Michael Glimcher had a lot to worry about in March 2009. The stock price for shares in Glimcher Realty Trust (NYSE: GRT) was hovering right around $1. The company had a massive pile of debt, and confidence in the real estate industry was slipping with every new foreclosure.
“We’re a capital-intensive business,” says Glimcher, the 552-employee company’s chairman and CEO. “When the banks were shut down and they didn’t want to lend money out and they just wanted to be paid back, it put us in the most precarious position that we’ve ever been in as a company in our 50-year history.”
Glimcher really needed to raise some cash and get rid of this debt that was strangling his business. But where was he going to find the money to get it done?
“How are you going to come up with $200 million?” Glimcher says.
This money wasn’t going to come from patrons at the malls and shopping centers that Glimcher managed. The economy had hit them hard, too. So he told his people not to spend time worrying about things over which they had no control.
“I basically told everyone here at the company, ‘If you want to pontificate about what’s going to happen to the overall economy and what’s going on in the outside world, you can do that all you want when you’re at home,’” Glimcher says. “But during the workday, if we can’t affect it, we’re not talking about it. It’s not an option.’
“We can control what our operating expenses are. We can control the morale within our organization. We can control how safe and clean our malls are and make sure they are great environments that people want to shop in. So there are a lot of things we can control.”
Glimcher felt that setting aside these uncontrollable factors would allow his team to get laser-focused on what could be done to get the $308 million company turned around.
Get people engaged
Glimcher needed $200 million. So the first thing he did was go to his people. He wasn’t looking for handouts to pay down the debt. Rather, Glimcher sought to assure employees that he was going to find a way to raise the money and pay off the massive debt.
“I made it real clear to everyone, ‘We’re going to win here,” Glimcher says. “‘We’re going to get through the issues we have to get through. Everyone who believes that we can get through it should be here. If there’s anyone who doesn’t believe we can get through these issues, you shouldn’t be here.’”
Glimcher wanted to express both confidence and resolve in his ability to turn the company around. But he was blunt about the steps it might take to accomplish this feat.
“Rather than giving people part of the story or half the story, we said, ‘Here’s exactly what’s going on,” Glimcher says. “‘We might be selling your mall.’ Frankly, we needed the help of the team to market the asset so we could get people excited about it. We had different potential investors coming through.”
So how do you get employees engaged in a battle to save a business when they may not even be part of that business when all the dust settles?
You get them doing whatever they can to make that move of last resort unnecessary. You get them focusing on the things in their world that they can control.
“The message is, if you do your job and if you do what you’re responsible for and you do it really well, it’s going to be a lot easier for us,” Glimcher says. “You need to instill confidence in the team.”
That begins with getting out of your office and becoming more visible with your employees. The more you hide, the more you raise suspicions.
“People are uncomfortable and nervous,” Glimcher says. “People want to be assured of what’s going on. I’d tell our company officers, ‘Get out of your office. Walk around. Meet with your department. Sit down and have a cup of coffee. Tell people what’s going on.’”
As you encourage your leaders to be more visible and more available, you should be working on getting the message out about the big picture.
“We called a state-of-the-company meeting and I outlined every issue we were dealing with and what we had to do to be a healthier company,” Glimcher says. “‘Here are the three or four most critical issues we have to correct. Here are the things we absolutely have to do, and when we do X, Y and Z, we’ll be in a much better place.’”
You’re not making promises that anyone’s job is untouchable. But you are engaging your employees in the effort to get things fixed and you’re showing them that you and your team is working right along side them in order to make things right.
“If you treat people nicely and you genuinely care about them and you’re incredibly honest with them about what’s going on, I think people really appreciate that,” Glimcher says.
Keep an open mind
If you’re truly seeking feedback from your employees that can help you work through a difficult time, you need to show them that their opinion has influence. So when someone brings Glimcher an idea, he tosses it right back in their lap.
“I try to never guide the decisions,” Glimcher says. “If someone presents something to me and they ask me, ‘Do you want to do A, B or C?’ I don’t answer them. I ask them, ‘What would you do? Why would you do it? Why would you recommend doing that?’ It’s empowering them to make the decision and make the recommendation. Guess what? I don’t always agree with it. But I want to know what someone thinks we should do.”
Glimcher recalls an asset financing deal where he did not see things the same way as his chief financial officer and his chief investment officer.
“I had made up my mind of what I wanted to do,” Glimcher says. “Our CFO and chief investment officer, they had a very different idea. And they were right and I deferred to them. I didn’t go in there and tell them, ‘Here is what we’re going to do.’ I actually went around the table and I got everyone else’s input and then I told them, ‘That’s not what I was planning on doing, but I think what you’re recommending makes sense and I think the reasons you’ve given me make sense, so I’m going to support it.’”
Glimcher had an opinion about how to pay down his company’s debt. But he respected the expertise of his leadership team to help him reach the best decisions to accomplish that goal.
“You have to rely on your people to play their position well,” Glimcher says. “Ultimately, I’m going to set the game plan, but I’m also going to set it with a lot of people’s input. There are some times where we come down to decision making and I feel very strongly. I believe this the right thing for the company and going in a different direction would be detrimental. I’ll override whoever I have to override.
“That’s how it goes. In the example I cited, I thought we would have been better off, but we’re not going to be hurt in any way by going in that direction. I’m not going to hurt the company just to make somebody happy. If everybody has input and we make a good quality decision, even if it’s not my decision, I’ll support it.”
One of the ways to help you judge if your people are making a smart decision, aside from gathering more feedback, is to make sure you know their history.
“Is this an area where they are really strong?” Glimcher says. “Is this an area where they are OK? Or is there an area where they are weak? If someone is passionate about something and you’ve seen through experience that that area is a weakness for them, you probably don’t listen to them as much. If it’s a strong area for them and they’re passionate about it, you probably better listen a little bit better.”
Glimcher knew it was going to take more than a good attitude and some elbow grease to erase his company’s debt. But as he pondered the big decisions that would have the most impact, he still wanted to show employees that their effort mattered.
So he began looking at the incentive program that was in place to help properties keep their tenants.
“We had an incentive program in place where if you renewed someone, say The Gap was in your mall and you got them to stay, you got a one-time commission,” Glimcher says. “If they were already there, the idea was it’s not that hard to renew someone. If no one was there and you got a new store to go in there, you got two times that amount of money. We put a higher value on new production versus keeping what we had. It was perceived to be a lot easier to keep what you had.”
But in the midst of a challenging economy that played a large role in the company’s debt predicament, Glimcher decided it was time to tweak this incentive program.
“In an environment where things were really tough, just keeping what you had was a big deal,” Glimcher says. “So we actually went in and we altered our compensation method. We said, you know what, renewing a deal is as valuable as getting a new deal. We’re going to pay the same amount for both. We knew No. 1, we wanted to keep the good salespeople working here. And No. 2, keeping the revenue we had was every bit as valuable. And frankly, that was what could be done in the environment.”
You need to take every opportunity in a stressful situation to show your people that you’re all marching toward the same goal. In your case, you need to show people that you are aware of any unique challenges they might be facing as they try to do their jobs.
“Do the goals of your incentive program match the goals of the organization?” Glimcher says. “If they do, it will probably work for you. If they are incongruent, they probably won’t work for you. We woke up one day and said, ‘You know what, the goals we set were fine for before. But they’re not fine for right now.’ As things get back to normal, it will probably go back. I think everybody respects that.”
The good news at Glimcher Realty Trust is that no mall properties had to be sold to erase the big debt. Revenue dropped to $275 million in 2010, but joint venture partnerships were arranged and a total of $300 million of equity was raised.
One of the biggest deals involved a joint venture purchase of Pearlridge Center in Hawaii.
“We’re going to be an 80/20 partner,” Glimcher says. “They’ll own 80 percent of it. We’ll own 20 percent, and we’ll operate the asset. Good things can come out of tough times. Now we’re growing with a partner when really we were contracting by bringing them into an asset. That worked out really nicely.”
Glimcher says the key in any tough situation is to keep your cool.
“When you’ve panicked in the past, has that been an effective mechanism for you?” Glimcher says. “If you yell at someone, are they going to feel good and want to do something for you? Ore are they going to feel kind of down and think you’re a jerk? People who are treated nicely usually wind up doing better things. If I thought people were going to be a lot happier and we were going to make a lot more money because I could go around yelling at everybody, maybe I’d start doing that. I don’t believe that’s true.”
How to reach: Glimcher Realty Trust, (614) 621-9000 or www.glimcher.com
The Glimcher File
Chairman and CEO
Glimcher Realty Trust
Born: Columbus, Ohio
Education: Bachelor of science in political science, Arizona State University
What was your very first job?
I did work at Youthland, which was a children’s clothing store. I worked there for a couple summers and part time over Christmas break. It was me and five women. I changed the light bulbs and I’d sit in the back room with the steamer and steam all these little miniature clothes. Anything that involved getting on a ladder and moving things around was my responsibility. I can still wrap a gift really nicely.
Who has had the biggest influence on you?
It’s probably a compilation of people. Obviously, I’ve spent a lot of time with and worked a lot with my dad, so he’s obviously had a huge amount of influence on me. You learn different things from different people’s management style. I’ve been fortunate to be exposed to a lot of pretty interesting people over the years.
What’s the best advice anyone has ever given you?
A great piece of advice I got was, ‘Put everyone else before yourself.’
If you could sit down with anyone, past or present, who would it be and why?
President Ronald Reagan. When you think about my style of relying on great people, delivering the right message, being positive and trying to inspire people, he certainly inspired me.
Clinton Coleman was given a mission when he was named interim CEO at Bell Industries Inc. back in 2007. Bell Techlogix, a business segment of Bell that provides IT managed services was missing out on a chance to cash in on the growing demand for its offerings. It was Coleman’s job to find a way to capture that market.
Segment sales had dropped from $90.3 million in 2004 to $75.6 million in 2006, causing leadership at Bell Techlogix to lose confidence in its core business and begin searching for other ways to make money.
“That usually is a recipe for not very good results if a management team is focusing on things that don’t build upon what you already do well,” Coleman says. “A lot of that had to do with some of the previous managers’ own personal interests rather than what really made sense for the company to be focusing on.”
Bell Industries was taking a hit, too, dropping from $136.2 million in 2004 revenue to $120.3 million in 2006.
Coleman knew there was demand for what Bell Techlogix did. He knew companies were looking for a better way to manage their IT services. The effort just wasn’t being made to capitalize on this opportunity.
The board of directors at Bell Industries agreed with Coleman and installed him as the man to make it happen at Bell Techlogix, which has 608 of the company’s 714 total employees.
“Bell Techlogix really needed to reinvigorate its strategy for growing IT managed services,” says Coleman, who is also CEO at Bell Industries. “It was something that Bell did well, and they had the core competencies to do it. But over time, they really lost their way with respect to sales and marketing execution. They had lost their sales-driven focus. We needed to reinvigorate that growth where there were some good opportunities.”
It wasn’t going to be easy as Coleman had to energize his team in the midst of a tumbling economy.
“But it was what it was and you can’t really change any of that,” Coleman says. “So we just had to deal with those issues.”
See who is with you
As the new guy in charge, Coleman had a captive audience. But if he didn’t move swiftly to give them something useful to latch onto, his audience would start to lose interest and fall back into their old routines.
“I really challenged the team to realize that we can be successful doing this,” Coleman says. “We needed to do things differently and we needed to make some changes. But it was always about building around those core capabilities that Bell Techlogix has and realizing that those can be successful.”
Coleman expressed confidence that the tough economy was only going to increase the demand for the company’s services.
“We were able to identify how our strategy of growing the company in some ways very much fit with the challenges our customers were having,” Coleman says. “We help companies reduce their IT support costs while also improving their service levels. That created some opportunity for us. They were facing challenges that required them to re-evaluate the long-held beliefs that they had about IT support.”
Coleman needed his team to pick up the pace and put in the work if he was going to take advantage of this great opportunity that was out there. He began by reaching out to the managers at Bell Techlogix.
“Getting the attitude right among the managers is absolutely the first thing you need to do,” Coleman says. “If you don’t have the right attitude amongst the managers while you’re trying to refocus a company’s strategic direction for growth, while also at the same time handling an economic downturn, it’s very easy for people to be pessimistic.”
It really comes down to showing your passion and commitment and finding out who is willing to stand up and follow you.
“Who is up to the challenge?” Coleman says. “Who do you want to be working through this with for the next year?”
To begin answering those questions, he moved the company’s monthly leadership meetings away from a monotonous rundown of the financial spreadsheet.
“That was a new experience for a lot of managers making our monthly business reviews into real business discussions,” Coleman says. “Not just running through the numbers, but real discussions about what we learned this month. … You allow the senior management team to all be hearing the same thing and be participating in the same discussion. Through that process, you realize that some people are more up for the task than others as far as how they respond to that discussion.”
There was a key question Coleman needed to answer before he could move forward: Did his team understand the difference between a goal and a strategy?
“We’re supposed to grow our sales by X amount this year,” Coleman says. “That’s not our strategy. That’s our goal. Are we able to talk about what we are doing? How do our results from one month to the next indicate we’re really doing a good job in this area and we’re trying to re-evaluate this other area and look at things we can do differently.”
He needed to see who was willing to dig beyond the numbers. Who was willing to put in the time to figure out what the customer wants and then take those findings and figure out what the company needs to do in order to meet the needs of the customer?
“You need to make sure each one of the managers are in a position to carry forth the company’s vision and hold regular discussions with their direct reports,” Coleman says. “That really does flow from the top down. But that only happens if you have a broad group of managers that are all part of the same discussion of where we are trying to go as a company and what we are trying to achieve.”
The result of the initial group meetings was that some managers proved to have what Coleman was looking for while others did not.
“We weren’t painting everybody with the same brush,” Coleman says. “It was a real evaluation of putting managers in position to demonstrate how they could be part of the company’s success going forward.”
Coleman felt that lack of communication was a key reason why the company wasn’t making more money on its offerings.
“We’re not doing a good job of communicating with new customers and our existing customers about what we do and how what we do helps them with the challenges they are facing,” Coleman says. “There are other companies in the space, other midsized IT managed service providers, that have been able to have some success.”
One of the reasons companies fail to capitalize on new opportunities is that they become unwilling to analyze what they are doing and make changes to their plan.
“Every year, we would set a business plan,” Coleman says. “The important thing wasn’t that we set a business plan that remains frozen in place. … It was very important for us to always be listening to our customers and the managers and the people on the ground at Bell and the salespeople that were actually interfacing with customers every day. It was really listening to that feedback and making sure we were responding to it.”
Coleman needed to instill a mindset whereby the annual plan would be used as a guide that was fluid. It could be changed when circumstances called for it. It would not be set in stone and it would not be the sole factor used to determine whether business was good or bad.
“Companies will set a budget at the beginning of the year and for the rest of the year, you’re judged against that budget and that’s the primary measure of whether you’re doing well or not doing well,” Coleman says. “That can create a shortfall for a company. What you really need to be having is not a discussion of the budget numbers, but what’s going on behind that.”
There are a number of factors that contribute to the financials that appear on any company’s ledger. You need to talk about those factors.
“What you really need to focus on is how are the things that we’re doing every month either leading to or not leading to having success in that metric,” Coleman says. “That’s by looking at things beyond just a static budget that’s set in place and stays in place for the year. That can also lead to missing out on some of the bigger opportunities where you have more momentum than you realize and you need to have a reallocation of resources.”
When Coleman took over as interim CEO, he approached the job with a sense that he had a lot to learn. He wanted that attitude of curiosity and naiveté to give his people reason to open up and share with him their ideas to help the business grow.
If they were to be passionate about it, they couldn’t just do things because he told them to.
“It was a gradual process,” Coleman says. “I didn’t come in and pretend to be an expert on the company and the company’s business. It was one where we worked toward a more natural conclusion with the managers by using their input and building upon the realities of what’s going on in the company and what our strengths and weaknesses were rather than coming in and already having a predetermined idea of what we’re going to do and how we’re going to do it.”
You need to talk about outcomes if you’re going to move your company forward. It can’t just be a discussion of ideas that never lead to anything.
“This is how we’re going to know if we’re making progress or not,” Coleman says. “That was part of my job was to make it real for them. This whole idea of talking about the strategy to the company wasn’t just a theoretical discussion. Make it a real discussion: What are we doing this month to help us get toward those goals? It’s having an open and honest discussion about why we did or didn’t meet those goals and doing it with the entire management team so everybody is hearing the same message and everybody is part of the same discussion.”
It’s your job to make sure your people have that idea in the back of their mind about what the bigger goal is while they are dealing with the day-to-day.
“We’re trying to go and make sure all our daily efforts are working toward that vision,” Coleman says. “Remind everybody of what was the underlying strategic goal behind the metrics. What did we learn this month to indicate to us whether we’re being successful or not successful? What should we do differently next month to better achieve our strategic goals?”
In addition to addressing concerns, you also need to celebrate successes.
“In any particular quarter, one division may be having more success than the other,” Coleman says. “But by having the discussion together with the management team, it does help improve everybody’s overall morale and optimism if they are able to hear about and see the successes that other areas of the business might be having in that particular quarter toward the overall strategic vision.”
As Coleman looks at his company now, he sees progress. Sales for the Bell Techlogix segment grew from $62.9 million in 2008 to $66.1 million in 2009 and Coleman expects 2010 to show even more growth.
“Working through the economic downturn didn’t really help us in achieving those goals as quickly as we would have liked,” Coleman says. “But we’ve gotten to the point where we’ve rebuilt our entire commercial sales team. Last year, we had success in growing our IT manager service business at a pace it hasn’t grown in years and years. We’re doing a much better job of communicating with our customers and packaging our services in a way that customers are demanding it.”
How to reach: Bell Industries Inc., (866) 782-2355 or www.bellind.com
Clinton Coleman, CEO,
Bell Industries Inc.
Born: Cleveland, Ohio
Education: Double major in physics and economics, Vanderbilt University. I spent my junior year at the London School of Economics and Political Science. A lot of it was exposure to international culture and international ways of doing business. The makeup of classes is from all over the world. It was intellectually stimulating from that perspective, but it was also a lot of fun. I spent a lot of time backpacking around Europe and doing things that you only get a chance to do when you’re that age.
What was your very first job?
I was a busboy and also did the salad bar prep for Steak and Ale restaurants.
Who has had the biggest influence on you?
Rick Leaman, [former] head of mergers and acquisition in the United States for UBS. The first job I had out of college, I was in the mergers and acquisitions group at UBS in New York. So I was working on Wall Street doing M&A investment banking work.
I worked with him on a number of deals. He took a lot of interest in me, and he allowed me to tag along with him at board meetings and negotiations with management teams at a bunch of different companies. He kind of took me under his wing and allowed me to get exposure to the corporate decision-making process at large companies in a way that is very difficult to replicate when you’re 22.
Adam Adache needed to make a big change at Adache Real Estate LLC. If it was going to work, he couldn’t give in to the panic that was consuming much of the real estate industry.
“You have no option but to make it work,” says Adache, founder, president and CEO at the 20-employee real estate company. “You have to have that mentality. You run a business and a business is always susceptible to a bad economy and things that might happen along the way. You might have to change your business model. But in your mind, you have to be confident that you’re going to make it work.
“If you have that mentality, you’re not going to sit there and think about the worst-case scenario. You’re going to spend time analyzing and really diving into the heart of the problem and finding out what your true obstacles are. That’s when you’re going to make your decision and make your changes.”
The change Adache had to make was a merger of his firm’s project sales and marketing division with its bulk real estate division. The economic crash was leaving a growing number of distressed properties unsold and Adache needed a way to get them off the market.
By merging these two divisions, he thought the firm would be better able to use its resources to cobble together deals that would get the properties sold that were bringing down the rest of the market.
“We convert an offer that is rejected into a new opportunity and that new opportunity is still a revenue-driving opportunity,” Adache says.
The challenge for Adache was he couldn’t just gather everyone together and tell them, “Everything you’ve been doing is bad and it doesn’t work anymore.”
“When you’re coming in to sit down with your staff and tell them that your current model isn’t working, it has a negative connotation to it,” Adache says. “So you have to quickly know how to spin it into a positive. I talked about the successes we had in the current approach. I talked about how we need to make it more successful, which I think is what every company strives for.”
Be open about the obstacles your business is facing and why what you’ve been doing isn’t working anymore. But make sure you follow that up with a discussion about what needs to be done to get things turned around.
“You have to explain, ‘I’m right there with you,’” Adache says. “They have to buy in to the long-term opportunities of remaining positive. The only way they are going to do that is if you paint the picture why we’re months away or even days away from turning the company around for the positive. You have to paint the picture and then get them involved in painting the picture even better.”
As you move forward in the discussion and gather input, keep in mind that you need to be the one who puts together the plan that hopefully gets you out of your funk.
“Give some ideas and a general direction of where you’re going to sail the ship,” Adache says. “Along the way, you can make some detours based on the input of everyone you have. Be open and simultaneously searching for other options while you’re moving ahead, even if it appears you’re moving in the right direction and things are going good. You need a backup plan and a backup plan for your backup plan.”
Most important, keep an open mind and an open ear.
“If you’re too hard-headed and not open-minded enough and you don’t listen to your people, you could crash and burn on whatever you’re doing,” Adache says.
How to reach: Adache Real Estate LLC, (954) 566-7400 or www.adachere.com
Lay it all out there
Adam Adache is all about projecting a winning attitude and being an optimist when things look bad. But that doesn’t mean he steers away from bad news that his employees at Adache Real Estate LLC need to hear.
“Our company, just like any company, hasn’t been averse to layoffs and the changing market,” says Adache, the firm’s founder, president and CEO. “Fortunately, we’re growing again and we are back on a hiring phase. But we had to make changes. When you have to lay off employees and cut pay, it’s not a positive discussion. In order to get them to buy in to everything, you can’t say, ‘OK, this person is laid off and your salary is cut. We’ll talk to you tomorrow.’ You have to spell out the short-term goals and long-term goals in a plan and explain how you’re going to overcome it.”
You need to find a way to stoke the passion of your people to help overcome this latest challenge.
“They can’t just say, ‘I’m going to do it because it’s part of my job,’” Adache says. “When you’re in business selling a product or service, it’s our belief you have to do it with passion. You can’t do it with passion unless you buy in.”
Joe Burgess saw a company in Insituform Technologies Inc. that was waiting for nation’s maze of aging underground water and sewer pipelines to fail so it could cash in on the recovery. But there’s a big difference between potentially making money and actually growing as a company.
“There has always been a disconnect at Insituform between the long-term potential of its business and the reality of its near-term growth potential,” says Burgess, the 3,000-employee pipeline service company’s president and CEO. “If I looked at how Insituform positioned itself in the past, it focused a lot on that long-term need and that, eventually, it was going to materialize and drift down to the local level and then this business would grow at a much faster pace.”
The problem, at least from Insituform’s point of view, is that pipelines don’t just break down all at once. And if they’re not broken today, most public officials at the local and state level are content to cross their fingers and hope they’ll hold out another year.
“So I could speculate that caused [the company] to take the approach that it would get better over the long term,” Burgess says. “We’ll just stay in this market and maintain our leadership position, and when the dam bursts, it will be a great story.”
When Burgess arrived in April 2008, he decided it was time to stop waiting.
“We’re a U.S. public company,” Burgess says. “We need to operate our business in the here and now. We need to look at the economic conditions and the now of our market and figure out how do we optimize financial performance for our investors now.”
Burgess does not deny that there is value both in planning for the future and trying to fill a niche.
“But if we had kept the company 100 percent wastewater and 100 percent in municipal markets, our company really is just floating along waiting for that dam to burst,” Burgess says. “There are some investors who have that kind of patience. But it’s my view most do not.”
Burgess needed to show people that there was revenue to be generated in areas besides just municipal sewer or wastewater pipeline rehabilitation.
“We needed to make some decisions and develop some workable plans to broaden the strategic direction of the company,” Burgess says. “That’s a challenge when you’re running a business that’s essentially been doing one thing for 40 years.”
Make your case
As the new guy, Burgess expressed respect for all that Insituform had achieved since the company launched in 1971.
“Insituform invented this business and was the leader in 1971 and is the clear leader now,” Burgess says. “If anything, it’s probably strengthened its position in these markets. That’s a great testimony to the technology roots of the business and the people that have poured their life work into what is a crucially important business.”
This proud history, however, was threatening to blind Insituform from other opportunities where its talents and its technology could be of great use.
“You can become so focused and enamored about what you do and your capabilities within it and then the markets change,” Burgess says. “You have this strong position, but it’s just not as valuable as it was 20 years ago. If you stay in that tunnel, you can switch from being a premium return company to a modest return company to a low return company. … You say, ‘Look, this isn’t about the past. It’s about this is where we are and if we want to continue in markets that are very competitive.’”
Burgess called the leaders of his business units together and initiated a review of the past and an assessment of the future.
“We tried to do some forward forecasting based on the improvements we felt we could generate in each of our businesses and modeled that out to see where it got us over time,” Burgess says. “We drew the conclusion that our core business would not get us to the premium return profile that we sought. At that point, you know you’re not going to fix it just inside with what you have.
“And so then we went to, ‘OK, let’s break down what we know how to do. Let’s look at opportunities that fit those skill sets and make sense for us to be able to tackle those confidently and to add value.’ We wanted to diversify into an industrial client base that would give us better balance as the company went through various business cycles.”
As you draw up plans and conduct round tables to figure out what your company could do, it’s critical that you keep your feet on the ground in making such plans.
“Many companies are in a low-return environment, but then they put together models that suggest or forecast that the situation will improve either through cost reduction or a turnaround in the market or a change in economic conditions or other things that they do,” Burgess says.
“Then they embark on that plan and two or three years later, it’s not there because the assumptions they made were overly generous. You have to be very rigorous about that. That was probably easier for me to do because I came from outside of Insituform. I’m not burdened with all the history. History can be a good thing, but it can also be a burden. So you have to be very rigorous about that. Because if you get that wrong, you might not see the situation as it truly is. That’s always a formula for making a bad decision.”
You need to base your decision on the facts as you see them at that moment.
“If there is a gap there, we have to do something different,” Burgess says. “Not blame it on the market or blame it on the capital structure of the company. We have to figure out how we can take the skills and the capabilities of this company and get to different markets.”
Execute the plan
Burgess and his team were ready to move on their plan. The highlight was the purchase of two companies, Corrpro and The Bayou Cos. Inc. The acquisitions would put Insituform in a better position to expand its presence in the industrial sector of pipeline remediation.
When the acquisitions were made, Burgess did not spend a lot of time worrying about aligning the two companies under the Insituform brand.
“You obviously do think there will be synergies and ways that you can cross-sell and the business is starting to do that now,” Burgess says. “But out of the chute, we tried very much to focus on acquiring businesses that could essentially operate on a standalone basis and just drive increased performance at that business-unit level.
“We spent a lot of time with our core business increasing the performance requirements and eliminating cost. But by taking this approach, what we allowed the business-unit leadership to do was focus on their business and drive that to maximize their return without having to worry about this integration and cross-selling. I think that’s a key when you’re trying to dramatically expand a business. … If we tried to say, ‘OK, we’re going to buy these things and then put them all together in a complicated, integrated organization,’ I don’t think it would have done nearly as well. It’s always been key to me to maintain business-unit focus with as little corporate interference as possible.”
That doesn’t mean you just sit in your office and play solitaire and watch the world go by as all this is going on. You actually have a lot to do to make sure everything is staying on track.
You need to work with your board of directors to keep the plan moving. You’re communicating your strategy to investors so that they stay excited about your business. Maybe they even look to strengthen their investment in your company.
“You have an even longer list of potential investors that you have to expose to the business plan and strategy so you can attract additional business,” Burgess says. “You become the face of the community in your local communities and other communities globally. You also have a time commitment with your customer base. You can do all of those things and very quickly run out of hours to stay connected to what’s going on in the business and be active running the business. It’s easy to drift off into CEO land and out of the operating framework of your business.”
Burgess made time to meet with the leaders of his business units to keep in touch with what was happening. He kept an eye on goals that were set to make sure progress was being made toward achieving them.
But he also took time to make sure his employees had reason to be confident in his leadership.
“People want to know that their management team has a competent plan and is focused and hardworking and will do what they can to execute against that plan and improve the company,” Burgess says. “People are smart. If you roll out a plan, most people would figure out pretty quickly if you lack true belief in what it is you propose to do.”
You can’t assume that enthusiasm will wash away any flaws that may exist in your plan.
“Enthusiasm has its place,” Burgess says. “It ranges from the rah-rah you get in a sales meeting to the very focused and rigorous approach of figuring out operating performance and whether it can improve. I tend toward the latter. People can figure out if managers are focused, intense and rigorous on improving the business and making sure it achieves its goals. If they believe that, I think they would be enthusiastic about the company.”
The best formula to demonstrate confidence in your plan is to be direct and factual with your people. Don’t be sneaky. Tell people what you’re trying to do, how they can help and what the outcome should ultimately be.
“Whether you’re giving a message about the current performance, good or bad, the needed performance, the direction, a strategic direction, the need to change or the need to be better, it doesn’t really matter,” Burgess says. “What people really want to know is, what is the situation? … When they lose sight of that, they get disconnected from the purpose of their work. But maybe even more importantly, they lose sight of how their work contributes to the overall goals of the business.”
The numbers say Burgess has Insituform on the right track. Revenue has grown from $495.6 million in 2007 to $726.9 million in 2009. The company is also on its way to meeting its goal of a 15 percent return on invested capital.
In early 2011, the estimated return had grown from around 3 percent when Burgess arrived to 9 percent.
“A 15 percent return on invested capital is the level I believe we need to be at to sustain a strong investment premise for the company,” Burgess says. “We wanted to create a company based on the solid skill sets that were here at Insituform that could sustain performance in a much broader range of economic and market conditions. I think we’ve done that, or at least started to do that.”
How to reach: Insituform Technologies Inc., (800) 234-2992 or www.insituform.com
The Burgess File
Joe Burgess, president and CEO, Insituform Technologies Inc.
Education: accounting and financing degree, University of Florida
What was your very first job, and what did you learn?
I was a stock boy at a local pharmacy close to my house. It was my first exposure to business, whether I even recognized it or not, in terms of taking inventory. The guy that ran the store was the pharmacist.
He was very focused on trying to eliminate waste and maintain the right mix of goods people expected him to carry while not trying to saddle his business with carrying everything. I remember listening to him talk about business issues in terms of what we were going to carry. It just struck me, the wide range of issues that a person trained in pharmacy had to have to run a business.
Who has been the biggest influence on you?
My father, John Burgess. He was a teacher and a football coach by profession. He was an interesting guy and very well-read in matters of religion, history and current events. He got his master’s later in life.
He was a very smart man and always very well-prepared, whether that meant constructing a test, reading essays from students or studying film to determine whether a guy was going to come on a corner blitz. That’s something that has stuck with me for my life. In most business situations, being unprepared is not a good plan. It’s almost never goes the way you think it will if you’re not prepared.
Are you reluctant to call out an employee who is not meeting your expectations? Do you worry about the conflict you might create by raising these concerns? If you answered yes to these questions, you’re not doing your job as the leader of your business.
“You read a lot about making sure you’re not hurting people’s feelings and not being over the top and too aggressive when you talk to people,” says Greg Harris, founder, president and CEO of Backhaul Direct LLC. “You need a level of aggression. You’re paying someone to do a job. They need to know where you stand. If you’re not happy with the productivity of an employee, you have to let them know.”
Before you get the wrong idea about the corporate culture at Backhaul Direct, you should know that Harris loves to have fun both at work and away from the office. The 75-employee freight management and logistics firm sponsors a collegiate bowling tournament each February and has a group of employees who bowl regularly.
“You have to be able to come here and enjoy what you’re doing,” Harris says. “That’s the last thing I want is for someone to come here and hate everything about their job.”
Harris considers it part of his job to foster a strong and healthy workplace culture. But it’s also his job to expect and demand the best from his employees and give them a kick in the butt when they need it.
“It’s the job of a manager, just like a personal trainer, to always be pushing you a little bit,” Harris says. “I tell my guys all the time, ‘You’re always going to feel some resistance from me. I’m always going to be pushing and challenging you.’”
Harris takes the physical fitness and training analogy a step further.
“I’m not going to tell you to fire off 10 reps at 15 pounds when I know that you can fire off 20 reps at 30 pounds,” Harris says. “At the same time, you don’t want to establish goals that are so far out of their range of capability that they will be disheartened and disgruntled with their job.”
The key in establishing goals is to make them a priority. Put them down on paper so that there is a record of what you and your employees have determined to be goals worthy of pursuing.
“You absolutely have to put them in writing,” Harris says. “You also have to create a plan on how you’re going to hit those goals.”
Backhaul Direct has made the pursuit of sales goals more fun by creating groups that employees can aspire to join. Newcomers are “Lottery Picks,” a nod to the elite rookies picked in the NBA Draft.
Next is the “Contenders,” a group of employees who have risen above the first stage but aren’t at the top of the heap yet. And at the top is the “Top Dogs,” the sales reps who handle the company’s most important accounts.
“They have the big clients, the flexible schedule and the company work card for unlimited lunches,” Harris says.
The idea is to create a sense of competition that energizes employees and drives growth. It’s a fun way to keep the motivation level high at a company that has plans to add more than 300 jobs by 2015.
“We try to maintain a competitive atmosphere where everyone is privy to the company sales goals, their numbers and the other sales reps’ numbers in our office,” Harris says. “We look at that as a motivating factor. You don’t want to be the low man on the totem pole.”
How to reach: Backhaul Direct LLC, (800) 518-1664 or www.backhauldirect.com
Ask the questions
So what happens if goals aren’t being met and revenue isn’t growing in your business? Greg Harris says you can start by appraising your own performance.
“Are they responding to your message?” says Harris, founder, president and CEO at Backhaul Direct LLC. “Are you giving employees the proper tools to meet those goals? Are they targeting the right clients? Have they not been taught appropriately from day one?”
If you determine that you’ve done your job, start looking at what’s going on with the employee.
“Do they not like the product they are selling?” Harris says. “Do they not like they are selling? Are they just not interested in what they are doing anymore? Is there something else I can challenge the person with? Maybe they have outgrown what they are doing. Ask the question: ‘You seem burned out. You seem complacent. Is there a reason for that? Can I do something different? Is there something within our scope that you can do in the company?’”
In addition to these questions, you also need to make it clear that there is a problem if an employee is not performing to expectation.
“Show concern and try to set something else for them to do,” Harris says. “But let them know, ‘Right now what you’re doing, it’s just not working for us. Is there something we can do to help?’”
How to reach: Backhaul Direct LLC, (800) 518-1664 or www.backhauldirect.com
Ken Kocher is a very proud, very loyal fan of the Chicago Cubs. It doesn’t matter that the ball club hasn’t won the World Series in more than 100 years and hasn’t even been to the World Series since 1945. Kocher still loves the Cubs.
His office at Hat World Inc. is full of team memorabilia with a heavy emphasis, not surprisingly, on hats. But Kocher doesn’t impose his own fan loyalty on his employees. Instead, he encourages them to show their own colors and wear hats and shirts to work for whatever teams they root for.
While providing a chance to show some love for their favorite teams, it also serves to get employees more connected to the product he wants them to be out there selling to customers.
“You need to be cognizant that the people in your company believe in what you’re selling,” says Kocher, who took over as president of the 7,300-employee hat retailer, otherwise known as Lids, in 2005. “If you’re passionate about your product, which in our case is hats and sports because we sell sports as much as hats, you have a more passionate employee that understands what the customer wants.”
Kocher feels fortunate to lead a company so entrenched in the entertaining business of sports, but it’s not all fun and games at the $466 million company. Kocher’s organization doesn’t succeed because employees get to wear hats to work or because they aren’t allowed to wear ties. It thrives because they are excited about the product and energized to sell it to customers. And it works because employees take part in the process to set goals and then share in the reward when those goals are achieved.
“If you’re results-oriented, you can make any job fun,” Kocher says. “The key is to create competition. That will make your job fun no matter what you’re doing. Even if it’s competition with yourself to get more done today than yesterday or to sell more today than yesterday. Competition is a driving force with everybody. I don’t care who it is. You have to be competitive if you want to succeed.”
This approach helped Hat World navigate through the recession that began in late 2008 and devastated many in the retail business. While many retailers were closing stores, Hat World added 36 stores in 2010 and plans to add 26 more this year.
Here’s how Kocher takes employee passion and turns it into business success.
Engage your employees
You need to get your employees excited about the product or service that you’re selling. Give them opportunities to offer input about your product and how it’s being sold and how it might be presented in a better way to catch the eye of your potential customers.
“If you have management from the top down all the time, employees just don’t think you care,” Kocher says. “Let people be creative and come up with new ways to do things.”
Most of the hats sold through the Lids stores are already designed and licensed and come with vendors that deal with other companies. But Kocher works with his people to make decisions on what products to sell and how to market them.
“We have a very dialed-in sports culture and a fashion element to that, too,” Kocher says. “Our buyers know what the customer wants, because they are the customer.”
If you’re perfect and know everything there is to know about what you sell, it’s OK for you to make all the decisions. But since you’re probably not perfect, try letting others step up once in awhile.
“You have to be willing to let your leaders underneath you and your managers be leaders,” Kocher says. “Give them the direction they need to go, but stay out of their way. Everybody gets to a point in a different way. I may have an organized desk and think that’s the most successful way to do it. My counterpart may have a disorganized desk, and yet he’s still somehow organized. That’s the same way with leaders leading this company or leading people. Every individual is different in how they think. Let them figure out which way they want to go and how they want to do it.”
The only way your people are going to grow is if you give them opportunities to apply their talents and prove themselves. It shouldn’t be your job to make every decision in your business. Let your people experience the pride of making a decision that helps the company grow.
That way, you can stay focused on the big picture.
“My role is on the growth side,” Kocher says. “It’s to provide avenues of growth for our company, for our employees and for our shareholders that maximize profit. I’m kind of steering the ship in the direction I feel like we should go as a team to best make use of our skill set at as a company.”
In most cases, your employees are probably a lot closer to your customers than you are. When you enable them and empower them to think about how your product can be better, you give them a chance to grow.
“That’s what drives them and gets them going every day,” Kocher says. “If you can create that competition throughout the whole company, even if you’re a customer care rep and they can have some competition within themselves, they will be more successful.”
If you’ve delegated in the past and ended up with employees doing something that does not fit your company’s vision, the fault may rest with you. Did you take the time to explain your vision to employees? Did you make sure they clearly understood what you were looking for?
“You can’t just assume the job is going to get done exactly the way you want it done,” Kocher says. “If you’re not involved in the process as they are going through the project and teaching them what they should be looking for, you’re going to get a train wreck at the end.”
There may have been a time when you weren’t the CEO and you were excited when your boss came to you and wanted your opinion. You can’t lose sight of that youthful exuberance that exists inside your employees who want to help your company succeed.
“Don’t forget where you came from,” Kocher says. “That will always make you a better person and a better leader. I’m always about the future, but there are people who have helped me become very successful that I’ll never lose focus on. Everybody has those people. You just have to make sure you recognize and understand the importance of the past to your success.”
Kocher is not looking for a show of hands when he seeks out leaders to help keep his company moving forward and growing.
“If anybody tells me they have leadership potential, I don’t want them working for me,” Kocher says. “You have to see it. Leaders go to the top. You can see a leader. If you walk into a cafeteria at a sixth-grade school, if you pay attention, you’re going to figure out who the leaders are of that classroom pretty quickly.”
The challenge for you is to create situations where your people can demonstrate their leadership skills. Create situations where you can be out there observing employees in action and seeing who rises to the occasion.
“We’re moving one of our businesses called Lids Team Sports from Madison, Wis., to Indianapolis,” Kocher says. “It’s something that needed to be done to get the synergies out of both businesses. We went to our directors and employees and said, ‘Can you guys take on this project and make it happen?’ It’s basically a project that they took on above and beyond what they were already doing. During this process, we have about a half-dozen employees that have been living in Madison away from their families for about four to six months until this move officially happens to help with the process of moving. So it’s a pretty large move.”
It’s an important move for the company and an important opportunity to see what kind of leadership skills the employees who are seeing it through have.
“We have a long history of taking a store manager and working them through our system to where they play a major management role in our company,” Kocher says. “That’s a lot more inexpensive than going out and finding that person initially. You pass over a lot of people and you lose a lot of culture along the way. We try to teach our people.”
That teaching and gaining of experience is where it’s at when it comes to finding leaders. The Type A personality with the voice everyone can hear is not necessarily your best leader.
“I don’t think the leader is the person who always gets up in front of people to speak and is a good speaker,” Kocher says. “Good speakers don’t make good leaders. A lot of people get confused. They think, ‘Boy, that person can really handle themselves with a mic.’ That doesn’t mean they can be a good leader.”
You’re a leader. You know that it’s the person who gets things done, not necessarily the one with the million-dollar smile, that you want leading the charge in your business.
“It goes back to a leader in our culture is someone who is willing to get down and dirty with the group,” Kocher says. “You let people go out and be leaders and stay out of their way.”
You still ask questions and you still check in and make yourself available to that person for questions and feedback. But you let them do their job and see how they handle it.
“Be involved enough in the process that you can see that they’re going in the right direction,” Kocher says.
When the economy began to plummet in the fall of 2008, Kocher had concerns about what the effect might be on Hat World.
“People were cutting inventory, and everybody was really nervous about what was going to happen to the economy,” Kocher says. “No one knew how bad it was going to get.”
Fortunately for Kocher, sales rose from $378.9 million in fiscal 2008 to $405.5 million in fiscal 2009 and then even higher in 2010.
“I told everybody that we just need to focus on the little things,” Kocher says. “Small victories; that was kind of our thing. Let’s shoot for small victories and not try to hit home runs. Let’s just look at what we’re doing and make sure we don’t make any dumb moves and we’ll be fine.”
Kocher could have panicked. He could have called a town-hall meeting and sounded the alarm about the downfall of the retail industry. But that wouldn’t have been his style, and it wouldn’t have been consistent with a culture that is always looking for opportunities.
“We don’t knee-jerk,” Kocher says. “We don’t start saying, ‘Hey, everybody needs to work five hours more because we have to do this or we have to do that.’ We don’t have to do that. We treat people the same regardless.”
How to reach: Hat World Inc, (888) 564-4287 or www.lids.com.
Ken Kocher, president, Hat World Inc.
Born: Crosby, N.D.
Education: Bachelor’s of business degree in accounting, University of North Dakota
What was your first job?
I was a paperboy for the Devils Lake Journal. I did that for a couple years. That teaches you the importance of money at a young age. At that time, we had to collect money from all the customers.
I was a multisport athlete growing up, so I had to do it around practice and games. It taught me time management. I played football, baseball, basketball and track. In football, I was a linebacker and tight end. It was a small school and you had to play them all. Otherwise they wouldn’t have enough kids.
Favorite sports to play and to watch: My favorite sport to play growing up was football. My favorite sport now to play is golf. Baseball is my favorite sport to watch now.
Favorite hat: Any hat that has a Cubs emblem on it.
Dress code at Hat World: We don’t allow ties in this building. If our buyers are meeting with a vendor, they’ll wear khakis and a colored shirt that day. But no ties allowed. People pretty much know, if someone walks in with a tie, we’ll go, ‘Who is that?’
Is everyone at Hat World a Colts fan?
We have a fair amount of Colts fans, but it’s all over the board. It’s fun to do that because you’ll see [who employees root for] in their offices, and it’s really a conversation piece. Why do you have Oakland A’s or New York Mets? How did you become a Vikings fan? That’s our culture. I’d say there are probably more other teams in here than the Colts.
Neil Mortine needed to show people that he had a plan. It was something he needed to do three times in 2010 as Fahlgren Inc. made three acquisitions to its business.
“You have to be able to convince people that you’re taking them somewhere good, somewhere that is a better place,” says Mortine, president and CEO at Fahlgren Inc. “You have to have clear goals and plans of where you want to go and what you want to achieve. Then it’s not that hard.”
Mortine’s 160-employee public relations firm has added Edward Howard & Co., Grip Technology and, most recently, Sabatino Day Inc. to its organization in 2010. One of the biggest challenges that comes about in acquiring a business is integrating the two cultures.
Fortunately for Fahlgren and the companies that were joining it, cultural integration was part of Mortine’s plan in each case.
“Culture is king,” Mortine says. “It is the primary driver for what we’re doing. … If the culture is not solid, I don’t know how it all hangs together.”
Mortine initiated the creation of cultural integration teams that would be made up of employees from both Fahlgren and the company it was acquiring.
“We wanted to have people involved that really understood our culture,” Mortine says. “We didn’t want it necessarily to be the senior executives. We wanted it to be people that had spent some time here, maybe some of the ones who had come to us just out of school but were still young in their careers, up-and-comers and overachievers. We purposely put those people on the team on our end. We asked the executives at the other company to do the same.
“The executives are always talking before, during and after. But we wanted the rank and file to be talking to each other just as fast as possible. We put the teams together and introduced them.”
When you put together teams for anything, be it cultural integration or some other special project, you need to empower that team to do its job. It can’t just be for show.
“Give people the ability to fail and the opportunity to be heard and to go out there with ideas and not be afraid of failing,” Mortine says. “Empower folks and act with a sense of urgency and give guys a freedom and authority to take action and influence change. We support that. We give them tools and resources they need and the confidence to stand up there. Part of what I need to do is build leaders that can move this thing forward after I’m done with it.”
You’re looking to convince people, especially the ones at the company that you are acquiring, that you’re not simply imposing your will on them.
“We told them it wasn’t going to be our way or the highway,” Mortine says. “We were looking for recommendations to make us even better and stronger. We didn’t want to force anything down anybody’s throats.”
Make sure the team members meet on a regular basis and feel free to check in on their progress. But for the most part, let them do their job.
“We gave them parameters of what to look for,” Mortine says. “But the ones we selected, we knew their credentials and we knew why we wanted them on the team. They would dig for information, they were collaborative and they were our overachievers.”
If your team comes back with ideas that you’re not sure about, don’t just reject them without consideration. That power and freedom to fail is something you need and your people need in order to achieve success.
“That’s what life is all about,” Mortine says.
Neil Mortine has been on both sides of the table when it comes to business acquisitions.
“Fahlgren acquired my company eight years ago, so I know what it’s like to be acquired,” says Mortine, president and CEO at Fahlgren Inc. “I know what it’s like personally to be part of a new team.”
With that experience, Mortine also knows what it’s like to be the CEO one day and an employee at someone else’s business the next.
“It can be pretty emotional,” says the leader of the 160-employee public relations firm. “Try to work through the title and roles and responsibilities very early on to see if they are interested. ‘Here are some new areas you can work in that can be exciting now that you don’t have so many administrative responsibilities. Can we take advantage of all that you’ve learned and your relationships?’”
If the person seems open to working with you, do yourself a favor and listen to what he or she has to say in terms of ideas for the business.
“I tend to come off a lot smarter to people if I’m quieter and just listen as opposed to just putting my opinion out there on day one when people meet me,” Mortine says. “People want to work with me a lot better and a lot more closely if I give them the lead and let them talk a little bit and give their point of view and ask questions.”
How to reach: Fahlgren Inc., (800) 731-8927 or www.fahlgren.com.
Dr. Steven G. Gabbe was aware that a lot of hours had been put in developing plans for a new cancer hospital on the campus of The Ohio State University. Gabbe was at OSU when the James Cancer Hospital first opened 20 years ago, and in 2008, he was back as CEO of The Ohio State University Medical Center.
He was excited that the project was moving forward but also aware that concern had been expressed about some of the plans that had been made.
“People wondered about the plan,” says Gabbe, who is also senior vice president for health sciences. “There was concern about the design of the hospital, which included two towers side by side with an atrium in the middle.”
This wasn’t the only concern and the uncertainty was great enough that university trustees wanted planners to take another look at the project.
“They challenged us to pause and go back and look carefully at those plans and then come back to the board of trustees and present to them our revised plans for the new hospital,” Gabbe says.
This opportunity excited Gabbe. He saw it as a great chance to go back to square one and get a clear understanding of the plan and its impact on the 16,000-employee OSU Medical Center.
“It was a billion-dollar project and most of the hospital was going to be paid for by our clinical revenues, as well as some philanthropy, but primarily by our clinical revenue,” Gabbe says.
It would have been completely natural for those who had put in a lot more time and effort on the project than Gabbe to be a little frustrated at the prospect of starting over.
“I’m sure some folks said, ‘Oh my gosh, now we have to go back and look at the plan again,’” Gabbe says. “But to everyone’s credit, no one was discouraged. No one looked at it as a burden. They all realized this was a chance to get to do this right.”
Get people excited
Gabbe began his effort to meet this important challenge by focusing on the opportunity he and his team were being given, rather than presenting it as a burden they would have to bear.
He focused on the fact that this new hospital would be built on a site that had previously been home to a tuberculosis hospital that was no longer needed.
“We now have effective means to prevent and cure tuberculosis,” Gabbe says. “And on this site, we hope to build a hospital that will provide care for cancer patients while at the same time, hoping there will be a day when this hospital won’t be needed anymore, because we’ll find cures for cancer.”
Gabbe focused on that opportunity, and then quickly moved into the challenges that were facing his team in making the opportunity a reality.
“Clearly describe the challenges you’re facing and why those challenges are important to everyone involved in the work group or in your company,” Gabbe says. “The project that you’re going to be working on impacts everybody’s position and the outcomes are going to impact everyone for years going forward.”
One of the keys to getting support on a big challenge is your ability to convey confidence and personal engagement. Your team needs to see that you’re not just passing all the work off of your plate.
“If you’re going to be leading an effort like this, you have to come in having done the work,” Gabbe says. “You have to have a vision for what you see that future will be. You have to understand the strategic priorities in the planning process. You have to be realistic about the challenges and about the difficulties. It’s going to be hard work. There are some understandings and some compromises we’re going to need to make.
“We’re going to make those together. You also have to make sure that people understand they need to be accountable for the decisions that are made and that those decisions need to be made together.”
Gabbe began by making sure that everything was put on the table at the beginning and nothing was left out. He began to ask questions, a lot of them, and had his team do the same.
“We kept asking the question, ‘Who else needs to be at the table?” Gabbe says. “What information do we need?’ One thing we did not want to do was create an elite planning group where people felt like it was being done behind closed doors, and they didn’t have a chance to influence the plan. This was too big and too important a project. Much to everyone’s credit, when we got done with the project, we did not have someone come up to us and say, ‘Well, you didn’t think about us.’ Or, ‘We weren’t involved.’ The group was very inclusive as we made the plans.”
There were more than 100 issues that were identified as requiring an answer with the cancer hospital project. Gabbe knew the team needed a method to track progress on resolving each of these items.
They came up with a color-coding system that used three colors everyone knows very well: red, yellow and green.
“We found the scorecard was very helpful in defining each of the tasks we had to complete for the project,” Gabbe says. “It was something we could look at and see red if we hadn’t solved the problem, yellow if we were getting there and green if it was fixed. It was a good reminder of where we were and what we had done and what we hadn’t done. Then we expected people to be ambassadors for the project and be willing to go out and talk to their constituencies and come back with objective feedback about what we were doing.”
Once again, reaching out to others is crucial in beginning to move toward solving your problems. The team asked the CFO to go back and confirm the medical center’s and OSU’s long-range financial plan to make sure financial projections were still accurate going forward.
“We had our architects go back and begin to look at design elements of the building and how they could be structured in a different way in a setting where there were smaller patient care units, space for education, space for research and space for families,” Gabbe says.
There was an analysis of parking and how far people would have to walk from their car to specific rooms. When concern was raised about the height of one of the hospital towers and how it might impact medical helicopters, the Federal Aviation Administration was contacted.
“We said we better make sure we talk to the FAA to make sure we’re not going to need to change where our helipad is,” Gabbe says.
But it wasn’t just problems Gabbe and his team had to address. They also needed to look at ideas that might not be able to be implemented for some reason, whether it be funding or the lack of availability of resources.
“We developed what we called ‘circuit breakers,’” Gabbe says. “If our long-range plan is not as positive as we had hoped, we need to come up with a list of parts of the building that we can hold back on.”
It’s easier to come up with these things in the beginning and easier when you have to make adjustments if that possibility is already stated at the beginning of the project. So develop a list that you can refer to in the event something unexpected happens. If it doesn’t, you haven’t lost anything for the effort.
“We presented that to the board that if things are not as good as we had hoped, we will defer the construction of this part of the hospital until things are better,” Gabbe says.
The fact that all this work was supposed to be completed in 100 days was never far from Gabbe’s mind and he made sure it was never far from his team’s mind either.
“You need to create an understanding of the overall importance of the project to the company or the work group and the sense of urgency about the time that’s allowed,” Gabbe says. “Provide a sense of what the timeline is and when this work must be done.”
Keep asking questions
As much effort as you make to work with your team and include others in a project, you still need to make sure everybody else knows what you’ve been up to. Whether that’s the rest of your employees or, in Gabbe’s case, the employees, students and faculty at OSU, you need to share your story with the masses.
And you need to do it before you’ve carved it all in stone.
“You want to do it at a point in time when the plan remains open to change,” Gabbe says. “This is going to be the largest building we’ve ever built at Ohio State and it’s going to be something they are going to pass by or be in every day. They need to feel they had the opportunity to be part of the planning. That was a key question. We wanted to have enough information so they could react to the plan. We wanted to have enough time so we can respond to their constructive criticism.”
Don’t just rely on one meeting to present and wrap everything up. People need an opportunity to hear about what you’re doing, mull it over, and then come back and raise their concerns or ask questions.
“We presented to them the overall design, but we also presented to them a number of different options we had for the hospital plan,” Gabbe says. “‘Here’s how we could do it. Which of these options do you prefer? Here’s how we could do that. Which of those options do you prefer?’ They could come and they could hear the plan and they could participate in the audience response, they could participate in a question-and-answer session, and they could send us their comments to a website so we could review those, as well.”
You should also let people know how they will be affected and be thorough and thinking about the impact of your project on the business, aside from the project itself.
“For example, we know the construction on our campus has disrupted traffic and we know it has made parking more difficult,” Gabbe says. “We tried to do everything we could to get out in front of those plans and let people know why we were doing what we were doing.”
If people have concerns, go out of your way to address them and give the person everything you can to either allay their fears or show that you’re addressing the issue.
“It’s what people don’t know that can be the risk,” Gabbe says. “People then begin to imagine or project. It’s always best when people understand what the finances look like. It’s just very important. There were no secrets. If people said something was wrong or something wasn’t right, we worked together until we were convinced we had the right projections for the future.”
Gabbe and his team worked through the multitude of issues that needed to be addressed and met the challenge. Work on the new James Cancer Hospital and Solove Research Institute is expected to be completed by 2014.
By 2015, the entire expansion to the OSU Medical Center is expected to add more than 10,000 full-time jobs in Ohio, in addition to the 5,000 construction jobs that will have been needed. The center takes in about $1.8 billion in operating revenue each year, but the expansion project is expected to create an additional economic impact of $1.7 billion by 2015.
“It was a great privilege and opportunity to be part of planning something that would make a difference in people’s lives every day for years and years to come,” Gabbe says.
He credits the openness and transparency of his team’s efforts for the successful outcome.
“The communication plan when you’re doing something as big and impactful as this is almost as important and maybe just as important as the plan for the new building itself,” Gabbe says.
How to reach: The Ohio State University Medical Center, (800) 293-5123 or http://medicalcenter.osu.edu.
Ohio State University Medical Center
Born: Newark, N.J.
Education: Bachelor of arts degree, Princeton University; medical degree, Weill Cornell Medical College
What was your very first job?
I was probably about 10 or 11 when I worked on a fishing boat off the New Jersey coast. I helped people bait their hooks and clean their fish, and I got a chance to do some fishing while I worked on the boat. I met a lot of people who got seasick.
Whom has been the biggest influence on who you are today?
Dr. Priscilla White. She was a pioneer at the Joslin [Diabetes Center] in Boston. I developed diabetes when I was a medical student. Dr. White took care of me when I was a resident in Boston. She was a pioneer in the field of diabetes in pregnancy. She began working with women not long after the discovery of insulin. I have dedicated most of my career to taking care of pregnant women with diabetes. She was a huge influence on my career.
What’s the best advice you’ve been given?
Do good, and don’t complain.
If you could sit down with anyone, past or present, whom would it be and why?
Hippocrates. I’d like to learn about the practice of healing as he thought of it in its very earliest stages. As physicians, we take the Hippocratic Oath. I would love to talk with him about how the Hippocratic Oath came to be formulated. It still influences our day-to-day practice of medicine.
Chris Blase never intended to go into the cleaning business as his career. It was something he decided to do with a couple buddies to supplement his full-time job.
Then he and his buddies lost their full-time jobs and the cleaning business suddenly became a lot more important.
“I thought it would be a pretty simple, straightforward business to start, and I found out it was a lot more difficult,” Blase says. “The biggest challenge by far was recruiting people that were motivated to do a good job. I hired and fired over 1,000 people over a five-year period.”
What followed was a time of stress, struggle and, ultimately, satisfaction as Blase learned what it took to find the right people and build a business that could thrive.?He says his first lesson was to stop trying to be all things to all people.
“I was getting to the point where it was not unusual for me to work straight through the night,” Blase says. “I was doing things like driving away from the gas station with the hose still in my car. And I walked out of my apartment one day and I hadn’t put my pants on.”
Blase was taking all comers as clients, no matter the size or location, and it was burning him out. After selling the business and working for a couple other companies that were suffering from the same problems, Blase decided to strike out on his own again. This time, however, he took a different approach.?He quit trying to do it all and focused on a specific segment, office buildings between 50,000 and 300,000 square feet.
Just as importantly, he made it a point to bring in motivated managers who could help him lead and grow his business. Buildingstars Inc. now provides cleaning services for more than 1,400 customers and took in $20 million in 2009.
“If you can find a way for your key managers to have a vested interest in the company, you’re going to get a totally different attitude toward work and just a totally different approach,” says Blase, the 48-employee franchise cleaning company’s founder and president. “Especially if you’re expanding on a large scale.”
Blase decided to get into franchising. And lest you think this story suddenly doesn’t apply to you anymore, Blase says, ‘Think again.’
“In theory, almost any business is franchiseable,” Blase says. “Companies are going to be faced with a decision where, ‘I’m happy here in St. Louis. I really don’t want to expand beyond this because I don’t want to make the investment and manage remotely.’ They should be asking the question: Would that make sense under a franchise model?”
Blase says franchising is a much more comfortable way to manage people.
“It’s like working with supporting partners versus managing employees,” Blase says.
So the next question is: How do you find people to fill these important roles of leading your franchise units?
“The key is not really looking to sell a franchise,” Blase says. “It’s more based on qualifying or recruiting a franchise owner that’s qualified. It’s not all about the initial investment. It’s more about the recruiting process. You should turn the process around and look at qualifying that person just as strong as you would when you’re bringing on a manager in your company.”
Blase says the difference in providing someone with equity and a stake in the business versus just being another employee in the company can be immense.
“I was able to attract a totally different type of individual that maybe wouldn’t normally go to work for a cleaning company,” Blase says. “It’s all about creating the right kind of management and development system for your key people.”
Put in the time
One of the first things Chris Blase does when he’s looking at a prospective franchisee is ask the person to put together a business plan.
“Have the prospective franchisee go through a very in-depth process to prove that they are competent or capable of managing that unit,” says Blase, founder and president at Buildingstars Inc. “The biggest mistake that companies make is they base the decision on that person’s ability to invest versus their ability to perform.”
The 48-employee franchise cleaning company has more than 1,700 customers and took in $20 million in 2009 revenue.?If you find that you’re not recruiting effective leaders for your business, assess your recruiting style and the questions that you’re asking.
“Am I identifying the same skills and using the same criteria that I would use in hiring a competent manager?” Blase says.
Set aside the investment aspect of franchising and focus on the basics of leadership skill and competence. Make it clear that you want to work with the person to help them grow.?At the same time, you need to stay in touch with customers to get their feedback on how your leader is doing.
“It’s important to be in touch with the perceptions of the customers and hear their positive viewpoints and negative viewpoints,” Blase says.
How to reach: Buildingstars Inc., (866) 991-3356 or www.buildingstars.com.
Jim Ousley looked at Savvis Inc. and saw a company that wasn’t growing as fast as he felt it should be.
“We came out of a recession like everybody did, and so, growth was stymied,” says Ousley, who has been chairman at the 2,600-employee company since May 2006. “But we knew we had issues at the top level, because the company was not growing as fast as our peers. You take that for a starter and you say, ‘Why not?’”
Ousley believed one of the problems was the acquisitions that Savvis made in recent years. While it grew the IT company from a physical standpoint, it also created a confusing culture that was focused more on operations and less on taking advantage of its new components to grow the business.
“It was more of an operational culture than a sales and support culture,” Ousley says. “We just started at the top and said, ‘We want to refocus this to where we’re making the age-old statement that the customer comes first instead of operational things coming first.’”
With that as his starting point, Ousley agreed that he was the best person to fix the problem and get Savvis back on a growth trajectory. So in March 2010, he added the role of CEO to his responsibilities.
Open the discussion
His first step was to comprehensively analyze the company’s sales and marketing leadership to determine what was or was not happening that was keeping the company down.
“Any time new management comes in, they have their own thoughts on what roles should be in the leadership of the company,” Ousley says. “I’m a great believer in going out and talking to the organization.”
Ousley had plenty of people around him who could provide a good report or summation of what they thought the problem was in the sales and marketing department at Savvis. But that wasn’t going to help him get to the root of the problem.
“I’m a great believer in touching the flesh and listening,” Ousley says. “One of the biggest challenges a new executive has is listening to the pulse of the company. You don’t do it by having it filtered through multiple layers of management. You have to go talk to everybody and you have to talk their talk. If you go down and listen to people and then you take some action, you really start to get people to enlist and get the organization to enlist.”
Ousley worked with his HR department to put together small group sessions with anywhere from four to 10 people from each group representing different areas of the company.
His focus was clearly on the sales and marketing department, but he wouldn’t do himself much good if the sales and marketing personnel were the only ones he spoke to.
“Let’s face it, sales management is biased,” Ousley says. “They have been living it at all levels. So I solicit from the sales organization but also the other support organizations and HR, finance and operations. I try to assimilate a lot of viewpoints, not just sales management’s viewpoints. Where do we have strong leadership in the sales organization? Where do we have strong talent? Where do we have weak talent?”
Break the ice in these sessions by opening up about yourself and encouraging others to do the same if they seem reluctant to speak up.
“You have a small group session of support engineers and you have 10 people who you have never met before,” Ousley says. “They are all nervous. So you just say, ‘OK, let’s go around the room. Introduce yourself. What do you like about Savvis? What don’t you like about Savvis?’ By the time you get around the table, everybody has gotten issues on the table.”
But it’s not enough to just hold meetings and expect that you’ll get all the answers to your problem. You have to work harder than that to see and hear what people are thinking.
Savvis put together an “Undercover Boss” day, a takeoff of the hit CBS television series in which CEOs get down in the trenches and experience what their employees do every day.
“My day was with the help desk,” Ousley says. “They get hundreds of calls every day. But I always knew that they put people in front of me who were the best people.”
Ousley wanted to hear from those people, but he made it a point to stray from the prearranged encounters and talk to other people, as well.
“So I’d sit in little cubicles with four or five people, and I’d be talking to one individual who would be showing me what they do, and then I’d lean over and talk to the other four that were close by and ask a question,” Ousley says. “Do you see the same problems? So there are ways to make sure you’re not just filtered to the most talented people and the noncomplainers.”
Ousley made it a point to quickly respond to each group after he had met with them and explain to them what he had taken from their meetings and discussions about the state of sales and marketing at Savvis.
“I try to crystallize it down to a few key messages that I heard,” Ousley says. “So maybe one or two, three maximum. I go back and I will send a note back to that group saying, ‘Here’s what I’ve done about this. Here’s who I have talked to.’ They have to see some visible business results if it’s something that’s important to them.”
You can’t afford to talk to every last person and group in your company, and then figure out what to do about it.
“You have to have some impact in the first six to 12 months or the organization just doesn’t believe you are going to have any impact,” Ousley says. “They just don’t believe.”
As Ousley began to get a clearer picture of what was happening at Savvis, he decided that some personnel changes needed to be made.
“We had to make some changes in the sales management both at the top as well as down,” Ousley says. “The first-level sales management is really critical in any company. They are the ones touching customers and prospects at the very first level of sales support people. We really looked very hard at the talent at the very first level of sales management and made a fair amount of changes. We did some extensive training and put some new training programs in place to educate the ones we felt did have the potential to excel.”
Ousley did make a change at the top of the sales department. But for the most part, you as the CEO should not be deciding who stays and who goes, no matter how thorough you were in your information-gathering sessions.
“You’re not that close to it down in the organization,” Ousley says. “If I’m getting e-mails from people complaining about this or clients saying we have quality problems or a service problem or a sales problem, I’m going to look at the quantitative data. I’m going to talk to people and talk to different support organizations and then tell the leadership, ‘We have some issues that need to be fixed. You need to tell me how you’re going to fix them.’”
One thing you do need to be sure of, however, is that a person who is taking a new position is better and more qualified than the person he or she is replacing.
“They have to be replaced by somebody that is perceived by the organization as better,” Ousley says. “If you have to let a district sales manager go and you replace him or her with someone that is perceived as better, the fear goes away. If you put someone in there who is perceived as not as good as the one you just terminated, then you get lots of fear and concern and frustration.”
It’s not always easy when you’re making changes to say, “Here’s where it starts and here’s where it’s going to end.” But you do owe it to your people to make sure they aren’t caught off-guard and that they understand when and why changes are being made.
“If you can communicate effectively why change needs to take place, then in general, people will say, ‘OK, I understand. That’s obvious. We had to do that. That person wasn’t part of the mission here,’” Ousley says. “It’s all about communication. If you can communicate why you’re changing this, the ones who want to understand it will. There will always be naysayers, and you can’t ever dispel all the fears. If you can communicate why things are being done, people can buy in to it.”
You also need to continue to show that there are open lines of communication between you and your employees and that the feedback they provided to you wasn’t for naught. They need to know that you’re using that feedback as changes are enacted.
“One of the things that became obvious to me in all these small group discussions was everybody was disgruntled over the lack of any merit increases for several years driven by the recession,” Ousley says.
Ousley felt like merit increases would accomplish at least two good things: They would show that he had heard employee concerns and was responding. They would also be perceived as a sign to employees that, “Hey, you’re part of our future. And here’s a bump in pay to prove it.”
“They are going to be rewarded for their energies,” Ousley says. “Then people have to look at themselves in the mirror. If I didn’t get a merit increase, why is that? That doesn’t make them any happier, of course, but if they are honest with themselves, it does have some impact.”
Ousley wanted employees to know that he didn’t view the changes he had led and implemented as the cure for everything that had been a problem at Savvis. So when employee surveys were conducted and revealed that some people still felt like there wasn’t enough communication, he openly talked about it.
“We had an employee meeting that I led and we showed the good, the bad and the ugly,” Ousley says. “Then I basically said, ‘We’re going to work on these three or four areas.’ That message gets across that, ‘OK, they are listening and they are going to do something about it. I can give my input.’”
As Savvis moves into 2011, the company is showing signs it’s on the right track. After posting $874 million in fiscal 2009 revenue, the company is on pace to build on that figure in fiscal 2010.
“The management team we put in place is leading this organization very effectively now, or much more effectively than in the past,” Ousley says. “So the changes we made in some of the senior leadership are working, so I feel good about that.”
Ousley says professional leadership training is one of the most important changes and will help maintain a culture focused on growing the business.
“You have to go listen to people and then you have to go do something,” Ousley says. “You have to show something visibly, show that you’re changing something. Those are a couple of the front-end leadership things that are pretty tried-and-true and work pretty effectively.”
How to reach: Savvis Inc., (800) 728-8471 or www.savvis.net
The Ousley file
chairman and CEO
Born: Burbank, Calif.
Education: Bachelor of science degree, business administration, University of Nebraska
What was your very first job?
I picked up golf balls on a golf range.
Who has been the most influential person in your life?
My grandfather in Lincoln, Neb. He started as an elevator operator in a little department store and ended up owning it. He was such a prince of a guy, and I learned so much from him. He was in Lincoln, which is where the university is, and later in life, I worked in his store. He had such a great combination of both corporate charity and church and just a combination that blended them all together.
What is the best advice you’ve ever been given?
Be patient. One of the best career things that ever happened was I got passed over for a very senior position in one of the companies when I was moving along rapidly in the high-technology industry.
I got very frustrated because I did not feel that the person who got put into the position was anywhere near my peer. I remember my boss sitting me down and telling me, not rationalizing why he made the decision, but saying, ‘Jim, be patient.’ I was going to quit but listened to him. I ended up being CEO of that company, Control Data Corp.
What one person would you most like to sit down and talk to?
The premier of (the State Council of the People’s Republic of China,) Wen Jiabao. I’d just like to understand how he is thinking about this explosive growth in China.