Every CEO would agree that a fully engaged and motivated work force translates to high company productivity and is more likely to quickly develop creative solutions to issues that threaten to derail a company’s progress toward its defined goals. It is also true that a disengaged or demotivated workforce can really put a damper on a company’s performance.
What are the keys to keeping a work force motivated and, on the flip side, to recognizing and avoiding behaviors and actions that might prove demotivating to employees?
In my experience, sensitive, compassionate, high integrity leadership virtually assures that a work force will remain highly motivated, even when times are tough. Such leaders routinely communicate both good and bad news to the organization in a timely manner, make sure that they are especially visible to employees and clearly in control during any company or industry crisis, and are careful to provide the rationale behind any business decision.
In many ways, the leadership practices I’ve just described are not only motivating because people feel informed and confident in their management but also head off one of the leading causes of discontent among employees — the spreading of rumors. It appears to be human nature that when people are uninformed they assume the worst, so frequent and honest communication is an important weapon in management’s arsenal.
Leaders earn the respect of subordinates when they consistently act in a way that serves these critical employee needs while failure to serve these needs is a sure way to destroy motivation. Note that I said “consistently act.”
I’ve learned that people interpret what you say by observing what you do. Modeling the behaviors that you say you value and are important to the company is the best definition I can come up with for “walking the talk.”
Any modern-day leader understands the importance of treating people with respect and can probably list the things that he or she does in that regard. But can he or she define “meaningful work” in the way that their subordinates would define the term? They would probably define it as job responsibilities that directly support the achievement of measureable team, or department goals that are aligned with the goals of the company. Employees feel valued when they are recognized for their contribution toward the achievement of those goals. Having mastered the methods and behaviors that serve these first-order critical needs, leaders can further engage and motivate employees in the following ways:
- By providing education and training in problem solving and process improvement tools and methods at non-traditional levels of the organization, and
- By encouraging and supporting risk-taking at levels of the organization below those where decisions are traditionally made.
In the first case, employees appreciate the investment in the development of their skills and view the investment as a validation of the value they bring to the organization. In the second case, empowering employees to take risks can unleash a level of creativity and employee commitment sufficient to enable an organization to outrun its competitors. There is a danger, however that these initiatives can backfire resulting in a workforce that becomes disenchanted and risk averse if the organization is not fully convinced of their benefits and fails to properly support their implementation.
It is the responsibility of the CEO to ensure that his or her management team models the behaviors that will result in a fully engaged and motivated work force. Although not every CEO is cut out to be a great communicator, he or she should be able to build an employee relations staff, as well as a communications department, to both keep his or her finger on the pulse of the organization and to assure that employee communication is timely, widespread and relevant.
George Perry has more than 40 years of experience in engineering, operations and executive management. He retired as president and CEO of Yazaki North America Inc. in December 2009. Reach him at firstname.lastname@example.org.
Katsu Uno believes in changing things, even when nothing is broken.
Where most CEOs might be hesitant to adjust cogs in a well-oiled machine, Uno operates with a different philosophy at Hirotec America Inc., a $90 million automotive component supplier that he heads as chairman and CEO.
Known by the Japanese terms kaizen and kaikaku, Uno runs Hirotec with an eye toward constant and revolutionary change to the company’s organization and processes.
Smart Business spoke with Uno about the importance of facilitating change, and why evolving and adapting is a must for any business.
How do you promote an environment of continuous change and improvement?
One thing I do is constantly change the organizational structure. Sometimes I drive my operational managers crazy because I like to make changes. One day I show up in the office and show them a piece of paper, showing them how the new organization and team will look like. And I tell them it will work. It will be a good development for you. Even right now, I’m continually working on new changes within the organization to meet the current business environment. So I constantly try to see what is the best way to utilize our employees, and depending on the business environment, I shuffle people around and create new environments within the organization.
I constantly adjust the company’s organizational structure to meet the demands of our customers, and try to integrate each employee’s unique skills. Our company succeeds because we work well together.
Why does this constant-change model work for you?
The first thing I should probably explain is that we have this concept called ‘K2.’ K2 stands for kaizen and kaikaku. Kaizen is a concept of continuous change and improvement. Here in America, we describe it as, ‘If it’s not broken, let’s make it better.’ A lot of people might say, if it’s working, why bother to change? But we believe that through change, you can make it better.
Kaikaku is a Japanese word for revolutionary change. It’s the idea that you always think outside of the box. You hear those words here a lot, because that is what we think is important. It’s what differentiates our company from our competitors. Those are unchanging components for our company. We change vision and strategy, we could change all kinds of stuff, but driving change is something we never change.
We believe this is the right company for people who enjoy change. We are looking for people who want to challenge and be challenged, and if you don’t like change, it is going to be very difficult to survive here.
Do you have an example of constant change and improvement in action?
It could be a product or how we do an engineering process, the organizational structure, and how we do all kinds of stuff. We have a core product called hemming solutions, and internally we have meetings where everybody gets together and discusses how we can change it, how we can we can improve it to meet the demands of more customers. Constantly, we’re trying to do that, drive change and make our products better.
How does change serve as a motivational tool for people?
The people we hire, the people we train, are people who like a challenge, and like changing and learning, so it’s not our system or our company driving them to change. We have people who enjoy changing and make it better. So it’s not a company where people are pushing the culture. We have people who create it; we have people who enjoy changing. I don’t’ need to motivate them. That’s what they enjoy, and they see the better product, a better financial result due to the changes they made.
What are the dangers of stagnating and not cultivating a change-oriented mindset?
You lose your competitive edge. Our reputation is that we are in a constantly changing industry, constantly needing to introduce new products and introducing new ways to do business. If you don’t change, you lose that reputation, and people in the company are going to lose motivation, because that is what is driving the team.
So that is the danger. If you don’t continue to change, really your company is no longer the same company if you have built your reputation on changing with the needs of the marketplace.
How to reach: Hirotec America Inc., (248) 836-5100 or www.hirotecamerica.com
Andrew E. Brickman says anything is possible if you’re persistent in pursuing your goals.
He’s proven that with the success of Abode Living’s recent development projects, despite a downturned economy that has particularly devastated the real estate market. Only one town home remains for sale of 27 at the upscale 27 Coltman in Little Italy, while the first phase of million-dollar town homes at Eleven Rivers in Rocky River has sold out.
Already on to a new project, Clifton Pointe in Lakewood, the managing partner and director attributes Abode’s success to innovation and quality fostered by a culture of employee empowerment.
Brickman emphasizes that his staff members are partners — not just employees — in the business. He looks to his nearly 200 current project employees to help him continuously improve the company and serve its customers well.
“If you have an opportunity to interact with people at all levels within the organization and you can see what they’re doing and you know what their position entails, you can work with them to help empower them to do a better job,” Brickman says.
To empower employees, ensure your compensation system directly relates to productivity, as opposed to a standard cost-of-living payment system.
“Rewarding people based on merit and productivity versus a fixed rate of compensation is — if practical — a more effective way to create a type of culture that I think will foster the most favorable results,” Brickman says. “I don’t think the fear of losing their job motivates people.
“I certainly believe in a pride of ownership — that if it’s yours, you’re going to generally take better care of it.”
Give employees more responsibility to further their sense of ownership in the company by allowing them the flexibility to make their own decisions, get creative and take risks.
Brickman’s director of branding and marketing developed a charitable partners program that committed Abode to match donations made by customers, suppliers and contractors. Despite the monetary cost, Brickman says the program has resulted in increased exposure to Abode’s target demographic.
“Creating a sense of significance and importance within the employees’ psyche relative to the overall success of the company creates a sense of confidence,” Brickman says. “It further empowers them, makes them feel more responsible and more a part of the organization’s success.”
Promote open communication so that employees feel comfortable sharing ideas and critiques.
“Foster an environment that leads to more people willing to speak up to try and make changes or try and identify problems sooner rather than later,” Brickman says.
“The people that (CEOs) surround themselves with have to be willing to speak frankly and speak their minds so that if they don’t understand the vision of the CEO, it can be refined and it can be improved upon.”
Brickman’s vision is for his employees is to go above and beyond the Golden Rule to satisfy customers, treating customers better than they would want to be treated in the same situation.
Employees who feel personally invested in the success of the company, and thus their performance on its behalf, will actively embrace this vision of excellent service. This benefits the company, as well as its customers and ancillary support.
“A relationship should be a win-win relationship,” Brickman says. “We should try and be focused on how we can help (customers and suppliers) improve themselves and their business. And that’s kind of the culture I’ve tried to create within the organization, one based on optimism, passion and persistence for always trying to do the best that we can.”
How to reach: Abode Living, www.welcometoabode.com or (216) 721-0027
It’s not just about how you can serve your customers; it’s also about how your customers can serve you. Andrew E. Brickman hosts “share its” to get outside input from customers and suppliers before starting a project, ensuring issues are identified and worked out before starting.
“Make these people feel like they’re an important part of the project, that their opinions matter and that we appreciate them taking time out of their busy schedule to weigh in on it,” says Brickman, managing partner and director of Abode Living. “By doing that, you get people who really care, who are sincere and who aren’t just there to say yes to the project.”
Be professional and hospitable by hosting these collaborative meetings at a distinguished venue.
“By hosting it in a fine-dining establishment, we create a certain sense of quality — that we’re committed right down to providing a quality experience for the people who are in attendance,” Brickman says.
Communicate with customers to find out what they value in a product or service to give you an edge over competitors.
“If you don’t have something very special and you can’t relay that to your customers, then you’re going to have a commodity,” Brickman says. “And if it’s a commodity, it’s just a race to the bottom in terms of price.”
As Frank Fantozzi continues to find ways to grow Planned Financial Services LLC, he finds it challenging to continuously reach the next level of success.
“I think the challenge is growing your practice prudently to fit the culture and vision and team that you assemble,” he says. “That’s the challenge because there’s no constant. If there’s one constant, it’s you and your leadership.”
Fantozzi is constantly looking to make sure that as he grows the financial services firm, which is part of the LPL Financial Network with $200 million assets under management, that the business still fits the culture he’s created.
Smart Business spoke with the president and CEO about the challenges of doing this.
How do you grow your company so it fits the culture?
It comes down to vision. You need to know what you want to be. If you can’t articulate, first of all, to yourself and then to your team and then to the prospective audience that you seek, you’re going to grow aimlessly. You’ll grow, but you won’t grow as effectively as you can. You have to know what you want to be before you can say how do you want to grow. If I want to go on vacation, where do I want to go? If I don’t know, I can go anywhere, and that’s what happens to a lot of companies.
Your mom and dad tell you, ‘What do you want to be when you grow up?’ What do you want your company to look like? That’s where you have to start — you have to know what that looks like, and then all your decisions as a leader should focus on moving toward that vision.
Think about it in the automotive industry. You can either be a Kia, which is a nice car but it has a certain marketplace and segment, or do you want to be a Mercedes Benz? I’m in the financial services business. If I ask you what financial planning means to you, you’re going to have your own definition. Are you a client for every financial planning firm out there? The reality is no. As a company, we can’t be everything to everybody.
For the health of the organization, you’re setting up expectations — that’s the key component of leadership. If you don’t know who you want to serve, you’ll attract all kinds. You won’t have the loyalty you want from your clients and you won’t have the effectiveness you want of your organization. Sometimes your efficiencies are better served for one marketplace than another. It’s critical for every leader to really define and remind your team that everything you do culturally has to be focused on this is who we are, this is who we want to be.
How do you define that well so there’s no confusion?
Write down for yourself what you think your company is — what the vision is. Then ask every one of your team members to do it. Take your best clients. Ask them and compare. If you get alignment on all three, then you’re probably spot on. It’s a three-point check — you have your vision of who you want to be, you have your team, and if those aren’t congruent, that’s problem No. 1. If your client sees you differently than how you see yourself, that’s problem No. 2. That’s the way you check it.
You have to know if you have alignment. If you have alignment you’re good. If you don’t, then the question is, ‘How do you get yourself in alignment?’
So how do you get yourself in alignment?
You have to say, first of all, is the vision I thought I had the right vision. Maybe your employees’ vision, because they do heavy lifting, is better. If there’s not alignment, is the vision I thought I have the right vision? If it is, then how do I get my team in alignment, and how do I convey that message to my clients? If it’s the other way around and it’s a different vision, then I have to first define what I want my vision to be.
There, you just have to do some soul-searching. You have to say where’s my company at? Where’s my life cycle? Where do I want it to be? Maybe you get input from your team and come up with a vision and then you have to get your clientele in. I would look at it in two different ways. If you’re all in alignment, great. If you’re not in alignment, and I like the vision I originally had, the goal is how do I get everyone in alignment, or if I come to the conclusion that I don’t like my original vision, then you have to start from scratch and figure out what you want to be.
How to reach: Planned Financial Services LLC, (440) 740-0130 or www.plannedfinancial.com
In the 12 years since Hillel Sackstein founded Virtual Graffiti Inc. as an e-commerce software development company, the business has sprouted from a startup outfit in Sackstein’s home to an international IT solutions provider with nearly 30 employees and $23.8 million in 2010 revenue.
As a result, the company has outgrown the systems and processes that Sackstein originally implemented. As growth opportunities have arisen, Sackstein has needed to ensure that there is a strategy in place to meet the demand.
Sackstein spoke with Smart Business about how he has strategized for growth and how you can keep your own business ready to grow.
How did you begin to construct your growth plan?
First, we identified what the issues were, because we definitely had to document those challenges. We had an idea as to what we needed in terms of systems and processes and what we needed in place to take us to the next level. We then did a thorough investigation of all the possible options, and there were a number of them. One was to develop a lot of functionality internally here, using our existing systems. Or, we thought that we could do what we did end up doing eventually, which was a company overhaul of our systems and finding a platform as a starting point for doing that.
That really meant doing a thorough investigation of all the software products on the market, and I did that personally.
What would you tell other business heads about constructing a growth plan?
In order to grow as an organization, it is definitely about looking at your business and understanding what the strengths of your company are. No company can be good at everything, so it’s really key to have a good understanding of what is different about your company and what you can do with your company to make you a stronger competitor, able to find that competitive advantage.
In our business, we are in the technology field and things are changing very rapidly. We’re always looking for the hot new products, what the trends are, what businesses need, what sort of technology companies are buying. Then we try to make sure we’re in those markets. Also, we try to make sure we’re developing the right partnerships for us, that we’re partnering with the right service providers and so forth.
How do you ensure your company is growing in the right manner and direction?
It’s finding something or a need in the market that is going to differentiate you from your competitors. We look for opportunities where there is recurring revenue in the product we might be able to sell. There is a lot of product out there that we might be able to sell very easily, but it’s a one-off sale. It may cost us a lot of money to advertise and find the customer that will buy the product, but very often, we may never hear from that customer again, because that product serves their needs.
Where we really want to look for areas in which we can grow is a product that has a recurring component to it — products with service contracts or products that are sold on an annual subscription kind of basis. That way, there is a component in there where we’re working with customers to ensure that they’re renewing those services, and it’s also an opportunity to find out what their needs are at that time, if they have a need for other technology solutions that we might offer.
What would you tell other leaders about capitalizing on a good growth opportunity?
In business these days, it is very hard to find that niche where there is no other company. It’s hard to find a silver bullet where you’ve found a product that no one else has made. In anything you do, there is always competition, there are always companies that are going to look at what you’re doing and copy it, and the growth opportunity is really going to come by being in a business that is going to be around for a long time and doing what you do well. That is really how to grow — it comes back to concentrating on what you do well, focusing on that and not allowing your company to get sidetracked. If you excel at that, that is what brings your business long term relationships. That is really how we’ve tried to grow our company.
How to reach: Virtual Graffiti Inc., (949) 870-3500 or www.virtualgraffiti.com
A couple years ago, a team at Volkswagen turned a flight of stairs in a Stockholm train station into a giant piano. The theory was that if you made stairs more fun, fewer people would choose the escalator. It turned out to be a good theory when 66 percent more people chose the stairs once they knew they’d be playing a tune on their way out of the subway.
This got me thinking not only about how cool Volkswagen is, but about the effects fun can have on our customers and clients, not to mention our own employees. Fact is, it’s a treat to work with people who know how to have a good time and companies that foster a fun culture have been shown to be better at retaining employees.
And yet, in my experience, too many businesses unwittingly limit the fun to lunchtime conversations between employees and occasional outbursts in the break room. Meanwhile, everything client- or customer-facing feels as though it’s been run through a highly effective humor-extracting device.
Isn’t it reasonable to suggest that if I love working with, say, Ryan, because he’s smart and cracks me up, that our customers and clients may appreciate Ryan’s personality too? That the average consumer doesn’t want to read mind-numbing ROI-based marketing messages any more than you or I do? We at Jellyvision work — and it is work — but we work to think of our target markets not as demographic categories, but as individuals who would appreciate creativity and humor in an explanation of their health benefits as much as they would in a discussion with a relative about Uncle Lou’s new girlfriend.
Granted, you might wonder whether humor fits naturally with your brand, not to mention with that of your customers and clients. Fair enough. I may be a little biased working for a place called Jellyvision. And perhaps there are topics where it is better to convey an air of thoughtful, razor-like focus, such as… airline safety.
Enter Southwest Airlines. They’ve successfully walked that serious/playful line by taking subject matter that is uniquely scary and boring and getting travelers to actually pay attention by focusing on the unique comedic sensibilities of their employees. Their flight attendants rank at the top of all airlines for customer satisfaction, as does the company in general. Their sense of fun and their creative marketing direction not only captures the attention of their audience, but results in the appreciation of their customers, building loyalty, differentiation and ROI.
So. How do you bring more fun to your work?
Hire funny people
That doesn’t mean hire comedians. It means place a premium on candidates who, in addition to possessing the skill set their role requires, have a good sense of humor. If someone can have fun in an interview, it’s likely they’ll bring that sensibility to their work.
Get rid of robotic language
Look at all the ways you interact with prospects and customers — automated voice responses and e-mails, form letters, everything — and toss out every phrase that sounds like a robot wrote it. Our standard, semi-automated reply to job applicants, for example, was written by one of our creative staff. It assures candidates that each application will be read by “a real human or two” and concludes with the line, “I don’t have any pull around here, but I’m rooting for you.” More famously, Groupon allows people to unsubscribe while making one last, and lasting, impression. It’s a great example of using humor to remain on task while not getting in the way. Go here to see it: www.groupon.com/unsubscribe
Be funny on task
Effective humor isn’t about peppering punch lines onto your existing content. The creativity and humor should work at the service of the goals. It should be woven into how you communicate with your audience about your product and about renewing, unsubscribing or buying.
While “fun” might not be synonymous with your “Brand Voice,” ultimately, your prospects and customers experience your brand largely through interactions with the people in your company. So unleash your funniest, most creative and delightful personalities on your marketing, customer service, and internal communications. Job satisfaction may just skyrocket, and customer loyalty will likely follow suit.
Amanda Lannert is the president of The Jellyvision Lab, the interactive conversation company. Jellyvision creates virtual advisers who help clients attract customers, train employees and reduce the costs of customer service. You can reach her at email@example.com or (312) 266-0606, ext. 116.
While some business leaders said the recession officially ended in June 2009, Tom McGraw would hardly agree.
“I think that those folks probably got into the Kool-Aid,” says McGraw, CEO of First National Bank of Northern California since 2002.
In 2009, the organization had a break-even year. And in the last three years, he watched as 345 banks went under.
“I think some of these banks that failed essentially were so paralyzed by the sheer volume of problems that they had that they just didn’t do anything,” McGraw says. “Then there were others who said, ‘Well, this thing is going to pass. It’s going to get better.’ For those people, denial was not just a river in Egypt. It was a way of managing things, and unfortunately, I think it led to their demise.”
Instead of being paralyzed by fear or in denial, McGraw thought that during the recession it was more important than ever for the bank to make the challenges facing customers and employees the top priority.
“By no means are we perfect, but I think we take a much more active approach when we have problems instead of trying to wait for them to resolve themselves,” he says.
Whether it’s with a customer or employee, McGraw wants to learn about people’s problems sooner rather than later so he can take swift action to address them. Personally, he’s found that having an open-door policy with customers and employees, especially in tough times, gives him the advantage of staying highly attuned to people’s needs.
On the bank’s home page, for example, McGraw lists his direct phone number and e-mail address so that customers always have someone to reach with any issue.
“I say, ‘Well, OK, if you’ve lost complete faith in us, then maybe that’s the right thing to do, but if you want to share with me what your challenge or problem or issue is, perhaps there is something I can do to try and turn it around,” he says.
Right away, McGraw also brought in all of the bank’s creditors who were struggling to help them find workarounds moving forward, such as switching to interest only payments.
“There were some where we had to take losses, but when those happened, we took them promptly,” he says. “We got them off the books as soon as we could rather than just holding onto them and hoping and praying that things were going to get better.”
For a CEO, this transparency and willingness to help also goes a long way in earning people’s trust and loyalty. More than 70 of the bank’s 180 employees have been with the bank for 10 years or longer.
“I think the access to management, our visits, our open-door policy — it really keeps a connection with what is happening within the system,” McGraw says.
By staying connected, you also know what people value and what keeps them inspired when times are tough. The company’s bank-funded employee profit-sharing plan has traditionally been a key factor in the company’s uniquely high retention rate. So while McGraw and his executive management team took no raises and bonuses in 2009, they were adamant about keeping the profit-sharing program.
“What we said is, ‘Look we’re in this together,’” he says. “‘If we can salvage a year and make some money, then we are all going to benefit from it. If we don’t, then we’re all going to have to feel the pain a little bit.’”
Through furthering a culture that ensures people are always a priority, McGraw has led FNBNC to survive a recession that many of its peers have not.
“You have to lead by example,” he says. “If you are going to ask people to take a little bit of a hit, I think that you have to, as well.
“Families stick together. They work through their problems. They’re not perfect, but they depend upon one another … and that’s the metaphor we like to use that holds for both our employees and for our retail customers.”
How to reach: First National Bank of Northern California, (650) 875-4865 or www.fnbnorcal.com
When CEO Tom McGraw spots someone in his company who isn’t executing well or isn’t happy, he makes sure he finds out why. To keep complacency at bay, it’s important to recognize people’s motives in their roles so you can figure out which employees may want to do more, which are unhappy and which really are content where they are.
“Sometimes you want to try to promote people,” McGraw says. “You want to push them. You want to see how far they can go. While that’s good in concept, the reality is that if they don’t want to go, you are going to set them up for failure.
“We have some tellers who have been here for 25 years. …That’s a very important job. They have the most contact with our customers, but that’s all they want to do. And then you take them and you put them in an operation supervisor position and they fail miserably. Well, they didn’t want to be there.”
As a leader, you need to be attuned to what people’s expectations are for their career, what their aspirations are, and then try to match those with positions in the company.
“So you’ve got people with various aspirations,” McGraw says. “If you can line up those aspirations and those skills with the position, the chances of success are much greater.”
When it comes to employee fringe benefits, small- and medium-sized businesses are in a tough position. Fortune 500 companies often offer unbeatable benefit packages, profit sharing and 401(k) matching with which their smaller counterparts simply cannot compete. This begs the question: How can businesses with less to spend secure and retain top talent? It took me 10 years as a business leader to answer this question and the conclusion was surprising.
Employee morale was not necessarily tied to the cost I spent on benefits and perks. Of course, paying employees fairly is important. But what I learned over the years is that small things do matter. As simple as it sounds, I truly believe that small personal touches are responsible for my company’s, Akraya Inc.’s, No. 1 position on the San Francisco Business Times’ 2011 Best Place to Work in the Bay Area list.
Growing businesses often make the mistake of concentrating all their efforts outside of the company to bring in investors and clients. My experience is that it is never too early to start building a strong company culture. Instead of letting the company culture take a back seat, shaping company traditions and customs with the same vision and precision used to shape your products and services is important. This can be as simple as choosing a company mascot or an artifact of significance that symbolizes the company’s values.
At Akraya, celebrating success has always been a cornerstone of the culture. Thus, we installed an old-fashioned dinner bell in a central area of the office that we named the Akraya Bell of Success. Every time an employee completes a project or comes up with a solution to a problem, his or her supervisor rings the bell and the whole team gathers for a round of applause.
While Fortune 500 giants have the budget to wow employees, small- and medium-sized businesses possess the power of flexibility. They simply aren’t constrained by a 500-page policy manual. And flexibility is something employees really appreciate. One way of exercising this is to simply grant time to employees to attend to family obligations or take time off when going through a rough patch. Sometimes, even a small favor like letting them arrive to work half an hour late to avoid traffic can improve their lives.
Another important lesson learned is that when it comes to investing in perks, you should spend on things that really hold value to the employees. Company picnics are great, but they can feel like a burden, especially if the employee already has little time left after work hours. But a couple years ago, I observed that my female employees often complained to each other in the break room that their weekend was spent cleaning their houses and they didn’t have time left to recharge. Thus, I decided to look for a local professional cleaning company and signed my employees up for a complimentary biweekly house cleaning. This new perk became a smash hit among Akraya employees as they gained an extra couple of hours to spend on other things.
Respect and trust are two core values your company culture should be built on. Most employees leave a company not because of perks or compensation. They leave (or stay) because of their boss. At Akraya, we promote a culture where the individual is respected. Starting at the very top, the message is that subordinates are treated with respect. We praise in public but criticize (constructively) in private.
Earning and retaining employee trust is also crucial. Employees don't mind if a leader disagrees to a proposal or request. However, if you do agree and then renege when it is time to pay up, you lose their trust.
When thinking of ways to secure and retain talent, spending on high-cost perks is not always the best solution. Instead, focus on building a strong work culture to draw people to your company. As my favorite line from the movie “Field of Dreams” says, “If you build it, they will come.”
Amar Panchal is the co-founder and CEO of Akraya Inc., which he and Sonu Ratra founded in 2002. He brings more than a decade of management, international business development, technology consulting, product management and software engineering experience to the company. Learn more at www.akraya.com.
President Doug Kovatch knew the timing was right to lead the multimillion-dollar plant expansion for Kovatch Castings Inc. After the company secured a $1 million grant in 2010 from the State of Ohio’s American Recover and Reinvestment Act, he now had the capital to combine the company’s own $2 million to expand its Green, Ohio facilities by 16,000 square feet, add 45 new employees and invest in new equipment.
“It was a $3 million risk to do this expansion and reinvestment into the business, but at the same time, I was very confident that it was the right thing to do at the right time,” Kovatch says.
Financing aside, there were a lot of other aspects of growth to think about. Facing the logistical challenges with moving equipment, altering processes, and making sure production continued to move efficiently, he also had to keep customers satisfied and employees engaged throughout the transition. What made it all possible was the company’s culture of teamwork and enthusiasm, which has been a key part of its success so far.
“We really felt that we were able to overcome that just with really excellent communication and leadership and the support that I have for my people,” Kovatch says.
While the new facility will enable the company to go from its current $16 million in sales to more than $25 million next year, there is still much unforeseen with the current economy. By keeping a focus on collaboration, Kovatch prepares his team to meet any setbacks or challenges ahead with positivity and creativity.
“That helps them feel that they are part of what we are doing and engaged,” Kovatch says.
Including people in the decision-making process during a growth period also encourages employees to accept the new level of flexibility it takes to adapt in an ever changing business environment. It means operational and structural changes, but also handling the ups and downs that come with an ebb and flow of new business.
“Some business will be lost and that’s just sort of how that goes,” he says. “We all have to come to accept that. But it challenges us to grow in automation, to constantly be focused on cost reduction, servicing customers, shortening lead times, doing these things that maybe the low cost providers don’t do as well.”
One way the company encourages teamwork is fostering a work environment that is committed to serving others, not just its own bottom line.
“We try to be a light and set a good example to other businesses around us,” Kovatch says.
“I think that really inspires people to do their best.”
Kovatch says it’s important to remember that just because you are growing successfully as a business, you shouldn’t start thinking you don’t need the input, help or advice of others, or stop giving yours.
“We don’t want to ever get too large that we don’t forget the people who are most important,” he says.
“We understand the importance of giving back, of understanding that we as a group are much bigger and have a bigger impact on the world around us than any one person alone.”
The company gives a percentage of its quarterly profits to both local Akron organizations and others all around the world, such as Samaritan’s Purse, which runs a project that takes shoeboxes and fills them with gifts for the kids during Christmas time. This year, the company’s 195 employees aim to send out 1,000 shoeboxes with clothing, toys and school supplies.
“With our employees, we had to remain adaptable to a changing environment, which means lots of problem solving along the way and keeping people positive and focused on the goal,” Kovatch says.
“There’s real power in group dynamics and in working together as an organization to impact the world around us.”
How to reach: Kovatch Castings Inc., (330) 896-9944 or www.kovatchcastings.com
As Kovatch Castings Inc. celebrates its 35th year doing business in Akron, President Doug Kovatch continues to be an advocate for the region’s manufacturing industry.
“Akron is a great location for manufacturing,” he says. “We have a terrific labor market here. We have materials. We have a supplier base. We have a reasonable cost structure. It’s been a very good place for us to do business.”
For Kovatch, Akron is also an attractive location because its low labor costs allow the company to do finishing operations such as machining and plating much more cost effectively than somewhere on the east or west coast, where labor rates are much higher. While the company has secured a significant amount of new business this year, it’s not just from promoting its own offerings.
“What we do is utilize trade shows and marketing promotions to promote this area,” Kovatch says. “We’re growing because we are actively pursuing new business all the time.”
He also participates in the local Akron Chamber group that brings together leadership from different industries to support a dialogue on regional growth. This organization is extremely valuable he says, because of the resulting wisdom that comes from many joining together to help on another.
“Those kinds of dialogues where CEOs can come together and help and support and feed off of each other’s ideas are very positive and very beneficial,” he says. “I’ve grown and I think improved as a result of hearing others perspectives.”
A significant amount of John Treace’s career has been focused on returning failing businesses to profitability by retooling their sales and marketing areas. So time and again, he’s come into a company where the sales organization was the needlepoint for other problems.
“Of course, the sales operation of a company really is the heart and soul of the company,” says Treace, who is the founder and CEO of JR Treace & Associates LLC. “The performance of everyone else in the business is weighed and justified on the performance of the sales team. … It all shows up in sales.”
Smart Business spoke with Treace about his book, “Nuts & Bolts of Sales Management: How to Build a High-Velocity Sales Organization,” in which he explains how business leaders can create a high-powered sales organization, starting with the company culture.
Why is culture the first section of the book?
Every company that I’ve ever been in that was failing or stumbling was failing because of top management up at the CEO level and at the VP levels. They fail because they don’t have a culture of success. To create the culture you have to identify your core values.
Core values should be written. They are like the 10 commandments. They are simple. They are action statements. As an example, one of the core values that we used in our business is ‘Don’t run out of cash no matter what.’ It sounds simple, but every company that I’ve ever gone into in my business career had run out of cash.
How can you effectively communicate core values to your team?
When you are presenting them, you have to make an emotional connection with each core value. As an example, the core value ‘Don’t run out of cash no matter what’ — when you tell that to a group of people, it really doesn’t sink in because they can’t imagine their company ever going bankrupt. However, if you ask a question to the audience and you say, ‘Have you ever known somebody who didn’t get a paycheck?’ — You’ll see hands pop up all through the audience. You talk to those people and say, ‘See, those people were working for a company that didn’t have this as a core value.’ Then they can make the emotional connection.
So you create your core values. You publish them. You create the emotional connection with your employees. And from that, you can write your mission statements.
Can you explain the relationship between morale and execution in managing your sales team?
In every failed company I’ve been to, the morale was just terrible, with sniping from the corporate officers at the sales team. One company I went into, and I interviewed the CEO and the CFO to begin with, I asked them what they thought the problem was, and they answered, ‘Well, we have a terrible sales force.’
I’ve never seen a terrible sales force in my entire life. I’ve seen sales forces of low morale and sales forces that were not effectively deployed, but I’ve never seen a terrible sales force. In that situation, with the CEO passing down word throughout the company that the sales force wasn’t very good, it totally demoralized the sales force.
The sales force wants predictability. They want to be able to answer these three questions of corporate management: Do you care about me? Can I trust you? Are you committed to excellence? I actually learned these in a talk with Lou Holtz, the football coach.
So when the corporate officers do things that don’t allow the sales team to answer yes to one of those questions, then it’s going to hurt the morale.
How to reach: JR Treace & Associates LLC, (904) 314-1442 or www.treaceconsulting.com