When Hittle Landscaping Inc. lost 30 percent of its revenue during the recent housing market crash, President Jeremy Hittle had some difficult decisions to make. The first one was how to bring the $10.4 million family-owned company out of the funk. That took teamwork and some painful choices.
But equally as tough was to decide whether or not to hire a pricey leadership coach who could teach the Hittle management team the skills needed for long-term prosperity.
“It was expensive and it was difficult to spend the money in times like those, but it had to be done,” Hittle says.
“When the housing market crashed, we had to react to it quickly. Getting the upper management team together to fight the fight was a lot better than me just fighting it myself.”
The decision to hire an executive coach often requires considerable discussion. A business must tie it to an analysis of expenses, how to increase revenue and how to increase efficiency.
“You need to discuss what’s a better way to manage your business, manage your people, manage your customers,” Hittle says. “The lists will get very long and very hard to manage. How can you ask the employees to work harder? You can, but what’s that going to get you? So better leadership skills are a great way to improve efficiency, morale and communications. That’s where efficiencies come from. Efficiencies don’t just come from working harder.”
Hittle asked consultants to suggest a coach, and he hired one who had also written a book on leadership. Weekly and biweekly sessions helped the management team set goals and provided different ways to think about situations.
“It really makes a difference,” Hittle says. “There is a lot of frustration today in leadership. Frustration just doesn’t help. It’s kind of like carrying around baggage when you’re trying to be a leader.”
The personal leadership development benefits can be significant.
“It’s been great. It’s fascinating when a person does decide to consider his own leadership style, develop upon that and grow on what he’s found,” Hittle says. “I know it’s been huge for me, and I have had several employees step back and say, ‘Wow, I better understand my job now. It’s not just to tell people what to do. It’s about being supportive. It’s about accepting better who you’re managing.’”
The term “supportive” is a key operative word that is stressed in the leadership sessions.
“Employees need to know how valuable they are to the organization,” Hittle says. “You don’t want them to feel like they are employees ? you want them to feel like business owners. They all should feel like they have their own small business that they run beneath them. They feel like those beneath them are the employees that they employ, that they support, encourage and direct.”
That support helped the company reclaim 60 to 70 percent of the revenues that were lost and racked up near-record profitability for 2010.
Compassion is another focal point of leadership training.
“Listening, understanding what they want, and giving it to them,” Hittle says. “It’s not being a leader by directive. That’s not what to shoot for. Shoot for trying to nourish their needs, and your needs become their needs.
“A lot of leaders don’t quite understand it because they just want to have the first and the last say-so, and they expect it to be done that way. I don’t believe that works very well.
“Usually people that excel to a leadership position are firm-minded thinkers,” Hittle says. “They don’t realize that you have to open up, be a little vulnerable, and ask for some help and do some self development ? to try to pass along the message that we can all be better.”
How to reach: Hittle Landscaping Inc., (317) 896-5697 or www.hittlelandscape.com
Trimming and pruning
With a significant portion of its business tied to the housing industry, when the market hit bottom in 2009, Jeremy Hittle and his management team had their plates full learning how to be better leaders while they trimmed and pruned Hittle Landscaping’s operations to weather the storm.
“It was my job to not give direction but to convey a message,” says Hittle, president of the 140-employee company.
“The message was that we are in trouble, and we need everybody's help. I spent a lot of time in 2009 making sure that nobody thought otherwise. I tried to make sure that they knew that the company’s challenges were their challenges ? that we were all in it together.”
The solution was plain and simple: Everyone needed to be in concert and do some brainstorming.
“The only possible way to get out of a downturn like that was to come up with 50 ways that would help,” Hittle says.
“Obviously we had to lay off some employees, and we changed things around,” Hittle says. “Nobody worked any overtime. We worked four days a week instead of five. We saved on travel.”
Steps taken to recover from the downturn are lessons that likely will be retained.
“We are constantly working on reorganization. Even today, it’s about how we are going to change today to deal with tomorrow, just like we did back in 2009.”
How to reach: Hittle Landscaping Inc., (317) 896-5697 or www.hittlelandscape.com
It was late May last year that David Forsthoffer was informed that two major customers had accepted his company’s bids to open on-site safety apparel stores at their manufacturing plants ? but there was one major concern.
Both companies wanted the stores opened by June 15. That gave Safety Solutions Inc. about three weeks to assemble and install what usually takes six to eight weeks. To top it off, they weren’t even close to each other. One was some 600 miles from the other.
The challenge was handed to the management team, made up of the CEO and three upper-level executives, and an existing group that handled these types of projects,
“We had to mobilize and get everything from the technology, all the computers and software designed as well as everything from the store fixtures to the racking plus inventory,” says Forsthoffer, president and CEO. “It was quite a challenge, and the way we accomplished all that was by pulling in all our resources.”
Here are some pages from Forsthoffer’s playbook on how to meet such tight deadlines.
The first concern is to have an implementation team. You’ll be ahead of the game if you already have one in place that slide right into action, but at the least, you’ll need people like the CEO, director of sales and director of operations in the group.
“I’m part of it,” Forsthoffer says. “When we have these deadlines, we all sit down and ask, ‘How are we doing to do this?’” This has to be systematically answered. Each department’s role needs to be defined.”
The customer service and sales departments can make a list of all the contacts needed at the customer’s site to ensure that communications get to the right people. The IT department can purchase the necessary computer hardware and program the customer-specific software. The procurement department will manage the acquisition of physical goods and fixtures. The operations center will need to handle logistics.
“From there, do a lot of delegating,” Forsthoffer says. “Delegation is key.”
Once the assignments are made, it’s a matter of constant monitoring so that each department meets its deadlines. That can mean overtime and weekends to get the work accomplished.
“We had a lot of people in the company involved in duties that they didn’t traditionally do to solve the challenge,” Forsthoffer says.
When the moment arrived to open the stores, all was in place.
“We ended up with very satisfied customers, and I think that’s the whole moral of the story,” Forsthoffer says.
Satisfied customers don’t happen by accident. Forsthoffer’s approach to providing exceptional customer service is a combination of attitude and culture.
“Service your customers with care, sincerity, enthusiasm and a passion, always giving them more than was expected,” he says. Find employees who want to do business and like to do business with people.
Always have a positive, “can-do” attitude. Never compromise on ethics or integrity. Treat associates, customers and suppliers with the utmost respect. Maintain a healthy work-life balance.
“That’s for everyone in the company,” he says. “Put the customer’s best interest first and you’d be amazed at what happens later.”
What happens later? For Safety Solutions in 2011, it’s being on track to sell $54 million in products.
While those five points solidify the mission, it doesn’t end there.
“To add to that, it’s one order or one person at a time,” Forsthoffer says. It is comforting to customers that the company cares enough about them to commit a specific person to their account.
“Understand what is important to them, all the details from products to packing slips ? become an extension of their company,” he says. “Do things their way. Provide exceptional customer service from the start to the finish.”
How to reach: Safety Solutions Inc., (800) 232-7463 or www.safetysolutions.com
Don’t sweat collections
An exceptional customer service approach needn’t be limited to the sales department. David Forsthoffer says even the accounts receivable department, traditionally cast in the role of bill collectors, can see effective results.
“Let them know they are part of the customer service process,” he says. “It’s never easy to collect past-due funds, but when you are collecting them, collect them with the attitude that you’re in customer service.”
One of the keys to customer service success is to be a relentless communicator.
First, send out a friendly reminder. Make it clear that it’s a reminder and not a notice.
The next step should the reminder not help is to make a personal phone call.
“The phone call again will be handled in a very respectful manner,” says Forsthoffer, president and CEO of Safety Solutions Inc. “Again, with a customer service flair to it.”
From there, continue to be patient, sometimes even to a fault. But if you stick with it, your collections, past-dues and write-offs can be minimal.
“It’s really a great way to maintain customer relationships because some customers, like many companies, have ups and downs,” he says. “Try to help see those people through those down periods again, treating them respect and again with that customer service mindset.”
How to reach: Safety Solutions Inc., (800) 232-7463 or www.safetysolutions.com
When McDonald’s Corp. bought Donatos, something new was added to the mix, and Jane Grote Abell remembers it well.
“I never knew what it was like working in fear until we were under the Arches,” she says.
Business was off in 2002-03. McDonald’s tallied a record low for its stock. Rumors hit the streets that Donatos would be sold off or closed.
Abell was senior vice president for development/franchising and human resource chief, having worked for the family business since she was 11 years old. And she wanted to continue to work at Donatos.
“I tried to maintain focus on what we needed to do in the restaurants to serve our customers and keep our doors open,” Abell says. “It was a very painful time in my life.”
One time at 3 a.m. she needed inspiration, so she turned to a copy of the poem, “Desiderata,” that her father Jim Grote had given her a few years earlier.
“I don’t know why, but a light came on,” she says. “‘Desiderata’ is about how to live your life. I remember sitting back in my chair saying to myself, ‘Wow. All of the times I had talked to our managers about not working in fear I was doing it myself.’”
Her human resource background was telling her that when the leader starts working in fear, the entire company picks it up.
“They feel it,” Abell says. “It’s intuitive. Everybody starts working in fear and you become paralyzed. You can’t make decisions, and you become paranoid. It became a fear of not being about to carry on our mission and promise the way that we believed we could. Unfortunately, although I should say fortunately looking back at it, I think it was a great learning experience for me.”
The next morning, she began to change her thinking so she could lead the company through tough economic times and onward, diversifying its portfolio and increasing the number of franchises. Here are some of the keys to Abell’s success to overcome the fear factor and get the 5,000-employee company back on track.
Communicate to alleviate fear
Any type of change can cause fear. To address those fears, it requires a lot of communication and being able to put the human aspect into the company.
“Employees need and want to know the people they are working for, so for me, it was about putting the face behind the brand again,” says Abell, now chair of the $189 million Donatos Pizzeria LLC. “I spent 90 percent of my time out in the stores with our people, putting the heart and the soul back into our business again. I think the most important thing you can do in these cases is be visible and be transparent as you possibly can.”
Not having a person behind the brand name can have a negative effect on employees. This perception needs to be reversed.
“People will be working for a paycheck instead of for their passion, a career, what they really wanted to do in life,” she says.
Communication needs to be rooted in the culture of the company.
“I think culture is the most important thing that you can stay close to or manage because it really is a shadow of your leader,” Abell says. “I was the chief people person, and you can imagine the shadows that cast.
“Unfortunately, if you don’t trust your environment, and you don’t trust the people that you work for, then it’s easy for good people to start working in fear.”
Let employees know that you hear their concerns.
“If people don’t trust that you’re really going to listen or that you’re looking out for their best interests as well as the best interests of the company, they’re not going to tell you where the pitfalls are,” Abell says. “They’re not going to say, ‘Oh, that’s a great vision. I’m going to work toward it. But here are all the obstacles in between.’
“They’re not going to tell you those things, so you have to have humility and be able to sit around a round conference room table so there is no power or authority and employees can really express themselves and trust the environment to say, ‘We can do this but here are all the obstacles.’”
Resolving the concerns about major changes pays big dividends. Among the first to voice support likely will be longtime employees who still believe in what the company stands for and still carry the torch for it.
Maintain open communication, even in hard times. Such was the case in 2002 when Donatos decided to pull out of the Atlanta market, closing 23 sites.
Being proactive in terms of helping employees helps put the company in the best light possible when eliminating positions.
“We set up a career fair and called other restaurants,” Abell says. “We had four or five companies at an expo, and all our managers attended. We had every manager employed by the end of two weeks. We also gave them severance packages. We had our hourly associates given severance packages, as well. We all spoke to our managers in a meeting before the restaurants closed so they could hear it from us and not hear it on the street.”
Lead through change
Donatos was bought by McDonald’s in 1999. Abell and her father bought it back in 2003. In both cases, the changes required strong leadership to keep the business going. Abell has identified the traits a leader needs to be successful: character, conviction, courage and compassion.
When you have a strong leadership corps, fear won’t become a problem.
“First, you have to have leaders in your organization that have strength of character ? honesty and integrity,” she says. “You can always do what you say you’re going to do, but doing it when you say you’re going to do it is important.
“Be a place where you can bring your principles to work with you, and that you can be yourself. That’s character, and it’s really being authentic with who you are, all the time, at work and at home. That’s a really important trait for a leader.”
The second trait, conviction, is about having passion for what you do and loving what you do ? or you may as well not do it.
“I tell our managers that if you really don’t love serving people, if you really don’t love coaching and teaching the hourly associates, then that’s OK; you can’t work here,” Abell says. “You have to love it. If you don’t wake up excited about your job, then this isn’t the right place for you. I encourage people to find what their passions truly are. You have to really love what you do in order to be successful.”
The third trait is courage, which can take many forms.
“Too often, people have character and they’ll have conviction, and they’ll have passion, but they don’t have the courage to do anything about it,” Abell says.
“I believe in having the courage to dream, the courage to act on that dream, the courage to confront others, and the courage to be confronted, which is a more difficult one sometimes.
“A really big one is the courage to see your current reality,” she says. “It’s being honest in where you’re at as a business. Have the courage to listen to people. Have the courage to love. We’re in the people business. If you don’t love people, then you really probably shouldn’t be in the people business.”
The last trait is compassion. Compassion is being able to put yourself in the other person’s shoes, being able to be approachable and having the ability to listen to other people and their perspectives on an issue.
“One of the best pieces of advice that has been given to me over the years is that in business, you can take away a person’s job, but shame on us if we ever take away their dignity,” she says. “That goes back to making the tough decision, but doing it with a balance of your head and your heart and being compassionate when you do it.”
Treat other people the way that you want to be treated ? the Golden Rule.
“Whether they’re working for me or whether I’m working for them, I want to be in an environment where there’s trust,” Abell says. “That’s probably the most important thing about compassion.”
Once you are able to address the challenges that present themselves in managing people through difficult times, it’s critical to keep the rest of the ship on course through choppy seas.
“The wonderful thing about tough times is it makes you continue to improve and be innovative and to look as yourself differently and objectively,” Abell says. “When you’re an owner and you face tough times, you end up focusing on the long term, not the short term and an exit strategy. Then you’re going to make some decisions that help you for the long haul.”
Find new opportunities, perhaps even partnering with companies.
Donatos founded Jane’s Dough Foods during the recent economic recession to sell take-and-bake pizzas at Kroger’s. Some franchise partners took a different look and saw the products as competing with the restaurants. However, a solution was reached: Share the profits from the take-and-bake products with the franchise partners.
Jane’s Dough Foods is currently in 1,400 points of distribution.
“This is a wonderful and exciting opportunity ? so here we are running great restaurants, and I don’t say I’m running great restaurants, our managers run great restaurants, our people run great restaurants, and we also have the opportunity to expand our business through Jane’s Dough Foods,” Abell says.
“You have to be flexible with your plan,” she says. “You can’t just write a five-year plan and say this is where we’re going ? everybody charge ? without constantly taking a look at it. You’d like to say look at it every three months but in this state and environment, you’ve got to look at it every day.”
How to reach: Donatos, (614) 416-7700 or www.donatos.com
The Abell file
Born: Columbus, Ohio
Education: The Ohio State University, majoring in organizational design and communications
What was your first job?
Working at the Thurman Avenue Donatos at age 11. I can’t say I remember getting paid. My dad taught us to work harder than anybody else. We worked in the summers. We worked on the weekends, after football games. It was our life, and I loved it.
What’s your definition of success?
I think success for me is intertwined between personal and professional ? that we’re able to grow our business and fulfill our destiny with our mission and keeping our soul and the spirit of Donatos alive through growth. Any time we don’t feel like we’re able to do that, then we need to retract and make sure that we’re able to grow, keep the light shining, keep the spirit alive and keep the culture healthy. That’s success to me. And it’s not about numbers, it’s not about bigness; it’s about doing it the right way.
What was the best business advice you were ever given?
Hire people who are smarter than you are.
What is the best business advice you can give?
Don’t let fear enter the culture, and to be aware enough to know it’s there. Allow people to make mistakes. And have humility.
Mike Vinton was just venturing into the business world out of high school when he found his vision. There was a catch — he didn’t have any formal education on how to operate a business, much less on being a leader. However, it didn’t stop him.
“I knew at that time, there was no doubt in my mind that was the kind of work I wanted to do,” he says, after a stint on a tennis court project in Michigan inspired him to be a sports contractor.
“When you fall in love with doing something, you will know it,” says Vinton, president of The Vasco Group. “It’s just an overwhelming desire to get up and go do it. And somehow, some way, in spite of any circumstances good or bad, you’re going to make it happen. You become willing to do just about anything.”
Despite the obstacles faced, being relentless and doing the right thing along the way brought rewards. Vasco’s 2010 was the best financial year in its 44-year history.
“If the spark starts to burn inside any man ? if it truly is a passion, a vision ? he will go to just about any length to explore that to make it happen,” Vinton says.
Once illuminated with a vision, the would-be leader would do well to seek out mentors.
“Watch other leaders ? what they are doing, how they act, how they treat people,” he says. “Just try to do what the winners are doing.”
People that are successful usually are willing to share advice.
“The big part is asking for help,” Vinton says. “Once you ask, I’ve found that people want to help. I’ve been blessed in that respect in that people have always taken me under their wing and helped me.
“Mentor other young people that want to be leaders. Read leadership books nonstop, and study leadership styles.
“I heard someone say a long time ago that if you want to keep wisdom and knowledge, you’ve got to give it away. That was always modeled for me and that’s what I try to do as a leader today.”
Pick a mentor that works in a different industry.
“Choose people that you came across in relationships,” Vinton says. “I had a commercial real state developer take me around and show me his properties. We would discuss what a leader would do in certain situations.”
Then as you develop your skills, the time comes for more specific mentoring. In a competitive field, it’s a reality check that no one is going to share tips to a possible competitor. But a suitable alternative can be found through associations. Securing a board position on an industry association puts you in touch with professionals from all over who are open to helping.
“I’ve never had people in the industry help me until I was part of national business organizations that did not include local contractors,” Vinton says. “I got many contacts that way.”
The camaraderie will help develop the principle to treat other people as more important.
“One of the most important leadership principles is servant leadership,” Vinton says. “Learn it, teach it and model it for young leaders that serving people in your area of influence is more important than yourselves. Give others the credit when things go well.
“As a leader, be intuitive and aware of the people around you and make yourself available to them on their time.”
How to reach: The Vasco Group, (800) 487-0422 or www.thevascogroup.com
When it comes to acquiring another company, there are two tips that shouldn’t be overlooked: Be patient, and see that synergy ? when a combination is greater than parts alone ? is a component of the decision.
“Make sure you have synergy between the two companies ? that the company fits with your core competencies,” says Vasco Group President Mike Vinton, whose vision included company expansion into other cities and states.
“Get your key people together and ask, ‘Does this create synergy or does this create division?’ That’s a huge thing in making sure that synergy is a part of it.”
Your management team needs to have complete buy-in that the two companies can work hand-in-hand, each pulling its own weight, with no negative feelings.
As the team gets on board and supports the decision, not just the leader’s edict, negotiations can go forward. Timing is everything in acquisitions.
“Don’t be in a hurry,” Vasco says.
Take your time, and be ready to cancel negotiations if a red flag appears.
“I walked away from a deal once. The fit was not good. Three months later, he called me back and said he was ready to start talking again. We did a deal within a month.”
How to reach: The Vasco Group, (800) 487-0422 or www.thevascogroup.com
Like many other companies and organizations during the 2008-09 economic downturn, HealthNet Inc. found it necessary to tighten its belt, and Booker Thomas was struggling with how to tell the staff.
“It really hit our bottom line in terms of providing services to so many people,” says Thomas, president and CEO of the $50 million organization.
“I knew that there would be a lot of ramifications throughout the organization,” he says.
The first step is to analyze the situation and lay the groundwork that the organization is facing some economic challenges.
“Try to be as transparent as possible with employees, and let them know exactly where the organization is financially at all times,” Thomas says.
This can be communicated at staff meetings and department meetings.
HealthNet’s 500 employees had looked forward to annual general wage increases as a type of reward for their dedicated service, but its leadership decided it could not grant the increases that year unless it laid off staff members.
By being upfront, contacting each employee with information and showing empathy for their situations, it can put a better perspective on the issue. E-mail may not be the most personal method, but it provides a timely announcement for all employees and can help forestall rumors.
“I sent e-mails out to each employee to explain our financial issues and that because of the economy, we have decided that we would not give the general wage increase in order to keep everyone working,” Thomas says.
Along with the matter of a wage freeze may come the issue of a hiring freeze. Employees will want to know the organization’s position on attrition. At this point, it should be stressed that the administrative team will review each case and decide if the position is critical to the operation or not.
“If we were able to hold back on support staff, we did that,” Thomas said. “But those direct patient care positions we continued to hire.”
Announcing a wage freeze, which many times may happen around the December holidays, is a tough call, and timing does little to help the matter.
“I don’t think any way is a good way,” Thomas says. “But at least they have time to plan and prepare and make other arrangements prior to Christmas if they knew of the wage freeze beforehand.”
Be prepared for reactions running the gamut of emotions. If you’ve worked your plan well, you may be able to get employees to see the situation for what it is.
“I was honestly shocked that we didn’t have more of our staff sending me e-mails how it had hurt them by not giving the increases,” Thomas says. “I felt sure that I’d get some. So after we made that announcement, I also sent an e-mail thanking employees for their patience.
“I did not get one negative comment out of all the employees. I was just elated because I expected a lot of people to go against that and have their own individual concerns.”
A leader still has a duty to put in a personal appearance to meet with employees, take questions and discuss the decision.
“I went to all of the centers ? we have nine sites now ? and explained to them why we had to make that decision,” Thomas says. “They looked at it and said, ‘We all have jobs, and we’re here to serve the needs of clients,’ and they were OK with that. That’s the dedication we have.
“I told them how I appreciated them and their patience and the support that they have for the organization and the mission that we share, and thanked them for it.”
How to reach: HealthNet Inc., (317) 782-2111 or www.indyhealthnet.org
The time when a new employee meets the leader of an organization is an important time to explain the culture of an organization.
“I speak to every new employee, try to set the culture for the organization, and let each person know what we expect of them,” says Booker Thomas, president and CEO of HealthNet Inc.
“It’s critical right at the beginning,” he says. “I try to give them a feel for the gut of the organization in terms of what we are all about.”
This is an optimum moment to explain that employees, especially those who deal with customers, are ambassadors for the organization. A client will see his or her point-of-contact person as the organization. The experience clients will have with employees will define the company or organization in their eyes.
This is also the ideal time to let new hires know they can voice any doubts they may have at a later date regarding the position. Let them know of the options.
“I will say many of you may work for us for a few weeks or months and see that this is not your cup of tea, this is not your niche ? and that’s all right because everybody can’t deal with clients,” Thomas says.
The employee needs to know that management will work with those who request a different position, as opposed to being in a situation that they didn’t like and in which they were having some problems.
In addition, the CEO has the chance at this time to make employees aware of an open-door communication policy. Describe the feedback channels, and stress that communication is important to the success of the operation. Underscore the fact that the organization wants and needs the employee.
“Each position and each employee is valuable to the mission of the organization,” Thomas says.
Steve Russell was feeling some serious pain. Not only had the economy taken a nosedive in the fall of 2008, but it was now January 2009 and he had to contend with a toothache as well as bleak economic news for his company, Celadon Group Inc.
Not one afraid of putting people on the spot, Russell, Celadon’s chairman and CEO, asked his oral surgeon after a shot of Novocain for his advice.
“I said, ‘I believe the true test of someone in life is not that someone can make a good into a better, but somebody who can make a bad into a good,” he says. “This is a bad ? pulling my tooth. What can you tell me you’ve learned in life to make this a good?”
Incredulous at the question, the oral surgeon took up the challenge.
“You know what I’ve learned in life, Steve?” he says. “And I’m not talking about your tooth. So what I’ve learned into life is, ‘Lean into pain; don’t run from it.’”
Russell says that sage advice ? to face the pain ? helped him and his senior managers figure out how to freeze salaries, scrap management bonuses and cut 12 percent of the trucking company’s nondriver personnel.
“We came through the mess better than, if not the best, of any truck company in America,” he notes. “Zero bank debt. Very healthy company.”
This year, Celadon Group is on track to top the $530 million in annual revenue it made last year.
Here’s how Russell keeps Celadon on track to new heights of success.
Keep the employees happy
As an elected official has a constituency to answer to, a company CEO often has more than that.
“There are three constituencies that my principal role is to keep happy,” Russell says. “No. 1 is employees ? if you don’t have happy employees, you don’t have a good company. No. 2 is happy customers ? if you don’t have customers, you can’t pay the employees. No. 3 is happy shareholders. We’re a public company. At the end of the day, those are the three priorities.”
Treat employees as a person, not a number, and they will feel better about the company.
“No other CEO in the top 100 fleets in America talks to new employees when they join, and I do it regularly.”
Such attention will help encourage employees to want to go to work in the morning and want to go home at night.
“If they don’t want to go to work in the morning, they won’t stay ? and you don’t want them to stay,” Russell says.
Happy employees means low turnover. The 4,000-employee Celadon Group turnover rate is about half the usual rate for the industry.
Russell encourages communication by citing mottos and aphorisms that he’s collected all his life.
“One of the best ways to communicate is to make sure employees understand, ‘Don’t get ulcers, give ’em.’”
Not voicing a complaint or grievance can lead to misunderstandings between employees and managers. An open-door policy so the two parties can help iron out issues on the spot can go far in reducing problems.
“Get it off your chest,” Russell says. “Don’t put your head on your pillow at night and say, ‘Why the heck didn’t I say that to Joe, to Bob or whoever?’”
While happy employees is one goal, another is healthy employees. In a company where the average age of a driver is 47 years old, it’s only fitting that steps be taken to make medical attention more accessible.
Russell knew it was inconvenient for a long haul driver to visit a doctor or clinic. So he brought the clinic to them. It’s at company headquarters in Indianapolis ? most drivers pass through the city two or three times a month so it was the logical location.
Not to be overlooked are nutrition concerns. A nutritionist on staff can help employees find the right diet and ways to lose weight if needed.
“We had a driver who’s been with the company four or five years ? he’s lost 180 pounds since he’s started his regimen,” Russell says. “He said his sense of self has gone through the roof, too. It’s a great program.”
Keep the customers happy
To keep customers happy, determine their most critical demand and measure results on how well you deliver on that.
“In regard to customers, if you can’t measure it, don’t do it,” Russell says. “That’s a philosophy I have in life.”
Measure the performance by customer. By being able to show that customer the numbers and statistics, it motivates the company to be accountable for and focused on service. Be sure to communicate to the customer any extenuating circumstances that might have affected the figures. It will help build customer relationships.
Since service is so important in all industries, it pays to be open and honest about matters on how state or federal requirements may limit what can be done.
Don’t overlook the fact that a number of companies are into green programs and are interested in supporting environmental-friendly campaigns. The fact that a company is introducing biofuel and is taking measures to reduce greenhouse gases and air pollution can have an impact in sealing a deal.
“It’s green from the cash flow standpoint and it’s green from the environmental standpoint,” Russell says.
Keep your equipment up-to-date. Impress this fact upon customers, emphasizing that it is thus less likely to break down. Set up an equipment retirement/replacement plan to support this policy. Offer the latest in tracking abilities for your product or service.
“Young equipment is less likely to break down and therefore, service is enhanced,” he says.
Keep the shareholders happy
With regard to shareholders, it’s easy to keep them happy by answering one simple question.
“We’re a public company, so the question is, ‘How is our stock performing versus our peers?’” Russell says.
Comparing company performance with that of its peers is a necessary rule of thumb. Economic challenges appear each day and shareholders will want to know how the company is managing them as compared to others in the industry.
“In other words ? manage; be able to demonstrate to your shareholders whether you’re doing a good job or a bad job,” Russell says. “And the reality is, they’ll measure you completely every quarter, every announcement, etc.”
Keep the balance sheet in the black, and hope that your stock performs better than others because you are doing the right things. That requires going to investor conferences on a regular basis, making presentations and having one-on-ones with investment advisers.
“It’s a matter of communicating with your shareholders so they trust you, believe you and want to own your stock,” Russell says.
Simple good business practices go a long way with cementing a company’s image with shareholders, as well as customers. So as an indication to shareholders that you’re performing well, don’t do business with customers who aren’t responsible for their bill.
“In fiscal 2010, a lot of people took between July and June a whole bunch of write offs, companies, customers going broke and stuff like that ? we did $530 million in revenue, and we had total write offs of $122,000,” Russell says. “Awesome. Truly awesome.”
Russell, who was once president of Hertz Trucks, founded Celadon in 1985 after he ran into a former colleague who needed to solve shipping problems to Mexico. He put up $30,000, leased tractors and trailers, called the company Celadon after hearing it was the prettiest word in the English language and grew the firm to one of the largest in the nation.
Along the road to prosperity, Russell discovered four ingredients of a successful business leader and put them into an acronym.
“L.I.D.S. You’ve got to have all four,” he says.
L is for leader. A good leader is not just someone who runs a company, but someone who will get people to follow him or her. A good leader must also have integrity.
“If you don’t have integrity, nobody will follow you,” he says. “I think integrity is inborn.”
I is for intelligence. A leader must have the intelligence to learn the roles of management, including how to delegate responsibilities. Not only do you endow your people with responsibilities, but measure their performance.
“And if you are intelligent, you can learn anything,” Russell says.
D is for drive, that motivational quotient that pushes you to succeed. It’s a work ethic that makes you want to put in long hours to reach a goal.
“You’ve got to be driven to success,” he says. “My father gave me that work ethic because as a taxi driver, if you’re not working, you don’t make any money. My father would work 14 or 15 hours a day.”
S is for street sense. You learn it from your environment, and you need it to survive.
“The S is the most important of all and it’s not taught anywhere ? Harvard, Yale, Princeton, Cornell,” Russell says.
“Whom do you trust, whom don’t you trust. What’s wrong with something, what’s right with it. What’s negotiable, what isn’t negotiable,” Russell says.
Discontent or dissatisfaction by someone on the management team needs to be dealt with in respect to the larger goals of the company. The person needs to be taken aside and told to focus on improvement ? improvement of the company.
“If they have mother as the objective, and I’m defining mother as the company, that’s who they’ve got to be able to help, that’s who they have to focus on improving,” Russell says.
Post the department performance measurements, the benchmarks, the comparisons over time, on the walls. This helps employees keep those goals in their heads.
On the topic of task priorities, rank them in order, and then stick to it. Don’t get distracted by something that may seem urgent.
“In other words, a person who says this is one of our priorities ? we’ve got to do this, this and this, but then just reacts to e-mails every day and doesn’t work on those priorities, it’s the wrong way to be,” he says.
Delegation is critical if you want to be a leader.
“I feel that you should always delegate as a CEO of a company ? you should delegate virtually everything. Now if your company develops a product and you have 30 people under you, the focus is developing that product. But if you are running a business, you should try to hire people who have LIDS.
“The key in delegation is to surround yourself with people who are as good as or better than you are,” Russell says. “Be secure in yourself to do that. You are only secure if you surround yourself with good people.
“This is what makes a great company because it’s not just the CEO, and I really mean this, it’s the senior management, the middle management. Both have to be very good. Don’t tolerate mediocrity. He or she in management, who tolerates mediocrity under them, is mediocre.”
How to reach: Celadon Group Inc., (800) 235-2366 or www.celadontrucking.com
The Russell file
Born: Brooklyn, N.Y.
Education: Master’s degree, business administration, Cornell University
What’s the best business advice you were ever given?
Don’t get ulcers, give ’em.
Who has been the biggest influence on who you are today?
That’s a tough question to answer. My father gave me a work ethic; my mother gave the realization that all you’ve got in life is time. My brother, a college professor, gave me the importance of getting the best education you can, and my older sister, who sort of acted like a surrogate mother to me after my mother died when I was 6.
What’s your definition of success?
I can’t wait to get to work in the morning; I can’t wait to get home at night. And be happy.
Russell on why he got into business: When I was 12 or 13, I wanted to be an astronomer. When I got into Junior Achievement, we had a little company. We distributed $40 to each person of us. Forty bucks doesn’t sound a lot today but that was in 1955. I decided, “Hey, I’d better go into business because I can’t make any money as an astronomer.” That’s when I decided to go into business.
Russell on having a beard: You know why I have a beard? Because I save five minutes a day by not shaving. I’m saving, say, a half-hour a week, over 52 weeks, that’s 26 hours a year that I’m doing something more productive, plus I’m saving money. My wife trims my beard every two weeks. That’s the definition of a good wife. Basically, that’s why I have a beard because shaving is a waste of time.
Tom Campbell’s business dream team has four simple parts: mission, vision and values, but most of all, an independent board of directors.
“The first place you should start is to put together a fiduciary board of outside directors,” said Campbell, CEO and principal shareholder of Quick Solutions Inc., the 190-employee Columbus information technology consulting firm. “That is absolutely No. 1. And then mission, vision, values.”
Campbell is not hesitant to say what he thinks about midsize companies operated by one or two people ? they’re dictatorships.
“It’s very autocratic, and it’s what they want to accomplish,” he says. “I don’t figure that works well in today’s environment.”
His solution is a strong board of directors, an actual fiduciary board just like a public corporation would have. All directors should be chosen for their levels of expertise. The company CEO and president would sit on the board, as well, making, for example, a total of seven members, five of which are from the outside.
“What that does is it brings outside perspectives ? they give you independent advice without fear of repercussion,” Campbell says. “You’ll get a lot of straightforward advice, and I think that is vital.”
The next step in building the dream team is to get employee buy-in.
“Everyone has to be on the same page, moving in the same direction,” Campbell says. “Mission is very important, vision is very important as is your core set of values.”
Mission is what you are, vision is what you want to be, and your values should include communication, people, character and accountability, among others.
“People need to know what is going on,” he says. “Communication is absolutely vital. You cannot overcommunicate.
“You’ve got to do it in small groups, you’ve got to do it in large groups, you’ve got to do it over and over again,” Campbell says.
Meet every Friday and talk about what was accomplished in the previous week, what’s on the table in the current week and what is getting done. Assign someone to take notes so everyone has a record.
“That way, you are continually making progress and everybody knows exactly what’s being done. It’s transparent,” Campbell says.
Employees should be involved in determining the mission, vision and values.
“Being able to really be an integral part of the team helps move things forward,” Campbell says.
He recommends finding people who will take on new challenges.
“You have to find those people who want to take on additional responsibility, and when you find them, you have to be very clear about what the work is.”
If you are not, the employee could not want to take on the load, and you’re back to square one.
“Once they take it on, it’s like teaching your kid to ride a bike ? you run alongside him for so long, but sooner or later you’ve got to let go and see if they can do it,” he says.
Pick them up if they fall and get them back on track.
“It is amazing when people are truly empowered; it’s amazing what they will do,” Campbell says. “They’ll rise up. The effort that they will put in, the sense of accomplishment, the pride ? there’s nothing better than that. It takes special people, but you’ve got to give them the opportunity to succeed.”
In the end, it’s the people that make the business.
“We sell intellectual capital in the marketplace, but our people, their character, dedication and drive is the essence,” he says. “That’s what you have: Your integrity comes first, your dedication and your ability to do what you said you’re going to do is really what makes a difference.”
How to reach: Quick Solutions, (614) 825-8000 or www.quicksolutions.com
If your company is ready to expand and wants to locate branch offices in other cities, the planning starts with a steering commission, say Tom Campbell, CEO of Quick Solutions.
“We created a steering committee, and then we went through and got a number of people involved,” he says. “We created a plan on how to go about that ? a specific plan on what cities we’re looking at and the work that needed to be done.”
Campbell says if you are fortunate as he was to have a company board member who was successful in launching branch offices, have him head the steering committee.
Once the research has been done and the site selected, the steering committee should draw up another plan to find the right person to head the new branch office.
“It’s a process that’s been used very successfully by some of the larger firms,” Campbell says. “It’s not like recreating the wheel, though. If you don’t articulate what it is you’re trying to accomplish, what everybody’s role is, and then assign that, get out of the way, let people do what they need to do, but give them timelines and have constant meetings set up for communication for results ? you’re not going to get anywhere.”
Merv Dunn was having a moment of truth with himself. He realized he was frightened to go global with his company, Commercial Vehicle Group Inc. At that time, the company was only in the United States and had 95 percent of its business in one area with only two customers.
“I was afraid to start with it,” says Dunn, president and CEO of the vehicle component manufacturer. “But I was afraid of failure if I didn’t. I looked at my biggest competitor. I saw that they had stayed in North America, and they weren’t developing as the kind of company that I wanted to be. I was afraid if we did not go, we would not be successful, and we would dry up.”
There was another problem. The economic downturn of 2008-09 threatened not only the company’s health but its five-year strategic plan. The plan’s vision for growth and diversification geographically and in market use was at risk.
The first step was to start at the top, then work through the company to pare expenses.
“I took a 10 percent pay cut and so did my direct reports,” he says. “Then we put in a 10 percent pay cut across the board. In some cases, it was furloughs. They worked four out of five days a week. Some people we had to let go totally ? that was our last choice.”
And above all, the work continued. The team stayed true to the strategic vision. Global projects undertaken during the recession began to bear fruit.
When the 2010 sales figures came in, CVG tallied $598 million, up 23 percent from 2009. The company is in eight countries now.
Here are some tips on how Dunn helped stabilize the company as it gained strength to venture overseas.
Stay in focus
Dunn knew it was important to follow the strategic vision.
“Two years ago, there were a lot of people who didn’t think we were doing well,” he says. “They were questioning the strategy and they were questioning even internal management. When you started explaining your strategy and why you’re making these certain moves, then the overall company sees it. You may have pockets that still disagree, but once you can get them to understand why you’re making moves, I think then you get the buy-in.”
The vision needs to stay in place in good times as well as bad times.
“First of all, if you withdraw and pull everything in, you might as well tell everybody in the company that you’re closing,” Dunn says. “If you’re not working hard during the down cycle, then they lose confidence that you’re going to be here when the up cycle comes.”
Keep an eye on your competition because if they go under, you have a chance of getting their business. Develop contacts that could pay off with tips for new business.
“We get calls from customers who say, “We can’t get deliveries out of these guys. They seem to be having financial problems. Will you look at their product and quote it for us?’”
It’s not uncommon that if you follow those steps, you’ll see the benefits in more ways than one.
“It’s not unusual to pick up the business, and it’s not unusual to get a little better price for it because you’re going in with a product from a company that’s known to have a technically superior product and is known to meet its commitments ? and also does it in a consistent manner, and is honest,” Dunn says.
Hold on to staff such as the research and development department and assign them to develop new products or services.
“We developed three new products,” he says. “When you’re doing that, your people have confidence that they’re doing the right things and that you’re leading them the right way. In coming through an economic downturn and surviving that stronger, people kind of have confidence in that we know what we’re doing.”
Successes will encourage the employees, boosting their energy. Dunn used it as a rallying point.
“To come through it like we did, people are kind of walking on a cloud, saying, ‘Hey, you know, we’ve got a good game plan. Let’s keep after it,’” he says. “The successes that they’re seeing right now, it’s just tremendous, with the growth, and the different markets, the different customers. There’s just an excitement level. It’s like a basketball or football game. You start scoring, and your competition comes out with different plays, and you’re still scoring on them. People get pumped.
“You don’t always have to have what some people would consider the best team or the best captain, but if he’s winning, they get confidence in him quickly and they get excited.”
Be honest, consistent
The approach to take when expanding globally is really not that much different from the tactics you would take when building here at home.
“First of all, you’ve got to be honest,” Dunn says. “You’ve got to be competent in your abilities, you’ve got to trust your abilities, and you’ve got to be consistent. If I go there and they ask me to do something, and I don’t think there’s a chance in hell that I can do it, I tell them I can’t do it.”
People want honesty, no matter how hard the news is, and no matter which country is involved.
“If I tell them I’m going to deliver, when I’m going to deliver it, and I deliver it ? news travels. If I don’t deliver it ? news travels.”
Another important consideration about global expansion is to make sure the customer wants you to be there.
“A lot of people have had the attitude over the years, ‘Build it and they will come,’ or ‘We’re not going to build it until we know for sure we have customers,’” Dunn says, noting that finding a middle ground often works.
Go in small, and then with your technology, and quality and delivery systems, grow the confidence of the domestic market.
“That gives you the ability to start growing in leaps and bounds very quickly,” Dunn says. “But you have to be there in some form or you’re not going to get business because they don’t want somebody they can’t talk to.”
Do your homework. Get yourself in the geographic areas where your customers need you and learn about the country.
“You have to know the culture of the country that you’re in,” he says. “I would want people to get to know my culture if they were coming and putting a plant in my country, because to be able to turn my plants over to them, I need to know the culture, and I need to have trust in them.”
Gaining trust also involves patience. Subtleties in conversation can be misunderstood, for instance, when agreements are made. Be aware that some cultures place importance in not disappointing the other person.
“You’ve got to keep asking the same question and peel the layers of the onion back,” Dunn says. “See how consistent it is because many times you have to sort out the fact from the perception.”
When it comes to managing sites overseas, look at various options. You may find someone who already works for you that shares the culture and who could be given a management position.
“Usually, we can find somebody in our company that speaks the language,” Dunn says. “We’ve grown people either through acquisitions, we’ve selected the best talent, and if that talent was better than someone else we had in our company, we’d put the other person in a different role and we’d put this guy in the lead role.”
Ensure quality and buy-in
Concerns about quality are not limited by geography, and by following a simple rule that workers should treat a product like they were going to purchase it, many problems can be avoided.
“I think there are concerns about quality of products made in any developed country let alone an emerging country,” Dunn says. “Treat it like it’s a product that you’re going to buy. Do you want to be hassled taking something back that doesn’t work?”
The labor force in emerging countries can be trained just as in any other country.
“The people have to learn how to work in a factory when they’ve not been used to doing that,” he says. “Those lessons you’ve got to teach, and you’ve got to teach them until it’s second nature.”
You can do your global expansion alone, or take on a partner. Either way, make sure your reasons are solid.
In one country, Dunn built his own plant.
“I didn’t want to go in there and worry about that I might have a partner who didn’t see the same strategic vision as we had and the same commitment to the customer that we had.”
But in another country where CVG had already had some business dealings, it may be another story.
“I probably will have a partner, because we’ve been using engineering services,” he says. “We’ve had a strong relationship with someone over there that I feel has the same commitment to customers and the same commitment to innovation and to the employees and to the leadership.”
Once quality is secured, you also need employee buy-in.
“I believe in honesty,” Dunn says. “If a customer calls me with a problem, I don’t try to figure out whose fault it is. I want the problem fixed, and then we’ll deal with whose fault it is. It’s important to fix the problem, but it’s more important to fix the problem than to fix the blame.”
Not only does that lead to successful customer service, but it sends a message to the employee.
“Once you have a win, your team looks at kind of why you win. If they look at it and can see it was because you made the right strategic decisions and you make the correct day-to-day calls in the huddle, they buy in pretty quickly,” Dunn says.
Buy-in is something that needs to be addressed constantly with the staff, at all locations.
“If they don’t have confidence in the decisions that you are making and the outcomes that are happening, then they lose focus real quick and lose interest,” he says.
Give the employees the straight story no matter if it is something you don’t want to be honest about.
“Sometimes when you’re standing in front of a group and you get questions, you’ve got to say, ‘I just can’t discuss it right now.’ And, there are sometimes when you’ve just got to say, ‘Look. That’s not going to happen.’ Then there are sometimes you can go, ‘Yes, we agree with it and that’s what we’re going to do.’ You’ve always got to be honest. You’ve got to be consistent. You’ve got to trust your abilities. And you have to constantly stay in contact with the customer. Those are the kind of things that I push from my leadership role.”
If the leader can show his human side, the effects can be immeasurable. Dunn puts a high value on the experiences he has had with employees, even when a plant closing was imminent.
“I said, ‘We can’t be competitive here, and the customer is not happy,’” he says. “We’re in an economic depression with our end market, and we’re just not going to be able to keep it open. And I’m standing there, and I am thinking, ‘Oh God, how long can this take? I don’t want to do this. I don’t want to tell these people, but I’ve got to.’
“And at the end of it, there were these two older women who came up to me and said, ‘We’ll be OK. We’re worried about you, because we know how stressful this is on you. We know how hard this was for you to do. But we’ll be OK, so don’t worry about us.’ Two men said, ‘Is there anything we can do to help? Can we do anything to save it?’ I said, ‘Well, we can try. But I don’t think there’s any way to, to be honest,’ and they said, ‘We know how hard you have worked to keep it open. And we’re going to keep on working.’
“You know, that damn plant is still open. It doesn’t have near the employees it had, but they’re still adding to the bottom line. And they made it through the worst economic depression in this industry. The competitor liquidated and they got the business back after all these years. So it taught me that being honest with everyone is critical.”
How to reach: Commercial Vehicle Group Inc., (614) 289-5360 or www.cvgrp.com
The Dunn File
Born: Dayton, Ohio
Education: Eastern Kentucky University, master’s degree in operations management
What was your first job?
My first job was at 11 on a tobacco farm picking tobacco blooms. It was a buck an hour. That was a lot of money with my dad not able to read or write and my mom with a third-grade education.
What was the best business advice you were ever given?
I was fortunate enough when I got out of college to end up working for a guy that I had strong admiration for. One thing he always stressed to me was, ‘Try to think through your decisions. Don’t make them emotional. And most of all, be honest. Be honest with yourself more so than anyone else. And be true to who you are.’ My whole life I’ve competed against Harvard grads, MIT grads, and I have an undergraduate degree from Eastern Kentucky University. You’ve got to have something else to go along with it. I think being able to handle confrontation and being straightforward are probably the things that he taught me that I’ve stuck to. Have confidence in yourself. He said you’re here for a reason. You’ve got the job for a reason.
What’s your definition of success?
I consider success that as a person, when I see that my family is successful and then I look at my company and I see the people that are here are being successful, we’re being successful because the customer wants us, and to be wanted is a success. For me, seeing my company come out of this crisis, and people want to be part of my company, I consider that a success. It has to be wanted to be a success.
On taking risks: I don’t want to be 85 sitting on a front porch saying, … ‘I wished I’d tried that!’ I left a great company where I was president to jump out on my own in private equity. I screwed up, got with the wrong partners, lost a lot of money, started over again, did the same thing and won ? came out with good success because I learned from my failure. I think it’s always go
Call it a perfect storm or the worst-case scenario, but a convergence of factors is giving the manufacturing industry headaches in the labor department.
As the industry is moving out of the economic recession and continues to add jobs, older skilled workers ? those who perform advanced procedures other than repetitive assembly ? are retiring or getting close to retirement. What makes that situation worse is that there aren’t enough new ones to replace them.
“That created the perfect storm for the tremendous skills gap that’s out there,” says Chad Schron, manager of Tooling University, an online training site based in Cleveland for manufacturers and vocational schools. “There weren’t enough in the pipeline of new people learning welding, fabrication and machining and entering the work force as employees started to retire.”
Mark Tomlinson, executive director and general manager of the Society of Manufacturing Engineers, sees the skilled worker shortage as an iceberg looming on an uneasy sea.
“We’re just approaching it; we haven’t hit it yet but we know it’s there,” he says. “People are starting to see it. They just don’t know how to deal with it.”
Before companies focus on how to deal with the situation, they need to take a retrospective look to see the trends that have put the manufacturing sector in troubled waters.
Evaluate the factors
While forecasts of a shortage of skilled manufacturing workers first arose in the 1980s, it has been in recent decades that it became reality as the industry evolved from needing low-skilled production-type assembly workers to being highly technology-infused as it follows lean principles.
“If you go on today’s manufacturing floor, it’s extremely high-tech, lots of computers, lots of lasers, lots of robotics, very high-precision, a very clean environment where they’re making some of the advanced aerospace or medical device parts,” Schron says.
Companies who haven’t already heeded that wakeup call need to realize that times are changing.
Technology innovations enabled companies to reduce the number of employees and required higher skills and education levels of remaining workers, says Emily Stover DeRocco, president of The Manufacturing Institute of Washington, D.C., an organization dedicated to improving and expanding manufacturing in America.
The automotive industry, once the sector that provided the lion’s share of jobs in manufacturing, is not as strong as it was a decade ago. Some automotive suppliers did not survive the recession. Many cut their training programs. Those that did survive often diversified into other areas of manufacturing.
“Now there is an increased need to fill the manufacturing jobs associated with aerospace, energy, medical device manufacturing and aspects of transportation,” Tomlinson says.
While many observers acknowledge that manufacturing has led the United States out of the recession, the improvement brings a mixed blessing ? more skilled workers are being needed, but the supply is limited.
“What we’re seeing right now is really a lack of a pipeline, and the disruption is causing us so much pain,” says Jeff Joerres, chairman, president and CEO of Milwaukee-based ManpowerGroup, a work force solutions supplier.
Baby boomers, who have put in their time over the last few decades, are reaching retirement age. U.S. Bureau of Labor statistics estimate that 2.8 million, nearly a quarter of all U.S. manufacturing workers, are 55 or older.
“We are facing a huge replacement requirement for the retiring baby boomers, as well as a huge quality issue in the level of education and skills that are necessary to work in today’s more advanced manufacturing environment,” DeRocco says.
Building up the skilled worker pipeline is taking time because of a number of factors, including a waning interest in mathematics and science fields.
“I think we’ve got a long-term history of not producing enough skilled workers in the area of science and math and technology in this country,” says Ed Hughes, president of Gateway Community and Technical College in Florence, Ky. “We are now seeing some effects of not having students graduate from public and private schools with significant skills in those areas.”
Jim Ferguson, director of training at precision manufacturer Penn United Technologies of Cabot, Pa., agrees.
“There is definitely a skill gap in terms of people’s ability to do basic math at the level we need, which isn’t super high, but certainly, geometry and a little trigonometry are an important part of the package,” he says. “We find very few people are able to pass even a basic aptitude test to be hired.”
Look at it as branding
Companies of any size will likely tell you that branding is important, that image is how people see you ? and correcting an unflattering image takes time and effort.
In an age when innovation occurs regularly and perception is vital to success, manufacturing has been trying to shake off the view that it’s dark and dirty ? to rebrand itself.
“It’s absolutely true that the image and the definition of manufacturing in this country has not kept up with the industry,” DeRocco says.
Indeed, the parents, teachers and counselors who influence students and young people are often given the wrong picture.
“They have an image that either there are no manufacturing jobs or the ones that they know or they think they know are really what they remember as children in their communities,” she says.
Only 30 percent of respondents to the 2010 “Made in America?” survey conducted by Deloitte and The Manufacturing Institute said they would encourage their child to pursue a career in manufacturing ? despite reporting encouraging improvements in their perceptions about the jobs.
The survey reported that respondents feel state and federal leadership, tax rates on individuals and government business policies are the top concerns hampering American manufacturing competitiveness ? and that Americans are less likely to pursue jobs in manufacturing or encourage their children to consider these jobs in the future because of those issues.
In addition, only 22 percent said their school system encourages students to pursue manufacturing careers and only 18 percent said their parents encouraged them to pursue a career in manufacturing.
“Most people in Gen Y out of high school don’t think of manufacturing as a career or as a good option,” says Kika Young, human resources director at Forest City Gear Co. Inc. of Rockford, Ill. “They don’t think of it as glamorous; they think of it as dark and dingy and dirty and aren’t interested in going into that.”
It’s important to break the mold of that outdated image, and some signs of progress are being seen. Appealing to a nobler perception is key to successful image building. So is taking innovative approaches and strategies.
“I don’t think the image is the problem any more,” Tomlinson says. “You see many examples in advertisements, like General Electric’s, that take manufacturing out of the dark and dirty environment,” he says. “The real value right now for the younger generation is that through making things they could change the world. You have to innovate, create and make if you really want to improve everybody’s lives and environment.”
In the end, each level of success builds upon the previous one. For the manufacturing industry, those levels are the employers, workers, educators and economic developers.
“This winning proposition for these sectors has really led to an incredible amount of momentum and support, and not that we don’t have a long way to go, but we think it’s a model that other business sectors can and should be using,” DeRocco says.
SBA loans are available to a wide number of businesses for training and other purposes
There is a common belief about loans guaranteed by the U.S. Small Business Administration that they’re only for small businesses like the corner coffee shop ? and that the loan criteria are very restrictive.
Not so, says Pamela Davis, senior vice president and national sales manager for SBA lending for PNC Bank.
In fact, SBA-guaranteed loans with either fixed or floating interest rates even can be used to retrain employees, and about 98 percent of U.S. businesses would qualify under the definition of small business.
To meet the SBA eligibility criteria, a business must either comply with the Standard Industrial Classification code, found on sba.gov, or alternative size standards based on tangible net worth and average net income.
One of the types of loans available is the SBA Express Program.
“It can go up to $350,000 and can be used for any type of working capital,” Davis says. “It can be reworking of your people, purchasing inventory, if you had to buy computers to help train these people ? everything like that.”
Under that program, loans are guaranteed at 50 percent by the SBA against default. Part of SBA’s flagship 7(a) loan program, the Express Program, offers an accelerated turnaround time and lower interest rates for borrowers.
Businesses turned to SBA loans for longer and more creative terms than conventional bank loans to the amount of $22 billion in 2010. Guidelines were revised in 2009 and 2010 so more businesses could obtain capital to survive and grow.
For businesses seeking larger loans, there is the SBA 7(a) Preferred Lender Program that can go up to $5 million.
“That can be used for a lot of different things,” Davis says. “You have to qualify under prudent lending criteria, but it can be used for literally anything you can think of. You can buy equipment, you can use a portion of it for working capital or an addition to the building or if you wanted to hire more employees because you wanted to send some over into Germany to do processing there.
“Any program that creates jobs in my mind is a great program.”
How to reach: PNC Bank, www.pnc.com
Innovative strategies are aimed at providing manufacturers with skilled job candidates
As the shortage of skilled manufacturing workers continues to worry companies, creative ways to fill the need are on the increase ? and are starting to show signs of progress.
It’s no surprise that candidates with potential are in high demand, enrollment is rising at technical schools and training programs are adding teachers. Competition for students can get intense.
“When we recruit students for manufacturing, it’s the same student that other people are going after for engineering technology, for information scientists ? those types of things,” says Ed Hughes, president of Gateway Community and Technical College. “We think we’re in a better position to compete with them now that we have our new advanced manufacturing center.”
As creative and varied as the approaches are, the common thread is to nurture a future employee whose career pathway is aligned to credentials. Having industry-recognized skills certifications ? like those automotive repair technicians have ? applicable across advanced manufacturing and related fields give employees the opportunities to move among careers rather than be at one job in one industry that may experience a downturn.
“Credentials provide a third-party validation that the individual has the general workplace and the technical skills to succeed in an entry-level job as well as an advancement path within their employment,” says Emily Stover DeRocco, president of The Manufacturing Institute, which conducts efforts in 25 states to deploy certification systems.
Grooming potential workers is starting as early as possible. The Society of Manufacturing Engineers Education Foundation offers a complete K-12 program.
“The foundation puts on over 300 one-week day camps in middle schools and high schools across the county to show the value of math and science in making things,” says Mark Tomlinson, executive director of the Society of Manufacturing Engineers. “The hope is that they then go back into their school lives and consider jobs in the process of making things rather than just jobs in the service sector.”
Foundation scholarships to the tune of $600,000 a year also entice those entering manufacturing, education or educational programs related to manufacturing.
Challenging the traditional “man’s world” of manufacturing is another approach to tap a hidden source of potential workers. A program conducted by the College of Engineering and Engineering Technology at Northern Illinois University in Rockford, Ill., focuses on middle school girls selected by their science and math teachers.
Dividends are in the making. Brian Cluff, vice president of Star SU, a gear-making machinery supplier, hopes that his 13-year-old granddaughter Alexi might follow in his footsteps as a result of her enrollment in the NIU program.
Companies with apprenticeships or training programs that had been cut to save money during the 1980s and 1990s are rejuvenating the practices. Penn United Technologies of Cabot, Pa., an employee-owned precision manufacturer, set up an in-house apprenticeship program that blossomed into a 17,000-square-foot learning facility where employees are trained.
Similarly, Jergens Inc., a Cleveland manufacturer of holding and clamping systems, started a training program for employees that evolved into Tooling University, now used by 1,200 companies to train employees through 400 online classes.
Machine tool manufacturer MAG IAS of Erlanger, Ky., began an apprenticeship program with Gateway Community and Technological College in 2007 that provides 100 percent company-paid tuition to successful candidates.
Even a good, old-fashioned job fair can bring results.
Forest City Gear registered 120 people at the Rockford, Ill., manufacturer’s recent job fair. The company was willing to take unskilled laborers and train them, but only 30 were cleared for interview. A dozen were hired. Four had no skills, five had some skills and experience and three were skilled and needed only minimal training.
Still, it’s reason to hold future such events, says Human Resources Director Kika Young.
“We ended up needing more workers even after that,” she says.
Bill Dahm knew he had a decision to make. He and his younger brother Mike were running Mike’s Express Car Wash and the business was having growing pains. The elder Dahm wanted help at the top.
New locations were being opened each year. Mike Dahm, the vice president, was needed to oversee Ohio operations, where he lived.
“I was leading the company and our operational excellence was just suffering,” CEO Bill Dahm says. “With our growth at the time, I had way too many direct reports. We were still making money but it was time to bring somebody in that could focus just on the operational excellence at the location level ? to free me up to work on growth issues, our vision and where we’re going with the company.
“So I had to make a decision ? it was one of the best ones I made,” Dahm says, “I brought in a top executive in our industry to be the COO. Boy, did that pay off because I was trying to wear too many hats.”
Dahm says he is convinced that the 650-employee company would not have the growth or the profitability today had he not been honest about the situation.
“I thought it was time for another top executive here that just spends time working with these area directors and making sure that we operate at a high level of expectation for our customers.”
With his COO, Dahm was able to ensure that the operations went smoothly and that he could concentrate on new ways to make customers highly satisfied. Here’s the formula Mike’s Express Car Wash uses for its 39 locations.
It starts with vision and mission statements. Each states the message and sets the stage:
“Here’s our vision: We will be the service industry leader by embracing innovation and providing opportunities for team members to reach their full potential while ensuring profitable growth,” Dahm says.
A mission statement takes the vision and puts it into action.
“We talk about it all the time,” Dahm says. “To create lifetime customers by delivering a clean, fast, friendly experience through engaged and valued team members.”
Finding employees that fit that definition takes some effort. To be an industry leader, you have to have the best people in the industry. If you don’t make excellent hiring decisions, you may end up trying to make something work that really isn’t workable.
“Sweat the details,” Dahm says. “Of every 100 applicants we consider, we just hire one.”
Do extensive behavioral interviewing, pre-employment assessments and check all references. Encourage applicants to apply online so that the recruiting department can easily look for red flags. When it comes to the actual hiring, don’t let local management have the final decision. Make that a function of middle management to ensure that no shortcuts were taken should less desirable candidates be hired to fill an opening quickly.
“Make sure that you have the discipline to only hire the people who truly enjoy working with customers,” he says.
Once the employee is hired, put in the time to properly train the person. If your company structure includes a central office with branch sites, provide for training at both locations.
“The worst thing you can do is have this great training and then they get to the branch level and don’t see the same examples of customer service and courtesy and smile and hustle,” Dahm says. “It has to be something you practice.”
Base bonuses on productivity. Performance reviews should be done on a regular basis to ensure that employees have genuine buy-in, and aren’t just going through the motions.
“If you don’t take care of that, the next thing you know, it spreads,” he says. “Our company culture has always been about believing that the people that wait on customers make or break your company.”
How to reach: Mike’s Express Car Wash, (888) 285-9274 or www.mikescarwash.com
In the loop
One of the challenges of running a company with multiple locations in different states is staying in touch, keeping everybody on the same page going for the same end zone. Bill Dahm, CEO of Mike’s Express Car Wash, and his team worked out a solution using a weekly video called In the Loop.
The company human resource department shoots the video, which features sections such as a positive comment from a customer, safety tips, employee promotions and other items designed to advance the company culture.
“The number one goal should be to inject your culture and what the company stands for to remind associates that what they’re doing is truly making a difference,” Dahm says.
He based this type of communication on similar ones used by the Ritz-Carlton Hotels and Disney Enterprises.
Employees view the 10-minute production either at their location or over the Internet on YouTube. Location managers keep track of who signs in. It’s the honor system, but the videos are well-received.
“I do believe there is a high percent of our people that watch it because we try to keep it fun,” Dahm says. “It’s just not another way to talk about things they don’t want to hear about. We try to keep it very complementary.”
How to reach: Mike’s Express Car Wash, (888) 285-9274 or www.mikescarwash.com