How Frank Venegas Jr. keeps employee passion burning bright at The Ideal Group Featured

8:01pm EDT August 31, 2012
Frank Venegas Jr. Frank Venegas Jr.

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.