Dean Aloise has big shoes to fill in Pittsburgh and he knows it. Aloise, principal and Pittsburgh market leader of Buck Consultants, took over the position in January 2011 after his predecessor was promoted to managing director of the East region. Aloise is a young guy in his early 30s but is up to the challenge of leading the 70-staff employee benefits consulting firm.
“I’ve actually been fortunate in transitioning to this leadership role,” Aloise says. “My predecessor, Harry Rienhart, has moved up in the Buck organization. My transition has been eased by the fact that part of what I’m expected to do is continue that momentum that Harry created. That’s one of my main goals, and obviously, what I’m trying to do is build further on what he created.”
Smart Business spoke to Aloise about his appreciation for his new position and looking to make his own mark.
Examine the organization
You have to understand the current history and culture of the organization that you’re in and the successes that your firm has been built on. Really embracing that, recognizing it and respecting it is a huge part of understanding where you fit into all of that. Going forward, you will be accepted a lot more as a leader that understands where he might fit within the organization’s history.
You have to spend time with the people that you know got the organization to where it is. For example, say there’s an account that’s been around for 50 years and there’s an account executive that’s run that account for the last 25 years. That’s someone you need to get to know, that you need to understand and that you need to respect. Those are the types of people that you absolutely need to spend time with.
Get to know employees
To become familiar with the role, you need to be very involved. You have to really get to know all the people that you are working with. It’s the personal relationships, whether it’s with your client base or with your employees that are required in order to build trust.
Trust is where you need to get to really be firing on all cylinders. To get that trust in a leadership role you have to put in the time on a personal level to understand people and put yourself in their shoes, have them get to know you and establish a rapport with all of your employees and all of your clients. Unless you do that you’re never going to connect to the level that you need to connect.
It might seem simple, but … take the time to go to lunch one on one with employees. Spend a solid hour talking about them and learn to truly be interested in them and in their well-being. Similarly with clients … get together with them to learn about them and get to know them and have them get to know you so you can establish that trust.
You need to figure out who you are as a leader. I think to be successful, you can’t just show up in the position and exist without putting some specific thought into how you want your organization to work and how you want the culture of your organization to exist. Part of that might be reading leadership books and finding what parts of those books resonate with you and trying to establish your identity, who you truly are, but really getting to know who that is and then you have to deliberately work to try to live that out in your job every day.
Focus on leadership
Always be putting your team and the people around you first. Always be looking out for the best interest of the folks around you. It might seem counterintuitive, but you as a leader should be the last person on your own mind. If you’re taking care of your team and the folks that work around you and your clients, then things probably will work out the best for you in the end.
HOW TO REACH: Buck Consultants Pittsburgh, (412) 281-2506 or www.buckconsultants.com
Susan C. Kelley doesn’t want her employees to provide great customer service because she told them to do it. She wants them to do it because they feel and believe that it’s the right thing to do.
“In my view, it’s creating a culture where employees want to treat the customer that way,” says Kelley, president of Shell Vacations Hospitality and Shell Vacations Club. Both are part of Shell Vacations LLC, which has more than 1,700 employees.
“The only way you’re going to create that culture is face time with your employees and creating an environment where your company is human,” Kelley says. “There’s no one single thing that a company or a CEO does to create that culture. It happens over time. It happens because management spends time with the employee.”
And it happens when you stand by your word and become someone who your employees can trust.
“If you say you’re going to give a performance review every year, then you have to do it,” Kelley says. “If you say you’re going to create incentive programs for you, you have to do it.”
And if you say you’re going to survey your employees on a regular basis and gather their feedback on how the business is being run, you have to do that too.
“If a hot button issue for an employee, which it always is, is to feel empowered and appreciated, we can create training programs and incentives that are going to help that employee feel empowered and appreciated,” Kelley says. “I’m a huge believer, and it’s been proven in our organization, that that employee turns right around and that’s exactly how they treat the customer.”
Here’s how Kelley uses surveying to stay tuned in with her employees and to help them provide better service to customers.
Set the stage
Shell Vacations was a much different company when Kelley arrived in 1994. For one thing, there wasn’t really a system in place as to how customers were to be treated. It varied depending on which employee was providing the service or at which resort it was being provided.
Kelley wanted to change that. So she launched an effort to gather feedback from both employees and customers as to what they expected from the company.
“If you can gather the priorities of your employees and your customers, then it becomes a function of culling through that information and saying, ‘OK, what kind of training do we need to provide to our employees to reinforce what’s important to that employee, but mesh it with what the hot button is for the customer?’”
Surveys obviously can be an effective way to gather this kind of information. But before you take that step, you need to go talk to your people face to face.
“It doesn’t help any company or any CEO to just send out the survey and say, ‘Here, take the survey.’ Then it has zero credibility,” Kelley says. “Particularly if you’re trying to create a culture where this becomes a way of life on a long-term basis and not just the one time. In order to do that, you have to go out and talk to your employees and tell them what you’re doing and why you’re doing it.”
In some cases, the face-to-face conversations may be enough to gather the feedback that you need.
“If I was a CEO of a company that had 100 or fewer employees, frankly, I too perhaps would question how critical [a survey] was, knowing I could spend time with 100 people in my organization in any given month, quarter or half year,” Kelley says. “But when you have hundreds of employees or over 1,000 in our case, the ability to find out what they are thinking and feeling is absolutely essential to the success of your organization.”
In Kelley’s case, a survey was needed as she was trying to build something that would have a lasting impact on the company. So she explained to people exactly how the survey process would work before it was to be carried out.
“We tell employees, ‘OK, you’re going to take the survey on Oct. 2’ or whatever the date may be,” Kelley says. “We will have the results by Nov. 5 and by no later than Nov. 10, we’ll be scheduling departmental meetings to go through the results of the survey.”
You also need to work with your direct reports to make sure they are clear about the schedule and to make sure that they understand how critical it is that everything happen according to the plan.
“My direct reports provide me with a very detailed timeline of exactly the schedule for the survey,” Kelley says. “When is it being rolled out? When are we expecting the results? Here’s what we’re going to do when we get the results. Here’s the action plan of how we’re going to follow up on those results. So we actually train management on what the proper process is for following up on the action plan.”
It’s these details and your commitment to them that can make a difference in how seriously your employees take your survey process.
“One of the biggest mistakes that companies make is making promises and then either not following through or being very late in following through on those promises,” Kelley says. “I always tell the management team that reports directly to me, it’s like spanking a puppy for having an accident on the carpet. If you don’t catch it right away, it no longer has any meaning.”
Trust the experts
Your best bet for conducting an effective survey of either your employees or your customers is to find a third-party company that does it for a living.
“We look for a company that has done surveys in our industry,” Kelley says. “We look for a company who is willing to sit down with us and understand our company’s culture, our company’s mission and service statement and our service goals. A company that every time we do a survey, and we’ve been doing our surveys now for almost 12 years, it’s willing to go through the results of those surveys with us before they get rolled out to the employees.”
The best thing is to find a company that you can stick with on a long-term basis as it’ll be able to track changes and trends that you are going to want to know about as more surveys are conducted.
“They can look at trends and compare information from the prior survey and provide us with analytics from having so much experience,” Kelley says. “They may say to us, ‘Sue, all of a sudden your results in ‘I feel appreciated’ have jumped 10 points across your company. Have you done something different in your organization in the last six months that would have caused the results of that question to jump by 10 points? It’s hugely beneficial for us because we can take a look at how what we’ve done has had a positive or negative impact on the survey. They are our partners.”
So with that long-term view in mind, provide a sense of what you’re looking to accomplish with your surveying. A good survey company will work with you, although they may not always agree with you.
That’s when you need to keep in mind, this is what they do for a living.
“They initially provide us with stock questions,” Kelley says. “We sat with them and said, ‘Fifty percent of these questions work for us, and 50 percent we’d like to tweak.’ They said, ‘Your tweaks don’t work.’ There are scientific reasons why and that’s why they write surveys and we don’t. But they said, ‘We understand where you’re trying to go with your tweaks, so let’s alter the question and see if it works for you.’ So they provide us with the stock questions, but for that 50 percent we wanted to tweak, they helped us customize them for our particular organization.”
If a company is not willing to work with you, it’s probably not going to provide the benefit you’re looking for. So you want to find someone you feel comfortable with and someone who you feel is after the same goal that you are.
“They are our partners,” Kelley says.
Make it matter
Surveys of customers are very similar to employee surveys in that you’re typically after the same goal: to get good feedback that you can use to make your organization better. The difference is that customers come and go all the time and it can take some effort to reach them depending on what your business does.
Shell Vacations uses electronic surveys with customers that include drop-down menus that ask for more feedback if someone had a negative experience in a particular area. But perhaps more importantly, the cover letter on the survey is signed by Kelley.
Customers are also reminded when they check in and when they check out that the surveys are of great value to the company.
The idea of surveying is one that should be valuable to any business, whether that company in the hospitality business, the manufacturing sector or any other type of industry.
“Every business in this day and age is competitive if for no other reason than with the Internet,” Kelley says. “You can buy anything and everything by going to Google and typing one word and finding 1,000 different organizations that provide the same product. In our world, as fast as it’s moving, understanding your customers’ needs and your employees is translatable to any type of business or organization.”
You need to show yourself to be someone who is tuned in to what’s happening in your business and responsive to the needs of both your employees and your customers. You need to show people that you care.
“In the bigger picture, this is not just relating to surveying,” Kelley says. “It’s very important for management, if there is a glitch, if there is a concern, if a particular division of the company or particular area of the company begins to slip or has a trend that’s going in the wrong direction, you can’t get mad about it. You have to look at it objectively and create an action plan to try to fix it. You have to be patient. Take a deep breath and count to 10. Don’t immediately assume that somebody is doing something wrong.”
How to reach: Shell Vacations LLC, (847) 564-4600 or www.shellvacationsclub.com
The Kelley File
Kelley on her big career break: “In between graduating from high school and going to college, I needed to have a job. I had a scholarship to go to college but there were ancillary expenses. So I needed to have a job. I went to downtown Chicago looking for a job and walked into the Congress Hotel on Michigan Avenue having absolutely no clue what people did that worked in hotels.
“I was very fortunate that I was hired for the summer. I worked there the entire summer between high school and college and I absolutely loved it.”
But the college thing didn’t really work out.
“I went to college in the fall and absolutely hated it. There was not a moment in time that I was in college the first semester that I didn’t wish I was back at the hotel working.”
So after being offered a full-time job with the hotel, back she went.
“For me, it was like somebody handed me a check for a million dollars. … I never went back to college, and I have worked in the hospitality industry ever since.”
What is the best advice anyone ever gave you?
This was from Jerry Sikes, front office manager at the Congress Hotel. He had tremendous patience in this young girl who had stars in her eyes, but also willingly, openly and without a moment of hesitation taught me everything that he knew. He said, ‘Just try to figure it out and if you make a mistake, pick yourself back up and figure out another way to get it done until you get it right.’
David Petratis has a long background and a strong history in building products. As the former chairman and CEO at Square D Co. and CEO of Schneider North America, he is no stranger to the demands and fluctuations of the construction industry. That experience has proven extremely valuable since Petratis took over as CEO of Quanex Building Products Corp. in 2008, right in the middle of one of the worst economies for any industry.
“I think the performance of Quanex in the worst building environment maybe ever says that we’ve got a lot going here,” says Petratis who now serves as chairman, president and CEO. “And today, even with construction flat on its back, we’re on a margin basis, more profitable than we’ve ever been, are growing and are debt free.”
The strong position Quanex now finds itself in didn’t happen overnight or by accident. Petratis and the 2,300 employees at the manufacturer of windows and doors have worked tirelessly to keep the company pushing forward during a period where if you rest, you don’t wake up. Here’s how Petratis rebounded Quanex from $585 million in 2009 revenue to $798 million in 2010.
Evaluate your business
As a new CEO to Quanex, it was vital that Petratis got a full understanding of the business and how it was operating.
“What we did from the day I hit the door through 2009, we revisited our strategic perspective and our strategic plan three times,” Petratis says. “In six months, we made some observations and then we did it again. In an 18-month period, we took three hard looks at our strategic plan, our markets, and we came to some pretty strong conclusions that has driven growth at Quanex Building Products in a market environment that remains the weakest in my lifetime.”
While the economy made it tough for companies operating in any market, the construction industry was hit particularly hard. Petratis wasn’t sitting still expecting the poor conditions to evaporate quickly.
“First of all, you had an unprecedented decline, especially in businesses related to construction, but you also had a big commodity slide,” he says. “I think, No. 1, when you’re in an economic slide, don’t assume that there’s light at the end of the tunnel. You need to take aggressive steps that ensure the continuity of the business. You cannot make assumptions that the market’s going to come back and life’s going to be good again. The companies that have made those mistakes are still struggling today. You have to create your own opportunities within the business portfolios that you have.”
Creating opportunities in a weak market and an economy as poor as it has been is not an easy task. You have to be aggressive and make sure you’re evaluating your entire business.
“We took aggressive steps to free up cash on our balance sheet,” Petratis says. “We challenged the inventory on our balance sheets and in our factories and took them to historic lows and kept them there. That has generated cash, No. 1, to survive, but No. 2, to go redeploy in things that are growing. We have right-sized ourselves to the new business reality. We had a scale and infrastructure that was built to produce 2.2 million homes; today, we struggle to get above 600,000. Some major restructuring had to occur. We eliminated nonvalue-added activities. We made investments in the skills of our people. You have to give people hope that we’re going to make it through this, but also give them new skills to be able to compete. We have invested more … in the business than we made during the up cycle.”
Evaluating your business and restructuring areas that need it is a critical element at any point of a cycle.
“We looked at our portfolio in a BCG Matrix,” he says. (Editor’s note: A Boston Consulting Group Matrix looks primarily at market share and market growth). “Where did we make money? Where did we lose money? Where are our opportunities for future growth? What are the businesses that we’ve got to get out of? What are our stars, cash cows, dogs and dilemmas? You look at your business and try to emphasize and invest in those businesses that have opportunity or are generating large amounts of cash and you get out of the ones that don’t.
“The other thing that we did was went through a review of our customer profitability and looked for opportunities for price realization. You’ve got profitable customers and unprofitable customers. You’ve got to think about that in terms of just standalone profitability and then you’ve got to think about it in terms of cost to serve. There are customers that are more expensive, take more customer touch and that’s got to go into the analysis. Have a dialogue with your business leaders and your salespeople and ask, ‘What’s our cost to serve?’ A customer that has a low margin and has a high maintenance cost are the first ones that you take action on. It’s critical with a triple underline to know where you make money within your product portfolio.”
Whether the economy is forcing hardships on your company or you’re simply having a tough year, communication within your business is the most important thing a CEO has to do.
“We stepped up our communications aggressively, especially versus my predecessor who operated in a better economic time,” he says. “We cut a quarterly video. There’s a camera crew that comes in and we cut a 20-minute message every quarter. Employees get a letter from me every three-day holiday and I do site visits. You also have to put on your customer ears and get out and visit customers. We’ve done surveys to understand our ability to deliver and our understanding of the voice of the customer.”
Petratis also stressed the importance of safety among his employees and communicated how safety could help improve the business as a whole.
“As a new guy coming in, I have pushed the hell out of safety awareness,” he says. “To me, this is Maslow’s Hierarchy of Needs. If I can get our employees to believe that I care about their safety and health, I am awarded by our employees the opportunity for them to self-actualize into things like customer satisfaction and continuous improvement of our business. In a down environment, if you fail to communicate, if you fail to invest along that hierarchy of needs, I think you’ll lose your work force. We’ve certainly done the things that we’ve needed to do in terms of our cost structure, but we’ve provided extra attention to the people that are still with us.”
If leaders don’t take the initiative to get out in front of their staff and tell them the good and the bad, the company will lose direction and purpose.
“I would say to those CEOs who are not aggressively communicating where they want to go and what are the tough issues that face the business, they probably own the business or should be looking over their shoulder for the next guy who’s going to come in and replace them,” Petratis says. “Think about any human dimension. When things are uncertain because of economic crisis, family crisis, people want to know, ‘Where am I going? Help me understand the risk and uncertainties.’ People understand that times will be tough. You can’t run from them. You have to communicate and you have to do that in a variety of manners. You’ve got to do it in person, you’ve got to do it in writing, you’ve got to do it through media communications and then you’ve got to go back and do it all over again.”
Throughout Petratis’ business career, he’s been in front of the people that he’s led every quarter since 1986.
“That level of communication has rewarded me and the people I’ve worked with with excellent performance and you’ve got to double down when it’s tough,” he says. “You communicate in the good times and it’s like putting money in your checking account. You’re building in the confidence of your work force so when times are bad, you’re believable. They know who you are, you’ve made an investment and now you can make a withdrawal when you’ve got to do something tough.”
Adapt to changes
During a down economy you have to be looking for ways your company can change and adapt to keep pushing forward.
“I think anytime you’re going through a change effort you have to establish proof of the need,” Petratis says. “This is why we need to do this. This is why it will be good for customers, shareholders and employees. Once you’ve satisfied that criteria, there will be resistance. You’ve got to check for that resistance. There are people that can’t make change. For those people that can’t buy in to where you think you want to go and you give them the chance to air their opinions, they need to move into new positions or on to new companies. I think it’s one of the tougher things for managers and leaders to make that call.
“You’ve got to make sure you’ve got the talent around you to take you where you want to go and they’ve got to believe in it. If you don’t have the talent, if you’ve got people in the wrong position, you’re not going to be able to get people where you want to go. You’ve got to have the courage to help them get to where they can contribute the best.”
Through a project Quanex coined ‘Project Nexus,’ the company reshaped its sales force and is serving a broader customer base with its total portfolio.
“We had resistance when we started Project Nexus,” he says. “First of all, we socialized where we wanted to go. I believed when we first launched Project Nexus in January 2010 that we would have resistance, but I didn’t make organizational changes. I didn’t just blow up the organization day one. I let the idea percolate. I got people around it, and we sold it. Then I changed the organization. It was six or seven months after we began to share the data, share the opportunity, help our organization understand that if we didn’t go out and create prosperity, prosperity wasn’t going to come knocking at our door. We still had resistance and we continue to fight that.”
Change is an ongoing process and in the same way that people change, companies change. It’s critical that you communicate that fact.
“You’ve got to continue to communicate that goal, why it’s important we make that change,” Petratis says. “It goes back to your communications and it goes back to your vision and you’ve got to reinforce those things. Nobody likes change. I would just assume to have things the way they were in 2005 when we were building 2.2 million home starts. I wish it never would have changed from that, but it did. You’ve got to change with it, or you die.”
Change seems daunting to most companies, but oftentimes, change brings out the best in employees, leaders and the company.
“Another element to this is that you’ve got to help educate people in the change process,” Petratis says. “Give them new tools and skills. As you change things you create problems and a work force that has a solid toolbox of problem-solving tools manages through those changes more effectively. I don’t give them 20/20 vision; I give them direction. They’ve got to apply the problem-solving tools and get us to where we need to be as a company and as an organization.”
When companies undergo change, it can be very stressful to all involved. Make sure that you celebrate any successes change brings.
“The other thing you have to do in the change process is punch up your wins,” he says. “We created a lot of change with Project Nexus. In our fiscal 2010, our engineered products business grew by 12 percent and our aluminum business grew by 25 percent in a market that was negative. We could have hunkered down and not changed anything and we would have had more pain because the market wasn’t going to give it to us. You’ve got to punch up your wins and help people see there are benefits to taking on new challenges.”
HOW TO REACH: Quanex Building Products Corp., (713) 961-4600 or www.quanex.com
The Petratis File
Born: Council Bluffs, Iowa
Education: University of Northern Iowa, production management; MBA, Pepperdine University
What was your first job and what did you learn from that experience?
I’ve had a lot of jobs. My first job was mowing grass, shoveling snow and detasseling corn. I’ve pumped gas. I’ve worked in an ice cream factory where I bagged ice. My big break that changed my life was getting a job in an electrical supply house when I was 18. I learned how to work. I learned how to be accountable and responsible. I learned how to listen to customers both internal and external.
What’s the best business advice that you’ve ever received?
Take care of your employees and your customers and everything else will take care of itself.
Who is someone that you admire most in business?
I have a mentor named Charlie Denny he was the chairman and CEO of Square D Co. He played a big influence in my life. Jerre Stead is the chairman and CEO of IHS. Those guys are different types of leaders, but I benefited from my exposure to both of them.
What traits do you think a good leader needs?
I think you have to have honesty, respect, courage, tenacity and resiliency. You also have to be a servant leader.
If you weren’t a CEO, what would be your dream job?
I would be a cattle rancher and farmer. I’ve already got the farm part. I like being around equipment and being around animals and working on the land. I’ll have it someday.
As the largest municipal transit operator in Los Angeles County, Long Beach Transit has a very specific mission: serve the area’s residents, employees and visitors with world-class service.
With Laurence Jackson at the helm as president and CEO, Long Beach Transit has done just that, and in the process, it has become a nationally acclaimed public transit system that serves nearly 30 million customers each year.
It hasn’t been easy, but Jackson has done the job well.
“In a time when public agencies are struggling with huge deficits and unfunded services, conservative fiscal management has allowed us to operate as a business for over 47 years with a balanced budget, never missing a single day of service,” he says.
Because of this, Jackson was named one of the 2010 Smart Leader honorees by Smart Business and Chase Bank. We asked how he keeps Long Beach Transit on time and on budget.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Until we started our specialized Dial-A-Lift program, it was nearly impossible for persons with disabilities to get around. For our residents who were unable to ride a fixed route bus system, Dial-A-Lift was a successful public/private partnership with our local taxi company service, Long Beach Yellow Cab. This made a huge difference in the lives of many people who were not otherwise able to leave their homes. On the business side, we sought ways to make the service more cost-effective and efficient by making our vehicles part of the taxi fleet. Long Beach Yellow Cab now has accessible taxi cabs for the general public while Long Beach Transit was able to lower its total operating costs by nearly 50 percent.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
Long Beach Transit has always been a leader in working to improve the environment, well before regulatory deadlines. We were the first transit agency in California to use ultra low sulfur diesel fuel and install particulate traps on our entire fleet of full-sized diesel buses. We then pioneered a new propulsion technology with the purchase of hybrid electric buses, replacing aging diesel buses in our fleet. Long Beach Transit now has the largest fleet in the nation of hybrid gasoline electric buses, and we can boast that these buses have the lowest emissions of any transit bus currently available. The effort was so successful that several other Southern California transit operators joined in purchasing hybrid vehicles for their fleets.
Long Beach Transit is also a leader in real-time bus arrival information. We were first in Southern California, and third in the nation to provide real-time technology via the web and now offer trip planning through Google Transit. We also make real time bus arrival information available at bus stops, on board the bus, and from a customer’s phone.
How do you make a significant impact on the community and regional economy?
Long Beach Transit is a critical link in the economic and social well being of the area's residents, employees, and visitors, who have positively rated the system’s overall service quality above 90%. We are a nationally acclaimed public transit system providing a wide range of transit services to nearly 30 million customers annually. The organization directly employs over 700 people plus 100 private partnership persons, with an annual capital budget and operating budget of $100 million.
How to reach: Long Beach Transit, www.lbtransit.com
You’ve taken a look at the balance sheet and your company has lost more than $1 billion in revenue from the previous year. What do you do?
If you’re Brett Good, president of the Southern California district for Robert Half International Inc., you face some very painful decisions. Good manages a small part of Robert Half and not the entire $3.2 billion specialized staffing firm. But he still felt the pressure to demonstrate leadership.
First, he had to get over his own frustration about what was happening.
“I remember sitting one day and just ticking through my head the amount of market capitalization that had disappeared over the course of three or four months,” Good says. “I got up to over $100 billion in market cap and decided I was making myself depressed and just stopped counting.”
Good, who has about 200 employees in his district, had spent enough time wallowing. It was time to make those decisions and do what had to be done to survive. He knew he had to start with his own demeanor.
“I think about the pilot who landed the jet in the Hudson River,” Good says. “He was such a consummate professional. He was poised through that whole crisis. He averted disaster just because of that poise and calmness and the way he approached that situation. When faced with crisis, calm and poise is important.”
If you’re going to get the root of what needs to be done in your business, you can’t have people who are afraid to deliver bad news to you.
“Quite candidly, you want to hear the bad news more than the good news because those represent the areas of opportunity within an organization,” Good says.
As you begin the process of feedback, you need to go out of your way to show that you haven’t already made up your mind.
“People at all levels can contribute to a really good idea,” Good says. “A lot of times, they are so much closer to the problem or the opportunity that they can provide insight that you simply don’t have if you are removed by multiple layers.”
Good recalled discussions he had at Robert Half about reducing variable expenses and cutting costs. When he met with people to discuss possible steps, his attention was on that meeting.
“You’re going to have an important staff meeting regarding a project or cutting expenses or something important to the organization and you spend the time in that meeting checking your BlackBerry or your smartphone,” Good says. “It’s those little things that can have a big impact on the psyche of the staff. How much better would it be if you call that meeting and you say at the front end, ‘Cellphones shut down, put your iPads away. Let’s sit down and really talk about what’s going on.’”
When you feel you’ve reached a decision, you need to demonstrate commitment and belief in the choice you’re making.
“You don’t want to blindly stick to it, but be committed to it,” Good says. “If you and the people around you truly feel it’s the right decision for the organization, whether it’s disposing assets or slashing variable costs, communicate to those who are the key stakeholders what decision has been made and why it’s been made. Reinforce that decision and stick with it. Then follow up on it to make sure it’s having the desired impact on the organization.”
Good is hopeful the bottom has been reached and the economy will continue improving. But when you’re still searching for bottom, he adds that hope is not a very useful tool.
“Time is not your friend,” Good says. “The longer you take to make a decision, it usually doesn’t help the end result.”
How to reach: Robert Half International Inc., (650) 234-6000 or www.rhi.com
You may never think you’re doing enough to get your company out of danger. But working 16-hour days is usually not the answer, says Brett Good, president of the Southern California district for Robert Half International Inc.
“What I found during those really challenging times was leaning a little more heavily on the personal side,” says Good, who has about 200 employees in his district at the specialized staffing firm. “What are some things that can reinvigorate me?
“I’m blessed to have a beautiful wife and three young children. Having the opportunity to watch a tee ball game with the kids all in a mosh pile on top of a baseball and a quiet time to think about something other than the business, that’s what recharged my batteries. It allowed me to put a little perspective on what was happening around me to make those decisions.”
You can’t take the whole company on your shoulders and take all the responsibility for what needs to be done.
“Rely on the input of people around you to make the best decisions possible,” Good says. “That goes a long way with helping to develop them and it may just reaffirm what you’re already thinking, or you could get a different idea that helps you solve that problem better than you would have by yourself.”
Since he joined First Watch Restaurants Inc. more than 20 years ago, Ken Pendery has grown the company to 83 locations across 12 states. Though he’s significantly expanded the footprint of the breakfast-focused restaurant concept, he is less concerned with his own tracks than he is of the customers going in and out of his restaurants.
“I think the biggest challenge of the last couple years has just been traffic,” says Pendery, who is the president and CEO of the Bradenton, Fla.-based company. “I felt that working with the challenges of what we now look back on as the bubble — where there were just a lot of restaurants opening and we were competing for traffic — it was just more and more competition.”
Yet even with the added challenge of a turbulent economy, Pendery has avoided making any major changes at his restaurants. He reinforces customer loyalty by doing what he’s always done — keep First Watch employees focused on providing consistent, quality customer service.
“We’ve really just wanted to maintain value and service and make sure we give the same experience, if not better, than people have grown to expect,” Pendery says.
“We have not changed our recipes. We have not cut back on food, meaning we have tried to continue to deliver the excellent service that we’re known for at the same price without cutting anything. We’ve been very adamant that we’re not going to take something away, that we’re going to make sure that people find us of the same or greater value.”
The result of this service-focused philosophy is tried and true. Today, First Watch is the largest, privately owned, daytime-only restaurant nationwide with more locations being added every year.
Here’s how Pendery leads his team of 2,000 employees to deliver top service for First Watch customers across the country.
Communicate your values
To ensure execution across national locations, a CEO needs capable managers who can motivate service excellence and handle customer issues successfully at the local level. Though Pendery splits his time between the corporate office and First Watch restaurants, his visits to different locations aren’t about micromanaging employees. He sees them as an opportunity to keep the company’s service mission and values front of mind through clear and regular communication.
“They are there every day,” he says. “Just because I get to every restaurant two or three times a year on average … really is fairly meaningless. But I think for them to see and know that I travel that much is meaningful to the fact that we do what we say we’re going to do and let’s keep the focus on our service.
“We have monthly service meetings and we talk about our five steps of service and we talk about our ten commandments. We constantly talk about it. We don’t just post it on the wall and say, ‘Yeah, we believe in this.’ We talk about the speed of our service and the friendliness of our service constantly.”
Providing opportunities for employees and management to routinely communicate creates a natural pipeline for identifying and delegating customer issues more effectively.
“We communicate a lot, and I think communication brings focus and that focus brings the commitment to our speed of service and the quality of our food,” Pendery says.
“There could be a break down in food. There could be a snowstorm coming. There could be a customer comment about reservations or no reservations. Whatever it may be, that’s talked about at a weekly meeting, a monthly meeting, a server meeting and theoretically all that gets pushed uphill so that we have conversations about it.”
If you develop strong organization wide communication, information flows more efficiently from managers to team members but also from team members to management. Ultimately, you and your managers will have a more accurate picture of the customer experience and how it can be improved at the national and local levels.
“[I] love to have servers who give me feedback on what does or does not work,” Pendery says. “I keep extensive notes, and I’m always referring back to that. We just had our regional vice president meeting last week and I brought out two years worth of notes, things that we’ve covered in the last year, highlights, things that we’ve done and reacted to well or things that we forgot about or things that, ‘Well, we didn’t push this one very far.’ But again, it’s all meant to be a strong collaborative nature.
Creating a great customer experience comes down to more than having a great product or service. It’s about delivering that great product or service on a consistent basis. Pendery recognizes that First Watch’s customer loyalty doesn’t come from meeting people’s expectations one time or even most times, but every time.
“The reason we have our degree of success is that people have grown to count on us for our level of quality food and our level of service,” Pendery says. “I always tell people in presentations, that’s why we go back to the dry cleaner in our neighborhood or the place that works on our car. We go back to places that we can count on, for whatever service we have, and I think they go back to restaurants or they go back to First Watch — they being our customer — because they have grown to count on us for our performance.”
But no matter how many good experiences customers have with your business, one bad experience can change their whole perception of whether or not they can count on you. Day to day, there are always things that can wrong, so it’s up to the CEO to keep people committed to doing the right things.
“You always have a staff member that breaks down,” Pendery says. “There are human errors that happen and people have a bad day or something like that. I’m not suggesting for a moment that our staff of people is perfect or that we don’t have a fundamental flaw that can happen. But I will argue, and I would support, that day in and day out we execute very, very well. I think that my style is to compliment that execution and to encourage a collaborative nature in our challenges and feedback and things that come our way that we have to pay attention to.”
Even though Pendery wants to please the majority of customers, he’s also careful about pursuing trends that could compromise First Watch’s service promise. When it comes to how people like their food, customer feedback is obviously mixed.
“We’re 27 years old,” Pendery says. “So people will tell us don’t change a thing, because they don’t want to see something change, and on the other hand, people will say the trend is turkey bacon or something like that. But that can be a little bit misleading.
“It all sounds and reads really well, but how much can you enact or do tomorrow morning? Is the trend short term or long term, and is it really meaningful? Years ago you might remember that everybody just jumped on the Atkins diet. Everybody wanted to put it on the menu, and six months later, it comes off the menu.”
That’s why it’s important to make sure the consumer’s perceived interest is real before fully committing resources to a new product or trend. To find out if a new menu item has the potential for long-term success, Pendery first puts it on the First Watch specials menu to see how customers respond.
“We run it through our specials category and if it’s successful, we’ll do it more as a special, and if it’s really successful we run it onto our menu because it’s so popular,” he says. “We’ve always done it that way and we continue to do it that way.”
If you begin facing ongoing challenges related to consistency, it may be because you’re pursuing an idea or strategy that doesn’t fit with who you are as a business. When something isn’t working, you need to re-examine whether it aligns your company’s core values and mission.
“We just have to understand what we’re in business to do,” Pendery says. “There are just some things that First Watch — we probably can’t do. Not that we haven’t talked about it for a gazillion years, but we don’t do espresso for instance. … We don’t think we can execute espresso. It takes too much time and probably drives the average check too high, as an example. So we can’t be everything to all people.”
Know your customer
While Pendery won’t change his philosophy on service, he understands the value of being flexible to give his customers what they want. He knows that when it comes to breakfast, people can be more specific about what they like and don’t like. That’s why at First Watch customers are encouraged to customize their orders any way they can. More than half of the orders from diners have some variation from the original menu item, whether it’s adding cheese or skimping on the bacon.
“Very simply I think we reinforce well: ‘If we can, we will,’” Pendery says. “When a customer says, ‘Can I?’ Almost when those words come out of their mouth — if we have it, we’ll do it. And I think the service staff and the kitchen is well trained and communicates well with the consumer. If they want it and we have the ability to do it, then it’s simply done. That’s how it happens.
“I think that proves the point that people like to have it their way, and we do that well. We fit into the marketplace well and we’re considered local, because we execute that special request to their liking.”
By staying attuned to who you are and who you aren’t as a company, you’ll be able to highlight your areas of strength and eliminate your weaknesses. Pendery says it’s not about following the trend but examining the trend and educating yourself on what it means for your business.
“Luckily, we have a tendency to look at things and not react too quickly,” he says. “Maybe that’s part of our weakness that we don’t react too quickly, or maybe it’s part of our strength.
“I stand pretty tough on the methods by which we’ve been successful: our 10 commandments, our five steps of service, the speed of our food, the quality of our food, the cleanliness of our restaurants. This is not space science here. This is service.”
By establishing First Watch’s reputation for consistent, quality, customer-focused service, Pendery keeps loyal customers coming back while adding new ones every day. In 2011, he hopes to reach the milestone of opening First Watch’s 100th restaurant.
“I think the best advice is always set is stay true to your core values and stay true to your mission,” Pendery says. “I work really hard to run a business with integrity. I work really hard to live up to the promises we make to our employees, our management, our leadership and our customers.
“At the end of the day there are a lot of great restaurants serving omelets and pancakes and salads and sandwiches and chimichangas, specialty items like we have. There’s a lot of a restaurants that do that and do it well, but I think the reason we are successful with it and the reason we do it well is because A, we’re very consistent or we work very hard to be very consistent, and you earn a reputation on that consistency. You earn a reputation on the speed of service, the friendliness of service and the quality of your food on the most consistent basis. That’s what people come back for because they can count on you.”
How to reach: First Watch Restaurants Inc., (941) 907-9800 or www.firstwatch.com
The Pendery File
President and CEO
First Watch Restaurants Inc.
Hometown: Cincinnati, Ohio
Education: B.A. from Indiana University
Favorite First Watch menu item: eggs benedict
On problem-solving: I think the biggest thing that a lot of times companies do, and we certainly have done it from time to time as well, is we try to fix things with a fix rather than go back to the base or the fundamental or the foundation of the decision. It’s fix things with a Band-Aid whether than go back and really understand where the true root of the challenge is, and in the restaurant business, I always feel that the root of the challenge is always back to the base, which is the food, what you manufacturer. If we are having problems with pancakes or we’re having problems with eggs or we’re having problems with bacon, go back to the root of the cooking. Go back to the root of the product. Find what the challenge may be and then understand it from that. Don’t just make a switch or put a patch on something, but really understand the base of the problem.
In a span of six months, K.B. Chandrasekhar found himself in the position of having to reduce his company’s headcount from more than 250 people to a handful of employees between its India and California operations. For the 24 months leading up to 2000, the party had been nonstop, but when the dot-com bubble burst, Chandrasekhar suddenly had to keep the doors from closing on his business.
“So we know for the next two to three years nothing would happen, but you have to keep the lights on and keep the engineers motivated and other people motivated in developing the product,” says Chandrasekhar, chairman and CEO of the cloud technology company, Jamcracker.
“The question is, at that time, how do you move from the party binge to develop a sober mode and still keep the core employees? But at the same time, you have to go through the painful exercise of probably reducing the company size to a fraction of it was before, then grow back up in a manner that positions itself for the market to come back and then take the leadership.”
After reducing head count, it can be just as hard to convince people who are invaluable to your company to remain loyal and stay motivated.
“I think the challenge is constantly looking at what kind of people you need to stay ahead,” Chandrasekhar says. “Our business is all about people business. If they are great people, we know we can scale great heights.
“Many of the times, I think this is where the leadership comes into play, because you have to lead from the heart at that time, in terms of the vision and the conviction and why this is going to be big in the future. In the near term, it’s why we all have to sacrifice. At the same time, keep the faith at a heighted level so we are sustained for success.”
To do this meant opening up the channels for honest and open communication about how Jamcracker would move forward. Because people can see every day what is happening in the company and outside, hiding news just erodes employee trust, so transparency for Chandrasekhar was critical.
“In tougher times, people want to ensure that they hear from you a little more regularly, and you also use electronic communications whenever possible,” he says. “So a judicious mix of the two helps you stay in front of your crowd.
“It is being upfront about it rather than trying to sugarcoat it. But at the same time keep emphasizing the vision, and where we are going and why this is a great opportunity as the next big thing.”
When people’s jobs are vulnerable, it’s critical that a leader demonstrates to the people that he or she is also willing to make sacrifices to commit to the long-term vision.
“I must be willing to put myself up to say, ‘Here is my resignation letter,’ if I’m not performing to what I said I would perform,” Chandrasekhar says.
Even though the company was losing money, Chandrasekhar was passionate about getting Jamcracker back on track. So he invested his own money to show his team his renewed commitment.
“We bought out all the other investors to bring in my own money, because we said this is going to take a longer time and other investors may not be around to make it happen — or rather, may not have the appetite to make it happen,” he says. “That boosted the confidence of all employees by reminding people that, ‘Chandra believes in it.’”
By keeping the vision at the forefront, Chandrasekhar has successfully built Jamcracker back from a low of 11 employees to 200 people in 2011.
How to reach: Jamcracker, (408) 496-5500 or www.jamcracker.com
In addition to empowering your team, K.B. Chandrasekhar, CEO and chairman of Jamcracker says successful growth requires leaders to sense when to let go of conservatism and know when to move into high gear.
Here are Chandrasekhar’s tips for how to prepare your company for when the market turns.
Set a scalable structure.
“Most times companies implode because they are not able to scale effectively. The key is to put in a structure that will enable a company to scale successfully when the opportunity is in the market.”
“Second is what I call the willingness to change the rules as the situation demands, because you are not the only stakeholder in the company. There are a number of stakeholders in the company, which means you must know when to really take risks and when not to take risks. You are constantly juggling between growth, value, creation and just management.”
Feel it out.
“If you are an early stage company and entrepreneur, you may not have all of the parameters to back up everything that you do, which means you are going to rely a lot on your intuition, on your gut and your perception of where the market is going. It’s important to have that third dimension of that.”
The degree to which authority is delegated is a sure sign of the overall efficiency of any organization. A clear and efficient system of delegation is essential to ensure that all tasks under a leader’s responsibility can be achieved, and that the leader has the time and capacity to direct, mentor and monitor their subordinates. Only by doing so will the aim be achieved in the most timely and efficient manner.
Delegation is an area in which many managers perform poorly. Some fail to put in place the right people and processes to make delegation work and claim it is quicker and easier to do the job themselves. Others want to control everything, either because they believe they are the only ones that can do it properly, or because they think it makes them indispensible and so guarantees job security. The result is unmotivated employees and an inefficient organization. Managers who cannot delegate properly simply shouldn’t be managers.
Delegation empowers subordinates. It encourages them to feel a sense of ownership and responsibility for their job. This, in turn, enhances their individual motivation and contributes to the cohesive relationship between the leader and the led. Delegation demonstrates trust in a subordinate and so encourages reciprocal trust in a leader. An organization that empowers its employees is an organization that the brightest and the best will want to work for — it attracts new talent and retains the old. Retaining key staff and promoting from within have a very real effect on a company’s productivity and its bottom line.
So to whom should you delegate?
Immediate subordinates. Never skip a management level. If you bypass the authority of a more junior manager, you undermine their authority. Few things are more guaranteed to damage their confidence in themselves and their trust in you. It means the people who need to know don’t know what is going on and who is doing what. Chaos and resentment are the result. If someone has specific expertise that you need, always delegate through the chain of command.
Those who need the experience or need to be tested. Delegation is a crucial part of preparing subordinates for the additional responsibilities that come with promotion and developing their careers. However the tasks delegated must be within the reasonably expected capabilities of that position, it is completely unfair to delegate a responsibility that you know, or should know, is beyond a subordinate’s capability.
Those with spare capacity — in terms of time and capacity to handle the additional responsibility. Otherwise you invite failure, for which ultimate responsibility remains with you.
Delegate as widely as possible within the competencies of your staff and avoid delegating only to those you think are the most able. By delegating to only a few of those you feel are the most competent, you risk a dangerous imbalance in their workload. They may come to resent the extra burden they have to carry and the remainder will soon doubt your trust in them.
Delegation of authority is not abdication of responsibility. Whatever a leader delegates to their subordinates, the leader still takes ultimate responsibility for the actions of the people who work for them and for the results of their team. Those managers who habitually work long hours in a constant state of crisis while their teams are underemployed are not making themselves indispensible; they are merely inefficient managers and poor leaders. By getting involved in every aspect of the minutia they are incapable of performing their most important task, which is to ensure the selection and maintenance of the aim. Failure to properly delegate is a failure to lead.
Julian K. Hutton is president of Merlin Hospitality Management, where he oversees the company's hotel management and distressed asset management operations, drawing on 20 years of experience in the worldwide travel and hospitality industry. Reach him at email@example.com.
Achieving a sustainable competitive advantage in any business often seems to be an elusive goal.
There are many ways to gain a competitive advantage, but in today’s world, information crosses the globe so rapidly that ideas and methods are soon copied and technologies quickly become obsolete.
Executives of high-tech companies claim innovation as a core value and point to an extensive portfolio of product and process intellectual property as evidence of a “culture of innovation.” It is this culture that they claim to be their source of competitive advantage. Why then do so many such companies find success short lived despite maintaining a robust IP portfolio?
I won’t deny that there is a strong correlation between technical innovation and competitive advantage, but the fact is, a true culture of innovation encourages and supports creativity from all associates, not just those in the technical community. To eliminate any confusion that might arise, I prefer the more encompassing “creativity” label for the core value necessary for sustainable competitive advantage.
Many companies struggle with the conflict between standardizing every process, method and procedure to minimize risk and/or assure consistent quality and allowing associates to be creative, encouraging them to think outside the box and rewarding risk-taking at every level of the organization.
The secret to achieving a sustainable competitive advantage lies in finding the solution to this apparent conflict that works for both your internal organization and all of its customers.
I have observed that companies that are not successful in finding this solution, and they often fail for one or more of these three primary reasons: poor communication within the company, an ill-defined process for implementing improvement ideas, or inadequate associate training in the use of the tools of improvement.
A communication plan should be a fundamental part of any company strategy, but it becomes even more important when the organization is in transition. Management must make the case for change to all associates, create a picture of what success will look like, establish metrics and provide frequent progress reports. It is important that all supervisory personnel are on the same page so the message is consistent throughout the company.
Continuous improvement programs must be built around stable processes. These processes provide a performance or output baseline from which the effectiveness of any proposed change can be measured. The first step, therefore, often missed, is to establish that a process is stable. This is how the risks associated with constant change are mitigated in an environment of continuous improvement.
Of course, disciplined use of the tools of improvement throughout the organization is the backbone of the change control system. Integrating the use of these tools into the fabric of the company can be done in a number of ways, ranging from hiring specialists to support improvement teams to training all associates in selected problem-solving methods.
Given that these elements are in place, delegating responsibility and decision-making to subordinates at lower organizational levels while accepting accountability for the business results often opens the floodgates to continuous improvement, resulting in quick, creative solutions to company and customer concerns, issues and problems.
The goal is to develop a work environment in which each and every associate is empowered to help the company succeed by finding and eliminating waste and inefficiency in his or her job function as well as throughout the enterprise, has the necessary skills to do so effectively and willingly accepts that challenge.
With the right checks and balances in place to protect its customers, a company that goes down this path will be on the way to achieving a sustainable competitive advantage.
George Perry has more than 40 years of experience in engineering, operations and executive management. He retired as president and CEO of Yazaki North America Inc. in December 2009. Reach him at firstname.lastname@example.org.
Since founding the company that is now Outdoor Hub LLC in 2007, CEO David Farbman has been in growth mode. His efforts have paid off, as the online platform for outdoor enthusiasts generated $10 million in 2010 revenue.
But growth can be a dou
ble-edged sword, providing challenges along with opportunity. Farbman has had to keep his leadership team a step ahead of growth, by structuring the organization to better react to the needs of growth.
Smart Business spoke with Farbman about how he’s maintained room to grow and how you can stay ready for growth at your business.
How has your company’s management structure positioned it for growth?
Historically, as we were starting to kind of grow the business, people were wearing multiple hats on a regular basis. As we were growing the business, we did get recapitalized in April 2010. After that, we really started to staff up and hire more experienced, specialized talent. So the weight of the management structure is set up today, it’s actually unlike anything I’ve run in the businesses in my career. We have people that are what we call a T1 and T2 responsibility.
T1 implies our leadership team, and that leadership team meets on a weekly basis with a very strong cadence that is focused on doing that every Monday, first thing before the day kicks off.
We have seven people on that leadership team, and each person is responsible for what we call T2, which is essentially their pillar of the business. It could be metrics and financials. It could be sales, it could be trafficking and ad operations, it could be new revenue, it could be content. Those people report up to me.
How does that setup help things run more efficiently?
It does two things. It creates an allegiance at the T1 level that basically says to someone on the T1 team, your first allegiance is to this leadership team, there is no ego on this leadership team, there is an ability to make decisions as a team and push things forward. It allows for us to work in a cohesive way on a regular basis, where synergistically we can take an issue to the other people on that team and get a technology perspective, get a marketing and research perspective. It allows us to be able to hash out an issue and then keep moving.
How do you foster a collaborative mindset within a team?
It has to start with the person at the top of the organization. You have to believe in a very authentic style of leadership with a lot of transparency, and you can’t believe ego is very productive for results. It does start there.
You’re looking for people that want to work toward a greater cause and put their energy toward creating something great, and not looking for self-fulfillment at each turn. At the same time, it always has to be regularly coached, and you have to have a very open table. If someone has an issue with me, they can just about tell me to ‘F-off,’ and I wouldn’t care, as long as it was moving the company forward. We try to clear issues quickly, and having that T1 level allows you to clear issues quickly.
What would you tell other business leaders about managing a high-growth company?
No. 1 is, providing you can afford to do it, you need to staff slightly ahead of the growth. You need to begin to do your all to specialize people more, so that the company becomes more scalable and areas can be molded as the company grows. You need to upgrade your systems, both from a technical level as well as a procedural level. We’re trying to do that each day. By no means are we in a perfect place, but we always have a constant desire to try and improve that.
How to reach: Outdoor Hub LLC, (248) 663-4440 or www.outdoorhubmedia.com