When Greg Faherty looked at his company last April, he saw too much manufacturing capacity and too many people serving a rapidly stagnating new housing market.
But before taking the drastic action of consolidating two of the window and patio door manufacturer’s plants, Faherty, president and CEO of Atrium Cos. Inc., sought the input of his leadership team, customers and vendors.
“We had to take a look at what we could do in terms of shutting down some of that capacity and reducing our cost,” he says. “We have a couple of facilities in Southern California. We decided that we could serve our Arizona and Nevada markets from California fine.”
The move — which consolidated the company’s Tolleson, Ariz., and Anaheim, Calif., manufacturing facilities into a single California location — shouldn’t have surprised anyone. Though the company experienced revenue growth during the first few years of the nationwide housing slump — moving from $720 million in 2004 to $840 million in 2006 — 75 percent of its sales originate in the new home construction market. But even with such conspicuous market indicators, Faherty couldn’t pull the trigger without first consulting with his people to get their input.
“You get input from your people, you get input from your customers, you get input from your suppliers,” he says.
What’s more, he can’t imagine any leader that wouldn’t.
“I can’t imagine a leader that on his own says, ‘This is what we’re going to do now,’ and his team disagrees, and he wants them to go out and implement it perfectly,” he says. “He’s going to have trouble.”
To avoid trouble during times of duress, maintaining a two-way flow of communication with your key constituents can make all the difference. Your employees, customers and vendors supply you with the information you need to make the best decisions, and being able to explain the rationale behind your decisions can facilitate understating while quelling anxiety or anger.
“You have to respond with the people who have provided input, and if you decide to go in a different direction, you need to explain why you’re doing what you’re doing,” Faherty says.
That’s exactly what Atrium’s president did in the events leading up to the company’s consolidation. By seeking input from his key constituents and then articulating the decision that resulted, Faherty successfully navigated through a tumultuous situation while keeping the 5,000-employee company charted toward a brighter horizon.
Seek input from key executives
Making a decision without the appropriate information is like shooting at a target without lining up the gun’s sight.
“You need to make sure that you’ve got all of the information to help you make the decision so that you’re not doing some kind of a hip-shot situation where you’re pulling the trigger without all of the information that you need,” Faherty says.
As the housing slump worsened and Atrium’s unused capacity was beginning to stifle incoming revenue, Faherty didn’t shoot wildly. Instead, he gathered up as much information from as many different sources as possible to home in on his target — the right decision.
Much of that information came from national reports and databases that report on past trends and predictions within the housing market. While that certainly was helpful, Faherty says no information dredge is complete without tapping into your constituents. But soliciting feedback from your leadership team can’t be a one-time request.
“That has to be a part of your style, a part of your culture, a part of the company’s culture,” Faherty says. “You can’t turn it on and turn it off like a switch.”
To establish that collaborative dialogue, Faherty says to hold regularly scheduled meetings with your key executives every month.
“You seek to bring them in,” he says. “You ask their opinion. You don’t give them a yes or no question. You give them a question that requires their responding with more than a yes or no type of answer.”
Asking open-ended questions is a great way to elicit feedback from your more introverted executives. It’s also a great way to pull multiple opinions on the table to get the conversation going. As each idea is being presented, just make sure to give them proper consideration.
“Don’t bite people’s heads off if they come up with a stupid idea,” Faherty says. “That’s the last time they’ll come up with any kind of an idea.”
When members from your leadership team contribute to the conversation, Faherty says they’ll begin to develop a sense of ownership about the ultimate decision. They may not like your chosen course of action, but at least you’ll foster a certain amount of buy-in.
“Nobody liked doing it, but if we had to do something, that was the right decision to make,” Faherty says of the consolidation. “If you get buy-in with all of the people involved, then the execution of it becomes a whole lot easier. Everybody wants to execute the strategy because they’ve played a part in that decision.”
Solicit customers and vendors
When Faherty first became Atrium’s president and CEO in January 2006, the housing market had just started to crater, and the company was beginning to feel the effects. One market that was hit particularly hard was Florida.
“We were having some difficulty servicing our customers in Florida,” he says. “We had a facility that really needed to be overhauled and get its service and quality right. I visited several builders in the Florida market, and every one of them told me the same thing: ‘You guys suck. You’ve got to really improve.’ That was good feedback. I wish it would have been different, but it was the honest feedback, and it told us where we stood and what we needed to fix.”
Your customers will often be your most honest barometer of performance in a given market.
“You’d be surprised by what they’re willing to tell you,” Faherty says. “They don’t sugarcoat it.”
But unlike your leadership team who will come to you with their feedback, you most often go out and seek customers yourself.
“You get out in the marketplace, and you meet with your customers,” he says. “You learn so much more because you really get what the true world is. Sometimes, things get filtered from up the organization from salesmen to sales managers to general managers. By the time it gets to me, it’s been so filtered that I’m not sure I’m getting the true story. So getting out and talking to the customers one on one really gives you an insight into how you’re doing and what you need to do better.”
That can be hard for a busy executive. You can’t expect to interact with the consumer on a daily basis. Instead, Faherty suggests organizing efficient visits with your sales force when time permits. If your team is making a West Coast swing over the course of two weeks, for example, that would be a much better use of your time than flying 500 miles to tag along on intermittent sales calls over the course of three months.
However you organize it, the important thing is to get out and interact with your customers face to face.
“You travel with your salespeople,” Faherty says. “You go visit, whether they’re a national account or whether they’re a local distributor or a builder. You just walk in and shake hands, sit down, and say, ‘How are we doing? What can we do better?’”
You should also direct those same questions at your vendors. At Atrium Cos., Faherty invites key suppliers to come in once a year to audit each facility.
“You’re buying their equipment to manufacture their products, and they know exactly how that equipment should be used to maximize the productivity and efficiency of the equipment, and how the men on the line ought to be using the equipment and what they ought to be doing,” he says. “From what is optimal to what we wind up doing, there’s often quite a big spread.”
Eliciting feedback from your suppliers also provides a great window into the practices of your competitors.
“They can go look in our plant and look at our operation and compare it to our competitors operation,” Faherty says. “They’ve got an opinion about what you can do better, so you elicit that, and you listen to them.”
Articulate the tough decisions
Whenever you make a hard decision, Faherty says you or your key executives need to explain the rationale behind it to enhance understanding and get buy-in. While this practice certainly comes in handy in the boardroom, it’s even more important when articulating a major decision that affects many of your employees.
Take the consolidation. When he and his team decided to close the Tolleson facility and consolidate it with one in Anaheim, Faherty knew the move had to be conveyed with care.
“You have to understand that consolidations are difficult, and they’re hard on the people,” he says. “There are going to be some people who lose their jobs.”
When articulating the rationale behind a hard decision, Faherty says the first thing you must consider is the messenger.
“An executive needs to be there,” he says. In this case, Faherty sent the company’s western regional president who oversaw the affected manufacturing facilities to deliver the news. Delivery from a key executive or manager always gives the rationale a stronger sense of credibility.
Once you’ve identified the messenger, Faherty says your next consideration is time. The worst thing you can do is sit on a decision and not inform your people.
“You need to let people know,” he says. “You can’t wait until the last minute and pull the trigger.”
After you’ve designated the messenger and time frame, the only thing left to do is to explain the decision and share the rationale.
“Let them know what you’re doing, why you’re doing it, more importantly, how’s it going to affect them,” Faherty says.
Part of that process involves allowing your employees to make their own voices heard. Faherty says you can’t simply announce a major decision and then cut and run.
“You give them an opportunity to ask questions,” he says. “You give them an opportunity to vent because a lot of them are going to be unhappy.”
That’s precisely what Faherty’s regional president did at the company’s Tolleson location. After explaining the rationale behind the consolidation, he allowed the facility’s employees to air their grievances and ask questions. Though the decisions itself didn’t make many people happy, devoting extra time to that process proved therapeutic when it was all said and done.
“At the end of the day, they still aren’t happy, but if you explain the rationale correctly, and you’ve taken the time to do it in person, and you’ve taken the time to let them ask you questions or vent, they’re never pleased, but at least they understand,” Faherty says. “They say, ‘Thanks for taking the time to come to talk to us in person to let us know what you’re doing, why you’re doing it. We don’t like it, but we understand it.’”
HOW TO REACH: Atrium Cos. Inc., (214) 630-5757 or www.atrium.com
Employers who seek to regulate or monitor their workers’ electronic communications could be stepping into a legal quagmire. Lest they get their shoes muddy (and mess up their legal standings, too), employers should be up to date on court rulings on employee communications. The latest ruling comes from the 9th Circuit Court of Appeals in California.
Smart Business asked Michael A. McCabe, a shareholder at the Dallas law firm of Munck Carter, P.C. with expertise in e-discovery and labor and employment law, to help sort out the situation.
Let’s cut to the chase; can I legally monitor workers’ e-mail accounts?
Yes, in most states. But, you have to go about it in the right way. The key is to defeat the employee’s expectation of privacy in his or her workplace communications.
Employers can do this by distributing a policy that clearly and unambiguously states that any communication made over the company’s e-mail system is not private and will be monitored by the employer. Having established no expectation of privacy to workplace communications, the employer is on solid ground to legally monitor the communications.
Does that mean I can monitor personal communications on company computers?
This is a relatively new and dynamic area of the law that is constantly being fine-tuned. However, most courts have consistently ruled that so long as an employer’s policy dispels any expectation of privacy, it is fair game for the employer to review communications made over the employer’s e-mail system.
Some courts have gone so far as to hold that communications between employees and their lawyers cannot be privileged if the employer retains the right to review communications sent or received over the company’s e-mail system. In the words of one court, a properly drafted policy is equivalent to notifying employees that ‘the employer [is] looking over your shoulder each time you send an e-mail.’
How about monitoring other technology like cell phones, voice mail, BlackBerrys?
Written communications, in whatever form, that are transmitted over the employer’s computer system can be monitored if the employer’s policy eliminates any expectation of privacy. This same rule should apply to voice-mail communications that are transmitted over an employer’s e-mail system.
Monitoring cell phone conversations is a different story altogether. The law of most states and the federal government is that telephone conversations can be monitored if proper notice is given and consent received. In some states, only one person to the conversation needs to consent to being monitored, while in other states, all parties to the conversation must consent. That’s why you’re informed that your telephone conversation is being recorded when you call a customer service hot line.
To monitor employee’s cell phone calls, you would have to receive consent from both the employee and whomever he or she calls because you don’t know if he or she is calling one of the more restrictive states.
For all practical purposes, it would be very difficult to implement such a policy with cell phones.
But didn’t the 9th Court’s June decision draw some lines?
Not as much as you might think. The 9th Circuit ruled that Arch Wireless, a text message provider, violated the federal Stored Communications Act (SCA) by disclosing a police officer’s sexually explicit text messages to his employer, the City of Ontario Police Department, even though the city was the subscriber on the service contract. In the court’s view, Arch Wireless violated the SCA because it disclosed stored text messages to a third party without the consent of either party to the communications.
This does not, however, stop employers from monitoring e-mails that are sent entirely over their own e-mail and computer systems. The easiest way for employers to avoid the 9th Circuit’s ruling is to limit business communications to those devices that can be monitored by the employer, such as BlackBerrys and traditional e-mail.
Can I take disciplinary action against an employee for a post to an industry blog?
Probably, but it can differ from one state to the next and between public and private employers. There are several cases in which employees were fired or disciplined for material they posted on an industry or personal blog that was critical of their employer. Other employees have been disciplined for making statements online that appear to be the employer’s official position on a topic.
To avoid these problems, all employers should have a policy that prohibits employees from blogging about their employer without making their employment status known and without stating that the espoused views are personal to the employee and not the views of the employer. Furthermore, the policy should remind employees that they can be disciplined if they paint the company in a bad light.
MICHAEL A. McCABE is a shareholder at Munck Carter, P.C. and a member of the firm's labor and employment and litigation sections. He can be reached at (972) 628-3609 or email@example.com.
It is critical that the owners of privately held businesses understand that their business will transition, certainly at their death, and that the overwhelming majority of opportunity lies in planning for a transition while the owner is alive and the business is continuing to prosper. Many business owners have contingency plans in place that address an untimely death or disability. However, the more likely scenario is that the owner lives a normal life span and at some point will want to redefine his or her relationship with the business. This is where a “during lifetime” orientation to business transition planning can really pay off for owners, their family, their employees and the business.
Successful business transition involves a complex matrix of interrelated personal, family, business, legal and financial issues. Also, business transition can take many forms including: changing the ownership and management of the business, retaining the business for family members, shareholder dispute resolution planning, an internal sale of the business to a key employee group or a sale of the business to a third party.
The complexity of these issues prevents many owners from taking any action at all, says Lloyd E. Drumm, Senior Vice President and Group Director of Capital One Client Advisory Services in Dallas. Others take only limited action and fail to deal comprehensively with their situation.
Smart Business spoke with Drumm about how business owners can best address business transition issues an often difficult process that may happen only once in a business owner’s life.
When should a business owner begin planning for a transition of his or her business?
Most business owners should start planning early so that the desired transition path happens more quickly, costs less money and falls in line with a comprehensive objective set. Also, early planning usually accomplishes more.
The key resource business owners have to implement a business transition strategy congruent with their family, financial and personal objectives is time. Successful business transition strategy can take several years to successfully address the myriad challenges that integrated business transition presents. More planning time is needed when there are many objectives or when the gap between resources and desires is narrow, and less time when there are a few objectives to accomplish and many resources to deploy. Time is an essential resource for significant tax reduction.
Most business owners have primary goals that become the focus of transition planning. If started earlier, the transition could also address secondary goals, such as evaluating the ‘readiness’ of the next generation to successfully run a business, resolving conflicts among active and inactive shareholders, building a management team that will support new ownership or mentoring the family on wealth stewardship.
What penalties will a business be subject to if it doesn’t plan properly?
There are no specific ‘you planned poorly so you pay extra’ kinds of things. However, an owner can be subject to significant expenses at the worst possible time with little relief from those expenses. An example in terms of estate taxes: The government wants its 45 percent tax paid within nine months of a person’s death, so there is typically a huge scramble for liquidity by those who haven’t been preparing for that (or haven’t been finding some way to reduce the tax) this while the company may have just lost one of its most productive members, possibly hurting the company and casting uncertainty among employees about the company’s future.
Is strategy formation different if the business owner plans to transition to family members versus to employees?
If the business owner plans to sell to a long-term partner or to an unknown third party, a different and possibly less complicated strategy matrix may result than if power is being transferred to someone new, such as the owner’s adult children or key employees. Strategy will escalate if the owner’s financial or personal happiness hangs on a successful power transfer.
The critical question here is: Can the business support a significant, nonperforming stream of payments and continue to compete successfully in the marketplace? The answer requires management evaluation and precise financial modeling.
What issue do you consistently encounter that can be a major roadblock to successful business transition strategy?
Many transition strategies fail to balance the current and future needs of the business with those of the owners. Considering family business transition, it doesn’t make a lot of sense for the owner to enact strategy that ends up critically burdening the company into the future. Superior transition design can balance these two critical objectives and prove successful in delivering the needs of both the departing ownership and the ongoing business.
LLOYD E. DRUMM is Senior Vice President and Group Director of Capital One Client Advisory Services in Dallas. Reach him at (972) 855-3699 or firstname.lastname@example.org.
If you want to work for John C. Miller, then you’d best be prepared to embrace the “Bueno way.”
As president and CEO of Taco Bueno Restaurants LP, Miller knows how he wants things to be run and the experience his customers should have, so he refuses to settle for less than the highest standards, which he is constantly looking to improve upon.
“We celebrate the little victories, but then we set new goals that have some stretch in them every year,” he says. “No one should ever rest or be content in their latest achievement because the competition isn’t going to rest.”
To stay ahead of the competition at the $183 million restaurant chain, which has more than 180 locations, he continuously measures progress and gets feedback from his customers so he knows what he’s doing right and what he needs to change.
Smart Business spoke with Miller about how he knows what to do next.Establish good metrics. If you don’t have ways to measure, you don’t know how to assess what to do next in the business. You’d have to be lucky, or you’d be on your way to a short life.
What adds value to the organization? There’s all sorts of things you measure, but the measures have to be anchored in why any of those matter. Quite simply, what you value is what the customer values.
Nothing is sacred except that the guest returns. They have a lot of competitive choices. Those measures are against what customers say matter, then what our shareholders say matter, and then what our employees say matter. If you think of those as a wheel that rolls nicely down the street when they’re balanced, it works pretty well, but if they’re out of balance, the company doesn’t work well.Talk to customers. Sam Walton said it best if you don’t know what to do next, if there’s not real clarity around where you’re doing well and where your performance is slight, then go ask your customer.
Know your customers. You can get it with surveys, from employee opinion, but there’s nothing as valuable as face time with real customers that you can synthesize.
Listen to those consumers on what they’d like to see. You have to constantly ask. Sometimes, the consumer doesn’t know how to tell you you have to twist their arms. If you ask a straight-up question like, ‘What can I add to the menu?’ sometimes they can’t answer. If you probe a little deeper, you find out.
I interview a lot of guests and employees. If there’s an enthusiastic response and endorsement, I’ll probe more, trying to get to the bottom of why they were delighted.
If they weren’t delighted, ‘What would have made you happy? What kept you from being excited about the business?’ You get to the heart of what the consumer is looking for.Listen better, then assess. If you’re listening and then feel like, ‘Well, that’s not how we do it. I wish more people liked it the way we did it,’ then you’re not really listening. If you’re really listening, you’re listening for what you can take action on to improve your business.
Consumers are not static. They’re constantly changing based on what’s available to them, but it takes a commitment to be engaged with your consumers.
Assess where you’re at against what customers say matter, and give yourself an honest assessment with your team every year.
What are your strengths against what consumers say? Protect those. What are your weaknesses? Improve those. What are your opportunities things you aren’t doing that customers would like to see you do? Add those.Hire the right people. You don’t get to try people out for a year. How you staff is a critical part of putting together a successful organization that has continuity and can work together as a team.
We’re not in a hurry to fill every spot. We’d rather do it right.
In our reference checking, we ask some pointed questions about accountability, teamwork, customer focus, other people focus, employee focus. There are ways we ask that, interestingly enough, even people who mean to endorse their candidate, they sometimes pause over those questions, and that can be telling at times.
What most people do is assign that to a junior HR person who goes through a list would you rehire them, can you recommend them, would you say this person has integrity? The problem with those questions is, it’s too easy to say, ‘Yes, no, yes, they’re fine, they’re great,’ and you don’t get into it.
So the questions are more open-ended and designed to have conversation not yes-no answers.Strengthen your hiring process. If you’re not careful with the selection process, it’s difficult to maintain the environment you want. We have a verification process that requires some redundancy, so the store manager would not add a staff manager without an assistant manager or district manager’s involvement.
When you add a second layer of verification, it adds another layer of strength and credibility to the process. That causes people to slow down. If the system is really strong, it makes it easier for a manager to make a strong decision.
By having a set of high standards that people have to go by, the system becomes self-policing and self-fulfilling.
HOW TO REACH: Taco Bueno Restaurants LP, (972) 919-4800 or www.tacobueno.com
When Clinton Howard founded RBC Life Sciences Inc. in 1991,he was the entire company and did everything himself.
Today, as chairman and CEO of the $27 million nutritional supplement and wellness company, he knows that to move forward in business, you have to hire with the skills to get you there.
“I can’t come to work in the morning and open the door and do all the work,” he says.
“I can’t be very productive, and if we want to grow, we have to have people who I can delegate the jobs [to], who have skills greater than mine in specific areas.”
Smart Business spoke with Howard about how Henry Ford’s words on hiring guide him today and why conducting multiple interviews with a potential employee is critical.
Q. How do you identify which qualities you’re looking for in potential employees?
You bring in people who have skills. Henry Ford said it’s easy to run a big company all you have to do is hire people who are smarter than you are in each area and get out of the way. If you’re going to grow, you got to have good people. It’s very important.
Honesty has always been No. 1. A person has to have good moral fiber to be able to work with them year after year. You look for honesty, and you look for people who have a positive attitude toward their work and a positive attitude toward their relations with their fellow employees.
Q. How do you gauge these characteristics during an interview?
You can’t just by a conversation because some people who aren’t honest are very skilled at appearing to be very honest. It’s important to know what kind of record a person has in their past employment or school if they’re coming out of college or graduate school.
It’s really important to check their references. A lot of times people don’t bother to check references, but that’s very important because I’m not a psychologist or an expert in sitting across the desk and evaluating a person in my interviewing them.
That would be No. 1, to see how they’ve worked out in their previous activities.
Q. What else do you do to make sure you get the right people?
Besides checking their references, we have multiple interviews. A person doesn’t come with our company and just be interviewed by their future supervisor. They’re interviewed by several executives in the company, and we get together and get everybody’s opinion. That’s important.
Secondly, everybody who comes with us, they’re on a probationary status for a while because it is difficult to really accurately evaluate a person just in an interview. An interview is like a honeymoon everyone is nice to each other and smiling and positive, but it’s important to know as much as you can possibly know about a person before you actually bring them in to a company.
The better job you do in screening and evaluating, the better success you’re going to have in their productivity. None of us are skilled psychiatrists. None of us are that perceptive of a person’s character and what they will be like when they get on the job, how they’ll relate to the person at the desk next to them, how they’ll work out on the job.
Multiple interviews are good because it gives you the benefit of different viewpoints.
Maybe everybody agrees with the evaluation of the person. That’s great if they do, but I just can’t trust my judgment of a future employee on the basis of an interview. If we are interested in possibly hiring somebody, it will not likely be on the first meeting. It would be after the second or third interview.
I have a lot of respect for the viewpoints of the other supervisors in the company.
Q. How do you work through differing viewpoints about a candidate?
You probably don’t. You probably end up rejecting a potential employee if somebody that you worked with for years sees a real negative that I didn’t see or somebody else didn’t see.
I trust their judgment and their insight. Maybe they asked just the right question that I didn’t ask that revealed some flaw in that person that I didn’t pick up on, or someone else didn’t pick up on. It would need to be pretty much unanimous to bring a person in.
If you bring the wrong person into a company, it can be very destructive even if it’s only temporary until you straighten out the problem. Good morale is important.
A person who shows undesirable traits can hurt the morale of other fellow employees if they don’t get along with the other fellow employees or they gossip or criticize.
You can’t get in a hurry and just bring in bodies. Hire the very best people you can, and then educate and train them properly.
HOW TO REACH: RBC Life Sciences Inc., (972) 893-4000 or www.rbclifesciences.com
An employee at Hisaw & Associates drops his wrinkled dollar bill into the pot and then timidly steps on to the scale to see if he’s lost any weight in the last week. He sees that he’s lost another 2 pounds since the last weigh-in, smiles and steps off.
It’s not some company policy requires employees to be a certain weight; rather, it’s a corporate challenge, based on the hit TV show “The Biggest Loser,” to encourage employees to be active and healthy. At the end of the challenge, whoever has lost the most weight gets all the money.
It’s just one initiative that President Kathryn Rehm Hisaw says has made a difference at the general contracting company. By encouraging and rewarding employees, she strives to make all 40 of them feel like family at Hisaw, which posted 2007 revenue of $120 million.
Smart Business spoke with Rehm Hisaw about how providing employee incentives, such as a trip to Las Vegas, makes people feel appreciated.Get buy-in. It’s important to listen to people and hear what people have to say and be open. A lot of times, companies are not open to change and not open to listening to people in their own organizations.
Let’s say it’s [an idea] in the accounting department. We discuss it in the accounting department at our weekly meeting, and we get the pros and cons, and I or [CEO] Richard Hisaw will ultimately make that decision. We don’t come out and say, ‘This is a new policy for Hisaw.’ We say, ‘Debbie has made this suggestion, and we think it’s a good policy, and we’ll try it.’
That gives people a self-worth of being part of the company and part of the team. People hate change. [But] if people feel they’re going to derive a better life, or something will make their work life better, that they’re going to become an intricate part of a company they’re proud of, they’ll change.
That’s part of just being a team. If they’re not going to do that upon knowing that, then they’re never going to change and never be part of the team.Give people authority. One of the toughest things for people to do is delegate that power away from them. People are frightened to do that.
If they start working with someone that’s going to be their protégé, and you take them as if they are your protégé, and you give them bits and pieces, and you test them, what also happens is you’re empowering them and giving them ability to make their own decisions. You’re giving them the ability, and they know that you trust them enough to make those decisions. Without that trust, they’re not going to be happy.
It almost allows them to feel they’re in a laissez faire leadership themselves because they feel they can be a leader for other people.
I don’t care how small the job may seem to a person from the outside looking in, every job we have is an intricate part, and nobody is insignificant. Everybody is a pertinent part of the machine that keeps us working.Make people feel they matter. If it’s a birthday, we have a special cake for that person, and the office goes out to lunch together. In our best years, we match the 401(k) dollar for dollar and give profit-sharing and bonuses.
They become part of the company, and they know the profitability they create will equal bonuses. At Christmas, they all come to a party, and we do reverse gifts. Maybe you’ll get an ornament or a professional waffle iron. It could be anything, but the final name that is drawn out gets a trip, and, usually, it’s to Vegas for two nights, three days, airfare and $500.
It’s not just for department heads it’s for Hisaw team employees, and they know everyone has an equal chance.
Those are the things that give people great satisfaction that they’re really appreciated. People are quick to call you and tell you how bad that is or how bad that is, and there’s a problem here, but the simple words of, ‘I really appreciate you thank you so much,’ go a long, long way. We have some longevity here. Longevity is everything because longevity is also loyalty. That’s what gives you optimal growth and exceeds your break-even points and gives you your maximum profit.Constantly communicate. Seventy percent of all the mistakes are due to communication or lack thereof 70 percent.
Communication is everything. Once you have a structure, communication is so vitally important. Listen to your client. Hear what he has to say. Don’t prejudge it and think what he wants. Know what he wants and do it.
When we talk to our people, we are talking with our people because when we communicate, we often ask for feedback and we ask their opinion. Sometimes people are shy, and they don’t want to tell you, but as they work with you longer and longer, they will tell you, and that builds strength within a company.
That communication is really, really important. Some people have a breakdown, and that breakdown in communication breaks down the trust. Once it breaks down the trust, then it erodes wherever you’re at.
HOW TO REACH: Hisaw & Associates, (972) 380-4448 or www.hisaw.com
When Philip Verges started NewMarket Technology Inc. in 1997, he traipsed around the country to bring in new clients, but when his office called him one day to tell him it’d be a squeaker to make payroll that month, he was blindsided.
While he’d been doing a good job of attracting new clients, he realized that he had done a poor job of collecting on his receivables. He didn’t understand the balance sheet, and he decided it was time to seek advice from others who did.
Recognizing his weaknesses and finding people who are strong in those areas has helped the chairman and CEO take his company, which delivers systems integration and emerging technology solutions, to $93.1 million in revenue last year.
Smart Business spoke with Verges about how recognizing your weaknesses can help you grow your business.
Q. How does recognizing your weaknesses help your company?
The business’ strengths and weaknesses reflect the entrepreneurial leader’s strengths and weaknesses, so as the entrepreneur overcomes weaknesses, that’s reflected in the organization.
We all have our weaknesses. In North America, we’ve had this culture (develop) where we don’t admit our weaknesses. We hide them. I have a fun game that I play in social settings. In conversations, just for fun, I’ll admit a past problem or issue I had ran into whether it’s parenting, business, management of my own credit card and as soon as one person goes, then the room opens up, and everybody starts rolling out their mistakes and their problems and issues that they have.
Q. What weakness do you have right now?
I have never grown a company from $100 million to $1 billion. While I have some ideas, I need to get other people involved that have that experience from the $100 million stage to $1 billion.
It’s not difficult to identify people that have those experiences. What’s difficult is to identify those people that have those experiences and have the aptitude to be comfortable inside the company that’s just grown to that size.
I’ve been through a couple of great (chief operating officers) very capable, great people, way better resumes than me, but ultimately, they’ve been personally uncomfortable inside of the organization.
Q. How do you know if someone will fit in your organization?
You have a number of different perspectives who are interviewing the individual, but there will be a certain percentage that might get through. There are some people who interview very well but are not good at their jobs.
Even when you find that right person, you need to have a grace period where both the organization and the individual, over that first six months to a year, are still getting to know each other and make sure it’s a great fit and trying to identify any issues early and resolve them and move on quickly.
Q. What helps you have a better chance of bringing in the right person?
When you’re looking for personality fits, one of the practices is to engage the whole person. We like to take our time. We like to meet the person’s family and see them in a social setting with their family.
While someone may be able to put a good face on in the interview process with the board of directors, there are very few people who can maintain the same composure when they’re put in front of their spouse and children. We like to, whether it’s a BBQ or dinner, get to know the person and the environment they live in, and it’s usually very telling on the corporate mask they may put on in the interview process or even in their daily work. We get to meet the person behind the mask when we see them in a more casual environment that brings with them the environment they live in on a daily basis.
Q. Why is that personality match so important to growth?
Key-man businesses often reflect the strengths and weaknesses of the key man. Early-stage businesses frequently pay competitively but are not at the top of the pay scale by industry, so the people are there because they believe in the company.
They believe in the key man, so there has to be a personality fit with who that key man is and with the overall management team that the key man has developed around him.
As it starts to grow, there has to be a recognition of where the company is today and growing from that base forward, as opposed to, ‘Let’s crumple it up and throw it away.’ If you have a management personality conflict and you’re getting the skills that you need but they’re counter to, personalitywise, the existing management team, you run too much of a risk of running a counter impact to what you’re otherwise trying to achieve, which is that next stage growth.
HOW TO REACH: NewMarket Technology Inc., (214) 722-3065, (972) 386-3372 or www.newmarkettechnology.com
Commercial entities, such as banks, retailers and airlines, know that some of their own employees are far more likely to steal from them than a thief outside of the organization breaking into their facilities. This “likelihood” also ports to companies that own or manage intangible assets — ideas, know-how, confidential information, inventions (patented or not), works of authorship protectable by copyright, trade secrets, trademarks, trade dress, business methods and patents.
“Employees can do serious damage to a company’s future if they walk off with their employer’s intellectual property, particularly its confidential information, including trade secrets,” says William Munck, chairman of the Dallas-based law firm of Munck Carter, P.C.
Smart Business talked to Munck to find out how a company can better protect its trade secrets and other intangible assets.
What is a ‘trade secret’?
Trade secrets may be thought of as any information having independent economic value and that is not generally known or otherwise readily ascertainable. Examples of trade secrets may be ideas, patterns, compilations, programs, formulas, methods, techniques, processes and secret devices. The courts have also found such things as machining processes, blueprints, computerized stock trading systems, customer lists, pricing information, unpublished inventions and nonpublic financial data — overhead rates and profit margins — that help companies price their goods and services to be trade secrets.
How can companies prevent exiting employees or contractors from stealing trade secrets and other IP when they leave the company?
It is impossible to prevent all trade secret theft by exiting employees or contractors. The situation is unfortunately exacerbated when a company fails to take appropriate precautions. Some tools at the company’s disposal include requiring employees and contractors, when they are engaged by the company, to sign engagement agreements, including (i) broad nondisclosure provisions and (ii) narrow noncompetition pre-visions that cooperate to prohibiting the employee or contractor from using company confidential information to compete with the company; educating employees and contractors about trade secrets and other IP and the importance of keeping confidential information, such as trade secrets, confidential; conducting exit interviews with departing employees and contractors to remind them of their duty to keep confidential information secret; limiting access to confidential information to those who need to know; and employing electronic surveillance equipment and software to limit and monitor access to confidential information.
Are noncompete agreements enforceable?
Frankly, they must be appropriately narrow in scope to be enforceable. This means that provisions must be limited, such as to geographic areas, scope of employment and duration in time. It is always recommended that such terms be included in an initial engagement/employment agreement that is executed by the employee/contractor and the company at the start of the relationship.
In the event that such language is not initially included, and the company decides that it is desirable later on to include such terms, the situation is more complicated. To add not-to-compete covenants into existing agreements, there must be additional and adequate consideration exchanged between the employee and the company for post-employment obligations.
With little USB drives, is it easy for current employees to walk off with files?
While USBs are a new tool for stealing confidential information, they are only slightly different than e-mail or other tangible mediums for copying the same. The real question is, ‘What can a company do about an attempted or actual misappropriation of confidential information or other IP?’
The company must immediately pursue injunctive relief to prevent an attempt to misappropriate confidential information from becoming an actual disclosure of the same. While such action involves retaining an attorney and filing a lawsuit, it is often necessary because once the confidential information, particularly the trade secret information, is made public, it is much more difficult, if not impossible, to restore the information to trade secret status.
It is important to note that pursuing monetary relief due to corporate misappropriation of confidential information may be more practicable. Most jurisdictions actually permit recovery of both the actual loss caused by the misappropriation as well as any unjust enrichment gained by the wrong-doer as long as the ‘enrichment’ is not included within the ‘actual loss’ portion of the analysis. If such damages are not easily proved, the company may seek to impose a ‘reasonable royalty’ damage model. If the conduct leading to the misappropriation was willful, most jurisdictions permit the awarding of punitive damages and the
WILLIAM A. MUNCK is chairman of the Intellectual Property section at Munck Carter, P.C. He concentrates his practice on domestic and foreign IP procurement, exploitation, enforcement and counseling. Dedicated to counseling clients concerning their development of offensive and defensive IP portfolios, Munck emphasizes market-focused long-range corporate strategies for private financing, public offerings, mergers, acquisitions and establishing market leadership. Reach him at email@example.com.
Born: Waynesboro, Pa.
Education: Bachelor’s degree, mathematics; master’s degree, computer science, both from Penn State University
What was your first job, and what did it teach you?
My first paying job was working on the Pennsylvania Turnpike in a gas station while I was going to school summers and holidays and things like that. There were two things I learned there. One was service. You were working with the public. These people are traveling across country, and they are hurried, and this was a day when you didn’t pump your own gas. Service was a part of it. The other part of it was sales. One of the company’s things was when people came in for gas, you’d check their oil, and you’d also be doing things like looking at air cleaners for replacement or oil changes or tires. It wasn’t just selling the gas.
What has been your biggest business challenge?
I’ve been through multiple mergers with the way the defense business is going. The largest one of these mergers is Raytheon bought E-Systems, we bought T.I. (Texas Instruments) Defense and Hughes Aircraft. You have four large entities coming together. It was a very big business challenge, trying to meld together these cultures, because they were all very different, into one culture.
What has been your biggest business lesson?
I read this somewhere as a joke, but there is a lot of truth to it. The quote was, ‘Each day, do more than what is expected of you, and before long, more will be expected of you.’ The truth in that is as you take on every assignment, going beyond what is defined for that assignment and taking on more and more responsibility and not being afraid to try new things.
What traits or skills do you think are essential for a business leader?
There is a laundry list. Communication is definitely very important. Also, talent selection is important. You get very little done by yourself.
What is your favorite movie and why?
I can’t really say I have a particular favorite. As a genre, I like action movies. The reason is that it’s a release thing, the car chases, the shoot ’em up, the ‘Die Hard’ (movies) and that sort of thing.
What business book or books have you read that impressed you?
The first is, ‘Every Business is a Growth Business’ [by Ram Charan and Noel Tichy]. Specifically, it talks about growth and the fact that you need it to be a corporate mind-set created by the leaders. The second one is Larry Bossidy’s book ‘Execution.’ The thesis there is that a leader’s most important job is to be engaged personally in the execution discipline. It’s the difference between carrying out a strategy and not carrying it out. It’s an excellent book. One of the most fun ones is a book called, ‘Connect’ by Keith Harrell. I heard this guy speak. He spoke at a Raytheon leadership forum. His nickname is Dr. Attitude. He is so positive, and he has a couple of messages. He believes attitudes make the whole difference, looking at things positively. The other thing is connecting with people. As an individual, you only can take things so far.
Lee Wagner doesn’t mince words. “Most corporate managers simply don’t have the time or resources to adequately deal with real estate issues,” says Wagner, Senior Vice President in Grubb & Ellis Co.’s Dallas office.
Real estate brokers who specialize in tenant representation can eliminate many of the hassles in site selection and negotiation, save you a substantial amount of time, prevent potentially disastrous missteps, and possibly cut much of your real estate expense.
“Tenant representatives can find a first-time office space, renew an existing space, or relocate within the same building or into another building,” Wagner says. “They can also move you to a completely different submarket altogether.”
Smart Business talked to Wagner about what you should expect from a bona fide tenant representative.
What are the main reasons that a company looking for a commercial lease should employ a tenant representative?
Primarily, a tenant rep will have allegiance only to you, like a lawyer who has a fiduciary responsibility to his client. He or she will give vendors and real estate solicitors a single point of contact to act on your behalf.
A tenant rep will also balance the representation of parties. Nine times out of 10, the landlord will have representation. Why would you want to go into negotiations without representation, knowing that the other side will be represented?
Finally, your business, most likely, is not real estate. That responsibility can be outsourced to someone who can oversee the process and make sure it runs smoothly. Tenant reps know changes in laws, ownerships, building availability and lease documents. This is their life every single day.
Do companies normally have to sign contracts with tenant reps?
There should be a contract because it helps to understand the roles and responsibility of the tenant and the broker. When you’ve got seven brokers calling on a building that they think will be a good fit, this leads to chaos in the marketplace. The contract will outline responsibilities of each party.
Any valid contract will need to have a commencement date and an expiration date. The term should coincide with the objectives that the rep or broker is trying to accomplish on behalf of the tenant.
For companies with multiple sites, sometimes the contract becomes a corporate services contract.
What services can you expect from a good tenant rep?
The two big things are market knowledge and lease negotiations. They know of opportunities in the marketplace that may not be public knowledge. They’re constantly looking for spaces and new opportunities that are coming to the market. You wouldn’t have access to that knowledge if you tried to do it solo.
Typically, tenant reps/brokers will challenge clients from day one to make sure that they are getting exactly what they need. They want to make sure that tenants are right-sized with some space, perhaps, reserved for a little bit of future growth.
Good tenant reps also might be able to create a bidding war among landlords for your business. Then, during lease negotiations, they can identify provisions that could cost you money. Does the lease have those things in it that a true tenant rep would typically fight for? Does the lease include sublease rights? Does it allow for expansion or contraction provisions? Does it reflect a current operating base year? Does it include liability issues?
Tenant reps often establish a longer-term relationship with their clients. Then, once the lease is signed, they can serve as a buffer between the client and the landlord. Plus, if the economy starts to soften up and a company needs to contract its business, a tenant rep can market the unused or unwanted space. If a company needs to expand, then a rep can help do that.
What other ways can a tenant rep save a company money or headaches?
A tenant rep will always encourage a client to start the process earlier than expected. When time is on your side, you have leverage. On the other hand, when you’re under the gun, before you know it, the process of finding the right location becomes extremely difficult. It becomes rushed.
It’s very important to have people on your side of the table with timelines especially with today’s economy. And having time to decide before you act also helps ensure that you don’t make any stupid mistakes.
Real estate decisions are big decisions. Real estate costs are typically the second-largest line-item expense and normally equate to 25 percent or more of a corporation’s overall budget. Mistakes, then, are extremely costly.
LEE WAGNER is Senior Vice President in the Dallas office of Grubb & Ellis Co. Reach him at firstname.lastname@example.org or (972) 450-3284.