Charles Swanson was used to dealing with challenges. As a youngster whose father was an exploration geologist for Exxon, Swanson had moved so often that he had been enrolled in 12 different schools by the time he was in eighth grade. But the challenge he was facing after a number of years with Ernst & Young LLP was more than new places; it had the peculiar description of being a doughnut phenomenon.
Swanson had helped build E&Y’s relationship with its client Ashland Oil (now Ashland Inc.) while serving at the firm’s Louisville office. He was chosen to lead the oil, gas and energy practice in North and South America at the company’s Houston office.
“We really didn’t have that strong of a core group practice in Houston in energy at that time, and it was kind of a doughnut phenomenon — we had some big clients and capabilities sprinkled all over the world, but we had no center to build around,” Swanson says. “So I was asked by the firm to try to solve that, to try to build the core and the home for the energy operation globally.”
It took the work of many dedicated partners at E&Y, Swanson says, who spent the time to get to know what the clients wanted and developed a vision of where they likely should be going.
The sacrifices and the heavy workloads that the E&Y partners took on paid off. The energy services department has grown by 20 percent each year, and Swanson’s efforts didn’t go unnoticed. He was promoted to his current position of managing partner of the entire $350 million E&Y Houston operation of 1,200 employees.
Here’s how Swanson took on the challenge, grew annual revenue in the energy division from $17 million to $250 million over 15 years and increased the number of energy partners from three to 50.
Talk about what’s going on
If there is one place to start filling in the center of a doughnut, it’s to find out the information necessary to deliver what clients want. Once Swanson realized this was where to begin, he took charge. He called for monthly sessions with partners to determine the energy pulse of clients and the market.
“I think that knowing what clients want is important, which seems so mundane to say that, but it amazes me how many times in the business world you run across managers and leaders who don’t fully appreciate that,” he says. “As the old saying goes, ‘If you are selling something that nobody wants, you go out of business.’ And that is essentially what happens.”
Swanson’s experience had showed him that E&Y was a collegial and collaborative firm, so he met with all the energy partners regularly and listened to them.
“We would talk about what is going on, what we are seeing in the market, what the trends are, what we believe they are. From that, you can come up with a view about what is likely to happen, and then that really drives your actions,” he says.
“I always try to look ahead three to five years, and I say, ‘OK, what kind of service needs are these companies going to have then?’” Swanson says. “Then you need to try to make sure that you are building to intersect with them at that point down the road.”
Staying abreast of ever-changing regulations and compliance with them should play a large part in arriving at a vision. Swanson cites the case of Wall Street reforms.
“A great example is the recent Dodd-Frank Wall Street Reform activity,” he says. “We knew that was coming a while back. While it primarily impacted the financial services industry initially, we knew that it would eventually affect commercial and industrial companies, many of them who are dealing with hedging activity or use of derivatives, and whether it is supply of fuel or whatever it may be, and product.
“So we geared our energy practice to develop the expertise and depth to be able to help our clients come to grips with that new requirement, and sure enough, it is arriving right on schedule as we thought it would.”
Put in the effort needed
It takes enormous effort from current staff to help make an expansion effort — filling the doughnut hole — a success. Indeed, many could be asked to put their personal lives on hold for periods of time. But with the knowledge that there will be light at the end of the proverbial tunnel, that task becomes achievable.
“You have to sacrifice on the part of many, but because as you try to bring in new partners, your existing ones have to carry a bigger load of work because it is a whole lot easier to convince a firm to promote a new partner or bring one in from the outside when there is a book of business already in place for them,” Swanson says.
“Our partners sacrificed quite a bit during those early years in carrying very heavy workloads, knowing that by doing so, it would help us get more people promoted into the partnership in energy, and then we could start off-loading some of that work.”
Once new additions joined the fold and learned the culture, they were expected to do the same: carry a heavy workload for a while.
“That kind of mentality took hold, and we realized 20 percent annual growth rate ever since,” Swanson says.
While that sums up the process, under the surface, you have to account for variations within your team.
“As for our growth and success, I’m often asked why, and I really attribute it to our partners,” Swanson says. “I think they have a very strong market and service orientation. But even with us here, it’s not everybody. I mean some partners are really attuned to that. They tend to be very good service providers, and they can be very effective in the marketplace when it comes to bringing in and tracking new clients and growing our revenue for our people.
“But it’s not true for everybody; that was true when I came to Houston, and it is even still true today. I certainly try to instill in them an awareness and an understanding that serving the market well, serving our clients is paramount, and it is that which will give rise to future growth and financial strength, which creates opportunities for our people.”
Lead by example
To get your team members all on the same page, it is critical to set the tone at the top. By leading by example, a leader can spell out the expectations — and then craft that final piece to fill in the doughnut hole.
“I think each organization has to set for itself what are the priorities that need to be focused on,” Swanson says. “Then whatever those are, the CEO needs to devise different mechanisms to make it clear to the organization that this is what they are defining to be important, and then here are the goals that they set within those priorities.”
To the majority of organizations, revenue growth and financial strength are often those goals.
Building consensus is going to help you implement and realize the goals.
“Ultimately, it is the people who are going to make it happen — the people out in the trenches or in the field — and they have to be engaged and motivated and, more than anything else, respect their leadership to really do that,” Swanson says. “That respect is critical. It is very hard to accomplish much of anything in the long haul without it.”
The leaders who generally are the most effective are those that have a connection with “the trenches.”
“I don’t think leadership comes from the podium or through webcasts,” Swanson says. “You’ve got to be out there, understanding, as Gen. Omar Bradley was always so well known as doing: He ate the same food as his troops because he wanted to know how hard he could push them. That’s a good lesson in many large organizations as well as the business world.”
The lesson learned helps lead to better decisions that can be made to bring about optimum results.
“There are actually processes you can go through to help you make the right decision, but one of them is there is no reason usually to delay in making a decision,” Swanson says.
“Delays rarely work for you,” he says. “I have always followed a philosophy that I am going to make the decision, and I am going to make it quickly. If I am wrong, I will be wrong quickly. It’s not OK, but it is better than being wrong slowly. If you are wrong quick enough, there is often time to change your decision and go another direction.
“Don’t be on cruise control; be ready for change. No matter how good it is right now, times will change again. As the folks say around here, it doesn’t take long to fall from the saddle and hit the ground. And we are always trying to stay in the saddle.” ?
How to reach: Ernst & Young LLP, (713) 750-1500 or www.ey.com
The Swanson File
Ernst & Young Houston office
Born: Tulsa, Oklahoma. I grew up primarily in Oklahoma. My father was with Exxon, and we got moved literally every year.
Education: Tulane University. I got my bachelor’s degree and my MBA there. I initially majored in mathematics, but I later focused on political science and economics. They did have a graduate business school, so I was geared toward going to that after my undergraduate years. I went into the MBA program, focused on corporate finance. I did get enough accounting to sit for the CPA exam. And I ended up in the accounting profession, of all places.
What was your first job, and what did you learn from it?
I used to get paid five bucks a day to take care of the Little League fields, water them, rake them and then line them to get ready for the games every evening. I learned responsibility and the importance of dependability. The game was going to start on time every time so field had to be ready, one way or the other.
Who do you admire in business?
I admire a number of our clients. We have the fortunate luck to work with some really capable, bright, innovative people. I admire visionaries and innovators. In Silicon Valley you have a bunch of them, such as Steve Jobs, and a lot who are not as famous, who make new products and come up with these things that really have an impact on our lives.
Then there is what I would call the entrepreneurial innovator visionary. I think we need a lot more of the latter. Since the early and mid-’80s, we have gotten away from that. Too much financial engineering, too much regulatory stuff, and I think that is really one of the big burdens of trying to get our economy going and getting job growth.
What is the best business advice you ever received?
Everything keeps changing, nothing stays the same. Don’t get lulled into thinking that because you are sitting fat and happy right now that it is going to continue. I have seen a lot of our client companies over the years just going great and then five years later they are out of business. They get bought up because they’re about to go out of business.
Things will change; it will be uncomfortable when they change. That’s how we live our lives. Don’t let it scare you, don’t avoid it; try to deal with it in an upfront fashion, and I think it helps you get through it.
What is your definition of business success?
I would say to gain the respect of your colleagues and your clients and customers. I think that’s very important. When you say that, to gain it and maintain it, there is a lot that underlies that. You’re talking about your interpersonal skills with these people, how to communicate with them, the judgments you’ve made that they have seen or not; your technical competence is important, whether you are an engineer or CPA or attorney or whatever it may be. It’s the ability to have vision and connect the dots in a way that other people haven’t yet.
When it comes to attracting businesses, size alone should put Palm Beach County at a distinct advantage over its Florida peers. With 38 municipalities, the county trumps Broward, Pinellas and even Miami-Dade as the largest in Florida and third in population.
The problem is, although geography plays a role, it is not nearly the most important factor for businesses choosing whether or not to invest in your county, says Kelly Smallridge, president and CEO, Business Development Board of Palm Beach County.
“When you’re in economic development, one community can look like another community,” she says. “These CEOs are looking at 20 or 30 communities at a time, and it’s the communities that are going to roll out a much different experience and feeling of a corporate home that they are going to remember.
“We cannot present the same product as everybody else. So with everything that we do, whether it’s the message we deliver in a website, social media message, any printed material or their experience when they visit our community — it must make a lasting impression.”
Since taking the top role at the board in 2004, Smallridge has helped overhaul its economic development strategies to grow jobs and drive business investment in the county. Between 2011 and 2012, these efforts have helped create or retain 1,700 jobs and $166 million of capital investment into Palm Beach County.
In addition, Smallridge herself has been recognized by the South Florida Business Journal as an “Ultimate CEO” and by South Florida CEO as one of the top 40 business leaders in Palm Beach County.
Smart Business spoke with Smallridge to discuss what economic and business leaders can do to create make their counties attractive for businesses and why it’s an ongoing process.
What makes a county globally competitive for business?
Workforce has to be top notch, meaning highly skilled and available. Education K-20 has to also be more than excellent to attract families and corporations to this area — so workforce and education. The cost of doing business has to remain affordable … and the ease of doing business has to be far better than other locations, other competitive sites.
As CEO, what did you feel that Palm Beach County needed to change to be more competitive with other counties?
I saw a tremendous amount of focus on bringing someone in from other states, when really, a job is a job whether you bring it in from the outside or you create one here locally — it’s the same opportunity for our area residents.
I saw too much of a focus on that outside effort and not enough focus on nurturing those companies that already call Palm Beach County their home. So we traded more of a balance internally to grow what’s in our backyard. As a result, about 70 percent of our job growth in this county comes from companies that already have an existence in this county and 30 percent come from the outside.
How did you begin redirecting the county’s job growth efforts?
First of all, I had to build the best economic development team. Hiring great leaders that were well-experienced in economic development was No. 1. Two, I had to educate my own community — my own public and private leaders — about the value and importance of economic development and how to be well-versed in what CEOs are looking for when they are selecting a location for expansion, retention or relocation.
Starting with your internal leadership, what were the key steps in building a strong economic development team?
If you study economic development organizations throughout the county, the challenge is that a lot of these people are selling counties — they are very good at it — but they don’t know their county the way we know our county because we are products of this county.
Building that team of VPs here who are very passionate about what we are selling is No. 1 — hiring the best economic development professionals. Our average tenure in this organization is 10 years, very rare. … A quarter of our staff was either born or raised in the county that we are charged with selling.
No. 2, making sure that we subscribe to the highest levels of economic development principles. We went through what’s called an accreditation process. There are only two accredited economic development boards in the state of Florida, and we are one of the two. There are something like 25 in the United States.
We didn’t go for accreditation until we knew we had reached certain fundamental goals in this organization, a five-year strategic plan, the highest level of leader on our board, strong financials — most not-for-profits are strong financially — and more private support than public support.
So how did you apply those principles across the county’s 38 cities?
We created something called Economic Development 101. We started training our elected officials and municipal stakeholders on how to answer questions from CEOs looking at their city.
It was very surprising how much elected officials didn’t really understand about economic development and what would be the highlights of promoting their areas: understanding the major employers, the taxes, the cost of doing business, knowing what the strengths are of their cities from a business perspective and being able to speak very articulately about what makes their city one of the best business locations.
How did you develop the Economic Development 101 curriculum?
Once we did three municipalities, we really got a much better understanding of what the learning gap was, what they clearly understood and what they didn’t understand. We changed that accordingly and continue to build upon that. Every time that we go to an election we go back to those cities and re-educate those people. It’s made a very big difference.
Another key part is making sure that economic development is a top priority of the municipalities. If you have strong economic development, your retail thrives, your mom-and-pop businesses thrive and your residential does well because now you have people with expendable income who can purchase your homes and apartments and frequent your restaurants and your retail establishments.
We really try to get them to understand that it’s the high-end economic development that’s going to create the trickle-down and fuel the other types of business operations in their community.
Why is it so important for economic development boards to work closely with city leaders?
Too often, economic development boards focus on their organization and don’t understand that they really represent their entire geographic region.
They have to get out there and make sure that their entire geographic region has tax incentives, that they are moving quickly in expedited permitting, that they are cutting down on the layers of bureaucracy and they can speak the languages that businesses need to hear, that they put out a warm, friendly welcome mat.
Sometimes it’s not about the amount of money or incentives that you send to a CEO; it’s about how warm your welcome mat is.
I can only sell the product that I’m given by my cities. So if they don’t understand how to make their area attractive to businesses, it doesn’t matter how strong my organization is. I have to make sure that the product is strong, and the product is the comprehensive component of 38 cities.
Once you get everyone on the same page, how do you keep them there?
You form an economic development stakeholders council that brings them all together on a regular basis to communicate, share best practices internally, inform them of what new programs have come through the state that are available for all municipalities and that they can integrate into their respective areas.
Some of the things that we’ve brought to the table that many of our municipalities have taken advantage of are Ad Valorem Tax Exemption, passing that through their cities, and expedited permitting ordinances.
This is very large county, and one of the new things that I implemented when I became the leader is, ‘You are visible if you are present in their community.’ The county is about 40 miles long. It’s the largest county east of the Mississippi River and larger than a couple of states. It’s a very big, massive land area.
What I did was to establish satellite offices in the north, central, south and western part of our county. I went from one office, to one office and three satellite offices — big difference. Now you’re present in the community working side-by-side with your teammates and other city officials.
What results have you seen from PBC’s newest economic development initiatives?
Too many presidents of economic development boards are quick to get to that ribbon-cutting ceremony when really we’re in there to help them through the entire process until they turn the key and then for many, many years down the road. That’s why we’ve had companies come back to us five or 10 years beyond our initial relationship to help them with their expansion.
If you have an entire community that is working in the same direction toward creating jobs and you eliminate the competition internally and you get everyone on the same page, you end up with entire group of public and private leaders that are all working toward the same goal.
That may seem very fundamental, but it has taken years to get to that stage. If you look at other communities throughout the U.S., you will find very few where all public and private leaders have the same end goal in mind. ?
How to reach: Business Development Board of Palm Beach County, (561) 835-1008 or www.bdb.org
The Smallridge File
President and CEO
Business Development Board of Palm Beach County
Born: West Palm Beach, Fla.
Education: University of Florida
What would your friends be surprised to find out about you?
For the most part, I keep my private and professional lives separate. Therefore, my friends would be surprised to see what a normal business day is like for me. Every minute of every workday is usually booked solid with meetings, speeches, interviews, prospecting, traveling, deadlines, with absolutely no downtime until Friday afternoons.
How do you recognize new business opportunities?
I do not like to perform or develop a product or program that I’ve seen out on in the market. If I see it, then I tend to steer away from that and try to figure out what is really going to be the ‘wow’ factor in the way that we present a product. It distinguishes us among our competition.
What happens when you don’t close a business deal that you wanted?
One of the keys to any leader is that you’ve had numerous failures. Every one of those I’ve look at as character building exercises. We’ve lost some deals that I thought that we should have won. I don’t sweat over that too much, but instead, evaluate the situation very quickly, figure out what we did wrong and what we did right, and move toward developing some sort of resolution that ensures to the best of our ability that it won’t happen again. We’re quick to take a look at ourselves and be our biggest critics.
What do you do for fun?
I am a firm believer that in order for my mind to stay healthy and make good business decisions, I must find time for fun. As a mother of three boys, all of my free time is spent with them at football, basketball or family vacations. We love to cruise to the Caribbean a couple of times a year as a family. In addition, I am blessed to live within a few miles of my parents, my brother and my sister. Getting together at least monthly with the whole family, especially during football games, has been a source of great memories.
To turn Pinnacle Technical Resources Inc. into one of the fastest-growing technology companies in northern Texas, it just took a living room office with one employee, a big dream of success and Nina Vaca’s entrepreneurship.
Now, some 16 years later, the founder is not only chairman and CEO of the company, which provides contingent IT workforce staffing and vendor management services to Fortune 500 companies in North America, but she oversees 4,200 employees who help the company earn revenue of $236 million.
Vaca talked with Smart Business about the combination of entrepreneurial drive, motivation, culture-building and astute hiring that she has used to propel her company to these heights.
Q. Your organization seems to have a group of passionate people who love what they do, and that seems to come from the top. How are you able to get people passionate about what they do?
By simply communicating to my team that everything in life is a matter of perspective. How you view yourself, how you view what you’re doing in the world — it’s all a matter of perspective.
We have found a way to have an incredible perspective about the industry we’re in. You’ll never see such a big group of people on fire about third-party contract labor. I mean, it’s not sexy, but it’s something that’s growing tremendously.
The perspective I grew up with in my childhood is that you can do anything you want in a country like the United States. That perspective shaped my ability to dream big and to be passionate about what I do. I do the same thing at Pinnacle.
There’s a fundamental difference between motivation and inspiration. I think you can inspire people about what they’re really doing, being part of an award-winning company, their contributions to this economy, how it’s allowing us to be a better country. Those are things we often don’t think about when we do our day-to-day jobs.
I take the perspective at the 10,000-foot view and communicate it often, and people are excited about it.
Q. How do you communicate it? We often see that leaders who communicate well create effective cultures that can carry on without them.
What you’re talking about is actually extremely difficult to do once you start to grow quickly. An example of someone who has nailed this concept is Mary Kay [Mary Kay Ash, founder of cosmetics maker Mary Kay Inc.]. I really try to emulate a lot of things she is doing.
As we grow larger, it’s more difficult. What you have to do is really make certain that your culture is advanced not just by your leadership team but the layers behind them. When we were smaller, I would do a campaign with a different theme every year, and everything we did that year was based around that theme. You even see this in large corporations — there’s a theme for the year and everyone moves in that direction. We would have shirts made, mugs made. We would constantly see it visually, because you can launch a theme, but if you’re not seeing it every day, there won’t be enough energy around it. Whether it’s on a mousepad or a pen, you have to constantly be reminded of the theme.
Those are small tactical ways that we’ve been able to energize the group, and believe it or not, they work.
Q. How many employees do you have?
We have 4,200 people in the U.S and Canada. By the mere fact we are in third-party labor, we have lots of W-2s. And there’s a lot of motivation around those 4,200. Every Friday, everyone around the country wears a Pinnacle shirt. That’s just what we do. It’s part of our a culture. It’s a tradition that we have upheld. Little things like that are really important.
Q. What was the impetus behind founding the company?
I could tell you I was a visionary who knew Texas was some sort of can-do business state and that it would be the last one into the recession and the first one out as well as a right-to-work state. But the truth is I come from a very entrepreneurial family, so I understood the risks of starting a business and growing one. I had a front-row seat to make sure I capitalized on the opportunity.
Like a good entrepreneur, I found a need and serviced it. Starting a service organization, the barriers to entry are very low. I was young and aggressive. Again, I watched my parents and their parents and my whole immediate family make their way through entrepreneurship, so I wanted to do the same.
Q. Do you have a theory about children of entrepreneurs? Do they have a built-in entrepreneurial spirit? Talk about that front-row seat and how it helped you take that leap.
That front-row seat helped make me who I am today. During my upbringing, the silent example my parents taught me was big in the fact that I watched them lose a lot. I always tell entrepreneurs to never be afraid for your children to see you stress or to see you fail. It’s naturally human that we want our kids to have a better life and to have it easier — and to not see you cry and not see you lose. But I actually think the opposite. I think watching my parents have and have not — mainly have not — really taught me a lot about risk tolerance.
Now we’re all grown up, and when we have decisions and we have our lulls and it’s full of peaks and valleys, I never sweat it because even at our worst we’re light years ahead of where my parents were. I keep my perspective very crystal-clear on the mission we’re trying to accomplish.
Q. What’s an example of a challenge that you faced in your organization, what you learned and how were able to find a solution to overcome it?
I started the company in 1996, and we grew very quickly. As a service organization at the height of the dot-com era, there was lot going on in the staffing of third-party labor. Margins were big and life was good. I had a group of about 50 consultants, and life was great. Then, in 2000, we had our first recession.
I had a partner at the time, and we were pretty much down to a liquidation plan. One of my first customers, which we had about 50 percent of our business in, took it to India overnight. To say we were devastated is an understatement. My partner at the time said, ‘I’m out of here. If you have X [dollars], you can have it all.’ So I bought all of nothing, pretty much. It was a very lonely time for me — emotionally, in business. To be down to a liquidation plan and have the consultant say you need to wrap it up and let go, that was a very devastating time for Pinnacle.
But I have learned throughout my personal life experiences that it’s in your darkest moments that you always find your most inner strength. The absolute refusal to give up and the fact that I did have 100 percent control gave me the freedom to literally take matters into my own hands, which is what I’ve been taught to do my whole life. I diversified the business, I recruited some of the best talent in the industry, I went and talked to our customers and found out what they were really looking for. We found a niche in fixed-base, deliverable IT solutions. I leaned on my mentors and my family to work for free. I worked for free. Fortunately, my husband had a great job. I had an absolute refusal of giving up and had the ability to share a vision with others and have them come on at relatively low pay or, in some cases, no pay. That was the tipping point for Pinnacle. It was in 2001. We were literally at our worst. We’ve been growing since then.
Q. How did you extrapolate that vision, communicate it, and then create the plan to get there?
I spent a lot of time personally recruiting and handpicking all the right people. The CEO’s job is getting the right people on the bus.
Q. When you say the right people, you must have had an idea of what you were looking for.
Oh, absolutely. They had to embody the traits we were looking for, and they had to have the right type of expertise.
Q. How did you figure that piece out?
By being a student of the industry. I spend a lot of time figuring out what our next play should be. If people aren’t buying contract labor, they’re buying fixed-priced, deliverable IT solutions. You have to be a student of the industry, a student of the procurement process. When you do business with Fortune 500 companies, you have to be able to figure out why they buy your service. ?
How to reach: Pinnacle Technical Resources Inc., (214) 740-2424 or www.pinnacle1.com
The Vaca File
Chairman and CEO
Pinnacle Technical Resources Inc.
Education: Bachelor’s degree in communications and business, Texas State University-San Marcos
Vaca on delegating and motivating: I spend a lot of time working not just on the business, but in the business. Of course, as we’ve matured, I’ve had to work more on the business and not as much in it. But you have to be willing to do both. You have to be willing to roll up your sleeves, and you shouldn’t ask people to do things you’re not willing to do yourself.
Vaca on grooming IT workers: America is at an all-time high for IT workers in this country. Yet the number of degrees we’re producing, not just in technology but in STEM [Science, Technology, Engineering, and Mathematics], is at 1980 levels. So we’re upside down. If America wants to continue to be a front runner in the world of information technology, we have to create a bigger pipeline. What companies like Pinnacle are doing is taking matters into our own hands and specially grooming our own. We have veterans program, a youth program. We’re doing everything we can to be ready for tomorrow.
Vaca on corporate citizenship: I don’t believe you should just live in a city — you should help build it. At Pinnacle, we do that on steroids. We’re involved in a number of initiatives: the Blueprint for Economic Prosperity program; the [Dallas] mayor’s internship program; the Peace Through Business program. I have the privilege of serving as chairman of the U.S. Hispanic Chamber of Commerce. We’ve grown our corporate partnership in the last two years by more than 70 corporations. We’ve had to change our approach to achieve this, because corporations are shrinking the amount of philanthropy dollars. We no longer communicate to them that this is goodwill or corporate responsibility or a feel-good item. Our new approach is more pragmatic: Here is our mission, and our goals, and here’s how that mirrors your mission and your goals. It’s a business proposition. And it’s something they’re willing to invest in.
Michael Kaufman has the people who made his company. And he has the people who will make his company.
It’s Kaufman’s job to know the difference.
“Can the heroes of the past become the heroes of the future?” says the president and CEO of Specialized Education Services Inc. “You have to assess if you need the heroes of the past around anymore or if they can become the future of the company.
“It’s hard, because you might really like and respect somebody, but they might not be able to come with you on the journey you’re beginning. It’s tough to move someone along because it’s just not working anymore — especially when they were there to help you grow from the beginning.”
With approximately 1,000 employees throughout the SESI organization — which conducts programs for special-needs students in public school districts throughout 11 states and Washington, D.C. — Kaufman and his leadership team have an ongoing task as they continually analyze the people within the SESI organization, determining what puzzle pieces they have and how they can best fit together to strengthen the organization moving forward.
“When you hire someone, you want to start from day one thinking not only that you hired them for a job, but you start thinking about what they can do here in their career,” Kaufman says. “You start thinking about their leadership trajectory. If people see and feel that, they’re going to want to work for your organization.”
Determining the trajectory of people within the organization means evaluations of their strengths and weaknesses, ways that the strengths can be optimized and ways the weaknesses can be neutralized — either through skill compensation from others or skill enhancement of the individual via training.
“To me, that all comes with building relationships,” Kaufman says. “You need to be very comfortable talking to people about what they’re good at and what they need to work on. If you spend time with people, you can tell them that tough feedback, because they’ve seen that it’s in their own best interest. You want them to do well.”
Assess your people
Not many people like performance reviews. Whether they’re monthly, quarterly or annually, no one relishes the idea of sitting down with their boss and having their work critiqued.
You might not like the fact that your company has to conduct performance reviews. Depending on how many employees you have, it can become a lengthy process involving many different people. It’s man-hours that could be put to use running the business instead of making sure your employees are doing their jobs at an optimum level. But standards have to be maintained.
That’s why Kaufman and his team try to navigate what can be a less-than-pleasant process by continually coming back to the concept of continuous improvement. At SESI, performance reviews focus on the positive aspects of an employee’s work as much as the areas for improvement. Any need for improvement is phrased in the context of the employees’ growth as an individual and a professional.
“We have different areas we look at to assess how a person is doing,” Kaufman says. “Since we are an educational company, we call it ‘A-plus performance.’ That A-plus performance comes around different things that we look at and test. It could be students growing from the beginning of the year to the end. It could be staff assessments of the leaders, district satisfaction surveys or financial targets. We communicate around those regularly.”
In all cases, Kaufman wants his employees to buy in, which makes what he and his staff communicate and how they communicate it vital to the continuous improvement of the organization and the people who work in it.
“I feel that if you create rules and goals from the beginning and you can create buy-in, and you can assess the progress against those goals, nobody feels that they’re getting cheated,” Kaufman says. “It’s very fair.”
One of the ways Kaufman facilitates communication is by creating a sense of ownership between an employee and his or her progress. He doesn’t want supervisors simply dictating an employee assessment. He wants employees to take an active role and look within.
“I love to do self-assessments,” he says. “You ask someone to assess how they are doing, and it’s interesting to see how most people will be tougher on themselves than you will be. It’s great to get someone to look at themselves and acknowledge what they need to work on before you even need to tell them yourself.”
Individuals are often their own worst critic, so in some cases, you need to paint a realistic picture. You don’t want to sugarcoat your assessments, but you don’t want employees to develop an excessively negative view of their performance. It’s something Kaufman reinforces when he brings the leaders of his organization together at meetings.
“When I bring our leaders together — and that’s all our middle and senior leaders, which I do a few times a year — I really try to teach them that communicating with employees is all about authenticity with affinity. You have to be authentic, but you have to have affinity for the person.
“I used to be a big sugarcoater. I only wanted to tell people the positives, and I realized that people liked me, but their respect for me was somewhere in the middle. I found out the more honest I got, it’s what people wanted.
“If a person doesn’t feel like you know them, it feels like criticism when you give them feedback. The glass is only going to be half-full if they know you want them to do well. And you should want them to do well. Your company is only successful if your employees are successful. If they can’t perform, you’re not going to look good.”
Develop new leaders
The practice of assessing the skills, strengths and weaknesses of your team members will only matter if you put your findings to use. Your assessment methods can help identify areas of focus for training and improvement, but it is also going to help you find individual roles that will allow your company to best leverage the skills and talents that each person brings to the table.
Great talent can look less than stellar if people in your company are utilized in roles that don’t properly suit their skills or personality.
“We had one of the most credible people in the company running a school,” Kaufman says. “He was outgoing and gregarious; he loved people and loved the company. But he really struggled with giving tough feedback. If someone was struggling, he would pretty much ignore it and only highlight the positives. That led to a bit of a free-for-all at the school.
“But as far as the school districts, he was amazing. He’d check up with them to see how they were doing, and the people who ran the districts absolutely loved him.
“So I created the position of outreach director for him. It was really where he needed to be. He was so good at it; we’ve added other outreach directors in other parts of the country. He basically created the position by assessing his strengths, and we were able to work with him and find a suitable role in the organization.”
If someone is struggling in their current role, you may or may not have another place for that person in your organization. But before you cut ties with a mismatched piece, you should always step back, look at the landscape within your company and see if there are other places where a given person might make a better fit.
Cutting good talent loose should only come as a last step. Once it’s gone, it’s gone, and if your company gains a reputation as an organization that treats employees as interchangeable pieces, you’ll have a more difficult time attracting good talent and making quality hires in the first place.
“You really are only as good as your employees,” Kaufman says. “You have to look at that and find ways to develop them. As a CEO, if you’re going to grow and you want to have more operations, you have to create a replicable model that can be run by other people besides the CEO. That’s why the best gift you can give to somebody is to believe in them before they believe in themselves.”
You believe in your people by giving them the structure to improve their skills, move up in the organization, and continually learn — both in formal training and on the job. You often learn on the job by making mistakes, which is why you can’t be quick to punish someone who commits an error.
“You have to be extremely generous with praise and really allow people to do their jobs,” Kaufman says. “Don’t micromanage them. Allow mistakes.
“If you can find an incredible talent who believes they were put on this planet to do what they’re doing right now and you can get them to see that they are capable of even more than that — that they can become an amazing leader creating more leaders — that is the whole idea of believing in someone before they believe in themselves. It’s the greatest gift I ever got as a leader.
“And it really is the greatest gift you can give to someone in the business world.”
How to reach: Specialized Education Services Inc., (215) 369-8699 or www.sesi-schools.com
Assess the competencies of your people.
Critique with the goal of improving your people.
Identify and develop new leaders.
The Kaufman file
President and CEO
Specialized Education Services Inc.
What is the best business lesson you’ve learned? To create leaders from within. Always make sure you are doing that. When you interview somebody, don’t just interview the person for the position that you’re seeking. Interview people for all they can be.
What traits or skills are essential for a leader? You need strength, compassion, accessibility and accountability. You need to be someone who is well-rounded and understands what it takes to lead an organization. You need to be able to look at the numbers. Don’t run from them, and don’t make excuses. Let everyone know what is going on in the organization, because there shouldn’t be any surprises for anyone. The strongest leaders are transparent. Don’t act differently based on whoever is in the room.
What is your definition of success? If someone thought I was an incredible CEO, that’s nice, but the real question is whether I lived my life with dignity and class, and have I earned the respect of others. Not just that I got respect because I ran an organization, but that I earned it because the people knew I had the best interests of the organization at heart.
Roger Andelin believes in the power of storytelling — so much that even an e-commerce business composed of people from the impersonal sales and technology fields can benefit from the skills of a good storyteller.
Andelin had served as the CIO of Internet retailer Buy.com for six years before leaving to take the same position with The Washington Post, one of the most famous and influential newspapers in the country. It was during his stint with the newspaper that Andelin, an executive with a commerce and technology background, discovered how to take good storytelling and apply it in the world of commerce.
“I became a lot more aware of the power of storytelling and the power that can have in a business, especially on the commerce side,” Andelin says. “Commerce was missing that.”
When the opportunity arose for Andelin to return to what had, in the interim, been renamed Rakuten Buy.com, he felt he could utilize the sum total of his experience as an executive, splicing together his e-commerce background with a newfound knowledge and appreciation of storytelling to open new doors for the company.
“When I sat down for the first time and heard about our chairman’s vision, it resonated through and through,” Andelin says. “The idea was [that] we want to give merchants a voice in our marketplace. Let’s connect our merchants with their customers; let’s bring a new shopping experience to the table.
“It was very different from the typical model in our space, which is you come in and search for a product, put it in your cart and check out. It really brought back a lot of the nostalgia in the commerce business, which was missing on the Internet and electronic side. We had a chance to bring that back to the whole process.”
After accepting the president’s role at Rakuten Buy.com — which was rebranded as Rakuten.com Shopping in January — Andelin set out to tell the story of the company’s new vision and how it would be realized. He wanted to get every executive, manager and associate in the Rakuten system to believe in the vision and to feel motivated to carry out the plans that would make the vision a reality.
Define your drivers
Any retail business — whether in the e-commerce space or reliant on a bricks-and-mortar network of stores — will always be driven by the numbers. The number of customers you can get to your site or store will convert to a number of sales, which will convert to a number of repeat customers.
But to realize the new vision for Rakuten.com Shopping, Andelin needed to promote something else. He needed to promote loyalty. It’s something that can’t be directly quantified on a balance sheet, but Andelin realized, soon after he took over, that it would be an essential ingredient in the success of the vision. It would be, in short, a primary driver of the business moving forward.
“The business really boils down to the number of visitors that come to our site and our conversion rate to how many of those visitors buy from us and what the average value of that order is,” Andelin says. “So once you look at those drivers, those KPIs [key performance indicators], you look into it and see what is it that drives that component. Traffic, or visits, are driven a lot by advertising but also by loyalty.”
As such, Andelin wanted his team at Rakuten.com Shopping to focus on driving customer loyalty and merchant loyalty. Since the staff at the company is, in large part, composed of people with technology backgrounds, it was a different concept.
“What happens is that technology departments often get focused on a feature,” Andelin says. “They’ve been asked to deliver A, B and C, and at the end of the day, they deliver that, but it doesn’t always yield the business value that was expected. So by shifting the emphasis away from the actual feature we’re delivering and getting the teams focused on delivering business value, it fundamentally shifts the whole project pattern in a very meaningful way.”
Andelin and his team began to implement initiatives, such as a reward points program, as a formalized way of building merchant and customer loyalty. But he also wanted to see his team deliver value in more fundamental forms.
“One of our objectives, for instance, is to increase the voice of our merchants online, to help them connect more with their customer base,” he says. “That is one of the main things that is going to separate us in a meaningful way from our competition. That technology stepping in and facilitating that communication is something that would be pretty unique for a merchant.”
Give people a voice
You can craft a well-thought-out vision that aims the company toward new heights of prosperity, but none of it will matter if you can’t achieve buy-in from everyone in your company.
It’s something that Andelin acknowledged early in his tenure, and it’s why he embraced the role of storyteller from his first day on the job. Employees can hear about the vision, they can learn the drivers, but until they see tangible ways that the vision will lead to a better, more profitable company — and by extension, more earning potential and job stability at their level — they won’t completely buy in.
“Alignment can be challenging,” Andelin says. “But I have found the best way to do it is to very clearly articulate the problem or very clearly articulate the vision and then explain why the solution we’re all working toward will resolve that.
“You start to get individuals to understand the vision or the problem by articulating it very clearly. They see it and recognize what you are doing and why you’re doing it. People generally get that. It’s when the communication isn’t there that the team starts to falter and lose the passion for what they’re doing.”
In order to tell a story, you need a means of communication. Authors have books, journalists have mass media and directors have the cinema. At Rakuten.com Shopping, Andelin has, among other things, weekly “asakai” meetings that utilize technology to bring together people from Rakuten’s U.S. operations and beyond.
During the weekly meetings, senior management reinforces the vision and values of the organization to employees throughout Rakuten’s footprint. The meetings are another way Andelin is using technology for storytelling.
“What we say at the weekly asakai meetings goes all the way down to daily huddles, where each department will get together and talk about their departmental issues,” Andelin says. “The thing to remember is the teams you are leading have to get it. The business leader has to be open enough and accessible enough, to the point where if the team has questions, they feel able to ask those questions.
“If they have concerns, they have to get those concerns out on the table and walk through them.
“One of the most powerful ways to reach consensus is not by reducing the conversation but by increasing it. It is through conversation that leaders and managers are able to convey the vision and get individuals to come on board with the direction of the organization. Communication is absolutely key.”
Show your wins
Every story has a beginning, middle and end. In Rakuten.com Shopping’s case, the story is still in progress. If you don’t have final results to show your people, you need to show them progress and trends. Keeping employees in the loop is another essential way to bring them on board with your vision. You have to demonstrate the wins you are tallying and the progress you are making toward realizing your vision.
“As an example, we ran one of our summer sales at the end of August, right after I started,” Andelin says. “We measured the sale based on year-over-year performance — so, how we did on these days versus the same days the prior year? That event ended up giving us a fairly sizeable increase in our number of orders, in visitors coming to the site, all of the key metrics that we’re looking at. Those wins really help focus the team.”
If you’re going to tell a story that it’s going to serve as a motivator for your people, the story has to inspire. That doesn’t mean your people have to leave the meeting or conference call ready to climb Mount Everest, but it does mean that they leave as believers in what the company is doing.
“It’s a fairly basic idea that winning is contagious,” Andelin says. “It builds confidence; it helps you to solidify a repeatable process. It shows us what we need to do to drive sales during a particular event. If we get really good and learn those things, we can repeat it, and we can grow our business to improve step-by-step, by improving those processes. Everybody gets excited, and it really becomes a companywide initiative, because everybody has a little piece of it. So when you start to achieve your vision, everybody feels good.”
How to reach: Rakuten.com Shopping,
(949) 389-2000 or www.rakuten.com
The Andelin file
What is the best business lesson you’ve learned? You want to take accountability for when things don’t go smoothly and perfect. At the end of the day, if you screwed up, take responsibility for it, figure out what happened and move forward. That is one of the most relieving principles in business. It’s a liberating principle for all leaders, as opposed to passing blame and making excuses.
What traits or skills are essential for a leader? Having a vision and being able to communicate it on both an individual and group level. Leaders have to be approachable, accept criticism and be able to defend their positions with logical, rational arguments backed by data and facts. Authoritarian leadership doesn’t fly nowadays. You have to win the minds of intelligent people who are used to thinking for themselves, are well-educated and have fabulous opinions.
What is your definition of success? There is a sense of irony around it, because as soon as you start to define success, you limit yourself. If you define success as you see it, you just cut yourself off from other areas where you could be a success. You have to kind of know success when you see it, just like knowing what art is, or knowing what sounds good in music. So many things drive success, to define it is almost impossible.
Tell a great story.
Communicate it to your people.
Show evidence of success.
Nobody in Alan Jay Kaufman’s field is looking for the insurance industry to develop the same professional glamour appeal as a movie star, professional athlete or international spy — but they are looking to get on the same recruitment footing with banking, finance and just about any other area of business.
The insurance industry is fighting that kind of an uphill battle. It’s primarily because college students, in many cases, don’t view insurance as an appealing career choice, which hinders the recruiting efforts of firms such as Burns & Wilcox, a 1,000-employee insurance brokerage, which Kaufman leads as chairman, president and CEO.
“The effort from our industry to go to universities looking for the best and brightest isn’t there,” Kaufman says. “It’s also not a profession that universities are encouraging people to go into. They think about banking, finance, marketing but not insurance. It’s not emphasized as a great opportunity or a great career.”
But without attracting, training and retaining great talent, a business in any field can’t hope to flourish. So Kaufman and his staff must swim against the recruiting current, challenge the preconceived notions about life in the insurance business and give bright, talented people reasons to want to come to work at Burns & Wilcox.
“That’s my biggest challenge,” Kaufman says. “We need to acquire the best and brightest talent that can take the company from one good level to the next higher level. And after you’ve acquired them, after you’ve trained them, you face the issue of retention. How do you retain the best talent you have so that you can continue to improve your team?”
It has required Kaufman to help spearhead recruitment efforts and formalize training programs, all with an eye toward making Burns & Wilcox not just an attractive place to work but an ideal place to build a career.
Find your selling points
To understand how your company can best appeal to potential employees, you have to understand what sets your company apart from the competition. You have to know what you can uniquely offer to the people you recruit.
If you are aiming to hire young talent, as is the case at Burns & Wilcox, you have to develop programs and facilitate opportunities that appeal to recent college graduates who are mobile, both in a geographic sense and corporate-ladder sense. Young employees value career advancement, and many of them also value the opportunity to live in different areas of the country and world before settling down.
It’s something Kaufman and his HR staff have carefully considered as they have built their company’s recruitment and training programs.
“The recruits we’ve brought in have been impressed with our training, that we have a course that helps them get their careers off the ground,” Kaufman says. “We can move them around to different regions. They can spend some time here in our corporate headquarters in Michigan, and we can move them to different offices where we have training programs operating. They can understand how the office in Atlanta works versus the office in Dallas or Los Angeles.”
Not every office in the Burns & Wilcox system is set up for training but enough are equipped with training staff and capabilities so that a newly recruited employee has an opportunity to experience living in different cities and learn about the work environment in various company offices.
Kaufman and his team have developed the company’s recruitment and training platform, in part, by observing the competition and analyzing the holes that competitors weren’t filling in the recruitment game.
“We don’t necessarily react to what the competition is doing, but we do certainly pay attention to it,” Kaufman says. “We’ve realized, for example, that our competition has been more focused on compensation, as opposed to training and career advancement.
“I believe that the right leaders are going to realize that compensation is important, but training and providing promotion opportunities is more important to career advancement. We do meet the competition as far as compensation is concerned, so I’m not trying to undermine the fact that compensation is important, but the education and training aspect is critical.
“I’d like to see more of our competitors in the industry implement some programs for advanced training. It would be better for us and better for the industry. I consider it a weapon in our arsenal, but it’s not a secret weapon.”
Build a training program
To sell recruits on your company’s ability to advance their careers, you must develop a comprehensive and formalized training program that lays out a process for how your company can help its employees achieve their career goals.
At Burns & Wilcox, the company formalized its training program under the acronym KELP — the Kaufman Emerging Leadership Program, which is administered by Burns & Wilcox’s parent company, Kaufman Financial Group.
“We formalized the program to a greater degree by actually hiring a recruiter internally, just for university graduates, just for the program,” Kaufman says. “We have one person on staff who is devoted to that. That’s all she does. We’re constantly trying to improve our formal approach through the KELP program and other programs that we have. That’s one way we have of searching for the best talent — and I emphasize ‘best,’ because it’s not just a matter of hiring people. We need people who fit the insurance culture, who will embody the best aspects of our company.”
Employees in the KELP program have usually graduated college within the previous five years. The three-year program is selective, with approximately 30 people gaining admission each year.
“We hire many people with the hope that they’ll get into the program, because it’s not guaranteed that they’ll get entrance into the program,” Kaufman says. “We first hire them, then after a period of time — maybe six months to a year working for us — they can potentially get entry into the program.”
But the size of a training program is less important than its quality, measured in the success rate of its graduates. A successful training program is usually successful because the leadership of the company committed resources to it and made it an organizationwide priority.
To build great leaders, they need to be taught by great teachers who understand the principles of effective leadership and how those principles fit into your company’s culture.
“It certainly has to start off with the right leadership in the training program, and the company has to put that on the list of priorities,” Kaufman says. “You can’t have an internal program without the support of the senior executives and management, which is why we always try to involve the best leaders in our company in the implementation of the training program.
“For two weeks, we bring our best leaders into the program, people who work in various disciplines throughout the company — whether it be underwriting, brokerage, property, professional liability or any other area. Without the support of those people, the program wouldn’t be successful, and the company wouldn’t be as successful.
“If you look at the people in our company, the people who have historically been the most successful are the people we have trained.”
And that training has to be open to all areas of the company. You might have certain departments that you view as more essential to your company’s success than others, but the next great leader could emerge from a department that’s on the edge of your radar screen.
“Open your training to people in every area,” Kaufman says. “Our training program also includes assistant underwriters and other people through all levels of the company. It’s across the board because you can’t just train certain individuals. You need to have a macro approach. And that goes back to having someone on staff who is entirely devoted to training on an ongoing basis.”
Consider other factors
Your recruiting efforts can get talented employees in the door, and your training programs and compensation packages can get them to accept the job. But once you have them, how do you keep them? That is a question with a multipart answer that involves additional factors, including the work environment, networking opportunities and the way in which the job contributes to — or detracts from — quality of life.
“There is not a magic formula, but those items are all part of the formula,” Kaufman says. “How you balance it and mix it is an ongoing process. It’s never perfectly right, so you just have to keep looking at the ingredients.”
It’s why Kaufman makes it a point to personally keep his finger on the recruiting pulse of Burns & Wilcox. He empowers his HR staff to do their jobs but remains in tune with the company’s ongoing recruiting efforts.
“I participate in recruitment and the interviewing process,” he says. “I interview hundreds of people a year and certainly anyone on the management level. And I expect that standard of other people in our regional offices. You need to maintain a strong leadership team that works together and comes to a consensus on what to do. You want a consistent approach.”
How to reach: Burns & Wilcox, (248) 932-9000 or www.burnsandwilcox.com
The Kaufman file
Alan Jay Kaufman
chairman, president and CEO
Burns & Wilcox
What is the best business lesson you’ve learned? The lesson I learned from my father (Kaufman Financial Group founder Herbert W. Kaufman) about his door being open to anybody. You didn’t have to go through different layers to get to him. That is the way I am, and I encourage my executives to be the same way. If you want to know something, you have to go right to the source, and with our management style, you can talk to anyone in the company — and our employees do that. Regardless of your size, you want your company to keep that part of the culture, keep that feeling that people can talk to anyone.
What traits or skills are essential for a leader? Humility, honesty and hard work. That, and you have to lead by example. I can’t expect someone else to work hard if I’m not working hard. I set the pace for everyone, and I expect, from my level on down, to keep that pace. As an example, I expect everybody — clients, insurance brokers, agents — to understand our history and what we’re selling.
What is your definition of success? The quality of the team around you. The better the team you have, the more it will be able to carry you through thick and thin. A company isn’t one or two people; it’s the total team. A great team leads to success — it’s true in business, it’s true in government, just as it is in athletics.
Sell recruits on your company.
Build a strong recruitment strategy.
Formalize your training program.
Can you imagine a world without Oreo cookies? Anyone who has taken one and dipped it into a glass of milk before popping it into his or her mouth to savor the flavor would shudder at the thought of such a scenario.
But when Irene Rosenfeld returned to Kraft Foods in 2006, she found that the company was on verge of delisting the Oreo brand in China.
“We took a U.S. product and jammed it down the throats of the Chinese consumer,” Rosenfeld says. “We were losing money, and it was a very unattractive proposition. We had a $60 million factory in Beijing, which was sitting empty because sales had not materialized. So we were about to delist the product.”
Rosenfeld and her team at Kraft decided to reach out to people in China before taking such a drastic move. They asked what it would take to make the Oreo brand a success in their country.
“They very quickly told us that the product was too big and too sweet for the Chinese consumer,” Rosenfeld says. “When we allowed our local managers to redesign our product for the local taste and local customs, we had a phenomenal turnaround.”
The Chinese Oreo is smaller and less sweet and actually comes in a green tea flavor. It’s not at all what American consumers want when they open their package of Oreos, but different cultures have different tastes. Rosenfeld knew in that case she needed to adapt to earn the business of the Chinese consumers.
The effort has paid off thanks in part to China’s own Yao Ming, a former star basketball player in the United States.
“Who is the best symbol in China but Yao Ming?” Rosenfeld says. “He’s our spokesman, and we actually go to the local guy. It has been a phenomenal business in China with almost $800 million of the $2 billion business from Oreo worldwide,”
The willingness to adapt played a large part in the move completed last fall to split Kraft into two groups. Kraft Foods Group now holds the company’s North American grocery business, which is led by iconic brands such as Oscar Mayer and Maxwell House.
Kraft Foods Inc. is now Mondelez International Inc. and will focus on high-growth global snacks.
“Our dream for this company is to create delicious moments of joy,” says Rosenfeld, chairman and CEO for Mondelez. “The opportunity for us is to create a $36 billion start-up. It’s an opportunity to take an incredible roster of brands that are household names, brands like Oreo, Ritz, Chips Ahoy, Trident and Cadbury, and put those together.”
Getting to the market fast
Rosenfeld does not go so far as to say that the grocery side of the business was holding back snacks. But the two sides did require a different approach, and that created a challenge for leadership.
“North American grocery needs to be managed for cash and for margin,” Rosenfeld says. “There is a big focus there on maintaining the moderate growth but making sure it’s a very cost-focused company.
“Our global snacks business is all about growth. So the focus is on global platforms for each of our brands. The focus is on capabilities and the supply chain and sales, which will drive these products more rapidly around the world.
“The opportunity for us to be able to scale up very quickly if we are properly structured and have the proper communication from one part of the world to another is the main idea for our new company.”
The ability to make smart acquisitions of new brands and make strong connections in emerging markets will go a long way toward determining the ultimate success of Mondelez.
“The rate of consumption in the emerging markets is a fraction of what we see in developed markets,” Rosenfeld says. “So that whole investment thesis behind Mondelez is this idea of a growth company because of our geographic footprint and our category participation. It’s really depending on explosive growth, and we’re growing at a double-digit rate in these emerging parts.”
Focusing on health
It’s hard to talk about snacks and the love that people have of them without talking about obesity. Rosenfeld says the problem of people being overweight and out of shape is big in the United States, but it’s also a concern in other parts of the world.
“It’s every bit as challenging in India, and it’s on its way to markets like China,” Rosenfeld says. “It’s an issue we take quite seriously, and we look to address it in a couple of ways.”
The first part is looking at calorie intake. Efforts are ongoing to formulate products in a way that they taste good but can be enjoyed without guilt or risk to your future health and well-being.
“We continue to focus on taking things out like calories and sodium and sugar and replacing them in our products, as well as increasing the level of fiber,” Rosenfeld says. “We’re not pretending chocolate is going to be something other than it is.
“What we’re doing with products like that is to make sure the consumer has portion control. We’re making more of our candy bars scored so you can break off a piece at a time. We have resealable packaging. We’re doing a lot more single-serve products, which is good for price value and consumption.”
As for burning calories, Rosenfeld says she and her company will always do what they can to promote exercise and an active lifestyle for consumers young and old.
“We have been working very actively in partnership with organizations like KaBOOM! and with playgrounds in inner cities in this country and in programs like Healthy Schools in the U.K.,” Rosenfeld says. “We’re helping to educate children about good nutrition and the value of exercise.”
The key to being successful in providing nutritional foods to consumers, whether it be children, college students, young professionals or senior citizens, is easy to understand. But it’s often a lot more difficult to achieve in actual practice.
“Healthier products like Triscuit and Wheat Thins are growing at twice the rate as the base products,” Rosenfeld says. “There’s a clear business opportunity as well as the social responsibility. It’s not a tough sell, but what’s hard is to make sure these products taste delicious. Because at the end of the day, if it doesn’t taste good, the rest of it doesn’t matter.”
Staying in touch
From the outside, it seems like it would be a nearly impossible task to manage 100,000 employees. And while Rosenfeld has a proven track record of effective leadership and is regularly named one of the most influential leaders in the world, she agrees that managing that many people is impossible.
“The fact is I can’t manage 100,000 employees,” Rosenfeld says. “What I can do is inspire as many of the leaders of the company, then, in turn, to inspire their teams. It’s a cascading process.
“The single biggest role I play is in communication and talking about where we are going, why we are going there and what it is I need the organization to do. Then I really need the leaders to grab that and translate that mess into what it means for their folks on the ground.”
Rosenfeld spends about two-thirds of her time on the road meeting with employees and assessing whether they have what they need to succeed.
“I spend an enormous amount of time thinking about talent,” Rosenfeld says. “I look at our key roles, and I want to make sure they are operated by our top talent and that we have good career paths for those individuals as well as good succession plans behind them.”
The name change from Kraft to Mondelez has required a restating of what it means to work for this new organization.
“A lot of the work we’re doing right now is creating an employee value proposition and being explicit about what Mondelez can offer you as the prospective employee that you might not get elsewhere,” Rosenfeld says.
Empowering women to grow and succeed is another area of focus for Rosenfeld. Half of her management team is female and a third of her board is women.
“For many companies, they can legitimately say they have no one in the pipeline because they didn’t focus on that,” Rosenfeld says. “It’s a multilayered process, and it has to be a commitment from the top. I’m very proud of the progress we’ve made and we continue to talk with peers about what sort of actions we’ve taken that have contributed to our success.”
If you ask Rosenfeld for advice on how to succeed in life and in work, she says to just be yourself.
“If you’re not comfortable in the environment that you’re in, get out of it and do something else,” Rosenfeld says. “We all work too hard at what we do to not be comfortable and to feel like we have to be somebody that we’re not.”
The Rosenfeld File
Name: Irene Rosenfeld
Title: Chairman and CEO
Company: Mondelez International Inc.
Education and memberships: Rosenfeld holds a bachelor’s degree in psychology, an MBA and a doctorate in marketing, all from Cornell University. She is active in a number of industry and community organizations including The Economic Club of Chicago. She also serves on the Grocery Manufacturers Association board of directors and Cornell’s board of trustees.
The path to Mondelez: She began her career in consumer research, later joining General Foods, which itself became part of Kraft Foods. Rosenfeld led the restructuring and turnaround of key businesses in the United States, Canada and Mexico. She served on the team that spearheaded the company's IPO in 2001, and successfully integrated the Nabisco, LU and Cadbury businesses.
Rosenfeld took a short break from Kraft Foods in 2004, serving for two years as chairman and CEO of Frito-Lay. While there, she accelerated growth in better-for-you products and health and wellness offerings.
She returned to Kraft Foods, the predecessor to Mondelez International Inc., in June 2006 as CEO and became chairman in March 2007, following Kraft’s spinoff from Altria Group.
How to reach: Mondelez International Inc., (855) 535-5648 or www.mondelezinternational.com
With the market for computer backup storage devices decreasing about 15 percent a year as far as revenue and number of units sold, Simon Garneau feared that Digital Storage Inc. might soon be one of the many in the technology scrap yard.
“It took us awhile to see that it was declining because obviously all our suppliers were trying to convince us otherwise — that it is growing, and it is exciting,” he says. “Secondly, there are all kinds of competing and advancing technologies that satisfy the demand for more storage.
“So our challenge was what else can we do because if storage devices and distribution are all we do, we will disappear from the surface of the map,” Garneau says.
The parent company, Dexxon Group, which distributed high-capacity tapes for computer backups, decided it was time to diversify rather than to stick with the way things had been. Its response was to establish a division in North America of Emtec, its retail side of storage devices that grew in Europe out of the former BASF brand.
But there was a challenge, and Garneau knew it would be a formidable one.
“The whole strategy was to focus on the retail market of which we knew absolutely nothing,” he says.
“We had no idea how retail worked, how do you introduce these kinds of products to retail, and we were facing very large and well-established competitors: SanDisk, Kingston, Lexar and PNY,” he says.
Garneau was not fazed. His business sense told him that in a competitive market, you have to be different to survive.
Here’s how Garneau, president of Digital Storage Inc. and Emtec North America, built a $75 million successful retail business over the last four years by offering customers something the competition didn’t.
Pitch to a different crowd
If you are a clothing manufacturer and you are searching for the next big thing, it may be as easy as signing a promising designer and going with his or her creations. But Garneau didn’t have the luxury of just adding a new line to the market he was already in.
He was finding himself in the much the same stadium, but he was going to have to pitch to a different crowd.
“Digital Storage had focused on the commercial market, or the B2B as a wholesale distributor,” he says. “Our challenge was to find a growth market for the company because we knew that we could not stay where we were.”
The company started looking for opportunities in the data storage arena because it was a field in which it had familiarity as well as capabilities with logistics and distribution. Emtec would be the company’s own retail brand in North America that was sold through the business-to-consumer sector. An added bonus was that the European division had been marketing flash storage, or key USB flash drives, for a number of years.
Garneau and his team began discussions with existing customers about what Emtec could deliver that other companies would not.
“For instance, doing private labels, modifying their products, packaging it differently and that sort of thing,” he says. “So we decided as a strategy, we said, ‘Well, since we have no brand recognition, we will do for them what the other guys wouldn’t do.’ That was our differentiation strategy.”
The company began creating the novelty type of USB flash drives, with animal characters and popular culture comic icons such as Looney Tunes, Angry Birds and the European Asterix characters.
“Up to that point, most flash keys were totally utilitarian; they were all black or silver, fighting on price and no special attraction,” Garneau says. “But taking the lead from the customers, we decided to do private labels, and we added colors, patterns, schemes, shapes and forms and so forth. That’s really how we got in.
“So we got lucky in that sense and based on the advice of our marketing reps, they gave us good coaching as far as which programs to support with the customers.”
Garneau says that by taking the approach of listening to the customers, being sensitive to what they want, responding, making suggestions, engaging in a working dialogue as opposed to a high-pressure sales pitch — as well as receiving a vote of confidence from the headquarters in Europe — a solid retail effort was launched.
Get off to a good start
Once Garneau and his team had their strategy, it was time to find those who would drive in the revenue. The question then was whether to go in-house with sales associates or outsource the efforts.
“The No. 1 issue was if you don’t know anything about this business, you hire manufacturers’ reps,” he says. “We went with manufacturers’ reps because we felt that they would know the business, we would have the benefit of their contacts, and we could move quicker, if you will, and we only pay once we have sales, so it is not a drain on cash flow.”
Garneau was able to recruit in a short period of time a network of manufacturers’ reps, including one particular standout whose performance was excellent. A major opportunity for a large line review with a large company was obtained, which as luck would have it, already had a relationship with the European division of Emtec.
“Then here in the U.S., we were able to get some strong references from distribution customers who could say, ‘Digital Storage is very strong from a logistics point of view, and they are responsive, and we are happy with them,’” Garneau says.
With a sound strategy and a good bit of luck, Emtec was underway in the U.S.
“The first order we got was like $4 million,” he says. “We literally created a new category of flash keys. Now, we are challenged to keep it up because all our competitors are trying to imitate us. We have a thriving business.”
Sales figures support that observation. Two years ago, the business grew by 32 percent, last year 37 percent, and this year, Garneau budgets about 50 percent growth.
Keep the old as important as the new
If a company launches an innovative venture and the sales figures indicate that things are pretty rosy, there is still the challenge the company faces of how the new plays against the old.
“When you face a situation like this, the challenge is how do you motivate the people — all of them?” Garneau says.
“You have a group of people who are dedicated to your old business, which is declining. And at the same time, you are building a new business, which is all new and exciting, but you have to keep a balance between the two because you need the first one to provide the cash to fund the new one.
“The key challenge then, which is also ongoing, is how do you motivate everybody and not make the old people feel that they are not so important anymore versus the new guys who are building all the excitement,” he says.
Should you find yourself in this or a similar situation, communication will often make or break the situation.
“We do this through a lot of information exchange,” Garneau says. “We tend to be very open with everybody. We share the numbers. We have town meetings every quarter. We state the strategy in simple terms.
“The trick is to make sure that everybody feels they have a role to play and that they are very important in that challenge.”
This has to be reinforced all the time, Garneau says.
“I like to do a lot of walking around,” he says. “If I talk to the people in the warehouse, they have to understand how important it is for them to be quick and caring and satisfying for the customers, which they do. But everybody has a role to play. We need people to sell the old media because we have to maintain that business as long as we can.
“So it’s ongoing. Let’s communicate; let’s talk. Let’s share the information. Everybody’s important; everybody has a role to play.”
In short, you need to develop your company culture to include two extremely important aspects.
“What makes us different from others is that people care,” Garneau says. “Everybody here cares. If a customer hurts, everybody hurts. We don’t tolerate indifference. We don’t hire indifferent people; you have to be excited. You have to believe in what you do, and you’ve got to care.”
The second point is to try to be fast, not fast to the point of making mistakes but to the point, quick and responsive.
With a major retailer that didn’t know Emtec from anyone, Garneau established a 24-hour turnaround policy for communications.
“Every single thing that they asked of us, we responded within 24 hours,” he says. “They were totally surprised. They were flabbergasted. It gave us such credibility with them because they were thinking, ‘Well, gee, if they respond to our legalese that way, we can only imagine how they will service our account.’ And we really got their attention that way. We ended up doing business. We’ve been doing millions of dollars of business with them ever since.” ?
How to reach: Digital Storage Inc., (800) 232-3475 or www.digitalstorage.com
The Garneau File
Digital Storage Inc. and Emtec North America
Born: I was born and raised in Québec City, Canada. I am French-Canadian.
Education: I have two degrees from Université Laval in Québec City, a bachelor of arts and a bachelor of science in engineering physics.
What was your first job and what did you learn from it?
As a teenager, I pumped gas at a gas station. I realized that, in those days you had to serve the people gas. But it struck me that most people wanted to talk to you, as opposed to sitting in the car and to let you finish filling the gas tank. So it really hit me. I felt that, gee, this was an opportunity to be of service and be pleasant and listen and be curious about these people and you can have a little chat. It could be to your advantage to take the lead with people as opposed to assuming that they don’t want to talk to you.
What is the best business advice you ever received?
I will give you two that really hit me and served me well in my career. I worked for a CEO, and the big thing he taught me was that his approach was to focus on revenue first. Everybody believes that a budget is a license to spend, well, it is not. You only spend if you have the money. If the money is not in there, let’s talk revenue first.
As for the other one, I was the president of the division at National Computer Systems in Minnesota. I learned from the CEO not to feel obligated to fix every problem at once.
Who do you admire in business?
I don’t go by names; I admire attitude and style. Just to give you one example, one billionaire CEO I used to run a company for was so humble and simple had such respect for people. If he made a commitment to you, he would always honor it. That is the kind of person I respect. To me, when I give my word, I come through with it, even if you cross me. I will meet my part of the bargain. But it is this kind of honesty and commitment that I admire. I like people who commit and come through with their commitment.
What is your definition of business success?
Make your numbers, because if you don’t, you can explain and this and that but when you make your numbers, everybody is happy, you are satisfied and everybody wins. And you don’t have to explain it for too long. I remember when I applied for this job that was the point I made to the people. At the time, out of 30 years in business, I had made my numbers at least 28 times. To me that is important.
The financial meltdown that rocked the economy in late 2008 damaged U.S. businesses in myriad ways — but LeasePlan USA Inc. was one of the unfortunates that got hit from several angles at the same time.
LeasePlan, which provides automobile fleet management services and manages about 385,000 vehicles for its clients across the United States, is basically in the business of financial services. It helps companies finance and service their vehicle fleets. When the meltdown happened, liquidity and credit dried up practically overnight, making things very tough for LeasePlan.
“All of a sudden, these things became a huge issue for us,” says Mike Pitcher, LeasePlan’s president and CEO. “In that environment, a lot of our clients were under a great deal of financial pressure. And so were we, with regard to liquidity, cost of funds and simply doing business as usual. Financial services and the entire industry were very challenged.”
At the same time that liquidity and credit were drying up, the recession began to stifle many sectors of the economy, sending some of LeasePlan’s key corporate clients into downturns of their own. Consequently, those companies started looking for ways to save money. And one of the line items they began to scrutinize closely was vehicle fleet costs.
“Some of our clients were starting to downsize,” Pitcher says. “Their fleets were getting smaller, and they started looking at different options for vehicles as well.
“A telltale sign for us was that, before this downturn, the six-cylinder engine was always the predominant engine in our industry. Nobody ever ordered four cylinders for fleet. But we started seeing some of that. We started seeing some of our clients not only downsizing the number of vehicles in their fleets but using smaller vehicles. And they were holding onto vehicles longer instead of replacing them.”
All of these factors put strong downward pressure on LeasePlan’s business.
“In ’09 and ’10, we saw our overall fleet — the total amount of cars we finance — go down quite a bit,” Pitcher says. “I can tell you that our overall fleet went down by thousands of vehicles. It was a substantial drop. It got our attention. These were significant client behavioral changes we were seeing. It was an indication that some fundamental changes were happening in our industry.”
Focus on controllables
Pitcher pulled his management team together to come up with a practical plan aimed at pulling LeasePlan out of the down spin it was falling into.
“One one hand, we knew we had a credit crisis going on,” Pitcher says. “The availability of credit and liquidity was a serious issue for us. But that was really at a macro level and largely beyond our control.
“So what we decided to do as a company and as a senior management team was we started talking about how we could get back to the basics and get all the basics right.”
The result of these deliberations was a new five-year strategic plan dubbed Triple Crown, which LeasePlan put into effect near the end of 2009.
“Our Triple Crown initiative was based on our performance in serving our three main groups of constituents,” Pitcher says. “Those constituencies are our employees, our clients and business partners, and our shareholders. And we said that none of those were more important than the others. Each was critical and fundamental to our business.”
LeasePlan’s Triple Crown five-year plan set forth concrete objectives regarding how effectively the company serves each of those three stakeholder groups. The plan laid out methods to measure employee engagement and client loyalty and goals to be reached in both of those areas based on those measurement methods.
LeasePlan’s shareholder return objective was to achieve a double-digit percentage increase over the five years covered by the Triple Crown initiative.
“We started to measure employee engagement — not just satisfaction but employee engagement,” Pitcher says. “We started to measure customer and client loyalty — again, not just satisfaction but loyalty — with the key definition of loyalty based on whether the client would refer us and whether they had an intent to repurchase and do business with us again.”
LeasePlan hired a consulting firm, TNS, to periodically survey its employees as a means of measuring their level of engagement in their work.
One of the initial findings was that LeasePlan has an unusually high percentage of workers classified as “drivers” — that is, passionate, already highly engaged employees who act as if they have an ownership stake in the company and work hard to deliver exceptional service every day. They learned that with such a high percentage of “drivers,” communication becomes even more critical than usual.
“We learned that with a group like this, you can never communicate too much,” Pitcher says. “Part of the reasoning for this is that in the absence of truth, people will start to make stuff up. If you don’t tell them the truth — clearly and consistently — they’re going to make something up. And usually it’s something far worse than things actually are.
“So we started having regular town-hall-type meetings and monthly communications from myself and our CFO regarding our financial performance and monthly emails from our chief sales and marketing officer talking about accounting and departures.”
LeasePlan also pledged not to lay off workers except as an absolute last resort and managed to live up to that pledge, even through the recession’s darkest days. The company implemented a two-days-a-week, casual-dress program and a weekly “dress for success” day, as well as an employee health program called HealthyU that includes free biometric testing, a weight-watching program and a running group that participates in 5K races — all of which have been popular and have helped increase the company’s employee engagement scores.
“We’ve received great feedback from our employees,” Pitcher says. “They love these programs. They’re great morale boosters, and they cost the company little or no money.”
As part of its Triple Crown five-year strategic plan, LeasePlan engaged an outside firm to interview its clients by phone to measure their degree of loyalty as well as their perceptions about LeasePlan’s customer responsiveness, its level of innovation, its technological know-how and the value of its service vis-à-vis how much it charges for that service.
“Client loyalty is really about a lot more than client satisfaction,” Pitcher says. “It’s about a client’s intent to repurchase. Will (clients) be willing to spend additional dollars with you as a vendor? It’s about expanding services and share of wallet and whether they’re willing to be a referral for you if another client would call. Those are the factors that drive client loyalty.”
Pitcher proudly notes that LeasePlan is now laying the groundwork for a new five-year strategic plan because it achieved all the goals of its Triple Crown five-year plan in just three years.
“We laid out a five-year plan, but our team hit all the metrics we set forth in that plan within three years,” Pitcher says. “We achieved them all during 2012. This plan brought us back to pre-credit-crisis levels of profitability.
“We hit our metrics in all three areas — employee engagement, client loyalty and shareholder return. So now we’re back to the drawing board, looking at what our next five-year plan is going to look like.”
Asked what key pitfalls he has learned to avoid while leading LeasePlan through the credit crunch and financial downturn, Pitcher says he strongly suggests resisting a common mistake.
“One of the biggest pitfalls is surrounding yourself with people who always tell you you’re right,” he says. “If you get a big enough audience with very diverse and original ideas, you’re going to find out you don’t have all the answers. As a CEO, you can become very insulated, and people won’t bring you the real problems and the real challenges. You have to stay away from a group of advisers or managers that simply always tell you you’re right.”
Pitcher also recommends empowering the rank and file to help find the solutions your company needs when it gets in a tight spot — and be sure to acknowledge those contributions.
“One of the things we learned is that your team members really want to be part of the solution,” Pitcher says. “They want to be heard. And they usually know best how to attack a problem or an opportunity and find the solution. Our best recommendations and suggestions almost always come from front-line employees.
“The other thing is — and I know this sounds trite, but it’s really not meant to be — people want to be recognized for a good job. People do a lot of good things, and it’s leadership’s responsibility to catch people doing things right, make a point of to others and say thank you.”
How to reach: LeasePlan USA Inc., (770) 933-9090 or www.us.leaseplan.com
The Pitcher File
President and CEO
LeasePlan USA Inc.
Born: New Orleans, La.
Education: Bachelor’s degree in marketing, University of Louisiana at Lafayette; MBA, Emory University
Looking back over your years in school, do you recall any important business leadership lessons you learned that you still use today?
That you can learn from any experience, good or bad. From good leaders you can learn good aspects of leadership — but you can also learn from bad leaders, what not to do. There are role models on both sides of that coin, and if you take every experience as a learning experience, I think you can become a very well-rounded leader.
Another important lesson is that attitude is everything. In the face of crap, you can say, “The whole world is falling apart, and there’s nothing I can do.” Or you can say, “This is an opportunity.”
What was the first job you had, and what business lessons did you learn from it?
I was a painter and sandblaster on oil rigs in the Gulf of Mexico. I worked 21 days straight, 15 hours a day. In other words, I worked a 105-hour week for three weeks in a row. And the lesson I learned is that I wanted to make a living with my mind, not my back.
Do you have a main business philosophy that you use to guide you?
It simply would be that people have an inherent desire to be successful, and management’s main objective should always be to harness their passion and find ways to show them how they can succeed.
What trait do you think is most important for an executive to have in order to be a successful leader?
If I had to pick one, it would be integrity.
What’s the best advice anyone ever gave you?
Never do anything your mama wouldn’t be proud of. My older brother said that. Having been raised by my mom for a long time, I would say that’s up there.
Bob Duncan was taken aback a little when he went to a meeting last year as the new Indianapolis International Airport executive director.
There were only three people at the meeting. It was the employee engagement committee.
“I said, ‘What’s going on? Where are the rest of them?’”
It turned out the committee hadn’t been maintained that well. The group needed new leadership and was ready for a revival.
When Duncan along with the HR director breathed new life into the committee, it was re-energized into a much more interactive and robust employee group.
“So that’s worked really, really well in the last year,” he says.
It turns out that making things work well is Duncan’s signature. He had been with the Indianapolis Airport Authority for nearly 40 years and previously served as general counsel and COO. Duncan was closely involved in the planning of the airport’s new midfield terminal, which opened in 2008. Add serving as interim executive director in 2012 to his resume after the previous director and the board of directors parted ways.
As he came into the leadership post, he was fortunate that he had a fairly clear picture that the culture under the previous administration was not as collaborative as he would have liked. He already got to know over the years hundreds of employees by their first names, so the territory was familiar.
“But I viewed the culture as tense,” he says. “Kind of silo-ish. You hear that a lot, that people had developed silos, which was not efficient in my mind. With the reorganization that I did, I broke down the silos.”
Here’s how Duncan eliminated the silos, built up teamwork and put his signature on the culture at the Indianapolis International Airport, which had revenue of $193 million in 2011, serving 7.5 million passengers.
Instill a sense of teamwork
If you’ve determined that your mission is to make your organization’s culture more collaborative, the most important sense to instill is that of teamwork.
Duncan realized that he needed to focus on the senior team members as well as the line service. He wanted to gain their trust, which would increase their commitment.
As a first step, Duncan recommends making yourself known.
“I made it a point to get out and about at virtually all hours,” Duncan says. “I have been known to show up at 5 o’clock in the morning and go to police roll call. I show up on Saturdays just to talk to people, particularly on second and third shifts, to let the folks know that I am interested in what they do and how they do it.”
As you cover your territory on foot, you will get to know your people better.
“I insist that my employees call me by my first name so that we can develop a team spirit,” Duncan says. “At the same time, you have to establish trust in management so that they know when a decision is made that may impact them, they understand why it doesn’t come as too much of a surprise.
“Be credible. Be open. Be approachable. Recognize the type of workforce that you have. I want them all to call me by my first name.”
As an example of building trust, he cited a recent instance when the airport’s public safety officers, which are not law enforcement personnel, were privatized. Rather than eliminating the 38 jobs, Duncan found a private security firm that would start to re-employ the officers at the airport in similar roles.
“So everybody that day walked out knowing they had a future,” Duncan says. “That is the right thing to do when that happens. It established trust in management, that we were sensitive to the feelings of the people, and I didn’t want people walking out with a change like this without the security that they knew they were going to have a job and benefits. That’s what we did, and it worked really well.”
Look for inefficiencies
A shakeup will always cause people to sit up and take notice. It’s a sign that you are in charge and want to try a better idea, hopefully to get better results.
Duncan reorganized his senior leadership staff, and it resulted in the reduction of some positions. However, it not only shrank the senior management numbers, it improved the organizational efficiency.
“I literally abhor bureaucracy,” Duncan says. “We are a quasi-governmental entity so there is a certain amount of statutory bureaucracy that we have to deal with. But what you deal with about internal planning and internal decision-making, you try to cut down layers of the approval process so that you empower people to make decisions and do that in a collaborative manner.”
A sore subject for some executives is the number of hours of meetings they often have on their calendars. Duncan is a firm believer that such time often could be spent more productively.
He took 18 hours of senior-level meetings a month down to four.
“Let’s say there was a senior-level meeting, and then two days later, there would be a senior-level meeting with the director-level people,” he says. “So there are five hours of just talking. What I’ve done is to have all the senior managers meet at the same time with most of the directors at 9 o’clock every Monday morning.
“Everybody brings everybody up to speed, and then once a month, we bring in directors, managers and supervisor levels so anything that they want to talk about, we can bring up. That’s worked really well for me.”
Spending less time on unproductive discussions forces managers to organize their thoughts and prioritize issues. It’s important that everyone gets together on the same page, and it should be done at least once a month.
“We have a project coordination meeting; it doesn’t last very long,” Duncan says. “We go down all the projects, so all the department heads know what projects are, where they are and what’s going on with them. So that’s the kind of attitude I want. I don’t want anybody sitting in their chair without getting up and talking to other department heads.
“Let senior directors and their directors develop their own action plans, their goals and initiatives,” Duncan says. “I can count on one hand and two fingers the number of times that I have gotten directly involved and changed something. That is because I know a lot of these people, and I trust their judgment, they trust mine, and that’s really important to the effective operation of the organization.”
Duncan says it is essential that the CEO encourage his team to challenge the leader’s ideas without fear of any potential negativity. It’s part of being flexible.
“I can remember when I reversed myself twice in the same day,” he says. “Someone came up to me and said, ‘You sure you want to do that?’”
Members of a team should feel free to make mistakes and get the experience of surviving through them.
“I always ask folks that I come in contact with, ‘Do you know what experience is?’ I will get a wide variety of answers,” Duncan says. “Then I will say, ‘No, experience is the exercise of good judgment,’ and you get experience through the exercise of bad judgment. Everybody is going to have some of the bad judgment experience.
“Let people know that if they make a mistake, they are not going to get their head chopped off. As a team, we will work around those kinds of problems the best we can.”
You don’t necessarily have to say you’re not an asset to the organization because you just made a mistake.
“I don’t do that, I mean, there are certain folks that sometimes you try to do all you can to improve them and like all organizations, there are just sometimes when you have to say this just isn’t working,” Duncan says. “I work real hard not to have that happen.”
Nurture success and keep it alive
There comes a point in your effort to build teamwork that you want to know if your approach is working. If you aren’t seeing more employee engagement, it’s not working. Employees should feel a more collaborative effort. They know that you are in charge ultimately, but without teamwork, there is no progress.
“I think as an executive director or CEO, sometimes you have to keep your ego in check,” Duncan says. “At the same time, you are earning the respect of the people that you’re working with and maintaining that respect. You do that by empowering people.”
Also, look at your turnover rate.
“At the senior director, manager director level, we don’t have much turnover,” he says. “Since we do run three shifts a day, we have a little higher turnover rate in third shift janitorial services. But I am trying to figure out how I can reduce that rate of turnover, and it could just be the hours that the third shift works or things like that.”
Once the operation shows improvement, don’t get complacent about communicating with employees — and fall into the lure of email’s convenience. Duncan believes email has become too impersonal.
“If you are not careful, you can say things in emails that don’t mean or that people take the wrong way,” he says. “It is much better to walk around and talk to people — more of a face-to-face thing. Again, that’s part of my concept of openness and having people come in. I have two doors in my office and they are always open. People can walk right in anytime they want. “That’s the way I like it; some people don’t. I do.” ?
How to reach: Indianapolis International Airport, (317) 487-7243 or www.indianapolisairport.com
The Duncan File
Indianapolis International Airport
Born: Philadelphia. I lived in New Jersey until I was 15. Then I moved to Indianapolis. I learned to fly when I was 16 years old, and I was a professional pilot when I went to law school. Flew all day, went to law school at night.
Education: Bachelors’ degree from Hanover College in Indiana, with a major in history and political science. I went to law school at Indiana University.
What was your first job and what did you learn from it?
I worked in service stations. I pumped gas, cleaned windshields, and I was a pretty good car mechanic back in the early to mid-’60s. Then I started flying.
What is the best business advice you ever received?
The gentleman that hired me, Dan Orcutt, executive director of the airport for 25 years — I’ve had the deepest respect for. I think part of my business attitude came from him. It was kind of what I have already said. He said, ‘Be credible. Be trustworthy. Be firm but be fair.’ I think that that works because sometimes in business negotiations, you have to be firm, sometimes vocal, but you always want to be fair. We work hard at being fair to ourselves and our business relationships but also to our customers and tenants. Sometimes we have to say no, and they don’t like hearing it, but they will always understand why and why the decision is what it is.
Who do you admire in business?
To be perfectly honest, I don’t know if I could drag it down to one particular industry. The aviation industry — one is Elaine Roberts, the president and CEO at the Port Columbus International Airport. She started here at the airport. I always admired her sense of fairness and her sense of doing the right thing, and at the same time making very sound business decisions. I really kind of admire her in my particular industry.
What is your definition of business success?
For me, it would be respect, that people shoe respect knowing that they would be treated fairly in dealings with the airport, that we are recognized for our integrity. That would be business success for me in addition obviously to positive financial results.