The sign in the social services facility said it all for JamesAbrams.
“Plan or be planned for,” Abrams recalls of the sign he saw backin 1968.
At that time, Abrams was a 21-year-old teacher in Detroit, accompanying a student who was having problems at home.
“Right behind that building was another very large building inDetroit, which was commonly referred to as the ‘projects,’ wherethey effectively housed people that had not planned very well fortheir life,” he says.
“So, it was very impacting on me as a young man. I don’t think I’llever forget it walking in there and seeing that sign and saying,‘Oh my goodness, if one doesn’t plan one’s life, other people havea plan for you that you may not like.’”
The sign made such an impact in Abrams’ life that he still usesthe lesson today as a key factor in leading Clockwork HomeServices Inc., where he serves as chairman, president and CEO ofthe provider of electrical, plumbing, HVAC and other services tohomeowners.
“It’s our plan really that sets us apart to begin with from everybody else,” he says. “The plan is allowing us to have this type ofgrowth and generating profits each step along the way.”
The growth Abrams refers to starts with the company he co-founded in 1998 and had sales of approximately $2 million in 1999.After a steady climb, revenue jumped to $59.8 million in 2005,$111.9 million in 2006 and, in 2007, the company posted revenue of$182.3 million.
However, simply developing a plan didn’t lead his business tosuccess it’s how Abrams measures within the plan and how hereacts when something isn’t working within it that keep his company running smoothly.
Lead with a plan
Before developing his strategic plan, Abrams had a study doneasking consumers what it was they valued most about home services.
The answer was time. “They wanted somebody that could come right now,” he says.“And, if they couldn’t get there right now, then get there when yousaid that you would.”
Beyond that, customers also indicated a concern about safetyand security, so he adopted an operating philosophy of conductingemployee drug tests and doing criminal background checks. Thisgave him the operational backbone to keep customers once hehad them by allaying all their concerns.
Customer feedback helped shape his strategy and gave him aclear insight into what they wanted. Abrams says the most important step in planning is to clearly understand your strategy andstick with it.
To help everyone on his team understand the strategy and operatewith it, he created a book called “The Strategy,” which he updatesevery year and passes it out to his management personnel. Sticking towhat’s inside that book is vital to making sure the company heads inthe right direction because deviating from your plan can cause problems.
You need to stick with your organizational chart and fill each position specifically, instead of trying to get too much out of one goodemployee, avoiding what Abrams calls “ease of management.”
“By that, I mean, I might have somebody who is very talented that perhaps I could exploit their talents and carry them over intoa broader range of responsibility,” he says. “But, ultimately, myexperience has been that will hurt the organization.”
For example, it’s tempting to have someone who thrives in onearea assigned another area of responsibility.
“I don’t think that serves a company well in the long run,” hesays. “In the short run, it could work. In the long run, you end upwith ‘Joe’s job,’ rather than the defined operational position within the company.”
Measure within the plan
About two years ago, a field employee in the company’s air conditioning business discovered data that helped the company addmillions in sales.
One of the key reasons a consumer replaces a system is its age.The company was not tracking the number of service calls that theyran on 15-year-old plus systems, and, in Las Vegas, a 15-year-old system is pretty much shot and should be replaced.
“We were just looking at when our technicians went out to calls,how many people did they present a price to, and then how effective were they at converting that customer into a sale,” Abramssays. “Once we started tracking operations, our sales from ourservice department just accelerated dramatically.”
By tracking that number and holding people accountable to it, theygrew sales $2 million for a 12-month period in Las Vegas.
“That is probably the most dramatic example of a number thatbecame real important to us,” he says.
It’s also an example of why Abrams says metrics are essential torunning his company and keeping it on track with its plan.
His focus on data starts by having one of his subordinates test hismanagement personnel to make sure they understand the company’s strategy and are on board with it.
“That allows them then to talk to their subordinates about whatthe plan of this company is,” he says.
Along with the test results from managers, he also uses keyreporting mechanisms in each division on a daily basis to showwhether the plan is working or not.
With 100-plus salespeople across the country and approximately1,000 employees throughout the company, Abrams needs to seedata to know where the company is succeeding and where it’s failing so he can be proactive in taking action instead of reactive.
“I know what a closure rate should be,” he says. “If all I did was lookat a financial statement, let’s say from our L.A. center at the end ofthe month, I could see either a great performance or a failed performance at the end of the month and respond to it at that time.
“On a daily basis, I can take a look at what our salespeople aredoing. I can take a look at the number of appointments we are running each day. I can see our closure rate, our average sale, and wecan actually respond to that daily if we start to get off track so we’renot surprised at the end of the month.”
Abrams says most business leaders know what data they need,but some are afraid to set a goal in fear of not meeting it.
“To begin with, much of it is logical,” he says. “Most businessowners or executives understand what are the key performancefactors in their business; many of them don’t want to look at it.
“After I stopped teaching school, I went to Weight Watchers, andthe most common reason a person doesn’t begin losing weight isbecause they don’t want to put up something that they might failagainst. Weight Watchers’ biggest objection was always getting a
consumer to come in the door because the first thing we did wasput up a goal weight. I think once you put up a goal weight andunderstand what you are going after, you have a much more likelihood of success.”
Throughout the years, Abrams discovered the main reason people don’t like to see goals set is because they don’t want to be heldaccountable.
“They don’t want to hold themselves personally accountable andsee themselves as perhaps failing against a specific goal,” he says.“So you have to overcome that ego drive that says, ‘OK, I’ll putsomething up here and begin measuring myself, and this is what Ibelieve I can get done.’ Now, you may find that what you perceivedcould be accomplished isn’t accomplishable, and you’ll have toadjust those goals downward. But, you’ll never know that unlessyou begin to track them.”
You also need to remember people will judge you if the goalsaren’t being met.
“I think there is a little bit of a fear there that if you start to trackthese things, other people see them,” he says. “So, other people aregoing to start to measure your competence as a leader and as a business manager.
“There are not many places to hide if every key performance factor is being tracked in the company each day, and you’re the guythat dictated that these are the things that are going to be met.Ultimately, it ends up your responsibility to make sure that theyare met.”
Change the plan if necessary
Because Abrams has such a focus on data, it allows him theopportunity to take action when the numbers aren’t adding up toexpectations.
One such case involved a patented product that Abrams thoughtconsumers would love. The product can monitor heating and airconditioning systems, which would allow the company to alert aconsumer before a problem occurred.
“We’ll be able to call them and tell them before they even have aproblem with their furnace and air conditioning, and they’ll neverexperience another day of discomfort,” he says.
“So, looking at it, we thought, ‘Wow, consumers are really goingto want this.’ And in an attempt to market it to the consumer, wefound there was no interest whatsoever.
“We were spending a lot of money on attempting to educate consumers on why this was so important for them. They were just tellingus, ‘I get it, but I don’t want it.’ That was something we could have keptknocking our heads against the wall on and saying, ‘Come on, youhave to understand this because we get it. We like it in our ownhomes.’ But the consumer just didn’t want it.”
The company had already spent $2 million marketing it, andAbrams contemplated spending another $1 million because hebelieved in the product so much. But ultimately, he had to stepback and realize the marketplace indicates a product’s success.
“Then I started doing the math on that, indicating that I would have$3 million invested in that initiative, and how long would it take meto get back my money?” he says. “I just said, ‘I’m a businesspersonand my real scoreboard is how much money I make.’ It’s not reallyabout, ‘Look at how brilliant I am with this idea.’ It’s how muchmoney I make, and that’s what stopped me.”
If you have exhausted all your avenues to market a certain product or service, and employees are telling you no one wants it, youneed to listen or risk wasting more time and money.
“It was easy for me to sit in my office and say, ‘But, here’s what itdoes’ and go out to the field and espouse the virtues of that particular product,” he says. “But, my field people were saying, ‘Mr.Abrams, I understand, but I gotta tell you, they are kicking me outof the house. They don’t want it.’ And, of course, I didn’t want to hear that. So, I was thinking, ‘You’re just not doing it right. Try itthis way; try it that way.’”
The decision was made more difficult because Abrams actuallyhad success selling the product when he would accompany technicians into homes.
“But I was vested to the bone in the product, and I’m not going toget that from a technician who has chosen a career to fix things forconsumers rather than sell the next new, great product to consumers,” he says.
Salespeople also attempted to sell the product, but Abrams hiredthe salespeople to sell new furnaces or air conditioners, not themonitor.
“So, we just didn’t really have the resources within our company inthat example to be able to do that, and it’s just recognizing that this isnot who we are,” Abrams says.
The first step in dealing with a failure is recognizing it and coming to terms with the fact that you won’t be successful 100 percentof the time.
That’s something Abrams learned from a mentor early in hiscareer.
The mentor told Abrams: “Management is very much like bettingon horses. If you went to the horse races every day of your life andbet on every single race and you ended up winning 51 percent oftime, you’d probably end up OK in life as a gambler. Business is alot like that. You have to make a lot of decisions, and you’re goingto make a lot of wrong ones, and you have to be able to acceptthat.”
HOW TO REACH: Clockwork Home Services Inc., (941) 366-9692 or www.clockworkhomeservices.com
The day after the deal was done, Bak, president and CEO, started transforming the third-party benefit administrator into an organization that would not only survive but grow.
The three entities that formed HealthPlan Holdings HealthPlan Services, American Benefit Plan Administrators and Montgomery Management were subsidiaries of a larger company. Bak had been president and chief operating officer at HealthPlan Services and saw the potential of a combined organization, so with the help of Sun Capital Partners, he led a leveraged buyout to take control.
But buying the companies was just the beginning. The new organization was beset with inherited problems. The previous management had made commitments to customers that couldn’t be kept, it made acquisitions that didn’t pan out, and debt had piled up as a result.
“Rather than going north, they went south, and it got them in trouble,” Bak says.
The company couldn’t support the number of employees it had on the payroll, and cash flow was a problem.
Tough decisions needed to be made and made quickly if the company was going to survive.
“What we’ve learned the hard way is we are better off making a decision with 60 percent to 70 percent of the facts and, if necessary, correcting, than we are waiting for 90 percent of the data,” Bak says.
Control your cash
Bak says the first thing to do in a turnaround is to make sure you manage your liquidity and know where your cash is at all times.
He and his team first had to negotiate a revolving line of credit that could get them to a point where they could put their plan in place.
“Once we knew we had enough to get our plan, we looked at everything else that was potentially cash-generating,” Bak says. “We went to work on being very aggressive on cash management.”
It meant stretching every payable as long as they could without going into default.
“Why would we want to pay a bill in 15 days?” Bak says. “We went to Net 45, and I challenged the organization to go Net 90. Let’s just say you go from Net 30 to Net 60. You just picked up an entire month of payables, and if you’ve got $6 million of payables, you just created $500,000 of liquidity by pushing out payables by 30 days.”
Many vendors, provided they are paid, are fine with that approach.
“A few scream,” Bak says. “What you do is dial them back to faster terms if they are very important vendors that you need to run your business. A lot of things are in your control, and you just don’t take advantage of them.”
The team also put together cash forecasts so they could see what was going on with the inflows and outflows of the business and the balance sheet. Bak says saving money and being cash-conscious can go a long way to improving earnings.
“We stretched, and we made every dollar go a long way,” Bak says. “We looked at every check that went out, and myself and our CFO would personally review every accounts payable check that went out of the building. It’s amazing how many things you don’t need that the business thought they needed previously. So, we did a lot of reviews of, ‘Who is this, why are we paying them, and why do they consult?’ You start almost like an onion through those small slivers at a time, you find out that those expenses go away.”
Bak called the first year and a half of running HealthPlan Holdings miserable, mainly because of the 200 job cuts that had to be made.
“We did a lot of cutting, and we shrunk the business down to a manageable level, knowing that we were going to have some further revenue decay and also knowing that we had to make money,” Bak says.
“It was probably the biggest challenge to have to get up every day and know you had to find different ways to save money and cut back on head counts. A lot of people who we liked and respected as individuals, we couldn’t afford to keep. You make those tough decisions.”
Bak says to get through those tough times, he tried to focus on the positives that would come out of the moves.
“I kind of turned it 180 and said, ‘I’m not really focused on the 200 jobs I’m cutting. What I’m focused on is the 350 jobs I’m keeping.’” Bak says. “I just had that mindset. That is what enabled me to get through it that first year and focus on the 350 that were going to be remaining and making sure that was going to work, or otherwise, it’d be 550 jobs that are lost.
“We had no choice. When your back is against the wall, you do what you have to do to make the company work.”
There was no easy way to make the cuts, so Bak made sure people knew where they stood as soon as possible.
“People generally want to know where they stand and what’s in it for them,” Bak says. “You know the old radio station, WIIFM what’s in it for me? The sooner you can tell them where you are headed and why you are headed there, even if it’s bad news and even if it affects them, the better. We didn’t dally. We got after it and got through that kind of period within a matter of 60 days, and I think people were appreciative. They knew where they stood. They knew ... they could be hired back someday, if, in fact, we were going to grow. They got a fair severance, and they were appreciative that we were communicative early, and we got all our cards on the table. I think for that 60 days it was tense, and people were unsure of their position, and, subsequently, performance goes down somewhat.
“But once we got the word out, once people knew where they stood, they could mentally start going to the next step. The survivors could breathe a sigh of relief and carry on, and the folks who were going to leave could do the same thing with their lives and their careers.”
Bak had to cut some “A” players because they didn’t have roles that fit in to the plan of keeping people who had customer-facing positions.
“You get back to basics, and you focus on executing, and you do more with less,” Bak says. “So, the things that fall off the table are anything that is not absolutely, positively needed.”
He says leaders normally don’t cut as much as they should because it’s not a pleasant experience.
“Cutting people who you know and who have worked for a business is hard,” Bak says. “It’s unpleasant; it’s not easy. If it ever becomes easy to do that as a manager, you probably shouldn’t be managing any longer because you’ve lost that soul around how you manage people.”
While Bak had to cut plenty of employees, he and his team also had to reassess what kind of clients they wanted.
“If you have an account which you inherited and you can’t get them to move off the dime on increasing your fees and you can’t cut your way to a margin that is acceptable, how long are you going to accept a losing proposition?” Bak says. “So, you make some tough decisions on those if you have an obstinate client or a client that’s not trying to create a partnership or a win-win scenario. You have those once in awhile.
“The company that owned the business previously was unwilling to take that risk because they were so concerned about keeping top-line revenue because they were public; they had different demands, different requir ements. When we went private, we had a window of really going underground and rearranging the pieces on the chess board to our liking, and we could afford to drop revenue and even drop earnings with the hope that it would rebound and come back.”
Time to grow
By the second quarter of 2002, the cuts were complete, and making a comeback was the new mission.
He went from what he calls “chief cost cutter” to “chief growth officer” and began putting himself out in the market to make contacts and attract new customers. Slowly but surely, the contacts and referrals fell into place and grew into opportunities to showcase the business.
“We had pretty much cut, trimmed, delayed paying and done everything we could do from an expense-cutting perspective,” Bak says. “So, the 80-20 rule was in effect. The handful of things we could do that was going to make 80 percent of the difference was done. Now, it was time for my operating team to take the next step to get the extra 20 percent out, but I didn’t need to do that. So, I focused more on strategically where we needed to go how do we get ourselves in a position to attract new clients?”
Bak says it’s important to define the ideal customer you would like to be able to land, all the way down to the arduous specifics size, products and how much are they going to pay you to come onto your platform.
“What you are going to do for them?” Bak says. “If you don’t know what you are looking for, you will waste a lot of time looking at things that aren’t really in your wheelhouse.
So, define what it is you really want, your ideal customer, and then do a modest amount of research on figuring out how many prospects there could be within that wheelhouse, then make sure you go about it and are persistent about trying to get as much exposure to those companies as you possibly can.”
Bak says you also need to be very reflective to a point of being critical about what it is you are doing or can’t do for that customer who you finally convinced to come to your office to hear your pitch. If you lose that first opportunity to a competitor, then you need to look in the mirror.
“You have to be hyperparanoid about why you lost that business, and be very, very honest with yourself and your business because if you’re not, you’re fooling yourself,” he says.
“Customers vote with their feet and their wallets, and if they are walking away from you in direction of somebody else and paying your competitors to do what you wanted to do for them, there is a great lesson. We have learned a lot more about losing deals than we ever did about winning deals. You learn from getting in front of your existing customers and asking them why they choose you and why they are working with you, and you learn from prospects who don’t work with you and figuring out why.”
After taking those steps, HealthPlan Holdings began to see positive results, increasing its revenue every year from $65 million in 2002 to about $74 million in 2003 and more than $80 million in 2004. The company jumped to more than $83 million in 2005, more than $103 million in 2006 and finished 2007 at almost $125 million in revenue, while continuing to add new customers.
Bak also sold Montgomery Management last year so as to better focus on HealthPlan’s core holdings.
“It’s been heavy growth mode, and it’s been expansion and training and hiring and expanding the amount of space we have and landing new customers and bringing on IT professionals,” he says. “The business has ramped pretty significantly.” <<
HOW TO REACH: HealthPlan Holdings Inc., (813) 289-1000 or www.healthplanholdings.com
Pete Kalis is the first to admit it.
He didn’t lead K&L Gates to major growth all by himself.
Kalis, chairman and global managing partner of the law firm,surrounded himself with people who have very high analyticaland emotional intelligence and who are energetic and able toclearly articulate a vision. He says when you have a leadershipgroup with those qualities, it allows your goals and plans to fallinto place relatively painlessly, which is not the case if the grouplacks those traits.
“If you have a leadership group without those characteristics, Ithink it is a sort of a perpetual visit to the dentist chair,” he says.
Surrounding himself with talent has also allowed him to create anenergetic culture for the firm’s 3,200 people, a number that continues to grow thanks to a strategy based on acquiring other firms.
The results of his methods are evident — revenue has increasedfrom more than $372 million in 2004 to more than $755 million in2007.
Here’s how Kalis deals with the challenges of leading a growingcompany.
Use talent wisely
In order to maximize the benefits of a talented team, Kalis makessure each person’s role is defined. He then trusts each person to execute and makes sure each worker knows what is expected of him orher.
“Ad hoc delegations tend to create confusion because then thestakeholders begin to ask, ‘Who’s on first?’ he says. “So, I think, a lotof the best delegation occurs a priori through role definition. By creating a role, defining it with relative clarity, there comes along withit a de facto delegation. Of course, if someone fumbles the job, itdoesn’t mean the delegation can’t be revoked, but, at least, youknow what the role is and you can tell whether or not they fumbledit.”
As people take on greater responsibilities internally, it can causesome problems externally.
Because some of the firm’s best leaders are also the best lawyers,there is enormous client demand for their services. The firm may usethe lawyer in more of a leadership role, which could cause a client tolook elsewhere for services.
“There is always this balancing act about how to deploy a lot ofour best leadership talent so that we don’t rob Peter to pay Paul —we don’t rob the client function in order to further the law firmorganizational function,” he says.
Kalis says it’s key to communicate to everyone involved what isgoing to happen.
“You are very frank with the partner involved,” he says. “You haveto talk with the client, and you try to see whether certain duties canbe adjusted so the person can do both. It’s not one size fits all. Youjust have to try to strike the proper balance, as any particular situation calls for.”
Having the right people in place and allowing them to do theirjobs is a universal key to success.
“Sometimes, I feel that if I’ve got the right people playing the rightpositions on the field, my job is a day at the beach,” he says. “Ithink I have a challenging job, but it would be infinitely harder andprobably way beyond my meager abilities if I were not surrounded by such an extraordinary group of people and if they were notin the proper roles to maximize their effects on the organization.”
Keep people energized
Kalis says being on a growth trajectory just doesn’t happen. Youhave to push it aggressively and not assume it’s going to happen.
Pushing that growth revolves around creating a culture that isexcited and ready for action.
“You have to keep your organization energized and focused on thefuture,” he says. “You have to overcome the impulse to pause or rest.You have to understand where your markets are heading, and youhave to beat the markets there.”
In order to keep the organization energized, Kalis does his best toembrace his role as a leader and a cheerleader.
“A good part of leadership is exercising what might be calledrhetorical power — to be very communicative, to report good news— enthusiastically — and to articulate the areas for improvement,equally enthusiastically, and, overall, to build a general team-orientedenvironment so that a victory by one is a victory by all,” Kalis says.“A defeat for one is [a] source of concern for all.”
Kalis says you have to be genuinely enthusiastic and not just gothrough the motions.
“I’m sure we’ve all been around people for whom enthusiasm wasan inauthentic characteristic, and there is nothing worse than fakingit,” he says.
“I think legitimacy in one’s leadership role is earned, it’s not conferred. I think if you are fortunate to have been in the role long enoughto earn that legitimacy, it works in your favor. People understand it,implicitly. It’s hard for me to imagine that someone who adopts aninauthentic voice is ever going to be regarded as legitimate.”
When Kalis first took over at the firm, it wasn’t a matter of gettingeveryone to jump on board.
“Most people are prepared to give new leaders the benefit of thedoubt,” he says. “I don’t think anyone expects a new leader to be perfect, but they expect them to be confident in the direction of theirleadership, and they expect them to be very efficient in the executionof the plan to operate in that direction. Neither of which suggests fora moment that anyone is perfect or that anybody among the stake-holders automatically ought to jump on board.
“Especially in leading a law firm, there is always a healthy degree ofskepticism. It comes with the nature of lawyers. You have to earn theirtrust and respect as a leader, even if they do give you [the] benefit ofthe doubt, which they did with me.”
Kalis says a leader who wants to establish an environment of enthusiasm has to ask himself or herself some questions about his or hercompany.
“The first thing I would say [is], ‘Is there an ethic of excellence?’” hesays. “Do people take pride in and measure themselves in accordancewith that ethic of excellence? Is there a customer or client orientation? Is there a devotion to the intergenerational nature of the business, which is to say, is there proper mentoring and training of newgenerations of leaders? Is it a highly communicative culture, where,again, the good news of one is celebrated as the good news for all? Isthere an agreed-upon set of metrics that can be consulted to determine the organization’s level of productivity and financial performance vis-À-vis its peer organizations.
“If you want to drive cultural change away from a lethargic, directionless organization to one that has got its eye on the ball, those areamong the questions you should be asking.”
If K&L Gates didn’t have a culture of enthusiasm, Kalis says the firmwould have suffered.
“We would either be disbanded, or we would be dead and not knowit yet,” he says. “There are no free rides in the law business. There aretoo many competitors; the markets are too fragmented. Lawyers arehighly mobile. My assets go down the elevator every day. It’s a volitional act whether they come back the next morning. So, we have tohave a better mousetrap. If you don’t have a better mousetrap, youtend to lose your best talent, and if you lose your best talent, you are,in a word, dead — whether or not you know it.”
And the mousetrap isn’t necessarily made of money.“Money is only one chip in the mosaic,” he says. “Money has to be inthe right ZIP code, you don’t have to be at
the top of the ZIP code.Different things appeal to different people. In our business, those different things can include a work-life balance initiative. They caninclude a diversity initiative. They can include proper professionaldevelopment. They can include a powerful brand. They can include acontinuing stream of young talent coming into the business to supportone’s practice and so on. So, compensation is only one chip in themosaic.”
Growth through mergers
Under Kalis’ watch, the firm has done six mergers in a 10-yearspan, including one in January 2007 that merged Kalis’ firm,Kirkpatrick & Lockhart Nicholson Graham LLP with PrestonGates & Ellis LLP.
Yet, it was a merger that happened on Jan. 1, 2005, that tookKalis’ firm international. The merger involved joining forces with afirm in London. Kalis says it was one of the most substantial trans-Atlantic mergers in the law profession, and it didn’t happenovernight, nor did it happen behind closed doors.
Kalis says the process began with a period of study and evaluationin 2001 and 2002. Then, there was dialogue with the partners acrossthe firm to determine their views and interest in a significant officein London.
“It continued through the identification of a merger partnerthrough lots of communications with the partnership during thatprocess,” he says. “When the matter became a little more ripe, webrought the leadership of the U.K. firm through our major officestwice and involved the partners in the dialogue directly. We privately would meet with our partners in various offices to listen totheir questions, concerns, suggestions. Then when it came time tovote on the merger, our roughly 200 partners in the U.S. voted unanimously in favor of it. And I think, partly, that reflected the veryopen and transparent and nonparanoid process.”
In addition, because culture is an important part of K&L Gates,it’s important that a firm merging with the organization be on thesame page.
“Cultures and organizations differ; there is no question about it,”he says. “I have never found one identical exactly to our own andso on. You can tell a lot about a law firm’s culture from its leadership, if they are long term. Are they cohesive? Are they collaborative? Are they collegial? Ask yourself those three questions. If itcomes out yes, yes and yes, then you can say, ‘Alright, we’re goodon culture, let’s move on to economics.’
“If you find a cohesive leadership group that they are collegial inthe way they deal with us and with each other, and they promotea collaborative approach to the practice of law in their law firm,that is all part of one ball of wax.”
Kalis says there will always be hiccups when you are talkingabout consolidation within an industry because smaller cominginto bigger means a loss of autonomy.
“It tends to be the case that the loss of autonomy is felt before thearrival of the opportunities that result from the merger,” he says.“So, there are a few ticks along the way, typically. You just have towork through them in good faith.”
Kalis says the reason his firm’s mergers have gone smoothly isbecause of the amount of work the firm does on the front end.
“Remember, this is not like General Motors and Toyota deciding tomerge,” he says. “We are large, but we aren’t so large that people-to-people interactions don’t occur and can’t be evaluated. We typically— well before there’s a handshake deal — will have the practice leaders across our firm and the other firm meeting, having video conferences, and discussing idea and opportunities. If they were to comeback and say, ‘What a bunch of dolts,’ I think it would stop there, and,in fact, it has once or twice.”
He adds that merging is a great way to grow, but it is not withoutrisks.
“One, because of the economics, you can analyze it, and youcan choose to do it only if the economics are going to be good,”he says. “Secondly, because you usually get those qualities ofcohesion, collaborativeness and collegiality already inbred in, wewouldn’t go there if they weren’t already inbred in. So, it makesfor a much more settled and effective entry into a market."
HOW TO REACH: K&L Gates, www.klgates.com or (412) 355-6500
Sometimes Dennis J. Engel
finds himself sticking
longer than he should with an employee who isn’t
cutting it. Yet, that patience
has also paid off for the CEO
of KeySource Medical Inc.,
such as the time that a member
of Engel’s management team
had a problem with alcohol.
Even though the immediate
reaction may have been to fire
the person, Engel saw talent
and waited while the employee worked through the addiction.
Engel says being patient is
all part of being a coach, and
that trait has helped Engel
take the pharmaceutical distribution company with more
than 40 employees to 2006 revenue of about $22 million.
“The more you bury your
own ego and bring out the talents of the individuals that are
working with you, the more
productive those people
become,” he says.
Smart Business spoke with
Engel about how to be more
of a coach than a taskmaster.
Q. How are you a coach
rather than a taskmaster?
I do it by allowing people to
tell me what is necessary,
rather than me telling them.
When I sit down with subordinates, the question is, ‘What do
you need? What will make you
more effective? Where are the
problems in the organization?’
Rather than making it a top-down arrangement, I usually
try to make it a bottom-up
I have always found that to
be much more effective than
giving people their marching
orders and expecting them to do exactly what you say. That
Q. How can leaders become
more of a coach?
I would suggest you back
off of what you normally do
and open your ears and listen more. I think the worst
problem that someone in a
leadership capacity has is
the tendency to bark orders.
You have so many things
that need to be done, you
tend to give marching
orders rather than sitting back and listening.
And it is a difficult discipline to sit back and
open your ears and
say, ‘Let me listen to
somebody, even if they
aren’t as important as I
think they are or as
maybe as I want them
to be.’ Maybe they are
lower in the hierarchy.
But, it is important to
listen to someone
before you go out and
give them orders.
I think for anyone in a
leadership position, to
me, the most important
thing you can do is back
away from tending to
push people, and back off and
listen to them.
Q. Is there a process to
being a coach, or do you just
have to tell yourself to
For me, that’s pretty much
what it is. I mean, you have
to bite your tongue sometimes because the tendency
is to go out and tell somebody or cut them off and say,
‘Yes, yes, I know all that, but
this is what you have to do.’
It’s a quick tendency to do that. So sometimes you have
to bite your tongue. So if
there is a process, maybe
that’s a process of biting
your tongue and sitting back
and just saying, ‘Tell me
what is going on.’
Q. How do you get people
to be honest when they
come to you?
I try to make it as relaxed
an environment as I can. I
normally don’t do it across my desk. I have a round
table in my office and I normally will seat them there so
they don’t feel as if they are
being dressed down. And I try to make it as much of a
peer-to-peer arrangement as
I possibly can.
The organization we have,
we try to keep as flat as we
can. There isn’t any preferred
status on individuals. As a
matter of fact, the higher up
you are in the organization,
the more responsibility there
is, rather than the more privilege. So you tend to work
harder the higher up you go.
So people know when they
come in, they’re usually going
to get more help than they are
Q. How has creating
that atmosphere benefited
I think that turns the organization on. I think it switches
people on. When people are
lambasted, when they’re
beaten, it takes away their
morale and it takes away the
gusto to perform.
So, even if you know somebody has done the wrong
thing, to sit there and chastise them and criticize them,
you are probably going to
have somebody that is going
to go out of your office with
their tail between their legs.
And, instead of getting more
work out of them, you are
going to get somebody that
sits at their desk and grumbles.
And to me, that’s the worst
thing. I’d rather sit at my
desk and grumble and have
the person I just chastised go
out and feel good.
HOW TO REACH: KeySource Medical Inc., (800) 842-5991 or www.keysourcemedical.com
When Mark House is sitting down with new hires, he gives thema one-page leadership philosophy that clearly states his corebeliefs and his expectations. The managing director of the TheBeck Group’s Florida Division views the paper as a contract thatestablishes certain expectations upfront for both himself and theperson being hired.
“It puts a lot out there on the line saying, ‘Here is what you canexpect from me. It’s in writing, and I want you to hold me to itbecause I’m going to hold you to it. This is what I am about and thisis what I expect from you,’” he says.
House has used his open and honest leadership style to move hisway up the ranks of The Beck Group, where he started in 1989 asa senior project manager responsible for integrated services which encompasses architecture, real estate and construction.Now, as head of the Florida Division, he is responsible for morethan 100 employees and about $170 million in 2006 revenue.
While a leader faces many challenges, House says his threebiggest obstacles are finding and retaining the right people, communicating his message, and then making sure everyone in theorganization understands it.
Here’s how House faces those challenges and is taking his division into the future.
Finding the right people
In today’s environment, House says he wants somebody who isvery flexible, open-minded and creative, and someone who doesn’t rely on what he or she did in the past to succeed.
“What we don’t need is to have somebody say, ‘Well, we’vealways done it this way,’ or, ‘I’ve done it back at such-and-such aplace,’ because ... the technology is changing so fast, the construction techniques are changing fast, and the population of our experienced workers is reducing very quickly,” he says. “This baby-boom generation is retiring and the X and Y generations behind itare much smaller populations. So, therefore, we have much lesspeople to do more work with. So, you have to be open-minded, andyou can’t do things like you did in the past.”
In order to find the right person for a management position, asking the right questions can give insight in regards to how somebody will fit in to an organization and how he or she may handlesituations.
“If we are looking for a management-type person, we are goingto start asking questions like, ‘What is your biggest challenge youfound in a management role?’ or, ‘Explain to me how you are goingto deal with a confrontational employee,’” he says.
House and his direct reports will also put together a scenario andask how that person would handle the situation.
They may ask, “You’ve got to build a large retail center and yoursupply of granite tile is coming in and it’s held up in customs. Whatare you going to do? What steps are you going to take? You havean opening date, it’s a drop-dead date, and it doesn’t look like youare going to be able to finish with the materials specified. How areyou going to handle that?”
“Put them in a position where they have to think on their feet,”
House says. “There may not be any right or wrong answer. We arejust looking at how they are going to react and coming up withsome solutions.”
House says he and his team may talk to a potential employeemultiple times but in a number of different ways.
“We bounce people around pretty well, and we tell them rightaway that we have an unconventional hiring technique,” he says.
House tells them, “You are going to talk to three or four people. Itmay go dark for a week. We may not talk to you for a week, but it’s notbecause we don’t want to talk to you. It’s because something else hascome up that we need to jump on it right away because we don’t havea formal hiring person.”
House says having a hiring process that is a little different helpshim find the right person for the job.
“The classic HR way is, you go through somebody’s resume, andyou look at somebody’s resume and check off a bunch of boxes,”he says. “This way, you are being more creative. You’ve got somethings on a resume, but what you are doing is I am looking formore people skills, soft skills, you can’t necessarily see on aresume. In this particular environment, we’ve got to have someleaders out there that have some soft skills, rather than people thatare engineers that just have analytical skills because we have to dosome things a little differently.”
Once House has his direct reports in place, he needs to trustthem, especially with the people they are going to hire.
House says he will generally meet a person being hired by adirect report, but won’t spend too much time with him or her.
“My direct reports, I have to entrust in them, and if I don’t trustthem, then you are not sending a clear message to them that,‘Look, I trust you; I believe you are going to hire the best possibleperson,’” he says. “If I intervene in there, then I don’t need that person. The person that works for me needs to know they have myundying trust and support. The person they’re hiring is going towork for them so they need to have the most influence.”
Though employees will make a mistake, it’s important to continue to trust them. House recalls a situation when a senior-level manager was working on a small project that was easy for the manager. Everyone made the assumption the manager could handle itand didn’t check on the situation. The manager went to Houseeventually, but the problem was bigger than they originallythought. House says it was a valuable lesson for the manager, andthe experience made him a better builder.
House says developing that trust is done through actions andtime, which show that if a mistake is made, it’s not the end of theworld.
“Desperate people do desperate things,” he says. “If you put people in that kind of position to know that there is no room for failure, then they’ll do something that may not be in the best interestof the company or themselves. We want everyone to feel, ‘Hey,things go wrong, let’s figure out what went wrong and how we canprevent it again, and lets react to it so we can make it better asquick as possible.’”
Communicating your vision
Finding the right people is just the starting point. Once you havethem in place, you have to communicate through as many different means as possible to get a message across so that everyone isworking toward common goals.
“You’ve got to communicate very well to your direct reports, yourmanagers and say, ‘Here is the big idea, guys,’ and ask them to pushthat down through their chain,” House says. “Then, what you aredoing is following behind them and hitting different points in thechain and saying, ‘Hey, did you get the word? This is what our ideais.’”
House then follows up with e-mail, which he calls a necessaryevil, to get a point across, though he would much rather use “facemail” by getting out and talking to people face to face.
When talking directly to someone, House likes to ask peoplewhat they think and hear what the message is in their words, buthe tries to approach the person in a natural fashion. He says to dothat, you need to establish from the beginning that you have anopen-door policy and talk to people on a regular basis.
“If I am giving an official communication or asking somebody todo something, I’ll go through their manager , but I don’t hesitate togo to somebody and say, ‘Hey, how are you doing? What is goingon? Tell me about your family,’” he says. “It’s not an unusual thingthat I go talk to people because that is part of my job to continually talk to people.
“It should be part of the normal conversation. I’m talking about,‘How’s your kid doing in baseball?’ to, ‘What do you think aboutwhat we are doing here?’ or, ‘Did you see this the other day on theWeb site?’ or, ‘What do you think about this new policy we’ve gotabout safety?’”
Finally, at every opportunity you have, you need to communicatethe message to make sure everyone is hearing it consistently.
“If it’s a meeting of only 10 people, a staff meeting, or if it’s a meeting where we call our stakeholders meeting, you bring it up again,”he says. “Then we have a monthly electronic newsletter we sendout, and we may put an article in the newsletter. I don’t think youcan undercommunicate.”
House also finds handwritten letters are a great way to communicate, not only to get a point across but as a way of acknowledging good work.
“If you really want to show somebody you care about them, thenwrite a handwritten letter or note to them about how you’re proudof them,” he says. “In a couple of instances, I’ve written people’sparents and said, ‘John’s been doing an outstanding job, we’ve justpromoted him, and I wanted you to know we’re proud of him andyou should be very proud of him.’”
Not only have handwritten letters served as a great communication tool, but it’s also aided in retention at the company, which hasa turnover rate of less than 5 percent, House says.
“Because if you’ve got a good, young, hot employee and they’retempted about going somewhere else, they more likely than notwill talk to their parents and that parent might say, ‘Are you out ofyour mind? These guys care a lot about you. I’ve never had anybody write me a letter other than your third-grade teacher aboutyou and how much they care about you.’”
He also advises not to cause confusion by overloading workerswith too many ideas.
“You got to stick with one or two ideas and go there,” he says. “Ifyou’ve got the Gettysburg Address of all these different things, youdilute what the main idea is.”
But, no matter how hard you try, someone isn’t going to understand the message. You then have to talk to the employee, not toembarrass him or tell him that he’s wrong but to point him in theright direction.
“You say, ‘Here is where we are really thinking about this,’ andkind of try to reset it and reset their mind,” he says. “Then, you goback to the manager and say, actually, you go up as high as you canand say, ‘I think our message is getting twisted a little bit, and let’sresend this message back down and communicate it back downagain.’”
HOW TO REACH: The Beck Group, Florida Division, (813) 282-3900 or www.beckgroup.com
To show employees he is really listening to them, John Graham makes himself available so they can talk to him and meet with him on an informal basis. Then, the president and CEO of North Oakland Medical Centers acknowledges what the person suggested and demonstrates where changes are being made, explains why it isn’t realistic to do something right now or explains why the suggestion is inconsistent with the goals of the $115 million organization. Smart Business spoke with Graham about how to communicate change and why it’s important to balance work and play.
Set a vision. A great deal of it is active listening at the level of the board, at the level of the medical staff leadership, to define, very clearly, what the primary role is for the hospital. Then, taking that broad vision and defining the specific actions that are required of a multitude of players inside a hospital setting to then accomplish the vision.
There is a nursing component of the type of care we’re going to provide in a given setting and ancillary services and everything up to and including the way that housekeeping is interacting with those patients and families and nutritional services. So, it’s breaking it into the component parts to make sure that everybody on the team understands how their role interconnects with other team members and how it takes everybody providing all of those activities at just the right time to be able to do it well.
So, everybody on the top executive team is involved in the process in following up on implementation of that vision. It’s a great deal of personal communication as well as in a variety of forums written communications, internal newsletters, town-hall meetings that we routinely run with all the employees to make sure that they’ve heard personally what the vision is that we’re trying to accomplish.
Then, follow up between the executive team and the department managers to make sure they understand and are trying to explain to the staff where the linkage occurred to bring the pieces together.
Balance your professional and personal lives. We encourage everyone on the team that you need to have a balance between what you are doing at work and what you are doing in your personal life. Family is paramount, and you need to make sure you are leaving time so you can gain the value out of having family interaction that you need to be a fulfilled person, and you can passionately pursue activity here at the hospital.
But when you leave, you have to be able to contain it so it doesn’t become all-consuming.
That’s an ongoing exercise. We have a very dedicated set of employees, solid management team, where we have probably spent more time encouraging them to focus on continuous learning and, again, making sure they take the time off to meet family obligations to recharge their battery.
A very concrete example: This is an organization that banked earned time off and would routinely have it paid out. Well, we changed some of that policy and procedure to encourage people to take the time off because it is very valuable to the retention of that balance.
Communicate change. As you go through a change process, it is very important to repeat the message several times in several different formats in slightly different ways because people don’t always hear what you are trying to communicate in that process of change. It’s very important that, to the extent they can, they understand what change is occurring and why it needs to occur.
Once we’ve identified an objective, we may very routinely write it up as part of an internal or external written communication, and then have a slightly different perspective on that same goal as part of verbal communication that would take place in department-head meetings or in town-hall meetings with groups of employees. Then, very basic follow up during tours of the facility, touching base with individual staff members to try to make the linkage back to what that bigger goal or objective was.
So it’s, ‘How is it that you, as a nursing assistant, directly affect the communication with the patient to assure that they feel like they are getting the proper respect? So, did you introduce yourself? Did you let them know what you are going to be doing?’
That’s a program that has been communicated in writing. It’s a program that has been communicated through the management chain of command, but then we try to reinforce it when we are out just making rounds, as well.
Follow up and review potential hires. (There is a) fairly elaborate interview process that we try to use to make sure there is some type of confirmation of the actual activity. Then, a great deal of it is behavior-based interviewing, where you are attempting to get the candidate to explain very specific situations and what their behaviors were in those situations so you can identify that because past behavior is probably the best predictor of future behavior.
You are targeting specific behaviors that are needed for their role, and then trying to get into enough detail in the interview to ascertain how they specifically acted in that situation. I’m not saying that people can’t still fake it, but it becomes more difficult.
Identify employees’ passions. It is identifying where their passions are and how we can harness those passions into specific projects, activities that move the organization forward based upon the energy that they bring to the task.
It gets back to very active listening and then identifying their strengths, identifying the major needs of the organization and how to bring those together to gain the most benefit for the organization.
HOW TO REACH: North Oakland Medical Centers, (248) 857-7200 or www.nomc.org
Leaders who are too involved in their own company are kidding themselves, says Deni Tato. The president and CEO of Contract Interiors of Cincinnati Inc. says the biggest problem she hears from her peers is the inability to step back and realize their way isn’t always the right way to do something.
“I just think you bring a lot of confusion to the organization when you micro-manage,” she says. “So, step back and make that list of, ‘What do I really excel in? Where am I really needed?’”
Tato uses that philosophy to lead her office furniture solutions company, which posted $11 million in 2006 revenue; she estimates 2007 revenue of about $15 million.
Smart Business spoke with Tato about how to step back and let employees do their work, while still staying in contact with them.
Q: What are the keys to being a good leader?
The job of a leader is to recognize and nurture and inspire the unlimited potential in people. You have to have an infectious passion about what it is you’re doing. A leader needs to be able to paint a picture that allows employees to see the success that comes from aligning the strengths of each individual for the greater good and to instill in them the belief that we have what it takes to succeed.
What works for me is to always work from a position of abundance rather than scarcity. We try really hard around here, and we preface things in such a way that we are able to really focus on strengths as opposed to eliminating weaknesses.
Q: How do you recognize employees?
I have 20 employees, and I know each and every one of them very, very well. I know what they deal with on a personal basis is always a part of what they bring here. So, really knowing them and valuing them as an individual, instead of my accounts payable person, is huge.
I allow tons of flexibility. I really believe in their ability to self-manage, to get the work done, to know the right way to get the work done. My way is nothing more than my way of doing things. And I allow them so much freedom.
We have to agree to a common goal or a certain outcome; how they get there is really up to them. I just recognize them
as a unique human being that has desires and passions and issues that are unique to them, and that we kind of work around that and help them capitalize, again, on their strengths and what is working and, ‘How do we do this and get you to the next step?’
Q: How do you know when to step in and help an employee?
As the owner, I know I could have a lot of control. But, again, I believe the best results for my company come from trusting in their ability to self-manage that process. I really do work from the 30,000-foot perspective. I do work on the business; I do not work in the business.
I leave that to the employees within each department. I know because we have constant conversations. That is where my day is spent, not in big meetings; it’s completely open. We are a very flat organization, but it’s in constant conversations and me asking questions. I offer very little answers. I think the answers need to come from them. I just pose a lot of questions.
If there are barriers that I can remove in order for them to be able to visualize it and see what the right answer is, I do that. But I really stay away from dictating or saying this is the right way because, I think, a better result comes from them finding it, and it usually is because they know what they do much more intimately than I do.
Q: What advice would you give to someone who is working too much?
It’s an internal process. You have to sit with yourself and say, ‘What is it about me that makes me think I am so valuable to everyone?’ I think people, if they leave at 3 and they don’t think their work is done or they think something is going to go wrong, that’s uncomfortable and not at all healthy.
I think the work of the CEO really needs to begin internally and get to know yourself and say, ‘Why am I so bothered by this? Why do I respond in this way, and what is it about me?’ I think when you really sit with those thoughts and digest it and just kind of accept that your way is not necessarily the best way.
HOW TO REACH: Contract Interiors of Cincinnati Inc., (513) 641-3700 or www.contractint.com
When A.D. Frazier was asked to join Danka Business Systems PLCby some of his friends who served on the company’s board of directors, it sounded like a great opportunity for him. “When you do thissort of thing and help things turn around or fix things that are brokenfor a living and have a chance to do it again, it is a fascinating opportunity,” says Frazier, chairman and CEO of the office imaging systemssupplier. When Frazier joined the company in March 2006, it was having its fair share of difficulties. It had lost money for several quarters,had debt that needed to be paid down and had a business model thatwas focused on the wrong end of the balance sheet.
Though revenue was growing, losses were deepening. A previousmanagement team had made an ill-fated acquisition of EastmanKodak’s global copier business using a lot of debt to finance the deal.The acquired business was sinking at the time of the deal and continued to decline afterward, dragging Danka down with it.
“Our sales process was focused on revenue and moving and sellingcopiers and was not focused on bottom-line profitability,” Fraziersays. “It was important to them that growth and revenue was a measure of success. Whether that was taking their eye off the ball orwhether that was what they set out to do, and they thought the profits would follow, I presume the latter, they didn’t.”
Frazier looked at the numbers and realized he needed to change thephilosophy of how the company operated. The previous managementteam focused more on revenue and growth, while Frazier shifted thefocus to profitability, even if it meant reducing revenue.
He refers to a big revenue number that isn’t transferring into profitas “empty calories.”
“It’s just like when you are on a diet and you are eating somethingthat doesn’t give you anything but calories,” he says. “That’s whatdieters call things they shouldn’t eat.”
Frazier concluded that to get the company back on track, he wasgoing to have to create a new vision for the company that was focusedon profits, change the culture to execute that vision and pay down thedebt load that was holding the company back.
Listen to your employees
In his first few months at Danka, Frazier developed a vision aroundwhat the company was capable of, and he broke it down into three different parts: Make every customer a reference, reduce the opportunity for errors and meet established targets.
Along with using his own experience, Frazier developed the visionthrough working with the people at the company. By talking to theleadership and the employees, he was able to create buy-in for thevision.
“It’s amazing how much you can find out if you just ask people whatis going on,” he says.
By listening to people, Frazier found he didn’t run into too manyresisters when he was forming his plan.
“I went on the road,” he says. “I think I had over 25 town-hall meetings all over the country with our people and listened to what they hadto say and told them what we were trying to get done. They generallywere pulling on the same oar as I am. They seemed to be pretty willing to do what I asked them to do.”
Frazier says he doesn’t have any secret formula to why he didn’t faceany resisters when talking about some of the ideas he wanted toimplement. He simply told them he was there to help the company andfocused on doing so.
“I told them when I came here that I really didn’t need to work, andI was here to help them be successful,” he says. “The only interest Ihad is to help them be successful. I’m not trying to get in here to makea quick buck and get out, and they are left holding the bag. I don’t havean out package and would have refused it, if it would have beenoffered.”
He took a pay cut in May to back up his claim.
Even if some employees would have resisted, Frazier says forcingsomeone down a path they don’t want to go is an unwise move foreveryone involved.
“I never felt like I had to force anybody to any conclusion,” he says.“We’d lay out the facts. ‘This is what we are thinking about doing.’ Ifthey bought in, they bought in. I didn’t have to browbeat them. If yourideas aren’t worthy, then people shouldn’t follow them. If they areworthy, then you don’t have to beat them into submission in order toget them adopted.”
Frazier says it’s important to get buy-in on your vision and to makesure that vision is consistent.
“I’ve been around managing some part of business for almost 40years,” he says. “But the thing I’ve learned over this period of time ismost managers who get fired, get fired from within. They are firedbecause their people lost confidence in them or didn’t have confidence in them. They behaved in a fashion inconsistent with what theysaid.”
Frazier says employees are expecting their leadership to presentthem with thoughts, themes, ideas, plans and initiatives that resonatewith them personally.
Leaders also need to find out what their employees are capable ofdoing individually, and what the company is capable of as a whole.
“You can almost guarantee certain failure unless you shape yourplans around what the company can do,” he says. “You can make allthe promises to the street or to the board or to the shareholders youwant to, but you’ll fail because the people you got can’t deliver.”
Once again, Frazier took a simple action to find out what the company’s employees were capable of doing.
“I went around and asked,” he says. “I listened to them, read theirbody language, listened to the words they said, had meetings aftermeetings after meetings with the key staff and key direct reports andothers who had a lot to say about the things they thought had notworked so well in the past.
“It sounds so hard. But, for goodness sake, if you just check your egoat the door, and start by hearing what somebody else has to say andsee what you can learn from that, then it doesn’t take long to separatethe fly poop from the pepper.”
Frazier says from there, you must take demonstrative actions basedon what you’ve heard.
“That is what is frequently referred to as walking the walk as well astalking the talk,” he says.
Build a supportive culture
Frazier says the company’s culture was in desperate shapebecause of the mixed messages being given by management.
“There were too many senior people at the head office givingorders, and sometimes the orders conflicted one with the other sopeople weren’t sure whether to shoot gophers or rattlesnakes,” hesays.
One way Frazier gave clarity and improved the culture wasrenaming the head office in St. Petersburg the “field supportoffice.”
“They are working here to support the people out in the field,” hesays. “The fact that their office is in St. Petersburg gives them nohigher knowledge about the business. In fact, they probably haveless high knowledge about the business than the people closer tothe customers. So, just as a small thing, I said, ‘Your job is to helpthe people out in the field be successful. If you don’t have a jobdoing that, then get one because that is the only kind of jobs wehave here.’”
Besides reorienting the attitude of the corporate office, Frazieralso changed the culture by recognizing people who made animpact at the company.
“What I did ask the board for and got was the authority t o giveaway stock,” he says. “I wanted to be able to give stock awards onthe spot to anyone I felt went above and beyond the call of duty attheir job. We’ve given close to 100 of those awards in the past year,and people seem to react very positively toward them.
“It’s not much. It’s only 125 shares. The stock is only worth abuck so we are not talking about a great deal of money. I thoughtit symbolized the right values because the employees are workingfor the shareholder, and I wanted them to be a shareholder. Also, Iwanted them to have an interest in stock evaluation and have asense that they had a dog in the fight when it comes to running thisplace.”
He says putting the culture back on track by giving employees aclear direction and recognizing them helps keep the company in astable position.
“As long as you stay in touch with your people and do what yousay you are going to do, things tend to stay on a pretty even keel,”he says. “The minute you start saying one thing and doing another,you get into real trouble and probably should.”
Know your assets
Besides redirecting Danka’s people, Frazier also had to deal withthe company’s financial problems.
In order to pay off debt, Frazier had to organize a process for selling Danka’s profitable European business.
“You have to pay your money when it comes due,” he says. “It’snot a choice. So, the question is, where are you going to pay it?Either you earn it and pay it back out of earnings or you sell something and pay it back.”
The company went back and started talking to the people whoexpressed an interest in the European division as a whole or thosewho wanted to buy parts of it. As it turns out, there was a lot ofinterest in people buying parts of it, but in the end, Ricoh EuropeB.V. ended up purchasing it as a whole in early 2007.
“It was the only thing left that we had to sell,” he says. “I didn’twant to sell it. I didn’t have any choice but to sell it because it wasthe only asset that people were interested in buying.”
The move has dramatically changed the scale of the company.Before the sale, Danka had slightly more than $1 billion in revenue. Now it’s about $450 million, and the employee head countwent from 4,000 to 2,000. But the move allowed the company topay off and refinance its debt, dropping the debt burden from$254 million to $120 million, and reducing interest expenses from$29 million to $13 million annually. The company also reduced itsnet loss from $85 million in 2006 to $29 million in 2007.
Frazier says coming to terms with having to sell a profitable portion of the company wasn’t just a matter of doing it. It was a matter of looking to the future and deciding what was best for thecompany down the line.
“Nothing is simple,” he says. “In retrospect, sometimes things looksimple that, in the course of undertaking them, weren’t simple at all.The need to sell something was either sell something in the UnitedStates or sell something in Europe. We had a better-developed business system in Europe with more clearly established market positions and a better structure. So, I thought it would have been easierto sell, and it was, than in the U.S. where we had to rebuild the structure, put new leadership in a number of places and hire a bunch ofpeople.
“So, we had more work to do on this one; although, I felt likefrom my standpoint, the U.S. business had greater long-termpotential. So, if we fixed it, it would be good to keep it as opposedto fixing it and selling it.”
HOW TO REACH: Danka Business Systems PLC, (727) 622-2100 or www.danka.com
After Hurricane Katrina, Cindy Pasky knew she had to do something to help the employees of Strategic Staffing Solutions Inc.’s New Orleans office. The founder, president and CEO of the company which provides information technology professional consultants split the corporate team, with half working as part of a disaster group while the other half focused on moving the business forward.
Pasky says that even though there was a tremendous tragedy in New Orleans, it was important for the company to keep a focus on the day-to-day operations of the business. One executive went to New Orleans a week-and-a-half after the hurricane, while Pasky, who led the disaster side, went down two months later to assess the damage.
Pasky said it was important to send the message that the company which posted 2006 revenue of about $140 million was going to take care of its employees.
Smart Business spoke with Pasky about how to earn respect and how to grow a company while maintaining a personal life.
Earn respect by making tough decisions. When you make a tough decision, people shouldn’t be surprised. You should be willing to, within reason, explain why the decision needs to be made, and you need to be consistent across the board as you make decisions.
You have to be more interested in having people respect you than like you. Usually, when people decide if they like someone, it is your personality. Are you fun to be with? Do you make me laugh?
My objective in the business world is to be viewed as a businessperson first and be respected for that. Then, if my style happens to fit with someone’s and they decide they like me, that’s an extra benefit.
If you are yourself, then I find that people like you more anyway.
Realize growth isn’t easy. You have to recognize how hard you are going to work to make that happen. You are going to get it done through other people, but you mostly start by getting it done through yourself. What I’ve seen is a lot of entrepreneurs, they reach a certain point where they think they should be able to live the life. But, what happens is, they have to become a CEO, and a good CEO should always work harder than anyone else in the company. That is a mindset. You might be able to go out and buy the nice car, but you aren’t going to be able to drive it often.
Then you have to say, ‘Can I do it? Where do I think my voids are, and how can I supplement them with other team members?’
Mix work and play. It helps if you really like what you are doing. If I have an operation in Eastern Europe, every third trip, you might add a country onto the trip for a couple of days. I love to golf, so if I can get a customer to golf, that’s a win-win.
I’m a runner, and our company sponsors an 8K to raise money for a woman’s shelter every year. If you look at what you like to do and how you want to do it, you can find lots of ways to intersperse that in your life.
As you grow and get a good team around you, it creates opportunities for you to take a vacation, take off early and play that round of golf, or take the dog for a walk. I think balance is a bad idea, and I just don’t think it’s realistic. That doesn’t mean you can’t have a life.
Get involved in the community. It’s the obligation of the corporation to do that. It’s good for your employees. They can participate or they cannot participate, but it sends a message to them that the business does have an obligation to do this.
A lot of people, that’s the type of company they want to work with. It gives them an outlet. Maybe they wouldn’t be able to figure out how to get involved on their own. But, if their company does, then they can participate.
Then, from a benefiting-the-company standpoint, it does make recruitment easier. It gives you other reasons to strengthen relationships with your customers if it’s a shared activity and something else besides business you are working on.
We’re pretty particular about what we get involved in. The first thing we say is, ‘Does it fit in to the category of the type of organization we want to support?’ The second thing we do is we’ll look at, ‘Does this align with something a customer has asked us to do?’
Then we’ll look at it and say, ‘Do we have the budget to do it?’
Culture has to start at the leadership level. We believe every position in the company is equally important. A customer once told me, ‘For a good size company, you are the huggiest company I have ever met.’ We all see each other and hug. It’s ridiculous. Our customers do it, too. You have to start at the top and really care about people.
You have to be willing to say, ‘Thank you. Nice job,’ and recognize that there is nothing wrong with having a little bit of silly fun. You have to be comfortable enough in yourself to do that.
In the corporate office, we have a workout facility and showers; a really nice kitchen. Each branch picks what works for their teams.
In our world, people are going to work really hard. If you can create an environment where they are working hard, they feel like they are appreciated, can get a good workout in and fix their lunch, then the work they provide is going to be better and provide a higher sense of loyalty. They are people; take care of them.
HOW TO REACH: Strategic Staffing Solutions Inc., (313) 843-1243, (888) 738-3261 or www.strategicstaff.com
When Kevin P. McCarthy was having a disagreement with someone about how to run a meeting, he asked that person to bring it up at the next meeting. The president and CEO of Modern Office Methods wanted to make a point: He wanted people to see that it was OK to challenge other people’s ideas even his and to get involved in developing programs.
“If (a manager) has a lot of say in developing the program, then it’s his program to make succeed or fail, rather than, ‘This is a program that Kevin mandated, and I have to do this,’” says McCarthy about how things operate at the $30 million integrated document solutions provider.
Smart Business spoke with McCarthy about how he handles mistakes and how to find employees with the right attitude.
Q: How do you let employees know you are listening to them?
Those who have been around awhile know I listen to them because they know me; for the new ones, if they have a suggestion or bring something up that is a good or bad idea, responding to them and letting them know what we are going to do based on what they said. Then, keep them in the loop.
A lot of people don’t like to hear complaints. I don’t mind hearing complaints from clients or employees. The reason I don’t is because my philosophy is if somebody is complaining about it, then everyone else is thinking about it and is not willing to stand up and say something about it.
Typically, in their own little peer groups, they are discussing those issues. If we can address those issues where it’s a problem, then it gives us an opportunity to make our company stronger.
Q: How did you establish your corporate culture?
A lot of it just evolved on its own. I could write all the corporate mission statements, but if I am acting differently, then that’s the reality. It comes out of what your true core values are as an individual. I don’t think you could make a culture that isn’t really you. If you could, you would be acting every day, instead of, ‘This is what my values tell me is the right way to be.’
If they see me cutting it up and not working, then it’s like, ‘This must be OK. I’m all right with people cutting up and having fun, as long as they get the job done.
Q: How do you know if a potential employee will fit in to your culture?
There are certain things you can ask.
If I’m interviewing a sales representative, rather than asking, ‘What would you do if you came across this issue, and how would you handle it?’ a better question would be something along the lines of, ‘Give me some examples of how you’ve handled a particular type of adverse situation in the past,’ and make them explain it. ‘Tell me what you did to overcome it and where you were an underdog, and you should have never succeeded; tell me how you did it.’
Even if it was something in high school, you want to find out what they are made of.
I tell our managers, ‘I would much rather have a bunch of (hardworking underdogs) on our sales team than a bunch of thoroughbreds who don’t have to work hard because everything has always been easy for them.’
Q: How do you handle failure?
Sometimes you just have to chalk it up to, ‘Maybe we put together a bad business plan, or maybe we put the wrong person in charge,’ and we have to figure that out.
I like to keep people upbeat, but if someone is not doing the job or makes a bad decision, you have to address it with the individual. If someone does something great, you want to praise them in public. If someone does something wrong, you want to pull them in and discipline them in private.
I don’t think I’m going to develop any loyalty if I criticize you in front of a bunch of people. In fact, I would guarantee I would develop zero loyalty.
If I say, ‘Brian, stand up for a minute. Hey everybody, I want you to hear what Brian did. Brian did this, and here is what it meant. By the way, great job.’
Brian’s on cloud nine, and everyone is saying, ‘Good job’ and slapping you five. There is mileage out of that.
Now, if I stood you in front of everybody and said, ‘Brian, let me tell you what Brian did. Brian stinks.’ It not only weighs heavy on Brian but everybody. Everyone is going, ‘Do I get the next bullet?’
HOW TO REACH: Modern Office Methods, (513) 791-0909 or www.momnet.com