But the CEO and chairman of iBASEt brought something just as valuable to the table a great knowledge of people. Poonian, a former nurse, has since built the company around a culture of caring and nurturing.
“The more that you are involved with your employees and the more you care about them, they will take care of you,” Poonian says. “They always say you can draw a lot more flies with honey than with vinegar.”
While a gentle person by nature, Poonian has also proven herself a fighter. At one point, she helped solidify her control of the company by raising enough money to buy out another investor. And along the way, she transformed iBASEt from a telecommunications consulting company into a $38 million company providing integrated, paperless solutions for complex manufacturing and maintenance process management.
Smart Business spoke with Poonian about how motivates employees and drives success.
How can a corporate culture contribute to a company’s success?
Our company focuses on an achievement and support culture with a strong emphasis on teamwork. Upper management aims to motivate rather than micromanage the employees.
We try and break down the barriers between upper management and the rest of the employees.
We are all part of what I like to think (of) as a family. We all are part of the team. No individual is better than the next. We encourage employees to get along with each other so that they can be more efficient and productive in the workplace.
I always want feedback from employees about their experiences working at iBASEt. I consistently meet and greet iBASEt employees to make sure they are happy and they are happy working here. What they tell me is, ‘You know what I like about this company? We are taken care of as a whole. You come and you talk to us. You discuss things. If there are issues, you work on it right away. We get results.’
How is that beneficial?
You have to know your employees, know what will help to keep them productive. You want to meet their needs, too.
I found that knowing your employees, respecting them, complimenting them, acknowledging them, knowing their name, knowing about their family, knowing a lot about them as a person, being able to look at them as, not that you are the owner of a company but as their equal, you gain their respect. It’s very important to motivate and to encourage employees so that they can really feel good about themselves and know that we care about them.
How else do you motivate employees?
Rewarding employees is a very important part of motivating them. If they really do a good job, we ... recognize them among their peers. When they have done something well, you acknowledge it. We want employees to enjoy where they work.
Promoting from within is a great motivator. They know that there is a pathway for them. ‘If I am very productive and I am very good, I can go up the ladder.’ That is important for employees.
We also have flexible hours. If they are productive and they are meeting their deadlines and meeting their goals and are not taking advantage of the company, we will work with them.
If they want to exercise, they can go and exercise. If they want to go to the doctor, they can go and they can come back and make up the hour. One of our employees goes biking at lunch for about two hours, then comes back and finishes his work.
One has to be flexible. You cannot say you are 9 to 5, and that’s it.
How do you keep employees adaptable to change?
We never remain complacent in what we have. We must innovate or die, (so) we look for ways to consistently educate our employees.
For example, our IT department attends many IT courses to understand how to handle the enormous growth that we experience.
We also encourage communication among members of all various levels and expertise. We try to have team members hold sessions to educate each other so people can familiarize themselves with other technologies.
HOW TO REACH: iBASEt, www.ibaset.com
“I was working at a very large Wall Street law firm at that time in their Los Angeles office, and they were charging me out at $350 an hour,” Liu says. “I realized most people can’t afford that amount, and most people don’t have somebody that they could turn to for writing a will or getting a power of attorney.”
In 2001, Liu partnered with Brian S. Lee and Robert Shapiro to found LegalZoom.com, an online legal services company that would provide documents and services to the everyday person in a quicker, more accessible way.
The idea was an instant success, and the company has grown its revenue 4,500 percent in the last five years.
Smart Business spoke with Liu about focusing on what you’re good at and using honesty to build a reputation.
What things can hurt a company’s growth?
Companies make a lot of different mistakes at the very beginning because I think naturally you have this feeling that you’re an entrepreneur and you want to try a lot of different things. The main thing is that, when you’re starting a company, focus on what you’re good at.
There are so many other ideas that pop into your head that are somehow linked to your product. But don’t get distracted, because that core business is what’s really going to propel you forward.
We almost made that mistake. We tried to create a software product, and it took literally six months of effort, sweat, tears, all of our resources, and it just really diverted our attention. Luckily, we got back on course.
How can a company build a good reputation?
The partners that we do have, we (are) brutally honest with them. People run into problems a lot when they over-promise, and it doesn’t get done at that particular time. Brutal honesty will make people respect whatever you say.
Finally, on the consumer side, for everything we do, if you make a mistake and inevitably, everybody makes a mistake one way or the other just deal with it directly, head on, and don’t try to cover anything up. Apologize, and then fix it.
How can bartering help a business?
When we were starting out, it was a very difficult environment to raise money because it was a dot-com bust, and we were a dot-com company. What we ended up doing was really doing a lot of bartering for services.
We designed our Web site purely for stock options. We bartered some services for a case of wine for employee bonuses. Our next-door neighbor was a graphic design company, so we helped them with some trademarks and with setting up their own corporation in exchange for their graphic design services.
When we found somebody that had a service, especially a service that we wanted, we asked them if there was any way that we could exchange some of our services for (theirs).
How did your role change as the company grew?
When we started out, I was doing everything from customer service to order fulfillment to being the janitor. It was a great experience because you’re so close to the customer that you know what exactly they want, what they need.
As the organization grows larger, I become a little bit out of touch not out of touch, but (I don’t have) day-to-day interaction with customers. I realize that those people who are really dealing with customers every day, they have a lot of good ideas. So we want to encourage that, foster that.
What advice would you give to other CEOs trying to grow their companies?
Don’t overspend, and always have good contingency plans. What happens is that people are really over-optimistic, and then they spend and they do things based on these optimistic projections.
I say always reserve 20 percent in the tank in case things don’t meet up to those optimistic projections. You still have something to fall back on.
There’s only one really good piece of advice that someone gave us, and that is that when you reach a certain size, once you reach about $5 million a year in revenue, at that point you’ve got a good chance of making it, except you have to be prepared, because everything will change at that time your whole organizational structure, the way the employee relations are, not knowing a lot of the different people any more.
HOW TO REACH: LegalZoom, www.legalzoom.com
While innovative ideas may not be hard to come by, transitioning what looks like a good idea on paper to tangible success and increased profits is a whole other story.
Even the largest of companies with limitless advertising budgets sometimes struggle with getting consumers to buy in to their newest concept, product or service.
So what’s the key to a successful launch? While there’s no one-size-fits-all solution, there are shared strategies that can turn the tables in your favor.
Advertising and public relations firms seem to agree on one thing: You need to get into the mind of the consumer.
That was certainly the case for The Goodyear Tire & Rubber Co., which in 2003 was desperate for a hot product that would reverse the $2 billion in losses it had experienced over the last two years.
“After we introduced Aquatred in the early ‘90s, we had an extended period where we did not bring a successful, broad-market consumer tire to the marketplace,” says Ed Markey, vice president of PR and communications for Goodyear’s North American Tire business. “We had no new products in the pipeline and really needed something.”
But rather than developing the company’s own fancy brand of tire that executives thought consumers would like, they instead took the time to ask them.
“In other words, we went to consumers first, and we did extensive consumer research,” says Markey. “We tried to find out what was missing. What did consumers want in a new tire? What kind of features were they looking for? What their expectations were. What wasn’t available that they wanted and needed and would be willing to pay for?”
Although it sounds like an obvious approach, it’s one that’s too often ignored even by companies with tremendous household brand recognition, says Keith Busch, vice president of client services/business development at Hitchcock Fleming & Associates Inc., the Akron-based advertising/marketing firm that worked with Goodyear to help launch a new product.
“This was one of their first attempts to do this from a consumer perspective,” says Busch. “They went out and got the wants and needs of the consumer and then made tires to go after those wants and needs. ... You have to know who you’re targeting, because you can’t be all things to everybody.”
With the information gathered from consumers, Goodyear went on to design a line of tires that would meet the two major requests of consumers: tires that could offer confidence in any weather condition, and a more comfortable ride. In February 2004, the company launched its Assurance line, featuring the TripleTred and ComforTred tire. They quickly became the best-selling new products in the more than 100-year history of the company.
And by thinking like a consumer products or marketing company instead of a manufacturing company, Goodyear was able to reverse its slump, posting annual sales of $19.7 billion last year - up from $15.1 billion in 2003 - with a net income of $228 million.
Sending a message
Your product won’t sell well if you can’t articulate its value. So the second component to a successful launch is all about communication. This is no earth-shattering secret, but what often gets missed is communication with employees.
“When you’re connecting with customers, it’s critical to recognize that that’s only one piece of the puzzle,” says Chas Withers, senior managing director at Cleveland’s Dix & Eaton Inc., a public and investor relations specialty firm. “Connecting with your customer base has a direct impact and is influenced by the connection that you already have with your associates.”
If you’re going to educate your customers on why they should buy your product or service, you have to first educate your work force and the people handling your product.
“If you don’t go through a formal exercise to really do that, you take 100 different people within any organization, and they’re all going to have a different view of what a product does or what strengths the company has,” says Withers, who had to apply this ideal when one its clients, Lubrizol, wanted to have clearer messaging around what the company’s true value proposition was.
“If your associates are engaged and they understand the value of a product and what it’s going to deliver, how it has been priced and how customers should view the true value proposition of that product, if your associates get that first and foremost, it’s going to translate best to your customers,” says Withers. “And it creates a bond with the customer as opposed to just a transactional relationship.”
The process often has a chain reaction effect. Informed employees lead to more sales, which leads to increased valuation of the company by outsiders, such as the trade media and Wall Street.
The same phenomenon was also observed at Goodyear. During the launch of its Assurance line, the company held “ride and drive” events for dealers in more than 40 cities so that they could see for themselves how well the product worked.
Goodyear recognized that dealers are a vital point of customer influence and trained close to 10,000 Goodyear sales associates on how to speak about the products, what benefits to talk about and how they compared to the competition through on-site seminars, e-learning programs and self-guided booklets, as well as the ride and drive events.
“If I were doing PR for Apple, I could send you an iPod ... and you could figure out the technology pretty easily, and within an hour, you’ll have 100 songs loaded on it and you can see how it works,” says Markey. “I can’t do that with a tire. So you do rely on the people who are selling the tire.”
And when the time comes for dealers to recommend a tire, they’ll be more likely to suggest Goodyear because of their first-hand experience and knowledge, says Markey. In fact, the company’s data show that in 2004, outlets with trained sales associates sold, on average, 80 more Assurance tires per month than outlets with nontrained salespeople.
To be successful, companies must also make sure their message is in a language that consumers speak. That often means taking highly technical information and making it relatable to the everyday person.
Markey refers to this as “kitchen logic.”
“We tried to tell a story of how the product was easy to understand and how the value that it delivered was easy to grasp,” says Markey. “When we chose a name like Assurance, the name said something. Further, when we chose the name of the technology TripleTred or ComforTred it was easy to grasp. If you’re standing in your kitchen talking to a spouse or a friend about the tire you can say, ‘TripleTred it’s got three tread patterns, [drives well in] any condition. ComforTred. I get it. It’s comfortable, more comforting ride.’”
Sometimes it’s not what you do but what you don’t do that makes the difference.
And one thing you shouldn’t skimp on is doing your homework upfront.
Take the example of one of Kathy Obert’s clients, who set out to develop a new vacuum cleaner without doing any research or testing.
“They had done no market research whatsoever,” says Obert, chairman and CEO of Edward Howard & Co. “Then they came to us and said, ‘Well, how are we going to launch it?’ Their challenge wasn’t the consumer. Their challenge was getting Home Depot and Lowe’s to put it on the shelf because there was a perception that you really didn’t need a different one.
“So we said, ‘Well, you need to prove that the consumer will buy the thing.’”
Obert and the company had to go back and do the research to demonstrate to retailers why they should carry the product, even though the company had already built the molds and started to manufacture the new vacuum.
Research backed up the contention that consumers would buy the product, but the story could have had a much worse ending.
“Sometimes somebody wants to cut costs and cut corners and cut time, and they won’t do that research up front,” Obert says. “It can really hurt you in the end.”
Once the research is done, sometimes the obstacle lies in finding a way to make your product relevant and newsworthy enough to gain mainstream media coverage.
Several years ago, Obert worked Kidde, which makes smoke alarms, fire extinguishers and carbon monoxide detectors.
“They’re important products, they save people’s lives, but they’re also not something that would typically pique your interest,” says Obert. “One of the challenges for a company like that with a new product launch is how do they make it relevant, how do they make it interesting, how do they get people to care about protecting their families?”
Obert found a way to tie Kidde’s carbon monoxide detector in with the start of fall. Because people begin closing their windows in fall and turn on the furnace, there is a greater chance of carbon monoxide poisoning.
Obert created a campaign called “Smells of the Season,” which targeted TV news stations - meteorologists in particular - with scratch-and-sniff cards of fall scents. But the last card, which was colorless and odorless, represented carbon monoxide.
“A lot of the meteorologist used the idea of, ‘Remember, this is the time of year when you need to be thinking about carbon monoxide and safety in your home,’” says Obert. “It was a case where they never would have been able to buy with advertising dollars the amount of coverage that they could get.
“It was relevant. It was newsworthy. It was tied to a timing that the meteorologists would have an interest in.”
HOW TO REACH: The Goodyear Tire & Rubber Co., www.goodyear.com; Hitchcock Fleming & Associates, www.hitchcockfleming.com; Dix & Eaton Inc., www.dix-eaton.com; Edward Howard & Co., www.edwardhoward.com
“It was the most incredibly devastating experience ever,” says Lawton, who went on to start her own full-service company, TLC Staffing. “So five weeks later, I was in my own business because of the unprofessional way in which they treated me. I had such support from all of my former clients that every single one of them came with me.”
The experience is still fresh in Lawton’s memory, and she often draws on it in her interactions with clients, job candidates and staff. She has succeeded by treating people well, and her courteous manner and thoughtful business practices have enabled the firm to grow revenue from $9.5 million in 2004 to $11.4 million in 2005.
Smart Business spoke with Lawton about how to build a good relationship and reputation with customers and employees.
How do you create customer loyalty?
When we first started the business what made it so popular was the way we treated people. I didn’t care if you weren’t qualified to do diddlysquat if you gave us the time and the courtesy to come in and fill out an application for us, we certainly gave it back to you with dignity and with a good interview.
You have to treat people fairly and with a great deal of respect. And people sense that in you. That’s nothing you can fake. They know when you’re genuine. That word gets around.
We have to be very consistent in what we do. And you have to consistently deliver what you say you can deliver. You have to be like a willow tree and be so darn flexible you can’t believe it.
What you never change is your core value. You can change the way you approach things and the way you do things, but you can never change that core value, which is treating people well and being consistent in that.
How else can you build a positive reputation for your company?
I am a huge advocate of community involvement. And I’m very visible that way. You don’t want to be the best-kept secret in town. And if you don’t have a lot of advertising money, how are they going to know who you are?
If you’re going to be active, make sure that you’re active with people who will be able to use your services. And I don’t mean go out there and tap on their shoulder at every cocktail party and say, ‘This is what I do, and this is what I want you to do for me.’
They see that you work hard and that you care about your community and other people. Because they know you, it’s going to work.
How do you motivate and empower employees?
We hire people who are qualified enough that we don’t micromanage them. I think that’s the kiss of death.
If you’re in the business to tell people (what to do) every single day ... you’re not going to make it. If they’re getting the results that we require of them, then we leave them alone.
Nobody’s ever chastised. Everybody falls flat on their face from time to time. It’s human nature. (My job is to ask), ‘How can we help make it better?’
We’ve got a big ship’s bell outside our COO’s office, and anybody that does anything gets to ring that bell. And everybody comes out (to see what the occasion is).
A placement, a brand-new company just called, whatever we celebrate everything.
That sometimes means on a Friday afternoon firing up the blender and having Bloody Marys and margaritas.
What one thing can hinder a company’s growth?
The big black eye is lack of operating capital. My biggest problem in the first two years that I was in business was funding the growth. It’s a common story.
For the first two years, banks will not speak to you. You are just a nonentity until you have two solid years of good financial statements behind you. And then they start you with baby steps.
How do you combat that?
Never give up. Wherever your personal checking account is, let (the bank) know, ‘I’m in business now, and I’m going to need this.’ Wherever you start your business banking, before you even ask for loans, you need to be credible, you need to be friendly and warm.
And as soon as they trust you, that’s when you’re going to get that level of respect back.
There are three people that have to be your best friends all throughout your business career. That’s a banker, an attorney and a CPA. So you start building those relationships.
HOW TO REACH: TLC Staffing, www.tlcstaffing.com
Don’t be complacent.
At El Pollo Loco, what we had was a good company. But I needed a way to rally franchisees and company employees around a vision of greatness.
Jim Collins’ book “Good to Great” was the perfect medium for me to express how I felt and how I wanted to lead the company to the next level, which is, ‘Good is the enemy of great.’ If you’re complacent with good, you’ll never get great.
Let’s set our course on being a great company. Let’s benchmark what great companies do. Let’s set our standards to be great, and let’s all move forward on that basis.
Create alignment through results and momentum.
You have to demonstrate to the vast majority of the folks working with you that you can create results and positive momentum. And once that happens, people align behind you.
If you try and win their hearts and minds through speeches and presentations and four-color, tri-fold brochures, it is a waste of time. When we roll out a change initiative, we will carefully watch the early adopters in the company.
When those people who embrace the change start getting results and performance, we then broadcast that through the balance of the company to demonstrate to people that, No. 1, it’s not impossible; No. 2, people just like you can do it; No. 3, we’re getting great results from this; and No. 4, after a period of time, we’re holding you accountable to do the same thing.
Hire passionate people instead of trying to create them.
I maintain that CEOs can’t instill passion or motivate employees.
The CEO’s job is to find, hire and nurture employees that already are motivated and have passion. That’s the key job.
If you’re not motivated, then we can change the environment, we can give you different challenges, we can provide you with different opportunities, and if that’s not working, then I need to find somebody who is motivated and passionate.
Know your business.
The key to recognizing good business opportunities starts with a deep understanding of your own business so you know what makes your business tick and what makes your business successful.
The second is having a discipline around an annual strategic planning process where you question the key elements of what’s working and what’s not working for you and your competitors and your industry.
When you have that ... you will begin to see opportunities emerge that make sense for your business and that fit with your strategic plan. Balancing risks and opportunities is always an issue. If you have a deep understanding of your business, you’re in a better position to take a risk because you have a better understanding of what the potential upside might be and how you can fix that business or add value to that business or change that business to get a return on your investment.
Create learning experiences out of failures.
Your greatest challenges are when you haven’t been successful when you have taken a project or situation and you have given it everything you’ve got with passion and motivation, and it has not worked. That is a very tough situation with obviously personal ramifications and, in many cases, financial ramifications, too.
The key in those situations is to take that negative and turn it into a positive by making sure you learn everything you possibly can about why it didn’t work what you did right, what you did wrong on a really blunt, brutal basis.
By making that situation a learning experience, you can salvage a tremendous amount of value from it, and it will not become a millstone around your neck going forward, but a way to motivate you and inspire you and give you good learning for the future.
Clearly define your performance criteria.
People can’t do what you ask them to or what the company needs them to do if they don’t know what that is.
So many times, we find in performance management that the employee in question doesn’t know what they are supposed to do. There are unclear, murky or unfocused metrics for success.
We have clearly defined metrics for our restaurant-level leaders. You need that to have a really great performance-oriented environment. We’ve been refining them and building on them for years now. They need to be firm, but fair and achievable.
Continually upgrade your team.
The single most important thing for a CEO to be successful is to have a committed and passionate team supporting him or her.
One of the things I did when I came to El Pollo Loco is I took a very hard look at the folks that were working with me, and over time, as there was natural attrition, I made a point to dramatically and significantly upgrade the quality and experience of the individual that replaced that former individual.
That has paid dividends for me big-time. That same thought process needs to trickle down throughout the organization. Any time you have natural attrition, you want to bring a person in who’s better than the person who left, and you want to raise the average watermark of the water level of the folks in that group.
HOW TO REACH: El Pollo Loco Inc., www.elpolloloco.com
TECO’s CEO retired early, in mid 2004, and Hudson was the board’s first choice for a replacement. He accepted and wasted no time developing a plan to revive the Tampa-based energy-related holding company, which had lost its focus a scary thing for a $3 billion company with more than 900,000 customers.
“In 2005, the company was recovering from some significant changes and difficult financial times that challenged our team,” says Hudson, who serves as chairman and CEO. “We were exiting businesses that no longer fit with our strategy, and it became very important for us to communicate who we are today as a company and where we want to be.”
The company had invested in a power generation strategy to take advantage of the opportunities presented by utility deregulation. But that strategy never panned out because deregulation didn’t work out the way anyone expected. TECO Energy posted a net loss of $909 million in fiscal 2003 and $552 million in fiscal 2004, mainly because of that strategy, and as a result, began to exit that market.
Hudson recognized that he needed to redefine the values that would, in turn, redefine the company.
“In this last year-and-a-half, we spent a lot of time coming up with refining our mission and vision statement and our five core values,” he says. “They’re quite basic, but they really speak volumes about who we are, where we see ourselves and then the values we want to be evaluated by.”
Lighting the way
The process began with TECO examining the values it already had in place to decide if any of them were still pertinent to the organization’s five businesses: Tampa Electric, Peoples Gas and TECO Transport in Tampa, TECO Coal in Kentucky and TECO Guatemala.
The leadership looked to see how those values could improved upon, then explored what else the company wanted to say about itself.
“This is not something totally new; this is just really a refinement,” says Hudson. “Two of them safety and integrity have long been hallmarks of our culture. With our return to a focus on our five core businesses, it was time to restate those as central to TECO Energy and underscore them.
“The other three respect for others, achievement with a sense of urgency and customer service are things we wanted to add to our list as being critical to the type of company we want to be. ... We just did some real meaningful thinking, and updated what was in place and really brought it all into a cohesive document that everybody really feels comfortable about and can buy into.”
But before the values were instated, they were passed by many eyes. Hudson knew that to succeed, he needed the involvement of all employees, not just senior management.
“This is an art, not a science,” he says. “It’s one of those things that there’s not a right or wrong answer.”
Corporate officers shared the values with their direct reports, including company presidents, who shared them with their teams through department meetings and focus groups. In all cases, individuals were to find out what people thought of the statements, if resistance was anticipated and how to best deploy them through the organization.
“One of the things we talk about a lot is we’re a company where people want to work, and if you’re going to be that kind of company, people have to really feel that they are owners of the business,” says Hudson. “To be owners, that means they need to be involved in any of the key factors that are involved in the company. There’s really nothing more important than enunciating our purpose, our vision and our core values.”
TECO also looked to other companies for guidance, in both what to do and what not to do.
“There’s an awful lot of companies that have very fancy purpose, vision, whatever you want to call it, and values,” says Hudson. “But unfortunately, that’s what they are they’re on the shelf, they’re there on the Web site and they’re not in the hearts and souls of all the people. And our goal was ... we want our people to really understand this, and we want them to live it every day.”
It took six months to develop and implement the new core values, but once they were defined, the company had to communicate and integrate them throughout TECO’s five core businesses.
Powering the plan
TECO’s leadership felt the first step toward integration was to explain the ‘why’ behind the new values. People had to understand how the new mission of the company would positively affect them before they would embrace the change.
“You must explain the goals and objectives of the change openly at the start of any new initiative that will impact a team,” says Hudson. “That decreases resistance at the outset. And to march together in a forward direction, you have to continually communicate about the need for the change and highlight progress toward your goals.”
It turned out there was no resistance at all, says Hudson, as employees saw the potential benefits of the changes. But Hudson recognized that it might be easy for them to forget about the values once the initial excitement of the change wore off, so the company committed to making them part of everyday operations.
For the mission and values to make a difference, Hudson knows they have to be talked about often and they have to be visible. The company even had table tents made that exhibit the company’s purpose, vision and values made for people to put on their desks, and they are prominently on display throughout the company’s facilities.
Realizing that 40 percent of employees are not regularly on the Internet, the company also publishes a monthly newsmagazine featuring stories that show how at least one of the company’s values was demonstrated in action, or how it translates to someone’s role in the company.
The company’s officers also go out and frequently speak to people about the work they are doing, building the values into their remarks and referencing them in conversations.
“There is no such thing as overcommunicating,” says Hudson. “We absolutely must lead by example. I expect that each person in a leadership role in TECO Energy to reflect the values each and every day in their actions. That’s what keeps the values from being words on a page.”
TECO also gives its employees a powerful tool to judge if the values are working. Last year the company reinstated an employee survey.
“The reason we do it is it’s an absolute yard stick,” he says. “It’ll be our report card as to how we’re doing in the eyes of our people.”
It provides an honest picture of where the company still needs to make improvements, whether it’s with one of its core values or another issue. But more important, the company actually makes changes based on the results.
“We have meetings after the survey results are out to talk about them and to demonstrate to people that we really are serious (about) what they tell us,” says Hudson.
Based on survey answers, each department is given its individual top 10 items the things it does well or employees appreciate and its bottom 10 items areas that employees think need improvement. Each department is then responsible for developing action plans to address the bottom 10 issues and improve them.
“We either do the things they think we should do, or we explain to them why we can’t,” says Hudson. “You can’t always do what all your people want, but you can always give them a good, basic answer as to what’s happening.
“People have to feel that they are important, that they are needed, that they are appreciated, and that they have input and that they are listened to when the input comes,” says Hudson.
One change that came out of the surveys was major improvements to the company’s customer service operations. Employees had made it clear that they wanted to see more money invested into the company, specifically Tampa Electric, to better serve customers especially since better serving customers is one of the new core values.
Tampa Electric installed software to track calls and used this data to determine call patterns and volumes. As a result, it upgraded its automated voice response system to eliminate busy signals, added a line for customers to get an estimated time for restoration of power and installed an outbound dialer system that calls customers whose power should have been restored and encourages them to call back if this is not the case.
As a result, for 2006, 90 percent of calls are answered in 30 seconds or less, compared to 2005, when 80 percent of calls were answered in 60 seconds or less.
Also, less than 0.5 percent of callers receive a busy signal when they call, compared to 18 percent or more in 2005. The company also says that 98 percent of callers have their issues resolved with one call.
Never one to dictate policy from afar, Hudson also makes himself personally accessible to employees. Almost weekly, he takes eight to 10 employees from all levels of the company out to lunch. It’s their opportunity to ask questions and share concerns in a confidential setting.
“We just have an hour to two-hour lunch and talk about anything in the world they want to talk about that’s going on in the company,” he says. “Any recurring themes that come up in that, we look at it and we address those and are responsive to it. So hopefully that will be taking care of things on a continual basis, in addition to really our intense focus once a year when we get the results of our employee survey.”
While the company has made great strides in a short period of time it posted net income of $275 million in fiscal 2005, compared to a net loss of $552 million in 2004 Hudson knows it will take constant attention and refinement to keep TECO on the path of success. And as its leader, he will continue to implement processes that will enforce the core values and new identity and lead the company to operational excellence.
“You don’t get there and then sit down and say, ‘Well I’ve got there, now I can rest,’” says Hudson. “It’s something you have to work at every day.”
HOW TO REACH: TECO Energy Inc., www.tecoenergy.com
Myers has developed effective strategies and gained insights for all aspects of business, from building client relationships to building a strong reputation.
“You could have the best strategy in the world, but if you can’t execute on the strategy ... you’re just going to lose any competitive advantage that you have,” says Myers, who grew the company’s revenue from $69 million in 2004 to almost $77 million in 2005. “Conversely, the most brilliant process in the world can’t save you if, in fact, you have the wrong answer.”
Smart Business spoke with Myers about building relationships and the importance of integrity.
How do you build a strong reputation?
It’s integrity, first and foremost. And integrity comes in a lot of forms. Integrity starts with you maintaining faith with what your vision really is, because the people that you’re going to attract, the first thing they’re going to want to know about your company is, ‘Well, tell us all about what your vision is because we have to buy into that.’
If the employees aren’t drinking the Kool-Aid, they’re not going to have the commitment and passion that’s needed to contribute to the long-term success of the company.
And then, you have to have integrity in dealing with your customers. Everyone has integrity until it’s tested. And the real test of your integrity is how you deal with situations that aren’t going too well.
How do you build integrity with your employees?
It goes beyond whether or not they’re being paid appropriately, because people will vote with their feet. They’re not going to stay in a situation where they feel that they’re undervalued, that they feel that they’re not being properly utilized, that they don’t feel like they have their place in the sun.
So integrity is all about how it is that you deal with each and every individual in your company, from the young woman at the receptionist’s desk ... all the way up to your senior executive management team.
How do you approach client relationships?
If you’re not creating a win-win situation for your company and your client’s company, then you’re not building a relationship, you’re merely conducting a transaction. And if all you’re doing is conducting transactions, well, you can’t build a reputation because people aren’t going to want you back.
Success in business in the long run comes from your ability to develop long-term, repeat relationships with people. You can win the battle and lose the war by going out and having a highly successful transaction from your perspective, but one that leaves a bad taste in the mouth of the client. Now you’ve had one transaction and you’ve lost 10.
You have to be kind of a paradoxical combination of persistent and tenacious while you’re being flexible and adaptable. It’s a fine balance.
If you’re too patient, you’re not pushing the organization. And if you’re not patient enough, you’re just stripping your own organization’s gears.
How else can companies win business?
Competing for business is a lot like playing sports. The teams that succeed, they have their act together psychologically. They have the proper motivations, they have their heads screwed on right.
Secondly, if you win without a strategy, it’s really luck. Before you start doing a lot of work and investing a lot of time and money in any competitive situation, you’ve got to start with the question, ‘What do we have to do to win? What is it actually going to take?’
Third, one needs a process for competing. The way we like to describe it is this: In order to win, you have to do the right things. That’s strategy. But we also have to do things right. And that’s process.
Fourth, it’s all about proficiency. What do we learn again from sports? That the best amateurs in the world can’t compete against professionals. You have to have a lot of experience that only comes from having done it.
How do you define success?
Success is so much in the eye of the beholder. For each of us, you have to decide what it is that’s important to you, what you value, and use that as your success yardstick not what others think.
If you think you’re going to be successful because your business is bigger, well, there’s always going to be a bigger business. Or by how much money you make - there’s always going to be people that make more money than you do.
Life is a mystery to be lived, it’s not a problem to be solved. My sense of personal success comes from living the mystery well (and) enjoying the process.
HOW TO REACH: SM&A, www.smawins.com
“You want to be successful in today’s marketplace; (and) whether you’re selling widgets or zippers, you just need to have service,” says Peter Miragliotta, CEO of security company Tenable Protective Services.
Miragliotta’s approach to service has enabled the Cleveland-based company to grow revenue from $870,000 to more than $17 million in the last 13 years. The company has also opened offices in Akron, Toledo, Cincinnati, Columbus and Detroit.
Tenable Protective Services provides security and guest services for Cleveland Browns Stadium, among other clients, and in April it was awarded a contract with the Cincinnati Bengals.
Here Miragliotta shares the business techniques and ideas that have enabled his success.
Treat every client like it is your best client.
Treating clients equally is a great way to build loyalty, especially with smaller clients who may have felt snubbed by other vendors in the past.
“Whether we’re doing eight hours of security or we’re providing 1,000 hours worth of ushers, everyone is our No. 1 client,” Miragliotta says. “Nobody gets slighted. My management knows to take care of all of them equally, to the best of our ability.”
Listen and communicate. “As we went around and listened to (new clients), we kept getting (told) this same thing that basically companies were telling them what they needed, instead of asking them and working with them,” Miragliotta says. “Our management have learned to sit there and ask the client what they want, and then we know that we need to adapt.”
This doesn’t mean you can’t offer guidance or suggestions, but you need to ask lots of questions to determine what’s going to make your client happy.
“It’s communication, both on the top end and on the bottom end with your client to find out exactly what the expectations of your client are and where they see things and where their priorities are,” he says. “Then communicate that to your work force and say, ‘Look, this is what’s important to our client. This is why.’”
Offer customized solutions. There’s no one-size-fits-all approach to service. You’ve got to be prepared to offer each client a specialized plan that’s customized to their needs.
“In Cleveland, the way we handle a rib cook-off will be different from the way a promoter may want something at the IX Center,” he says. “At the IX Center, all those shows have a different promoter, and each one of those promoters all have a different priority system.”
Here’s your opportunity to offer suggestions. For example, Tenable worked with the Browns to come up with a wheelchair response team. When patrons in need of assistance get to the gate, someone is dispatched with a wheelchair to assist them in getting to their seat.
It’s a simple premise that requires little additional effort on the part of Tenable, but the idea was received with delight, Miragliotta says.
Be accessible. People are tired of calling a company with questions or concerns and speaking to a machine or not getting the immediate help they need. That’s why Miragliotta gives every client his personal cell phone number.
“If you’ve got a problem and it’s not resolved within my chain of command, I’ll be here,” he says. “It might take me a day a two, but I’ll get in front of you and you can tee off on me if you need to. By my senior staff members and my junior and mid-level staff managers knowing that, that sparks them to answer our clients’ questions.”
HOW TO REACH: Tenable Protective Services, (877) 836-2253
For the previous two years, he and his employees at insurance agency Brown & Brown Inc. had been focused intensely on the company’s goal of doubling revenue from $2 million to $4 million. But while revenue had, in fact, doubled, the company’s operating profit margin had dropped from 16 percent to 8 percent in that same two-year period.
“So we made the exact same amount of money two years later, and we’d been working like crazy,” says Brown, chairman and CEO. “At that juncture, we decided we’re not probably doing this right.”
Rather than change the company’s core business, Brown thought a better solution was to change the company’s culture instead. He would get people in each of the company’s offices (Brown & Brown calls them profit centers) focused on increasing earnings instead of on increasing revenue, and he would give them the motivation and tools to do so.
Brown thought the most effective way to get employees focused on that common goal would be through a culture that motivates people with personal incentives. And with that thought, Brown & Brown’s meritocracy was born.
“It’s a structure that encourages and allows people to rise or recede based on their abilities and how hard they work,” says Brown. “It doesn’t matter at Brown & Brown what your name is or where you went to college or what’s your race or religion or creed. If you put your shoulder to the wheel and you’ve got the goodies, you will rise period.”
Rising to the challenge
While the principles behind a meritocracy are simple, the culture’s success at Brown & Brown with more than 4,600 employees at 150 locations in 33 states depends on clear goals and standards.
In Brown & Brown’s meritocracy, compensation plans are directly aligned with increased earnings per share, from the office managers to department heads to individual producers. Regardless of level, everyone has a budget within a budget to meet.
“You must grow your earning at each profit center by 5 percent or more each year, or your income recedes,” says Brown. “So the more they sell and the more they retain in terms of renewals, the more money they make. If the producer makes more money, the profit center makes more money, which means that the agency ... makes more money.”
Those who are underperforming are not permitted to affect others in the office in a negative way.
“If you allow one underperformer, then the person sitting across the room who’s responsible for another department says, ‘Well,why am I going to work so hard since they’re allowing that person to underperform?’” says Brown. “In a meritocracy, you have to be very protective of performers.”
Employees struggling to meet their goals get development assistance and copies of the quarterly reports on all the company’s offices.
“They are distributed to each office so that each department manager and the head of office can look at those numbers and determine where they are in the pecking order,” he says. “So someone [who] is not doing well then has further access to all kinds of data about how the ones that are performing well are being operated.
“We will help them, but if they just can’t make it happen, then they have to be changed.”
The other component that makes Brown’s meritocracy a success is the company’s decentralized nature. Employees may have common goals, but they won’t all reach them by the same route, something that Brown sees as a positive because it means people are thinking like entrepreneurs.
This decentralization is also a powerful recruiting tool and helps when the company, which made 32 acquisitions in 2005, is seeking to acquire additional companies.
“Some people simply don’t like a decentralized culture because they want to be guided and told what to do,” says Brown, “We want them to be true entrepreneurial Americans and do what’s right for our insurers and do it quickly, as opposed to having to be told what to do.
“We don’t centralize the authority. It’s very difficult for someone sitting in a central city New York, Chicago, Los Angeles, Houston, wherever it is to make decisions for offices who are selling and servicing insurance in another location. The strongest people, the ones that are best able to make the decision more rapidly, are those that are right on the ground.”
As a result, each of Brown & Brown’s managers is essentially running his or her own mini-company. Each has responsibility for budgeting, hiring and firing, as well as coming in to save struggling accounts when necessary. Managers are expected to bring real value to the office as opposed to just running the show.
“Our people aren’t administrators; our people are leaders,” says Brown. “And so leaders, then, must be able to solve problems. They bring solutions.”
Although each office has its own system of doing things, everyone is expected to provide the same high-level of service the one consistency Brown demands.
“If you’re not providing good service, you will be a nonperformer, and you won’t be with the company,” says Brown.”
Structured for success
Brown & Brown has also taken measures to make sure its culture can achieve what it was designed to do. In Brown’s case, that meant eliminating the formation of fiefdoms.
“Fiefdoms are little companies inside big companies where a leader tries to pull to his or her breast the leadership group within that particular region,” says Brown. “So therefore, they aren’t necessarily doing what’s best for the company, they’re doing what’s best for John Smith or Mary Jones.”
At Brown & Brown, it would be very easy for a regional manager to create a fiefdom where he or she was the know-all, end-all, says Brown, and what that regional manager does might be different than what Brown & Brown’s culture dictates.
“Turf battles undermine careers and companies,” says Brown.
To prevent that from happening, Brown & Brown uses a process called “flipping.”
“What that means is, let’s say John Smith or Mary Jones has 20 offices or 15 offices that report to them, then we are constantly moving reports to someone else,” says Brown. “So you may have Nashville, Tenn., reporting to you for five years, and then on the sixth year, it’s reporting to another person.
“That’s a further curve against creating a fiefdom so the people aren’t loyal just to a regional person, they are loyal to the company.”
While some people might consider that constant change counterproductive, Brown considers it stimulating and in the best interest of the customers.
“One of the code words in our company is that the only constant is change,” says Brown. “So if you are afraid of change, then you wouldn’t like Brown & Brown.”
While Brown & Brown’s culture is strong, it’s not very formalized, and Brown sees room for improvement when it comes to corporate communication. He has taken steps in the last few years to remedy that, starting with a quarterly meeting of the 10 regional managers to compare notes on what they’re doing that works and what hasn’t been so successful.
“There’s just a plethora of detail that is being accumulated,” he says. “If you take an office in, let’s say Las Vegas, why is it doing better than an office in Albuquerque? And what are the characteristics? Is there a difference in the mix of business? Is one office older than the other? Has the head of office been in place for a longer period of time? Is the head of office someone who is going out and producing business and helping to produce business for others all those kinds of things. ... Then that will be fed back out to the leadership.”
He’s also created a new executive position an executive vice president for leadership and development that is charged with setting up measuring devices so that all employees have a clear idea of what is expected, and the measurement tools are clearly defined. Part of this involves standardizing the annual review process.
“What we have to do is make sure that we don’t allow anyone who is not performing to assume that they are, and therefore be misled,” says Brown. “The most difficult piece of the annual review is talking about the shortcomings. The only way that someone can get better is if they understand that, understand the shortcomings, and then we try and help them.
“It’s really objectivizing our measurement system and then identifying people in our leadership groups and helping them to be better than they are or better than they thought they could be.”
The company is trying to improve its employee development by revamping Brown & Brown University and creating a training school for managers. Brown has also taken care to not let any one office get so large that the office manager can’t frequently and effectively communicate with employees.
The culture at Brown & Brown has allowed the company to increase dividends for 53 consecutive quarters, landing the company on the list of Mergent’s Dividend Achievers companies that have increased their dividend every year for at least 10 years, a feat accomplished each year by 3 percent of all publicly owned, dividend-paying companies in the United States.
For more than two decades, the company has seen its operating profit margin climb from 8 percent in 1982 to 24.6 percent in 1990 to 37.6 percent last year.
And with revenue increasing from $646.9 million in 2004 to $785.8 million in 2005, the company is also within reach of achieving its goal of $1 billion of revenue with a 40 percent operating profit margin.
The key, says Brown, is to acknowledge that there is always room for improvement.
“We’re not a static organization,” he says. “If we can find a better way to do something, by gosh, we’re going to do it.”
HOW TO REACH: Brown & Brown Inc., www.bbinsurance.com
The president, CEO and founder of Family Heritage Life Insurance Company of America has been developing a summer internship program that he hopes will be just as beneficial for students as it is for his Cleveland-based company. But more important, he sees his company’s internship program as an opportunity to create a well-trained pool of future employees.
“You can never have enough qualified, good people,” says Lewis. “That’s what limits the growth of any business. So that’s why we’re so excited about this internship program because that becomes a feeder system for the leadership of our company and future generations.
“We want to develop them in our business so that when they graduate college or they graduate from their master’s programs, they [know] that Family Heritage is a viable outlet for them. We truly believe that we are developing tomorrow’s leaders.”
Lewis has invested many resources into creating the program, which will launch in Family Heritage’s Northeast Ohio offices this summer. He even created a full-time position, filled by Michael Casco, director of college career development, to oversee the program. Casco himself is a recent college graduate. Lewis saw the value in hiring a young professional who understand how college students think and the issues they face.
Lewis’ and Casco’s goals are to make the internship as rewarding of an experience for students as they can, so that even those who don’t become Family Heritage employees down the road will have gained practical, real-world experience.
“There are lots of companies who do summer internship programs, but many of those programs tend not to be rewarding for the college student because the kind of things that they’re doing are not really impactful work,” says Lewis. “So many times you hear young people going into an internship program that turns out to be just not very fulfilling or rewarding, or they’re doing some menial task, or they’re doing some function where they just show up and answer phones or do file work.”
Family Heritage’s program will open with a weeklong sales school, followed by training and development meetings at least three mornings a week. Students will be exposed to not only their primary focus, they will also learn about the internal operation of the company, its history and its philosophy.
Students will be paired with a mentor who will talk with them every week to see how things are going and what problems they’re having.
Although Lewis hopes to recruit interns who may eventually want to sell insurance, he has opened the program to students in all disciplines, realizing that a successful company has strength in all of its departments.
“We hope that there’s every kind and size and description of student in that group,” says Lewis. “We hope there are accountants, we hope there are people who want to study investments and banking, we hope there are people who are studying journalism and photography and communications and IT and whatever.”
Lewis plans to expand the program to all of the company’s Ohio offices next summer, and the following year, it will launch nationally.
“At the end of the summer, the young person has made good income to be able to go back to school, they really have learned a lot about themselves, and they’ve really learned a lot about our company and our business,” says Lewis.
HOW TO REACH: Family Heritage Life Insurance Company of America, www.familyheritagelife.com
Plan for success
Thousands of companies have internship programs, but not all of them are successful or rewarding. The No. 1 way to ensure a winning internship program is to have a detailed plan in place. Here are some things to consider.
Salary. Salary rates and other benefits are set at your discretion, but co-op and internship salaries tend to resemble salaries of entry level employees in the same field. Top students in any major may require higher salaries if your organization wishes to be competitive.
Housing and benefits. You should, at the very least, be prepared to provide information on about housing and apartment complexes that provide short-term leases.
Many students are covered by their parents’ or universities’ health insurance plans, but you must still determine to what extent you will provide benefits such as sick days, vacation time, tuition reimbursement, etc.
Orientation and training. Give students the same orientation to policies that you provide other employees. Clearly communicate your expectations for behavior and performance at the beginning of the work term. And remember, you will likely need to train students on your company’s equipment and software.
Supervision. The quality of supervision can make or break your co-op/internship program. One of the primary reasons students choose to co-op or intern is to learn, so a supervisor should be interested in on-going teaching and coaching.
Evaluation. Keep students continually informed of what is expected of them and how well they are performing. You should also create a means for students to evaluate your program internally. This enables you to identify strengths and potential problem areas in your program.
Source: Virginia Tech Career Services Web site, www.career.vt.edu/EMPLOYER/Co-op/Develop.html