Five dollars a share.
That was the new reality when Michael Barry became chairman, president and CEO of Quaker Chemical Corp. in 2008. The manufacturer of specialty industrial chemicals, which trades on the New York Stock Exchange, had a stock worth $30 a share just several months before.
Then the economy’s bubble burst, and almost as quickly as a lightning strike can fell a tree, Barry was left staring at the shattered remnants of his company’s once-healthy stock.
Five dollars a share. And the end of the free fall was nowhere in sight.
“We went from making money to losing money, almost immediately,” Barry says. “And nobody knew how bad this would get. Nobody had perfect visibility about how long this was going to last.”
With less than a year on the job, Barry was immediately thrust into the crisis of a career.
“We had to take some really dramatic action,” he says. “We pulled together our senior management team, trying to get everyone involved at the senior-management level, helping us to make some of the important decisions we would need to make.”
Barry and his leadership team made the decisions that many leaders made in that time frame: They slashed the global workforce of Quaker Chemical, eliminating between 10 and 20 percent, depending on the region.
They cut the company’s 401(k) program, eliminated all bonuses and tried to spread an even coating of adversity throughout the entire organization.
Along the way, Barry acted as a guiding hand for his reeling team, keeping them as informed as possible, every step of the way.
“We communicated all the steps we had to take and did it continuously,” he says. “Maybe people weren’t happy with the news, but they felt we treated them fairly. They felt we did a good job of keeping them informed.”
Don’t clam up
In a time of crisis, your instinctual reaction might be to perform damage control on your company’s reputation. While you should take steps to salvage your company’s good name, if your methods of reinforcing your company’s reputation extend to sugarcoating, half-truths and other opaque messages, you’ll end up creating more harm than good —particularly if that’s your communication strategy with your own employees.
It’s difficult to swallow your pride and tell your people that you don’t have all the answers, to admit that the future is uncertain, but it’s a necessary step in maintaining long-term trust with your people.
Barry realized that early on and made it a point to maintain a frank, honest and ongoing dialogue with his team. It’s something that has continued throughout Barry’s tenure.
“Making communication a dialogue is, admittedly, something we have struggled with,” Barry says. “What we have done is, during our meetings, myself or my direct reports are talking, and we try to get people engaged and involved with the conversations. We turn it into a town-hall type of meeting. That concept evolved, and then we started bringing together smaller groups of people, including the people who report to my direct reports — so a couple of layers down in the organization.”
The people on that level then bring the messages from those meetings to their own teams, and facilitate dialogue within their area of the company.
“In a smaller group with their manager, your people might feel more comfortable asking questions,” he says. “So we try to give all those managers talking points and answers to frequently asked questions.
“With those kinds of sessions happening all around the globe, we’ll gather the questions people have been asking to see if there are any underlying themes — something everybody is asking, but we’re not doing a good enough job of telling them. But you need to keep that dialogue going, make those meetings a two-way street.”
When enduring hardship, particularly on a global level, culture becomes an increasingly important topic to address as the storm clouds gather. When your business is in survival mode, you might find yourself focused on the financial steps you need to take in order to guarantee your company is still operating at the end of the month or end of the year.
But neglecting to focus on your core values, mission and vision for the future — even if that vision is years away from realization — can have damaging effects to morale, employee confidence and, by extension, your company’s ability to keep its talent pool intact.
“We have spent a lot of time on culture,” Barry says. “We communicate it frequently because it is such a critical aspect of how we operate, how we feel, how we collaborate. You have to consistently reinforce what you are as a company, and we’re a very collaborative company. It’s a key to our business model.
“So during that time period when we were going through the worst of the recession, we talked about it a lot. We even put it on our computer screensavers, highlighting messages that reinforced the core values of the company.”
But messaging on your values and culture is like a booster shot. The real dosage of medicine comes from your actions.
“If you don’t live the culture, people will figure that out pretty quickly,” Barry says. “If you have people in the organization who don’t live the culture and you don’t take steps to correct that, it becomes a problem. A large piece of this is the ability of you and your leadership team to walk the talk.”
Add to the momentum
Though some of them were unpleasant to endure, the initial steps that Barry and his leadership team took in late 2008 and early 2009 helped Quaker Chemical to not only weather the worst of the recession but to quickly emerge from its down cycle in an aggressive growth mode.
Within six months, the company had started to grow again. After employing a workforce of about 1,300 in mid-2008 and dropping below 1,200 after the rounds of cutbacks, Quaker Chemical now employs about 1,600. Net sales for 2011 topped $683 million, an increase of more than $139 million from 2010.
Whether your recovery takes six months or six years, you need to show your people the progress that the company is making. Victories and milestones, however small, can help increase employee confidence. During the recession, you played not to lose. The victories your company gets on the rebound can change that mentality. You want to play to win.
“I think people saw our progress mainly through our performance,” Barry says. “We’re a public company, so they saw right away that we went from losing money to breaking even and that we did it in the span of a quarter.
“Then after breaking even, we started making money, and in each subsequent quarter, we started making more money. That was the biggest encouragement we could have given them, because it gave everyone in the company evidence that we were doing the right things and taking the right steps. People started to feel more secure in their positions.”
As you begin to see daylight, you can use opportunity to take stock of where your company is and what your growth strategy should be as you move forward. Throughout 2010, as Quaker Chemical began to add momentum to its rebound, Barry and his team continually analyzed the company’s strategic position and where it needed to be in order to continue to prosper in the future.
“We used it as a period of time to step back and look at our whole business strategically,” Barry says. “We did a very large strategic planning exercise. We evaluated the markets we are in, as well as adjacent markets we should think about entering, all with an eye toward taking our business to a different level.
“It was a process that involved a number of our associates, certainly on our senior management team but also a good number of people from our middle management. It allowed them to have an impact on how we were going to move the company forward.”
It comes back to the atmosphere of collaboration that Barry tries to perpetuate. Collaboration is a major component of engagement, which is a major component in companywide momentum and long-term success. It’s also an effective way to spread best practices throughout your company’s footprint.
“That is a key aspect of our company that we used to help us as we moved forward,” Barry says. “We have people all over the world, in every industrialized country, and we are working very collaboratively to help each other out. That is critical for your success.
“If we have a person in China who is having an issue with one of our steel customers, that person can rely on others within the company. They can tell another person through various company avenues that they’ve been having an issue with a customer.
“You want to develop a nonpolitical culture, where you are focused on doing the right thing and doing the ethical thing, where you’re not consumed with who gets the credit and who gets the blame.”
How to reach: Quaker Chemical Corp.,
(610) 832-4000 or www.quakerchem.com
The Barry File
Name: Michael Barry
Title: Chairman, president and CEO
Company: Quaker Chemical Corp.
Education: B.S. in chemical engineering, Drexel University; M.B.A., Wharton School of the University of Pennsylvania
What is the best business lesson you’ve learned?
You need to get buy-in whenever you are making a significant change in a company — whether in strategy, direction or anything else. You need to get buy-in from senior management and any other key people who are influential in the organization. There are two reasons for that. One, you need to get your best thinkers involved in any major change. Two, you need to get buy-in from the people who will make the change happen and instill the change in the organization.
What traits or skills are essential for a leader?
You need to be able to listen. You need to be able to make a decision and stick with it. You need to create a vision and a strategic direction for the organization. Part of that is establishing appropriate goals and holding people accountable to that, and creating the right culture for what you’re trying to achieve. You also need to be able to get the right people in the right places, and let them do their jobs, because it’s not about you, it’s about the people in the organization.
What is your definition of success?
It’s achieving your goals, be they business or life goals. Establishing a goal, and then achieving it, is success to me.
Communicate during a crisis.
Create a dialogue with employees.
Use your wins to generate momentum.
Every company has its baby photos. Monoprice Inc. is no exception.
A decade ago, the Internet electronics retailer was a small start-up. The company’s owners wore many hats, dictating almost every aspect of the company’s culture, strategy, systems and processes.
That was then. The “now” for Monoprice is the company that CEO Ajay Kumar has fronted for the last two years. It’s a $121 million player in its space, growing at a rate of 25 to 30 percent every year. With rapid growth and a workforce of 250, Kumar can’t possibly dictate every angle and nuance of the company’s day-to-day operations.
“When you start a small company and grow it, you can manage every aspect of it,” Kumar says. “You can be hands-on, making every decision, involving yourself in every detail.
“But now, we have to have all the appropriate controls in place to manage the company. We have to have the right organization, accountability, reports, metrics, all that stuff, so that it’s not just the top person running the whole thing. You need the structure and controls in place to make it all work.”
By the time Kumar took over, the CEO’s role had evolved into a global-view position. Instead of laboring in the trenches, Monoprice needed its CEO to define a vision, work with his leadership team to put goals and processes in place to achieve the vision, create metrics to measure progress against the goals, and build a team that could achieve and exceed the goals.
“My leadership style is that I am hands-on but not a micromanager,” Kumar says. “I want people who are capable of executing what I need done in each functional area. In addition to the goals and metrics, we need the right people in the right places throughout the organization.”
At its heart, Kumar’s biggest challenge has been to harness the ability to look ahead and anticipate what his company will need in the coming years.
Create a vision
Vision equals direction. Without a well-defined vision, a company is operating without a compass or a rudder. That’s a recipe for turning growth into stagnation and eventually into mere survival.
That’s why Kumar’s first job upon taking the CEO’s role was to define a vision and ensure that the vision and the reasoning behind it could be adequately explained to the Monoprice team.
“I was able to have a vision for the company coming in, since I had a lot of experience in this industry,” Kumar says. “I had a lot of experience in terms of sourcing products from Asia, getting products made rapidly. The consumer electronics business is something I’ve been in for a long time, so I had a good idea of what the vision needed to be for the type of company we are.”
Kumar’s vision was to produce products equal to or better than big-name brands in terms of quality and compete on price.
“We didn’t want to get into selling any product line if we didn’t feel we could generate at least a 30 to 70 percent advantage over the retail selling price,” he says. “That creates a certain amount of discipline as far as launching products. We don’t want to be randomly launching products.
“We want to launch products where we have a price advantage. The way we do that is we don’t sell other brands. A lot of Internet retailers are selling other brands. We don’t do that, so we are eliminating a whole layer of markup.”
By not carrying outside brands, Kumar and his team also attempted to make a statement about their belief in the quality of their products — a move made, in part, to bolster consumer confidence in the product lines.
“If we sell other brands, we’re, in effect, saying their brands are as good as ours, but they are much pricier, so why are we selling them?” Kumar says. “It’s like saying their products are a step up from ours. That is a key part of our vision: The products we make need to be as good as the famous brands. If the quality is the same but the price is lower, people aren’t going to go anywhere else.”
Related to that, Kumar incorporated a sense of focus into the vision. Monoprice would compete on price and quality but would also compete by becoming an expert retailer in a focused space, as opposed to carrying a broad spectrum of seemingly unrelated offerings.
“A lot of Internet retailers carry tons and tons of products that all seem kind of random,” he says. “It doesn’t feel like a portfolio.
“Our goal is to pick product lines that we want to be in. If we want to be in the Apple accessory area, we need to come up with the right mix of products in the portfolio. Not too many, not too few, because our goal is to become a destination for each product line that we want to be in.”
With the vision focused on those three factors, Kumar then had to roll it out to the company at large — complete with a compelling set of processes and incentives aimed at motivating people throughout the company.
Make them follow
To drive the entire company toward realization of the vision, Kumar had to give all 250 people a reason to get on board. He had to show everyone in the company how their performance related to the company’s ability to achieve its overarching goals and turn the vision into something concrete.
Kumar and his leadership team started by rolling out the vision with a companywide presentation, with an opportunity for dialogue and feedback. That planted the seed, but Kumar says the seed sprouted thanks, in large part, to the company’s bonus plan.
With a bonus plan anchored in corporate-level metrics, Kumar steered every person in the organization, regardless of department, toward the goals that would help Monoprice realize his vision.
“I think a bonus program is always tricky,” Kumar says. “Do you measure people based on department results or overall company results? Some companies go down one path and some go down the other.
“Early on, I decided our path should be aligned along one set of metrics at the corporate level. We decided to focus everyone on three metrics that drive our bonus program: sales, profit and cash flow. Some people in some functions might not be able to directly impact all three of those, but we wanted everyone thinking about all three.
“The thing I like about having the metrics at the corporate level is that everyone in the company is focused on the same thing. It’s the same bonus program whether you are a warehouse worker, customer service person, IT or even myself. It keeps everyone working in the same direction.”
The disadvantage to developing a bonus plan driven by corporate-level metrics is that some people in certain areas of the company might not feel a high level of urgency to meet the company’s goals.
To avoid coasting, Kumar and his team have devised department-level metrics. Since those metrics don’t directly impact the bonus program, Kumar relies on a culture of accountability to enforce them.
“They’re producing against those department-level metrics, they’re showing plan versus actual against those metrics, so there is a little bit of accountability and professionalism at stake when you’re executing on that plan in front of your peers,” Kumar says. “That, in and of itself, will drive a certain level of motivation.”
Find the talent
You can have a well-defined vision, and you can develop metrics and incentives that ensure people are working toward realizing that vision. But your people provide the momentum that will really power your company toward the goals you have set. Without competent employees, nothing gets done.
Kumar believes in attracting top-notch talent but not without first understanding the roles that he needs to fill. He wants talent, but he doesn’t want to simply stockpile talent for talent’s sake, without a plan for utilizing it.
“One of the key things before you go recruit people is making sure you have an understanding of what, exactly, you want from a particular role,” Kumar says. “Some folks may go out there and hire a generic person for a generic role. What I try to do is figure out exactly what I want to get from a particular role.”
Then, when you bring a candidate to the office for an interview, make sure your line of questioning aims to ascertain whether the candidate is a match for the criteria you have established.
“One of the things I like to do is get into the details of what they did at their past job and how they did it,” Kumar says. “When you look at resumes, sometimes it will say a person saved 30 percent or grew sales by $50 million, but you start digging, and they didn’t do it all themselves. They didn’t drive it. I’m looking for people who generated benefits at their previous jobs, and I want to know if they can do the same thing at this company.”
How to reach: Monoprice Inc., (877) 271-2592 or www.monoprice.com
The Kumar file
Name: Ajay Kumar
Company: Monoprice Inc.
What is the best business lesson you’ve learned?
I am a big believer that what you don’t work on is as important as what you do work on. It’s important to know when you should pass on an opportunity. In most companies, it is too easy to get bogged down on doing too many things. It is the nature of a high-performance person. You want to get things done, but you can’t do everything.
What traits or skills are essential for a business leader?
Having a vision that makes sense, creating a sense of buy-in, recruiting the right people, drive, performance, being a good two-way communicator, facilitating teamwork, and providing a coaching and mentoring approach to growth. One of the primary things people want to get out of a job is what they learn from their boss.
What is your definition of success?
For me, it is setting goals and then achieving them. That might seem very metrics-oriented, but if you don’t achieve goals, it won’t be a fun place to work. People won’t feel like the company is successful. If you set goals and don’t make them happen, you don’t get that sense of accomplishment. People start to feel like you’re wishy-washy.
Develop a strong vision.
Create buy-in on the vision.
Hire the right people.
It’s a fairly common approach when taking on a new job to talk to those people who have been there for a while to learn what the company is all about. Harold Edwards tried this approach at Limoneira Co., and he didn’t like what he was learning.
“To be pretty direct, a lot of complacency and apathy had crept their way into the organization,” says Edwards, president and CEO at the Santa Paula, Calif.-based grower and provider of lemons. “We literally had situations where the people who had worked for the company for the longest period of time were probably doing the least amount of work.”
As Edwards looked at the financial numbers, he could see that the company wasn’t really on the upswing. But it was the attitude of senior leaders at Limoneira that concerned him even more.
“Most evident when I showed up was just a lot of senior-level managers and people who had been with the organization for a long time were not only not aligned with the objectives of the organization but also were very clearly and very evidently complacent about their day-to-day duties and responsibilities,” Edwards says.
The work culture and environment had become a big problem. Edwards needed to act swiftly to get things turned around at the company, which employs 226 people and has been producing lemons since 1893.
“The area where a lot of companies go wrong is they don’t stay current with their dynamic environment and they don’t consistently go through and define those objectives and focus on the alignment or realignment of those objectives every year as the environment continues to change,” Edwards says. “That’s where many companies fall down.”
Edwards hoped his plan would keep that from happening at Limoneira.
Laying out a new course
The changes on the leadership team were first up for Edwards. They were not easy moves to make.
“There were some pretty strong and big power struggles that had bred themselves within the organization,” Edwards says.
“One of my first orders of business as I was building my senior management team was to attempt to eliminate those power struggles. I wanted to get everybody’s full commitment to the vision of the organization and the new, very decentralized structure that we were putting in place to foster better teamwork.”
Edwards made it clear that he wanted to identify new growth opportunities and assess what was working and what wasn’t working to help Limoneira function to its full potential.
“We never had the vision that maybe the way to manage the company in a better way would be to really focus in on the growth of the business,” Edwards says. “And by growth, I mean really make it our business to transition from our focus from just being a producer into becoming a supplier of lemons.
“Surround ourselves and our assets not only with our own fruit but eventually with the fruit of other growers that would allow us to take advantage of our strong brand reputation in the marketplace.”
Those who weren’t committed to pursuing this new path didn’t stick around long, which turned out to be a good thing.
“In a way, it was very emancipating and helpful for the overall organization because as some of those people who were hanging onto their turf exited, you could almost hear the overall organization breathe a big sigh of relief,” Edwards says. “It was viewed as very empowering for many of the other people who were in essence held down or oppressed by some of these former managers.”
To those who feared they might be ousted by this new leader, Edwards worked hard to get them to see that he wasn’t there to conquer Limoneira. He was there to give people the freedom to help the company grow.
“My style is not to micromanage anybody on my team,” Edwards says. “It’s really just to position myself as an enabler and a supporter and to try to see that each one of these individuals is able to have success with the objectives that they’ve laid down for themselves and their teams.”
Building communication channels
The next step for Edwards at Limoneira was not a painful one, but it was a big challenge. His goal was to have his managerial team identify the top five objectives for the entire organization.
“They weren’t financial goals,” Edwards says. “They were more specific strategic objectives. Once they were created, we methodically went through each person in the senior management team, down through the management team, down through every salaried employee and then down through the rank-and-file employees.
“When the exercise was complete, the goal was everybody in the company had their own top five objectives that if they were successful accomplishing, the organization would have the best chance of achieving its top five objectives.”
It’s obviously a lot more challenging in practice than it is on paper. You have to accept that while there may be some hiccups along the way in developing all these objectives, they will lead you to a better outcome if you stay disciplined with the process.
“It really takes a commitment,” Edwards says. “Not all organizations are able to embrace that. There is a downside to innovation. There’s a downside to being really entrepreneurial and, in this case, intrepreneurial. It can be very disruptive. But if you’re willing to embrace some choppiness and disruption to do things better, it will work.”
With everyone committed to pursuing new growth opportunities, Edwards says the past five years have provided a consistent flow of new ideas from employees who previously weren’t involved in such talks.
“We have laid down very specific and very measurable growth targets that have really helped us smooth out the cyclicality and volatility of our business,” Edwards says.
“It’s also gotten all the employees who are involved in this part of our business very specifically focused on what their role and responsibility is. We can determine if we were successful or not. That is a specific objective that really has helped us transition the company and helped us grow.”
Edwards says it’s a message he repeats over and over again that great ideas at Limoneira do not have to begin in his office.
“Encourage people to think outside the box and come up with ideas about how to streamline efficiencies and how to get things done in a more efficient way,” he says. “Don’t just assume or accept that there is only one way to do things.”
Stick to it
When you think you’ve finally driven home the idea that you want employees to feel empowered to share their ideas, you need to resist the urge to stop talking about it.
“Part of the performance management program has a quarterly evaluation process that makes each employee better connected with a greater sense of consistent purpose with his or her manager,” Edwards says. “That allows them to do a better job of determining when an employee is getting it done and when they aren’t.”
Most employees want to make their supervisors and managers proud and want to do their part to help the business. But you have to maintain the dialogue and keep talking about it to make it work.
“The skill of the manager is to make sure that the things that aren’t going to be good objectives and goals, that those aren’t implemented,” Edwards says. “The ones that will really drive the organization forward are used.”
The discipline is not just a means to keep employees on task. It’s to help keep you and your management team on task as well.
“It’s very easy to see if we didn’t stay vigilant and diligent on quarterly evaluation and the communication of those evaluations, that it could very easily become just another thing that the organization was doing and the whole purpose would really be lost,” Edwards says.
One of the final pieces of the transformation at Limoneira has been to make sure the board of directors and company leaders understand the difference between management and governance.
“Part of the board’s responsibility in good governance is to help define and lay out good strategy for the organization as it moves forward,” Edwards says. “What had happened was the board had begun to get involved in personnel decisions. It had actually started micromanaging certain managerial posts sort of at the expense of the authority of the CEO of the company.”
Edwards shared his thoughts that the board needed to focus on strategy and let leaders like himself deal with day-to-day operations.
“By getting the board back to being a part of the governance structure and the management team really focusing in on the management of the company and keeping those roles and responsibilities separate and distinct and very disciplined, we’ve allowed both to operate at excellent levels that have really pushed the company forward,” Edwards says.
The result is a business that has grown consistently, with revenue leaping from $52.5 million in 2011 to $65.8 million in 2012.
“It’s much clearer the level of collaboration and teamwork that is necessary in order for all the employees to be successful,” Edwards says. “It’s forced people to play their roles and responsibilities more in concert as a team rather than as individuals. It’s that new alignment and fostering of teamwork that really set the company in motion.”
How to reach: Limoneira Co., (805) 525-5541 or www.limoneira.com
The Edwards File
Name: Harold Edwards
Title: President and CEO
Company: Limoneira Co.
Born: San Francisco
Education: Undergraduate degree in international affairs, Lewis and Clark College, Portland, Ore.; MBA in global management, Thunderbird School of Global Management, Glendale, Ariz.
What was your very first job?
Working on a ranch in Santa Paula. It was physical labor. I was hewing weeds, chopping suckers off trees or laying down mulch and fertilizer. I’m five generations deep in one of six families that represent the largest shareholders of this company. I grew up on one of the ranches that is one of different 15 ranches that the company manages.
What do you enjoy about the work?
I’ve sort of committed myself to making the world my canvas and taking opportunities to be living in a global world that produces and distributes product all over the world. The part of my job that gives me the greatest level of satisfaction is to, in a very small way, play a part in feeding the hungry world.
Why do Europeans consume so many more lemons than the United States?
You correlate it with obesity and the quality of our diets here versus the diets in other parts of the world. Then you look at life expectancy and health and you start to see some trends that are very compelling. If we were just to reach parity with Europe in terms of their lemon consumption, we don’t grow enough lemons here in the United States to accomplish that today. So we spend a lot of time trying to convince people to use lemons in their everyday lives here in the United States. So far we’re starting to see the results of a lot of these efforts take place.
Be clear about your intentions.
Build channels to communicate.
Stay disciplined with your plan.
It wasn’t your typical corporate relocation when Cartridge World Inc. moved its North American headquarters from California to Illinois in 2011.
For starters, most of the employees who had worked at the Emeryville, Calif., headquarters were not making the trip to the new offices in Spring Grove, Ill.
“Institutional knowledge disappeared if it wasn’t retained in the system,” says William D. Swanson, CFO of the global ink and toner printer cartridge retailer and CEO of North American operations.
“Even then, it might be in the system, but it’s not in the minds, hearts and thoughts of the people coming on board. So that was interesting. It was one of the most difficult challenges to overcome when we came here.”
It was difficult, but it was a challenge that Swanson and the leadership team at Cartridge World felt needed to be tackled. The company had slumped during the recession and found itself struggling to get back on its game.
“We ended up in a situation where as a company, we had significantly more expenses than were sustainable based upon our revenue stream,” Swanson says. “So it was really taking a company that was stuck and creating negative cash flow and then creating positive cash flow and, more importantly, value for its constituents.”
Making the situation even more interesting for Swanson was the fact that he, too, was new to Cartridge World, which is owned by Wolseley Private Equity in Australia. He joined the company in May 2011 as global CFO and didn’t become North American CEO until July 2012.
So the task was rather daunting.
Swanson needed to get himself up to speed with what the company was all about while at the same time, he worked to integrate new employees into a new culture in its new home that would enable the company to generate better financial results. He also had to engage franchisees at the company’s 650 stores across North America. The company has about 2,275 store employees in North America and 50 corporate employees.
Fortunately, Swanson brought a lot of confidence to this seemingly difficult mission.
“If you have good, compelling arguments and a good, solid vision that people can buy in to and understand, you get people to move forward in that direction,” Swanson says.
Build your team
The move to Illinois wasn’t just about rejuvenating the business. It would put Cartridge World in a more central location with which to work with its franchisees since two-thirds of its U.S. locations were east of the Mississippi River. It would also provide closer proximity to the company’s technology partner.
But those are physical details. The act of building a new culture from the ground up that would help the company start growing again wasn’t going to be as easy.
“You don’t know what you don’t know,” Swanson says. “That can be a very difficult place if you’re going down fat, drunk and stupid and you don’t know where you’re going. Any road will take you there. You better get clarity and you better help the new team understand that clarity.”
Swanson looks for three things to help determine if someone can be a strong member of his team.
“First of all, I make sure everybody has a consistent view of what success looks like,” he says. “Where are we trying to go? What does success look like both tangibly and intangibly? Paint that picture. Create specific numbers and reinforce that. Ask them to repeat it so that I can gauge their understanding.”
The next is one-on-one time with the person talking about his or her place in the company.
“I have a formal one-on-one session with my direct reports on a weekly basis, but informally, we meet and chat in the morning or sometimes we’ll be here late,” Swanson says. “It really is making sure I can gauge how they view their responsibilities, the tasks they are working on and the judgment they are exercising as they make decisions and take action.”
Finally, Swanson wants to know what kind of initiative they have to get things done and make things happen.
“Some people might see opportunities and others wait for those opportunities to be pointed out to them,” Swanson says. “Some take action and some wait for action to be assigned. When we have a company where staff has been reduced by 50 percent, I need people who can take an initiative and exercise good judgment moving in the direction that we need to move in.”
The goal is exactly the opposite of creating drones who will follow his every word. He wants people who see success the way he does and have the desire and energy to achieve it. But he has no problem if they have a different way of making it happen.
“They are more likely to achieve success when they get to choose the path that they are going to go down, as long as it’s consistent with the vision, and I know they can exercise good judgment,” Swanson says. “If they try to go down my path, they are not going to completely understand it, and they’re probably never going to do it exactly like me, so I’m not going to be thrilled by it.”
As important as it was to get his leadership team on board with his plan, Swanson very much needed to have a good relationship with his franchisees if Cartridge World was to succeed.
The key to a good relationship with any group of people is to be respected.
“When you’re dealing with franchisees, what you have to know is a lot of them put up their life savings to be in this, and they’ve committed their financial resources to the success of the business,” Swanson says. “That has to be understood. They have to know that you respect them and what they’re doing and how they are going about it.”
You owe it to them to listen to what they have to say when they have opinions about how the business should be run.
“It doesn’t mean I’m going to agree with them,” Swanson says. “I may, I may not. If I disagree, I’ll present it in a way that maintains their esteem and doesn’t put them down but rather presents another issue. I like to think of it as though we’re all businesspeople around the table. The issue is on the table; it’s not with any of us around the table.”
When you establish that foundation of respect, you can then move more easily into addressing some of the things that may be holding your business back.
“If you see things that are happening in the business that aren’t consistent with what it is you as a business are trying to accomplish, then you have to say, ‘Why are we doing these things?’” Swanson says. “What might seem like a good idea in the short term because maybe you had some high-priced consultants or you had something that convinced you as a company that this is the direction you want to go in, maybe it just wasn’t a well-thought-out idea. Those things happen. They happen everywhere.”
When you jump right into a decision without gaining the understanding of what your people are seeing and experiencing and any other pertinent variables, you run the risk of making a big mistake.
“Stephen Covey said it in one of his seven habits,” Swanson says. “‘Seek first to understand before being understood.’ I’m not sure all leaders do that. It can be a struggle to not jump in and say, ‘No, do it this way.’ Now certainly, if you’re going off a cliff, you’re going to stop that from happening.”
Cartridge World was struggling, but it wasn’t going off any cliffs. So Swanson took the patient approach.
“It’s constantly learning and taking a look at what you did yesterday,” Swanson says. “What went well and what didn’t go well? What did we learn from it? How do we take yesterday’s or today’s experiences and use that to shape what we’re going to do tomorrow?”
One thing Swanson does not do as he is guiding the company is step on the toes of people who hold leadership positions at Cartridge World.
“I have an open door, and if anyone ever wants to talk to me, they’re always welcome to talk to me,” Swanson says. “But I’m not going to go around my leadership team if I don’t need to. I respect them and what they’re doing.”
The results of recent changes have begun to pay off. With a redefined sense of roles and responsibilities, the company is back on a growth trajectory. In 2012, it launched Cartridge World Express, a mobile business that offers more than 400 ink and toner products for every major brand of printer, copier, fax and postage machine. It also expands the company’s mission of recycling to keep printer cartridges out of landfills.
“You have to be firmly committed to the direction you’re going and why you’re going in this direction and you can’t be short on communicating the vision and direction and the reasons why decisions were made,” Swanson says. “That has served us well.” ?
How to reach: Cartridge World Inc., (815) 321-4400 or www.cartridgeworld.com
The Swanson File
Name: Bill Swanson,
Title: CEO, North America
Company: Cartridge World Inc.
Education: Bachelor’s degree, accounting and business administration; CPA, Augustana College, Rock Island, Ill. I’m also certified in cash management.
What was your very first job as a kid?
My first job was caddying. I went to the golf course and the caddy master said, ‘Well you’re a little too small. Why don’t you come back next year?’ I came back the next week. He said, ‘Weren’t you here before?’ I said, ‘Yeah, I was. You told me I was too short. But I think I can do it, and I’d like the opportunity to show you.’ So I did and I was able to caddy for a couple years before I turned 16 and could get a real job.
Who has been your biggest influence?
I was in public accounting and then I left and worked in private industry for three brothers for around 20 years. One of the brothers, Arnold Miller, was just fantastic. That’s where I developed the way I think about business, running a business and the values that I have that are very important to me.
Who would like to meet and why?
Warren Buffett or Sam Walton; both of them for their purity in running a business and saying, ‘What is it we’re trying to accomplish? Keep all the self-serving stuff out of the way.’ Both of them are very successful in understanding what it is they are trying to accomplish and then to be able to do it by focusing on the fundamentals that it takes to get done. Not on wishes, not chasing rainbows, but truly understanding the fundamentals of what it is you’re trying to do. Work utilizing those fundamentals. If you do that, good things will happen.
Know what you’ve got.
Always show respect.
Never stop learning.
It would have been easy to hold off on salary raises just a little longer and wait for a clearer sign that the economy had turned a corner.
But Joe McKee and Keith Wolkoff were unwilling to wait. They believed that their employees had worked hard to help Paric Corp. through the recession, and they deserved to be recognized for it.
“The questions do get asked,” says Wolkoff, president at the 234-employee design-build firm. “Is it prudent? Or should we continue to invest in the business? We asked a lot of our people during the very difficult times. It’s just as important to reward those people when you’re starting to see a little more fluidity in the marketplace. It’s the right thing to do.”
The decision was based on the leadership team’s commitment over the past two years to a long-term view and a belief that you can’t let fear guide your decisions, says McKee, Paric’s CEO.
“When you have a crisis, you can circle the wagons or you can choose to move forward,” McKee says. “Most of the times I know when people have circled the wagons; it hasn’t really worked out well for them. Our attitude was to keep moving and be nimble and quick.”
Both leaders wanted to focus on the core things that Paric did well, believing that those skills would be desired by customers even in a tough economy. As they developed a strategy to maximize those qualities and began to see the potential become reality, it became an easy decision to reward the team.
“It was a very painful period in the industry,” Wolkoff says. “But as odd as it is to say, we’re a lot stronger for having gone through it.”
The numbers reflect that assessment. Paric’s revenue grew from $200 million in 2010 to $240 million in 2012. Here’s a look at how the company bounced back so strongly from the recession.
Recalibrate your position
The path to Paric’s better future began with a blunt assessment of what the recession had done to the economy.
“What many people try to do in that environment is to get up and ignore the reality of what’s happening around them, and they don’t speak frankly,” McKee says. “It’s a little bit like what happens when a dog senses your fear. You lose all credibility and bad things happen. So it starts by being brutally honest and by making tough decisions.”
McKee and Wolkoff didn’t hold back in talking about the difficulties the company was facing. They also talked about those opportunities that they believed they could take advantage of. The key is they talked and kept talking to their teams whether the news was good or bad.
“In the absence of us communicating what actions we were taking and how we were addressing the economy, people were going to come to their own conclusions,” Wolkoff says. “We just refused to allow that. We were meeting if not every six weeks, then every eight weeks to give everybody a debrief on, ‘Here’s where we’re headed, here’s what we see and here’s what we’re doing about it.’
“Maybe all the information wasn’t pleasant. But at least everybody knew what was going on. There wasn’t all that chatter that can just be counterproductive.”
The crux of the new plan was to focus on the strengths and stop doing the things that weren’t making the company any money.
“When you have limited resources, there are some things you’ve always done because that’s the way you did it,” McKee says. “You need to figure out what those things are and quit doing them. What do we need to work on to move the organization forward?”
Preconstruction services were going to be a big part of Paric’s offerings to customers. Another was going to be the core markets that the company worked in, such as historic renovation, urban development, senior living and interior construction.
“We don’t service everybody,” Wolkoff says. “We go where we can bring value to our customers. Even in bad times, that’s going to prevail.
“It took a little bit of reinforcing from leadership to say, ‘Let’s hunker down, let’s pick our spots, let’s be smart, and let’s continue to invest, and we’ll be fine when we come out the other end.’ Are you going to cover 10 opportunities with your limited resources or are you going to cover three opportunities and increase your hit rate?”
McKee says you go with the three.
“You get two out of those three versus focusing on 10 and you only get two,” McKee says.
Know who you are
In working through the plan and defining what set Paric apart from the competition, Wolkoff says the company’s leadership unearthed a problem that they felt needed to be addressed.
“We started to ask ourselves, how do we define our business as it looked at that point in time,” Wolkoff says. “While we all had great things to say about ourselves, none of us were telling the story exactly the same way. And it really caused us to question, ‘Well, if we’re having that much trouble defining who we are, what are our customers saying?’”
It was with that thought in mind that Paric’s leadership team set out to interview customers, vendors and employees. The goal was to hit on a theme that would accurately and clearly define what the company is all about.
“In everything we do, every opportunity we have to touch each other, at a meeting, even if it’s an outside social event, there needs to be a consistent theme in how we talk to each other,” Wolkoff says. “Every company meeting we have, it has to be the central talking point over and over again.”
After talking to people at all these levels, the theme they arrived at was “Experience Excellence.”
“It doesn’t mean we’re perfect, but we strive for perfection, and that’s the piece we hit on,” Wolkoff says. “At every station we touch, whether it’s a client, vendor or internal employee, we have to strive for that perfection and that excellence.”
When money is tight with customers, the key to making a sale can be the perceived extra value that the customers believe they are getting with your business.
“You could say on the one hand that a building project is a very daunting task,” Wolkoff says. “But it shouldn’t be. If you have the right partner, it should be something that is exciting. It’s changing your organization. So we have to make sure that everybody who touches it from our end makes it the most satisfying experience it can be.”
The goal was to take these words that could easily become a cliché or something that is forgotten soon after it is brought up and embed it into the company’s culture.
McKee compares it to a quote he remembers from retired Denver Broncos quarterback and NFL Hall of Famer John Elway.
“He said on a Super Bowl winning team, they hold each other accountable,” McKee says. “If the guy next to you wasn’t doing his job, the guy to the right of him would say, ‘You better get with it and do your job.’ The coaches weren’t telling him. The players were doing that. We work really hard to try to create that kind of culture with people to where it’s a real team environment.”
When you’re just trying to get a motto or slogan like that to sink in, you can just ask the question.
“With a younger person, you might say, ‘What have you done today to create experience excellence?’” McKee says. “They’ll look at you the first couple of times like you have two heads. But after a while, they’ll begin to understand what you’re getting at. It’s about that discipline to do it right every day.”
One of the things that Paric began during its battle through the recession and has continued to this day is a weekly senior leadership team meeting. It consists of five people: Wolkoff, McKee, the company’s CFO and the senior vice presidents of sales and operations.
“That’s the one meeting that doesn’t get moved off people’s calendars,” Wolkoff says. “It’s the most important meeting we have in a given week.”
The challenging of opinions and belief is not only accepted, it’s encouraged, says Wolkoff.
“There are five people sitting in that room and if one of the five is not voicing an opinion and challenging something, you need to consider, ‘Do they need to be in the room?’” he says. “We’ve been fortunate that there are five very strong leaders in the room.”
The idea isn’t to create tension but to make sure every angle is being explored so the company can make an informed decision. Once the meeting is over, the conflict, if there is any left, must stay in the room.
“Once we leave the room, we’re unified,” Wolkoff says.
McKee says the elimination of secrets and unspoken concerns is one of the keys to success in any business.
“If you’re going to lose, lose doing the things you think you need to do rather than getting to the end and thinking, ‘I wish I would have done that,’” McKee says. ?
How to reach: Paric Corp., (800) 500-4320 or www.paric.com
The McKee and Wolkoff Files
Joe McKee, CEO, Paric Corp.
Born: St. Louis
Education: Bachelor of science degree, civil and environmental engineering from Vanderbilt University; MBA, Washington University, St. Louis.
Did you think about becoming a CEO some day?
I always knew I wanted to build, so that much I knew. But I’ve succeeded well beyond my wildest dreams. I was the kid who designed the clubhouse and treehouse and built go-carts. That’s what I love doing, besides hunting.
Who has been your biggest influence?
It starts with good parents. My parents were absolutely amazing. After that, Rick Jordan helped me a great deal and the current chair of our board, Larry Young. They are both on our board and have been good mentors to me through the years.
Keith Wolkoff, president, Paric Corp.
Born: St. Charles, Mo.
Education: Bachelor’s degree in architecture, Washington University, St. Louis.
Did you think about becoming a company president some day?
No way; it was the furthest thing from my thoughts. I thought more in the now and whatever I was doing, I wanted to do it to the best of my ability. When I saw an opportunity, I had the mindset that I’d rather try and fail than not try at all. By some good luck and some hard work, I find myself where I am today.
Who has been your biggest influence?
Very early on I had an English teacher. Maybe my spelling wasn’t always the best, maybe my attention wasn’t always the best, but I was always a good writer, and I enjoyed it. That particular teacher focused on what I was good at and that empowered me to excel in other areas.
Don’t sugarcoat your problems.
Know what you stand for.
Keep looking to do it better.
Twenty-five years ago, Fred Potthoff and his partner took out a $300,000 line of credit to start their own company. Potthoff backed his half by putting up his house and his retirement savings, and from that moment, it was a race against time to see if he and his partner could sell enough before running out of money.
Fast forward to today, and the company they started, Kroff Inc., a leading water and wastewater treatment and recycling services company, has more than 80 employees, eight different businesses under the Kroff name and annual revenue of more than $50 million. Potthoff’s entrepreneurial gamble paid off, and today, he isn’t stressed about making enough money to survive but rather about finding the right talent to keep the company at the top of its game.
“We are a bottom-up run organization, and we go by the philosophy of hiring bright, creative, entrepreneurial people and giving them the right tools. Then we get out of their way to let them flourish,” Potthoff says.
Even with the company’s eight different businesses, Potthoff has remained an integral part of its hiring process and ensuring that great talent enters the company.
“Some people are surprised when they talk to me first, second or third in the organization as one of the original owners,” Potthoff says. “I tell them, ‘This is the single most important thing that I do in the course of my workweek or month.’”
Since Kroff’s inception in 1988, the company has experienced an average of 24 percent growth every year. The attention to his company’s hiring process, which he calls motivational fit, is what Potthoff focuses on to make sure Kroff Inc. will continue to grow.
Here is how Potthoff hires the best available talent.
Find the best fit
Kroff Inc. has seen some incredible growth over the years and that success is a direct result of the people Potthoff has been able to hire. In fact, each of the organization’s eight businesses started with ideas from sales associates.
“Aside from the original company, my partner and I didn’t come up with any of the other ideas,” Potthoff says. “It was people in our organization coming to us and us listening to them and running with that idea.”
When Potthoff interviews candidates, he is interested in trying to spark that kind of enthusiasm and interest in the company.
“It doesn’t mean that everybody who comes here is going to run their own company, but it’s part of our culture,” he says. “People who fit in well here think that way and look for opportunities. When we interview, the key is looking for that kind of person, so we’ve all been trained in behavioral interviewing and that’s an important component of trying to identify the right person.”
Behavioral interviewing is a key component at Kroff because when the company was first started, Potthoff put a lot of stock into resumes and conventional interviewing. While resumes can provide wonderful statistics about how much somebody sold or how many new accounts they created and a lot of facts and figures, they aren’t as effective at finding the best fit as behavioral interviewing.
“In behavioral interviewing, you get into specific examples and you try to drill down and mine for a number of examples where they’ve shown an attribute in the past,” Potthoff says. “If they say they have an entrepreneurial bent, you say, ‘Give me an example of when you demonstrated this in your past job.’
“Whatever the attribute is, we want specific examples where they’ve done it before and they can tell us a clear story about why they have that talent and where they manifested it.
“It’s a more difficult interview process because often they have to think and dig down to find an example, but that’s what you want. Then you know you’re getting the right person if they can give you a lot of examples where they have demonstrated this capability before.”
While this technique of interviewing has resulted in strong employees for Kroff, it isn’t without its drawbacks.
“Behavioral interviewing is a challenge; you have to sit and wait sometimes for the person to think of examples because you want them to give you very specific, very concrete examples,” he says. “So the interviewing process takes a little patience whenever the candidate is in front of you.”
In Kroff’s case, the company hires a lot of sales engineers, and one of the first challenges is finding an outstanding chemical engineer who wants to have a career in sales.
“Sometimes it’s mixing oil and water, and we’re often looking for personality attributes that aren’t in one person,” he says.
Another challenge is where to find the best talent. The best candidates may be the passive candidates, not the ones shopping their resume around.
“They are the ones who are successful who are doing a great job wherever they are,” Potthoff says. “To try to get their attention sometimes is difficult.”
The third thing Kroff does to find good talent is to check references or see if someone has worked with that person before.
“If you depend on the interview process and the resume, it’s more of a crapshoot,” he says. “If you can find somebody in your organization or get references from reliable people who have worked with the person, then your chance of having success with that person is greater.”
To overcome these challenges and have help in the search process for talented employees, Kroff often utilizes the services of recruiters.
“We’ve picked two or three that we work with and we bring them in to our office and try to educate them to make sure they understand exactly what we’re looking for, because when you’re dealing with recruiters, they’ll often throw resumes at you in hopes you’re going to hire somebody,” he says.
“It is important to invest some time with the recruiter and say, ‘This is exactly what we’re looking for, and don’t send us anybody else.’”
Translate talent into success
While a company’s success can benefit greatly from its products or services, Potthoff believes his hiring techniques and the talent he has been able to bring in are the true difference makers.
“You can have the best products in the world and you can have the best computer software and order entry, but it really comes down to quality people,” Potthoff says. “The key component of our success is that we’ve been very fortunate for the most part in hiring great people.”
Another key component of Kroff’s success has been that Potthoff has done a good job of listening to ideas.
“It’s one thing to give lip service to somebody, but if somebody comes to you with a good, creative idea, you can’t summarily dismiss it because maybe you tried it before or it seems a little harebrained,” he says. “You have to be willing to listen and trust the people, and if you think it’s a great idea, be willing to move and invest in it. When you do that, the culture responds to it.”
A lack of listening is one of the biggest mistakes many companies make.
“I don’t think many companies listen well enough to the people in the field who have their fingers on the pulse,” Potthoff says. “If you’ve hired the right people, they’re closer to the action and the opportunities than somebody sitting up in a corporate office somewhere.
“I’ve seen it in the past where some vice president comes up with an idea about what market the company should go after. It may be a brilliant idea, but oftentimes, it’s not. I think you are better served by getting intelligent, creative people and listening to them when they come to you with a market opportunity, because they’re in a better position in a lot of ways to see opportunities.”
To incorporate this kind of thinking into your organization you have to make the behavior part of your company’s culture.
“View company meetings and company culture as a meritocracy, which is the way we look at it,” he says. “In other words, if we are in a manager’s meeting, I set the tone for the meeting. It’s not myself and my business partner pontificating about where the company is headed and what we’re going to do.
“When you present ideas, everybody has to chime in with what they think the best idea is, and we will hash it out here and the best idea will rise to the top.”
This mentality is an easy thing to say, but it’s a hard thing to accept because you have to set your ego aside and listen to comments and criticism.
“That’s where some entrepreneurs and business owners go array because they are so vested in the company,” Potthoff says. “The way they got the company off the ground is the right way to do it, and it’s hard for them sometimes to hear somebody criticize it. It is vital to stay vibrant and alive, so you have to listen to the new people that you bring in.” ?
How to reach: Kroff Inc., (412) 321-9800 or www.kroff.com
Be involved in the hiring process.
Utilize resources to help you find the best talent.
Once you have the talent use it to grow your business.
The Potthoff File
Co-founder and co-owner
Born: Latrobe, Pa.
Education: He attended Shippensburg University and got a bachelor of science degree in business.
What was your very first job?
I was a lifeguard in the town of Latrobe. It was a great summer job.
What is some business advice you would give to others?
The bulk of my time in business has been in specialty chemical sales … and if you graphed how much time I spend listening and how much time I spend talking, I probably listen 75 percent of the time and talk 25 percent of the time. For anybody in business, that is a good ratio. You can learn a lot more and get a lot more accomplished if you use that ratio to build your business and career.
Who do you admire in business?
If you could have a conversation with someone from the past or present, who would you want to speak with?
I’m a history buff, so there are a lot of people that I’ve read about over the years that I’m intrigued with. Out of the Founding Fathers, I think the most fascinating person to speak with would be Thomas Jefferson. I think he is one of the most brilliant people that I have ever read about, and how fortunate we were to have him as one of the founding fathers.
What are you looking forward to in the future of your business?
What excites me now and what motivates me is watching people underneath me do well personally and professionally.
It could be a deal. It could be a business strategy. It could even be a house. Whatever the project, Joe Nettemeyer is all about making it bigger, better and more successful.
“I had a boss tell me once that I was not a person that he would put into a business to sustain it,” says Nettemeyer, CEO of Valin Corp. “He’d always put me into something that he wanted to build because I couldn’t help but start trying to re-engineer anything I wanted to get my hands on. Building something is an ongoing challenge, but the results give you a huge amount of satisfaction.”
A builder was exactly what Valin Corp. needed when Nettemeyer joined the industrial solutions business in 2001. Despite years of great success in the semiconductor capital equipment business, Valin has been a fast casualty of the computer-chip industry downturn. With a whopping 90 percent of its revenue coming from chip manufacturing, the company’s revenue plummeted by two-thirds in six months.
“Everything crashed, equipment owners crashed, and we went from being a $75 million business to a $25 million business in about 120 days,” Nettemeyer says. “We didn’t lose market share; it’s just that the slides of the market opportunity dramatically contracted.”
As Valin’s new CEO, Nettemeyer realized the 38-year-old chip manufacturer had two options: Continue in the same direction and fall apart or rebuild as a much more diverse business. Here’s how he transformed the floundering company into one of the nation’s fastest-growing businesses.
Shake off complacency
With such a large percentage of Valin’s income tied to shrinking revenue streams, Nettemeyer looked for ways to create new sources of income — and quickly. Acquisitions would allow the company to efficiently diversify its portfolio and grow new business lines.
“When I came in, I realized that we had such a great dependency on too few accounts,” Nettemeyer says. “It was such a huge risk. We had to move into acquisitions. So right in the midst of that turmoil I went out and started borrowing money and buying businesses.”
Not everyone was as excited as Nettemeyer about diversification.
“Experimentation brings rewards and risks that make people uncomfortable,” Nettemeyer says.
“It was challenging for people because they were in a comfort zone. They’d done extraordinarily well for 20 years doing what they were doing, and we were pushing them outside of it.”
In the past, Valin focused on small diameter process management, working with quarter-inch or half-inch tubing. Suddenly, the company was working with up to 60-inch pipe.
Recognizing that he was asking people to make some big changes, Nettemeyer made sure that he and the leadership team were transparent and thorough when they laid out the acquisition strategy to employees.
“I walked the management team through a plan, and we talked about how we could integrate these different technologies and provide solutions versus just selling parts and pieces,” he says.
“There was a lot of communication. I selected all the individuals that I felt were key leaders and we had monthly leadership meetings. We reviewed where we were at, and we had an open book approach to financials. We were measuring the initiatives that we were undertaking. Through that 24-month real crucial period, we were giving monthly feedback.”
Employees appreciated the fact that Nettemeyer didn’t sugarcoat the changes.
“I wasn’t going to pretend that this would all pass,” he says. “There was a core group that really came together and embraced what we had to do.”
At that point, employees who still wanted to take a “wait and see” approach to the market — including two members of Nettemeyer’s leadership team — were asked to go their separate ways.
“I think it’s my responsibility to the company to leave it a better company than it was when I came here,” he says. “That means we’ve got to get out in front. That gives you some heartache and pain. It gives you sleepless nights and scary moments. You have to celebrate the successes, but you also have to say, ‘That was really a dumb idea — let’s stop it.’
“I had to replace some of the management team because they wanted to sit and wait. They thought that the semiconductor industry was going to continue what it always did — it was only in a short-term contraction. Well, that contraction lasted for three years.”
Soon after making Valin’s first acquisition in October 2001, Nettemeyer began buying businesses and product streams that were within the company’s technical bandwidth and that could provide it a competitive advantage. Some acquisitions were a natural expansion of things that the company already did, such as safety devices. Others helped flesh out Valin’s expertise to transform it from a parts provider into a resource for customers.
“We have to find new ways to do things because if you’re going to stand pat, you’re going to get slowly sliced up in the marketplace,” Nettemeyer says. “The biggest struggle we face is the fight against the complacency you get with maintaining the status quo.
“Every year in our planning process, we say, ‘Is this the way that people are going to want to do business with us 10 years from now?’ When you ask that question, everybody says no, and then the next question is, ‘Well, what should we be doing about it?’”
Valin has completed 28 acquisitions since Nettemeyer joined the company 12 years ago, building on technology, and moving more aggressively into light manufacturing, medical devices and service lines. Instead of chip manufacturing, Valin’s biggest markets are now energy, oil and gas. The diversification strategy has allowed the San Jose, Calif.-based company to more than double its size and value over the last five years.
One of the reasons that Valin has been able to integrate so many new businesses so effectively is by having a clearly defined integration process that provides ongoing support.
“The smallest business we’ve bought had $500,000 in revenue,” Nettemeyer says. “The largest we’ve bought had $25 million in revenue. I’d say we spend most of our time buying businesses in the $3 million to $20 million range. We just have to make sure that we take them on at a pace that’s digestible.”
Valin’s integration process goes like this: After purchasing a business, the company converts the business’s IT systems in one weekend. Next, Nettemeyer brings in a team for one week to teach employees how to navigate and enter information into its ERP system. After the tech teams leave, an expert is assigned to stay and work with the business over the following months.
“You teach people, but they forget how to do that and how to make connections,” Nettemeyer says. “We have an embedded expert there for 60 days because we find that’s about how long it takes to get people comfortable with it.
“Then after that we have a call desk that they can call at any time, and they continue to have technical support. It’s getting them integrated into our system quickly that gives us good control over our assets, inventory receivables and cash flow. We’re excellent at doing that.”
Invest in education
While contracting revenue forced Valin to shrink its employee base to 45 employees in 2001, acquisitions enabled it to transition into a variety of new markets. By 2011, chip manufacturing — previously the company’s bread and butter — accounted for just 25 percent of the company’s $150 million revenue. This growth also meant Nettemeyer could begin hiring again, adding employees to expand the company’s businesses across the country.
However, there were some challenges stemming from Valin’s diverse and growing footprint.
On one hand, Nettemeyer and his team — like many manufacturing companies in the U.S. — have had to deal with a dwindling talent pool, specifically, the lack of highly qualified engineering talent in the market. Taking advantage of new business opportunities requires a well-trained work force with the sophisticated skills.
To attract and retain talented people, Nettemeyer has worked to create fellowships with IBM, Texas A&M School of Engineering and The Ohio State University to open opportunities for employees at Valin. Each year, for example, the company sends two promising managers to participate in the Texas A&M School of Engineering master’s program in industrial distribution so that they can learn critical skills to drive the business forward.
“Part of our educational effort is we’re monetizing education and teaching engineers how they can run their facilities more efficiently and prevent downtimes — a huge expense,” Nettemeyer says. “They are more likely to be thought leaders, and you get thought leadership through education.”
Investing in education, both formal and informal, also helps you provide a framework that enables employees to come together and be successful. Having employees aligned behind common goals and a common vision has been critical in a culture that gives Valin a competitive advantage.
“If I have five presenters going around trying to teach something, they are all going to teach it differently,” Nettemeyer says. “We wanted to get uniformity in the message. We wanted to make sure that we’re highlighting the things that we think are important.
“If you don’t do that, people on their own will spend their time managing their own basket and not managing to the goals and objectives that we have to achieve.”
Today, Nettemeyer and his leadership team spend much more time visiting with managers to talk about their priorities and responsibilities as owners. Being a 100 percent ESOP business, it’s important for Valin to have a consistent message about what ownership is and the responsibilities owner have to suppliers, shareholders and customers. Three years ago, the company also hired a doctorate in education employee to develop online training modules that give Valin’s 240 employees in nine states and 15 locations a common process and common approach to management and establishing priorities.
“The education component is critically important for us,” Nettemeyer says. “You buy different companies, and they all have their different approach. Everybody thinks that their way is better. What we have to strive for is being consistent. Being consistent means that people have to have a repeatable positive experience when they interact with our company, and we see training as a huge part of that.” ?
How to reach: Valin Corp., (800) 774-5630 or
The Nettemeyer File
Born: St. Louis
Education: St. Louis University
What is one part of your daily routine that you wouldn’t change?
I get up at 6 a.m. every morning and read for about an hour and a half, usually something that pertains to work. I have a responsibility to the organization as CEO to stay current with contemporary business. Most of the material I read is focused on economics, insights on how to make better decisions and improve the business or how to sustain our business for the long term.
What do you do to regroup on a tough day?
After a tough day, I like to go home and have dinner with wife of 36 years, talk about our family — four children and three grandchildren — because they are the cornerstone of my life.
What is the toughest business decision you made recently?
I’m making tough business decisions every day, whether it’s the decision to make an acquisition or walk away from an opportunity. These decisions are the challenge of a healthy struggle. If you think it’s easy, you are missing something.
What do you like most about your job?
We’re pushing the envelope. Organizationally, we’ve committed ourselves to being students of our industry … I find that intellectual stimulation to be really gratifying.
How do you find good people?
I remember Ross Perot when he wrote his book, he said, ‘Eagles don’t flock together. You have to go find them one at a time.’ You have to find the people, and you’ve got to have people that have passion and commitment and want to accomplish bigger things. They want to be part of something that they have major accomplishments … you have to be looking all the time for people with that profile.
“We’re in that generation that is now caring for our parents,” says Gilmartin, president and CEO of Sunrise, Fla.-based Interim HealthCare Inc., the nation’s oldest health care franchisor. “And I see the technology driving a lot of care that will be. You’ve got this whole surge of baby boomers that are going to demand more [health] care at home…They’re going to be driving a lot of policy and insurers by being incented and motivated to do more care at home.”
Health care can now be delivered in the home easier than ever before, thanks to advancing technology and a growing demand for health care services. But the rise in the demand for home health care also places significant pressure on home care providers such as Interim HealthCare, which must continually adapt on both fronts in order to stay competitive and effectively serve a new generation of clients with diverse needs.
“The challenge over the last four years is the speed of change,” Gilmartin says. “We’re in an industry that is changing very quickly — home care, personal care, hospice and health care staffing. Pick one. There have certainly been changes in any one of those areas of our business.
“It puts a lot more on providers to accelerate what they’re doing. It isn’t a time to say, ‘We’re just fine the way we are.’ It’s going to be a case of, ‘We’ve got to do more and probably do it at a faster clip.’”
Since rejoining Interim HealthCare in 2008 — she first left the company when split off from a larger health care entity in 1997 — Gilmartin has worked on positioning the company and its network of 300 franchised locations in 43 states at the forefront of the home care evolution. Here’s how she is doing it.
Avoid ‘vision creep’
When Gilmartin came on as CEO in 2008, Interim HealthCare was in the process of transitioning to a 100 percent franchised company. The change came as company leaders looked for a way to streamline the focus on supporting franchises. Eventually, that meant doing away with all of the company-owned locations.
Founded in 1966, Interim HealthCare is the only home care franchisor with a model that delivers health care services from personal care and support to hospice services. This involves a broad spectrum of business areas. So as the company shifted to a 100 percent franchised model, Gilmartin also discovered a number of business lines that no longer made sense under the new model.
“It’s not unusual when you have companies that have close to 50 years of history that they start out and they grow, and as they grow, things get a little bit more complex and spread out,” Gilmartin says.
“You think that you’re focused on something, but you don’t realize that other things have sort of grown up inside of that. Sometimes they’re on the periphery. Sometimes they’ve been there so long that you get a scotoma, where you just don’t see what’s right in front of you. You have a blind spot to it.”
Gilmartin calls this “the vision creep.” What begins as a small investment gradually takes up more and more support, resources or time. Over years or decades, it may even start to take away resources from critical areas of business.
Innovation, while beneficial, can be one of the biggest culprits of vision creep. The same muscles that lead you to innovate can send you in directions that cause your company to stray from its core strengths. For example, investing in innovation led Interim HealthCare to develop its own IT system and a technology platform geared specifically for delivering home health care services. But Gilmartin and the company’s leaders soon found that an IT operation was an unjustified cost.
“We don’t have the DNA of being an IT company,” Gilmartin says. “We have the DNA of providing health care services in the home and providing health care personnel to facilities that need them.”
Instead of funding a whole division to support its IT platform, Gilmartin and her team decided it was a better investment to find a partner to handle its IT. In 2011, the company handed off the division to health care IT firm Procura for continued development.
“That care and feeding is probably being sacrificed from something else,” Gilmartin says. “So you always have to be sure that you look yourself in the eye and say, ‘This is our primary focus. This is what we do best. This is what we want to be doing for our constituents and stakeholders.’ Anything that doesn’t fit in that picture you have to be willing to say the time has come.”
The same went for the other “clutter” accumulated under the old model. Before long, Gilmartin was able to find homes for all of the business lines that weren’t synergistic with the 100 percent franchised structure.
One way to spot vision creep is by constantly asking, “Am I getting the best output in all areas?” or, “Are we getting the results we want?” If you’re not hitting on all cylinders, you need to step back and do some mining with your management team, board and equity partners, Gilmartin says.
When you are able to have those difficult conversations and to look objectively at each area of your business, you free yourself to bring even more leverage to your core competencies.
“You suddenly have this renewed energy, and you feel like, ‘Oh my goodness, we have more resources than we thought because some were being diverted or distracted getting these projects done,” Gilmartin says.
“It was being able to take the clutter out of the picture so that you see very clearly who you are, what your mission and purpose is and what is ultimately our ‘hedgehog,’ which [for us] is knowing that we want to be the most successful ‘continuum of care’ franchisor.”
Lay down a path
In most industries, it’s not enough anymore to respond to the market. Leaders of great companies don’t just evaluate change; they are in a regular cycle of changing all the time, always asking “What’s coming next?”
However, the key to driving proactive change across a large organization — Interim HealthCare employs more than 40,000 health care workers — is to balance the urgency of wanting to see change happen with the patience of recognizing that some changes take time to spread and be adopted by employees.
“Like a Rubik’s Cube — it would be one of those mental challenges of how do you keep the moving pieces and how do you get them to be at the right place at the right time?” Gilmartin says.
“Do franchisees have the information? Are we training them? Do they have the support? When I think of what makes this business tick and be successful, it’s people, but it’s people across a number of moving pieces.”
Essentially, the nature of care at home is that it’s a very personal service. Yet much has changed in the way that service is delivered. Ten years ago, there was no automation. But today, health care providers use point-of-care devices such as tablets, laptops and smartphones to capture patient interactions and electronic data in real time. This emerging technology is also a valuable tool for leaders such as Gilmartin to help drive change at all levels of their organizations.
In addition to traveling year-round to visit different franchise locations, which includes home care visits with nurses and meetings at the franchise and regional level, Gilmartin utilizes technology to stay connected and to find out what staff and management need to be successful, whether it’s training, support or technology resources.
“Every stakeholder has a nugget of wisdom or inspiration that leaders need to constantly be gathering,” Gilmartin says. “I sometimes look at our key leader group or key franchise group and think that the loudest and the biggest have it all right. But what I’ve done a better job of, and every leader can do better, is to communicate more and use lots of media in how you communicate … using the technologies of email and Skype and FaceTime but also including more voices that help shape the future rather than fewer voices.”
Once you have a clear destination in mind, making progress comes down to working closely with members of your team to get there.
“Some groups may have been doing certain pieces of health care for 20 years, but they recognize now that they have patients who require services that they haven’t done and would like to,” Gilmartin says. “We will train them in that and bring them through all the additional certification, training, hiring and actual management of how to do that business … so they can do it just as well as they’ve done all the other parts of the franchise.
“If you’re true to what the core of your company is, you’ll always be innovating better processes, better programs and, in our case, go to the next level of care delivery,” Gilmartin says. “That’s what has to be continually inspired and perspired, because there is a lot of sweat that goes with change.”
Helping its franchises continually adapt and grow has continued to pay off for Interim HealthCare. In 2011, the company generated $740 million of network revenue while maintaining one of the highest employee retention records in the industry — its average employee tenure is 18 years.
“People often think of return on investment first as financial, but there are also stakeholders of our patients and our caregivers and our management team — all of the people who work in our individual franchises,” Gilmartin says. “It’s taking those three circles, and if you bring those together, you can crystallize where those overlap and that keeps you focused. It keeps you rooted in, ‘Is every initiative we’re doing helping reinforce that?’ And success is the result.” ?
How to reach: Interim Healthcare Inc., (800) 338-7786 or www.interimhealthcare.com
The Gilmartin File
President and CEO
Interim Healthcare Inc.
Born: Buffalo, N.Y.
Education: D’Youville College
What do traits you look for in an employee?
There are many things you can overcome with training and knowledge, but if people don’t have the right caring and have a leaning to ‘I want to be in this business because I like health care and I choose health care to apply my business skills to’ — it’s not a right fit for everybody. I can tell you from new franchise development we’ve had franchise prospects come in and they are genuinely nice people. By the time we’re meeting them we’ve had a phone relationship, they’ve gone through initial screening, they’ve done homework; but there are times where we have the discovery day to meet us … they don’t necessarily recognize that caring for people is a 24/7 commitment. It includes holidays. It includes vacations.
What’s next for Interim HealthCare?
I see us being in a real growth mode because we’ve clarified we’re 100 percent franchised. We’ve got new franchises that we’re back selling and starting and feeding the forest in places where we haven’t had franchises. We have some very, very large franchises that have been building their infrastructure and working on management and succession planning because the business is getting bigger and more complex. I think home care has come of age.
If you could have dinner with one person you’ve never met, who would it be and why?
That’s easy, Bill Gates. He spent three decades creating products and services at Microsoft that changed how we operate businesses and manage our lives. Then he put his creativity and capital to work to eradicate disease in Africa and other parts of the globe. It would be a fascinating dinner to pick his brain and learn what makes him tick.
What do you to regroup on a tough day?
In any leadership role you have incredibly high days and rock bottom low days. The key is to keep the mental snapshots of the great days front and center so you don’t lose focus or faith on the bad days. The bookcase in my office also has photos I love of my family and friends to remind me not to take myself too seriously.
For Chuck Shive, coming to Mikesell’s Snack Foods Co. was an opportunity to get into a different industry and utilize his background to make a difference. He entered Mikesell’s as the executive vice president of marketing, looking to upgrade a more than 100-year-old potato chip brand.
Not long after Shive started, the company’s CEO, David Ray, retired and Shive made the leap to president and CEO in May 2012, becoming only the fourth CEO in history of the company, a 180-employee organization with annual revenues of more than $40 million.
Once he was in the top spot, he turned his attention to building on the company’s strengths while also taking the opportunity to rebrand outdated packaging and also introduced new flavors of chips.
“It was an opportunity to take the equities that the brand has and build on those,” Shive says. “We didn’t want to touch the quality of the product, because in 100 years we’ve learned how to make it pretty well over here, but we wanted to take a look at the packaging and differentiate it and emphasize our premium product.”
While Shive and his team at Mikesell’s believe they have the best chip in the marketplace, the branding and packaging didn’t reflect that. Shive set out to make some overdue changes and upgrades.
“The keys were building on the strengths that we do have, but also looking at the challenges and opportunities going forward and being willing to address those rather quickly so we could establish our new strategic direction going forward and get that in front of our employees and in front of our partners and make sure it was a dynamic transition as it was happening,” Shive says.
Here is how Shive combined company strengths with new ideas to improve a more than 100-year-old brand.
Find your direction
Undertaking a challenge such as rebranding a company, not to mention one with a rich history, is a daunting task. Shive had to make sure he did his due diligence before moving forward with ideas.
“You have to ask a lot of questions,” Shive says. “Ask a lot of questions with your team, with your employees and with your suppliers. How do they view the company? How do they see the strengths and weaknesses of the company? What are the opportunities going forward? What are the great ideas?”
Mikesell’s received a lot of ideas from its employees over the past year and especially since Shive has been in charge. The company executes on the ideas that make sense and will move the business forward.
“There’s a lot of good institutional knowledge among partners and employees that all you have to do is ask and they’re willing to share that information and ideas,” he says.
Sitting in the CEO chair, Shive had his own ideas about where he wanted to lead the company.
“There are a lot of opportunities out there and some are opportunities that make sense for you and some don’t,” he says. “You’re going to understand that as you move forward and move through the planning process and strategy development process and then the execution around that strategy.”
While Shive had his own ideas about direction, that doesn’t mean he ignored others’ input in the decision process.
“It is a balance,” he says. “You strategically have an idea of where you want to go and through asking a lot of good questions and getting a lot of good feedback and working with your executive team and others, you refine that strategy based on what is realistic to expect and execute going forward.
“At the same time if you believe in your strategy, your team and employees, and the company understands what that strategy is and you’ve communicated it well enough, then it becomes time to implement it and execute it.”
Define your brand
To execute on the direction Shive wanted to take the company moving forward, he sat down and discussed how they wanted the new branding to look and what the challenges and opportunities would be.
“We basically took an overall review of our branding as a company, our branding on our packaging and what the strong points were that we wanted to keep and what we thought we could do better with going forward,” Shive says. “Some of the key equities of the brand and packaging that we have is, No. 1, our name.
“Mikesells is an iconic brand for this region, so we didn’t want to touch that to any degree, but we wanted to refresh the small town feel that we have.”
Mikesell’s old packaging as well as some of its competitor’s old packaging was what Shive calls “old foil cartoon-looking packaging.” Mikesell’s made subtle switches such as moving from a foil bag to a matte-finish bag, which gave the product a much more premium look and feel in the marketplace.
The company also cleaned up some of its messaging that has appeared on the packaging since 1910. The slogan changed from, ‘They are delicious’ to ‘Creating delicious since 1910.’
“We went through that process and some consumer testing and reviewing with the steps along the way to make sure we were making the right moves and that consumers were delighted by the new packaging we were coming out with,” he says. “Then it just became the process of implementing that with our packaging partners to bring the new branding to life on the new bags.”
The company also took the opportunity to find what differentiates Mikesell’s from its competitors in the snack food arena.
“It’s not our packaging, it’s our product, but with our old packaging you really didn’t get a look and feel of what our product was,” Shive says. “You didn’t see the actual appetite appeal that our product has, so we wanted to emphasize that on the new packaging moving forward.”
Mikesell’s strength was its product and the rebranding of its packaging helped to emphasize how good the product really was.
“A lot of people may look at a brand change as an opportunity to correct weaknesses, but for us we look at it as an opportunity to build on the strengths that we have,” he says. “That’s a more proactive than reactive approach to take to it.”
Building on those strengths allowed Shive and Mikesell’s to develop a newer brand that will help push the company forward for many years.
“It’s about getting to an area that you’re really comfortable with that you’ve kept the soul of the brand and enhanced it to where it meets what you’re looking for going forward,” he says. “It’s not a quick fix. Our point of rebranding and upgrading our packaging was not so we could do it every couple of years.”
Add new products
Once the new branding had been put in place, Shive kept busy last summer by also adding new products to the company’s line of potato chips. Mikesell’s introduced a sweet chili and sour cream flavor and a Tuscan spice flavor.
“We wanted to put flavors in there that matched consumer wants and desires,” Shive says. “These are the first new flavors we’ve added in more than five years. We’re constantly reviewing what our offerings are and whether we see any need for new products out there.”
Mikesell’s is always consulting its employees, consumer feedback and its partners to help drive new product decisions.
“We get to try new flavors constantly,” he says. “We take them through a process where we rank them versus existing flavors or rank them on the taste qualities and expectations of a particular flavor going forward.
“If we have a particular item out there where it doesn’t seem like we made the right decision for what the consumer was looking for, then we’ll look at moving that out and replacing it with a new flavor or new offering.”
One of the reasons Mikesell’s released these two new flavors was because it had been a while since the company had new offerings out in the market.
“By the nature of the business, consumers are looking for new, different flavors and we’re making a conscious effort to be a little more responsive to that,” Shive says.
Releasing new products that make an immediate impact is a game of hit or miss.
“You want to do all of your due diligence and define what that product is going to be based on robust consumer and market research,” he says. “Then you have to follow through with it and be prepared to support it when you bring it out.
“A lot of people want every single item or product that they introduce to be a home run and that’s just not going to happen. You have to go in knowing that and expecting that. You take the learning’s from that, and you apply them to the next one.”
How to reach: Mikesell’s Snack Foods Co., (937) 228-9400 or www.mike-sells.com
Gather input for any new direction of your business.
Build on strengths, don’t correct weaknesses.
Do consumer and market research surrounding new product releases.
The Shive File
President and CEO
Mikesell’s Snack Foods Co.
Born: Vicksburg, Miss.
Education: Graduated from the University of Southern Mississippi with a B.S. in business administration
Sports: He was a pitcher at Southern Miss from 1987-89. He was drafted by the Philadelphia Phillies and spent one year in their minor league system. “All I ever wanted to do was be a professional baseball player, and I got to do it for a little bit.”
What was your very first job, and what did you learn from that experience?
One of my first jobs was working in a production plant on a production line grabbing containers of pesticides and sticking them into boxes for eight hours a day. What I learned was in that line, nobody is independent from anybody else. In what is considered a basic menial job, you’re still dependent on the guy to your right and the guy to your left to make sure that the line ran correctly.
From the earliest job that you could have, even to the role I’m in now, you’re still reliant on interactions with other people.
What is the best business advice you’ve ever received?
None of us is smarter than all of us collectively. The collective wisdom of a group outshines any individual wisdom.
What is your favorite Mikesell’s product?
It’s tough to pick among them, but I’m a big fan of the new sweet chili and sour cream chips. A close second would be our bold Bahama barbecue kettle chips. I like spice and flavor.
What are you most excited for about the future of the company?
Where we are today there’s still so many growth opportunities out there that we haven’t tapped and putting our strategy in motion to go out and attack those growth opportunities is what gets me going every day.
He was hired as president and CEO of a foundation to raise funds to build a new hospital in Indianapolis to replace an existing one — a public facility that never had a major fundraising drive in its more than 150-year history.
Previously known as City Hospital and Indianapolis General Hospital, the public entity had been renamed Wishard Memorial Hospital in 1975. The last time there was new construction there was in 1914. So Vargo was tilling new soil, and he went ahead with his efforts to survey the situation.
“We were talking to a lot of people, and we were not on their priority list,” Vargo says. “There were so many groups ahead of us. People were already involved with some really good causes for a number of years. We did not have that long-term base of support.”
Undeterred, Vargo developed a strategy to get the buy-in from his target groups. He focused on going out into the community, to educate and inform citizens about the great things happening at Wishard Hospital, which served the most vulnerable people in the community.
His most successful visits were with Sidney and Lois Eskenazi, who owned Sandor Development Co. and who donated one of the largest gifts ever made to a public hospital in the United States — $40 million — and Fifth Third Bank, which donated $5 million.
In honor of the Eskenazis’ gift, the foundation was renamed the Eskenazi Health Foundation, and the new hospital will be the Sidney and Lois Eskenazi Hospital when it opens in December.
Having grown up on the South Side of Indianapolis where the hospital is located, the Eskenazis wanted to give back to the community in a way that would impact many people.
The fundraising efforts didn’t stop there. Vargo gave tours of the current facility just to familiarize potential donors with the hospital — and he knew he was getting the buy-in when long-time area residents were admitting, “I never knew that! I never knew!”
Here’s how Vargo achieves buy-in by staying in focus to his mission.
Concentrate, focus and deliver
When it comes to getting people to donate to a cause, it’s not that different from getting employees to buy in to a new corporate vision statement. The main premise is to focus on the mission.
A hospital’s mission is to advocate, care and serve — those are its core values. By keeping those core values in focus, Vargo believed he could engage his staff who would then engage people. That meant crafting a sales pitch that would be consistent with the mission.
“Be very thoughtful in your approach,” he says. “We don’t ask people for money the first time they come here. But we are trying to engage them so that they feel good about a gift and hopefully, that results in bigger gifts for us.”
The sense of making a contribution to a team, even an emotional feeling of belonging to a worthy effort, is as important as an employee who has been newly empowered with new responsibilities at his company.
Vargo also stresses that his team is in many ways a collection of networks. As many company leaders find early adopters among employees, Vargo found early contributors. These are thought leaders, and their enthusiasm is an invaluable asset to engage others.
“All of those folks on our board of directors and our campaign cabinet were all early contributors,” he says. “So they also had credibility when they were calling on people because not only have they volunteered to give their time to do fundraising but they have already made a sacrificial gift.”
Vargo says the Eskenazi gift never would have come into being if the board chairman hadn’t personally known Sidney and Lois Eskenazi. The chairman had been having a conversation with Sid Eskenazi when the potential donor asked what was going on at the Wishard Hospital project. It opened the door.
“That was the beginning of that conversation,” Vargo says. “It has really been a networking success.”
While there was a certain amount of good fortune in landing that donation, Vargo is careful not to rely solely on luck. That’s why so much effort goes into education and contacting people — to communicate the mission.
“It has really been an outreach to folks,” he says. “Not surprisingly, most people we ask in the community if they have ever been to Wishard say, ‘No, I should have. I’ve lived in this community all my life, but I haven’t been.’ And in many cases, they will say nobody has ever invited them.”
So Vargo and his staff invited them to take tours. It was a teaching moment and the lesson was to weave value-added features into the approach.
“So when you take components of a new, modern facility, plus our relationship with the school of medicine — all our physicians are on the faculty of the Indiana University School of Medicine — there are a lot of compelling reasons for people to give to the foundation,” Vargo says. “The other thing that is very compelling especially to the business folks is just that we have a good business plan — our finances show how we have been turned around.”
The personal touch, the tours, the face-to-face conversations show people what is happening and what the vision is for the new hospital has really resulted in phenomenal support for an organization that had not done this type of campaign before, Vargo says.
Grassroots support is not overlooked. Nonphysician employees of the hospital have donated $2.2 million to the fund, whose annual revenue for 2011 was $48 million.
“It’s just been an amazing outpouring from our employees,” Vargo says. “Forty percent of those gifts came after we announced the Eskenazis’ $40 million gift.”
Don’t get sidetracked after a ‘no’
After a process has been developed and is put into use, there may be occasional challenges. These give you an opportunity to meet the challenge by staying true to your mission focus.
For instance, Vargo closely followed the caring approach when faced with an unusual rejection from a potential donor.
“Out of the blue, the man called me one day and said, ‘I feel really bad about this, but my wife had breast cancer years ago, and we’ve really never done anything for the hospital that treated her. We are not going to make a gift to you. We are going to make a gift to this other hospital.’”
Vargo assured the couple that it was the right thing for them to do. With his thoughtful approach, he enabled them to see the value of a philanthropic donation, although it was to another hospital.
Afterward, he did some self-reflection, and saw how this experience reinforced that his message was delivered clearly but it was only the outcome that was different.
“We are all in competition obviously, but it is ultimately what is in the best interests of the donor — and all donors are different.”
Capitalize on your success
If you complete a successful merger, acquisition or turnaround, there is a payoff — and that payoff is often only a new beginning, not the culmination of your efforts.
The next step is about taking advantage of that accomplishment. For the hospital campaign, the large gift from the Eskenazis allowed for construction to begin — and it offered another opportunity.
“One thing that obviously has been helpful is having this new magnificent facility because it can be that stepping stone to get people involved,” Vargo says. “We are having this success but it will be a failure if we don’t capitalize in the future on the success we are seeing today.”
If your project reaches its goal, it is time to enjoy the moment but keep looking ahead. For the Eskenazi Health Foundation, it was resetting the original $50 million goal to $75 million after the campaign’s large shot in the arm.
“We want to keep the same fundraising staff moving forward because it would be silly to ignore all these people who made gifts to us once the new hospital has been built,” Vargo says.
To build on that intention, continue to be in front of people to take the vision as far as what the future is going to be in regard to funding priorities, he says.
“One of the things that we have done is to begin adding new board members who are key players in the community,” Vargo says. “Our incoming board chairman and vice chairman are some higher profile people in the community who are really engaged.
“There is something about building a brand-new project that is exciting,” Vargo says. “But I also think that there are people who would prefer to give to programs. I think we will continue to have success. It is really identifying and articulating what it is that we are going to do.” ?
How to reach: Eskenazi Health Foundation,
(317) 630-6451 or
Get a focus on your mission.
Don’t get off track after hitting a brick wall.
Capitalize on your success.
The Vargo File
President and CEO
Eskenazi Health Foundation
Born: Akron, Ohio.
Education: University of Akron. I majored in communications.
What was your first job?
Working at a car dealership in the Akron area. When people bought a new car, I was one of the guys who got them ready. I learned the importance of doing your job well. If we could work really hard and get it done right the first time, you didn’t have to take it back and do it over. I also got to be involved with the business a little bit. I became familiar with the owner and learned a little bit about how a car dealer business runs.
Who do you admire in business?
A good friend of mine whom I got to know well when I served on the school board here in town was a man named Bob Laikin. He was the founder/entrepreneur of BrightPoint. He’s a guy who is just a passionate, driven person, but also a very caring person. He is just this incredible entrepreneur who just has a lot of integrity.
What is your definition of business success?
The reason I like fundraising is that we have tangible goals. You either make them or you don’t make them. I am really driven by goals and like to have numbers in front of me. But take those short-term goals and incorporate those into long-term goals — how can we be judged and be successful today and raise the money that we need to raise but also how can we take that and make that a long-term success — that’s what motivates me. I am really goal-driven.
What is the best business advice you have ever received?
I came to Indianapolis to work for my college fraternity. I worked for the executive director who was this really brilliant guy, George Spasyk, and he taught me so many little things, such as, ‘Always carry a pen in your pocket so you’re ready to write down whatever you need.’ But more importantly, ‘Treat everybody equal. It doesn’t matter if you are an executive or you are the person in environmental services, they are all important. And if you treat everybody the same, it comes back to you, and you will be successful because of that.’ And the other thing that he taught me was just the importance of having a strategic vision, having a goal for what it is that you were going to do.