Eileen Auen leads PMSI through tough economic times. Featured

8:00pm EDT May 26, 2010

Before you can understand how to best build and run your business, you need to understand your situation.

Since becoming the chairman and CEO of PMSI in December 2008, Eileen Auen has been reading the lay of the land that surrounds her and the 600 employees at the provider of solutions for the workers’ compensation market. From that, she has set about building a business and culture that can react to the changes in the market terrain.

“I think a good leader needs to have a very clear sense of purpose and vision and needs to communicate that very well throughout the organization,” Auen says. “You need clarity on where you are going and where you need to go. You need an absolute focus on the customer, and that varies depending on what service you’re in. Once you have all of that in place, build an execution-oriented culture — a culture of people who do what they say they’re going to do, who will honor their commitments and deliver what the market expects.”

To make it happen, Auen has formed a tight focus on the type of people she hires, how they’re trained and how she communicates the vision and goals of the company with them.

In addition, she creates an environment where employees and managers are enabled to both speak up and listen to what is going on — creating a culture that values different opinions, ideas and allows for constructive criticism from subordinates, peers and superiors alike.

Build a team

Your company needs a compelling mission. But in order to keep that compelling mission alive and thriving, you need employees, particularly at the management level, who will embrace and promote the mission.

At PMSI, Auen wanted her staff to place a renewed emphasis on customer relationships and customer service. It was one of her top priorities after taking over PMSI’s top post, and she made an early decision to hire customer-service-minded leaders with complementary skill sets.

“Here at PMSI, our mission has really been trying to restore the luster to what was an industry pioneer, a company that had lost its way and had gone through a series of ownership structures and changes,” Auen says. “We really needed to go back to our roots, refocus on the customer then re-emerge in the marketplace. If you’re going to do that, you have to understand the mission and the kind of people you need to get there. You need people who are industry experts or functional leaders, whether it be in sales or operations or wherever your key holes are. You try to understand that, and you try to bring together the people who have the right brand of skill sets. Most of all, you need people who are energetic, tireless and enthusiastic and really focused on excellence.”

To find those types of people, you have to recruit them. Then you have to learn how to spot the right kind of candidate during the interview process.

Auen observes one hiring rule above all others: When it doubt, don’t make the hire.

It’s better to take a little longer and make the right hire than to hire someone simply to fill a hole, and then realize a short time later that you made a mistake.

“You need to be personally focused on recruiting,” Auen says. “Not just through interviews and sourcing people but making sure you do all the references yourself. I personally reference everyone I hire, both formally and informally through industry contacts. You also need to have discussions on both a formal and more informal basis with management candidates. Do it in both formal and informal settings so that you can get a feel for whether you can really work with the person.”

When evaluating executive-level job candidates, Auen meets with her executive team prior to the interviews. The meetings are aimed at ensuring that every member of the team is in lockstep with regard to the questions that need to be asked of the candidate, and the qualities that are needed for the position.

After the interviews, Auen and her team meet again to compare notes and impressions, developing a final consensus on whether to pursue a given candidate.

“You need to meet and come up with a series of traits and skill sets that everyone is looking for,” she says. “Nobody has everything. What you find is that you get a slate of candidates and one person might have a really strong sales orientation but they might not be a good manager. Another person might be a good manager but not as good in another area. That’s why you meet before and then meet again afterward, to really dig into personal references and find out whether someone is a good fit.”

Once a new hire is made, Auen and her staff put the new manager through what amounts to a weeklong saturation bombing on all things PMSI — company policies, culture, goals and objectives, and how the newly hired manager fits into the larger puzzle.

It can be a bit much to absorb at one time, so following the intense first week on the job, each new hire is given the several ensuing weeks to put what he or she has learned into practice. After a few weeks of hands-on experience, one of PMSI’s established executives checks in with the new person.

“You meet with them again once they’ve gotten their feet under them and you go through a new set of observations,” Auen says. “You tell them, ‘Here is what I see, here is where we need to go, here is where we’re going to focus.’ Then you let them go off on their own, build their team and you check back with them periodically.

“I like to talk with the new hires and with all of our people frequently. I want to hear what they’re thinking, give them an opportunity to understand all the various challenges facing the company.”

Formulate a vision

Once you’ve built a team, you need to give your people something to accomplish. You need to let them help you build and grow your business.

To do it, you need a well-defined vision for where you want the company to go and get everyone on board with it. The first step is to formulate the strategy, a task Auen has helped perform on several occasions in her prior career as a consultant.

“The strategy process doesn’t need to be hugely formal, but it needs to have all the classic elements of planning, where you say, ‘OK, what is the market doing, how does the market look, how am I positioned against the marketplace, what are my strengths and weaknesses, how are the competitors doing, what are the needs of my customers?’” Auen says. “You pull all of that together and figure out where you think the sweet spot is strategically as you move forward. Once you have that, you do a classic gap analysis of where you’re going, where you are now and how do you get there. Out of that, you build a set of priorities for the organization. You state where your focus is for this year and everything you need to do to realize that focus in some way.”

As you formulate your vision and strategy, you need to be gathering employee support as part of the process. You bring employees and managers along by allowing opportunities for input and, in some cases, criticism.

If you are met with a great deal of criticism when you roll out your vision for your company’s future, it might be a sign that either you’re not on the right track or that you have made some hiring missteps by bringing in philosophically divergent people. But you should have some differing opinions and clashing perspectives. It’s a sign that you have free thinkers on your team. If you don’t have some people who think differently, it can be as bad or worse than having a management team that is ma

rred by constant infighting.

“What you’ll find typically is the organization agrees on 80 percent of what needs to happen, but you’ll need to make some judgment calls on the other 20 percent,” Auen says. “Usually in a group discussion setting, we’ll talk through differing viewpoints and what is important. Hopefully that can drive a consensus for the last 20 percent. If you can’t, you have to make a call as the head of the company, then be able to explain why you made that call and move forward from there.

“Usually, if you get reasonable people into a room, you can drive through discussion and come up with a sense of agreement. But if you can’t, you have to do what you think is right, and at least people know that they’ve been heard, that they’ve had an opportunity for input.”

Even if you can’t drive 100 percent consensus on all issues, you can increase your chances of building consensus on key issues by setting the ground rules for discussion and debate ahead of time. If you want people to drive toward consensus and compromise, communicate that to everyone on your team at the outset of the first strategic planning meeting.

“You have to start out by letting everyone know that this is a drive for consensus around the organization’s priorities,” Auen says. “But the bottom line that you have to communicate is that we are going to come out of here with a definite set of priorities, and if I have to make some calls myself, I will, and everyone needs to support that final decision. It’s one of the basic rules of team leadership. It’s great to disagree, but once you’ve set a direction, you really have to hold together as a group. If you can’t do that, it violates your clarity of purpose and vision.”

There are two conditions where you generally draw the line between trying to build a consensus and exerting your executive decision-making power: when the issue isn’t moving toward consensus after hours and hours of meeting discussions or when everyone has reached the point of mental exhaustion. It’s a point that varies among companies and leadership teams, but as the person at the head of the table, you need to recognize the warning signs for your group.

Live the strategy

Once you’ve built the team and the strategy, you need to continually revisit the groundwork you’ve laid, making course corrections and adjustments as necessary.

Auen says a strategy needs to be a living document that grows and morphs with your company and the needs of the markets you serve.

Whether you re-examine it every month, every quarter or intermittently throughout the year, regular strategic checkups are the key to keeping your strategy current and your people in tune with it as conditions change.

“You need to be talking to people all the time,” Auen says. “You need to be talking to your consultants in the field, customers, competitors, your sales team, your account management team. Everyone who is out there, you need to be talking to them all the time, listening to them and collecting data.

“It’s very easy to become internally focused, so you always need to recreate this sense of what the market is telling you. Because the market will tell you what is going on, what you need to do, and you have to make sure that monthly or quarterly everyone is listening and helping to re-evaluate your plans to figure out where you want to go.”

How to reach: PMSI, (877) 275-7674 or www.pmsionline.com