Deborah Sweeney was just about at her breaking point. She had a group of employees at MyCorporation that she loved, but the tight bonds that she had built with them was making it really tough to be an effective leader for the business.
“I want them to be connected to me, to feel a connection to the business and to me as the owner and I want to be open with them,” says Sweeney, president and CEO at the 40-employee company that provides online document filing services for clients who wish to form corporations or limited liability companies.
“But sometimes that can end up taking every single waking minute of your day. They all have their ideas and their personal initiatives and motivations and goals. It’s balancing that against the focus on the broader strategic goals of the business.”
Unfortunately, Sweeney was not doing a good job balancing these two tasks.
“I felt this drastic pull of, ‘Wait, I have to grow this business and really focus on the larger business initiatives. I just cannot do both.’”
She needed to find a way to stay close to her people and enable them to still feel close to her but, at the time, separate a bit so she could work on bigger picture tasks like strategic development and growth.
“I didn’t want to shock them,” Sweeney says. “I’ve been running it this way for a year. How do I make this message?”
She began by meeting with key leaders to get their buy-in on her idea to step back a bit from day-to-day responsibilities at her company and focus more on growth.
“I empowered them to work directly with their direct reports instead of having to come to me for all the questions,” Sweeney says.
She scheduled an all-hands meeting which she touted as a celebration to let everyone know about the changes she was making.
“I didn’t position it like, ‘I’m exhausted and I can’t handle you guys anymore,’” Sweeney says. “I positioned it like, ‘Hey, I really think we have an opportunity to grow the business. In order to do that, I need to spend time on those things that are growing the business. So I have a couple people who are going to be taking on more leadership roles and are going to be answering your day-to-day questions.’”
She then handed out charts that explained how things would work going forward and moved her office to the back of the building.
“I felt I needed to give the people to whom I was giving the responsibility that kind of center space for them to be more in front of the employees,” Sweeney says.
At the same time, when you decide to step back from the inner workings of your business and focus more on external issues, you need to make it clear that you’re not abandoning your employees.
“You don’t want to be perceived as disengaging from the business,” Sweeney says. “I almost try to overcommunicate with where I’m going and what I’m doing. You build a trust and respect.”
You also make sure you create systems for people to bring up concerns with you since you are still the CEO.
“I have them every week tell me the five things they accomplished this week,” Sweeney says. “They give it to me every Friday and then they tell me their top three initiatives for the following week. I don’t do it with all employees, so I ask them to ask for the same thing from their team members. So we all consistently flow that information upward.”
The result of all this is that Sweeney has found more time to help her business grow without reducing the workplace culture at MyCorporation to a detached and impersonal environment.
“I’ve seen so many CEOs fall into that thing where they can’t let go, and then they lose the respect of their team because they are so busy trying to manage the minor nuances of who sits where and who is hired when and all these little things that they lose the perspective,” Sweeney says. “I think this is my opportunity to get that back into perspective.”
How to reach: MyCorporation, (877) 692-6772 or www.mycorporation.com.
Just do it
Deborah Sweeney had tried many times to get other people in on the hiring process at MyCorporation. And every time, it was met with very little response.
“Every time I used to do interviews, I would offer, ‘OK, who would like to be involved in the interview process? I want to engage the team,’” Sweeney says. “One or two people, always the same people, would volunteer.”
Sweeney decided that needed to change. This time, they weren’t being asked to help. They were being asked to do it.
“I said, ‘I don’t want to do the interviews this time. I want your team to make the decision to hire this person. If they end up being not that great, you’ll have to deal with the consequences,” Sweeney says. “They did more reviewing of resumes than I’ve ever seen. They had more people on the team interview the people, more engagement once we decided to hire this person and then of course a welcome party and all of this other stuff. They set up it so much better than if I or one of the leaders had made a unilateral decision.”
The key was the empowerment of not being asked to help, but being asked to take on the responsibility themselves.
“They really took ownership,” Sweeney says.
Technology and social media has made it a whole lot easier to gather feedback on new products and services that your company may be looking to launch. But if you don’t take a thoughtful approach in how you analyze that feedback, Irv Shapiro says you could get yourself into a big mess.
“The risk you have is the phenomenon of the vocal minority,” says Shapiro, CEO at Ifbyphone. “You get an individual or a couple potential customers that say, ‘This feature is critical. Without this feature, I would never buy your product.’ Yet in essence, they do not represent the majority of the product space. So you have to be very careful to make sure you reach some critical mass.”
The lesson is that openly soliciting feedback from random sources is often not the best approach to see if you’ve got a winner with the product you want to bring to market. A more strategic approach in which you seek out potential partners who also have a product or service that is valued can be a more effective and lucrative way to go.
“In doing partnering, you’re not making a sales call or trying to sell something,” Shapiro says. “What you’re trying to do is communicate opportunity. That’s very different than making a sale. In communicating opportunity, you must be able to do it while sitting in the seat of your potential partner. It’s not, ‘Why is this good for Ifbyphone?’ Why is this good in this particular case for Zendesk?”
Zendesk is a software provider that helps companies engage with their customers. Ifbyphone is a 50-employee voice-based marketing automation platform. Over a period of six to nine months, the companies worked together to see if they could come up with a plan to drive revenue for both organizations.
One of the keys to forming solid partnerships is looking beyond your own wants and needs.
“You have to make sure you have an aligned sense of urgency and that there is a win on both sides of the equation,” Shapiro says. “When we started these discussions, we didn’t have an integration between Ifbyphone and Zendesk. Partnering is about building a shared strategic direction that may involve some engineering on both company’s parts in order to gain access to a larger market to improve the economics of your company.”
The Ifbyphone/Zendesk partnership puts technologies from both companies together to help provide better service to the clients of the two companies.
“Step No. 1 is classic business development,” Shapiro says. “You have your marketing organization look for potential partners. You reach out to those partners and you begin to discuss the dynamics of what the benefits would be for each company.”
Your role is to make sure everyone understands what you’re looking for and what your goals are as the potential partnership is explored.
“You want your partners to have the same goals,” Shapiro says. “Zendesk is growing as fast or faster than Ifbyphone. So you have two high-growth companies that are mutually aligned. If we went to do a partnership with IBM or Microsoft, it would be much harder to find shared mutual interests.”
In searching for a partner, you have to find someone that is not just looking for a quick shot in the arm. You don’t want someone who is eager to open and close business with you and then move on to something else.
“The opportunity has to be bigger than a particular single-point solution,” Shapiro says. “It has to be an opportunity that is strategic to the company. Make sure that you find value and large opportunity for your partner and talk about your partner’s opportunity and not your’s.”
How to reach: Ifbyphone, (877) 334-8301 or public.ifbyphone.com
Don’t say no
Irv Shapiro tries very hard not to reject the ideas of his employees at Ifbyphone about how to grow the business.
“I believe it’s best to avoid ever saying no,” says Shapiro, CEO at the 50-employee voice-based marketing automation platform. “It’s better to ask lots of questions. There’s a famous book called ‘The HP Way.’ I believe Mr. Hewlett used to call it the Three Hat Rule.
“He would walk through a factory and a guy in the machine shop would come up to him and say, ‘Mr. Hewlett, I’m so glad to see you today, I have a fantastic idea.’ He would describe that idea to Mr. Hewlett, and Mr. Hewlett would say, ‘Interesting, very interesting. Let me think about it and get back to you tomorrow.’
“The second day he would come back and Mr. Hewlett would say, ‘John, did you think about this and this and this and this and this? Why don’t you think about it and I’ll stop by tomorrow.’ On the third day when Mr. Hewlett stopped by, the guy might say, ‘I thought about it and it doesn’t fit. Mr. Hewlett would say, ‘Well, that’s all right. Let me know next time you have an idea. I want to talk about your idea.’ That epitomizes ideal CEO behavior.”
Mitch Lowe is not looking for sympathy. He just wants you to know that the rapid growth of Redbox Automated Retail LLC — going from a dozen kiosks to more than 27,000 locations nationwide where you can pick up a movie for a dollar — has come with a few challenges along the way.
“If you asked most people in business what you would be worried about, growth would not be one of them, especially in the economy we’ve had over the last couple years,” says Lowe, president of the $1.16 billion subsidiary of Coinstar Inc. “But growth brings on a whole set of challenges that are unusual and very complex.”
One of the most complex challenges is finding people to fill the constant job openings that tend to come about with a rapidly growing business.
“You need to hire people very quickly, and you need to work a lot harder than I ever expected in making sure you don’t cut corners in your hiring,” Lowe says. “You try to continue to keep your high standards as far as the people that you hire and the rigor that you put in finding people who are the perfect fit.”
With the popularity of Redbox, Lowe is not lacking for quantity when it comes to receiving applications for newly posted job openings. But the quality is sometimes a different story.
“When you are so attractive, you start to have a lot of folks who are trying to get jobs there who are really good at presenting themselves but are not so good at fitting in with the culture or the style of the company,” Lowe says. “When you’re trying to hire 50 people a week, it starts to get very tedious, and you see people inclined to cut corners.”
Lowe needed to find a better way to fill personnel needs at Redbox that would prevent the kind of compromises that could ultimately hurt the 1,600-employee company’s ability to keep growing.
Make it a team effort
The solution to the hiring conundrum, like everything else about Redbox, was arrived at in a flash. Implementation would take a little more time and effort, but the idea became apparent very quickly.
“We have always been a fast-action company, and I believe we did this within a couple days,” Lowe says. “You have to set up an environment where making mistakes is not something that you try to hide or are fearful of.”
The idea was to get more people involved in interviewing potential job candidates. It wouldn’t just be a single department head or a department head and a division president.
“We instituted this practice of 100 percent unanimity in bringing on any individual new employee,” Lowe says. “We had typically seven people across the company from all levels who would interview any new candidate from the person at reception to someone who works in the field to a VP to myself. And even if the hiring manager was 100 percent behind hiring this person, if the merchandiser who merchandised the jewel stores did not agree that this person should be hired, we did not hire this individual.”
The idea was to get more people to take ownership of the culture and the responsibility of bringing good people to Redbox.
“Everyone realized that I have as much to say about whether we hire the absolute best people that I can count on and can count on leading the company as anybody else does,” Lowe says.
The opportunity to be part of a job interview would be open to anyone. Actually, it was even more than that. It would become an expected part of your duties as an employee at Redbox.
“There are going to be people who don’t make themselves available to conduct the interviews,” Lowe says. “So you need to make it much like our jury system in the United States where employers are required to allow people to participate in juries. It has to come from the top, a very clear statement that the reason why we are doing this is so that, over time, we build an incredible group of people who are going to be dedicated to solving problems. It’s going to be a much more enjoyable place to work. In order to do that, you have to participate. You have to live up to the rules of this process.”
Lowe was confident that the collaboration and involvement of other people in the hiring process would make a big difference in the quality of people who were offered jobs at Redbox.
“It wasn’t just a poster on the wall that said, ‘We believe in integrity and humility and we believe in perseverance,’” Lowe says. “It was real and no matter where you were in the company, you were responsible for hiring people that lived up to those values.”
It didn’t all happen that smoothly, of course, and Lowe had a few problems to overcome to get this new employment interview protocol up and running. First and foremost was the scenario where a hiring manager didn’t get the candidate he thought was best for a position because someone from another department didn’t see it the same way.
“This was a very controversial idea,” Lowe says. “Not everybody agreed with it, especially the hiring managers who did not want to lose their authority in who they were going to hire. People imagined, and this actually came to pass, that they would be really sold on a candidate.
“This person was going to be working for them and an individual in the call center didn’t think this person represented our core values and vetoed the individual. There were all these debates that happened very quickly upfront. They got it out on the table. ‘I don’t think this is going to work because it is going to slow down our process,’ or, ‘I know best who I should hire and these others won’t.’”
Lowe reiterated his belief that getting more people involved in conducting interviews, even if those people weren’t in the same department as the position being hired for, was a good thing.
To further bolster his position, he referenced the book, “The Wisdom of Crowds,” by James Surowiecki.
“It’s the basis for our jury system and the basis for why democracy works,” Lowe says. “The core tenet is that a lot of people with some information on a topic, if they all get together and vote about what they believe in on a topic, they are more likely to be correct than if you put two or three experts on the topic trying to answer a question. … So that’s why we have this random group of people interviewing from different perspectives.”
A matrix was built that would list out categories of employees and the quantity of people that had to participate in the interview. It was done in such a way that interviewers would be chosen randomly by the human resources team, with anywhere from five to 11 people selected, depending on the level of the position.
“You have to be careful you don’t set it up so it can be manipulated and become a stacked deck,” Lowe says. “The trick is the hiring manager is not picking the people who interview the candidates because the hiring manager can be very biased.”
As much as Lowe believed this was a great idea, he did not force it upon the employees at Redbox.
“I have to show that I am not stuck and stubborn with my own preconceptions and my own ideas all the time,” Lowe says. “Only very rarely do I push through my own beliefs that might be contrary to others. Set the example that you are open to trying new things and new ideas and not being fixated on your own view of the future.”
He didn’t get everyone to agree with the plan. But through being transparent and willing to discuss the idea and answer questions, he was able to earn their support.
“When you have that consensus building, people say, ‘Well, I don’t agree, but the majority of you do and I trust you and I have faith in you, so I will try it.”
Perhaps the most important piece of this new hiring practice, aside from earning support for the idea, was to put employees in the best position to conduct good job interviews. The first point covered was critical if this plan was to have any chance of being a success.
“There was a stated rule at the very beginning of those meetings that no one was going to try to force you to change your mind,” Lowe says.
The reason this rule was so important was that there needed to be a way to resolve conflicts peacefully so that no one felt pressured to change their opinion for the wrong reason. If that wasn’t the case, the system would lose all legitimacy.
In addition to having the freedom to make their own choices, employee interviewers would also be free to come up with their own questions.
“We try not to script them too much in the way they ask their questions so we get all kinds of feedback from a different perspective,” Lowe says. “We encourage a free flow of questions.”
When an interview is completed, forms are filled out by the interviewer and turned into the human resources person managing the process.
“What they do is if there is more than the majority against hiring this person, we just move on to the next person,” Lowe says. “If it is one or two people out of five or seven or 11, then they will put together a panel to bring that group together to discuss the issues that they saw.”
It was some time after the system had been implemented that Lowe faced the very scenario his hiring managers had feared.
He had been looking to hire a senior vice president of purchasing for about a year and thought he had found the perfect candidate for the job. But out of the 11 interviews that were conducted, it was a near even split with people both for and against the candidate.
“So we got together, all 11 of us, and everybody explained why they were for or against,” Lowe says. “At the end of that, I could see pretty clearly that the issues that the people raised who thought the candidate wasn’t right for the role, they described things that I had not seen, but made sense.”
Lowe freely admits the decision frustrated him.
“I thought this candidate was perfect,” Lowe says. “What they taught me was that there are things, because of their unique perspective, things they saw that I did not see. And so we decided not to move forward with that candidate. It ended up taking me a whole other year to find the right person. It can be frustrating for the hiring manager, but you have to respect the process and respect the insights that come from the diverse interviewer. The other great benefit of this is that each individual feels that they play a big part in building the leadership and the teams across all parts of the company.”
There has also been a benefit to the people who have been hired under this system.
“We found the wider the range of people that did the interviewing, the more likely we were going to get employees that were going to stay longer, have more impact and have more fun working here,” Lowe says. “And it really has paid off. There’s just a whole sense of passion about Redbox and our mission from everybody, wherever you’re working at Redbox.”
How to reach: Redbox Automated Retail LLC, (866) 733-2693 or www.redbox.com
The Lowe File
Born: Omaha, Neb.
Education: High school graduate
What was your very first job?
Working as a demolition guy in a construction job. My job was tearing apart barns and removing metal roofs and that kind of stuff. It was fun because you could take a hammer and a crowbar and yell, ‘Timber!’ and watch stuff fall. I got this job from a friend of my parents who gave me the job as a favor to my parents to try to keep me out of the house during the summer.
My boss was this guy named Shorty, and he was never satisfied with the work that I did for him or the work that anyone did for him. It taught me a good lesson on how not to motivate and manage people.
Who has had the most influence on you?
One is Gregg Kaplan, the president of Coinstar Inc. What Gregg really taught me was analysis. If you want to continue to make decisions over and over again that end up being right, you need to do a lot of research and analysis and testing.
The other person was the person who was the co-founder of Netflix with me, Reed Hastings. He taught me focus. Focus on the big things. Focus on the things that could change the business in a big way. Leave the small things for later.
Who would you have loved to have dinner with and why?
It would be Thomas Jefferson. He was such an innovator and such a great creator. He was always devising tools and equipment to solve problems and he lived in such a turbulent time. I would love to see what was going on in his brain.
Mark Reynoso could hear the rumble approaching on the horizon, and he knew it spelled trouble for Belkin International Inc. Competition was growing fierce in the consumer electronics industry and if he didn’t act fast, he and his business were going to get run over.
Belkin launched as a seller of computer cables and surge protectors. But the business evolved into products that make electronic devices such as laptop computers, iPods and eReaders easier for consumers to use and easier to integrate with other devices.
As the calendar turned from the 1990s to 2000, the company of more than 1,000 employees found it wasn’t alone anymore in this realm. Belkin was facing more and more competition and Reynoso needed to respond to help his company stay ahead of the pack.
“We saw that the retail market, the shelf space that our products lived on, was becoming more competitive,” says Reynoso, the company’s president and CEO. “Not only were we competing against other brands like Belkin, but retailers began to develop their own private brands to compete with people like Belkin.”
Companies such as Best Buy and Circuit City were now in the market offering their own specialized electronic connectivity solutions. Reynoso feared that without quick action, his products were at risk of being moved to the back of the shelf or even getting bumped off completely.
“It became really clear that we needed to push our organization upstream in terms of our innovation capabilities to really continue to put ourselves in a space that was ahead of the commoditization curve so that we’re bringing new products to market and creating new categories that would allow our brand to maintain its relevance and strength,” Reynoso says.
“Our goal was not just to sustain our business; it was to grow and expand our business. The only way we would be able to do that was if we were bringing differentiated solutions to the market that people really cared about and that consumers loved.”
Make a commitment
Reynoso reached out to his people and explained the dire circumstances. He told them that they all needed to work harder to come up with new and innovative products that would excite consumers and help Belkin stand out from the competition.
The plea did not go over well with his employees.
“Initially what we discovered when we tried to inject this way of thinking into our business was that it was really hard to get it to take hold,” Reynoso says. “People were running their day-to-day businesses. It was hard to get them to change gears and change focus and begin to develop some of these new strategies.”
The response underscored the fact that the increased competition wasn’t due to a lack of effort from his employees. They were working hard and didn’t have much capacity to take on additional tasks.
“So then to say to somebody, ‘Hey, I want you to go kick off this new initiative because we’ve discovered a customer need,’ it would be really difficult to make that successful,” Reynoso says.
He had shown them that he understood the environment in which they were working and was willing to adapt that environment to make this new initiative possible.
“You have to have the conviction to stop doing certain things if you want to do new things,” Reynoso says. “One of the CEO’s primary responsibilities is to set priorities for an organization. Something is going to have to fall off the list. The biggest thing you can do is remove barriers.”
Innovation was desperately needed at Belkin. Reynoso knew he had the talent on hand to be innovative and develop new products that would excite consumers. It was time for him to give that talent a chance to blossom.
His idea was to create an entrepreneurial program in which selected leaders in the company would be given a chance to take an idea conceived by the consumer insights team and develop it into a great product for Belkin.
“Every company has their bureaucracies that are designed to make them more process-driven, efficient and effective,” Reynoso says. “Start-ups succeed in part because they don’t have any process. Everything is done pretty much in an ad hoc, entrepreneurial fashion. The best thing you can do for somebody in that situation is to put them in an environment that liberates them from a lot of the structures in your organization and truly gives them the freedom to be completely entrepreneurial.”
This program would solve a big problem for Reynoso. Employees chosen to take part in it would be freed from other responsibilities and given a chance to dedicate all their time to the new project. The excuse of not having enough time or resources would no longer be valid.
“We’re going to allow entrepreneurs within Belkin along the lines of this vision and future that we’ve talked about really push the needle of our innovation profile,” Reynoso says. “We’re going to fund those ideas, we’re going to fund those entrepreneurs and we’re going to allow them to work within our corporate development group. We’re going to cocoon or isolate them so that they can really focus in exclusively on nurturing their specific idea.”
Connect with your customer
With the framework of his entrepreneurial program in place, Reynoso needed a great idea to hand off to one of his fresh-faced entrepreneurs. A scan of the marketplace revealed that laptop computers might be a good place to start as they were becoming really popular, particularly for home users.
“We recognized that we were going to need to understand consumers’ needs and preferences in order to create new solutions or categories that would allow us to drive growth,” Reynoso says. “A real direct result of that discussion was our commitment to begin to disproportionately invest in and become experts in our consumer research and consumer insights.”
Reynoso made it clear to his employees that ideas would be given the opportunity to breathe and grow at Belkin. In order to do that and begin the entrepreneurial process, he and his consumer insights team had to identify an idea with great potential. He had to reach out to consumers and figure out what would get them excited.
If he was lucky, the team would stumble upon an idea that consumers didn’t even know they needed.
“That’s really the gold mine for us,” Reynoso says. “It’s a need that a consumer can’t articulate because we’re solving a problem that they didn’t know they had. When we’re mining for unarticulated needs, you can’t ask them direct questions. You need to spend time understanding broadly how they live and how they use the product and the pain points they have with it.”
Whether you’re reaching out to people through a database of customers who have bought products from you or you’re flipping through the Rolodex on your desk, you need to get inside the heads of the people who use your products.
“If we’re learning about laptops, what do you love about your laptop?” Reynoso says. “How do you use your laptop? Where do you use your laptop? What is it you don’t like about how you use your laptop? The more data you gather in that respect, certain trends and themes will begin to emerge that will give you a hypothesis to begin to innovate around. That’s how you tackle unarticulated needs.
“It doesn’t need to be complicated. The key is less about the sophistication of the system versus the sincerity of the conviction to make it a priority for your business. What you need to figure out is the best way for you and your company to engage your customers.”
You’ve got to show customers that you’re genuinely interested in their feedback and that their responses will play a key role in the product decisions you make.
“Be really clear in communicating your sincerity of your objective of what you want to achieve,” Reynoso says. “Then make sure you listen and deliver. There’s nothing worse than taking up somebody’s time and then effectively ignoring their recommendations.”
It’s the kind of thing that will drive your customer to a competitor.
Through its commitment to intensive research, Belkin came up with an idea that Reynoso and the consumer research team believed laptop users would love.
Find the right person
It was now time to find someone to lead the initiative to develop a product related to laptop computers that would excite Belkin consumers and serve as a springboard to even more innovation.
“You have to identify a vision and you need to go make some quick wins so people can see that direction is a good direction,” Reynoso says. “When people see it, they’ll follow suit. It’s like Roger Bannister and the four-minute mile. Until somebody does it, it seems impossible. Then as soon as somebody does it, people can see that it’s real, it’s achievable and it’s possible. You have to go from something that appears to be not possible to something that was done so they can see that it can be repeated.”
In order to make the initiative a success, you need to think beyond just the technical expertise in whatever realm you’re asking this person to work in. You need to look at their ability to work in an entrepreneurial fashion.
“Somebody who is very structured, process and rules-driven is not somebody who you want in start-up environment,” Reynoso says. “There are people who thrive on innovation, thrive on the ups and downs and don’t require a tremendous amount of management to work through the hiccups that you’re inevitably going to have. They recognize it’s part and parcel of the path that needs to be taken.”
Use your HR team to identify people who have the personality and temperament to take on leadership roles.
“If your HR organization is focused on developing your people and caring about your people, usually that tends to be a correct recipe,” Reynoso says.
Once you put the person in place, you have to live up to your promise and your intent to let the person be a leader in developing the initiative.
“You can tell somebody, ‘Hey, we’re going to be supportive of you when you make mistakes or when there are failures,’” Reynoso says. “OK, great. But they are going to test it when it happens. They are going to want to see that when a failure occurs and there is a setback, you truly are willing to support them. We have a good track record of being able to say, ‘OK, you fell down. Pick yourself up, dust yourself off and move forward.’ Don’t nickel and dime them.”
You should also understand that any plan is likely to go through changes and perhaps even complete transformations over the course of development.
“I don’t recall what the initial assumptions and expectations were for the laptop at home business when we initially put together the business plan,” Reynoso says. “But I can promise you what ended up being successful was only half of what we originally wrote down. We just had to give our leader the freedom and the empowerment to go to make mistakes.”
What Belkin came up with was the Cush Top, a product that would help laptop computers keep their legs cool while using their computers.
“It’s an ergonomic, comfortable laptop stand that you put on your lap whether you are in your bedroom or your living room or wherever you are,” Reynoso says. “That was one example of innovation driven through consumer insights that was a huge home run for us.”
The work also produced a product called Home Base that would connect computers, printers and any other USB device in your home. Consumer research discovered that connectivity was a big issue for many people.
“Collectively, those insights drove our laptop at home initiative that basically allowed us to create a new business that is now in excess of $100 million,” Reynoso says. “Had we tried to drive that through our existing businesses, it probably would have failed because everybody was so busy with everything else they were doing. That dynamic is more true now than it was seven or eight years ago.”
How to reach: Belkin International Inc., (310) 751-5100 or www.belkin.com
The Reynoso File
Born: Addis Ababa, Ethiopia
Education: Bachelor of arts degree, law and society, University of California, Santa Barbara
Who has been the biggest influence on your life?
My parents. They just really taught their kids to understand what right and wrong was and tried to make sure they behaved accordingly. Just a real ethic, a moral grounding was what they brought to us.
Reynoso on making the right personnel choice: You don’t want to pick somebody who is doing really well and put them in a job where they struggle because now you’ve made two big mistakes. You’ve taken somebody who was successful and made whatever they were doing less successful because you pulled them out of that.
Then the initiative you wanted to do is now not going to be successful because you put somebody in there who isn’t going to be successful. And now you’ve got an employee who was feeling really good about themselves being successful who is now struggling. It’s a real disaster in that respect. You just want to be really careful you don’t misalign opportunities with roles.
What one person would like to have a conversation with?
Nelson Mandela. For somebody to go through the life that he did, to be imprisoned by his own country because of the color of his own skin, to be willing to struggle for freedom and to then embrace the society that imprisoned you and lead that country as he did out of apartheid, it requires a depth of a person that is really hard to understand. He would be an incredible individual to be able to spend some time with.
Albert Pujols is one of 1,600 employees who work for St. Louis Cardinals LLC, but it’s safe to say he’s quite a bit more famous than just about any of the others. And while his colleagues with the ballclub understand that professional baseball players, like other pro athletes, make a lot more money than the average American worker, it can still lead to occasional feelings of envy.
“Most people in the front office are aware that it’s two different economies under the same roof,” says William O. DeWitt III, president of the Cardinals. “But some people have a hard time with that. Some employees have a hard time with that. They see millions going to players, but then in the front office, it’s the real world as to how people are incentivized and compensated and things of that nature. I would say that would be one of the key leadership challenges of my job.”
And before you turn the page because you think this story does not apply to you, you should realize it’s an issue that can crop up in pretty much any kind of business.
“You see it particularly flare up as it pertains to sales folks versus nonsales folks,” DeWitt says. “Typically, in most businesses, the sales function has a different set of incentives and compensation features than non-salespeople. We call them revenue generators versus non-revenue generators in our business. I mentioned the difference [between] front office and players. Probably the more appropriate distinction is between sales and nonsales.”
You don’t have to be an expert in human relations or business culture to recognize that when you have a divide between groups of employees, it’s not healthy for your company. Here are a few things DeWitt does to bridge these gaps and keep everyone working toward the same goal of providing winning baseball on the field and exemplary customer service off of it.
Even the novice baseball fan understands that if it’s a tie game and there is a runner on third in the bottom of the ninth inning, it’s the batter’s job to get that runner home and end the game. Unfortunately, it’s not always as easy to identify job descriptions in other lines of work.
This includes the business side of the St. Louis Cardinals.
“We brought in a consultant to help us really understand our salary structure and our benefit structure and really just benchmark where we were with our front office,” DeWitt says. “It’s been a nice tool to be able to more clearly articulate what our structure is, why it is that way and what sort of changes we may need to make in that structure to give people confidence that there is rhyme and reason to the approach.”
The problem for DeWitt was the team couldn’t always give good reasons for making one compensation decision or another because no one had really spent a lot of time studying what the Cardinals’ peers were doing.
“We were having a hard time explaining our structure to people, because we weren’t 100 percent sure what the true marketplace was,” DeWitt says. “So that was something that bubbled up through the HR department.”
DeWitt wanted to know that the way the Cardinals were compensating people was consistent with his peers in terms of what employees were doing and what they were receiving for that work.
In addition to gathering data through a series of surveys and benchmarking studies done by Major League Baseball and other firms in St. Louis and across the country, DeWitt launched an effort to get everyone to compose a personal job description.
“We had everybody think about that and had their managers approve their job description,” DeWitt says. “So it gave everybody in the organization a chance to write down what they were doing and what their functions are in the company and the managers signed off on it. That provided the foundation for this benchmarking.”
DeWitt’s goal was to take an honest look at where the Cardinals ranked in terms of salary and benefit structures with its peers. So that’s exactly what he told employees when introducing this idea of composing job descriptions.
“We were just honest about it,” DeWitt says. “We said we want to understand the salary structure and where we fit in. There’s a level of trust between employee and management that goes back a number of years in that we’ve had some success on the field as well as off the field in growing the brand and growing the business.
“I could see where in a struggling business, employees might be skeptical of that figuring there is a right-sizing type of exercise going on. We were clear that that was not what this exercise was all about. We were just honest and upfront and that worked out well.”
DeWitt and his team took the job descriptions that had been composed and the data gathered about other organizations in terms of salaries, benefits and bonus compensation plans and began to get a better sense of where the Cardinals fit in when compared with its peers.
The project is ongoing, but DeWitt says he likes the direction it is heading.
“Between salary, bonus and benefits, you’ve got a full picture of how front office people are compensated,” DeWitt says. “It’s a much better way of having that conversation with employees than just having to be defensive about what Albert Pujols makes.”
When he does face more questions about perceived compensation inequities, DeWitt says he will often give people the option to try something new.
“Let’s say they are not in sales and they are probing about what is different about the compensation structure,” DeWitt says. “You just say, ‘If you want to be in sales, you’re welcome to try it.’ I think that’s one of the things we’ve tried on a few occasions. Some people have said, ‘Maybe I will give it a shot,’ or, ‘No, that’s not for me.’ They understand that there is no prejudicial approach, it’s just form following function in the way we set up compensation structures.”
Recognize all the parts
You could have the greatest starting pitcher in all of baseball on your staff, but if the rest of the rotation is terrible, you’re not going too far with your team. It’s the same way in business when it comes to completing projects.
“We have a number of people that are on the sales side, for example in corporate sales, that try to land a deal,” DeWitt says. “But there is also a servicing aspect. Once you’ve done a deal, that’s great. But we need to deliver all these assets to people as part of these agreements.”
So before you offer up a gold watch or use of the company jet to your top salesman who sold a major deal with a client, take a moment to look at the work others do to give that client the most bang for their buck.
“A company might have a sponsoring package with us, a day at the ballpark where all their employees come and get a breakout session where they might have a batting practice on the field,” DeWitt says. “That requires execution from our staff. You have operations people that work with the facility vice president and they need to help with prepping the field and bringing out the equipment and doing all that. The servicing people on the corporate sales side have to be there and walk the customer through the event. Obviously, the salesperson is going to be part of that. But it’s a team effort, not so much in closing a deal but in delivering the assets. A lot of things require a lot of teamwork around here. That helps foster that and breaks down some of those walls that would otherwise exist.”
The answer is pretty simple: Show appreciation to those unsung people who aren’t on the front lines of closing the deal but still play an integral part in getting the client what they paid for.
“Just acknowledging it is a big step in the right direction for that issue,” DeWitt says. “Telling an employee that they are giving the extra effort and it’s appreciated. That’s half the battle in terms of employee relations. … We try to give everybody in the organization a sense they are part of the overall goal of servicing the customers and getting more fans to the ballpark.”
Know your role
DeWitt does not turn away employees who have concerns, even if those concerns seem pretty minor at first glance. At the same time, he doesn’t always launch an immediate investigation into every problem that gets brought to his door.
“Generally speaking, you want employees to solve their problems themselves,” DeWitt says. “If they are running into a problem getting that done, even if it’s somewhat trivial, I’m not going to just send them back out to solve it. I’ll work with them. But you want that bar to be reasonably high for them to come in to see you. Otherwise, you get a lot of little issues that might otherwise have been dealt with at a lower level.”
DeWitt makes it known that he is available to anyone in the Cardinals organization at any level.
“Make sure the people who report directly to you understand that you’re always going to take a phone call from someone within the organization at any level,” DeWitt says. “Then you’re not undercutting them, because it’s always been your policy. That’s important.”
One technique you can use to make that kind of undercutting less likely to occur is to put the person who is complaining in your shoes.
“You say to them, ‘If you were me, what would you do with this problem?’” DeWitt says. “That gets people to think in a different way about the problem they are part of. ‘Do you want me to address this with your supervisor or do you want to see if it gets better before I get involved? Do you want to try a different approach before I get involved first?’
“Those are the kinds of things that when employees have raised problems with me, hopefully that’s a fresh way to think about it. Sometimes it leads to resolution; sometimes it doesn’t. But it’s a good start in terms of looking at it and maybe getting it solved before you have to address things head on.”
Posing questions is also a good way to make sure that you’re not missing problems that may be festering in your company without your knowledge. Instead of asking these questions to people who are bringing you a complaint, sit down with someone who you trust to give you good feedback and honest answers.
“Particularly your most trusted employees that you don’t have performance issues with at all,” DeWitt says. “Getting advice from those employees about how you could communicate better or get better feedback from others, that’s an important thing to do. Sometimes you need to put your ego aside in that instance. If you’re the president of the club, people aren’t just going to serve up advice. But if you’re open to pulling it out of people a bit, you can learn a lot about how effective you’re being.”
How to reach: St. Louis Cardinals LLC, (314) 345-9600 or stlouis.cardinals.mlb.com
The DeWitt File
Education: History of art, Yale University; Harvard Business School
Talk about the connection between your family, baseball and the cities of St. Louis and Cincinnati: My grandfather was in baseball here in St. Louis his whole life. He grew up as a treasurer for the Cardinals and worked for the Browns and moved on to a bunch of different things in baseball. One of which was he got involved with the Reds as a general manager and owner in the early 1960s. So my family moved to Cincinnati from St. Louis. Then when my father got involved as chairman and led the ownership group in 1996 in St. Louis — it was sort of a homecoming.
What is your best memory with the Cardinals?
It would have to be the World Series victory in 2006. That was just a great moment for us.
Who has been the most influential person in your life?
I would say definitely my father in terms of that direct relationship and the fact that he has a certain personality and style that I’ve emulated to some extent. He’s very much a leader by example, sort of quiet, but prepared and very passionate. Those are the qualities I try to emulate with a slightly different style.
Whom would you like to meet?
It would probably be Branch Rickey, who gave my grandfather his first job. He was a legendary figure in the Cardinals organization and the times were so different back then in terms of what baseball was all about. And yet he was trying to win the same game. To compare and contrast what we deal with versus what he was dealing with that many years ago would have been a neat thing to probe.
Michael Fischer wasn’t expecting utopia when he took the helm at Swan Corp.
“Companies rarely bring in a new leader because everything is going perfectly,” says Fischer, president and CEO at the kitchen and bath product manufacturer. “So you normally are thrust into an environment where you can see right away more opportunities than you have the time or resources to tackle.”
Fischer took over the 300-employee company in April. At least in the early days, he resisted the urge to make immediate changes.
“You get tempted to go to your playbook and execute against things you’ve done,” Fischer says. “But unless you really understand what the needs are of the business, that may not be the right solution.”
Smart Business spoke to Fischer about establishing the right tone to lead effectively.
Get familiar. For me, the first 90 days is getting to know the organization inside and out. I normally start outside and work my way back in, which involves meeting with customers and listening to what they think of the company and where they think the opportunities are. As you make enough of those rounds internally and externally, the pieces start to come together. Usually for me, it’s at about the 90-day point.
You may not figure out right away what the biggest levers are to move the business. But the first week I was here, we started meeting as a team across all functions. To me, it’s all about teamwork and breaking down the functional silos. I wanted to send that message from the first day I was here that that was the way I wanted to run the business. Whether we solve anything or not, you can send those kinds of messages.
Ask questions. I met with everybody in the organization in the first two weeks. By the time you get to the 30th or 40th person, you start to see trends or some things that keep popping up. So I try to direct questions. ‘If you were the CEO for a day, what would be the one thing you would do to improve the company? If you could change one thing in your job, what would it be? If a customer could change one thing about our company, what would it be?’ Try to direct the conversation a little bit to idea generation and not, ‘I don’t like the lunch in the lunchroom.’
Back up your words. You have to remember that you’re the CEO or president and people are observing everything you do to see if you really are walking the talk, even more so when you’re new. If you say, “I’m going to run this as a team, and it’s all about teamwork and accountability and being customer-focused,” you have to try to find opportunities very quickly to exhibit that behavior. People tend to play chameleon in a new situation watching the CEO. What does the CEO value? What does it take to be successful in the organization? I’ve tried to communicate that.
Don’t be afraid to change things. The one thing that will get me upset or agitated is somebody saying, ‘We’ve always done it that way.’ I read one time those are the last words of a dying company. Even if you’re doing something well and it’s working today, it doesn’t mean you can’t keep challenging it and keep trying to get better each and every day. That goes with the attitude that if you’re not trying to challenge the status quo, you’re not trying to get better. You can learn from the past, but let’s not dwell on it. What are we going to do positively going forward?
City: St. Louis
Size: About 300 employees. Swan Corp.’s products are available through about 8,000 wholesale and retail outlets nationwide, as well as in the United Kingdom and Europe.
How to reach: Swan Corp., (800) 325-7008 or www.theswancorp.com
Jim McCarthy was frustrated. He worked hard to hide the fact that his employees at Goldstar Events Inc. were one of the biggest reasons for his frustration. They just didn’t get it.
They were worried that a sudden surge in the number of competitors offering half-price tickets to live events was going to be too much for Goldstar to handle.
“Our employees and other people started thinking, ‘Are we going to be overwhelmed? Are we going to be ignored because of this massive wave of discounting everywhere?’” says McCarthy, co-founder and CEO at the 50-employee company. “I’ll confess it was mildly annoying to me that my employees just didn’t get it.”
What they didn’t seem to understand is that Goldstar had gotten pretty good at what it did and was well-positioned to deal with some competition.
“I realized I wasn’t doing enough to help them understand the picture,” McCarthy says. “My approach to that and the approach of our management team as a whole was to really center people back on a couple of things.”
McCarthy reminded his employees of the attributes that made Goldstar great and encouraged them to quit worrying about what other companies were doing.
“What I made very clear to people is, ‘Don’t be focused on the success or failure of other companies,’” McCarthy says. “It doesn’t help us for other companies to fail and it doesn’t hurt us if they succeed, unless we don’t do a good job. … You hear about the seven deadly sins. When you see a company growing like crazy and getting popular overnight and that kind of thing, one tends to be a little envious of that. But there is a reason why envy is one of the seven deadly sins. It’s not good, and it’s not helpful.”
McCarthy decided he needed to step up his game and unleash a barrage of communication through multiple mediums to convince his employees that as long as they continued to work hard, there was no reason to fear the competition.
“If you feel your communication is adequate or sufficient, you’re almost certainly undercommunicating,” McCarthy says. “I felt like if I was being a nuisance, it was probably just enough. Here’s what we represent, here’s why it’s good, here’s why it’s unique in the marketplace, and here’s why the success of others doesn’t necessarily make a difference to us one way or the other.”
Overcommunicating doesn’t just mean repeating the same message over and over again. Then you’re a nuisance that serves no purpose but to annoy your people.
“You have to show, not tell,” McCarthy says. “Don’t tell me we need to be distinct and stand on our own values. Show me an example of something we do that nobody else does. Show me that the feedback system we have on our events is unique. Show me that nobody has the ability to get as many venues on one site. If your strategy is coherent, you should be able to tie it all back to the same core ideas.”
Alignment is critical to getting employees to buy in to your message.
“If we’re saying our venue relationships are a critical part of our strategic success, but the group is understaffed and undertrained, the message is really hollow,” McCarthy says. “The objectives of the organization and the work that people are doing on a daily basis, it has to line up with what you’re telling them is important. If the things they’re being asked to do in their work don’t match up with it, it doesn’t work.”
Two years later, McCarthy’s strategic overcommunication onslaught has paid off and helped employees get their mojo back.
“Our growth has sped up and the organization is stronger than it’s ever been,” McCarthy says. “Now they get it.”
How to reach: Goldstar Events Inc., www.goldstar.com
Find your greatness
When an employee brings you a genuine concern, you need to resist the urge to blame that person or anyone else for the problem. It’s a lesson Jim McCarthy learned as he fielded employee worries about how competition might hurt business at Goldstar Events Inc.
“It didn’t take me long to realize that it was a me problem and not a them problem,” says McCarthy, the 50-employee company’s co-founder and CEO.
“It’s like when you take your kid to the ice cream place and they sing ‘Happy Birthday.’ The employees have probably sung ‘Happy Birthday’ 50 times that day. But to your kid, it’s the one and only time. It’s very important if you’re in the ‘Happy Birthday’ chorus, that you sing it like it’s the first time. I try very hard that if someone asks me a question, I’m giving the information as though it were the first time I’m delivering it with that kind of thoroughness.”
As much as you may embrace the glory when you make a wise decision, you also need to embrace and respond to your own imperfections when you make a mistake.
“I wasn’t frustrated from the sense that I was annoyed that they were asking questions,” McCarthy says. “It just took me a little while to recognize that what I had was a management problem of my own.”
James Young identified a company that was successful but tired when he arrived as president at Spring-Green Lawn Care Corp. more than seven years ago.
“The business was actually very successful and profitable,” Young says of the family-owned tree and lawn care company. “But the first-generation energy and appetite had brought it to a point where they had achieved their success and ultimately had exhausted themselves to get the business there.”
Young needed to find a way to re-energize the business, which has 75 independent franchise owners and does business in 27 states. His goal was to do it without destroying the cultural foundation that had been nurtured so meticulously by the founding family over the years.
At the same time, these changes would need to be purposeful and bring real value to the business.
“If it’s not going to move the corporation forward, why are we doing it?” Young says. “Because it’s a better way to do it? Well, that’s probably going to be met with the most resistance.”
When considering change, you need to identify areas where that change will make a visible and positive difference in the organization. You then need to illustrate those differences and demonstrate why they are good for both the business and the employees themselves.
“It’s easy for the new guy to say, ‘We can be a $100 million organization, and we can do it in the next 10 years,’” Young says. “I have to figure out how to grow their business and put money in their pocket and any change I want is going to occur much easier.”
Young quickly identified consumer marketing as the area of greatest need. Spring-Green was still doing most of its marketing by telephone and Young decided it was time to incorporate some new technology into the mix.
“What I saw was a very dismal future for growing our organization with the current marketing methods,” Young says. “We had to really change our thinking in how we were going to acquire customers and we needed to not skip a beat. We needed to become great right out of the gate.”
Young wanted to use technology to stay in touch with consumers and more quickly advise them of new products and services to drive both satisfaction and revenue for Spring-Green.
“The difficulty in any business is staying in tune with all these up-and-coming changes and trying to be receptive to them,” Young says. “We wanted to have an integrated approach to become more effective and efficient with what we did.”
One of the keys to making sweeping changes is the inclusion of your people who are out in the field interacting with your customers. Don’t let them feel as though they aren’t vital to the success of your plan.
“Everybody needs to be included,” Young says. “You need to find relevancy and meaning for all your people, regardless of the company’s changes. You can go out and champion it, but it needs to be echoed through all the channels.”
Keep those channels open so that your people feel part of the change but also comfortable offering their input about what’s happening with the business. When you’re taking over a business that has a great deal of history and still has involvement from the founders, you need to keep them apprised of what you’re doing too.
“Make sure your core values align,” Young says. “I was fortunate to come in and say, ‘You’ve got this great core structure, but what it needs is some new energy and an updated vision of where it can go and maybe some updated thinking when it comes to marketing and technology.’”
Of course, success is ultimately the best way to earn support, whether it’s a founder you work for, your board or one of your franchisees. Spring-Green’s revenue grew from $32 million in 2009 to $34.2 million in 2010 and a projected $36.5 million in 2011.
“The statement I’ve made publicly is lead a franchise owner to profitability and their trust will follow,” Young says.
How to reach: Spring-Green Lawn Care Corp., (800) 777-8608 or www.spring-green.com
Set the ground rules
When James Young arrived as president of Spring-Green Lawn Care Corp., he wanted to know the ground rules for what he could and couldn’t do in leading the business. He didn’t have a board to report to, but he did need to work with the family that had launched the business back in 1977 and built it into a success.
“Define your authority,” Young says, identifying the first key to success in this situation. “Is there anything you don’t have authority to do? That’s pretty much for any executive leader. Is there anything I don’t have the authority to do? What are the things the founder or ownership would like to have influence on?
“What are the areas of the business they want to have some influence on? If you have that, you can develop a communication style and a working relationship under that context. Without that, it’s hit and miss and you’re learning as you go.”
Young was able to build a positive working relationship with the company founders, and it has resulted in success for the business. Revenue is up more than 70 percent since 2004.
“It took us several meetings to establish what those boundaries were going to be,” Young says. “Looking back now seven years ago, it was probably some of the best conversations we ever had.”
John G. Peluso doesn’t mind telling people what to do. It comes with the territory as president and senior managing director at Wells Fargo Advisors Financial Network LLC. But at least once a month, he turns the tables. Peluso gives each person on his management team a chance to sit down and tell him what’s on their mind in a one-on-one conversation with the boss.
“I have no agenda,” Peluso says. “It is my direct reports’ responsibility to bring an agenda to that meeting or to talk about whatever they want to talk about. So much of the dialogue is the leader explaining why we need to do something. It tends to be largely one-way communication. I try to avoid that. Whether it’s through the staff meeting or through these one-on-ones, I want open exchange. I want people to feel they have an opportunity to talk to me about whatever is on their mind, whether it’s business or something else.”
Each of these monthly conversations is different as each person approaches the meeting with a different style.
“It’s not uniform,” Peluso says. “Some are really into the coaching aspect of it and are always trying to get better. Others throughout the month will have a legal pad and they’ll write down issues they want to talk to me about. Some come with a written agenda and some just come prepared to ask questions. I’m very fluid and I’ll let each member decide how they want to run each meeting. It varies with each person, but that’s the idea. It’s their meeting, not my meeting.”
It’s that approach of being a coach as much as a leader and working with his team to develop and implement a solid game plan that has helped Peluso lead the independent financial advisory channel of the $85.2 billion Wells Fargo & Co. He is responsible for guiding the strategy for 900 financial advisers and 476 practices across the United States.
In 2010, the practice grew 15 percent and the number of advisers grew 14 percent.
Peluso gives much of the credit for this growth to the steady flow of communication back and forth with his people.
“At the end of the day, no one can read anybody’s mind,” Peluso says. “In the absence of open, honest and frequent communication and building trust through transparency and accountability, you’re not going to know what that other person is thinking. That will destroy a relationship.”
Here’s a look at how Peluso keeps driving growth by keeping his employees informed of every step the organization takes.
Your business first needs a foundation upon which everything that you and your employees do is built upon. Your employees need to understand what this foundation is composed of and why it is so critical to your success.
“In our industry, being that we’re so highly regulated, supervision and compliance becomes an integral part of that strong foundation,” Peluso says.
Whether your foundation is innovation, execution, policy and procedure, profitability or even something else entirely, your people need to understand how important that one thing is to your business and how it touches everything else in the company.
“You need to really believe that that is the most important thing to your business,” Peluso says. “You need to have a lot of energy around it. You need to be willing to talk about it. You need to be able to articulate very clearly why that activity is in the best interest of your clients, why it’s in the best interest of your employees and why it’s in the best interest of your prospects, the people you’re trying to do business with. It needs to become a fabric of who you are.”
The trick is that unlike the foundation of a house, which barring something cataclysmic will do just fine holding everything up without attention for a long time, the foundation of your business requires almost constant monitoring and tweaking. You need to make sure that you have systems in place to assess how you’re doing in terms of living up to your foundational goals.
“You need to remain curious about it,” Peluso says. “You can’t think you solved it and it’s gone forever. Everything is always changing. You need to maintain this sense of curiosity.”
Talk to your clients and your customers and see how they feel about your performance.
“A lot of times, they’ll tell you things or you’ll be able to infer something from a comment that they make,” Peluso says. “If you’re a good listener and you’re listening to your clients, you’re able to take what you’re hearing from them. If you have this curiosity hat on all the time, you’re able to go back and question why you do things the way you do.”
If you feel like you don’t have time to monitor your foundation or if you believe it doesn’t require your constant attention, you could be in for a hard lesson.
“You better embrace change and be ready to evolve all the time,” Peluso says. “The people that aren’t curious, it’s because they aren’t impacted by change and there isn’t any industry that isn’t changing constantly.”
Peluso says there’s no such thing as maintaining the status quo in the business world.
“You have to be thinking, ‘How do I go up?” Peluso says. “How do I get better? Just by naturally thinking that way, it makes you curious. The opposite of that is you’re complacent. Complacency will just kill you.”
Take the time to think about your foundation and where it needs to be and how it affects your reputation and you’ll do your organization a lot of long-term good.
“Because we’ve built this company on such a strong foundation of risk management and have effective and meaningful controls in place, that has enhanced our reputation both internally and externally in the marketplace,” Peluso says. “That reputation is something we guard and care for regularly.”
When you’re at a place where you feel like everyone has a good grasp of what it is your business is supposed to stand for, you need to develop good lines of communication to make sure you’re living up to those standards.
This is where you’ll do yourself a lot of good by stepping off your CEO pedestal and letting your team members talk to you.
“It’s pretty straightforward,” Peluso says of these conversations. “Look, I want to meet with you on a regular basis once a month where I’m not driving the discussion. This is not about the firm’s initiatives or my objectives as a leader to drive the business forward. This is about your role and your responsibilities and you having an opportunity to talk to me. Not only about what’s going on with the ability for you to effectively execute your job and the challenges that you may or may not be facing in the organization but also to just talk to me about anything, whether it’s business or personal.”
Use this time to identify the issues that are on the minds of your direct reports, talk through those issues and develop solutions.
“They are bringing things to me and asking questions and all I’m doing is asking questions back and letting them self-discover,” Peluso says. “It really flips the traditional role of leader to report in that one-hour dedicated meeting. I don’t have the answers. I try to avoid pretending like I have the answers and I try to turn it back around and challenge them. So I end up asking a lot of questions.”
Peluso says the universal theme that seems to run through all his one-on-one discussions is pace.
“Most mistakes that leaders make have to do with pace,” Peluso says. “You’re either going too fast or you’re going too slow. One of the things these coaches meetings do is it allows me to see the pace that these leaders are operating at. Sometimes they are going too fast on an issue and they’re getting ready to jump off the tracks and other times they are probably going too slow.”
The meetings also present an opportunity to deal with mistakes. Your people need to have a forum where they can bring mistakes to your attention without fear of punishment.
Peluso says he approaches mistakes with the idea that the person who made it had the right intention in their action.
“Always assume positive intent,” Peluso says. “Never assume someone is trying to do something evil or that someone is trying to do something that would be contrary to a positive outcome for the business.”
And if you’re going to talk about someone’s mistakes, do it in person. Even if you’re not talking about a mistake, it’s best to avoid lengthy e-mail conversations, but this is especially true when a problem is the topic.
“It’s a lot easier face to face to say, ‘You know what, I think I was wrong. I think I’m going down the wrong path. Which way do you think I should go?’” Peluso says. “E-mail does not lend itself to that type of communication.”
There’s one more thing you can do that can help you build better bonds with your people: Smile.
“I have this one woman who as I walk in, she gets here early and she is always here,” Peluso says. “I call her my smile corner. When I walk in, she always looks up at me with the biggest smile and says, ‘Good morning, John.’ It’s always a great check for me to have that same smile on my face when I see my team members and my reports. It’s amazing what ease and comfort that puts people at when you just smile.”
Keep reaching higher
The final step in Peluso’s plan for building a successful organization is one that he will never actually achieve, but one he must keep reaching toward.
“As a leader, you should always be focused on what you’re doing well,” Peluso says. “If you’re keenly focused on what you do well, you’ll find different ways to do it. There will be new and better ways to do things. The way you would become complacent is to say, ‘We’re doing our best. The results are there, revenue is growing, our clients are happy. We’re doing our best.’ Shift that concept to, ‘Are we the best there is?’ What does it take to be the best there is versus we’re doing our best. That subtle shift in mindset is huge. To be the best there is, there is no end to that. You’re forever seeking that.”
Your people need to always know how well they are doing on the job and what they could be doing better. If they don’t know that, how can they ever get better?
“People need to know how the outcome of their work impacts the result of the business,” Peluso says. “It doesn’t matter how hard I work. Unless everyone who touches things around here every day, unless they understand the impact or the outcome of what they do every day and how it impacts our clients and how it impacts our business, it won’t work.
“They are highly engaged and understand the impact of their work. If that’s the case, they are serving our clients better and they are always looking for new and better ways to do things. Those naturally and organically propel the growth of the business.”
How to reach: Wells Fargo Financial Advisors Network LLC, (866) 485-5383 or www.wfafinet.com
The Peluso File
Born: Richmond, Va.
Education: Bachelor of science degree in economics, College of William & Mary, Williamsburg, Va.; MBA, Virginia Commonwealth University
What was your very first job?
I was a newspaper boy for the Richmond Times Dispatch, in Richmond Va., delivering papers to an apartment complex.
Who has been the most influential person in helping to make you the person and leader you are today?
My older brother, Louis Peluso, who is a VP for PNC Bank in Dayton, Ohio. When I entered the corporate world in 1988, he told me to ‘Show up early, work hard, and go home late. If you do that, you’ll be better than 90 percent of the other people you work with.’
What is the best advice anyone ever gave you?
My mother, LeReve Mallory Peluso — a registered nurse for over 40 years, until she died in 2005. She taught me the value and importance of the Golden Rule. Both professionally and with my family, I believe in being fair, honest, considerate, accountable for my actions and to communicate clearly with all of those who surround me. That’s just how I want others to treat me.
If there was one person, past or present, in the whole world that you could sit down and have a conversation with, who would it be and why that person?
I have been an avid Green Bay Packers fan since I was a little boy. I would want to talk to former Packers quarterback Brett Favre. I would like to understand his perspective on leadership and perseverance that it took to bring such a proud franchise back to the top in 1997 to win the Super Bowl.
Mel Elias was losing customers at The Coffee Bean & Tea Leaf. It wasn’t happening quickly enough to be obvious to the customers who still flocked to his stores for a cup of coffee, an Espresso Macchiato or a tea latte over ice.
But the drain, or perhaps “drip” is a better word in this case, was real.
“Disposable incomes were down, gas prices were up, and we were coming out of the recession, and we noticed we were losing morning business,” says Elias, president and CEO at the $400 million chain of coffee sellers that is officially known as International Coffee & Tea LLC.
It wasn’t that people were turning away from coffee. But in a growing number of homes, they weren’t leaving their kitchens to get it. Figures released by the National Coffee Association backed up this trend. They showed that in just a couple years, the average number of Americans out of 10 who were drinking coffee from home had risen from 7.6 to 8.6.
“It turns out that out of 140 [billion] or 150 billion cups of coffee consumed in America, more than 115 billion cups of coffee a year are consumed at home,” Elias says. “So the lion’s share of coffee consumption takes place at home.”
Elias believed the remedy to the problem at his 2,900-employee company was obvious: He needed to find a way to bring his decadent drinks directly into the kitchens of all these thirsty consumers.
“All the forces of the universe are pointing toward The Coffee Bean & Tea Leaf entering into a brand extension, which provides single-serve coffee predominantly for the home consumption market,” Elias says.
But he wanted to do more than just bring them the grounds to use in their home coffee makers. He wanted to develop a patented machine that would be specifically designed to use Coffee Bean & Tea Leaf coffee capsules. Consumers could pick them up in the company’s 785 stores located in 20 countries around the world.
And he wanted this whole new segment to be up, running and ready to go for the 2010 Christmas shopping rush.
“How do I get a perfectly executed single-serve program to market in about nine months, which competes with people who have been in this business for 15 years?” Elias says. “That was my challenge.”
Sell your plan
As January 2010 dawned, Elias had received approval from his board to pursue the development of a single-serve coffee system for home consumers. He had done the research and felt that there was an opportunity in the market that Coffee Bean & Tea Leaf could exploit.
“There were competitors out there that made brewed coffee and espresso, but no one developed a machine that did brew, espresso, tea and powdered beverages,” Elias says. “I looked at the opportunity here and said, ‘You know what? We really have a shot at being at least the No. 2 single-serve platform in the United States.’”
Now Elias had to sell the idea to his people and get them as excited about delivering this single-serve coffee system to the consumer market as he was.
“In anything a leader does, one has to have a clear vision and strategy for the brand and the ability to articulate and communicate it to the rest of the organization,” Elias says. “It starts with being very clear with what it is you want and how you want to get there.
“I had a very clear vision of what I wanted to achieve, what our platform would look like, what our market share would be and what our business plan was. It was clear in my mind. I saw it, planned it and I understood what needed to happen. Because I had that clarity of vision and clarity of understanding, I was able to articulate that to the rest of the organization.”
When you’re bringing your people in on an important project that is going to require a major commitment of time and effort, you need to show them that this isn’t some wild scheme that just popped into your head on your way into work. Show them that you’ve done your homework.
“You have to be the most optimistic, the most confident and the most prepared person in the room,” Elias says. “You have to know your facts. You have to keep it simple. The message has to be very simple. ‘This is what we’re doing. This is why we’re doing it and this is how we’re going to do it. This is why I believe we’re going to be successful and this is how we are different from the rest.’ It’s very simple. Everyone can follow that.”
As you speak, keep in mind that people aren’t just listening to what you say. They’re also watching your body language. Make an effort to sell your plan and get them as excited about it as you are.
“They watch how you act,” Elias says. “I was generally excited. It starts with you with your energy, your excitement and your optimism.”
It’s the combination of passion and confidence that helps you make a connection and gets people thinking about how they can contribute to making your plan happen. You need both of these qualities to really make it work.
“You build a certain amount of trust within your work force,” Elias says. “February and March was the time I had to stand in front of the company and say, ‘I need to leverage some of this trust. I need you guys to trust me. We have something here, and I need your help and your support and your belief.’
“You win the hearts and minds of the people. Not because of charisma or because of empty rhetoric. But because you have a substantive idea that makes sense and they see your optimism and they see your excitement. You create a sense of creative excitement for everyone.”
When you do that and you show people that you really believe in an idea and are willing to put in the effort to make it happen, that’s when you earn the real support that you need.
“You get all the pushback,” Elias says. “But because you have trust and you have clarity of vision and you have creative excitement and because they could see this was something I was personally driving, I felt the organization say, ‘You know what? Let’s do this.’”
Build the momentum
Elias needed to capitalize on the excitement that had been created by his initial push. He couldn’t take a chance on letting the single-serve coffee system idea fade into the background.
“This was about developing the project,” Elias says. “I knew I needed representation from product development. I knew I needed a project manager to keep all the pieces together. I knew I needed my supply chain people involved. I kind of knew who I needed. Then it was a question of making sure than when and if they joined it, they were ready for what was to come.”
You can start by simply looking for people who seem excited by what you’re talking about.
“Look for people who have enthusiasm,” Elias says. “Go to people who are passionate and engaged and who believe in the idea. You can tell when somebody is enthusiastic about it.”
Get those people in your office and see how deep their passion runs.
“I have real conversations with them,” Elias says. “I’ll sit down with an individual and I’ll say, ‘This is what I’m thinking of giving to you. This is what is going to be required of you. How do you feel about that? Are you ready for it? It’s a great challenge and a great opportunity and these are the things that you’ll learn. This is how you’ll feel if we’re successful. Can I count on you?’
“You’ve got to connect with your people. You have to think about what’s in it for them and explain that. Keep it simple and real.”
If you’re having a tough time finding people who seem excited about your idea, you may not be conveying a sense of empowerment.
“Have you really given them true ownership and empowerment?” Elias says. “Or are you sitting there micromanaging everything and second-guessing everything they do? Are you yourself extremely clear about the vision and the goal? Do you have the ability to articulate it simply?”
All of these things contribute to the big question that you really need to ask yourself if you sense that people aren’t buying in to your idea.
“Does the organization trust you?” Elias says. “These are the kinds of conversations you have when people are finding it difficult to get into the belief frame of mind. You can’t implement an impossible task using the same set of rules. You have to change the structure.”
It seemed like there were a million things that needed to be done in order to get this single-serve coffee system to market by Christmas 2010.
“There were so many minor obstacles on a daily basis, which at the time seemed unsurpassable,” Elias says. “Were we going to be ready for our online platform because the development time was pushing over? Were the subcontractors going to be ready with all the merchandise units? There were so many everyday issues that each person had to solve. But it wasn’t me solving these issues. It was my team who was responsible for their different divisions dealing with this because they had true empowerment and ownership.”
As the deadline was drawing near, Elias and his team realized there was a problem with the instruction manuals.
“We didn’t have time to do a Spanish translation on the instruction manual,” Elias says. “When we sit down collectively, it wasn’t even my decision. It was the person who had ownership. She made the decision that time to market is more important. We don’t want to risk being delayed on our machines.”
When you’ve been clear about your vision for your product and shared that information with your people, you don’t run into as many problems that require you to step in.
“They understood our goal,” Elias says of his leadership team. “They understood the task at hand. They were given real empowerment and real ownership and they made these decisions. There was no time for everything to come back up to a central decision-making authority.”
Elias spent much of his time offering encouragement to his people as they worked hard to complete the project on time.
“They are involved with the day to day, and they are dealing with the tactical issues,” Elias says. “They are dealing with the daily issues and I’m encouraging them. From my perspective, the helicopter perspective, they are moving so fast and so well. I’m trying to make sure they are not discouraged every time they have a setback. I’m reminding them of how the setback they overcame two weeks ago, how they overcame that brilliantly and then I’m challenging them to do it again for this one.”
That encouragement was a big factor in a successful launch of the CBTL line of single-serve coffee capsules and coffee makers for the Christmas season.
“There was no investment capital required, because we had sold so well in our December months and we sold to our franchise community that we actually didn’t even lose money on developing a new business,” Elias says.
He heard concerns that giving customers an option to make coffee at home would just drive store sales even lower. But just the opposite has proven to be true.
“The same customer still comes back, but now they leave with two boxes of capsules in a week, in addition to getting their Chai Tea Latte at 10 o’clock in the morning,” Elias says. “So we’ve just increased our same-store sales in our store and we’ve given our customers the Coffee Bean experience in their home.”
Elias made sure to thank his people for their huge part in achieving the big goal he had put in front of them.
“You can’t allow a top performer who has performed at the top of their game go unrewarded,” Elias says. “Top performers are also incentivized when they see people who don’t perform be held accountable. You must make sure that’s the case.”
Fortunately for Elias, he had more people to thank.
“It’s not always money that drives people,” Elias says. “It’s reward, recognition and acknowledgement. It’s the satisfaction of being given ownership of a project and knowing that they were responsible for what is sitting on the shelf.”
The Elias File
Born: Kuala Lumpur, Malaysia
Education: Law degree, London School of Economics and Political Science
What was your very first job?
I worked as a cashier and a server in a restaurant. I went into The Singapore Army for about 2.5 years. When I was 27, my first out of law job was I ran a record store. It was my first experience with real business.
When did you come to the United States?
About 11 years ago. It was an opportunity to work for The Coffee Bean & Tea Leaf in midmanagement. I’ve done practically every job there is to do at this company over the last 12 years, and about three years ago, I became CEO.
Who has had the biggest influence on you?
It would probably be my family. I grew up in a household where my grandfather was an entrepreneur. My grandmother was an entrepreneur. Both my parents worked in business. So in our conversations, everything was about business. It’s just in your DNA when that happens.
Did you want to be an entrepreneur?
No, I didn’t. I wanted to be a soccer player and a physician and then a lawyer. I realized that the law wasn’t for me because I wanted to be part of creating something. That’s when it became very easy to fall into business.
Whom would you have liked to have met from history and why?
Leonardo da Vinci. He was an engineer, a painter, a renaissance man. I would love to have a conversation with him to figure out how he functioned, what he was thinking about and how he was so visionary.