He dreamed of getting out of the country and seeing what else awaited him in the world, and through hard work and opportunities, he went on to eventually co-found NETGEAR Inc. in San Jose in 1996.
[See Smart Business Executive Editor Dustin Klein
The computer networking company has evolved over the years, but despite its success, Lo remembers that feeling of helplessness in not knowing what else was out there or what opportunities he had. So he passionately wants to improve the quality of life for everyone on the planet by providing access to information through technology.
“All along, we absolutely believed that technology changes people’s lives around the world, and we’ve looked at how people’s lives around the world get changed with mobile phones and PCs,” the chairman and CEO says. “Every time these technologies change, they improve significantly the quality of life for everybody. We believed that the Internet did the same thing.”
Because of this belief, Lo and his team have been on a single mission: to put a NETGEAR box in every home and every office around the world so that people will be able to better their lives by connecting to the Internet. It sounds like a grand plan, but with the right approach and execution, it’s possible.
“Just last year, the number of Internet users in China has surpassed the U.S., so you can see the improvement of the quality of life in China and the openness of the country,” he says. “And things are starting to look up in India in the same way. More and more of the Indian people are starting to use the Internet to better their life, even in the villages. I think that’s really the right direction that we’ve pegged and chose.”
By focusing on this mission, NETGEAR’s net revenue has grown from $383.1 million in 2004 to $743.3 million in 2008.
In order to execute on your plan, you have to first set the mission, reinforce it throughout the company, and then hire managers who will buy in to it, as well. Here’s how Lo did it.
Set your mission
If you have a mission statement that’s a page long, nobody is going to remember it, let alone work toward carrying it out. When you set your mission, you have to keep it short. NETGEAR’s is just two sentences long.
“We purposely make the mission very simple, …” Lo says. “It’s easy for people to understand and remember that.”
On top of being simple, you have to absolutely be passionate about your mission.
“If you do not believe in it yourself, you won’t be able to sell it to other people,” he says. “You’re going to start with yourself and your co-founders or your management team, and let it permeate down so every employee will be able to sell that mission and abide by it every day. That’s very important, and if you find it very hard to sell that idea, you might be on the wrong thing.”
Your mission also needs to be something grand and exciting if you want people to share your passion in it.
“Take your time and find out the mission that is what we call noble and grand and is a long-lasting one,” Lo says. “That’s the only way to keep you going and keep the team going. You might not hit it in the first days, but after a few innings, you should be able to find one. If you’re down to the fifth inning, and you still don’t know yet, then you probably need to quit.”
Finding your mission in some fields may be more obvious, but if you’re not sure what the passion point in your business is, look at the bigger picture. For example, Lo says if you want to open a factory to manufacture clothes, it may seem like there’s nothing exciting there, but that’s not the case.
“You can say, ‘I’m going to prove to the rest of the world that the U.S. workers will be able to master skills and machineries and processes to make first-class garments that will be welcomed abroad and beat the Chinese,’” he says. “That’s a grand and noble mission. Or the reverse — you’re in China, and you open up a factory, and you say, ‘We’re going to build a factory that doesn’t just raise the level of craftsmanship but also the level of design that the garments produced in this factory will rival those coming out of France and Italy.’ That’s a noble mission.”
If you can’t find something that exciting to drive people’s competitive side, look at the very basics.
“Even at the very mundane — I’m opening a factory in Pakistan or wherever that will be able to make this the most efficient and low cost for producing, bar none, anywhere, anytime,” he says. “That’s good, too. No matter how mundane it is, you will be able to find something. The important thing is, what is the end result? The end result has to absolutely be that you make people’s lives better — either the customers’ or the workers’. If you don’t do that, it’s not going to last.”
Reinforce your mission
Everybody at NETGEAR knows what RINSPERC means. It’s not a competitor or new product. It’s an acronym and a slogan to help reinforce the mission, which is what you have to do after you establish it.
Each letter in the word represents another word that will help move the company toward achieving its mission. The R stands for revenue, the I for innovation, and so on. Every year or two, the management team comes up with a new slogan.
“It has to closely relate to your mission, and it has to closely relate to what you have to achieve for the next 12 months, and then make the slogan a simple word to remember,” Lo says.
The management team forecasts out over a 12- to 24-month time period to see what could happen in that time period, and as a response, what the company should do about it. Then Lo and his team boil it down to eight or nine things that they have to do, and it gets coined into the slogan. That slogan is on the intranet home page, and it’s repeated in every newsletter and quarterly meeting. On top of that, each employee’s annual goals are somehow tied into it.
“Revenue is more pertaining to the salespeople and the operations people,” Lo says. “Innovation is more pertained to the product marketing folks, so different people have different parts of the cascade of corporate objectives.”
Each person’s manager communicates his or her part at the beginning of the year, and every six months, each manager is evaluated. This helps keep people on track to achieving the mission.
On top of a slogan, you simply have to repeat your mission constantly. Lo goes through it in every training meeting, every quarterly meeting and in every weekly product meeting. During these product meetings, he also has questions that he asks of any initiative that people want to pursue, and those questions support the mission.
y product is weighed against the same thing — does it make connection to the Internet cheaper, easier, faster? Does it enhance the quality of life for people? Does it serve the ultimate mission of letting Internet service the communications, entertainment, education for people’s lives?” he says. “That’s what we do all the time. If it doesn’t, we’re not going to do it.”
He also asks if the product will add value compared to what is already in the market or bring in a completely new product line to make people’s lives better, among other questions.
“It’s repeated again and again, and when we have all-hands meetings, I’ll pick people and ask people to answer those questions,” he says. “So it’s making sure people get repeatedly reminded.”
Lastly, remember that all of this starts and stops with you. Each year, Lo travels to every employee around the world and meets with them in groups of eight to 10 to explain the mission and its importance and see if they have questions.
“It’s very important to set a tone from the top, and we just have to practice it in every single thing that we do,” Lo says.
Whenever possible, Lo prefers to promote from within, but sometimes he has to hire executive team members from the outside. When that happens, the mission stays front and center there, too.
“If they don’t buy in to it, that means they’re not part of the team,” Lo says. “It’s as simple as that. We’re playing football here. If you come in here and sign up and say, ‘Football is not my game, I’d rather play ice hockey,’ that’s OK. Then go join another team. Join the ice hockey team, but here, we play football.”
To make sure he gets the right players, potential executives go through a rigorous interview process with between 10 and 15 different individual interviews.
“The first thing is to get those 10 or 15 interviewers to feel comfortable that this person’s personality will fit in to the culture of the company, and they will get a sense that this interviewee is getting excited about what we do here,” he says.
Lo has no qualms about hiring someone without the technical experience if he thinks that he or she will fit culturally.
“You can’t change somebody’s personality and cultural orientation, so it’s important for us to find the cultural fit into the executive team — more important than the technical experience or prior field experience without training,” he says.
He doesn’t tell people what to ask in the interviews, but he says some questions help get to the heart of a person, such as, “Why are you interested in what we do, what do you think is the next step that this company should take to further its success, how do you measure yourself in terms of judging whether you’re successful or not, and what do you want to do next?”
With the same kinds of questions coming at a potential executive from 10 to 15 people separately, it sends a strong signal to that person.
“Every executive who has gone through those interviews, they’re surprised how unified the message is that he or she is getting from everyone on the executive team,” Lo says. “It’s repeating again, again, again.”
And when your message is repeated and unified, it helps job candidates know what they’re getting into.
“Very rarely would we have group interviews so we can have them say, ‘Gee, even though I talked to them individually, how come all 15 of them give me the same message?’ It doesn’t look like it’s cooked up,” he says.
This creates a mutual understanding of each other.
Following the interviews, Lo then talks with the interviewers individually so that they don’t influence each other.
“I’ll just ask them, ‘What do you think is the strength of this interviewee, and what do you think is the No. 1 challenge this interviewee will have if he or she joins us?’” Lo says. “Then we group those things together and come up with all the strengths and weaknesses that people see, and then I will ask everyone to rate if someone is an absolute hire, a maybe or an absolute nonhire.”
If he can continue to do these things, then Lo will get more and more people who are completely sold on his mission, which will propel NETGEAR forward in the future.
“The most important thing is they have to buy in to it and be passionate about what we do,” Lo says. “If they’re interested in really, really excelling to help people connect to the Internet to better their lives and they’re compassionate about doing this better than our competitors, they will fit in. But if not or they’re here looking for a career to climb up further on the ladder or to learn something so they can do bigger and better jobs, then they will most likely not fit in.”
How to reach: NETGEAR Inc., (408) 907-8000 or www.netgear.com
Story feedback: Kristy O’Hara, email@example.com
Getting coffee used to be a very different experience for Stephen Pagano. A jaunt to get his morning joe could result in a chat with employees, and by the time he returns to his desk, he has learned something about customer needs or service issues.
Back when he oversaw fewer people at Time Warner Cable, he had the time to manage by walking around. Plus, because more of his employees worked in the same building, he was more likely to bump into them during his rounds.
But it’s not that easy anymore. As the executive vice president over the West Region of the media giant — which has 7,000 employees sprawled across Southern California, Hawaii, Lincoln, Neb., and Kansas City, Mo. — Pagano has to find more creative ways to reach his people.
“When the customer service department’s right in your building, you can get your cup of coffee in the morning and just sort of wander down there and pull people aside. It can be a much more informal operation,” says Pagano, who shares Los Angeles office space with mostly management and back-office positions now, instead of customer-facing employees. And whether you are moving up the ranks or are already in the top spot dealing with a growing organization, it’s not easy to communicate.
“It’s more challenging when you’re removed from that environment to stay in touch. You really have to work at it harder,” he says. “I had to do a lot more reaching out and actually organize more formal events like lunches or breakfasts and carve out portions of the day to have these meetings.”
It’s been a challenge for Pagano to shift his style without sacrificing the time he likes spending with his reports — or the valuable input it elicits. He’ll have to keep adjusting his techniques now as he transitions into another executive role, where he will be overseeing customer care, original programming and other national initiatives at the company, which posted 2008 revenue of $17.2 billion.
No matter what changes face Pagano — whether it’s a new office that’s even farther away from the communal coffee pot or just more employees and, therefore, less time to spend with each one — he keeps his priorities straight. And at the top of his list is listening.
“The challenge is putting yourself out in front of the employees and listening, making the effort and spending the time,” he says. “Don’t spend your life in an office. Most of it should be spent with the people you’re leading.”
Here’s how Pagano overcomes the obstacles of time and space to stay in touch with his employees.
Because Pagano can’t sit down with every employee in the company, he has to pack the most punch into the interactions he does have. For him, that means going after the people who can funnel the most input together. So instead of going after each employee individually, he has employees go to other employees who go to other employees. Then he asks them what everyone is saying.
To do this, he arranges frequent lunch meetings with supervisors. He sees them as the midpoint between management and customer-facing employees. He refers to them as “concentrated customer service agents” as well as noncommissioned officers, borrowing lingo from his Army-base upbringing.
“They interface with the front-line employees — who are interfacing with the customers — and they also interface with management,” he says. “So I can tell both what a customer thinks of us through their interaction with the front-line employees and what they think of management: if we are listening, if we’re getting the message, if we’re paying attention.”
Pagano brings together a mix of supervisors from various departments and geographic regions. While he’s trying to learn what’s happening in each corner of the region, he reminds himself that he’s not the only one who’s curious. Everyone else in the room also benefits from a varied chorus of voices.
“Not only can I hear what’s going on, but they can each hear for themselves what’s going on in different parts of our region,” he says. “Everybody gets the benefit of hearing from everybody else.”
Of course, sharing the benefit of feedback also requires sharing the floor with everybody. For Pagano, that’s as simple as telling the supervisors that the agenda is theirs.
Your employees need to understand that meetings are their chance to share what’s happening — not just to keep everyone informed but also to vet ways for running each department more smoothly. If nothing else, reminding employees that the end goals are to make their jobs easier and to make the company more successful should get the ball rolling.
“I want you to tell me what you think I need to know, so that you can do your job better and I can do my job better,” Pagano tells his supervisors in the meetings. “It’s really that straightforward.”
But usually, getting employees to talk isn’t that much of a battle. You simply have to ask.
Generally, the questions stem from one: What’s happening? To make sure his employees bring the extremes to the table, Pagano then asks specifically that supervisors point out areas where their departments are either improving or backsliding.
“That information is kind of what they live with day in and day out,” he says. “When they see a problem … then it sort of gets filed away. So when you do ask these questions, they have a lot of specifics. Oftentimes it’s over my head, but I’ll make a note of it and we’ll make sure that we get an answer or we resolve the problem.”
In the end, the reason employees bring problems to the table is so they can find solutions that will make their jobs easier and their customers happier. Because your employees have the best insight into their problems, they also have the best ideas for solutions. So Pagano asks what tools, specifically, they need in order to progress in the right direction — even if something from another area of the company is affecting them, such as marketing messages or bundled offerings.
While he depends mostly on his supervisors to filter issues up through their departments, Pagano also looks to other groups for more specific feedback channels. He conducts in-house focus groups to bounce around ideas or introduce offerings.
He either pulls people in randomly for general topics or more selectively if he’s looking for niche feedback. In other words, if he wants to test how Hispanic audiences will react to a programming change, he’ll ask Hispanic employees.
“Our front-line employees are like very concentrated customers because they talk to so many customers on a daily basis that they have a really good understanding of the customers’ wants, needs, frustrations,” Pagano says. “That’s not to say that we don’t survey customers, but I do think 90 percent of the answers lie within your front-line employees.”
Keep employees informed
Pagano’s position changes have upped the ante for his outward communication. He has learned that the more employees he has and the further they’re spread, the more important it is to keep everyone on the same page however he can. And that comes down to not only gathering input from everyone but also delivering your own message.
“If you’re listening, then, at some point, you’re expected to respond,” he says. “That’s where you need to have a message, and you need to make sure that message gets back to everyone.”
The first way to respond is simply to do something about the issues employees bring to you. But not every problem they bring up is always worth the whole team’s effort. If the supervisor who mentions the challenge seems to be alone in facing it, it may be a department-specific problem as opposed to a company issue.
“If, all of a sudden, half the room is saying, ‘Yeah, yeah, yeah,’ and they’re all starting to jump on board, then you can highlight that as one that really needs attention sooner than later,” Pagano says.
The problems with the largest shared volume become priorities. When a pain point is shared by several departments, it usually means they can’t handle it on their own. So the first step is often forming a multidepartmental task force to tackle it from every angle.
“We take some people from X, Y and Z departments and say, ‘OK, here’s the issue. Now, you guys are the experts,’” Pagano says. “‘No one department can fix it by itself. So you guys work it out and let me know if there are more resources or more expertise that you need to resolve that issue.’”
He has learned the bigger the segment of the company he’s leading, the bigger the challenges they face and, often, the longer it takes to resolve them. When it takes more than a couple of meetings to brainstorm and implement solutions, that just means you have to communicate what’s happening that much more thoroughly and frequently.
Pagano takes notes of the issues that evoke the biggest reactions in meetings and then verifies those with the next level of managers and directors. Sometimes, he discovers that one of the departments is already taking action against the problem.
“Now, it’s just a means of communicating that gap,” Pagano says. “Maybe what I’m not doing is making them aware that we know the issue. We have a plan. We have timelines and benchmarks set to resolve the issue.
“It is always the bottom up that initiates it, but there’s as much responsibility coming from the top down after you recognize it — even after you start working on it — to continue to communicate what you’re doing.”
Pagano relies on several methods for doing that. There’s the internal Web site, newsletters, online video and, of course, meetings. Twice a year, he travels to each location — or at least the bigger locations, in which case the smaller locations are invited to attend — for a series of breakfast meetings.
“Give people a chance to hear from the leaders and ask questions,” he says. “That’s the best way to do it if you can: in person.”
Making those rounds is increasingly difficult as the company expands. But it’s also increasingly important.
“The easiest mistake to make is not to put yourself in a position where you’re in contact with the rank and file,” he says. “I think a lot of leaders are on the 20th floor. They never leave it, nor do they ever invite anybody up to it. It’s a pretty isolated ivory tower.”
So Pagano gets in front of employees every chance he gets. But he also realizes that he can’t be everywhere at once. So to fill the gaps, he also relies on his direct reports to carry the message when he can’t be there.
“At some point, it’s not physically possible for one person to cover that much ground. But what is possible is to have the subordinates doing the outreach, as well,” he says. “So, at the end of the day, it’s not one person leading an organization. It’s one person leading a group of people, who are leading another group, who are leading another group.”
How to reach: Time Warner Cable, (310) 647-3000 or www.timewarnercable.com/socal
Wrong. It’s just always been one of his priorities to propel employees up their career paths. In fact, it was one of the earliest tasks he tackled when he became CEO at ValueClick Inc. in May 2007.
“One of the first things I do in any company is learn who are the top performers in that business,” he says. “I try to develop them so they’ll be ready to take my job when I move to something else.”
Vadnais joined ValueClick when it acquired Mediaplex, where he was president and CEO, in October 2001. He stayed on as the general manager of the subsidiary. He later took a similar role to integrate another acquisition into the online marketing company — but not before promoting one of his employees to replace him. When he moved on from that division, he bumped another employee into that lead role, as well.
But if his commitment to internal promotion ended there, the successful chain of replacements would fizzle out. Instead, by cascading his philosophy down to his managers, Vadnais makes his focus on employee development part of the culture at ValueClick. It creates an environment where employees are driven to set goals and motivated to constantly improve.
Some leaders might take that as a threat. Some would look cautiously over their shoulder, anxious about someone sneaking up on their title.
“You just can’t worry about that,” Vadnais says. “If you’re worried about that, you’re too insecure to do the job well.”
Instead, he focuses on honing his employees’ leadership skills to make ValueClick better and position it to keep getting better in the future.
“Everybody knows pretty well that the way I function is promotion from within,” he says. “It’s our job to be developing people so they’re ready for these jobs.”
Find potential leaders
First, you have to know who your top performers are so you can prepare them for advancement. To get an accurate picture of your employees’ performance and capabilities, you have to measure them on various scales and from multiple perspectives.
“You try to have a blend of both quantitative objectives and the more subjective sorts of judgments and roll all those together to determine the overall performance level,” Vadnais says.
You want to evaluate employees’ current leadership abilities to deduce their future capabilities. For Vadnais, this starts with an evaluation of their problem-solving skills.
Consider how often employees ask for assistance in their current role. If they need frequent oversight to make decisions for 15 people, they’re probably not ready to handle 50. Your future leaders, however, can work independently and confidently without hand-holding.
Knowing how important communication is in his role, Vadnais also evaluates employees’ communication skills by watching how comfortable they are delivering messages.
“You may ask them to give a speech at the next company meeting about the new product that they just announced,” Vadnais says. “You see how they perform there: Were they effective? Were they convincing? Did the audience buy in to what they were doing?”
You should also look for employees who are highly motivated to advance. Sometimes, the search becomes a two-way street because these people may approach you.
“Those are the people that many times come to you and say, ‘Hey, what do I have to do to get ahead here?’” Vadnais says. “If they’re motivated to get ahead, then they become good students, good listeners, good learners of the skills necessary to do that.”
But you can’t base decisions solely on your opinion of people’s traits. When Vadnais examines managers, he also turns to their employees, gathering input through anonymous surveys that ask them to evaluate their leaders. Sure, those ratings are still subjective, but they’re more measurable than your independent appraisal.
“You’re always finding something that you can look at to try to assess what that performance is, as opposed to just being totally subjective,” he says. “You always want to try to find some metrics that give you some support to that.”
The results of an employee’s department are a good starting point to measure their performance objectively. But unless a position is specifically tied to achieving certain revenue, for example, you usually can’t hold one person responsible for the business results.
You also have to understand the context of those metrics by weighing results against the rest of the company and the marketplace. You have to know what employees are up against, because especially in this economy, financial downtrends shouldn’t automatically infer poor leadership.
“Everybody can do well when the environment is good,” Vadnais says. “But when the environment is not so good, you sometimes find out who your best leaders are because they’re the people who make the best out of a not particularly good situation.”
Prepare employees for leadership
It doesn’t do much good if you just identify your top performers and then sit on the sidelines. The next step is polishing their skills to prepare them for leadership positions down the road.
First, of course, you need to let them know they’re on your radar. Acknowledge their potential and find out what they want to achieve so you can help them achieve it. Although this goal setting is a mutual process, you can’t set career goals for someone else. It has to start with the employees, so begin by asking what they would like to be doing in three, five and 10 years.
“If I don’t know what their goals are, I can’t do that much to help them,” Vadnais says. “Once you have that feedback, then [your] job is to give them feedback on how they could achieve those goals.”
Your appraisal of employees’ leadership potential should have already signaled their strengths and weaknesses. Match those against the skills and capabilities required in the positions they’re eyeing. Then you can either discuss the areas they need to improve or suggest roles that may be a better fit. And, of course, let them know what kind of training is available.
“Once you understand those goals, it’s important then that you communicate with your employee as to what you’re doing to help them achieve those goals,” Vadnais says, adding that feedback and training are the best tools you have to develop employees.
Of course, that means you have to keep tabs on the employees to see whether they’re actively improving those skills. You have to stay in touch with them and keep measuring them with the scales you used to first identify them.
The key is staying in sync on their goals and their progress toward achieving them.
“You’ve had that kind of dialogue, so one day, you call them into your office and say, ‘Congratulations, I’m promoting you to this position,’” Vadnais says. “That shouldn’t be a big surprise.”
Encourage managers to follow suit
To support your focus on promoting from within, you need to cascade it through the company.
Start by b
eing consistent with your commitment to it. Vadnais’ track record shows proof of his preference for promoting from within, especially when it comes to management positions.
That kind of consistency will back up the message when you encourage managers to follow your lead and prepare their employees.
“It has to start with an awareness and recognition of the need to develop people,” Vadnais says. “When I talk to my general managers, for example, I will ask them, ‘How is so-and-so doing?’ Or if I don’t know their people that well, I would say, ‘Tell me who your best person is in this department or in this function.’”
Because ValueClick is part of a high-growth field, the company is frequently hiring — and moving people around internally — to fill new positions. Though the economy has slowed that cycle, the general pattern of growth necessitates that management stay aware of candidates who are ready for the next level.
When managers keep an eye on future leaders, they’ll make their jobs easier down the road. If you have candidates in mind for certain positions — and prepare them by developing their skills — you won’t have to worry about bringing future hires up to speed with the business or wonder whether they’ll perform like their resumes suggest.
“When we have a management opening, the first question I always ask is, ‘Who in your organization is the most qualified person for us to promote into that position?’” Vadnais says. “And it’s rare that I get an answer of, ‘We don’t have anybody.’”
Vadnais tries to visit ValueClick’s various offices as often as he can to interact with employees and gather both objective and subjective data about their performance. But with 1,200 employees worldwide, he can’t identify all the potential in the company by himself.
“You may have an opinion of an individual because you see them twice a year in a meeting or you talk to them once a month on the phone, but that opinion is not enough to make a key business decision on,” Vadnais says. “So if you don’t spend enough time with them to know them well, then you should be getting a lot of advice before you make a decision.”
Because your managers are closer to their employees than you may be, they’re a better judge of who’s ready for a promotion. But when you encourage managers to prepare future leaders, you also have to trust them to do so.
First, recognize that your managers may not be measuring employees against the same scales you would. They have a better idea of the skills necessary to run their division, so they may value different traits in their future replacements.
“I don’t expect them to use every tool that I use or think the way I think,” Vadnais says. “What I’m more concerned with is: Will that person be the right person for the job in that division? If the general manager is convinced, unless I have some very strong evidence to the contrary, I’m going to side with them.”
Still, you should test why the manager is making that choice. Don’t just take his or her word for it; ask the manager to explain what the employee has done that indicates superior performance and leadership potential.
If you consistently identify top performers and attentively develop their skills — and encourage your managers to do the same — you’ll not only create a domino effect of internal promotions but you’ll also foster a culture where employees strive to be those top performers and to improve themselves.
“This is part of the way that we operate,” says Vadnais, whose company reported 2008 revenue of $625.8 million. “That never changes. They know there will be goals. They know we will measure those goals. They know we will recognize the leaders who achieve their objectives at the highest level.”
How to reach: ValueClick Inc., (818) 575-4500 or www.valueclick.com
“He always stuck with his convictions, even when it was against conventional wisdom, and he always did what he genuinely believed was right and stuck to those convictions and had the discipline and fortitude to stick with it even when it put him at odds with the popular people or the latest trends,” Aronson says.
The result of doing these things? In the end, Roark got all of the accolades and successes that one could hope for in life, but Aronson also learned a lesson from reading the tale of Roark.
“It wasn’t a linear path to success,” he says. “There’s plenty of bumps in the road, but he felt good about himself because he never sold out and always stuck to what he believed in. I guess it’s not just the result, but the journey is relevant — how you get there.”
That’s something that has stayed with Aronson, and he founded his private equity firm, Roark Capital Group, naming it after his fictional hero. Since then, he has grown the firm to have $1.5 billion in capital and 13 brands under management, which collectively bring in $2.9 billion in systemwide revenue.
Through it all, he’s learned a lot, and some of the key lessons that Aronson has absorbed in his career are knowing what he can control, empowering his people and effectively addressing mistakes.
Know what’s controllable
With everything going on in today’s economic environment, it would be easy to get distracted and freak out a bit. But Aronson says that one of the keys to leadership is knowing what’s out of your hands.
“That’s what part of being a leader is, to make sure you know what those things are that just are out of your control,” he says.
For instance, he says the economy is out of his control as well as the price of oil and, more often than not, government regulations, as well.
“We try to think about what those things are that are out of our control, and then we try to really think about what are the things that can move the needle that are in our control and get focused on the things that can have the biggest impact and really try hard to do something about those things that can have the biggest impact,” Aronson says.
Along with that challenge, though, comes the people factor within your business.
“The biggest challenge is keeping people focused on what is in our control and focusing our time and energy and attention on what we can do about those things,” he says.
He says you have to quantify things when you’re looking at opportunities and risks in your business for the upcoming year. Doing so helps you prioritize. Once you’re able to identify those risks and opportunities, then you can take it a step further.
“Then we try to measure those opportunities and risks throughout the year,” Aronson says.
He says it’s important to talk about those opportunities and risks with your team.
“Discuss them to really understand everybody’s perspective on how likely it is to happen,” he says.
As you and your team work through things, be mindful of what really matters and affects your organization.
“Try to think about what will have the biggest impact and what will have the best chance of success,” he says.
Focusing on those two things helps you recognize what areas you can move the needle in.
“Some of it is proactive, and some of it is avoiding the converse — avoiding things that are too much of a long shot, and we try to avoid swinging for the fences,” Aronson says.
In order to recognize if something is a long shot, you really have to talk to your team.
“That’s the discussion among the team about trying to understand what it would take to achieve that objective or goal,” he says. “Instead of just making it an objective or goal, we break it down and say, ‘What are the things that would have to happen — what would have to go right for us to achieve that goal?’ Talk about what has to go right and what could go wrong to get in the way of that.”
It’s important to have that dialogue about the process and not just about conclusions and end results.
“Hopefully, those inputs make it less daunting to make the decision because maybe the inputs are more logical or more easy to get your head around,” he says.
Going through this process then allows you to see what’s worth your time and energy and, more importantly, what’s not.
“We talk about an issue that’s on somebody’s mind, and if we find that it has very small dollar impact or a very low probability, we don’t spend a lot of time on it,” Aronson says. “So the two things we try to think about are the dollar impact and the probability of that happening.”
Once, Aronson had an employee who worked around the clock for three months straight on a transaction. He was very enthusiastic about it, and given that in the private equity industry, people often define success as when you complete a transaction, he had an end goal on his radar. However, in the end, he ultimately recommended that Roark not proceed with the transaction, despite the amount of time and money the firm had spent working on it.
Most would look at this situation and say the man failed, but at the end of the year, he was actually rewarded with a promotion.
“Instead of rewarding just people that close deals, we rewarded great insight and great judgment, and we promoted him,” Aronson says. “It was a great message for the rest of the team.”
Rewarding people is just one way that you can empower your employees, and it also helps create an environment where people can thrive, which is another challenge Aronson has faced in his career.
“Ideas are often in the team’s head, and so facilitating and creating an environment where people feel comfortable and excited to share their views is really one of the most important things,” he says.
One of the key things you can do is to reward your employees for the positive contributions they make.
“People don’t celebrate successes enough,” Aronson says. “The world is very competitive, and the economy is difficult, and we’re all under pressure for more results, and so we’re putting out fires all day, and we forget to step back and make sure that we celebrate the successes along with the challenges.”
You may not always be able to give someone a promotion, like the man who recommended that Roark not proceed with the transaction, but at least calling to other people’s attention your employees’ successes can still go a long way.
“Make sure that people proactively spend time focusing on successes and who helped lead those successes and call those people out with their peers and their subordinates and their seniors,” he says. “Make sure everybody knows when somebody has done something well and hopefully reward them so you’re focusing on both successes, not just challenges.”
Another way to create an environment where employees feel comfortable sharing their ideas is to make sure you don’t talk down to them.
“We work hard to recognize and reward good ideas and good work ethic and good focus, and we also make it really clear that if we disagree, we treat that disagreement with
respect, and we really don’t talk down to anybody,” Aronson says.
In those situations, he says it’s key to explain why you disagree and thank that that person for participating so that they’ll be encouraged to participate again in the future.
“We really want to hear the ideas, so in order to make good decisions, we want to hear what the possibilities are, so try to create that environment where people feel good about sharing good ideas, and they don’t feel bad about sharing bad ideas,” he says.
One of the things that Aronson is proudest about at Roark is that in any given week, two or three of his CEOs will call and tell him what went wrong that day or week, and that’s a testament to how he treats his people when they make mistakes.
“They only do that because they know we’re going to be supportive and sympathetic and potentially helpful in how do they solve some of their problems and challenges,” he says. “If they thought they were going to get beaten up, they wouldn’t be calling.”
Making people feel comfortable bringing up the bad news is another challenge that Aronson has faced, but the key to overcoming it is to know how to act in those situations. First, you have to recognize that people will make mistakes.
“We don’t think you can be successful if you don’t make a bunch of mistakes because you have to try a bunch of things, and if you try a bunch of things, you’ll make some mistakes,” he says. “Nobody has ever gotten successful avoiding mistakes.”
Recognizing that people will make mistakes prepares you for when they actually do. When that happens, be a good listener.
“We try to ask questions like what did they learn.” Aronson says. “We try to ask questions how they would go about something differently, and we make sure we understand how long it went on and how painful it was before that mistake was admitted. Then, in the end, we try to be supportive and encouraging.”
It’s also important to communicate to people that you want them to come forward with their mistakes.
“We deal with bad news really well, and we deal with surprises really poorly,” Aronson says. “So by articulating that to people, we say, ‘We don’t mind, tell us all the bad news — it’s no problem,’ but we really discourage surprises, because if you don’t know about it, you can’t fix it.”
Then, you have to let your actions gradually make people feel comfortable coming to you with those mistakes.
“In the end, I think it’s about, you can talk about it, but people will follow your actions more than your words, so I think it’s being consistent and uniform with everyone and having everybody have a good experience when they come to talk to you about what went right and what went wrong and trying to be balanced about the goods and balanced about the bads,” he says. “We try not to get overly excited about some good news and try not to overreact to the bad news.”
You can also work to educate your people about how to make better decisions instead of trying to make every decision for them. Aronson printed out a two-sided paper that had the firm’s values on one side and its investment strategy on the other. He gave one to each person and asks all of his employees to read it every day when they come in. If people can make decisions based on those values and that strategy, then it will help Roark make better decisions more frequently and lessen the amount of poor decisions.
“We’re certainly not perfect and try to learn all the time,” he says. “But if we can get people to think about what’s the right thing to do and make sure it’s consistent with what we’ve all agreed we believe in, then we have a better shot at making better decisions.”
How to reach: Roark Capital Group, (404) 591-5200 or www.roarkcapital.com
In 1989, while attending The Ohio State University, Carl Albright was all set to be a part of ESPN’s National Sports Trivia Championship. But at the last minute, it was discovered that the two partners he qualified with weren’t actually students at Ohio State. As a result, he had to take his two roommates who didn’t know much about sports.
That meant Albright, who is now president and CEO of InfoCision Management Corp., would have to carry the load and guide his team to victory. He did just that, but don’t expect to hear any bragging coming from his direction
“I knew sports,” he says. “One’s a doctor; one’s an engineer. I’m sure if they were medical questions, I would have struggled, too,” he says with a laugh.
It’s that type of humble and likeable attitude that is driving InfoCision’s culture.
Albright wants all of his employees to like and respect each other at the telemarketing company, which posted $173 million in 2008 revenue.
To back up his point, he stresses that by exemplifying the culture and getting along with people, employees will succeed at the company. To be promoted at the company, you have to hit your numbers and impress your boss, but you also have to get along with people and be on the same page.
“I tell people, ‘That’s how you are going to advance, that’s how you are going to do well, that’s what your clients are expecting, that’s what are culture is, and that’s what I am expecting,’” he says.
Because with that kind of culture, the company is more likely to succeed.
“If people like being at the job, I think they are going to work harder for me, for the company and ultimately for our clients,” he says. “If they don’t like it here and they don’t have friends here, I think then they are literally going to start phoning it in.”
It’s the simplest action a person can do — saying hello to someone you pass in the hallway. Yet, it’s a simple gesture that will go a long way in building a positive corporate culture.
“It’s treating people like you want to be treated,” he says. “Knowing that I want to be talked to a certain way and I demand that everyone talks to me this certain way.
“If I’m walking down the hall, I expect the cleaning people to be nice. I expect us to be nice to the cleaning people. I expect the receptionist to be friendly and kind. So, I definitely, expect our senior vice presidents to be friendly and kind.”
Albright also wants his team to learn what employees do outside of work and get to know them outside of the office.
“Now, you can’t be friends with everyone and it’s not healthy to be that way,” he says. “But, if I know a little bit about you, what sports you like, what TV shows (you like), then I can have a conversation outside of your day-to-day reporting. … Now, you’re going to pass that person six times in the hall that day, you’re not going to say the same thing every time. Then it’s a nod of the head, that kind of stuff — the simple acknowledging to someone that you value who they are.”
While Albright wants to keep friendly relationships with employees, and he encourages friendships between his employees, you, as the leader, have to draw a line on what is appropriate.
You can’t be going out for drinks with employees and acting like a fool. You have to use common sense and realize no one will have respect for you if you act inappropriately.
“The main thing is you have to remember at all times, it’s about the company first,” he says.
InfoCision has golf and bowling leagues, a fitness center, and other amenities that make working there enjoyable. While all of that helps, it’s minimal to what really matters, and that’s showing employees that they are appreciated.
“I think people, if they are paid well for their job or at least fair market value, it’s really about how they are treated,” he says. “Do they like the people they are working with, and do they like the company they are working for?”
Albright has open forums for employees to express any problems or ideas they have and to give them company updates. By keeping employees in the loop and asking for their opinions and questions, they know that they are appreciated and that they matter to the company.
“I’ve got to make sure almost everybody I come in contact with knows that I appreciate them, that they know the direction of the company I preach in the culture,” he says.
“Then, I’ve got to make sure my senior vice presidents, my vice presidents are doing it to their directors, the directors to managers and managers to supervisor and supervisor to front-line people.”
He does about 15 town-hall meetings a month at each call center to give an update on the company and to give employees a chance to ask questions.
Some people will be hesitant to participate in a town hall, even though they have something important to say. To create an environment where people are going to be forthright, you have to be mindful of your body language.
“If I have a nonverbal communication style where I don’t look like I’m open to this or I’m rolling my eyes or squinting my eyes or actually telling them, ‘That’s a dumb question. We’re never going to do that,’ then I think I’m stifling them,” he says.
“But they’re making the calls, they’re taking the calls, they’re our front-line people. I want to hear how we can get better.”
If someone raises his or her hand with a complaint or an issue, Albright and his management team get together and, about two weeks later, they give an update or answer about what is being done by posting it in the break room.
Sometimes you may be put on the spot like Albright has been after people ask for raises in a public setting. You have to be direct and honest when confronted with what could possibly be uncomfortable or controversial topic.
It can be especially difficult for Albright because someone will point out how well the company is doing and suggest that everyone deserves a raise. Before you know it, the group is cheering and applauding because of the statement.
Albright keeps his cool and, again, is straight with them. He tells them that if they feel they deserve a raise, then they should state their case to their manager.
“They can ask me any question at all, just be respectful, but don’t ask me to make more money,” he says. “That’s a personal one-on-one thing.”
It’s great to spread your message throughout the organization when you interact with people in person and at town-hall meetings, but you need to monitor in order to make sure employees are actually following through with that message.
At InfoCision, most employees anonymously complete peer reviews about management, supervisors, administrative assistants and other employees whom they work with.
Peers do not review communicators in the call center, but their supervisor, manager and human resource coordinator do. There are three sections to the review — performance, personality and open-ended questions.
It’s really a 360-peer review,” he says. “Everybody you come in contact with regularly is going to be reviewing you.”
To start a peer review at your company, you need to first ask yourself some questions to know what to ask on the reviews.
“Get everybody together and say, … ‘What’s important to your company? What do you want to accomplish? What do you want an account executive to be; what kind of person do you want them to be?’
“Same thing with managers, IT, accounting, basic questions, and just send it out with the people they work with or for or who work for them. You’re going to get very, very, very enlightened feedback.”
Before the reviews went companywide in January 2002, employees thought everyone loved them and everyone got along. That, however, was not the case.
When the reviews first started, 4 out of 5 was considered a good score, while 4.5 was amazing. Now, because the reviews have helped shape the culture, 4.7 is the average score.
“If I stop sending out peer reviews in the next five years, I don’t think we’d ever go back to a 4 being the average, but I guarantee that number would erode, because there is accountability toward it,” he says.
The company started with 75 questions, but now has it down to just 10 personality questions and 10 performance questions. For example, a performance question would be: This person pays attention to the different levels of detail that overall helps the company be successful.
The personality section would feature questions such as: This person shows a great work ethic by working hard, working smart and being accountable.
For those two sections, employees rank their peers on a scale of 1 to 5, as well as answer open-ended questions such as: What is your overall view of this employee’s performance?
To gather complete and accurate scores, you need to make sure employees get reviewed by everyone they work with. Albright approves the peer review lists for management on up. Management approves all other peer review lists.
“They send a list to us, and we look at this and say, ‘He’s leaving off a couple of people he doesn’t get along with,” he says. “Or, ‘She’s getting people that are just her friends.’ “So, they send it to their boss and their boss’s boss and we decide, ultimately, who we are going to send the peer review out to.”
The feedback allows employees to see where they are strong but also where they need improvement. Some employees may not agree with the assessment their peers gave, which could prompt a negatively reviewed employee to confront the people they thought gave them bad reviews.
You have to be clear with that employee when you talk to him or her that the review is not meant to list everything he or she is doing wrong. It’s meant to help the employee improve in areas where his or her peers feel he or she is struggling.
As a leader, advise employees to ask the reviewers how they can do better and not to focus on receiving a bad peer review.
“It’s not to play internal affairs or gotcha or police,” he says. “We want to create a more positive culture for everyone.”
While the number of people an employee works around determines how many people will review them, about 30 people will review the typical employee.
With those numbers, an employee can’t say that it’s only a few people who dislike him or her. There’s strength in numbers, and if 30 people say someone struggles with a certain aspect of the job or the culture, there are facts to back it up. It’s those facts that will help you mold a culture that drives your company to success.
“Business is a lot about accountability,” he says. “I still would deal with people that were a problem, but now it’s an exact science, too. I can sit there and say, ‘This is a problem.’ (They say) ‘I don’t understand. All my people love me.’ Well, now I’ve got actual numbers to go through it.”
How to reach: InfoCision Management Corp., (330) 668-1400 or www.infocision.com
The story of John Soroko’s leadership at Duane Morris LLP actually begins years before he took over as chairman and CEO of the law firm in January 2008.
For nearly a decade before Soroko assumed the firm’s top post, Duane Morris had been transitioning from a local Philadelphia law firm with a centralized base of lawyers and clients into a national firm with offices in most major markets throughout the U.S.
By the time Soroko took over, Duane Morris employed 650 lawyers and 1,400 total employees, reporting $375 million in 2007 revenue.
Soroko needed to continue growing Duane Morris, and he needed to do it with a firm that had vastly increased its locations, its employee numbers and, perhaps most dauntingly, the miles in between.
“That was my big challenge, to keep that [growth] going, to move on to the next plateau and do it all while maintaining the culture that we very much value, a culture of collegiality and cooperation,” Soroko says. “Then, just to make things a little more complicated, do it all in an economic environment that is far from ideal.”
To make it happen, Soroko has placed an increased emphasis on hiring people who fit the culture, utilizing feedback to fuel growth and staying accessible.
It’s been a complicated process involving risk, but as with any business, the consequences of inaction are potentially more severe.
“The thought process was that if we stuck with the former, the best that could come out of that would be a fairly moribund institution,” Soroko says. “Therefore, it was a good gamble to take. We felt we could leverage our existing firm and culture to attract outstanding lawyers to help us build offices everywhere from San Diego to New York to Miami.”
Hire people who fit your culture
When searching for new players for your team, you need to find people who will fit your culture. At Duane Morris, the cultural fit is the most important fit for a newly recruited lawyer.
“If the cultural fit is there, then we’ll delve into the economic issues of how that lawyer joining us would affect his or her practice,” Soroko says. “We certainly won’t sacrifice the cultural fit in pursuit of a business fit.”
Finding the right cultural fit for your business can take some time, particularly when hiring for the management level. You need to formulate a hiring process in which multiple people in your company get to know a job candidate over the course of a series of interviews.
Soroko has potential new attorneys at Duane Morris interview with executives both in the markets they will serve and at the headquarters in Philadelphia.
“We have a process where if we’re talking about hiring for an office outside of Philadelphia, a potential candidate will be reviewed by a partner or the head of the office in that market, then come back and meet with a hiring committee within that market,” Soroko says. “Ultimately, that person will come to Philadelphia for a day of interviews and all of our reactions to that person will be carefully considered.
“At the end of the day, you’re getting a reaction from an awful lot of people involved in the day-to-day operations, and the track record in evaluating the candidates is usually pretty good. It’s something in which we’ve done very well.”
At Duane Morris, the firm’s leaders are looking for lawyers and staffers who are, above all, client-focused, open to collaboration and teamwork, and against the creation of internal territories and fiefdoms.
Culturally, you need to know what you want in a job candidate. But you also need to know what candidates want from the culture of their workplace.
Soroko says that one of the most important aspects of a work environment from an employee standpoint is the knowledge that he or she can speak up, voice concerns and share his or her ideas.
Listening is a critical leadership skill. As the head of your company, you are always obligated to keep yourself in the loop with regard to what your employees and customers are saying about your company.
“One of the things I stressed upon taking over the firm as chairman was my realization that, even though I have spent my entire career at the firm, the biggest mistake I could make was to not listen to the ideas, insights and perspectives that our partners have,” he says. “That includes partners who were newly arrived at the firm.”
But it’s not just you. Anyone in a management position in your company needs to listen. They need to hear what their subordinates are saying and what your customers are thinking. If those channels of communication wither, your company could stagnate.
Listening is not something that simply happens with employees, clients or customers. It has to be a conscious decision on your part.
“I decided to be a good listener,” Soroko says. “I’ve communicated that openness to our partnership, and there has been a largely positive response. To have meaningful client relationships in business, you have to realize that this is too big of a job for yourself alone. In this business, the key for me is, ‘Will my partners come through for me and treat my clients like their own in terms of giving them the most outstanding service they can?’ That’s the best story I can hear as the chairman, that a client is raving about the service from a new lawyer. Then, I know our relationship with that client will be stronger than ever because of the teamwork we exhibited.”
After Soroko took over the top post at Duane Morris, he and his leadership team began to formulate a plan for collecting feedback from clients, then using that feedback to improve the way the firm does business.
“We decided that this had to be attacked in a way that is more systematic than simply waiting until we got anecdotal evidence of client satisfaction or dissatisfaction,” Soroko says. “We decided that what we needed to do was reach out to clients by sending a team out to visit them. That team would then help us assess what we were doing right or wrong.”
Many companies distribute client satisfaction surveys. Duane Morris took it a step further, with the surveys taking the form of in-person interviews, conducted on the client’s home turf whenever possible.
“It’s been a great learning tool,” Soroko says. “We’ve found out much about our clients’ needs for the services we provide and their relationship with our firm.”
The feedback is then disseminated throughout the firm so lawyers can take the information that is relevant to their practices and use it to improve their client service. They might even get some ideas for new services to offer.
During the in-person survey interviews, clients have expressed a need for other legal services, helping Duane Morris increase the span of its service.
Soroko says you must take the good with the bad when seeking feedback. Customers might criticize parts of your business that need improvement, but you might also find new ways to serve your customers.
“It’s one of the most interesting things that we’re learning from those interviews,” he says. “Areas in which clients are indicating a need for legal service, areas the clients are not currently having addressed by Duane Morris. In many instances, we could be the answer for a client’s needs.
“For instance, we might have a client for which we were largely doing construction law. But the client satisfaction survey might indicate a pressing legal need in another area, possibly an area in which the partner we have serving the client was too busy and really hadn’t inquired with the client about it. That’s how this client survey interview process has been an excellent way for us to assess the needs of our clients on more of a 360-degree basis. It’s really been a win-win situation.”
Flying around to visit each one of your customers might not be practical in every case, but the need to gather feedback in some form and use it to improve your business is constant and something about which you should be vigilant.
Employees won’t be able to help your business grow if you don’t give them a platform to communicate with your company’s decision-makers. You can have formal methods of interaction, such as monthly or quarterly meetings. But communication in any form is a step toward building and maintaining a culture in which employees feel involved and valued.
At Duane Morris, Soroko likes to walk the halls whenever possible — but when walking the halls doesn’t cover enough distance, he relies on technology to bridge the distance. Many CEOs dislike the absence of personal engagement when communicating by e-mail. Soroko says that while e-mail can’t sustain a communication strategy alone, its ability to reach many people in a short period of time and its ability to allow people to reach you just as fast shouldn’t be overlooked. E-mail can’t substitute for in-person communication, but it can fill the space until you are available to meet in person.
“I am a walk-the-halls kind of person, but in a law firm that has almost 700 lawyers, 200 of which are in Philadelphia, you have to walk the halls in a cyber method,” Soroko says. “I send a lot of notes to people. I use e-mail a lot. When I read about a partner in our San Diego office having published a very timely client alert, I’ll stick it in my briefcase, read it, give the person an attaboy or attagirl and add some comments.
“In the aggregate, it has had a very positive effect in two ways: I get a good sense of what our partners are doing, and they get a good sense that I’m following it all.”
But electronic communication only works as a supplement to communicating in person. Soroko visits all of the Duane Morris offices on a rolling basis. As with the in-person client interviews, it’s a time commitment, but if you want to make yourself into a good communicator, it’s time you have to mark on your calendar.
“It’s simply about prioritizing,” he says. “Communicating is at the top of my list. It might mean that you sacrifice some time or attention for other functions, but you have to make up your mind that your people are important enough that you are willing to do that.
“When I first addressed our partners as the newly installed chairman last year, I stressed that if there was one thing I understood very clearly, it’s that I did not then and would not over time have all the answers. I was relying on them to give me input, suggestions, complaints and feedback about what steps we could take to make Duane Morris the strongest firm possible.
“If you have that openness to the ideas of others while at the same time having a good vision in your own mind about how you are going to lead, that will prove to be a winning combination. But if you think you have all the answers, and it’s a matter of you leading and people scrambling to follow you, that is a far less successful approach.”
Dale Karmie would rather see ForeverLawn Inc. shutter its doors and go out of business than sacrifice even a bit of his integrity to earn an extra buck.
“Back in the beginning, if we went out to deal with a customer, the goal wasn’t selling that customer on as much as I could sell. It was to solve that customer’s problems,” says Karmie, the company’s president and co-founder. “We weren’t looking at what the customer wanted but the problem they were trying to solve. A lot of times, they would say, ‘We’ve had a half-dozen people out here, and you are the first person to suggest that.’”
It’s that commitment both to customer and to purpose that Karmie and his brother, Brian, used in 2004 to launch ForeverLawn, which now has between 30 and 35 dealers across the country. The company, which installs simulated grass product, maintains headquarters in both Uniontown, where Karmie works, and in Albuquerque, N.M.
Karmie says focusing on your core values and principles doesn’t mean you’re less interested in making your business profitable.
“If we don’t make money, we’re not in business,” Karmie says. “I realize there are people out there based on the motivation of money. I know those things can motivate an individual, but I don’t believe they can drive a business long term through the pitfalls.”
When your focus is on money, it becomes easier to veer off-course to meet that financial goal.
“It’s important to us that we’re not one person one place and somebody else another place,” Karmie says. “Pretty quickly, you forget who you are supposed to be.
“We try to be the same people all the time. There is a certain transparency with employees and co-workers that keeps you true.”
It’s as simple as following the same behavior and taking the same actions whether you’re dealing with a customer, an employee or someone else who comes in contact with your company. It’s that consistency that will drive home your commitment to your values.
“We’ve tried to put ourselves in a position where we side with the customer,” Karmie says. “When you take that stance, some of the employees react: ‘Why would you do that when you had a legitimate argument here?’ This is about trying to do what’s right, not make the dollar the bottom-line decision. We want to protect the image.”
When you go to such lengths to protect your image and to stick to your core values, Karmie says you’ll usually come out ahead in the long run.
“I think the key is you have to be convinced that what you are doing is right,” Karmie says. “If employees see their leaders sacrificing their values, I think that will kill the business. We don’t wear it on our sleeves. I don’t go around and say, ‘I operate my business with integrity.’ I think it’s more subtle so you’re not overwhelmed. When it’s a little more subtle, it becomes part of the subconscious.”
Transparency, consistency and repetition are among the keys to building the foundation you want with your business. He equates it to the care that a farmer takes planting crops.
“A good harvest comes through perseverance and hard work,” Karmie says. “A bad harvest comes on its own. Weeds grow; they don’t have to be planted. That’s been a critical part of keeping grounded and growing our business is understanding and believing that.”
With consistent communication, your team will back you up on your commitment.
“If it were me alone standing on my character, I would fall,” Karmie says. “The fact that it’s part of the company, maybe someone who is a part of our team comes up to me and says, ‘Remember, this is how we operate.’ It becomes the nature of the company.”
How to reach: ForeverLawn Inc. (330) 614-9390 or www.foreverlawn.com
Arthur B. Culvahouse Jr. is no stranger to handling situations of
international importance. Culvahouse, who served as White
House counsel for President Ronald Reagan from March 1987 to
January 1989, was brought in to that spot by former Tennessee
Sen. Howard Baker. When he first took the post, he had a meeting
with Baker that he never forgot. “I went into the White House at
the same time that Howard Baker did to be chief of staff,”
Culvahouse says. “Senator Baker had recommended me to be
White House counsel. Before we went in, we met at Howard’s
house, and he said we would have three, and only three, priorities,
and everything else could not distract from the priorities.” Those
first three priorities, which included getting Reagan through the
Iran-Contra investigations, negotiating an arms agreement with
the Soviet Union and getting a Republican to succeed President
Reagan, were laid out clearly so that Culvahouse was on the same
page with White House expectations.
So when it comes to his daily work as chairman at O’Melveny &
Myers LLP, the international law firm, Culvahouse still thinks
about that conversation. His firm has more than 2,200 personnel,
including more than 1,000 lawyers, and has offices all over the
globe. It would be easy, then, for any of those offices to take off in
its own direction. But like his initial conversation with Baker,
Culvahouse and the senior leaders at O’Melveny focus on getting
everyone on the same page.
So how do you get 2,200 people working anywhere from
Shanghai to San Francisco on the same page while still finding the
time to conduct your business every day? It’s not easy, but
Culvahouse and O’Melveny have done it by unifying the firm
around its values statement, ramping up communication frequency and channels, and when a solid majority is reached, moving forward without hesitation.
Use a guiding principle
It’s just a guess, but you probably have taken some time at your
company to put together something you consider to be a values
statement or a mission statement — some ideas and practices that
you think define what your company is about.
But after you went through that process, did you ever make them
the foundation of what you were doing?
While many companies have things they think drive their company, most don’t use their values as a guiding principle for daily
interactions. At O’Melveny, the firm uses the values it wants to live
by to drive everything it does, from hiring to giving raises.
“All of our messaging and everything we do is guided by our values, we’re a value-driven firm, so whether it’s compensating partners, deciding who to call back from law school interviews to evaluating administrative assistants or marketing professionals, each
of us is evaluated in terms of excellence, leadership and citizenship. Almost all of our messaging is focused around our values and
that is a unifying theme,” Culvahouse says.
“(Values) are the guiding stars for everything we do, from compensation to performance rankings to admitting lateral partners,” Culvahouse says. “We passed on particular acquisitions because we
thought they were values challenged. If a partner is considered by
associates to be unreasonable and not a good colleague in terms of
working for, we will have a conversation with that partner and we
will coach him or her on how to be a more value-driven colleague.”
The idea is simple: If you have four core values that you want
your people to live by, do something today to show people that
those are important so everyone realizes you aren’t just floating
around big ideas — you’ve created a shared rallying point. For
example, O’Melveny makes community service an important
value, so the company regularly shares the good work that people
do in firmwide communication.
Another piece is celebrating your guiding principle. While most
leaders will happily share with you their company values, how
many of them have a process for celebrating them in a way that
encourages people to make them part of daily life? At O’Melveny,
values awards are given to those who exemplify the firm’s values.
“We give values awards every year to two partners, two associates in counsel and two members of our staff, so that binds us
together in ways that are unique,” Culvahouse says.
And to conjure up even more interest in the firm’s values, those
awards are not just handed out by senior leaders, there is a
process that allows anyone in the company to fill out a nomination
for someone else.
“Everyone in the firm, from the most senior partner to the most
junior paralegal hire in Shanghai, are encouraged to nominate their
colleagues to receive the firm values award, and we have several
thousand nominations every year,” Culvahouse says. “So I think
receiving the values award, which is not a big deal financially, it
might be a very nice watch or something like that, but people are
really touched and moved to get it. It reminds us of the glue that
binds us together, it reminds us what is special about our firm. As
we become much more geographically diverse and much larger,
practicing law, in many respects, with much greater intensity than
our forebearers, we don’t want to lose that part of our heritage.”
The celebration of your guiding principle also gives you a database for people that can help get others behind your company. At
O’Melveny, Culvahouse and other senior leaders rely on a values
committee to help push their efforts to get people on the same
page. They wanted this committee to be diverse in age and scope
so it would have more effectiveness, which would normally be a
hard vetting process with 2,200 people. But O’Melveny had little
difficulty, as the firm already had a group of values awards winners and incoming applications full of reasons to include potential award winners to help guide that decision-making process.
Expand and repeat your
Beyond using a unifying theme to get your people behind you,
you also need to take into consideration how well your messages
are getting across. Consider the struggles that Culvahouse has at
O’Melveny. The firm has more than 1,000 lawyers spread across
the globe. His decision-makers aren’t just busy, they’re working in
different time zones and often are inundated with e-mails and
phone calls. That’s how he came up with a rule of thumb for communication.
“I read someplace, I can no longer quote you the source, that says
you need tell the average law firm partner something eight times
before it really sinks in,” he says.
It’s not that Culvahouse thinks his people intentionally block out
messages, he just knows that there is a lot of information out there.
“We live in a world of communication overload, so if you communicate something eight times, you’re hoping at least one of the
messages gets through and is retained,” he says.
“You can say it’s really, really important that we have acquisition
finance capacity in China, but if you say it only once, you may only
have 20 partners that heard you.”
And if you are only getting it across to 20 people, then everyone
else is already down a path to misunderstanding.
“And if our partners don’t have current and up-to-date information, then they will assume the worst, which is what we’re taught
to do as lawyers, to imagine the unimaginable horrors,”
So Culvahouse follows the eight-times rule by constantly considering how important it is to get messages to people not just several times
but also through several avenues. One reason for that is obvious: A
law firm doesn’t just throw its strategic plans up on a blog where the
world can see it. But there’s more to it than that. Part of trying to get
something across is understanding that some people might have one
method of communication that they often ignore or one that they are
constantly tied to. The best communication strategies include not just
consistency of message but also different forums.
“I think each one adds value,” he says. “One-on-ones or small
groups are the most effective, but they’re the most time-consuming.
We try to be a transparent firm, all of our financial information, our
strategic plan, we have no secrets from our partners.”
That means that O’Melveny has diversified its communication
strategies. The company does the usual stuff to lay groundwork —
off-site partner meetings, practice group retreats, etc. — but also
makes an effort to have communications available when people
can get to them. The firm has 90-minute videos that it places online
so people in different time zones can access them at any time. The
firm also is completely open with information, sharing financial
decisions and structure so that that no other communications
seem shrouded in mystery.
Beyond that, the governance structure of the firm has adapted to
include an executive committee that is made up of those value-award-winning types that acts as an additional bandwidth for communication between senior leadership and the firm at large.
All of this helps Culvahouse create a firm where people have consistent outlets that help them understand the firm’s direction.
“Every partner understands that they’re entitled to information,
and it’s really our responsibility to respond to that need because our
partners are very good lawyers and they want to understand decisions,” Culvahouse says. “Lawyers by style are not command-and-control types, we don’t salute and say ‘yes sir’ or ‘yes ma’am,’ and it
takes some convincing and some explanation, so you really need a
Run with a healthy majority
While solid communications come from a guiding principle and
an effort to push the message in multiple formats, you also have
to respect the fact that there is a timetable on decision-making. It
may only take one person to hang a jury, but you cannot let one
naysayer to your plan destroy your business. Culvahouse would
love to get a vote of 100 percent confidence in everything that he
does, but he knows that getting everyone on the same page means
running with a healthy majority instead of constantly circling
back and changing plans.
“Once you reach a confidence level that is 66 2/3 percent or
greater, and this is in respect to a particular course of action or particular strategy, then all other time is best spent on executing rather
than trying to reach a higher confidence level,” he says.
So while O’Melveny is constantly pushing the firm’s value messages and trying to keep everyone in touch, Culvahouse is looking
for that magic two-thirds majority of his senior decision-makers
before he pushes a decision. Working for a higher than normal
majority will help keep people on the same page with what you’re
doing because you’ll have high support, but not waiting for everything to come in at 100 percent will keep you nimble. O’Melveny is
a juggernaut in the legal world, but Culvahouse knows that its success leans heavily on the fact that the firm can quickly get everyone on the same page and get strong execution on an idea.
“It’s really appropriate for O’Melveny, because we as lawyers,
being conservative, not politically but in terms of running our own
business, being very good at imagining unimaginable horribles,
would want to really try to achieve a much higher confidence level
and that detracts from being nimble and decisive and opportunistic or strategically opportunistic,” he says. “So ... while I think as
lawyers we should always be very careful, but we need to run it
like a business, and frankly, fierce execution has been one of our
strengths over the past eight years. There’s nothing in our strategic
plans that is so extraordinarily creative that anyone would be surprised by what’s there. A lot of what we try to do is pretty obvious
in many respects. It wouldn’t knock people out, but we’ve been
pretty darn good at execution.”
HOW TO REACH: O’Melveny & Myers LLP, (800) 635-2189 or www.omm.com
business strategy class required many late nights. The class met
two nights a week from 6 to 10 p.m., and throughout those 10
weeks, he and his classmates often bonded in the halls over
snacks as they dreamed of how they would take on the world after
graduation. On the day of his final, Bettinger and his classmates
felt pretty confident that they would ace their final exam after
doing so many business case studies.
“We were ready to graduate,
thinking we were going to go out and change the world and all be
these successful businesspeople,” he says. The professor handed
each of them a blank white sheet of paper and told the students
their final assignment. “I’ve taught you everything about business
strategy as you go into the real business world,” he said. “Your final
exam is, ‘What’s the name of the lady who cleans this building?’”
Bettinger had no idea.
“We had spent four hours a couple nights a week there for the
last 10 weeks,” he says. “We had taken two or three breaks
every evening to get a soft drink or use the restroom, and she’d
been there every night. I often say to people that I didn’t know
Dottie’s name — her name was Dottie — but I’ve tried to know
every Dottie since.”
That message stayed with Bettinger as he started The
Hampton Co., a retirement services provider, after college and
grew it until The Charles Schwab Corp. acquired it in 1995.
He worked his way up the Schwab ranks, and last year, he
took over as president and CEO of the $4.99 billion financial
services giant. Despite his position, he still remembers to focus
on the people — both himself and his team.
“That’s a powerful message because it reminds us that business and the decision-making is a part of it, but people are the
biggest part,” Bettinger says. “ ... If we fail as leaders of people,
we will fail as business executives.”
Know your role
After Bettinger’s business got acquired by Charles Schwab,
he took on a new role in the larger organization and had a performance review with his new manager.
“When you were running Hampton, you were the most capable person in the firm at sales, marketing, accounting ... but
now that you’re at Schwab, you’re not the best at any of
those,” the manager said. “You may be competent in all of
them, but you’re not the best at any of them. Your job now is
to go out and find and recruit and recognize those people that
are better than you at each of those things.”
The honesty felt like a slap across the face, but Bettinger
realized that the job really had changed and he needed to
change with it.
“As you move up in the organization, you become less of the
person who does something and more of the person who actually invests in building the team who will go out and actually
do the work,” he says.
If you don’t accept this as your personal role, you’ll likely
squash your organization’s growth. As your role or your organization changes, you need to recognize how you should
change, as well.
“Each time I have moved into a broader range, I’ve had
another (personal assessment) done to try to align the dynamics of the new broader role with my strengths and my long list
of weaknesses,” he says.
This constant re-evaluation of yourself as it relates to the
position you’re in is crucial in business.
“It really begins with emotional intelligence ... and at the
core of emotional intelligence is the ability to look in the mirror and be honest with what you see back,” he says.
Often it’s hard to see your own weaknesses, so that’s why
having a third party do the evaluation can help in seeing yourself in the proper light.
“It’s easier for that independent organization to do,” he says.
“They’re not contingent on that leader for their job. They’re
open, and they’ve done this before with hundreds and thousands of executives.
He says once they paint that picture for you, it can be very
telling and accurate.
“Then it just comes down to how motivated are they to
change, because now they have someone holding the mirror
up to them,” Bettinger says. “What they do with that mirror
then will really be the determinant of whether they want to
change, because they believe their organization will be more
healthy and they’ll be better able to serve their employees and
clients and shareholders.”
The ability to be humble and see yourself for what you really are will ultimately dictate how successful you are.
“Success is never permanent,” Bettinger says. “Failure is
never permanent. Career success is attributable to many factors — not just the leader. The leader plays a role but only a
part of it. When you emphasize that if you choose to be a
leader, you’re really choosing to serve others as opposed to be
served yourself, it helps ensure the level of humility that is
needed to both be honest with what you see back in the mirror as well as attract people around you who are highly capable themselves.”
Build a team
Once you know where you stand as a leader and what your role
is, then you can focus on the people surrounding you. Bettinger
says it’s vital to establish a strong team, and one of the keys to
doing that is balancing your strengths and weaknesses with those
around you. He suggests using an outside organization to help you
with that, as well. He used a large, global organization that
worked with hundreds of Fortune 500 CEOs to make sure he had
someone with experience helping him.
“It can help you identify areas of strength and areas that you
need to build out your team with certain personalities and skill
sets and capabilities so you have the most effective functioning
team possible,” he says.
Another key to assembling a good team is to take people with
“To the extent that you can, build a team and be surrounded by
a team of people that have different experiences in life and different environments they were in, whether it’s different businesses
or different geographies — just different life experiences,” he
When people have different experiences, they will bring different views to their decision-making process. He says you also need
to have people who share the same core beliefs as you.
“If you have fundamental agreement on the core beliefs, there’s
lots of room for debate and differing views,” Bettinger says.
For example, at Schwab, everything centers around the fact that
team members want to be the advocate for their client. The belief
is that if you do right by the clients, they will choose to do more
business with you. If people don’t agree with this, they won’t be a
good fit. If they do, then he can sleep easy knowing he won’t
waste time simply trying to get people to buy in to a decision that
aligns with the organizational values.
“Talk about the philosophies that you have of leadership,”
Bettinger says. “Ask the other person about their philosophy of
He often asks people to talk about what they have viewed as
their greatest failures and successes in life. Doing so allows him
to learn more about their psyche.
When he’s interviewing for a senior team member, he also likes
to gain more insight into that person’s character. One way to do
that is by taking the person to lunch or dinner.
“It’s less of because of what they’re going to say to me, but I like
to see how they treat the waiter or waitress,” he says. “I know
how they’re going to react around me — they’re trying to get me
to hire them for a job. What I want to see is how they treat those
who maybe they view can do very little for them or they’ll never
interact with again. That gives me a glimpse into the character of
Once you have your team established, then you have to foster trust among the team members so that you can collaboratively move the organization forward. He says it’s crucial to
have confidence in each other and promote openness, transparency and vulnerability.
“You have to encourage the team to have healthy debate,” he
says. “I always feel like if my team can’t have healthy debate,
it’s my fault. It’s not their fault. It’s I haven’t created the environment to ensure that can occur.”
The first part of this involves listening more and talking less.
He says that in order to be an effective listener, you have to
have a dose of humility.
“If you begin from a position that you’re right with a capital
R, it’s very hard to set aside the views that you might have at
that point in time and listen as actively as you should to other
people’s views,” Bettinger says.
You can’t listen if people don’t talk, so make people comfortable voicing their opinions.
“Make as clear as they possibly can that it is not only safe for
the people on their team to have differing views from the
leader but actually an expectation,” he says.
Part of that comes from criticizing yourself.
“You have to be, to a certain extent, self-deprecating, self-critical, so people recognize that you would be the first to recognize if the king walked into the office one day without any
clothes on,” he says.
You also have to admit your mistakes to everyone in the
organization — all the way down to the lowest levels.
“They have to recognize that when they put together a team,
they own that team’s mistakes,” Bettinger says. “You can’t take
credit for the successes as a leader, nor can you pass off the mistakes. You have to attribute the successes to your team,
and then you have to personally own the failures.”
This trait is the fine line that divides successful leaders from
“Both probably make 50 percent good decisions and about 50
percent of decisions they make aren’t as good,” he says. “But
the difference is that the better executives are more open and
willing to admitting the half that they made that maybe weren’t
as good and are willing to do something about it. The executives that are more mediocre struggle to understand which 50
percent were which and maybe don’t have the humility to
admit that they were wrong and reverse course.”
Your people will help you identify the wrong 50 percent, but
you have to leave room for people to counter you.
“When a leader makes a point, they also have to always wrap
around that this is not necessarily the correct answer, but this
is how I see it right now,” Bettinger says. “You have to give
those openings — that room for people to maybe say, ‘Well,
you know, Walt, I agree with you — I think your point is
wrong.’ You have to create the openings. If you make a series
of definitive statements, it’s very hard for people in an organization to voice their opinion if they’re contrary.”
Bettinger also makes it a point to thank people who counter
him so they know he appreciates their feedback. That humility
acts as glue, and it makes you, your team and, ultimately, your
He says, “If the leader doesn’t leave room for the capabilities
and the competencies of the people on their team, it’s very
hard to keep a team together.”
HOW TO REACH: The Charles Schwab Corp., (866) 232-9890 or www.charlesschwab.com
Kennedy Health System. But circling a date on the calendar was only the beginning. In the months leading up to his May 31 retirement, Murray, who took the top spot back in 1992, has helped lead a massive transitional effort that has included identifying potential successors, assisting the board of directors in the hiring process as needed and, most importantly, helping the entire 3,600-employee health care system make the transition to his successor. “There has to be a date where the new person takes over,” Murray says. “But by the same token, to make that transition successful, I do think you need a transition period. All companies and corporations have separate cultures and ways of doing things, some of which is on paper and some of which is not on paper. Some of the hardest transitions occur not on the technicalities of the job but because of the unwritten culture of the organization.”
When you do decide to step down, your successor might be an internal promotion or an external hire. The person might have
been selected by you, by your board of directors or by a vote of shareholders. No matter how you find your successor, Murray says he or she is going to need the support of the people in the company. That starts with the transition process.
Make the best hire
The transition process formally began in September 2007 when Murray announced his retirement to the board. Following his initial announcement, Murray appointed a succession planning committee composed of members of the board of directors and himself.
“I wanted to make sure that there was sufficient time for the organization to quietly and systematically go about the process of selecting its next CEO,” Murray says.
In order to identify the best candidates and make the best hire, Murray says you have to take your assumptions and preconceived notions out of the equation.
To aid in that, the leadership at Kennedy Health brought an independent consultant on board. Murray says consultants can help a company’s leaders take a wide-angle view by removing personal bias from the decision-making process. Consultants can also put metrics in place to help you better weigh the positives and negatives of the decision you are about to make.
“Our consultant evaluated each of the candidates using various testing methodologies,” Murray says. “There was personality profiling, written and electronic exams, and different testing protocols that typical search firms use to evaluate candidates and make good matches for their clients. It allowed us to really take objective measures in the testing of our internal candidates and see how they might stack up against the best talent that might be out there across the region and the country.
“When we went through this process, we recognized that the first decision we’d have to make would be whether we had someone in-house who is the best candidate for us or whether we’d have to engage in a nationwide search. When we brought in (our COO), that was the result of an extensive search, and we were willing to go through that again if need be.”
As part of removing himself from the decision-making equation, Murray says he made it a point to take a backseat to the board of directors.
“I acted as sole counsel to the board, and when asked, I gave my opinion on the suitability of a candidate,” he says. “But really it was just consultative. This was the board’s decision on who to hire, and I tried to be very careful not to overstep my position or to try to influence the decision in any way. In our case, the board has to live with the decision they make, and it’s certainly their role and authority to make the call.”
After an internal search by the succession planning committee whittled the search down to several internal candidates, last year the board elected to hire Martin Bieber as Kennedy Health’s new president and CEO, effective June 1. Bieber had been hired as the COO in 2006 and is now the system’s executive vice president. Murray says he had prior CEO experience from a previous career stop, making him a natural fit for the role.
“Marty Bieber was the logical internal choice, being the COO, but we had two other senior executives who have a great deal of experience and who, under normal circumstances, would be considered potential candidates,” Murray says.
Keep your people informed
Shortly after announcing his retirement to the Kennedy Health board, Murray made his announcement to the entire system.
When a major change is forthcoming in an organization, the quickest way to start rumors and spread anxiety is to remain tight-lipped on the reasons behind the decision. Murray made it a point to communicate as transparently as possible about his retirement.
“There are normal anxieties whenever there is a change in leadership,” he says. “Part of that, in our case, is that even without a major change in leadership, the health care industry in New Jersey is under a lot of strain. We’ve seen many of the hospitals in New Jersey close, and there are more in bankruptcy.
“There are questions about stability, questions about change, is there going to be a new direction, will there be a tailing off of productivity and success.”
Murray announced his retirement through a letter sent directly to the homes of all Kennedy Health employees and kept employees informed on the progress of the successor search through internal mass-communications, including e-mail and the companywide newsletter.
Murray also relied on in-person communication facilitated in large part by those in upper-level management.
“An organization with between 3,000 and 4,000 people is a large organization, so we have regular meetings with various groups to make sure information is communicated upward and downward,” he says. “I have a corporate officers group of four senior vice presidents. I meet with them regularly to discuss our progress and changes. They each meet with the people that report to them.”
It might seem obvious that open communication helps a company remain able to adapt. But Murray says you need a detailed plan for how to approach communication during a transition at the top, and see to it that the plan is cascaded to all areas of the organization. If you don’t, you’ll risk losing people in the shuffle.
“Good managers and good leaders know that the success of an organization depends on its people,” he says. “People have to naturally adapt to a changing environment. From a managerial point of view, it’s establishing regular sets of goals and objectives, then holding people accountable. You also have to have the right level of communication with the various levels of the organization so that change can be brought to the forefront and acted upon in a reasonable period of time.
“It’s not brain surgery. It’s just the sound principles of managing and, more than anything, maintaining the lines of communication. It’s having a style that incorporates participatory management that allows for an organization to adapt to things that come down the pipe.”
Manage the change
Murray tries to stay ahead of the curve with regard to change, and that includes his own tenure. He says change is inevitable in any business, and when the need for change becomes apparent, you should adapt, not resist.
“I’ve been very sensitive to staying at the party too long,” he says.
“I’ve been around a long time; I’ve been very much involved in the major health care associations. So I’ve known a lot of people in the state, and I’ve seen CEOs come and go over the years. But the one thing I’ve been sensitive to is getting out at the right time.
“This was not a spur of the moment decision. I’ve been thinking about this for some time, and I told select members of the board several years ago that this was generally the time frame I had in mind.”
Your responsibility as the leader of the company is to set the stage so that a management transition is ultimately a positive experience for employees at all levels of the company.
“Well-trained, committed and cared-for associates recognize that change is necessary, and that the most important thing is to manage that change so that it is successfully accomplished,” he says. “What I mean by managing change is that I think change has to occur for good reasons, not just for the sake of change. It has to be clearly spelled out why things are changing so that people understand it and embrace it.”
In the end, succession management is change management. You might only retire once in your career, but you’ve been learning the lessons of how to bridge the gap between you and your successor for most of your career. Interacting with your people to get a feel for what they can tolerate with regard to change is one of the essential steps in change management.
“Part of managing change is to have a good grip on where your people are and what they’re capable of taking at any one point in time,” Murray says. “Change will come, and when it does, you have to parcel it out and prioritize what is important. If you try to jam in too much change at one time, it can demoralize your personnel and weaken the company, and it leaves you with a very bad result.
“Even without any dramatic changes, there are newfound requirements — certainly in health care, and I know in other industries, as well. Life is more complicated today, the bar has been raised and associates are being asked to do more with less. That’s part of business even without adding on layers of major change. There are a lot of pressures and responsibilities day to day.
“That’s the role understood by good management and good leadership, to evaluate change and understand how much is appropriate to overlay at any one point in time.”
HOW TO REACH: Kennedy Health System, (856) 566-5200 or www.kennedyhealth.org