Michael Abt got his start in the restaurant industry at age 15, flipping burgers at Charlie’s Hamburgers in Houston, where they riffed on McDonald’s famous slogan with the catchy “Over Two Dozen Sold.” Abt was hooked; the restaurant industry was in his blood. Abt spent five years at Pizza Hut before heading to a franchise of Arby’s called RTM Restaurant Group.
“I’ve been in the restaurant industry all my life,” Abt says. “When I started with RTM in 1993, we had 350 restaurants, and when we sold the company to Arby’s Corp. in 2005, we had 800 restaurants.
“I got an awful lot of experience being on the franchisee side of the business with Arby’s for many years. When we sold the business, I wound up on the franchisor side of the business. I got a pretty good perspective of how both sides can work to help each other.”
Abt left Arby’s in 2010 to take some time off. With his experience in the industry, however, he was a highly sought-after executive. In 2012, Sentinel Capital Partners started a relationship with Abt and soon offered him an opportunity to become CEO of Huddle House Inc.
“We started talking about the Huddle House opportunity, and I spent a little time on due diligence and really fell in love with the brand,” Abt says.
Huddle House, a 50-year-old restaurant chain of 396 restaurants with system sales of $260 million a year, became Abt’s new home when he took on the role of CEO last October. With his prior experience and knowledge of both the franchisee and franchisor sides of the business, he had some new ideas for Huddle House.
Here’s how Abt is taking his unique experience in the restaurant industry and evolving the Huddle House brand.
Do your due diligence
When Abt was first introduced to Huddle House, he was unfamiliar with the brand, but after experiencing what Huddle House was about, he found numerous differentiators, as well as opportunities to make the brand better.
“As I started exploring the business, I thought the food was really good,” Abt says. “It separated itself from some of the other chain concepts in that the products are more cravable and aligned with Southern comfort food, which I thought was a great niche.”
He also liked the atmosphere that Huddle House restaurants provided to guests.
“I liked the feel of the restaurant in terms of the level of hospitality that we provided to our customers,” he says. “It’s the kind of place where customers show up, and you know the customer’s name. A lot of our servers have been there for a long time. The owners and operators of the Huddle House restaurants have one or two stores, so they live in the communities that they operate in and are entrenched in the community.”
One thing Abt was careful to avoid as the brand’s new CEO was jumping to conclusions.
“My approach at Huddle House is I didn’t want to come in assuming to know what we needed to do in the business,” he says. “I spent the first 60 hours interviewing people at corporate. I also interviewed franchise partners, field personnel and vendors. I had a series of questions I asked to understand what we needed to do to strategically move our brand forward.
“I spent the better part of two or three weeks on discovery. That helped lay the foundation for our strategic plan.”
Abt stresses that it is imperative to spend the time to get to know what you are working with rather than feeling as if you have to make immediate changes.
“Don’t feel like you have to change the company in the first 30 days,” he says. “Spend the first 30 to 60 days really understanding the brand’s personality, particularly if you are a franchised brand. What’s the brand about? We have 385 restaurants that are franchised. We have 11 company restaurants for a total of almost 400 restaurants. The success of our franchise business is dependent upon the individual franchise partner that we serve.”
Since Huddle House depends on its franchise partners for success, those are the brains Abt picked to get some answers for improving the business.
“I believe the way to start off a franchise business is to understand from the franchise partners what the critical opportunities are that we have from a brand standpoint,” Abt says. “Understand the relationships between the franchise partners and corporate. Understand who the key and influential franchise partners are in the system and start working through them to create advocacy within the system.”
Make strategic decisions
For Abt, it’s important for the franchise partners to understand that the company focuses on and cares about how they can make more money. In order to make more money, Abt had a few changes in mind.
“One of the things I recognized very early on was that we had an opportunity to provide significantly higher levels of support to our franchise partners, so we started hiring franchise area directors,” he says.
The franchise area directors are the individuals who work directly with the franchise partners to help them grow their capabilities and ultimately create an elevated experience for Huddle House customers.
“We started hiring field personnel immediately,” he says. “We hired five additional franchise area directors, we on-boarded a director and assistant director of training. Our goal was to strengthen our operations so we could provide better support to our franchise partners and they could run a better business and take care of their customers.”
Abt also recognized that the Huddle House menu had become bloated over the years, so a mission of simplification, menu optimization and management were on the top of the agenda.
“We embarked on a program to minimize the number of items on our menu and make it easier to execute in the restaurant,” he says.
A tweak in the menu wasn’t the only thing that Abt wanted to update. The company had a new design concept for its restaurants that gave them a fresh look.
“I think our new evolution prototype restaurant is a great-looking restaurant,” Abt says.
Earlier this year Huddle House launched its evolution remodel incentive program in which the company will give its franchise partners $25,000 to remodel their restaurant to the current prototype. It will cost franchisees $100,000 to $110,000 to do an interior and exterior redesign. Huddle House has seen sales increases of up to 30 percent in remodeled franchises.
“It has a very strong contemporary feel and we’re a 50-year-old legacy brand, and our new evolution prototype restaurant and remodel really elevates our brand,” he says. “We want our franchise partners to know that we’re in it with them, and we don’t think there’s any better way to do that than to give them some money back when they remodel.”
As Abt has identified Huddle House’s strengths and areas of opportunity, the main goal continues to be profitability.
“We are trying to keep it fairly simple here,” Abt says.
The key to making these changes successful is gaining buy-in from franchise partners.
“We established committees on the front end to help our franchise partners get more involved in the decision-making going forward,” he says. “We have a franchise advisory council that provides input on operations. We have a margin improvement task force that provides feedback on profitability, and we have a menu committee that provides feedback on our menu items.”
To make buy-in an easier task, Abt suggests having key players, franchise partners in his case, involved in as much of the decision-making as possible.
“One of the things that we did on the front end was to establish clear lines of communication to our franchise partners,” he says. “We established hour-long monthly system calls with our franchise partners, myself and our C-level executives where we outline our current plans and what our results have been.
“We also developed a newsletter that goes out every two months that gets more communication out to the franchise partners. And personally, I make myself accessible. I return phone calls, I pick-up my phone when somebody calls, I return emails, etc. My presence to the franchise partners is very important because if they know that the guy at the top of the company is listening to what they have to say, they feel like they are involved and they are cared about.”
What has Abt most excited about the future of Huddle House and its franchisees are the remodeled restaurants.
“About 10 percent of our system is refreshed at this point,” he says. “We have an opportunity with this program to refresh 80 percent of our system in the next five years. We have allocated $2.5 million to give back to our franchise partners in the form of the incentive rebate.
“We’ve allocated up to 100 remodels this year so we can elevate the image of our brand and I’m very excited about that.”
How to reach: Huddle House Inc., (770) 325-1300 or www.huddlehouse.com
Understand your company’s strengths and weaknesses.
Make strategic changes for growth opportunities.
Gain buy-in and move forward.
The Abt file
Born: Pittsburgh, Pa.
Education: Attended Texas State University and received a bachelor of business administration in finance.
What did your first job teach you about business? Working at Charlie’s Hamburgers taught me that I liked the restaurant business. I enjoyed preparing food and talking to customers. I liked that action and activity of the restaurant. It’s the music of the business. It taught me teamwork and responsibility at an early age and that you have to work hard because the restaurant business isn’t easy.
Who do you admire in business? I like Howard Schultz of Starbucks because I like that he left the company and came back and not necessarily resurrected it, but got it back to what the culture was in that organization and fixed it.
Do you have a favorite menu item at Huddle House? Our stuffed hash browns. They have just about every breakfast ingredient you can imagine in it. Breakfast is my favorite meal of the day.
With more than 2,700 locations and 800 independent retailers, Rick Bennet oversees a cooperative that has significant strength in numbers. In fact, CCA Global Partners Inc. has more purchasing power in its floor covering business than Home Depot.
Founded by two independent retailers in the floor covering business in 1984, Howard Brodsky and Alan Greenberg, CCA Global Partners’ primary business is Carpet One Flooring & Home. CCA is a cooperative of 14 independent brands in the home improvement industry with more than $10 billion in aggregate gross sales and more than 100 consecutive quarters of profitability. Its retail floor covering stores and its non-floor covering businesses each see annual revenue of about $5 billion.
“These people have come together with our management and our infrastructure and are able to bring scale to their business and compete with big box and other large retailers by banding all of their purchases and resources together,” says Bennet, co-CEO at CCA.
Despite that ability to band together, the downturn in the housing market had an impact on CCA and its independent retailers.
“We entered the downturn early and I would suggest that we’re coming back out of it later,” says Bennet, who was formerly president and CEO of Kauffman’s and vice chairman at May Department Stores. “These guys are small independents and so they have been really rocked. The biggest challenge we continue to face is just keeping people up and moving ahead.”
Bennet has had the task of helping his retailers cope with the downturn, push through it and now move forward.
“We are not exclusively floor covering, but it is at the core of our business,” Bennet says. “Many of the things that we have opened up are things like cabinets or lighting, but they are all home improvement, so we are closely tied to the housing business and the economy has been tough out there and housing has been the worst of it.”
Here’s how Bennet and CCA Global Partners Inc. have helped independent retailers through a tough time and as a result, repositioned them for the future.
Face the facts
In a tough economy it is very hard to have to start rationalizing business and look at cutting costs. When times get tough it comes down to basic math, and you can’t spend what you don’t have.
“You do what you’ve got to do,” Bennet says. “The tougher challenge has really been the emotional one. When you go through five or six years of downturn and you’re waiting for things to bounce back, the drag on people’s patience and emotions is really tough and much more problematic than just the cost cutting that had to happen a couple years ago.”
During those years Bennet often found himself on the phone with owners of their business facing such challenges as having to fire a friend or relative.
“I get calls from guys saying, ‘I need your advice. We’re under a cash flow press and I’ve shed all the workers that I can and I’m now down to family and I’m facing firing my brother-in-law. What do I do?’” he says.
At that point, tough business decisions have to be made.
“You have to save the business first, because if the business is saved and things get better then you can re-employ,” he says. “If the business dies, then you’ve got no chance.”
One of the biggest problems CCA deals with is assuring its independent retailers that it’s OK to ask for help.
“If you’re in trouble as a small business, the best thing you can do is ask for help earlier, because then there’s time to do some of the tough decisions and save the business,” he says. “If you wait until your balance sheet is totally upside down and you’re facing bankruptcy there’s very little that can be done.”
The other challenge CCA faced was market attrition. About a third of the independent retailers in CCA’s space have shut down over the last eight years.
“Our store count is down only fractionally,” Bennet says. “Now that the pendulum is starting to swing, people actually get under more cash flow pressure because they’ve got to invest in buying product as the business starts to turn up.”
Today, business is starting to turn around for CCA and its retailers. Some of them, however, are hesitant to invest in the business, to rehire people and spend money on advertising and marketing.
“It’s tough to cross that line because you’re worried about the next customer that’s going to come in the door or when the next downturn is going to be,” he says, “and you’re nervous about launching a new ad or hiring a new person.”
But that’s where CCA’s decades of experience come in. CCA tries to provide incentives, coaching and a sounding board for people who need to make those tough decisions. The message — the time is now to switch to offense.
“Their brain tells them, yes I should, but their heart tells them, I’ve just been beaten up so badly I’m not sure I can make that investment,” he says. “The market has definitely shrunk, but it’s time to start investing in the business and get market share and it’s hard for an independent guy to step across that line.”
Reinvest and branch out
The first step in getting CCA’s independent retailers back on track following the downturn was to have them reinvest in their businesses to take advantage of new opportunities in the market.
“You first start with people whose basic business is in pretty good shape,” Bennet says. “If somebody still hasn’t made the tough decisions, then you’ve got to make the right business adjustments to your expense model before you go making investments.
“If you’re dealing with a small business that has operated with some discipline, made those cuts and their basic business is in good shape, then you have to start investing in people and advertising to move forward. If the business is growing, then it might be time to push them into the next step, which is to open an adjacent business. If they’re even stronger, then you may suggest that they open a branch.”
CCA itself made similar moves to advance its brands over the years. CCA was originally Carpet Co-op of America. The first strategic change for the company was to move from a carpet co-operative to a floor covering business. What was originally the Carpet One business became Carpet One Floor & Home.
Today, CCA is making the next strategic shift, which is to spread out beyond floor covering into all aspects of the home improvement field, as opposed to filling only one part of it.
“We’ve moved into the kitchen and bath business with cabinets,” Bennet says. “We have a lighting business, and we continue to contemplate other additions to that. We’ll try to engage in anything that involves home improvement so we provide synergies and leads to our dealers, as well as synergies with the customer.”
When looking to break into new markets you have to ask yourself, what’s the value that you’re providing? As you answer that question you determine where you can add on.
“For us it’s a service equation,” Bennet says. “We’re in the customer’s home and we’re providing the service. What other products can you add to that? It’s the question of what do you do well and how do you do more of it rather than trying to add stuff that’s irrelevant to your business.”
Even CCA had to learn the hard way that going too far outside your core area is a difficult undertaking. A number of years ago it tried its hand at tuxedo rentals.
“It was out of our space,” he says. “You get out of your sweet spot and you’re operating a little bit more in the blind, and you bring less expertise and value. It taught us to stay close to home.”
It comes back to that core question of, where do you add value and what are you good at. You have to make sure you get honest answers to that question.
“When you go into a new business, make sure you’re leveraging things that might work for you,” he says. “Whenever it came to standing something up that was brand new because you thought it might fit, you have to second guess it. You can dream up things that you might add to any of those business structures, but if it’s outside of the core of what you do, you have to be careful.”
CCA keeps asking the question, ‘What do we do well and how do we add to that?’
“If it’s small business, it has to do with the home and we can provide scale, then it’s an open place for us to work and we’re always looking for those places,” Bennet says.
“The world of housing has gone through a lot of attrition, so as that bounces back we’re in a terrific position to pick up a lot of share, and being able to bolt on these different extensions of what we do is a lot of fun to work on. We feel better today than we have in five or six years.”
How to reach: CCA Global Partners Inc., (800) 466-6984 or www.ccaglobalpartners.com
Don’t be afraid to ask for help in a tough situation.
Make the necessary efforts to save the business.
When good times return, be ready to invest
for the future.
The Bennet File
CCA Global Partners Inc.
What was your first job and what did you take away from it?
I was a short-order cook for a little drive-in restaurant called Carl’s in St. Louis. I started working for Carl himself at 90 cents an hour. It was all about good relations with the customers.
What is the best business advice that you’ve ever received?
I had a mentor once say to me, ‘If it is to be, it is up to me.’ That stuck in my head very strongly, and I really believe in the power of self-determination. I try to impress that in our company. If you’re going to spend time trying to figure out how somebody else screwed it up, you’re not going to get anything done.
The second one is Peter Drucker’s advice, which was managing your strengths. So many people spend all of their time trying to correct their weaknesses. You have to know what you’re good at and what you love to do and leverage that. I try to live by that.
If you could speak with someone from the past or present, with whom would you want to speak with?
If you were going to redo some flooring in your house, what product would you use?
This new product line of New Zealand wool is exceptional. It’s beautiful. I got out ahead of the launch and put some of it into my home, which we just remodeled. The brand name of it is Just Shorn, as in shearing a sheep. I love the distinctiveness of wool and the softness and warmth under your foot. It’s an exciting addition to what we do, and it’s a terrific product.
Bill Byham holds a doctorate in industrial/organizational psychology — but that’s not the only way to define him. While he is not only considered an expert in the scientific study of employees, workplaces and organizations, he was one of the first in the world to use a groundbreaking hiring technique called assessment centers.
Some 35 years ago, Byham worked for J.C. Penney Co. when he began using simulated on-the-job techniques to find the most qualified potential employees.
“Assessment centers are a way of evaluating people by putting them through simulations where the people can show what they can do rather than just conducting an interview,” Byham says. “It’s like picking a basketball player — you wouldn’t interview them, you would put them out on the basketball court to see what they could do.”
Byham had great success with these assessment centers at J.C. Penney and wrote an article in the Harvard Business Review that made him famous, gaining the interest of many big companies looking to use this technique.
It wasn’t long until an entrepreneurial opportunity was born. He partnered with Doug Bray of AT&T and started Development Dimensions International Inc., which today is a leader in talent management, leadership development, hiring and talent acquisition.
“We help companies make the most of their employees,” says Byham, chairman and CEO. “We help organizations be more successful in hiring people by teaching interviewing skills. We are very big in the training business, particularly at the supervisory level, where we train more than 500,000 people a year.
“We also have a big business to help companies determine who will be their fast trackers and how to develop them for higher-level jobs.”
Since Byham started DDI, a 1,100-employee, $200 million organization, the company has trained upwards of 20 million people. Today, his focus is on the continued R&D of products in training and development techniques.
Here’s how Byham goes about R&D to keep DDI in front of its customers and on the cutting edge of its industry.
DDI places a great deal of energy into its R&D process. As a global company, DDI offers its products in as many as 20 languages. Rolling out changes to an existing product or developing a completely new one is a big cost. Costs and language aside, however, to remain an industry leader, you need to have plenty of ideas, and good ones.
“We do so much R&D here,” Byham says. “A problem that we do not have is a lack of good ideas. We have more good ideas than we know what to do with.
“So the first problem is trying to slim down the list of projects because all the projects are in the multimillion dollar range.”
In order to develop all these good ideas that DDI brings to the table, the company fosters a sense of empowerment among its employees.
“The whole company is built on empowerment — that is to empower people to own their job and feel responsible to make decisions,” Byham says. “If you treat your employees so that they feel empowered and they treat their job like they own it, then people will always want to improve and come up with ideas.”
In addition to a sense of empowerment, DDI prides itself on having a management team that is very open to new ideas and has a willingness to make changes.
“That’s one of our big problems — we make so many changes all the time because people come up with new ideas,” he says.
The management team works to narrow down the options.
“We have a series of meetings to cut them out and usually it’s not hard to get it down to eight,” he says. “But then to get it down to two or three new projects is tougher. R&D to us is brand new, game-changing products, or a big change in what we’re doing.”
DDI’s biggest product is called Interaction Management, which is a supervisory training program that is among the best-selling of its kind in the world.
“We try to update it every six or seven years,” Byham says. “That essentially becomes a new product.”
DDI recently finished a new middle management training program. The concept rethinks how middle managers get trained, including what they get trained on and how their skills are developed and what happens after that in the company to make sure they really learn it and apply those new skills.
“It’s not just coming up with a new idea,” he says. “It’s coming up with the whole pathway to learning and change, which starts out with a better understanding of their needs.”
Focus your R&D efforts
Part of having a strong R&D process is being able to not only take suggestions from your customers for products and develop those, but also being able to develop products out in front of what your clients want before they know they want it.
“You have to look at R&D in that sense as a 50/50 balance,” Byham says. “We do a lot of customer surveys. We’re out with our customers a lot and they’ll say, ‘We want a training program on this.’ However, I think it was Steve Jobs who said, ‘If you only give your customers what they ask for, you’ll always be behind.’
“What I’ve always noticed is you have to be out in front of the customer because sometimes it takes us several years to develop these things. If you just try to keep up with that hot topic, we won’t get it out until it is no longer a hot topic. So we have to anticipate needs and then be ahead of that.”
DDI has had instances where it was ahead of customers on products. Just a few years ago DDI developed a product to help companies prepare for retirements and how to handle an older workforce.
“We’ve been way ahead of our contemporaries and competitors on that,” he says. “The bad side is the whole thing is built on the assumption there is going to be a huge amount of retirements. With the economy being what it was until recently, a whole lot of people who were going to retire decided not to. We’re still ahead of the tide there a little bit.”
The R&D process isn’t just about finding the next new product, but also devoting some effort to keeping well-performing, existing products up-to-date.
“The more products you have, the more it costs you to keep the old products good,” he says. “The ratio for us is around 60 to 70 percent old products and 40 to 30 percent new. You have to look at the sales of the old product. If you’re still going up with the old product, you will want to keep investing in it.”
Byham likens it to Tide for Procter & Gamble. There have been 20 new versions of Tide and they’re still making money on it. They’re going to keep that product and put it in front of customers.
“If you really have an excellent old product, like we have with Interaction Management, you would not want to let that go, but you still want to be out looking for new things,” Byham says.
Plan for the future
Byham’s biggest focus may be on R&D, but another forward-thinking area he is keeping in mind is succession planning. Byham is 76, and very aware of his age. He knows that anything could happen at any time requiring someone else to lead the company.
“There’s never been a company more ready for retirements because the whole company is so dedicated to growing our own leaders,” Byham says. “We practice what we preach.”
One of the keys to succession planning that DDI lives by is that you can’t develop everyone for high-level jobs.
“If you try to spread your money out evenly across people, you don’t have any effect by it,” he says. “The first big thing is to define who are the people who have the most raw talent to be developed. Then you have to look at how you accelerate their development.
“You keep on developing everybody and you keep on promoting people, but there are certain people you promote faster who are being accelerated up the ladder.”
DDI also believes that you don’t aim people at high-level jobs. You aim people at a level of jobs, like the C-level, but you don’t name the job specifically because companies today are too dynamic.
“We preach that companies should do away with the old succession plan, which was to take an organizational chart and move people up who are next in line,” Byham says. “We have done all kinds of research that proved that did not work.
“Instead you should get a pool of people who are the most talented and get them to aim at a level within the organization rather than a particular job. Then when the job is open, you choose from that pool.”
How to reach: Development Dimensions International Inc., (412) 257-0600 or www.ddiworld.com
Foster an environment that breeds
Focus R&D on a mix of customer demands and brand new ideas.
Think about the future of your company and who’s going to lead it.
The Byham File
Chairman and CEO
Development Dimensions International Inc.
Born: Parkersburg, W.Va.
Education: He received his bachelor’s and master’s degrees from Ohio University and a doctorate from Purdue University.
What was your first job and what did you learn from that experience?
My family was in the undertaking business. If you work in a funeral home, there’s a lot of work to do. My early job experiences taught me the importance of good interpersonal skills.
How would you describe your work habits?
I value creativity a lot, but at the same time, I have a strong scientific orientation of proving it and challenging and doing research. I’m pretty good about coming up with new ideas, but I’m also very good about punching holes in new ideas and doing research to make sure they really work.
Who is someone you look up to in business?
I looked up to my father. He was an entrepreneur and owned his own company.
What is your favorite DDI product?
It would have to be our supervisory training program called Interaction Management. We have trained millions and millions of supervisors.
Kailesh Karavadra didn’t always want to be an accountant. In school he studied electronic engineering and later decided he wanted to try his hand at accounting. He fell in love with the profession and first joined EY in the U.K.
A few years later, the $24 billion accounting firm asked Karavadra if he’d be interested in moving to Silicon Valley.
“With my background in engineering and computers and business background in accounting, it made a lot of sense with what the Valley was going through in the early ’90s,” says Karavadra, managing principal of EY’s San Jose office. “So I came here, and I loved it, and have been here ever since.”
Karavadra has been with EY for more than 20 years, but it was in early 2012 that he was named managing principal for the 750-employee San Jose office, an announcement that coincided with the firm’s 50th anniversary of its presence in Silicon Valley.
“When we wake up every day and we put on our EY uniform and we come to work, our heart and soul is in building a better working world,” Karavadra says. “Over the past year I’ve had the chance to talk to almost every one of our employees, from our partners to our staff, and connect with them and listen to what’s on their minds and understand some of the complexities and challenges we work with.”
Karavadra has been focused on continuing to foster a strong culture at EY as well as continuing to recruit and retain top talent that will help the firm in its goal to build a better working world.
Here’s how Karavadra is making sure EY San Jose is prepared for the future.
Start with culture
Karavadra has been with EY for 23 years. He’s been with the firm for so long that when he speaks with young professionals today they’ll say, ‘Twenty-three years! Aren’t you bored?’
“I laugh because I have never had a single boring day,” Karavadra says. “The one differentiator is our culture and our people value that a lot.”
EY has been named to Fortune’s best companies to work for list for 15 consecutive years.
“That comes from our inclusiveness and flexibility and that we really empower our people,” he says. “For our employees, every day they show up for work it’s about choices. What we try to do is cultivate a culture that empowers them to make the right decisions, leverage the information that’s available in our culture and have diverse thinking to do the right things when serving our clients and our firm.”
Karavadra and the San Jose office encourage and empower employees to drive their own bus. “There are so many opportunities within our firm to drive their careers, to learn so many things, to be able to experience many things, and that’s the culture we want them to be able to feel,” he says. “Our employees are excited, they’re energized, they’re enthusiastic, and they’re passionate about what we do.”
One of the things that EY is very proud of is inclusiveness and that is something that Karavadra heard loud and clear from his people as something they value.
“This isn’t just about ethnicity and gender and those things that many organizations like ours do a great job around, but it’s the diversity of thought,” he says. “We encourage our people to bring that diversity of thought, to bring the different thinking and look at the problems we’re trying to solve for our clients and the value we’re trying to add to our clients in different ways.”
Developing a culture such as what Karavadra has in San Jose and what EY has bred around the globe hasn’t happened overnight.
“There’s a great saying out there that I personally believe in, which is, ‘People don’t care what you know until they know you care,’” he says. “At the foundation of our culture is the caring. We treat ourselves as family.
“One way we foster that culture is through our alumni and our retired partners. We did several events last year where we bring our retired partners back, and it’s amazing to me the pride, passion and excitement they have for our firm. We have almost 1 million alumni that have gone through the EY culture. During these events we invite our alumni to reconnect with each other, as well as reconnect with current employees.”
Another way Karavadra helps foster EY’s culture and helps to build a better working world is through five things that he constantly talks about with his team.
“No. 1 is that we really do contribute to the success of the capital market,” he says. “No. 2 is that we truly help and improve as well as grow businesses. The third is we support entrepreneurs. Fourth is we are incubators for leaders. Fifth is giving back to the community.”
Find and retain top talent
Those five things are important aspects of the EY culture, but they also help drive why employees love to work for the firm and why potential employees are attracted to working there as well.
“There’s a saying by John F. Kennedy Jr., ‘Some people see the world the way it is and say why, others see it differently and say why not,’” Karavadra says. “When we go on campuses we see a lot of very young, talented people who want to make a difference, who want to contribute and have a sense of belonging.”
Karavadra makes sure to talk a lot about the firm’s family culture, team atmosphere and sense of empowerment.
“We also bring our current employees because we want them to be the voice and they will shoot from the hip and give an honest view and opinion of what it’s like working here,” he says.
Karavadra also goes on these campus visits to speak with potential hires. He wants to make sure he understands what those candidates are looking for in a company and in a job.
“What they tell me is they want to work in a dynamic environment,” he says. “They love the innovation, entrepreneurial spirit and the teaming aspect of an organization.”
Focusing on recruiting strong talent is important, but all that energy is wasted if you don’t also focus on retaining those great candidates once you have them.
“It’s not only important to hire good talent and keep them here, but for our clients in the markets at-large it means that when people have energy, enthusiasm and they believe that we’re doing the right thing, they’re going to provide exceptional client service,” Karavadra says.
“They’re going to be a part of the highest performing teams and when you add our global strength and structure to the local empowerment in our local offices, that’s a real strong recipe for people to have a successful career.”
Karavadra believes that above all else, trust is one of the biggest factors for retaining talent in an organization.
“I truly believe in my DNA, that trust is at the heart of it,” he says. “Young people these days are incredibly smart, incredibly connected and talented.
“But when we’re out there talking to people, the most important thing that I share, whether it’s for recruiting or with employees, there is nothing more important than making sure you hold the ethics, reputation and integrity of yourself and our firm at the highest level. Nothing should compromise that.”
Whether you’re on campus recruiting or trying to attract experienced hires, establishing trust is the most important thing.
“They need to feel that this is an organization with honesty, trust, integrity and teaming. Where employees feel there are common goals and we work together,” he says.
While trust is a big reason employees will remain with a company, a second big reason is training and the ability to develop new skill sets.
“We put in 2.7 million hours of training last year for our people,” Karavadra says. “We really want our people to be the very best they can be. It is important for us to make sure we provide all of the latest and relevant insights to them, whether it’s classroom training, industry training or leveraging our web-based technology tools. The San Jose office is the global technology center, so we have a lot of our thought leadership around the world that we develop right here for our technology clients.”
Training at EY is not the only formal training team members get, they also get to take advantage of the firm’s apprenticeship model.
“What I learned when I started as a staff member 23 years ago is that I looked at people around me and there were mentors and coaches who took an interest in me and cared about me,” he says. “They would take me aside and say, ‘You just did this inventory account, this cash reconciliation, and looked at this tax document. Here’s why it’s important for us, why it’s valuable to the client and the impact it could have.’
“Right away from the first day, the training climatizes you to understanding the importance and the accountability that we have on the work that we do. It’s not just showing up every day to put in your number of hours and then we clock out. There’s a real importance to that training.”
How to reach: EY San Jose, (408) 947-5500 or www.ey.com
Work on establishing a culture that is attractive to employees.
Devote time to recruiting the best talent for your organization.
Provide training resources to help retain your best talent.
The Karavadra File
EY San Jose
Born: Kampala, Uganda
Education: He studied electronic engineering and received a master’s degree in engineering from University College of North Wales in Bangor.
What was the first job you had and what did you learn from it?
I delivered newspapers. I used to get up at 5:30 a.m. before school and do it again after school. So it was twice a day, six days a week. I was always inspired by working hard and taking my responsibilities seriously, because you’re accountable for the things you are doing. Hard work will always get you a reward.
Who do you look up to?
I have five mentors that I am in constant connection with who are across five different continents. That has happened because of the years of experience here and the networking. I can call them anytime and pick their brains and they try and make sure they support what I am doing.
If you could speak with anyone from the past or present, with whom would you want to speak with?
The one person who has shaped me more than others is Mahatma Gandhi. I have always been incredibly inspired by the willpower he had. He was someone who realized that something needed to change and he was willing to take the first step.
Imagine it’s a hot day. You’re thirsty and hungry, but don’t want anything unhealthy. There aren’t many options available to meet all those needs. In the early ’70s, the concept of the smoothie was born out of this unmet need. Opened in 1973, Smoothie King Franchises Inc. was the original smoothie brand.
In 2001, Wan Kim had this same urge to find a healthy option to quench his thirst and satisfy his hunger. He had his first experience with a Smoothie King smoothie while studying at University of California at Irvine. The high quality, healthy product had him hooked immediately.
Kim was so impacted by the product that he became a Smoothie King franchisee in South Korea. Since 2003 he has owned several Smoothie King franchises, and in 2012 when the opportunity came about to own the brand, he jumped at the chance.
“I bought the company in July 2012,” says Kim, Global CEO. “I really love this brand. It’s not because I’m the owner, but because we have great products. There are a lot of changes still happening, but it’s exciting.”
Smoothie King, a 300-employee, more than $230 million organization, is now 40 years old. The brand has more than 700 stores and a presence in the United States, Korea and Singapore. Despite the company’s established age and fairly big size, a new owner and plenty of potential market opportunity leave the brand in growth mode today.
“Our next five-year growth plan is to open 1,000 stores in the U.S. and 500 outside the U.S.,” Kim says. “Last year the company did about 26 franchise openings. This year in the first quarter the company has done 40 to 45 signings.”
Kim’s experience as a franchisee and now a franchisor has given the company new life and Kim is excited about where he can bring the brand and its smoothies in the near future.
Here’s how Kim is spreading the word about Smoothie King in the U.S. and overseas.
Understand all areas of your business
Kim was a franchisee for nearly a decade in South Korea. His stores were some of the highest grossing for Smoothie King before he became CEO.
“Obviously franchisees and franchisors have some different views, but eventually the bottom line is to make a better brand,” Kim says. “The path they take can be different, so you have to keep communicating to each other and look at the bigger picture.”
Kim has a very unique advantage over numerous other franchise CEOs. He now has experience as a franchisee and a franchisor.
“I have both aspects and know what a franchise wants and needs, and I know how I need to communicate,” he says. “In any kind of business, sometimes people forget why we do it. So that’s why I keep communicating and keep telling our people why we do this business. We have a great mission and a great vision. We just have to talk about it.
“A lot of people want to make money and be comfortable and I get that and that’s very, very important, but there has to be another reason why we do this. Smoothie King is a healthy choice and our mission is to help people live a better lifestyle.”
While the company’s mission is to help people live a healthier lifestyle, Kim wanted to make sure that the company’s franchises were in good health also.
“As soon as I bought the company I looked at how many single franchisees we have, because when I was a franchisee I thought becoming a multi-unit franchisee was actually very challenging,” he says. “As a franchisor, they don’t understand what kind of challenges franchisees have when they have a second or third location.
“I started to visit some multi-unit franchisees that we have to look at what kind of system they have in place. Today, we are assembling all those systems so that whenever we have a single franchisee try to become a multi-unit franchisee we have some system to help them grow.”
Having those systems in place will become very beneficial as Kim continues to look at ways he can expand the brand.
“Right now we are in growth mode and are opening a lot of stores and also expanding into other countries,” Kim says. “When you grow, you are hiring a lot of people and when you’re expanding outside the United States you encounter different cultures. In order for me to assemble all those differences I need a really strong mission for why we do this business so that it doesn’t matter what kind of culture or background you’re from.”
Prepare for growth mode
Today, Kim is focused on growing the Smoothie King brand outside the U.S. and in the Southern parts of the U.S. where the company has a strong presence, but a lot of potential still remains.
“We want to make sure that we secure our market before we expand to a different part of the U.S.,” Kim says. “That expansion is happening in Florida, Texas, Georgia and other southern parts of the U.S. Going outside the United States we are looking at Malaysia, Indonesia, Thailand, Taiwan, Japan and the Middle East. Our goal is to open two markets this year and two more markets next year.”
Fast-paced growth like Smoothie King is expecting requires a strong culture and mission that make the company attractive anywhere it goes.
“When you are in growth mode I would advise that you want to have a really strong culture in your organization, so that whomever you hire can be blended into your culture,” he says. “You have to set up a strong mission, vision and keep communicating with your employees.”
When you take your company outside of the United States you will experience a lot of cultural difference, and you have to be prepared for it.
“A lot of times when people don’t have any experience with different cultures they will think it’s wrong, but in fact it’s different,” Kim says. “In order for you to go to other countries and do business you have to learn how to respect their culture. If you don’t respect their culture they will know immediately. You have to educate your employees.”
The vast cultural differences Smoothie King employees will experience as the brand continues to expand isn’t the only change they’ll have to accept, they’ll also have to buy into the sheer amount of growth that Kim sees in the company’s future.
“A lot of times when companies grow employees don’t really see how far we can go,” he says. “When we start to grow there is a lot of work coming in and a lot of things are changing. It is very important that I need to keep communicating with employees that we can get there, because if you don’t believe we can get there, then it’s not going to happen.”
One of the first things Kim did when he bought the company was to tell the employees about the growth plan and a lot of people didn’t buy in.
“They were thinking, ‘Oh, it’s a new owner; of course he’s going to be thinking of growth, but it’s not possible,’” he says. “So I had to keep communicating that it’s going to happen and one by one, I started to show them that this would happen and then it really happened and people believed in the plan. I know there are still people who don’t believe where we can go, so I still have to communicate.”
Kim bought the company a little more than a year ago and he is having a blast seeing the company succeed little by little.
“I tell my employees to imagine if we were the size of any big fast food company, the world could be a different place,” he says. “It’s not just about making money and having success. It’s also about influencing more and more people to live a healthier lifestyle.”
How to reach: Smoothie King Franchises Inc., (985) 635-6973 or www.smoothieking.com
SS&G recently announced the promotion of Jim Dannemiller, CPA, to managing director of its Akron office.
Dannemiller will focus on growing the Akron office, mentoring new staff, building the firm’s presence in the community and will continue to serve clients. He will be co-managing the office with Mark Goldfarb, CPA. Dannemiller joined SS&G in 1993.
SS&G’s Akron office also welcomes Ilona Aronov as a senior associate in the tax department. Prior to SS&G, Aronov worked as a tax associate at PricewaterhouseCoopers LLP.
SS&G has also announced three new employees to its Cleveland office.
Courtney Ockenden joins as a senior associate in the entrepreneurial services group. Ockenden worked as a senior accountant at Zinner & Co. LLP before joining SS&G.
Mario Ciclone joins as an associate in the tax department. Prior to SS&G, he worked as a staff accountant at Hobe & Lucas CPA Inc.
Steve Newton joins as an associate in the IT department. Newton worked as an IT service specialist at Progressive Insurance before joining SS&G.
First Federal of Lakewood recently announced that Rebecca Ruppert McMahon has been appointed to the board of directors, and Jeffrey Bechtel has been named senior vice president and commercial banking senior lender.
McMahon has devoted nearly 20 years to building a successful legal career in both the public and private sectors. Most recently, from 2009 to 2012, she served as general counsel for Cuyahoga Community College.
Bechtel, a 25-year industry veteran, will lead First Federal’s efforts to establish a broader commercial banking presence in Northeast Ohio, with a focus on traditional commercial and industrial banking opportunities.
C.C. Hodgson Architectural Group continues to expand with the announcement of the addition of architects Bob Seaman and J. Ryan McNutt.
Bob Seaman brings more than 25 years of experience as a project manager for a variety of building types, with a specialized focus on the design and management of large health care projects. Most recently, Seaman served as director of health care architecture for the Cleveland office of URS Corp.
J. Ryan McNutt has 13 years in the business, most recently serving as Project Manager for Ewing Cole/Belson Design in Cleveland.
EYE Lighting International, a leading manufacturer of lamps, luminaires, controls, and related lighting products, is pleased to announce the addition of Suzanne Beatrice as the director of HR.
In her new role, Beatrice will be responsible for expanding organizational development goals for all employees as well as leading recruitment, hiring and on-boarding activities for new employees and managing personnel transitions.
Beatrice has worked for more than 20 years in the HR field, most recently with Airgas USA LLC.
Janney Montgomery Scott has announced the hiring of Michael Guyre as director and senior analyst, forensic accounting at the firm’s Cleveland branch office. Guyre, CPA, joins the firm with more than a decade of experience on the sell side as a forensic accounting analyst. He began his career at Arthur Andersen.
John Dewine looks out his window on the ninth floor of the Standard Building in downtown Cleveland at the construction project he has been leading — The Global Center for Health Innovation (GCHI) and Cleveland Convention Center (CCC). Dewine, a Turner Construction Co. vice president and construction project executive, is no stranger to construction as a 37-year Turner veteran, and no stranger to Cleveland either, as he worked on both the Key Tower and Quicken Loans Arena projects.
Turner Construction, a design/build contractor, brought Dewine to Cleveland to head the project, which the firm completed three months ahead of schedule and on budget in June this year with the help of URS and LMN Architects.
“We got hired in early May 2010,” Dewine says. “From May through the end of 2010 we worked with the designers, engineers, Merchandise Mart Properties Inc. (MMPI) and the county to conduct a series of budgetary estimates and checks to make sure that the project design was staying on budget, providing the programming needs and scope that the county wanted.”
The GCHI (formerly known as the medical mart) and CCC are a $465 million Cuyahoga County project being developed, managed and marketed by MMPI. GCHI brings buyers and sellers together at the world’s first market facility designed specifically for the health care industry.
The state-of-the-art facility integrates permanent showrooms with convention and conference facilities to uniquely meet the innovation, education and commerce needs of the medical marketplace. GCHI showrooms will feature the latest technology from the world’s premier health care and medical manufacturers while the convention center is designed to host health care industry trade shows and conventions.
“The GCHI will be occupied by companies such as GE Healthcare, Cleveland Clinic and Invacare,” Dewine says. “There will be areas for collaboration, which Cleveland Clinic CEO Delos ‘Toby’ Cosgrove hopes will help yield next generation innovations for the medical field.”
The GCHI and CCC project had numerous engineering feats and challenges that Dewine and his team, along with the help of 168 small business enterprise contractors had to overcome.
“On Jan. 3, 2011, at midnight, Armageddon took downtown Cleveland when we started to put in barriers and fencing to corner off three city blocks,” Dewine says.
The GCHI and CCC is located at the corner of St. Clair Avenue and Ontario Street. Before any structure was put in place, a lot of prep work was done to prepare the area for the new buildings.
“In downtown Cleveland the geology is such that the bedrock is almost 200 feet down,” he says. “For heavily loaded buildings, caissons or drilled shafts are imbedded into the rock, and it’s a very unknown-type process. We have an idea of what we’re going to encounter, but you don’t know until you’re drilling the hole.”
Dewine and his team encountered a lot of methane gas, so much that they installed a permanent methane venting system in the facility. But that wasn’t the only issue the Earth’s crust offered.
“The structure and strength of the clays that you drill through are such that if you drilled a hole and left it overnight it would squeeze shut,” he says. “That’s not a good thing, because if it squeezes shut it creates a void somewhere else, maybe under another building. So we had to put steel casings down as we went to prevent the walls from caving in. Getting through that caisson process was huge.”
Besides the groundwork, Public Auditorium and the old convention center provided several challenges for Dewine and his team.
“In the 1960s when they built the old convention center, they successfully incorporated a lot of mechanical and electrical equipment from the convention center to help service and feed Public Auditorium,” Dewine says. “We had to unhook and separate Public Auditorium from the convention center so we could tear the convention center down. Public Auditorium stayed in service, so it was very specific as to what we could and couldn’t do until we had enough of it isolated.”
The other thing that was a real challenge during the build was that the old convention center’s loading dock was at the same elevation as the floor. To create a true loading dock where the trucks are lower for ease of loading in and loading out, Turner had to lower the existing floor by 8 feet.
“As the loading dock goes underneath Lakeside Avenue, we had to lower the subgrade within 2 feet of a 99-inch brick sewer that was installed in the 1880s,” he says. “That took some extra precautions and measures to ensure something catastrophic didn’t happen.
“We had to make sure we didn’t collapse Lakeside Avenue in the process. We had to shore up Lakeside Avenue, remove the columns that supported it with temporary means, dig it out and lower it, put new foundations in and new columns back in, and then release the loads.”
Dewine says the real success of the project and the reason it was completed ahead of schedule was due to a very positive preconstruction period. Turner and its partners were able to sequence the 17-acre site and attack it from a number of locations at the same time.
“I believe the project got completed early because of how successful we were in sequencing the work,” he says. “When we put our guaranteed maximum price schedule together we had about 350 items in the schedule. At the end, we we’re well over 4,000.
“As items became identified and determined in the schedule, we could micromanage it so that you measure and know what you have to accomplish each week. What you don’t accomplish you have to have a recovery plan for how you get it done the next week. It takes a tremendous amount of communication.”
Turner had a general project manager/superintendent meeting every Thursday morning. In addition, the different areas — north of Lakeside Avenue, south of Lakeside Avenue, the GCHI and Public Auditorium — each had their own separate meetings as well.
The result of all those meetings and the hard work done by thousands of people is a finished project ahead of schedule, on budget and without any major accidents. Dewine is happy to now look out his window across the street at a completed GCHI and CCC.
“It’s a real good feeling,” he says. “It’s the successful result of a lot of efforts from a lot of good people. We were blessed with the contractors that ended up being successful in bidding and being awarded the project. We’ve had well over 6,000 employees take home paychecks as a part of this project. The level of cooperation has been unsurpassed.”
By the numbers
The GCHI and CCC is located in the nation’s medical capital, home to the largest concentration of medical leadership in the U.S. More than 230,000 health care professionals, including 43,000 at Cleveland Clinic and 25,000 at University Hospitals, along with more than 600 biomedical companies are located within the region.
Building Size — 1,003,000 million square feet
- Site Area — 14.6 Acres
- LEED Certified Silver
Global Center for Health Innovation
- 235,000 square feet
- 100,000 square feet of permanent show room space
- 11,000 square foot junior ballroom
- 2,000 square feet of retail space
- Outside windows pattern evokes strips of DNA
Cleveland Convention Center
- 767,000 square feet under Malls B and C
- 230,000 square feet of high-quality exhibit hall space
- 60,000 square feet of high-tech, flexible meeting room space
- 32,000 square foot column-free ballroom
- 17-truck capacity loading dock
- 90-foot interval columns to carry a load equivalent to a 65-story building
When Timothy Yager started at Revol Wireless in the fall of 2011, the company had been losing customers every month for an extended period of time. Late 2009 through the first half of 2011 were tough years for the organization — rumors of bankruptcy and new ownership were being floated around and the wireless communications provider was in desperate need of change.
“The company was having some financial issues,” says Yager, president and CEO. “So my arrival was a chance to hit the reset button for Revol, not only for our customers, but for our employees and say, ‘It’s a new day. The ownership change has happened and they’ve brought in new management and we’re going to focus the company on winning.’”
When Revol was first launched, it was a more than 300-employee, $100 million company. It had a reputation as being on the cutting edge of the prepaid wireless industry.
“Revol had a lot of success early on because it offered unlimited voice and those kinds of things on a prepaid platform,” Yager says. “They were the only provider in the footprint offering that type of service.”
In 2008 and 2009, other prepaid providers started moving in and the competitive forces grew. In a hypercompetitive industry such as wireless, Revol wasn’t as competitive as it should have been and it quickly began to fall behind.
“They needed some help getting the business turned around,” Yager says.
Here’s how Yager reinvigorated Revol Wireless with a strategy to get the prepaid provider winning again.
Evaluate the business
Prior to Yager’s arrival, Revol’s strategy and day-to-day operations were hindered by its capital structure, which brought about a slow-to-react atmosphere. Once the company was free from that structure, there were a lot of people who were looking for strong guidance, enthusiastic leadership and setting of general objectives to get the company back on track.
When Yager was first introduced to the team, it was a transformation in enthusiasm, direction and general motivation. Everybody suddenly had a place to go and a job to do. Yager brought a lot of that enthusiasm and direction to the table, and that’s exactly what people needed.
“Those first few days and weeks were really about analyzing the team that was here and where the strengths and weaknesses were,” Yager says. “The other thing was trying to change the focus and mindset of the company.”
Yager wanted to instill a strategy that said the company was in it to win it. It didn’t happen overnight, but employees started to recognize that there was a new philosophy.
“Revol had gotten mired in the minutia and a lot of times in companies that are struggling, people retreat from making decisions,” he says. “One of the biggest things I did was come in and start making decisions.”
Simple things like “yes and no” decisions went a long way toward starting to improve morale and helped employees realize there was a new sheriff in town. Yager represented new ownership, new direction and new thought.
“I think people started to feel empowered to be successful,” he says. “In a turnaround situation, one of the biggest things you’ve got to do is make decisions. So often companies get polarized with the fear of making the wrong decision that they make no decision, and I firmly believe that sometimes a wrong decision is better than no decision.
“If people are just constantly treading water and they don’t know whether they’re going up, down, right or left, it zaps the life out of a company.”
People respect leaders who come into a company and lay out a plan of attack, are upfront about the plan and who are forceful.
“I can remember that first meeting and saying, ‘I’m not going to do everything right and I’m not going to pretend to do everything right, but we’re going to make decisions, have short meetings, focus on what needs to get done and we’re going to get it done,’” Yager says. “In our wireless industry, where it is so competitive, we don’t have the luxury of taking six months to analyze everything.
“Sometimes you’ve got to look at the facts, make a decision and move on.”
Revol started 2012 losing customers every month, just as it had been the year prior, but with Yager on board the wheels were in motion for the company to move forward.
“When I came in, one of the first things I did was put some extra incentives out there to our dealers to sell some phones,” Yager says. “I was trying to buy some enthusiasm from our partners to get reinvigorated about selling the Revol brand.”
Another key decision Yager made was to get out in the field and visit a lot of the company’s owned doors and indirect doors to help get the message across that it’s a new Revol and a new day.
“Those were things that didn’t cost a lot of money, but helped move the business forward because it put a face with a name they were starting to see on emails,” he says. “It also gave them a chance to meet me and realize that I’m a relatively aggressive guy.
“When you’ve got five to eight competitors in a marketplace, you’ve got to be aggressive, and by people meeting me and realizing that I wasn’t just saying we were playing to win, they could tell by meeting with me that we want to win the game.”
One of the most crucial issues that Revol and Yager identified that needed to be changed was their network.
“Revol was still operating on an older technology called 1X and had slower data speeds,” he says. “In today’s world of smartphones, Androids and everything else, data is key.”
Shortly after Yager joined the company, the board approved a plan to upgrade the network to a 3G network.
“Our key initiative in 2012 was the company deploying 3G,” he says. “We launched that service in September last year and noticed an immediate uptick in our sales to customers as well as a stickiness of our existing customers.”
Yager’s key to helping Revol right the ship was his ability to deliver on his decisions. He was careful not to promise too much.
“I came in and made a few simple promises — two or three key things and then I spent a year beating the drum on those things to do it,” Yager says. “Too often people come in and make a laundry list of 26 items they’re going to promise. No one can get that done in a reasonable timeframe and you lose credibility. Pick and choose what needs to get done and then deliver on it.”
In 2012 Revol was all about getting 3G launched. In 2013 the company is all about selling phones and keeping customers happy.
“When we launched our 3G network we saw an immediate turnaround to our gross sales and our net sales,” he says. “We have more than doubled our sales in January 2013 from January 2012. We’ve really seen that the successes are bearing out.”
Everyone at Revol had to put in the hard work to get the pieces in place, but now that that’s done, the company has seen noticeable improvement. To continue to see those sales and revenue numbers increase, the company has to keep a focus on growing its customers.
“I’m happy to report they are growing,” Yager says. “I’m excited about what we can achieve this year. Last year we had a hard time competing from a sales perspective because we hadn’t upgraded the network. This year we’ve got those key ground-level type things in place, so I’m looking forward to being able to execute and win.
“We have almost a singular focus in 2013, which is to grow the business. There’s really only one way to grow the business, and that’s to be successful in adding new subscribers and keeping existing subscribers.”
How to reach: Revol Wireless, (800) 738-6547 or www.revol.com
If you had any doubt about the recession being in the rearview mirror, consider this tidbit from the ERC/Smart Business Workplace Practices Survey. In the last 14 years, only two years — 2009 and 2010 — have returned results with Northeast Ohio companies reporting the poor economy as their toughest challenge. For the 11th year, companies in 2013 are reporting that their biggest challenge has been hiring and retaining talent.
The survey, which has been a collaborative effort between ERC and Smart Business since 2001, is aimed to let you know what companies in Northeast Ohio are doing to drive their businesses forward.
This year in particular showed an overwhelming amount of companies, 49.5 percent, listing hiring and retaining talent as their No. 1 challenge.
The other concern many Northeast Ohio workplaces have includes health care costs and the uncertainty of the Affordable Care Act (ACA). The good news is that a mere 5 percent of companies named economic conditions as the toughest challenge.
“Hiring continues to be strong,” says SueAnn Naso, president of Staffing Solutions Enterprises. “We see more and more companies adding recruiting talent, and it’s getting much more competitive to find those people, which is a good sign.”
Companies in Northeast Ohio are ramping up their recruiting efforts with 84.2 percent utilizing Internet job boards, and 50 percent utilizing social media to recruit talent.
“On the hiring side, you see a lot more LinkedIn activity,” says Lauren Rudman, president of the Cleveland Society for Human Resource Management (SHRM). “LinkedIn is still the No. 1 way to go, but I’ve also seen job opportunities pop up on Twitter and Facebook.
“Word of mouth is still a great way to go if your company has a referral program. Between social media, specifically LinkedIn, and word of mouth, those are still the No. 1 and No. 2 ways that work for recruiters and talent acquisition teams.”
While companies are finding ways to recruit more talent, they are also very focused on retaining that top talent once they have it.
“We’ve seen a continued emphasis on things like workplace flexibility and investing in training and development as ways to retain employees,” Naso says. “They’re focusing on keeping their turnover numbers as low as possible.”
According to the survey, 77.7 percent of companies provide financial assistance to employees to upgrade their skills through advanced education or job-related training. In addition, 28.6 percent offer a mentoring program.
“Training and development is a big one, especially for some of the millennials (Generation Y),” Naso says. “They really are focused on learning and growing, so I’ve seen a lot more hiring of people that do training and development, creating leadership training programs and having a leadership track so these young professionals see a career path and aren’t looking outside the company for growth.”
Today, there are more training and development programs than there were in the recent past and there are a couple of things that factor into that.
“One is the economy,” Rudman says. “Unfortunately, when things go bad, training and development is the first thing to get cut. As the economy continues to get better, those will either come back into play or grow.
“Another big part of it, too, is Generation Y in the workplace. Generation Y wants development, training and to know how they’re doing. Companies need to recognize that in order to retain top talent they have to provide these resources like mentoring, coaching and development opportunities because they want it more than some of the generations in the past.”
According to the companies that responded to the survey, roughly 75 hours of training are provided to new-hires in their first 90 days. Another way more companies are incentivizing employees to stay at their current company is through workplace flexibility.
“That has been a huge trend,” Naso says. “There has been a study that mentioned that about 78 percent of U.S. workers are looking at workplace flexibility as a primary reason why they’re either staying where they’re at or making a move. That is as important to them as compensation.”
According to the 2013 survey, 44.3 percent of companies in Northeast Ohio are offering flextime, 14.8 percent are offering compressed workweeks, 17.2 percent offer telecommuting and 32 percent offer a work-from-home option.
“It’s interesting because workplace flexibility tends to be something a little different to each person,” Naso says. “We’re seeing companies trying to put things in place that provide a variety of options for employees. It depends on the type of job or their focus and how they can create that flexibility.”
While hiring and retaining employees remains the top challenge, the upcoming ACA and its pending changes to health care costs have companies anxious about what the result will be.
“One trend we are seeing that was published recently in one of the staffing industry magazines is that temporary staffing jobs hit a record high in May as companies are trying to lighten the burden of the whole Obamacare regulation,” Naso says. “Instead of adding staff, they are using contingent labor to manage some of that.”
In fact, according to the survey, the average percentage of the workforce that was temporary of the companies polled was 3.6 percent, the highest since 2006. The percentage of contingent workers in 2013 was 8.6 percent.
“In preparation (for the ACA), a lot of companies are attending conferences and meetings,” Naso says. “However, I haven’t seen any hard and fast actions yet. I haven’t seen companies that have actually reduced their part-time staff from 35 hours to 28 hours or anything like that. They’re all in that wait and see mode.”
Due to the uncertainty of the ACA, a lot of employers and companies are being proactive.
“We’re seeing companies bringing in wellness coaches, reimbursing employees for gym memberships and bringing healthy food into their organizations via vending machines or fresh produce stands,” Rudman says.
“Biometric screening is another big one. You see a lot of those efforts happening, which down the road can hopefully impact and decline health care costs for those companies, as well as employee’s out-of-pocket costs.”
The biggest decision looming for companies is whether they will “play” or “pay” with the ACA.
“Pay means that the company is not going to offer health care and they will pay the penalty, which is $2,000 per employee, and then those employees will be a part of the health care exchange that the government is offering,” Naso says.
“Play means a company will provide a health insurance plan that meets all the new government standards. Even companies that currently offer insurance could be affected because their current plan may not meet those requirements anymore.”
One of the requirements is that health care doesn’t cost an employee more than 9.5 percent of their salary. There is also a minimum coverage.
“Companies that currently have a plan could have increased expense because they may have to pay more of the premium or increase the amount of coverage, which increases the cost of the premium,” she says. “At the moment I have heard that more companies are going to play than pay. But it’s still a huge unknown.”
Despite what may result from the ACA, there is no doubt that companies in Northeast Ohio are once again flourishing and waving goodbye to the recession. Smart Business thanks ERC and those companies that participated in this year’s Workplace Practices Survey.
“A Pat Catan’s Company” reads the sign in the lobby of Darice Inc. where Michael Catanzarite greets his guests. Catanzarite, or Catan for short, is the son of Pat Catan and is CEO of Darice Inc., a premier wholesale distributor in the craft industry.
That lobby sign is a symbol of the company Catanzarite’s father started in 1954 with $200, basically creating the craft industry.
“It’s a unique story because how the hell would you get into the craft business?” Catanzarite says.
Pat Catan was a pilot instructor during World War II. When he returned from service the only place to get a job in Cleveland was at NASA. As a new guy living in Cleveland walking around, he saw a need for supplying decorations for decorators of store window displays.
“Back then, department stores’ biggest form of advertising was the window decoration itself,” Catanzarite says. “He started supplying products for that. It evolved into material for making your own flowers for displays and floral arrangements for your house and grew from that point.”
In 1954 Pat Catan’s was just one single store. By the mid-’70s, the company had six or seven stores.
“He was a pioneer in the industry, because there really was no craft industry,” Catanzarite says. “In the early’70s, we came up with the name Darice. Darice is our wholesale name and that’s the majority of our business. If you go into any big box store like Wal-Mart, Target or Michael’s, you would see the Darice brand in there.”
The wholesale division started in the 1970s. Catanzarite entered the family business following his graduation from high school in 1976.
Catanzarite knows the ins and outs of Darice. He knows the names of virtually every employee and can quote his father’s sayings and other inspiring messages that line the walls of the Darice office.
But what else would you expect from a man who has worked at the company for his entire life?
“My dad was my idol, my hero,” Catanzarite says. “I enjoyed being with him and I enjoyed working with him. Why did I come into the family business? I hated school.”
Catanzarite has been CEO for nearly 20 years, but he isn’t the only family member working at Darice. In fact, there are 22 family members who work full time in the business. His office contains nearly 100 photos of family and items like his dad’s old briefcase and jacket, which help motivate him and serve as a symbol of who started the business.
From 1954 to today there have been a lot of changes within Darice and the craft industry itself.
“The difference between today and yesterday is the speed to market and the speed of business,” Catanzarite says. “You better be at the wheel every day and have your foot on the gas 100 percent or you’re going to be left behind.
“Today, we are fortunate because of our employees and their hard work, we’re the largest in the industry at what we do. Being the largest has its challenges in that you’re always a target for competition.”
Here’s how Catanzarite keeps a family feel at Darice while also pushing the company to remain an industry leader.
Fight the competitive forces
Darice Inc. today has 1,800 employees and is one of the top privately held companies in Ohio. The company supplies craft product lines such as craft basics, jewelry making, paper crafting, bridal, floral design, fine art supplies, kid’s crafts and licensed products to retailers such as Wal-Mart, Target and Michaels.
“We’ve made it a priority in our company that we are going to be product-first people and product-innovation focused,” Catanzarite says. “That’s our business: creativity and products. When we do that, everybody in this building understands that our goal is to find the next best product to make sure we’re to market quick and can respond to a call from Target or customer X to have a presentation done in a week.”
Anything that Catanzarite does to be successful is a result of the company’s mission statement and that his employees work on it every day. It requires the right kind of people to live the company’s mission.
“Do we have the right people and the free thinkers for that?” Catanzarite says. “That’s how we take something from concept to reality. In any company, if you just talk about stuff and you don’t make it a priority with the facility and the people, you’re not going to get anywhere.
“If you say you’re going to do something, but all you have is an idea on a piece of paper, well, what the hell good is that? You’ve got to give it substance.”
Catanzarite spends a lot of his day motivating and counseling employees and trying to figure out what areas Darice needs to improve.
“You’re constantly changing and trying to upgrade, but not because the people are bad, successful companies merge new ideas in with the old ideas,” he says. “We never really focus on the competition. We just try to be as good as we can be.”
Part of making the company better is continuing to get products to market quicker than anyone else.
“Here, we do things quickly,” Catanzarite says. “We get stuff to market in half the time of our competition. We react to our customer faster than anybody. That’s the only way you’re going to beat the competition because everything is so fast and everybody is trying to increase their margin to go around you.
“Today, you better be the best at everything or you’re going to get run over. We’re focusing on how we do that.”
A big reason for Darice’s success is due to its employees and the culture Catanzarite has helped foster over the years.
“The people part of the business, which a lot of people shy away from, is really the most important part of the business,” he says. “It’s what’s driving the company. You have to motivate them to do what’s next.”
Catanzarite fosters this kind of culture through commitment, consistency, being honest with his organization and devoting the time to it.
“I always compare it to being a parent,” he says. “The biggest component to being a parent is that children need your time. There’s nothing, as you raise your children, that’s more important than time. Your employees are the same way.
“If your boss came in today, sat with you, had a cup of coffee, and was nice to you, that would make your day. But a lot of people are just so busy going to the next meeting that they don’t carve out that time.
“You’ve got to spend time on relationships. That’s how you get the trust. My goal is for people to do good because they want a paycheck, but also because they like me and they don’t want to fail me.”
Eliminate family politics
In a family business, it’s easy for family members to develop office politics and destructive habits that can destroy a company. Darice and the Catanzarite family follow a simple motto to squash any of those possibilities.
“Faith, family and friends is our motto,” Catanzarite says. “We live by it. There’s nothing more important than faith, which drives our family. Once you’re my friend, I’ll never get rid of you. We have 22 full-time family members that derive their full-time income from working at Darice. How do we deal with that? We try to eliminate politics.”
If a family member wants to come to work at Darice, the most important thing Catanzarite does is find the right job for that person.
“Are you going to make a guy who’s good with his hands and likes working on cars a salesman at Wal-Mart?” Catanzarite says. “You may, but his chance at failure is much greater.”
Catanzarite’s family members let him have the ability to place them where he thinks they’re best served within the company.
“So far everybody still comes over on Christmas,” he says. “But with 22 family members, if somebody gets mad, they go home and tell their spouse and they tell her mom who might be my sister, so you have to have the openness and honesty.”
Not every family member works full time inside the company. There are others who play outside roles.
“Even if you’re not internally in the building, most everybody else is in the business,” Catanzarite says. “The guys that are outside play such an integral part that if I lost them, it would be like I’m losing somebody internally. It’s good the way we mesh that.”
To keep the family atmosphere in a company that has gone from three employees to 50, 50 to 100 and 100 to 1,800, it takes openness and transparency. Most importantly, someone needs to take charge.
“There are a lot of families that have trouble even sitting in the same room to meet,” he says. “As a company you need a plan and unfortunately there could be five to 20 relatives in there, so you need a boss.
“There has to be a single leader in the family and the family has to be committed to supporting that, otherwise you’re going to fail,” he says.
Darice is currently undergoing a succession planning process so that it is prepared for the future. The company has also brought in people from outside the family for integral leadership roles.
“A lot of family businesses struggle to bring in professionals in executive positions,” Catanzarite says. “We were the opposite. Our president is a non-family member. Our CFO is a non-family member. Our IT director is a non-family member. Our head of marketing is a non-family member.
“Long term, one of our decisions will be that we always want an outside president and CFO. In family businesses, it’s tough for people to do that sometimes. They say, ‘I’ve been doing this forever; I know everything.’ I may know more about crafts than anybody, but I don’t know more about selling to Wal-Mart and Amazon. I’m not an expert in distribution.
“Bring those people in and allow them that ability. Having those outside positions in a family business helps the rest of your employees too, because they see that it’s not just Catanzarite’s running the company.”
Every decision Catanzarite makes about the future of Darice is done so with his family and employees in mind and how that decision is going to make everybody feel.
“My focus is on continuing to grow this business to be a premier company in what we do and taking it to the next level and seeing the employees flourish,” Catanzarite says. “I’m driven by the goal that my dad wanted a great company for his family, and if I don’t finish that, I failed. I’m not going to fail. You’ve never met a guy so driven to make something successful for the benefit of his family.”
How to reach: Darice Inc., (440) 238-9150 or www.darice.com