It’s no secret that some states are considered to be friendlier business environments than others. But are the advantages really worth uprooting your business’s headquarters and moving to take advantage of some of the tax, work force or cultural benefits?
Smart Business talked with William C. Lucia, CEO and president of HMS Holdings Corp., a company that provides coordination of benefits and program integrity services for health care payors, about his company’s decision to relocate.
HMS announced in July of last year that it was moving its corporate headquarters from New York City to Irving, Texas. What was the primary factor that drove your decision to relocate?
HMS has more than doubled its revenue since 2007 and we required a location that could support this rapid growth. In considering a move of our HMS, Inc. corporate headquarters, we had to determine both short- and long-term cost savings as well as other aspects related to the business climate in a chosen destination. HMS looked at all the different costs involved in running our business over a long period of time and we also factored in things like cost of living, all the different kinds of state and local credits, and money available for training and for building infrastructure. In that respect, and in many other areas of consideration, North Texas and Irving in particular stood apart.
What other factors were weighed in addition to the cost of doing business for HMS as you explored whether to relocate?
We looked at a number of factors that were critical to us. Chief among them were location and accessibility, a pro-business city, work force availability and quality of life. For our company, a location centrally located to serve our national client base with ease of travel from an outstanding international airport was very important. Of course, a company is only as good as its employees and with our rapid growth, we absolutely had to have access to a large skilled labor pool and a very high quality of life that would help our company recruit and retain a strong work force. We were very fortunate to find a pro-business city as well, with a Chamber of Commerce that has been a great resource in guiding us and helping us navigate everything from site selection to securing valuable incentives to the permit process.
Can you talk a little more about what makes a city pro-business?
Absolutely. It was important to us to have our headquarters in a pro-business city that is already home to a number of Fortune 500 global headquarters. We don’t underestimate the importance of a business-focused culture in a city that has the social maturity to assimilate corporate executives into the mainstream of the community and its social circles with opportunities to serve as advocates for economic development. From an infrastructure standpoint, Irving has among the lowest municipal property tax rates in the Dallas/Fort Worth Metroplex. And for qualifying new, relocating and expanding companies, the City of Irving offers incentives that can reduce property taxes by 30 percent or more for up to 10 years. To further support qualifying businesses, the city often takes a creative approach to structuring abatements. Incentive agreements can even be structured to allow a higher percentage of benefits early in the abatement period to offset moving and start-up costs. Those are the kinds of things that set Irving apart as being pro-business.
Was HMS able to take advantage of some incentives?
Yes, the state is investing $1.6 million through the Texas Enterprise Fund in our company to help us create 350 new jobs and generate an estimated $17.6 million in capital investment. To have that kind of support from the state as well as the City of Irving was obviously a huge factor in our decision. And the State of Texas is pro-business, exhibited by the significant job growth compared to other states, and is a great location to run a rapidly growing business.
How did your employees respond to the announcement?
We already had a major center in Irving with 500 employees so we had been moving in this direction for a while. It didn’t come as a shock to anyone, but our employees responded with all the questions you might expect: Where will I live? Where will my kids go to school? What can I do for fun when I’m not working? What kind of cultural opportunities are there? Being in Irving, in the heart of Dallas-Fort Worth, we have many great education and housing options as well as entertainment and cultural activities. So our move was overwhelmingly viewed as a positive development by our employees.
What advice would you give a company considering relocating?
My advice is to follow a structured process where you closely examine your company’s overall strategy and the needs of the headquarters operation. List the issues that exist at the current city and identify the opportunities and benefits from being in an ideal location. If at the end of the day it makes sense, don’t be afraid to go for it! HMS is one of many companies that have engaged in a headquarters relocation that has infused new energy, improved market positioning and driven growth and revenue. It’s a challenging initiative, but with a well-structured process, an effective plan and a committed team, the payout can be extremely high.
William C. Lucia is CEO and president of HMS Holdings Corp., which provides coordination of benefits and program integrity services for health care payors. He has more than 20 years of experience in health care reimbursement, information systems and large-scale insurance administration.
When Stephen Mansfield was hired on as president and CEO of Methodist Health System in the fall of 2006, there wasn’t any drama around it.
The former CEO was simply retiring and things were running like clockwork. But with that retirement, the board saw an opportunity. The hospital’s financial performance was starting to deteriorate, primarily because of the amount of charity care and uncompensated care it had to provide — a common problem for hospitals as an increasing number of people lack health insurance.
“My feeling was, and the message was, that we need to grow,” Mansfield says. “If we’re going to be able to sustain the mission of this company and provide care to the poor who are unable to pay for their care, we’ve got grow in some new areas that can generate income to offset that.”
His first 90 days on the job were spent in conjunction with the outgoing CEO, so he did one-on-one interviews with the board, senior leadership, community leaders and about 80 medical staff members, all in an effort to understand the organization well.
By January, Mansfield was in a position to stand before the board and the entire medical staff and provide his assessment and early thoughts as to how and why the company should grow from where it was — about $460 million in net patient revenue — to $1 billion in net patient revenue by fiscal 2011.
The results in his first four years are impressive: $890 million last fiscal year and nearly doubling the net patient revenues. Additionally, the system has grown from two hospitals in 2006 to seven today.
“It’s been a pretty aggressive growth trajectory,” he says. “I don’t know many other health systems that have doubled in size over the last four years. We’re very fortunate.”
Here’s how Mansfield used two key strategies — planning and careful hiring — to hit his growth goals.
Create a plan
Mansfield simply loves strategic planning, and it’s the first thing he went into following his address to the company in January 2007. He knew that if Methodist was going to grow, it couldn’t just meander its way through it.
“Next to the right people, strategic planning is one of the most important functions you can do,” he says.
Mansfield essentially creates a four-year plan every three years, which allows for a year overlap on each plan. For example, he began creating Methodist’s 2012-2014 plan in February 2010, while still in the middle of the 2009-2011 plan.
He starts with an off-site, one and a half day conference with the board, leadership team and medical staff leadership. One of the keys to strategic planning is getting an outside perspective, so he brought in well-known, industry experts to speak about where they saw health care going.
“Have thought leaders from your industry come and talk to your leadership,” he says. “We tend to get myopic in our focus on our own organization and our own market, and we think that’s the way the world’s running, but, in fact, there may be trends occurring outside of your market that you need to take into account for your market. …
“You may not agree with all of them, and some may not work for your market or your company, but it’s helpful to expand our horizon of thinking at the beginning of a strategic planning process. Then you take it from broad to narrow and make it work for your organization and your service area or market.”
After that, he says to come back with your senior team and synthesize the thought from that session at a high level and put it into a document.
“Whoever’s going to be tasked with the primary responsibility for delivering on your plan needs to be involved in your planning process so they feel ownership in that plan,” he says.
Over the months that followed, the senior team members discussed and refined it, and in September, they presented it to the planning committee.
“We had a lot of people involved in it, because we wanted to have buy-in from the medical staff,” he says. “I didn’t want it to be Steve Mansfield’s strategic plan — I wanted it to be our medical staff’s plan, our board’s plan, our community’s plan, our employees’ plan, our management structure’s plan.”
A year after the initial conference — and still a year before the plan starts — is when he starts the budgeting process for that three-year plan. They create a planning calendar, which he calls a racetrack, that has the key things that have to happen during that time period for the plan to be successful.
“As much value as I place on planning, I don’t think it’s the final plan that’s so important as it is the process of creating the plan,” Mansfield says. “Then the real differentiator is not necessarily the plan but how well you execute on it.”
He says companies get caught up in creating a plan but they don’t involve key stakeholders and then they don’t track their progress or see how they’re doing against the plan.
“Those things are so important to making sure the plan has the impact on the organization that you want it to,” he says. “I tell people all the time, as proud as we are of our strategic plan, reality is, if you compared our strategic plan to our two top competitors’ strategic plan, there’s probably about an 80 percent overlap. So what’s the differentiator? The differentiator is who can execute the plan better.”
Once the plan actually begins, he meets every other week with his senior executive group to review key data. In one meeting a month, the key metrics of the plan are reviewed by the planning department, and the team receives feedback on how they’re doing on accomplishing and delivering on the plan. The hospitals are given updates on the things they’re measured on once a month. If anything is off, he and his team try to find out why.
“Missing a goal is not the cardinal sin,” he says. “Missing the goal and not having discussed it and asked for help along the way is.”
Lastly, to make sure people are staying on track, he also stops by people’s offices — not call them to his — to casually talk with them about how things are going.
“There’s no substitute for periodically sitting down with the key members of your team and saying, ‘How’s it going? How are things working? Do you feel like you’re getting things done that you need done? Is there anything I can do to help you? Oh, by the way, I saw that you did such and such, and that’s awesome,’” he says. “We get, as CEOs, so busy sometimes that we don’t just take the time to sit down with the key members of our team and just spend a little bit of time refreshing on the priorities and making sure that we’re acknowledging the successes. We have a propensity to assume success and sometimes to withhold encouragement, and that’s not good.”
Hire the right people
When Mansfield came into his position, he was new to the area, having just moved from Arkansas, so he recognized his weakness — not knowing the market. He needed to hire a development officer who knew people, knew the area well, could look for growth opportunities and had the relational acumen to facilitate complex transactions. He hired someone in, and that person made a lot of connections for Mansfield very early in his tenure.
“You plant a lot of seeds and not a lot of them grow, but we planted a lot of seeds in those early weeks and months and a lot of them did grow,” he says.
That person got a group of physicians in McKinney, Texas, to agree to do a joint-venture hospital there. Shortly after that, he brought another group of physicians in the community on board that was already assembled and looking for a partner to do a joint-venture hospital. The city of Richardson also approached Methodist about merging its hospital into their system. On top of all those efforts, they also opened two other hospitals.
The system was also facing a physician shortage, so Mansfield got the board to agree to an aggressive employment recruitment strategy, so hiring was a major part of his position when he started.
But hiring can be tricky, so Mansfield was very particular in his process and says that’s the way you have to do it if you want to be successful. To start, he first looks at if there’s anyone he knows that could do the job well.
“The best way to make sure you make a good hire is when you hire someone you already know will fit in that job if you can just convince them to take it,” he says.
That was the case with the development officer, as well as with the CEO for one of the hospitals, the new system COO and the human resources executive. Despite knowing these people, though, he knew it couldn’t be all up to him.
“Even if it’s someone I think will work, they’re not going to be effective if they can’t work with the rest of our team,” he says.
So despite having a front runner for a position, he still did searches and put each candidate through a hiring process that makes them interview with teams of board members, medical staff, employees, senior executives and middle management.
“It helps to do a team interview,” Mansfield says. “I’m not sure if it helps you so much with your selection process as it helps you with that person’s assimilation … to have key people who would have to help that person be successful involved in the selection process.”
He says to ask behavioral-based questions, such as what have they done, what’s the worst decision they’ve made and what they did about it, instead of what’s their management philosophy.
“Those kinds of questions you can get a little bit deeper than ‘What’s your management philosophy.’” he says. “Don’t ever ask that question.”
All together, a candidate can meet with about 120 to 150 people in his or her interview process.
“It’s a scheduling nightmare trying to get that many people together, and it exhausts our candidate,” he says. “If that candidate is still perky at the end of a day and a half of being asked the same question that many times, they can probably handle a typical day at Methodist.”
With that many different people scoring a candidate, it’s easier to get buy-in for whomever you ultimately hire.
“Through that process, we select a person — it’s not just Steve Mansfield’s person, it’s all 150’s person,” he says. “We’ve all got a vested interest in that individual being successful and quickly assimilating to our team.”
Beyond sheer numbers in interviewers, there are other keys to hiring. He also suggests, especially for senior executives, for you and your spouse to spend time with them and their spouse in a dinner setting to see how they interact together, what kind of support they have in their life and how they are in social settings.
He also makes it a point to look for diversity and likes to have at least one of the final four candidates come from a racial or gender minority.
“That doesn’t mean we select the diverse candidate,” he says, “But if you’re not seeing them, you certainly can’t select them.”
After that, Mansfield likes to get an off-the-record perspective on that person by speaking to someone he may know that might have worked with that person. And then the final step is to use an outside company to complete a psychological profile of that person, which is what he calls Myers-Briggs on steroids.
It’s a long process, but he’s successfully recruited more than 100 physicians that have helped Methodist grow.
“Despite all of that, I think the interview process is still just a little better than a coin toss,” he says. “It’s like getting married. No matter how long you date, when you get married, you find out some things you just didn’t know. Usually those are mostly pleasant things, but that’s just the nature of it.”
How to reach: Methodist Health System, (877) 637-4297 or www.methodisthealthsystem.org
The Mansfield file
Mansfield on leading change: To change anything — to change a habit or change culture or change anything that’s indelibly embedded as culture — you have to start with making the compelling case for why. Why change? If we’re successful, if we’re delivering on our mission, if we’re happy, then why change?
Changing a culture is like breaking a horse — you’re going to get bumped off, but you have to be willing to get back on and keep getting back on until you get the change from the culture that you need to be successful.
Mansfield on your career choices: Work for an organization whose espoused and practice mission matches well to your own value system and life priorities. I feel very fortunate to have had almost a four-decade career, and I have never been in an organization where I felt like I had to compromise my value system in order to be effective in the role that I had. I think that’s very important as you’re contemplating where you’re going to spend your career, to make sure you’re working with a company whose goals and value systems and mission and vision statements you can embrace and support from a personal standpoint.
Mansfield on setting personal goals: I’m still amazed by the number of people who don’t do it, but it’s so important for human beings to have the discipline to periodically create and update your own personal goals. Not just your goals related to work, but your goals related to community and faith and health and all of those variables that make us multidimensional creations. Human beings have the capacity to accomplish so much more than we do.
One of the delimiting factors is we don’t create a road map that’s trying to take us to a better place as individuals. If you don’t really care where you’re going — it doesn’t matter — one road’s just as good as the other, but if you’re intentional about what you want to accomplish with your life across its many dimensions, I think that there’s strength and power in that acknowledgment. The Bible says that as a man thinketh in his heart, so is he. What does that mean? I think that means we can accomplish a whole lot if we establish an expectation of ourselves to do so.
As I was formulating some thoughts around this topic, this tweet appeared from @DrWayneWDyer: “Your reputation is in the hands of others,” reads the tweet. “The only thing you can control is your character.” It succinctly summarizes the message I want to share with you with regard to managing company reputation.
Managing reputation begins with top leadership and is rooted in your organization’s core values and corporate governance. It is reinforced in your financial performance, corporate offices, employee relations, and customer service guidelines and policies. It is reflected in the quality of your products and services. It is expressed through your company’s social responsibility, vendor and distributor relations, and media relations.
While a corporate image can be created, a corporate reputation is earned. As CEOs, we need to treat our corporate reputation as one of our most valuable assets and protect it at all costs. Protecting corporate reputation is a proactive position rather than a reactive one. It is in reacting to a situation that we can inadvertently cover up truths, make statements we’d love to take back and make poor decisions.
Proactively managing reputation pays off
At Greencrest, we established our core values more than a decade ago as a group exercise — getting input and consensus from all employees. In the end, the core values mirrored my own personal beliefs and defined the performance and operational tenets of our company. Because they were a part of our roots, they are relevant today and continue to be our guiding principles. They are painted on our wall and greet employees every day.
By identifying company core values, as leaders we can begin to put structure around all other policies. How are your core values reflected in your corporate governance? What about your employment and customer service policies? Corporate image is formed from internal and external communications. It is formed through the quality of products and services, our own behavior and attitudes. It is also influenced by our employees and the experience others have when interacting with us and our company and our physical offices. It can also be shaped by the company’s financial practices and our community and social responsibility.
As leaders, we must continually reinforce the company’s core values and policies and make sure our key staff represent and reinforce them, too. I have found that it is easy to become soft, too forgiving and accepting of the status quo. We become too busy to deal with important disciplinary matters or absent from managing direct reports for whatever reason. But as a company, we are at our best when we enforce our core values.
Don’t forget to plan for the unexpected
As CEOs, it is also our responsibility to manage the unexpected. My industry labels this as “crisis communications.” Organizations can successfully plan how to respond to worst-case scenarios, and in doing so, make us CEOs less “reactive” to situations where personal emotions and immediate response don’t allow us to think as clearly and rationally as we normally do.
I have successfully counseled numerous companies through crisis situations — everything from hiring illegal immigrants to negativity around organized labor contract negotiations to unfavorable actions of key executives to job-related deaths and injuries. But when the emotional impact of false statements made about my own company took me by surprise, I hired an outside public relations consultant to coach me and to manage our internal and external communications. It was well worth the expense.
Warren Buffett said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you will do things differently.” This couldn’t be more relevant today, especially in the wake of the social media revolution. Those five minutes are more like seconds. So, if you’re not managing your company’s online reputation, you need to be doing that, too.
Kelly Borth is CEO and chief strategy officer for Greencrest, a 20-year-old brand development and strategic marketing firm that turns market players into market leaders. Kelly has received numerous honors for her business and community leadership. She serves on several local advisory boards and is one of 30 certified brand strategists in the U.S. Reach her at (614) 885-7921 or email@example.com, or for more information, visit www.greencrest.com.
In the book, “Judgment: How Winning Leaders Make Great Calls,” Noel Tichy and Warren Bennis state that “Judgment is the essential genome of leadership.” They add that “While misjudgments in any domain can be fatal, the one where a misstep is most damaging is poor judgment about the people on your team.”
Tichy and Bennis have articulated what many of us know from experience. We’ve demonstrated poor judgment or seen poor judgment in action when it comes to building an effective team. So how do we maximize the opportunities we have to build effective teams? Here are a few suggestions that provide a foundation for building a leadership team before you even address whom to put on your team.
Clearly define your value
One of the first considerations in building a leadership team is being clear about the value you’re trying to create. In last month’s column, we discussed the importance of knowing your primary organizational strength. The roles that need to be represented on your team need to support the value you’re creating.
Let’s use UPS as an example. Its primary organizational strength is operational efficiency. The value to the customer is dependable, cost-effective delivery. When thinking about building a leadership team for an organization like UPS, it seems logical that one team member needs to have operations as his or her sole focus.
If, however, you are leading a social service organization, while your processes need to be efficient, it probably won’t be your primary organizational strength. Your operations may fall under another function such as finance. However, talent management is critical. You may want to consider having someone outside of your transactional HR function serving on your senior team since your value is so critically linked to the attraction, retention and development of your people.
Of course, everyone on your leadership team is critical to your success. Each team member has different roles that will depend on your organizational strength. The key question is, “What functional leadership do you need to ensure that you’re building the value you’ve agreed on?”
Clearly define your role as CEO
As leader of your team, you serve two broad functions: One is to ensure the organization’s goals are met. The other is to ensure that your team has the resources it needs to meet those goals.
In order to do the first, you need to lead the team in defining who you are as organization. This includes, but isn’t limited to, your organizational purpose, direction, how you’re different or better than your competition and the behaviors that are key to your success.
You also need to lead the team in creating shared goals that support your identity. What will you do to make the identity come alive and how will you measure your progress over time? You need to ensure that the team has resources to meet your goals. This includes having the necessary talent, setting the right measures and ensuring the commitment to measurement and adaptation when you’re not meeting your goals.
Clearly define the purpose of your team
Other than being your direct reports, why does your team exist? What purpose does it serve? Here are a few suggestions:
- Your team exists to be stewards of your identity and shared goals.
- Individual leadership team members lead and serve their teams by ensuring they have set goals that support the entire organization and that resources are available to meet those goals.
- Leaders need to model the behavior outlined in your organizational identity. You need to live and demonstrate what you expect from others.
- Leadership team members hold each other accountable for the goals you co-create.
Unless you address these three steps first, even the best leaders can flounder in helping your organization create the future you long for.
Andy Kanefield is the founder of Dialect Inc. and co-author of “Uncommon Sense: One CEO's Tale of Getting in Sync.” Dialect helps organizations improve alignment and translation of organizational identity by discovering and using the unique strengths of the organization and its people. Andy can be reached at (314) 863-4400 and firstname.lastname@example.org.
In any endeavor, before anything can be successful, the people involved need to know what it is they are trying to achieve and what efforts and resources are directed toward achieving it.
The company vision is the manifestation of its purpose and its values. From it emanates the strategy by which its goals will be attained, the leadership approach of its executives, the motivation for its members and the inspiration for its customers. A clear, well-thought-out, inspirational and easily communicated vision is the wellspring from which everything else flows.
And yet for the vast majority of companies, their vision is created in isolation by the marketing department and relegated to become mere corporate wallpaper in employee manuals and annual reports.
Even when it is well thought out and inspirational and communicated to employees and customers, all too often the direction of the company and the values demonstrated by its leadership are at odds with the company’s vision that it renders the vision meaningless. For the vision to resonate, company leaders must be seen working toward fulfilling it and genuinely conducting themselves in accordance with the stated ethics of the company.
But before the vision can be bought in to, it has to be developed. Ideally, that should be a managed process throughout which the staff is consulted, instilling a sense of ownership — although that is a luxury that many companies, particularly larger companies, do not have. At the very least, the heads of departments and senior management should set aside enough time together to discuss the strategic vision of their company, to create one if they’re running a new company, or in light of changing markets and products, to assess the relevance of the vision they already have.
Inevitably, many will see this as a waste of their time. They’re good at their job, they know what needs to be achieved, and they resent the implication that any touchy-feely, marketing-gobbledygook corporate retreat is going to make them better at it. But it is often the skeptical ones who stand to benefit the most from the exercise.
To make it work, it therefore needs the wholehearted support from the very top of the company. Ideally, it should be conducted by an experienced third party who can bring a dispassionate objectivity to the process. Money is well spent on hiring a training or consultancy firm for this. Putting all the senior executives in the same place — those who by nature of their positions are likely to be strong characters — and giving them free rein to voice and defend their opinions almost guarantees a relevant and important exchange of ideas. Even people who have worked together at the same company for a long time and who might be expected to have a similar vision will discover that they all have differing views of what the company is all about, where it is going, how it should get there and what it will look like when it does.
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 experience in the worldwide travel and hospitality industry.
Just as every action sparks a reaction, I can clearly remember the moment that spurred our decision to add a new brand and expand our company. Or, perhaps I should say that we recognized the undeniable need for change, and adding a new brand was the ultimate solution.
In another instance, adding an additional service line was the right answer.
How might your need for change bring you to one of these conclusions? In my experience, there are some key points to consider.
• What are the synergies? Consider whether the new service or brand will complement your core business or detract from it.
• How well can you support it operationally/administratively? Carefully consider the additional time and manpower this new service would require.
• How will it impact the branding or industry positioning of your core business? This is where marketing comes into play and, in my opinion, can play a large part in determining whether you expand your existing service offering or add a new brand.
• What is the long-term viability of the service or brand — is it sustainable? Are you dealing with something that is hot today but could become a passing fad?
• Is there a market for the product or service? An amount of new R&D will be required.
• What will your point of differential be? Again, is it different enough to warrant a new brand or will it better serve as a complement to your current service offering?
• If acquiring a business, how does it fit culturally? If the addition may compromise your culture, you may want to reassess.
After years of explosive growth within our DUCTZ air duct cleaning franchise, we saw revenue begin to level off in specific markets, particularly when the recession hit. We identified a synergistic service in kitchen hood cleaning, which fit many criteria including technical expertise and administrative support.
However, adding the new service would present a challenge in positioning, as the customer base was exclusively commercial and geared toward fire prevention, whereas DUCTZ services commercial and residential focused on indoor air quality. We decided to launch HOODZ as a separate brand, giving franchisees the option to represent both brands. HOODZ actually lent itself to the existing marketing treatment of DUCTZ and, although complementary, it was different enough to warrant its own brand.
We revisited the DUCTZ service offerings to establish a comprehensive solution for our customers. Because a significant benefit of duct cleaning is improved indoor air quality, we sought other services that would do the same.
We found that, second to ductwork, carpet and upholstery cleaning greatly improves indoor air quality. Carpet cleaning alone is a competitive field so it wouldn’t have made sense to launch a new brand, plus we needed to establish a point of differentiation. As the nation’s largest indoor air quality company, we added the service as the DUCTZ Total Care offering, adopting the marketing position, “Improving indoor air quality from the ground up.”
Once you’ve gone through a similar checklist and process and identified parallels and strategic marketing initiatives, ask yourself one more thing, ‘Is it going to be strategic?’ In this case, I would define strategic as accomplishing at least one of the following: increasing your customer base, increasing value-added services to your existing customer base or increasing purchasing frequency from your existing customer base.
John Rotche is the president of Ann Arbor-based BELFOR Franchise Group Inc., a multiconcept franchise system. The company’s two franchise concepts, DUCTZ and HOODZ, center on the compliance and proper maintenance of commercial kitchen hoods and residential and commercial air duct, carpet and upholstery cleaning services. For more information, visit www.belforfranchisegroup.com.
Stephen Polk senses a slow return to normal for the automotive industry as the coming months and years progress.
It’s just that “normal” is going to come with a new definition.
Polk is the chairman, president and CEO of 1,400-employee R.L. Polk and Co., a provider of information and marketing solutions to the automotive industry. He has had a front row seat as General Motors and Chrysler declared bankruptcy and were forced to undergo massive internal restructuring. He’s watched as countless auto suppliers have gone bankrupt or been sold to interests outside Michigan.
But it won’t always be this way. And when things do begin to rebound, businesses all across southeast Michigan will need to function in a new, post-recession environment.
“With the energy we’ve seen so far this year, we’re starting to see a return to normal,” Polk says. “Not to the normal of five years ago but to a new kind of normal. I’m optimistic about the future. Our forecast for 2011 is 12.9 million vehicle sales in the U.S., and I’m confident we can achieve that.”
What will the new normal be? Polk says it will center heavily on every company’s ability to develop and maintain close relationships with customers. Businesses will need to give the employees at the customer interface points the tools and the sense of purpose that will allow them to build those relationships. Corporate leaders will need, more than ever, to stay in touch with customer wants and needs and the ongoing changes in the marketplace.
The coming years won’t be a time to assume. It will be a time to listen and react and to remember that the success of your company’s relationships will determine your long-term success.
“It’s about the success we’ve had in staying close to customers, understanding what their needs are as the world has changed,” Polk says. “While the OEMs, the manufacturers, represent a piece of our business, there are a number of other customer sets we’re dealing with, [such as] the agencies trying to promote products, the dealers trying to sell products. We need to align ourselves with where they are in the world today.”
Commit to your people
In any economy, if your customers are consumers, you have to keep them buying. If your customers are other businesses, you have to keep them selling.
Polk’s company falls into the latter category, so the job that he and his team will have moving forward is to support clients in the auto industry so they can keep producing products that find their way into new car models and, in turn, into consumers’ garages.
Your role as supporter is critical when your customers are going through hard times. It’s something Polk recognized early on, and as the industry emerges from the deepest part of the recession, he anticipates being able to reap the benefits of the support and loyalty his business showed.
“Our commitment was to serve those immediate customers so they could continue to do day-to-day work as they went through the whole bankruptcy phase and came out of it,” Polk says. “Some of it was on our own nickel, as we realized that during the bankruptcy proceedings, we weren’t going to get paid for some things right away. But we were able to maintain a continuity of service, and that helped our customer to continue to sell throughout the recession. There was some recognition that we were there when they needed us.”
In order to commit to your customers to that extent, you need to commit to your employees. Your employees need to be supported by your leadership if they are ever going to be able to support your customers through trying times.
And the key element of that support system is a soapbox — many of them, actually. You need to give your employees a means of being heard by you and your leadership team. If your employees on the front lines feel empowered to relay what they’re hearing from customers, if they feel like management is actually going to listen to them and use their information to make decisions, you’re going to have a staff on the front lines that will engage customers, ask questions and remain aware of their changing needs.
“A lot of it is just listening and training your staff to make sure they’re listening to what the customers’ needs are,” Polk says. “You communicate what you want, really try to build it into your meetings and various avenues of communication. Then you listen back, make sure everyone knows what is important, everything from performance evaluations to planning for the year, it all has to revolve around some kind of customer metrics.”
Use what you hear
If you’ve put your front-line people in a position where they can reach upward in the organization with ideas and information, you need to be able to take what they’re telling you and use it to better the company. Otherwise, you’re sending a negative message to your employees about the effect their work is having on the company’s overall mission.
Polk uses the engagement of his customer-level employees as an opportunity to gain a realistic picture of where his company’s customers are headed and what their needs will be in the foreseeable future, which allows he and his leadership team to begin sketching a strategic plan for the coming years.
“The first part is starting with that very open and realistic assessment of what the current reality is,” Polk says. “What your strengths, weaknesses, opportunities and threats are. You take an environmental scan of where your customers are growing and where they see the most value in the products that you deliver.
“We want to know where we can create efficiencies to help our customers and ourselves, then try to project that into the future. The real challenge is creating a living plan out of it, something that isn’t going to sit on the shelf.”
A living plan has to have some degree of flexibility. If you are going to place an emphasis on listening to customers and reacting to their needs, you can’t formulate a market strategy that is so cumbersome or rigid, you can’t react to an unexpected change.
It’s a delicate balance to stay on your core competencies but remain willing and able to pounce on an opportunity that allows you to employ those competencies in a new way. Polk says you can’t deviate from your mission as a company, but your products, services and areas of focus have to exist in a fluid environment.
“You have to start with a recognition that what you are putting out there in the market is really about how you want to conduct the business,” he says. “There are focus areas that are going to have to change, but it’s understanding the types of services you want to be at, the types of products you want to be building around in each environment. You have to communicate the fact that those areas are flexible, create an understanding with everybody in the company. That is probably the most important thing.”
To understand when you need to take advantage of an opportunity or forge a new direction, you need to be able to measure your progress against your goals. That means you need process checkpoints and a willingness to allow your team to assess where you are in relation to your goals.
“You really need to be able to understand what your checkpoints are along the way in any process or product or in any initiative that you are outlining,” Polk says. “It really needs to be a candid self-assessment of what is the reality that your customers are dealing with, the reality of how you’re delivering on expectations, then making adjustments to it.
“Sometimes you need more effort, and sometimes conditions dictate that you stop doing what you’re doing — even if it’s something that you had been committed to. The right answer is ultimately to be open and honest about the reality you’re facing.”
Make it cultural
You can engage your employees by builing avenues through which they can communicate and make sure that their input and ideas have a bearing on the decisions that will affect the future of the company. It’s all great in theory and better in practice. But over time, as the economy improves and the business environment becomes more stable, it will become easier to let some slack into the organization philosophy to which you once rigidly adhered.
The only cure for that is to make customer focus and employee empowerment a part of your company’s culture. You make that happen, in large part, by rewarding the behavior you want to see and promoting your best and most experienced employees to more influential positions.
“It all starts with building a culture that employees can appreciate and thrive in,” Polk says. “A big part of that is the importance of having a great leadership team in place. Our senior leadership team includes a variety of experience in all aspects of the automotive business. You have to fit the culture to you business, to where you want to take the business in the future. For that, you need to instill a common values system that is shared by all employees and reinforce those values by ensuring that your people are well compensated and are going to have avenues for career growth within your company.”
Ultimately, employees want a fair salary, but more than that, they want to feel like they’re working with upper management, not working for upper management.
If you build strong relationships within your organization, your team will be better able to build strong relationships with the people you serve. The often-referenced cliché about happy employees leading to happy customers — it’s a cliché for a reason. Because it’s tried-and-true.
“If employees understand your business goals and objectives and what their role is within the organization, they can effectively contribute and provide valuable insights in their areas of expertise,” Polk says. “That is why we host regular communication meetings with our staff and also communicate important business announcements in a timely manner. It helps continually engage our employees in an open, honest dialogue with management, which helps solidify our overall communication structure within the team.”
How to reach: R.L. Polk & Co., www.polk.com or (800) 464-7655
The Polk file
Education: Bachelor of science degree, Denison University, Granville, Ohio
History: Great-grandson of R.L. Polk & Co. founder Ralph Lane Polk; employed by company since 1981; president since 1990; chairman and CEO since 1994
Polk on the CEO’s role in setting the stage for the future: My role is to lead the organization and prove a foundational direction for the business. The senior leadership team we have in place at Polk is effective and dynamic, and all of them are accomplished leaders. I work very closely with them, both individually and as a team, to help further develop our business goals and objectives, develop strategic ways we can be supporting customers and representing Polk in the marketplace.
Polk on achieving success in the current business climate: It may sound cliché, but it’s the reality of things — if our customers succeed, we succeed. In our business, it truly is about the relationships and strategic partnerships we have with our customers, to help them achieve their business goals and to help them succeed in the marketplace.
Joe Gingo doesn’t remember how he stumbled upon his pattern years ago. What matters is it works.
During his more than 40 years of moving up the ranks of The Goodyear Tire & Rubber Co. and now as chairman, president and CEO of A. Schulman Inc. (Nasdaq: SHLM), the pattern he uses when it comes to tackling the challenge of a new position has withstood time.
“Every one of the moves I made, whether they were in Goodyear or when I came to Schulman, has been different and has represented its own challenge,” Gingo says. “The challenges are different, but I think how you overcome them is relatively the same. What you have to do is you have to develop a vision of the future state that you would like to have, a strategy of how to get there, clearly communicate that vision and strategy to your associates, and then empower them to execute the strategy.
“As I moved up to a bunch of different positions, each one became a little bit bigger, a little bit wider. But I always employed the same technique in how I overcame them.”
When you’re faced with challenges, you need to rely on past experiences — wins and mistakes — and let the information guide you.
When Gingo arrived at A. Schulman at the beginning of 2008, the supplier of high-performance plastic compounds and resins was being sold and it was losing money in the United States, while its overseas operations were doing well.
Here is how Gingo created a strategy that included turning around A. Schulman’s U.S. operations.
Ask and listen
Gingo’s background in manufacturing served him well when he arrived at A. Schulman. He quickly noticed the company’s U.S. focus needed to shift, and the profitable overseas operations could have the answers. His discovery came from asking, listening and observing.
“Any business or staff position I’ve ever gone into, I generally ask from the start for reviews with each of my division heads and their key people,” Gingo says. “I would ask them what their activities were. It would be a presentation on their part, but it was informal in the sense that we would talk about what they were doing, what their goals were, how they had been established.”
When you’re stepping into a new role, you really need to get a handle on how the company is being operated and where the top managers see their division or department headed. You can’t do that from behind a desk.
So when Gingo arrived at A. Schulman, he did what he’s always done. He met with the division heads and their top reports. He started in the United States and repeated the process in Europe, Mexico and Asia.
To get a complete understanding of each division or operation, you can’t rely solely on the information you gather from the team calling the shots.
“Whenever I’m in an office, no matter where it is, I make an effort to go out and introduce myself to people and just talk to them,” Gingo says. “They have a lot of good insight into what’s really going on. As a leader, you sort of get a colored picture of the situation. You really have to check the points that (management) give you with the people that are living the points.”
When you’re striking up a conversation with employees, you don’t need in-depth details. You’re mainly looking for trends in repetitive answers.
“You say hello to them, and then you say, ‘What do you like about this job?’” Gingo says. “The second question is, ‘What don’t you like about this job?’ Some people are hesitant, but some people are quite open and talkative. You begin to hear patterns. Patterns are things like several people say, ‘This is what I like.’ That gives you an overall view of what’s going on in that division or in that office.”
If employees aren’t warming up to your questions, ask them about what they do and what their day is like. Through the conversation, you should get some indication of what about their job or the company is important to them.
Remember, you’re asking, listening and observing venture is to get an overall understanding of the entire company so you can later strategize for the future. You can learn a lot from engaging people like your customers and suppliers. By asking the right questions, you can get a better indication of what your company’s strengths and weaknesses are.
“One of the ways is talking to customers, visiting customers and finding out what the customer likes about the company, what the customer doesn’t like about the company,” Gingo says. “You can talk to suppliers. Suppliers sometimes give you, ‘Well, here’s your company’s reputation. Here’s what we hear about your company.’”
Analyze the information
The ultimate goal of every business is to make a profit and to grow. Clearly, there are other aspirations to strive for, but fundamentally, that’s what every business has in common.
“The strategy has to be developed around what can you do to make yourself more profitable and what can you do to grow,” Gingo says. “Then you come back to core skills. You start out with, ‘Well, what am I good at, what do I do well?”
That question can be answered with the culmination of your information gathering and analyzing.
“You take all of those things and you say, ‘What do we do well? What is our core skill? What can we build on?’” Gingo says. “One of the ways to really do that is to look at your profitable divisions and say, ‘Well, what do they do that makes them profitable?’”
Gingo tends to look for an anomaly in all of his information and data to start his focus.
“Data that sticks out either bad or good,” he says. “You think: Why is that occurring? What’s interesting about that?”
One of Gingo’s objectives was to return A. Schulman’s U.S. operations back to profitability. So he looked at the overseas operations that were doing well and asked a logical step of questions to figure out a new strategy.
“If I can do that well, for example, in Europe and I can do that well in Mexico, why can’t I do that well in the United States?” he says. “You begin to say, ‘Who are my competitors? Are my competitors different in the United States and Mexico?’ If the answer to that question is, ‘No, they’re not,’ that’s a clue to you that, ‘Hey, maybe I can do it.’ Second, ‘Do I make the same product that I’m making in Mexico and Europe in the United States?’ If the answer is no, ‘Well, what do I have to do to make those products? What kind of equipment do I have to bring in? What kind of technical skills? What new product support do I have to get? What kind of new products do I have to introduce?’
“Fundamentally, you look around, you see what you’re doing good and then look where you’re doing bad and try to figure out why am I doing bad there.”
Engage your team
Once Gingo has a better understanding of the bigger picture, he jots down bullet points and takes them to his team for input.
You generally don’t want a large group. That’s why Gingo sits down with only his direct reports.
“If you have somebody, even in a short period of time, that you begin to believe you have some trust with, you might even see them before that meeting and say, ‘Here is what I’m thinking. What do you think about that?’”
Either way, sit down with your direct reports and present your ideas in a written format. Writing your points not only makes them clearer but will provoke more of a response.
“There’s more reaction if I have words on a page than just talking, because your message sometimes doesn’t get across,” Gingo says. “You have your bullet points up, and you say, ‘Here’s the five points. Here is what I’m thinking about.’ Then you get reaction.”
One of Gingo’s mantras, which he learned from a former chairman at Goodyear, comes into play when he’s asking for feedback.
“The first time I came into meet with him he said, ‘Joe, it’s your opinion versus my opinion. We’re going to make a deal. My opinion will usually win,’” Gingo says. “He used the word usually. ‘But your facts versus my opinion, your facts will always win.’”
The facts have to be put on the table. Even though you’ve put in time and research to understand where you think the company should be headed, you need to listen to your direct reports and be willing to admit when your proposed direction might need to be shifted.
“It’s really important when you’re having a conversation about these little bullets, you let them know, ‘Tell me I’m wrong,’” Gingo says. “‘It’s OK. If you tell me I’m wrong and you have the facts that show me I’m wrong, then I’m going to accept the facts.’”
At the same time, you need to be considerate about your employees own ideas and opinions.
“You can’t shoot the messenger,” Gingo says. “Let’s say you’re in this meeting and somebody says something that is totally wrong, you know it’s wrong. Well, if you want to keep the meeting open and communication to go on, don’t shoot them down. You don’t show them how dumb he or she was.
“You try to diffuse it without embarrassing them because everybody around that room is listening. What is very key for me is when I think somebody is just totally off-base, I do not display it at all. Somehow say, ‘Well, that’s a good thought, but have you thought about this?’ You can in essence diffuse their own argument by the questions you ask them.”
When you’re having a serious meeting to strategize about the company’s future, you need to make sure that everyone has the opportunity to speak to the bullet points you presented. And not only that they have the opportunity, but they take advantage of it.
“No matter what the group is, certain people are going to say something,” Gingo says. “What you have to worry about are the ones who don’t say anything. Literally, you don’t leave that room until everybody has had a chance for input. If somebody says, ‘Yeah, everything is OK,’ then you challenge that but not in a negative way. You say, ‘What do you like? Did I miss something? Is that part good?’”
By listening to the reactions, you should be able to gauge whether or not you’re on the right track. If you get push back from a lot of your sources, you probably want to rethink the direction you plan on heading.
The main point is you need to be open and respect other’s ideas.
Gingo knew when he arrived some of his plants were running at less than 50 percent capacity. While A. Schulman was doing decent business, it was taking it at a loss. Someone in manufacturing presented him a program — a program based on facts — that would shut eight plans. It made sense. They shut them.
Two years after Gingo took over, the company’s U.S. operations turned around by nearly $18 million and was breaking even. The company’s revenue for fiscal 2010 was $1.59 billion.
His experience combined with his time spent with employees trying to understand the company contributed to that accomplishment.
“You have to get out,” Gingo says. “You have to have your pulse on your company and what’s going on good and what’s going on bad. That’s awfully hard from a CEO position because, for one thing, you have a lot on your agenda, so you just have to find time to do it. But truthfully, one of the most boring things to me is having to sit all day in my office.”
How to reach: A. Schulman Inc., (330) 666-3751 or www.aschulman.com
The Gingo File
chairman, president and CEO
A. Schulman Inc.
Education: Bachelor’s in chemical engineering, Case Western Reserve University; J.D. University of Akron; master’s in business management, Sloan Fellowship program at Massachusetts Institute of Technology
What is the best business advice you’ve received?
It was a quote that I got in a training course, and it’s my No. 1 principle. It said, ‘The first job of a leader is to define reality. The second job of a leader is to provide guidance and support. The last job of a leader is to say thank you.’
Gingo on empowering employees: I always tell people who work directly with me, ‘Look, if I have to do your job for you, I have a tremendous cost-cutting program in mind and it doesn’t involve me.’ You really send a message. That doesn’t mean you can’t come talk to me, that doesn’t mean you can’t ask advice from me. But in the end, I’m not going to make your decision for you.
I remember some boss saying, ‘Here’s what I want you to do.’ The employee would come back and, fundamentally if you listened real close, what they said to the boss was, ‘Your plan failed, what would you like me to do next?’
They were never accountable; they always just did what the boss said. I won’t allow it.
I’ll tell people, 'In this situation, here are some of the things I’ve done in the past. But, in the end, it’s your decision. I’m not going to make this decision for you.'
When partners Steve Goodman and Craig Swill purchased Welcome Wagon International, Inc. in 2009, the business was still the world’s largest welcoming service for new homeowners at 82 years old. They decided to keep the company updated and relevant moving forward by refocusing the company completely on sales and marketing. The problem was, the company’s corporate culture was very negative and communication between the corporate and sales sides of the company was poor.
“You kind of had a sales versus corporate clash going on within the organization,” says Swill, the company’s CEO.
The corporate side cared more about technology and was insensitive to many sales-oriented issues. The sales employees felt cut off from many changes at the corporate level, with some of them working as individuals in remote parts of the country.
“When people do not have communication and are out in the field by themselves, they kind of get this paranoia. … So you have a lot of missed communication when there is lack of any communication,” Swill says.
To get employees re-engaged in the vision for Welcome Wagon, especially on the sales side, Swill and Goodman needed to reopen some lines of communication that hadn’t been open for decades.
Together, they went on a “world tour,” visiting every company region to give presentations for the sales teams and to discuss their vision and goals for the first 12 months of their leadership transition. Most of the people they talked to had never met anyone from the corporate office, much less the heads of the company.
“They were very touched that we felt enough to go out and really learn about their challenges in selling and about their challenges in the economy,” says Goodman, Welcome Wagon’s president.
“We asked them questions to learn what they were looking for within the organization. From the very beginning, we opened lines of communication between the corporate office and our field organization.”
They implemented weekly meetings to provide sales training for corporate employees, so they could better understand the experiences of their sales counterparts. On the sales side, they offered representatives and managers training opportunities to learn new technology and skill sets, giving them the resources needed to be most effective. Now, sales officers communicate weekly and daily with field officers to reinforce and align their goals.
After their one-year anniversary in 2010, Goodman and Swill did another world tour to discuss progress and go over their five-year strategic plan. Their reception this time around was a lot different. They’d grown sales every month, and in less than a year, they made Welcome Wagon a debt-free company.
“We started receiving hugs. Literally, people wanted to come and hug us,” Swill says… “We were able to check off bullet point by bullet point, page after page, all of the things we promised them, and we hit everything that we promised them. We were able to gain their trust, and that is huge.”
Today, Swill and Goodman continue to make themselves very accessible to the organization’s employees by talking on the phone to address sales problems, questions or issues, and always looking for ways to support the sales team with the resources they need to succeed.
“Some of the most negative people that I could give examples of a year ago were so positive this year and saying thank you for taking this organization and totally revamping it, turning it around, giving us products and giving us a company that we can now go out and truly be proud of in the way that we sell it every day,” Goodman says.
How to reach: Welcome Wagon, www.welcomewagon.com
Law of limits
According to Steve Goodman, successful strategic planning isn’t just about winning people over to your vision. That is one part of it, and so is communicating that vision effectively. But another key part of executing a strategic plan is recognizing and understanding other people’s limitations.
“You have to always understand, that just because we can get something done and we see things going from A to Z, that doesn’t mean that all of the people that you lead see things in the same way,” Goodman says. “Some people are really pigeonholed in what they do 100 percent; they don’t understand how to tie things together at different levels within the organization.”
As a business owner, CEO or entrepreneur who is used to fast-paced change and goal-setting, you may be tempted to push hard and move fast in carrying out your plan. However, leading people isn’t about pushing people in the direction you want them to go, it’s about guiding them, showing them you are aware of their capabilities, and giving them the resources needed to get there.
“It’s the ability to get people to see things in a way that makes sense as they move forward and to help them further their careers,” Goodman says.“You have to see people’s strengths and weaknesses to see how to move them.”
In his time as president and CEO of Syniverse Technologies Inc., Tony Holcombe has seen many different opportunities for growth and expansion come across his desk. From new products to new markets to old competitors exiting the space, there is frequently a chance for Holcombe to expend company resources securing a new entity that might allow Syniverse to operate in a new space.
But the road to growth can be lined with potholes before you encounter even a streak of golden pavement.
That’s why Holcombe places an emphasis on due diligence that goes beyond the bottom-line revenue numbers. Just because a growth opportunity will make you more money in the short term doesn’t mean you’ll be able to sustain the revenue. The success of your expansion will hinge on your strategy and your people.
In short, Holcombe says you need a plan, and then you need your people to buy in to your plan. If you lag strategically or on the teamwork front, you probably made a wrong turn somewhere, and the new venture is ripe for a downfall.
“We have a very clear strategy,” Holcombe says. “Our strategy is that we need to be able to integrate the acquisition immediately. That means we have to have a plan laid out, and we have to think through how we get the people integrated, how do the customers get integrated, how do the systems get integrated. The good thing is, that forces you to get a lot of questions answered throughout the process — questions that you might otherwise put off.”
Armed with a policy of thorough due diligence, Holcombe has been able to carefully select the acquisitions his $483 million company has pursued, and Syniverse has weathered the recession well.
Develop a plan of attack
To decide which growth opportunities to move on, you need to first define your field of play. You need to know what it is your company does well, the skills and talents your people bring to the table, what type of resources you are willing to invest in a growth opportunity, and then measure the opportunity against those criteria.
If your company doesn’t measure up, you either need to move on or add the competencies and assets that will allow you to make the new addition to your business a success.
But it all comes back to defining what you do well as a business. It’s the first question you should ask of yourself and your leadership team.
“When we look at new markets or services, whether it’s something we want to build or something we want to buy, we always challenge ourselves by asking, ‘What do we know how to do?’” Holcombe says. “If it’s something we don’t know how to do, generally speaking, we’re not going to get involved in it. You want to be really focused on your strengths, and build and buy based on those strengths.”
You need to match your competencies not just to the product or service you are considering adding to your arsenal but to the entire process of developing, marketing, selling and supporting it.
“You don’t get involved in things you don’t know how to do, and that mentality has to run from the actual product or service, how it is priced, how it is sold, what is the business model for it, what is the sales channel for it, what is the value-added service you’re providing to the customer,” Holcombe says. “When we do that, we kind of check it off against an internal matrix to see if it fits with what we do.”
But the most important question you can ask when deciding whether to move on a growth opportunity is a question of culture. The acquisition, service, process, any new people you might add — does it all fit with the values and mission of your company?
A bad cultural match could have long-term effects for your business, especially if you’re considering a large-scale addition that will significantly alter your company.
“If you’re considering an acquisition, culture is what I would consider the most important thing,” Holcombe says. “Are the two cultures going to work together? If we try to put a culture into our culture and it’s completely disparate, what happens is we lose all the people. So that has to be part of the due-diligence process. You’re trying to find out if these people in the company to be acquired have the same type of approach to customers that you have, do they have the same business model, do they have the same kind of service mentality? If those things fit, that is kind of the key issues for us.”
And you have to be willing to walk away if the pieces don’t fit.
“We’ll walk away from a lot of deals where the business model doesn’t fit, but we’ll also walk away from deals where we could tell the culture just wasn’t going to fit well,” he says. “That is really critical for us as a global company with 1,400 employees and 600 of them outside the U.S. We have to knit not only our culture but also a global culture.”
When considering an acquisition, Holcombe wants managing members of all departments at Syniverse to come to the conclusion that it’s a good move.
The “conclusion” factor is an important element in the vetting process. Holcombe doesn’t want a bunch of ministers preaching to a like-minded choir. He wants debate, opposing viewpoints and some amount of disagreement. If those differences among the leadership team can be ironed out over time, it’s probably the right move. If the differences can’t be resolved, it’s time to step back and figure out why.
“Everybody needs to have that ownership,” Holcombe says. “From the sales leaders to technology leaders, office leaders, finance, human resources, legal, everybody has to own their piece of that integration. We all have to come to an agreement that this is a good deal, we all have to agree that we can make it work.”
To ensure that the various departments within Syniverse communicate with one another, Holcombe’s merger and acquisition team work as part of the leadership team, not as a separate field unit that beats the bushes for purchase opportunities, then hands them over to upper management.
“We don’t do what I’ve seen a lot of companies do,” he says. “We don’t have an M&A team that just goes out and buys things, kind of throws them over the wall and says, ‘OK, we think this is a good idea; now you guys figure it out.’ My M&A team is part of the executive team, and we all figure it out together. The ownership is established, everyone has bought in to it, and if some members of the executive team think this isn’t going to work, we hash that out before we buy the acquisition. That is the key to making sure we get it right.”
Holcombe wants the initial discussions between members of upper management to create a hypothesis of how the acquisition will be integrated into the company. With that basic assumption in place, he and his leadership team set about challenging the assumption throughout the due diligence process. As questions arise and new information is gathered by the due diligence research team, the assumption is refined and, in most cases, dissenters have their concerns satisfied.
However, discussion and research must lead to an ultimate decision. As the leader, that responsibility falls on your shoulders.
“We’ll talk through why someone doesn’t agree with a certain area, we’ll bring our due diligence team back together for more information,” Holcombe says. “We may adjust the thought process about how we’re going to pull it all together. But it’s also my responsibility as CEO to say, ‘OK, we’ve debated it; I need to make the call.’”
In the end, if debate and discussion lead nowhere constructive, you’re probably not headed down the right growth path for your company.
“If you don’t have that high degree of buy-in from your team, chances are you’re not doing the type of deal you need to do, and you might think about trying other things with your time and effort,” he says. “But you do want to get everyone involved. You want everyone on the leadership team to have the same information. You want to give everyone a chance to vocalize their issues or concerns. You want the team to own the decision, not just one individual.”
Blend, don’t stitch
When you have decided to add a new unit, acquisition, product or service, you want to make the addition as seamless as possible. You want the acquired entity to blend with your company. You don’t want to stitch it on so the seams show.
Solving that problem comes back to combining cultures. There are different ways to accomplish that, based on the size and nature of the acquisition.
At Syniverse, Holcombe’s team has completed one acquisition on average of every 12 to 18 months during his tenure. They’ve ranged from a 2007 acquisition that added more than 100 employees in Germany to a smaller acquisition of a Boca Raton-based company.
The Boca Raton acquisition was a product-based addition. The European acquisition, which also added personnel in England, was much more focused on the people involved and took more resources on Syniverse’s part.
“The key was getting our teams in Tampa and Germany to work together,” Holcombe says. “We tried to cross-pollinate the teams; we had them travel back and forth and spend a lot of time talking about the project plan. When you do an acquisition on a global basis, there are just differences on a cultural basis on how people communicate, what people say to each other, do they interpret things differently. Those are all things that make the process more complicated. Geography and time zone differences make it very difficult to pull that kind of information together.”
That’s why Holcombe stays involved in the merger and acquisition process at all times. Though you don’t want to micromanage your people, when it comes to moves that could radically shift your culture, you need to be hands on. You need to be the voice that is reinforcing the common themes you want all areas of your organization — both older and newer — to live by.
“First, I want to go back to how the new part of the organization treats customers,” Holcombe says. “Are they service-oriented, do they put customers first, do they make sure they do all the right things for customers? That is our big key, because if you’re working on a problem together and they’re putting customers first and you’re putting customers first, you’re all working toward the same goal. Then you know you’re living by the same cultural principles, which is good for the entire organization.”
How to reach: Syniverse Technologies Inc., (813) 637-5000 or www.syniverse.com
The Holcombe file
president and CEO
Syniverse Technologies Inc.
Born: Carrollton, Ga.
Education: History degree from Georgia State University
First job: I started stringing barbed wire on my grandparents’ farm when I was 14 or 15 years old. Being out there stringing barbed wire in the hot Georgia sun convinced me at a pretty early age that I wanted to go to college.
What is the best business lesson you’ve learned?
The purpose of business is to create a customer. There is nothing more important than that for a business.
What traits or skills are essential for a business leader?
Think strategically and understand the markets of your customers. Your job is to lead the organization to different levels, which means you have to love the organization and meet the needs of your customers and shareholders.
What universal truth have you learned about leadership?
You need to get focused on the ethics and integrity of the people you hire, and you need to set that example yourself. Be honest and forthcoming, and let people know well in advance if something is going to happen. And if you mess something up, work to satisfy any customers that were affected.
What is your definition of success?
Do we retain employees, and keep our shareholders and customers happy? If you do that, you’ve satisfied everyone involved in your business.