Accounting for success Featured

9:59am EDT July 29, 2005
What does an accountant say when you ask him the time?

It’s 9.18 am and 12 seconds; no, wait — 13 seconds, no, wait — 14 seconds, no, wait ...

Let’s face it — accountants have something of a reputation as obsessive bean counters, people who live and die by the numbers. To these types, mistakes are a nightmare.

Alan F. Schultz is trained as a CPA but he certainly doesn’t conform to the stereotype. As chairman, president and CEO of Valassis Communications Inc., a provider of integrated direct-to-consumer marketing and promotion services to clients in the United States, Canada, Europe and Mexico, he’s a big-picture thinker, a man who sees the future, plans for the long haul and has a high tolerance for error.

“Being risk-averse stifles growth,” says Schultz, who joined Valassis in 1984 and has served as its leader for the past seven years. “I encourage people to be forward-thinking, to move outside their comfort zones in pursuit of innovation.”

Consumers have an ever-increasing array of tools that let them opt out of receiving marketing messages. For a company such as Valassis, the key is to stay ahead of the technology and create imaginative and productive solutions for its customers.

Valassis serves manufacturers of consumer packaged goods, retailers and tech companies, offering a portfolio of newspaper-based, direct mail, direct-to-door and Internet promotion products. It can reach as many as 69 million households in a single day with messages from its clients, which include 80 of the top 100 advertisers in the country.

To do that effectively, new ideas are essential. Some will work, others will flop. A willingness to try things that have not been done before allows a large, established company such as Valassis, which posted rev enue of more than $1 billion in 2004, to retain the energy and flexibility of a smaller, more entrepreneurial one.

And this ability has helped it become and remain an acknowledged leader in its field.

“Our industry is constantly changing,” Schultz says, “and we have to change with it. In 1998, we had 1,500 employees. Today, we have 4,000, and more than half of them are involved with products and services we didn’t even offer back then, including database marketing and performance analysis.”

As a result of the expanded products and service, revenue is up.

“Our fourth quarter earnings reflected 27 percent revenue growth,” Schultz says. “That’s the largest increase in our 13-year history as a publicly held company. I believe it’s a result of our willingness to take risks. You can’t create anything exceptional without it.

“From that perspective, wrong decisions become learning experiences. That was a lesson life taught me when I was 9.”

Laughing at the memory, the 46-year-old Schultz recounts a visit to a carnival. His mother gave him $10 to spend, and he got suckered into blowing it all on a game of chance. Every time he failed to knock over some metal milk cans and win a stuffed animal, the carney convinced him to keeping trying.

“I thought she’d be mad when I told her what happened. Instead my mom gave me another $10, and a piece of advice — don’t make the same mistake again. You can be sure I made that money last all day.”

That experience informs his business model. Schultz, who says he’s been reading stock reports and preparing to run a company since he was 14, strives to create a safe space for experimentation and the failures that come with it. Shared, one person’s mistake becomes useful information for somebody else.

People who work for him soon discover that they’re not putting their positions or careers in jeopardy by thinking outside the box — or in the case of Valssis, thinking off the page and outside the coupon book and sample bag.

This spirit contributes to a culture of growth, says Schultz, that, in turn, generates opportunities for professional advancement and personal development. And that helps the company draw and retain a talented, energetic and loyal work force.

“Once you have a base of great employees like we do, it becomes easier to attract more of them,” Schultz says.

The company’s culture has also contributed to its eight-year run on Fortune magazine’s list of the “100 Best Companies to Work For.” It’s one of only 22 companies, and the only one based in Michigan, that has been on the list every year since the magazine began publishing these ratings.

“Fortune randomly surveys employees,” says Schultz. “Two-thirds of our score comes directly from their responses. Our staff are responsible, in large part, for putting us on that list and keeping us there.”

He’s convinced that good communication and frequent celebrations fuel their positive attitudes. Management actively solicits input and feedback from staff at every level, and intradivision exchange is encouraged. Diversity councils are in place at facilities in Michigan; Durham, N.C.; and Wichita, Kansas. Pats-on-the-back and praise are standard operating procedures.

It begins, Schultz says, with a clearly articulated vision for the company.

“When everyone is moving together toward the same end, it naturally eliminates a lot of competition,” he says. “The result is a better, healthier, happier work environment for all.”

He outlines a seven-step action plan for implementing a culture that allows the company — and its employees — to thrive.

  • Involve a large cross-section of people, at a variety of levels, in the creation of a mission statement.

  • Make sure every employee understands it. Define each word.

  • Link job descriptions to specific elements/aspects of the vision.

  • Go back and sell it to your staff so that every member buys into it and sees how he or she can contribute.

  • Empower employees to pursue it.

  • Regularly assess performance in pursuit of the mission goals, update strategies and keep people informed.

  • Highlight successes and recognize achievements.

The company measures performance against specific criteria at quarterly intervals, holds a more comprehensive annual review and provides every employee with a scorecard of outcomes. Vision awards acknowledge individuals who have made significant contributions, and rewards include everything from announcements and trophies at after-work gatherings to an around-the-world cruise, a prize for the company’s best “global thinker.”

“Success breeds success,” says Schultz. “People are motivated by their own and the company’s progress, so we invest time and money in getting the word out. There’s nothing like winning to create enthusiasm.

“And all of our employees have stock options, which means they are aligned with shareholders and have a personal interest in creating value for the company.”

For Schultz, there are two ways to approach running a company and managing its employees. One is to identify weaknesses and strive for improvement. The other is to see where your strengths are and capitalize on them. He ascribes to the second, positivist attitude, and recalls that he learned its value as a high school athlete.

“I had a coach that led our basketball team to the state championships without a single player over six foot,” he says. “He worked with what he had, knew how to bring out the best in each person and made every player as good as he could be.”

Like a truly great coach, Schultz credits the team for his winning track record at Valassis. He’s not the kind of CEO who grabs the limelight, and he’s more comfortable talking about what others do right than what he knows. As a member of an executive committee that forms the ultimate decision-making body, Schultz has one vote, just like the other five members. And he likes it that way.

“I am only one of many,” he says. “I have a role to play in the company, but so does everyone else. My goal is to create an organization that can function exceptionally well without me, and my job is to empower and motivate our employees to do their jobs. I see myself as a facilitator.”

He admits he’s amused — and a little confused — by what’s best described as the power portraits that often grace the pages of business magazines, and, it should be noted, resisted the idea of being photographed alone for this article.

“CEOs are typically pictured standing alone, arms folded across their chests, as if to say that they are personally responsible for selling every order and loading every truck,” he says. “That’s not the reality, and the danger, when you are a leader, is to make yourself the focal point for an organization.”

The truth, he says, is that the head of a big company has very little to do with the day-to-day operations that drive the organization. Schultz has what he describes as “a strong, talented team in place,” assembled by putting people in positions where they can excel and then giving them room to build on their strengths.

That leaves him free to concentrate on connecting the multiple constituencies he serves, representing the interests of investors, employees, suppliers and customers. His secret to doing that well is no secret at all.

“Things are only as complicated as you make them,” he says. “Despite what some MBA programs may suggest, being a good CEO is not that difficult. It comes down to basics. Listen. Build relationships. Treat people well. Never forget that it’s the little things that count.”

HOW TO REACH: Valassis Communications Inc.,