Every organization has a culture, whether it is purposefully created or not. A great culture, when combined with great operations, contributes to a healthy, productive work environment that spurs employees to reach their peak performance.
Culture is multifaceted. It is unique to each organization and grown organically, which makes it difficult to define. That said, culture is best described as the personality, character and soul of a company. It includes the concrete aspects of work life, such as compensation, benefits and career development, as well as the non-concrete characteristics formed through employee and leadership attitudes, behaviors and values.
Culture is also an extension of your brand and reputation, which means it impacts all your stakeholders, whether clients, partners, investors or the public.
Unfortunately, some companies discover the important role of culture only after they’ve had a crisis, whether a disgruntled employee, product failure or financial misstep. A company that allows operational achievement to rule the day can quickly lose sight of the importance of building strong culture. While operations might determine what goals must be achieved, company culture defines how those goals are met, and to what degree of success.
Recipe for a strong culture
The secret to creating a strong company culture is two-fold: equal parts tightly-knit community and recruitment and retention of a team of A players who focus on the what and the how of peak performance achievement. Top performers are driven, ambitious, innovative and hardworking, and they typically excel at working as a team toward a common goal.
Building a strong culture doesn't happen overnight. It is an active process that is the responsibility of every employee. Culture cannot be “handed down” from the top, although it is leadership’s responsibility to create an environment for culture to flourish.
For a strong culture to take root, management must provide employees with the tools they need to excel — from health insurance benefits and fair compensation plans to the right technology and resources to do their jobs.
The company also needs to nurture a healthy cultural environment that inspires participation and engagement from the entire workforce. This includes building a work community that inspires camaraderie between colleagues and helps employees feel eager to come to work each morning. In such an environment, employees are working under the best possible circumstances and motivated toward peak performance as individuals and as an organization as a whole.
Putting values into action
Once a company has the plan in place for strengthening its culture, the next step is to define company values and put them into action. The values of SquareTwo Financial are focus, alignment, accountability, integrity and trust. Here’s what it takes to transform those values words into daily practice.
Every company operates as an interdependent community where it is in everyone’s best interest to help colleagues succeed. The finance and HR departments may not seem to have much in common when, in fact, employees from both departments are looking beyond their specific roles to advance a common company purpose.
Employees are encouraged to evaluate their own actions and their consequences, and are rewarded for being action-oriented, results-driven and passionate. Top-performing companies don’t overlook accountability. Instead, they are deeply obligated to excellence, with employees expected to bring their A game to work every day.
Integrity and trust
Character is essential to long-term success, personally and professionally. Sound moral and ethical principles are part of culture; they are traits that hiring managers look for when recruiting. Employees are encouraged to — and recognized for — always acting in the company’s best interest. They also strive to build strong, meaningful relationships with each other, partners, clients and other stakeholders.
All employees are focused on achieving individual goals as well as the company’s strategic objectives. Employees have a deep understanding of how they fit into the broader organization. And as a result, they are constantly evaluating how to better achieve their goals, and goals of their department and the company.
Paul A. Larkins is president and CEO of SquareTwo Financial, a leader in the $100 billion asset recovery and management industry that along with its network of legal partners employs about 2,000 people in North America, including 160 in the state of Florida. For more information, email firstname.lastname@example.org or call (303) 296-3345.
It was a dream that made absolutely no sense to Michael Landau. But this was his sister and he loved her very much and so he set out to help her make it happen.
“I not only knew nothing about the hair and beauty business when this started, I also have no hair,” Landau says. “I’m completely bald and I didn’t understand why women would want a [professional] blowout, why they needed a blowout or why they would pay someone else to get a blowout.”
Landau’s sister, Alli Webb, had launched a small mobile hair blowout business in Los Angeles and it really took off. It was so successful that she couldn’t keep up with the demand, so Landau decided to step in and try to take the concept to the next level.
“I lent her the money to do her first store,” Landau says.
The response was staggering.
“We had an eight-chair shop in Brentwood,” Landau says. “When you’re in the restaurant business, sometimes it’s a good problem to have when you can’t get a reservation because you seem hot. For us, our clients were getting so annoyed that they couldn’t get in.”
Landau and Webb quickly opened three more stores and they were just as jammed with business. This new company named Drybar simply could not grow fast enough. Waiting lists were 40 and 50 people deep on the weekends and customers were driving from all over the city to get their hair blown out.
“It was fast and furious,” Landau says. “For the first year, it was all hands on deck, chaotic, working around the clock 24 hours just to keep the door open and everything happening the way it should.”
The company has grown in a little more than two years to more than 850 employees who do about 24,000 blowouts each month. A dozen new locations are expected to open this year, doubling the size of Drybar.
“It was just amazing how people were coming from what felt like all walks of life and they were traveling an hour or an hour and a half from different cities all over L.A.,” Webb says. “It was really amazing and humbling and gave us the fuel to keep going.”
So what’s the key to succeeding when your business grows infinitely faster than you ever imagined it could? Landau says it all comes back to satisfying your customers, even if that means chasing them out the door, following them down the street and buying them a cup of coffee to make them happy.
Keep your customers content
If you asked Webb about the moment her brother chased a disgruntled customer out the door at Drybar, she might tell you Michael had it coming. It was his zeal, after all, that often left the store bursting at the seams.
“In those very early days, Michael would be in the shop sitting in the back answering the phone and telling anybody, ‘Yeah, come in, come over!’” Webb says. “I was like, ‘No, stop, because we had a line out the door.’ We didn’t have enough stylists, but Michael couldn’t say no because he was just so happy and excited to have all the interest.”
But back to the unhappy customer. She saw a sign that said walk-ins were welcome and came in, but quickly discovered it was going to be a long time until she was serviced. Then she had a bad experience with a cashier and that just made things worse.
“I witnessed this whole thing,” Landau says. “I watched the woman leave the store so upset. So I followed her out and ran down the street because I was determined to not let this person leave so upset.”
He brought gift certificates and tried to give them to her as a peace offering. She wouldn’t accept it and continued walking and Landau thought he had indeed lost her. But then he decided to give it one more shot.
“It was in front of a Starbucks and I said, ‘It’s going to ruin my week if I can’t apologize properly to you. Can I buy you a cup of coffee?’” Landau says. “She actually got a kick out of it and we went inside, and I bought her a cup of coffee and I started talking to her.
“The bottom line is this woman ended up not only becoming such a great client, but she told so many of her friends about that story and how the owner did this and did that.
“We learned early on that you can take a negative situation and really turn it into a positive. It’s one thing when people just like you. But it’s another thing when a leader is put to the test in terms of dealing with a negative situation or a problem. That’s where you can show your true colors and turn a customer around and keep them for life.”
When you have a business that is really taking off, that’s obviously a great thing. But there’s also the potential to create hard feelings if someone doesn’t get to experience your business because of the high volume. You won’t please everyone, but you’ve got to try.
“We’re dealing with a high volume of customers and sometimes, things go wrong,” Webb says. “Michael and I established early on that we care so much about the customer and the customer experience and we want everybody to be happy and we don’t want to let even one person leave unhappy. You see that with our girls and all our people in the shop how they bend over backward for the customers.”
In an attempt to ease the chaos in the stores, and reduce the risk of another disgruntled customer storming out of the store, Landau and Webb decided to move the act of taking reservations to an off-site location.
“We hired and trained very quickly a call receptionist who could work from home and just plug in the Internet phone to the computer and we could route our phone calls to them,” Landau says. “It was such a breath of fresh air because now our customers were calling and it was a quiet place where they could have a conversation, the client could hear us and we could hear them. That really took the pressure off in one certain aspect in a major way.”
Manage your culture
In the styling business, it’s obviously critical that you have people who can do great things with their hands. But if their personality is abrasive, you may not get much return business.
“We’ve come across great stylists who are amazing at hair, but they are just not all that friendly or personable,” Webb says. “To us, that’s not a winning combination and that’s not what we look for. Unfortunately I’ve had to let stylists go who were fantastic at hair, but they were divas or they didn’t share our over-the-top customer service. That is definitely a challenge.”
Landau learned just how much people value great customer service and a welcoming personality when he finally gave into his sister and let a stylist go who had great skills, but not a lot of personal skills.
“Alli really wanted to get rid of her and I was so scared because she had such a following and so many people coming to her,” Landau says. “We debated ad nauseam over it and Alli won and we got rid of her. I have to tell you she was so right. The whole attitude in the shop changed. There was such a change in the energy and the vibe of the shop in terms of the other stylists and how they got along.”
Webb says you can’t underestimate the value of having team players who your employees and customers like being around.
“If you’re causing problems with the staff and the stylists and bringing things down, it’s just not a good fit,” Webb says. “It’s not going to work.”
Landau says Drybar has found success by developing leaders and grooming them for more responsibility in the company.
“As we grew and became more sophisticated organizationally, we tried to bring in more experienced managers,” Landau says. “It didn’t work as well. They didn’t have the respect of their co-workers. For us, it just works so much better when we bring people from within that we’ve had a chance to get to know and we’ve nurtured.”
You need to share with people what your vision and culture is all about and make sure they understand it so they can live it with your customers.
“There’s a lot of training that we do, but I think it’s more philosophical,” Landau says. “We’ve worked on defining and articulating what our core values are as an organization and making sure our key managers have an active part in that.
“That way, there can be broad-based buy-in for that, and you’re making sure you’re building a foundation where people really understand what the vision is. They can become leaders within their individual organizations and kind of extend that.”
Get good people
When a business is growing as fast as Drybar, there can often be a lot of pressure when it comes to hiring. You need people fast and you may be tempted to skip a few steps just to get people out on the floor faster.
It would be a mistake. But there are ways you can learn more quickly whether a person is a good fit for your organization.
At least for me personally, I feel like I can tell when I’m interviewing somebody if they’ve done their homework on Drybar,” Webb says. “They know a lot about us. Our website is pretty extensive and they come in with that hunger and excitement saying, ‘Oh, I’ve been looking for something like this. I love styling hair and I really want to be part of it.’
“You can get that as opposed to the person who comes in and says, ‘Oh, you guys don’t do haircuts?’ That person hasn’t taken the time or the interest to really see who we are. That would create a huge red flag for me. You haven’t even checked out our website.”
If a prospective employee is more concerned about their own future, that’s not always a good thing. You want people who want to grow as individuals, but in an interview, you want people who are excited about what you do.
“You really have to dig deeper,” Landau says. “We would rather have somebody who is so passionate about what we’re doing and our brand and about what’s going on and who really wants to be here because that person, we can teach certain stuff. But you can’t teach that passion. You can see that attitude.”
Webb says she always has her eyes open for people who show the ability to be a leader so that she can provide encouragement and get them to show even more.
“We’re always looking at people and we’re always even encouraging stylists who are showing more leadership capability and tremendous enthusiasm and passion for the brand and the company to consider management,” Webb says. “We put a bug in their ear and that starts it.”•
- Keep your customers happy.
- You can’t cover up a bad attitude.
- Encourage people who show leadership.
The Webb and Landau Files
Born: We were both born in Long Island, N.Y., but grew up in Boca Raton, Fla.
Education: For 25 years, our family had a retail clothing store that both Alli and I grew up in, sweeping the floors. It’s where we really learned many of our philosophies on customer service. We come from a family that is a fourth-generation retailer. It was just what all the kids in our family did.
Webb on working with her parents: I feel like I learned so much early on. My first job was actually in retail because that’s all I knew and that’s what my parents did. But I remember so well being young and treating wherever I worked like I owned it because that’s what my parents did. I feel so incredibly grateful for how much of those values we got from our parents without even really knowing it. A lot of that comes through in our business now and it helps us to be successful.
Who has been the biggest influence on Landau? Seth Godin. I speak to him or e-mail him on a daily basis and he’s just been a mentor of mine. His philosophies on marketing have shaped everything that I do and I definitely, without being overly dramatic, wouldn’t be who I am today without Seth.
Who has been the biggest influence on Webb? Michael thinks it’s Michael. He has taught me a lot, even in Drybar, with more of the business side. I still kid him that I’ve taught him about the hair side. But I think if I had to pick, it’s probably mostly my parents.
Learn more about Drybar at:
How to reach: Drybar, (877) 379-2279 or www.thedrybar.com
Eric D. Belcher was not overwhelmed by the fact that his company went from having a presence in four countries to having one in 44 countries in just a single year.
“When you’re in a rapid-growth environment, change is … not just something that you need to embrace and get used to,” says Belcher, president and CEO at InnerWorkings Inc. “It’s something you learn to feed on. It becomes exciting and important. My guess is if we dialed back our ambitions and had more time to spend worrying, who knows? We might find ourselves using that time to worry or talk about people at the water cooler.”
Belcher and his team have worked hard to position InnerWorkings as the market leader in outsourced print management services. They’ve done so by giving the customers what they want – a one-stop shop that can tackle all their printing needs.
He has been able to sell that promise and in the process, rapidly expand the company’s presence around the world. Belcher says the frenetic pace is only going to keep gaining speed.
“For us, it isn’t as though we’ve gone global and now we can sit back and integrate and grow at 5 to 10 percent and do what many other organizations do in situations like this,” he says. “We’ve both gone global and added about 300 people to our ranks last year. But we’re going to add at least that again this year to our company and probably grow at an extremely rapid clip once again.”
New people are showing up almost daily, bringing the total number of employees to more than 1,200 and still growing. Belcher says it’s not always easy, despite his affinity for rapid growth, to keep everyone moving forward as one.
“That makes the communication of who we are and what we do and where we’re going and making sure everybody is aligned all the more challenging than it would be if it were a more static environment,” Belcher says.
“We’re pioneering a space and we expect substantial competition at some point. By the time that competition comes, we hope to have a fairly meaningful jump on that competitor or set of competitors.”
Here are a few things Belcher and his team do to manage the company’s rapid growth and prepare for future competition in the print management industry.
Find the right fit
Belcher doesn’t want there to be any misunderstanding with potential new hires at InnerWorkings. In short, the message he conveys is that the future is subject to change and so is your job.
“It takes a certain amount of courage to show up on day one knowing that you’re going to have to deliver and it’s not the company that’s going to tell you in some long-written form exactly what the expectations are,” Belcher says. “It’s up to you to help us figure out where the gaps are and plug your talents in.”
Recruiting at InnerWorkings is done for individuals and not for specific positions. The reason is that some positions that exist today will not exist tomorrow and some that will exist next week haven’t even been thought of yet.
“There is sort of a natural selection that goes on with the candidate pool when you do recruit more for the company, the cause, the energy, direction and vision versus, ‘Hey, I’ve got a role and I need to fill it,’” Belcher says.
When you’re looking to bring people in quickly, you have to be in an almost perpetual state of recruiting. It’s probably not something you should delegate.
“I do delegate plenty, but on this one, I stay pretty involved as I find it’s much better to have a firm grasp of who we’re partnering up with early on versus making a decision and then hoping there will be an opportunity to blend that person into the culture and strategy of the business,” Belcher says. “It’s just time well spent.”
Skills are obviously important, but when you’re growing fast, you need to focus more on personality and attitude and make sure the person you’re looking at can handle whatever you throw at them.
“We are looking for people who are hungry and have a fire in their belly,” Belcher says. “People who see the master goal, the major goal that we have as a company, which is revolutionizing one of the oldest and largest supply chains in the world. We look for people who can get excited about that just like us. So there’s a passion, a fire, an intangible that we are constantly searching for.”
One of the keys to InnerWorkings’s success at finding people is the recruiting groundwork that was laid before the company entered hyper-growth mode.
“We work very hard to understand the people that we hire and their background not so much from doing the rote checking of self-supplied references and making a few calls like that,” Belcher says. “We do it but by finding contact network overlaps where we can get candid feedback and also by watching an individual as they perform over a period of time prior to joining our company.”
If you don’t have the time to do that, focus hard on the attitude because it will be a key to your new hire fitting in and meshing with your team.
“We just communicate frequently and openly and generally; decisions made about hiring are made in a fairly collective manner where a number of people within our organization will have a chance to weigh in on somebody that we’re thinking about hiring,” Belcher says.
While Belcher believes the future is wide open for InnerWorkings, there do need to be goals and objectives to keep everyone on the same page. It’s the ability to toe that line and promote independent thought that still fits in with a common goal that is his challenge.
“It would be easier for me to micromanage and be more autocratic than it is to step back and have the trust that is required for people to flourish,” Belcher says. “There’s a way to stand back and allow autonomy, but yet still have a firm understanding of what’s going on in the business. That’s the challenge.”
Belcher and 10 other members of his leadership team have put on paper a few priorities that they each plan to pursue for 2012.
“It’s not a broad, ‘I’m going to do a good job this year,’” Belcher says. “It’s very specific. That group meets once a week and we pull that document out every month and we make sure that within the macro, we all understand what everybody else is focused on and expects to accomplish throughout the course of the year.”
With that foundation in place, leaders are free to work within a set of parameters to find their own creative ways to deal with issues and challenges that arise each day.
“There is everything in between those one or two top priorities and the day-to-day, which is the vast majority of what fills our work days,” Belcher says. “With that component of the business and how we interact as a leadership team with one another, it’s very open, very dynamic and there’s a tremendous amount of autonomy that each leader has to make decisions.
“Ultimately, as long as there is that vision of what is the one thing that my function or my geography or my role needs to knock out this year to make it a successful year, it works.”
The regularly scheduled meetings work to keep everyone apprised of what their colleagues are doing. Beyond that, Belcher says he doesn’t want his direct reports to feel like they have to check in with him on every little decision that needs to be made.
“I want to be able to make decisions that I feel safe and comfortable making without having to hit the pause button and consult and hold meetings,” Belcher says. “There’s a simple framework that we’re all working toward, but outside of that, there’s quite a lot of room and freedom and excitement that people feel.
“The enjoyment people feel on Monday morning is exponentially magnified when there is this sense that I can make decisions within my world. If I don’t make them all right, which I’m not going to, I don’t have to worry about hearing about that. As long as I’m making decisions, everything is going to be good.”
Take smart risks
It may not always seem like it’s possible, but you’ve got to have a plan in place no matter how fast your business is growing. If you don’t, it will eventually get the best of you and you’ll hit the wall.
“That starts not with the CEO saying, ‘Hey guys, go take some risk and it will be cool if it doesn’t work out,’” Belcher says. “It starts with having a disruptive, ambitious and aggressive growth strategy which by definition is somewhat friendly to taking some risks and trying new things.”
If you always keep the big picture in mind and trust that your people are talented enough to deal with the occasional bump in the road, you can avoid the things that slow companies down such as a bottleneck for making decisions.
“It isn’t as though we’re reckless and charging ahead and someday, we’ll look back and clean up the mess,” Belcher says. “But we’re very comfortable making quick decisions as a company. I think we’re just very good at correcting as we go.”
Dialogue needs to be regular so that people constantly feel they are in the loop and know what’s happening and know that they need to be doing.
“We hold quarterly calls, we call it an open mic where for an hour, we’ll get on and it’s essentially a Q&A with people from around the world asking questions and things of that nature,” Belcher says. “It’s a very candid and open internal conversation.”
Belcher also makes it a priority to get out to his company’s locations around the world as frequently as he can to have face-to-face meetings. But the key, whether it’s laying out a new plan or troubleshooting an existing one, is to keep things as simple and manageable as possible.
“We really do keep to a minimum that which is most important to us, which is client retention and the reputation we have in the marketplace based on what our clients say about us,” Belcher says.
The formula has helped InnerWorkings grow from $482.2 million in 2010 to $633.8 million in 2011. One of the keys to enduring success will be Belcher’s ability to stay ambitious.
“The natural inclination when something is working so well is to hunker down and try to protect it,” Belcher says. “We suppress that and our goal is to keep introducing is at as rapid a clip as we can do without compromising our service offering.”
How to reach: InnerWorkings Inc., (312) 642-3700 or www.inwk.com
People with the right attitude help you grow.
Have a plan everyone understands.
Make smart decisions.
The Belcher File
Eric D. Belcher
President and CEO
Born: St. Paul, Minn.
Education: Bachelor’s degree, Bucknell University, Lewisburg, Pa.; MBA, The University of Chicago Booth School of Business
What was your very first job?
It was working for the village that I lived in in Southern California for the summer, doing things like laying asphalt and trimming trees. Laying asphalt in the summer in Southern California, as hot as it is, I lost a lot of weight. It taught me I better go to college and get an education. It was a requirement of my parents that I get a job for the summer and I guess that’s the one I saw advertised and went and applied for.
Who has had the biggest influence on your life?
My wife, Lisa. Knowing me as a person, knowing me from the inside, she’s able to put into a unique perspective questions I may have regarding my work environment. And I can always trust that she is going to give me the most direct and open feedback that I’ll get from anybody, anywhere. It doesn’t hurt that she’s super bright.
Belcher on making decisions: The day I see the company struggling to make the difficult decision or taking too long to make what is a somewhat obvious decision, but yet is not being talked about with pure intellectual honesty in meetings — that type of stuff we have zero tolerance for. We’re just very open and we’re very quick at making decisions. That’s in part because of the business model and our strategy and our business approach and that’s what gives me the confidence that we’re doing things right.
Jane Saale isn’t happy with the way communication flows at Cope Plastics Inc. It results in wasted time, missed opportunities and a shortfall in productivity — and that bothers her.
“One time it’s like this and the other time it’s like that,” says Saale, president and CEO at the plastics fabricator and distributor. “We don’t have a clear process and place to say, ‘Every time we do this particular thing, we’re going to communicate it like this.’ I would say from a communication standpoint, we have lots of room for improvement.”
Saale is hardly alone, however, in bemoaning her 380-employee company’s communication difficulties. It’s pretty safe to say if you’re reading this story or if you’ve ever been part of any kind of organized activity, you’ve experienced problems communicating. It’s all part of the human struggle to interact with each other.
“Does anybody ever get up in the morning and go, ‘How am I going to communicate today’?” Saale says. “Nobody says that. But it’s a challenge. You have so many different dynamics of people and personalities and different backgrounds and knowledge and expertise. You have different ways of how people interact with each other. It’s a big challenge.”
Despite the ongoing challenge of improving communication, Cope Plastics has weathered the storm of the 2008 economic crash and is back on track toward hitting the $100 million mark in revenue. Revenue in 2011 totaled $86 million, up from just under $70 million in 2009. Saale says the key to success is being yourself, accepting that you’re not perfect and making sure your team members understand that and are ready and willing to do their part to fill in the gaps.
“You have to earn their respect by being genuine,” Saale says. “They’ll trust you if you are genuine and if you talk on their level. Be yourself, know your audience and know where you need to be and what kind of conversation you should be having with the people you’re talking to.”
Here are some of Saale’s thoughts on becoming a better leader and striving for better lines of communication in her organization.
Focus on yourself
Saale’s efforts at becoming a better communicator begin with herself. She’s the leader, after all. If she does a poor job of sharing information, the company has no hope of becoming a more cohesive and more informed group.
“You have to have clear and concise directions and you have to make sure your folks know where you’re headed,” Saale says. “You have to be a good listener. You have to understand and know your audience. You have to set expectations, and they have to be clear.”
She says growth in her confidence as a communicator has been achieved through plenty of practice.
“It’s come from experience,” Saale says. “We have trade associations and I’m on several boards in the area. I’ve also gone through some leadership roles and done some speaking. The folks in my community and on the boards that I serve on, they have helped me grow as a communicator and as a leader.”
If you feel like you’re not as effective as you could be talking to your people and delivering information, find ways to practice. Learn what works and doesn’t work, and it will help you improve.
“I have topics that I need to speak about and those topics are written down, usually on a piece of paper,” Saale says. “But I don’t write it out. I used to write it out and I used to read from the paper, but I’ve come a long way. Now I just kind of go with the flow. “I try to talk to them on an even keel, and I don’t try to be this person who is the president and is trying to make this big statement. I’m much more personable. I engage my people. I giggle or sometimes I tear up, depending on what I’m talking about. I just try to be very personable.”
Another important component is the fact that Saale doesn’t shy away when she makes mistakes, either through action or something she said.
“You’ve got to lead by example and if somebody has a critique about something I did or didn’t do, I listen,” Saale says. “It’s a consistency thing that you always have to be aware of. “It’s about talking to them on their level and getting them to understand why some of the things that we do, why we do it that way. They need to know the whys behind things and I think that gets them to buy in.
“They may not all agree about certain things, but it is what it is. It’s all about engaging them as a team and helping them understand that we’re all in this together.”
When you get feedback in those situations and people pose questions back to you, the same rules apply as to any other situation: Don’t be afraid to admit that you don’t know the answer.
“I don’t have a problem saying, ‘You know what, I have no idea,’” Saale says. “If you try to come up with a half answer, that’s not good enough. I usually just say, ‘Good question. Let’s get so and so in here who is more of an expert. I’ll learn from it, too, as we go through it.’”
You can’t worry about what your people think or about cynics who believe as the CEO, you should know everything about every last detail of the company.
“If people want to think that, they are going to think it, and there is nothing I can do about it,” Saale says. “But I’m surely not going to be one to say I know something when I don’t know it. I think I’m versed in all the different divisions in my company, but there are things I don’t know how to do. I understand the process. I’m versed in as much as I need to know.
“If there is an issue that comes up, I can get the background to understand what the problem is so we can try to get to the root cause to try to fix it.”
Bring people together
One area that has been a particular concern for Saale at Cope Plastics is interdepartmental communication.
“Most of our groups are pretty cohesive,” Saale says. “The challenge is when you start talking about inventory management to salespeople or to the branch managers and that dynamic of getting them to understand what the inventory manager’s role is or the material manager’s role is or what the salesperson’s role is. Everybody has their own directives and goals and objectives. It’s trying to get them to mesh.”
As part of the effort to fix this and bring more common purpose to everyone’s work life, Saale is working to instill shadowing opportunities for people to experience what happens outside their department.
“I need to get them to understand the whole piece — salespeople shadowing people in corporate and corporate going out and shadowing salespeople just to see what their challenges are on a daily basis,” she says. “That’s the kind of stuff we’re looking at to meld these departments together and communicate better and understand both sides of the equation.
“I just think it’s a huge value to have people who understand and are better-rounded and understand not just what they are doing, but how all the other departments need to work together.”
When you have meetings with department heads, make sure people are getting an opportunity to get familiar with what others are doing. You don’t want to overload them with things they don’t need to know or that don’t concern them. But a basic level of knowledge can go a long way.
“I’ve grown a lot with my plant manager and my director of manufacturing and understanding their challenges and the whole process of manufacturing and all that goes into that,” Saale says. “I feel with the background I have, I can be very empathetic and sympathetic when I need to, but I also understand these are the things we need to do to make it better.”
When Saale addresses her employees, she doesn’t go in expecting a ton of questions at the end of her remarks.
“Usually there are one or two people that you know are going to ask a question,” Saale says. “For the most part, people don’t raise their hands in those meetings. You just have to say, ‘OK, I have an open-door policy. But do me the courtesy of making sure your supervisor knows that you are coming to me.’ I don’t like people to do end runs.”
If you want to be collaborative, you’ve got to make yourself available. But you also need to take care that you’re not cutting out leaders who you’re paying to serve in a supervisory role and deal with certain situations on their own.
“That puts their supervisors in a bad way, and I don’t like that,” Saale says. “As long as their supervisors are aware of it and for whatever reason, they can’t get the answers they are looking for or they are frustrated, that’s fine. I just try to encourage them to go through the proper channels first. It is somewhat of a reflection on them if they don’t and it makes them look bad.”
As much effort as you make to hear the concerns of your people, you’ve also got to be careful that you don’t let them rely on you or on their supervisors so much that they become unwilling or unable to make decisions on their own.
“There are times I want to go, ‘Guys, you’re the experts. I’m not in your field, so guess what? You make that decision. If you fail, that’s fine. Try something else. I’m not perfect. We go one way and that doesn’t work, we’ll admit it didn’t work and go in a different direction,’” Saale says.
Saale takes the same approach of instilling self-reliance when she asks others to deliver information to the rest of the company. She doesn’t go overboard imposing her will on their thoughts and she doesn’t ask them to recite everything they are going to say to her before they talk to the team.
“You just have to ask questions, things like, ‘OK, what are you saying? Does that make sense?’” Saale says. “You have to give communication back to them. I try to be collaborative, almost to the point where people think I’m too collaborative or too soft.
“I don’t say, ‘OK, now read that back to me. Or tell me what I just said.’ I guess it’s a matter of how you present it back to them. But my approach is to give the people the opportunity to decide and make their own decisions. It’s always about, ‘How can I make you better.’ It’s all in the approach.”
How to reach: Cope Plastics Inc., (800) 851-5510 or www.copeplastics.com
Don’t think you’ve arrived as a great communicator.
Make sure your departments are coordinating.
Don’t let people shy away from decisions that can make.
The Saale File
Born: Alton, Ill.
Education: Eastern Illinois University, Charleston, Ill. Business administration degree with a concentration in accounting. I love numbers, but I’m also an extrovert. Most of the time, your numbers people are kind of black and white. I’m not black and white. I’m definitely gray. I have a mixture of accounting and marketing in my blood.
What was your first job? I worked at Ken’s Pizza as a waitress. I learned about dealing with people and being a servant. It somewhat humbles you to serve other people and want to do the right thing and make them happy so they enjoy their experience.
Who would you like to sit down and talk to? Because I was too young and too inexperienced and naive to think about it before he passed away, it would be my grandpa. He’s the one who started this business. He passed away in 1995. I was 30 at the time and I didn’t have the experience and knowledge and know-how I have today. So I never sat down with him on a business level. He was always just Grandpa. And I would love to do that. Boy, would I like to pick his brain about things at work.
Clayton Frech loves customer service. He loves it despite the fact that his first job was managing a dormitory salad bar at the University of California, Santa Barbara.
“It was the worst job in the cafeteria other than maybe washing dishes,” Frech says with a chuckle. “But you learned quickly and within a year, I was one of the assistant managers and I started managing my own team.”
That passion for stepping into a tough situation and not only making the best out of it, but finding a way to thrive in it, would serve Frech well years later when he was asked to get things turned around as division manager for the Southern California division of Safelite AutoGlass.
Sales had been flat for the three years prior to Frech’s arrival in 2009, and that had fostered a work environment that didn’t have a whole lot of energy.
“In that kind of slow to no-growth environment, there aren’t a lot of new stretch assignments,” Frech says. “There’s not a lot of need to develop new talent.”
Frech wanted to start developing talent and get people excited about serving the customer and energized about the opportunity to become a leader in the Safelite organization. Doing so was the only way he knew to get Safelite on the map in Southern California with potential customers and boost the division’s mediocre sales volume.
“I love the service side of things and I love thinking about the underlying people and operations processes needed to ensure that the service delivery is excellent every time the customer walks through the door,” Frech says. “While I’ve changed industries over the years, this is what I’m most passionate about.”
When Frech brought up the idea of providing leadership and customer service training to employees, he didn’t get the response he expected from his general managers.
“I was thinking about whom my managers are going to be in two or three years and what skills do those guys need because I want to start grooming them,” Frech says. “And my managers said, ‘Well, the guys who are running the business right now need some of this too.’”
So Frech changed course and opened the training up to existing leaders as well the leaders of the future. And he set out to create a program that would give them the skills they needed to make Safelite a company of choice for its potential customers.
Lay the groundwork
Frech was fortunate that Safelite’s headquarters in Columbus, Ohio, had put together a leadership development program that had already proven to be effective at grooming leaders and improving customer service.
It would provide a template to work with in developing a curriculum for the Southern California division. Frech knew he wanted the training program to balance learning about leadership principles with the functional side of being a manager.
“We weren’t teaching them how to do their day jobs,” Frech says. “We were teaching them the intricacies of people management as well as the softer side of leadership. To put it another way, in terms of conducting a performance review, there’s the nitty-gritty functional things you just need to know about how to do it and do it correctly.
“Then there is also the side of what do we expect out of our people. Is it just that they are able to put a windshield in correctly? Or do we expect them to have a good attitude? Do we expect them to bend over backwards for our customers? It’s a balance.”
As the curriculum was hashed out, it was decided that the first training course would take place over the period of a year. But in both cases, Frech says one of the keys to success is often a willingness to remain flexible.
“You have to be rigid and flexible at the same time,” Frech says. “If you don’t put dates on the calendar, it will never happen. So getting the dates on the calendar and planning it and forcing everybody to make it happen is critical. But then it’s trying to listen to your people and be flexible when you really need to make a change.”
An agenda was provided at the beginning of the training to give participants an idea of what to expect, but caution was taken to not reveal too much.
“They never really knew exactly what we were going to do,” Frech says. “So there was an element of knowing and an element of surprise. But it was a healthy balance.”
As for the participants in the Safelite training course, everyone who was already a manager would be required to take part. High-potential employees who had a strong desire to one day become a manager would then submit applications.
“The main thing we looked for in the applications was a vision of where they wanted to go with their careers and if they could articulate that vision, even in a limited way, and really show that they were hungry, engaged and willing to learn,” Frech says. “For us, it didn’t need to be that polished perfect application. It was more, is there desire in there?”
There were 50 slots filled for the first course, with about 75 percent of high-potential applicants accepted. Those who weren’t chosen were put on a list and a point was made to give them more opportunities to stretch themselves in their work. They would also be given strong consideration when future training courses were offered.
As for those who were selected, the excitement was high.
“They had never been through anything like this before,” Frech says. “So the general mood going into the classes was excited and positive.”
Make it worthwhile
Since it was something new, Frech did indeed feel a lot of energy about the leadership development course that was about to begin. It was now up to him and his team to make sure the students weren’t disappointed.
“In every class, there needs to be an aha moment,” Frech says. “The content of the class needs to be compelling enough so they are searching for that aha moment. They are really paying attention. That’s probably the most important thing.”
Frech wanted employees to focus on gaining knowledge and getting better at their jobs. There would be no grades and there wouldn’t be a final exam at the end of the course either.
“The main emphasis was on them reporting back in some way and using the knowledge they gained as part of the discussion,” Frech says. “That’s how we reinforced the homework. At the end of the day, the classroom is only so good. You’ve got to be in the field and learning on the job. That’s where the vast majority of learning is going to take place.”
Frech and his team sought to make the classes interesting by bringing in people who could offer compelling lessons to the trainees.
“We brought in high-level speakers from other parts of the organization, some in person and some on conference calls,” Frech says. “We toured facilities together. We just did a lot of different things and tried to keep it fun.”
While there was thought to bringing in outside help to lead the course, Frech was confident he had the resources in house to train people the right way.
“For us, the basic goal of this effort was to take an hourly technician and turn them into a team leader/store manager of five to 10 associates and to be able to lead those associates to their optimal performance and capabilities,” Frech says. “We weren’t trying to take on the world here. We were just trying to develop a new generation of managers with some idea of what it means to be a manager and what it means to be a leader and have expectations.”
As the first year drew to a close, it became apparent that employees had gained a lot of knowledge about managing people.
“But it didn’t provide any insights into the business and how we want to run the business and where the opportunities are to improve the customer’s experience and the customer’s journey,” Frech says.
So a second class was scheduled to begin a year after the first one ended. It would focus on the customer journey and all that went into providing great service.
“We got experience at the distribution center and an understanding of the supply chain and at our warehouses where the glass is stored and shipped out to our technicians,” Frech says. “We spent time with the technicians and talking about their perspective and then we spent time doing the glass and talking to customers, real customers, on both ends of the process. We talked to them at the beginning when they’re making the decision and at the end when they’re deciding if they are happy or not.”
Frech says the two-year plan of first learning to be an effective manager, then learning about customer service, was not exactly how he had it planned. It just happened to work out that way.
“It’s a pretty good one-two punch the way it ended up, but I’m not going to take credit for some grand vision,” Frech says. “If we take care of our people the right way and they in turn take care of our customers; that’s the heart and soul of what we do and of our strategy.”
Provide a path
Frech made no promises to employees who took part in the training program in regard to raises, promotions, bonuses or any other incentives.
“The implicit deal that we struck with the associates was if you can adopt the learning in your life, you will be much more viable for a promotion,” Frech says. “It’s got to be a two-way street. You can train people, but how much training goes in one ear and out the other?”
You’ve got to stoke the flames of self-improvement in your people and create an environment where they see the potential opportunities ahead and get excited about going after them.
“That’s what I talk about with my people. Are you on a journey of self-improvement? What are you working on? If they do all those things and start stepping up and taking more responsibility, that’s when I’m more comfortable to give raises and promotions,” Frech says.
“If they can start on the journey and show that they are really genuinely improving, the opportunities are going to be there for them. It doesn’t mean you win every opportunity or you get everything. But that’s the commitment that has to be made.
Frech’s division has since been expanded to include all of California and now encompasses 566 employees. Since the training began, 20 promotions have been issued and 16 of the people who were promoted took part in the training course.
“So that’s 80 percent,” Frech says. “That probably keeps them motivated. I don’t tell them who has been promoted out of their peers, but they know. It’s really worked to give them visibility with myself and the general managers as well as with their peers and has really moved their learning along.”
How to reach: Safelite AutoGlass, (877) 800-2727 or www.safelite.com
Think about what your people need.
Make sure that you’re not wasting anybody’s time.
Give employees a reason to get excited about what you’re asking them to do.
The Frech File
Born: Bethesda, Md.
Education: Bachelor of arts in economics, University of California, Santa Barbara; MBA, University of California, Los Angeles
Who has been the biggest influence in your life?
Steve Miggo, senior vice president of operations and human resources at Safelite. There are a lot of bosses in the world, leaders in the world, who don’t always appear to have a caring or kind manner.
Steve is the kindest, most genuine and caring guy and he’s 100 percent focused on building the organization in that same vein. He was one of the folks I interviewed with when I was thinking about joining Safelite.
His leadership philosophy was just so perfectly aligned with how I have always wanted to lead. It’s almost like a homecoming from a values and leadership philosophy standpoint.
Who would you most like to meet?
I would probably say Jack Welch. The reason I say Jack is he spoke at our annual leadership conference back in 2011. And he talks a lot about people and talent development. He talked about how he evaluates his managers along two criteria: performance and values. This has really had an impact on the way to look at managers.
It’s easy to discard values if you get performance, and he made the point that you absolutely can’t do that because in the long run, it’s not sustainable if managers do not share your values or have your values. I think about that all the time and it’s one of those things that has stuck with me. It’s so simple.
The results of the 2012 ERC/Smart Business Workplace Practices Survey demonstrate Northeast Ohio employers using innovative ways to attract and retain top performers.
While respondents indicate for the second year running that the economy is no longer their most pressing challenge, other challenges such as funding, health care costs, controlling costs and financial stability all featured prominently in the top-10 challenges faced by employers. Despite this focus on costs, hiring and employee retention continued to be most employers’ top concern.
So how can employers be so worried about costs and be looking to make new hires? These two topics are in fact closely intertwined. Making good hiring decisions at the outset and then developing that employee into a top performer can save an employer thousands of dollars over time. To ensure that the “right” employee is hired from the start, more employers are using job boards, online career centers, and social networking sites, thus expanding their network of potential candidates. The use of psychological assessments for selection is also quickly gaining popularity, up about 6 percent in 2012 to 57percent.
A surge in technology usage among manufacturers as it relates to workplace practices was also reported. In the survey, manufacturers accounted for virtually all of the increased use of social networking as a recruiting tool. Similarly, manufacturers increased their use of electronic communication with employees in areas including e-mail (97.8 percent), website/intranet (51.1 percent) and social media (8.9 percent).
Similar to last year, participants reported pay raise projections of about 3 percent. In addition, the average dollar amount of individual cash bonuses saw healthy increases over 2011, particularly in manufacturing up $4,492 on average. Even the minimum hourly rate paid to employees improved, up to $11.02 on average. In addition, the use of non-monetary rewards significantly increased, with the percentages of employers offering work-life benefits such as flexible scheduling and paid time off banks up by 8 percent and 12 percent, respectively.
Clearly employers are seeking more creative ways to retain their employees, particularly as the job market begins to recover and factors such as voluntary turnover become more of a concern. In fact, participants reported a voluntary turnover rate of 8.6 percent, up from 2.7 percent in 2011. To combat this increased risk of losing top talent many organizations are trying to improve their workplaces. Based on the exceptional practices of this year’s participants as well as our NorthCoast 99 winners, here are a few suggestions to help you retain your top performers:
Communication is key. Keeping all employees informed builds trust and helps employees better understand their impact. Face-to-face conversations with an employee can go a long way – particularly when trying to ensure that top performers understand just how much their exceptional job performance is appreciated.
Find creative ways to reward for performance. Look for meaningful ways other than pay raises to reward and recognize your top performers. Autonomy, flexible work arrangements, or other non-monetary incentives can serve as lower cost, but effective alternative rewards programs.
Manage benefits costs. If you haven’t yet, implement wellness programs and incentives. The overall health of your pool improves as employees make healthier lifestyle choices, which can help you manage your health care costs in the long run.
Make technology work for you. Use social networking to expand your pool of potential candidates and consider exploring web-based training which often is more cost effective and offers a nearly unlimited list of topics to fit the needs and interests of your employees.
Thanks to the organizations that participated in this year’s survey and to Smart Business Magazine for 13 years of survey collaboration. In addition, we would like to acknowledge the NorthCoast 99 winners over the past 14 years (www.northcoast99.com) for their continued perseverance to create and maintain great places to work.
Pat Perry is president of ERC (www.ercnet.org), Northeast Ohio’s largest organization dedicated to human resources and workplace programs, practices, training and consulting. Reach him at (440) 684-9700 or email@example.com.
Yogurtland has been a frozen dairy-powered rocket for Phillip Chang. The president and CEO of Yogurtland Franchising Inc. founded the chain of self-serve frozen yogurt bars in 2006, and in the six years since, has grown the company to more than 170 locations, owned by more than 100 franchisees and employing more than 2,100.
But when on a stratospheric trajectory sometimes things don't always go according to the script.
Which is why, several years ago, Chang threw out the script and began concentrating on the actors in his company.
"Before then, even though our stores performed pretty well, some people's behavior didn’t reflect the culture we wanted to have," Chang says. "We didn't see enough of the honesty side, the respect for each other, the desire to help each other."
Chang quickly realized that if he were going to build a stable culture that embodied high ethical and moral standards, he needed to find the people first. So he started to shift how he and his leadership team recruited, what they valued in prospective employees and franchisees, and what constituted a great hire.
In short, Chang began focusing on candidates' hearts first and their heads second.
"When the company started, I had hired too fast, and because of that, some people had a lot of experience as far as the technical side of things, but they didn't have high moral standards," he says. "So I started looking at this in terms of two areas. One was the culture, in terms of the level of ethics and honesty, and the other side was their technical experience.
"I looked at how each candidate performed in both areas, but I set my bar very high on the ethical side and was more generous on the technical side. You can teach technical skills, but you can't really teach ethics and morals."
Since refashioning the company's recruiting and hiring practices, Chang says it has had a profound impact on the culture of the company.
"It has been big for us," he says. "We now look at our company more as a family."
Ask the right questions
If establishing your ideal culture starts with hiring the best people, then hiring the best people starts with asking the best possible questions during the interview process.
Chang wanted to develop and nurture a culture that embraces high ethical and moral standards, but also promoted the idea that Yogurtland behaves something like a large extended family.
Though many company heads talk about the family atmosphere that exists in their companies, making the leap from professional colleague to something more familiar is difficult, and one that can't happen without close involvement from upper management.
Chang wanted a constructive bond to develop among the people in Yogurtland's Anaheim corporate office, so he started by developing bonds between himself and his team members. He developed relationships with his people in which he got to know the significant things happening in their personal lives.
If there was a way Chang could leverage Yogurtland's resources to help an employee realize a significant life goal, he wanted to help.
"In our situation, I think it’s important to look at a company as family members," Chang says. "When you have a parent, sister, brother, and you're working together, you're thinking about the ways you can help them and make their life better. You're asking 'How can I teach them to fish?' That's why, maybe you don't want to just hand them a prize, but you want to figure out a way that you can help them realize the dreams they have for their own lives."
One of the first questions Chang asks a job candidate has nothing to do with the lines on their resume. It has everything to do with trying to learn what really makes the candidate get out of bed each morning.
"For every single person I interview, I ask them what is their ultimate goal in life," he says. "That gets them to think deeply and reveal some truths about who they really are. Their goal can be relevant or irrelevant to our company, but I want to know what their goal is. If we hire them, I want to customize a path for their dreams.
"Maybe someone wants to buy a house for their mom. It really has nothing to do with us, but we look at the numbers, we put together our collective wisdom and try to see a way this person can achieve their goal. If that person can finally buy a house for their mom after so many years, that is very motivating for them.
"We see it as something we're not obligated to help with, but if you truly view your people as family members, as a brother or sister, that is my role. If they see me and those of us in the company going above and beyond to help them, they start to see and believe that we act as a family."
Finding those life catalysts is a critical component of motivating employees at their jobs. Employees do come to work each day for a paycheck. Without income, they don't pay their mortgages or utilities, don't make car payments and don't buy groceries. But the sum total of what constitutes gainful employment doesn’t begin and end solely with what ends up in each employee's bank account every two weeks.
People want to work at an organization where they can make a lasting difference. What defines "lasting difference" changes from person to person, but the greater need is always there. As the leader, it's up to you to ask the questions, both of your current and prospective future employees, and find out what truly motivates them.
"In a lot of cases, I don't think financial compensation is the real motivation for people," Chang says. "When they hear the company is trying to achieve something beyond just the numbers and financials, when they see that we come together as a company, we reach out and help each other achieve our goals so that we can achieve our overall company goals, that is a common motivation where people see we're not just out to make a profit. We don't come to the office each day just to make money. It's more than that."
Perform daily maintenance
It's easy to project enthusiasm about a new strategy or a culture shift at the outset, when everything is new and exciting. But how about a month after, or six months after, or a year after?
At some point, you will leave behind the rush of blazing new trails and exploring new frontiers, and sustaining what you worked so hard to develop and roll out will be a matter of daily maintenance.
At Yogurtland, Chang considers his company’s cultural conversion a success. The atmosphere around the company's corporate offices — and by extension, at franchise locations — is based on Chang’s vision of a company that behaves as an extended family. It is a commonplace occurrence for Yogurtland associates to build and sustain meaningful and fruitful interpersonal relationships.
But if Chang were to rest on his laurels and consider the mission accomplished, he would run the risk of allowing his culture to backslide into the bad habits he spent several years eradicating. That's why he makes sure to create regular interaction points between him and his team, so that he can continue to reinforce the principles he introduced at the outset of the company's culture shift.
The company's rapid growth adds an extra layer of complexity to the equation.
"Right now, we have a corporate office of 40 and it is already difficult to reach to all levels," Chang says. "The only way is to remain vigilant about communication. In our regularly scheduled meetings, what we're discussing isn't just about simply store operations or the numbers we are trying to achieve. We discuss more than that."
Chang tries to address technical issues quickly so that he can spend more time reinforcing the culture. Whenever possible, he wants common-sense, uncomplicated solutions to issues involving the company's infrastructure. Since maintaining a great culture is hard work, he wants the nuts and bolts of running his company to be as simple as possible.
"When we need to visit the technical side of things, we can be pretty quick in figuring out what the best solution could be, and then put that in a memo to whoever it concerns," Chang says. "That way, it's in an e-mail, everybody reads the e-mail, and if the subject needs to be addressed in one of our meetings, we are all prepared beforehand. That hopefully leaves us more time to address our culture and how we are putting ideas together for the future. The meetings are where we really dissect what is going to help the company’s future. So we want to spend a lot of time on those big-picture, conceptual ideas."
Chang says the new culture at Yogurtland has affected the way he runs the business on a fundamental level. Like most CEOs, Chang used to focus on strategic planning before anything else. Everything — from hiring to culture to job descriptions — stemmed from the strategic plan laid down by management.
But as Chang advanced deeper into his new philosophy of focusing on people first, he discovered talent was his most important asset, and motivating that talent was his most critical task. Now, he values talented people who embrace the culture far more than he values strict adherence to any organizational strategy.
Yogurtland still has an overall direction and goals, but the method by which those goals are achieved is now largely up to input from his team.
It is something that requires a level of adaptability that might extend beyond the comfort level of some business heads. But Chang views it as an essential part of his leadership philosophy. He'll compromise on how something gets done, but he won't compromise on who does it.
"Typical company leaders, they will do strategic planning and everything related to that first, and then try to fill out the team by putting people in the right positions," Chang says. "We do it the other way around. As I've said, I find the right people first. That takes a level of risk, because sometimes you find a really great person and you know right away where they're going to fit in the organization.
"That's where it gets kind of strange, because what I've learned is that if I find the right person who fits the culture, someone who is honest, humble, receptive, confident and wise, that is where you really can't compromise. You can be pretty generous regarding how you hire for technical skills. If you've hired someone who is smart and receptive, they can catch up their skills fairly quickly. That is why you find the person first, then do the planning.
"If I were starting a company from scratch again, I now know that is how I would do it."
How to reach: Yogurtland Franchising Inc., (714) 939-7737 or www.yogurt-land.com
The Chang file
Born: Seoul, South Korea
Education: B.S. in mathematics, Sogang University
What is the best business lesson you’ve learned?
One thing that has impacted me throughout my career, and what I keep emphasizing to my people, is that you need to surround yourself with the right people. You need the right employees, the right partners and the right people around you in everything you do.
What traits or skills are essential for a business leader?
The ability to build a great team. You need to have the ability along the technical lines of what it takes to run a business, but you can’t go anywhere without a great team. And that comes back to how you communicate with people and share your goals.
Chang on the CEO’s role in sustaining the culture: As the company has grown, I’ve tried to set myself as more of a cultural leader, rather than an operations leader. I try to focus more on the bigger goals and being a good role model, demonstrating our cultural principles by example — honesty, high morals and so forth. As the leader, you are constantly watched by everyone, and they have to see me embody those core values at every turn, because they are going to follow my example.
As former firefighters, brothers Robin and Chris Sorensen know that quality and quantity are both important when it comes to a sandwich. So when they co-founded Firehouse Subs in 1994, their vision involved providing better service and a better restaurant experience for their customers. It also involved more meat.
“We made a list of things we thought we had to do to be different and be competitive, and it came down to the concept, and it came down to the experience at the floor level and service levels,” Robin says. “And then it came down to the food.”
Over the years, Firehouse built a reputation for its appetite worthy portions of premium meats and cheeses. With the advantage of being one of the least expensive brands in the fast-casual segment — competitors include Five Guys and Panera Bread rather than Subway — the company steadily grew its regional foothold from Jacksonville, Fla., to 300 locations in 17 states.
But at the beginning of 2007, all of that changed. The restaurants started losing traffic.
“Up until that point, we never had a down quarter,” Robin says. “We’d been building on a continuous basis, and we didn’t even realize how good we had it.”
While the brothers didn’t know it yet, the company’s problem went deeper than the economic recession. The problem was “crappy” marketing.
“What we learned is that people who weren’t eating there — they didn’t really understand what we were,” Robin says. “The Subway customer assumed when they saw our sign that we were just like Subway.”
Root out the problem
Facing some of the darkest days in Firehouse’s history, founders Chris and Robin knew that the company’s franchisees were looking to them for reassurance. Feeling that they owed it to them to look at every opportunity to revive business, they took input from owners and employees, realizing that many of the ideas weren’t viable options.
“For the first time, we could feel the weight of the system on our shoulders, almost literally looking at us and asking, ‘What are we going to do?’” Robin says.
“Some of them were saying we should cut our portions down — which my blood pressure is going up thinking about it. But we had to look at different opportunities. That whole process — all it did was lead us to say, ‘We’ve got to do something.’”
Both felt strongly that they couldn’t jeopardize the quality or quantity that defined the Firehouse Subs brand in exchange for short-term profits. But they agreed they couldn’t stand still either. So as they debated how to handle the declining numbers, the Sorensens also started taking a hard look at their advertising agency.
The company had talked about changing advertising agencies in the past. And seeing the poor results of recent efforts, its leadership offered the agency one last opportunity to present its ideas on how to resuscitate customer traffic. Needless to say, they weren’t impressed.
“Basically, we were out of options,” Robin says. “We weren’t in great shape. So we did something drastic.”
Feeling more and more that the reason for poor performance stemmed from ineffective brand marketing, the leaders proposed a radical change.
In the summer 2008, they decided to rescind the 2 percent in royalties that franchisees paid the company for its corporate marketing efforts. Instead, they told franchisees that they could keep the money — if they agreed to do their own marketing.
“We came up with a comprehensive plan on what they need to do with that money at their discretion, the old fashioned stuff — hiring sign wavers, developing catering, knocking on doors, ‘touching’ people, speaking at the chamber — all of the things that helped us build the company,” Robin says.
Then they hopped on a bus, traveling around the country to present the new marketing plan to store owners with a national founder’s tour. A key part of the presentation was showing franchisees how to execute the new, guerrilla-style marketing initiatives.
“We’d have 10 people from our office get off the bus and we’d all hit three, four or five stores depending on the city,” Robin says. “We would go out and market those stores on the ground ourselves with them to show them how to get it done. We always built sales wherever we were at. So it was radical, but we tried it.”
After six months, about 20 percent of the system was really on board and executing on the suggestions. So the brothers decided to extend the efforts for another six months.
In the end, the local marketing ramp-up wasn’t enough to stop the decline. Continuing to lose traction, the company closed out the 2008 year down 6 percent in comparable store sales. By 2009, the company was falling nearly 7 percent. The Firehouse Subs brand still wasn’t registering with the customers; and Chris and Robin went shopping for a new advertising agency.
Focus on the right customers
As they began their search, the brothers looked for a smaller agency where they would know the owners personally. So they were skeptical when their consultant proposed a meeting with Zimmerman Advertising, an agency worth $2 billion whose clients include high-profile brands such as Papa John’s Pizza.
“I said, ‘Let’s not even go down there to Ft. Lauderdale because they are too big,’” Robin says. “‘We’re going to be lost in the shuffle.’ And the consultant said, ‘They are different people down there. They are a unique agency, and I’ve seen a lot of them. … I think you guys are going to hit it off.’”
Compared to the last 20 presentations they’d gone through, Zimmerman was the only agency so far that had no marketing ideas to pitch. As they sat down to meet with the company’s leadership, its staff admitted that they didn’t know much about who Firehouse was. Instead, they pitched themselves.
The agency’s founder, Jordan Zimmerman, pointed out that both of the company’s previous agencies had pitched their ideas for the business before they even had time to research who and its customers were. But Zimmerman did things differently.
“His point was how do they know if that’s right when they haven’t had enough time or money to go out and really do thorough research?” Robin says. “And he was right.”
So when the meeting was over, they hired Zimmerman as their new agency. They also gave them the money to go out and do the necessary market research to develop their brand strategy. The agency used techniques such as intercepting customers — going into other stores and offering them a free lunch at Firehouse Subs in exchange for feedback — Zimmerman soon figured out why the company was losing customers. The brand needed to reach more people.
At the time, the company had lost about 10 percent of its traffic. But while the owners were so focused on getting those people back in the door, they’d also overlooked an essential question: are these the right people?
“The point is — they’re gone,” Robin says. “We weren’t really focusing on the 90 percent that are OK with our proposition. So we started trying to better understand who those customers are and who other customers are.”
The agency also told the brothers that it would take a 4 percent investment from each of the franchisees to execute a new brand marketing strategy.
“I said to them, ‘So you’re asking me to go our franchisees and say not only do you have to give me the 2 percent back that we let you keep temporarily, but you’re required to, and you need to give us two more that you’re not required to?’” Robin says. “It was radical.”
But while knocking on doors worked occasionally, the customer data made it clear that Firehouse Subs had to reach more consumers with its message if it was going to stay profitable.
“The simplicity of it was just 'find more people,'” Chris says. “Tell them who we are and why we’re better. With the economy down, there were a certain number of people who couldn’t afford to eat with us, and we weren’t going to get them back until the economic situation was corrected. But there were thousands upon thousands of people that we could reach, which is what we did.”
Try a new tactic
With the help of Zimmerman, Robin and Chris began making the changes to the company’s marketing and advertising. First, the company increased its emphasis on the items that make it different from competitors — its big portions of quality meats. At the heart of the strategy was the radio.
The agency suggested that, as founders, Robin and Chris should represent the brand in radio commercials. Instead of discounting the price, they’d focus on Firehouse Subs’ bigger portions and fresh-sliced, steamed meat and cheese. The commercials would also include a new slogan: “Our way beats their way. If you don’t agree, it’s free.” By mentioning the price in the commercials, customers would know exactly what to expect coming into the restaurants — a medium hook and ladder for $5.39, not a $5 footlong.
“We’re giving a guarantee,” Robin says. “So if you take one bite and you don’t like it, we’ll give you your money back. While everybody is talking about smaller sandwiches — $2 torpedoes, $5 footlongs — we’re going to be the only one talking about premium.”
At first, Chris and Robin were hesitant about going on the radio, even as they helped write and develop the spots. So they began a 10-week test run, doing radio spots in Jacksonville, Fla., Knoxville, Tenn., and Augusta, Ga.
“We were concerned about not doing it well, and we don’t want the system thinking that we think it’s all about us,” Robin says. “What if we fail at it? So Zimmerman was like, ‘If you suck, we’ll be the first to tell you.’”
Within days of starting the radio campaigns, the stores saw 10 to 15 percent lifts.
“Without discounting, without changing who we were, without coming up with the next cheap sandwich, we stuck to what’s made us who we are and just started blasting the airwaves and finding new customers,” Chris says. “And it worked.”
Bring the fight home
The company now had real data in its back pocket showing that the radio worked. But now, Chris and Robin had to go back to owners with the new marketing strategy and convince them to invest in it. In summer 2009, the company held its first ever corporate-wide conference to introduce the new agency and new marketing investment.
The brothers explained the tests and the results of radio campaigns. They explained the big picture and the vision. Because the plan to give owners the reins over marketing hadn’t worked, they felt that they had even more authority to ask franchisees to support the changes.
“If we hadn’t given them money to try it on their own, they may have demanded some other options,” Robin says.
“We said, ‘You’ve had this for a year. We tried an agency. We couldn’t get results. We gave them an opportunity to present their ideas. They weren’t good. We tried it. Check. Then we gave you the money for a year. It didn’t work enough to turn us around. Check. Now we have a new agency.”
They asked the 80 percent attendance of franchisees in attendance to double down on their investment into the corporate marketing. In the following five months, they held meetings with the other 20 percent to get their support. In the end, everybody who was eligible to be on the radio voted to do it.
“As much money as we spent, it came down to buying the right media to talk to the right group of people, and hitting it heavy with the right message,” Robin says.
“The bottom line is that it was a major risk, a double down in a bad economy, and it absolutely was the most phenomenal thing we’ve ever done.”
Since the second quarter of 2009, the company has continued to increase sales 4 to 6 percent every year, fueling its expansion to approximately 500 locations today. Revenue for 2010 was an impressive $256 million. The brothers have already invested close to $5 million of their own money in the radio campaigns. Yet there is still one thing they would have done differently a second time around.
“Fired our agency earlier,” Chris says.
How to reach: Firehouse Subs, (800) 388-3473 or www.firehousesubs.com
1. Figure out where you need to improve.
2. Rethink your market of customers.
3. Step outside your communication comfort zone.
The Sorensen File
Chris and Robin Sorensen
Born: Jacksonville, Fla.
Favorite Firehouse sub:
Robin: Smokehouse Beef & Cheddar Brisket
Chris: Smoked Turkey Breast
About the Firehouse Subs Public Safety Foundation
Mission: To buy life-saving equipment for fire, police and other public safety institutions
Robin: We’ve saved lives with the equipment that we’ve donated, and it’s really taken on a life of its own. People understand Ronald McDonald House, and that’s big part of who they are. We want the same thing with Firehouse, because not many companies have really made a great connection like that, like we have. We started it from the heart because we enjoyed it and thought it would be great. One of our agencies put it as one of our brand pillars in who we are. It’s one of the pillars of building a great business in the community.
About 50 percent of the donations come from the store and our customers. The other 50 come from our vendors, franchisees, Chris and I and our partner Steven. We’ve put in almost $600,000 of it ourselves.
What are the best business lessons that you’ve each learned in your careers?
Robin: One of the biggest failures — there’s two parts to it. One is people just aren’t willing to do what it takes to grow their business. You hear it in the way they talk about it, ‘I’m willing to do this, but I’m not willing to do that. I’m not willing to put the hours in.’ They set parameters on themselves: ‘I’ll work five days a week, but I’m not working on Saturday during the college football season.’ When we opened up, it wasn’t that we said we’ll do anything; that was our philosophy and mindset. The other part of is, are you in it for you or are you in it for the company — the frugality piece.
Chris: I was told this advice from an old mentor of mine. He told us if you want to be a smart business owner, you don’t buy expensive cars or a yacht. He told us if you can’t write a check for it, don’t buy it. My brother and I still practice this to this day.
Paul Schumacher was eager to get down to business as he addressed employees at Schumacher Homes’ 2012 annual meeting. That’s because business was good. In 2011, the company’s leads were up. Sales were up. Customers were happy. And to top it all off, it was the single best year in Schumacher’s 20-year history. All in all, the market outlook for custom home building was looking pretty great.
But if you weren’t in that meeting, you’d never know it.
“It’s probably the best time ever to build a custom home and get exactly what you want,” says Schumacher, founder and CEO of the custom home building company that has built more than 10,000 homes to date. “Low interest rates, material costs — everything is in the advantage of the customer — other than the perception that it’s gloom and doom out there.”
Schumacher understands that many prospective homebuyers remain recession-wary. Value is the new cultural mentality, and consumers are now quicker to assign labels such as “expensive” and “extravagant” to products advertised as “new” or “customized.” In fact, the company’s biggest competition now comes from the used home market.
“When you think of building a new home, people think, ‘Oh my God; it’s going to be too expensive,’” Schumacher says. “‘It’s going to take forever, and I’m going to end up in a divorce when it’s done.’ So we’ve just got to flip that on its end.”
Show; don’t tell
As a veteran homebuilder, Schumacher knows that no one in the construction industry is going to say that they don’t make a quality product. He’s seen the word “quality” exhausted by competitors and other builders. So to set the company apart from its competitor’s claims, he’s created a business model that lets customers experience its quality firsthand.
Schumacher developed the unique model early in his homebuilding career. He frequently had customers who were interested in model homes, but either wanted to build in another area or purchase the models. That meant the company needed new model homes to showcase the quality finishes, design elements and building materials for its next set of customers.
This dilemma led Schumacher to a realization. Making it easy for people to experience your value is the first step in converting new customers and showing them what you can do for them. If quality was one of the company’s key differentiators, why not display the model homes in commercial locations where people could view the quality, design and finishes any time they wanted? Then the company could build its new homes on the customer’s lots.
“It’s very different than the typical homebuilder coming in, and putting in a subdivision – going up one street and down the other — with a cookie-cutter approach,” Schumacher says.
“People can go through 365 days a year and see and experience our quality and not just talk about it. When they go through a model home they can hold us accountable, and we expect them to hold us accountable to that exact same quality that they see in our model homes.”
The “build on your lot” model also opens the company to a broad group of potential customers. While location is predetermined with all used homes and many homebuilders, Schumacher can offer customers quality custom homes that fit virtually any price range in any geographic location.
“We say, ‘We want you to live in what you love,” Schumacher says. “So in any geographic location we’ll have 200 to 300 different floor plans that we offer, but those are just a starting point.”
Today, the company builds model homes along the highways throughout where it does business. It’s no surprise that employees refer to them as “a parade of homes,” especially considering how many people pass through them each week.
From a marketing and advertising standpoint, the models help the company learn about the attitudes of buyers in different communities where it operates.
“It’s great to have big numbers coming through where we can kind of hear the same things over and over to try and identify trends,” Schumacher says.
“People really like the fact that we’re like a permanent fixture on the highway, that we’re not going anywhere. We’re not a builder that’s just going to go into a subdivision and when the subdivision is built out, they’re just going to move across town or out of town.”
Make it special
An ongoing challenge for any business is creating products that people prefer to ones readily found out in the market. While you need a product that’s affordable and good quality — of course — you also need to offer a better buying experience.
To show customers that building a new, custom home won’t blow their budget or boost their blood pressure, Schumacher developed his business around the idea that it’s all about customers getting exactly what they want.
“We say we’re not going to stop in the design process until we nail it and you’re getting exactly what you want, because our competition is the used home market,” he says. “We always tell people in buying a used home — someone else’s dream home — it just comes down to how many compromises are you willing to make. In building a new home, you don’t have to make any because it’s all designed around you.”
First, the company uses every opportunity to survey consumers and learn their new home “wish lists,” incorporating the market’s feedback into upgrades in existing models. It also adds these design options and features into its vast design database for future customers.
“You have to change,” Schumacher says. “Our whole design philosophy is we have to be able to give something to someone when they walk in a model home — it’s a blueprint that’s fun and exciting and inspiring — to get them to build, because if it’s the same old, same old, been there, done that, there’s no point in building it. They can go out and find it in the market.”
Larger trends in consumer feedback even prompted Schumacher to launch a new line of home designs called the Earnhardt Collection, which addresses a market segment that desires more informal spaces such as great rooms and open kitchens. Collaborating with the Earnhardt family — popular from the NASCAR racing world — the company launched the new line in late 2011, and it is already popular with customers.
“People really want unique, fresh homes,” Schumacher says. “They want a very relaxed and comfortable atmosphere — formal is out.”
Since the majority of people want significant customization on the outside or inside of their home, the company also emphasizes the fun, straightforward nature of its design process. To help people envision their changes, designers demonstrate them on a live monitor, using interactive, real-time design technology.
“They’re seeing the walls move before their eyes,” Schumacher says. “They’re seeing the exterior change. And the beauty of that is we’re all so visual, we can say, ‘Is this exactly what you mean or do you want to add two more feet here? Do you want to rearrange the kitchen?’ and they’re doing it all right in front of their eyes. People say this is great because you can get so much more done when you’re doing it in real time.”
Even with these design elements, Schumacher knows that price is still the major factor in building a new home instead of buying used.
“People say ‘I love the plan. I’ve designed it. I’ve customized it. It’s exactly what I want,’” Schumacher says. “But the next big question is, ‘OK — how much?’”
To answer this question, he’s spent the last 10 years developing a price quoting system that lets customers individually price every piece of their home. When you are dealing with customers who are unfamiliar with the many costs going into the final product — design, labor, building — transparent pricing is even more critical, Schumacher says.
“We put them in control so they see where every dollar is spent,” Schumacher says.
“It’s that innovation all around the whole design and buying cycle that I think really differentiates us.”
The success of the company’s business model is evident in the quick turnaround time, good communication and high quality that make up its competitive advantage. But it’s also the product of the 225 employees who contribute to the company’s goal-oriented and results-driven culture.
The backbone of this culture is a company-wide scorecard system, which rates each store location and individual employee with color-coded metrics. Metrics are built around areas such as sales, time of construction and homeowner satisfaction.
“A big part of our success is the whole scorecard system where everyone, every department knows what’s expected of them on a monthly, quarterly and yearly basis and everyone is working in the same direction,” Schumacher says. “Without those goals, a lot of it is just talk.”
Red scorecards indicate stores or employees that are below a goal, yellow indicates that they’re within 10 percent of a goal and green signifies that they’ve met or exceeded a goal. The simple and visual nature of the scorecards makes them especially effective, he says.
“Anyone in Schumacher Homes can pick up a scorecard, and without even looking at what the individual metric is, they can see a lot of green means ‘Man, we’re doing a good job! We’re on plan.’ Yellow — ‘Hey, we’ve got to address those areas’ — and red, ‘We’ve got to take note of it,’” he says.
Scorecards also show individuals how their achievements roll up into the company’s overall progress on its goals. Results are shared on the corporate Intranet as well as publicized at regional meetings.
“We’re an open book,” Schumacher says. “Whoever is in first place, it’s very well-known and whoever is in last place it’s very well-known. Everyone really strives to be the best they can, to meet their goals and then to be the best in the region and the best in the overall company.”
Schumacher uses company meetings as an opportunity to recognize top performers as well as to recognize accomplishments such as ‘most improved.’ When you discuss goals clearly and often, people can see what you trying to accomplish on a short-term and long-term basis, empowering them to be part of the success.
“You communicate the importance of the goals, in that, by hitting the goals we can get to the next level of investment or we can do these significant projects,” Schumacher says. “So everyone understands their significance, their role, and what the company is trying to do.”
Today, the company’s culture is built on green scorecards and how employees can see more of them. When visiting different offices, Schumacher notices that employees are quick to pull out their scorecards and ask for feedback.
“They’ll say, ‘What is it going to take for us to be green in whatever the metric is?’” he says. “There’s great sense of pride and teamwork in that.
“We know that we have to have a very good, straightforward, simple process that makes it fun and exciting. At the same time we have to deliver an unbeatable value, a great value.”
Out of 35,378 homebuilders in America, the company was recognized with the 2012 National Housing Quality Award, an industry benchmark award for total quality management. Coming off its best sales year ever, it’s also seeing a new spike in customer interest through leads and site visits.
“Our mantra here is we don’t really care what’s going on in the industry — we’ve got to go make our own market,” Schumacher says.
How to reach: Schumacher Homes, (877) 267-3482 or www.schumacherhomes.com
- Show your value to customers.
- Customize your customer experience.
- Get your team invested in your value proposition.
The Schumacher File
founder and CEO
Born: Canton, Ohio
Education: Western Reserve Academy, Cornell University, University of South Carolina
What is one part of your daily routine that you wouldn’t change?
Working out every day at 5 a.m. — physical stamina and mental stamina go hand in hand.
Who are your heroes in the business world and why?
My mom and dad are great role models for a strong work ethic, positive attitude and to believe all things are possible.
What would your friends be surprised to find out about you?
I had four holes in one — and climbing Mt. Kilimanjaro with my 14-year-old son in June.
On getting out of the ‘flipping’ business into the home construction business: What I realized is that all you are doing is dealing with someone else’s mess, because you’re just going in and fixing up old houses. As I got into it after a year or two I thought, man, it would be great to have your own brand new, fresh product and not be fixing up someone else’s mess from 40 or 50 years ago.
Susan S. Elliott wanted to write a book that would share the inspiring words of wisdom she picked up in her 50 years in business. It would also keep her out of her daughter’s hair.
Elliott launched SSE Inc. in 1966 after a successful stint as a female programmer at IBM. She led the 100-employee IT services firm until 2004, when she transitioned leadership to Elizabeth, her daughter.
“If I could help do the same thing for others who were coming along or leaders who were building their leadership roles, that was what I hoped and dreamed about,” Elliott says.
Elliott’s book is called “Across the Divide.” She spoke with Smart Business about the lessons that helped her be a more effective leader.
What are keys to successful leadership?
If you have passion, there are no obstacles and nothing stands in your way. If it’s important to you, you persevere. A favorite quote I read from Steve Jobs was when Steve believed in an idea, he was both passionate and patient, scratching away over the years until he got it right.
It’s relentless intensity and total commitment. The only way to do truly great work is to adore what you are doing, which is a combination of passion and perseverance.
How do you deal with these times of constant change?
You have to look at change and look to the future right when your business is at the peak of its success. It’s the hardest time to do that. Your revenue is coming in. You’re feeling good about what you’ve accomplished. That’s when you have to make the transition.
IBM almost missed the PC market altogether. They stayed with the mainframes so long. Microsoft, they were late coming up with Internet Explorer, but it did replace Netscape. But look at Bing, it doesn’t touch Google. The last one is Kodak. They had to declare bankruptcy. They missed the whole digital world transition.
How do you get your people to buy into change?
You have to build a team that is responsive and receptive to your vision.
Elizabeth, my daughter, pulled together people from various aspects of the company. She did not include me or the gentleman who had been president when she took over. She pulled together people who were technical, business office, back office, that type of thing.
What they did was figure out, what can we be the best in the world at? What can be we passionate about? What do we have that is an economic engine that will make it work?
By pulling the various entities into this discussion, they came out with this manifesto as to what SSE should be doing going forward. That filters through the whole organization because it bubbled up from the people.
What is a leadership trait of your daughter that you really admire?
The ability to make a decision and follow through. It’s not shoot from the hip. It’s well thought out, carefully prepared in her mind and then executed. There are so many business executives that just weeble-wobble and can’t bite the bullet. You have to make decisions. You have to follow through.
If you don’t, your employees look around and they think, ‘Well, they tolerated this, they won’t care because this is OK.’ You have to be strong. Don’t second-guess yourself.
How to reach: SSE Inc., (314) 439-4700 or www.sseinc.com