Merv Dunn was having a moment of truth with himself. He realized he was frightened to go global with his company, Commercial Vehicle Group Inc. At that time, the company was only in the United States and had 95 percent of its business in one area with only two customers.
“I was afraid to start with it,” says Dunn, president and CEO of the vehicle component manufacturer. “But I was afraid of failure if I didn’t. I looked at my biggest competitor. I saw that they had stayed in North America, and they weren’t developing as the kind of company that I wanted to be. I was afraid if we did not go, we would not be successful, and we would dry up.”
There was another problem. The economic downturn of 2008-09 threatened not only the company’s health but its five-year strategic plan. The plan’s vision for growth and diversification geographically and in market use was at risk.
The first step was to start at the top, then work through the company to pare expenses.
“I took a 10 percent pay cut and so did my direct reports,” he says. “Then we put in a 10 percent pay cut across the board. In some cases, it was furloughs. They worked four out of five days a week. Some people we had to let go totally ? that was our last choice.”
And above all, the work continued. The team stayed true to the strategic vision. Global projects undertaken during the recession began to bear fruit.
When the 2010 sales figures came in, CVG tallied $598 million, up 23 percent from 2009. The company is in eight countries now.
Here are some tips on how Dunn helped stabilize the company as it gained strength to venture overseas.
Stay in focus
Dunn knew it was important to follow the strategic vision.
“Two years ago, there were a lot of people who didn’t think we were doing well,” he says. “They were questioning the strategy and they were questioning even internal management. When you started explaining your strategy and why you’re making these certain moves, then the overall company sees it. You may have pockets that still disagree, but once you can get them to understand why you’re making moves, I think then you get the buy-in.”
The vision needs to stay in place in good times as well as bad times.
“First of all, if you withdraw and pull everything in, you might as well tell everybody in the company that you’re closing,” Dunn says. “If you’re not working hard during the down cycle, then they lose confidence that you’re going to be here when the up cycle comes.”
Keep an eye on your competition because if they go under, you have a chance of getting their business. Develop contacts that could pay off with tips for new business.
“We get calls from customers who say, “We can’t get deliveries out of these guys. They seem to be having financial problems. Will you look at their product and quote it for us?’”
It’s not uncommon that if you follow those steps, you’ll see the benefits in more ways than one.
“It’s not unusual to pick up the business, and it’s not unusual to get a little better price for it because you’re going in with a product from a company that’s known to have a technically superior product and is known to meet its commitments ? and also does it in a consistent manner, and is honest,” Dunn says.
Hold on to staff such as the research and development department and assign them to develop new products or services.
“We developed three new products,” he says. “When you’re doing that, your people have confidence that they’re doing the right things and that you’re leading them the right way. In coming through an economic downturn and surviving that stronger, people kind of have confidence in that we know what we’re doing.”
Successes will encourage the employees, boosting their energy. Dunn used it as a rallying point.
“To come through it like we did, people are kind of walking on a cloud, saying, ‘Hey, you know, we’ve got a good game plan. Let’s keep after it,’” he says. “The successes that they’re seeing right now, it’s just tremendous, with the growth, and the different markets, the different customers. There’s just an excitement level. It’s like a basketball or football game. You start scoring, and your competition comes out with different plays, and you’re still scoring on them. People get pumped.
“You don’t always have to have what some people would consider the best team or the best captain, but if he’s winning, they get confidence in him quickly and they get excited.”
Be honest, consistent
The approach to take when expanding globally is really not that much different from the tactics you would take when building here at home.
“First of all, you’ve got to be honest,” Dunn says. “You’ve got to be competent in your abilities, you’ve got to trust your abilities, and you’ve got to be consistent. If I go there and they ask me to do something, and I don’t think there’s a chance in hell that I can do it, I tell them I can’t do it.”
People want honesty, no matter how hard the news is, and no matter which country is involved.
“If I tell them I’m going to deliver, when I’m going to deliver it, and I deliver it ? news travels. If I don’t deliver it ? news travels.”
Another important consideration about global expansion is to make sure the customer wants you to be there.
“A lot of people have had the attitude over the years, ‘Build it and they will come,’ or ‘We’re not going to build it until we know for sure we have customers,’” Dunn says, noting that finding a middle ground often works.
Go in small, and then with your technology, and quality and delivery systems, grow the confidence of the domestic market.
“That gives you the ability to start growing in leaps and bounds very quickly,” Dunn says. “But you have to be there in some form or you’re not going to get business because they don’t want somebody they can’t talk to.”
Do your homework. Get yourself in the geographic areas where your customers need you and learn about the country.
“You have to know the culture of the country that you’re in,” he says. “I would want people to get to know my culture if they were coming and putting a plant in my country, because to be able to turn my plants over to them, I need to know the culture, and I need to have trust in them.”
Gaining trust also involves patience. Subtleties in conversation can be misunderstood, for instance, when agreements are made. Be aware that some cultures place importance in not disappointing the other person.
“You’ve got to keep asking the same question and peel the layers of the onion back,” Dunn says. “See how consistent it is because many times you have to sort out the fact from the perception.”
When it comes to managing sites overseas, look at various options. You may find someone who already works for you that shares the culture and who could be given a management position.
“Usually, we can find somebody in our company that speaks the language,” Dunn says. “We’ve grown people either through acquisitions, we’ve selected the best talent, and if that talent was better than someone else we had in our company, we’d put the other person in a different role and we’d put this guy in the lead role.”
Ensure quality and buy-in
Concerns about quality are not limited by geography, and by following a simple rule that workers should treat a product like they were going to purchase it, many problems can be avoided.
“I think there are concerns about quality of products made in any developed country let alone an emerging country,” Dunn says. “Treat it like it’s a product that you’re going to buy. Do you want to be hassled taking something back that doesn’t work?”
The labor force in emerging countries can be trained just as in any other country.
“The people have to learn how to work in a factory when they’ve not been used to doing that,” he says. “Those lessons you’ve got to teach, and you’ve got to teach them until it’s second nature.”
You can do your global expansion alone, or take on a partner. Either way, make sure your reasons are solid.
In one country, Dunn built his own plant.
“I didn’t want to go in there and worry about that I might have a partner who didn’t see the same strategic vision as we had and the same commitment to the customer that we had.”
But in another country where CVG had already had some business dealings, it may be another story.
“I probably will have a partner, because we’ve been using engineering services,” he says. “We’ve had a strong relationship with someone over there that I feel has the same commitment to customers and the same commitment to innovation and to the employees and to the leadership.”
Once quality is secured, you also need employee buy-in.
“I believe in honesty,” Dunn says. “If a customer calls me with a problem, I don’t try to figure out whose fault it is. I want the problem fixed, and then we’ll deal with whose fault it is. It’s important to fix the problem, but it’s more important to fix the problem than to fix the blame.”
Not only does that lead to successful customer service, but it sends a message to the employee.
“Once you have a win, your team looks at kind of why you win. If they look at it and can see it was because you made the right strategic decisions and you make the correct day-to-day calls in the huddle, they buy in pretty quickly,” Dunn says.
Buy-in is something that needs to be addressed constantly with the staff, at all locations.
“If they don’t have confidence in the decisions that you are making and the outcomes that are happening, then they lose focus real quick and lose interest,” he says.
Give the employees the straight story no matter if it is something you don’t want to be honest about.
“Sometimes when you’re standing in front of a group and you get questions, you’ve got to say, ‘I just can’t discuss it right now.’ And, there are sometimes when you’ve just got to say, ‘Look. That’s not going to happen.’ Then there are sometimes you can go, ‘Yes, we agree with it and that’s what we’re going to do.’ You’ve always got to be honest. You’ve got to be consistent. You’ve got to trust your abilities. And you have to constantly stay in contact with the customer. Those are the kind of things that I push from my leadership role.”
If the leader can show his human side, the effects can be immeasurable. Dunn puts a high value on the experiences he has had with employees, even when a plant closing was imminent.
“I said, ‘We can’t be competitive here, and the customer is not happy,’” he says. “We’re in an economic depression with our end market, and we’re just not going to be able to keep it open. And I’m standing there, and I am thinking, ‘Oh God, how long can this take? I don’t want to do this. I don’t want to tell these people, but I’ve got to.’
“And at the end of it, there were these two older women who came up to me and said, ‘We’ll be OK. We’re worried about you, because we know how stressful this is on you. We know how hard this was for you to do. But we’ll be OK, so don’t worry about us.’ Two men said, ‘Is there anything we can do to help? Can we do anything to save it?’ I said, ‘Well, we can try. But I don’t think there’s any way to, to be honest,’ and they said, ‘We know how hard you have worked to keep it open. And we’re going to keep on working.’
“You know, that damn plant is still open. It doesn’t have near the employees it had, but they’re still adding to the bottom line. And they made it through the worst economic depression in this industry. The competitor liquidated and they got the business back after all these years. So it taught me that being honest with everyone is critical.”
How to reach: Commercial Vehicle Group Inc., (614) 289-5360 or www.cvgrp.com
The Dunn File
Born: Dayton, Ohio
Education: Eastern Kentucky University, master’s degree in operations management
What was your first job?
My first job was at 11 on a tobacco farm picking tobacco blooms. It was a buck an hour. That was a lot of money with my dad not able to read or write and my mom with a third-grade education.
What was the best business advice you were ever given?
I was fortunate enough when I got out of college to end up working for a guy that I had strong admiration for. One thing he always stressed to me was, ‘Try to think through your decisions. Don’t make them emotional. And most of all, be honest. Be honest with yourself more so than anyone else. And be true to who you are.’ My whole life I’ve competed against Harvard grads, MIT grads, and I have an undergraduate degree from Eastern Kentucky University. You’ve got to have something else to go along with it. I think being able to handle confrontation and being straightforward are probably the things that he taught me that I’ve stuck to. Have confidence in yourself. He said you’re here for a reason. You’ve got the job for a reason.
What’s your definition of success?
I consider success that as a person, when I see that my family is successful and then I look at my company and I see the people that are here are being successful, we’re being successful because the customer wants us, and to be wanted is a success. For me, seeing my company come out of this crisis, and people want to be part of my company, I consider that a success. It has to be wanted to be a success.
On taking risks: I don’t want to be 85 sitting on a front porch saying, … ‘I wished I’d tried that!’ I left a great company where I was president to jump out on my own in private equity. I screwed up, got with the wrong partners, lost a lot of money, started over again, did the same thing and won ? came out with good success because I learned from my failure. I think it’s always go
Call it a perfect storm or the worst-case scenario, but a convergence of factors is giving the manufacturing industry headaches in the labor department.
As the industry is moving out of the economic recession and continues to add jobs, older skilled workers ? those who perform advanced procedures other than repetitive assembly ? are retiring or getting close to retirement. What makes that situation worse is that there aren’t enough new ones to replace them.
“That created the perfect storm for the tremendous skills gap that’s out there,” says Chad Schron, manager of Tooling University, an online training site based in Cleveland for manufacturers and vocational schools. “There weren’t enough in the pipeline of new people learning welding, fabrication and machining and entering the work force as employees started to retire.”
Mark Tomlinson, executive director and general manager of the Society of Manufacturing Engineers, sees the skilled worker shortage as an iceberg looming on an uneasy sea.
“We’re just approaching it; we haven’t hit it yet but we know it’s there,” he says. “People are starting to see it. They just don’t know how to deal with it.”
Before companies focus on how to deal with the situation, they need to take a retrospective look to see the trends that have put the manufacturing sector in troubled waters.
Evaluate the factors
While forecasts of a shortage of skilled manufacturing workers first arose in the 1980s, it has been in recent decades that it became reality as the industry evolved from needing low-skilled production-type assembly workers to being highly technology-infused as it follows lean principles.
“If you go on today’s manufacturing floor, it’s extremely high-tech, lots of computers, lots of lasers, lots of robotics, very high-precision, a very clean environment where they’re making some of the advanced aerospace or medical device parts,” Schron says.
Companies who haven’t already heeded that wakeup call need to realize that times are changing.
Technology innovations enabled companies to reduce the number of employees and required higher skills and education levels of remaining workers, says Emily Stover DeRocco, president of The Manufacturing Institute of Washington, D.C., an organization dedicated to improving and expanding manufacturing in America.
The automotive industry, once the sector that provided the lion’s share of jobs in manufacturing, is not as strong as it was a decade ago. Some automotive suppliers did not survive the recession. Many cut their training programs. Those that did survive often diversified into other areas of manufacturing.
“Now there is an increased need to fill the manufacturing jobs associated with aerospace, energy, medical device manufacturing and aspects of transportation,” Tomlinson says.
While many observers acknowledge that manufacturing has led the United States out of the recession, the improvement brings a mixed blessing ? more skilled workers are being needed, but the supply is limited.
“What we’re seeing right now is really a lack of a pipeline, and the disruption is causing us so much pain,” says Jeff Joerres, chairman, president and CEO of Milwaukee-based ManpowerGroup, a work force solutions supplier.
Baby boomers, who have put in their time over the last few decades, are reaching retirement age. U.S. Bureau of Labor statistics estimate that 2.8 million, nearly a quarter of all U.S. manufacturing workers, are 55 or older.
“We are facing a huge replacement requirement for the retiring baby boomers, as well as a huge quality issue in the level of education and skills that are necessary to work in today’s more advanced manufacturing environment,” DeRocco says.
Building up the skilled worker pipeline is taking time because of a number of factors, including a waning interest in mathematics and science fields.
“I think we’ve got a long-term history of not producing enough skilled workers in the area of science and math and technology in this country,” says Ed Hughes, president of Gateway Community and Technical College in Florence, Ky. “We are now seeing some effects of not having students graduate from public and private schools with significant skills in those areas.”
Jim Ferguson, director of training at precision manufacturer Penn United Technologies of Cabot, Pa., agrees.
“There is definitely a skill gap in terms of people’s ability to do basic math at the level we need, which isn’t super high, but certainly, geometry and a little trigonometry are an important part of the package,” he says. “We find very few people are able to pass even a basic aptitude test to be hired.”
Look at it as branding
Companies of any size will likely tell you that branding is important, that image is how people see you ? and correcting an unflattering image takes time and effort.
In an age when innovation occurs regularly and perception is vital to success, manufacturing has been trying to shake off the view that it’s dark and dirty ? to rebrand itself.
“It’s absolutely true that the image and the definition of manufacturing in this country has not kept up with the industry,” DeRocco says.
Indeed, the parents, teachers and counselors who influence students and young people are often given the wrong picture.
“They have an image that either there are no manufacturing jobs or the ones that they know or they think they know are really what they remember as children in their communities,” she says.
Only 30 percent of respondents to the 2010 “Made in America?” survey conducted by Deloitte and The Manufacturing Institute said they would encourage their child to pursue a career in manufacturing ? despite reporting encouraging improvements in their perceptions about the jobs.
The survey reported that respondents feel state and federal leadership, tax rates on individuals and government business policies are the top concerns hampering American manufacturing competitiveness ? and that Americans are less likely to pursue jobs in manufacturing or encourage their children to consider these jobs in the future because of those issues.
In addition, only 22 percent said their school system encourages students to pursue manufacturing careers and only 18 percent said their parents encouraged them to pursue a career in manufacturing.
“Most people in Gen Y out of high school don’t think of manufacturing as a career or as a good option,” says Kika Young, human resources director at Forest City Gear Co. Inc. of Rockford, Ill. “They don’t think of it as glamorous; they think of it as dark and dingy and dirty and aren’t interested in going into that.”
It’s important to break the mold of that outdated image, and some signs of progress are being seen. Appealing to a nobler perception is key to successful image building. So is taking innovative approaches and strategies.
“I don’t think the image is the problem any more,” Tomlinson says. “You see many examples in advertisements, like General Electric’s, that take manufacturing out of the dark and dirty environment,” he says. “The real value right now for the younger generation is that through making things they could change the world. You have to innovate, create and make if you really want to improve everybody’s lives and environment.”
In the end, each level of success builds upon the previous one. For the manufacturing industry, those levels are the employers, workers, educators and economic developers.
“This winning proposition for these sectors has really led to an incredible amount of momentum and support, and not that we don’t have a long way to go, but we think it’s a model that other business sectors can and should be using,” DeRocco says.
SBA loans are available to a wide number of businesses for training and other purposes
There is a common belief about loans guaranteed by the U.S. Small Business Administration that they’re only for small businesses like the corner coffee shop ? and that the loan criteria are very restrictive.
Not so, says Pamela Davis, senior vice president and national sales manager for SBA lending for PNC Bank.
In fact, SBA-guaranteed loans with either fixed or floating interest rates even can be used to retrain employees, and about 98 percent of U.S. businesses would qualify under the definition of small business.
To meet the SBA eligibility criteria, a business must either comply with the Standard Industrial Classification code, found on sba.gov, or alternative size standards based on tangible net worth and average net income.
One of the types of loans available is the SBA Express Program.
“It can go up to $350,000 and can be used for any type of working capital,” Davis says. “It can be reworking of your people, purchasing inventory, if you had to buy computers to help train these people ? everything like that.”
Under that program, loans are guaranteed at 50 percent by the SBA against default. Part of SBA’s flagship 7(a) loan program, the Express Program, offers an accelerated turnaround time and lower interest rates for borrowers.
Businesses turned to SBA loans for longer and more creative terms than conventional bank loans to the amount of $22 billion in 2010. Guidelines were revised in 2009 and 2010 so more businesses could obtain capital to survive and grow.
For businesses seeking larger loans, there is the SBA 7(a) Preferred Lender Program that can go up to $5 million.
“That can be used for a lot of different things,” Davis says. “You have to qualify under prudent lending criteria, but it can be used for literally anything you can think of. You can buy equipment, you can use a portion of it for working capital or an addition to the building or if you wanted to hire more employees because you wanted to send some over into Germany to do processing there.
“Any program that creates jobs in my mind is a great program.”
How to reach: PNC Bank, www.pnc.com
Innovative strategies are aimed at providing manufacturers with skilled job candidates
As the shortage of skilled manufacturing workers continues to worry companies, creative ways to fill the need are on the increase ? and are starting to show signs of progress.
It’s no surprise that candidates with potential are in high demand, enrollment is rising at technical schools and training programs are adding teachers. Competition for students can get intense.
“When we recruit students for manufacturing, it’s the same student that other people are going after for engineering technology, for information scientists ? those types of things,” says Ed Hughes, president of Gateway Community and Technical College. “We think we’re in a better position to compete with them now that we have our new advanced manufacturing center.”
As creative and varied as the approaches are, the common thread is to nurture a future employee whose career pathway is aligned to credentials. Having industry-recognized skills certifications ? like those automotive repair technicians have ? applicable across advanced manufacturing and related fields give employees the opportunities to move among careers rather than be at one job in one industry that may experience a downturn.
“Credentials provide a third-party validation that the individual has the general workplace and the technical skills to succeed in an entry-level job as well as an advancement path within their employment,” says Emily Stover DeRocco, president of The Manufacturing Institute, which conducts efforts in 25 states to deploy certification systems.
Grooming potential workers is starting as early as possible. The Society of Manufacturing Engineers Education Foundation offers a complete K-12 program.
“The foundation puts on over 300 one-week day camps in middle schools and high schools across the county to show the value of math and science in making things,” says Mark Tomlinson, executive director of the Society of Manufacturing Engineers. “The hope is that they then go back into their school lives and consider jobs in the process of making things rather than just jobs in the service sector.”
Foundation scholarships to the tune of $600,000 a year also entice those entering manufacturing, education or educational programs related to manufacturing.
Challenging the traditional “man’s world” of manufacturing is another approach to tap a hidden source of potential workers. A program conducted by the College of Engineering and Engineering Technology at Northern Illinois University in Rockford, Ill., focuses on middle school girls selected by their science and math teachers.
Dividends are in the making. Brian Cluff, vice president of Star SU, a gear-making machinery supplier, hopes that his 13-year-old granddaughter Alexi might follow in his footsteps as a result of her enrollment in the NIU program.
Companies with apprenticeships or training programs that had been cut to save money during the 1980s and 1990s are rejuvenating the practices. Penn United Technologies of Cabot, Pa., an employee-owned precision manufacturer, set up an in-house apprenticeship program that blossomed into a 17,000-square-foot learning facility where employees are trained.
Similarly, Jergens Inc., a Cleveland manufacturer of holding and clamping systems, started a training program for employees that evolved into Tooling University, now used by 1,200 companies to train employees through 400 online classes.
Machine tool manufacturer MAG IAS of Erlanger, Ky., began an apprenticeship program with Gateway Community and Technological College in 2007 that provides 100 percent company-paid tuition to successful candidates.
Even a good, old-fashioned job fair can bring results.
Forest City Gear registered 120 people at the Rockford, Ill., manufacturer’s recent job fair. The company was willing to take unskilled laborers and train them, but only 30 were cleared for interview. A dozen were hired. Four had no skills, five had some skills and experience and three were skilled and needed only minimal training.
Still, it’s reason to hold future such events, says Human Resources Director Kika Young.
“We ended up needing more workers even after that,” she says.
Bill Dahm knew he had a decision to make. He and his younger brother Mike were running Mike’s Express Car Wash and the business was having growing pains. The elder Dahm wanted help at the top.
New locations were being opened each year. Mike Dahm, the vice president, was needed to oversee Ohio operations, where he lived.
“I was leading the company and our operational excellence was just suffering,” CEO Bill Dahm says. “With our growth at the time, I had way too many direct reports. We were still making money but it was time to bring somebody in that could focus just on the operational excellence at the location level ? to free me up to work on growth issues, our vision and where we’re going with the company.
“So I had to make a decision ? it was one of the best ones I made,” Dahm says, “I brought in a top executive in our industry to be the COO. Boy, did that pay off because I was trying to wear too many hats.”
Dahm says he is convinced that the 650-employee company would not have the growth or the profitability today had he not been honest about the situation.
“I thought it was time for another top executive here that just spends time working with these area directors and making sure that we operate at a high level of expectation for our customers.”
With his COO, Dahm was able to ensure that the operations went smoothly and that he could concentrate on new ways to make customers highly satisfied. Here’s the formula Mike’s Express Car Wash uses for its 39 locations.
It starts with vision and mission statements. Each states the message and sets the stage:
“Here’s our vision: We will be the service industry leader by embracing innovation and providing opportunities for team members to reach their full potential while ensuring profitable growth,” Dahm says.
A mission statement takes the vision and puts it into action.
“We talk about it all the time,” Dahm says. “To create lifetime customers by delivering a clean, fast, friendly experience through engaged and valued team members.”
Finding employees that fit that definition takes some effort. To be an industry leader, you have to have the best people in the industry. If you don’t make excellent hiring decisions, you may end up trying to make something work that really isn’t workable.
“Sweat the details,” Dahm says. “Of every 100 applicants we consider, we just hire one.”
Do extensive behavioral interviewing, pre-employment assessments and check all references. Encourage applicants to apply online so that the recruiting department can easily look for red flags. When it comes to the actual hiring, don’t let local management have the final decision. Make that a function of middle management to ensure that no shortcuts were taken should less desirable candidates be hired to fill an opening quickly.
“Make sure that you have the discipline to only hire the people who truly enjoy working with customers,” he says.
Once the employee is hired, put in the time to properly train the person. If your company structure includes a central office with branch sites, provide for training at both locations.
“The worst thing you can do is have this great training and then they get to the branch level and don’t see the same examples of customer service and courtesy and smile and hustle,” Dahm says. “It has to be something you practice.”
Base bonuses on productivity. Performance reviews should be done on a regular basis to ensure that employees have genuine buy-in, and aren’t just going through the motions.
“If you don’t take care of that, the next thing you know, it spreads,” he says. “Our company culture has always been about believing that the people that wait on customers make or break your company.”
How to reach: Mike’s Express Car Wash, (888) 285-9274 or www.mikescarwash.com
In the loop
One of the challenges of running a company with multiple locations in different states is staying in touch, keeping everybody on the same page going for the same end zone. Bill Dahm, CEO of Mike’s Express Car Wash, and his team worked out a solution using a weekly video called In the Loop.
The company human resource department shoots the video, which features sections such as a positive comment from a customer, safety tips, employee promotions and other items designed to advance the company culture.
“The number one goal should be to inject your culture and what the company stands for to remind associates that what they’re doing is truly making a difference,” Dahm says.
He based this type of communication on similar ones used by the Ritz-Carlton Hotels and Disney Enterprises.
Employees view the 10-minute production either at their location or over the Internet on YouTube. Location managers keep track of who signs in. It’s the honor system, but the videos are well-received.
“I do believe there is a high percent of our people that watch it because we try to keep it fun,” Dahm says. “It’s just not another way to talk about things they don’t want to hear about. We try to keep it very complementary.”
How to reach: Mike’s Express Car Wash, (888) 285-9274 or www.mikescarwash.com
Andy Alexander had his work cut out for him. It was April 2009 and he had to continue to get Red Roof Inn on solid financial footing. The company was letting the dust settle from ownership and leadership changes and economic doldrums were causing a downturn in the travel industry. The new owners and Alexander agreed: The iconic brand needed to get back to basics.
In his role as interim leader, and later officially as president, Alexander had to overcome customer perception that the icon was dragging a bit.
“We were a brand that needed a push,” Alexander says.
Customer reviews said Red Roof’s midscale lodging experience at an economy price was at best, something they didn’t think the company still had, or at worst, or something that had been lost.
Returning the 4,500-employee company into the groove started with patience and persistence. After a year and a half, things were looking up. The portfolio size was increasing, the revenue per available room was 14 percent higher than the competition and perhaps most telling, Red Roof Inn was garnering high customer satisfaction scores in online hotel review sites.
Here are steps Alexander took to breathe new life into the brand.
Define the vision
The lodging chain’s new owners were adamant about reinvigorating the brand, so much so that it built new headquarters in Columbus where it all began in 1973.
“Being downtown and part of the Columbus community is a very important aspect to reinvigorating the brand and bringing it back to those roots,” Alexander says. “The theme kind of does a 360 back to that aspect.”
Over the years, the number of competitors in that segment grew and made it more difficult for Red Roof Inn to stand out.
Alexander was no stranger to the hospitality industry, and he brought with him an important piece of advice that he learned from his former boss at another lodging company.
“He said for a brand to succeed, you have to know what you’re best at,” he says.
Defining the company’s core competencies is an important initial step. This involves meeting with employees and the management team until a mission statement is developed.
“That was the first thing I asked the team here ? what are we best at?” Alexander says.
“What we found was that we are best at the basics.”
You have to come up with your core competencies and work from there. Mold and manipulate the information until a concise statement is developed. Brand recognition, customer service and consistency are critical areas that should be part of the vision ? and the mission.
“You want to impress your customer with outstanding service and give them what they are expecting time after time ? that same consistency,” Alexander says. “I think the brand consistency is what sells; it helps us to sell both to consumers and franchisees. Without that consistency, and the consistency of service and product, you’re likely to become a brand that’s much more a commodity.”
The analogy of gasoline stations illustrates the dangers of becoming just that.
“You come up to the corner and if one’s two cents cheaper, you choose that one over the other one, regardless of what the brand is,” Alexander says. “When you lose your consistency and people can’t count on receiving that high quality and value, they’ll just come to the corner and look at the various prices or look on the Internet and choose the cheapest.”
When you are developing the vision, add a heavy dose of customer feedback into the mix. Rely not only on customer surveys, but also on consumer sessions, discussions with members of a loyalty or rewards club if you have one and face-to-face chats with customers.
Surveys, if done properly, help a great deal in narrowing down the strengths and weaknesses as seen by customers. Avoid the short-answer questions that usually result in answers but not the reasons for the answers.
“There is advanced technology so surveys really lead the customer to give more precise detail without burdening the customer with lots of open-ended fill-in questions, which you know if you’ve taken a survey, you don’t like,” Alexander says. “What you want is to be led through the question-and-answer tree so you reach the point where you make a specific point and tell why. Whatever the customer’s issue might be, surveys now give the ability to get in much finer detail the information needed. That’s a big area for feedback.”
Along the lines of technology and feedback, social media is proving to be a useful tool.
“It was not that long ago that if you had a big enough marketing budget, you could go on television or radio, in print, and over and over again say, ‘We’re great, we’re great, we’re great,” Alexander says. “Eventually the public believes you because they’ve heard it enough, they’re not sure where they’ve heard it from but they know you’re great.
“Social media has put an end to that because with social media, you can’t just say you’re great ? you need to be great,” he says. “It’s really leveled the playing field, and for a company that had a smaller marketing budget, it puts it in a great position.”
Social media can bring a double shot of benefits when you are fine-tuning the vision. Not only can it define what customers are saying and would like to see, but it can give you prompt feedback on the action you have taken
“Two years ago, as WiFi became more important, our guests said one of the top things they wanted was free WiFi,” Alexander says. “So we rolled out free WiFi, and the guests responded. I think our performance has improved as a result, and that’s just a testament to making sure you’re listening to your customers and responding when they have need.”
Once the vision and mission are defined, you have to get to know your employees before launching action to reinvigorate the company and secure employee buy-in.
“You can’t just be a leader who is out traveling around the country as a figurehead,” he says. “Be a working CEO, day to day, and work with your team to understand them, their personalities, the way they like feedback, they way they work among the team when they need support ? and when they need to be left alone.
“But each is different. Some players, if you don’t touch base with them 10 times throughout the course of a project, you end up getting off track. Others you touch base with them 10 times, and you just slow them down. It depends on the individual, but if you’re a figurehead, or someone who’s just offsite, you’ll never learn the traits of your people.”
A leader often has to walk an imaginary tightrope when it comes to delegating responsibilities.
“Individual department heads have to be accountable for results, but they can delegate to achieve results within their department,” Alexander says.
Think of delegation as a method to recommend proceeding with less guidance or more guidance, whatever is needed.
Today’s ever-changing technology poses challenges at times, but a peer approach to designing and teaching can have good results if for instance, you’re installing a new computer system or upgrade.
“Change is always difficult and getting employees to buy in is important, but the best way to do that is to have as many of them as possible, at least many of their peers, involved in the process,” Alexander says. “Use individuals who aren’t managers and use them in the process of determining which system to choose. Obviously, that helps when not only do you get a better result, but you get buy-in because the people who have to actually implement the project were part of the process.”
Buy-in efforts should include designing the proper team to help ensure the mission statement is carried out.
“A CEO can come up with a vision, but without a team that can achieve results and achieve superior results to see a vision, it will fall by the wayside,” Alexander says.
“Use this approach: spend a significant amount of your effort in not only just creating the vision but in putting the team in a position, in a sense, to overachieve ? to reach their highest potential, both as individuals and as a team.”
Nurture the effort
The final step is to nurture the changes. Management should next identify employees who are willing to step out of their comfort zones and try something new.
“I’ve seen it as I’ve worked at different levels with peers as well as people who have worked for me that most people have much more inside them than what they give,” he says. “It’s not that they don’t want to give it; they just aren’t given the opportunity.
“Encourage them even if they sometimes fail, and do not punish the failure but reward the attempt. In a way, it’s a social science that’s really developing. People are more and more recognizing that missed opportunities are more harmful to an organization than taking the opportunities and failing.”
Work hard to make sure all employee ideas are rewarded with recognition and support that inspires confidence. Employees need to be given the chance to put their ideas into play to advance the company where they feel they can.
“What makes one person overachieve will not work for another,” Alexander says. “It’s important as a leader to figure out what the right buttons are to push and what are the right incentives to make each individual succeed and overachieve. Avoid treating everyone the same and trying to push them along the same way.”
Changes often will take time, but an incentive program can reward employees for their success and can help them stick it out.
The commonly used multi-tiered incentive in the form of a bonus that balances quality, service and financial performance is workable for the manager level. At the coordinator-type level in which there is frequent customer contact, use a different approach.
“Focus, obviously, much more on what they can make a difference in, toward things they can affect,” Alexander says.
If you have a survey system in place which applies to the coordinator level, report results quarterly. Tally them so they can compete against other company divisions or regions.
“They take great pride in that they’ve earned the most and correct points in their region, and it’s a rallying point for them,” he says.
Energized employees will help reinvigorate the brand. And if you’ve been successful in getting across your message that you’re not abandoning the core of the business, your people will support the plan.
“Don’t try to be a brand that’s something different than you’ve been,” Alexander says. “Just try to be better than you’ve been.”
How to reach: Red Roof Inn, (800) 733-7663 or www.redroofinn.com
The Alexander file
Education: George Washington University; Case Western Reserve University School of Law
What was the best business advice you were ever given?
This was at my first hospitality job. When I arrived, the CEO took me inside and said, “What I’d like you to do is before you jump in, I’d like you to watch, listen and learn before you speak.” It was great advice. It allowed me to learn the culture, understand the strength of the team and understand the vision and goals of the company before I inserted my personality and my own agenda into the company. I give that advice to everyone ? everyone wants to hit the ground running but you need to have something underneath your feet first. That was the advice that gave me that foundation. Then when I started running, I was actually able to get somewhere.
What’s the favorite part of your job?
It’s maybe not a part of my job, but fortunately I have an opportunity to visit the different inns and observe both the customers as well as the employees. The most rewarding thing is when the customers tell me that we met or exceeded their expectations and my employees tell me they loved where they work.
Alexander on doing business:
We’re doing business without a net. That’s how I would describe it. Seventy-five percent of our reservations are either made or walk in the day of that night. So we don’t know what is going to happen that day. We have a lot of data to tell us what should happen that day, but we are very focused on a world that can change on a dime for us. It means that while we look at data and we have a ton of it, we have to make sure our people are focused on the meaningful.
Luconda Dager officially had been president of her family business, Velvet Ice Cream Co., only a few months when a major crisis reared its head.
An important customer with 600 stores wanted to dump the way it had been doing business with her company in favor of scanned-based trading ? basically, consignment selling. The leaders at Velvet were more than a little steamed up.
But Dager was able to remain cool-headed.
When dealing with a gut-wrenching issue like this, which meant spending $200,000 to buy back the inventory and then getting paid for what was scanned out the front door, there has to be a partnership, Dager says.
“When you have a good customer, a true client relationship, it should be a win-win,” she says.
A key early step is to stay focused. Conversations, meetings, and deliberations ? they are all important to inform senior management how this was going to affect the operation.
“We really felt it was important for us to go back and have a few more meetings, face-to-face, one-on-one,” Dager says.
The first thing you need to do when handling a controversial issue is take the emotion out of it. Consider the pros and cons carefully. Look at the advantages, and don’t dwell on the disadvantages.
“We tried to make the best business decisions and not make an emotional decision because this was such a big part of our business,” she says. “We still feel this issue favors the retailer but at the same time, we’ve tried our best to look at the whole program.”
Look at the numbers first. The numbers will tell you which way to go, especially if you are feeling price increases from all your suppliers.
For example, fuel costs may be a factor. Transporting products to market poses some serious concerns for many businesses and it may even mean re-evaluating markets.
“Do we need to bring in our footprint a little bit because we’re having to drive a half-hour, 45 minutes, out of our way to get to a customer, or several hours away to get to a certain market?” she says. “Is it a profitable market? Can we absorb the fuel increase?”
Put a strategic-minded team together to study the issue including senior level people such as the director of distribution and the CFO.
For issues that impact employees, a decision may involve more than just looking at numbers.
“If it’s something we’re going to have to do, like submit layoffs, and it’s going to involve affecting people’s lives, we would look at it a little differently compared to ‘Is it just about pulling out of a market because we can’t make any money in that market?’” Dager says.
Make the employee feel valued. Make them feel important. Include them in as many company meetings and activities as possible.
“They’re extended family; that’s not just lip service,” she says about her 125 employees. “If you look at the statistics, it’s not money that motivates them or anything. It’s really just making them feel valuable, and patting them on the back, and giving them a simple thank you.”
Set up an off-site meeting, full of energy, and they will be riding high. Dager organized a meeting at the Ohio State University Union, with speakers such as President E. Gordon Gee and former football coach Earle Bruce ? and a couple of OSU cheerleaders.
“We had 75 staff members at our sales meeting, and really pumped them up. We expressed our goals and objectives so we’re all united and all on the same page. That helps motivate them.”
How to reach: Velvet Ice Cream Co., (800) 589-5000 or www.velveticecream.com
Careful business succession planning can make the difference between prospering or failing.
“We’ve just been very fortunate with great leadership in this family, and it’s the way you hand the business down that is key,” says Luconda Dager, president of Velvet Ice Cream. “My father and my uncle ? they both did an excellent job together.”
The brothers hammered out a succession plan for the business started by their great-grandfather in 1914, knowing that one would retire before the other. What made the hand-off easier was that there were qualified people ready to come off the bench.
“It really even starts before the succession plan; the way Dad rooted us in the business, was key,” she says about herself and her two sisters who now lead the company.
Have your successor learn the business from the bottom up ? not the top down. Work in as many capacities as possible; it will build respect and trust among employees. Another rule to follow is to have had employment outside the company after college graduation.
“That way we know what it was like to have a boss that’s not your father,” Dager says. “We could bring something back to the business, so we had a different perspective.”
How to reach: Velvet Ice Cream Co., (800) 589-5000 or www.velveticecream.com
David Harding knew there had to be a better way to reduce the stress at work. So he read an article about executive coaches, hired one, and set out to change the company culture with his newly minted purpose statement.
It was his “aha” moment. The revelation? Hiring the best people, trusting them and letting everyone share in the duties ? and share in the rewards.
“We dreamt that people would want to work here and would be lining up at our door to join the team,” says Harding, president and CEO of HardingPoorman Group, whose annual sales are about $30 million.
Once that vision is solidified, you develop the purpose. Harding finds this one fits the bill: “To make a meaningful difference in the lives of our employees.”
Finally, ask, “How can we deliver on that purpose?”
Then comes the action. Take away the autocratic management style. Put in a democratic style, where managers are allowed to run their departments. Take away the plant manager.
“We chose not to have one because everyone tends to go to him/her for answers,” Harding says. “Pretty soon you have a stressed-out person because the staff puts monkeys on his/her back.”
The culture revolution won’t be easy. It took Harding about two years to get his 154-employee graphic arts company turned around. Autonomy was especially problematic at first.
“It wasn’t a habit for them to make decisions, and so they would come to us and say, ‘What do I do here?’ and we would say, ‘You’re running the show; what do you think you do?’ and eventually, after you do that a few times, they understand: ‘OK, I need to be making my own decisions.’
“Instead of answering the question for them, you ask them to come up with the answer themselves. And nine times out of 10, it’s the same answer you give them, especially if they understand the vision of the company.”
Management, in a twist of the usual case scenario, should be accountable to employees, and not the other way around. This is the optimum way to benefit the customer.
“Think about it,” Harding says. “The people that can really provide value to a customer are the people that are closest to that process. In other words, the people that are closer to producing a product can probably provide more value quicker to a customer than managers. The reason is they work with that product every day and they know what improvements can be made. So it’s faster. They don’t have to go upstairs and say, ‘Is it OK if I do this?’ Of course they can do it. You should really turn the pyramid upside down and let them provide the value.
“In fact, there is a good book written on the subject called, ‘Employees First, Customers Second,’ and by making employees first they should know what the customer is wanting, too, and what the customer’s vision is, as well. So you have to connect them with the customer.”
If you hire the right people, it makes your job so much easier. Harding points out that his company’s turnover rate for 2010 was 9.1 percent. Statistics show that manufacturing companies average about 16 percent a year.
“There are a million things you can do to make sure a hire is a correct hire,” he says. “Pre-employment testing is one. Multiple interviews. Actually have the employee go through vocational-type tests.
“One time I even drove by an employee’s house, because it was a very important position I was hiring for,” he explains. “I actually could tell by the shape of his house and the garage whether he was an organized person or not.”
Did he get the job? Yes, and he’s now a partner.
How to reach: HardingPoorman Group, (888) 809-7741 or www.hardingpoorman.com
Bring on the feedback
Employee feedback through staff surveys will bring meaningful results in building a great company, says David Harding, president and CEO of HardingPoorman Group.
Each year, the 154-employee graphic arts company conducts a staff survey to evaluate where the company is headed and where it has been.
An outside firm conducts the process and answers are anonymous.
Some of the 35 questions include, “My supervisor is willing to listen to ideas I have about improving my job,” and, “I understand the values of this company and what is important to it.” Respondents agree or disagree on a scale of 1 to 10. Comparisons are made to previous year’s scores to see where improvement is needed.
“We take the average of all 12 questions about the manager and put it on their review,” Harding says. “That way we are telling the managers what’s important.
“The manager can see what his department’s low areas were. Then he can set a plan, or we can set a plan with him, for how he is going to increase those scores this year. You’re benchmarking the company. You can benchmark the manager.
“I’m proud to say that every year our numbers have improved,” Harding says. “I would hope that if you asked our staff if they ‘bought in to’ our culture, they would overwhelmingly say, ‘Yes.’”
How to reach: HardingPoorman Group, (888) 809-7741 or www.hardingpoorman.com