Born: Boonville, Mo.
Education: B.S. in agriculture, University of Missouri
What is the best business lesson you’ve learned?
There is no substitute for profitability.Any business that isn’t profitable is not going to sustain itself. When you get right down to it, any CEO’s job has to be profitability. You might have some short-term periods in there whereyou’re not as profitable because you’re in an anti-growthphase, but you have to run the business profitably.
I learned that early on because I have a sales and marketing background where I worked for a hard-nosed sales guy, and those were his words.
What traits or skills are essential for a business leader?
First and foremost, you have to have trust and honesty. If those aren’t present, nothing else matters. If our franchisees and employees feel like they can trust management and if management is honest with them, they can make a whole lot of other things flow through. If they don’t, it’s not going to happen.
What are some universal truths you’ve learned about leadership?
One is you can’t have all the right answers. Arrogance really doesn’t work in a CEO’s position, but the personality profile of people who get into those positions might come across as somewhat arrogant. You don’t have all the right answers, so you have to get the assistance of the people on your staff.
Also, you don’t have to be right all the time. Being able to deal with the gray areas is important in a leadership situation. Sometimes, you have to make a judgment call if you have no idea if you’re making the right call. Hopefully, you’re right the majority of the time, but you have to have the courage to make that call, not just sit on it forever and have no action.
What is your definition of success?
Five or 10 years from now, when I’m no longer in this position, if I can look back and say I did the right thing, I would feel successful. Yo u want to see the company grow and be profitable, that sort of thing. But in doing so, did we do the right thing for our staff, employees and franchise members. If we didn’t have their interests at heart and didn’t do the right things for them, I couldn’t say we were successful.
Employers today are implementing workplace programs that are designed to promote a culture of wellness. A recent case study allowed experts to evaluate which wellness programs were effective, the return on investment for employers and the overall importance of wellness programs for companies.
For employers to create a culture of wellness and find effectiveness, they must create awareness and introduce activities that support wellness and healthy lifestyles, says Bob VanEck, associate vice president of Clinical Quality Improvement with Priority Health.
Smart Business spoke to VanEck about the success of wellness programs and how solid workplace wellness programs can contribute to overall employee health and lower health care costs.
What did the case study evaluate?
For this case study, a group of more than 13,000 employees was introduced to the wellness culture for an extended period of time. Not all of the employees chose to participate. To evaluate the effectiveness of the wellness programs, experts reviewed the biometric screening data of the participants. The data measured very basic and important information of a person’s overall health, such as glucose levels, cholesterol levels, blood pressure and weight, and also evaluated immediate health risks and risk behaviors. A nurse or health coach was on hand at the end of the screening to discuss the results.
In this study, experts were also able to review the claims of the same group of individuals. By comparing the biometric data and diagnosed conditions from claims, experts were able to demonstrate to the group members how their health behaviors affected the costs of their health care.
What did the results show?
That a person’s weight has a direct impact on his or her health. Of the general population without diabetes or cardiovascular conditions, 52 percent of the population was overweight or obese; for those who suffered from diabetes or cardiovascular conditions, 83 percent were overweight or obese. Weight stood out as a key factor in the health and health care costs, as diabetes and cardiovascular conditions are two conditions with the highest associated costs.
Another costly set of conditions are degenerative orthopedic conditions (the wear and tear of necks, backs and knees). Weight had an effect on those conditions, as well. In those people without degenerative orthopedic disease, 60 percent were over-weight or obese. For those people with degenerative orthopedic disease, 83 percent were overweight or obese.
Weight also affects health care costs. Obese employees cost 71 percent more in health care costs than those employees with a healthy weight even if they have the same health condition. Obese employees have a 27 percent greater overall health care cost even if they do not have a diagnosed health issue.
There were positives found in the study, as well. People who reported they were more physically active had lower costs for chronic conditions. Some conditions are hereditary and cannot be avoided, but this study showed that with physical activity health care costs will decrease.
What is the importance of the information found in this study for those people who manage company health care plans?
Different companies utilize different plans and change wellness programs as needed to fit the needs of the employees. This study demonstrated that there are significant cost savings found in managing employee weight. In this case, offering incentives for participation in healthy behaviors led to more employees with healthy weight. Such information helps employers redesign their wellness programs to increase effectiveness.
How can employers present this information to employees to increase participation and effectiveness?
Celebrate the accomplishments of employees. It doesn’t have to be about completely eliminating health care costs or eliminating disease completely. Rather, it should be about creating the healthy culture and maintaining healthy habits.
The culture of wellness takes time to build. Employers may want to start with general classes and offer health risk appraisals. These programs will make employees aware of healthy and risky behaviors and create the building blocks for the wellness foundation and participation. It is important for employers to understand that this is a new era of a culture of wellness.
Are there other areas where employers should focus wellness attention?
Smoking cessation is a great place to focus. Offering incentives for smoking cessation is also cost effective for employers as smokers often have high health care costs.
Another area of interest noted in this study was the importance of healthy coping skills. Sometimes overeating and smoking are simply coping mechanisms. Employers can offer programs, classes and incentives, but they cannot control the way individuals cope with stress and/or their surroundings.
BOB VANECK is associate vice president of Clinical Quality Improvement with Priority Health. Reach him at (614) 464-8204 or email@example.com.
If you want to become an approachable leader, don’t shoot down someone’s idea, even if you’ve heard it before, says Steve Kopitz.
Kopitz, founder, owner, president and CEO of Summit Sports Inc., says that it’s easy to cut ideas short when you’ve been in business awhile and think you’ve heard it all, but you need to keep an open mind.
“We may have tried it 10 years ago,” says the leader of the sporting goods company, which posted 2007 revenue of about $20 million. “It may have not worked back then, but it may work now.”
Smart Business spoke with Kopitz about how to be more approachable to your employees.
Q. What is the biggest challenge to being approachable?
The biggest challenge is getting people over the hump of really believing that it’s true. They’ve usually worked for people that are not approachable or who say they are. We have a saying in my company, and that is, ‘No one can be fired for anything that they say.’ Meaning, you need to feel comfortable and you should feel comfortable in voicing your opinion, even it’s completely against what we’re doing. Maybe it’s you think everything we’re doing is ridiculous, but we want to hear that opinion. Even if we maybe don’t agree with it, when we’re done hearing it, we still want to hear it, and I don’t think that corporate culture exists in most companies.
So, you can’t just have a person come in and you tell them, ‘Well, nobody ever gets fired in our company for what they say (and) that all of a sudden they’re just going to be an open book and tell you everything that they feel. It takes time, often months or years, before people truly believe and understand that philosophy.
Q. How can a leader create an open corporate culture?
The best thing that you can do is simply go around and ask people how they really feel. That doesn’t mean they’re necessarily going to tell you the first time, but, over time, they’re going to get comfortable when you seem to really be interested in their opinion, and especially when their opinion actually ends up being something that you implement.
Because we sell sporting goods and it’s something that everybody who works in the company really likes, we have these things called ‘Sports Bucks,’ and that’s basically gift certificates that we give employees for a variety of reasons.
One of the things we give them to (employees) for is for good ideas. So, when an employee comes up with a good idea, we’ll give them $25 or $50 or $100 of ‘Sports Bucks’ that they can use toward free sports equipment of their choice.
So, not only do we compliment them that it’s a great idea, but we really reinforce it by rewarding them with some cool sports equipment.
Q. How do you become more approachable?
The first thing is you have to be very open-minded. You think you know the way, and I have very strong opinions in my business, but I never make any decision without consulting at least multiple people. Because, even though I think things are really clear, after I consult multiple people, I find that sometimes, my ideas are not as well thought out as I thought.
I try to emphasize to all of my staff, ‘Don’t make any decisions in a vacuum. Run your ideas by other people.’
Sometimes, you’ll change your idea completely, or some times, you’ll get an enhancement on it. But, even at the top, it’s very dangerous to make decisions without getting as much input as you possibly can.
Q. What other advice would you have for a leader on how to become more approachable?
One is just a real open-door policy. I’ve got about 150 employees, and they all can and often do call me or e-mail me or sometimes even stop in to say something or even invite me to lunch if they have something really on their mind.
Q. What does an open-door policy mean to you?
It means that every employee has to feel comfortable. I mean, your door can be open, but that doesn’t really mean anything. They’ve got to feel comfortable that they can really speak their mind and get a bit of your time and that you really will give them the feeling and the sense that you really care about their opinion.
Even if you don’t agree with it, they don’t always have the information that you have. But, sometimes there’s a morsel, that if you shut yourself off just because maybe you’ve done it before or it’s something that you are totally against the best ideas come out of the craziest ideas.
So, you’ve got to let a person completely explain what their thought process is and not shut them down in the very beginning because once you shut them down the first time, they’re not going to come back and talk to you again.
HOW TO REACH: Summit Sports Inc., (888) 271-7500 or www.summitonline.com
In the midst of major change, Gary Graves has provided stability at American Laser Centers.
Last year, Graves was appointed CEO of the company when two private equity firms became majority owners. During the personnel changes that accompanied the transition, Graves developed his employees’ trust by proving himself a consistent, approachable leader.
“People that trust their leaders will tend to push hard, take risks and put their all into the job,” says Graves, whose company posted 2007 revenue of about $150 million. “If they don’t trust, they’ll be watching the clock and wondering what they’re going to be doing that weekend.”
As the 1,600 employees of the laser hair removal company began trusting him enough to give him their input, Graves brought both new and inherited talent together to strengthen the company.
Smart Business spoke with Graves about how to establish trust with your employees.
Establish your stability. People are fundamentally the same across businesses in terms of their dreams and aspirations, how people want to be treated. I’ve found certain things that work for me, and I continue to bring them along in whatever setting I’m in.
You have to be predictable and consistent. People don’t want to sit around wondering, ‘How’s this guy going to react to this or that?’ They like to know, if this happens, this is how people will react. Anybody
that’s ever worked for somebody that’s unpredictable or inconsistent [can tell you] that’s not a great situation.
It will take a little time. There’s no speech or big town-hall meeting you have and say, ‘Well, I’m going to be consistent.’ You just have to demonstrate it through your actions as events unfold. People see how you react to success, people see how you react to failures, when things are down, when things are up.
What’s worked for me is being also emotionally balanced. If, in the downtimes, you’re running around yelling and panicking, the organization is probably going to panic, as well, and not focus on the things they need to do to improve it. They’re just going to focus on self-preservation.
As time unfolds, people will see you in a variety of situations and see that you’ve been consistent in how you deal with the good news and the bad news.
Build trust through reliable hires. Surround yourself with good people — which might mean that you have to bring in people that you’ve worked with before that you know and trust.
They not only need to be deep in their functional area. That’s kind of a given; the CFO is going to be good at finance. What I’m also expecting is that they’re broad businesspeople, willing and able to contribute to ideas that aren’t necessarily in their functional group.
You probably are going to step on some toes. Sit down with people and explain to them why you’re doing it. I involved the people that I kept in part of the interview process. I brought on some field people that I had worked with before. But I just didn’t parachute them in and say, ‘We’re going to accept that.’ I had my team be part of the interview process. I don’t want them to feel like I’m making that decision for them.
The first time you bring somebody in and everyone sees that that was a great hire, they then trust your judgment. The next time they hear Gary’s bringing in somebody he’s worked with before, people don’t worry about it.
Encourage input. You would set the expectation or make it known that you’re really interested in their point of view on things. Some people have not grown up in a culture where they were asked to step outside the box. They can do it but don’t feel comfortable doing it. If you just let them know that it’s expected and it’s OK, many of those people might be able to do that.
In terms of how you make somebody feel comfortable doing that, it’s really just sitting down with them. A lot of times, what happens is you’re sitting around the table, you’ve had lunch brought in and you’re just shooting around some ideas about the business. It doesn’t feel like a formal business meeting because it’s just lunch. People get caught up in the conversation. People ... have a point of view on a lot of things.
Really, it’s not hard to get that going. It goes back to being the consistent, predictable and approachable
leader. If they work with you a little while, they’re going to understand it’s OK to have an idea about a different area. You tell them it’s OK and that you actually would like their feedback. Usually, there are one or two brave people who believe you right off the bat, take you at your face value and come in.
Then the word filters out that, ‘Hey, he is approachable.’ People are pretty smart reading people. If you walk around and you look approachable, you’ve got a smile on your face, people will read you before you have any kind of meeting or say anything. It’s how you carry yourself as a leader and if you’re visible, if you’re out and about.
If you’re in your office behind closed doors all the time and people never see you, they’re probably not going to feel you’re approachable.
How to reach: American Laser Centers, (877) 252-8922 or www.americanlaser.com
When Wall Street is going gang-busters, even the most conservative investors loosen up and take on more risk in their portfolios than usual. Confident in the market and riding the “good times,” they forget the golden rules of investing.
“The fundamentals of investing are to diversify and balance your risk,” says Craig Johnson, president and CEO, Franklin Bank, Southfield, Mich. “I think a lot of people forgot those fundamentals when the stock market was so good.”
Every employee with a retirement plan is watching his or her savings erode, though long-term investors which is anyone in the market for five years or longer will see the market rebound eventually. For some, the current economy is a hard-learned lesson in being prudent in good times and bad. But regardless of one’s financial position, news headlines are sparking serious concern for retirement dollars.
As employees consider their 401(k) contributions and re-evaluate investment portfolios for fiscal 2009, business owners can do a great service by offering education and access to financial advisers who can provide practical retirement planning insight.
Smart Business spoke to Johnson about what employers should communicate to their staff concerning retirement plans and the investment alternatives that banks offer.
What should employees understand about their company 401(k) plans in light of Wall Street’s volatility?
As an employer, you have employees who contribute to a company 401(k) plan, and they are afraid because they see their money evaporating. Some may be tempted to stop participating in the program or to decrease their contribution level. Explain to employees that neither is a wise, long-term investment decision. Here’s why. A 401(k) plan offers two features not available anyplace else. One is tax savings. Contributions to a 401(k) are not subject to federal income tax upon deposit. There is no bank mutual fund or credit unit that will provide that instant return on your investment. Two, most employers match a certain percentage of employees’ 401(k) contributions. Because of this, a 401(k) is probably the most lucrative, long-term investments out there. Finally, by contributing to a 401(k), employees essentially are buying in to the stock market. You know the old saying, ‘Buy low, sell high.’ Now is the time to buy everything is on sale.
What about pre-retirees who are considering pulling all funds from their retirement accounts?
One of the biggest mistakes people make near retirement age is getting too conservative with their plans, thereby limiting their returns. The goal is to not outlive your money. Pulling funds from an investment account to invest in a low-interest CD, for instance, may feel ‘safe,’ but what’s safer? Taking a little risk and maintaining higher returns for longer or cashing out of the market with the reality that the money will dry up in less time? Individuals are asking bankers about rolling retirement funds into CDs because they get FDIC insurance and avoid stock market volatility. Make sure this decision is not based on the events of the day. Stop and count to 10. Make rational decisions, not emotional ones.
Are there alternative bank products or other retirement savings vehicles that satisfy those with low risk tolerances?
An individual might consider a bank CD for a portion of savings, though exiting from the market completely is not a sound, long-term decision. An honest discussion with a financial adviser should preface discussion with a banker concerning savings products and mutual funds. Some banks provide wealth management services; take advantage of those offerings. Ask about annuity products. Traditionally offered by insurance companies, these products have evolved over the years. Wealth managers are offering them as an option for individuals who want more risk protection and ‘upside’ opportunity. Also, companies can attach a Roth 401(k) feature to their 401(k) plans. Unlike traditional Roth IRAs, with the Roth 401(k), employees can contribute up to $15,500 if they are under the age of 50. That money grows tax-deferred and is tax-free at retirement.
What education can managers provide employees to help them make wise, long-term fiscal decisions concerning retirement plans?
Employers can ease concerns about participating in company retirement plans by connecting their work force to experienced bankers and advisers. Let employees know that the company is partnered with a financial institution and team of advisers. Now is a great time to invite a professional to speak about the market, retirement planning and the importance of thinking long term. Most financial advisers partnered with retirement plan providers or banks will give presentations and consult with employees for free. Arrange a mandatory meeting at your business, and allow employees to sign up for one-on-one sessions after the talk. The confidence employees gain through education will help them make wise investment and banking decisions.
CRAIG JOHNSON is president and CEO of Franklin Bank, Southfield, Mich. Reach him at CLJohnson@franklinbank.com or (248) 358-6459.
The changes to IRS Form 990, Return of Organization Exempt from Income Tax, beginning with tax year 2008, are the most significant in the last 30 years. Driven by Congressional concerns over nonprofits being used as illegal tax shelters and as fund-raising vehicles for terrorist groups — as well as the Pension Protection Act of 2006 — these changes will require more transparency and disclosure.
“These changes are important to all of us — nonprofit employees, board members and donors alike,” says Harry Cendrowski, CPA/ABV, CFE, CVA, CFD, CFFA, managing member of Cendrowski Corporate Advisors LLC. “In addition, if you’re involved with a small, community-based nonprofit, such as your child’s soccer league, you’ll want to know about the changes required of these organizations, as well.”
Smart Business asked Cendrowski how nonprofit reporting will be different from this point forward.
What are some of the major changes?
The new governance section, Part VI, requires information about the organization’s governing body, its governance and management policies, and its disclosure practices. Governance policies and practices are not required by law, but the IRS recognizes that a nonprofit is more likely to report its activities correctly if it has policies and practices in place.
How detailed does the information in the governance section have to be?
The organization will now have to make declarations regarding officers and board members who receive salary or payments. In the past, only salary had to be disclosed. Now, information on consulting and other relationships must be disclosed, as well. Before, the organization was only required to disclose the officers. Now, it has to disclose the number of board members and how many of those members are independent (the standard of independence is that you can’t receive more than $10,000 per year, nor can you or any member of your family be involved in a transaction worth more than $10,000 per year). This is significant in that it will reveal how many, if any, board members are personally benefiting from being involved with the organization. Form 990 is a public document. Most charities post it on their Web site or list it on www.guidestar.org, which maintains information on charities. This is where the transparency comes in. If you have a board of 20, but only three are independent, how does that look? As you can see, the new requirements aren’t just for the government but also for people choosing where to donate.
What do nonprofits need to watch out for?
Be aware of the new compensation reporting requirements. The new form requires you to report on a calendar year basis for officers, employees, trustees. You will have to list base compensation and bonuses, deferred compensation, nontaxable benefits and other compensation, and report on compensation practices.
Be aware of any nondirect relationships with officers and board members. For example, board members who receive endowments or who have additional business relationships with the charity will cause additional scrutiny by the IRS and donors.
Do you have any advice for preparing for the transition?
Meet with your internal staff and accountant now to identify what new information will be needed and to determine who will collect it and how. You’ll need to gather information from officers and governing body board members — maybe obtain declarations. Have a workshop or webinar with your employees and governing body so they’re clear on the changes. The changes may result in you realizing you need to make adjustments in your record-keeping system. If you’re not documenting all board meetings, make sure this is one of the first things you begin to do.
The IRS realizes the changes will take time to adapt to. There is a three-year transition period in place, and you may be able to file Form 990-EZ in lieu of Form 990. A phase-in chart is available in the charities and nonprofits section of www.irs.gov.
Will anything new be required of small nonprofits that never had to file in the past?
Small organizations whose gross receipts are normally $25,000 or less are now required to electronically submit Form 990-N, also known as the e-Postcard. The IRS sends reminder notices but often has outdated contact information on file. An organization that fails to file the required e-Postcard for three consecutive years will automatically lose its tax-exempt status. If you’re involved with any small, nonprofit community groups, make sure the main contact person is aware of this new requirement. Form 990-N can easily be filed at www.epostcard.form990.org.
HARRY CENDROWSKI, CPA/ABV, CFE, CVA, CFD, CFFA, is a managing member of Cendrowski Corporate Advisors LLC. Reach him at (866) 717-1607 or firstname.lastname@example.org or go to the company’s Web site at www.cca-advisors.com.
Local and regional government authorities play a big role in your company’s real estate selection process; knowing how to work with them can open up many doors.
“We have several different levels of government in Michigan,” says Giancarlo Pinterpe, senior vice president of the Industrial Group at Grubb & Ellis Company. “Cities, townships, counties, the state the bureaucracy can be daunting.”
Some administrators are more pro-business than others and offer incentives and tax abatements. Planning and zoning boards can make or break a project, and city ordinances and timelines can seriously affect your bottom line.
The process may seem overwhelming, but an experienced real estate broker can help your company navigate the process.
Smart Business talked with Pinterpe about working with government authorities to ensure the best real estate solution for your firm.
What role do government administrators play in real estate policymaking and subsequent decisions?
When brokers consider a client’s requirements, they’re thinking about where the company would best fit, minimizing moving expenses, negotiating tax incentives, and researching brownfield and renaissance zone opportunities. Government administrators play a significant role in all of these things and may vary amongst themselves in mentality.
Planning boards, which regulate master plans and review them with third-party engineering companies, also must be considered.
Zoning ordinances also are important. The language might be strict or ambiguous, allowing the zoning board to approve or reject certain uses for properties within the zone.
For instance, a few years ago, one of the townships I cover realized that many of its industrial buildings would sit vacant because the automotive industry is consolidating, so it reworded its zoning ordinance to include uses that would not traditionally fall into the industrial category. An array of ancillary businesses like gymnasiums, service/retail businesses, dance studios and even shooting ranges normally considered higher commercial-type uses flocked to the township.
How can government incentives and tax abatements make a difference?
Companies meeting certain criteria can negotiate tax abatements and other incentives. Additionally, properties can be approved as brownfield sites, which are typically functionally obsolete or have environmental issues, or be located in a renaissance zone, which provides tax incentives designed to spur investment in a particular area. Examples of incentives include the following:
- exemption from the single-business tax, which is based on number of employees, total payroll, new jobs created and type of use of the property;
- abatement of up to 100 percent of the usual real estate tax;
- abatement of up to 100 percent of the usual personal property tax for new equipment; and
- reimbursement of roughly 10 percent from the state on brownfield projects more than $10 million.
Keep in mind these incentives don’t last forever they usually expire seven to 12 years after the date of issuance.
When municipalities or governments are involved, how much advance time is needed to seal a real estate deal?
On average, it takes between nine and 18 months for a new building, depending on where you’re going to locate.
However, the timeline may vary between municipalities. For instance, one municipality might give building permits within a few weeks, while another might take six months or more. I can have a company in and up and running in one municipality before anything even gets approved in another. Overall, the earlier you get started, the better because then you can cover everything and make sure it’s done right.
Of what value can a broker be in the real estate selection process?
Politically, having existing relationships with government authorities is a huge step toward breaking down barriers and capturing incentives. A good broker has a leg up in the negotiation process because of the trust that he or she has established through past performance.
Another consideration is experience. Some municipalities, for example, might be less attractive to real estate professionals on behalf of their clients because they are too difficult to work with from a use or rehab standpoint, because they can’t comply with established timelines or simply because they aren’t as pro-business.
The smart approach is to develop criteria upfront with a qualified real estate broker. It should include a business plan, anticipated growth and overall philosophy of the company. Real estate agents cannot circumvent the legal process of government approvals and timelines thereof, but they can prepare their clients to make informed decisions, maximizing investments and minimizing risks.
GIANCARLO PINTERPE is senior vice president of the Industrial Group at Grubb & Ellis Company. Reach him at (248) 350-1192 or email@example.com.
If someone says “diversity,” what is your initial reaction?
Carl Camden thinks he has a pretty good idea.
“If you did a poll, I’m certain it would be racial background, ethnicity, gender, maybe lifestyles if you’re more enlightened,” he says. “When you talk about diversity, people tend to go into a little bit of a dazed-eye look. They’ve been there, they’ve heard many presentations on diversity and all the things you’re supposed to do.”
Camden, the president and CEO of $5.7-billion staffing and recruiting giant Kelly Services Inc., has seen firsthand through decades in business how companies can cross over from diversity awareness to diversity overkill. And he wants to change it by changing the way people in business think about diversity.
More specifically, he wants to write a new definition for diversity as it pertains to business. In a company, diversity shouldn’t simply pertain to employing people of varying skin colors or ethnic backgrounds. He says that the true meaning of diversity is employing people with diverse backgrounds and experiences.
In a society where people from various ethnic backgrounds now frequently share the same experiences during their formative years, it’s no longer enough to assume that people from different races, ethnicities or genders will bring different perspectives to the table.
“Just because we don’t look alike doesn’t mean we don’t think alike,” Camden says. “It used to be easy to assume that you were guaranteeing the company diversity of thinking or background if you achieve apparent diversity in age, ethnic origin and gender makeup of the staff. Now, we’re arguing that just because you achieve that doesn’t mean that you have the wide range of background and thought that you’re looking for.”
Camden says diversity shouldn’t be viewed as a buzzword or a goal you set simply to make your company look socially progressive. It’s a real issue with real consequences for your balance sheet, and it takes serious thought and planning to address.
Recognize the benefits
Diversity helps your business in a very tangible way if you approach it correctly. A diverse work force will help you sell your products and services to a diverse customer base.
“The understanding of the markets you are targeting is always better if you have people from a similar background as your customers,” Camden says. “My son and daughter, who are teenagers, the marketing to them is infinitely more effective if it’s being guided by people of the same generation, as opposed to people who only know that generation through market research. Nothing replaces having people who understand those who you are serving: the customers and the markets.”
Kelly Services’ leaders have had to learn how to use diversity to serve new markets over the years. Many people who grew up in decades past probably remember the “Kelly girl” moniker, an informal term for a clerical staffer hired and placed by the company. For years, Kelly Services was synonymous with secretaries and office workers. But as the staffing needs of businesses evolved, Kelly Services had to evolve, too. Overtime, the company began supplying engineering and technology firms with staffing help. But there was a problem, and diversity was at the root.
“We at Kelly and throughout the industry believed that anybody who was good at recruiting for our established core areas could do an equally fine job recruiting individuals who were from all of these specialty areas,” Camden says. “It turned out that we and others were wildly ineffective at recruiting inside some of these specialty areas until we got to the point of realizing something that now seems simple. We thought, ‘Gee, maybe the people who run the engineering branch and do recruiting should be engineers. Maybe the people who do the recruiting for accountants should be accountants.’”
When Kelly Services started hiring engineers to recruit engineers and accountants to recruit accountants, the company’s growth in those areas gained momentum and the company’s leaders gained a new perspective on how a workforce with diverse backgrounds could help the company conduct business.
“If you go back to pre-Internet days, if someone was looking for an office clerical job, they would pick up the paper and look at the want ads,” Camden says. “But engineers don’t do that. That’s not how you find them. You had to understand what professional associations they belong to, what are their interests and hobbies. It changed where you placed your ads; it changed where you put your recruiting efforts.”
Start with the interview
To find people with diverse backgrounds and experiences, you need to get to know job candidates beyond surface-level information. Unfortunately, the interview process for many companies doesn’t go beyond the surface when it comes to a candidate’s personal background.
“You need to spend as much time talking about their life experiences as their academic experiences,” Camden says. “What were their biggest challenges, how did they find their way into college, what were their difficulties in getting to college and being successful. You have to work with your HR department to find out what questions you can and can’t ask, but I think that we tend to gloss over background questions very quickly in the interview process.”
Camden allocates a larger portion of interviews for getting to know job candidates on a more personal level.
“I’m setting myself up so that a third of the interview is about their background and life experiences,” he says. “I do that because in my experiences when I’ve been sought after for a job, it’s basically,
‘Tell me something about yourself,’ and you typically answer, ‘I was born here, I went to this college, I studied this and my job is X and Y.’ All we really do when someone asks us to tell us something about ourselves is give a short summary of what is already on the resume. Then, the interviewer checks off the box and moves on to, ‘Tell me about your first job.’
“We don’t ask questions like, ‘How did you decide what college you were going to go to, how many majors did you have along the way before you settled down to become a journalism major, a biology major, and what made you change from one to the next?’”
Camden says human resources departments are coached to stay away from drilling down on personal information because it ventures too close to subjects like race, ethnicity and other areas that might open to door to questions that could be viewed as probing or even discriminatory.
It’s no secret that race and ethnicity are potentially touchy subjects around which you and your HR team should tread carefully during the interview process, but you shouldn’t go180 degrees in the other direction. Camden says that if you remain too distant from getting to know a candidate on a personal level, you’re staying in a comfort zone. That can lead your company to hire people based on familiarity and comfort level, which can be bad news if you’re trying to build a diverse work force.
“Your ears should perk up anytime someone in the company says, ‘Isn’t it amazing that we all ...,’ whatever that ‘all’ is,” he says. “‘Isn’t it amazing that we all went to the same school, all play golf, all belong to the same club,’ whatever it is. That’s a sign that the backgrounds of your people might be too homogenized.
“I was fortunate to have a boss very early on who, at a time when everyone at the top ranks of business played golf, asked me if I played golf. I said no, figuring that was going to be a negative response to him, and he said ‘Great. We need a nongolfer around here. That’s all they talk about around here is golf, so you make certain you talk about something else and bring in another perspective.’”
Camden says that when recruiting for a position, finding different backgrounds and perspectives should be more important than finding a comfortable fit.
“We, as leaders, have just got to stop telling our recruiters that a comfortable fit is the No. 1 criteria,” he says. “I can’t tell you the number of times I’ve been called when someone is recruiting folks or pitching to folks and it all comes back to that comfortable fit.
“Tell me they believe the same core values we believe, that they possess a high sense of integrity, that’s fine. But when the pitch is all about the comfortable fit, it really has to be setting off some alarm bells. That can’t be first or second on the list we’re feeding our recruiters. It’s not rocket science; it’s a matter of raising the idea of diversity further up in the priority set.”
Communicate the concept
The comfort zone is an easy trap to fall into simply because people tend to gravitate toward what is familiar. If an employee at Kelly Services finds Camden falling into his comfort zone, he requests something of them: “Watch me, and yell at me if I’m doing it, because it’s probably not going to be apparent to me that I’m doing it.”
Raising consciousness about diversity of thought, and maintaining that consciousness, is a matter of constant communication and dialogue from all levels of the organization. Along with diversity of backgrounds and experiences comes a need for diversity in communication methods.
“The keyword is ‘tailoring,’” Camden says. “What I need in diversity can be different as you roll down the organization. Our managers have their own management meetings, their own group meetings, their own internal blogs and their own speaking opportunities.”
To keep the message front and center, Camden says employees need to hear it from their direct supervisor. A wide-ranging message from the CEO can help start the message cascading, but in order for it to take root, the managers who interact with your employees each day have to take an active role.
“It’s always constant communication, and a message from your own direct boss is often more powerful than a message from the distant CEO. That way, it keeps rolling down the organization.”
When you lay out your reasons for placing an emphasis on diversity, do so as simply and as clearly as possible. If you can relate the reasons in a convincing fashion, you stand a greater chance of getting everyone to not just buy in to the concept but also emphasize it when it comes time to hire or build a project team.
“It’s almost like ‘Field of Dreams.’ If you build it, they’ll come,” Camden says. “If you look for it, if you make it a priority, you’re going to get it. But you have to make it a priority, and you have to communicate it frequently. You have to demonstrate that it’s a priority by the people you are directly hiring around you.
“If you are thinking about the challenges you are facing and how differences in backgrounds would help you meet those challenges and form your responses to those challenges, I think that, over time, what you are looking for in people would change. You need to take that time to step back and ask what set of experiences and backgrounds would be useful to where you are and where you are going.”
HOW TO REACH: Kelly Services Inc., www.kellyservices.com
If you’re a manager at Village Ford Inc., Jim Seavitt wants >your cell phone number.
The president and owner of Village Ford Inc., an auto dealership that earned $95 million in 2007 revenue, says the cell phone should be his primary way of contacting his managers. And if you are a manager and he rings your desk, you had better not be there to answer.
“If I call your office and you’re in it all the time, that means you’re not walking around,” Seavitt says. “So give me your cell number so I can call your cell while you’re walking around and you can get out of that office.”
Seavitt says an effective leader is a visible leader who keeps employees in the information loop and values their opinions.
Smart Business spoke with Seavitt about how he builds bridges between management and employees and why doing so is critical to the success of any business.
Stand up and get out. You want to be out there; you want to be sure that you’re visible to your employees. It’s so easy to get into that comfort zone, to get on that damn Internet and just be content with phone and e-mail.
Sometimes, it’s a struggle to keep yourself visible. We’re spread out here in three different buildings, and sometimes getting across the street can be like trying to get to a whole other state. You really have to force yourself to get up and get around.
People need to know you’re there, that you’re just not up in your office or playing golf, that you are actively involved. Every day, I make it a point to walk through the entire dealership and stop and talk to people. It’s the touch point.
If you were to walk in and take a tour of my dealership with me, I’d venture to say that 80 percent of the people would ask me, ‘Jim, how’s it going?’ and know that I’d know them and they’d know me pretty well. That leads to my whole philosophy, that if your employees like what they do, if they like where they are, like the people they work for, more than likely, you’re going to have great employee morale, which will translate into customer satisfaction.
There have been a number of surveys I’ve seen where people always think pay is at the top of the employee satisfaction list, but it’s not. At the top of the list is being in on things. How do you let employees be in on things? I have a lunch once a month with 15 to 18 employees, so that by the end of the year, I’ve had lunch with every employee.
I call it ‘Lunch with Jim.’ They all come upstairs, go to a meeting room, we buy them lunch, they ask questions, and I give them a state of the nation where I give them an update on the economy of the nation, because a lot of them don’t keep up with that.
I tell them what is going on with Ford Motor Co. and what is going on with Village Ford. That way, they feel like they’re in on things.
Understand why you’re communicating. Employees need to have the feeling that they’re helping, that their opinions count, that they know what is happening at their company. As I said, pay is important, but more important is the fact that they know what is going on, that they feel they have control over their destiny.
Even now, with Ford Motor Co. laying off people by the scores, by the thousands, my people have a very good feeling of where they stand. They know the way that we are going to scale our business down, and we’ve done it mostly through attrition.
They know what we’re doing about health care, how we’ve had to change the plan three times here. You can imagine how that touches people and what would happen if you didn’t give them a heads up on why things are changing and what is in it for them.
When I’m communicating, I’ll tell my employees 90 to 95 percent of what I know. There is a point that has to do with the financial part of the dealership that I can’t tell them, but it’s pretty doggone open. If we didn’t turn a profit for the month, I’ll tell them.
To give a related example, we’re redoing our showroom in a couple of areas. Our waiting area needed to be done. I knew what was going to happen. People tell me, ‘I’m not going to get a raise, but Jim is putting new stuff in the showroom.’
So I had to let them know why I was doing that, where that money came from, that it was money I put into the dealership that goes toward capital repairs and improvements, and that it’s different from operating profit. I explain that to them in detail so they understand it, so they get a better feel, and it improves their comfort level.
Hire managers to help you communicate. Select good department managers, give them good direction and encouragement, and get out of their way; let them take responsibility and lead. That’s my leadership style with my management team.
With my employees, I believe in management by walking around. I have 187 employees, so it’s all about getting out there, walking around every day. You need to be walking through the shop and walking through the office, walking on the showroom floor, getting to know your people.
HOW TO REACH: Village Ford Inc., (800) 331-4909 or www.villageford.com
Whether or not you are satisfied with your current bank, abundant media attention covering the financial industry may inspire you to shop around. When was the last time you “interviewed” banks? When was the last time you considered your own business goals in relation to your bank’s objectives for the future?
“Before you make any moves, evaluate your business in terms of size, life cycle and growth expectations,” says Craig Johnson, president and CEO, Franklin Bank, Southfield, Mich. “Once you figure out who you are, so to speak, you can focus on choosing a financial institution with products and services that complement your needs.”
Prior to starting a new banking relationship, consider Johnson’s advice to Smart Business for selecting an institution that will serve your business years down the road.
What ‘inside work’ must business owners do to be prepared to ask the right questions?
Before you do anything, evaluate your own business. Where are you today, and where do you see the company heading in the next three to five years? What will revenue look like? Will you expand your facility, move to a new location, potentially add more products to your lineup or hire more employees? What are your immediate growth goals, and what are your objectives for sales/growth in five years? Will your lending needs be great, or is acquiring capital not an issue in coming years? This is important because you want to make sure the new bank you partner with is equipped to handle your lending needs down the road. Be sure to ask this question.
Finally, spend some time defining your company culture and business philosophies. The financial institution you choose should share these mindsets. You will share intimate business information with your banker. You should feel comfortable and ‘on the same wavelength’ as him or her.
What mistakes do business owners make when choosing a new bank?
The bank on the corner or across the street from your office isn’t necessarily the best match. In real estate, location is king. In banking, convenience is critical, but that doesn’t necessarily mean the bank should be located within eyeshot of your headquarters. You want to partner with a bank that provides the best service and products you need.
Should you decide to do business with a financial institution across town, you could always retain a payroll account at a neighbor bank for the convenience of employees’ with payroll accounts at your business. With the ease of today’s electronic banking, you can seamlessly transfer dollars online from one bank to another. This arrangement is necessary in some instances, but ideally, once you decide to move your banking business, you should move all of your business, including loans and deposits.
How important is pricing?
Pricing lures business owners to the front door of a bank, but prices are deceiving. Is the bank truly offering the level of service and product portfolio that your business requires? As with anything, you get what you pay for. Be sure to shop more than one bank. Interview several prospects and do not rely on a single referral from your accountant or attorney. Do check out the bank your advisers suggest. Don’t limit yourself to that ‘one.’ Also ask peers in the business community who they bank with and why. During networking events, pose the question: Who is your banking partner? Most business owners are open to providing candid feedback. From there, visit several banks that can fulfill the objectives you identified for your business. Just because a bank coins itself as ‘business friendly’ doesn’t mean it will retain that philosophy. Look for a bank that communicates a consistent message about its culture and philosophies.
Who should be involved in choosing the bank?
Usually, the CEO or business owner, along with a chief financial officer or lead accountant at the business, will be involved in the banking decision. Be sure that everyone is on the same page, priori-tizing relationship, cultural fit, products, services and the financial health of the bank. When visiting a bank, speak with more than one representative. Talk to the senior lender, a retail manager or someone in treasury management. Ask to meet with a member of senior management. Be sure each associate communicates the same ideas and that you ‘click’ with more than one person at the bank. In case of turnover, you want to develop relationships with several associates who will take the time to understand your business and needs.
CRAIG JOHNSON is president and CEO of Franklin Bank in Southfield, Mich. Reach him by calling (248) 386-9860 or e-mailing firstname.lastname@example.org.