Talk about getting hit with severe hardship right off the bat. In 2008, SRS Real Estate Partners split off to become a standalone company when its parent, Staubach Co., merged with another real estate firm. Then, a month later, the U.S. financial crisis began and flipped SRS’s world upside down.

“We sold all of the Staubach Co. assets to Jones Lang LaSalle except the retail business,” recalls Chris Maguire, SRS’s chairman and CEO. “We closed the sale in August 2008. We were just starting to adjust to life without Staubach. Then we got hit with the financial crisis.”

Virtually all U.S. business sectors were affected by the subsequent recession, but two markets that suffered especially abrupt, deep and lasting cuts were real estate and retail. And those markets are SRS’s bread and butter.

“In the real estate industry, I think anyone would tell you that of the four food groups, the retail business got hurt the most, because it’s led by consumers, and consumers got hammered,” Maguire says.

“When retailers shut their pipelines down in September and October 2008, it resulted in dramatic revenue declines for our business. Our brokerage business, peak to trough, was off 60 percent. And that went on for about two years before we were able to stabilize our business.”

The downturn was a rude shock for SRS. The company found itself thrown back on its heels with business drying up and bad economic news coming from all directions.

“We weren’t sure where the world was headed, much less how we were going to adapt our business,” Maguire says. “It was a scary, unbelievably uncertain time for our business.”

Get back to basics

As SRS’s revenue began to take a dive in the last quarter of 2008, the company’s leadership team members got together and circled the wagons. The threat level they faced was hyper-urgent. They had to find a way to rally their staff and stanch the bleeding.

“The first six months was the worst,” Maguire recalls. “Today, I remind our people all the time about that: Don’t forget how bad it was from September 2008 to March 2009. We really didn’t know what was going to happen to our business.”

The first thing SRS’s leaders recognized they had to do was to guide the company back to the basics of what had made it successful during the two decades-plus that it had operated as a unit of Staubach Co.

“What we realized we had to do was drill down to our core business,” Maguire says. “And our core business at SRS is transactions. We receive fees when transactions are executed. As long as transactions are taking place, that’s how we get paid.”

The financial crisis slammed the retail sector hard, and SRS began feeling the reverberations immediately.

“It was unlike anything I had seen in my career,” Maguire says. “We started seeing retailers who for years had been growing their business by opening new locations not only shut down their new-growth pipelines, but they also were scrambling to figure out how to get out of some of the deals they’d previously committed to.”

Therein, though, lay a key to SRS’s chances to reverse the tide and get back on its feet. Transactions were still taking place in the retail real estate business. It’s just that they were transactions of a different type than the Staubach Co.’s retail division had been used to seeing in normal economic times.

“We were clearly going from a period of growth to a period of contraction,” Maguire says. “That meant our clients were going to need help on the disposition side — getting rid of dark stores, restructuring existing leases. And our landlord clients were going to be doing a similar type of thing: Trying to figure out how to lease their centers in a very uncertain economic environment.

“So we knew the market was going to be difficult for growth. As a result, we had to focus on where the transactions would be. We had to shift from being a business focused on retailers growing to a business focused on retailers shrinking.”

Manage tough transitions

While SRS’s leaders and staff members knew retail real estate transactions were out there, uncovering them proved to be a tough learning curve for the company.

“It was rocky,” Maguire says. “Really, for 24 months, it was very tough going for us.”

Exacerbating the business problems were issues of insecurity related to SRS’s parting with its longtime parent company.

“We were not only dealing with an uncertain economic environment and a continual stream of bad news as it related to the consumer and retailers, we also were dealing with a company that for 22 years had been part of the Staubach organization and was now split off on its own,” Maguire says.

“So we got the double whammy there. It was hard enough going through an economic period that none of us have ever experienced, but to compound it, we were trying to teach our people that life is going to be OK without Staubach.”

The former football star had been an inspirational business leader, and many in the company found it difficult to adjust to having new leaders.

“It was hard for some people to grasp that, for it to sink in,” Maguire says. “Roger was an incredible leader. He had a great reputation. Being part of that company was important to people. And, well, I’m not Roger Staubach; I don’t have a Heisman in my trophy case. But I’ve been in this business for a long time, and our management team has been together for a long time.

“So we had to focus on the details, and on stabilizing our business. We had to focus on teaching our people how to deal with the market and the realities of where the transactions in the retail business were happening at that time, which were very different than where they’d been for the last 20 years.”

During the recession’s deepest depths, staff morale was a particularly tough issue to deal with for SRS’s leaders.

“We’re in a business where most of our people on the SRS side are independent contractors,” Maguire says. “They’re brokers that get paid commissions. It was hard to motivate them, as well as our own employees, when all they read in the papers every day and all they watch on TV is bad news. They walk into the office with their head down every day.

“We had to find a way to show them that, ‘Look, you can’t think about this day to day. You’ve got to ignore the bad news. You’ve got to come in here and focus on what you need to get done. We’ve been doing this for a long time. We’ve been through a number of cycles, and we will get through this. But it’s going to be tough, day to day. It’s going to be a marathon.’ And that’s clearly what it turned out to be.”

Focus on the achievable

For a few months, Maguire and his leadership team found their own morale running low, and that made it extremely difficult to motivate their staff. They learned that they would have to dig deep to find reserves of strength and hope within themselves.

“It was hard because none of us had ever experienced a downturn like this,” he says. “There were times early on when I stood up in front of our company and said, ‘Look, we’ve got to focus on our core business; we’ve got to focus on our history and our track record and the fact that there will be transactions there; if we do these things, we’re going to be OK’ — and for about six to eight months, I’m not sure I even believed it. But I had to get up there and project a positive attitude.”

Concentrating on taking small steps and improving the company’s standing little by little was an approach that began to turn the tide for SRS.

“There was nothing we could do at that time that was going to dramatically slow the decline in our revenue or stop retailers from shutting stores and from shutting off the new growth,” Maguire says.

“So we had to focus on small, achievable goals and wins. I looked at the situation and said, ‘Any progress we can make day to day is important.’ At the beginning of the downturn, five out of five days in the week were bad days. My goal initially was to just find a way to have one good day a week, then two good days a week, then three good days a week.

“Even in good times, not every day is going to be a success, and you’re going to have problems. But we really had to get our people focused on, ‘OK, what are you going to do today? How can we make a difference with these clients who we’ve had long-term relationships with, who still need our help — they just need it in a different way?’”

Not everyone was able to adapt to the new business realities that SRS faced. Some of the company’s longtime staff members found themselves unable to make the transitions that needed to be made.

“We had some people who had rode the wave for a decade,” Maguire says. “They were surfing a wave that was cruising along, and all of a sudden, that wave hit the rock shore and was gone, and those people got up in the morning and said, ‘What are we going to do?’ Our management team’s message to them was, ‘There are transactions out there. These retailers need our help. But you’ve got to get out and you’ve got to be proactive.’ And I’ll be honest with you: We had a number of people that had been very successful with our company that couldn’t hack it. And they had to go do something else.”

Be transparent

Communicating with staff is a tough thing to do when all of the news coming at you is bad, and Maguire concedes that he didn’t communicate very well at the beginning of the crisis.

“It was hard for me early on,” he says. “I like to communicate a plan: Here’s what we’re going to do, here’s our goal, here’s how we’re going to get there, here’s how the company’s doing financially.

“But everything was really uncertain. And I think probably one of my biggest mistakes early on was not communicating up front and talking about all the bad things — the bad news, the uncertainty. I had to work through that.

“My management team and others encouraged me to spend more time talking about those things: ‘Look, these are the challenges, and frankly, if this revenue decline doesn’t stop, we’re not going to have a business. So here’s what we’re facing. Let’s figure out how we can overcome it.’”

Thus, Maguire says a key piece of advice he would give CEOs facing a similar predicament is to be transparent and to convey all of the news clearly from the outset.

“Communication is the most important thing,” he says. “And not just the good news. Not just, ‘We have a plan.’ It’s much more than that. It’s, ‘Where is our business today, really? Where do we stand? Good, bad or ugly, let me know where we stand.’ And then, ‘Let’s put a plan in place to fix it.’

“One thing I’ve learned that I’m not sure I really appreciated before is that employees really want and need to know. I was concerned that if I give them too much bad news, they’re going to curl up and not be able to accept it. But the reality is people are smart and they deserve to know the real news, not just the CEO rah-rah.”

Eventually, haltingly, after rocky transitions and some shakeout, the U.S. retail business began to recover. And SRS’s business began to grow again as well. The 350-employee company now has about $45 million in annual revenue.

“For us, stabilization came when we saw the bottom,” Maguire says. “Our revenue flattened out, and then we started seeing growth. In fiscal 2010, we grew our business at just under 10 percent. Then for fiscal ’11, we were at 12 percent. And this year, we think we’ll be at 15 percent or so.

“Historically, our target has been 20 percent growth. As you get bigger, it becomes harder to hit that level because the numbers are bigger. But for us, we’d love to get back to 20 percent. It’s a bit of a stretch for us right now, but that’s our goal.” <<

How to reach: SRS Real Estate Partners, (214) 560-3200 or www.srsre.com

THE MAGUIRE FILE

Name: Chris Maguire

Title: Chairman and CEO

Company: SRS Real Estate Partners

Born: Trenton, N.J.

Education: University of Texas at Austin

What was your first job, and what business lessons did you learn from it?

My first job was delivering newspapers here in Dallas. It forced me to be accountable. I had to be there every morning on my bike picking the papers up and putting them on the doorsteps of all the people in the neighborhood, because if you didn’t deliver, they weren’t happy.

Also, we had to go out and knock on doors and collect the monthly fees for the papers, and some of those people were hard to collect from, but if I didn’t collect, I didn’t get paid. So that was some early insight into how the business world works.

Do you have a business leadership philosophy that you use to guide you?

In our business, you have two things you have to protect at all costs: your reputation and your relationships. If you do that, and you build a track record, you’re always going to do the right thing.

What trait do you think is most important for an executive to have in order to be a successful leader?

You’ve got to have vision. People want to work at companies that are going to grow, that are exciting, and that can be leaders in their industries. And in order to have that, you have to have a vision that’s not Disneyland. It has to be a vision that you can actually achieve over time.

What’s the best advice anyone ever gave you?

Roger Staubach had a lot of good advice. One thing he said that has stuck with me over time is “There’s no traffic on the extra mile.” It’s about putting in extra effort and working a little harder, because most people don’t do it. Hard work doesn’t necessarily ensure success, but it goes a long way toward achieving it.

Published in Dallas

To become a PPO (no, not that one — rather, a “peak performance organization”), it is a precondition to hire and retain A players. It is just that simple.

No matter the state of the economy, it is never easy to find A players who possess an insatiable appetite for curiosity and a “lifelong learning” mentality. You need to know, first and foremost, what to look for and how to attract them and then, how to inspire and motivate them as professionals. Here are a few steps your organization can take.

Step 1: Identify stretch goals.

PPO associates need to be inspired by their managers to continuously perform at the highest level. They want to be kept on their toes and be challenged. They must want to develop themselves, to achieve the best they can and, because of this, contribute to the success of the organization — again, lifelong learners.

PPO managers, therefore, should consciously inspire their associates by giving them interesting work, challenging tasks and increased responsibilities and stressing that they should be proud of their own achievements and those of the organization. They stimulate self-confidence, an entrepreneurial attitude, firmness, a can-do attitude and a winning mindset in associates.

PPO managers raise the performance of their people and themselves by simply setting high standards and stretch goals. It’s easier said than done, but it works.

Step 2: Start inspiring associates.

There are two main ways to inspire your associates: by changing your own behavior to be more inspirational, and by creating conditions for your associates that increase their motivation. Below are some ideas for both techniques.

Five proven tips on how to begin the process:

1. Be passionate about the goals of the organization, show emotion and generate enthusiasm for these traits in your associates.

2. Be connected with your associates by showing real interest in them and finding out what motivates and inspires them and actively looking for their ideas and opinions.

3. Be (somewhat) unconventional and take personal risks by doing things differently and operating outside “normal” organizational boundaries and outside your comfort zone and letting your associates do the same.

4. Be a good listener with your associates. They have more insight than you give them credit for.

5. Be a great storyteller who is able to package messages in a more appealing format that captivates associates.

Now that you have “inspired,” how do you move on to “motivating” your associates?

That is step three. Below are five proven tips to motivate your people — who are your most valuable unlisted assets.

Step 3: Motivate your associates.

1. Paint your associates an attractive picture of the future of the organization and their place in it. Put another way, explain the “whats” and the “whys” of how their hard work is benefitting the company.

2. Create an environment of trust and openness with management. Be willing to share with them the good, the bad and the ugly of your organization.

3. Give your associates work that challenges and recharges them. Allow them to take risks and learn from the experiences.

4. Provide your associates with the opportunity to get into contact with the beneficiaries of their work (such as the customers). The dividends will be immense.

5. Recognition, recognition, recognition. We never say thank you enough. Recognize your associates’ many achievements in public. Let everyone know of his or her achievements and advancements. Do it, and it will motivate that individual but also others around him or her to do better.

Put these 10 tips to work in your organization and watch your performance and profitability skyrocket.

G. A. Taylor Fernley is president and CEO of Fernley & Fernley, an association management company providing professional management services to nonprofit organizations since 1886. He can be reached at tfernley@fernley.com, or for more information, visit www.fernley.com.

Published in Philadelphia

A little over a year ago, Randy Highland came back home.

He had been away from the California division of McCarthy Building Cos. Inc. for nearly eight years, heading the company’s Nevada/Utah division in Las Vegas. In 2011, he accepted an offer to return to the company’s Newport Beach office as the president of the California region. It’s a place where he had served the construction contractor in a variety of roles for 16 years before leaving for Las Vegas in 2004.

But when you leave as a subordinate and return as the man in charge, the perspective changes.

“There is obviously a big challenge getting yourself familiarized with all our people here,” Highland says. “There are a lot of new folks here who weren’t here seven and eight years ago. So, initially, I was taking a lot of time to get acquainted with them, understanding everybody’s strengths and making sure all of the new folks who didn’t know me from my first stint here got an opportunity to meet me and ask whatever questions they might have.”

But it wasn’t as simple as handshakes and introductions. As the regional president, Highland needed to form a vision for the future of McCarthy in California, help form a plan for executing the vision, create buy-in on the plan and see it all through to completion.

“When you step into a role like this, you need a plan, and then the biggest challenge is making sure you are adequately communicating the vision,” Highland says. “I needed to make sure it was communicated accurately and frequently, and that I was getting multiple touches with all of our folks in all the areas where we operate.

“They say you can never overcommunicate, and I think it’s true. You need to take the opportunity to communicate that vision and your strategic direction for the company at all times.”

Form the vision

As the president of a division within a larger organization, Highland is in the position of ensuring that the goals of his region fall in line with the goals of the company at large.

When he took over as the president of McCarthy’s California operations — which generated $950 million in revenue last year — Highland began a period of internal assessment. He wanted to know where the region stood, so he could form the best possible plan for where it needed to go.

“There is obviously a direction for the division and goals and objectives for the division that already exist,” he says. “And there is a strategic vision for the division. So you come in, you assess where everything stands, and you form an adequate time frame for the transition to the new leadership. That is one thing I think we did extremely well.”

Instead of an abrupt switch — picking a day and switching the nameplate on the president’s office door — Highland worked with retiring regional president Carter Chappell over eight months to help smooth the transition process. Highland officially assumed total capacity of the president’s role this past February.

“The last thing you want in a transition like this is for it to have a negative impact on the division’s goals and financial results for the year,” Highland says. “So you want to make sure you don’t take a step backward because you’re spending all your time on the transition while failing to keep your eye on the ball.”

During the first half of the transition, Highland served as something of an apprentice to Chappell, shadowing the outgoing president to begin meeting employees and learning the processes that are employed throughout the region.

Over time, Highland took increasing control of responsibilities and decision-making. During the second half of the transition, Highland effectively served as the president, with Chappell as his adviser.

As Highland assumed more control, he began to fashion a new direction for the region. His vision didn’t differ from Chappell’s vision on a fundamental level, but there were some new areas Highland wanted to explore.

“Certainly, my predecessor had a vision, and for the most part, there is agreement in the overall vision,” he says. “But there are going to be some tweaks on what I see as our vision and where I want us to head as an organization.”

Specifically, Highland wanted to focus his efforts on driving McCarthy’s California region to $1 billion in annual revenue. He also wanted to commit resources to the company’s San Diego-area operations with the goal of becoming the top commercial construction contractor in San Diego.

“It’s a vision that has both short-term and long-term aspects,” he says. “It is important to set the stage of where you see the organization in five years and beyond. You definitely want to spend time thinking about the big-picture objectives surrounding the long-term vision.

“Then, you spend time formulating the short-term strategies that will help you ultimately achieve those longer-term goals. That stuff is a little more tactical, as opposed to strategic.”

Once you have formed a detailed vision for where you want to take your company, the next crucial step is to get everyone in the organization on board with it. You do that through a multifaceted communication strategy that encourages dialogue and feedback.

Create buy-in

Throughout his first year as regional president, Highland has repeatedly stressed the importance of utilizing a communication strategy that offers multiple interaction points between him and his management team and the hundreds of employees who work both at the regional home office and at job sites throughout the state.

The interface opportunities come in a variety of methods and settings, including formal seminars, informal social functions, person-to-person meetings and electronic avenues.

“As far as the big-picture opportunities go, we perform a divisional seminar twice a year,” Highland says. “It’s an update on both the division and the entire company. The seminars are a mechanism for me to set the vision for where we are headed and do so in front of everyone in the region.

“Last October, when I was still in my transitional period, we had one of those seminars, and that is one of the first places where I laid down my vision for the region and set up the goals and objectives for the whole group.

“However, you still need multiple touches, because you can’t expect all of this to happen in one get-together. You need numerous opportunities throughout the year.

“Another thing we’ll do is have quarterly updates within the division. Those are different from the twice-yearly seminars in that they’re constructed as informal social hours. We try to have a little fun with those. It’s kind of like a happy hour where I’ll get everyone in the office here and bring them together, and we’ll just talk about the current division highlights, then take any questions that the group may have.

“Those gatherings are smaller than the seminars, where we can have 400 to 500 people. The smaller groups offer more of an opportunity to take questions and give updates.”

The formal, twice-yearly gatherings allow Highland and his leadership team a chance to roll out large-scale presentations. The smaller, informal gatherings are a chance to inform the staff of smaller-scale tweaks and alterations to the plan, along with any other changes that have come up in the interim. It allows the leadership to drill down on areas that might need a more detailed explanation.

It’s those areas of detail that allow for dialogue between management and employees, which is a critical aspect to his communication strategy because McCarthy is constructed as an employee stock ownership plan, or ESOP, — a company structure that allows employees to have an ownership interest.

With an ESOP structure, employee input becomes necessary regarding the company’s future, since employees are stakeholders.

“There were a couple of questions at the first meeting about what work, exactly, we are going to do within our commercial business unit,” Highland says. “We talked a bit about one market that we are definitely going to chase in that unit, which is the wastewater market. We talked about a few other areas in those markets, including detention and correctional facilities, hospitality and entertainment, and airport work.

“So creating those opportunities for dialoguing is just another way to connect the dots throughout the whole organization, getting everybody to understand what the tactical approaches are going to be for executing on the strategic vision — meaning, what markets we are going to attack.”

In addition to his own personal contact with employees, Highland utilizes communication avenues that don’t require him to be in the room. It’s an important aspect of communication for any CEO or president, particularly if your company covers a large geography. You can’t be everywhere at once, but your message still needs to resonate with all employees at all locations.

Highland uses email blasts to inform the staff of events, new hires and promotions, and various other accomplishments within the division.

But Highland believes a computer screen can’t be the only other face of the company besides his, so he relies heavily on his management team to keep the messages clear and the dialogue moving. He enables his management team and middle managers to communicate the vision, but he also wants feedback to ensure that the message is reaching everyone’s eyes and ears in the form he intended.

That’s why he checks in regularly with many of his managers, asking them what feedback they’re getting from their teams.

“It is important that you take the time to have touches with those people, so that you’re getting a sense at all levels of the company about what the pulse is out there, how people are responding to the direction you are headed, and it gives you another opportunity to see if the communication is getting through.

“You kind of do an ‘end-around.’ You might think you’re communicating well, but it’s always good to go back and see if the message really resonates, if people understand it. Are your midmanagers communicating the message effectively to all members of the organization? It’s kind of a trust-but-verify approach.”

Highland will often ask his managers what types of questions they’re receiving from their teams. It’s often a good barometer for determining whether the message is getting through clearly as it passes through the various levels of the company.

“Just by the questions that folks have, you can get a read on whether the message was communicated accurately,” he says. “You can find out if some folks legitimately have a point or an issue with what we’re doing, if it’s something we need to address.

“My direct reports and the layer under them understand that part of their job is to make sure they take the time and make the effort to take the pulse of the company, find out what folks are saying about the information they’re hearing. That is a key part of communication and making sure everyone is on board with your vision.” <<

How to reach: McCarthy Building Cos. Inc., (949) 851-8383 or www.mccarthy.com

The Highland file

Randy Highland

President, California region

McCarthy Building Cos. Inc.

Born: Lansing, Ill.

Education: Civil engineering degree from Bradley University, Peoria, Ill.

First job: I was a paperboy for a paper called the Village Press. I’ll never forget it, because it wasn’t a subscription paper — it went to everybody. So I had to deliver like 600 papers twice a week on my bike. Obviously, that teaches you that hard work pays off.

It also demonstrates something that I try to teach our younger people: Try to ace everything. Sometimes you’ll be asked to do things you don’t want to do, but even if you’re not passionate about it, it’s a short-term thing, and what is important is that you ace it. If you do that, you’ll be recognized earlier in your career as someone who has the ability to do a lot of different things successfully.

What is the best business lesson you’ve learned?

I have two. One is the importance of communicating the strategic vision to your folks, getting the right people on the bus, give them the support to be successful and then stay out of their way. Another is to take a genuine interest in the development of your people. You are only as good as the folks around you.

What traits or skills are essential for a business leader?

If you don’t have honesty and integrity, people are going to see right through you. You also have to be a good communicator, a solid evaluator of talent and you need to be willing to put the interests of other ahead of your own.

What is your definition of success?

Achieving the goals that you set is my most basic definition of success. But it’s also watching your people grow and develop, and becoming successful themselves – and having a little bit of fun while you’re at it.

Published in Orange County
Friday, 26 October 2012 11:54

The topic of succession planning had been on the table for quite some time for Andy Morrison and his fellow co-founders at Market Strategies International. But it wasn’t until 2006 that the clock really started ticking.

“We started to understand, really around 2000, that as we matured in the business, it was time for us to start thinking about who would be our successors, really under the condition that we wanted the firm to remain independent,” Morrison says. “That is when we started to think about a succession plan and a succession strategy for our positions.

“But in 2006, we acquired a private equity partner, Veronis Suhler Stevenson, and that was really the second stage of succession planning because now we had an outside partner and a board of directors.”

As a component of the partnership, Veronis Suhler Stevenson mandated that Market Strategies look for add-on acquisitions, particularly companies that had younger leadership.

“That was a main part of the criteria for any acquisition, that we find young-but-seasoned management who would be in the business for a considerable period of time and could potentially become companywide leaders once they joined our organization,” Morrison says.

In 2007, Market Strategies acquired Doxus, a marketing and product strategy consulting firm, bringing Rob Stone into the fold. Morrison and the leadership team quickly identified Stone as someone with high growth potential in a leadership role and began grooming him in an executive vice president’s role.

In February, Morrison — the company’s CEO since 1994 — decided to step down, effective March 31, transitioning into the chairman’s role. Satisfied with Stone’s development, the leadership team offered Stone the CEO’s position, which he readily accepted.

That’s the short version. In reality, it wasn’t as simple as Morrison stepping down and Stone stepping up. Over the course of many months, Morrison and Stone worked together, along with the rest of Market Strategies’ executive team, to develop and execute a detailed succession plan that fell in line with the overall goals of the market research and consulting firm and to communicate it to everyone in the company.

Lay the groundwork

A good succession plan is a road map. It shows you where you need to go and what possible routes you can take to get there, so that you and your team can plan the safest and most prudent route for your business.

The preparedness of the leadership team is something that made an immediate impression on Stone when he joined Market Strategies in 2007.

“That is one of the factors that worked well in our favor,” Stone says. “Andy and the entire cohort of founding managers have always been very transparent in the company regarding what their plans are, what the timelines are — because it is critical for people to understand what the road map looks like so that these sorts of changes don’t come as a surprise.”

The transparency is the result of an ongoing dialogue among the top managers in the company. The communication among the members of the management team gave Stone and George Wilkerson — who was named president at the same time Stone was named CEO — an opportunity to have a voice in the decision-making process as the future of the company took shape.

“There is a level of unnecessary surprise that can mar succession planning,” Stone says. “The communication process, which allowed myself and George to be completely invested and present in the key strategic decisions that the company has been making, helped remove that. It also has helped us to be more available and present to the staff at large.

“It has always been clear to our people as to who has an ongoing voice in the management of the company, who were the people on the executive committee and who were the people authoring the strategic three-year plans.”

Even though Stone and Wilkerson were involved as members of the leadership team, their consideration for the top spots in the organization wasn’t automatic. Market Strategies conducted a lengthy search that narrowed the field down, first to an internally focused search, and then specifically to Stone and Wilkerson.

Morrison and his team initially looked at candidates both inside and outside the organization. They wanted their ideal candidates to possess a number of qualities, including areas of expertise that Morrison’s team didn’t possess, such as experience with international markets.

Developing a list of essential qualities that every leadership candidate must have is a critical component to the hiring process. Along with international experience, Morrison and his team constructed a list of other qualities needed to successfully lead Market Strategies, which generated $75 million in revenue during 2011, Morrison’s final full year as CEO.

“On the established leadership team, we knew we had to think about who the replacements might be, and that was very much spurred by the integration process,” Morrison says. “We knew we wanted to add younger businesspeople who had played a big part in running their own companies. They knew how to meet a payroll, they knew what it takes to manage a business.”

However, along with the valuable experience and skills comes baggage. Incoming leaders learn how to manage according to the rules of their previous company, and assimilating them can take a certain amount of deprogramming and reprogramming.

“The baggage manifests itself in a number of different ways,” Morrison says. “Their own track record can work against us. They might have had to sign significant noncompete agreements that create major barriers to them holding a management role at another firm.

“Age was another factor. Some other people we talked to had a similar age to myself and those of us who were already leading the firm, which meant there was no real advantage in terms of bringing them aboard in a successor capacity, since they were probably looking at retirement as well.”

Morrison never hired a third-party search firm, but he and his team did work with a consultant on an informal basis. The consultant helped Morrison refine the criteria for evaluating a leadership candidate, which ultimately led to a focus on internal candidates.

“He is a trusted industry adviser and ran one of the largest firms in the industry at one point,” Morrison says. “He helped give us the final insight regarding what he saw as the advantages and disadvantages of internal succession planning candidates versus external.

“When you add all of that up, it really did lead to the fact that we did have candidates internally who were going to be as well-qualified and well-positioned as we could have hoped for. That is what convinced me that we would be fine selecting from the people who were already managers in the organization, as opposed to people who were on the outside.”

Step into the role

The transition occurred at the end of March, but soon after Morrison and his team zeroed in on Stone as their CEO candidate of choice, they began to train him for his role. One of the chief responsibilities Stone needed to master is that of communication.

It’s perhaps the biggest difference between a leader and an assistant. The leader needs to oversee the entire organization, not just a piece of the pie. An assistant coach in football or basketball might only take charge of the offense or defense. He might manage a section of the playbook. But the head coach has to bring every player on the roster together and unite all of the players around a common set of goals.

That means the head coach, much like a CEO, has to know how to communicate effectively to a large audience.

In the six months prior to their formal appointments, Stone and Wilkerson ramped up their interaction with the entire Market Strategies workforce. It was a job with an added degree of difficulty due to the acquisitions the company had made in recent years, which meant a portion of the company’s employees weren’t originally members of the legacy company — including Stone and Wilkerson.

“That was one of the concerns for the people here who had been a part of the legacy Market Strategies for quite a while,” Stone says. “They wanted to know what this means, if anything, for our culture because the people now leading the company at an executive level are not the people who founded it and led it for the first couple decades of its existence.”

Stone’s primary location was another area of concern for employees. Stone is based in the Atlanta area and decided at the outset of the transition that he had no desire to relocate to the Detroit area. He would, instead, visit the company’s Livonia headquarters on a regular basis while primarily operating out of Atlanta.

“We had to ask ourselves if that really matters anymore,” Morrison says. “Does it really matter if all the C-level officers live in one place? We’re a smaller firm, but I had to ask myself how a Ford Motor Co. operates when their leadership is literally worldwide, with senior officers on every continent. In this day and age, if you haven’t learned to communicate worldwide, you’re in trouble from the get-go. You need to be able to effectively communicate worldwide.”

With modern communication technology, you can effectively run a business with executives, managers and employees in different locations. But it also creates an added set of challenges for someone in Stone’s position.

Most critically, if you aren’t there in person each day to promote the vision and strategy of the organization, someone else needs to be communicating in your place. Otherwise, you run the risk of complacency setting in.

It’s something that Stone has worked at tirelessly in the months since he’s taken over the CEO’s role and something that he’ll continue to work at as he fine-tunes his approach.

“That’s the danger in an internal transition, particularly if you’re running an organization with several lines of business,” Stone says. “To answer that, George and I are continually ramping up our communication, particularly to the next group of leadership candidates that we hire. We want to impart the best practices that we would hope leadership candidates would abide by. Their first priority upon accepting their new role is to get out there, talk to people, be present and available.

“It’s easy to get complacent. If you’re transitioning into a new role from another place within the organization, you can kind of become complacent yourself. You can take it for granted that people throughout the company know you, that the people on your team know you.

“That’s why, when you are assuming a new role like this, you need to put as much attention and care as is possible into reaching out to your people, getting your message into all of your various offices and locations.” <<

How to reach: Market Strategies International,

(734) 542-7600 or www.marketstrategies.com

The Morrison/Stone file

Andy Morrison, chairman, Market Strategies International

Rob Stone, CEO, Market Strategies International

Education

Morrison: Doctorate in mass communications research and bachelor's degree in English and journalism with a teaching certificate, University of Michigan.

Stone: Doctorate in cultural studies, Columbia University.

What is the best business lesson you’ve learned?

Morrison: Constant communication, which includes both talking and listening. Everybody emphasizes listening nowadays, but you also have to be an effective talker.

Stone: You have to be absolutely dedicated to the success of your clients and colleagues. It seems like one of the simplest lessons to learn, but it is one that is seldom learned.

What traits or skills are essential for a leader?

Morrison: You need integrity in every sense of the word. You need to be open and transparent in your communication, and deliver on the promises that you make to clients and employees. I also admire decisiveness. Make a decision and set in motion the steps you need to get to the result you want. That is something that is critical to me.

Stone: I would add that you need to convey passion for what you do. That is a big part of our job as leaders, to constantly convey the passion and excitement we feel to all of our teams.

Published in Detroit
Friday, 31 August 2012 20:01

Natasha Ashton: Blink and it's grown

Every entrepreneur dreams of going big, fast. However, few recognize that the dream of rapid growth can, if managed incorrectly, turn monumental momentum into inexorable inertia. The fact is, whether a business ultimately succeeds or fails comes down to how well the CEO plans for growth — especially rapid growth.

As CEOs of a company that has experienced 2,200 percent growth in revenue during a three-year period, with a workforce that feels as if it is multiplying faster than cells divide, my husband Chris and I have learned that having the best product in the marketplace helps but can’t guarantee long-term success. You sometimes need to take a leap of faith. But, at all times, you need passion, vision and a plan. Here are some tips on managing growth.

Communicate your vision

Before your team members can help fulfill your vision, they need to know what it is. Communicate your long-term goals, and set the bar high. Establish strategic milestones along the way, and celebrate each one.

Clearly define your core values, and ensure each decision you make as a leader can be supported by those values. Lead by example, and choose key staff and managers who do the same.

Power to the people

One of the best things you can do as CEO is hire experienced talent that understand your business model and can develop the key areas of operation. Resist the urge to keep a hand in everything — you simply won’t add as much value to details as you could to the big picture.

In the early days of Petplan, Chris and I were accustomed to doing everything from answering the phones to marketing, from accounting to recruiting. Eventually, we were so immersed in day-to-day tasks that we became further and further removed from the strategic vision that fueled our initial growth.

We adjusted our focus back into driving the business forward and created the structure to allow our managers to lead their teams. It was difficult at first, but everything that’s worth doing is.

Maximize your mentors

Creating strong external partnerships is important to any business, but an internal partner who can focus on driving growth is invaluable.

When Vernon W. Hill II, founder and retired chairman and CEO of Commerce Bancorp, agreed to join Petplan as chairman in 2008, his get-it-done philosophy increased the pace of our decision-making significantly.

The right mentor can push you outside your comfort zone and help you grow in ways you never imagined.

Take advantage of technology

The importance of understanding when and how to make investments in technology can’t be overstated.

In the early days, many of our administrative systems were manual. The office was coping fine, but our teams were overstretched. By investing in technology and automating administrative tasks, we reduced the opportunity for human error and focused our human resources on other key areas, such as exceeding customer expectations.

While the initial investment was not insignificant, we ultimately saw a cost savings of more than 90 percent, which allowed us to make key investments in other areas.

Don’t just get customers, make fans

Take good care of your customers and they’ll tell their friends. Transform your customers into fans and they won’t just tell their friends, they’ll speak so passionately about your product, service, culture and core values that their friends will wonder if they’re getting a commission.

Putting our policyholders’ needs front and center has codified our position as the top-ranked pet insurance company in North America since 2008. Keeping their needs in focus during periods of rapid growth has ensured we not just maintain that position but fortify it.

To an entrepreneur, a rapidly growing business is both the challenge and the reward. And with an unwavering vision and the right people to help execute it, you can harness the momentum to achieve even greater heights.

Natasha Ashton is the co-CEO and co-founder of Petplan pet insurance and its quarterly glossy pet health magazine, “Fetch!” — both headquartered in Philadelphia. Originally from the U.K., she holds an MBA from the University of Pennsylvania Wharton School of Business. She can be reached at press@gopetplan.com.

Published in Philadelphia

When people are looking at business ownership, they are in one of two positions. Like my story, I’d say about 15 percent are just coming out of college and are full of a “taking on the world” attitude.

But that segment is certainly the minority. The substantially larger group, from my experience, does so because they were forced to. Most people say they would like to own a business, but the truth is that most people never start one. It’s only because of a layoff or downsizing that they ultimately say they don’t want another J-O-B.

Like me, most entrepreneurs have found starting out in business to be much harder than originally thought. However, reaching this stage of business ownership, it’s much more rewarding — both financially and emotionally.

Whether it is adding a new brand to your holdings, adapting an existing operating model, or making leadership changes in your organization, I want to share four strategies that have helped me over the past three decades:

  • Have a plan. You don’t know if you’re achieving success unless you have a written plan. This allows you to organize your vision and outline strategies to achieve your desired results. Secondly, the act of planning helps to make you accountable to tracking your progress against your goals. Remember, it is not uncommon for plans to require updates as conditions change. I was asked recently if my career looks the way I predicted it would when I began at 24 years old. It’s entirely different, but that’s OK!
  • ·
  • Be determined. An unbelievable amount of determination is required to be successful in business. There are unimaginable road blocks that creep up, whether you’re starting a new business or you’ve been established for many years. The ability to have a goal and adjust to conditions such as competition, the economy and technical advancements showcases your positive mindset on achieving your set goals – even if the pathway to get there has to change.

  • Recruit a board of advisors. Having a group of professionals whose judgments and recommendations I trust and treasure has been crucial to my business success. Look at the areas where you struggle and look for skill sets you need help with in finance, insurance or marketing. Go after high-level experience in the areas you need help with. It’s amazing to me that when I started in business, by just asking someone a question, they were willing to help. I have asked people at the top of their industries to give me an hour a month and they happily agreed. I’d tell them what was going on in my business and then listen to their advice. Share your written plan from step one with those who are willing to hold you accountable.

  • Amass enough working capital. Having enough money, from launch to break-even, is important for a new venture or strategic investment in your business. I’ve learned that whatever number you have in mind, you should double it. I like to compare working capital in business to the space shuttle. In business, it’s money and with the space shuttle, it’s fuel. If you only put three quarters of fuel in shuttle’s tank, it will only go three quarters of the way to orbit, which would have a horrific ending. The same is true in business. You must have enough working capital to get the business into orbit. In business, orbit equates to cash flow, breakeven and producing a profit so the business becomes self-sustaining, and in space, it means free travel in zero gravity. Enjoy the ride!

David McKinnon is the co-founder and chairman of Ann Arbor, Mich.-based Service Brands International, an umbrella organization that oversees home services brands, including Molly Maid, Mr. Handyman, 1-800-DryClean and ProTect Painters. To contact him, email davidm@servicebrands.com

Published in Detroit

Frank Venegas Jr.’s company, The Ideal Group Inc., was facing what you would call, well, not an ideal situation.

The year was 2008. Even if your company didn’t file for bankruptcy or face an existential threat, you probably had a bottoming-out point about that time or thereafter. At some point, your company probably reached a nadir, and you knew the only place to go was up.

The Ideal Group’s low point came when the company had to slash nearly 14 percent of its workforce. For founder, chairman and CEO Venegas, the staff reduction was a fork in the road. He could have chipped away at his staff little by little, reducing the short-term trauma level, but potentially forcing his company to go through multiple rounds of demoralizing cuts.

Or he could take the lump-sum approach, get it all the cuts over with at once, causing more short-term trauma, but beginning the healing process sooner.

Venegas chose the latter approach.

“At that point, we were probably operating the company at 30 percent larger than what it needed to be,” Venegas says. “What we told everyone was ‘Here is where we are at, we are going to cut it really hard and heavy, and we are going to do it one time, instead of doing it every month.’ And we were fortunate because we were able to hold true to that. We did it once, and we held on.”

As the saying goes, laws are like sausages; you really don’t want to know how they are made — you really don’t want to know how staff cuts are made. It’s a stomach-turning process for just about every business leader to decide why one group should remain employed and other group members should lose their jobs.

But in uncertain times, information is your company’s lifeblood. Venegas quickly realized that if his industrial manufacturing, distribution and solutions company was to recover and emerge stronger, he’d have to lead the way.

That meant keeping his remaining employees in the loop regarding the company’s status, why the cuts were happening and, perhaps most importantly, the reasons to get excited about the future.

“You can’t do much about the short-term morale of the remaining people,” Venegas says. “The only thing you can do is keep them up on what you’re doing as a company, and be honest and forthright. You try to give them new opportunities whenever possible, and really establish an entrepreneurial culture where people have the ability to try new things and make some mistakes along the way.”

Create a culture

Employees do come to work for a paycheck. They rely on your company for the money that provides food, shelter and other basic life necessities. So to say money has nothing to do with fulfillment of employees is flat-out wrong. Money is a factor.

However, it’s a basic factor. If you can’t provide competitive wages, the discussion regarding talent retention ends there. But if you can satisfy an employee’s financial requirements, employment does become about something else.

In short, once the money matter is settled, fulfillment is a matter of engagement. Employees want opportunities to think, create and innovate. They want a leadership group that is responsive to their input.

Employee engagement is increasingly critical when a company has to do more with less.

Ideal’s staff cuts were the product of a customer base that was about 70 percent automotive. When the U.S. auto industry took a historic nosedive during the depths of the recession, the ripple effect hit Ideal. While the company was able to endure the shock better than some of its competitors, sales slipped to under $100 million in 2009, making cuts necessary.

While those left behind had to deal with the collective morale damage and other fallout, Venegas saw an opportunity. Ideal had to do more with less, but the opportunity was there for his remaining staff to flex its entrepreneurial muscles and demonstrate their versatility.

Entrepreneurship is something that has always been a part of Ideal’s culture, but Venegas realized the time was right to embrace the concept anew.

“When you walk in here, and see the way the company looks, the way we run the company, it doesn’t take you a long time to realize that we are a highly entrepreneurial and change-oriented company,” Venegas says. “We’re like a Silicon Valley company in that we do things far differently than anybody else.”

The key to developing and maintaining a focus on innovation within a company is to educate employees, which is as simple — and as complicated — as communicating with them. You have to reveal your vision, your strategy, your methods and, when possible, your financial numbers, to your people.

If you can paint a detailed picture regarding where the company stands, and where each person fits into the larger picture, you stand a much better chance of motivating employees and keeping the idea stream flowing.

Venegas likes to keep his employees apprised of where the company stands financially, whether the numbers show a profit or a loss. Though some leaders might look at a financial loss and see something that would damage employee motivation, Venegas believes the act of informing employees is a motivator in and of itself.

“You get people to buy into an entrepreneurial culture by making money,” he says. “So for our purposes, we want our people to know whether we are making money or not. We run a monthly financial statement for each of the six companies that we have, and those are reviewed not only by senior management but also by the people who lead those companies — which we call BUMs, or business unit managers. They are in charge of their balance sheet, P&L and the whole deal.

“You just make it really clear for everyone to see whether you are doing well or not so well. Everybody should be able to hold their eyes open and take a look.”

Informed employees have a better idea of how to formulate new ideas that walk in step with what the company needs. They feel more empowered to take calculated risks, live with the consequences, and if the plan fails, to turn it into a learning experience for next time.

“We don’t box many people into any particular role,” Venegas says. “My brother and I own the company, and I guess we were taught how to take things apart and put them back together. A lot of times, if we didn’t need this part or that part for a given project, we didn’t get it.

“So we were always looking at how we could build things faster, less expensive and more reliable. That is a concept we’re always trying to pass on to our people here.”

Feed their careers

Venegas believes employees want four things out of an employer, apart from financial compensation: consistency, opportunities to express their ideas, opportunities for promotion and the chance for longevity.

“My CFO just celebrated her 15th anniversary here,” Venegas says. “When she initially came to work for me, she was a graduate intern from the University of Michigan. Obviously, she wasn’t the CFO when she first started, but she grew into that position, she demonstrated great learning habits, and it has been a real blessing to have her here.”

To Venegas, the long tenure of his CFO reinforces the importance of career development as an employee motivator. In particular, Venegas values hands-on employee development that coaches his team to think, create and innovate in a real-world setting, formulating ideas that will be relevant to the company moving forward.

“Our career development operates every single day,” he says. “We are a very well-managed company. The key, I believe, is to set your missions in a very clear way, establish performance metrics and go through them frequently. We go through them not only on a monthly basis, but on a weekly basis.”

Venegas also has his team conduct frequent meetings. Though many business heads view meetings as one of the biggest time-wasters on the company schedule, Venegas still sees value in getting a group of people together in a room to exchange ideas, and share what is working and not working in the company’s operations.

“People say meetings are a waste of time, and that is their opinion,” he says. “But here, it really gives us time to open up and talk. Here, our meetings are pretty open, and you can say what you want. When someone proposes an idea for a new project, we start out with a white board, and begin listing the pros and cons. There is no particular recipe regarding the how and why of the projects we pick, the things we are going to go after.

“But I do find that it is pretty apparent over the course of the meeting whether it makes sense or not. We can generally see whether we’re filling the white board with reasons why we should do something, or reasons why we shouldn’t do it.”

As long as the conversation remains respectful and all viewpoints are considered, Venegas says his team will come to a consensus on how to proceed. If there are any disagreements or conflicts, those have to be addressed in order to get everyone back on the same page.

Motivating employees means respecting them — their work, their opinions, their careers, their ideas. Venegas has promoted that viewpoint at Ideal, and it has helped lead the company out of the recession to $201 million in revenue last year.

“We look at our company values during our meetings, and our mission statement, and from there it’s really not that hard to put together what we have to do in order to be a success. I remind our people — and sometimes, I have to remind myself — that we went through this whole recession, and we’re still here. We remain strong, and we didn’t have the problems of some of our competitors and other companies.”

How to reach: The Ideal Group Inc., (313) 849-0000 or www.weareideal.com

The Venegas file

Frank Venegas Jr.

Founder, chairman and CEO

The Ideal Group Inc.

History: I started the business 33 years ago because I won a Cadillac in a card draw. I sold it a few days later, took the money, put it in my banking account and started Ideal.

What is the best business lesson you’ve learned?

My grandfather always told me that if you do what the boss doesn’t want to do, you’ll have a job every time. Also, you need to create a reason why you’re in business. Do what someone else in the market isn’t doing. You could be in the window-washing business, but it might be how you present yourself. Maybe it’s how you let customers inspect the final product. But you do something a little different, and that draws the customers back to you.

What traits or skills are essential for a business leader?

Have integrity and don’t lie. I’d say that’s the most important thing by far. Once you’re not honest, no one wants to work for you.

What is your definition of success?

Being happy in anything and everything you do and seeing everybody around me fulfilled. I lost $18 million on a business deal in 1998. I did something that I should have thought harder about. The company made it back, not because I was a great leader, but because of the people who work for me. It takes a whole bunch of effort from a whole lot of people to keep a company happy.

Published in Detroit

Going into 2008, Chip Conley was concerned about the future, and not just for the obvious reasons. Yes, there was the looming possibility of another economic downturn. And with his company launching 15 hotels in a 21-month period, he wondered like many business leaders what impact a recession would have on his organization and its 3,000-plus employees. The difference was Conley’s personal life was also in turmoil.

“We were growing as fast as we ever had at a difficult time,” says Conley, the founder of the San Francisco-based hotel group, Joie de Vivre Hotels. “I also had a family member who was going to San Quentin prison wrongfully. … I had a long-term relationship end. I had five friends commit suicide during that time.”

Soon, the CEO faced the repercussions trying to juggle so many emotions.

“I had my own flat-line experience,” he says.

After finishing up a speech in St. Louis, Conley fell unconscious. In the five to 10 minutes that it took the paramedics to arrive, his heart stopped.

While Conley fully recovered from the heart attack, his experience sent him through a search for meaning, a way to make sense of all the things happening in his life.

“CEOs — you sort of think that they’re above all the emotions and the difficulties and no one should be pitying any CEOs,” Conley says. “You know — ‘Don’t cry for me, Argentina.’ But the bottom line is that I was really confused by all of the emotions I was feeling — a lot of things were falling apart in my life at once.”

As the leader of a $250 million business, Conley knew that he couldn’t be the only one facing this challenge. To empower himself as well as other leaders he did extensive research on the psychology behind emotions and how this translates in business, writing “Emotional Equations: Simple Truths for Creating Happiness+Success.” The book focuses on how business leaders and individuals can become more emotionally fluent, and subsequently, improve their organizations. To date, his transformational leadership practices have been featured in publications from Time to Fortune and The Wall Street Journal.

“In business, what we want to do is influence things,” Conley says. “We want to have an impact. And usually it’s very external: how can I have an impact or influence the world? What I’m saying is if you can influence and impact your emotions, you can actually be more impactful as a leader in the world.”

Become a CEO (Chief Emotions Officer)

Conley’s research on emotions led him to the work of author Daniel Goleman and an interesting finding that the author made in his book “Emotional Intelligence” 16 years ago: that two-thirds of the success of business leaders comes from their EQ — emotional intelligence quotient — while just one-third is due to IQ level or experience. This statistic struck a powerful chord with Conley.

What it means for a CEO is that the best leaders have more influence and control over their emotions. The most effective CEOs are “chief emotions officers.”

“First of all, the more that you’re emotionally fluent and emotionally intelligent about what’s going on inside of you, the more effectively you’ll be as a leader and the happier you’ll be,” Conley says.

The first step in becoming a chief emotions officer isn’t an easy one for all, however. It begins with becoming more attuned to what’s going on inside of you by taking your ego out of the equation.

Conley notices that many young leaders tend to use talking to motivate people. They have a tendency to think that if they give a good speech or make a proclamation that that the emotion will get people excited. While this works sometimes, he’s learned over the years that trying to motivate people without good information can also backfire.

Frequently when people want to get things done, their ambition in tandem with success can lead employees to interpret it as narcissism, Conley says.

“What happens sometimes is a leader of an organization wants to get people fired up and people think that he or she is really out of touch with what they are seeing,” he says. “So it’s a fine line, because you do want to be a visionary as a leader and help people see things that aren’t as obvious, but you also have to keep your feet on the ground.”

Practicing empathetic leadership starts with becoming a better listener.

Conley uses the example of commercial airlines. When jet fuel prices went up and they started adding new charges for items such as amenities, luggage and so on. The exception was Southwest Airlines, which considered the impact on employees when it decided to maintain many of its pre-recession policies.

“The airlines teed off us — the customers — for charging for bags and for food and no longer handing out peanuts, except on Southwest,” Conley says. “So they upset us, but more importantly, they also upset the flight attendants. Because they were going to start charging us for bags, we brought all of our bags on the plane. You turn flight attendants into baggage handlers and the level of the satisfaction of the flight attendants went way down. And guess what? Customer satisfaction plummeted, except at places like Southwest.”

Understanding people’s feelings takes a two-way conversation. So instead of giving a speech about how it’s going to be, Conley now asks his people how they want it to be. As CEO, he frequently had dinners with different groups of employees, taught classes for team members and maintained an open door policy to encourage people to share their emotions and ensure they felt heard.

“When you can understand the subtleties and the nuances of what this person in front of you is looking for in their life, it allows you to deliver on those needs a lot better,” Conley says.

Identify the variables

The challenge in learning to control emotions for most people is becoming more responsive to them. Because people tend to react quickly when something happens to us, they often don’t take time to think about the root cause of emotions or worse, push them off, Conley says.

Due to the stresses of day-to-day business dealings, it might take CEOs days or weeks to realize that something has been eating at them because they were too busy to deal with it at the time.

“Sometimes efficiency takes us away from our emotions and we just ignore them, and then they come out in other ways,” Conley says. “We wonder, ‘Why am I so angry about this?’ and you don’t realize that yesterday this person sort of blew you off when you were supposed to have a meeting with them. And you just had other things to do so you didn’t focus on it.

“So something happens and we react. The lifespan of an emotion physically in your body is usually 90 seconds long, but we actually hold on to it a lot longer than that. It gets stale, but it’s still that emotion that you’re holding onto. Learning how to be more responsive and less reactive is a good thing.”

In a business culture, emotions are contagious, from smiling to yawning and frustration, to fear and anxiety. So not addressing the fear or anxiety of one person — or yourself — can quickly turn into the emotional neglect of many, causing creativity and innovation to suffer.

When Conley researched “Emotional Equations,” he found that although emotions seem fleeting and uncontrollable, they are actually quite predictable. Once you identify the emotion that you or your people are feeling, you need to examine ingredients that created it. Most can be broken down into simple math.

In a study done several years ago, participants were given two choices: get an electric shock now or get an electric shock randomly in the next 24 hours, but it would be half as painful. The vast majority of people in the study chose the option to get the shock immediately.

Why? They had more control over the situation by knowing when the shock would happen, lowering their anxiety.

“Anxiety has two different ingredients: uncertainty and powerlessness, or what you don’t know and what you can’t control,” Conley says. “Once you start to realize this you can actually influence the ingredients and then may influence the emotion.”

Other examples include (Disappointment = Expectations - Reality) and (Workaholism = What Are You Running From?/What Are You Living For?)

By dissecting emotions into variables, leaders can influence the variables to better control the emotions themselves. Take anxiety, for example.

If employees in a company harbor anxiety, they will eventually become distracted and less productive. So when leaders find out that people are anxious about their jobs and finances, they should look for ways to deplete some of the powerlessness and uncertainty they may be feeling.

“If we know that uncertainty and powerless is what creates anxiety, and we know that anxiety makes people less creative, less innovative, less engaged, less productive, then when we have bad news, we better figure out how to package it quickly and get it out to people,” Conley says.

“When people are just stewing about what they think will happen, it becomes a big distraction from what they really should be doing in their work.”

While reassurance with words is always helpful, you also need to take action. Set tangible goals. Provide comprehensive feedback. Get employees more engaged in innovation.

The same goes for anxiety of a CEO. By creating more certainty in your life and taking power over the areas that you can control, you reduce the anxiety that can paralyze you and your organization.

“Even in a time when people are worried about things like layoffs, they can feel like ‘Ah, I have some power or some influence in terms of my effectiveness if I do the following three things,’” Conley says.

Make it a commitment

CEOs who use empathy in their decision-making processes can create cultures with happier employees, who in turn, provide better service.

“What we saw is the more employees felt engaged, the happier they were and the more likely they were to give a great experience to our customers,” Conley says. “So our employee satisfaction went up and then our customer satisfaction went up as well.

“When you get more engaged employees in a service environment, you’re able to put an environment together that allows the customers to get solutions faster. And the employees are going to feel not just engaged but they feel like their fingerprints are all over the business.”

Seeing the power of emotional equations, Conley began teaching them to leaders at Joie de Vivre to help them better identify with their emotions and empathize with the emotions of others. And so far, the impact on organizationwide morale has been overwhelmingly positive.

“Initially people thought, ‘Oh God. Here’s Chip with his New Age stuff again,’” he says. “But honestly, the last few years have been an emotionally trying time for people in the business world. So the fact that I was being vulnerable and authentic about my own fears and frustrations and concerns about life meant that people felt like, ‘OK, I can breathe. I don’t have to be Superman.’”

Giving more voice to emotions doesn’t mean productivity has to suffer either. In fact, it should be the opposite. When people have the safety to express their emotions, they’ll be more empowered to make decisions because the fear of making a mistake or anxiety about their job security won’t be distracting them.

“If you have a problem in a hotel or any kind of business, you want the person right in front of you to solve it,” Conley says. “You don’t want to have them say, ‘OK, well, I’ll talk to my manager.”

While he’s transitioned from the role of CEO, Conley continues to promote the equations at Joie de Vivre as a strategic adviser. Today he focuses on creating one emotion in particular: joy (Joy=Love-Fear), which is also the company’s mission statement.

“Our company name is Joie de Vivre, which means joy of life,” Conley says. “The fact that we have an underlying message and many of us wear these wristbands that say “create joy” is a reminder that that’s what we’re in business to do.”

How to reach: Joie de Vivre Hotels, (800) 738-7477 or www.jdvhotels.com

The Conley File

Chip Conley

Founder, former CEO and strategic adviser

Joie de Vivre Hotels

Born: Long Beach

Education: BA and MBA from Stanford University

What was your first job?

The fries and shake station at McDonald’s

What is one part of your daily routine that you wouldn’t change?

Compensation is a right and recognition is a gift so I try to provide two honest and detailed forms of personal recognition to people I work with daily. If I slack off one day, then I add those to the next day.

What would your friends be surprised to find out about you?

I’m not sure that many people know that I have a 35-year-old stepson, a six-week old baby and three grandchildren, with the oldest being 17 and 3 inches taller than me. As much as Joie de Vivre and our various hotels were sort of like my children and family, I feel fortunate to have these kids and grandkids in my life as they remind me of what’s truly important at the end of the day.

If you could have dinner with one person you’ve never met, who would it be and why?

Herb Kelleher, the former CEO of Southwest Airlines who was in that position for 37 years. He created a compelling culture that walked its talk around the customer coming second and the employee coming first. The airline industry is brutal — cyclical, high fixed costs, lots of unions, big risks — so I’d want to learn more about how he dealt with the emotional roller coaster that came with being CEO for three dozen years. He outdid me by a dozen years since I was CEO of JdV for two dozen years.

Published in Northern California

A few years ago, I was lucky enough to retire from daily work and take some time off. It was a chance to spend time with family and friends, pursue overdue projects and contemplate my past business success and failure.

My company had been prosperous, and while I sat with my feet up on my desk appreciating how good the outcome had been, I also started wondering about what I could have done better. It occurred to me that had I known then what I know now, there were a few key questions that I wished someone had asked me, if not at the start, then at least early on.

The first question — and probably the biggest one — was: What did I ultimately want from the business I founded? Was it to grow it quickly and sell it to the highest bidder in a short period of time, say five years, or to create a “lifestyle” company that would conservatively allow me to withdraw a sizable salary each year, for many years to come?

Looking back, I realize my answer always depended on the numbers. If, for example, my choice was between a business that produced a salary of $1 million for 10 years, or a business that produced a salary of $200,000 for five years with an exit value of $8.9 million at the end of the fifth year, which scenario would I prefer? Doing that math, perhaps it would have been easier for me to make a clear and informed choice.

But what if the numbers didn’t provide an easy answer?

For you quantitative people, you’ll notice both scenarios above yield roughly the same Net Present Value, thereby eliminating money as a deciding factor. So if money isn’t the deciding factor, what is left to consider?

This brings me to my next question: Is it more important to have a profitable business, even if the day-to-day operations are boring? Or would I rather earn less money and work at something “cool” that I was excited to tell my friends about? If you are facing this choice today, think carefully. Can you really handle 10 years of feeling unchallenged? Will the money be enough to get you out of bed in the morning and into your office? On the other hand, if you sold your business after five years, what would you do next? My father-in-law worked his entire life in anticipation of retirement, only to discover retirement drove him crazy.

Lastly, take an honest look at yourself. How much of your ego is wrapped up in the outcome? My father dreamed of building a family legacy — that was the most important thing for him. Yet for some of my friends, fixing a business and selling it left them feeling fulfilled. There is no right answer, other than to ask yourself, when it’s all over, will you feel prouder of “built to last” or “built to flip”?

I wasn’t lucky enough to think about these issues when I should have, and when I discuss them with business owners today, they often respond with, “What difference does it make?” The reason these questions are important to consider now, is that the answers to these questions will help you make better long-term decisions every day. You’ll allocate resources differently for a company that you intend to keep for life than you will for a company that you hope to flip quickly.

For example, if you are planning to sell your business to a larger company, the buyer tends to look for great products that can fit into their product line. For this reason, it makes more sense to invest in your product or service as opposed to sales and marketing. On the other hand, if you are planning to keep the business for a long time, you will need to invest in building a strong and resilient sales and marketing organization.

The best advice I can offer you is: Answer these questions and then build your business accordingly.

Terry Cunningham is president and general manager of EVault Inc., A Seagate Company. He founded Crystal Services, which was purchased by Seagate in 1994 and integrated into the company's software division, which then became Seagate Software. His accomplishments include serving as president and COO of Veritas Software, and founding, building, and leading two other successful software companies.

Published in Northern California

Does your company have alignment between its mission, its vision and its strategy? If you don’t, you may want to ask yourself if everyone on your team is on the same page as to what those terms mean to your business.

Maybe you’re like a former client of ours who knew that having a clearly stated and motivating mission was important, but wasn’t sure what a “mission” was or how to lead his team to either create one or uncover the one they were already living.

It may be that “mission” is not something that motivates you as a leader. It’s perfectly natural that some aspects of an organizational identity are not equally motivating to us as leaders.

At the same time, as leaders, we need to recognize that we work with and lead others who do find “mission” to be important. They will evaluate us as leaders and our organization based on whether or not we have a clear mission and whether or not we can deliver on that mission.

One of the most common definitions for mission is to answer the question, “Why do we exist?” For example, Nestlé Purina PetCare has a mission to “enrich the lives of pets and the people who love them.” Notice they didn’t declare a mission to sell the best (or most) pet food or pet care products. While we can safely assume that they want to do both, they’ve chosen to declare a reason for being that connects to those they serve: pets and consumers.

Answering the question of why you exist is helpful to many, but it can sometimes be too abstract for certain organizations and people who prefer the concrete. It can sound like you’re about to launch into a discussion of Socrates’ view of virtue rather than address concrete business issues. There are alternatives that get at the same concept in more concrete ways.

The first is to ask a broad cross section of employees the question, “What problems do we solve for our clients/customers?” Of course, one can also ask your clients/customers directly, “What problems do we solve for you?” This phrasing often helps employees and clients describe the value that you bring in a more concrete form. From that data, one can begin to see patterns that demonstrate the value that you bring to your external stakeholders.

You could also ask employees and customers, “How do we help you?” or “What difference do we make in your life/business?” Follow it up with, “Tell me about why that is important to you?” and you can get to answers that resonate more on an emotional level.

Imagine someone asking a consumer, Mrs. Johnson, who buys Nestlé Purina’s Dog Chow the following series of questions:

Interviewer: Tell me about why you buy Purina Dog Chow.

Mrs. Johnson: Our dog, Butch, likes it.

Interviewer: What other reasons are there?

Mrs. Johnson: He’s been very healthy eating Dog Chow, so that’s important to us.

Interviewer: So tell me why that is important to you and your family. The answer may seem obvious, but go ahead and tell me anyway.

Mrs. Johnson: Well, I know that when I buy Dog Chow, Butch is going to be happy, healthy and ready to play with our family. He has brought immense joy to our family, and we want that to last for as long as possible.

You have a choice when you describe your mission. You can make a laundry list of things you do, or you can describe the difference that you make in the lives of those we serve.

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. To explore how to better align your business to an inspiring mission, you may reach Kanefield at (314) 863-4400 or andy@dialect.com.

Published in St. Louis