Brooke Bates

Sunday, 25 April 2010 20:00

Finding value

Ernie L. Danner asks a lot of questions.

Whether he’s trying to find out what customers really want, what employees are going through to meet those needs or how he can poise the company to make both sides happy, he’s going to ask plenty of other people what they think before landing at an answer.

“Most of the time it is just asking 4 million questions in 4 million ways so that you try to get it out of them,” says Danner, president and CEO of both Exterran Holdings Inc. and Exterran Partners LP.

Danner sees his role as the path-setter for the company, which has 10,000 employees providing oil and gas infrastructure products across more than 30 countries. Ultimately, his goal is to set a vision that will guide the company toward growth. But he can’t do it alone.

It takes a lot of input from employees and customers to set a vision in the right direction and, later, to gauge whether employees are on board with it.

“First, you’ve got to make a lot of visits to employees in the fields,” says Danner, who became CEO in June 2009 after serving as president and chief operating officer since October 2008. “You’ve got to get out of your office and you’ve got to go. The second is you provide the employees ways of getting you feedback. So I’m going out and asking. I give them a place to talk to me.”

By involving others in the vision he sets, Danner strives to make it a collective goal that everyone plays a part in achieving. He rallied employees together to increase 2006 revenue of $1.6 billion to $2.9 billion in 2009.

“To be a good leader, you really do just have to set the path for the organization that you’re leading. And to effectively set the path, you have to set the vision for the future,” Danner says. “And if you can combine that vision with great people, you can have success.”

Create customer value

Your vision begins with the reason you’re in business: your customers. More specifically, it stems from what you do for them.

“You’ve got to find your niche in the marketplace, and then you have to build what differentiates you from the competitors, what value you’re going to bring,” Danner says. “Define what creates the most value for your customer and the organization, and you tailor your vision around that.”

It takes curiosity to find that value, which means you have to ask a lot of questions. You’re really examining past successes and failures to find future opportunities.

With employees, you’re asking about their previous interactions with customers: Why did the customer call? Did we meet that need?

When you’re talking to customers, it goes beyond the basic question of: How are we doing?

“You have to ask those, but then as you get into the future and trying to create value, you start delving into, increasingly, what are they frustrated about, both with us and with other vendors,” Danner says. “What are they having the hardest time accomplishing in the space that we’re providing them services? You just keep digging around their frustrations and ultimately you get to your opportunity.”

Even if the customer says your service is great, keep digging. Ask what you could do differently to get more business.

“Since customers want to solve their problems, they want to find partners that will solve their problems,” Danner says. “If all you ever do is just show up and ask them a thousand questions and never give them any solutions, they’ll get tired of you fairly quickly. But as long as you’re working together and creating value and they can see where this is going, sure, they’ll talk to you forever.”

Customers might not be able to pinpoint the big-picture problem. But they may know, for example, that they’re confused by your invoices. Even that’s a starting point to improve your service.

“You circle back and you solve the invoicing question — which is really not the key part of the service you’re providing, but by doing so, it makes the company easier to do business with and you’ve solved a customer’s problem,” Danner says. “So it’s an example of how asking questions can lead to a better opportunity.”

Prioritize opportunities

Once you’ve adopted that opportunity-seeking mindset, the digging expeditions get easier because the feedback starts coming voluntarily. Then, your challenge is just prioritizing the input you get.

“You take this list of opportunities and you start measuring them both on what creates the most value for the customer and what creates the most value for the company,” Danner says. “If you get too big of a list, you freeze. So narrow it down on value and narrow it down on what’s achievable. And then you turn that into the vision and then the strategies to achieve that vision.”

Identifying what’s doable is a risk assessment that involves anticipating obstacles you might hit. Danner constantly revisits what goes right and wrong with each project, building a keener ability to predict future barriers.

“If you’ve done your work on analyzing what goes right, what goes wrong on existing projects as you’ve grown, then those barriers and the potential pitfalls fall out through continuous improvement [or] some people would call it post-mortems on projects,” he says. “It’s just always examining what goes right and what goes wrong and striving to improve.”

Ideally, after each project, have your team debrief with group self-evaluations that weigh results against the goals of both the company and the customer. Don’t stop at what happened — also think about why.

“You go, ‘What were the keys to us getting [those results]?’” Danner says. “Or if you missed and you were late or over budget, you break it down into a root cause analysis as to what went wrong.

“You’re always examining what you did. Did I do what I said I would do? Did the team do what we said we would do? And you’re holding yourself accountable to those pluses and minuses.”

With that background knowledge, you’ll build your foresight of future potential pitfalls. You probably won’t build your company around a solution buried behind too many barriers, so you’ll be able to prioritize which opportunities hold the most value — and therefore, which ones to build your vision around.

“Try to think about what you’re going to do to knock down the barriers,” Danner says. “Are those barriers within your control, or are you really going to have to rely on a third party? If you’ve got to go outside to rely on that third party, those opportunities probably go to the back end of this analysis. You keep going to the ones you can control or, in some ways, you can get control of.”

Secure commitment

Identifying opportunities and obstacles is crucial, but it’s moot if you stop there.

Even if you’ve already included input from others in your vision-setting process, the key to driving it through your organization is securing commitment.

“Once you’ve set the vision … you’ve got to bring it down to the level of what do I — each individual in the organization — what do I do and how do I fit into that long-term vision?” Danner says. “They’re going to have to be communicated with. They’re going to have to understand and share the vision. And if you can combine that vision with great people, you can have success.”

Instead of putting the emphasis on ever-important communication, Danner focuses on the receivers.

“It can’t be just communicating the vision,” he says. “It has to be getting people to understand the vision and why it’s important and what their role in it is. As the leader, you can only set this and communicate as much as you can. You cannot communicate to every employee. So to really drive the vision, you have to have people who are committed to that.”

Start by hiring employees who already buy in to the idea that each person is an important player helping the whole team succeed. Try to identify whether they’re looking out for themselves or their team by watching how they interact with others.

“They have to really value all employees and treat them with respect,” Danner says. “Are they people who want a big office? Then they probably aren’t respecting everybody else. Are they people that, as they come in the building, are holding the door open for the janitor? Well, now they’re respecting everybody. So I look for it in the little ways that people interact with each other when I’m looking for a new employee.”

You also want employees who see their role in the entire company’s success, rather than merely satisfying a job description.

“The whole organization has to pull together so you’ve got to hire people that aren’t just the old style of ‘I’ll tell you what to do and then you’ll know what to do,’” Danner says. “People have to understand they can’t create value if they’re just doing what they’re told to do. If they draw the line right there, then we won’t be successful.”

If employees can think beyond scripted responsibilities, that will translate into their ability to break the broader vision down into individual goals. That means you can focus on setting a high-level vision, long-term strategies and annual priorities for your company to focus on, then rely on employees to set narrower group and individual goals to support those.

Obviously, entrusting employees to set their own goals also requires that you hold them accountable. Danner has his employees meet with their managers at least every six months for progress updates and an opportunity to discuss what support, training and education they need to fit in with the year’s plan.

“It is about trying to put it in a small enough package that everybody can see for themselves how they fit in, so they’re driving that process more than we are telling them exactly, ‘Here’s what your role is,’” he says. “They understand the road map well enough that they can drive their role.”

Monitor commitment

If you’re trusting employees to break the vision down into their specific roles, their understanding of that vision is automatically being tested. But that doesn’t mean you can just assume everyone is on board. Constantly examine your employees’ commitment.

“The easiest sign you see is in employee turnover,” Danner says, adding that by the time they quit, something is very wrong. “That means they’re not buying in to the vision or that the company is not sharing the rewards of that vision with the employees.”

To try to catch commitment issues before it’s too late, Danner uses Gallup’s employee engagement surveys. They measure whether employees feel like they’re in sync with their company by asking questions like: Do you have a best friend at work? Do you understand what’s expected of you? Do you feel like your job’s important?

But you can’t sit in your office and wait for survey results or — even worse — wait for people to leave. The best way to measure whether employees are on board is to get out and talk to them. You reinforce the vision by reiterating it directly, and you give employees an opportunity to respond — at least, you should.

“First, you’ve got to smile a lot,” Danner says. “If you’re smiling then it sends the message that you’re willing to talk to somebody. As a leader, you have to pay attention to your demeanor because it’s sending a message all the time.

“Actually looking at the person when you talk to them is crucial. If you are fidgeting or looking at your BlackBerry and trying to hold a conversation, they’re not going to give you good feedback. If you are looking them in the eye and you are smiling at them and you respect them and their presence and their advice, then they’ll give you the feedback you need.”

Danner solicits and uses that feedback throughout the process, both to help him build the vision and to make sure employees stay in sync with it.

“It takes both great people and it takes the great people having a common platform to pull,” he says. “And you’re not going to achieve it without either.”

How to reach: Exterran Holdings Inc., (281) 836-7000 or www.exterran.com

Friday, 30 April 2010 20:00

From vision to fruition

When Charles Allen took the wheel of Crowe Horwath LLP in 2007, he didn’t need to change direction or make repairs. His company — still called Crowe Chizek and Co. LLC at the time — was a well-oiled machine, far from broken.

In fact, it was one of the largest regional accounting and consulting firms in the country. But that didn’t mean the new CEO couldn’t rev the engine.

“It wasn’t necessarily a business that needed to be fixed,” Allen says. “It was one that needed to be positioned to get to the next level.”

That much was obvious, at least to a man who had spent his entire career at the firm — plenty of time to recognize potential for additional growth. He had been watching the client base expand geographically across all 50 states and even internationally. He decided it was time to catch up.

“Many clients had operations that were located outside of our footprint,” Allen says. “What was happening was we were a regional firm but we were really doing business nationally from our regional locations. So we believed it was in the best interest of those clients and our people to expand nationally in order to manage the travel requirements and the stress on our people but to also better serve the clients in the localities that they were in.”

So he set out to reposition the regional Crowe Chizek as a national firm that would be known globally as Crowe Horwath after garnering the support of Horwath International, which became Crowe Horwath International.

The previous CEO focused on daily operations for the last nine months of his term while Allen took over big-picture items.

“I had a chance to sit and contemplate what needed to be done and then spent time with others, both inside and outside the firm, better understanding the profession, the market and where we needed to go before I started to put together the vision and the priorities,” Allen says.

During the gradual takeover, he heard clients talking about their need for national support and employees about the national travels they took to accommodate. That led him to the vision of catapulting the firm from regional to national status.

But to vet that vision and drive the change through the company, he’d need to engage all of the other stakeholders.

“What we’re trying to do is to move an organization of 2,500 people — and an international network that’s even much broader than that — in one direction,” Allen says. “It’s taking investments and taking risks to support this effort … to really invest in our future.”

Invite various perspectives

Allen’s first action was calling together a task force to vet his vision and determine how it would play out across the company. To do that, he pulled from research he’d already done.

When you start listening to your company — whether it’s to familiarize yourself as an incoming leader or just to keep a continual watch — you’re not only learning how units operate and where they’re headed, but you also identify who’s leading the pack.

“The first thing I did was to better understand the business units outside of those that I [had been] running. I did spend a significant amount of time with executives in their individual businesses to understand their strategy models and their individual plans within those business units,” Allen says. “I also wanted to understand their individual commitments to the firm, how long they intended to be engaged in the role they were in, the energy levels they had, their desire to play on my team.”

Those conversations pointed him in the direction employees saw for the firm and revealed who would take it there.

Specifically, look for energetic people with a commanding knowledge of their business unit. Those are the thought leaders who will bring the best input to the collaboration.

“It’s a process of gathering individual data points, marketplace perceptions, understanding the skill sets of the people,” Allen says.

Make sure you’re looking in all corners of the business — and beyond. Allen’s task force included people from various business units, the chief people officer, chief operating officer, previous CEO and a retired partner from a Big Four auditing firm.

“It was a diverse group, and that was part of the intention,” Allen says. “It was made up of those in a leadership position in the firm, past leadership, leadership from an outside firm to give us an outside perspective with a business knowledge.”

As tempting as it might be, you should pass up the seat at the head of the table. Don’t just hand it to one of your executives, either, because with an executive-level title comes a certain amount of influence. If you want your team to be a conglomeration of best ideas from various perspectives rather than a top-down initiative, you need to give control to someone further down the totem pole.

“I asked one of our young partners to lead the strategic task force, not one of the senior management, because he wouldn’t overinfluence others during the process,” Allen says. “He would be the one that was gaining and building consensus, not leading the thinking going into it.

“I could have led that strategic task force and I could have driven it the way that I wanted to drive it, but that would have not necessarily had the buy-in from others on that committee. And quite frankly, I’m not sure we would have gotten all the thoughts out that we needed to get out to get where we needed to go.”

To help facilitate open idea-sharing, communicate your expectations at the start.

“We set the stage upfront that everyone needed to check their hat at the door, that people needed to leave their personal priorities outside of the discussion,” he says. “We were working to develop a strategy for the firm, not for individual units or individual people. The only way you could get to the right decision was to make sure that people were open and felt freely about communicating and disagreeing.”

Keeping the focus on the common goal means keeping it fresh in everyone’s minds Your vision should be part of each discussion.

“Keep it in front of them at the beginning of every meeting,” says Allen, whose team met monthly. “Every session, go back to the vision. Restate the vision and work off of the key elements of the vision.”

But the vision should be more than a mantra you repeat; it should be the foundation of your agenda.

“We took the key elements of the vision and broke them down and then assigned folks from the task force to develop the strategic plan for those elements,” Allen says.

Then, as people bring strategies back to the table, continue to weigh them against the vision.

“There was a point where we could have gotten off track,” Allen says. “There was an issue that came up that was more tactical than it was strategic. Pretty quickly, we had a discussion as to whether or not if we went down that path it would take us off of the main objective.”

Roll it out

Allen’s task force got on board with his vision to flesh out the strategies that would achieve it. That was the confidence he needed to start rolling it out across the rest of the company. But bringing everyone on board took more effort than he expected.

“I underestimated the amount of time it was going to take to communicate and the effort and preparation that goes into communicating,” he says.

>It took a tiered approach, starting with the firm’s executive committee — which is essentially their board — then the partners, then the board and CEOs of the Horwath International network. He secured buy-in from each group before moving on to the next, and he secured buy-in from all of them before ultimately cascading the vision down to his employees.

At each stop, pull out the elements of the vision that are most relevant to each group.

With the international network, Allen’s focus was on rebranding to Crowe Horwath and Crowe Horwath International to build global recognition. Inside the organization, it was emphasizing how the new vision would create development and leadership opportunities.

But you may not always know what issues top each audience’s concerns, so it’s especially important to make your message two-way by inviting input.

Allen gave response opportunities to the partners and the international network immediately during his presentations. Laptops were set up on tables so people could send in comments as he talked. A group of leaders at one table sorted through the comments and kept the most popular topics flowing to Allen so he could address them right away.

“It was like having 300 people all yelling at you at the same time,” Allen says.

That feedback will help you flesh out your message as you go along by adding their questions to your future presentations.

“It wasn’t only getting the feedback but it was responding to people’s questions, helping them understand and starting to build consensus,” Allen says. “We could start to see where the concerns were [and] address the concerns so that they better understand why we were heading in the direction we were headed.”

But by welcoming input — especially when it’s anonymous — you invite reinforcement as well as criticism. Don’t go in expecting everyone to jump on board right away.

“You will never get 100 percent consensus,” Allen says. “If we get the majority of the people on board with where we’re headed, that’s what we were trying to accomplish. You gain the majority and then what happens is, as you move forward, those outliers come on board.

“My response has always been, ‘I understand your perspective and I appreciate your perspective, but this is where we’re headed.’ Understanding their perspective and respecting that may not change the direction we’re on but may help that individual continue to be successful. You can’t fit everybody’s specific need and concern.”

That broad consensus-building process is preparation for the message you give the people who will carry out the vision — your employees. Only after Allen perfected his vision through the input and support of those other groups did he take it back to his employees.

He worked with his communication team to put the finished version of the vision into a brochure that explained verbally and visually where he was taking the firm. Thanks to feedback from the executive committee and international network, he was able to get a clearer picture of the vision and condense it into a succinct statement that would stick with employees.

Then he traveled to each office with his chief operating officer so he could present that vision and respond to concerns personally.

“It was a process of consensus-building starting at the very top of the organization, taking it all the way down to those in the individual offices,” he says.

Allen rallied his troops to achieve a revenue milestone of $507 million in 2008. Under his leadership, Crowe has opened offices in Los Angeles, New York, Tampa, Atlanta, Dallas and Philadelphia, bringing the total number to 25 U.S. locations. The firm continues to be named a best place to work, making seven lists while Allen has been in charge. According to an annual independent survey, he also led Crowe to a firm-high client satisfaction rating 26 percent higher than its major competitors.

Now, keeping employees in the loop is just as important as it was when he first introduced the vision.

“People need to know what you’re doing and when you’re going to do it and why you’re doing it,” says Allen, who keeps employees updated on the vision with monthly scorecards, periodic webcasts, annual visits to each office, the company intranet and a weekly newswire. “We are tracking our progress and trying to be transparent in regards to that. It also gets everyone involved in achieving the overall result.

“People ask me what’s the biggest challenge I’ve had in the taking over of the firm. I learned very quickly that communication to build consensus was critical to achieving the vision, the strategy and the initiatives that we put forth. Don’t underestimate the skills and time and effort it takes to accomplish that. Communicate, because that’s key to achieving what you want to try to achieve.”

How to reach: Crowe Horwath LLP, (866) 662-7693 or www.crowehorwath.com

Ted Werth got frustrated trying to solve his father’s

technology problems in Washington, D.C., over the phone from Boston. So he

started PlumChoice Online PC Services Inc. in 2001 to provide 24-7 remote

repair and support for digital devices.

Early on, Werth interacted with most of the customers. But as

the company grew, his 650 employees began to handle most of the direct contact.

“One of the biggest issues with companies as they grow is that

the people who are making decisions get further and further separated from the

actual customer,” says Werth, chairman and CEO. “Once you get removed from the

customers … it’s become more of a theoretical process than a real process of

how you work with customers.”

To maintain that connection with customers, consistently

expose yourself to them and their reactions to your service.

Werth does this by monitoring calls between employees and

customers at least weekly — sometimes even participating.

Not only does that give you insight into customers’ issues,

but it also lets you monitor how employees are providing solutions.

“You’re looking for patience, how they communicate,

effectiveness of the service that’s being delivered, … time that it takes to

solve problems,” Werth says. “And then, of course, we look at the customer

surveys: How satisfied is the customer with the result of the work that was

done, and why?”

Those surveys go out to every customer after each service,

usually as an online questionnaire that pops up after the tech terminates the

remote connection. It asks how satisfied the customer is on a scale of positive

to negative, how likely the customer is to recommend the service on a scale of

0 to 10, and other open-ended questions.

Those ratings come back to the respective technicians, so

employees know how their customer satisfaction and net promoter grades compare

to the standard.

“You not only assist people through training, but you can also

monitor adherence through the tools,” Werth says. “It could be as high-level as

you [mandate] a certain customer sat as a business. It could be that we develop

the training and processes so that people understand what it takes to provide

excellent customer sat. And then we monitor 100 percent of what they do; we can

use those to build add-on training.”

But even employees who don’t deal directly with customers

should know the recipe for their satisfaction.

“It takes a fair amount of work to get someone to understand

the customer as well as they need to to do their job in a way that affects the

customer in a positive way,” Werth says. “If we don’t take the time to have

them use our service, listen to the service, talk to the end customer, they’re

really not clear on what they’re [doing].

“Get them a chance to sit down next to an agent who’s

providing service [and] listen in to the calls so they start to appreciate what

customers want. It’s really getting a chance to listen to the customers’

reactions that gives the context for understanding why we’re in business, what

we’re doing as a business.”

By hearing how customers respond to the service they receive —

and making sure employees do the same — Werth keeps PlumChoice tuned to

changing needs.

“It’s all about the customer,” he says. “If you’re not

customer-focused, you absolutely will be losing touch with how it makes you successful.”

 

How to reach: PlumChoice Online PC Services Inc., (866) 811-3321 or www.plumchoice.com

When your kids bring home papers from school, you proudly display them on the fridge. That’s the idea at Hobsons EMT, where Managing Director Sasha Peterson sends letters to high-achieving employees.

As the company grows, he keeps it personal with his 180 employees.

“The key is trying to have as close a pulse as you can, which I’ll readily admit will become harder and harder as we get bigger,” Peterson says. “That’s not easy, but it’s possible to make sure you talk to everybody during the course of the year.”

In 2007, Peterson took over the Enrollment Management Technology division, which accounts for about $45 million of Hobsons’ revenue by providing customized database management packages to help universities manage retention. He’s already had to adapt to the growth.

“If people believe in what you’re trying to do more broadly, then hopefully — as long as they know why you’re making those decisions along the way — change shouldn’t be a scary thing,” he says.

Smart Business spoke to Peterson about staying in touch with your employees.

Communicate goals. The critical job of any leader is to convey broad directionality and make sure that the themes that you’re trying to focus on are understood very thoroughly and deeply by everybody that’s working for you. It’s a constant refinement. It’s trying to distill a very broad vision into a couple of immediately actionable goals.

As far as how I distill that, the biggest challenge I’ve given myself is to be as transparent as possible. On a weekly basis, whatever office I’m in, I have a small lunch with people. I open up with just five minutes of stuff that I’m thinking about and working on and then the rest of it is pretty open. Sometimes it’s work-related; sometimes it’s very personal — but either way it’s a win. If it’s work related, it’s a lot easier to ask questions in a small group. And if it’s personal, it just helps build that rapport where people will feel more comfortable to come ask you questions along the way.

On a monthly basis, I do a companywide lunch meeting we’ve creatively named Snacking with Sasha because on the West Coast it’s breakfast. Continue to have that rolling dialogue with people, you know, ‘Here’s what we’re hoping to do next month,’ and then, ‘Here’s how we did on that.’ Continually keep people updated and continually trickle down that information.

Then on a semiannual basis I have a companywide in-person meeting with everybody that outlines the broader objectives. So the monthly ones are pretty operational; the semiannual ones are a little bit more aspirational. Tons of communication and as much transparency as possible are the key drivers of making sure that people are aligned to the same goals.

Plan meetings. I started doing an annual calendar that maps out where I need to be for meetings or conferences or important client visits and then where I want to be, which is a reasonably equal distribution across the offices. Just getting that on paper and seeing it in front of me makes me accountable to myself to say, ‘I really don’t feel like going to California next week, but I said that I would and so I’m going to go.’

The other thing is making vocal commitments about things I’m going to do. We do these semiannual meetings, and announcing at the beginning of the year when they’re going to happen, makes them happen. So I self-create some pressure to make sure that things will happen.

Make yourself accessible. It’s just being up and available. I spend most of my day just walking around, talking to people, trying to understand what they’re working on and making sure that if they know that I know what they’re working on, that it’s important. Make a very conscious effort to spend time physically in each office — and not just with the managers.

I’m very conscious about who is there, who I’ve talked to. Most of it I can remember, but I do make little notes from time to time about significant events in their lives — if they’re getting married, if they’ve got children.

As soon as somebody thinks of you as president of the division, then suddenly there’s this organizational chart that makes it really difficult for them to feel like they can come talk to you. When they know that I’m Sasha and I’ve got two daughters and I’ve got the same challenges they do in their life, that makes them a lot more likely to do it. I’ve tried to make sure that people know me not just as their boss but as a person, and that is enough to make them come talk to me.

Listen to responses. If an employee believes that they matter to the organization and that the organization is sincerely focused on empowering them with tools that they need to do their job more efficiently, that’s a pretty big driver and motivator, as well. But that also translates back into the communication, because if it’s just me talking my head off, then what good is that? It’s got to be a feedback loop so that they can feel like they can come and talk to me or their manager about ideas that they’ve got.

If you can create environments in which people can sincerely give you ideas and they see those ideas implemented within a month, that’s pretty powerful stuff.

One of the ideas that I’m introducing this year is asking people to have a hassle log. What’s making your life harder? What could I do to make it easier for you to do your job better? I said I want a quarterly list from people beginning in December. I told them to call me personally, e-mail me personally — it’s not anideaforyou@hobsons.com. They know I’m going to get them.

One of them was, ‘I don’t know everybody anymore. We have new people starting all the time. How about name plates to put on our desks?’ That’s a really good idea. We’ll have that in a couple of weeks.

If we can say, ‘Hey, Brian had this idea; it’s done,’ that’s a really quick and easy win. When people see those quick wins happening, then they’re going to say, ‘Well, this isn’t just lip service.’

How to reach: Hobsons EMT, (800) 927-8439 or www.hobsons.com

Friday, 26 March 2010 20:00

Second opinions

Pamela Davis knows a thing or two about taking risks to expand her company.

She knows you can’t be timid if you’re going to become the first hospital in Illinois to build all private patient rooms. You can’t be timid if you’re going to allow open visiting hours when everyone else sets a strict block of time. And you certainly can’t be timid when you call the FBI to blow the whistle on corruption that separates you from growth.

By 2003, Davis, as president and CEO, had already led Edward Hospital & Health Services through significant growth by investing in renovations, expansions, cardiovascular and cancer centers, two health and fitness centers, and two off-campus medical facilities.

But when she sought capital approval from the Illinois Health Facilities Planning Board for a new medical office building, she hit a roadblock. An investment banker called advising her to use a certain contractor if she wanted approval. She brushed it off, only to have her proposal turned down. Then, the contractor approached her directly, urging her to use his firm.

Davis reported the activity to the FBI, who wired her home and office and, in some cases, her person. Her tapes contributed to a snowball of “pay-to-play” convictions that ultimately led to the indictment of former Governor Rod Blagojevich.

Now, Davis is applying the lessons learned back into her business — the lesson being: It takes risk to expand a company.

“The combination of calculated risk and appropriate planning has resulted in huge business success,” Davis says.

But it isn’t a solo effort that amped Edward from serving less than 37,000 patients in 1987, right before Davis stepped in, to more than 440,000 in 2007 or revved the hospital to 2008 net patient revenue of $459.8 million. It’s really a cultural approach, where Davis starts by building an environment where her employees can contribute input and information so she can analyze whether risk is appropriate. That requires getting employees involved and making herself approachable.

“You’re never going to have perfect information or the ability to say that something is black and white in this world anymore,” she says. “So one of the best skills for a leader is to be able to analyze what information you have. You have to make some predictions about the future and then based on the combination of those two, you have to be willing then to make a decision, and that means taking risk.

“Risk obviously then opens you up for success or failure. But the responsibility a leader has to the organization is that you must take appropriate risk in order to succeed and have innovation.”

Elicit input

Many of the risks that boosted Edward ventured into uncharted territories. So it wasn’t a matter of seeing what others were doing and trying to adapt it; it was a matter of doing things differently.

You can’t really prescribe that kind of thinking or train people to stretch to new heights, but you can encourage it.

“The easiest decisions are those that you can base on statistics and on what others are doing,” Davis says. “I find it much more fun to look at the statistics if they’re available but not so much at what others are doing if they’re all doing it the same. That’s where creativity comes into play.

“I don’t know if you can teach creativity or not, and I don’t know if you can make people comfortable taking risks if they’re not a risk taker. What you can do is set the environment for those natural qualities to be utilized. You set an environment where you’re able to use those things.”

The first step is finding employees who are innately comfortable pushing boundaries and innovating. Davis uses behavioral interviewing, or questioning candidates specifically about the characteristics she wants in a position.

“We actually describe the type of behaviors that we want here and try and interview for those, asking people are they open-minded, describe a situation that they were involved in making change, describe some way in which you suggested an innovation and how did you do that,” she says.

Once you’ve discovered naturally innovative people, the next step is establishing an environment where they can shine.

If you want your employees to contribute ideas and get involved in your decision-making process, you have to provide opportunities. A good place to start, especially if you have 4,100 employees like Davis, is with the employees who will be most affected by the decision.

“We involve employees in making decisions and getting their input, and we do that at the unit level,” she says. “If we’re going to do a renovation, we will have the individuals who will be working in that area work actively with us and the architect on how that should be designed.”

Davis offers opportunities for employees to get involved on rotating committees either within their units or in other areas, such as business development or safety. She also organizes focus groups where, along with potential patients, previous patients and their families, employees can respond to ideas she’s considering. But it’s not all abstract talk, especially if the changes will be tangible. For example, she’ll set up mock rooms for staff and patients to walk through, see and feel the changes and respond to how those might affect them.

The key to keeping employees involved is reinforcing their ideas. When you receive input, recognize the employee who gave it with a simple thank you — whether or not the idea will be rolled out.

“That’s where you give positive reinforcement,” Davis says. “If they’re not implemented, that’s not a failure. We show tremendous appreciation and support for people who are willing to come forward with ideas and so people feel good about coming up with ideas. They know not everything can be implemented, and that doesn’t even mean it’s a bad idea, [but] we just have limited resources and time. But it’s fun for people to be a part of the culture and contribute their ideas.”

Fortunately, you can recognize ideas without acting on all of them. Through a Good Saves Program, all of Davis’ employees’ cash-saving ideas are posted online so they can see their ideas whether they are implemented or not.

However you decide to garner input, the underlying lesson is that you give employees a voice — and listen to it.

“You can take a very creative and innovative person in an environment where they would not be able to use those skills and that would be a shame,” Davis says. “The environment here is that we want people to think. We want people to have suggestions and new ideas and to then work within a process so those things that are worthwhile can be implemented.”

Be approachable

It’s no use asking for input if you’ve built yourself up on an executive pedestal that employees have to scale before connecting with you.

Davis strives to keep herself approachable so employees can saunter up to her in the cafeteria for a quick conversation. But approachability isn’t just about keeping a first-name basis with everyone. In some cases, it may mean recognizing that not everyone will know you by name, so you must initiate by reaching out to everyone.

“First of all, I don’t always wear my name tag,?

D; she says. “So I talk to people who may or may not even know that I’m the president.”

After you’ve set the ball in motion, you can rely on word-of-mouth, at least to some degree. But back up what employees say by directly reinforcing how you want them to interact with you.

“I think that stories are told between employees, that she’s easy to talk to or she’s open,” Davis says. “When people see that I’m in the cafeteria and somebody says, ‘Hey Pam,’ that sort of sets the stage that it’s OK for other people to do that, as well. When I make rounds, I say to people, ‘Look, please say hello to me when you see me,’ so it sort of just becomes the norm.”

In order to make that happen, you have to give employees the chance to see you out and about. You’re not going to seem approachable, or even accessible, if you sit behind closed doors all day.

Like the rest of her managers, Davis conducts rounds where she walks around various departments and chats with employees. She follows a template for questions but makes them open-ended to invite discussion and input. She’ll ask, for example, “What things are working well and why? What changes would help you do your job more effectively?”

Davis also offers opportunities for employees to have intimate meetings with her. Employees can sign up for Coffee with the President, and then 10 to 12 names are randomly drawn to meet with her. In those settings, the key to encouraging input is creating an open environment. That boils down to two words for Davis: open communication.

“[It’s] allowing people to ask questions and have you respond,” she says. “You just have to set that style of open, two-way communication.”

At the onset of a meeting, explain the kind of communication you expect, as Davis does for her sessions of Coffee with the President.

“I tell everyone when they come that there are no rules in the forum except that I’d like to have everyone talk,” she says. “I tell them that what we’re looking for are common themes that might make a difference for everyone. For example, parking would come up.

“So then we would follow up with an e-mail to all employees saying at one of the Coffees with the President there was confusion over parking, and here’s what we have now done to rectify that. Once people see that there’s some action and that there’s no punishment, there is no problem with having people come prepared with ideas and information that they want to share.”

That follow-up piece is crucial. When employees hear directly from you — whether in face-to-face meetings or through weekly e-mails — what becomes of their ideas and how you used their input to make your decision, it reinforces the fact that you are listening.

Talking about employees’ ideas makes you seem accessible for future ideas — especially when you share ideas that didn’t quite cut it in reality. Employees will admire the humility it takes to share failures as well as successes.

“You have to be able to be wrong and acknowledge that,” Davis says. “If you’re never wrong, you’re probably not making enough decisions. In fact, the statistics do support that you have to do a lot of new things in order to have one of them succeed. And that requires some humility.

“We tell stories about the successes and things that went wrong. When there’s no punishment having tried something and having it fail, that really sets the stage for taking appropriate risk.”

How to reach: Edward Hospital & Health Services, (630) 527-3000 or www.edward.org

Thomas Cassady’s salesmen don’t need to be loved. They just want some respect.

“The old stereotype of an insurance salesman (that he is) a pat-on-your-back buddy is an anachronism,” says the president and CEO of USI Midwest Cincinnati. “They look for your respect, and they don’t need to be your buddy.”

But in order for any of Cassady’s 105 employees to earn his respect, they have to build up some trust. That requires a constant flow of feedback that goes both ways: top-down as well as bottom-up.

“This is an industry built on trust,” Cassady says. “Are they going to fool us? Shame on us if they do.”

With that sense of accountability, Cassady has spurred revenue from $7 million in 1999 — when the company was created through the merger of his agency with another — to $24.5 million in 2008.

Smart Business spoke with Cassady about building trust and accountability with your employees by offering and receiving feedback.

Offer feedback. The most important thing a leader can do is have the trust of the people who are following. It is sort of like Stephen Covey says: You have to make deposits in the credibility accounts of the people that you rely on. You make those deposits by giving them … honest feedback, whether or not it’s all positive. Good employees want fair, candid feedback. Every employee is looking for specific ways on how they can improve, especially if you can give it to them in a timely fashion — not at the end-of-the-year performance review, even though those are important. A leader that provides instant feedback is much more credible.

We provide a traditional performance review where the supervisor provides written feedback to the employee. In that, we have a forced calibration, which is based on not only what the employee did but how the employee did it and the relative contribution of that job to the overall success of the company.

We have five categories — far surpassed, surpassed, fully achieved, partially achieved and achieved far less. We rank what was achieved as well as how they did it. We don’t want to put somebody in the very top ranking that achieved great things but was a terrorist doing it, so they have to play well in the sandbox as well as achieve superior results.

It’s really whether or not they’re consistent with our company philosophy of how we want people to represent our brand, how they work not just internally but with our carriers and our customers. That would be judged with things like: Do they tell the truth, are they disciplined, do they help others, are they a good inventor, [and] are they a good model for others to follow? They are subjective, and the supervisor probably has the best and the most credibility in those discussions. It’s not what (you are) going to do; it’s what you actually do. It’s just by observing their actions that we are able to do that.

The third — and this is sometimes the most controversial area — is their relative contribution to the overall success of the company. The best way that we have found to try to define relative contribution is how difficult is it for us to go out and replace that person? If it’s relatively easy, then the relative contribution is weaker. If it’s fairly unique and we don’t believe that the person’s skills can be found in the marketplace very well, if at all, then the relative contribution increases dramatically.

The management team and the supervisors get together in a room and talk about everyone and have that open debate on how to rank people.

Don’t evaluate alone. The second part is the internal customer survey in which direct reports provide feedback to a supervisor. Even if you don’t have any direct reports, you do have internal customers. A receptionist, for example, has no direct reports but everybody is her internal customer.

My direct reports give me feedback on my skills, habits, knowledge, but most importantly, attitude. So it’s a bottom-up kind of performance survey.

We use a software program so people are really doing it anonymously. Some people sign their names to them, but it’s really a way in which they can say whatever they want. They grade the customer on a scale of 1 to 10. If you’re going to grade them below a 6, you have to make a comment, a suggestion for improvement. Then that report becomes aggregated and then goes to the supervisor and the supervisor shares that with the employee.

Start with the right slate. We look for people who represent the same kind of values that the company has, and the two most important values the company has are integrity and our sense of accountability. In our business, we sell a bunch of promises on a piece of paper, so people need to have absolute trust that what you say is true.

When we recruit, we are looking for people who want to be held accountable, that it’s OK to take feedback. If a salesman comes into our office and says, ‘You don’t have to worry about me. I’ll just do my own thing, and I’ll give you the results at the end of the year,’ that doesn’t work for us.

If you tell them about it upfront and people say, ‘Well, no, I’m superstitious. I don’t like to talk about an account that I’m working on,’ that just doesn’t work for us.

You really get paid for doing the right things when no one’s watching. So I really have no idea what our salesmen are doing 95 percent of the time because they’re out doing their thing.

We want to know what they’re doing — particularly in sales, the front line out with the customers, which is very important in how we promote and protect our brand. Every appointment is documented and discussed at a Monday morning sales meeting, and we do track results. We know who they’re meeting with.

Nothing happens unless there’s some activity. And if we see people with lots of activity but very poor results, then we know that there’s a problem with either skills or knowledge.

How to reach: USI Midwest Cincinnati, (513) 852-6300 or cincinnati.usi.biz

Tuesday, 26 January 2010 19:00

Living values

They say you can’t judge a book by its cover, but Mark S. Heaney thinks his company’s Web site is a pretty keen indicator of what you’ll find inside Addus HomeCare Corp.

The first thing you’ll notice on the home page is a collage of photos scrolling across the top of the screen — some of the employees who provide home care services for the company, along with a few of their clients. Above them, a banner proclaims their beliefs and values, from communicating to caring to celebrating everyday heroes.

You’d think you were watching a slideshow from a small, close-knit office where everyone shares a single coffee pot.

Not quite.

Addus is far from compact, with more than 12,000 employees scattered across 120 offices in 16 states. But that stretched geography doesn’t mean Heaney has to sacrifice the feeling of closeness.

“Our approach to every employee is that we want you to feel connected to this organization, even though you’re not here every day,” says Heaney, who was named chairman of the board in June 2009 and has served as president and CEO since May 2008.

He does that, first, by referring to headquarters as the support center rather than the corporate office. But he really keeps employees connected by reinforcing a consistent culture founded on the beliefs and values that headline the Web page.

Heaney could rely on policies, procedures and centralized processes to do that, and does when he can. But he also faces another challenge — because Addus provides Medicaid Personal Care Programs, each one is subject to state-regulated requirements, from the name of the program to the qualifications of the provider.

So Heaney isn’t after absolute conformity when it comes to all of the details. Instead, he keeps the employees aligned on culture. Already, he’s grown Addus from 2007 revenue of $195 million to 2008 revenue of $236 million.

“So what becomes important is: How can you maximize your efficiency and effectiveness — and maximize your margin — while you operate in all these different states under different sets of rules, which affect your operation?” he says.

Here’s how he does it.

Establish a consistent culture

Heaney starts by reinforcing a single culture throughout the company. That would be a lot easier if every employee came into the office — or any office at all — on a regular basis. But because many work in the homes of seniors and rarely report to an office, Heaney can’t rely on holding meetings or hanging posters.

“How do you teach a Marine to be Marine?” he asks. “You … create an environment in which the values of the Marines are consistently reinforced. That’s what we do — we create an environment where those beliefs and values are consistently reinforced and talked about.”

Whether you’re fostering military men or Medicaid providers, the first step to creating the environment you want is articulating what that is. Start as soon as employees are hired.

During Addus’s two-week orientation program, new hires are assigned to coaches who make sure they each go through the same steps. New employees must schedule meetings with every executive in the company, at least by phone. Each executive explains his or her job, how it fits into the company and how it affects the new employee. To show they’ve completed each step, employees must collect signatures from the executives they meet. Later, their files are audited to verify they’ve received all of the necessary training.

But how do you explain something as ethereal as a corporate culture?

“If you want to know what your company is, where it’s going, it’s best to know where it’s been,” Heaney says. “To communicate the culture of the organization, you really want to spend time on the history of the organization and the different mileposts that the company experienced along the way.”

Explaining how and why your culture was developed will help employees understand it better than if you just hurled them into it.

Talking about the past should lead into your vision for the future.

“It’s important to talk about where the company is going,” Heaney says. “‘This is what we want to be; this is why we want to be it.’”

But you wouldn’t drop your Marines on the battlefield with just an orientation handbook. So continue reinforcing your beliefs and values to keep employees connected to the culture after their first couple of weeks.

Sometimes, that involves simply pointing out examples of your culture in action.

“You literally will tell somebody that we’re doing this because it’s consistent with our beliefs and values,” Heaney says.

So if one of your values is personal growth and development, you should support that with a training program or a tuition reimbursement system — but also explain the correlation.

One of the most obvious examples of how Addus reinforces its culture through communication is the company’s Web site. The beliefs and values get first glance at the top of the page, and an additional link gives more in-depth descriptions of each one.

The home page also showcases a scrolling news box that alternates company updates and industry statistics with accomplishments of employees and their children — from a 40th wedding anniversary to the birth of a grandson, a son’s football scholarship to the completion of a sign language course.

In addition to the online updates, employees get newsletters featuring people’s names and accomplishments. They also attend regular training sessions where leaders repeat the themes of the organization.

Classes in the Addus Learning Program are posted to the company calendar so everyone — from the receptionist to a division vice president — has a chance to accept the invitation until the class fills up. Everyone must attend a certain number of classes per year.

“The content for Addus Learning ranges from really simple things: training on your telephone, training on spreadsheets, on new programs or upgraded training on systems that we’re already using,” Heaney says. “But then it can be on industry trends, on customer service, work safety.”

Regardless of the topic, there’s always an opportunity to emphasize the bigger picture.

“There are two important purposes for the Addus Learning Program,” he says. “One is to develop personnel. But the second — and, frankly, maybe the more important thing — is to create a vehicle for communicating the culture and values of the organization.”

Enforce your expectations

You can repeat your culture until you’re blue in the face, but compliance really starts when you enforce the environment you want.

“It’s making sure that things that you do and the things that you make people do are all consistent with your beliefs and values,” Heaney says. “It’s not like, ‘OK, it’s policing values time.’ You should have policies and procedures — and approaches to policies and procedures — that are consistent with your beliefs and values.”

For him, that means establishing a clear process to deal with employees whose actions don’t line up with your values. Heaney says identifying those cases is easier than it seem s because falling short of a value usually affects other areas of performance. For example, Addus values dependability — but failing to return calls or to show up at the office will send up obvious red flags other than value-related ones.

“If an employee is consistently late for work [or] consistently missing work, they’re consistently generating complaints from the consumer, these are things you can quantify and you can correlate them to a norm,” Heaney says. “We have metrics that we can use to measure their performance, and it’s compared to the expectation.”

In addition to performance metrics, you should also keep an eye on the nuances of how employees act.

“You can listen to people and how they relate to others,” Heaney says. “We treat people with respect; that’s one of our beliefs and values. I can measure that because I can tell you when I’m hearing respectful language and when I’m not.

“So there’s a combination of actual metrics and the more consistent measurements you do when you’re working with somebody — tone, response time, those kinds of things,” he says.

Though the way you identify cultural compliance at your company may differ, the important thing is that you have a structured system to correct it.

“An employee has to be told that they’re not conforming,” Heaney says. “And then continuing not to reform, it has to be written that they’re not conforming. They have to be given a pathway for getting into compliance, and then if it continues, there can be either a final warning prior to discipline or a termination.”

Although it seems like a scary process for employees to go through, the mere existence of such a detailed disciplinary system should be reassuring.

“You’re saying, ‘I’m confident that if I ever get myself off track, there’s a system for me where I’ll be certain that I know I’m off track and I have the ability to remedy,’” he says. “It also works to reassure staff that this is a place where there are no surprises with regard to my performance or my employment.”

Allow room for autonomy

As important as it is to maintain consistency across an organization, you have to remind yourself that you’re not running a militaristic boot camp. Once you align everyone under the framework of your culture, you have to allow room for regional operations to flesh out what that means at their office.

Heaney wants to see things hanging on office walls that reflect the local personality — whether it’s employee of the month plaques or paraphernalia rooting on the local baseball team.

“Uniformity is actually something we’re not looking for,” Heaney says. “We want uniformity of the basic message, but communities are all different and we want our leaders to reflect their community. We don’t need them to be automatons. They can do it their way.”

For example, agency directors at Addus are required to create outreach programs to educate people in their communities about available government-funded elder care programs. The directors receive thorough training — and retraining, through Addus Learning — on what their outreach messages should entail. Their manual identifies outreach targets and which messages would appeal to each one — for example, it would note that employers want to hear that elder care programs can increase productivity for employees who care for parents.

But the key is that employees aren’t given a script on what exactly to say or how exactly to design their outreach programs.

“There’s uniformity in the training and messaging, but as to how they develop their business development plan and their execution of it, we don’t manage that,” Heaney says. “We look for people to play to their strengths.”

To make sure employees do stay within your corporate framework when you offer autonomy, it’s smart to have checks and balances in place.

A team setting can provide checks during a project, instead of waiting for an end review. For example, agency directors work together with salespeople and the regional director to create their outreach programs. That way, if one employee starts to veer off path, the multiple perspectives of others can bring him or her back on board.

But you should also have executives monitor their direct reports consistently. Regional directors check in with agency directors weekly and keep track of their numbers daily.

Heaney also relies on systems to keep employees in line, at least for back-office issues. He recommends centralizing all of the administrative transactions you can.

“It really comes down to a uniform, broad-based operating system,” he says. “Following the system requires you can’t wing it. It’s going to ask you, ‘What the hell are you doing?’ Everybody’s following the same procedures so you have predictability.

“It allows us to keep overhead down. It allows us to keep manpower focused on customer service and business development as opposed to transactional production.”

Finding a balanced level of consistency is really about distinguishing where you expect rigidity and where you allow creativity. Clear communication and reinforcement make for a smooth operation.

“There’s a high degree of confidence that the procedures are being adhered to,” Heaney says. “You don’t allow the sites to follow nonstandard procedure because otherwise you have chaos. So we’re rather rigid in the back office but creative in the front office.”

How to reach: Addus HomeCare Corp., (847) 303-5300 or www.addus.com

Saturday, 26 December 2009 19:00

Laura Ellsworth inspires employees

Laura E. Ellsworth’s goal as a leader is to move beyond a certain movie moment.

“There’s this great scene in ‘Casablanca’ where Ilsa leans against Rick’s shoulder and she says, ‘I’m so tired. You’ll have to think for both of us now,’” says Ellsworth, the partner-in-charge of Jones Day’s Pittsburgh office.

Ellsworth could play Rick’s role and make decisions for her 115 employees, but her ultimate goal is to wean them off of her support by encouraging them to think independently.

Smart Business spoke with Ellsworth about inspiring your employees to take ownership of their ideas.

Q. How do you create an idea-welcoming environment?

Avoid falling into the trap that you know more than everybody around you. If you assume that you know less, you’ll learn more.

I always talk about obliterating the inner sanctum. When there is a view that there’s an in crowd or some inner sanctum, people don’t take it onto themselves to be part of the overall operation because they think somebody else is doing the planning and thinking for them. If it is clear that there is just a group enterprise and we are all in this together, you tend to get a lot more engagement from a lot more levels.

Some ways that you can do that can be very personal. Have people over to your house for dinner. Do things outside the office that aren’t necessarily related to office things. You are better off if you connect on many different levels.

Q. How do you encourage employees to step out of their comfort zone?

I’ll say, ‘I would love to see you do X,’ but I’m also very candid with people about what I see as the pros and cons of different things that they might undertake. And I hope that they are also reciprocally candid with me, so if they say, ‘That’s just not something that I want to invest my time in,’ they understand why I thought it would be a good idea, I understand why they don’t think it would be a good idea, and we both move on.

If they repeatedly refuse to engage, you become concerned that it’s the underlying investment of time or commitment to the enterprise. Then you have to deal with it differently.

Giving people an actual opportunity to assume the responsibility and make a project their own is critical. Rather than directing someone to go do a task, explain to them the outcome that you want at the far end and then let them sort out for themselves how best to get there.

Q. How do you respond to ideas?

You look at that person and you say, ‘That’s terrific. I never would have thought of that. I really admire you for thinking of that. What can I do to help you?’

If it’s a bad idea, I typically don’t say, ‘What a bad idea.’ I’ll use it as an indication of a direction that the person wants to go. The next question for me is: What don’t I like about what they’re suggesting? What alternatives can I suggest to them that would get them on a path that makes us both happy? Think about how to tweak the suggestion or how to amend the plan in a way that might be more productive.

If it’s something that I don’t think will work, I try to explain to them why I think it won’t work. I’ll focus on the parts of it that I think are good and positive. I’ll be very forthright about where I see problems with it. I will solicit their input as to how to solve problems that I have with it, so it’s very much a conversation.

A dictatorial yes or no is generally not all that helpful for anybody.

Q. How do you support employees’ ideas?

I make available my resources and the resources of the firm to support those activities. Somewhere in my network of connections, hopefully, there’s somebody or some organization that I can connect you to to help you carry out your idea in a way that you couldn’t have done yourself or I couldn’t have done myself.

I encourage other people to take credit for what they did; I give credit for what other people do. It’s important to do that, not because people need rewards for what they do, but because if they are acknowledged as being good at what they do, other people will want to do it with them.

Talk about their achieve-ments very openly whenever you get an opportunity, whether that’s within the organization or without the organization. Give them the leadership role and say, ‘That’s Mary’s project.’ I refer people to them wherever I can, rather than making a decision myself, if there’s something that’s in a shared zone of responsibility.

Simply thank them for what they did and the change that they brought. It’s funny, in this day and age, we’re all going at a million miles an hour and looking down at our small electronic devices [that] it’s so rare for somebody to just look up in somebody else’s eyes and say, ‘Thank you. I really admire what you did, and I’m grateful to you, and you did a really wonderful job.’

Some people have a management philosophy that praise is inappropriate — that we should all expect this of one another and praise is sort of like the new generation where everybody gets a trophy at the end of the game. I think that an honest acknowledgement of gratitude and admiration goes a long way.

How to reach: Jones Day, (412) 391-3939 or www.jonesday.com

Saturday, 26 December 2009 19:00

Wired in

Getting coffee used to be a very different experience for Stephen Pagano. A jaunt to get his morning joe could result in a chat with employees, and by the time he returns to his desk, he has learned something about customer needs or service issues.

Back when he oversaw fewer people at Time Warner Cable, he had the time to manage by walking around. Plus, because more of his employees worked in the same building, he was more likely to bump into them during his rounds.

But it’s not that easy anymore. As the executive vice president over the West Region of the media giant — which has 7,000 employees sprawled across Southern California, Hawaii, Lincoln, Neb., and Kansas City, Mo. — Pagano has to find more creative ways to reach his people.

“When the customer service department’s right in your building, you can get your cup of coffee in the morning and just sort of wander down there and pull people aside. It can be a much more informal operation,” says Pagano, who shares Los Angeles office space with mostly management and back-office positions now, instead of customer-facing employees. And whether you are moving up the ranks or are already in the top spot dealing with a growing organization, it’s not easy to communicate.

“It’s more challenging when you’re removed from that environment to stay in touch. You really have to work at it harder,” he says. “I had to do a lot more reaching out and actually organize more formal events like lunches or breakfasts and carve out portions of the day to have these meetings.”

It’s been a challenge for Pagano to shift his style without sacrificing the time he likes spending with his reports — or the valuable input it elicits. He’ll have to keep adjusting his techniques now as he transitions into another executive role, where he will be overseeing customer care, original programming and other national initiatives at the company, which posted 2008 revenue of $17.2 billion.

No matter what changes face Pagano — whether it’s a new office that’s even farther away from the communal coffee pot or just more employees and, therefore, less time to spend with each one — he keeps his priorities straight. And at the top of his list is listening.

“The challenge is putting yourself out in front of the employees and listening, making the effort and spending the time,” he says. “Don’t spend your life in an office. Most of it should be spent with the people you’re leading.”

Here’s how Pagano overcomes the obstacles of time and space to stay in touch with his employees.

Funnel input

Because Pagano can’t sit down with every employee in the company, he has to pack the most punch into the interactions he does have. For him, that means going after the people who can funnel the most input together. So instead of going after each employee individually, he has employees go to other employees who go to other employees. Then he asks them what everyone is saying.

To do this, he arranges frequent lunch meetings with supervisors. He sees them as the midpoint between management and customer-facing employees. He refers to them as “concentrated customer service agents” as well as noncommissioned officers, borrowing lingo from his Army-base upbringing.

“They interface with the front-line employees — who are interfacing with the customers — and they also interface with management,” he says. “So I can tell both what a customer thinks of us through their interaction with the front-line employees and what they think of management: if we are listening, if we’re getting the message, if we’re paying attention.”

Pagano brings together a mix of supervisors from various departments and geographic regions. While he’s trying to learn what’s happening in each corner of the region, he reminds himself that he’s not the only one who’s curious. Everyone else in the room also benefits from a varied chorus of voices.

“Not only can I hear what’s going on, but they can each hear for themselves what’s going on in different parts of our region,” he says. “Everybody gets the benefit of hearing from everybody else.”

Of course, sharing the benefit of feedback also requires sharing the floor with everybody. For Pagano, that’s as simple as telling the supervisors that the agenda is theirs.

Your employees need to understand that meetings are their chance to share what’s happening — not just to keep everyone informed but also to vet ways for running each department more smoothly. If nothing else, reminding employees that the end goals are to make their jobs easier and to make the company more successful should get the ball rolling.

“I want you to tell me what you think I need to know, so that you can do your job better and I can do my job better,” Pagano tells his supervisors in the meetings. “It’s really that straightforward.”

But usually, getting employees to talk isn’t that much of a battle. You simply have to ask.

Generally, the questions stem from one: What’s happening? To make sure his employees bring the extremes to the table, Pagano then asks specifically that supervisors point out areas where their departments are either improving or backsliding.

“That information is kind of what they live with day in and day out,” he says. “When they see a problem … then it sort of gets filed away. So when you do ask these questions, they have a lot of specifics. Oftentimes it’s over my head, but I’ll make a note of it and we’ll make sure that we get an answer or we resolve the problem.”

In the end, the reason employees bring problems to the table is so they can find solutions that will make their jobs easier and their customers happier. Because your employees have the best insight into their problems, they also have the best ideas for solutions. So Pagano asks what tools, specifically, they need in order to progress in the right direction — even if something from another area of the company is affecting them, such as marketing messages or bundled offerings.

While he depends mostly on his supervisors to filter issues up through their departments, Pagano also looks to other groups for more specific feedback channels. He conducts in-house focus groups to bounce around ideas or introduce offerings.

He either pulls people in randomly for general topics or more selectively if he’s looking for niche feedback. In other words, if he wants to test how Hispanic audiences will react to a programming change, he’ll ask Hispanic employees.

“Our front-line employees are like very concentrated customers because they talk to so many customers on a daily basis that they have a really good understanding of the customers’ wants, needs, frustrations,” Pagano says. “That’s not to say that we don’t survey customers, but I do think 90 percent of the answers lie within your front-line employees.”

Keep employees informed

Pagano’s position changes have upped the ante for his outward communication. He has learned that the more employees he has and the further they’re spread, the more important it is to keep everyone on the same page however he can. And that comes down to not only gathering input from everyone but also delivering your own message.

“If you’re listening, then, at some point, you’re expected to respond,” he says. “That’s where you need to have a message, and you need to make sure that message gets back to everyone.”

The first way to respond is simply to do something about the issues employees bring to you. But not every problem they bring up is always worth the whole team’s effort. If the supervisor who mentions the challenge seems to be alone in facing it, it may be a department-specific problem as opposed to a company issue.

“If, all of a sudden, half the room is saying, ‘Yeah, yeah, yeah,’ and they’re all starting to jump on board, then you can highlight that as one that really needs attention sooner than later,” Pagano says.

The problems with the largest shared volume become priorities. When a pain point is shared by several departments, it usually means they can’t handle it on their own. So the first step is often forming a multidepartmental task force to tackle it from every angle.

“We take some people from X, Y and Z departments and say, ‘OK, here’s the issue. Now, you guys are the experts,’” Pagano says. “‘No one department can fix it by itself. So you guys work it out and let me know if there are more resources or more expertise that you need to resolve that issue.’”

He has learned the bigger the segment of the company he’s leading, the bigger the challenges they face and, often, the longer it takes to resolve them. When it takes more than a couple of meetings to brainstorm and implement solutions, that just means you have to communicate what’s happening that much more thoroughly and frequently.

Pagano takes notes of the issues that evoke the biggest reactions in meetings and then verifies those with the next level of managers and directors. Sometimes, he discovers that one of the departments is already taking action against the problem.

“Now, it’s just a means of communicating that gap,” Pagano says. “Maybe what I’m not doing is making them aware that we know the issue. We have a plan. We have timelines and benchmarks set to resolve the issue.

“It is always the bottom up that initiates it, but there’s as much responsibility coming from the top down after you recognize it — even after you start working on it — to continue to communicate what you’re doing.”

Pagano relies on several methods for doing that. There’s the internal Web site, newsletters, online video and, of course, meetings. Twice a year, he travels to each location — or at least the bigger locations, in which case the smaller locations are invited to attend — for a series of breakfast meetings.

“Give people a chance to hear from the leaders and ask questions,” he says. “That’s the best way to do it if you can: in person.”

Making those rounds is increasingly difficult as the company expands. But it’s also increasingly important.

“The easiest mistake to make is not to put yourself in a position where you’re in contact with the rank and file,” he says. “I think a lot of leaders are on the 20th floor. They never leave it, nor do they ever invite anybody up to it. It’s a pretty isolated ivory tower.”

So Pagano gets in front of employees every chance he gets. But he also realizes that he can’t be everywhere at once. So to fill the gaps, he also relies on his direct reports to carry the message when he can’t be there.

“At some point, it’s not physically possible for one person to cover that much ground. But what is possible is to have the subordinates doing the outreach, as well,” he says. “So, at the end of the day, it’s not one person leading an organization. It’s one person leading a group of people, who are leading another group, who are leading another group.”

How to reach: Time Warner Cable, (310) 647-3000 or www.timewarnercable.com/socal

Saturday, 26 December 2009 19:00

Cultural alignment

For Joseph A. Cutillo, the big picture is just a starting point. He zooms in on the brushstrokes that create it, too. So when it comes to making acquisitions, he looks beyond the books of business to consider how people are impacted by the change.

“People grossly underestimate cultural clashes,” says the president and CEO of Inland Pipe Rehabilitation LLC. “If the culture is diametrically opposed to your culture, even though both businesses are good, it’s going to be a hell of a lot harder to make that successful in the long run.”

Since stepping into the position in October 2008, Cutillo has made one successful acquisition, with another slated to close soon. He continues to actively pursue other additions to grow the underground structure reconstruction company, which had 2008 revenue in excess of $107 million.

But he doesn’t let his expansion strategy fog the human factor. His priority is helping his 445 employees assimilate to the changes.

Smart Business spoke with Cutillo about bringing acquired employees on board as quickly as possible.

Address people’s concerns. [The biggest challenge is] getting through the emotions. An acquisition sometimes is like a death. You can’t deny that people are going to be shocked or may be upset or angry or concerned. The key to success is getting them through those stages as fast as possible.

You have to understand what emotions the acquired company is going to go through. First, the simple thing of: Do I have a job? Second, I’m on this team that I maybe have been competitive with. What are they going to expect from me?

The beauty of an acquisition is there is a high level of expectation from the company that’s being acquired that changes will happen. Because people are expecting the worst, you can usually capitalize on that. You create an excitement out of it versus a worry. The longer you wait, they assume that there’s not going to be any change, and then if you start making changes, you actually have a backlash.

I always use the analogy when I go in with a new team, I say, ‘This isn’t [like] you’ve been sold out to the enemy. You’ve been traded to another team in the NFL or the American League. You’re still a great player. You just wear a different jersey.’

To make an acquisition successful, you have to go in very, very rapidly. We generally meet with the entire team the very first day of the acquisition. Talk to them about their future. Let those that are staying know they have jobs. Let them know what their bonuses are going to be, what the expectations of the company are of them, and then bring them on board and assimilate them as quick as possible so they are part of that.

We will generally have the highest level of the organization participate in those so we can answer as many questions and get as much out in the open and make decisions quickly if there are concerns.

One of the things we’re working on right now for an acquisition [that] we’re getting ready to close is a welcome package in a box. It’s going to be everything from shirts and hats and coffee cups to policies, procedures, handbooks, benefit packages. You get through all of that as quickly as possible.

Get buy-in on changes. At the same time, you’ve got to make sure that you don’t come in as a conquering nation. One of the biggest challenges as the acquirer is making sure the organization doesn’t come in and lose the things that are actually done better, and then we back-adopt those into our culture.

They’ve got to feel that they were bought for a reason. It’s important that we articulate that to them and they’re excited that they’re part of the team, not scared.

What we have to do early on in communication with the business being acquired is we say, ‘Look, there are things we bought you for that you are doing better than us. And there are processes and procedures that we are doing that are better than what you’re doing. We are going to put those in place and we’re going to also steal shamelessly the stuff you do better, so you should be proud of that.’

We have members from that regional team participating in the due diligence. It enables the team to come back and say, ‘What these guys are doing for maintenance is a hell of a lot better than what we’re doing.’ Our organization will accept it because we’ve recognized it; it’s not being forced on them.

We’ll also split crews. So we’ll take people from the acquisition and we’ll put them with teams from our company to work in a given area together. It’s not just a matter of telling them, ‘This is the way to do it,’ but they can physically be involved and see firsthand that it’s better. If people see it work better, they’ll adapt to it much quicker than if you tell them in a meeting room and just ask them to go out and do it.

Provide ongoing support. We don’t make an acquisition that’s going to sit out there as an island. We’ve set up a geographic regional structure so that we have a regional vice president. We’ll generally put in a project manager or two from our other business. We’re not overbearing on them, but we have our checks and balances in place.

We try not to set them free completely. They’ll always report in, in some way, shape or form. If you let them run on their own, they will do things that you don’t want them to, and it’s more difficult to correct after it’s done than beforehand. That’s why we went to the regional structure, so that we could tuck these acquisitions in and still have that local overarching support.

We try to put processes around it as much as possible, but there is a human side at the end of the day. There’s some coaching that will take place. There are more one-on-one conversations that will take place [with struggling employees.] Don’t prolong it. Get 80 percent of the way there as quick as possible and you’ll be able to work through the other pieces.

How to reach: Inland Pipe Rehabilitation LLC, (313) 899-3014 or www.inlandpiperehab.com