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.
Nearly four years ago, when Tom Salpietra joined EYE Lighting International of North America Inc. as its president and COO, a woman approached him interested in operational development at the company.
Since Salpietra was a new leader, it was expected that he would make changes within the company to improve EYE Lighting International while keeping the best things about the company intact.
“Everybody is going to have things wrong, but if you preserve what’s right, that’s where the secret is in organizational development and implementing change,” Salpietra says. “If you screw up the things that are right, that’s where you go wrong.”
Salpietra worked with her to develop questions to interview the employees about what they liked at the company. Since this was an appreciative inquiry the study only focused on what the employees thought was sacred about EYE Lighting International, not about what needed to be fixed.
The study found that every employee was extremely engaged in the company and its business.
“This was how we developed the four basic principles around the customer,” Salpietra says. “We made the customer the center of the business and did process improvement to all the things that we do on a day-in and day-out basis.”
EYE Lighting International is a nearly $100 million U.S. division of Iwasaki Electric of Japan. The company designs and manufactures high performance lamps, luminaries and lighting-related products that serve major commercial, retail, industrial, utility and specialty application lighting markets in North and South America.
Since Salpietra’s arrival at EYE Lighting, he has been focusing on efforts to develop new technology and to keep the organization’s sights on the next big thing in the lighting industry all while maintaining employee engagement levels.
Progress your company
EYE Lighting International’s unique competitive advantage is how the company doses the arc tube of its lighting products (dosing refers to the mix of metals inside the arc tube). The market is currently producing a lot of high intensity discharge (HID) lighting but soon the market will move to LED lighting. While LED works in certain applications, it is expensive, and there are still kinks to work out in other applications where it’s not ready for prime time.
“We’re trying to shift the company from just making HID lamps to offering broader solutions in our market segment,” Salpietra says. “We’re not going to stray from our core competency, which is dosing the arc tube and making unique types of lamps. The challenge we have is if we don’t move in that direction, our years and decades of existence will start to decline.”
As a management team, EYE Lighting knew that the company didn’t have to change too much to succeed, but if it didn’t start changing and moving in a certain direction, it wouldn’t be in that same kind of comfort zone it has been three, six or 10 years from now.
“We’ve taken it very seriously that what we do today will impact the company years down the road,” Salpietra says.
With the lighting industry making a slow transition into LED, Salpietra and his team had to look for opportunities that better suited EYE Lighting’s general lighting purposes until LED is ready for the applications where the company would primarily use it.
“The merging of the two traditional technologies into ceramic metal halide gave us the ability to continue to do what we do, which is making lamps,” Salpietra says. “If that technology wasn’t there, we’d be lost and everybody would be rushing to do LED more quickly.”
What EYE Lighting has been able to do is make the regular technology much more efficient and deliver white light, which creates good color rendering and color temperatures to be able to see both in the day time and at night.
“It’s been proven that white light versus a yellow light or a blue light make a big difference in being able to see,” he says. “If you can make your light create the spectrum that matches the way the human eye wants to see the spectrum and discern it, you’ve just enhanced the way you do it.”
On top of developing new technology to enhance the company’s core offerings, EYE Lighting has been looking for broader applications to its technology and has its sights on potential partnerships that could benefit the company.
“When we do our strategic planning, we look heavily at our core competencies and what we think we can do with new technologies,” he says. “Part of every good company’s strategy has to be looking at the M&A side of things as well; you want to grow organically, but what should you do to augment that growth with outside skills and services?”
Salpietra and his team are keeping their options open for potential strategic alliances, mergers, joint ventures or buying a company outright.
“In order to grow and thrive and create jobs and create value for our customers, shareholders and employees, we’ve got to look at the overall business and determine what we can be looking at to expand our business beyond what we do day-in and day-out,” he says.
A big move that EYE Lighting made in November 2012 was the acquisition of Aphos Lighting LLC, which expedited EYE Lighting’s move into LED. The products acquired are LED-based luminaires that carry with them 14 different design patents for their optical, mechanical and thermal management performance. EYE Lighting will maintain the Aphos name for this new line that will expand its business by introducing LED luminaires to municipalities, utilities and industrial customers.
“As we’ve looked in the general lighting market space, we ask ourselves what’s our core competence and where do we want to go. We get involved in a lot of unique things that stem from our core technology.”
The other areas in which EYE Lighting participates, in addition to the general lighting market, are institutional, educational and hobby markets.
“Because we dose that arc tube differently than anybody else in the world, we’re able to recreate some spectral distributions of light,” he says. “Not just the color of light, but the intensity and what light rays are being emitted from the lamp.”
Due to this ability, EYE Lighting can make lamps that enhance plant growth, as well as lamps that can simulate solar power for use by companies or universities doing solar tests. The company also makes solar aging equipment for businesses such as Sherwin-Williams, Behr paint, automotive companies that make windshield wipers, roofing companies, and anything that’s outdoor-oriented.
“Those types of companies want to test in a lab whether or not they’re going to get a 30-year warranty, but they don’t want to test for 30 years,” Salpietra says. “The equipment nowadays has you test six to nine months to be able to project a 20- or 30-year lifespan.
“We make a machine which is called a super UV. You can put samples in the machine and within three weeks we can equate 10 to 15 years. We can also put more than just UV rays on it; we can also put water on it and chill it.”
These types of broader offerings are due to the highly engaged employees that EYE Lighting has been able to keep around the business over the years.
Keep employees engaged
With a Japanese parent company, EYE Lighting puts a lot of focus on lean manufacturing and kaizen events, and 130 employees are quick to recommend how to better the business.
“What is unique about us is that every employee on the factory floor changes positions at least once a day,” Salpietra says. “Everybody is highly cross-trained and capable of performing at least two different jobs.”
Some employees remain in the same department and move upstream in the process versus downstream. Others will go from one department that transforms the raw material, and then they go to the end of the line to do packaging.
“It allows us a tremendous amount of flexibility,” he says. “The employees love it because they don’t get bored in their daily job. Ergonomically it’s good for them because they’re not doing the same repetitive task day-in and day-out when they come here. It helps keep them alert and safe, especially when they know different jobs and how to behave around different pieces of equipment.”
One thing missing from EYE Lighting that most other manufacturers utilize is a suggestion box. Salpietra says his employees will come forward with ideas on their own, making a suggestion box unnecessary.
“Everything emanates from the floor,” he says. “When the employees change jobs by going upstream or to another department, they see the product of their work or the beginning of what comes to them to pass on to somebody else. So they inherently get together to have a kaizen event over a particular issue.”
To aid in employee’s abilities to help the company further its growth and development, Salpietra and his team implemented four core principles: customer-centric, process improvement, financial focus and talent development.
“We did this rather simplistically to make sure that it was easy for everyone to recite and keep it close to them day-in and day-out,” Salpietra says. “We keep our customer at the center of our business. We deal with process improvement, which is part of our DNA as a Japanese-owned division.
“And everyone in every organization wants to improve and enhance the skill set of employees, so we push our people to get out of their comfort zone.”
Develop your talent
To keep EYE Lighting employees on their feet and thinking about different aspects of the business, Salpietra made talent development a big part of the organization’s core principles.
“We added talent development because that captures what we do on the factory side that we want to do throughout the whole organization, which is work out of your comfort zone,” Salpietra says. “You’re going to become more knowledgeable and more valuable for yourself.”
To allow your employees to grow and develop, you have to be willing to give them the tools and resources to do so.
“You need to have an open-door policy,” he says. “The leadership, especially new leadership, has to develop two things primarily — trust as a leader and then respect comes. Then you can develop the feeling of hope. If the employees see that there’s hope in things and they become a part of that, it will help engage them.”
That engagement will also help when your company has to make a tough decision or make a change in direction.
“It’s very important that you get a lot of group interaction so that when you go to make a decision or implement a change, everybody is onboard with that,” he says. “If you engage your people and say, ‘Here’s what we’re going to do. We’re going to move in this direction and we’re going to need your help. We do not know all the answers.’
“They love to hear that because they will have questions and suggestions for the company. As much as you engage your employees, they will become engaged on their own. All of a sudden ideas and suggestions will start surfacing.”
How to reach: EYE Lighting International of North America Inc., (440) 350-7000 or www.eyelighting.com
Keep yourself in tune with your industry and where it’s going next.
Always think about ways to broaden core offerings.
Develop talent and keep employees engaged in the business.
Steve Phillips doesn’t understand why customers in today’s world wouldn’t want help from a salesperson. But he’s not so stubborn that he refuses to believe it is true.
“My son keeps talking about stranger danger, that customers don’t want to be approached by salespeople anymore,” says Phillips, president and CEO at Phillips Furniture Co. and six Ashley Furniture HomeStores in the greater St. Louis area.
“As a leader in my position, this is where I’m going to have to rely on these young people to make decisions that will put us in a great position for younger customers.”
Phillips Furniture is a family-run business that launched in 1937. Phillips doesn’t see things the way his father did. His son, Michael, the company’s vice president of advertising and merchandising, doesn’t always agree with his father’s point of view.
But it’s their ability to respect each other’s differences and then reach a consensus on how to operate the business in today’s world that allows the company to succeed.
“I’m hearing what they want, and I’m OK with what they want,” Phillips says of the younger generations that are becoming a larger part of both his customer and employee bases. “It’s just foreign to me. But as a leader, I have to be willing to let them try things that I’m not familiar with.”
Phillips says it’s not always easy to move away from behaviors that you’ve grown up with and used to achieve success. And he doesn’t always believe it’s necessary to shift away from something that has become a proven success. But if it is necessary to change, doing so beats the alternative every time.
“It is tough,” Phillips says. “But it’s tougher if you fail. If I keep dictating policy and how we’re going to do things based on how we did it in the past, I know we will die and that’s not good. So I just really trust these young people, and I trust the organization. If we truly have the customers’ best interest at heart, we’re going to do what they want, not what we want.”
It’s that idea of constantly seeking a better way to please customers that drives Phillips and his 330 employees.
Set a foundation
Perhaps one of the reasons Phillips is more agreeable to accepting new ideas is that he has been reluctant to follow the crowd when it comes to furniture salesmanship.
“The furniture business has not had the greatest reputation for integrity,” Phillips says. “A lot of people give false high prices and fake savings, and I didn’t want to do business that way. We have one price on a piece of furniture.”
The problem for Phillips is that many employees who have worked in the industry for a number of years were trained to take the misleading approach.
“There was a very specific way we wanted to do things that was not normal in the furniture business,” Phillips says. “That’s why we don’t necessarily want people who have been in the furniture business because we don’t know what their training background is.”
The solution for Phillips was to create a training program that new employees must go through before they are allowed to speak to a customer.
“So everything that we do structurally and integritywise is ingrained before they talk to their first customer,” Phillips says. “As a matter of fact, we probably don’t spend enough time talking about product. It’s more about how we do things. We have leadership round tables every month also. We have our leaders come in and we just go through what’s important to our customers.”
The goal is to have a sales team that doesn’t just talk a good game when it comes to pleasing the customer, but they can actually show how they’re going to do it.
“They have to role-play to show us, not just tell us, but show us they know how to service customers the way we want them to,” Phillips says.
That’s the end result. The steps for getting to that point where employees have the ability to display those skills must be dutifully followed if training is going to work.
“You can’t train or correct anything until you can measure it,” Phillips says. “We know how many pieces per hour some of our furniture assemblers can do and what the standard is. We know how many pieces per hour one man can unload on a truck. You can’t manage and train until you know what the issue is, which is only done through measurement.”
Once you have that data to work off of, you’ve got to put what you want to do in writing and then make sure you do it.
“If it’s not in writing, it’s not real,” Phillips says. “So everything is in writing, and you just go over it step by step. They can’t be promoted until somebody observes and there is a physical check-off that this is what they can do.”
If you don’t believe you have time to conduct training with an already cramped schedule, you’ve got to find a way to make it work.
“Training has to be a priority,” Phillips says. “If you get caught in the treadmill of doing business all the time, you’ll never get off the treadmill and start training. If you train and make it part of your culture and your business religion, you don’t think about it as being a disruption of your normal process. It is your normal process.”
Take a visible role
Many leaders will talk about how important a training program is, but then they personally move on to other things and leave the team to figure out the best way to make it work.
Phillips says you have to do more than that as CEO.
“Every training class we have for salespeople, I’m the first presenter,” Phillips says. “I take the first hour or so and tell them about the company and what we stand for.”
The company’s COO tackles the next segment and then training responsibility shifts to Phillips’ brother, Matt, who heads up training at Phillips Furniture.
“What we want these people to see is that everybody at the top also believes in everything we do,” Phillips says. “The fact that we spend so much time with them, we certainly hope that’s what they believe.”
As a way to encourage leaders to want to take part in the training process, Phillips suggests rewards for leaders whose direct reports receive promotions.
“A lot of leaders withhold knowledge or training for fear of somebody rising above them,” Phillips says. “Our managers are rewarded for having someone promoted from beneath them. We love store managers who want their assistant managers or their team leaders to be promoted. They don’t feel threatened by it.”
Focus on core values
The other piece of the puzzle for Phillips is core values. While he is open to changing training methods and operational policy, he leaves no wiggle room on his commitment to the company’s core values.
“No matter what processes or changes you make in your business, you can still hold tightly to your core values,” Phillips says. “That’s the one thing I will never negotiate — how does it look with our core values. You have to keep that out there in front.”
Arriving at the three core values that define Phillips Furniture was no easy chore. Phillips and a team of more than a dozen leaders left the company’s headquarters and headed to a remote cabin in the Ozarks. Once they arrived, it took three days to finish their work.
“There were a lot of great ideas,” Phillips says. “I just didn’t want a lot of them. We could have had 10 great core values, but I wanted to be able to sink our teeth into three or four. Once you get past three or four, they start becoming a little redundant. These were three that nobody could ever argue with.”
The three core values they decided on were “integrity above all else, honesty in all we do and service to others first.”
“If you can get your entire organization to buy in to those three things, you have a much easier time finding great leaders because leaders want to buy into something greater than a dollar,” Phillips says.
Some companies consider “making a profit” a core value and Phillips says he understands, even if he doesn’t agree with it.
“We think that’s the result of doing the first three,” Phillips says. “So we wanted the core values to produce the results that we were looking for.”
Phillips says his company wants to make a buck as much as anyone. But by focusing on other things, such as the customer experience, employee readiness and job satisfaction and giving back to the community through charitable efforts, everybody comes out ahead.
“It’s imperative that a company stand for more than a dollar,” Phillips says. ?
How to reach: Phillips Furniture, (314) 966-0047 or www.phillipsfurniture.com or Ashley Furniture HomeStore, (314) 845-3084
The Phillips File
President and CEO
Phillips Furniture Co. and Ashley Furniture HomeStores/St. Louis
Born: Dayton, Ohio
Education: I went to the University of Missouri for three years. I got married when I was 20, and I got tired of being broke, so I quit school and took a job.
What was your very first job?
Raising vegetables and selling them door-to-door. I’m an avid gardener, and I still am to this day. My first full-time job was in the furniture store while I was going to school at Mizzou.
What got you into gardening?
My dad had an extra lot next to the store. I always wanted to be a farmer my whole life, and now I do own two farms. There is something really neat about getting your hands in the soil. He gave me this plot of ground, and I had a wagon. I would load it with vegetables I grew and picked and I would take them door to door to our neighbors. I didn’t have prices. I always said pay me what you think they are worth and I got taken advantage of quite a bit. So I learned not to do that the next year.
Who has been the most influential person in your life?
It would have to be my mother and my father. From a business point of view, it would have to be my father. He was the most patient and kindest man you ever met. I never saw him raise his voice ever. I don’t know that I got those traits from him, but I’ve always admired those traits. My mother had six kids and she’s a phenomenal woman.
Don’t be afraid to change.
Make the time to do training.
Don’t choose too many core values.
Edward Kennedy is an experienced chief executive with a successful track record of creating value at companies in the communications equipment industry. So it’s no surprise that his ascent within Tollgrade Communications Inc., a more than $50 million, 120-employee provider of network assurance solutions for the utility and telecommunication industries, was a quick one.
Kennedy was named to the board of directors in June 2009 to help the company from a strategic standpoint. He became chairman of the board in March 2010, and just three months later, he became Tollgrade’s president and CEO. In his more than two years in the role, he has helped Tollgrade grow in several ways.
“Our customer base is the who’s who of telecom players, both here in the United States and Europe — AT&T, Verizon, Quest, Frontier, British Telephone and more,” Kennedy says. “We have a very strong footprint — roughly about 250 million lines under test — 140 million in the U.S. and 110 million in Europe.
“Because of all that, we have over the years, developed some very, very sophisticated software that allows us to maintain this leadership role in testing.”
Beyond Tollgrade’s core service of testing telephone lines, Kennedy has helped the company break into the smart-grid business with a product called LightHouse.
“As utilities globally look at how to become more efficient with their distribution of electricity and also how they manage different types of electricity generation, such as renewables and how that comes into the network, the ability to monitor your network becomes key and that’s what we do with our smart-grid product,” Kennedy says. “That’s a high-growth area for us.”
While Tollgrade’s core business and its new smart-grid business are similar technologies, they are vastly different businesses, and trying to grow a new business while maintaining the other has been Kennedy’s biggest challenge.
Here is how Kennedy is balancing Tollgrade Communications’ growth of a new business while maintaining its core service to take the company to the next level.
Create investment opportunities
Along with the challenge Kennedy has of balancing a new growth opportunity and an existing business, he also needed to find ways to invest more in the future of the company.
“One of the things we did back in May 2011 is we went off of the NASDAQ and went from being public to being private,” Kennedy says. “The motivation to do that was we saw the requirement to make larger investments in new products and larger investments in increased infrastructure inside the company.”
As a public company, you’re measured on a very tight set of parameters. All of those metrics don’t lend themselves when you want to do an investment for the future.
“In a public company it’s kind of a catch 22 — you don’t really have enough money to invest the way you want to grow the business, but if you don’t invest, the business won’t grow the way you need it to maintain increasing stock price,” he says.
Tollgrade decided it needed to look around and see what it could do to unlock some of the investment dollars. The best way for the company to do that was to go private. The company was then bought by a large private equity firm out of California called Golden Gate Capital, a $12 billion fund that invests in all sorts of technology companies.
“With that we are allowed the flexibility to make investments the way we need to grow the business,” Kennedy says. “It allows us to invest for the future, which these days is pretty challenging. Keeping one step ahead of the competition, but also having the next generation of products is going to be key to keeping your business vital.”
Strike a balance
Tollgrade’s ticket to keeping the business vital is through the growth of its LightHouse product in the smart-grid area.
“The smart-grid area has the largest potential for growth and is the one that is the most challenging because we are in so many different areas and applications,” Kennedy says. “The utility environment itself is in a period of change and the requirements for electricity are ever increasing.”
Utilities are looking at how to better manage their grid, which opens up a huge opportunity because the power grid has been the same for many decades.
“Now what’s happening is the issue of different types of power generation where it’s not just nuclear plants, coal plants, hydro plants; it’s also wind farms, cellular rays and things like that,” he says. “There’s a whole new set of demands that have to be addressed and that’s what we are going after.”
While Tollgrade is investing heavily in the smart grid and is one of the market leaders in the sensing and monitoring of that for the utility group, its telecommunications business is also still vibrant and growing. Kennedy has to make sure that Tollgrade is successful at striking a balance between both the new business and the existing business.
“Having multiple business lines in very different market areas is challenging and where it becomes challenging is you want to make sure you put enough investment in the new products to grow it, but you’ve got to make sure you’re not hurting the overall profitability of the business by investing too much,” he says.
Where companies get in trouble or get offline is they don’t sit and think about what the metrics are for success along the process.
“Everybody says, ‘I want to grow this from zero to $100 million in sales,’” he says. “But what are the major steps along the way and what are the definable milestones that you can figure out whether you’re making progress toward that? If you’re not making the progress you thought … what are the issues preventing you from hitting the milestones?
“Having that kind of environment where you’re analyzing in real-time how your business is doing makes people gloss over a little bit because they’re so busy trying to grow the business. As a CEO your primary role is to step back and think on a more strategic and global basis to understand how the company is doing.”
If you’re not keeping tabs on how all your business segments are performing, it is very easy to lose track of one or more of them.
“The core business can’t be seen as an orphan or a stepchild because all the fun and excitement is in the new products,” Kennedy says. “People have to realize that maintaining and growing the existing business is as important, or sometimes even more important, than the new initiatives because the new initiatives aren’t paying for anything if they are still in the investment mode.”
When focusing on a new business, you have to put together some milestones to get to a certain amount of revenue in a certain amount of time and highlight what needs to happen in order to get there.
“As you move forward with your plan, you need to compare that to what’s actually happening and have a feedback loop to understand if you were too aggressive or not,” Kennedy says. “You have to constantly improve your model to better predict how you’re doing moving forward.”
There is a different set of metrics that you put on a new product or a new business area because you have to take increased risks that you wouldn’t take in your existing business because you no longer need to.
“Sometimes these risks work out and sometimes they don’t,” he says. “Failure isn’t not achieving a goal. Failure is not trying hard enough to achieve the goal.
“You focus in on your core strengths and what you know and what you don’t know and by having a very clear conversation with the team that’s running the new business, you can have a view of what progress is and how you measure it and figure out if it’s doing what you think it’s doing.”
The biggest key to having successful growth of a new or existing business is the people who drive the company every day.
“It is crucial to have very motivated and smart people under you that get it,” Kennedy says. “You have to give them an environment where they want to go out and grow the business and they’re rewarded for growing the business and success is seen as management of risks and rewards versus making sure that they stay in their comfort zone.” ?
How to reach: Tollgrade Communications Inc., (724) 720-1400 or www.tollgrade.com
- Create opportunities that enable investments for the future.
- Strike a balance in how you grow a new and existing business segment.
- Set goals and create milestones to measure growth.
The Kennedy File
President and CEO
Tollgrade Communications Inc.
Education: Has a B.S. in electrical engineering from Virginia Tech
What was your very first job and what did you learn from that experience?
My first job was cutting lawns around my neighborhood. I’ve always been kind of a high-energy-driven kind of guy. I learned that you have to work hard to get ahead.
What is the best business advice you’ve ever received?
Be tenacious and thoughtful and think about what you want to do and then be relentless to get it.
What are you most excited about for the future of Tollgrade?
I’m excited about the fact that we have a huge installed base in the telecommunications side that we can continue to grow and help our customers globally to provide better service for their customers. On the smart grid side there is a huge opportunity to help the whole energy marketplace in a better and more efficient delivery of electricity. That’s going to be a major social trend and a major business trend and we can be a pretty significant player in that.
If you could speak with someone from the past or present, with whom would you want to speak with?
I would like to sit and talk to Winston Churchill. He was a man who faced incredible situations and had the weight of a lot on his shoulders, and it would have been interesting to see in his time what he was thinking.
If you had the chance to do something dangerous one time, without consequence, what would you do?
If I couldn’t get hurt, I would want to try flying around in one of those squirrel suits. As long as I land safely, that would be fun to do.
As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.
“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”
Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.
Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.
“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.
“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”
Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.
Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.
“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.
So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.
“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.
“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”
Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.
“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”
You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.
“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”
Trim the excess
Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.
Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.
“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”
Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.
“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”
Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.
For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.
Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.
“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”
Enable a responsive culture
Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.
“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”
Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.
“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.
“Our independence is a key part of our competitive advantage and a big part of our culture.”
The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.
“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”
Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.
“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”
As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.
“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.” ?
How to reach: Woodruff-Sawyer & Co.,
(415) 391-2141 or www.wsandco.com
Ask customers where your business provides the most value.
Utilize technology to cut down on time and cost in customer interactions.
Empower employees to help clients by avoiding a top-down culture.
The Rosson File
Woodruff-Sawyer & Co.
Born: San Jose, Calif.
Education: B.A. in history from UCLA
On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.
What is your favorite part of the business?
The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.
What would you be doing if not for your current job?
Teaching English in Argentina
What one part of your daily routine would you never change?
Interacting with our clients and prospective clients
How do you regroup on a tough day?
I try to exercise every day.
What do you for fun?
Cooking, traveling, reading, coaching kids’ sports
Niloufar Molavi is now facing a challenge that she hadn’t seen in her years with PricewaterhouseCoopers LLP — acquiring and retaining talent for the accounting firm in the light of fierce competition. The complicating factor is that thanks to a heavy presence of energy companies, young talent in the Houston area is in high demand and supplies are low.
Molavi, Houston market managing partner for PwC, is realizing that you have to pull out all the stops to have an edge over the competition.
It’s no secret that PricewaterhouseCoopers over the years has developed comprehensive internship and management development programs that attract desirable young talent. Molavi is betting on those programs to make a difference.
“The average age of our workforce is 27 — so that will give you a sense of how much we rely on and focus on young talent such as college interns,” Molavi says.
“The students like to have an experience while they are in college, and they really don’t know what to expect ultimately when they come out of school, so we just give them that glimpse,” she says.
But more importantly, the interns will get to know PwC, which hopefully will lead to their choice of PwC for employment.
“It has been a great tool for us to not only recruit but they will see what it is like before they have to make a decision that will have an impact on their long-term careers,” Molavi says.
Here is how Molavi uses internship and management programs at the Houston location of PricewaterhouseCoopers to help fill the 1,069 seats at the table and keep those seats occupied.
Look and listen
The practice of finding and hiring qualified job candidates has grown more sophisticated for most companies in recent years. Such was the case of PwC some years ago when it started its internship program, now a well-entrenched fixture.
With the competition to secure talented individuals, it is essential to look for the skills that clients are demanding.
“It’s important to sit back and make sure that you have identified not only the technical skills in people you hire but, more importantly, the soft skills or the intangible skills that you are looking for in people,” Molavi says. “Identify what those are, and recognize over time those change — just because we know today what we are looking for may change over time. We live in an ever-changing environment, and you need to revisit that as often as you can to ensure that those intangibles haven’t changed.”
Once you sound out your clients, you’ll have a better opportunity to know what will best match their needs.
“The most important thing is listening,” Molavi says. “Spend a lot of time with your clients to make sure that you are listening to their issues, issues that are important to them, issues that they are dealing with, challenges and opportunities that are at the forefront of their minds.”
There are several key qualities that should be “must haves” on the intangible resume of an internship seeker.
“Adaptability — someone who’s willing to come in and adapt to new opportunities and a new environment,” Molavi says. “It’s someone who comes with flexibility of different ways of doing things.”
Equally as important is the attitude that learning is a dynamic procedure that lasts an entire career.
“Another important element is the ability and the desire to continue to relearn; when you are in an environment that’s changing all the time, you need to be comfortable that you are always learning, and it doesn’t really matter what level in the organization you’re at,” Molavi says.
If the desire to learn is kept burning, it can help establish a long-term interest in a particular field. The possibilities of advancement are many.
“Even as a leader, you can continue to have opportunities to learn new things every day,” she says. “For me, that’s exciting. That’s really what’s kept me in the industry and at PwC.”
Find the right fit
It’s been said that in the military as well as other sectors, the age group of 18 to the mid-20s make the best soldiers or workers if properly trained. And those who are even more well-trained do even better.
While the business world can’t really compare its stresses to those of the military, the advantages of young recruits are unmistakable — and similar in both fields.
“Our clients are always interested in our talent because we bring in the young; we help develop them,” Molavi says. “Our talent gets to see a lot of different opportunities and things and they learn pretty quickly on the job because of the exposure they get to our clients. So they are in high demand in the market. And we know that; that has been something we’ve been dealing with for years.”
With a focus on young talent, new entry-level candidates coming right off the college campus, it’s critical to look at their abilities and what they’ve learned on campus and their technical skills.
“First of all, try to find the right fit for the organization,” Molavi says. “At that entry level, spend quite a bit of time not only in the interview process on campus but spend time with those individuals over a two- or three-week period to get to know them and build that relationship — and then offer the best ones an internship.”
A typical internship lasts 10 to 12 weeks. It’s an opportunity to get to know the interns and see how they can work in the environment — and is a great opportunity for them as well to see what opportunities they may have.
“Look at a lot of those intangible qualities in individuals,” Molavi says. “Teamwork is huge for us. We work in teams. We do not do anything alone. So watching the interns work in teams and how they perform is important. Relationships are very important, both within our organization as well as with our clients, and watching how they develop those relationships and their abilities to learn in that area is essential.”
An internship is also a type of probationary period. It’s time to spot any red flags.
“I have had at least one person who interned with us, and at the end of the internship, she and I sat down together — she realized that accounting wasn’t for her and had never really been her passion,” Molavi says. “She had made certain decisions to go into the accounting field, and although she did a great job, she decided that her passion was somewhere else.”
Remember that interns are still students. Most will still have another year of college to finish.
“Internships happen generally right after their junior year for most individuals, so we don’t expect them to come in and know everything,” Molavi says. “We are not testing them on the technical knowledge that they are bringing to the table on day one, but you want to really look for those qualities for a good fit. Then put them on jobs that you would as brand-new associates so they get to experience what it’s like when they join as a full-time hire.”
One of the more important steps any organization needs to consider when you bring in interns is if you will have the opportunities for them to learn and develop in that short period of time.
“If they come in and they are not getting those opportunities, then it is going to be difficult,” Molavi says. “I think any business needs to look at how it is structured and what opportunities it can offer to an intern.
“I know that many of my clients even use internships to give students a sneak peek of an industry by bringing them in over a summer period and rotating them through various parts of their organization.”
Focus on the basics
It’s a serious undertaking for an organization to operate an effective internship program. But it doesn’t have to be expensive. PricewaterhouseCoopers’ program, while a significant commitment for the company, looks at it more as on-the-job training.
“On-the-job learning and development is really important,” Molavi says. “We do that quite a bit, and it’s easy too. I mean it doesn’t cost you a lot of money; you’ve just got to make sure that you are paying attention to it.
“You take the opportunity as you would a project — you stop and make sure that your team understands what you’re doing, why you are doing it, why it is important to your client, what they are going to learn from it so that it doesn’t just become a task; rather, it becomes a learning opportunity.”
As you develop your training programs over the months and years, design as much on-the-job training into it as possible, and it will help pay dividends.
“When we look at our training programs, about 70 percent of it is actually on-the-job training — every day on projects, at clients, real-time feedback and learning,” Molavi says.
PwC’s program has evolved over time to its current configuration: Each intern is mentored by three colleagues.
“One, they will have a buddy,” Molavi says. “They will have an associate who is closer to age and in experience to them, someone they can go to from day one with any questions they may have. They could be administrative, technical or industry questions. The buddy is someone with whom they can engage on a day-to-day basis.”
In addition to a buddy, each intern has a mentor who is a manager/coach.
“The manager ensures that they are getting the experiences, the exposure, the developmental opportunities,” she says. “The managers are responsible for their assignments during that period and help the interns through that.”
The last is a mentor who will nurture what are often called soft skills.
“The interns also get a relationship partner so they will actually have a mentor who will be engaging with them and spending the time to talk about opportunities in the profession, and more importantly for our interns, the opportunities at PwC that they will have in the long term,” Molavi says.
“The program involves quite a bit of investment but again it has become a very important source for our full-time hiring, and we believe the investment ultimately pays off both for us and the recruits.”
Another aspect of an internship program is shadowing. Interns are given the opportunity to shadow a partner for one day to get a glimpse into a day of a partner’s life.
“Because they see us in bits and pieces, the interns probably don’t really realize everything in which a partner may be involved,” she says.
“One of my interns a couple of years ago had the opportunity to shadow me,” Molavi says. “She had a fantastic experience. It just happened to be one of those days where I was doing a lot of different things. We started off the day when I was actually in a coaching session with one of my ‘coachees,’ and moved on to an interview that I was doing that day with a publication. She got to sit in on that.
“We went to lunch with a client. We had a client meeting that she attended with me. Then we came back and dealt with some of my internal roles.
“She was just amazed at what I touch in one day and saw things that she would be very interested in down the road. So hopefully those kinds of looks give the interns a little bit more in terms of what a day could be as they go through a shadowing process.”
Develop new leaders
If your organization has made it a practice to have an internship program, it needs an employee advancement plan to get the most advantage of the intern program.
Tapping outside talent for management posts is not an easy process today, and it is beneficial to promote from within, not only to recognize that individual but to prepare in case a manager should leave. Talent that started as interns is an excellent source for management positions because of the familiarity with the company and work records that show advancement through the ranks.
For example, PwC uses a global leadership development program called Genesis Park for employees who are approaching some nine years of experience — a senior manager or director. This is a 10-week residential program for about 50 people, three times a year, which moves around the globe.
“You bring in individuals from around the world so every one of these 10-week residential programs is very global and very diverse,” Molavi says. “You are bringing people together who have never worked with each other — to work with each other.
“It takes individuals through what I call real-life experiences. This is not a situation where they’re going to role-play. It gives them the opportunities to work on real projects for either a particular territory, PwC territory or a global issue that our global leadership is dealing with.
“They’ll have the opportunity to work on that project and come back with solutions and thoughts. So they are really learning and having that experience of working with individuals they didn’t know before, bringing different talents together, putting their minds together and driving innovation to come up with solutions.”
Programs such as Genesis Park allow employees to not only continue to develop professionally but personally, as well, with leadership skills.
“My coachee who went through came back out in some ways a different person,” Molavi says. “The most important change that I noticed was the self-confidence that she gained from being part of that team and part of that opportunity, and knowing that, she exhibited an attitude, ‘Wow, I did this, and I was able to have a very different experience, and it felt good, and I learned a lot.’”
How to reach: PricewaterhouseCoopers, www.pwc.com or (713) 356-4000
The Molavi File
Houston market managing partner
Born: Tehran, Iran
Education: University of Texas at Austin, with both my bachelor’s in business administration and master’s in accounting
What was your first job?
My very first job that I got paid for was working during summer school at Houston Memorial High School, and I helped the staff in the office, running a lot of different errands.
What has been the best business advice you ever received?
To be willing to take risks. In terms of my career development, this has been the best advice that anyone could give me — the fact that someone took the time to sit me down and talk about the fact that unless you take risks, you’re not going to learn, you’re not going to develop, you’re not going to see new opportunities. You need to step out of your comfort zone and do it often.
When you become complacent and you’re getting comfortable with something, it’s time to do something different. So that is something that has certainly stuck with me. My sponsors early on pushed me and gave me those opportunities, opened those doors for me to step out of my comfort zone and do different things. It certainly has been very important to me, and I have seen it help me in my career and in the advice that I give others.
Who do you admire in the business world?
There are a lot of individuals who have accomplished great things, so maybe the way I would put it is not so much the individuals but those people who going back to what I was taught who had been authentic. They are not trying to be someone who they’re not. They are authentic leaders. They have at times put their necks out there and done something different that was not conventional, taking the risk, and then been successful at it.
Those are the people that I look to, those individuals who aren’t always going to be sitting at the top of organizations. They’re not necessarily going to be the CEOs but individuals who have had significant impact on success with an organization, for-profit or nonprofit as well.
What is your definition of business success?
For me, I think it is really simple: if you think about the success and the legacy that is behind, to be able to have clients who would say, ‘Well, she was our business partner and she was able to help us achieve our business goals.’ Being a tax practitioner, it is important to make sure that we are helping our clients achieve their goals. I think that would be to me a great legacy to leave behind if I could look back at the number of partners I have personally made so that they could be successful.