Treat others with respect. I promised myself that if I was ever fortunate enough to have a business that I would treat people with dignity and respect, and treat people the way I would want to be treated.
It’s really simple. I’ve worked for jerks in my life and I don’t want any of my people to have to work for a jerk.
Leaders need to think about how they would want to be treated in a work environment and deal with people the way they would want to be dealt with. It’s really basically very logical and simple. If you want to be dealt with, with dignity and respect, that’s how you treat other people.
As a result, people know where you’re coming from and they can trust you. People know where they stand at all times. If I’m angry or I’m concerned, I voice it. I don’t hold back.
People prefer that. We always want to know where we stand with other people, and if you’re open and honest about that, and foster open and honest communication, it frees people. People are burdened by what they think other people think, and they don’t have to worry about that with me.
Embrace change. An organization that doesn’t change or doesn’t evolve is an organization that is dying. I’m pretty much a change leader in everybody’s mind, from a truck driver to security guard to supervisors to our upper management.
I’m a change agent and I believe in challenging the organization to evolve and change, as opposed to being a CEO who likes the status quo. I’m constantly asking people to grow and change, and I am, too. I’m evolving constantly.
Without being open to change, another company is going to come up and basically eat your lunch. If you don’t reach for excellence and embrace change as people, you cease to be relevant, really, because what was successful yesterday will not be successful tomorrow. There are thousands of companies in the United States that have perished because they did not change; they did not vary what they do and the way they do it, and the way they look at the market and their people, and the way they interact with their people and internal and external customers.
Empower employees and learn from mistakes. People need to feel safe in the work environment, safe to venture out and make a mistake, and we’ve got to try to foster that. We all make mistakes, and that’s OK. We kind of even celebrate the mistakes because we can learn from them, and we certainly celebrate the positive results.
Get employees involved in the process. We have groups called ‘do-it groups’ in our business, where there are teams of people that just come up with their own projects, present it to a ‘do-it council’ of executives and we almost always green-light it and say, ‘Go for it.’
Leaders can’t do it all on their own. You have to harness the intellectual and emotional power of the organization to help move the organization to the next level.
You have to give people authority to make decisions. You have to let them go a little bit and allow them to go out on their own. Sometimes it’s going to burn you. We’ve had some issues where we’ve given authority in some areas and it cost us, but in the long run, it helps develop people.
As long as you keep your eye on everything, it won’t be that critical a mistake. A leader has to trust. You have to hire the right people and then you have to trust them. You can’t be a micromanager.
Reinvent yourself constantly. Our biggest consistent challenge is reinventing ourself as a company. We started as a tiny futon and sofa bed company and progressed to something else, and then morphed to something else, and went from traditional marketing for our type of business to electronic advertising, from radio to TV.
The biggest issue is to reinvent the business and morph into something bigger and better and different, and accept that and not be so stubborn that you’ve got to do it the way you did it a couple years ago.
Being open to that change and that reinvention is what will make a business great. If you do it the way you’ve always done it, you’ll always get what you’ve always gotten. We have to change. We have to evolve as people or we don’t have to. We could decide we want to be X millions of dollars and we’d probably be OK with that, but eventually, somebody is going to come and do it better.
Somebody is going to invent the company that is going to put you out of business if you don’t keep evolving and changing. My biggest fear is becoming a company that’s happy with its success and just stagnant, and under my watch, that will never happen.
HOW TO REACH: Sit ’n Sleep, (800) 675-3536 or www.sitnsleep.com
For years, Tom Schwartz had a policy: When someone bought a new BMW from his dealership, The BMW Store made the event special by detailing the car and adding accessories before delivering it a few days later. But then some employees posed a question. ‘What if,’ they asked, ‘someone is excited and wants the car today?’ The owner and president responded by changing his staffing around so that if a customer wants the car immediately, the dealership can customize and deliver it the day it’s purchased. It’s just one example of how Schwartz listens and responds to his employees and is a big part of the reason his 130-employee BMW Store had revenue of $92 million last year. Smart Business spoke with Schwartz about how he shares his passion, and the importance of listening to your employees and taking risks.
Show employees your passion. One of the biggest problems I see in small businesses is that there are way too many managers and not enough leadership. I barely even manage anymore; I simply lead and give them an example.
When we first started, I was a service manager and when that department closed down for the day, I’d go and manage the new car department with just one salesman. I was in it, and if you cut me open I’d probably bleed BMW blue. I showed them that I was willing to put the time in and that I would be able to keep pushing.
There were times when I would come in at 5 in the morning and not leave until well after midnight. People saw that and believed in me because I had a vision.
People believed I would make this work, and it was kind of like, ‘We’re going to go work for Tom.’ Thirty years ago, I opened up a little repair shop, and two fellows who worked with me at another dealership quit to work for me.
Why would they do that? I didn’t have any benefits, money or anything else. But it worked, and that was a leap of faith. And you can’t just do that on charisma and chutzpah. You have to walk your talk and you have to deliver. You have to make sure people see that you are really doing everything you can to make it happen.
Evolve with your people. A lot of times, people come in and they really know where they want to go and how they want to get there, and that can be a problem.
Say it’s a new manager, and that person comes from another store, or even another industry, and that person has an idea that he wants to do it this way. Well, you don’t want to crush that person because his way has worked for him. We all kind of hang on to what got us where we are today.
At the same time, by nurturing him and really trying to see what he does and how he does things and comparing that to how we do things, we find some common ground, and it’s going to work better. So it’s a question of, we do it this way, we’ve always done it this way, but I’m open to ideas that you’ve got to make anything better as long as we can keep these key areas from being compromised.
We live our processes, and everyone knows how important they are, but we want them to be breathing things and to keep evolving. There’s a synergy that you get by compromising the way you do certain things as long as you keep your focus intact.
Stay focused, and the people will follow. Good people find you. I’m not proud enough to say that we’re the best organization on the planet or anything, but we have an operation that really resonates with people we’re well-thought-of in Cincinnati, and that’s because we’ve never strayed from our calling.
What happens is, when you really focus on one thing and you’re really good at it and you want to be great at it then the people find you. We don’t put an ad in the newspaper; we just focus on what we do well, and people are drawn to that.
The level of attitude and drive and competence in our group is phenomenal. I guess for us, it’s sort of when the student is ready, the teacher appears.
Let employees help you take the risk. I look at something like our Mini Cooper dealership. I went and talked to some of our guys that were really gung-ho on it, and they told me they really thought it was just the cat’s pajamas and they just wanted it like there was no tomorrow.
So I went home and thought about it for about a half an hour and came right back in and submitted our application. You have to listen, listen, listen and listen.
The people that really developed into being truly great managers and even better leaders are the ones that listen to the troops about the big moves. You have to listen to your own gut and conscience, but it’s the people that listen and really openly seek the input of other people that are the most successful.
I look at risk like eating properly. If you’re not taking risks, you’re going to die. And they can’t just be calculated risks that are small potatoes. You have to keep that edge.
As you get older and a little more established, it’s very easy to get away from that edge to where you’re more secure but then you’re not living your life.
Listen to ideas from the outside. When somebody comes in from another place, one of the things we do is make sure they understand our philosophy, and once we’ve kind of saturated them with what we do around here by showing them our systems for a couple of weeks, then we’re in a position to say, ‘OK, what’s working for you, what’s not working for you, and what can we do to facilitate you better?’
It’s good to get ideas from other people in the business. We really encourage our people to speak out and we’re willing to listen to ideas.
If somebody doesn’t change a lot when they’re successful then they mess up. You know, if you always do what you always did then you’ll always get what you always got. So, it’s important to be constantly changing and be constantly open to new ideas. Never compromise your principles, but everything else is open to discussion.
HOW TO REACH: The BMW Store, (800) 651-5569 or www.bmwstore.com
When Tom Wood took control of Floor Coverings International, the company was in its eighth straight year of declining revenue.
It had gone from a peak of $60 million in 1996 to $22 million in 2004, when Wood took the reins as president and CEO. After a difficult restructuring period, Floor Coverings is back on track, with two straight years of double-digit growth and 2006 revenue of $26 million. The turnaround is the result Wood’s complete strategic review of the industry, the company and its customers. “We took a good, hard look at our own organization, and we came out of that realizing there wasn’t a whole lot we did well,” Wood says.
Smart Business spoke with Wood about how a CEO’s vision and passion can spark a company turnaround.
Q: What skills does a successful leader need?
Vision and clarity of direction are critical. I’m in several groups with other presidents and CEOs. You look around the table and you can see people who don’t have the vision for their organization.
They can’t see what their next move is going to be on the chessboard. And I don’t mean the next move they’re going to make; I’m talking about the move they’re going to have to make next year or the year after.
Q: How do you train yourself to have that vision?
One thing I had to learn as I moved into senior management is that it is egotistical to think you can do it all yourself ... thinking you know so much you don’t need the influence of others.
Being open to coaching is important not informal coaching, but some sort of regular coaching. The funny thing is, you look around the business world and there are not a lot of people who utilize coaches to reach their own peak performance. But certainly in the athletic world, there is no athlete in the world who does not have a coach, or a team of coaches.
For example, I’m an avid tennis player. I joke with my wife and say, ‘It’s time for me to go see the swing doctor.’ Now, how often do you hear a business leader say, ‘I’m working on a tough problem, I’m going to see my business doctor.’ It could be somebody who doesn’t necessarily know the answer, but they can help coach you to work through it.
I don’t make $18 million like Barry Bonds does, and he’s not too proud to go out and grab a coach or two.
Q: What do you look for in an employee?
People who are desirous of making a difference in an organization and that difference is not just doing someone else’s work. The difference really comes from contributing from the ground up from the germination of the idea all the way through to the execution of tactics in the field.
The essence and core of leadership is being able to get results through other people. You can’t grow your organization if you’re depending on yourself to make all the key decisions and do all the hard work.
I do my best leadership when I have passion and inspiration for our business. Make sure your key employees can share in that vision and have that burning passion for whatever it is that they’re doing.
Q: How do you find those people?
We tend to do better through word of mouth and referrals. You want your people to be empowered, and you need people who have a desire to be empowered to make a difference in your organization.
But it’s a fine line between being empowered and being a maverick. If we can select our people from a known source in some way, that helps us find people who share a passion in our vision, versus coming in as a maverick a bull in a china shop just looking to get things done.
Q: How do you deal with a bad decision?
Try to dig into why the wrong decision-making process was made. If it was an informed decision, it’s hard for me to come down on somebody, to make somebody pay for it. Everybody makes mistakes. You need to know what led up to the mistake.
If you went through the decision-making process properly and you made the decision, you probably would have built a protective buffer around the decision. So if it was the wrong decision, you’re able to catch it and correct it and change the direction before the ramifications grow too great.
Q: How do you prevent making bad decisions?
You have to build measurements to track the progress from an early and ongoing basis. It’s critical, because what gets measured is able to be managed.
As long as you’re measuring it, you can enact some sort of corrective behavior if it was the wrong decision, before it dramatically impacts people or events.
HOW TO REACH: Floor Coverings International, (770) 874-7600 or www.floorcoveringsinternational.com
Doing something wrong isn’t always something someone wants to admit. Yet Perry Daneshgari, owner, president and CEO of Computer Builders Warehouse, wants his employees to come clean when they make a mistake. “’Fessing up is celebrated and not punished,” he says. “We are educating managers to be small business owners and not followers.” Coming clean is also the way Daneshgari, who follows the business approach of Toyota and Microsoft, deals with failure. “We admit it,” he says. “Then we change course again. It doesn’t matter if it’s me or one of the managers.”
Daneshgari is also president and CEO of MCA Inc., which acquired Computer Builders Warehouse. CBW posted 2005 revenue of about $20 million and estimates 2006 revenue of about $25 million.
Smart Business spoke with Daneshgari about how he implements his collaborative leadership style and lets employees know he’s listening.
Q: What causes a company to fail?
Primarily lack of business knowledge of top managers. Management’s lack of understanding of business principles. They try to be profitable by increasing their prices, and they can’t compete.
Second, management thinking people working for them would be able to think like them. That is the biggest fallacy of all management gurus. They have all their theories and they think the people standing on line are going to think like their executives. If they were going to think like their managers, they would have their jobs.
Third, managers don’t understand how workers think because they have thought that way all their life and they have gone though the ranks. What makes workers tick might be different in manufacturing than in sales or the office. You can’t have one-model-fits-all. Managers have to understand how people think.
Fourth, the fact managers try to put in untested and unvalidated managerial theories. All these fads that come and go. They are all theories of some professors and nothing against professors, I’m one myself at the universities sitting there and creating theories. It worked in the ’60s and ’70s because we bombed the hell out of the rest of the world and no one could compete with us. Any management theory would have worked.
Fifth, the commitment of the management to change. Durability and the management actually stays behind the change. That usually kills implementation, if they don’t stay behind the change.
Q: How do you implement your collaborative leadership style?
We create implementation teams. First of all, we set the direction. Implementation teams go all the way down to the lowest level of the company. They are given direction. They are not self-driven teams; they are mission-driven teams.
The people who do the work know the environment the best. They are only lacking the bird’s-eye view, which the management brings in. We give them enough authority to come up with implementation and to do the actual implementation.
We assign an executive to the implementation team. It’s a very surgical, cross-functional team. Let’s say on a manufacturing team we have people who are involved in sales, as well as procurement, as well as manufacturing. There are multitudes of inputs. Manufacturing just does-n’t dance to their own drum. They take inputs from the users upstream and downstream.
Q: How do you make decisions?
That’s sort of an open door. I may have ideas I may put on the table; because I am the owner, they may think I have a higher weight on the ideas.
But I have to educate them if my idea is correct or not. Very often, they may have opposition to that. If the opposition is valid, we have a methodology we will test first before we put it across the company.
We take the input, and sometimes the decisions are just made by notifying me.
Q: How do you let employees know your door is open and you won’t ignore the suggestions?
I call that ‘open door, but closed mind’ policy. The doors are open, but the mind is not. It’s the action. We can talk about things, but, if you don’t act on them, you lose their trust.
We have the open issue list. We call it O.I.L. Every manager and every employee has an O.I.L. If they have any issues, they track on it and we review that religiously. If the items on O.I.L. are not resolved in a certain time, we assign a task force to go resolve it.
Let’s say the employee says we need to advertise in XYZ magazine. They literally have to go investigate what the cost is, what the read-ership is and then bring in the facts. We aren’t going to pass it to somebody who doesn’t have the same passion about it.
That person has to convince other people. Once it is approved by the management group, then we put resources behind it for implementation.
HOW TO REACH: Computer Builders Warehouse, (586) 756-2600 or www.cbwstores.com
Early in his career, Chuck Bengochea faced a difficult choice take a big promotion with an even bigger international company and uproot his young family to Europe, or decline it and look for a different opportunity. He chose the latter, which eventually led him to The HoneyBaked Ham Co., where he serves as president and CEO. Under his leadership, the company grew to an estimated $250 million in revenue last year up 10 percent over 2005 and he encourages his 1,000 employees to live meaningful personal and work lives.
Check your ego. I don’t want any arrogance in our organization. I can’t take arrogance.
I don’t have an ounce in me, or anybody in my leadership team, that I’m one bit better than our store managers. I might be better trained academically, but that doesn’t make me better.
I don’t have a right to say, ‘Go get my coffee.’ There’s a please and a thank you in everything you do, and there’s a sense of gratitude when people do things well. That’s the way we ought to operate.
Embedded in all that is when you have the privilege to lead people. Leadership is a privilege, not a right. Too often, leaders think it’s a right. When you view it as a right, there becomes a sense of, ‘I’m better than you ... It was ordained in me.’
No, it’s not ordained in you. A lot of people view it that way, but I’m not very motivated by bosses I’ve had that view the world that way. You need a sense of humility. If it was all up to me, I’m not sure if we’d fail miserably, but I’m sure we’d not be in the position we’re in because we have a lot of talented folks alongside me, and we’re all in this journey together.
Drive execution. Growth takes creativity and innovation, and you have to continue to challenge yourself. It doesn’t matter how pretty you articulated it, it’s what you’re executing.
Whatever they think they can do, I want two times that. Challenge them beyond their expectation, but then equip and enable them to achieve that. That’s the most satisfying thing you can do professionally.
If you think you can deliver 10 widgets, I say, ‘If we really think creatively about this, if we just open our minds up, I think we can do 20.’ You go, ‘I don’t think so.’ I say, ‘Give it some thought, how you would go about doing that.’
You can’t do last year’s job a little bit better to go from 10 to 20. You’ve got to do something holistically different, so ... it’s going to demand that you think about it differently.
Then you’ll come back and say, ‘I hadn’t thought about that. Let’s try that,’ and boom, you did 16. You were going to sign up for 10, I asked you for 20, and you did 16. Sixteen is a grand slam because it’s six more than you would have done.
Adapt to grow. Ensure that you’re following the trends. Demographics have changed dramatically. Family size has shrunk from 20 years ago, and the ethnic makeup has changed dramatically.
That impacts that core ham that we’ve sold all these years. What are we going to do? Complain that the demographics have changed, and the baby boomers are empty nesters, and they’re not buying as many hams? We could complain, but it’s just not going to help us, so what do we do about it?
Stay current with where the consumer is going and how they make decisions and where the opportunities could be.
Recognize opportunities. Have bright people that you trust, and enable them to push you. You have to create a culture that is open and allows people to say, ‘The emperor has no clothes, and we need to go in a different direction, and here’s an opportunity.’
At the end of the day, the consumer is going to dictate. The consumer doesn’t have to get my approval for what they want to do. The consumer is going to go in the direction that they want to go, both on a macro level and an individual level, so we need to have folks close to that consumer.
I find myself often behind my desk in my office, so you have to hire people that are talented out there, who are close to the consumer and know what the trends are and feel comfortable pushing back to me and my leadership team and saying, ‘I think there’s an opportunity here.’
Create values. It can’t be a game. It’s got to be from the heart. You have to sincerely believe this is the way to lead an organization.
When you start playing games because you have an objective, people see through that. It looks like it’s patronizing. It’s not sincere. Take a deep look at your heart and see where you think it needs to go. Then bring your entire leadership team into the processes. The values I didn’t come down from the mountain and give them a tablet.
We got offsite and said the destination is to be the best place to work, where people can pursue their dreams professionally and personally, and what would that look like?
Promote balance. Start with core values that are compelling. We articulate it this way: great results, great culture. I want to deliver the greatest results in my niche as the GEs of the world can do consistent year over year, exceeding all the expectations, but at the same time, I want a phenomenal culture. I want to enable lifestyles, passions and dreams that our employees have.
I get great satisfaction by what I do at work, but that deep joy doesn’t come from work. That deep joy comes from seeing my son married or seeing my other son commissioned in the Marine Corps. That deep joy is the balancing act that we can have.
You’re more productive if you’re compelled by where you work, if you feel that they sincerely care about you. My legacy when I’m done is not going to be how many hams I sold. The legacy each of us carries is broader than that, and I want to enable them to do that.
HOW TO REACH: The HoneyBaked Ham Co., www.honeybaked.com
If you want to become the kind of CEO who bridges the gap between workers and executives, Gregory Jackson has some key words for you: “Dockers and loafers. Jeans and a shirt.”
In other words, lose the suit from time to time.
Jackson, founder, president and CEO of Jackson Automotive Management, which operates 10 car dealerships in Michigan, Ohio and Florida, didn’t learn how to lead his company in a board-room or behind a desk. He learned in the service garage, in the showroom and on the delivery truck.
When he formed Jackson Automotive in 1993, he set about learning the ins and outs of the dealership business by participating in the day-to-day operations of the company. He sold cars, helped make deliveries and worked the parts counter. He spent between three and four months working in every aspect of his dealerships.
Not only did the experience teach him how a dealership runs, it helped him create a bond with both his employees and his customers by breaking down the wall that sometimes exists when a CEO becomes too detached from what is going on in the field.
Jackson isn’t quite as hands-on nowadays, but every once in a while, he is still known to hang up his suit, put on some khakis and a casual shirt and spend time working in one of his dealerships. “It’s amazing the natural feeling people get for you,” he says. “When you’re sitting there talking with them and after three or four minutes, they’ll say, ‘You work here, what do you do?’ And you say, ‘Well, I actually own the place.’ It’s amazing how they feel about that, what that means.”
Jackson’s interactive approach to leadership has helped him grow Jackson Automotive into a chain of dealerships that netted more than $1 billion in sales in 2005. To Jackson, leading a company is more about relating to people than anything else.
Jackson’s first lesson on relating to employees: People want you to lead, not rule.
A CEO has to appear confident and competent but not cross the bridge to arrogance or aloofness. Jackson avoids detachment by getting to know many of his approximately 500 employees. The little things you can remember about those on the lower rungs of the company can really help get them behind you. “The one thing you have to do is not hold yourself out as the king,” he says. “You want to be approachable and personable. It’s just knowing a little bit about them, what is going on in their life. ‘How is your son doing with the baseball team? How is your wife’s illness, is she doing OK?’ Knowing something about the people you manage creates some personality and encourages people to want to help you out and help you learn.”
Jackson encourages others at his company to reach out, as well. The culture he has communicated to his employees is one of teamwork, of helping others out, even if it’s not in your department. “It might be a salesperson going into service and checking on a car, ensuring that everything is all right,” he says. “It might be me as a manager doing the same with an employee associate, talking with them, asking if we can help. It might sound a little clich, but it works.”
Jackson constantly reinforces his messages through e-mail and face-to-face contact. He relies a lot on communicating through his dealership managers, but every so often, he’ll call all of the employees at a dealership together for a kind of large-scale brainstorming session. “I give everybody a little sheet, kind of an ‘ideas for improvement’ sheet,” he says. “We ask everybody to write down the things they see, problems they notice, and what your solution would be to the problem.”
Jackson says that because some employees are timid about approaching the CEO and some might not believe their opinion really matters, it’s up to you to seek out their input and make it matter. “I think you just constantly have to request it from them,” he says. “Then, when they give you a suggestion, act on it. That doesn’t mean you always do it, but at least respond to them.”
If the company uses an idea, or an employee does a particularly good job, recognition is a must. Recognizing employees fulfills a need that every person in your company has, and Jackson says that a measure of recognition or gratitude doesn’t have to be grand it can be as simple as treating an employee to lunch or giving that person a small gift. “I just recently gave someone a leather notepad carrier that I got at a conference,” he says. “People are thrilled that you’d give something to them. It doesn’t have to be big. It’s just the recognition that ‘I did something well, and guess what? Somebody took notice.’”
Jackson says making those small gestures can easily be overlooked by a CEO, but it should be no different than how you might handle things at home. “If you’re married, sometimes you might forget how important it is to tell the wife you love her,” he says. “After so many years, it’s like, ‘She knows I love her.’ But sometimes, it’s just giving that recognition as opposed to assuming. The need to be recognized is part of the human hierarchy of needs.”
The right people
A company is like a puzzle that doesn’t come in a box. The CEO’s job is to enable people to find the right pieces and put them in the right places so that the finished puzzle meets the original vision.
But it’s not as simple as something that can be bought from a hobby store.
Jackson says fostering relationships in a company starts with a philosophy of open-mindedness with regard to job placement. You need many different types of people in different positions in your company, particularly if you deal with the public.
When considering a person for a job, Jackson says the management at Jackson Automotive puts a candidate through rounds of internal and external evaluations including psychological evaluations and behavioral examinations to determine if a candidate would be a good fit for a job and a good fit with the other employees he or she would be working with.
Even if somebody has worked in a department for years, that person will still go through rounds of evaluation when applying to manage that department. “Just because you are a great baseball player doesn’t mean you can manage a baseball team,” Jackson says. “Just because you are good at a task doesn’t mean you can manage others who do the task.”
One of the most difficult skills a CEO must learn is how to place dissimilar people in situations where their differences complement each other instead of clash. “Sometimes, you want different people together on a task because they can best accomplish it,” he says. “In other areas, you might want similar people. It’s situational.”
For instance, different employees might be able to handle different customers. Some customers need a softer touch, while some need to have the law laid down in front of them. “The customer is always right, but I think sometimes the customer needs to know when enough is enough,” Jackson said. “So you send in a softer person to try and soften the person up, but the customer is still not going to be happy, even though you’ve done right by them. So you send in a little more forceful person to tell the customer, ‘This is it. This is what we are going to do. Why are we still talking?’”
No company bats 1.000 with regard to putting the right people in the right jobs. But just because an employee is underperforming in one capacity doesn’t mean he or she needs to find a new line of work. It might be that he or she is fully capable of becoming an outstanding performer in another area.
It goes back to the rounds of evaluation Jackson Automotive puts job candidates through. A person who is a bad fit in one area could be re-evaluated as a potential fit for another. “If you have a broken piece of equipment, you don’t throw it out, you try to repair it,” he says. “You don’t throw it out until you realize that it simply isn’t going to work right.”
If other employees see management working with a problem employee instead of tossing that person to the curb, it helps to grow a positive feeling within the company. “I think that when the other individuals see you working with an employee, they feel good about that,” Jackson says. “They know that you’re not throwing away people and that you are doing right by that person.”
Jackson views poor work performance as a symptom, not necessarily as a disease. While some employees simply don’t take their jobs seriously, a great many with work performance issues have an underlying problem. Part of the employee evaluation system in place at Jackson Automotive looks at what is going on in the lives of underperforming employees. “We counsel them to find out what’s happening,” he says. “Are they just slouching off, is it something that’s going on personally, do they need additional training? That dictates what we do next, whether we need to send them for training or whether they need a little time off to deal with something personal. We try to find out what the problem is first, then we attack it from that standpoint.”
Jackson says he frequently uses a saying borrowed from a book by business mogul Jack Welch. “One of the things Jack Welch said was that if you are having a performance problem, you have to change your people, or change your people,” he says. “You either change what a person is doing, or put a new person in that job. We look at all those options.”
Jackson says he strives to make Jackson Automotive’s dealerships a comfortable place to work and to do business. To do that, he and his managers must work constantly to maintain customer satisfaction and employee trust, something that only happens with frequent communication and constant re-evaluation of people and policies. “Bankers and financiers lend you money, and so often they tell you, ‘I’m not investing in the company so much as I am investing in you,’” Jackson says. “To maintain that, you have to build relationships with your people, and you have to get your arms around the business. Not just the top level, but the nuts and bolts of it.”
HOW TO REACH: Jackson Automotive Management, www.prestigeautomotive.com
How was your day?’ might be a simple dinner table question, but at the Testa home, it often leads to a meal-long discussion of business issues.
Paul Testa is CEO of Cuyahoga Falls-based Testa Cos., which includes construction, real estate, property management and land development divisions. His wife, son, daughter and brother also work at the company. “We have five employees for every one Testa so we don’t overwhelm them,” Testa says.
The company’s 38 employees have helped Testa grow revenue nearly 60 percent from 2003 to 2005, and he expects 2006 revenue to exceed $30 million.
Smart Business spoke with Testa about how he creates close-knit relationships with both customers and employees.
Q: How can other CEOs grow their company the way you’ve grown yours?
Concentrate on relationships and on repeat business, as opposed to new business. You’re not always going out, trying to advertise and create new business.
Try to help the organizations you’ve already done business with and hook up with companies that have continued growth. If you satisfy them, you’re going to be part of their growth.
Look at where the growth is in the industry: What expertise do you have, and what expertise do you need to meet their needs?
We’re comfortable in the size of our company now, and we’re really not looking for explosive growth. Growth is good, but profitability is better. You can lose control of growth.
Q: How do you know when a company’s growing too fast?
If you start to drop the ball with your quality and service, you need to take a look at whether or not you need to add staff to meet continued growth or be comfortable where you are.
I’ve always subscribed to the philosophy bigger is not better. I never had a desire to grow to the size we are, but it just sort of hap
How to Express Heartfelt Commitment to Your Mate,’ by Gary Chapman. It’s based on relationships with men and women, but we can take this into the workplace and understand what motivates each person.
Where one person may want verbal affirmation that they’re doing a good job, somebody else may want monetary affirmation. Somebody else may just want a pat on the back.
We try to get a true understanding of what each person wants to be satisfied in their work environment and provide it, and it may be different for all 38 people.
Q: How do you establish team spirit?
If we create a product for a customer, and the customer’s happy, then the employee who helped put that product together feels a sense of pride. It’s not, ‘The company just built that.’ It’s, ‘We just built that.’
‘We’ is the most important word within a company. I don’t like the word ‘I’ because I don’t do anything alone; it’s a team effort.
Q: How does that benefit your customers?
I tell my employees, ‘I’m not the guy who pays your salary; the customer pays me to pass it on to you.’ You don’t need just to satisfy me, you need to satisfy all of us, clients included. That’s the key. The customer’s going to be happy to pay our bills, and he’s going to be happy to recommend us to others.
Q: What advice would you give other CEOs at fast-growth companies?
Your employees are your biggest asset, and if you take care of your employees, respect them and make them part of your family, they’ll respond in kind. As a team, you’ll build a better environment and a better product.
Money comes, and money goes, but if you want to leave a legacy for your family, [it comes down to] what did you do, what did you accomplish and were you right by people? As long as I’m going to have my family’s name on the company, I better bring honor to them.
HOW TO REACH: Testa Cos., www.testacompanies.com or (330) 928-1988
An employee takes off his coat and, like he’s solving a jigsaw puzzle, intricately packs the pieces in her carry-on so she can board her flight.
You might think this helpful hero was an average shop worker, but in this case, it was Gregg Paradies, president and CEO of The Paradies Shops, which operates the Georgia Aquarium store and more than 500 specialty, local and national brand stores in 63 airports and three hotels in Canada and the United States.
While many corporate executives give lip service to the fact that they get down in the trenches with their employees, Paradies actually does. He strives to live the core values of this family-owned business in every interaction with employees and customers, and this leadership focus helps maintain the values that define the 46-year-old company his father and uncle founded.
“If you talk to most companies today, they’ll tell you about their core values,” Paradies says. “The question is, when you spend time in that organization, do you feel those core values? In many cases, the answer is no. It’s just talk. Talk is cheap. ...We know that if our people love the company and feel part of something bigger than a company, they’ll be happier.”
Paradies wants his employees to embrace the family environment the founders created a feeling of a tight-knit community, where employees feel like citizens instead of just workers. Within that community, people are enthused, energetic and passionate about their responsibilities, their co-workers, the customers and the company.
Mix those things together, and you get a positive environment that people actually enjoy spending their time in and people who are excited about going to work.
Happier employees tend to give better service to customers, something that’s absolutely critical to a retailer. But happy employees don’t necessarily get that way on their own they are a product of a culture designed to bring out their best traits.
Creating a foundation
Taking care of your employees and making sure they are living the culture is key to a company’s long-term success. This approach has led to 46 consecutive years of profitability for Paradies.
“If you’re only looking short-term, you’re going to cheat yourself long-term and cheat the employees, as well,” Paradies says. “Part of the long-term perspective is make sure you treat your people right. People are too smart. They can see through the fluff. If the core culture’s not in place, the company’s going to have a hard time attracting and retaining great people.
“In today’s world, people are very mobile. To keep great people and recruit great people, you need to have something special to offer them. That’s frequently what is cut first in these companies that have these challenges. In reality, that should be the last thing that’s cut. Once you lose your great people, you really lose everything that made the company successful at one time.”
Cultural initiation starts with managers and corporate employees attending Paradies Shops University for training and to experience the culture first-hand. There, Paradies explains how the family culture evolved and the role it has played in the company’s growth.
“If they don’t feel the culture, they will not be able to spread the culture,” Paradies says. “We must ensure from Day One they have a feel for the culture, and that builds and builds so they can spread it to their teams.”
Through the university, employees delve deep into TRIFIC, the acronym used to identify the company’s core values of Trust, Respect, Integrity, First-class service, Innovation and family-Culture. They put these values to work when they are transported to one of the company’s shops to work the registers for a day. Everyone continues to work in the field at least once a quarter to maintain that understanding.
“The customer is what pays our paycheck and pays all the bills,” Paradies says. “You see it in other companies where they lose sight of what their business is. Our business is all about providing first-class service which exceeds the expectations of the customers we service.
“It doesn’t matter if you’re in accounting, human resources or IT, we want to make sure that everyone recognizes that we’re a support center here. We don’t have cash registers here, so we need to do whatever it takes to support the people in the field. In order to support the people in the field, we need to know what their challenges are, day in and day out. By working on the front line on the sales floor, you recognize these challenges.”
Instead of giving managers rigid guidelines on how to run their stores, Paradies empowers them to embrace their entrepreneurial flare to personalize their stores. The only stipulation is that they adhere to TRIFIC.
“That’s the fun part of the business, because entrepreneurs love change and love to get better,” he says. “If we continue to do the same thing year in and year out, our business won’t grow. We need to continue to innovate and come up with new ideas. ... Nothing is more rewarding than being successful with an idea you created. Each of our managers has that opportunity.”
While every store is different, Paradies sees the importance in keeping them all on the same page in terms of goals. Twice a year, managers fly to Atlanta for a company meeting. And because Paradies expects them to roll out the red carpet for customers, he does the same for them by giving them a classy experience.
“The first priority of that meeting is for everybody to feel the culture, so they can take that culture back to their location,” he says. “When I say ‘feel the culture,’ it’s a very motivating week. We celebrate, give out a lot of awards, and then we articulate our game plan for the coming year.”
Managers take that enthusiasm back to their stores and let it permeate the environment using their own forms of recognition and morale-building. Paradies sees this spirit first-hand when he and management travel to the stores.
“You can’t look at a report,” he says. “You need to be in the location, see what’s going on. Every store’s different. Every airport’s different. The only commonality among all our operations is they’re all different. It’s not The Gap.”
Although costly, Paradies says the travel benefits the company.
“Obviously there’s a tremendous expense for that, but that’s an expense that we do not challenge,” Paradies says. “We want our support center traveling. We know that if we can get closer to our associate, make sure they know who we are, make sure they’re getting a clear message as to what their role is, we know we’ll be more successful.”
Beyond personal communication with employees, traveling allows him to develop stronger relationships with those who are on the front line with customers, giving him a better gauge of his business.
“We know when we visit a location immediately if that general manager is doing a good job of motivating his employees and creating that family culture,” Paradies says. “You feel it. It’s a tough thing to explain, but you just feel it the employees are happy. They appreciate their job.
“These are front-line people who know where the opportunities are better than anybody. You’d be amazed at the good ideas these people have.”
In fact, the TRIFIC values acronym wasn’t concocted in the support center by upper management but by two employees at a West Palm Beach airport store. Management quickly embraced it, and those employees received an innovation award. Paradies says rewarding employees for their contributions gives ownership in its success, which creates buy-in. When employees have buy-in, they’re more productive and less likely to tolerate behaviors in their colleagues that hurt the company.
“You get all these benefits by creating a great place to work and live,” he says. “Is there an investment to doing that? Absolutely. I cannot tell you that we get a dollar-for-dollar return on every item, but when you put it together, that makes our company unique and special.”
When employees feel the culture and buy in to the company’s mission, it heightens their dedication to serving the customer, which is crucial for the company’s reputation and growth.
Unlike most retailers, The Paradies Shops doesn’t have the luxury of controlling the number of stores it opens in a given year. Its niche is primarily airport retail, and the people running the airports ultimately decide whether Paradies can open a store.
“We compete for every contract,” Paradies says. “In order to grow, we have to be successful winning new contracts or expanding existing contracts. The way you win new contracts or expand existing contracts is your quality of operation. A big part of your quality of operation is the customer service you offer in your stores.”
To help him gauge the quality of his employees’ performance, customers are encouraged to fill out comment cards. Each month, between 2,000 and 3,000 do so.
To those who submit positive feedback, Paradies sends the customer a letter of thanks for the feedback. He also sends the comment card with a personal note to the employee involved to thank that person for his or her commitment.
When he receives negative customer feedback, he meets with the store manager involved, who addresses the problem with employees and provides feedback about how they can do it better next time. Paradies then sends the customer a note thanking him or her for helping the company improve and encloses a $25 gift card with a request to give the store another opportunity to make it right.
“It’s a lot of work involved, but that’s what makes the difference,” Paradies says.
Additionally, employees are recognized each month with service awards for going above and beyond. Of these monthly winners, six are selected as annual winners, and their stories are featured on the company’s Web site. With each win, employees receive points, which they can redeem for items such as DVD players, plasma TVs, and washers and dryers.
“It’s easy for the little things to fly through the cracks if you’re not committed to this culture,” Paradies says. “It’s easier for me not to do it. When you put them all together, it works. It’s not one thing individually. It’s a package of trying to ensure each associate in some way feels and appreciates the culture.”
This cultural experience and appreciation has propelled The Paradies Shops’ growth. It hit the $100 million revenue mark in 1994, broke $200 million in 2000 and will surpass $400 million for the 2006 calendar year. But Paradies doesn’t let that success distract him.
“You can get spoiled by success, but I’m frequently reminded when I read the papers and talk to others outside the industry of how lucky we are,” he says. “Well, luck doesn’t just happen. We have created our luck here because we hire great people and we have created a great culture and we are in a dynamic and growing industry.”
How to reach: The Paradies Shops, www.theparadiesshops.com
From that difficult beginning, it grew from an $8 million company that banks considered a high risk to a $25 million company that owns and operates seven retail pharmacies and one pharmacy specializing in long-term care under the Mission Pharmacy Services banner. Hess learned that growing a business is more like running a marathon than a sprint, and PSP LLC is keeping a steady pace.
Smart Business spoke to Peter Hess, managing partner and CEO of Professional Specialized Pharmacies LLC, about how he has grown his business.
What is the key to the success of your business?
Everybody talks about their employees, and I have to agree with them. I’d be nowhere without the other people in my company. We have 11 partners in our company some are employee-owners, some are just plain investors but having those people that you can trust and depend on makes my job so much easier.
At the same time, we had a situation a few years ago where we had an owner-employee who wasn’t really on board with what we were doing. We had to part ways with that person. You’ve got to get rid of negative influences, and you’re got to get people to believe in what you’re doing.
How do you get those people?
Nothing happens overnight, and a lot of things have to happen over six months or a couple years. I am not in a dictatorial kind of position. I have to convince my fellow owners, at times, of why we want to do something.
Then, vice versa, I have to sell it to my employees. It’s building consensus rather than working on a command and control kind of basis. We work on arriving at the best decision as a group. Let’s beat each other up at times, but once we have the best decision, let’s move forward.
When you’re surrounding yourself with people, you never want to let somebody go, you want to give people every chance in the world. But when there are people who don’t get it, you have to part ways at some point to go in the right direction.
What are the skills a CEO needs to survive?
Perhaps most important to being a leader is to accept risks, take responsibility and make things happen. The theme I kept coming back to was trust and integrity and building up that intangible quality, and that’s what has struck me in the last five years or so.
That has been useful in convincing the bank, convincing my other owners and convincing employees that here’s what we’re going to do, and then doing it.
When it works, you build momentum and some credibility. The more you do that, the more people start buying in to the fact that it’s not a pipe dream if we do these things, it works.
When you do that, the momentum builds, and that’s where this has turned out to be the homerun of companies.
How do you make decisions?
There’s a book about the life cycles of a company. The basic premise is when a company is young, it makes its decisions on the elevator between the first and second floor. There’s a lot of flexibility in the company.
As the company matures, it can actually reach a point of stagnation where you can’t make a decision without six months of talking about it, and going through 10 or 12 steps of approval. You become very rigid, and it’s tough to make a decision.
I don’t know that we’re on the elevator between first and second floor, but we’ve at least maintained enough flexibility that we can make decisions on a fairly rapid basis.
How do you keep that flexibility?
The environment we try to create here is that if there is disagreement, let’s openly try to work though it. We try to not let egos get in the way and ultimately come to what’s the best decision for the company. As long as we can arrive at the best decision, then we’ve been successful.
In general, it comes down to a philosophy of my role, or other people’s roles. I consider my role to be a facilitator, somebody that gives other people the tools to do their job and do their job well.
Part of my job is not to bottleneck processes, so by the time something gets to me, hopefully I have the right information to make the right decision.
How to reach: Professional Specialized Pharmacies, (724) 545-1600 or www.missionpharmacy.com
Olans and co-founder Lee Masover created TRG in 2000 as a one-stop-shop for retailers who need to open new stores in a hurry. TRG provides clients with every service connecting with opening a store, from the original design to computer installation. And because it is involved with every aspect of the process, Olans says he and his team become an extension of the client’s company.
TRG is growing at a rate of about 30 percent a year, and the $25 million company has helped Weight Watchers, T-Mobile and others open new locations customized to their needs.
Smart Business spoke with Olans about he builds relationships with his clients and maintains quality as TRG grows.
How do you communicate your mission and vision to employees?
They have to understand the fact that the chain is only as strong as the weakest link. If anybody falls down on the job, then the whole process will basically crumble. Every individual needs to be a strong link in that chain so that everything goes off as smoothly as possible.
We like to talk about the fact that no matter whether we are doing our first store or our 100th store, that the experience on the part of the client has to be the same. There is no letting down and saying, ‘Well, it’s our 100th store, we don’t have to worry about performing to the same degree.’ We feel, and our customers feel, that we have to hit it out of the park every single time.
How do you build close relationships with your clients?
Most people in the store fixture business (are) specialists. Those companies only care about their one particular specialty, so they’re given a set of drawings ... they produce what is on those drawings and don’t go any further than that. They’re strictly acting in a role of a supplier.
We’re acting in a totally different role, which is we are now becoming an extension of the company we are working for. The first thing that we do, and we tell our clients this upfront, is we learn their business. We take whatever time is necessary to truly understand what they’re trying to accomplish, so that whenever anyone is dealing with them, it’s as if they are dealing with us. It’s one continuous loop.
How do you learn a client’s business?
We sit down with the key people in the organization, because our success is going to be predicated on having them available to us. We don’t just want to meet with the head of real estate or the head of the construction department. We want to meet with as many top-level people as we can, because we want to make sure that they understand that our success is driven by a buy-in on their part.
We spend quite a bit of time out in the field. If they have existing locations, spending time with them and asking them questions and trying to gather as much information as we possibly can, both good and bad, in terms of the experiences that that client has had [is important], so that we don’t make the same mistakes that have been made previously.
How do you maintain quality?
It’s something that is actually inherent in what we do. It’s what runs through all the individuals who work in our company. If everybody is not perfuming at a top level, then they don’t stick around very long. It’s a team effort, and everybody has to be performing at a high level.
It’s the extra things that you do. We speak with our clients on a daily basis, more typically multiple times on a daily basis. We really maintain close contact.
There has to be a very good fit between what we offer and what our clients needs. We’re very selective in terms of the clients we take on. We want to make sure that what we are doing is what they need and also works in terms of what we do.
We are not a price-driven company, though we are extremely competitive. If someone right out of the gate has cost the No. 1 issue, we say, ‘Thank you very much, but that’s not what we’re all about.’ We’re all about value and service and being that extension of that company, as if we were sitting right there in their office.
HOW TO REACH: Total Resource Group, (847) 329-7900 or www.totalresourcegroup.com