Class action Featured

7:00pm EDT November 24, 2006

Cesar Alvarez was a better-than-average high school football player, but when he wanted to take his game to the college level, he was discouraged by his coach. “He told me, ‘Look, you’re a pretty good player, but you’re never going to make it in college. You’re not big enough. You’re not fast enough,’ says Alvarez. “I didn’t know any better. I said, ‘I guess I can’t do it.’ That was the end of it, and I moved on.”

Alvarez’s younger brother had the same experience, but he didn’t listen to his coach. “He went to the University of Florida and was a consensus all-American as a sophomore,” Alvarez says. “This kid, who they told couldn’t make it, didn’t listen, and he did incredibly well.” Ever since that time, Alvarez, president and CEO of Greenberg Traurig LLP, has refused to let anyone tell him what he can and cannot do. And he runs his business with an attitude that anything is possible. “I don’t let anybody ever limit what we can do,” he says. “It doesn’t mean we’ll be successful. I’ll take my three strikes. I’m going to get to the plate and I’m going to try to hit the pitch.”

That attitude has led Greenberg Traurig from 325 attorneys and one office in 1997 to 1,650 attorneys in 33 offices around the world today. Alvarez has built the firm by insisting on collaboration, delegating decision-making to those closest to the customer and finding the right people to carry it all out.

Encourage collaboration

Alvarez recounts a conversation with the general counsel at Enterprise Rent-A-Car Co. about developing culture. Enterprise chose to build the company based on service and made that the key factor in its approach to business. “Unless you have the highest rating for service in whatever job you have, you cannot be promoted,” Alvarez says. “It doesn’t matter what else you are doing; you have to have the highest rating for service. Guess what they’re going to achieve in that organization — service.”

One of the things that has allowed Greenberg Traurig to grow is Alvarez’s willingness to relinquish control over many areas of the company. “I have always had a decentralized view of management, particularly for a service industry,” he says. “The way I have managed, always, is by giving the power to make decisions to those who can best make it at whatever level it may be. “It would be pretty silly of me to think that I can really figure out what needs to be done in 33 other cities all over the United States and the world, that in over 25 practice areas, I’m going to be the smartest guy and figure out what to do in those practice areas.”

If an organization is going to continue to grow, Alvarez says several things must change, including the way new people are brought in to the firm and how they are motivated. “It is very clear to me, after spending some time with this, the new generation thinks about things differently than we do,” Alvarez says. “These are the folks who are going to be moving the organization forward in the next 15 to 20 years. They’re the ones who we need to motivate. “If you put your head in the sand and say, ‘Damn it, this has worked for us the last 30 years, and it’s going to continue to work the next 30 years’ — anybody who does that is making a mistake.” Alvarez needs a certain kind of person to fit in to the culture — independent thinkers who can work with others and handle the responsibility delegated to them. “We obviously understand that intellect is important, but intellect is not the only reason to hire someone,” Alvarez says. “Now we look at other traits that, in our view, are probably as important — if not more important — to ultimately determining how successful you’re going to be.”

At Greenberg Traurig, Alvarez took a similar approach to emphasize collaboration. The law simply has too many specialties for any one person to be able to handle it all, and Alvarez wants everyone working together to solve problems as quickly as possible. “When you’re dealing with 1,650 lawyers, that’s 1,650 brains that you can tap for information,” Alvarez says. “If you send an e-mail only to corporate lawyers, you’re only going to tap those corporate lawyers. We have a lot more in our brains than the area of practice that we practice in. “Things need to be right; they need to be right immediately. We don’t have a lot of time to do research and other things that we had 10 years ago.”

Alvarez has a very simple method to encourage collaboration: He pays for it. “Whatever the key factors are that you are evaluating in [your] compensation [plan], that is what you will get,” Alvarez says. “If people know that you are putting dollars [behind collaboration], then collaboration is important. If they get negative reviews on collaboration, then their compensation is going to be less, and you’re going to get a lot more collaboration.”

At the end of each year, Alvarez and a few of his top managers review reports from each of the partners. “The first page of questions deals with collaboration — ‘Who has helped you? Who has collaborated with you? And who has not collaborated with you?’” Alvarez says. “I get this for 600 partners, and I read them all. That’s how I can focus and know who are the folks who are living through to the right culture and which ones are not. The way you create monetary incentives will drive the culture tremendously.”

Because collaboration is so important, Greenberg Traurig simply can’t afford to have employees who can’t work with others. “I can get rid of people I don’t view to be collaborative,” Alvarez says. “I can warn them first by impacting their compensation. Then if they’re not working, move them out so you don’t have a cancer growing.”

Delegate authority

Whatever power the title may convey, when a CEO begins managing every decision, the company will suffer. “One of the biggest mistakes CEOs make is when they get that title — chief executive officer — they think their job is to make all the decisions,” Alvarez says. “If I had a perfect day, I should not have to make any decisions. It’s the opposite of what your name suggests. The more decisions you’re making, the worse it is for the organization.”

There is no argument that validates a CEO refusing to give up some control. “I can tell you why I should be making all the decisions,” Alvarez says. “I can make all the rationalizations for that. Basically, it is a wanting for complete control of what is going on. The more I do of that, the less control I have. You’re much better off letting the people that are closest to the information make those decisions and let them go. My rule is no one in senior management is allowed to come up with good ideas. Our job is not to come up with good ideas. Our job is to help those who are really operational in running offices, running practice areas, running departments — help them implement their good ideas. “Ultimately, that’s how it’s worked for us. It’s highly decentralized. What keeps us together is a very strong culture. On paper, I have great powers. But that’s not the way it really runs. It runs because I have a tremendous amount of respect for the people that are out there making the decisions. I’m here to help. I’m not here to tell them what to do.”

Instead, Alvarez works to promote communication and get employees to work together to promote the company’s culture of collaboration. “My job is to create a collaborative environment so those folks don’t feel threatened and they can talk to each other and they feel good about the process, instead of me being the one that sits here and decides, every day, there is nothing that can be done in the firm without talking to me about it,” Alvarez says. “There are plenty of people who do that. You just don’t get a good management system out of that.”

The most effective way to accomplish that is to lead by example. “Culture develops through leadership,” Alvarez says. “If you have a very controlling CEO, that’s the kind of culture you’re going to have. It’s not going to be a creative culture. It’s not going to be an open culture where everybody throws out ideas.”

Alvarez says there are right and wrong ways to develop a culture. “I see too many enterprises where they get some consultant to tell them what the right culture is,” Alvarez says. “They decide this is the culture they’re going to preach to everybody. You can preach it all day long, but it doesn’t mean anything because you’re not aligned that way — both in your recognition and your financial incentives and what the top management does. Until you do it, it’s not going to happen. “You can say you’re an empowering culture, but if you have an authoritarian CEO — you can preach it all the time, you can have as many sleek brochures as you want — it’s not going to happen.”

Find people who fit the culture

The company now looks at leadership skills and business acumen in addition to their law school grades. “When you look at people’s resumes, when you talk to them, you want to have people that have done more than just gotten great grades and graduated from great law schools,” Alvarez says. “That’s a given. You’ve got to be able to do that, but you’ve also got to see what they have done from a leadership position.”

Alvarez has also changed who is doing the recruiting. “Instead of sending the same folks to recruit, the more junior partners, we have turned that around, and we send the most senior partners who can make judgment calls on those other subjective factors,” Alvarez says. “We’re making sure that we hire to retain instead of hiring 100 associates (and) some will survive and some won’t survive.”

For newer employees, the turnover rate in the last two years has dropped about 4 percentage points from the industry average of about 22 percent. “Our attrition rate this year went down to 18 percent, which may not seem like a lot, but going down 3 to 4 percent is significant,” says Alvarez. “Turnover is very costly for any organization, particularly any service organization. If you have turnover, you have people that you have to bring up-to-date, not only into your business but also the clients’ businesses that you are representing. “It is a costly process on two levels. The more you can create a continuity of folks who are servicing your clients, the better off the clients are and the better off the firm is over time. Training is an expensive process, particularly in the complicated field of law.”

The future growth of the firm will depend on how on-target Alvarez’s leadership decisions have been. The firm posted 2005 revenue of $860 million and is projecting 2006 revenue of just over $1 billion. Alvarez knows future success is directly tied to the changes he has implemented. “The worst that would happen is that we would decide we can motivate people the same way and we didn’t have to change that many things,” he says. “That would be the worst case, if we’re completely wrong about this. If we’re right about this, and you just don’t do anything about it, you can miss the boat big time. “I think this is clearly something that you need to examine, and think about.”

HOW TO REACH: Greenberg Traurig LLP,