Years ago, a friend told William F. Hutter that every organization is perfectly designed to achieve the results it is getting. Hutter, president and CEO of Sequent, explains it this way.
“The easiest way to explain this idea is to look at a sports organization,” says Hutter. “As a spectator, it is really easy to see things about a play, a player or a team dynamic that the coach must not be seeing. Everyone has played the role of Monday morning quarterback or armchair coach. In that role, we see things that need to be fixed for the team to perform more effectively. Passing stats are off — ‘get a new quarterback.’ Two missed PATs — ‘get a new kicker.’ The armchair coaches will tell you, ‘The team is designed to get the results it is getting.’”
Smart Business spoke with Hutter about this analogy and how it relates to leadership.
How does ‘Every organization is perfectly designed to achieve the results it is getting’ relate to leadership?
To answer this, it is important to understand the difference between managers and leaders. In the most basic definition, leaders help define the direction, the culture and the belief in the yet-to-be-accomplished objectives for the organization. While managers execute directives and tasks critical to the operations of the organization, neither managers nor leaders can exist without the other.
Generally, leaders don’t manage well and managers often don’t lead. Leading and managing are different skill sets that are both necessary and that must complement one another. Now that the ground rules are defined, let’s look at a common mistake companies often make in selecting their next leader. It’s called the ‘last person standing’ rule.
What is the ‘last person standing’ rule?
Consider a common method for selecting the next person in leadership, the ‘last person standing’ rule. This is essentially what happens when companies choose to not be purposeful in determining the next level of leaders. Instead, a decision is made by default.
So why does this happen within good companies? The collective knowledge of employees is extraordinarily important to all companies. Any company that has suddenly lost a key, long-time employee knows how this affects the entire organization. As a result, seniority or longevity of service tends to justify to business owners that the employee who has been there the longest and/or is the most technically competent should be in a leadership role. These employees may also have a leadership expectation due to their length of service and contribution to the company.
Does every outstanding manager or worker have the potential to be an effective leader?
Consider this illustration of what can happen when a business begins to grow and evolve. The business owner of a thriving small business has relied on a key employee, Bob, for more than 15 years. The owner trusts Bob to manage the day-to-day aspects of running the business. Bob is also genuinely liked by the staff and has a good understanding of the owner’s goals. Due to the owner’s leadership and Bob’s ability to manage, the company grows and prospers.
Then, after years of working together, the owner decides to hire another person to help lead the company. Following the ‘last person standing’ rule, Bob is given the opportunity and is now focused on the overall business, not on operations. As a result, Bob needs to hire a new manager. Not wanting to disappoint, he, too, makes a decision by default rather than on purpose and hires his best worker to be the new manager. Unfortunately, the company is left without a good leader or effective manager and the best worker is now a manager.
Why does this rule continually play out in business?
Essentially this happens because it is easier to let it happen than to make a purposeful decision on leadership and address the difficult discussions with employees who will be disappointed when their expectations are not met.
Just because the key person is a great manager does not mean that he or she is prepared to be the next leader. Longevity and great results from an exceptional employee in a defined role could mean that the person is exactly where he or she fits best within an organization.
Every business has a key employee who works diligently, making sure the daily operation runs smoothly. However, the real challenge comes in knowing how and when to train key employees for natural transitions in the growth of the business. Unfortunately, businesses do not spend as much money training their employees as they do on keeping equipment running smoothly. Most entrepreneurs tend to think that everyone is blessed with the same leadership skills that they possess, but that is often not the case.
How can business be more prepared to avoid this situation?
It is imperative for any organization to plan for a transition by providing training for employees and helping them prepare for their next responsibility. As the leader, the business owner should work on the following:
- Create a culture that emphasizes the importance of every function.
- Acknowledge and remember the value of long-term employees.
- Match the skills of individuals with the jobs to be performed.
- Be honest with every employee about their potential and their fit within the organization.
- Purposefully plan for transition.
- Make the investment in training your most important people.
- Don’t be afraid to hire people with the skills your organization needs to grow.
If you know you need to change your organization, you must change first. Do things differently than you have in the past. It’s not easy ... be a leader ... decide to make the change.
William F. Hutter is president and CEO of Sequent. Reach him at (888) 456-3627 or firstname.lastname@example.org. For more information about Sequent, visit www.sequent.biz.
Insights HR Outsourcing is brought to you by Sequent
Business owners and managers are working longer hours these days in the face of mounting competition, trying to achieve superior results in a constantly changing environment. Many of them consider entrepreneurship as some elusive strategy that moves the billion-dollar idea from the pizza parlor to the IPO. In other words, says Mark Hauserman, how does this affect me?
Smart Business spoke with Hauserman, director of the Muldoon Center for Entrepreneurship at John Carroll University, about things to consider when determining your strategy.
What is the first thing to consider?
People often believe that entrepreneurship is the province of the young and gifted, particularly when it comes to intellectual property. However, the average age of the successful start-up entrepreneur is 38. If you think that seems old, consider that a recent study by the Ewing Marion Kauffman Foundation says that ‘in every single year from 1996 to 2007, Americans between the ages of 55 and 64 had a higher rate of entrepreneurial activity than those aged 20-34.’ This is also supported by the findings of Charles Eesley and Edward B. Roberts in their study titled ‘Entrepreneurial Impact: The role of M.I.T.’’
Would you rather have a bright idea or experience?
Experience will win out every time. Good ideas come mostly from people who have experience. Jay Brand, Ph.D., an expert on creativity, supports Malcolm Gladwell’s (Outlier,s Brown, Little & Company 2008) thesis that 10,000 hours of experience is the best preparation for achieving that ‘breakthrough’ result. Follow the money. Few venture capitalists invest in ideas; instead, they invest in people, and the best ideas are nearly always backed by experience.
Is entrepreneurship a learned behavior or the result of natural selection?
The question we are most asked in the academic environment is, ‘Can entrepreneurship be taught?’ The fundamental building blocks of entrepreneurship can definitely be learned. A working definition we use for entrepreneurship is ‘seeing an opportunity that others did not see, and taking action.’ Long before entrepreneurship became a buzzword, our institution was churning out successful private sector business owners. In the five counties surrounding Cleveland, there are more than 500 companies owned or run by our graduates. How did we do it? By leveraging a 125-year history of teaching students to think critically, one of the hallmarks of Jesuit education, and a building block of entrepreneurship.
What is the role of change in your business and how do you use it to your advantage?
At a recent meeting, I asked successful business owners to raise their hands if they were doing the same thing they did five years ago. As you might expect, no hands went up. So how do you get out in front of change? A key element is opportunity recognition, fostered by your experience. There are few people who have the experience you have and who know more about your business than you do.
The first two courses in our entrepreneurship program are Creativity, Invention and Innovation and Idea Development. Freshmen and sophomore college students usually don’t know enough to realize that their crazy idea just might work. We encourage them to think of solutions to problems they see right in front of them. One instructor uses the ‘bug list,’ asking students to walk around the campus and come back with five to 10 things that bug them. Then they are asked how they would solve the problem. Do your customer service people know what bugs your customer? Do you have a way to mine these nuggets?
Remember that profound change is often incremental. You do not have to turn your business upside down to leverage your team’s great ideas. By the way, the student idea is rarely ready for prime time. This is where your best, most experienced associates need to weigh in.
Tips to help you create a good environment for this strategy:
- Don’t have functional fixedness; if you spend too long on a single problem, all solutions may start to look the same.
- Avoid surveillance while working, Micromanagement will kill most good ideas.
- Don’t constrain your own choices, for example, ‘The budget will not support it.’
- Don’t predetermine the result by your method of evaluation.
- Don’t do what the competition does. They might be good, but they don’t know everything.
Mark Hauserman is the director of the Muldoon Center for Entrepreneurship at John Carroll. His undergraduate degree in business administration is from John Carroll and he is a Beta Gamma Sigma graduate of the M.B.A. program at Indiana University. Hauserman joined his family’s business, the E.F. Hauserman Co., in 1974 as a member of the corporate financial staff. After transferring to sales, he held a series of positions of increasing responsibility in both sales and sales management, working in Atlanta, Ga.; Rochester, N.Y.; and Cleveland, Ohio. In 1984, he bought a subsidiary, Decorative Veneer, from the company. In the 1980s and 1990s, he helped to develop a diverse group of smaller companies in information management, consumer marketing, office furniture and coating technologies by assembling the management teams and providing strategic direction and capital. He has now divested his ownership of these companies. In October 2004, he was hired as the executive director of the Entrepreneurs Association at John Carroll University and in 2006 he became the director of the Muldoon Center for Entrepreneurship.
John Carroll students are given many opportunities to develop their entrepreneurial talents through the University’s Edward M. Muldoon Center for Entrepreneurship. The university’s multidisciplinary program can help open doors for students who gain entrepreneurship skills and knowledge from both business and liberal arts faculty, and through hands-on experiences with ‘real life’ entrepreneurs who are members of the university’s Entrepreneurs Association that also volunteer to coach John Carroll students. John Carroll’s entrepreneurship program has been recognized by Bloomberg Businessweek as the 18th best program in the nation and the best undergraduate entrepreneurship program in Ohio. This marks the second consecutive year JCU has made the list; the program rocketed from 43rd in the nation last year.
Visit www.jcu.edu/muldoon for more information.
Insights Executive Education is brought to you by John Carroll University.
Lorain County Community College is committed to employing innovation in the workplace at all levels. Employees take an active role in achieving Lorain County Community College’s vision of excellence in the four cornerstones of education, community, cultural development and economic development.
Lorain County Community College’s innovative educational programs, including a University Partnership program that allows LCCC to offer more than 40 bachelor’s and master’s degrees, are building the talent pipeline while its continuum of entrepreneurial support helps drive regional economic development and job creation. LCCC is home to the Great Lakes Innovation and Development Enterprise (GLIDE), a partnership between the Lorain County Commissioners, Lorain County and LCCC that coaches, teaches and mentors entrepreneurs. The LCCC Foundation’s Innovation Fund provides preseed funding to technology-based start-up companies and has awarded nearly $6 million to 84 companies. With a $1 million grant from the Kauffman Foundation, LCCC launched Innovation Fund America to replicate its Innovation Fund at community colleges across the nation, a first step in making community colleges a recognized front-door for entrepreneurial support. LCCC is also home to the Richard Desich SMART Commercialization Center for Microsystems, bringing additional capacity to Northeast Ohio by helping companies commercialize sensor/MEMS-based products. All of these innovative programs are complemented by LCCC’s Entrepreneurship Innovation Institute, which partners with organizations and entrepreneurs for education, support and access to technologies and workforce development opportunities.
For more information about LCCC, visit www.lorainccc.edu or call (800) 995-5222.
Weltman, Weinberg & Reis Co. LPA
Our innovative initiatives include three core areas of our business — people, products and performance. On the people side, our partnership supports multiple leadership mentoring programs. Each attorney is assigned a partner-mentor to guide them in career development, sharing best practices and excellence in writing, file processing, leadership and court demeanor. Our support staff also participates in leadership development programs through our in-house WWR University training programs, as well as group and custom one-on-one training. On the product side, our partners have identified new services and new practice areas for the firm, exploring unique approaches to the real estate default market, probate and commercial recovery, along with improving our expertise in upfront call center collections and litigation. And in the performance area, our technology team is designing and developing infrastructure improvements for our core data warehouse and workflow processes, along with advances in security protocols, cash management and invoicing both for customers and our internal business unit teams. These initiatives are necessary to preserve our place as the nation’s top debt recovery law firm, all designed to help us maintain and support a positive customer service experience every day.
For more information about Weltman, Weinberg & Reis Co. LPA, visit www.weltman.com or call Alan Weinberg, managing partner, at (216) 685-1100.
Innovation is vital to the future of U.S. Bank, and it is a corporate priority to innovate and invest in technology and operations systems that make it easy, fast and secure to do business with us. We invest in new ways to provide the information, products and delivery systems that our customers need — and to enhance our capabilities in the areas of regulatory compliance and risk management. We have fostered a culture of innovation and are committed to investments in technology both externally and internally. Our initiatives include solutions for consumers and small businesses, as well as for larger businesses and targeted business sectors here and internationally.
Barlow Research Associates Inc. honored U.S. Bank with a 2011 Monarch Innovation Award, recognizing our ScoreBoard online payments management tool, which helps small businesses make smarter decisions about the financial operations of their business.
For more information about U.S. Bank, visit www.usbank.com or call (216) 623-9228.
LaCentre Conference and Banquet Facility
LaCentre Conference and Banquet Facility has built a solid reputation as the premier venue for hosting full-service conferences, special events and business meetings. Our world-class facility has embraced elegance, high-tech communications and delectable culinary creations to assure your event is an absolute success.
LaCentre’s innovation extends to its technology, atmosphere, capability, flexibility, form and taste. Our dedicated and devoted staff provides clients with a positive and enriching experience with more than 25,000 square feet of meeting space to accommodate events of nearly any size.
For more information on LaCentre, visit www.lacentre.com or (440) 250-2000.
Colortone Staging & Rentals
Colortone Staging and Rentals is a nationally recognized, award-winning, live-event production company that is continually investing in state-of-the-art and cutting-edge technology. Our innovation comes from the creative use of these “tools” to solve our customers’ presentation challenges no matter what the budget.
From simple breakout rooms to arena-sized extravaganzas, our staff along with our national and international partnerships offer live-event audio, video, lighting and scenic services with the same quality and consistency no matter where you are
And with our highly accomplished and competent staff with more than 200 years of combined experience, you can expect an on-time, on-budget, stress-free event with no drama, no missed rehearsals and no missed cues.
For years we have been making CEOs shine a little bit brighter and helping them deliver their message intact, in focus and crystal clear to the very last row. We have presented their PowerPoints, unveiled their products, honored their award winners and streamed their presentations onto the Internet. Our ability to combine all of those initiatives while keeping the client’s goals, audience and message in mind cuts to the heart of Colortone’s servant culture.
For more information, visit www.colortone.com.
Ohio.net is a full-service Internet technology provider that for more than 100 years has been an innovative leader on the cutting edge.
Ohio.net offers Voice over Internet Protocol and digital telephone services that reach throughout Ohio and to other customers in the United States. For the last eight years, this VoIP service has been a major area of growth in the telecommunications industry and has once again kept the company ahead of the curve. This Ohio digital phone service goes above and beyond a traditional phone company by offering private numbers, toll-free calling and expanded service areas all while saving companies money.
The company also has one of the largest service areas in Ohio and product offerings that range from high-speed access products to security and firewall-related services.
Owned by Doylestown Communications Inc., Ohio.net is part of a communications consortium that includes local phone service companies, a cable television company and other Internet providers. Ohio.net has leveraged this background and experience to stay ahead of the technology curve and make development decisions that result in steady growth. It has also been an innovator for more than a century.
For the latest information and upcoming events, visit www.ohio.net or call (888) 881-0805.
In a crowded marketplace, where traditional products and services continue to be commoditized, the ability to innovate has never been more important. Making your organization stand out by offering something truly innovative can be the difference between success and failure.
That’s why Smart Business is honored once again to recognize a group of savvy innovators — Rising Stars, Visionaries and Master Innovators — who understand how to effectively separate themselves from the competition.
This year’s honorees represent manufacturing, software and technology, retailing, as well as two business incubators. Each of them has approached the marketplace differently and has the results to prove it.
We are just as elated to feature a dynamic panel discussion with three entrepreneurs who define innovation at its greatest. Each has shepherded the development, promotion or support of breakthrough technologies.
- Steve Potash, president and CEO, Overdrive, has helped revolutionize the digital book industry, specifically the ability to check digital books out of libraries.
- Dan T. Moore, president, The Dan T. Moore Cos., continues to innovate with each of his properties, including helmet pad systems for the U.S. military through Team Wendy.
- Todd Goldstein, partner and CEO, Shaker LaunchHouse, leads one of the new breeds of start-up incubators that are helping to foster regional entrepreneurship.
Congratulations to the honorees, and we hope you join us Sept. 20th at the 2012 Innovation in Business Conference.
Innovation in Business Conference
Join Smart Business for the14th annual Innovation in Business Conference, which will focus on breakthrough innovation and how to achieve it.
Date: September 20, 2012
Venue: LaCentre Conference & Banquet Facility
25777 Detroit Road / Westlake, OH 44145
Cost: $30/ticket or $250 for a table of 10
5:00 p.m. Doors Open for Networking & Cocktails
6:30 p.m. Honoree Recognition & Panel Discussion
8:30 p.m. Dessert
Todd Goldstein, CEO/Partner, LaunchHouse
Dan T. Moore III, President, Dan T. Moore Cos.
Steve Potash, President & CEO, OverDrive Inc.
Business leaders from organizations that have been in existence five or fewer years with innovative approaches to a business process, idea, product or service.
CEO / Partner
Business leaders and organizations that have demonstrated a history of innovative ideas throughout their careers or business lifespans, or have developed cutting-edge processes or products.
President & Owner
Business leaders or organizations with sustained success and a history of innovation, as well as in excess of $50 million a year in annual revenue.
Scott Forster & Eric Lofquist
Co-owner, President & CEO;
Co-owner, VP & COO
Seth Mason & David Sterio
Energy Manager and the
Superintendent of Maintenance;
Manager, Engineering & Building Services
For more information and to register online click here, or contact Meredith Baldy at email@example.com or (440) 250-7023.
Craig Clark is one of several general managers who have held the position at The Rivers Casino within its first three years of operation. But that inconsistency at the leadership role has made it hard to create programs that benefit the casino’s customers as well as its employees.
The Rivers Casino, which opened in 2009, has more than 1,800 employees and saw 2011 revenue of $434 million. Clark, who became GM in June 2011, has been focused on enhancing both the customer and employee experience to make the casino a better business overall.
“The key is really consistency of leadership so you can put together programs with the community and programs within the facility to allow team members to grow and advance,” Clark says. “I think that’s the key to my leadership. In the gaming industry some people move around, but for myself I like to be located at one facility for quite a period of time.”
Before coming to Rivers, Clark spent nearly 15 years at Turning Stone in upstate New York where he was able to develop the facility.
“That’s where I spent most of my career, and we had a complex there that we kept adding to for years and years,” Clark says. “(In Pittsburgh) we have a great complete facility that we keep creating different entertainment experiences within and reasons for our customers to come and visit.”
Currently, Rivers Casino has 80 table games, 30 poker table games and 2,970 slot machines. It also includes five different food and beverage outlets, a banquet space and three bar locations on the casino floor. All combined, there is plenty of opportunity to impress guests with customer service and create programs that motivate the employees.
Here is how Clark is driving customer- and employee-related initiatives.
Develop key programs
In an industry where excellent customer service and employee training are staples of operating a business, it isn’t enough to simply talk about having good service. To ensure customers are treated well and employees get opportunities to advance, you have to implement programs that keep service and training as a top priority.
“We have a variety of different programs here at the property,” Clark says. “We’ve introduced a 12-Star program, which is a program for our young business leaders to learn more about all operations of the facility.
“We have leadership training components within that training program. We have accounting practices. We have how to do a review and give good feedback to team members when you give them their annual review. It’s a 12 different part program.”
While one program may be aimed at learning all aspects of the casino business, other programs offer employees a chance to learn what it takes to perform specific jobs.
“We have a dealer school here where people from outside can interview and be trained as dealers and team members who are currently dealers can learn other games that they might not have perfected to date,” he says.
The casino also has programs aimed at recognizing employees who are going above and beyond the expectations of their jobs.
“We’ve put in a program for team member of the month and we have team member of the year, where both an hourly and a salaried team member are recognized for their great contributions to the facility,” he says.
“We are also putting together right now a supervisory leadership training program focusing on how to ensure our supervisors are consistent and thorough in their coaching and their mentoring of team members so we get the right consistency throughout the organization.”
While setting up a program is one thing, continuing to improve it and make necessary changes is another. The key is to view it as an on-going process.
“It doesn’t start one day and end another day,” Clark says. “It’s actually a process that you have to live and breathe and it has to be part of your business soul. You need to focus on it each day because as a leader, the team members are looking at you as the example.”
When you can listen to employees and listen to their ideas and make a positive change, that’s how these programs are developed. You have to ensure your team continues to focus on service levels because it’s not lost on clients, customers or guests.
“Our guests have such a high expectation of coming here and they all want to be treated as if they’re that special person; our goal each and every day is to ensure that we do that and they walk away with a memory and an experience of coming here to the Rivers,” Clark says.
One of the biggest reasons Rivers Casino has the amount of opportunities available to its employees is to offer them a chance to grow and learn about the whole business. This creates employees who thoroughly enjoy what they do and strive to be well-rounded.
“Sometimes people are narrowly focused and I think the more that you can explain to them or educate them on more parts of the business, the more valuable they become to your organization,” Clark says. “If a dealer understands how the marketing promotions are being created and what our goals are with those programs, they’re our salespeople that are out there each and every day and it just makes them more informed and better team members and better guest service professionals.”
To help encourage employees to become well-rounded, it is crucial that you provide outlets for them to be recognized.
“Those types of programs start from one-on-one contact with team members and ensuring that you recognize them as you walk around the facility and thank them for their hard work,” he says. “That’s something that business leaders need to continue to focus on because that pat on the back is one of the best rewards that a person can have each and every day if somebody can have that personalized recognition.”
Another way to develop your employees is to establish expected criteria and highlight the individuals who provide strong examples of the attitude, behavior and work ethic you expect.
“When you look at human resource programs, we try to create the criteria that establish what the right business behavior for a team member or team leader is,” Clark says. “We want to take those people who are examples of that behavior every day and put them on a pedestal so people look at them and say, ‘Matt is a great guest service deliverer every day. He walks the walk and coaches team members.’
“He is an example that they can look at for that consistency. Consistency is the hard part in the hospitality business because things happen in your personal life and when you come to work you have to shed anything that’s not positive and ensure you put that smile on your face and be positive and proactive in what you do at the workplace.”
Strong employee development ultimately comes down to how much employees want to help themselves become better. If you can get your employees to want to achieve greater things and you allow them outlets to suggest improvements, you create a culture that fosters continuous improvement.
“Quite often some of the best ideas come from listening to your team members,” Clark says. “Keep an open mind. I’ll walk the casino floor and some of the best ideas I get are from team members who come up to me with suggestions or ideas that were passed on from a customer. You have to take those ideas, and as a leader our job is to align the resources, when practical, to implement those great ideas.”
On a quarterly basis Clark does something he calls “communication corner” where he sets up a table in the team member cafeteria for all three shifts to get their input.
“I ask them for their ideas, suggestions and concerns because a third of the ideas come from the leadership team and their experience, a third comes from our team members who are in the workplace each day and a third comes from customers,” he says. “So I can get two-thirds of the knowledge I need by just listening to our team members.”
An outlet such as Clark’s communication corner is a great way to gain access to employee’s ideas. However, the key to continuing that practice is to show them you are acting on those ideas.
“A lot of it is listening to those ideas and then having the team members see the change,” he says. “That openness to listening as well as showing action, positive actions reinforce that behavior. It’s like anything else in life, if you’re an athlete or if you’re a business leader, you have to exercise those behaviors. As business leaders we have to exercise the behavior of listening and we have to exercise the behavior of implementing the things that are practical to our businesses and cost-effective.”
Drive customer service
The concept of customer service seems simple on the surface, but to achieve it and be a leader at it your company takes the right employees first.
“One of the keys is starting with the selection process of the team member,” Clark says. “The next most important thing is we have a two-day orientation here at the property. Part of it is going through policies and part of it is really talking about hospitality and talking about our guests and the expectations of our guests.
“Also, it’s how we ensure that we are focused on those good behaviors to make it a great experience for the guests when they come here and how all the systems work.”
An orientation program is a key way to set the tone for someone arriving in the company. It gives employees a good overview of the type of businesses that they’re entering in to and ensuring they’re the right person. The casino doesn’t stop there.
“From that, we have a 90-day checklist program which really follows the job description and what their core functions are as a team member,” Clark says. “We make sure we go through that checklist to ensure that we have good training programs set up to ensure that they focus on the job function, the quality and the service.
“Those types of things tend to work out well where team members really understand the expectation and deliver the best results.”
To measure whether employees understand their job and are delivering desired results, it is important to have some form of review in place.
“We do a 90-day review of a person who joins the organization and then an annual review,” he says. “An annual review should never really be a surprise. It should be a summary of the year’s performance of the team member. The key is to have ongoing communication and ongoing coaching and praise.
“When you have a balanced program and all those cogs of the wheel are working together, that’s where you have the best result. If there is something team members need to advance their skill on, the key is helping them out with that as soon as it’s identified. If they’re doing great things it’s recognizing them immediately because that’s where you’re going to create the best team loyalty and the best team culture.”
To keep customer service levels at their peak it is important that you use what resources you have available to you. Rivers recently implemented a secret shopper program to help test customer service.
“We have an independent party that will evaluate service levels looking at it from a guest perspective,” Clark says. “A shopper service will come in and they’ll go through experiences as if they were a guest and then give us their feedback on individual team members and the property overall.”
There are a lot of great resources, some of them free and some of them you can acquire. “You have to stay current on different practices and different education processes,” he says. “The world is changing rapidly when it comes to online training. We’ve put several tutorial programs in place this year. The key is really seeing what the most effective way is to use this technology to train team members and ensure that they are current on all their practices.”
How to reach: The Rivers Casino, (412) 231-7777 or www.theriverscasino.com
- Design programs around initiatives.
- Provide opportunity and outlets for employees.
- Enhance the customer experience.
The Clark File
Born: Endicott, NY
Education: Received an associate degree from Broome Community College in business administration. He also has a bachelor’s of science degree from SUNY Binghamton.
What was your first job, and what did you learn from that experience?
I worked with my father as a residential carpenter during high school up until I graduated with my bachelor’s degree. What I took away from that was hard work, an understanding of what you can create with your hands, and a strong work ethic.
What is some advice that has held true through your career?
One of the things I think is most important is education. Somebody should always focus on educating themselves and continue that education throughout their life.
Who is someone you look up to in the industry?
I spent most of my career at Turning Stone and I worked with Frank Riolo. He was somebody who always believed in me and continued to challenge me and give me opportunities to grow.
Do you ever gamble and what is your favorite game?
In the state of Pennsylvania, I rarely gamble. If I make a trip to Vegas, I gamble a little bit, but not very much. I like to play craps. I enjoy the entertainment experience.
What are you looking forward to at Rivers Casino?
I’m looking forward to the continued development of Rivers. I love to grow a business and I really believe in the business plan. That’s why I enjoy this job because I can see the growth of the team members and the growth of the property and the success that’s driven by both of those.
When focusing on the day-to-day operations of your business, it’s easy to overlook planning for its future. And if your adviser doesn’t bring it up, you may never put a plan in place. However, having a well-thought out succession plan can ensure that your business continues after your retirement or death.
“It’s always a delicate conversation to have,” says Michael Dreveniak, vice president and wealth market leader with First Commonwealth Advisors. “Nobody wants to talk about when they are no longer here, but this is something that you have to do.”
It’s crucial to have answers for two questions, he says — what happens to the business if you are no longer around, and what happens in the event of your incapacity?
Smart Business spoke with Dreveniak about the importance of planning and how insurance can play a critical role in the process.
Why is succession planning critical to the continuity of a business?
There are risks associated with failing to plan. For example, when an owner passes away, there could be a lack of cash flow to maintain the business, which could result in a lower company value. And if the business isn’t well funded, it will lose key individuals and be unable to attract top talent to continue running the business.
The biggest misstep business owners make is failing to address this issue at all. Talk to your advisers — accountant, attorney and wealth manager — to ensure the best interests of your beneficiaries and heirs are considered. Your advisers are paid to walk through risks and anticipate them, providing ‘what if’ scenarios to ultimately arrive at a solution.
The classic example is the mom-and-pop shop that has been in business for 30 or 40 years and then closes its doors because the owner retires and there is no plan to continue the business. Proper planning could have allowed the business to continue running and the owners to accumulate additional wealth. Small businesses — classified as those with less than $7 million in annual revenue and fewer than 500 employees — represent 99.7 percent of all employer firms, and too many of those fail to create a plan.
When should business owners start planning and what steps should they take?
Five years is the perfect time horizon. Begin with the end in mind and allow financial professionals to ensure your balance sheet is cleaned up to maximize value. If the company is more attractive, you can receive top dollar and enable the parties involved to receive financing from a bank, other financial institution or investors. Then, evaluate the plan every year or two to monitor your progress.
Being proactive and having a well-designed plan can help with unforeseen future issues. When planning, prioritize what is most important to you, such as exit planning, income protection, retirement income, business protection, wealth transfer or survivor income. This keeps you from trying to tackle everything at once.
As your business changes — for example, you bring on another employee or your personal life changes — discuss it with your advisers so those changes are reflected in your succession plan.
How does a one-way buy-sell agreement work and why should a business consider it?
Many succession plans engage a well-defined buy-sell strategy, which dictates ownership going from the owner to another individual. It’s a key component of the planning process. With a one-way buy-sell agreement, if the owner of a company has somebody in mind — whether internal or external — who plans to purchase the company, there’s an agreement that he or she will buy from the owner upon some qualifying event, such as disability, death or retirement.
This works well where there is a sole owner, oftentimes for businesses with $1 million to $5 million in annual receipts and fewer than 100 employees. The one-way buy-sell will dictate how the funds change hands to purchase the business. If the owner is not around, in many cases, it provides a way for the beneficiaries and heirs to be compensated.
How can life insurance assist with a buy-sell agreement?
If the person who is going to purchase the business buys life insurance on the life of the business owner and the owner dies prematurely or the plan is to transition at death, the insurance provides the funds needed to purchase the company quickly. It’s a plan to provide certain funding when needed.
How else can the right insurance aid with planning?
Business owners work extremely hard to grow their assets, so protecting them should also be a priority. After accumulating a large asset base, that money can go quickly for long-term care if something goes wrong with your health.
In Pennsylvania, the cost to be in a nursing home averages $8,000 per month, or $96,000 per year, for care in a semi-private room. If high costs erode your asset base, your beneficiaries or heirs are forced to have a fire sale of assets to raise money for your care. Long-term care insurance is a way to mitigate some of that risk, to transfer it to an insurance company as opposed to the owner.
Here is a final reason to ensure that you incorporate insurance into a defined plan. Though some business owners say, ‘I may never use long-term care insurance. I get no benefit and just pay out every month,’ properly placed insurance enables business operations to continue when the unthinkable occurs. Until then, it works to protect your assets and brings peace of mind so that you can concentrate on your business instead of worrying about the ‘what ifs.’
Michael Dreveniak is a vice president and wealth market leader with First Commonwealth Advisors. Reach him at (412) 518-1854 or firstname.lastname@example.org.
Insights Wealth Management is brought to you by First Commonwealth Bank.
Transparency in health care means allowing consumers to have both cost and quality information for services delivered by health care service providers. In health care, this kind of information has been largely invisible and unknown to consumers, including employer groups. Many believe this lack of information is a factor in high health care costs.
In recent years, both health plans and employer groups have been supportive of the concept that directly engaging consumers in decision-making can help to reduce costs. And, in order to engage consumers, they must be informed about costs and quality of services.
“Transparency enables consumers to compare both the cost and the quality of health care treatments,” says Dr. Stephen Perkins, vice president of Medical Affairs for UPMC Health Plan. “Those two pieces of information are essential. That is the only way they can truly make informed choices among doctors and hospitals.”
Smart Business spoke with Perkins about transparency and its possible effects on health care and health care costs in the future.
Why is transparency important?
First, for providers, it benchmarks their performance, thereby giving them a way to measure their performance against others and, consequently, make improvements. For insurers, it provides a way to recognize and reward quality and efficiency in the delivery of health care. And, finally, it provides a way to help patients make more informed decisions about their care.
In addition, the cost of procedures can vary dramatically by facility, and often the consumer has no idea of the price differences. At present, health care may be the only industry in which consumers are expected to purchase a service without fully knowing the cost or quality of what they are getting. Most consumers who are part of an employer’s health plan have no idea about the cost drivers that determine the premiums they pay.
How can transparency affect health care costs?
At present, consumers are largely unaware of the price differences that exist for the same services from different providers. They have little idea about the cost of just about anything connected to health care, with the possible exception of co-payments. Consumers certainly have a right to know the quality and cost of their health care. Through health care transparency, consumers can get the information necessary to be able to make choices based on value. Reliable cost and quality information is essential to making choices. In theory, consumer choice should create incentives at all levels and motivate the health care system to provide better care for less money. When providers compare themselves to one another, this can begin a process that could lead to improvements in care and reductions in costs.
For almost all other purchases, consumers can readily get information about price and quality. This has always been presumed to be the basis for making intelligent choices that make sense economically. It would seem logical to assume that will be the case with health care as well.
Certainly, it makes sense that engaging individuals to be more responsible in managing their health and in purchasing health care services is a necessary first step to curbing costs in health care.
What about the differences between health care purchases and other purchases?
There are certainly differences. For one thing, consumers might be inclined to automatically associate cost with quality, when that may not necessarily be the case. In addition, it is not always possible for health care decisions to be made following a slow and deliberative process. These decisions are often made under emergency conditions and at times of high emotional stress.
What kind of consumer tools can be effective to ensure transparency?
In order for consumers to get information that is most useful, they would need to know data that is derived from actual claims. That way they see what actually was paid to the hospital for a certain procedure, for instance. They can use that information to determine, for example, what the cost of a certain procedure was in several different hospitals in the area. But consumers have to know not just how much a procedure costs but also the total cost of caring for a given condition.
How will health plans be involved in transparency efforts?
Health plans will be essential to transparency efforts because they have the capacity to make price and quality information available at the local level and they can offer consumer-directed plans for employers and individuals.
Health plans have the capacity to show comparisons of price, quality and efficiency. They are interested in transparency because providing quality and price information to consumers in a way they can easily access and use is also a way to build trust with members.
Why would providers support transparency?
Transparency data will allow providers to improve by benchmarking their performance against others. It encourages private insurers and public programs to reward quality and efficiency. And, it helps patients to make more informed choices about their care.
There will be concern, of course, that consumers might, at least initially, be confused by the new information, but essentially, transparency is seen as something that will certainly become a benefit to consumers.
Dr. STEPHEN PERKINS is vice president, Medical Affairs, for UPMC Health Plan. Reach him at (412) 454-7682 or email@example.com.
Insights Health Care is brought to you by UPMC Health Plan.
Lisë Stewart founded Galliard Group to support family-owned businesses in the many decisions that can make or break the future of a company. One significant area of decision-making for family-owned businesses is succession planning.
When considering how to handle the future of the company, many family-owned businesses don’t realize the number of options that are available. From transitioning to the next generation in the family, to bringing in a leader from the outside or deciding to sell the business, the decisions are very personal and require careful thought and planning.
That is where Stewart, founder of Galliard Group, lends a helping hand. Galliard Group provides consulting, training and support materials for family-owned businesses. Conversations in the succession planning process can be difficult, as most experienced family-owned business members will report. The process is challenging on several different levels.
“Owners who are currently running the business often really enjoy what it is they are doing and don’t necessarily want to leave, but they feel like they need to make room for the next generation of ownership,” Stewart says. “Others really want to get out of the business because they’re tired and they’ve been doing this a long time, but they realize they’ve never groomed a successor and they don’t know what to do with the business.
“Sometimes they think that their children may want to take it over, but they’re concerned that their children don’t really have the skills, background, or maybe the passion to do a great job. How do you tell your children that? So it’s a very difficult situation.”
These businesses need to understand their options. The sooner the business members start the planning process, the better.
“We try to convince our business owners to develop their exit strategy right when they start the business,” Stewart says. “Think about what the future needs to be and what your plans are. A lot of people don’t realize that it could take five years or more to really develop and implement a successful succession plan.
“The other thing I think is important to note is that succession is not just about finding one person to take over and run your business. A succession plan is a plan to continue the long-term viability and success of the business. That often means that you need far more than one person to take over — you need a strong leadership team.”
More often than not, family-owned businesses will have to look outside the family to get the right kind of talent to help grow the company.
“We really encourage family-owned businesses to place people into jobs based on their talent and skill, not on their blood line,” Stewart says. “You have to look at the job and what needs to be done to this company to meet a strategic goal. Get people into jobs that have the talent or the ability to learn skills that are key to that job being effective. Base your organizational development on key competencies as opposed to relationships.”
Family businesses often struggle to weigh the needs of the business with the needs of the family. It is important to be honest in discussions about the future, especially for families that do not plan to pass leadership to the next generation.
“We have a saying at Galliard Group, which is, ‘Deal with the emotional issues before emotions become the issue,’” she says. “If you believe your son or daughter or the next generation of potential owners don’t really have the skills … have a really honest conversation around what sort of skills you need in order to bring this strategic plan to life and if you don’t have it, what are the options.”
Depending on the needs and desires of the business owner(s), there are several paths to take.
“One might be that you form an advisory board of people who have knowledge necessary to help grow the company and they can serve as mentors and coaches for the next generation,” Stewart says. “The second thing you can do is bring in an interim leader. They come in in a leadership role, but they are hired with the knowledge that they’ve got to be able to coach the next generation of ownership. There really are quite a lot of options that family owners can generate if they are not sure that the right leader is in the family.”
How to reach: Galliard Group, (320) 762-1371 or www.galliardgroup.com
Going into 2008, Chip Conley was concerned about the future, and not just for the obvious reasons. Yes, there was the looming possibility of another economic downturn. And with his company launching 15 hotels in a 21-month period, he wondered like many business leaders what impact a recession would have on his organization and its 3,000-plus employees. The difference was Conley’s personal life was also in turmoil.
“We were growing as fast as we ever had at a difficult time,” says Conley, the founder of the San Francisco-based hotel group, Joie de Vivre Hotels. “I also had a family member who was going to San Quentin prison wrongfully. … I had a long-term relationship end. I had five friends commit suicide during that time.”
Soon, the CEO faced the repercussions trying to juggle so many emotions.
“I had my own flat-line experience,” he says.
After finishing up a speech in St. Louis, Conley fell unconscious. In the five to 10 minutes that it took the paramedics to arrive, his heart stopped.
While Conley fully recovered from the heart attack, his experience sent him through a search for meaning, a way to make sense of all the things happening in his life.
“CEOs — you sort of think that they’re above all the emotions and the difficulties and no one should be pitying any CEOs,” Conley says. “You know — ‘Don’t cry for me, Argentina.’ But the bottom line is that I was really confused by all of the emotions I was feeling — a lot of things were falling apart in my life at once.”
As the leader of a $250 million business, Conley knew that he couldn’t be the only one facing this challenge. To empower himself as well as other leaders he did extensive research on the psychology behind emotions and how this translates in business, writing “Emotional Equations: Simple Truths for Creating Happiness+Success.” The book focuses on how business leaders and individuals can become more emotionally fluent, and subsequently, improve their organizations. To date, his transformational leadership practices have been featured in publications from Time to Fortune and The Wall Street Journal.
“In business, what we want to do is influence things,” Conley says. “We want to have an impact. And usually it’s very external: how can I have an impact or influence the world? What I’m saying is if you can influence and impact your emotions, you can actually be more impactful as a leader in the world.”
Become a CEO (Chief Emotions Officer)
Conley’s research on emotions led him to the work of author Daniel Goleman and an interesting finding that the author made in his book “Emotional Intelligence” 16 years ago: that two-thirds of the success of business leaders comes from their EQ — emotional intelligence quotient — while just one-third is due to IQ level or experience. This statistic struck a powerful chord with Conley.
What it means for a CEO is that the best leaders have more influence and control over their emotions. The most effective CEOs are “chief emotions officers.”
“First of all, the more that you’re emotionally fluent and emotionally intelligent about what’s going on inside of you, the more effectively you’ll be as a leader and the happier you’ll be,” Conley says.
The first step in becoming a chief emotions officer isn’t an easy one for all, however. It begins with becoming more attuned to what’s going on inside of you by taking your ego out of the equation.
Conley notices that many young leaders tend to use talking to motivate people. They have a tendency to think that if they give a good speech or make a proclamation that that the emotion will get people excited. While this works sometimes, he’s learned over the years that trying to motivate people without good information can also backfire.
Frequently when people want to get things done, their ambition in tandem with success can lead employees to interpret it as narcissism, Conley says.
“What happens sometimes is a leader of an organization wants to get people fired up and people think that he or she is really out of touch with what they are seeing,” he says. “So it’s a fine line, because you do want to be a visionary as a leader and help people see things that aren’t as obvious, but you also have to keep your feet on the ground.”
Practicing empathetic leadership starts with becoming a better listener.
Conley uses the example of commercial airlines. When jet fuel prices went up and they started adding new charges for items such as amenities, luggage and so on. The exception was Southwest Airlines, which considered the impact on employees when it decided to maintain many of its pre-recession policies.
“The airlines teed off us — the customers — for charging for bags and for food and no longer handing out peanuts, except on Southwest,” Conley says. “So they upset us, but more importantly, they also upset the flight attendants. Because they were going to start charging us for bags, we brought all of our bags on the plane. You turn flight attendants into baggage handlers and the level of the satisfaction of the flight attendants went way down. And guess what? Customer satisfaction plummeted, except at places like Southwest.”
Understanding people’s feelings takes a two-way conversation. So instead of giving a speech about how it’s going to be, Conley now asks his people how they want it to be. As CEO, he frequently had dinners with different groups of employees, taught classes for team members and maintained an open door policy to encourage people to share their emotions and ensure they felt heard.
“When you can understand the subtleties and the nuances of what this person in front of you is looking for in their life, it allows you to deliver on those needs a lot better,” Conley says.
Identify the variables
The challenge in learning to control emotions for most people is becoming more responsive to them. Because people tend to react quickly when something happens to us, they often don’t take time to think about the root cause of emotions or worse, push them off, Conley says.
Due to the stresses of day-to-day business dealings, it might take CEOs days or weeks to realize that something has been eating at them because they were too busy to deal with it at the time.
“Sometimes efficiency takes us away from our emotions and we just ignore them, and then they come out in other ways,” Conley says. “We wonder, ‘Why am I so angry about this?’ and you don’t realize that yesterday this person sort of blew you off when you were supposed to have a meeting with them. And you just had other things to do so you didn’t focus on it.
“So something happens and we react. The lifespan of an emotion physically in your body is usually 90 seconds long, but we actually hold on to it a lot longer than that. It gets stale, but it’s still that emotion that you’re holding onto. Learning how to be more responsive and less reactive is a good thing.”
In a business culture, emotions are contagious, from smiling to yawning and frustration, to fear and anxiety. So not addressing the fear or anxiety of one person — or yourself — can quickly turn into the emotional neglect of many, causing creativity and innovation to suffer.
When Conley researched “Emotional Equations,” he found that although emotions seem fleeting and uncontrollable, they are actually quite predictable. Once you identify the emotion that you or your people are feeling, you need to examine ingredients that created it. Most can be broken down into simple math.
In a study done several years ago, participants were given two choices: get an electric shock now or get an electric shock randomly in the next 24 hours, but it would be half as painful. The vast majority of people in the study chose the option to get the shock immediately.
Why? They had more control over the situation by knowing when the shock would happen, lowering their anxiety.
“Anxiety has two different ingredients: uncertainty and powerlessness, or what you don’t know and what you can’t control,” Conley says. “Once you start to realize this you can actually influence the ingredients and then may influence the emotion.”
Other examples include (Disappointment = Expectations - Reality) and (Workaholism = What Are You Running From?/What Are You Living For?)
By dissecting emotions into variables, leaders can influence the variables to better control the emotions themselves. Take anxiety, for example.
If employees in a company harbor anxiety, they will eventually become distracted and less productive. So when leaders find out that people are anxious about their jobs and finances, they should look for ways to deplete some of the powerlessness and uncertainty they may be feeling.
“If we know that uncertainty and powerless is what creates anxiety, and we know that anxiety makes people less creative, less innovative, less engaged, less productive, then when we have bad news, we better figure out how to package it quickly and get it out to people,” Conley says.
“When people are just stewing about what they think will happen, it becomes a big distraction from what they really should be doing in their work.”
While reassurance with words is always helpful, you also need to take action. Set tangible goals. Provide comprehensive feedback. Get employees more engaged in innovation.
The same goes for anxiety of a CEO. By creating more certainty in your life and taking power over the areas that you can control, you reduce the anxiety that can paralyze you and your organization.
“Even in a time when people are worried about things like layoffs, they can feel like ‘Ah, I have some power or some influence in terms of my effectiveness if I do the following three things,’” Conley says.
Make it a commitment
CEOs who use empathy in their decision-making processes can create cultures with happier employees, who in turn, provide better service.
“What we saw is the more employees felt engaged, the happier they were and the more likely they were to give a great experience to our customers,” Conley says. “So our employee satisfaction went up and then our customer satisfaction went up as well.
“When you get more engaged employees in a service environment, you’re able to put an environment together that allows the customers to get solutions faster. And the employees are going to feel not just engaged but they feel like their fingerprints are all over the business.”
Seeing the power of emotional equations, Conley began teaching them to leaders at Joie de Vivre to help them better identify with their emotions and empathize with the emotions of others. And so far, the impact on organizationwide morale has been overwhelmingly positive.
“Initially people thought, ‘Oh God. Here’s Chip with his New Age stuff again,’” he says. “But honestly, the last few years have been an emotionally trying time for people in the business world. So the fact that I was being vulnerable and authentic about my own fears and frustrations and concerns about life meant that people felt like, ‘OK, I can breathe. I don’t have to be Superman.’”
Giving more voice to emotions doesn’t mean productivity has to suffer either. In fact, it should be the opposite. When people have the safety to express their emotions, they’ll be more empowered to make decisions because the fear of making a mistake or anxiety about their job security won’t be distracting them.
“If you have a problem in a hotel or any kind of business, you want the person right in front of you to solve it,” Conley says. “You don’t want to have them say, ‘OK, well, I’ll talk to my manager.”
While he’s transitioned from the role of CEO, Conley continues to promote the equations at Joie de Vivre as a strategic adviser. Today he focuses on creating one emotion in particular: joy (Joy=Love-Fear), which is also the company’s mission statement.
“Our company name is Joie de Vivre, which means joy of life,” Conley says. “The fact that we have an underlying message and many of us wear these wristbands that say “create joy” is a reminder that that’s what we’re in business to do.”
How to reach: Joie de Vivre Hotels, (800) 738-7477 or www.jdvhotels.com
The Conley File
Founder, former CEO and strategic adviser
Joie de Vivre Hotels
Born: Long Beach
Education: BA and MBA from Stanford University
What was your first job?
The fries and shake station at McDonald’s
What is one part of your daily routine that you wouldn’t change?
Compensation is a right and recognition is a gift so I try to provide two honest and detailed forms of personal recognition to people I work with daily. If I slack off one day, then I add those to the next day.
What would your friends be surprised to find out about you?
I’m not sure that many people know that I have a 35-year-old stepson, a six-week old baby and three grandchildren, with the oldest being 17 and 3 inches taller than me. As much as Joie de Vivre and our various hotels were sort of like my children and family, I feel fortunate to have these kids and grandkids in my life as they remind me of what’s truly important at the end of the day.
If you could have dinner with one person you’ve never met, who would it be and why?
Herb Kelleher, the former CEO of Southwest Airlines who was in that position for 37 years. He created a compelling culture that walked its talk around the customer coming second and the employee coming first. The airline industry is brutal — cyclical, high fixed costs, lots of unions, big risks — so I’d want to learn more about how he dealt with the emotional roller coaster that came with being CEO for three dozen years. He outdid me by a dozen years since I was CEO of JdV for two dozen years.
Tony DiBenedetto will never forget “the watercooler incident.”
“We were in our very first office building, and at that time everybody was bringing in their own bottled water,” says DiBenedetto, who is the co-founder, chairman and CEO of the national IT services provider. “We wound up having this meeting to talk about what we were going to do about the water.”
He and the other two principals sat down to deliberate the issue: Would they use bottled water or filtered? What about enlisting a water service? The meeting ended two hours later.
“At the end of that meeting, I looked at my two partners and said, ‘Guys — we’re never doing this again,” DiBenedetto says. “This is insane.’”
Seeing the inefficiency around decision-making, the partners agreed that something needed to change. With Tribridge still in its infancy, they understood that the way they handled decisions in the beginning years would set the precedent for the company’s future.
“What it led to was an acknowledgement that we all three did not need to be included in decisions,” DiBenedetto says. “In partnerships, a lot of times everybody feels the need to vote on every single issue and talk about every issue, and it doesn’t allow you to grow very fast.”
What the watercooler incident demonstrated is the age old problem of “too many cooks in the kitchen” combined with the mistake of bringing in the wrong cooks. When there are too many people involved in a decision, it’s hard for people to accomplish anything quickly or efficiently.
And if people are also participating in decisions that don’t concern them, they won’t have time to handle the issues that do.
What DiBenedetto and his partners realized early on was that most people at Tribridge, themselves included, didn’t really know what decisions were and weren’t their responsibility. They needed to divide the decision-making so that each person and department had clear areas of decision-making authority.
Today, each of the company’s partners has specific items that fall under his decision-making jurisdiction. For example, anything involving strategy lands within DiBenedetto’s arena, and sometimes, all three of the partners.
“I feel like my role here is to drive strategy, so if we’re going to stray from the strategy that is a decision I would want to be involved in,” DiBenedetto says.
Not all decisions in the company should be pushed down the ranks either. When it comes to large financial transactions, debt, M&A or strategy, you definitely want your top leaders to take the lead. As CEO, DiBenedetto still offers his input if there is a major decision that people want feedback on or when it’s a hire or fire decision where his expertise may help.
At the customer level, however, he’s rarely involved in decision-making. When the company opened its first office in Dallas, for example, DiBenedetto told Managing Director Bobby Priestley that he was charged with making all the decisions concerning Dallas — and not just some of them, but all of them.
“People closest to the decision make better decisions,” he says. “We have consultants in the field and 3,500 customers. They’re out there making decisions for a customer. They are in the best position to make the decision. They understand the customer’s needs. They understand what the firm can do.
“So to have them elevate that through a series of management layers is ridiculous.”
Rarely if ever has DiBenedetto seen a good decision that satisfied a customer but impacted the company negatively. That’s because the customer feedback loop can typically tell you whether or not employees are on the right track with their decision-making.
“We’ve got a nice built-in check and balance there — where if decisions are good for the customer, they’re good for Tribridge,” DiBenedetto says.
“In my 14 years at Tribridge, I’ve never felt like, ‘Oh my gosh, this person is such a rogue decision-maker, and I have to reel them in.’ I’ve never felt that at all — zero.”
Say what you need to say
When you have a lot of people making decisions every day, effective internal communication becomes much more critical. If communication breaks down, and decision-making becomes siloed, your company invites conflict within departments and across them.
“We probably have 100,000 decisions made a day, and the way our business works, we have 450 people making those decisions every day,” DiBenedetto says.
“A lot of times we make decisions but we don’t tell somebody either why we made it or even that we made a decision. So you might do something for a customer and not tell them, or you might do something internally and not tell somebody. Being able to communicate the decision is another lesson learned.”
One way to keep everyone apprised of important organizational changes or information while preserving decision-making autonomy is to have set meetings to share updates, talk strategy and discuss progress on goals.
At Tribridge, the company currently holds a monthly meeting for its national leadership team in Tampa as well as an all-company meeting each February, where more than 400 employees meet in-person at a chosen location. In addition, it conducts an all-employee phone call once a month.
Regular meetings are a great opportunity for people to bring topics to the table, submit questions and voice any issues or concerns that could require outside attention. But a two-hour meeting about bottled water? Absolutely not, DiBenedetto says.
In the case of the watercooler incident, it wasn’t the meeting itself that caused inefficiency. Rather, inefficiency occurred because the people in the meeting didn’t need to be there. So instead of vilifying meetings, which can contribute to productive, creative and helpful communication, the company does the opposite — it encourages them.
“One of the culture points for us is the very open communication process,” DiBenedetto says. “Most people here are very comfortable raising topics. So anybody can call a meeting. Titles are not involved. We don’t put titles on our business cards. It’s an open culture where people can call a meeting if they need to.”
However, another rule at Tribridge is that if anyone ever feels like they are in a meeting that they don’t need to be in, they are completely free to excuse themselves.
“They can say, ‘Hey listen, I’m not going to contribute to this meeting, so I don’t need to be here,’” DiBenedetto says. “It’s not looked upon as a bad thing. The culture of the company is not just to meet for meeting’s sake.”
The bottom line is that you don’t want to shackle people with endless meetings or ask them to check in constantly about their progress. This defeats the purpose of pushing out decisions in the first place. Once you give people power over decisions, you also need to give them the freedom to succeed or fail.
“I can’t come back later and constantly start micromanaging,” he says. “So part of it is a leadership point that you’ve got to allow the decision and the success or failure to happen. If it doesn’t happen, then nobody learns from it.”
So after any big decision is made at Tribridge, whatever group that is involved in that area of the business, whether it is a client, a region or the entire company, is also involved in a debriefing process. This step reinforces that every decision, good or bad, is a learning experience for your business and your employees and the key to continuous improvement.
If the decision was good, ask why was it good? How could an OK decision have been better? And what went wrong with the bad ones?
“You have to be able to keep learning from it,” DiBenedetto says. “It’s a skill set. So you get better at making decisions the more decisions you make. The fact that we have these hundreds of thousands decisions being made every day means our people are better decision-makers than if they worked somewhere else.”
Empower the right people
In the tech business, where you’ve got to be rapidly changing and adapting your business all the time, you can’t afford to have a culture that puts individuals on pedestals, DiBenedetto says. When you trust people to make important decisions that impact your customers, you need to feel confident they’re focused on helping the customers, not themselves.
That’s why DiBenedetto prioritizes a person’s cultural fit over his or her resume when he hires someone for a position of authority at Tribridge. Specifically, he looks for whether the person has the trait of “entrepreneurism.”
“The first thing we tell people who come to work here is that when we say ‘think like an entrepreneur,’ there are two elements of that,” DiBenedetto says. “One, keep improving Tribridge; two, really on an everyday basis when you’re working for a customer, pretend that you’re one of their shareholders. When you’re thinking like a shareholder for them, you’re making the best decision in their interest.”
Hiring for entrepreneurism doesn’t mean you only want people who plan to start their own companies or create new products. Instead, it defines a person’s willingness to take risks, make changes confidently, and guide the decisions based on how he or she thinks the customer’s business is going to go, DiBenedetto says.
“Culturally, it’s looking for people who have an entrepreneur’s mindset, who are comfortable making decisions in risky situations,” DiBenedetto says. “The easy decisions aren’t the ones that you are worried about. It’s the tough decisions where you want somebody who has more of an entrepreneur’s mindset making them.”
To get a feel for this trait when hiring, the company’s recruiters first ask job candidates to provide broad situational examples, such as a time when they used teamwork or faced a tough challenge. Then they use “critical behavioral interviewing” techniques to analyze the candidate’s behavior in those different situations. What they did when they made a mistake or when they had to give negative feedback?
“We’re looking at how they handled it, not the answer to the question,” DiBenedetto says.
“You’re not asking them about being honest. You’re asking them about teamwork or something else; and they start telling you the story. And you keep drilling down until you get to a situation where you have witnessed through their story what their behavior was. So it’s a crafty way of doing it.”
In behavioral interviewing, recruiters also look at the way people phrase statements and the subtleties of what they say. This can help you identify red flags in a person’s cultural fit. Big egos, for instance, don’t bode well when you’re making decisions for a team.
“Sometimes you’ll ask somebody, ‘Tell me what someone else on the team does,’ and they’ll answer the question by telling you what they did,” DiBenedetto says.
People who are new to an organization with decentralized decision-making may not feel confident making lots of big decisions right away. But by hiring people that fit well with the culture, demonstrate entrepreneurism, and are team players, DiBenedetto finds that most people can succeed in this kind of empowering environment.
“When you surround employees with people who help them all the time, that aren’t in it for themselves, that plan a team environment, and they are empowered to make decisions, they tend to like it,” he says.
“It translates into better decision-making, faster decision-making and therefore things happen quicker here. There’s a sense of urgency to get things done as a result of that, and that leads to growth.”
While DiBenedetto had some initial reservations about using a decentralized decision-making structure, today he can’t imagine doing things differently at Tribridge. From 2006 to 2009, the company grew its revenues 272 percent, generating $65 million in 2011.
“We’ve grown dramatically over a 10-year period,” DiBenedetto says. “We’ve had 9/11, multiple wars — we’ve had a tech bust, a real estate bust, a credit crunch. Yet our company continues to grow organically pretty quickly, and it’s because we have decentralized decision-making.”
How to reach: Tribridge, (877) 744-1360 or www.tribridge.com
- Give people clear responsibilities.
- Make meetings more efficient.
- Hire people who can make decisions.
The DiBenedetto File
Co-founder, chairman and CEO
Born: Brooklyn, NY
Education: Florida State University
What was your first job?
A paper route
What is one part of your daily routine that you wouldn’t change?
Waking up my daughter
What would your friends be surprised to find out about you?
I write a lot, especially poetry.
What’s the biggest challenge in the future growth of Tribridge?
The strategy for us to get to the next level has been built around something we call ‘Concerto,’ which conceptually is the brand that we’ve coined for the business we’ve moved to the cloud. If you think about Tribridge, we do services for customers and we use a lot of different technology. We’ve built a private cloud and we’re offering this technology that’s some Tribridge intellectual property as well as Microsoft’s applications. We’ve integrated that and offered it to our customers. … The next five years if I look at tremendous growth — that is it. With that come some opportunities and challenges. One is where are the next 500 consultants going to come from? We’ve got to find the next 500 team members.
What trait does a leader need to be successful in today’s business environment?
With the really turbulent economic times we’ve had the last 10 years, we’re lacking the thinking big — blind confidence. We’re lacking the ability for our leaders to think bigger. Because it’s humbling to know that things are unpredictable, we all get stifled in our decision-making. Thinking bigger is something I see as an attribute that allows people to fight through the stifling news that you get from watching or reading the news. We’ve got to ignore that, keep thinking big, expect more. Expecting more is really about how can I make this better? How can I keep getting better? So if I’m thinking big and expecting more at the same time, that’s just driving success.