Beating the unknown Featured

8:00pm EDT June 25, 2007

When Erik Vonk joined Gevity HR Inc. in early 2002, the company had just announced a $20 million loss for 2001.

While it wasn’t the ideal situation to jump into, Vonk was readyfor the challenge.

Despite the business’ struggles, he didn’t come in , clean houseand build a management team from scratch. While there werechanges that needed to be made, making immediate personnelmoves wasn’t necessary.

“I felt that would be even more overpowering while, on the otherhand, this was a strong company and had been a strong companyin the past and had strong people,” says Vonk, who serves as chairman and CEO. “So I focused energy on trying to convince peoplewho were here to hop on the train.”

Vonk set his sights on stopping the bleeding and producingeven a small profit, but to do that, he had to convince theemployees to buy in to his turnaround plan.

The company had been a successful professional employerorganization since the mid ’80s but was also involved in sellinghealth care and workers’ compensation insurance, whichbegan to hurt the bottom line.

“In the past, the company relied on insurance margins as itsprimary income source,” says Vonk. “What we did in early 2002was declare that had been a good idea in the past, but given thecompany’s existing distribution reach within the small-business community on one hand, and the existing technology platform on the other, it made much more sense to start focusingon delivering HR-related services to small businesses.”

Vonk says it can become a sensitive issue to convince peopleassociated with successes based on a previous business modelthat a change is for the best in the long run.

“What you are really asking people to do is change the knownfor the unknown,” he says. “Gathering momentum behind theunknown is hard and takes a lot of personal convincing ... [on]how a set of new ideas can lead to even better successes in thefuture without dismissing what the achievements were in thepast.”

To drive change through the company and get buy-in from its1,000 employees, he had to communicate clear goals, deal withthose who resisted and revitalize the culture.

Communicate

When change is necessary, you have to tell people why if youwant to get them to buy in to your plan.

“If I was part of a company, and someone would come in andsay, ‘Marching southeast over the last 20 years was great, butwe’re going northwest from now on,’ I’d want to know why andbe able to ask questions and share my thoughts and opinions,” hesays. “That is why I felt it was important to give people the opportunity to do that and create, as much as possible, a common platform in thinking and approach around the business.”

You have to have a simple, understandable, transparent logical message and the ability to provide context. From there, it’sa matter of keeping everyone updated on what’s going on.

“Everyone in the company gets together and spends severalhours on updating what has happened in the quarter justbehind us and what was on the docket for the quarter ahead ofus, creating ownership around the new ideas, challenges andgoals, and developing enthusiasm around them,” says Vonk.“On the other hand, it provides a forum to listen and give people who had been associated with the business a long time anopportunity to share their views and experiences and theirinput and questions, as well as criticisms and thoughts aboutwhy things would be wrong.”

Vonk tries to communicate goals in person as much as possible, and through e-mail as little as possible.

“E-mail is a blessing and a curse of this day and age,” he says.“It’s a curse in that we are all part of meetings where there arefour people around the table and two people are under thetables working their BlackBerrys. On the one hand, it’s terrible.On the other hand, it makes us much more effective in our ability to communicate.

“The emphasis should always be in person or face-to-face. Ifthat doesn’t work, then telephonic. If that doesn’t work, videotape something or make a CD. Last are written communications, but a letter with a signature in ink is better than e-mail.”

Facing resistance

With any change, there will be some resistance to the newdirection.

Vonk says gradually getting everyone aligned behind the newdirection can be challenging, but it is important to achievingsuccess.

Resisters need to be dealt with patiently but also with a certain firmness.

“I felt it was very important to show the respect that everybody deserved who had been here building a business that hadbeen very successful,” he says. “Take a lot of time to demonstrate that respect and use that respect as the basis to conveythoughts and ideas on a new direction.”

Vonk says you eventually have to make it clear that the trainis leaving the station, and everyone has a choice of either hopping on the train or staying on the platform.

“At a certain point, you also jeopardize progress and you arewithholding success from other people if you decide to delaythe train,” he says. “It is important to explain, and take a lot oftime to explain, when the train is leaving, what the destinationis and what the journey is, and give the people an opportunityto board the train or make a conscious decision not to boardthe train. At some point, you either come along or not.”

Vonk found out who was on board by asking questions and gradually seeing whether the answers were increasingly congruent with the overall direction of the business. Over thecourse of 2002, it became clear to Vonk who was on board withthe new direction, who wasn’t and who was undecided.

“It was much more under the surface,” Vonk says. “Youwould get together with two or three or 20 people and discussthe next steps, plans, budgets and goals. When everyone gathered in one room, everyone said, ‘Yeah, yeah, yeah, great.’ AndI said, ‘Thumbs up, great,’ only to see that I was the strangerand the group was a group that had been familiar with eachother for a long time. As soon as they left the room, they wouldadvertently or inadvertently say, ‘Yeah, right.’

“Or, [I would] think they were in agreement and they’d goback to their desks and 48 hours later were back in the oldgrind and nothing changed until the next meeting. I would say,‘Hey, last week we discussed A, B and C. How far are we onthat?’ In varying degrees, people would say, ‘Oops, never got toit.’”

The people who followed through without being told againwere, in most cases, the ones who rose to the top.

“They made a choice and saw something in it and said, ‘Yeah.We are on to something here,’” he says.

Repairing the culture

After years of success, the descent of the company’s bottomline also put the company’s culture in bad shape. Vonk knew heneeded to improve the mindset of the company as a whole toget things back on track.

“When something like that develops over a two- to three-yearperiod, you have to be very careful for the mood not to be negative and the culture to start to unravel, and that is what hadhappened,” he says. “It was a fairly gloomy environment,where a lot of people had lost faith in the business. The company was housed in a dilapidated building, and it was dull grayinside and had worn-out carpet, and the whole picture was notvery bright.”

Though now in a new building, Vonk says employees fixed upthe old building while they were still working out of it.Volunteers spent weekends painting everything yellow thatwas gray.

“On Monday, hundreds of people came into the building andsaid, ‘Wow, what is this?’” he says.

Plastic plants were replaced with living plants, worn-out carpet was replaced, broken desks were fixed, and the overallenvironment changed.

“In many cases, people spend more hours in an office thanthey do at home,” says Vonk. “We believe it is very important tocreate an environment where people feel at home. We have arejuvenation zone. We have a room with massage chairs andcorners where you can relax, and we have an Internet café andareas where people can walk away from what they are doing,from intensive work and say, ‘I am still in my Gevity home butcan catch a breath.’”

Vonk says allowing employees to take a mental break resultsin a more productive staff.

“It’s year of the Lord 2007,” he says. “The IndustrialRevolution was 150 years ago. You need to be part of an environment that is inspiring and rejuvenating instead of one thatwears people out.”

Gevity also gives employees March 4 off as a break and as areminder to keep goals in mind.

“Basically, it is to provide an opportunity for all of our colleagues to march forth the rest of the year to March 4,” he says.

“We’re telling everyone on March 4, we take the day off to dosomething meaningful or to take the day off to take the day off.See if there isn’t something in your private life you wanted todo and have a special day for. That in itself is a mechanism thatcan help people to bond. That is us marching forth to the nextMarch 4. Now, we are gradually beginning to be in a stagewhere we’d like to take March 4 as a community-building effortof our clients to recognize March 4 as their day.”

Vonk’s efforts to change Gevity have paid off. Profitability isup 800 percent since he took over, with revenue hitting $648million in 2006.

While the numbers are impressive, Vonk says revenue is theresult of hitting goals but shouldn’t be seen as the ultimatemeasure of success.

“Do not set revenue or profit goals as end goals, but recognize revenue and profits as the outcome of the sum of certain,specific actions,” he says.

HOW TO REACH: Gevity HR Inc., (800) 243-8489 or www.gevity.com