When Michael LaRosa took over as CEO of his family’s 64-restaurant pizzeria chain in 2008, he couldn’t just rely on the quality of the pizza, hoagies or calzones to get him through.
The economy was bad, and people weren’t eating out as much as they used to, and that included stops at LaRosa’s Pizzerias, which his father founded in 1954.
“It has been an extremely difficult economic period to lead a business and organization in any industry,” LaRosa says. “What I look at in my role as CEO is that I have to do my very best to keep the morale and the culture of the organization from my leadership as positive as possible and try to encourage everyone to keep doing the right things.”
Due to the economic climate of the last few years, LaRosa has had to stress more than ever the importance of making customer service his highest priority. From driving service into the corporate culture and training new employees to modeling expected behavior and learning from mistakes, LaRosa’s has survived the economic downturn with great customer service from more than 2,800 employees who helped the pizza chain earn revenue of $124.5 million in 2010. Here’s how LaRosa kept customer service his No. 1 priority.
The economy the past few years put a dent in how and where people spent their money. When economic climates change, you have to be able to adjust to those changes and make sure you continue to do what you can to provide the best for your customers.
“People are doing a little bit less of some of the things that are life’s luxuries,” LaRosa says. “You wouldn’t think that buying a pizza falls into the luxury category, but people decide to eat at home a little more often and try to save some money, and at the end of the day, everybody feels it. Even though we are all doing our best to manage costs and waste and making sure that we have efficiencies everywhere, at the same time, we can’t let the economic feeling be prevalent inside our business, because we are in the customer service business.”
When times are tough, you can’t let that trickle into your business. It is crucial that you be as positive as possible and continue to focus on providing the best products and services to your customers.
“You must keep your eye on providing your guests great quality products and great service and you can’t allow a dip in attitude throughout the leadership of the company or your store management teams or your front-line people,” LaRosa says. “You just can’t allow for that because there are already fewer people calling and coming in and the ones who are coming deserve the most fantastic experience ever each time they come in. I think anybody who has been in a leadership position certainly has sensed the importance of doing a much better job just keeping your people positive, keeping your eye on the ball and inspiring them each day to do the best they possibly can with the guests that they’re serving.”
It is also important that your people understand the company goals during trying times. Setting goals and making strides toward achieving them can provide a boost in morale when times are tough.
“If you have important goals clearly stated and understood by everyone and you proactively review those metrics on a frequent basis, you celebrate the things that are worth celebrating and you address the other issues, I think that activity can help lift everyone’s spirits and morale,” LaRosa says. “You have to have the right goals established and be communicating them to everyone and then have frequent reviews so that you can respond positive or negative as you need to.”
Make training a priority
Regardless of what the focus of your company is, it is critical that all of your employees understand it and that they know it from the moment they begin work.
“What you try to accomplish within the first 30 or 45 minutes is to create an expectation that is simple to understand, yet extremely important,” LaRosa says. “For us, we focus on our promise. Our promise each day is that we want to bring a smile to every one of our guests every time we serve them. Our promise is clearly stated and easy to understand, but in that first 30 minutes, you want every new addition to your team to understand that.”
When showing new employees what you expect of them, it is important that you are able to view the situation from their perspective and make them feel comfortable.
“You need to understand the team member’s perspective,” LaRosa says. “I’m hiring people and sometimes it’s their first job. They’re very nervous, and they’re fearful of what they are going to encounter. We work hard to understand the nature of our new hires, and we try to create an environment that’s comfortable for them.”
Making sure that new hires are comfortable will help ensure that they will be able to grasp what you expect them to do in their roles. What you tell them in the beginning of their training is crucial.
“You have to be very understanding of the individual you’re training so you can design a program that not only meets their needs but helps them be successful beginning with the first 30 minutes of their training,” LaRosa says. “I think sometimes people make the mistake of using a little too much corporate language and acronyms and they blow right past the new hire and the new hire isn’t comfortable enough to ask what that means. You have to understand your target and create an environment that makes them comfortable especially when asking questions or asking for clarification. If you’re able to do that, there’s a pretty good chance you’ll provide pretty good training.”
Excel at customer service
In just about every industry, customer service is one of the top priorities within a company. If customer service is something you pride yourself on, it is important that you are constantly providing it in every circumstance.
“Regardless of how pleasing the meal may or may not have been, service can mean more to the guest,” LaRosa says. “They will continue to go back to a place where maybe the food is a little bit inconsistent, but service will bring them back because they feel appreciated. Customer service has to be prevalent everywhere. You can never overuse it. It has to become an integral part of your culture.”
To make something an integral part of a company culture, the behavior has to be displayed by the CEO and everyone else will follow.
“The CEO is expected to lead by example, and then that just trickles throughout the organization and everybody else is expected to behave the same way,” LaRosa says. “If you do that 110 percent of the time, chances are your people are going to be doing it pretty well, too. You also have to make it prevalent. Refer to it and point to it constantly.”
Feedback is another great way to improve upon your services. It provides a firsthand opinion of what you can do better to make your customers and your employees happier.
“You have to make it easy for your customers to give you feedback and you have to respond to it,” LaRosa says. “The same thing goes for your team members. All levels of management need to constantly ask their team members for feedback. Is there anything that we need to do or provide you to help you do your job? Are there any obstacles that I can help remove so you can do a better job providing quality products and quality service? You have to always be out there asking for feedback that can help drive your improvement.”
Getting feedback from customers and employees can often lead to new practices, products or services that can provide a boost to your company.
“It’s always fun to use specific suggestions or recommendations that are made by front-line team members and build that into the company,” LaRosa says. “Those things are huge wins. Those kinds of things have to be free flowing. You have to have a culture that allows everyone to come up with ideas that will help make things better, save time or steps, make something more efficient or help make a customer more satisfied, those contributions are invaluable.”
Contributions from employees or customers will only improve your business if you are open to those suggestions. It is imperative that you hear all feedback and respond one way or the other.
“You have to be open to all comments and suggestions,” LaRosa says. “However, you have to have some sense or some sort of an evaluation process where you can put something into a test mode and determine if this is really going to be something that improves this, that or the other. It’s like a funnel, you want to be open to all ideas and all suggestions, but what actually comes through the funnel are things that maybe a subcommittee or a quality team has reviewed.”
Motivation to perform well and recognition of a job well done is an important part of creating an atmosphere where employees will want to excel.
“Somebody taught me a long time ago that when you catch someone doing a great job you need to make a big deal out of that and let them know that you appreciate that,” LaRosa says. “As much as possible I’ll visit a store and congratulate and thank a team member. That recognition of a job well done is very important and we try to share those stories.”
A job well done must be celebrated from the top down. Otherwise people won’t know that your company cares about good performance.
“Our team members see that as our attitude and that helps draw out the best in people,” LaRosa says. “If it was the opposite of that and no one cares and that’s the attitude, then that will trickle down, as well. As CEO, it’s really important to make sure that your managers are doing the right things and they care and are responsive to their employees.”
Managers must make sure they are providing encouragement in the right manner, because employees will respond positively or negatively based on how they are treated by their supervisors.
“What’s most important is having a culture where the managers care about their team members and their satisfaction so that your team members care about the guests and their satisfaction,” LaRosa says. “It’s a two-way street. Your team members are only going to perform at a level of how they are interacted with by their superiors. You’ve got to have an environment where everybody understands that a happy internal customer is going to provide for that external customer. So the culture and the environment have to be one that you care about your people at all levels.”
To build a culture that cares about people and motivates them at all levels, you must be able to learn from mistakes. If your company can do that, everyone will be better off having learned from those experiences.
“You have to have continuous learning and process improvement that’s driven from that learning,” LaRosa says. “That’s a very important way to motivate people across the organization. Leadership is charged with the responsibility to create that urgency around improvement. Complacency is the enemy. There are always little details that can get better and be improved upon. As a CEO, you have to create that type of environment.”
HOW TO REACH: LaRosa’s Pizzerias, (513) 347-5660 or www.larosas.com
The LaRosa File
Name: Michael LaRosa
Company: LARosa's Pizzerias
Food service experience: Has been in the food service business for more than 35 years working in and around the family business. His father started LaRosa’s in 1954.
Do you hope that your children will continue the family business?
My oldest son is involved in the company, and he is very passionate about the family business. But it’s really up to them. I don’t think it’s something you want to force upon them. It has to be a decision that they want to make for the right reasons.
What would you eat if you went into a LaRosa’s for a meal?
I would have a bowl of minestrone soup, a traditional crust pizza with pepperoni and sausage and a Diet Coke.
What are some traits of a good leader?
I think you have to be a person of integrity. You need to have vision. You need to be a servant leader and go out of your way for others and be as concerned about others and their development as you are yourself. You also have to be passionate about what you do.
If you could have a conversation with a person from the past or present, who would you like to speak with?
I would probably speak to Jesus Christ. I think you could have a pretty interesting conversation with him. I have a strong faith, and he is one of the people I most admire.
I believe that every CEO, hiring manager and search consultant wishes that there was a defined formula for talent acquisition that could be replicated across all hiring initiatives. Talent acquisition would be so much simpler if we could develop that “special ingredient” that could be sprinkled into every search initiative to guarantee a great outcome. Unfortunately, at the core of hiring is still a human being with unique motivations, goals and challenges.
Systems, methodologies and metrics are all critically important to a business’s success – including those utilized within talent acquisition. This sets the framework for how talent should be identified, attracted, gained and grown. However, as long as the word “human” is in Human Resources, companies need to realize that flexibility, agility and sensitivity are paramount to their ongoing success in talent acquisition. Not only will this help a company’s ability to attract the best talent, but it will also contribute to the company’s overall branding to the talent pool as people hear more and more about their “human” approach to onboarding talent.
When you are conducting a search effort, it is important that every person on the hiring team is on the same page. Your corporate values can’t just be something hanging on the wall; they need to be cemented into your culture. As much as hiring managers are interviewing talent for a role, they also need to have their selling caps on to showcase why their company is truly a special place to work. Once again, this is something that has to be real, not scripted – a “human” touch. Selling needs to include honesty, and hiring manages must be willing to discuss any potential weaknesses. Candidates appreciate this much more than just being sold. They are fully aware that no company is perfect and would like the opportunity to help in the growth of the company.
Be prepared to break protocol based upon the talent you identify for a given role. Having a more senior-level person initially speak with a candidate could be beneficial to the process. Recruiters should have the flexibility and empowerment to quickly turn great talent over to a more senior-level hiring manager who is better suited to talk with the talent – even if the talent has not been fully qualified by the recruiter.
Also keep in mind that the spouse or significant other is a big part of the decision-making process. Taking time offline to meet with the candidate and their spouse can be a nice “human” touch and could assist them in their decision-making process. I have seen instances where candidates reject a more highly compensated position to go with the company that paid them less but was a better cultural fit. This investment of the senior hiring manager’s personal time makes a bold statement to talent looking to come onboard with the company.
The recession caused people to become cautious in their decision-making process. Years of dedicated service, in many cases, were overlooked by employers as the economy spiraled downward and layoffs became prevalent. As a result, candidates now look at the culture of a company and how the company’s values align with their own. Talent looks at balance as much as career advancement and an upside in compensation. They want to enjoy working for their employer and be a part of a team that both challenges them and makes their day enjoyable.
Take time to understand how your company is being perceived by the talent pool. Surveys to candidates who have applied for positions could produce very valuable information to help you improve your corporate cultural branding. Top leadership needs to ensure that corporate values are more than words in a mission statement. They need to live those values and then permeate the culture with these values. Further training with staff will then cement how to better articulate these values within the hiring process – and put the “human” back into Human Resources.
This article was brought to you by Chris Carmon, President of The Carmon Group. You can find out more about The Carmon Group at www.carmongroup.com.
As president of Generational Equity, Ryan Binkley makes a living helping business owners prepare their organizations for sale. But with the economic challenges over the last couple of years, he’s seen business owners struggle to sell their organizations and potential buyers not be able to get loans necessary to make these transactions. During these tough times, he came to rely on his management and deal-making teams to stay in tune with clients’ needs and help them in the sale-preparation process.
“These are the professionals that work closely with our clients every single day on their exit plan,” he says
This approach by his 250 people helped the firm not only do well the past few years but also earned it a spot on the 2009 Inc. 500 list.
Smart Business spoke with Binkley about how to put together a strong team that can ensure success during tough times.
What’s the key to building a strong management team?
That’s a leadership challenge that’s there in every organization, whether it be private or public, and it’s important for the business owner to continue to have good leaders that can carry on the business in the same manner they do. What we try to do is always have good people that can run their departments at the same level that we could if we weren’t here. That’s the goal for every company, and people need to invest in that instead of solely relying on the business owner to be in a position to be prepared to hand off to someone else.
We built it over time and recruiting good people. We found some people in the industry who had a lot of experience in exit-planning and deal-making. It was a process of coming through and finding the right people that we felt were a cultural fit.
How do you make sure someone is both a professional and a good cultural fit?
It’s through not making a hasty decision and getting to know them a little bit. People are one or the other. A lot of people are one or the other, and it’s spending time with them during the interview process to make sure they share the same values as far as long-term business goals. We just want to make sure we’re doing the right thing for the client long term and not just the short term and be professional and have the right expertise that’s really needed in the marketplace.
What questions can you ask to get to know them in the interview?
There are two things. You have to have skill, and then you have to have the X factor, which is the leadership and integrity. We need to make sure that somebody fits the technical expertise we have, and that comes through their background as well as looking at some of the examples of the work they’ve done. You can talk to someone about the challenges they’ve had, and they can communicate their expectations there or not.
The other is just do they have that leadership factor that’s so important. In this difficult time, we need people who can really communicate with our clients and help them through the difficult times they’re going through and make proper decisions, and it takes a high-quality individual to get that done.
How do you make sure someone can work with clients really well?
I don’t know that there’s any secret formula other than based on experience, but once you analyze them and get a feel for them and how they’ll handle difficult questions that they’re asked, eventually you just go with the instinct you have as a professional. At the end of the day, if they seem to have the integrity and the leadership skills, you have to just go with your instincts.
How to reach: Generational Equity, (877) 213-1792 or www.genequityco.com
When Stephen Mansfield was hired on as president and CEO of Methodist Health System in the fall of 2006, there wasn’t any drama around it.
The former CEO was simply retiring and things were running like clockwork. But with that retirement, the board saw an opportunity. The hospital’s financial performance was starting to deteriorate, primarily because of the amount of charity care and uncompensated care it had to provide — a common problem for hospitals as an increasing number of people lack health insurance.
“My feeling was, and the message was, that we need to grow,” Mansfield says. “If we’re going to be able to sustain the mission of this company and provide care to the poor who are unable to pay for their care, we’ve got grow in some new areas that can generate income to offset that.”
His first 90 days on the job were spent in conjunction with the outgoing CEO, so he did one-on-one interviews with the board, senior leadership, community leaders and about 80 medical staff members, all in an effort to understand the organization well.
By January, Mansfield was in a position to stand before the board and the entire medical staff and provide his assessment and early thoughts as to how and why the company should grow from where it was — about $460 million in net patient revenue — to $1 billion in net patient revenue by fiscal 2011.
The results in his first four years are impressive: $890 million last fiscal year and nearly doubling the net patient revenues. Additionally, the system has grown from two hospitals in 2006 to seven today.
“It’s been a pretty aggressive growth trajectory,” he says. “I don’t know many other health systems that have doubled in size over the last four years. We’re very fortunate.”
Here’s how Mansfield used two key strategies — planning and careful hiring — to hit his growth goals.
Create a plan
Mansfield simply loves strategic planning, and it’s the first thing he went into following his address to the company in January 2007. He knew that if Methodist was going to grow, it couldn’t just meander its way through it.
“Next to the right people, strategic planning is one of the most important functions you can do,” he says.
Mansfield essentially creates a four-year plan every three years, which allows for a year overlap on each plan. For example, he began creating Methodist’s 2012-2014 plan in February 2010, while still in the middle of the 2009-2011 plan.
He starts with an off-site, one and a half day conference with the board, leadership team and medical staff leadership. One of the keys to strategic planning is getting an outside perspective, so he brought in well-known, industry experts to speak about where they saw health care going.
“Have thought leaders from your industry come and talk to your leadership,” he says. “We tend to get myopic in our focus on our own organization and our own market, and we think that’s the way the world’s running, but, in fact, there may be trends occurring outside of your market that you need to take into account for your market. …
“You may not agree with all of them, and some may not work for your market or your company, but it’s helpful to expand our horizon of thinking at the beginning of a strategic planning process. Then you take it from broad to narrow and make it work for your organization and your service area or market.”
After that, he says to come back with your senior team and synthesize the thought from that session at a high level and put it into a document.
“Whoever’s going to be tasked with the primary responsibility for delivering on your plan needs to be involved in your planning process so they feel ownership in that plan,” he says.
Over the months that followed, the senior team members discussed and refined it, and in September, they presented it to the planning committee.
“We had a lot of people involved in it, because we wanted to have buy-in from the medical staff,” he says. “I didn’t want it to be Steve Mansfield’s strategic plan — I wanted it to be our medical staff’s plan, our board’s plan, our community’s plan, our employees’ plan, our management structure’s plan.”
A year after the initial conference — and still a year before the plan starts — is when he starts the budgeting process for that three-year plan. They create a planning calendar, which he calls a racetrack, that has the key things that have to happen during that time period for the plan to be successful.
“As much value as I place on planning, I don’t think it’s the final plan that’s so important as it is the process of creating the plan,” Mansfield says. “Then the real differentiator is not necessarily the plan but how well you execute on it.”
He says companies get caught up in creating a plan but they don’t involve key stakeholders and then they don’t track their progress or see how they’re doing against the plan.
“Those things are so important to making sure the plan has the impact on the organization that you want it to,” he says. “I tell people all the time, as proud as we are of our strategic plan, reality is, if you compared our strategic plan to our two top competitors’ strategic plan, there’s probably about an 80 percent overlap. So what’s the differentiator? The differentiator is who can execute the plan better.”
Once the plan actually begins, he meets every other week with his senior executive group to review key data. In one meeting a month, the key metrics of the plan are reviewed by the planning department, and the team receives feedback on how they’re doing on accomplishing and delivering on the plan. The hospitals are given updates on the things they’re measured on once a month. If anything is off, he and his team try to find out why.
“Missing a goal is not the cardinal sin,” he says. “Missing the goal and not having discussed it and asked for help along the way is.”
Lastly, to make sure people are staying on track, he also stops by people’s offices — not call them to his — to casually talk with them about how things are going.
“There’s no substitute for periodically sitting down with the key members of your team and saying, ‘How’s it going? How are things working? Do you feel like you’re getting things done that you need done? Is there anything I can do to help you? Oh, by the way, I saw that you did such and such, and that’s awesome,’” he says. “We get, as CEOs, so busy sometimes that we don’t just take the time to sit down with the key members of our team and just spend a little bit of time refreshing on the priorities and making sure that we’re acknowledging the successes. We have a propensity to assume success and sometimes to withhold encouragement, and that’s not good.”
Hire the right people
When Mansfield came into his position, he was new to the area, having just moved from Arkansas, so he recognized his weakness — not knowing the market. He needed to hire a development officer who knew people, knew the area well, could look for growth opportunities and had the relational acumen to facilitate complex transactions. He hired someone in, and that person made a lot of connections for Mansfield very early in his tenure.
“You plant a lot of seeds and not a lot of them grow, but we planted a lot of seeds in those early weeks and months and a lot of them did grow,” he says.
That person got a group of physicians in McKinney, Texas, to agree to do a joint-venture hospital there. Shortly after that, he brought another group of physicians in the community on board that was already assembled and looking for a partner to do a joint-venture hospital. The city of Richardson also approached Methodist about merging its hospital into their system. On top of all those efforts, they also opened two other hospitals.
The system was also facing a physician shortage, so Mansfield got the board to agree to an aggressive employment recruitment strategy, so hiring was a major part of his position when he started.
But hiring can be tricky, so Mansfield was very particular in his process and says that’s the way you have to do it if you want to be successful. To start, he first looks at if there’s anyone he knows that could do the job well.
“The best way to make sure you make a good hire is when you hire someone you already know will fit in that job if you can just convince them to take it,” he says.
That was the case with the development officer, as well as with the CEO for one of the hospitals, the new system COO and the human resources executive. Despite knowing these people, though, he knew it couldn’t be all up to him.
“Even if it’s someone I think will work, they’re not going to be effective if they can’t work with the rest of our team,” he says.
So despite having a front runner for a position, he still did searches and put each candidate through a hiring process that makes them interview with teams of board members, medical staff, employees, senior executives and middle management.
“It helps to do a team interview,” Mansfield says. “I’m not sure if it helps you so much with your selection process as it helps you with that person’s assimilation … to have key people who would have to help that person be successful involved in the selection process.”
He says to ask behavioral-based questions, such as what have they done, what’s the worst decision they’ve made and what they did about it, instead of what’s their management philosophy.
“Those kinds of questions you can get a little bit deeper than ‘What’s your management philosophy.’” he says. “Don’t ever ask that question.”
All together, a candidate can meet with about 120 to 150 people in his or her interview process.
“It’s a scheduling nightmare trying to get that many people together, and it exhausts our candidate,” he says. “If that candidate is still perky at the end of a day and a half of being asked the same question that many times, they can probably handle a typical day at Methodist.”
With that many different people scoring a candidate, it’s easier to get buy-in for whomever you ultimately hire.
“Through that process, we select a person — it’s not just Steve Mansfield’s person, it’s all 150’s person,” he says. “We’ve all got a vested interest in that individual being successful and quickly assimilating to our team.”
Beyond sheer numbers in interviewers, there are other keys to hiring. He also suggests, especially for senior executives, for you and your spouse to spend time with them and their spouse in a dinner setting to see how they interact together, what kind of support they have in their life and how they are in social settings.
He also makes it a point to look for diversity and likes to have at least one of the final four candidates come from a racial or gender minority.
“That doesn’t mean we select the diverse candidate,” he says, “But if you’re not seeing them, you certainly can’t select them.”
After that, Mansfield likes to get an off-the-record perspective on that person by speaking to someone he may know that might have worked with that person. And then the final step is to use an outside company to complete a psychological profile of that person, which is what he calls Myers-Briggs on steroids.
It’s a long process, but he’s successfully recruited more than 100 physicians that have helped Methodist grow.
“Despite all of that, I think the interview process is still just a little better than a coin toss,” he says. “It’s like getting married. No matter how long you date, when you get married, you find out some things you just didn’t know. Usually those are mostly pleasant things, but that’s just the nature of it.”
How to reach: Methodist Health System, (877) 637-4297 or www.methodisthealthsystem.org
The Mansfield file
Mansfield on leading change: To change anything — to change a habit or change culture or change anything that’s indelibly embedded as culture — you have to start with making the compelling case for why. Why change? If we’re successful, if we’re delivering on our mission, if we’re happy, then why change?
Changing a culture is like breaking a horse — you’re going to get bumped off, but you have to be willing to get back on and keep getting back on until you get the change from the culture that you need to be successful.
Mansfield on your career choices: Work for an organization whose espoused and practice mission matches well to your own value system and life priorities. I feel very fortunate to have had almost a four-decade career, and I have never been in an organization where I felt like I had to compromise my value system in order to be effective in the role that I had. I think that’s very important as you’re contemplating where you’re going to spend your career, to make sure you’re working with a company whose goals and value systems and mission and vision statements you can embrace and support from a personal standpoint.
Mansfield on setting personal goals: I’m still amazed by the number of people who don’t do it, but it’s so important for human beings to have the discipline to periodically create and update your own personal goals. Not just your goals related to work, but your goals related to community and faith and health and all of those variables that make us multidimensional creations. Human beings have the capacity to accomplish so much more than we do.
One of the delimiting factors is we don’t create a road map that’s trying to take us to a better place as individuals. If you don’t really care where you’re going — it doesn’t matter — one road’s just as good as the other, but if you’re intentional about what you want to accomplish with your life across its many dimensions, I think that there’s strength and power in that acknowledgment. The Bible says that as a man thinketh in his heart, so is he. What does that mean? I think that means we can accomplish a whole lot if we establish an expectation of ourselves to do so.
Rumor has it that an economic recovery is underway. Maybe your employees haven’t ditched their chairs to sit on piles of cash (yet), but it’s at least evident from the slight uptick in the job market. If you’re fortunate enough to be adding to your teams this year, you’re probably doing so with great caution so getting the very best people matters more than ever.
Surely we all understand the costs — in lost productivity, morale and coffee — of making a disastrous hire. And most likely, your hiring skills are honed such that you can weed out these obvious stinkers during the initial interviews, if not before. The trick, though, is finding the truly great in a sea of good enough — finding a candidate who’s an indispensable game changer and not just another competent game player.
In my experience, it’s not dumb luck, but rather a combination of a rigorous process, an investment of effort and creativity, and a willingness to trust your gut (but only if it has largely served you well in the past. Otherwise, trust someone else who has a better one).
Here are a few proven tricks to jumpstart your talent scouting efforts:
1. Invest care and creativity in your job description.
If you’re using dry, boilerplate job descriptions, get ready to read lots of dry, boilerplate applications. Instead of viewing your job description as a classified ad, think of it as a marketing effort aimed at your ideal future employees. They’re not going to work for you, let alone apply to work for you, let alone even read your job description, if it doesn’t speak to them. Also, when you put time and effort into your postings, you’ll be pleased to see that great candidates do the same, and then it’s much easier to pick them out of the clutter.
2. Require cover letters and weigh them heavily.
Thanks to the Internet and fancy Word templates, anyone can crib together a smart-looking resume. But a compelling, thoughtful and well-written cover letter — those tend to come only from bright, interesting people. Great writing skills are an asset in any position, so it’s safe to assume that if people can’t craft an engaging page about themselves for a job they want, they’re not going to be any more engaging when, say, communicating with one of your customers. The time you spend reading all of those cover letters is time you won’t spend interviewing a bunch of duds. Candidates won’t do it, you fear? They will if they are humble, committed, caring and interested people, which are key characteristics of a true rock star employee.
3. Have an audition.
There’s a difference between talking about expertise and actually having any. We require our writers to pass writing tests. Our engineers have all passed coding tests. Our salespeople have prospected for their jobs. Our project managers weren’t hired until they demonstrated an ability to assemble a production schedule and impress us in some client-handling role-plays. And our marketing guy who bragged in his cover letter about making the best chili in the Midwest? Well, it’s a bit spicy for my tastes, but the point is, no one should be hired for merely talking the talk.
4. Weigh “DNA” over experience.
Greg Gretsch, a 2009 Midas Winner at Sigma Partners (and an investor in The Jellyvision Lab) says a secret to his success is picking A teams with B ideas over B teams with A ideas — because really great people can adjust to bumps in the road, whereas B players can drop a perfectly thrown spiral pass. So if someone comes in with smarts, hunger and a phenomenal work ethic, they just might be a better business bet than the perfect resume fronted by someone who lacks passion, intuition or creativity, for example, which are all characteristics that really can’t be learned.
5. Be patient.
For me, this one’s the hardest. When you’ve got financial targets and deadlines looming, it’s tempting to staff up with B teamers and bulldoze forward. But the truth is — whether you’re a small outfit or a ginormous conglomerate — a handful of rock star employees is better than a roomful of roadies — every time.
Truly great employees are rare, as you may know from all the times you wished you were working with more of them. All the more reason to be patient. Position yourself properly, make yourself visible to them, and they’ll appear. And when they do, you’ll know it.
Some inspiring job postings:
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. Lannert has served on the board of the Chicago Improv Festival, mentors local startups and often waves to people she doesn’t even know on the street, just to be encouraging. She has climbed several mountains, including Kilimanjaro and Space Mountain, birthed a gaggle of daughters and is known to award limitless slabs of grilled meats to co-workers who grow ironic mustaches for her birthday. Reach her at firstname.lastname@example.org or (312) 266-0606, ext. 116.
Though the trading floor is bustling and intense when the markets are open, the scene in Chopper Trading’s break room is quite the opposite when they close. There, in the 3,000-square-foot spaciousness, you’ll find some of Chopper’s 150 employees lifting weights or winding down with some table tennis or poker. After working hours, they usually go out together, maybe taking advantage of the company’s season tickets to cheer on the Blackhawks, Bulls, Cubs or Sox.
The nature of the business can be stressful enough. CEO Raj Fernando wants to keep the surrounding atmosphere as pleasant as possible to counter that, so it’s crucial that his employees get along.
So when it comes to hiring, he doesn’t approach it like some of his competitors, who may bring in 30 potentials, push them through a training program and come out with three hires and 27 fires on the other end. His hiring process is quite the opposite — lengthy and involved, with the purpose of bringing employees on board who will some day retire from the company.
In 2002, when Fernando founded Chopper, he established one rule for bringing employees on board.
“We don’t care how much money somebody’s going to make us; if they’re going to make all of us miserable, we don’t want them here,” he says.
And that has to go both ways.
“It’s a marriage,” he says. “We want them to want us. We do not want turnover. We try to weed everything out at the interview stage.”
Paint a picture
Chopper’s recruiting team attends job fairs at the top schools in the country. At this first stage of hiring, that team usually includes recruiters, traders, programmers and top executives — even Fernando himself. But he’s careful not to come off as too executive.
“We’re not a bunch of salesmen,” he says. “We’re not coming there in three-piece suits and $200 ties and trying to impress them. We’re ourselves when we go out there.”
That’s key, considering he’s not just looking for a candidate that fits the organization. He wants to make sure Chopper is a fit for the candidate, as well, so a crucial part of the interview process is painting an accurate picture of the firm to make sure he’s attracting the right crowd.
“It’s important that they know what they’re getting into because after a few months of interviewing and they turn down 15 other jobs, we don’t want them to come here and realize this isn’t what they thought they’d be doing,” Fernando says. “We’re very straight with them upfront on letting them know, ‘Hey, here’s the job.’”
Traders like John Sizemore travel to recruit and interview new trading assistants, then take the successful candidates on office tours to show them the environment they’d be working in. For example, the lack of walls between desks is an invitation for him to talk about the team atmosphere and open lines of communication. And the giant break room exemplifies the company culture, so Sizemore explains how employees deal with stress.
“Yes, we’re trying to spend a lot of time with the person so that we can get a good feel for what they’re like,” Sizemore says. “But also, we really want people to have a good idea of what they’re getting into so that there’s no surprise when it comes time to actually start work. We’re trying to hire people to retire here, and that being the case, we want people to really know what company is and what the company’s about and what it’s like to work here.”
Take your time
In trading, as in most industries, there’s not a list of certain traits that would make an employee successful. It’s more of a subjective intersection of technical skills and personality traits.
“There’s no specific background that prepares you for it,” Sizemore says. “There’s no major that we look for. There are no specifics of any kind that you can say, ‘Definitely, this person can make it and this person can’t, based on something that can be found on a resume.’
“Our interview process is really lengthy, and the reason for that is that we’re not able to really say specifically we’re looking for these five things. It’s more about trying to get a feel for whether or not the person across the table from you has that confluence of factors, has that mental makeup.”
Of course, Fernando has some basic technical expectations across the board, like math competency. But because his expertise is in trading, he turns programming candidates over to the chief technology officer or current programmers for technical evaluation.
“The programmers these guys like, I’ll definitely talk to them and give them my two cents on the company itself and a little bit about us and why it’s a fun place to work,” Fernando says. “I’ll tell them how important the programming is for our firm, but I won’t tell them anything technical about it.”
He has more general conversations with candidates, including brainteasers to see how they think on their toes and business-oriented questions to gauge their interest and knowledge.
“One strategy that you can use is to continually ask follow-up questions, particularly if they express an interest or say they follow the market,” Sizemore says. “You can start asking them about their level of understanding in the market and why they think things are happening, and generally you can see how they handle themselves.”
Gauging their interest may be the most important piece of the equation. It separates job hunters from career seekers.
“In the last few years, when the job market wasn’t that good, some of these guys (have been) just looking for a job,” Fernando says. “They might be interviewing investment banking companies; they might be interviewing at consulting companies. We really want guys that know what they’re getting into and really want to do that because this isn’t a small decision — a career. We hope they retire from our company.”
It’s a red flag if candidates don’t have genuine interest in your industry, your company, and the position. Their industry knowledge can indicate how genuine they are, but that doesn’t necessarily equate interest. That’s where observation comes in.
“I don’t think it’s outlandish to think that you can judge a person’s reaction to questions about their interests in something,” Sizemore says. “Generally, when someone has a passion for something and you see them talking about it, you can pick up on that passion without necessarily having to delve deep into their psyche. When someone is talking about something excitedly, you can tell that they have a genuine interest and a passion for it versus someone who’s just trying to put on a good face for an interview.”
A lengthy interview process helps you make that distinction, because the more time you have with candidates, the better you get to know them. Chopper’s recruiters start talking with college students as much as a year and a half before graduation — ample time to cut through interview personas to assess the true personalities beneath.
Plus, when you commit that much time to a new hire, you’re illustrating your investment in their success.
“What we ask of them is a pretty big commitment, but on the flip side of things, we’re trying to show them that we are going to be equally committed to what their career goals are,” Sizemore says. “It’s a two-sided coin.”
Turn employees into interviewers
As candidates move further through Chopper’s interview process, they interact with more employees in more areas — a sort of funnel effect.
“The more people that talk to him, the better it is,” Fernando says. “We try to take care of all the hiring process in the interview process. That’s why we don’t have a lot of turnover.”
Fernando will involve dozens of employees, from ones who used to have that position to ones who are currently in training, all the way to the top of the company. Current employees know better than anyone what it takes for employees to be successful at your company.
“We know what the people who work here are like and what it takes to get along,” Sizemore says. “We know what it takes to be successful as a trader, and we know what it takes to fit in with the company. Even though two different people might see a candidate differently, they both would more than likely be able to agree on whether or not that person is going to fit in with the culture of the company.”
A multitude of perspectives gives you a better understanding of the candidate. It becomes a group effort, where someone may pick up on something others missed.
“Because it is a subjective call, all of us as interviewers have our specific things that we’re looking for that we might place a little more importance on than somebody else does,” Sizemore says. “By getting a wide variety of opinions on someone, we feel like we get to know them pretty well.”
Because Fernando trusts the employee input he receives throughout the interview process, it makes his job easier when the candidate comes back around to him.
“By the time it comes to me, maybe 12 or 20 people have already talked to him,” he says. “And if these guys all liked him, the kid’s got to be pretty impressive. … It’s definitely a team effort in weeding them out.
“It’s not just ability; it’s also: Is it someone they want to work with and be next to 10, 12 hours a day for the next 10, 15 years? These guys hang out after work. You don’t work that much with someone and hang out afterward if you don’t like them. Personalities are very important.”
That’s not to say everyone needs the same personality. That’s another benefit of involving several interviewers — you understand each candidate’s overall demeanor as opposed to specific traits, so you can better identify pleasant personalities.
When decision time comes, get everyone’s opinions and observations on the table. You’re not looking for pure consensus, but ideally, most of the group will think positively of the candidate and no one will see major reasons not to hire.
If there are concerns, determine how serious they are.
“If it is the case that someone in the group sees a major red flag, we’ll talk about it,” Sizemore says. “We’ll say, ‘Look, I said this to this person and this was their response. I didn’t like for these reasons. Do you guys agree or not agree?’
“I’ve been a part of more than one of those conversations, on both sides of the coin, and generally we’re able to come to a decision, saying, ‘OK, yeah, you’re right. I felt that too,’ or, ‘You know, I really didn’t pick up on that, and even if that is true, I’m OK with that. I’m willing to move forward with this person.’ It’s not necessarily pure consensus, but generally we don’t hire people that one of the members of the group has a major red flag on.”
Though the hiring process involves some fun — like going out to dinner or shooting pool — the decision requires diligence.
“We’re not trying to wine and dine people to bring them in,” Fernando says. “As much fun and kidding around as we do, this is a serious process. The new lifeblood is everything to the company.”
Thanks to that attitude, Chopper boasts zero turnover and Fernando says he has never lost a successful trader. By devoting time and effort to the interview process, he’s able to hire future retirees, not just employees.
“It’s not just a job,” Fernando says. “Life’s too short to do things you don’t want to do or be with people you don’t want to be with. We like the people we work with, and it makes all the difference.”
How to reach: Chopper Trading, 312-628-3500 or www.choppertrading.com
Raj Fernando, CEO, Chopper Trading
The Fernando file
When did you come to the states?
When I was 1. The story behind it is my dad was a Fulbright scholar from NYU when my mom was studying at Juilliard. For Fulbright scholars, after your term is done, you leave the country for two years and you come back and you get your citizenship. So my older sister was actually born in New York.
Education: Beloit College in Beloit, Wis., with bachelor’s degrees in economics and history
The story behind the company name: Chopper is my eldest dog, a collie mix. He’s from anti-cruelty along with his little sister. A few of us were sitting at Smith & Wollensky [Steakhouse] having a few bottles of wine, trying to come up with a name. After about a half hour, I brought up, ‘How about Chopper Trading?’ and it stuck.
In the community: Fernando is a governing member of the Chicago Symphony Orchestra and a member of the Chicago Council on Global Affairs. He also actively supports the Steppenwolf Theatre, Cedars Sinai Medical Center and the Illinois Holocaust Museum, among other organizations.
What’s the best business advice you’ve ever received?
I was Hillary Clinton’s Illini finance chair, and in the course of the campaign, I met a lot of literal billionaires and they all said kind of the same thing: Surround yourself with the best and brightest people you possibly can.
What’s your favorite way to relieve stress?
I like playing guitar and a little bit of drums. Exercise is good but lately I haven’t been doing as much as I should. I like going out with friends and people from work.
According to Jane Mason, the founder, president and CEO of software provider eMason Inc., being the leader of a fast-growth company means always having to re-evaluate your strengths and weaknesses, both in your business and in yourself.
“You have to leverage every ounce of leadership and management skills that you have to grow the company — from where we were to here, and from here to the next level,” Mason says.
As a pioneer in offering Web-based business automation services, eMason has achieved 1,702 percent growth over the past three years as well as doubled its work force to 100 employees in just 12 months.
Smart Business spoke with Mason about her strategy for adapting her leadership style to manage her company’s rapid growth and expand the $10.2 million business.
Lead though behavior. My leadership style is very hands on, but I also lead through motivation and by setting an example. From a good leadership perspective, having a clear vision that can be communicated regularly is very important, and I think the most important part is your behavior; leading by example. Our vision includes the words kindness and respect, and that permeates my leadership style. My style is more motivation than it is autocratic. The things that I’ve seen that don’t work are the aggressive, autocratic behaviors and not living up to what you say. I’m very clear and I’m very tuned into following up on what I’ve said I’m going to do, corporate strategywise and with people.
Set your priorities. As we’re growing, I’m modifying my behavior in how I interact with people. I’ve had to step back, and I can’t be involved in all of the day-to-day operational things, because that’s not healthy. That’s not good for our company. I have to keep my eye on the market, on the strategy and on the client delivery. Because there are so many things coming at us personally and through the business, I’ve learned to chunk it down into three pieces and try and accomplish those things each day.
Delegate tasks. Personally, instead of making something happen — I need to make this business development report — I go to the person whose job or role that is to create a business development report. I’ve moved myself away from the day-to-day operations through the hiring of consultants and other high-level, skilled people. I’m letting them do what they do best. It’s a personal struggle in some areas because it’s hard to let go, but through good hiring practices and motivating through kindness, I think we create a level of trust where people are holding themselves accountable and delivering.
Retool communication. The original group of people still meets with me personally, and I meet with the management group, but there are a lot of people now that work here that I don’t know and don’t really communicate with other than my corporate messaging. I do internal videos where I reach out to the company and tell them what are we doing, what are the successes or we’re having some workshops internally, so sign up. I keep them in tune. It’s kind of like an internal YouTube. It enables them to see me if they don’t see me because I travel quite a bit and I’m on a different side of the building now.
Hire people with initiative. We’re an entrepreneurial company at heart, so we want the people that come here to be the best that they can be and we want them to understand that we need them to help us grow and add structure to what we’re doing. Self-initiative and self-responsibility is really important for us. We’re looking for people that can say, ‘I have the skill set, but I’m also honest enough to know that I might not be able to do this job,’ or have the self-responsibility to say, ‘I don’t know how to do that, but I’m going to learn how to do it.’
Focus on your vision. Motivation has a lot to do with the passion we have for our product and what we’re doing. I think employees are motivated by the fact that they are responsible. They can see they are making a difference, and we talk about how they make a difference and how we as a company are making a difference; I think that jazzes people.
HOW TO REACH: eMason Inc., (727) 507- 3440 or www.emason.biz.
Not too long ago, companies could show up at a career fair at a local college once or twice a year and the effort would produce a line of great talent predisposed to start work upon graduation. Today, great talent is still graduating all the time, but this talent is proving to have very different motivations and perspectives on how they want to position themselves in the workforce.
Companies that understand the nuances of the younger generations of talent can position themselves better to create opportunities to attract this talent and maximize their productivity. As the baby boomers continue to retire, companies must identify strategies that connect them with local colleges, their faculty and their programs to ensure an effective transition of talent to their business. This more strategic investment of time creates opportunities to attract talent and to mold that talent to better fit positions with their business long before graduation.
Recently, I had the chance to interview Deborah (Deb) Mills-Scofield, who is a strategy and innovation consultant, a partner with Glengary LLC and a Growth Partner with Baldwin-Wallace’s Center for Innovation & Growth (CIG). Deb shared experiences, insight and advice on ways her clients engage with local colleges and create programs to benefit from younger talent entering their businesses.
Q: Why do you continue to work with college students, and what benefits have you received from these efforts?
A: As I reflect on my career, I was mentored every step of the way – through college, Bell Labs and AT&T. I wouldn’t be where I am without it. So I feel that mentoring is important. I do that several ways: through the Brown University Women’s Launchpad for senior women, informal mentoring of startups from Brown, and through BW’s Center for Innovation & Growth (CIG). Frequently I’ll have the student fellows at the CIG get involved with my clients and at the VC firm, Glengary LLC, in which I’m a partner. At the VC firm, the students help us with due diligence. Their work has been very impressive and thorough, providing insights that we wouldn’t have thought of because of their age and different experiences. I will also have students help my clients as we do planning and innovation – doing some primary and secondary market research and analysis.
Q: What are the tangible benefits to having students involved in your work?
A: By involving students with my clients and Glengary on real projects, these companies get access to some of the best students in Northeast Ohio. These firms are able to assess how well the students fit into their environment and get an inside track to hire them after graduation. The students get exposure to how things are done in businesses, learn about corporate cultures and networking, and they receive practical, useable experience. This helps them get a better feel for what they may or may not want to do – including their own startup – and better evaluate their opportunities. And, let’s face it, this looks great on the resume.
Q: What are some of differences you see in Gen Y versus baby boomer and Gen X talent?
A: The 21st century has really shaken up the world – and the business world in particular. One of the major shocks to companies is Gen Y’s attitude to work, often misunderstood as selfishness or lack of commitment. The boomers and Gen Xers have worked hard, did as they were told, didn’t challenge the status quo, and punched the industrial clock. Gen Yers don’t buy in to this, for some very good reasons. They have grown up with absentee parents caught up in the corporate ladder-climbing rat race and experienced the lack of loyalty companies had to their parents in downturns. Gen Y’s loyalty must be earned over and over again (as should any employee’s). They are willing to work very hard, just not in vain, and they’re not eager to accept the same traditional rewards and recognitions their parents have (e.g., 2 weeks of vacation, 9-5, etc.)
Q: How do you think Gen Y talent will change business?
A: Well, I keep trying to get my clients to realize that Gen Y will have a very large impact on 21st century capitalism. The 20th century’s view of profits as the ‘ends’ versus the ‘means’ is not sustainable, as our financial crisis blatantly illustrates. Gen Y wants to be part of an organization that makes meaning, not just money. If they are going to give their time, energy and talent, it better be for more than just corporate profits. Gen Y gets it right – profits are an output; making a difference in customers’ lives is an outcome. Profits are a means to the end of making a difference, not the end in itself. As these ‘kids’ enter into business, creating their own ventures and working in existing ones, they will transform business into something much more meaningful and impactful. And that is a very, very good thing. Companies that allow Gen Y to make a difference will have a powerful advantage over those that don’t.
If you would like to learn more about Deb Scofield or the Baldwin-Wallace CIG Program, you can visit her company website at www.mills-scofield.com for more information.
This article was brought to you by Chris Carmon, president of The Carmon Group. You can find out more about The Carmon Group at www.carmongroup.com
Brandon Edwards is proud to be a geek about a boring industry. In fact, being passionate about tax credits has helped him build a team of likeminded stars.
“We’re tax credit geeks. It’s all we think about,” says the president and CEO of the appropriately named The Tax Credit Co. “One of the reasons we’ve been so successful is that we’ve been able to attract people into the company that think like that.”
Edwards’ previous experience in a recruitment outsourcing business also helped hone his hiring process to bring in the right 47 employees.
“We’re only as good as our people,” he says. “The difference between one really good person and one person that’s not necessarily a fit is tremendous in a company.”
Recruit with purpose. It’s not just about the interviewing. The recruitment process is critical to finding (the right) people.
First of all, when we write an ad for a job, it’s got a lot of personality in it. We are passionate about it, so that almost irreverent, fun-loving personality comes out. Not only is that helpful to attract good people, but it attracts the right people. They’ll say, ‘Wow, I was looking at all these ads, and these people look like my kind of people.’
From the very beginning, we try to find out about the person — who they are, not just what’s on their resume — so we ask for a cover letter. We put specific traits in the ad. For a documentation specialist, we’ll say, ‘Are you the type of person that every single drawer in your house is completely organized? Are you the type of person that gets bent out of shape if something on the wall is tilted?’ We’ll put fun things in there, but we’re looking for certain traits about people that are going to make them good fits for the job. That’s No. 1.
Interview people, not positions. We’re talking about a combination of what they’ve done in the past but also who they are. One of the keys to bringing in great people is to find out what that person is about. Finding out who that person is, I think, is more important than who they worked for and what they did. What’s the track record that they demonstrated that we could apply to what they’d be doing in the position: what they like, what they don’t like, what they get excited about, what drives them, what they get annoyed at, their attitudes on work in general?
The way you ask questions is very important. I’ll ask questions like, ‘What would your supervisor say about you?’ They would (answer) from that perspective, and you find out what would they say the good things are, what would they say the things that you could improve on would be. You’ll see an indication of a potential issue that you can explore from there.
You’re not looking for 100 percent adherence to all the job duties. You want to find out the core points of success or failure in that job. You say, ‘If a person had these traits, these skills, then they would be very successful. If they didn’t have these, then they would have problems.’ You want to specifically go after those in an interview.
We’re always looking for the person, not the position, and we’re always keeping in mind that this person may not stay in that position that long. So while we’re looking at the critical factors for that position, we’re also trying to test: ‘Is this a high-quality person in general? What are the make it or break it characteristics of the people that are successful in your company — the personality, the attitude, the work ethic?’
Remain objective. If you like somebody straight off, try to find something wrong. And if you don’t like somebody straight off, try to find something right. You don’t want your emotions to guide you in that process, because this is a snippet of your potential relationship with the person. Even if you go through extensive interviews, the entire process could represent less than a whole day of interaction with that person.
You need to make sure that you’re as objective as possible and not skimming over areas just because you really like the person. If you just focus on the areas that you like about them and you’re judging them based on that gut feel, then you can potentially miss some big issues.
Armed with the knowledge of a financial analyst, Charles Chanaratsopon knows what makes a successful business and how to manage that success. In 2004, he took that knowledge and applied it to an advantageous investment market and founded Charming Charlie, a women’s boutique and accessories store.
“I saw an opportunity, not only in an operating store but also in the realty business,” says Chanaratsopon, founder and CEO. “The capital or investment market was very frothy. So you could quickly develop shopping centers on leverage and build quickly.”
Deciding to break into the market for women’s accessories, Chanaratsopon saw an opportunity for big growth with little competition, and his plan has worked. Since 2008, Charming Charlie has been opening new stores at a furious pace, and today, it is one of the fastest-growing private companies in the country.
“The operating business had a lot of demand,” Chanaratsopon says. “A lot of customers were coming in and buying product from us. We had lines outside every day before the stores opened. People just loved the product. I wanted to figure out a way to grow even faster.”
For the last six years, that’s exactly what he has gone out and accomplished. He knew that with the right mix of employees, strategy and innovation, Charming Charlie could be big.
“From the very beginning, when we had three stores, I always thought we had the potential to be all over the country,” he says. “People always talked about how I had big aspirations and thought I was crazy, when at three stores, I thought we could be all over the country. Now we are all over the country, and I think we could be all over the globe.”
Listen to the consumer
Chanaratsopon saw an opening in the market for women’s accessories, due to a lack of stores that strictly focused on accessory needs instead of clothing. Only large department stores offered those products to women.
“Once we saw what the market looked like, we knew we had an opportunity to create a specialty store around it,” Chanaratsopon says. “We saw it as an opportunity that we could exploit, so we did.”
As Charming Charlie took off in the Houston area, Chanaratsopon knew he could grow the business quickly if he continued to offer what customers were looking for and wanted to see in the store.
“That thesis worked out and held very well for the first two or three years,” Chanaratsopon says. “As we opened stores, stores were very busy and business picked up. We went out and built another center and then another center and went out and did it again and again. As we focused on listening to the customer and building our team out, that was basically the steps for our success.
“The key thing is, you need to listen to your customers before you break into a market,” he says. “You can’t really go until you do a market feasibility or market study about what they need. Does it make sense for Charming Charlie to come; do they like the concept? We always explore to see what opportunities are out there before we do a big push. We test the different markets to see if the concept will work. Our concept is very portable, so we are able to now move quickly through the different markets.”
It’s all about making sure there is a net demand for what you sell, before you go out and start something.
“I think that is just moral hazard,” he says. “Whatever you plan, plan on not meeting it. Have a worst-case, base-case and an upside-case plan, because most of the time, it’s very unpredictable in the beginning. You have to mitigate the downside and make sure that you have contingency plans if things don’t go well in the beginning, because capital will be a constraint.
“In our first year or two as we solidified our playbook, we had a lot of key takeaways in ‘learnings’ and mistakes. So before we could go out and do a cookie-cutter approach, it took us a few years to make sure we had the right recipe for success.”
Everything starts and ends with the customer.
“My best advice is to go out and learn the customers, and make sure there is a need before you go out and build anything,” he says. “You survey your current customers and your noncustomers, and you ask them questions about what you can do better to improve. At the end of the day, our boss is the ultimate shopper. We just listen — that’s what we do. I don’t mean to make it sound so simple, but it is. We listen to what they need, and we do it, often. We spend a lot of money listening to their needs, and we try to give them what they want.
“We are not a tech company or a research group. We sell on experience and what we do is listen to our customer and make sure we deliver the best that we can, and that’s our mantra.”
Innovate and adapt
Growth in any industry naturally causes issues that must be overcome. The higher the rate of growth, the quicker a company has to adapt to that growth in order to succeed.
“You’re running at red line all the time,” Chanaratsopon says. “What I mean is when your car is running at 6,000 rpm, to get everybody used to running at that speed and understand what you’re doing is challenging. Not many companies grow this quickly, and that’s evidence that shows the percentage of retailers that can actually go out and do what we’re doing [is small].”
Charming Charlie has seen revenue grow from $9.2 million in 2006 to $51.9 million in 2009, a three-year growth rate of 463 percent. Chanaratsopon expects 2010 revenue to be around $140 million, and he realizes just how special his success has been.
“The odds are against you,” he says. “Five percent of businesses make it, and 5 percent of businesses only make it to $5 million. A very low percentage of businesses make it to a critical mass. So it’s very challenging to move at the current pace we are doing. It’s also very hard to change the mindset of your team when you’re managing three stores to now managing 100 stores. Your management team has to be open to change. When you don’t innovate and adapt to the business, I view it as binary. Either you innovate and you win, or you lose. There’s no common ground these days.”
In today’s economy, innovation and adaptation are very important to a company’s success. Chanaratsopon pointed to the examples of Linens ‘N Things and Circuit City, both of which went out of business within the last few years.
“That’s one of the great things about American capitalism,” he says. “You’ve got to be very sharp and very on, or there’s no room for you. You have to have the mindset to implement your information technology ahead of time and to plan for that is very challenging.
“You need an ability to split up what’s needed during your day-to-day part of the business. You also need to be cognizant of planning for the future and future roadblocks. You need to be able to set up radar or a systematic view for upcoming issues and be ahead of the curve. Have a cognizant view of how you spend your time between your short- and long-term strategy. Depending on what your long-term strategy is, set a blueprint to that plan and measure yourself constantly so you hold yourself accountable to your own business and personal plan.”
Hire smart, build smart
Since the founding of Charming Charlie in 2004, the company has grown to roughly 3,600 employees and has stores in 23 states. Continued success and the ability to keep opening stores in new markets, takes hiring more employees — and good ones at that. Chanaratsopon says the hardest part about getting the business up and running was finding the right people.
“This is a people business,” he says. “It’s hard finding the right team members to help you facilitate growth. There are a few things that are very challenging. No. 1 is finding the right people to help build a team. Whatever you do, be creative in the way you find people.
“We have gone through different people in the organization, and most businesses are team businesses, and without the right team, you can’t do it. You should overhire. If you think you have conviction in that your product or business will succeed, go out and get the best people that you can. Don’t be cheap on it.”
Start by focusing on attitude.
“You need to have people with good attitudes, specifically in a growing business. Attitude is half the battle. You also want people who have the same set of core values. A lot of people undermine that. When you have a small business that’s growing, you have to do many different things that you’re not accustomed to coming from a big retailer. People have to be able to adapt, and hiring on ability alone is not enough.
“My focus is trying to hire experts that are smarter than me in their specific function. I try to find people who are passionate about what they do and the business. I try to just give them the tools and support to help grow the business.”
A fast growth rate and an equally fast hire rate caused Chanaratsopon to adapt once more and create ways for his team to focus on common goals and visions.
“As you get more people, there’s a lot more people to build, as we call it, an ACA model with,” Chanaratsopon says. “That’s alignment, commitment and accountability. What we try to do now to achieve one goal is to find a team dynamic.”
In order to get his management team all on the same path and chasing after the same goal, Charming Charlie holds weekly one-on-one meetings and they build a company goal.
“That’s our road map to success or our blueprint to our business,” Chanaratsopon says. “That gets us all aligned and committed to the business, and we build accountability by having published goals that we need to achieve. It’s during these types of meetings that you need to follow up on your company goals. You need to make sure that people are executing to your goal. If I said, ‘Hey, I want to meet you in Florida.’ I’m sure you’ll get there. But if I said, ‘Hey, I want to meet you in Florida, and here’s a map.’ I’m sure you’ll get there faster. You need to have something mapped out. It may not be a perfect map, but you can change it along the way.”
One way that Chanaratsopon maps out his company’s future is by hiring ahead of time in order to acclimate new employees to the company and the goals it has set moving forward.
“Growth is challenging, but we weather through it by planning ahead,” Chanaratsopon says. “I invest in the future knowing that we are going to grow. I try to put our team players on early so that we can jell before we grow fast. A lot of people talk about what’s your capital budget plan. I talk about what’s my human capital budget plan. I need all these different team members to do this if we are going to open another 100 stores next year. I’m going to hire the overhead or infrastructure today, so we don’t have to do it last minute.”
Chanaratsopon emphasized that having fun and recognizing when employees do a good job are valuable aspects of creating a good rapport within your team. It also helps company culture to provide employees with ways to give feedback.
“Have a good feedback system,” Chanaratsopon says. “Your company is your customer. You want to survey about how your management team is doing. The same way you listen to customers, listen to employees.”
How to reach: Charming Charlie, (713) 579-1936 or www.charmingcharlie.com
The Chanaratsopon file
founder and CEO
Born: Houston, Texas
Education: I attended Loyola Marymount University in Los Angeles and received my MBA from Columbia University in New York City.
What was your first job out of college, and what did you learn from it?
I was a financial analyst at a bank, and I learned how to access money, how to put capital together, and how to understand a balance sheet and the ins and outs of financing businesses. I also learned about what makes a business work and what makes a business fail and the different metrics and how to measure against it.
If you could have a superpower, what would it be and why?
I wish I could fly. I always had dreams of flying as a kid. It felt pretty real in my dreams, so it would be pretty interesting to be able to fly around like Iron Man or Superman.
If you could invite any three people you wanted, living or not, to a dinner party, whom would you invite?
Rodger Federer, Warren Buffett and Barack Obama. I would be curious about how they think.