Bob Din didn’t want to overhaul his sales approach at En Pointe Technologies Inc. But the recession and resulting drop in company revenue was forcing his hand.
“The recession was tough on the IT business,” says Din, founder, chairman and CEO at the 1,200-employee technology solutions provider. “People really did not have the kind of money or budgets or allocation to spend on IT. Everybody was looking to cut expenses.”
En Pointe helps business and organizations in a variety of sectors find IT solutions that make it easier to get work done. Din’s problem was that a growing number of customers could no longer afford his services and as a result, business volume was dropping off significantly.
“Let’s say they are going to buy $1 million of equipment,” Din says. “The recession hits, business slows down and they say, ‘OK, this $1 million? We don’t have $1 million to spend anymore. Maybe we buy $100,000 worth of equipment.’”
That’s a pretty big chunk of revenue to lose and Din needed to find a way to stop the bleeding. In order to do that, he had to show customers that he both understood what they were going through and was willing to shake things up to retain their business.
“If you just sit in your store and hope like hell somebody is going to call you, it just doesn’t work,” Din says.
While many of his customers couldn’t afford the same large-scale purchases they had been making to that point, it wasn’t as if they wanted to stop doing business with him entirely. But it was up to Din to get creative and find a scenario where they could get what they needed and he could still make money.
He decided to allow customers to make monthly payments for products and services that they needed. It was certainly not a revolutionary idea. But Din wasn’t looking to remake the sales industry. He just needed a way to keep his customers and he felt he had an idea that would work.
“The benefit for the customer was he didn’t have to come up with all the money,” Din says. “We ended up getting more business because most of our competitors were not thinking like that. The advice is simply don’t just sit and wait.”
It’s this willingness to adapt that has helped Din grow En Pointe from the company he founded in 1993 to a leader today in the providing of IT services. The success of the customer solution allowed him to spend more time developing the company’s evolving cloud technology.
Here’s how Din keeps his wits about him during difficult times and works with those around him to find solutions to key problems at En Pointe.
Don’t give up
If there is a problem threatening your business, such as the sharp drop in sales volume Din was witnessing at En Pointe, you’ve got to believe that the solution to that problem is right around the next corner. And if you don’t believe that, you’ve got to at least convince your employees that you believe a solution is within reach.
“You as a leader cannot come to your office with your face down, depressed and thinking the sky is falling,” Din says. “You have to look at positive things and not negative things. Setbacks are always there in business. Sometimes you lose a big customer. Sometimes this happens or that happens. You’ve got to be strong.”
When you leave your office, find a way to blow off some steam. But when you return or if you find yourself in a situation where you can’t leave the office, you’ve got to find a way to keep your cool and stay upbeat for your team.
“Your employees and your associates, they look to you as their leader,” Din says. “If you go down and get depressed, the morale of the whole company is going to go down. You cannot afford to be down. You’ve got to put a brave foot forward. ‘Yes, we’re going to overcome that. These are the challenges and it’s going to take us a little longer, but we’ll get there. You as the leader have to have that leadership quality to take everybody with you and keep everybody motivated.”
Of course, putting on a happy face is only part of the answer.
Din still had to solve the problem of losing customers. But the key to finding an effective solution was that he launched into the effort with a positive mindset. It kept him feeling good and gave his employees a better outlook on the future as well.
Din recalled the challenges he faced when he launched his first business in the early 1980s.
“Back when I started my computer store, everybody said, ‘You’re crazy,’” Din says. “People are going out of business. Why are you buying that? It doesn’t make any sense. I believed I would go in there and I could turn it around and I could go out and start selling. I went outside and looked at how many customers are coming into a typical store and I believed I could do better. Whatever your idea is, really believe in it. You have to believe in whatever you are doing. Don’t let people bring you down and be persistent about it.”
Flashing forward to En Pointe, Din was confident that if his team sat down and put their heads together, they could come up with a way to make a financing option work for his customers.
“The bottom line is, when you run into challenges, sitting back and strategizing is something that is very important,” Din says. “What you cannot do as an entrepreneur is say, ‘We’re working really hard,’ but you never take the time to sit down and think out the strategy. This is where the market is going. Sit down and think about it. Debate it a little bit and see where you want to go. Think about how you are going to solve the customer’s problem.”
There may even be times when you find it helpful to break away from the team for a bit to gather your own thoughts. Don’t be afraid to do that, and then return to the team and continue moving forward with whatever new ideas you have come up with.
“Obviously, your objective is how do I make more money and more business?” Din says. “That’s very challenging in a day-to-day environment because you get into your office and there are so many people after you that you just don’t have the time to think and strategize.”
Whatever you need to do to get your mind around the solution, and then engage your team in the plan to make it happen, you need to do it. The key is approaching the process with an attitude that success can be achieved.
Back up your plan
When Din reached out to banks and lenders who could potentially handle the financing end of his monthly payment plan option for customers, he made sure he had all his facts straight about what he wanted to do.
“You line yourself up with some finance company who would actually do the financing for you, as long as you can get them to back you up,” Din says. “If I’m sitting in their shoes, the first thing I’m thinking is, I want to understand whoever is applying for the loan and their ability to pay me back. Is he really capable? Your personal integrity — that’s so important to the bankers. You’ve got to go and tell them how credible you are. Tell them a story that shows your integrity. You want to establish credibility because lenders want to lend to forthright people.”
In addition to your ethical standing, you want to convince lenders that you have a plan for what you’re going to do with the funding you are seeking.
“When you are seeking money, you have to have your own projections, you have to have your balance sheet and your income statement,” Din says. “You really have to understand it yourself. You can’t, as an entrepreneur, say, ‘Oh, here’s my CFO. I don’t understand finance. Why don’t you talk to him?’ The minute you say that to somebody, especially if you have a business which does not have any hard assets, most lenders tend to shy away. Understand your numbers inside and out and understand your projections inside and out.”
Tell them about what you want to do and don’t worry about sticking to only the financial details. That can only help reinforce your commitment to the project in their eyes and increase the likelihood that they will decide to help you.
“This is what we’re doing,” Din says. “These are the customers we are targeting. This is what our products and services are and this is how much money we expect to make. This is how long it’s going to take. That is the message you have to convey -- why your products and services are better than your potential competitors. That’s what it takes.”
Even if you meet with a lender and get turned down, if you’re paying attention to what they are saying, it doesn’t have to be a waste of your time.
“The people who turn you down, the best thing you can do is ask them, ‘Hey, what is missing?” Din says. “What was wrong? What if I had certain things, would you lend me money? It’s a learning process. Then you understand the objections you’re going to get from the next person so you’re better prepared to address them or put it in your business plan and cover it upfront when you go to see them.”
Appraise your customers
The worst thing that can happen when you enter into a financing arrangement with your customers is obviously that they fail to follow through on making their payments.
“You don’t want to be in a situation where after two months, they tell you, ‘I don’t have the money to pay you,’” Din says. “You want to make sure their finances warrant that they can turn around and pay you and that they are going to be around.”
Find a credit service bureau and run a report on the business you’re talking to.
“Just like consumers, I can run your credit report any day, any time,” Din says. “Similarly for businesses, there are a lot of services available where you can run a credit report on the business and figure out how strong their balance sheets are and how strong their income statements are. Then check a couple of their references.”
Din prefers to focus on who a company’s major suppliers are and who that company’s biggest customers are. He also likes to get out and meet with the finance person from the company he’s considering doing business with.
“You’re going to give them something on rent, you want to make sure they have the ability to continue paying you,” Din says. “Go and see the customer and look them in the eye. Ninety percent of the entrepreneurs are smart enough to figure it out sitting in front of them if the person is lying or where they stand.”
In the end, it may come down to a gut decision. And Din suggest you err on the side of caution.
“If you have a deal that is skinny to start with and the company is marginal, it’s better to pass on that sale than to have a sale and then not be able to collect,” Din says. “One, you’re not making enough money to start with and then if they don’t pay you, it really hurts you.”
How to reach: En Pointe Technologies Inc., (310) 337-5200 or www.enpointe.com
The Din File
Born: Lahore, Pakistan
Education: Undergraduate degree, engineering, Northrop Institute of Technology, Los Angeles; MBA, University of West Los Angeles
Who has been the biggest influence on you?
I have been very fortunate in a lot of ways. I wish I had mentors, but I really didn’t. What I had was a lot of customers who were very kind and gracious and certainly helped me in a lot of areas in business and finance and so forth. My mother’s family, a lot of them are in business. They always inspired me by how well they were doing, which inspired me to go into my own business.
What is the best advice anyone ever gave you?
Believe in yourself. If you believe in something, believe in that. I always believed in myself that I could accomplish it.
What was it about going into business that intrigued you?
I always wanted to have my own business. I did finish my degree, but the rewards of owning your own business are tremendous. People say there are a lot of good things. You can set up your own times, you don’t have to report to anybody, but you end up working way more than a normal person. We work twice as hard.
MorrisAnderson was a mess and it was largely going to be up to Daniel F. Dooley to fix the dysfunctional turnaround consulting firm.
“Historically, the firm had never had one clear leader,” Dooley says. “It was fractionalized into various geographical segments that didn’t collaborate with one another. A cynic would say they competed with one another.”
One of Dooley’s challenges was that while the then 25-employee firm was having problems, it was still profitable. So there wasn’t a lot of motivation to make big changes to a firm that many didn’t even think was broken.
“We hadn’t adapted to what was going on in our marketplace,” Dooley says. “The people we were competing with were much more professional and much more advanced in marketing and in their ability to convey what they did.”
Dooley needed to shake things up. So he led the way to removing three of the firm’s seven owners from power.
“We terminated two, and one we demoted, and he hung on for a couple years and then left of his own volition,” says Dooley, the firm’s principal and CEO. “We had to change out the management group to some degree and then the second thing we had to do was clearly unite behind one clear leader.”
Dooley was going to be that leader. And he was going to have to take drastic action to get everyone’s attention that change was needed. It wouldn’t work if he tried to tiptoe around the moves.
“The times people make really fundamental changes in their lives usually centers on a trauma,” Dooley says. “There has been something really bad that has happened. For example, a person who smokes cigarettes and they can’t stop. Perhaps when they have a heart attack and they almost die in the hospital and they have a quadruple bypass, maybe that’s when it becomes a little easier to quit smoking. They’ve had such a trauma, they have the ability to think things through and act a little differently.”
It was a major move. Dooley wanted people to know he was the leader, but he had to show it wasn’t just him ruling with an iron fist.
“We set up a board structure so I reported to a board and wasn’t a loose cannon doing what I wanted,” Dooley says.
With the board’s backing, Dooley went to work trying to create a culture that was more collaborative than competitive.
“I felt the best way to do that would be to take direct control of all the employees myself and to model collaborative behavior and to try to talk about it and preach and convince people that’s how we had to act,” Dooley says. “We had to work together and not against one another.”
There were some casualties as some didn’t like the new way things were being done. But Dooley needed to focus on those who were still in the fold and get them on board with his new vision.
“You can only work on a couple things at a time,” Dooley says. “One of the mistakes people make when they are in crisis or in trouble is they try to do too much too quickly. So they launch 25 initiatives. That ensures nothing will get done.”
So how do you get people to support you and buy into you with positive energy when you’re taking decisive action?
“You have to develop a strategy or a plan that is pretty realistic and not pie in the sky,” Dooley says. “It’s, ‘Yeah, we can do that. It makes sense we can do the following three, four or five things.’ Then you have to create some communication so people know what you’re trying to do and why you’re trying to do it so they can hopefully buy in or buy out of what you’re trying to do.”
Six years later, MorrisAnderson has 40 employees and reported 2010 revenue of $20 million. And while the tough call he made back in 2005 got the ball rolling on needed change, patience is still required.
“You have five or 10 or 15 years of history that you’re trying to overcome in two days,” Dooley says. “It’s kind of unlikely.”
How to reach: MorrisAnderson, (312) 254-0888 or www.morrisanderson.com
Answer the questions
Daniel F. Dooley has a lot of experience answering tough questions. He faced it in the remaking of MorrisAnderson and he faces it in the work that MorrisAnderson does as a turnaround consulting firm.
The key in both situations is not hiding from the questions that people have for you about what you’re doing.
“The more desperate you are or the more difficult the situation, the more you have to openly communicate with employees and give them the opportunity to hear what’s going on,” says Dooley, the 40-employee firm’s principal and CEO. “Try to craft a way that even though they are scared and nervous, they know they are getting the straight scoop from you.”
You do that by answering every question that comes your way with complete honesty.
“It’s more than just talking,” Dooley says. “You have to really listen to what they say. Those questions are important to them. Whether you think it’s important or not is irrelevant. If it’s important to them, it’s important.”
Robert J. Habeeb had no intention of taking the easy path to lead First Hospitality Group Inc. through the recession. He wasn’t about to slash jobs and close hotels and then sit in his office and wait for the economic storm to pass. In fact, Habeeb was even leery about cutting bonuses.
“We took a contrarian approach,” says Habeeb, president and COO at the 2,000-employee hotel management company. “Everyone would have understood if we had cut benefits or did away with reward programs or things like that. We did none of that. All of our benefit programs and our sophisticated network of reward programs are what we use to motivate the team. Our approach was to tell the team that their jobs were secure and we didn’t intend on laying anyone off.”
This was, of course, good news for employees at First Hospitality. But could Habeeb really pull it off? Could he manage through what was going to be viewed as the worst economic slowdown since the Great Depression without laying anyone off?
It was going to be a challenge because the hotel business was one of many industries getting slammed by the recession.
“We found ourselves, after a wonderful year in 2008, falling right off the edge businesswise in terms of consumer spending in 2009,” Habeeb says. “We didn’t know where the bottom was and there was a long period of time where the best news you could hear was that it didn’t get worse and that news didn’t come. We expected our strategy, which was to hold firm and keep the team together as best as we could, we knew that would be in jeopardy if things diminished to the point where we had no choice but to go to some of those measures.”
Habeeb made no promises. But make no mistake; he was putting himself out there with his people. By being public about his belief that First Hospitality could manage through the recession without draconian cuts, he was offering hope that could easily have been dashed. And that would have made the bad news and ensuing cutbacks that much more painful to take if it came to that.
“It would be untruthful to say that it’s not difficult,” Habeeb says. “The picture just looks so frustratingly bleak. But there’s nothing to be gained by not having yourself in forward motion and dealing with it.”
Steady the ship
Habeeb needed to speak to his people. The stock market was crashing seemingly every day, keeping people away from his hotels in droves. But perhaps just as bad, the news was only fanning the flames of fear in his employees.
“It’s the fear of the unknown that’s really wreaking havoc on the markets and creating a lack of confidence,” Habeeb says. “We tried to overcompensate for that. We communicated regularly with our team. We told them where we were at. We told them what our strategy is and how it’s working. Our employees really like that Steve Schwartz, who is our chairman, and myself, we went to great lengths to interpret what’s happening in the economy and what impact it’s going to have on our company, our business and their job.”
That last part is crucial to any kind of pep talk you might try to give your people when times are tough. As much as they may appreciate your financial analysis, they really have only one concern.
“Their first concern is how does this impact me?” Habeeb says. “While all of us in the business world are very quick to talk about our companies, translating that down to, ‘and here’s the impact this will have on you,’ is really critical.”
If you’ve hired good people, they care about your business. But when they see people losing their jobs every day on the news, your employees may quite understandably become very selfish. You’ve got to give them a reason to believe in you and a genuine indication that you’re thinking about their futures, along with the future of your business.
“You need to take time to rehearse in your head what you’re going to say and what questions you’re likely to hear from the audience when you open it up to questions, while at the same time avoiding sounding rehearsed at all costs,” Habeeb says. “My armchair analysis of what people are becoming really frustrated with today is everyone knows we’re dealing with a tough economy. Mr. and Mrs. Front Porch are getting tired of the demagoguery and the rehearsed speeches with punch lines. What we found is that people really respond when they know you’re talking from the heart and when you’re speaking with honesty and humility.”
Habeeb laid out his plan to not lay people off and not cut employee pay. He quickly added that despite this plan, it wasn’t going to be business as usual at First Hospitality.
“We’d all be going a year without a raise, but no one was going to be asked to take a pay cut,” Habeeb says. “A key on the employee side is fairness. What we find is everyone is willing to do their part so long as they perceive that everybody else is doing their part. The strategy I suggested can come back to bite you if you’re not equally asking everybody to shoulder the burden. We made it clear from the beginning that everyone in the company is going to do their part.”
So what did Habeeb have in mind to manage through the recession without layoffs and without pay cuts? Well, he started by getting laser focused on the costs he could contain.
“We’re in the service sector, so labor is important,” Habeeb says. “Since we made the conscious decision not to have cutbacks and layoffs, managing the schedule and scheduling people properly became critical. It was making sure that we have enough people to service our guests when we were busy and when we’re not busy, we sent people home early. Those are the day-to-day things, the business of doing business.”
This strategy can easily lead to hard feelings if you’re not careful.
“The easiest way to deal with a situation like this is to begin to cheat everybody,” Habeeb says. “You can cheat your guests and cheat your employees. The proverbial take the beef off the bun in a hamburger restaurant. But our belief is that is a very short-sighted strategy and it’s going to come back to negatively impact your business very quickly.”
The obvious answer, which isn’t always easy in practice, is to maintain the same level of customer service with fewer people and make sure you’re not shorting or favoring one group of employees over the other in terms of how work and responsibility is distributed.
But in addition to trying to be fair, you’ve again got to show employees that you truly value their presence at your company. You don’t need any money to do that.
“You’ve seen all the studies that talk about how people in job satisfaction, they look to monetary reward,” Habeeb says. “But they also look for recognition. They also look for feeling appreciated. They look for a sense of belonging. We really play heavily on those things and on making sure everyone feels part of the team and helped make the decisions on what we were going to do to keep our company healthy during this tough time.”
Habeeb’s ability to manage costs would ultimately determine whether he could get through the recession without having to lay people off. So why not get the people whose future is at stake involved in the effort?
“You have to ask yourself, ‘Am I truly fostering an environment where people feel comfortable giving feedback?’” Habeeb says. “The biggest wall that you have to knock down in getting honest feedback from your team members is that everyone is afraid of communicating upstream to the boss and that there might be consequences if they are critical.”
Talk to your people about the personal challenges that they face in making ends meet. Make that connection that will enable them to feel better about offering you their suggestions. And try to remove that image of you being the person who is looking to catch employees doing something wrong.
“We try to go out of our way to catch them doing something right and then compliment them for it,” Habeeb says. “People identify with a leader who brings themselves into a room as someone who speaks with humility and a little bit of humor and talks to people shoulder to shoulder and on their level. My experience over the years is that people really embrace that.”
It’s got to be genuine, however. If you really want to build those bonds and earn their loyalty, it’s got to be more than small talk.
“Focus on the human side,” Habeeb says. “If you can’t relate to those folks and empathize with them and learn from them, it won’t work. I’ve learned a lot.”
Make some money
The other piece of Habeeb’s plan to successfully navigate the recession without cutbacks was to find areas where the company could make money.
“When the market softens up, you either have to shrink with it or attempt to gain share to get back what you lost from the market circumstances,” Habeeb says. “For some reason, when times get tough, there is this natural tendency to begin making cutbacks in areas like sales. Our view has been that that is crazy. At a time need to grow share, you need to deploy more assets against that problem rather than less. We actually staffed up in our sales area during this last downturn and it helped us.”
Don’t just talk about how tough things are out there and wallow in frustration. Do something to make your situation better.
“We tried to be as forward-looking as we could be,” Habeeb says. “I found that was of great psychological help to the team. We’re all in recession fatigue. I’m so tired of hearing about it. We found that it was of great benefit psychologically to show that the company is still forward-looking and we still have a growth plan.
“We changed offices. We upgraded our computer systems. We spent over $1 million upgrading our IT infrastructure over this time because it was prudent to do so. There are so many vendors out there that are far more negotiable than they were a couple years ago. Because we have a clean balance sheet, we took advantage of that to undertake big projects. People saw that and I think they took comfort in it.”
Your people feed off the confidence or lack of confidence that you convey to them.
“Regardless of what words we use, if the company is seen to be shrinking or running or not continuing to look forward, than they know we might be in trouble and we have an inward focus and we’re becoming battered by the recession,” Habeeb says. “We want to set that example that we’re dealing with it like everybody else, but we’re continuing to look for a better tomorrow.”
The team approach has paid off for Habeeb and First Hospitality.
“We’ve grown our business through this recession,” Habeeb says. “We certainly were faced with the same challenging environment as everybody else. But we doubled our efforts and worked hard at marketing our hotels and maximizing the revenue potential. I’m very proud to say through this recession, and after 9/11, we didn’t lay off a soul and in fact we added jobs back.
“We made it clear we were all going to hang together and that the company wasn’t going to back down from its responsibilities. We hoped everybody would follow our example and people did.”
How to reach: First Hospitality Group Inc., (847) 299-9040 or www.fhginc.com
The Habeeb File
Born: Scranton, Pa.
Education: Undergraduate degree, general business, Lackawanna College, Scranton, Pa.
What was your very first job?
While I was going to college, I took a job in a bar and restaurant. That’s how I got drawn into this industry. I fell in love with it and stayed. It was exciting and very people-oriented. It’s pseudo entertainment. For a young person, it was pretty exciting on a daily basis. You were in the middle of things that were happening. I worked my way up. I have done everything from tending bar and cooking to serving guests and managing. There isn’t much of this industry I haven’t done at some point.
Who has been the biggest influence on you?
Far and away, my dad. I teach a grad class and I ask this question and I’m amazed at the number of people who have that same answer. So much of your character is developed by the time you are 18 years old and I give my dad No. 1 position there. And I’d say Steve Schwartz, who is the [CEO], chairman and founder of this company. I’ve been here since 1997.
What was the most important thing your dad taught you?
Integrity. My dad was very old-fashioned and old-school. Hard work and integrity, those were all lessons he really pounded into our heads.
What is the advice you’ve ever been given?
Protect your name. If everything you do, you remember in the back of your mind that you’re signing your name to it and you only endeavor to do things you’d be proud to sign your name, too, then you never do things you wouldn’t.
Michael Benoit took a risk when he launched Total Hockey Inc. in 1998. He had torn up his knee playing basketball and initially chose hockey as a sport, one he could play with less wear and tear on his legs. As he became more intrigued with the game and less excited about his job leading a health benefits consulting business, he decided to take a shot at building a business that sold hockey equipment.
The 210-employee company has grown steadily and earned revenue of $18.6 million in 2010. Benoit, the company’s founder, president and CEO, has high hopes to keep it going in the future.
He discovered one of the keys to successful growth is to not take the entire burden of building the business on your own shoulders. Take the lead in that effort, but don’t be afraid to accept or even seek help.
“I’m just as likely to be putting a fixture together as analyzing financials as negotiating with vendors,” Benoit says. “So I’m involved with a lot of different things. That said, I try to give our staff a lot of rope. The worst thing somebody can do is overmanage people. The best approach is to find good people and let them run. I like mistakes.”
Benoit describes the state of the hockey equipment retail industry as “primitive” when he first started his business.
“You could easily imagine you were back in the ’50s doing retail,” Benoit says. “It was very fragmented with a lot of mom-and-pop, single-store operations. We’re part of this drive bringing a much more modern, much more disciplined approach to the business.”
Benoit relied heavily on his people to help develop a modern identity he hoped would be attractive to both shoppers and investors. He wasn’t afraid that these people might make a few mistakes along the way.
“If you expect people to work hard and innovate and you expect them to make mistakes, you’ll be OK,” Benoit says. “Eventually, there will be a mistake. There will be problems and there will be things that are done that aren’t done the way you would do them. But that’s OK. Most companies suffer from overcontrol on things.”
So if one of your supervisors wants to put a line of equipment in one part of the store and you think it should go somewhere else, you have to ask yourself a question: Is this a battle you need to fight? Or are you better off letting your people do their jobs and trusting that they know what they are doing?
“When you have people out there trying to make things happen, there are a lot of times where I don’t agree,” Benoit says. “Whether it’s before the fact or after the fact, I’ll say, ‘Boy, I wouldn’t do that.’ The thing that is very important to me and what I insist my staff be conscious of is a sense of integrity and a sense of doing the right thing. Beyond that, I’m all in favor of them taking chances and trying to create new things and experimenting.”
Benoit believes that many entrepreneurs lose that willingness to trust as the years go by. They start out as very bold and open to taking a few chances to achieve their dreams. But somewhere along the road to growth, they lose that edge and become more conservative.
“If you’re not moving and innovating and encouraging people to fail, your days are numbered,” Benoit says. “They might be numbered in years, but they are numbered. We’re kind of always living on that line. That’s the target. We want to be just safe enough.”
As you ponder the growth of your business and the wisdom of a particular risk, ask yourself a question.
“What happens if you don’t do this?” Benoit says. “If the answer is, ‘Everything is OK,’ then it probably doesn’t make sense to do it. But if we will lose ground to someone who is willing to take that risk, that raises the importance of it and maybe you need to give it some more thought.”
How to reach: Total Hockey Inc., (866) 929-6699 or www.totalhockey.com
Stay true to you
When you’re trying to sell people on your business, you can’t put on a show that isn’t true to what you’re all about. You may win them over that day, but it won’t work for very long.
“The biggest mistake I’ve seen is trying to act like what you’re not,” says Michael Benoit, founder, president and CEO at Total Hockey Inc., a 210-employee hockey equipment retailer. “Trying to mirror the listener or prospect too much. Trying to tell them what they want to hear as opposed to what you’re all about. If you’re true to yourself and true to your market, you should be OK. It’s not always an easy environment, especially in the last few years with respect to financing.
“The banks aren’t terribly imaginative these days. But that still doesn’t mean you can afford to try to be what you’re not.”
When you’re trying to expand your business, don’t be the only one talking to potential investors or customers you want to engage. Let other people in your organization represent you, even if they aren’t managers. And don’t give them a script.
“I would rather trust,” Benoit says. “It’s better that way and much more natural. People can read preparation. That’s hard to disguise that somebody has been prepared.”
Caroline Nahas doesn’t try to be intimidating. But it would be naïve to deny that her position has that effect on people. So when she speaks to employees at Korn/Ferry International, she works hard to be very approachable.
“People can be intimidated through absolutely nothing that you did other than you have the title,” says Nahas, office managing director of Southern California for the executive search firm. “I always think one of the greatest approaches is to sit down and say, ‘Hi, I’m interested to hear what you think.’”
Nahas leads about 150 employees that work in offices in Irvine and Los Angeles.
“Show them the respect and show them that you think their views and what they have to say is of value,” Nahas says. “There is bound to be someone, whether they come up with a right or wrong statement, someone is going to open up. And suddenly, you are getting into this dialogue and then you can ask some of the questions that you’re curious about.”
Korn/Ferry is going through a transition where clients expect the firm to have more intimate knowledge of what recruits can do and how they can address specific concerns in their business.
When your business is going through a major transformation, you need to get your employees at all levels of your organization involved in the discussion about how to address the changes.
“I might say, ‘We are going through this strategic change, and the people on the executive team are extremely excited about it for these reasons,” Nahas says. “I’m curious, what would you do if you were us to get this out to the population of the firm?’ What you have just done is show them a great deal of value. You’ve said, ‘I value your opinion.’ When you do that, you break down the barriers, but you also engage them and win them over and make them part of something rather than making them feel part of something that is being imposed on them.”
Keep in mind that just because you’ve been thinking about this change for a long time and have talked about it with your peers, others in your company may not be as familiar.
“If you’re a CEO and living this day to day and it’s sort of your overall vision, you’re very deeply steeped in the subject,” Nahas says. “Sometimes people can forget because they are so engaged in it and so enthusiastic and passionate about it, they forget that the people they are communicating to haven’t had the benefit of all that vetting, of the debating, the learning and the creating. So you just have to be more repetitive and consistent in terms of delivering that message and trying to put yourself in their shoes, three or four levels down. Make it real for them.”
Reality is another obvious but often overlooked component in communication. Just as you look for concrete evidence to see that your business is growing, your employees appreciate tangible examples to help bolster the case for whatever it is you’re telling them.
“If you tell people stories about why something has been successful, giving them real-life examples of clients who have integrated and used some of those services and how they have benefitted and how the partners or the people at Korn Ferry identified those needs within the clients is extremely impactful for helping people understand how something works,” Nahas says. “Telling them on paper or giving them theoretical ideas is not as effective as practical application and real-life examples.”
After you’ve had a good discussion with someone who you don’t normally talk to, follow up with a note to express your thanks for their time.
“Write back and say, ‘I truly appreciated the open, candid session we had,’” Nahas says. “’Your input was valuable and your active participation made a huge difference, not only in the meetings but obviously also in our company.”
How to reach: Korn/Ferry International, (310) 552-1834 or www.kornferry.com
Don’t act too soon
Caroline Nahas doesn’t face a lot of conflict in her role as office managing director of Southern California for Korn/Ferry International, where she leads about 150 employees. But when she does, she works hard to maintain a sense of impartiality.
“When you’re going to be involved in resolving conflicts with individuals, it’s very easy when the first person comes in and gives you the story; generally, that person is obviously editorializing,” Nahas says.
“It’s not that they are trying to do that. It’s just natural. They have their own view and they are very passionate about what they are raising objectives about. It’s very easy, as you’re listening to that, to get drawn into the story and to potentially show a reaction or to even prematurely make a judgment.”
If you want to maintain peace in your company, you’ll resist the urge to make that judgment before you’ve heard the other side.
“Listen, don’t render any kind of a judgment, don’t show any kind of expression that you agree or disagree,” Nahas says. “You’re just listening. This is such a great adage. There’s always two sides to the story. Often times neither one is right or wrong or they are both right and they are both wrong. But it’s absolutely critical you get all the information before you react.”
It wasn’t arrogance that left Delta Dental of Missouri so unprepared for the sudden influx of competition it was facing. It was the fact that up to the beginning of 2010, there really had not been anyone to challenge the company’s status as the leader in providing dental benefits.
“For a number of years, there were limited choices in terms of dental benefit plans,” says David Haynes, the 113-employee company’s president and CEO. “Delta was the premier choice. As the economy worsened, large health payers have started seeing dwindling bottom lines because of increasing medical claims costs. They started looking for other revenue streams, and as they looked, a natural one to look at was dental. So we started seeing a lot of increased competition.”
Haynes was brought in to lead the business in January 2010. He was given the challenge of preparing this untested company, which had generated $437.4 million in 2009 consolidated revenue, and getting it ready to face this new threat.
“Because of the lack of change that had occurred for a number of years, as a business, we weren’t organized strategically as a team and we didn’t operate as a team because it wasn’t necessary,” Haynes says. “We operated more in silos. Each discipline represented things they needed to take care of and business was good. As you’re starting to move into a rockier climate and you know your business model needs to change, one of the first things I said we needed to address was how we structured the organization and how we operate and how we make decisions. We had to start making decisions much more quickly.”
This would be easier said than done as everyone had grown pretty comfortable with the way things worked at the company.
“My challenge is really getting my team and the employees rallied around some common efforts and common goals in terms of the changes that we need to make as the marketplace is changing around us,” Haynes says.
He didn’t have a lot of time as the competition was going to get more intense. But he had faced tough challenges before. This was a guy who as a high school student singlehandedly managed a lunchroom of 600 factory workers one summer and left an indelible mark in doing so.
“My supervisor at that time, he said, ‘You know, you’re one of the greatest guys I ever had working for me,’” Haynes says. “’But I’m going to be glad when you leave. You got all my people to quit smoking and they are going back to school and they think they can change the world.’ And I said, ‘You know what, Danny? They can.’”
Haynes faced a daunting task. But confidence would not be an issue in his effort to overcome it.
Build a team
The silo problem was first up for Haynes as he sought to put Delta Dental in a better position to respond to its new competition. It was a problem Haynes knew quite well having served as chief financial officer at the company for eight years prior to becoming CEO.
“As CFO, I dealt only with financial issues,” Haynes says. “As a chief operating officer, you dealt only with the day-to-day operating issues. Human resources and marketing, you dealt with your respective disciplines, as well.”
Haynes needed to demonstrate that these departments would benefit from knowing what the other was doing. Operations needed to know what IT was doing and IT needed to be familiar with what sales and marketing was doing and sales and marketing needed to be aligned with finance and so on and so on.
In order to accomplish that, Haynes had to get them to work together. He had to create a safe environment where they could get through their unfamiliarity and uncertainty about working more closely together.
“They have to feel comfortable to ask questions,” Haynes says of his leaders. “When you’re coming from a siloed environment to a multidisciplined approach to management, you have to make sure people don’t feel compromised at the table. Finance may not be their expertise, so all questions are fair questions.”
When you’re trying to bring leaders together who haven’t had a lot of interaction, the sharing of departmental knowledge is only part of the puzzle. You’re trying to build a team.
“It’s really important as a team to establish and clarify what is your mission and vision for the company,” Haynes says. “I find even with our team at times, all of the disciplines have a different take on the marketplace and what we should be doing. If your team isn’t on the same page in terms of vision, where you’re going, and mission, why you do what you do, it’s counterproductive. It’s wasted energy.
“At a senior team level, if you have that kind of wasted energy, it’s going to multiply out to all of your staff, as well. They are getting a mixed message. What is our vision? My boss said it was this, but I’m hearing this from somewhere else. That really is very difficult for an organization. Make sure you clarify your mission and your vision.”
If you find that people don’t understand your mission and vision and aren’t clear about where you’re trying to take the business, don’t automatically blame your people for failing to grasp your explanation. Take the initiative to solve the uncertainty before it spreads to the rest of your staff and creates even more confusion.
“That is something leaders struggle with because you really like it when people love your ideas, but you have to understand that any time you make a decision, there’s probably folks who don’t understand the decision or aren’t in favor of the decision,” Haynes says. It’s one thing to tell people, ‘Hey, we’re seeing more competition. We have to work more closely together.’ You’ve got to explain what that means and how your plan will solve the problem you’re facing.
“I’ve always looked at those opportunities and said, ‘Well, that means we didn’t communicate it well. We didn’t think through the objectives well enough. We didn’t communicate the objectives well enough. We need to do a better job.’ That’s why I welcome the discussion.”
Deal with resistance
There are times, of course, when it’s not a lack of understanding that makes it hard for people to buy in to your plan. Sometimes, they just don’t like what you’re proposing.
“We had an employee that when I sent this out, I got a bunch of e-mails back on it, and I got one that was a little disgruntled by it,” Haynes says. “He said, ‘I’m really disappointed by this, and I feel really kind of bad that we made this decision.’ I know this employee very well. We corresponded and chatted about it. I said, ‘Here’s the reasons behind why we did this.’ I think it’s important to take that time and effort to deal with employees and deal with them one on one, if at all possible.”
When you’re not able to do it one on one, do it in a broader forum. Try to understand what their concerns are so you can address them. It’s all part of making sure your employees feel respected and feel like they have a voice in what your company is doing. “One of the worst things for an organization at any level is fear,” Haynes says. “You have to get the fear out of an organization. If you can get fear out of an organization, you can move forward at warp speed.”
Few things cause more fear than the unknown. But Haynes need only look at his past experience in the business world to find leaders who were less than truthful with their employees.
“I always had a problem with that because employees are very smart,” Haynes says. “I said, ‘If you have trouble being truthful with an employee, then you’ve made the wrong decision.’ Once you’re comfortable with a decision, regardless of how hard or difficult that decision might be, you should be able to communicate that. You should be able to debate that issue and have people understand why you did that and why it was in the best interest of your organization. If a decision is in the best interest of your organization, regardless of how tough it is, I don’t mind presenting that to anybody. In fact, I welcome that challenge.”
Fortunately for Haynes, his efforts to be transparent about the moves to be made at Delta Dental paid off with at least one member of his team, who has seen the benefit of interaction and the way it can contribute to making faster and more informed decisions.
“I was talking to one of my officers and she made a comment to me,” Haynes says. “She said, ‘You know, when you said you wanted to start bringing senior staff together in that fashion, I wasn’t really sure. I thought, what’s the senior staff going to do? But after I’ve seen these meetings and I’ve participated in them, I’m getting it.’ She’s really excited. She does such a tremendous job of coming to the table and contributing to all the disciplines. The team now is seeing so much benefit in terms of the multidisciplinary approach. They are realizing that we mitigate a lot of business risk by involving experts in very different fields coming together to reach a good conclusion.”
Look at the big picture
Perhaps the most important piece of what Haynes wanted to accomplish was the instilling of core values that would be part of every decision made in the business. These values would be the glue that would guide the company in its new direction.
“Great companies are born out of values,” Haynes says. “If you’re living those values and they permeate your decision making, you can’t help but become a great company. It’s important in terms of how you enforce those values. It’s a daily issue. It’s a moment-to-moment issue. It’s done in the smallest encounters when you’re walking down the hallway to make a copy and a staff person stops and asks you a question about the latest policy change or what’s going on in the board room or whatever that question might be.”
Values often become a punch line at companies that do nothing more than posting a plaque on the wall. It takes years of parenting to instill proper values in your children and it takes an extended effort to convey proper values in the workplace, too.
“A lot of your line managers that are dealing with fires on a daily basis, they aren’t really thinking about, ‘Wow, how does this fit into our values?’” Haynes says. “‘How does this shape our organization?’ You’re trying to connect those dots and you’re trying to lead by example most of the time.”
So values aren’t really something that you specifically talk about. They are guiding principles that you use when making decisions about your business. And as Delta Dental altered its operations to respond to more competition, Haynes wanted to make sure everyone was on the same page with how to act.
“Employees are incredibly smart,” Haynes says. “I don’t care what level they are in the organization. Employees really understand management a lot better than people ever give them credit for. If you’re insincere about values or you’re inconsistent about them, they know it. And they absolutely are going to nail you on it.
“As a leader of the service industry, the one thing that I find is just critical for us is that our employees believe in the leadership of the organization and that they believe in the direction we are taking the organization. I find that loyalty level you’re looking for in a service industry really comes whenever you start walking the walk and talking the talk of values. People can gravitate toward them.”
By bringing people together and showing a deeper reason for it than just sharing department reports, Haynes helped Delta Dental to increase 2010 consolidated revenue to $489.9 million.
“I need to make sure we’re in sync so as I’m carrying that message to my senior leadership team and to our management team and our staff, they see crystal-clear alignment in terms of what we’re doing,” Haynes says. “Are we great at it? We’re not there yet. I’m not telling you we’re the example. But in five years, I hope to be the poster child for it.”
How to reach: Delta Dental of Missouri, (800) 392-1167 or www.deltadentalmo.com
The Haynes File
Born: Versailles, Mo.
Education: Bachelor’s degree in accounting, University of Missouri; MBA, William Woods University, Fulton, Mo.
Who has been the most influential person in your life?
I was a change-of-life kid. My parents were older when I was born, and my dad died when I was young. So my mother played a very instrumental role in the development of who I am and who I became as an adult. She was very instrumental in it. My maternal grandmother, I absolutely idolized and I hope to live and pattern my life after her. She was a friend to everyone she met and she had a true zest and love for life. She really dedicated her life to service. That’s a lot about who I am. My management style, if you want to put a label on it, and I didn’t know it for years, I’m a servant leader. In the roles I’ve been in, I believe in servant leadership. The person who taught me that naturally is my grandmother.
What is the best advice you ever received?
Be honest. I know that sounds so simple, but in business and as a leader, just be honest. Even difficult decisions are made easier when you’re honest.
Haynes on reinforcing values: As a CEO, you look for every opportunity you can to reinforce the values of the organization. I’m not the best at it. I know I’m not. I have to consciously focus on it every day. I tell my team, ‘Hey, if we miss an opportunity, call me out on it. Make sure we’re doing that everywhere that we can.’
Des Walsh was looking for a boost. This boost would not come from one of the products offered by Herbalife Ltd., a 4,500-employee nutritional products company that seeks to help people live more active and healthy lives.
Rather, Walsh was looking to provide a boost to Herbalife’s mediocre sales figures. In the three years prior to Walsh’s arrival as company president in January 2010, net sales had been flat, lingering right around either side of $2.2 billion. In 2009, the company registered $2.3 billion.
“Our founder had a vision for Herbalife to become a $5 billion retail company,” Walsh says of company founder Mark Hughes. “That was a core vision he had laid out many years ago. For this new management team, as we embraced the value and vision of the company’s legacy, we adopted that same challenge. We worked with our leaders to try to figure out, how do we grow the business?”
Walsh had a bunch of places he could look to discover this elusive boost. Herbalife is a global brand that markets and sells its products through a network of more than 1.9 million independent distributors in 70 countries around the world.
The problem was that while some parts of the world were experiencing growth, others were not, and that’s what was causing the growth problem. Walsh needed to find a way to take the good ideas and strategies and share them with the people who could use the help. If it was done effectively, revenue would increase and Herbalife would move closer to meeting the goal that its late founder ran out of time to reach. It was up to Walsh to devise a plan that would get everyone back on track toward achieving that goal.
Look at what’s working
Walsh wanted to get inside the heads of his successful distributors and figure out what it was they were doing so well and why it was so much more effective at generating good results than the strategies that others were following.
“We looked for distributors that were achieving significantly higher levels of success than their peer group in a particular market,” Walsh says. “We looked for two things: increasing sales and increasing movement of our marketing plan.”
The marketing plan would be key to achieving the $5 billion goal. Part of Herbalife’s strategy is to recruit new product distributors at the same time the product itself is being pitched. The company’s belief is that if you can get people so excited about your product that they want to help bring it to others, you’ve done more than just create one sale. You have the possibility of creating an exponentially higher number of sales as more people get more potential distributors excited and so on and so on.
The thought of bringing someone on board as a new distributor is always part of the sales pitch.
“When our distributors begin their Herbalife business, they come in with an entrepreneurial spirit,” Walsh says. “It’s driven with wanting to bring the Herbalife brand to more people. Our distributors are very interested in learning from other distributors and helping them to achieve greater success. It’s a very core part of our culture.”
Unfortunately, this sharing of ideas was not taking place uniformly across the entire organization, leading to the slow pace of sales growth.
Walsh needed to get things moving again. He needed to find the ideas that were worth replicating to the benefit of other Herbalife distributors and then work on breaking down the silos and reopening the lines of communication to spread those ideas across the organization.
The first stage of this process is identifying an idea or strategy and exploring whether it is worth sharing with others.
“What is it that is driving growth in a particular distributorship?” Walsh says. “Is this something which we believe is beneficial and sustainable? Sometimes they aren’t sustainable in the long run. We’re looking for success drivers with long, stable growth and duplication potential.”
You also need to look at external factors and determine if they are playing a role in the idea’s success.
“Sometimes an idea works within a particular distributor’s organization, but it’s not exportable or duplicable,” Walsh says. “That’s why we seek to have another distributor test it. If we find out based on that, it is an idea that can spread across cultures and across markets, we look to do that.”
If the idea still looks good after it is tried in multiple environments with multiple leaders, it’s time to give the originator a chance the share their inspiration with others.
“They show distributors what they’ve come up with and they train on how other distributors can duplicate what they’ve done,” Walsh says. “The last stage is we measure the adoption and track the level of success.”
Closely followed, Walsh was confident this process would generate results. He just needed to find an idea worth replicating and get people talking about it.
Spread the word
It wasn’t just one idea that got Herbalife back on course toward its goal of reaching $5 billion in sales. But one of the best examples of an idea that got the company moving in the right direction, and got people talking to each other again, was a weight-loss challenge conceived by a group of distributors in Michigan.
“It was a 12-week program in which they invited members of the community who wish to lose weight to participate in the program,” Walsh says.
After people met initially and recorded their weights and measurements, a regular meeting schedule was set up to monitor progress. These meetings would also feature discussions on the benefits of good nutrition, through the use of Herbalife products, of course.
“What it creates is a fun, competitive environment,” Walsh says. “People find it challenging and rewarding. This becomes a very supportive environment where people can learn about good nutrition. Most importantly, they achieve extraordinary levels of success.”
When you create a program that gets people to not only buy your product but to also be engaged in your product and participate in programs that surround your product, you’ve done more than make a sale.
“But also, in keeping that weight off, it creates permanent customers for Herbalife,” Walsh says. “Plus, many people say, ‘Wow, what a fun thing to do every week,’ and they become an Herbalife distributor. So it not only creates permanent customers, they become Herbalife distributors.”
It’s not always that simple, of course. In the case of people who already are Herbalife distributors, if you have one person who is experiencing success offering their perspective to someone who is not doing as well, the potential exists for egos to be bruised.
“All we can do is highlight success and have other distributors train on how that success can be duplicated,” Walsh says. “Our distributors are not saying, ‘What you are doing today is wrong.’ What you are doing today is great. But what we are showing you could help you even more. We’ve all heard the same thing before where the leader says, ‘I’m here from corporate and I’m here to help.’ But rather than force ideas from one country or one organization to another, it’s a slower path. It may take as much as two or three years, but it achieves a higher level of success.”
If you’ve got someone in your organization, whether they are an independent contractor or an employee, the key to getting them to successfully share an idea with a peer is convincing them to show humility.
“I’m not here to tell you what to do,” Walsh says, of how to open the conversation. “But what I am here to do is share with you my story. If there is something in this that can help you in your business, I encourage you to adopt it. It’s that spirit of humility that can make a big difference.”
It’s the same measured approach that you need to take with customers who you want to turn into distributors if you want a chance at closing the deal.
“The process that I’ve described is not a fast-track process,” Walsh says.
Your humility and desire to help others is important, but you need people who want to learn and want to explore the opportunity you’re presenting. So when you have opportunities out there to bring to other parts of your organization, it’s typically best to seek out volunteers to receive them.
In other words, don’t force ideas on people who aren’t interested.
“You want people to evaluate the concept with an open mind and with a real interest in helping it to be successful,” Walsh says. “If you take your top sales leaders and say, ‘I want you to experiment with this, who is interested in seeing if we can adapt this to your country?’ you will have people who are actively looking for ways to enhance and grow the idea and adopt it successfully.”
Create opportunities for people to share information and find ways to get them talking to each other.
“Have your sales and your corporate team spend as much time out in the field as possible,” Walsh says. “There’s no substitute to hearing and listening to good ideas firsthand.”
But don’t lay all the burden of talking with your people on your management team. Walsh makes trips around the world, and instead of just meeting with regional leaders, he wants to talk to the top performing salespeople.
“I want some personal face-to-face time with our lower-level distributors who are moving rapidly,” Walsh says. “I always have two questions for them. What are you doing that is causing you to have such success? What can we do to support you to achieve even greater success? By having these face-to-face meetings, which are always in the presence of local and regional management, we are constantly looking for the next great idea. We are fostering the culture that everyone is totally focused with helping.”
The Michigan weight loss program turned out to be very translatable to other parts of the world. As more communication took place and ideas moved more freely around the organization, sales began to improve. In 2010, net sales hit $2.7 billion.
“I was just at a Russian extravaganza in Minsk where they just launched an expansion of that program,” Walsh says. “What they found was that many customers in our Russian-speaking market would complete the 12 weeks and ask if they could come back and participate in the program with more topics. It just shows you the desire of people to achieve a weight loss goal in a supportive environment.”
Walsh says great ideas don’t always have to come from the president or CEO.
“No matter how bright somebody is, no matter how experienced we are, we all benefit from hearing ideas from others,” Walsh says. “Those ideas are best when heard from people closest to the customer. Making the time to hear ideas from those people who are in the early stage of their careers when they have a fresh perspective is always time well spent.”
How to reach: Herbalife Ltd., (866) 617-4273 or www.herbalife.com
The Walsh File
Born: Dublin, Ireland
Education: Bachelor of Laws degree, University of London
What was your very first job as a kid and what did it teach you?
My first job was in an insurance broker’s office in Dublin after I finished high school. It taught me that the best way to achieve success was always to be looking for ways to do things better.
Who has had the biggest influence on your life?
My dad, who exemplified the importance of staying calm in every storm, doing the right thing every time and treating everyone with equal respect.
Who is one person that you would like a chance to sit down and talk to?
More on Herbalife: The company’s products include protein shakes, protein snacks, nutrition, energy and fitness supplements, and personal care products. Its mission is “Changing people’s lives.”
Michael O. Johnson joined the company as CEO in April 2003 after 17 years with Walt Disney Corp., most recently as president of Disney International.
Daniel Adamany did not need to fix his business. At a time when many businesses were struggling to survive, Ahead LLC’s revenue had risen from $3 million in 2007 to $130 million in 2010.
But Adamany wanted to shake things up anyway. He looked at his 100-employee business, which provided IT products to its customers, and felt like he could be doing more to help them.
“We’re really changing the product we’re selling from a hardware product to a consulting-based solution,” says Adamany, founder and president of Ahead. “It’s been challenging. We’re getting through it and we’ve been successful, but it’s a lot harder than I thought it was going to be.”
One of the toughest parts was convincing employees that even though what they were doing was working, they should jump on board his plan to dramatically change the business.
“When I come to them and say, ‘Hey, we’re going to change,’ a lot of them question why,” Adamany says. “Why would we do this when we went from zero to $130 million in 4.5 years? It seems like what we’re doing is working. Why change it? It’s one thing if we’re losing money and we have to do this or we’re going out of business. We’re the best at what we do and they feel great and they know what they’re doing. It makes it even more difficult.”
Adamany says he has made some mistakes in trying to fix a business that wasn’t really broken. The first misstep was when he brought in people who had expertise on how to build a consulting business.
“I allowed them to come in and communicate to the team, but there was such a disconnect between how they were used to running their business and how we ran our business that for the average guy, it was too much,” Adamany says. “They couldn’t process it. In hindsight, I would have sat down with them and understood the model better and then communicated it in words that my guys would understand because that’s where I came from. Prepare a little bit before you communicate. That was an error that I made.”
You may have a vision for your business. It may look like an easy path to achieve that vision. But you’ve got to remember that you have living, breathing human beings who need to be engaged with your plan rather than just blindly commanded to follow a set of directives.
“All of these guys know their vertical better than me,” Adamany says. “So for me, my goal is to understand what they have to say. I also have a broad perspective that they don’t have, because they run within their vertical. My job is to listen to them and then try to understand how that applies across the verticals.
“When people feel a part of what’s going on and what’s happening and they feel that they are contributing, then that also stimulates thought and creativity and ideas,” Adamany says. “They obviously need to be comfortable enough to share those with you.”
What Adamany has learned is that it’s OK to admit, as he eventually did, that you don’t have all the answers or prescient knowledge about whether something is going to work.
“I just told everybody, ‘I didn’t really get this, but now I do,’” Adamany says. “These are the principles and we’re still going to experience some pain, but ultimately it’s the right direction. Getting them in the boat with you seems to be the best way to get through it.”
Adamany’s efforts have accomplished what he wanted. The company is now an even more valuable asset to its customers.
“From a consulting standpoint, we’re going in much earlier in the cycle to determine if they need anything and if they need it, what they need,” Adamany says. “We develop a solution to fulfill whatever they want to get done.”
How to reach: Ahead LLC, (888) 992-4323 or www.thinkaheadit.com
Time it out
Daniel Adamany identifies two big mistakes he made trying to turn Ahead LLC into a technology consulting business. One was the way he initially sold the plan to his people. The other was in how he set timelines.
“I wanted it to change much faster,” says Adamany, founder and president of the 100-employee company. “I put timelines in place, but I think I was a little bit too aggressive because I really didn’t understand what it was going to take to make the change. I would have been better off saying, ‘We want to make this change and we will put a timeline together once I understand it more.’ We failed to meet our timeline. Maybe it’s not a big deal financially, but you don’t want to communicate something and then not hit it.”
Milestones and realistic timelines give your people a good foundation to take the steps your plan needs to succeed.
“We kind of dove in headfirst and said, ‘Hey, we’re going to be successful at this and we’re going to be transitioned within a few months,’” Adamany says. “Reality is, it will take more like a year, because we didn’t know what we didn’t know. So it’s taking more time upfront, making sure we convey the right story and message and taking more time to put the plan together.”
Dustan E. McCoy wasn’t sure what the future looked like when the global recession began to tighten its grip on Brunswick Corp. Demand for recreational boats in the United States was plummeting, ultimately dropping from 300,000 units a year to slightly less than 140,000 units a year.
“We were faced with several obstacles in ensuring that the company was going to move through in a healthy way and secondly, that we were going to be prepared to flourish in the future, no matter what the economy brought us as we came out,” says McCoy, the 15,290-employee company’s chairman and CEO.
“In terms of how we identified the problem, for myself and our entire management team, it was quite obvious as we went through the meltdown in mid to late 2008 that demand for our marine products and ultimately for the products that come through our fitness business and the services we provide folks at our bowling centers would come under pressure.
“The first thing one has to do in these situations is say, ‘We have an issue.’ Identifying the issue is perhaps the easiest and the hardest part of the job that a management team goes through at a time like this.”
McCoy says the easy part is standing up and saying, ‘Hey, we’re in a recession. Things are going to be right.’
“It’s much harder to say we have a broad issue that is going to require us to go through dramatic change and have our business and our organization look, act and feel differently when we come out of the issue,” McCoy says. “In my judgment, the first thing one has to do is have a conversation with oneself at 2 a.m. in the dark and be really honest that there is an issue and we’re going to have to work our way through it. The first thing is to identify the problem and then describe it in a way that the entire organization can both see and understand.”
McCoy had seen the news. He had read the papers. He saw demand for Brunswick products dropping like a rock. It was time for him to act and help his company find a way to ride out the storm.
Identify the problem
When the recession began, many companies faced a similar problem. They didn’t know what the bottom was going to look like. Sales kept dropping, companies were laying off people and factories were closing everywhere. At times, it literally seemed like the sky was falling.
“There are just so many things to deal with that we’re not going to be able to deal with them all,” McCoy says. “Here’s what I always tell myself: What’s important is what’s important. Make a decision about what the real issue is and the solutions to that issue, though they may be hard and require difficult actions, they are also apparent once one describes the problem very concisely.
“In our case, the situation was that the country was clearly going into a recession. Demand for our product in the marine business was going to suffer. There would be pressure on our dealer network, and we had to have a solution that would get us through it and have us come out the other side better positioned than when we went in.”
It was a tall order, but McCoy couldn’t afford to close his eyes and hope it would all go away.
“Issues never get better with time,” McCoy says. “Difficult decisions don’t go away with time nor do they get easier to make. Stepping up both to the problem and a set of solutions quickly, concisely and in a way that can be easily communicated is very important.”
When you talk to your people about drastic steps that you are pondering, keep it simple and do what you can to leave little room for misinterpretation.
“It’s incumbent upon the management team to describe simple direct actions that have to be taken,” McCoy says. “They can’t be complicated. They have to be understandable. Every employee in the company must feel and see the actions that have to be taken and they must make sense and be understandable.”
McCoy identified three things that Brunswick needed to focus on. In addition to helping the dealer network survive and positioning the company to emerge from the recession stronger than it was when the downturn began, he also wanted to find a way to generate cash.
“We have to generate and conserve cash,” McCoy says. “Our view was that those in our industry that did not have cash when the dust settled were not going to be in existence.”
These areas of emphasis were not arrived at through a democratic vote of McCoy’s leadership team.
“The CEO has to understand that his or her name is the one on the door and ultimately, the success or failure of the organization lies at the foot of the CEO,” McCoy says. “It’s the CEO’s job. The first thing the CEO has to have everyone understand is that we are going to work together, we are going to move through this and if we get to a point where we’re unable to reach a conclusion or make decisions together, I’ll have to make it because we have to keep moving.”
McCoy didn’t make the decisions unilaterally. There were discussions, but there was also a blunt introduction to what needed to be done and a clear understanding of who was in charge.
“Here’s the way I described it to my teammates,” McCoy says. “If you don’t lay awake at night worrying about what we have to go get done, I don’t want you here. But if you can’t pull the trigger, you can’t be here. We all looked each other in the eye and said, ‘OK, let’s go. We have to get this done.’”
There needs to be complete trust among your team if you’re going to get through difficult times.
“The management team has to trust and respect all of the others on the team and believe that each of the others is executing the plan that we’ve all agreed upon and that there are no hidden agendas,” McCoy says. “No one is holding back. We all have to go get it done. Trust and faith in team members permits an organization to execute well a list of priorities that everyone has agreed upon.”
If you don’t have that level of trust, you don’t have a very good team.
“The most important role the CEO has is building that team and understanding if there is a person on the team who won’t act that way, they won’t be a good team member and it will be harmful to the functioning of the organization.”
Move to a decision
When you’re not sure what the bottom looks like in an economic tailspin, you can’t waste time trying to project it.
“Chasing the stock price and the market, in our view, was exactly what we did not want to do,” McCoy says. “I think it’s fair to say that as you look at our stock price, at one time we were around $2, not one of our senior managers in this company ever obsessed about that because we had the confidence we were doing the right thing.”
Your best approach is to come up with a worst-case scenario and make your plans based off of that.
“Don’t sugarcoat it in your own mind,” McCoy says. “Make sure you’ve made the hard decisions early. Don’t deceive oneself about how bad it can be. Assume it’s going to be very bad and then begin to make your decisions. Once you’ve done that, work your plan every day, measure your plan every day and communicate your plan throughout the organization consistently and constantly and communicate results consistently and constantly.”
If you have people who can’t support what you and your team believes needs to be done, you need to take them out of play.
“We did make human resource decisions and if there were members of our organization who just were not up to the change we were going to have to go through, then they needed to leave the organization,” McCoy says. “Because notwithstanding their best intentions, they would not be an enabler. They would be a roadblock to what we needed to get done.”
Find a way to survive
The cuts Brunswick had to make were drastic, to say the least. The company had 27,000 employees when the recession began. It has just over 15,000 employees today.
“We’ve taken about $450 million in fixed costs out of the company since 2007,” McCoy says. “We closed more than half our boat plants. We had four engine plants and when we’re done (in 2011), we’ll be down to three engine plants. All that had a dramatic impact on our cost structure.”
It also had a dramatic impact on the people who lost their jobs.
“We made life difficult for a medium-sized city in America,” McCoy says. “There is no way in the world to sugarcoat that or make it easier.”
When it comes to tough decisions like that, you shouldn’t even be trying to sugarcoat what you’re doing.
“The decisions need to be made quickly, openly and with great honesty,” McCoy says. “They need to be communicated fairly and in a way that no employee whose job is terminated is made to feel that they as a human being lost their job because of what they have done. It’s driven by the economy and the need for the company to take action in response.
“I can’t stress the need for openness, consistency and fairness enough. There can’t be exceptions one way or the other. You can’t bend over to get rid of some fellow employee and you can’t bend over to save a fellow employee. You’ve got to keep going down the middle of the road and doing what needs to be done.”
You’ve got to show compassion for the people you’re letting go. But you also have a responsibility to the people who are staying put.
“The decisions have to be made to keep the enterprise alive,” McCoy says. “As long as senior management is communicating with the entire organization and the entire organization understands that every decision is being made to protect the enterprise and to be as fair and passionate and equalizing as a management team can be, our experience here was the organization moved right through and performed magnificently.”
In 2011, the company showed signs of bouncing back. The stock price made it past $27 at one point and business is beginning to pick up again. Net sales, which dropped from $4.7 billion in 2008 to $2.8 billion in 2009 climbed back up to $3.4 billion in 2010.
One of the keys to getting through an event like a recession is constant assessment.
“It’s constant communication amongst the senior team and with the entire organization,” McCoy says. “So that constant tracking, communicating and discussion builds momentum and success begins to breed success and as a result, everyone begins to develop a clearer understanding of the precise path forward.”
How to reach: Brunswick Corp., (847) 735-4700 or www.brunswick.com
The McCoy File
Born: Grayson, Ky.
Education: Bachelor of science degree in political science, Eastern Kentucky University; law degree, Salmon P. Chase College of Law, Northern Kentucky University
Who has been the most influential person in your life?
I genuinely have had the great fortune to work for a successive series of leaders in my entire career where I didn’t always agree with their leadership style or their strategy, but I respected them as leaders. I attempted to copy the things I really like that they did and made sure I didn’t do the things I didn’t like. For me, it was an amalgamation. It goes back to my first-grade teacher, my Little League coach, I could walk you through five hours of a whole string of people and tell you what I learned from each.
McCoy on employee surveys: Employees have to believe that any response to a survey is completely anonymous. We work hard to make sure employees feel that. Secondly, at the management level, as these surveys are rolled out, it’s important for the managers all the way through the organization and the people that they manage, that they all understand the surveys are important. If there are issues we need to address, this is a great way for us to see them. So by stressing anonymity and importance and, No. 3, having a belief throughout the organization that actions will be taken based on survey results, it all comes together to encourage employees to be open and honest and do the work it takes on the survey.
Are you ready if some unthinkable disaster was to strike your business? What would you do? Who would you call? How would you rise above the pandemonium and be the leader that your company needs in order to make it through this calamity?
These are all important questions for any leader to consider, even if they aren’t very pleasant to think about. Your future depends on it, but perhaps more importantly, the future of your business and the livelihood of your employees hinges on how effectively you do prepare for the unexpected.
Smart Business spoke with a number of leaders about this topic over the past year and they revealed that it takes a combination of great urgency and steely resolve that helps you through the really tough times.
“A good leader has a sense of Zen or calmness even when it seems like chaos is happening. It’s really up to you to navigate through those moments and make it OK for everybody and begin to problem solve.”
Julie Smolyansky, president and CEO, Lifeway Foods Inc.
“Once you’re comfortable with the compass heading, you just have to charge ahead with it. The worst that happens is you get fired.”
Thomas J. Neri, president and CEO, Lawson Products Inc.
“You have to have your key leaders, functional leaders or divisional leaders participate and get involved. If they’re not part of it, they’ll fight it until the last breath of implementation.”
Tim Jahnke, president and CEO, Elkay Manufacturing Inc.
Summary: Don’t try to solve every aspect of the problem in the first five minutes.
Focus on what needs to be done most urgently.
Always keep the impact of your decisions on your people in mind.