, and they will talk to you about that, and that’s fine. Or, it may besomething that has to do with work and something we want tohear. It’s all about communication.”
Proving to employees you are listening will also establish a flexible company that can drive change as well as help retain employees by allowing them to advance in the organization.
For example, if an employee in the payroll department wanted to move into the finance department because he or she felthis or her skills were a better fit there, then the employeeknows, because of the culture, that it is an opti on.
“People here understood we were quick to listen to themabout moving,” he says. “There has been a lot of shuffling.People here are comfortable with the idea that could happenand people need to broach it if they are interested, or we wouldbroach it if we thought the skill set would fit someplace better.”
Bushong says any time you have communication, it is goingto benefit growth. “Everything that builds morale and makespeople feel comfortable in that company contributes togrowth,” he says. “More importantly, it contributes to a company I like to be in. I love to walk through this company andsay ‘hi’ to every person in it.”
The open communication and the company’s environmenthave set Bushong up for the future. He recently hired TeresaDick as CEO, which he called his single greatest act of delegation. Bushong says the two will have their differences, but heis going to get out of the way and let her do her job. Dick saysshe sees great potential for growth because of the foundationalready in place at the company.
“The culture that George and Sarah built where there wasopen communication, and everyone did believe they had to bea voice to make us successful is just a reality,” Dick says. “WhatI wanted to do when I first came in was to fine-tune whatGeorge and Sarah put in place. Everyone was motivated, had aheightened sense of excitement and wanted the company togrow, but there was a need for structure, as far as consistency,processes and policies to look long term.
“We have the intent to grow, but we needed to take a deepbreath and make sure the foundation was very firm so that,when we start with the aggressive growth that we want, as wegrow into new markets, we are ready for the growth. That’swhere a lot of PEOs have made the mistake they want togrow too fast and haven’t stopped to make sure they can.”
While ACC may be taking a breath, Bushong says he seesplenty of growth ahead using the basic tools and methods thatdrove the company to where it is today.
“This is a billion-dollar company waiting to happen, and wehave a five-year plan to do that,” he says.
HOW TO REACH: Administrative Concepts Corp., (941) 744-1317 or www.accpeo.com
Anne Chambers knows it’s vital to stay optimistic to lead on a daily basis, especially with the ups and downs of the business world.
Chambers finds having someone to talk to helps her stay focused at RED, her marketing communications company that posted 2006 revenue of about $10 million.
“It’s important for leaders to have their own sounding boards separate from the company, either a traditional board or a coach that you take time to talk with or someone who knows you well and knows what you are trying to achieve,” says Chambers, RED’s president and CEO. “That person who is removed from your business is able to be more objective so you can hash things out and hear an objective point of view.”
Smart Business spoke with Chambers about how a kitchen helps her build camaraderie.
Q: How do you get people to buy in to your plans?
That requires what you call speaking the vision. Saying it out loud, really getting buy-in, trying to paint the picture of where you are going, often and in a setting that allows people to ask questions. Even though they might not want to jump on board right away, they are collecting enough information and seeing the enthusiasm and seeing the train going that way that they are going to want to be a part of it.
If you are consistently building the business, then people are more inclined to want to jump on. If they see you either made a good decision before, and it was the right decision, and they want to be a part of it, or you made a bad decision, recovered well and there was good reason for it. People are supportive and want to be a part of that as long as they understand this is a process.
Q: How important is face-to-face communication?
Face-to-face for us is important because, at least for me, it lets me understand more about each of our employees what their interests are and what their passions are, and then it allows us to create space for their life to be full, within the context of the company.
For example, I have a couple of people who are genuine humanitarians. They love to have time to give back and do the things that they do. That’s important to us as a company because I want to make sure people feel fulfilled completely.
It’s not our job to fulfill people completely, but it’s our job to recognize that they are complete people that have different interests besides what we do day to day.
Q: Besides giving people time to volunteer, what else do you do to retain employees?
We eat a lot of cake here. We celebrate everything with cake. We have a lot of silly rituals in our company and a lot of them are around food, which is just funny, but, when you boil it down, it’s actually around camaraderie. I would definitely say we have a quirky culture, and nonsense is definitely appreciated.
We just do silly things but it’s a very happy culture.
Q: What do you do to create that happy culture?
We have a pretty nice kitchen, and everybody is welcome to use the kitchen however they want to do it. Sometimes people will come in and make a meal for everybody. One of the new guys came in and made a big pot of soup. So, it’s like being in your own home.
You know how people gather in the kitchen? We try to have the same feeling here. Not all the time because sometimes we are just flat out too busy for anything that nice. But, whenever we can, we do that.
Q: Doesn’t letting people cook take away from their productivity?
Well, you know how you can say a great idea comes to you in the shower? Everyone has had a great idea in the shower.
I look at that and say, ‘Well, when are you working and when are you not?’ If you are getting a great idea in the shower, is somebody paying you for that idea? No, but you are coming in the office and going, ‘I have a great idea.’
I see the same thing happening at any time in your life. You can be driving down the road, you could have a great idea. You could be talking on the phone, reading a newspaper, get a great idea. Of course, you get a ton of ideas from reading or listening to the radio.
The same thing happens in a conversation. When you take the time to sit, listen and talk, great ideas come out or problems come out. You find out there is an issue you never knew about because you were having a quiet conversation with somebody while chopping some onions. I know it’s crazy, but that’s just the way it is around here.
HOW TO REACH: RED, (513) 772-1020 or www.redbeyond.com
In a previous business, one of Mark Symonds’ partners had an ego that needed constant stroking. But when Symonds took over Plexus Systems Inc., an on-demand information system for manufacturing companies, he saw there was another way.
At Plexus, the founder had no ego, laying the groundwork for a culture in which the credit is spread around.
“It has to start at the top, and then not tolerate behaviors that go counter to that starting at the top and just reinforcing it every day, calling out good behaviors and privately talking to people who aren’t on board with that,” says the president and CEO of Plexus, which posted 2006 revenue of more than $20 million.
Smart Business spoke with Symonds about how to put a positive spin on change.
Q: What are the keys to being a good leader?
Willingness to be hands-on to do what is needed. Not asking somebody to do something you wouldn’t do. I always found that to be important. The other things that go along with that are ... delegation and empowerment. Together, as a team, we agree on a strategy and a message, and I may influence that strategy and message, but I let the team execute, carry the message to their areas of the company and really deliver that, and it gives them credibility and strength with their group.
Q: How do you know when to be hands-on and when to back off?
When the job is getting done, I tend to delegate more. As people show they can take responsibility, I lay it on them and let them have more. If there is remedial effort to be done, that’s when I get more hands on and show by doing, lead by example. ‘This is what I’m thinking, what do you think about this approach?’ that kind of thing. I try to stay out of micromanagement.
Q: How do you communicate change and make sure employees are buying in to it?
That’s the biggest challenge, no question. I’ve grown companies, and it’s always the same. People lament that, ‘It used to be this way,’ or, ‘I used to have direct access to so and so, and now there is, God forbid, a layer between us, or now we put a process in place.’
I read something years ago that said, ‘Grab that, shine a light on it, and take notice of it.’ We actually call out the changes and mourn the past. We acknowledge that it used to be this way but look at all the great things that are coming from growth, higher bonuses, more fun work, company awards, those kinds of things.
At the same time, we mourn the way it used to be, but we celebrate the progress we are making. It’s going to be there in any organization. You’ve got to shine a light on it and acknowledge it, or it just festers.
As far as what form the change takes, I like that to come from individuals. At a previous company, we started it without any titles because we were good with that. But our folks said, ‘I really want signposts along the way of my career to see how I’m doing.’ So we said, ‘You find two other people who are interested, and put together recommended titles and review processes and so on,’ and it was theirs.
Q: What is a pitfall to avoid in business?
From past experiences, it’s been focus on today, don’t lose sight of the fundamentals. Back in 1990, my partners and I sold our first business to a large public company. In the run-up to that, we got so distracted thinking about that deal that the business suffered post acquisition because we took our eye off the ball.
The most important thing is, don’t lose track of the blocking and tackling. That’s got to happen every day. Too many people get distracted planning for the future, thinking out there, and they lose track of making sure you are executing for today.
Q: How do you know a potential employee is being honest in an interview?
We get a lot of candidates from referrals because we found that good people tend to know good people, and you trust their judgment. But, we do, do extensive reference checking. So, with our new EVP of sales, he was pretty well known in the industry, so we have our own people we could draw on. But he also gave us 13 references, people he worked for, people who worked for him, peers and that kind of thing.
I look for a follow-up. In management positions, I don’t ask for it, I expect it. With other positions, I’ll ask for a recap of our meeting. I want to make sure the interviewee heard the value proposition and values what we feel we have here versus totally misperceiving what kind of company this is.
HOW TO REACH: Plexus Systems Inc., (248) 391-8001 or www.plex.com
“I was a big [Chicago] Bears fan and when the Bears won the Super Bowl in 1985, I said, ‘I’ve seen it all; I’ve seen my team go to the top,’ and I actually stopped watching football,” says Bostick, who led the company to more than $16 million in revenue in 2006. “I love football, but I had to have a balance and make a choice.”
Smart Business spoke with Bostick about making choices, delegating authority and how to create a people-centric culture
Q: How do you create a people-centric environment?
When I find CEOs or leaders that want to become more people-centric, the very first thing I say is, ‘Triple your listening and halve your talking.’ Too often, CEOs and top leaders know their business strategy because they live it and breathe it every day.
The challenge is, the people underneath them don’t understand that strategy. The CEO or leader doesn’t understand why they don’t understand it because to them, they live it every day, it’s simple. The people from an individual contributor level, which tend to be operational, are not living it every day, so they can’t see how they relate to that strategy.
I look at that and say, ‘Ask a lot of questions and do a lot of listening.’ When you do that, the questioning gets heuristic in style, and one question begets another question, which begets another question. You’ve got to kind of take your predefined notions you live with every day and your strategy, and park them outside your office, put them in a drawer and sit down with the people you are working with and just start asking questions and listening and start spending time getting them to talk and not you to answer.
I always like to say, ‘The art of managing is listening and questioning, and not talking and answering.’
Q: How has being people-centric helped your business?
Being people-centric creates leadership, leadership creates momentum, momentum allows us to achieve our planned numbers and also have an opportunity to hit our stretch goals.
Any time I look at an area where we are underperforming, it’s typically because people didn’t understand the objectives, the objectives change through external dynamics or internal dynamics, global market or internal organizational competencies or incompetencies. So, you look at that and say, ‘How do I get these people to march to the same drumbeat, and how do I get them to make sure they understand what I was trying to get at when I first dealt with them?’ I ask myself those kinds of questions because I always think if you ask those questions in a self-deprecating fashion and see the warts and see the parts where we’re not achieving the original results call it failure then you can look at that and take a perspective of, ‘We are where we are.’ So, you have to face where you are and continue to move forward.
Q: How do you talk to an employee who isn’t living up to your standards?
You have to go back to listening and questioning, rhetorically. My style is to get the person to switch shoes with you. So you say, ‘OK, you are the CEO, and I’m the manager or the leader in this one business unit. How would you treat me right now?’ Switching sides makes a very interesting way of going to the lowest common denominator of how we communicate. These are simple techniques that I use on a constant basis.
Q: How do you know when to delegate?
I have a very simple philosophy. The CEO should be in charge of shareholder relationship, strategy, and setting the tone for the people dynamics and the culture of the company. Shareholders first. You are in business to make a profit, and the profit should be demonstrated back to shareholders, first and foremost, for every business. No. 2 is strategy: Where is the company going? And third is setting the culture on the people-dynamics side.
If you can’t delegate 100 percent of everything else, then you have the wrong group.
Business is a bunch of exceptions, and an exception right here is, I believe, in every single company, the No. 1 customer representative is the CEO. I just said delegate all that and, at the same time, I’m going to contradict myself and say, ‘That’s right, delegate it all. But, at the same time, absolutely the CEO is in charge of customers first and foremost.’
HOW TO REACH: LÛCRUM Inc., (513) 241-5949 or www.lucruminc.com
Hearing the same message repeatedly can turn off employees, so Kevin Chase takes care to deliver his message in different ways.
Chase establishes three different themes for his company each year, but one theme, “growth, growth, growth,” always remains the same.
“They may hear me say it 50 times per year,” says Chase, president of Chase Plastic Services Inc. “You need to mix it up.”
Chase, who employs more than 80 people at his specialty thermo-plastics distributor and has led his company to 2006 revenue of about $95 million, once delivered a speech under an unfinished Chase Plastics building, which he used to illustrate his point.
“Instead of saying, ‘Growth, growth, growth,’ I said, ‘Chase Plastics is still under construction. To complete this construction project we have to continue to hit our budgeted numbers.’”
Smart Business spoke with Chase about how to develop employee engagement and how to avoid letting workers down.
Q: What are the keys to growth?
It’s all about the right people.
We are a ‘work hard, play hard’ company. But, if you don’t hit our high expectations, you’re gone. It’s not being a hard-ass, it’s just you can’t be part of this team. Every year, we establish a letter grade for every person in this company. It’s either an A, B or a C. Cs get to Bs, or they are gone.
If you get the right people and compensate them very well for what they do, they will take you where you want to go because they want to grow. You empower them through a very mature macromanagement style or variable compensation, but they have to perform. That’s the driver.
Q: How do you find the right employees?
We have a very extensive recruiting process that starts out with our key human resource manager and our vice president and interviewing these people on the phone. Once we get them through the phone process, they come in with a full-day team interview process of somewhere between six and eight people.
Then we test them on personality, analytical, a writing test, and then, at the end of the process, we get our interviewing team together, get their results and sit around and talk about them. The first thing is, are they a fit to our culture? Are they going to work hard, and are they smart?
Q: How do you engage employees outside of the office?
We do community service projects, and there are other party things we do throughout the year.
We call it employee engagement, but you can’t force them. All you can do is create the opportunity but not become a burden on their private life. We just want to give them an opportunity to be engaged in the company so they feel it is a special place to work.
It gets them outside the four walls of an office building. When they get their hands dirty and work on projects together, all it does is help teamwork. Plus, when you ask them to do something above and beyond, and they see a vice president out there and she’s mixing concrete for a new sidewalk for a disabled person, don’t you think that, if it were the right mindset, you’d be able to get that a little bit easier?
Q: How do you handle failure?
You don’t think about it. You embrace and engulf yourself in nothing but positive optimism that you are moving forward. But, when a problem arises, that’s when you rally together and break it down.
I was fortunate to see General Norman Schwarzkopf, and one of the questions from the audience after his speech was, ‘General, on the battlefield, you are analyzing all these problems. How do you end up making the right decision?’ He said, ‘At the end of the day, you do what’s right.’ During a problem or a failure, even if we are going to lose a large customer, if we have done everything right, that is all I can ask.
Q: What are pitfalls to avoid in business?
It comes back to commitment. Talk is really easy and cheap, but, as a business leader, don’t throw out things you think you can do but you can’t deliver. Those false promises to the individuals at our warehouse or truck drivers will tear your relationship with them apart.
If you are a leader and you can’t follow through on it, don’t say it. But, if you can keep that commitment, then say it, and let them know your expectations are high.
I had bosses that would come right out and lie to me, but I was so naive and in my 20s. At the end of the day, I wouldn’t go in the foxhole with them because I don’t trust them.
HOW TO REACH: Chase Plastic Services Inc., (248) 620-2120 or www.chaseplastics.com
Philip Sarnecki says his No. 1 job as a leader is to control his own energy.
To do that, Sarnecki practices the healthy habits he learned as a child, such as getting enough rest, eating well and exercising.
“Most business owners, leaders and CEOs, it takes energy to do their job,” says the chairman and CEO of RPS Financial Group Inc. “Our job is to make sure, as things are falling from order to disorder, we are putting them back into order. It helps your focus and your mental toughness, being in shape and healthy.”
Sarnecki channels that energy into leading RPS, which employs about 50 people, to 2006 revenue of about $20 million.
Smart Business spoke with Sarnecki about how to retain employees and how to make sure potential employees fit your company’s culture.
Q: How do you communicate your vision?
I need systems for everything, so I am always creating systems and structures. Once created, I am paying attention and making sure they stay in order.
All great things are created twice first in the mind and then reality. As a leader or CEO, our job is to communicate and overcommunicate the things we are thinking about. Your key vision and values, I don’t think those can be communicated enough.
Repetition is the mother of learning. People might roll their eyes and say, ‘Here is Philip talking about personal responsibility again.’ But maybe that is like a parent communicating to their child. Do they maybe get a little sick of it? Probably at times, but is it imparting something deep in them at times? Yes.
Q: How do you make sure potential employees are genuine in an interview?
I assume I am being put on during an interview.
We have an in-depth selection process, which is six to seven steps. We do several in-depth interviews with different people.
Even our receptionist, he or she is taking assessments because it’s also a good management tool. It helps us know their strengths, weaknesses and what makes them tick. Is this somebody that likes public adoration, or should I just walk by their office and say, ‘You did a nice job yesterday,’ in person?
We had a potential financial adviser, sharp young guy. He had really put on his best face, and we were really impressed by this guy. Then my receptionist told me he had been very rude to her on a couple of occasions.
We decided we don’t share values, and if this is him, what else is going on there? We offered him a contract to join us, and before he got into training, we revoked that. I believe all companies have a culture, and what happens is a culture attracts people like it and repels people not like it.
Q: How do you retain employees?
My leadership style is a high-trust style. My top people don’t have vacation days, and they don’t have sick time. I hire good people, and then we expect them to get the job done.
That may mean they have to come in on a Saturday or work a few evenings, but what they get on the other hand is freedom. They need to coordinate it with whomever it would affect, but they don’t have to ask for a Friday afternoon off.
We hire good people and treat them as adults. On the flip side of that, when I came here two and a half years ago, I told them they can abuse that and lose that privilege.
I assume high trust, but if you violate it, then we will have problems. They know one person violating it can ruin it for everybody, so it’s a self-policing thing.
Something else I did for my top people on my leadership team is they are not to come in on their birthday. Most people are distracted anyway, and there is stuff going on.
Q: How do you handle mistakes?
When mistakes occur, you need to look and see if this is an event or a process. Our No. 1 value is personal responsibility. My assistant, she’s great, and in two and half years, probably only dropped the ball on two or three things. But every single time, she walked in my office, looked at me and said, ‘I am sorry; I screwed up.’
I can’t stand people who try to blame other people for their mistakes. We will all screw up and make mistakes, but the reality is how you handle those mistakes both emotionally and mentally. If you learn from them, take responsibility and try to do everything you can to ensure they won’t happen again, then, even though the mistake wasn’t positive, the outcome could be positive.
HOW TO REACH: RPS Financial Group Inc., (513) 366-3600 or www.rpsfinancialgroup.com
To Mike Tierney, success is satisfying one customer at a time, and that can only be done by your employees.
The president and CEO of PSB Group Inc., a holding company for People’s State Bank, says that if employees don’t believe in your message, then they won’t be fully committed to it, which ultimately affects customer relations.
“Think about anyplace where you’ve interacted with an employee and it’s been an unsatisfactory experience for you,” he says. “How do you feel about that company? The corporate culture is important, and you have to have an organization that values good people and creates opportunities for them, so they can grow and stay with you.”
With more than 150 employees and about $45 million in 2006 revenue, Tierney is continuing to grow the company to provide employees with future opportunities.
Smart Business spoke with Tierney about how he shows employees he is listening and how to mold a culture.
Q: How do employees know you are listening to them?
We have a program called ‘Got Ideas?’ The committee comes in for the management meeting every couple of weeks, they tell us what the ideas are, and we go over them. One person said, ‘We don’t have screens that are big enough to be effective for what we do. We print screens, then switch to another screen, then print that, and we end up working off a lot of pieces of paper.’
The next day, the guy who is in charge of our operations put in a 19-inch screen and had somebody test it. They could get four panels up at a time and see all the things that they needed. It was something like 200 pages they didn’t print that day. Two days later, we had a 19-inch monitor in front of everyone in that office, and the productivity improvement was huge.
It’s doing those kinds of things. It demonstrates to your employees that, ‘We do listen, and we will move really fast if there is something there that we think works.’
Q: How do you mold your corporate culture?
We try to do a pretty good job of communicating our success and failures. When someone has a good week on the sales side, we have them talk on our weekly sales meeting call and talk about what it was that made them successful. Likewise, when we run into a situation when we were not successful, we try to learn from that. We do a lot of little things to make people feel good about working here.
Our company directory has a picture of every one of us on it. It has your birthday there, and I personally send a birthday card to each employee on his or her birthday. We just try to do things to recognize people and let them know they are important and a big part of our success.
Q: How do you retain employees?
We do have mechanisms we use to determine employee morale. We do surveys from time to time. We’re just going through a talent management process to look at what are the skills sets we have in each of the individuals in the company, what are their career aspirations and where they want to get to?
If they want to become something they don’t have all the background for now, then we need to get a development plan in place with them. ‘Here are the steps you have to take in your career to get yourself to where you qualify for the position you are looking for.’ We have tuition reimbursement plans, and we encourage our employees to continue their education.
If someone’s capabilities and demands are higher than the opportunities presented in the company, you don’t keep them. You have to be able to create opportunities. Likewise, if you put someone at a job and they don’t have all the training, that doesn’t work, either.
Q: What is a pitfall to avoid in business?
Never think that you have all the answers. I can see that it’s pretty easy at the top to think you have all the answers, but you don’t. You need good, strong people who will attack issues in a different way than you will. It’s that diversity of thought. I know what my strengths and weaknesses are, and I have to have people who work as a part of our team who have a different skill set than I have.
I only need to have a 90 percent solution, and I want some people who work with me that want 100 percent of the facts before they are ready to make a decision. That way, I am pushing them to go faster, and they are holding me back, saying, ‘You have to do a little more studying.’ Getting that balance is really important to having a good organization over the long run.
HOW TO REACH: PSB Group Inc., (248) 548-2900 or www.psbnetbank.com
A president hired a guy to run his company, and his first month on the job, the new hire made a decision that cost the company $1 million. The guy tells the president he knows he is going to be fired. The president responds, “Are you crazy? Your education just cost me $1 million. Now go earn it back.”
Simtob, president and COO of wireless retailer Wireless Toyz, shares the same beliefs.
“We all make mistakes,” he says “Use it for the learning experience, and never let it happen again. I’m not a big finger-pointer, but I like to hold people accountable. I’m going to let them know it was wrong and ask them how they are going to fix it. I’m going to work with them on how to fix it.”
Simtob has used the philosophy to help lead the company of more than 120 employees to 2006 revenue of about $80 million. Smart Business spoke with Simtob about how he keeps employees involved in the vision of the company.
Q: What are the keys to being a good leader?
To create a vision. I believe in open discussion. Taking people off-site usually works. Doing a lot of brainstorming and look at the future where you want to be 10 years from now.
We just came back from a three-day executive retreat where we took our executive level off-site, basically to focus on where we are today, where we can improve and where we want to go in the future. It put us all on the same page. When we left there, we knew exactly where we were going.
Coming in, we all had an idea, but now we’re focused more on what it will look like. We got more buy-in. There are too many phone calls and distractions in the office.
Q: How do you communicate your vision?
You do it in letters, monthly meetings and weekly executive meetings. It’s repetition. It’s not something you do and say once and it’s done. It’s something you do every day. People hear it and say it sounds good, but it becomes vital when they hear it all the time.
Some people change the message and vision, and that confuses people. By hearing the same thing over and over again, it’s, ‘This is the vision, and I know I’m working toward the right place.’
It’s not a moving target. It could be impactful, and it has to be relevant. It’s not repeating the same story over and over again. It’s making it relevant. Our vision is to be the premiere national wireless retailer. I can’t just get up in front of the group and say ‘We are going to be the premier national wireless retailer, next.’ It’s ‘We’ve made a decision or hired someone today that fits with our vision of being the premier national wireless retailer.’ Your activities tie in to the vision.
Q: What do you ask during job interviews?
I’m always asking where they want to be in five years and what areas do they need most improvement on. If someone says the thing I have to work on the most is my communication skills, and 50 percent of the job is communicating, you might have an issue.
If they say the thing I’m working on is organization, well, at least you know going in that they are strong enough in other areas to make up for that.
Q: How do you retain employees?
Keeping the job fun and interesting. You have to give them challenges. If you come to work and you get bored, you start looking for another job. A lot of it is high fives, ‘You are doing a great job,’ recognition in front of peers and taking time to coach and develop people. At the end of the year, they feel like they grew this year or they got better, and can’t wait to start a second year at the company.
Someone who is an executive assistant, that could be a mundane job. I keep it interesting for my assistant. We have a written job description and I keep adding things to it, and I throw her new challenges and things we’ve never done before. At the end of the year, it’s, ‘This job really grew into a great position.’ She’s always developing to really excel at the skills she has.
HOW TO REACH: Wireless Toyz, (248) 426-8200 or www.wirelesstoyz.com
“I was out there in L.A. for his 60th birthday and I had a chance to pick his brain,” says Whitton, CEO of TheraMatrix Inc. “He’s a bit on the aggressive side. I’m not quite that aggressive, but he always has some words of wisdom.”
One thing Trump said that has stuck with Whitton is that you should love what you’re doing. That, he says, is a key to handling success and staying motivated each day.
“It’s life in general,” Whitton says. “Every day is a new challenge. I love coming to work, but is it a bed of roses every day? No. We see thousands of patients and we get one complaint, and that will burst my bubble. Out of the hundreds of letters we get telling us what a great job we’ve done, it’s one that can set you back a step. You have to learn from that one issue.”
Whitton has used his passion for the job to lead the 140-employee physical therapy service provider to revenue of more than $10 million.
Smart Business spoke with Whitton about how to identify loyalty in employees and how to handle mistakes.
Q: How do you handle negative feedback from a customer?
You have to take a deep breath, look at it and consider all the pieces to that puzzle.
You bring your team together, look at your options and develop a plan. I’ve surrounded myself with a very loyal team. Loyalty is one of the big issues.
No one goes into battle without a plan. We develop plans and alternate options. We don’t just sit and stew on it. We actually sit down collectively and come up with options.
Ultimately, I will make the final decision.
You can’t just rah-rah-rah and sugarcoat everything. After you have your pow-wows, you have to make the final decision. You have to be stern. You have to demonstrate both of those characteristics. Ultimately, somebody has to accept responsibility in everything we do in life.
Q: How do you know someone is loyal?
What is the definition of loyalty? You can look at that. It’s the honesty and willingness to follow your work ethics.
I, from time to time, take a few days off. Then, I come back, and I know things are humming along just like I left them. You can’t do that if you don’t have someone who is loyal to you and your values and mission. It’s developed over time. It’s not something that comes overnight. A disloyal person, you’ll find that out in a relatively quick period of time.
Q: What is your interview process like?
In upper management, we have a team that interviews. If it’s within the corporate structure, I bring everyone in from the CFO to COO and myself, so we all play a part in it. We try to establish a team environment around here.
For the average employee, we have a human resources department. We have a director of operations who is involved in the interview process. We also have a director in charge of out-of-state facilities.
When it’s an employee for one of the sites, we give them a majority of the autonomy.
We bring them in on a monthly basis to sit down with us, hear them and let them have input. Letting them play a role in our organization has been key and helpful.
Q: How do you reward employees?
To motivate, you have to set rewards. We set goals that are reachable. Whether it’s compensation or bonuses, that’s all got to be tied into the pact. We have various rewards. We do two quality surveys among our patients and recognize clinics that shine. It’s not only monetary gains. We try to recognize them with various certificates and verbally acknowledge them. We have 28 sites, and they enjoy it when we come out to recognize their achievements.
Q: What are some pitfalls leaders should avoid?
The CEO who closes his door or who is hard to get at. I’m not at the level of a GM or Ford CEO, so I can’t speak at that level. But distancing that can occur at the top is a pitfall.
I worked at a hospital and there were 20 layers you had to go through before you could get anything done.
Q: How do you know you aren’t building layers?
With my door and phone line being open, by our monthly meetings and visiting the sites. People have access to me, and if it were a layer thing, I think I would hear about it personally.
I make myself accessible.
HOW TO REACH: TheraMatrix Inc., (248) 333-3335, (800) 545-3422 or www.theramatrix.com
Acquiring a company is so common at First Advantage Corp. that its 4,400 employees start to get restless if there isn’t talk of a deal.
“Sometimes, if we don’t announce a deal for a couple of months, I’ll be walking down the hall and someone will ask, ‘What’s happening? How come we haven’t done a deal? Are we out of money?’”says John Long, CEO of First Advantage. “People just get used to it. Some CEOs want that culture. It’s a good way to accelerate the growth of your company.”
The risk mitigation and business solutions provider averages about 14 or 15 deals a year. In 2005, it posted $644 million in revenue and did 14 acquisitions, with 10 more in 2006. While revenuehas steadily climbed with the acquisitions, so, too has the company’s net income, rising from $16.4 million in 2001 to $58.4 million in 2005. “As a general rule of thumb, we always have two or three deals we are working on,” Long says. “There’s a consistent hum here of activity related to transactions, even if, at the end of the day,we end up killing it.”
He has completed more than 50 acquisitions since June 2003.
Here’s how Long successfully executes his acquisition strategy.
Long says there is no tried-and-true formula for comparing the potential value of a purchase to its cost.
“We’ve got internal ways of measuring results of what we expect from transactions,” he says. “Some are done defensively. Sometimes you buy companies so someone else doesn’t getit. The value may be less clear.”
Long says that for the most part, First Advantage acquires companies that will help it grow and add more products.
“When we add products into a segment, the idea is to add complementary products,” he says. “Our salespeople can then cross-sell to their existing customer base. The idea is to sellmore products to the same clients. That’s a lot easier than to try to go bang on doors and get someone who you don’t already have a relationship with.”
Diversification also factors in to which companies First Advantage wants to acquire.
“I don’t want any of my businesses to be tied too much into any one cycle,” he says. “I don’t want it to be tied too much into any one technology or one customer base. I like diversification because it allows me flexibility to grow. The more I can diversify at the end of the day, the more stable the earnings are.”
Diversification also allows for situations in which one aspect of the company may be doing poorly but is offset by another component succeeding.
“Our credit business does a lot of mortgage credit reports,” Long says. “When interest rates are high, as general rule of thumb, that means less value. It also means economic timesare high, and that’s better for employment. We have an employment segment that will benefit from that. You certainly don’t want to develop a business where the whole thing goes inthe toilet. We try to balance it as much as we can.”
Keep things consistent
A key component of any acquisition is integrating the newly acquired company with the First Advantage way of doing business.
For many deals, much of the process involves coordinating management and sales, along with making sure the rules of human resources are consistent and the department is filledwith seasoned workers. “For the average employee, they don’t care who writes their checks,” says Long. “They just want to get it. So managing normal HR procedures is very important in a transaction.”Many of First Advantage’s deals don’t involve that much integration. When there is a lot required, Long says it can be painful. “You have to work through what your requirements are and what your goals are,” he says. “You have to work through customer needs and what they are used to. Sometimes, your customers have to make sacrifices when you make a deal.”
Since the customer is of the utmost importance, it is vital to keep good sales and customer service people while getting them accustomed to how the acquiring company does business. “At the end of the day, those are the lifelines for the customers,” he says. “You are buying customers when you do a lot of these.”
Accounting and IT structure are also centralized for consistency, and occasionally, back-office work is, too.
“If one of my businesses needs 10 full-time programmers, they’ve got 10 full-time programmers, and they aren’t working on anything else,” he says. “This perception that you can justbring all these people under one umbrella and all this work will disappear and you can cut all these people that’s just not true. You still have to have dedicated resources to the individual businesses and products that you acquire. A lot of things don’t change.”
Sometimes, positions are consolidated for efficiency.
“If we have two businesses that each had a controller, we try to get one controller in a centralized environment to control two businesses,” says Long. “Right away, that might saveyou $100,000 plus. That’s the simplest form. Then you get into the back office where you are maximizing productivity.
“Most of our deals we are looking to do that. You can save a lot of money reducing redundant technological platforms.”
As far as employee compatibility within the corporate culture, Long says if someone doesn’t fit in, he is more than likely to let him or her go.
“Sometimes it fits, sometimes it doesn’t,” he says. “I’ve never tried to tackle that head on. Pieces of the organization can be culturally different than other parts. Sometimes, people insome groups just don’t fit in. They aren’t comfortable from Day One.”
Sometimes, you just walk away
While acquisitions are a major way to grow, Long says he needs to keep a watchful eye that he isn’t growing just for the sake of growth. While the company has closed about 50 dealssince going public in 2003, about 15 more approved by the board were never finalized. “Just because it is approved doesn’t mean we do it in the end,” he says. “We go through a process of review, and sometimes we get in there and don’t like what we see. Sometimes it’smanagement. Sometimes that stuff hits you with a baseball bat. You sit back and say, ‘I can’t work with this guy. I’m not going to do the deal.’ Experience helps you out.”
Long says that a couple of years ago, he would have been more likely to follow through on a bad deal and close it.
“Having made one or two of those bad deals, I think we’ve just gotten better at [it],” he says. “I think we are more willing to bite the bullet early and just kill it.”
Sometimes a deal is already done when Long realizes he was told a different story before the deal was finalized.
“During the courtship of a transaction, people will tell you they are on board with certain things,” he says. “Then the deal is done, and they have the check, and then you go and do exactly what you said you were going to do, and they put the brakes on it, and say, ‘You can’t do that.’
“Of course, that’s why you bought the company, so of course you are going to do it. You sometimes have an incompatibility that will immediately pop up because people don’t wantto give up what they are accu stomed to, no matter what they said at the time. Usually, in cases like that, we agree to part ways, and they take their money and laugh at the beach.”While acquisitions are a great way to grow a company, Long says it takes a lot of work, and people can get burned out.
“Folks just get tired,” he says. “You are constantly introducing new blood into the organization. Sometimes customers expect more out of you. Sometimes perception is not the reality. You’ve got to work through issues.”
According to Long, 90 percent of the company’s day is working through issues.
“That’s not a negative,” he says. “It’s just that strategy breeds more issues. If you are just a guy who sits there and is organically growing every day and signing a customer hereand there and watching the change meter, it’s a lot easier.”
Communicate from the beginning
As with any organization, communication is key to First Advantage’s success. Long says it’s important to communicate expectations and goals up front so that incoming employeesknow what to expect. “The better job you do at communicating up front, the better everyone is,” he says. “People should start work with reasonable expectations about what the job is and the environmentthey’ll be working in. We certainly try. Sometimes we’re not successful, and sometimes people don’t always hear what you say. “When you walk in our building with so much activity going on, there is always opportunity for advancement for sharp people. We try to get that message through the organization.There is a price with that. You have to be able to work hard and deal with some of the uncertainty that a more inquisitive environment can bring.”
Communicating the message of the organization doesn’t have to come through some grand statement, either.
“I don’t think you have to stand up and make speeches,” Long says. “We do have meetings with key management and we do talk about what our objectives are and what our challengesare in terms of how you get this through the organization. I think we just developed a culture that is a word-of-mouth culture.”
HOW TO REACH: First Advantage Corp., (727) 214-3411 or www.fadv.com