Super User

The next time you think you have a hard time getting your people to move in one direction, imagine having roughly 31,000 locations and 1.5 million employees.

Welcome to the world of McDonald’s Corp.’s Ralph Alvarez.

So instead of spending all his time making out name tags or

constantly visiting the more than 100 countries that have a

McDonald’s, Alvarez, the quick-service restaurant’s president and

chief operating officer, and the executive team use another way to

unify the company: through its differences.

Building off the company’s diversity has become as closely tied

to McDonald’s growth as the Big Mac or Chicken McNuggets.

Want McProof? Since its inception in 1955, McDonald’s has had

only one slip in its growth, posting a loss for the first time ever for

its fourth quarter of 2002. Despite heading toward $16.2 billion in

revenue in 2003, the company was facing its worst margins and

things looked bleak.

“We took our eye off the ball some from the funding and the

focus around these long-term plans,” he says. “While we were still

very good, we could see how this is something that if you’re not

stirring every day, you can have a situation where you can lose

some of the progress.”

So McDonald’s refocused on creating opportunities for different

cultures to shine, adding to the foundation of recruiting minority

employee owners and franchisees.

“It’s easier to cater to the masses,” Alvarez says. “That’s the reality. But when we celebrate our differences, we’re better because

we’re different. That’s better than a leadership team that looks and

talks and thinks just like you.”

To keep benefiting from those differences, Alvarez has worked

to keep McDonald’s focused on growing opportunities given to

minority employees and franchisees, and then he makes sure that

the company isn’t just meeting quotas but giving the minority opinion a seat at the executive table. As a result, the company has

sharpened its focus on serving its diverse customer base, and

McDonald’s is setting growth records once again, posting just

under $22.8 billion in revenue and nearly $2.4 billion in net income

in 2007.

Grow your programs

Alvarez isn’t just a fan of McDonald’s diversity programs, he’s a

glowing example. He was born in Havana, Cuba, and came to the

U.S. at the age of 5. He joined McDonald’s in 1994 and realized that

there was more room at the company for his ascent than anywhere he’d been before.

Still, he cautions that there’s one very un-McDonald’s portion to

continuing to build diversity: There’s no drive-up window. You

have to be willing to lay a foundation through educational and

inclusion plans.

“The results are long term, you don’t see them overnight,” he

says. “It’s developing talent, recruiting outside talent, and bringing

them into an organization and helping them through the growth

curve. These are long-term commitments, you won’t see an impact

this quarter or next quarter, you’re going to see an impact three to

four years from now and being able to do that, that is always the

biggest challenge.”

Thinking for the future, McDonald’s has put programs into place

that not only enhance the power of minorities already in the company but that will also entice others to join. Employee networks

were created for blacks, Hispanics, Asians, women, and gays and lesbians so that there is a comfort zone for development. There are

also educational seminars provided regularly for anyone on a number of minority career development topics. Other simple steps like

converting the course materials at the company’s famous training

program, Hamburger University, into 28 languages have also been

made.

Coupled with other programs, these ideas help recruit diverse

employees and owners for McDonald’s — 41 percent of all its U.S.

owners/operators are women or minorities — and improve company culture. Each network is given its own voice within the company to celebrate its diversity and educate others. One example is

McDonald’s had a Martin Luther King Jr. celebration this year with

a presentation on the leader’s influence on the world as a whole,

which was then followed by a speech at McDonald’s headquarters

from a few executives on what King meant to them.

“I guarantee you that if you work here, you know a lot about

African-American history because of the programs we do,” Alvarez

says. “It’s about pieces that make you a much more well-rounded

person, and that reflects strongly in our culture.”

The programs McDonald’s uses may not be exactly right for

every company, but the point that Alvarez wants people to see is

that the effort is there. When a company creates outlets for minorities — ways they can network, talk, be educated and feel at home

in an organization — those employees gain a sense of empowerment and are more willing to add ideas and effort that contribute

to your bottom line.

“Gathering our black owner-operators organization, our Hispanic

owner-operators organization, our employee networks that we

have, people see we want that to happen; that makes us stronger,”

he says. “Maybe they come in with one voice that’s more powerful

than the individual voices to get a seat at the table.”

The results of those educational forums also help knock down

walls that often exist between one group and another.

“I’ve learned so much from my fellow workers about what they

may have gone through growing up or the challenges of being a

woman in a male-led organization,” Alvarez says. “We actually sit

down, and we talk about that in an open forum that’s much less

threatening than it would normally be.

“It’s very important because you are changing society. Part of

what we know we have in the U.S. is companies that have had success in doing this have actively gone after making a difference

through their training programs, through their recruiting efforts,

through the organizations that they support, through counseling

and through support organizations, so you’ve got to have it be part

of the business plans.”

Alvarez notes that if a company wants to truly expand beyond its

home markets — particularly into overseas markets — there has to

be a good sense of how important diversity is to helping figure out a

new region.

“It starts from the top,” he says. “You have to have the commitment from the leadership of the company that has to stress why

this is important to the organization and why it’s part of the company’s values — so it needs to be part of the company’s values —

and why it’s good for business or good for the organization. That’s

critical. This is a long-term mission, and it fits within how our

country has come to be. And if you are an international company,

it absolutely fits in with having success with different cultures

because first you have to be diverse yourself.”

Give diversity a seat at the table

Among the list of executives you’ll find at McDonald’s is Patricia

Harris, global chief diversity officer. It’s not a job description that

every company has room for, but it’s one way McDonald’s ensures

that diversity remains on top of the priority list. Alvarez loves to

point out something that Harris often says about how you have to

go from counting heads to making heads count.

“It sounds clichéish, but it really hits home that it isn’t about the

numbers you have; it’s about whether the numbers you have are

actually in leadership roles,” he says. “And leadership does not

necessarily have to be title, it has to be the ability to influence the

allocation of resources and the strategies that get placed for success for the brand.”

That means having constant conversations at the top level about

how diversity development is coming along. Alvarez and the rest

of the executive team have regular talks about each of the aforementioned education and succession programs and look for gaps

in the system where minorities aren’t being served.

“We’ll talk about gaps we might have in the farm team and in the

pipeline,” Alvarez says. “If we see a gap or we see someone that

can get extra development that’s where we can allocate extra

resources.”

There has to be a focus on that in every area and the financial

support to grow it, Alvarez says. McDonald’s makes sure that there

is succession planning made both internally and on the franchisee

side where diverse candidates are being adequately groomed to

take over.

That means regular visits from each of the company’s diverse

groups with senior leaders to hear what issues they bring to the

table. By writing diversity into the plan as a strategic initiative,

Alvarez and the rest of the senior leadership team have committed

the regular time to study such issues. And when it’s time to promote someone, the first place they look is to see where their management doesn’t match their consumer. Those opportunities have

created results: The company has won awards for its diversity

inclusion and currently more than 24 percent of its officers are

minorities.

Overall, Alvarez says the changing business world will demand

diversity from your company. Not only will customers expect it —

and the more markets you get in, the more you will run into diverse

customers with that expectation — but your ability to grow will be

fueled by it internally. A diverse company will not only attract

minority employees, but it will attract employees who are excited

about opportunities they haven’t seen in other places.

“It definitely had to do with two pieces: understanding our customers better and understanding our constituents better,” he says.

“Both from what motivates them, from the customer side for purchase, for their belief that we’re the best choice for them when

they are eating out and for our employees in a recruiting mode for

our franchisees in a commitment to grow mode.”

The results at McDonald’s have helped evolve the company from

a hamburger restaurant to a global empire that comfortably markets more exotic products like breakfast McSkillet Burritos or

Southwest Salads to customers all over the world. That regular

redirection is caused by those diverse opinions at the table,

according to Alvarez. With a constant push from different mind-sets on where the quick-service industry is headed, McDonald’s is

able to push marketing campaigns and customer service issues

that keep it on pace with the times.

“When we started having the right advertising, level of research,

product testing and seat at the table for executives that were

diverse, and when they were at the table when the strategies were

being developed or the products were being developed — versus

just making an adjustment at the end to try to fit it — there’s been

a huge difference,” Alvarez says.

“There’s a subtleness there, but it’s been a big part of our success. I also know it’s made us better as an American company that

operates over 50 percent of our restaurants outside the U.S. It’s

made us better in understanding and bringing our different leaders and different geographies to the table as we make the strategies that are global strategies.”

HOW TO REACH: McDonald’s Corp., (800) 244-6227 or www.mcdonalds.com

Sunday, 24 February 2008 19:00

Data miner

Stephen W. Lilienthal grew up getting used to having the weight

of a company on his back.

Working in his father’s delicatessen in New York City, one of his

jobs was to take the recyclables — then mostly glass bottles —

up the stairs to the street. The bags often weighed nearly as

much as young Lilienthal did, but he realized that if he could just

get ahold of the bag and get some momentum going, he’d be fine.

When Lilienthal took over as chairman and CEO of CNA

Financial Corp. in 2002, another heavy load awaited him: The

business and personal insurance giant was losing ground fast. By

2003, the company had a net loss of $1.4 billion, and Lilienthal

knew that getting his arms around the problems was going to

take several years.

CNA, an umbrella organization for a wide range of insurance

providers, had $12.3 billion in revenue in ’02 but was segmented into

different organizations with different data. A truth that just hadn’t

been processed among the nearly 10,000 employees was that the

company was in a nosedive.

“The hardest thing was getting recognition of the issues at hand,”

Lilienthal says. “There was not a common acceptance that the place

was struggling and had confronted some very serious and life-threatening issues.”

So he began taking those first momentum-building steps. He headed up the project to collect all the data to see the company’s mis-steps, and he began promoting and hiring the smartest, most direct

people he could find. Meanwhile, he tied the data coming in to uni-lateral goals for the company by making CNA’s success equal

employee compensation.

Gather and communicate the facts

To a fact-driven leader like Lilienthal, there are two simple steps

to starting a turnaround: You acquire data, and you clearly communicate the problems to employees.

“You have to say you’re struggling,” he says. “It’s that acceptance,

then it’s understanding what success is, what are the metrics that

we’ll be using, and what’s the data that we’re going to need?”

To say you’re collecting data is one thing, but Lilienthal says you

have to realize that it’s a big task, and you will need to put things

together incrementally and make changes regularly as you go forward.

“My project for the first two or three years was building a system

that would let me get at the data and refine it, and we planned it out

over a two- or three-year period so the refinements would come at an

incremental basis,” he says. “It’s not like we could shut down the

place for a couple of years while we rebuilt; we were operating a $12

billion company on the fly and trying to make sure we had something left after we did all of our re-engineering.”

Not only does getting data take time, but you have to realize that

some of the old data may point you in the wrong direction. At CNA,

the data from one portion of the business wasn’t always qualified the

same as another portion.

“Data quality was a huge issue because when you silo an organization to the extent that CNA had, it fractured the database and

made it difficult to get data in a consistent fashion and deliver it in a

way that I could really get my arms around,” he says.

By making redefining the data job No. 1, Lilienthal spent vast

amounts of time digging in and seeing some big problems at CNA.

Though the truths were often a bit scary, he says negative data can

be paramount during a turnaround.

“In terms of the ability to have a strategic vision and to develop a plan,

that will drive the organization to the desired outcome,” he says.

As data came in, Lilienthal and his senior leaders released it

through every communication process possible. It explained where

the company was off-balance and helped justify future moves while

giving employees a new standard for success.

“We release things and make people aware of any changes,” he

says. “The less surprises we have, the more stable, motivated and

focused the employees are in terms of the task at hand rather than

the noise that surrounds it.”

The more CNA could get the information out, the more it helped

employees get behind the turnaround. A new vision was created,

and employees got a better understanding of how what they were

doing would rebuild the company.

“The concept of leadership very much gets focused on one person

having a great idea and yelling, ‘Charge!’ and often not having anybody to go with them,” Lilienthal says. “We expect our leaders to

communicate on a regular basis whether people are meeting the

objectives, and that’s fact-based and quantitatively based.

“What differentiates an organization in terms of how it’s able to

motivate, attract and retain people is how you do it. You can have

hard challenges and act in a humane way and achieve more because

people are not afraid. They understand fact-based expectations and

the consequences, but they’re not living in fear.”

Let smart people do the work

As data was coming in, Lilienthal used another lesson he learned

at his dad’s deli.

“My dad’s message to me was, ‘You’re never as smart as you could

be, and you’re never going to be smart enough,’ so if you can recognize that, then you are unafraid to surround yourself with smart people who will help you get it done,” he says.

With data being released incrementally, Lilienthal began to apply

that to CNA. Whenever it became time to bring in or promote a new

leader, he looked for someone smart who could learn from data and

communicate it clearly.

“One of the reasons you absolutely have to have the smartest and

the best people is that smart people and experienced people can

operate with data that’s not perfect,” Lilienthal says. “You get people

who look at data and say, ‘I understand where this is leading and

what we need to do.’ That’s key because I couldn’t sit here and just

say I’m going to wave a wand over this technology and it’s all going

to be fixed in two weeks.”

To make sure he was getting smart people, Lilienthal and his senior team reworked the way they hired. First, CNA expanded interviews to feature several leaders — including those from other

departments — talking to candidates to see if the person displayed

the ability to work with other teams.

Beyond that, an emphasis was placed on patience. Lilienthal

worked his way up the insurance chain from one chair to the next,

and he knows the industry smarts that come with logical progression.

“To get to senior levels within any organization, you need to understand the fundamentals,” he says. “In this day and age, people are

impatient, and a lot of companies take chances on people that

skipped one or several levels of experience. So you wind up with

compensation levels being out of whack and with a lot of variability

in performance because people skipped the fundamentals.”

Lilienthal says the final litmus test is letting the interviewee show

his or her smarts by describing clearly and without prodding how he

or she would be successful.

“We don’t tell them the expectations of the job, we give a broad-based description and I ask, ‘If you had the job tomorrow, what

would you do, how would you do it, and how would you structure

the organization?’” he says. “And then I shut up. The measure is

their ability to communicate in a very crisp and concise way exactly what is in their head, how they would do it, the people they

would hire and what the core functions are.

“Sometimes what you get is an inundation-type answer, where if

they keep talking long enough and say enough things, somewhere in

there is an answer. The people I want are direct, very focused, they

have the facts and maybe they’ve done it before. They express themselves well because if they can’t communicate, they can’t develop

followership — and if they can’t develop followership, nothing gets

done.”

The test for an employee’s intelligence may seem basic, but

Lilienthal says it’s often overlooked.

“You have to have A players,” he says. “If you lose a year in today’s

business world, that’s a generation. You lose two, and you can say

it’s over. Smart people equal smart business, and if you give them

good data and good solutions, you have a shot at winning. If you do

not have smart people, it does not matter what your product portfolio or data quality looks like — marginal people equal marginal

business.”

Tie employee efforts to compensation

Besides reconfiguring how data was collected and utilized,

Lilienthal made another blanket move that helped CNA’s turnaround

gain traction: He tied senior employees to the success of the company with compensation. That doesn’t mean you tie people to the

success of their department, but you make sure everyone is looking

out for the company as a whole.

“They have vertical responsibility, but they also have horizontal

responsibility to help all the other areas get better,” Lilienthal says.

“That means the finance department would have primary responsibility for financial functions but also have an ancillary responsibility

to help other departments if they need support.”

In order to get everyone thinking in that horizontal fashion, the compensation plans at CNA didn’t let any one department earn extra compensation if the company was struggling.

“Our compensation plans are skewed toward the success of the

company, not toward the success of a department,” he says. “If CNA

does well, everybody shares in it.”

It sounds basic enough, but Lilienthal says some employees have

a hard time grasping that one’s personal success doesn’t always

equal big benefits.

“People ask me, ‘Does that mean that if my staff department hits

their target that we’re not going to get compensated over and

above?’” he says. “And I say, ‘You’re absolutely right because it wasn’t good enough. Whatever you did didn’t work because the results

weren’t there for CNA.’”

The idea isn’t to punish your employees when the company struggles, but you have to make them recognize that there is an overall

business objective, and you make them care enough to help in any

way they can.

“You have to care about a place if you’re going to be part of a winning team,” he says. “Otherwise you’re just a robot, and robotic

behaviors ultimately fail because you wind up gravitating to the middle. And if you are in the middle, you are just dead meat — sharks

hit when you stop swimming, so you have to keep moving.

“If you take one of the guideposts that you use, compensation has to

be there. It is probably the simplest and crudest way to keep people

focused on the results of the organization, but it’s recognition of success or failure.”

Compensation doesn’t fill in all the gaps, but motivated employees

will do that on their own. At CNA, the new direction created by tying

compensation to success bred an atmosphere where employees

wanted to do more. CNA had a record year in 2006, posting $1.1 billion in net income on revenue of $10.4 billion.

“It’s not just about compensation; the organization starts to

achieve traction, and people like to be part of a winning team,” he

says. “As the company does better, and our reputation and financial

results start to push forward, people feel good. They feel that it’s a

good place to work, and they stay here despite being potentially

recruited away.”

HOW TO REACH: CNA Financial Corp., (312) 822-5000 or www.cna.com

Tuesday, 29 January 2008 19:00

Cultural revolution

Forget that Dr. David T. Feinberg has more college degrees than the average small company’s staff, the best lessons he got in life didn’t come from a professor — and they didn’t cost him a dime in student loans.

Growing up in Burlington, Calif., Feinberg’s father taught him a very important lesson about business: Refuse the desire to get sidetracked.

“He said, ‘Stick to your business; don’t get sidelined,’” Feinberg says. “So he really taught me about being single-focused and sticking to what you do because that’s the business you know.”

On his path to becoming CEO and interim associate vice chancellor for UCLA Hospital System, Feinberg realized that in his profession the main focus of his job was his patient care. When he took over at UCLA, he had the realization that he had the medical technology to do his job, so if he could get the staff at the $1.3 billion hospital system, the hospital portion of academic medical enterprise UCLA Health System, focused on that people-first attitude, then there would be an improvement in patient care.

So Feinberg has created a culture where he leads the charge for taking care of people by making sure that he and his leadership team are out touching the front line, and then circles back to meet with employees to ensure that they’re happy so they’ll take better care of patients, then he continues to add people-oriented staff members to keep the culture going.

“We are in the business of taking care of people, and leadership has to show that, just like the nurses or other staff, we’re just people, with strengths and weaknesses, but with this common goal of coming in every day to make sure we take care of our patients,” Feinber says.

Pushing that culture led to UCLA Medical Center being ranked as one of the top three hospitals in America — including the best in the Western U.S. — by a 2007 U.S. News & World Report survey that ranks hospitals on various care factors, including patient care.

Here’s how Feinberg maintains his winning culture while continuing to move the organization to new heights.

Set the tone

Opening the lines of communication is vital to creating and maintaining a culture. Feinberg starts by meeting his customers — the patients.

“The business that we’re in, we have to remember to stay focused every day that we’re here just to take care of those patients, and I meet as many of them as possible,” Feinberg says.

That commitment to meet with people is something that he knows not every leader will make, but Feinberg insists it makes all the difference in setting an example for his culture. And, whether it’s patients or customers, you need to make that a priority so they can understand what is going on at the ground level. That means Feinberg makes a conscious decision to schedule a great deal of his time for speaking with patients.

“I spend 40 percent of my time not at the bedside but literally on the bed,” he says. “I introduce myself to the patient. I say, ‘I’m the director here, how are you feeling, how’s your care, have we communicated to you in a way that you understand? Here’s my card, give me a call if there’s anything I can do to help you.’”

While most leaders would be concerned that those kind of visits lead people to come to them with more trivial matters, that’s exactly what Feinberg wants. When he hears how the little things are going with patient care, he can work on the core problems with the system and see what’s working.

“Whether it’s that leukemia patient who calls my office to say a TV doesn’t work, to a patient who says, ‘I want you to compliment this nurse,’ to me, that’s our business, so I see that as my No. 1 job,” he says.

With so much of his schedule purposefully tied to these meetings, Feinberg sets an example for the culture at UCLA — after all, if the CEO makes time to sit with a patient, so can a nurse.

“It’s incredibly rewarding to have that direct connection with patients and families where we are literally changing their lives,” he says. “That’s why our 7,000 employees come to work every day, so to be able to do that shoulder to shoulder with them provides an inspiration to them. Despite the many challenges of the business, if you can be out there to help them remember why they come to work every day, it makes it much more rewarding.”

When you are pushing a culture that promotes an emphasis on people, the ability to talk with those on the front line can give you the greatest asset of all: a good story. For Feinberg, talking with patients means he gets examples of nurses and residents who did things right.

“When a mom says to me, ‘We’ve been to four hospitals; no one got it right, but we’re getting the right answer here,’ or somebody says to me, ‘We wouldn’t go anywhere else; this is our hospital,’” he says. “Those things come to me and I’m able to share them with everybody. I’m fortunate that those come to my office. They’re not about me, they’re about staff, but that energizes me, and I’m able to take those stories with me and share them with the staff.”

Shake a few thousand hands

While Feinberg appreciated the lesson on staying single-minded, he notes another tidbit he got from his father as even more important.

“The most important thing that he taught me was to have integrity,” Feinberg says.

Applied to business, that means if you say you want employees to be happy so they’ll take care of people, you need to have the integrity to prove it. Feinberg has to show the same commitment to that effort that he does to leading the charge in taking care of patients. He shows up at events that are important to the staff and makes his presence known by engaging in conversations. He says that if employees see you, it will be easier for them to feel comfortable coming to you with a problem.

“I invite 10 people to lunch once a week randomly from different departments,” he says. “As I’m walking the floors meeting patients, I meet with departments. I attend as many ceremonies as possible, I attend memorial services — any of the things where the staff is coming together. I go on rounds with the medical team. I try to be out of my office as much as possible because I’m 100 percent about the relationships.”

If you want to make employees care about others, you have to make sure they know someone cares about them. When Feinberg was the medical director at Resnick Neuropsychiatric Hospital before being promoted to the head of the hospital system, he knew all 400 of his employees by name and made it a point to know something about their family lives. He can’t do that now with his 7,000 employees, but he sure tries.

“When I took on this role, I made the commitment that my efforts are to meet all 7,000 people,” he says. “Now, I can’t tell you I remember everyone’s name, but I can’t imagine anything more important than those people who are so important to what we’re doing having access to me and to others in the executive suite. That’s why we’re here is to make sure those people do the job that we’re supposed to be doing.

“Now, obviously, I can’t listen to every single employee, so the whole leadership team is set up to have open lines of communication.”

Creating communication lines by having other senior leaders at company events or mixing with employees at luncheons, titles can be removed and opinions can be shared. Those conversations, mixed with Feinberg’s intense front-line work, help him see smaller, day-to-day changes that can help employees.

Feinberg’s leadership team did an employee satisfaction survey last year to address any gaps, trying to avoid letting one opinion slip through. While he knows that UCLA is afforded the technological luxuries of the field, he ensures that his leadership team follows up on employee happiness in other areas by responding to that survey. In showing that you care about the little concerns of employees, Feinberg notices that morale goes up — and that can be tied to patient care.

“We have focused very heavily on making sure our people felt on top of their game and the morale was good,” Feinberg says. “All my communication is around how to improve the patient experience — while connecting to the idea that we’re going to continue to take care of our people and we’re going to get the best support systems for them.”

Creating avenues for employees to feel supported is something that you have to stay on top of every day, but if it’s a priority to connect the mission with employee happiness, you will see the results in the efforts they put in to take care of people.

“I believe in the servant model, where the top of the organization chart is the bedside nurse, the residents are at the second level and the very top level is the patient,” Feinberg says. “I’m really at the bottom of the chart. My job is to support those that are taking care of those patients. When you think about the offering we deliver, it’s a very people-intensive process, so we have to make sure that our people feel heard and feel part of the team so they can stay focused on that offering.”

Hire for your culture

Feinberg could spend 99 percent of his time meeting patients and working with current employees and still miss the mark. In order to light a fire under employees he has to make sure UCLA is continuing to hire those that have the right spark for the culture.

“You need to hire people that want to care for people,” he says. “The place that we always need to continue to improve is that we can’t get so focused on [medical technology] exclusively so that we have a nurse that doesn’t have the time to sit down and hold the hand of a patient who is dying.

“We need to balance the high tech with some high touch, so we need to find those that really have that unique combination of being both brilliant and human — that’s the challenge.”

Calling that a challenge may be a bit of an understatement, but Feinberg says you can start the process by admitting that technology can show you a bit more than you think. Instead of continuously dealing with false positive interviews that allow potential employees to talk about how great they are with people, UCLA has started using Talent Plus Software, an assessment for personality and recruiting used by famed luxury hotel chain Ritz-Carlton, to get to the core of how people’s personalities truly match up with the job of taking care of people.

“You need to be a little more thoughtful in that process,” he says. “It’s a very time-intensive interview, but in the end, it tells you this is the kind of person that would go out of their way for a patient or a guest, so we use that as part of our hiring.”

That doesn’t mean that interviewing should be thrown out the window; it just means that Feinberg and his team see the benefits of relying on technology to help them make the harder decisions on candidates they can already see as qualified.

“Often in an interview, everyone talks about how they want to care for people,” he says. “It doesn’t necessarily translate when they get the pressures of their daily assignments, so we’re trying to be a little more thoughtful and objective in using this tool to get at that exact team because I know that you can’t do all that very well in an interview.” 

HOW TO REACH: UCLA Health System, (800) UCLA-MD1 or www.uclahealth.org

Tuesday, 29 January 2008 19:00

Stopping the leak

If there is one skill that Weatherchem Corp. has an abundance of, it’s the ability to prevent a leak. So when the controlled dispensing closures company decided to put its efforts into being more sustainable, it was able to put a lid on its more wasteful habits.

When Albert J. Weatherhead III purchased Ankeny Corp. in 1971 and changed its name to Weatherchem, the company began a consistent streak of creating closures that regularly were ahead of the market. But when Weatherhead and President Jennifer Altstadt looked into the future of the business, they realized a new focus on the products of the company — and the business as a whole — had to be made as the global spotlight on the environment grew.

The evolution into more sustainable processes started with small changes and eventually led to more drastic ones. By purchasing more energy-efficient and cost-effective light bulbs, having employees turn off lights during lunch and computers at night, and creating a recycling program that donated paper to schools so they could turn them in for money, Weatherchem created avenues that employees could participate in every day. Soon, Weatherchem purchased lighter, more energy-efficient machines that used 38 percent less energy. Along with that, new systems were created so that the machines are now booted up in a slower process that does not demand a spike in energy, keeping the company’s energy costs lower.

Beyond conserving energy, Weatherchem is also working to reduce its environmental footprint by producing less waste. The Environmental Protection Agency estimates that in most parts of the developed world, packaging makes up as much as one-third of the non-industrial solid waste stream, so Weatherchem developed two new closures for the spice market that are sift-resistant. The product is fully contained in its package, eliminating the need for a wasteful liner. That product combined with the company’s efforts over the last two years to create a lighter-weight design for all of its new products, creates less overall waste.

Finally, the company is working on a biodegradable cap, ensuring that the evolution of the company will keep up with business and environmental movements by being ahead of the curve when it comes to sustainability.

HOW TO REACH: Weatherchem Corp., (330) 452-4206 or www.weatherchem.com

Wednesday, 26 December 2007 19:00

Jerry Kline

Jerry Kline is the kind of guy who loves to promote people who work for him, but he also likes to hire new people into those positions. It sounds contradictory, but not to Kline, chairman and CEO of Innovative Interfaces Inc. Kline, who built the $70 million integrated library system company from the ground up, appreciates the history his current employees carry, but he also understands that new employees can bring fresh ideas to the table. By working hard to retain a large core of employees while occasionally peppering the mix with fresh faces, he keeps his 310 employees motivated with a path to promotion while working to carve out new challenges. Smart Business spoke with Kline about how to balance your hiring system and why sometimes you just have to let someone go.

Balance the hiring of internal and external people.

I believe in hiring from within where we can. We’ve been able to retain bright people, keep them motivated and give them a path. In our industry, where we are evolving, having the history and knowing why we made past decisions is very helpful.

But it’s also important to bring people in from the outside for fresh ideas. Just because we’ve been doing things a certain way doesn’t mean it’s the best way to go forward. So both are important.

When you’re looking at each situation, we can always bring in people from the outside, so if there is a chance someone can step up internally, we tend to default to that. If we see there is someone who clearly can do the job or deserves a chance to do it, then that’s what we do.

Seeing that there are people who have been here a long time sets an example for everyone. I see way too much turnover in IT companies, and as a customer to other IT companies, seeing new reps and policies all the time can be really disruptive. From that angle, retention and consistency are important.

Still, sometimes we have to bring in somebody new because there is no clear-cut inner hire — and that’s when we do it. So start by asking the question, ‘Is there somebody within the organization that fits this job so we don’t have to train someone?

Hire for retention. We’re looking for people who want to be here for a while. We are looking for people who are not trying to do a hit-and-run.

You have to look at their history — have they always bounced around every two years or had they been somewhere a long time, and then maybe hit a few situations where it wasn’t working? We have a lot of people here who are perceptive and can understand that you look at people’s situations and figure out what they’re likely to do. For example, are they tied to the area, or are they just moving in and moving out?

I learn things about this company every day, so certainly somebody who has been here for a year is still at a point where they are learning a heck of a lot. Somebody that’s been here two years is just starting to really give us the return, so if they’re jumping ship that quickly, that’s not so great.

Go ahead and delegate. The challenge for me was learning where I should stay involved and where I bring the right people in to let them go. Going from a one-person, two-person, 10-person company to 300-plus employees, you find out that if you’re going to lead, it has to be a different kind of leadership.

In most places, I turn things over to people who can run the day-to-day operations without me, and I get more involved in areas where I can make a difference. You can’t do everything when you’re mediumsized, and when you’re coming from somewhere where you were very small, you probably did do everything.

But you learn from your mistakes, you learn that if you are going to be directing every decision, then every decision is going to come to you, and your directors will start turning to you for everything, and you don’t want that — and can’t do it, frankly. You learn that if you’re going to grow, you need to turn over the leadership on a lot of things to other people and, even if it’s not exactly as you would do, you have trust in them.

Set the standard for your employees. I’m actively involved in the company every day, talking with our employees and customers, and that keeps me knowledgeable about what is going on.

My interest, excitement and passion for what we are doing helps keep them motivated. It lets them know that this is interesting stuff, it’s applicable and touches many people. Showing that enthusiasm for what we do, and coming in and talking to customers and talking to the staff here, makes me knowledgeable to a deep level where I can talk about where we’re going, and that helps.

Have front-line employees help you evolve.

Talking to your people that are out-front every day is important, I don’t know a better way to keep on top of it. Having working executives here in the office as my decision-makers — the ones who are talking to our customers on a day-to-day basis — and allowing them to shape our direction based on those conversations is really important.

I watch companies where decisions are made at a board of director’s level, where they may not even understand the business, and that’s one way to go, but I don’t think it’s the best way.

Having the people who are making these decisions working here every day, saying, ‘This is going to work for the next while, but we need something new next year,’ and trying to make those decisions of what we can start changing next month, that’s the key to staying ahead. It’s more than sitting down and talking at a high level about where the company needs to be in five years; it’s knowing that the company needs to be different every year and, even without knowing exactly what that means, having those people in the front in positions where they can quickly make the decisions when they see what changes have to be made.

HOW TO REACH: Innovative Interfaces Inc., (510) 655-6200 or www.iii.com

Thursday, 27 December 2007 19:00

Risky business

You wouldn’t have hired Alec E. Gores when he got out of college — and he’s OK with that.

“I had a lot of things people didn’t see because they were worried about my grade point and all the other things,” Gores says.

Though Gores, the founder, chairman and CEO of The Gores Group LLC, ended up getting a job at General Motors, even the executives there didn’t see what his strengths were right away.

“My strength was I was tenacious, aggressive, and I was willing to learn,” he says.

Today, Gores, a self-made billionaire, doesn’t want to forget that tenacity. He knows that passion is the lifeblood for TheGores Group, a private equity firm that focuses on acquiring controlling interests in mature and growing businesses, so he refuses to let himself get complacent.

“It starts at the top, so I’m open-minded, especially when hiring new people,” he says. “You also have to continue to be nimble, even though you’re big, you have to be willing to make mistakes and keep challenging your people because if it becomes about running everything by committee, you’ve lost it.”

So Gores has made a career out of risks, hiring passionate people who may not have found a home elsewhere and buying companies that weren’t making it alone.

By keeping himself challenged, keeping employees challenged by letting them take risks and make mistakes, and bringing in young talent for a fresh perspective, Gores has been able to shake the complacency out of The Gores Group on a regular basis. As a result, it has continued to grow, acquiring 70 companies since its inception in 1987 while expanding to include offices in Colorado and London. Currently, it controls more than a dozen firms with billions in combined annual revenue.

Keep yourself challenged

Gores knows a horror story that scares him more than any challenge he can have his people take.

“I worked with this guy a long time ago that had this word processing company worth $500 million,” Gores says. “Along the way came personal computers and this guy was so stuck in his technology that he was not open-minded to other technology. One of his engineers even saw the PCs coming along and he played around with putting their software on a PC. This guy, with his ego, basically fired him.

“Well, the rest is history. They went out of business a year or two later because the PCs came along, and that one mistake, not being open-minded and listening to your people, stays with me. If I get stuck in my way, thinking we’re the best instead of thinking, ‘Jeez, this business is changing, and we need to continue to look at the challenges and competitors and make it better, then I’m not doing what I’m supposed to do.”

Gores is constantly working to take on a bigger challenge than he’s ever met before to keep himself from getting complacent. He doesn’t go beyond the reach of his company’s financial capabilities, but he’s always looking for something that his competitors aren’t doing.

“Once you get successful, you’re stuck in this mindset and you think you have the best toy,” he says. “You are very close-minded because you think the world is never going to end, so it’s that fear that you have to have that this world is going to change, and you better be ahead of the game, and you better think like a start-up.”

To do that, Gores has to be the one leading the charge when it comes to taking risks. He constantly listens to pitches from managers on things the company has never done before.

“Status quo doesn’t exist for me,” Gores says. “I’m always keeping it challenging, I never want to do the same thing I dida year ago. We have to continue to challenge the people that are here so that they’re reaching to a point where it really hurts.”

That means that Gores tells himself something every day that most leaders don’t want to think about: He’s not the smartest guy on the planet.

“I don’t let that get in the way and start making a lot of assumptions that may not be true,” he says. “That’s a challenge because you almost are too smart, and you’ve been through too much, and that can keep you from going to the next step. But if you’re always challenging people to continue to take risks and reach and get better to make the company better, you have to do the same.”

When you are willing to hear those new pitches or sign off on something that the company has never done before, Gores says you don’t have to send out company memos every week telling people not to be complacent. When people see the senior leader producing challenges, it breeds more creativity.

“Whether it’s buying a company bigger than we ever bought or more broken than any before it, it’s always pushing, and that’s done by action,” he says. “I’m pushing the organization to do bigger things every day, so that’s the culture that exists here without me saying, ‘Gee, I want you guys to go out and do this.’They just know they have to do it. My job is to create these opportunities that push people.”

Tell employees to make mistakes

Though he likes to take risks, Gores had to come to terms with something that makes most leaders nervous: If you’re going to think like a start-up, you’re going to make mistakes. As much as that can hurt, he has two policies when it comes to that. He encourages his nearly 50 employees at The Gores Group and the thousands working for the companies run by The Gores Group to think without fear of a mistake while also telling them not to make the same mistake twice. The result is loyal employees who push the envelope.

“We make sure people understand that taking risks is good, making a mistake is good, as long as you don’t repeat the mistake,” Gores says. “I don’t want people that say, ‘I did a perfect job, and I never made a mistake.’ That concerns me. You create an environment where, when people make a mistake, they don’t get fingers pointed at them; you help that person fix the mistake.”

With a system where people aren’t just allowed to make mistakes, but they will be supported in their effort to fix their wrongs, The Gores Group is able to nip problems quickly because employees don’t try to cover up. That, in turn, helps reciprocate the company’s risk-taking capabilities because those people see the loyalty they get if they make a mistake.

“We’re not hiding someone’s mistakes under the rug, so that makes people open about making a mistake and taking a risk,”Gores says. “This open environment with people helping each other retains people because they know we have loyalty to them. Everyone wants to grow financially, but they also wantto grow personally, so our job is to make sure we create that growth for those individuals. Taking risks, making mistakes and the way the team comes together, those are all the things that keep people here. Most people don’t want status quo, most people want change. And I’d rather they grow here and make mistakes than go some other place.”

As with his own push for new challenges, Gores doesn’t want people being silly, so there are still checks in place for big decisions. Still, in order to think like a start-up he can’t have employees with feet of clay so he gives them the ability to pull the trigger on things to keep them from becoming stagnant.

“It ’s not like just go and do something stupid, it’s being calculated about it,” Gores says. “It’s making a decision. When you’ve looked at a decision and all the facts, sometimes you just don’t make the right decision, but as long as you’re not just running with your head cut off, it’s about encouraging people to make good decisions. If they made a bad decision, but they worked hard to look at all the facts, that’s OK.

“My whole career has been built on making mistakes, but you have to learn from those so the next time you do better. What’s important about this is if you made a mistake, you can’t get stuck in it. You can’t bring yourself down; you can’t think about it all the time. You have to let it go, you made that mistake, now go make up for it somewhere else.”

Grow young talent

If you’re thinking that what Gores wants his people to do isn’t for the faint of heart, you’re right. In order to keep challenging the status quo, Gores hires young talent and quickly throws them into the action. He remembers how aggressive he was when he got out of college and how there was no outlet for that passion.

“When I see a person that wants to come out of the box — a young person out of college who’s been here for two years —most people will try to hold that person back,” he says. “But I’m always pushing our people to throw these young people in the pool instead of coming up with 20 reasons why you can’t get them to the next level.”

That doesn’t mean that Gores gives young employees thepower to push the nuclear bomb button as part of first-day orientation, but he asks his managers to look for hunger in newemployees and tells them to feed growing employees as muchas they can handle it.

“I’m looking for young people that are hungry, that are willing to work very hard, and I want them to shake it up a little,” Gores says. “I want them to ruffle some of the people who have been here for a while. In many ways, the younger people that come in can challenge the others because they want to take on some things that maybe those of us who have been around too long won’t take on because we make too many assumptions.”

Once new employees get into the fold, Gores knows that even the most adventurous new talent may be reticent to speak up, so he makes sure that both he and his senior managers prod the talent to give his or her two cents.

“You tell them all the time that their job is to keep pushing and shoving to get themselves in — and that pushes people that have been here, so they’re growing, too,” he says. “It’s difficult for someone that’s young to be as open as you are whenyou’ve been through 20 to 30 years of experience, so teaching them to speak up and be open is important. Every now and then, you grab one that’s been here for two or three months; tell them, ‘Don’t be afraid to be aggressive, this is what you have to do.’”

In throwing those young people in the fire and letting them grow up in the company, Gores also found that there is a collateral benefit, they appreciate the vote of confidence and find a home with the firm.

“Loyalty goes both ways,” he says. “It’s all about retaining people, the experience, the good will that we get as a firm by keeping individuals here from the time they are out of college until the time they’ve been a professional for 20 years. We have a great track record of people who start young, they’re loyal to us, they stay with us over the years, and we’ve found ways to keep them motivated so they don’t want to go anywhere else.”

HOW TO REACH: The Gores Group LLC, (310) 209-3010 or www.gores.com

Sunday, 25 November 2007 19:00

Senior leadership

Andrew S. Kohlberg sees more than just a few catchy slogans

when he looks at the principles that drive Kisco Senior Living.

“We said from the very beginning, if we’re going to spend the

time to create something, we have to spend the time to have it

incorporated in everything we do,” Kohlberg says. “The hard part

is not establishing the vision and mission. The hard part is getting

it through the fabric of the organization to every level and making

it a living and breathing part of the organization, rather than something that sits on the wall.”

Kohlberg needed to develop a purposeful culture to ensure that,

no matter which location a person visited in his chain of retirement communities, each site would possess the same values and

standards of customer service.

In order for this to work, he needed to create an organization

in which employees would play an active part in developing

and maintaining the culture, says Kohlberg, the company’s

founder, president and CEO.

“People watch what decisions you make and are they consistent with the principles, values and beliefs,” he says. “They

watch who you hire, they watch who you promote, they watch

who you fire and what symbolic messages those send. ... What

you say doesn’t matter as much as what you do.”

Mission and vision statements are placed on employee business cards and recited regularly at staff meetings at the 1,500-employee company. They are talked about and analyzed during

visits Kohlberg makes to company properties, and they are

posted on the company’s Web site and included in the company’s marketing materials.

“They are in everything that we do,” Kohlberg says.

But Kohlberg is a firm believer that simply talking about

vision is not enough to make it work. And the CEOs who take

their eyes off the ball and let the culture run amok do so at

great risk.

“The culture still evolves,” Kohlberg says. “It just evolves in

some way that they may not like.”

Here’s how he drives home the culture that keeps the $120

million company moving forward.

Free your mind

If you expect your employees to live and breathe your company’s

culture, you have to give them a venue to express how they feel

about it. That collaboration has to begin with the CEO. Encourage

participation, and when you engage others in discussion, do so

with an open mind.

“If a CEO goes into a meeting with the mindset that they are

going to come out with only what they want, everyone in the

meeting gets the sense pretty quickly that all that is going to

happen is whatever the CEO wants,” Kohlberg says. “That

deflates everybody, and they kind of clam up; don’t really participate in a genuine way. There has to be a feeling on behalf of

the CEO that it’s going to be a collaborative effort.

“‘The emperor has no clothes’ is a common problem among

CEOs. They surround themselves with people who just tell them what they want to hear. They never really find out that

they are part of the problem. It just takes time.”

Getting people to offer their opinion means embracing feedback, both positive and negative.

“You cannot have negative consequences to people that say

things to you that you don’t want to hear,” Kohlberg says.

“That’s the most impactful thing to having a culture where people are free to speak their mind.”

Embracing feedback also means asking questions and making yourself available to your employees, whether it’s through

e-mail, a phone call or direct one-on-one conversation. It

means getting out of your office and following up on concerns

and complaints that may come about.

In simple terms, it means being seen by your people.

“You lose touch with reality if you’re not out in the field,”

Kohlberg says. “You really don’t know what’s going on. I’ve

heard people say the higher up you go in an organization, the

further you get from the truth. You need to spend time at all

levels of the organization trying to get a sense of what’s really

going on because people don’t always tell you everything.”

While there will likely always be a certain level of intimidation with some people about talking to the CEO, Kohlberg says

the challenge can be alleviated through regular communication.

“Sooner or later, they get the message that it’s real and

authentic, and they are a little more open,” Kohlberg says.

“They’re always going to be a little intimidated, and they’re

never going to tell you the total truth. But I’ll get a lot more

than sitting in my office.”

When sifting through ideas and concepts presented by

employees, the key is to make sure they fit together in the

overall plan before you decide to implement them.

“They have to be specific and applicable to the company,”

Kohlberg says. “Give people really specific guidelines of what the

organization stands for and where it wants to go. If they are so

vague that every company fits within it, it’s meaningless.”

Walk the talk

The phrase, “Actions speak louder than words,” may be a

cliché, but it is very true in trying to get employees to buy in to

your culture.

“You’ve got to have management walk the talk,” Kohlberg

says. “If they are doing things that oppose what’s written on

the pages of the paper, everyone thinks it’s a sham and nobody

really buys in to it.”

One example of how Kisco’s management espouses the values of the company is a program in which employees and managers travel across the border to help build homes in the poorer areas of Mexico.

“It sends a strong message of giving back to the community,

which is very consistent with our principles, values and

beliefs,” Kohlberg says. “People see that it’s real, it’s frequent,

and it’s authentic, and the senior people walk the talk.”

This philanthropic effort would not serve to enhance the

company culture if the good deeds were not in alignment with

what happens each day in the workplace.

“If all a company cares about is the bottom line and making

numbers and they get rid of people instantly who don’t make

their numbers, and they go out and do a charity event, there is

an inconsistency there,” Kohlberg says.

“It doesn’t have as big of an impact. If the values of the organization are to give back to the community and be a good corporate citizen, and that’s right in the vision and principles of

the organization, and then you do charity, that’s a powerful

thing because it lines up. ... It’s impactful and meaningful when

it’s aligned with the whole organization and that’s what people

believe in.”

You need to realize that every decision that is made and every

word that is spoken are being received and processed by

employees.

“If you’re firing all the people that fit the culture and keeping

the people that don’t, that obviously says a lot,” Kohlberg says.

“If you’re not getting rid of poor performers, that says a lot. If

you’re promoting your top performers, that says a lot. If you’re

promoting people who meet their numbers, but don’t fit the

culture, that says a lot. They watch the decisions that get made

and see if people are authentic to the values. Are they walking

the talk?”

Constant monitoring is needed to ensure that vision and culture are in alignment.

“Be able to articulate it and put it on paper so that people can

understand it,” Kohlberg says. “Then you have people willing

to move in that direction. Hire people and train people and

retrain people and recommunicate what that direction is.

Continually get everybody lined up. There are so many moving

parts, and there are so many different people with different

agendas. Getting everybody, year after year, to move in the

same direction is constant work.

“It’s kind of like trying to fix an airplane while you’re flying.

It’s not easy.”

Set goals

Employees can only move in the direction you want if they

know where they are supposed to be going. They need to be

given goals and benchmarks to strive for. In addition to analyzing its own practices, Kohlberg has his team research

benchmarks used at other companies, both inside and outside

Kisco’s industry.

“We look at what the turnover is at Ritz Carlton Hotels or

some other great companies that do a good job,” Kohlberg

says. “It gives you a whole framework on how to set goals and

targets. Then people can’t come back and say, ‘That’s a totally

unrealistic goal.’ You say, ‘Well, these three companies are

doing that. Why can’t we?’ Benchmarking and knowing what

your competitors are doing and also knowing what other great

companies are doing, even if they are not in your industry, is

very helpful.”

Kisco instituted a program in which a goal is set every six

months and based on that goal’s achievement, everyone in the

organization, from Kohlberg down to the lowest-level employee, gets a bonus.

“If we hit a certain resident satisfaction number, everybody

gets X number of dollars,” Kohlberg says. “It doesn’t matter

what level you’re at, you get the same amount.”

The program energizes employees and breaks down the barriers that may exist between levels in the company.

“Everybody in the organization knows that if we hit that goal,

everybody gets the same amount of money,” Kohlberg says.

Employees who aren’t meeting benchmarks and aren’t striving to achieve the goals of the company need to be dealt with.

“Good performers don’t want to be around people who are

dragging everybody else down,” Kohlberg says. “You have to be

really adamant about getting rid of people who either aren’t

doing the job or who may be doing the job, but don’t fit the culture. It’s easy to back off that and get lax because nobody likes

asking people to leave, and it’s a difficult thing to do. You have

to continue to be adamant about that.”

Those who want to succeed, but for whatever reason are

struggling to meet expectations, should be given a chance to

improve.

“We always bend over backwards to make sure we’ve given

A, honest feedback and B, time for them to develop the skills

to be a fit and be productive,” Kohlberg says. “You give people

the benefit of the doubt and time and resources to try to develop the skills and the attitude. If they can’t, you need to move

on.”

The benefit of having a purposeful culture in which leadership is

consistent whether you’re talking about mission, vision or values

is that employees know what to expect when they come into work.

“You have people that are more productive,” Kohlberg says.

“They are more motivated. They stay longer, and you have better results over a longer period of time. There is a direct correlation between a healthy culture and a healthy company. You

can have an unhealthy culture and a financially profitable one

for a short period of time, but you can’t have that for 10 or 20

years.”

HOW TO REACH: Kisco Senior Living, (760) 804-5900 or www.kiscoseniorliving.com

Sunday, 25 November 2007 19:00

Dr. Know

When it came time for Barry Arbuckle to get his staff at MemorialCare Medical Centers to implement a new electronic medical records system, he was reminded of a lesson learned from his predecessor.

“Be prepared for the thousand questions they’ll likely never ask you,” says Arbuckle, MemorialCare’s president and CEO. “Because if they ask you and you don’t know, you lose momentum and you lose credibility.”

So Arbuckle’s job was pretty simple when it came time to overhaul the entire medical records process for the health system: He needed every answer possible to sell each facet of the change to every employee — all 10,000 of them. After all, when you’re fundamentally changing the way people do their jobs, the onus is on you to give them the answers on why they should buy in.

“All of the sudden, you’re saying, ‘Change, it’s a fundamental swap, and you have to trust me that it’s going to be better,’” Arbuckle says. “Well, quite honestly, in the first couple of weeks, it’s hard, and there’s that propensity to say, ‘I’m going back to what I’ve done for years, it’s worked for 15 to 20 years, by golly, I’m going back to it.’

“Many of these people have done it the old way their whole life. Now we’re going to require them to change, and we’re going to take away every other means they had, that’s a big change, and you have to sell them on that.”

Rather than make employees feel like they were forced into changing, Arbuckle wanted to build buy-in for the new system to make sure employees felt like the adaptation wouldn’t just be good for MemorialCare but would also be good for them. To do so, he used a three-step process. He started off by including employees in looking for the answers on how to adjust, then used that information to push a consistent message about the new direction, and finally, followed up to make sure his staff had the right resources to make the change. As a result, MemorialCare implemented the new system on time and on budget, putting the $1.4 billion health system ahead of the technology curve.

Involve your team

“If folks understand why you are making the decisions you are making, they are more willing to go along with you on your journey as opposed to jumping ship and going elsewhere,” Arbuckle says.

The first step to that is acknowledging that even though you need to have all the answers for employees, you probably don’t have them.

“You have to know what you don’t know and acknowledge it,” Arbuckle says. “Sometimes, when you get to a leadership position, it’s easy to forget that. I’m a leader because I know more about this than most other people, but, my God, there are so many things I just don’t know.”

So when Arbuckle started the process of overhauling the records systems, he began by involving front-line people in the process before he implemented anything new.

“It’s got to be a vision that they also share,” he says. “It can’t be, ‘I’m being asked to do this because the hospital thinks it’s a good idea,’ there has to be, ‘I’ve been part of deciding that this is what we’re going to do because it’s what we want to accomplish.’”

The talk of a new system actually wasn’t started by Arbuckle but by MemorialCare’s volunteer physician’s society. Because physicians can’t be employed by a hospital in the state of California, Arbuckle has formed the volunteer group because he knows they are passionate about making medical care better.

Once the idea had been kicked around by the physicians, Arbuckle took it to other members of the team. He made it a point to get a diverse group of people, grabbing people from each department and each portion of the hierarchy because it’s important to make sure that every demographic is represented. When that group was formed, they became the eyes and ears for the staff, hearing vendors pitch new systems and voting to eliminate systems they thought wouldn’t work. The group was even invited to go to other hospitals to see working systems in place so they could ask about the things that concerned them.

“We said, ‘Let’s go out to a hospital like ours and see really how the system works,’” Arbuckle says. “‘Let’s have some side conversations and ask them, ‘If you could do it all over again, what would you do differently, would you spend more time doing this or that?’ And they got some grand ideas. It really added to our intelligence in terms of what to do and what not to do.”

Not only did it make employees feel involved in the process, but it gave Arbuckle a cheat sheet for those thousand questions that may never be asked.

“That’s useful because then you are able to articulate their reasons for decisions to board members or to employees whose livelihood you are potentially impacting,” he says.

To continue to get his staff thinking about the best system, Arbuckle even hired a former chief information officer of a hospital that had failed putting together a new system. The idea was to really let everyone get a close look at what would work best and what wouldn’t so they could articulate which system was the best fit. The employees had to make the change, so their opinions mattered more than anything.

“It was millions of dollars, but they selected it, and then they helped us build buy-in with our colleagues,” Arbuckle says. “The fact that they helped convince people who weren’t necessarily computer-ready to jump on this, that’s all that really matters because I don’t use that system. It’s easy for me to say, ‘This one’s big, this one’s popular, our neighbors chose this one,’ but that does-n’t work, particularly when you are asking folks to fundamentally change.”

Keep a consistent message

Though the inclusion process helped Arbuckle see the advantages of the new system, some of the staff still had to be sold on the fact that a change was going to be made. That takes a consistent communication process that ensures every employee sees the core vision.

“You have to articulate the end goal, ‘Here’s where we are today, here’s where we want to get, and does everybody agree that that’s going to require a change in between?’” Arbuckle says. “You kind of get everybody understanding that this is where we want to get to, there is a reason we are doing this, and the path that we’ve taken to today won’t get us there.”

Arbuckle could articulate the change well from what he’d learned by including his team in the process, but he still had to do it over and over and over again.

“It was communication, and that’s an overused term, but we probably overcommunicated,” Arbuckle says. “The number of Web casts that I did on this topic out in the field, the number of newsletters, meetings, social events and signs around the office, quite honestly, it felt like absolute overkill. But it turned out that it wasn’t, it was necessary because we had to just keep reinforcing why we’re doing what we’re doing.”

MemorialCare brought in a communications and education expert to design the communication plan because it’s tough to know how many times you have to tell 10,000 people something before it sticks.

“It was like, ‘My God, we’ve got to say this again. Aren’t people bored with this by now, I’m getting bored saying it,’” Arbuckle says. “But it turned out to be very useful. The more we did it, the more it became clear to them that this wasn’t just the project of the month or of the fiscal year, this was a marathon process where we were going to be steady and keep working toward the goal. That communication helped remind people that we were still out there, that they couldn’t forget about it. Just the consistency of the message is powerful.”

Not only does the consistency help the message resonate, but a consistent communication attack can also alleviate the negative virus brought about by the rumor mill. Arbuckle consistently spoke with his people about the change at meetings and spoke freely about the transition.

“I’ve learned over the years that people imagine and develop their own reasons for why leaders are doing what they’re doing, and many times, they are wrong, and many times, they can be disruptive,” Arbuckle says. “I always open myself up and say, ‘Ask anything you want.’ I bring the core message with me, and I’ll take that risk. Sometimes I’ll have to say, ‘That’s a good question, and I can’t answer it today, but I will answer it when I can.’ But I find that most of the time I can give people exactly what they want, reinforce the message, and we can move forward.”

Help employees adapt

Building buy-in doesn’t stop once the change is in effect, so MemorialCare continued to sell employees on the process even after the systems had been picked and implemented.

“Having them verbalize it is one thing, ‘Oh, yeah, I can make that change, it looks like a nice system,’” Arbuckle says. “Making sure they are actually understanding and willing to embrace and accept change is the powerful finishing piece of these projects.”

Understanding that some employees will take longer to change — and some will have to make bigger changes than others — is a big part of the last stages of getting employee buy-in. For MemorialCare, that meant understanding that even though the new systems got the thumbs up, extra time and resources had to be spent training those who couldn’t just jump into a technology upgrade. MemorialCare hired a clinical training specialist who was deployed to every physician’s office to see how each one handled computer systems.

“Part of that process was to assess where they were, where they were personally in terms of their own ability to use a computer — would they need a side class on keyboarding and navigating a new menu,” Arbuckle says. “Most people don’t want to admit that they aren’t ready for a change, or they’ll exaggerate a tad, and that turned out to be very powerful in working with them privately to see what they needed to improve upon.”

Arbuckle was also concerned with the emotional aspect of making a change. During the switch to the electronic systems, MemorialCare employed a psychologist specializing in change management who worked with employees who were set in their ways. It might not be a realistic expense for every organization, but the main idea is to let people voice how the change affects them mentally.

“It really turned out to be valuable,” Arbuckle says. “This fellow led sessions on change management, and some people would say, ‘I thought I came in to talk about computers, and we haven’t said the word computer,’ but it was so valuable to let people discuss the problems they had with changing because people aren’t always ready for it.”

More than anything, Arbuckle focused on the fact that it was his job to do everything he could to sell his people on the change. Getting 10,000 people to move in a direction is never easy, so the goal is always taking the burden off them by making sure they see the benefit of the change and then being ready to sell them with the right answer to those 1,000 questions that may come up.

“We never treated physicians or staff as people who had to do this,” Arbuckle says. “We treated it like a sell, we had to pitch the actual value of it to them again and again, and our job was to help them get there.”

HOW TO REACH: MemorialCare Medical Centers, (562) 933-1800 or www.memorialcare.org

Thursday, 25 October 2007 20:00

Looking up

Everybody has stopped by to spend a dime or two at his or her local lemonade stand, but Sunkist Growers Inc., to use a citrus pun, puts a special twist on it.

The fruit and vegetable cooperative has been running a program for several years now where a child, ages 7 to 12, can use a special Sunkist lemonade stand to raise money for his or her favorite charity.

To Sunkist President and CEO Tim J. Lindgren, it’s the perfect way to do some charity work while also building on an international brand.

“We build on the fact that Sunkist has a long tradition of wholesomeness and that reinforces that,” he says. “We provide them with a lemonade stand in front of public events or stores, and they serve lemonade with the Sunkist brand on it, so we get associated with some real wholesome activities, and I think we probably have now 20,000 of these stands, so every time you see one, it’s around some wholesome activity; that’s the image we’re building on.”

If it seems pretty basic that a household name like Sunkist has an image based on wholesomeness, then the brand work done behind the curtain has been successful. But that doesn’t mean that it does-n’t take a heavy dose of leadership to grow a successful organization. In addition to taking the reins for one of the largest brand names in the world, Lindgren is charged with leading more than 400 employees between Sunkist’s office and manufacturing facility, as well as working with the 6,000 grower members in California and Arizona. Lindgren has been aggressive with his leadership and has moved Sunkist forward, pushing it to $1.1 billion in revenue for its growers in 2006, up from $1 billion last year.

Here’s how Lindgren has continued to raise the bar at the largest fruit and vegetable co-op in the world.

Give your employees a basic vision

With more than 6,000 growers in the co-op, Lindgren will be the first to tell you that there are many, many babies to kiss and hands to shake along the path to building buy-in.

“I would tell a new CEO that probably the single most important thing you can do is to get a basic vision that is a composite and get it out in front, and then march ahead with it,” Lindgren says. “Because when you get a vision out there, it allows everybody to participate. Different people have different talents and a different frame of reference, but if you can get them all going under one vision and orchestrate it so all the product that comes out is a really one, single product, where everyone knows that is the goal, that’s the best thing you can do.”

That single vision becomes the cornerstone of every initiative in the company. For Sunkist, it’s based around being the best brand in the market. From that simple idea, Lindgren can get everyone on board and then start to work out the specifics for the rest of his strategic plan. That’s when he hits that long road of trying to get ideas and feedback from those 6,000 members.

“It’s extremely important to have a defined vision out there; it’s important for your team and staff to participate in developing the aspects of it and that they participate in the modification of the plan as you go forward,” Lindgren says. “We’ve had amazingly positive response from our growers, and we are really revisiting all areas of our company operations, everything that we do.”

Once you’ve set up the basic vision, you can go back and really focus on the details by doing something else that is simple: asking for feedback.

“We’ve gone to the growers and said, ‘We want to create a new vision and what do you see as far as priorities,’ and it’s been an amazingly satisfying prospect,” Lindgren says.

It’s in that mode that face-to-face meetings become important. Though he can’t realistically get to everyone, he does his best to organize ways to get feedback from as many growers as possible. He takes time on the road to see people and get as many people as possible involved — even if he can’t fit their idea into the updated version of the vision.

“There’s no substitute for that, going to their home or grove and talking to them,” Lindgren says. “We have grower meetings, we go to areas and have luncheons and have conversations with them about what is happening at Sunkist.

“It’s very important to see what they’re feeling out there and also communicate what you’re trying to do. It has to be done in a somewhat organized manner because obviously with 6,000 growers, you’re going to get 6,000 different points of view, so it takes experience to filter through it to make sure what you’re hearing, what you’re passing on, what you’re taking action on is done within an organized framework. But it is extremely important both from an information-gathering standpoint and for making them feel involved.”

Build a company around a brand

Lindgren wants you to know that whether you’re aware of it or not, the Sunkist brand is all around you.

Don’t be scared, it’s part of the plan. With Sunkist, building up and protecting the brand is on top of the organization’s to-do list. So, while it has lent its name to more than 600 products, ranging from soft drinks and juice to candy, in 50 different countries, there is a method to the madness.

“It’s a real sacred trust, it’s a brand that’s been built up over more than 100 years, it is one of the most recognized food brands, so it’s something we take very seriously, and our quality control and service levels have to be maintained and stay high,” Lindgren says. “My role as CEO is to be certain that when someone has a Sunkist brand they know they have a good, quality product, so we have a pretty rigid system of quality enforcement. Beyond that, we are always promoting our brand.”

That promotion, like the lemonade stands, is centered on keeping the brand tied to its strongest and best-known elements. The basic thing Lindgren wants to do is to keep that profile regardless of where the brand moves. Therefore, Sunkist has implemented a snack program where it provides sliced fruits as an alternative to vending machine snacks. Sunkist also turned its focus to organic fruits for the first time in 2007, a strategy that took years to plan out but that keeps consistent with the idea of building goodwill around the brand.

“Our main thrust was to get out and establish identity,” Lindgren says. “The product lends itself to that; there’s nothing more wholesome than a citrus product, so you start with that, we maintain high quality, we have a staff that’s dedicated to promoting that, and they are constantly taking that out into the public.”

Not only does Sunkist want the consumer to see the brand as the label of success, but Lindgren uses it as something like a company flag to fly outside the office.

“The brand is central to everything,” he says. “We take great pride in it, and it’s developed a great culture for us. The brand gives you a rallying point. When you have something to build on, it’s not like you’re starting from scratch. It’s important to understand that the brand is sort of the banner out there to combine the emotions and efforts of people. It becomes a really good rally point for combining people who have been in the system for a long time and the new people coming in who can immediately attach to a pride and a continuity.”

The idea of hanging a brand flag can work as an energizer on both ends, too. While building a successful brand will give employees something to believe in when times are rough, it can also act as a starting point for upping the ante when times are good.

“It’s important that when you talk about the brand and the vision that it isn’t just something that you do when you’re down or in trouble,” Lindgren says. “We came off one of our best years, but we decided to take on a major new vision wrapped around our Sunkist brand even though we’re on top. You always need to be improving and looking ahead, and it’s better to do that when you’re on top than when you’re fighting from behind, so you can use that to motivate them to keep upping the brand.”

Lead without fear

Lindgren has learned plenty about leadership in his time at Sunkist, but there’s one business lesson that he takes with him that comes from outside of the business world.

“I had a friend who was a great athlete, and I asked him one time, ‘How do you do this?’” Lindgren says. “He had all this national claim and attention, and he told me, ‘My motto is that I hate to lose, but I never let the fear of losing interfere with how I play the game.’”

That fearlessness is something that Lindgren has applied to his leadership tactics ever since. And while he appreciates the consensus he builds at Sunkist, he knows it’s not worth anything if he can’t push final decisions out the door.

“One of the things that I’ve learned is that you are the leader for a reason, and you’ve been selected to do that,” he says. “So the buck stops here, and the final decisions have to be made by you.”

That’s not his way of saying forget the team, but he knows that there are times that you simply can’t get a final move from a larger group, and when push comes to shove, you have to be willing to make the big decision and present it to your people.

“I consider myself to have a very participative style of management, so I like to build up consensus, but I guess the only regrets I’ve had over the years are when I have not ended up using my own individual judgment,” Lindgren says. “At the end of the day, you’ve got to sort everything out and make the decision. I’ve had ventures that I’ve not gotten involved in that I maybe should have because I got overly cautious advice or times where I was pushed by advisers to do something I wasn’t sure about. Over the years, my experience has been that my judgment, combined with the best advice I have available, is the thing that I have to lead with. At the end of the day, you have to go with your judgment, and you’re going to win more than you lose.”

HOW TO REACH: Sunkist Growers Inc., (818) 986-4800 or www.sunkist.com

Tuesday, 25 September 2007 20:00

Dream builder

Since taking the title of managing partner in 1999, Greg M. Nitzkowski has had a unique challenge at Paul, Hastings, Janofsky & Walker LLP: The international law firm is extremely successful.

It’s not a bad problem to have, but it gives Nitzkowski fits when he has to get his people to buy in to the changes the firm has to make to stay on top of the market.

“The challenge is, how do you get people fired up to recognize that as hard as they’ve worked, that the bogey is just going up?” says Nitzkowski. “How do you go about giving people who have been doing better each year for 10 or 15 years running a sense of urgency? That is really what a leadership position is about.”

The basic thing that Nitzkowski must do when he wants the firm to grow is create buy-in from his entire staff. That’s not easy when you have 1,200 lawyers and 3,000 total employees spread over 18 offices, so he goes through a process of building up momentum by keeping in touch with his people.

“We’d all like to stop and say, ‘Gee, isn’t this comfortable?’” Nitzkowski says. “But the goal is getting people to recognize that a sense of comfort is certain poison and that you always have to push yourself because we’re in an extraordinarily competitive marketplace. It amps up the need for communication. You have to project very specifically the need for change and how it relates to the decisions individual partners are making each day.”

Using that idea, Nitzkowski built a strategy to get buy-in for new direction at the firm. By making himself available to his people and understanding their jobs, he is able to tie the vision to a context that puts emphasis on how the firm’s success will benefit the individual. In turn, Paul Hastings has continued its success, growing from $667 million in 2005 to $815 million in 2006.

Show your face

It’s not easy to push new ideas for an already successful business, so Nitzkowski starts off with a very simple strategy at Paul Hastings: He shows his face around the office. Nitzkowski spends more than two weeks of every month visiting some of the firm’s 18 different offices, making the time to attend smaller partner meetings to listen to new ideas and to be seen.

“The most important thing is just being in the offices and being available,” says Nitzkowski. “It’s important for the other leaders in our law firm to see that we are really one of them. I want them to see that we are derived from them, and our authority derives from their skills every day — that’s essential to culture.”

To Nitzkowski, the first step to improving Paul Hastings is to get in touch with as many people as possible to find out where the firm can sharpen its acumen. And while he can communicate some strategies via e-mail or conference calls, he says the best bet for step one of building buy-in is working with employees to get new ideas and to give them a good look at the leader behind the plan.

“There is no substitute for being across from somebody, answering their questions, and having them challenge you and them seeing some of their own influence in the ultimate shape of the decision,” Nitzkowski says. “People respect that you ultimately have to go a certain direction, you have to make a decision, but as leaders, our decisions are very much touched by that input.

“E-mail is terrific, but it’s not the way to have meaningful dialogue. It’s terrific for information conveyance, but I don’t think it’s a good tool for consensus issues that you face or communicating about the successes or challenges of the firm. Somebody being inspired by the personal qualities and visions of a leader is very motivating, so you have to have someone people want to follow at the head of the enterprise. Very few enterprises succeed over the long run without having someone in the leadership position that others want to follow.”

Nitzkowski knows that he can’t be best friends with all 3,000 employees, but the idea is to make a human connection with every employee so that new strategies come from a leader, not a corporate signature.

“I try to be there for orientation and training so that we’re the human face of the firm,” Nitzkowski says. “Part of gaining consensus is you have to demonstrate that you have all the qualities that they admire in their colleagues — and the understanding of what’s going on in the market — so that you build the case in a logical way to get them to understand whatever kind of change you need to make to keep up.”

Finish your homework

While it’s nice for Nitzkowski to spend time in the office, he knows that’s just the first step. He has to come in with his homework finished.

“In doing this job, you have to accept that no matter how smart you are or talented you are, when you’re in the room with other lawyers, 99.9 percent of them secretly believe they are smarter than you,” Nitzkowski jokes. “You have to accept that, and recognize that ambition and pride is a great part of what drives them, so it’s a good quality.”

Before he talks with a partner at the firm, he insists on knowing what he or she has been working on and how it ties to the strategic plan for the firm.

“When I speak to a partner, I know exactly how they spent their time for the last five years, I know what their team looks like, I know the concept of that team, I know how the model of that team relates to the profitability model and the strategies of the firm,” Nitzkowski says. “I can meet with them and talk in a very specific way, some of it having to do with metrics, some of it more conceptual, about the direction of the firm, talk about mismatches, things that we need to see from them in order for Paul Hastings to reach its goals.

“When you ask, ‘How do you drive people toward the changes in behavior that they’re going to have to adopt in order for the enterprise as a whole to succeed?’ It’s about communicating deeply and clearly and being viewed as very prepared and knowledgeable about the marketplace in a way that helps us build consensus.”

A big part of that is going to the partners at Paul Hastings with a good bit of background on how individual work fits in with the market and what changes must be made. At the heart of building buy-in is a need to communicate but also a need to back up that communication with hard evidence on where Paul Hastings needs to go.

“It has to come from the needs of the enterprise itself,” Nitzkowski says. “Looking into the future, looking into the market, understanding what kind of enterprise you have and saying, ‘What do I need to drive us to a more successful future and what are the changes that are going to be out there on the market?’ Being familiar with their work makes the message much more powerful and helps me talk about the direction of the firm. That’s the key part of changing behavior, understanding what people are doing and connecting up where their strategy ties to the model and then showing them the mismatches in what they’re doing in a direct and thoughtful way.”

Put the vision into context

Once Nitzkowski has done all of his homework, the final step to building buy-in is to roll out a vision that is based on a mixed concept of the firm’s strategy and how it fits in to the context of his people. The idea is to make a personal connection with what may otherwise seem like merely high-end firm goals.

“It becomes about putting into context the decisions that we’re making that affect their daily lives,” Nitzkowski says. “Why we’re doing it, how does that relate to what’s happening in the marketplace, why it will give them greater opportunity. Making a connection between the things that matter to associates and the decisions that we’re making, that really is the job of the leader’s communication with employees. For those that aren’t as deeply invested in the firm, it’s very valuable that their career here is connecting to what they want their future to be.”

The contextual part is where it’s easy to get confused. While Nitzkowski would like to believe that he can put together a vision that will keep all of his employees deeply engaged in the future of the firm, he realizes that just won’t happen. Instead, he draws up a plan that shows how individual success drives company status — and how that company status will drive individual success.

“Retaining people is a combination of them believing in the vision, seeing the trajectory of the enterprise, understanding how the decisions being made will help propel that trajectory, them feeling richer in every way because of their connection to the enterprise,” Nitzkowski says.

“One of the things you have to accept as a leader is that people come for all sorts of different reasons, and not everybody shares the goal of going to the top of the firm. You have to communicate with them why your vision to be an elite player in the marketplace will help — because no matter what their personal goal is, if the enterprise itself is building up to be an elite institution, their trajectory is enhanced, as well. You give them that combination of self interest and the firm. You want people to believe that by hitching their wagon to a star they are going to soar much higher and farther than they would otherwise. That’s a big part of helping them see their own professional opportunity because regardless of what they are doing, they want to be part of the best team possible.”

To Nitzkowski, it makes sense to view getting employees to buy in to the firm in the rule of thirds: One-third of your employees will be on board with any company strategy, one-third can be convinced in time, and one-third won’t care about the company goals. Knowing that, he tries to make a connection with those people who may be not staying for the long term so that they still desire success in their tenure. By showing them how they can grow, he gives them a road map to a better future and a reason to get there.

“You can’t make the direct personal connection with every person about their goals,” he says. “But it’s about describing the vision and trajectory in a way that they can link their own future to it. They see where they hook their strap to that star so they can get that ride out of this. And when they see where they hook their strap, they can see that this place is going to take them much, much further.

“You have to have that human capital day in and day out, connecting with the big strategy so that they understand that the things they choose to work on, how the time they spend training an associate or not, will help the enterprise. You need them to understand how important what they do is so they feel connected to it.”

HOW TO REACH: Paul, Hastings, Janofsky & Walker LLP, (213) 683-6000 or www.paulhastings.com