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Saturday, 25 April 2009 20:00

Crisis management

Gary Holdren hasn’t had to face the worst.

But that doesn’t mean he hasn’t thought about it. Even though Huron Consulting Group Inc. has basically done nothing but grow since its inception in 2002, Holdren, who is the company’s chairman, president and CEO, is like you. He worries, and he realizes that the rough waves of the current economy aren’t going to calm overnight.

And the more conversations he has with clients at Huron, a management consulting firm, the more he hears people concerned with how they’re handling those tough spots.

“What everybody is going to face, and clearly this is something right now when you talk to friends, is knowing the right decisions to make on cutting people and cutting costs,” he says. “These are people, these are families, these are lives and livelihoods, and how you decide whether to stick with those people. Do you decide to make the best times of it, or do you just cut costs and cut heads and move on?”

Holdren has had to face those decisions head-on to keep Huron above the curve, and he did so to the tune of $615.5 million in 2008 revenue, up from $504.3 million in 2007.

Keeping that head of steam during the first wave of economic downturn wasn’t easy, but it starts with the ability to trim your budget while maintaining your core. That process requires you to take stock of your people and your costs and make decisions about what cutbacks you are willing to make in the budget. Once you’ve got that figured out, Holdren says you have to use the power of your credibility and integrity with employees to explain it. You need to be candid and honest in explaining how the cuts you made make your company stronger.

Figure out who’s performing and who isn’t

Going through a budget is never easy, but it’s a little bit easier if you know the things that have to be held sacred. At Huron, there are some functions of the business that Holdren simply can’t cut.

“The thing for me is we just have to be sure that we’re giving good client service and we’re being loyal to true performers who have been good for Huron in the long run,” he says.”

Finding those things you have to keep goes back to your basic vision. Huron prides itself on client service and holding up the people who excel in that field, so those areas don’t come under fire. Once you get past that, Holdren says, there is no one- or two-step process to trimming the budget.

“There’s no secret sauce,” he says. “What you’ve got to do is look at the line items, look at the details.”

That means an evaluation that should lead you to who your performers are — and, more importantly, who they aren’t.

“You owe it to all your employees and shareholders that you aren’t keeping people around who aren’t performing,” Holdren says. “So if you haven’t done a good job of assessing your people, the first starting point is (making) sure that if 5 percent of the work force is not performing, you do what’s best for the 95 percent.”

If you don’t have a system for figuring out who is up to the task, something Holdren does might work for you. Each of Huron’s nearly 3,000 employees has a goal-setting meeting with his or her manager at the beginning of the year where they set goals for the employee. If people have promised to improve on things and simply have not, you might have an easy answer to your hard decision — especially if you mix that in with their overall productivity.

“The way I basically explain this for our employees is, the worst place you can be is to not to do what you said you’re going to,” Holdren says. “So you’re the employee at the most risk if you’ve decided not to follow the conditions of employment. Now some people cannot follow that and be a good performer, but if their performance falls, then they’re at risk. If you have done everything Huron has asked of you and you’re making a good effort and just haven’t had as good a year, OK, you’re going to move up the pecking order. If you do everything Huron asks and had a good year, then you’re pretty bulletproof.”

And while Holdren has great sympathy for how an economic downturn can hurt his people’s overall performance, he also knows that looking at the performance across several peers will show you who is hurt by the market and who just isn’t performing.

“The one thing that I will not tolerate is people not being in the marketplace or not giving effort,” he says. “So first and foremost, you can imagine with 175 to 200 managing directors not every one of them is going to give the same effort. So, from that perspective, it’s pretty easy for me when I look at the results to know the decisions that we need to make. It’s very, very obvious about people who are market relevant, who are team players and who give you effort.”

Work through the budget

Holdren doesn’t like the idea of letting people go any more than you do, so there are many things you can do after you look through the production of employees.

“Once you get through that exercise, and this is exactly what Huron is going through right now as we budget for ’09, you say, ‘OK, if we decide to keep all of these people, then what we may have to do if revenues don’t come and times are short, then people may have to get less bonus,’” he says. “So, in essence, we’ve kept the team together, we’re going to get less pay, but we’re going to stick it out for a rainy day.”

The idea upset a few employees, but in a market where job losses are headline news, Holdren says most people are happy to have a job and the potential for continued high earnings.

“I’m trying to keep all of our employees grounded in these are unusual, tough times,” he says. “Having a job and us not cutting your base pay, not cutting benefits and giving you a good environment to work in, you ought to be thankful that you are working for this company. Don’t mope around that maybe you didn’t get a $5,000 to $10,000 bonus.”

Beyond the savings in bonus pay, Holdren looked at annual outgoing expenses.

“The third thing you examine is all the things you’re spending money on,” Holdren says. “Do you really need to travel? Could you cut back a little bit on training? You just have to go through line by line.”

When you go through that process, you have to make a decision on what things mean to your culture and your business.

“Just a little example is whether you should cut Christmas parties,” Holdren says. “Our people have worked so hard, and our young people enjoy getting together and seeing each other at such a joyous time, and those things are just too short run. You need to continue to have some things that are key to your culture and spend less in other areas.”

To Holdren, the cost of cutting a company event like a Christmas party would be more damaging than cutting some of the company’s travels during the year. He takes a similar look at the budget Huron has for entertaining clients. While it would save some money to cut that expense entirely, he knows that many of his clients have cut their own entertainment costs. This means keeping some of the budget will actually give him an advantage.

“Some clients would say at this stage, ‘I don’t want you to spend a lot or be extravagant,’” he says. “But there will be other situations where if they haven’t been able to do anything because of their (financial situation), and they might want something, so you just have to kind of look at it on a daily basis and see what the value proposition is.”

These are decisions you have to make on a case-by-case basis, but the key is to keep your company vision in mind to preserve the things you can in both your company culture and your value to your customers or clients.

Talk people through the process

Holdren was fortunate enough to play a round of golf in Florida with Jack Nicklaus awhile back, and he picked up a tip. Surprisingly, that tip had nothing to do with his short game. A third man playing with them was a bit older, and he shared his thoughts on doing good business.

“He said, ‘Son, whenever you do a deal or whenever you’re dealing with any person or any matter or any contract or anything, when you shake hands with someone, it’s your word. Make sure that both parties feel like they were treated fairly in any negotiations, that no one feels that they won or lost,’” Holdren says.

And while Holdren still brags that he came pretty close to Nicklaus’ score that day, he holds onto that advice even more dearly.

“First and foremost, people have to believe that you’re trustworthy,” he says. “If people don’t believe they can trust your word and they don’t think that you care about them and that you’re only in it for the money, that’s really a slippery slope.”

Part of building that is a simple philosophy Holdren has: “Don’t say something you just think they want to hear.” He lived that when he had to tell people that the bonus structure would be different for 2009.

“We recently had a conversation about bonuses, and I think it might have missed people’s expectations, but I think they appreciated the honesty and the candor,” he says.

In order to keep that candor, be present when the big announcements are made. In fact, Holdren addressed a new class of employees toward the end of 2008 because their starting day had been delayed by a few weeks.

“I went out and told all of them why they started late, why we decided to do what we did, what had happened to Huron,” he says. “And in some ways, it would have been easy to just say we’re not going to honor our commitment to you, we could have just not hired them and it would have been easy. So I told them what happened to the business, why it slipped a little bit, why we had to defer the hiring, why college hiring wasn’t going to be as much this year and how we’re going to sort of lean on employees and bonuses might not be as good. I told them the things that I suffer with every day as a CEO, and people appreciate that.”

Being present for those types of announcements helps humanize the tough decisions you have to make. It won’t always have employees doing cartwheels about cutbacks, but it will allow them to see you as an honest leader doing the best you can. To Holdren, living by those principles is what will make your long-term success as a leader.

“You have to be honest, and you have to be principle-based, and you just can’t vary from it,” he says. “It could be bringing someone in and telling them to leave because they’re not performing or making a tough decision that’s principle-based or that’s the right thing to do but that’s maybe not the best financially. If you don’t live by that, then you don’t really have much to live by.”

How to reach: Huron Consulting Group Inc., (312) 583-8700 or

Thursday, 26 March 2009 20:00

Division of labor

Susan L. Kelly likes to think about flocks of birds and emergent structures.

Science hasn’t precisely figured out how birds know how to flock without a single leader, but Kelly is working on a similar construction with her nearly 500 employees at K/P Corp. Kelly, president and CEO of the $60 million comprehensive marketing solutions company, needs her people to move together through systems that make clear everything about everyone’s roles so that they can act independently while working together.

“Because if it all has to come top down, if I have to think of all the changes that need to be made and communicate that, it’s too late,” she says. “So we have to have a way for people inside the organization to change on a dime and not crash into each other and yet still make progress.”

Smart Business spoke with Kelly about why you need a distinct chain of command and how writing out what keeps you up at night can help you get your work done.

Accept nothing less than a clear division of labor. When I first came in here, everybody felt like they had the right to know everything about everything. It was really a mentality that people felt they had a right to vote on whatever capital items we would buy, and it’s like, ‘Wait a minute; this isn’t an entitled society here. This isn’t democracy; this is a business, and we’re going to get our division of labor going and we’re all going to shoulder the boulder and push from the same side.’

If I delegated a person to make decisions, let them make decisions. As much as they try to pull you in, have the discipline to stay out of it. Say, ‘No, that’s yours, decide, and whatever you decide, I’m going to go with it, and if you fail, then you’ll fix it.’

After awhile, everybody realizes, ‘Oh, OK, maybe I should just get back to my work,’ and when it’s their turn to have a say, they know they will be the person deciding.

The other thing is reinforcing natural consequences of action. I would get e-mails from somebody telling me what they thought of me or the company or what we should be doing, and I’m thinking, ‘There’s natural consequences to that because you didn’t talk to your manager. I will let that supervisor know that you came to me, and if they feel that that is wrong, you may be terminated.’

People realize my devotion is to my senior managers. You have a right to come to me confidentially, so long as you use the channels right — and your manager’s there to help you, coach you.

A couple of behaviors like that that deal with natural consequences, it doesn’t take long for an organization to snap into that.

Draw support through fair practices. I wanted to make sure we had fairness of practices and fairness around pay, career promotions, positions and recognition. Once people believe that there’s a fair system, that if something is not right, they have a way to be able to scream or just cry foul, change management is a whole lot easier.

We had a roll-up of many businesses that were bought in a consolidation, so they grew up with all different practices, including compensation and organization structures, so things like making titles and positions more equalized across the organization is helpful.

Make sure you really take a look at pay and compensation and understand the levels and positions. Have a way to benchmark and a fair way to assess work and compensate for it, making things a little more transparent.

Obviously, the supervisors and managers communicate that and they can get behind that when they have issues inside the organization.

The thing that always stuck with me is what can be found out will be found out. Don’t ever think you can keep a secret, because what can be known will be known.

Just take the high road as to how you deal with that — not sharing salaries or anything. When they start to see that you’re actually doing benchmarking in the industry, and they’re seeing why they’re not getting a raise at this time because the average position salary is this and they’re kind of at the mid or top range, it’s a little easier for them to understand.

For the most part, they’re not going to look at their next-door neighbor and feel like they’re getting an unfair advantage.

Clear your mind to focus on your labor. Make sure you don’t spend all your time just managing the what-ifs and make sure you’re innovative enough to grow your business.

It is a lonely job … because you have to make fundamental changes in your business constantly, and you want to be able to think out loud about it. But how do you get your deepest inner thoughts and communicate that and make somebody your sounding board without making it your management team? That’s a tough challenge for most CEOs.

It’s more quiet time, it really is isolating myself, and then I kind of map the world. I sort of write what this all looks like and sometimes you can get some clarity by doing that. It’s like a whiteboard — you start to work yourself through it and eventually you start to find a path using chaos theory: What are the three things that keep you awake at night, and then what plans do you have for those?

That starts to clean it out so you can say, ‘Now, I have my energy on the right things.’

How to reach: K/P Corp., (877) 957-2677 or

Thursday, 26 March 2009 20:00

House calls

The oddest thing happens when you call Stephen Shapiro.

He picks up his phone.

Something similar happens if you e-mail him: He responds within minutes.

It’s not just the salesman in his blood; it’s part of the basic philosophy on which he and his partner, Kurt Rappaport, founded Westside Estate Agency Inc. No assistants, no secretaries. Just the basics, please.

Wouldn’t you do just the basics if in one decade you could build your company to $1 billion with four employees, two offices and about 50 independently contracted agents?

Shapiro, WEA’s chairman, has seen how the big real estate agencies do business, and he’s not impressed.

“I don’t think I can be delicate,” he says. “They basically have sales managers that are failed salespeople and they follow a book of rules and become lemmings to the corporate entity and they have to do A, B and C in order to get to D, and everything is very predictable. They have training programs that teach you how to fill out forms as opposed to working with us, where we teach you how to make deals. We are the last of a dying breed of salespeople.”

So when Shapiro and Rappaport opened their high-end agency, they didn’t want to build up a 10,000-employee representation of corporate American bloat. Already the two premier agents in the area — with a client list filled with people you wish would come to your birthday party — they focused on high-end sales and nothing else. They refused to dip their hand in any other businesses and built off a foundation of staying in constant contact with their clients, helping every employee become immediately productive and never forgetting where they made their money.

Here’s how WEA built up its business without being held back by bloat.

Don’t forget where you make your money

So you think it’s time to grow your company up and out. It’s only natural that you add more support staff and more offices. Maybe it’s even time to think about dabbling in some auxiliary businesses. After all, that’s how you grow, right?

To Shapiro, that’s where you start down the path to bloat. WEA has one focus: high-end sales. Everything else is overhead.

“We specifically targeted a market, understanding our goal was not to grow and open multiple offices like a Coldwell Banker or Prudential but deal in one specific market, which is a high-end,” he says. “We realize that we’re not going to have offices with hundreds of people; we’d rather have offices that specialize in the market we wanted to capture.”

Shapiro understands that there is money to be made by putting his hand in escrow and other businesses, but once you start mixing businesses, you’re compromising your core success.

“The other thing that (the large companies) did, they got into auxiliary businesses, they got into escrow, they got into title, they got into lending,” he says. “The commission became less important to them and what they did was force-feed the agents the necessity, ‘You have to make your deal through our escrow company, you need to write our title company, you need our loan company.’ To me, that’s just wrong. If you’re selling somebody a house for $20 million, that’s where you make your money. … When you’re transacting numbers like we do, that’s your primary focus, not your secondary focus.”

To Shapiro, it’s more about keeping his company’s focus tight. You can have higher returns with experts making you No. 1 in one field than by having thousands of employees muddling through several businesses.

A smaller, narrowly focused staff also helps with the next piece of advice Shapiro can extend: Stay nimble and you can excel through technology.

“Another problem of large companies is that when they make a technology change they are doing it for thousands of people, so they’re reluctant to do it,” he says. “And they also put it off because they know that whatever changes they make today, that technology will be less expensive in a year, so why don’t we wait a year, not understanding that in a year there is going to be newer technology.”

From the first generation of BlackBerrys to current phones that turn office voice mails into e-mails, WEA spends top dollar to make sure agents are in touch with clients. Spending on technology creates a more productive employee and can cut overhead costs on extra time and people saddled by old technology.

“We want our people to be available at all times,” Shapiro says. “It has changed the business that when somebody e-mails me, I immediately respond to them. Their conclusion is that they are very important to me.”

Promote quickly

If you want to grow without bloat, you can’t have employees who are sitting around for two years waiting for a promotion. You have to give them a chance to succeed immediately.

“If you don’t get down to the younger ages, then you’ll never grow because that’s where your future business is,” Shapiro says.

So WEA looks for moderately experienced agents tired of those suffocating big companies that have a good set of contacts in the business and immediately lets them sell on the lower end of the company’s spectrum. But while he wants to throw his new hires right into the mix, he doesn’t let them run wild with their $1 million and $2 million deals and put his company’s reputation in jeopardy. Shapiro and other top agents will give smaller clients to younger agents and then subtly check up on them.

“A couple of weeks ago, I had somebody who had a house that was probably worth a million and a quarter and they called me and I said to them, ‘You’ve been a friend of mine for years, I, however, am not the right one to help you,’” Shapiro says. “So I went up to visit them with my son, who is now 25 and has been in the business five years, and he knows that market far better than I do. So I come up, I introduce, I make sure I’m copied on all e-mails of communication so that they feel I’m not the hands-on person, but I’m standing above looking down on their transaction.”

By simply checking in on the communications going on, it’s pretty easy to see if things are going down the right path while letting a person grow. It’s also easy to see if that person is ready to move up to the next level.

“As you move up in price range, that person that’s now averaging a $3 million sale will, instead of saying no to a person for $1 million, bring in one of the lower people in the office and turn it over to them and oversee their deal,” he says.

That creates people that are never in such a silo that they can mess up a deal because of inexperience. At the same time, you can let someone go on his or her own, acting more as a lifeguard than a swimming instructor.

“They know that they always have someone to come to,” he says. “I’m in the office at 8 o’clock in the morning, and if I’m not out showing property, I’m in the office. So either Kurt or I are always here to answer specific questions, so they’re not just thrown out and told, ‘Here’s this listing for a million and a quarter, go do it.’ They’re coming back and saying, ‘This is what happened; that happened. What do I do when this question comes up?’ so they’re getting specific, hands-on help.”

Pick up your phone

Shapiro has a major pitfall you should avoid if you want a company built on quality over girth: Keep egos — including your own — in check.

He laughs it off now, but Shapiro was a bit of an ’80s TV star.

He did interviews with “48 Hours,” “20/20,” “The Today Show” — you name it. A young power agent selling homes to big-time stars, he got caught up in it. But a fateful phone call helped change his mind. Naturally, that call went to his secretary.

“I would have a secretary answering my phone and giving the standard bullshit line, ‘May I tell him what it’s involving,’ — which I hate,” he says. “What do you think it’s involving if somebody’s calling a real estate agent? So I’m in my office and my secretary buzzes me and says Kirk Kerkorian is on the phone, so I assume it’s his secretary. I pick up the phone and it’s Kirk Kerkorian making his own freaking phone calls.”

Kerkorian — a self-made billionaire, who is known as one of the important figures in shaping the city of Las Vegas — and Shapiro built up a client relationship, and Shapiro learned something new.

“He told me that the most important thing you can do is get back to your client very quickly, and he suggested that you should get back to your client in an hour or two,” he says.

Since then, Shapiro has never felt like his ego was too big to pick up his phone.

“I return all my calls,” he says. “I answer my phone myself, and now, in a world of direct-dial phone numbers, why do you need somebody to say, ‘Hey, it’s Mike on the line.’”

It’s only natural as you grow that your stars will think they need secretaries or additional staff. But Shapiro evaluates the situation on a very basic level.

“If you’re not owning a business, then you don’t have any of the back of the business to run,” he says. “So all you’re doing is showing property and trying to make deals, and how many hours a day are you actually doing that? Why do you need two or three people between you and the client? If you’re in sales today, your job is to sell. And in order to do that, you need to talk to your client.”

That led WEA to build up around a simple principle: You answer your own phone; you handle your own clients.

“Unlike the larger companies, where when agents started to make a little bit of money they gave them money to hire assistants, we do it ourselves,” he says. “We take what we can personally handle, and we show our own properties.”

To Shapiro, secretaries and assistants are about bravado. But if someone calls you, he or she expects to talk with a person that knows the answer — even if you are handing that person off to a younger employee, that person wants your guidance.

“It’s the ability to have your client understand you’re the expert in your business and they need to go no further,” he says.

“I tell my clients I’m reachable except when I’m sleeping. What Kirk taught me was accessibility and response to the client — make the client feel that they’re the most important person in your life.”

From 8 in the morning until 10 at night, Shapiro is on call. He responds to everything — requests regarding jobs, internships and out-of-market real estate advice. He recently took a call at 10 o’clock at night from a client seeking advice for an employee searching for a $400,000 home.

“So this is what I want,” he says. “I want him coming to me for anything dealing with real estate. So at 10 o’clock at night, I’m sending him an e-mail back and he’s sending me an e-mail thanks. … And the guy led off saying, ‘I know you don’t do this kind of business, and I hope I’m not bothering you,’ and instead he got the correct answer.”

And if your chairman is doing that, your company will be seen as a mainstay in the industry and your employees will see the way to treat a client or customer.

“(Employees) see that it’s not bullshit, the boss is doing that — this is how he does business,” he says. “And if I go and look at the people that have come here that have become successful, and see how they’ve worked their way up, they all do it the same way.”

How to reach: Westside Estate Agency Inc., (310) 247-7770 or

Thursday, 26 March 2009 20:00

Power of attorney

Kip Reader was excited about celebrating birthday No. 100.

Don’t do a double take looking at his picture; Reader is nowhere near 100 years old. But the law firm where he’s managing partner, Ulmer & Berne LLP, hit the century mark in 2008, and the company spent the year celebrating its successes.

During that celebration, the firm put together a book of some of its best moments and found there was a common thread: Lawyers and employees, both past and present, remarked constantly on the importance of the firm’s collaborative culture.

“A lot of the stories have included in them comments on the firm’s culture and history and the positive characteristics of working here,” Reader says.

That positive atmosphere is created by the firm’s efforts to constantly push teamwork and collaboration, two of Reader’s favorite topics when speaking with his 380 employees.

Smart Business spoke with Reader about how you can set the tone for collaboration and why it’s more important to celebrate teamwork today than to reward it with compensation later.

Use your voice to lead the way. You need to have communications skills, so listen to people on the incoming side and externally be able to move toward that picture. You need to be persistent or dedicated to have the drive to make it all happen.

I’m in regular communication with all levels of our professional and nonprofessional staff on the things that would hopefully move us in that direction. Internally at our firm, we have an administrative staff that I talk to, and I communicate daily with the chief officers of our administrative staff on issues that relate to what the firm is doing, where we want to go, what we want to do and the day-to-day tactics.

No. 1, my job is to make sure that there’s a support system at the firm that facilitates and enhances teamwork and collaboration. That’s part of my role across the board. Part of that is I need to find — and the firm needs to find — ways to reward and recognize people constantly for collaboration, and that is done over the long term by compensation, and in the short term, it is done by recognition.

As an example, yesterday I heard a great story about how a number of our lawyers collaborated on a real estate transaction to a successful result. I didn’t do anything fancy, I just walked upstairs and walked around the offices of the people involved and talked to them about it.

There was a lawyer in another office involved in it, as well, so I called him up and talked to him.

Value everybody’s contribution to build a team atmosphere. We have a firm where everyone tries to operate with one another with a feeling of mutual respect. That’s respect for our mutual strengths but also respect for the differences among us and trying to pull all that together into a collaborative effort.

A team effort is not always the simplest thing, but if you have mutual respect, it is far, far easier to do that than otherwise. There’s a little bit of tradition of what you might call egalitarianism amongst our firm. The idea that an individual’s opinion and position counts for a lot, no matter where you might officially stand in the scheme of the organization. More and more, we have an environment of collaboration. Every large firm needs to have that and foster it every day, and we have been pretty successful in that.

That’s the way we’ve always related to one another. It was that way when I was a brand-new lawyer, and it continues to be that way 30-plus years afterward. You have to appreciate and value the contributions that everyone makes.

Some people are able to contribute at higher levels than others, but you have to be very mindful of the fact that everybody’s contribution plays a role in the overall success of the corporation. You just have to constantly try to do things to keep that point in mind with yourself and share that thought with everybody.

I think there’s no difference; if somebody does a good job, you let them know, acknowledge it. You also try to deal with them as integral parts of the accomplishments and achievements of the firm.

You try as much as you can to diminish any differences between professional and nonprofessional folks by celebrating as one team.

Reward collaboration. The easiest thing is we talk up collaboration and teamwork constantly at the firm. We try our very best to reward demonstrations of collaboration and teamwork — reward it not only in terms of compensation over the long run but to acknowledge it internally.

When collaboration occurs and when it is successful, you give people recognition for what they’re doing.

We sometimes issue internal communications that acknowledge to everyone when our attorneys or staff members have done important things in a team exercise. That counts for a lot. It counts more than the compensation adjustment that happens months or even a year later. It matters a great deal.

The other thing is we have a situation where it’s not just the managing partner that’s doing the acknowledging and giving the recognition. We have practice group leaders and others do it pretty constantly and regularly without prodding and do it in a natural way. That’s a very productive way to make sure everybody is doing a great job together.

How to reach: Ulmer & Berne LLP, (216) 583-7000 or

Monday, 23 February 2009 19:00

Driving change

Ann M. Drake knows your pain.

The more technology comes into play, the more the business world gets itself into a big hurry, and now, you’re paying the price. Even in a tightened economy, people still expect products and services to be better and faster.

Drake’s empathy for that situation comes very honestly. She came into her role as CEO of DSC Logistics Inc. in 1994 and has watched the transformation. The logistics and supply chain industry has picked up speed in the last 10 to 15 years and so has the rate of change and adaptation she and her company have had to make.

“It’s unpredictable change,” Drake says. “When companies started saying, ‘We need a warehouse, and we need it to be up and running in 45 days,’ it was like, ‘Whoa,’ and it was hard to predict exactly what they were going to ask for, so it wasn’t just like it was faster but more of the same; it would be different.”

DSC had plenty of solutions, but the changing environment helped Drake come to a realization.

“We had to learn to be very responsive,” she says. “In other words, people weren’t just going to call you up and say, ‘Let’s talk about a long-term plan.’ They would say, ‘Hey, we just came out of a meeting, and we need this,’ so you had to learn how to be responsive. ... You had to realize that was the environment you’re going to live in, and once you realize that, that causes you to think differently, so then you say, ‘OK, how do I stay close to customers; how do I put mini-processes in place that can be put together in multiple ways?’

Here are some of the things Drake and her leadership team have implemented with the 2,000 employees at DSC to keep the company running ahead of the curve.

Create proactive processes
It sounds pretty basic, but it’s true: If you want your people to adjust on the fly, you better have people who have the ability to do so. Figure out what trait you need the most in your business and figure out what it means to you.

Don’t assume you know now. As Drake’s management style has changed over the years, one thing she noticed was she constantly interviewed almost everyone she met. In doing so, she started to think about the traits that made her people successful and how she was subconsciously looking for those in others.

Take a second and think about your best employees. What do they have in common that makes them adaptable to your business? At DSC, Drake sat down with her senior leaders and had this conversation, and they realized her most successful people are extremely flexible and have high integrity. Once you figure out something like that, Drake says you should put it on paper.

“We have actually formalized a process called ODR — it stands for organizational development review, which includes creating strategic criteria around which we hire and promote people,” she says. “And that includes flexibility and integrity so that we have a formalized written understanding and then we practice what we preach by using that criteria as part of our job evaluation for promotions or our evaluation of candidates.”

In all, Drake and her team came up with 12 criteria, then broke each down into workable definitions that could be explained to a layman. Flexibility, for example, needs to be not just something people practice in their project thinking but also in relationships with others. Now, every hire and promotion in the company is done by a cross section of people who work with the person and can individually judge those characteristics and talk about whether that person makes the cut.

“So we get some good cross-thinking because at times you can behave really well in front of your boss, but you go out there and don’t behave the same way, so it gives us good data on people’s behaviors, which is really what this is all about, and that’s how we decide on the actual promotion of people,” she says.

Using that process in everything is important. It’s one thing for you to hire and promote based on your criteria, but it’s far more important that it gets rolled out companywide.

“You have to always walk the talk, but that’s not enough,” she says.

“I always worry about people that say all you have to do is be a role model — you have to do a whole lot more than that. But if you walk the talk and are selecting people who meet these capabilities, then you’ve got a well-honed team that can act this way, which is what you need.”

And don’t think that once you’ve gone through this process that you’re done for good. You need to periodically look at the traits you value to see if they still fit your business.

“It’s a very flexible structure and yet it’s ‘planful,’” Drake says. “We think through what we’re going to need for the next year based on what our best guesses are so we’re not constantly reacting. You don’t want that, you want to do a better job thinking and feeling what’s happening.”

It can be slow going at first, but Drake notes that at DSC she sees the effect.

“Every now and then, I’ll take a snapshot and look back a couple of years and think, ‘Oh my gosh, these folks are really using their flexibility correctly; these folks understand what we mean by integrity,’” she says. “But you can’t just leave it completely up to culture and chance, you’ve got to have a process and formalization.”

Get things rolling and move on
Another part of leading a company that can adapt in an instant is, well, being a leader who can adapt in an instant.

“Given the amount of information we get through the Internet and the amount of change and unpredictability of the world we live in, you just have to be flexible,” she says.

This puts the onus on you. If you want to push your company, you have to be at the forefront of where the industry changes are happening. That means you have to learn when to let go of one project to tackle another.

“It’s deciding when you’ve accomplished something enough and it’s time to push in a new direction,” she says. “It’s interesting because you push, push, push and lead, lead, lead, and then someday, you need to say, ‘I think we got a lot of that done; it’s time to move somewhere new,’ and that’s an interesting challenge.”

This is a never-ending battle for CEOs, as it can be hard to give up controls. Drake recalls when DSC was emphasizing its focus on process management a few years ago, and it seemed like if she let her reins go, it might not take. How she learned to let go and tackle more pressing issues required a bit of abstract thought.

“It’s like you push this snowball up the hill, and until you get it over the crest of the hill, you’re not done, and it can go backward,” she says. “But once you achieve critical mass, then it quickly moves forward or sustains itself.”

In thinking of her work like that giant snowball, she says a leader will have a natural feel for who isn’t strong enough to hold up his or her weight. That’s the person you have to help first, and once he or she has that snowball to the crest — which means you feel comfortable letting the person manage that project — you can move on to the next project.

“Measurements help with that, but measurements are almost more outcomes and not necessarily focused on the pieces to get there, and so outcomes are what you want, but if you’ve got three good pieces and three more pieces to go to get to the right outcome, it’s helpful to be intuitive and figure that out and be able to say, ‘OK, I got this part accomplished, but the problem is over here,’” she says.

Act on the information you have
OK, it’s the oldest business cliche in the world: You have to trust your gut instinct. But the fact of the matter is, if you want to be adaptable, there will be times you’re going to have to run without all the information.

Drake’s father, an entrepreneur, taught her that there’s actually a bit of a system to the so-called gut instinct. She fleshed that idea out during her graduate work at the Kellogg School of Management at Northwestern.

“(My father) would say, ‘Follow your instincts even before you’re ready,’” She says. “Now, that also was manifested in a different way in business school. One of the things we talked about was how we were always making decisions before we were ready. When you had some data, you were looking at information, but it wasn’t enough, but then it was time to decide. So people who like to do things right and well sometimes aren’t good at quickly getting somewhere without all the data and information that they want.”

Following your gut means acquiring all the information you can and then acting on it.

“You have to make decisions and follow your instincts before you’re ready or you just won’t get anything done,” she says. “And your instincts are valuable, it’s not like it doesn’t count. And that’s something I’ve learned over the years — when I have this intuition about something, it’s usually right. That helps you move faster.”

Following your instincts doesn’t mean that if you have a hunch, you act on it. Instead, it’s taking the course of action that makes the most sense to you and doing your best to explain it to others.

“You have to articulate it enough to convince others if that’s part of what your game is,” Drake says. “The best is to give some examples, and even discussing it with people is a big move. I don’t think people do that enough. ... Even talking about these things to direct reports, or any level of employee, is a really good thing because I don’t think people get taught enough. Once you go to a job, it’s like you get a few training courses, but otherwise, you’re sort of on your own.”

The fact of the matter is, so many companies get so caught up on metrics that they are often slowed down because the idea of using the best information available and making a decision ahead of the market is almost looked down upon. But Drake thinks innovation usually comes from those entrepreneurs working on short information and high adaptability. In fact, she preaches going with an educated instinct to her people.

“I’ll often say, go with your intuition, go with what you think, decide right now,” she says. “It’s also one of those things that you can work on with younger employees, because they haven’t had the benefit of people talking to them about this, and it’s almost sort of expected that you know how and you’re really taught more about subject matter, but it’s these kind of things that help push you.”

HOW TO REACH: DSC Logistics Inc., (800) 372-1960 or

Monday, 26 January 2009 19:00

More than words

Alain Couder has no interest in taking responsibility for all the innovation that comes out of Bookham Inc.

Couder, president and CEO of the developer, manufacturer and provider of optical solutions, constantly makes it a point to tell his people that they’re in charge of innovation. And that communication with his 2,200 employees is a priority. In fact, Couder says that it’s those communications that drive the company.

By consistently building messages focused on where the $235.5 million company stands and on the need for accountability and innovation instead of standard office politics, people begin to understand the call for action.

“Communication is extremely important, and I do know that some people will follow right away, some will resist, but the majority of people are just waiting to know whether we are serious about moving ahead,” he says.

Smart Business spoke with Couder about how to engage communications about breakthrough products and why it’s important to shut people down when they start talking office politics.

Engage midlevel employees for fresh ideas. All the best ideas exist in the company, and top management doesn’t need to have many of those. When you do a turnaround, the first phase the executive team is smart enough to understand what to do, and then, in the next phase, the executive team is not smart enough to find the idea.

So middle management plays a very important role in that — and innovation is the same thing. The individual engineer has to come up with some new idea, and as the leader, you listen and you can grab those.

This is not the kind of idea you will get through a business review; this is where you will get the idea through a midlevel meeting. Meet with a team at the next level below or two levels below you or work with the higher-potential lower management and technical people. But it cannot be the job of the CEO alone; it has to be the job of every executive.

The best business advice I’ve received was from one of the HP executives when I was at Hewlett-Packard, and it was about imagining the user’s needs. All business books tell you about listening to the customer. ... The problem is, no great product has ever been invented by listening to the customer because they don’t know about breakthrough technology.

Your engineers have to imagine how things could be done differently, or you don’t create breakthrough products — like the iPod. No customer survey would have told you to invent that.

So when I joined Bookham, I would visit R&D and say, ‘Where is your skunkworks?’ And they’d say, ‘We don’t have a budget for that.’ And I said, ‘You will never have the budget if you don’t (start it up) because I’m worried about your ability to innovate.’

So that’s the kind of comment that makes people think it’s OK to come up with or share new ideas, even if it’s not part of the budgeted plan.

Create communication around accountability. You have to drive accountability in the organization by having good financial metrics for every job, but you also have to make it visible. For instance, we created bubble charts. The graphs show the profitability of the various product lines and the growth of the product lines, and people don’t like when their bubble is in the wrong part of the graph and they try to move it.

We reorganized the divisions so everyone gets a look at their share of overhead so they know how much they contribute to the profit of the company, so that’s the basics of accountability.

With the road map for new products, initially we are very good at having a road map and it’s always up to date because it’s revised every month. But it was never looking at the original road map compared with the current one, so you just put up the initial road map with the current road map. Just by showing things to people, things happen magically; people don’t like to have those red dots on their targets.

Bluntly share the reality. Look for numbers, metrics, facts, etc., and don’t deny it. Listen to them, look at them and share the conclusion.

I have a reputation for being fairly blunt and fairly direct, and I will show them the financial information in the company — I don’t want to make everyone an insider, that’s the thing about being public — but at the right time, you can do it and say, ‘Look, we are going to make this company successful even through tough times, and this is what it’s going to take.’

Kill office politics. Most of the time politics happen by having your executives come to your office and tell you, ‘I heard that so-and-so is doing this, and I’m not sure about this,’ and all kind of suspicions. So my first answer is, ‘Did you talk to that person to tell him or her that you have a problem with the way they’re managing?’ And if the answer is no, then it’s, ‘Go ahead and go. Leave my office, and go talk to him or her, and then we’ll talk. If the two of you cannot communicate, I can help. But it’s not fair to come to my office unless you have done that.’

The root of office politics is the leader accepts that people come to them with derogatory statements about their peers. Most of the work has to happen between my executives; I don’t need to be involved in every detail.

So if they cannot talk about difficult things, then it doesn’t work.

HOW TO REACH: Bookham Inc., (408) 383-1400 or

Friday, 26 December 2008 19:00

Youth movement

Mike Rippey admits that he would love to be lazy.

“My selfish objective is to do as little work as possible,” he jokes.

Of course, Rippey hasn’t given anyone the opportunity to call him lazy. The CEO and majority owner of auto-parts distributor Radiator Express Warehouse — which does business as 1-800-Radiator — has twice grown companies to land spots on the Inc. 5000, including when his current company jumped from $60 million in revenue in 2004 to revenue of $116 million in 2007.

And Rippey is getting closer to his goal. 1-800-Radiator can credit its boom to expanding via franchising starting in 2004, and Rippey happily concedes that it was his employees who designed the necessary technology infrastructure.

He’s not exactly putting his feet up on the desk, but Rippey has become comfortable growing his company with a young and purposefully less experienced team that adapts to the incoming technology of the field.

Smart Business spoke with Rippey about why you have to trust your best people and why someone with lots of experience knows too much about the ’80s to find technology-driven solutions.

Forget experience, hire young to fit today’s technology boom. Try to hire young people. I had another company back in the ’80s that was a fairly fast-growing company, as well. We went from zero people to 500 people and zero dollars to $50 million in sales in just about five years — and with that company, as we grew, the main thing we looked for was experience in the industry.

Today, when I go try to find someone, I don’t go for experience at all; I go for youth because young people understand the current technology much better than anyone who’s got a lot of experience does. They look at solutions from an IT standpoint, and that has helped us really leverage it more, and today, we’ve got almost three times as many young guys and girls that really get the IT side of stuff as we did when we first started growing. And this is in a world where today’s kids know how to do the parental locks for televisions at home better than the parents do.

I’ve had a lot of older people who come in who have a lot of motivation and drive, but today, they just don’t have the technology, and the solutions that they come up with are solutions that apply 10 or 15 years ago. They don’t think about going on Google and finding an answer that way. Or they don’t know things.

For example, most of the people here know how to write SQL (structured query language), which is a computer code associated with most Microsoft products. And these guys that have been around corporate life for 10, 15, 20 years don’t even know what SQL is.

Hire the friends of your young employees. It’s been word-of-mouth and friends basically who have formed the nucleus here. We’ve found some people the traditional way, but mostly, it’s about knowing people who are already here.

Friends of friends are usually similar to the friends that are here. They happen to be the right type of person to begin with — otherwise, they wouldn’t have been friends with the successful people here.

And the people inside who chose the friend to come in here, chose that friend because they matched what we have here. They didn’t choose the friend that’s sort of lying on the couch all day long. So that recruiting process was a big part of it, and once you have them in, if you have the right kind of person, you don’t have to do much with them to get them to adapt — they are already the right kind to begin with and have the natural personality and skill set to fit with what we have here.

And if there is anything I’ve found over the past 35 to 40 years of business, it’s that it’s a hell of a lot easier to find somebody good than to get somebody who isn’t good and teach them how to be good. The second is virtually impossible.

Once you’ve got a good team, put them in control. Once you’ve got a good enough crew working with you, which took us about six or seven years to build, the most important thing is you’ve got to give them tremendous responsibility and you’ve got to let them do their stuff with a minimal amount of interference. I’ve always been a little bit more on the loose side as far as structure.

I just can’t imagine doing it another way because then you’re just micromanaging 18 hours a day, literally, and there’s no way you can be good enough to cover all the bases with that kind of an approach. So you have to be very encouraging, upbeat; you have to really forgive mistakes easily.

Obviously, if a guy makes a lot of mistakes, he’s by definition not a good person to begin with. But if a person’s good, he’s going to make mistakes, and you just can’t come down on that in any kind of a big way. You just have to sigh and say, ‘Great, not a problem, let’s try not to make the same mistake twice.’

But if a person by definition is good, that person will not make the same mistake twice. You have to allow that. So the more I can have good people doing all the work, the more it accomplishes my personal goal — which is to have everything work out great with me literally doing nothing.

HOW TO REACH: Radiator Express Warehouse, (866) 780-9392 or

Friday, 26 December 2008 19:00

Personal touch

Diana M. Thimmig wants to know about your background.

Don’t get the wrong idea: She’s not digging for dirt. She is a champion of all upbringings and backgrounds as partner-in-charge of the Cleveland office of Roetzel & Andress.

But she wants to know as much as she can about you so that she can help you succeed. Born in Germany, Thimmig concedes she hasn’t followed the usual leadership path that you’d expect of someone charged with 85 employees. But she’s been a big hit at the $88 million, Akron-based firm because she is forever willing to take the time to understand her people and earn their trust.

As a result, she’s been at the helm during a time when the Cleveland office has become an anchor for the firm, almost tripling in employee numbers this decade.

Smart Businessspoke with Thimmig about how to hone your employees respect for you by taking a stake in their personal lives and why a superstar with a big ego is best off flourishing somewhere else.

Forget about e-mail, and go talk directly with employees. It’s critical to have frequent contact. That doesn’t mean an impersonal memo or e-mail but rather face-to-face contact — that’s the most effective way to communicate. I make a concerted effort to reach out to our attorneys and staff, both on a personal and a professional basis.

I don’t think you develop personal relationships through e-mail. To build a good relationship, people want to know that they’re a valued member of the team, and they want to be engaged. They don’t want to come in and simply punch their time clock and bide their time until the end of the work-day; they want to know they’re making valued contributions.

The way that you do that is through personal interaction and soliciting their ideas and listening to what they have to say. You can’t do that in an e-mail.

Roetzel & Andress has had a lot of strategic growth the last five years, and the Cleveland office has expanded to three floors now. So each day, I circulate through each of the floors to stay close to the folks, so if people have questions or concerns, they have an opportunity to voice them and they can get them addressed from me. And I know it’s effective because it works; I have people feeling comfortable enough to come into my office every day.

Take an interest in your people outside of work. There’s so much you can do as a leader to add that comfort level, to establish that trust factor. We do things outside of the workday together.

Get to know people, get to know them on a personal level, get to know about their spouses and their children and what their dreams are and aspirations are. It makes people feel as if they can belong without being the same.

We don’t just support various organizations monetarily, we also provide leadership in organizations and hands-on work. Every month, we go to the Cleveland Foodbank and we work side by side — partners, associates, staff members — sorting food with other volunteers where it’s outside of a formalized work setting. The barriers come down, the titles come down, and people just work together.

Over time, I learned that complete consensus is rare, and that the best way to deal with challenges isn’t through formal meetings with fixed agendas but really behind the scenes in the personal relationships that you develop. When you build these solid relationships, a leader can have an open and honest dialogue with employees and they will know that you care about them and understand them.

There are two important byproducts as a result of those relationships — trust and mutual respect. At the end of the day, I’m the one that has to make a decision, and it may not be a popular one. But because of the trust and mutual respect, people abide by the decisions, whether they agree with them or not.

Construct a culture without egos. Our culture is one that embraces diversity; it fosters an atmosphere of mutual respect. So if I’m going out and looking to hire somebody, it’s easy to say that we look for the best and brightest — I think everybody would say that — but what we’re looking for are people that value team-work.

And I’ll tell you what we don’t look for. It doesn’t come as any surprise to know that in the legal profession, we have our share of lawyers with inflated egos, and we expect people to check their egos at the door and work with other members of the team. If an attorney is unable to embrace that concept, it doesn’t matter how profitable he or she is, he will or she will be asked to leave — it’s best that they find another suitable place where their egos will be allowed to flourish and grow — which is really important for the other people to see, and it reinforces that culture.

When you’re hiring, you can find out a lot more than just (what you hear) in the interview. We’re not that big of a community.

There are a lot of us that are active in professional organizations where we interact on a daily basis, and if you have those conversations, it’s pretty easy to get a sense of a person’s ability to work with others or, conversely, an inability to work with others. It kind of follows them.

HOW TO REACH: Roetzel & Andress, (216) 623-0150 or

Friday, 26 December 2008 19:00

Creative relations

Nancy Ruscheinski has done all she can

to drive growth at Edelman.

She’s helped make the nation’s largest

public relations firm tops in Chicago, she’s

responsible for carving out a niche for the

company by founding its interactive and

creative services groups, and, of course,

she took more than a monthlong sabbatical

not too long ago.

That’s right, she took a nice, long sabbatical to clear her mind and do some traveling with her family. Look, Edelman is not

Ebenezer Scrooge’s PR company. With the

competition constantly vying for

Edelman’s top clients like Burger King and

Wrigley, Ruscheinski and the leadership

team are forever pushing new angles on

how to spark growth through creativity.

“The industry that we’re in, creativity is

table stakes,” She says. “It’s not a luxury;

it’s a necessity for us, so there’s real self-interest in creating an environment that

spurs creative thinking.”

Creating that environment isn’t easy, so

Ruscheinski, who is president and chief

operating officer for Edelman U.S. and

chairman for Edelman Digital, is constantly

thinking about what motivates her people.

And the more time she puts in, the more she

realizes she is at her creative peak when

her mental batteries are full, and maybe,

just maybe, it’s the same for the roughly

1,900 people in her charge. So while nobody

likes to see a good employee take several

weeks off, Ruscheinski and the other leaders at Edelman have been pushing for more

open ideas the past few years to give it an

edge in innovation. Edelman has been

focused on creativity for a long time, pushing beyond $200 million in fees early this

decade, but Ruscheinski, who is also on the

firm’s executive committee that oversees all

3,100 of its employees, is part of a new leadership breed that has focused on a people-first strategy to drive growth.

That drive has been built around two

things: the internal creativity in the office

and the space people need outside the

office to keep from burning out.

Bring creativity into your office

Like you, Ruscheinski has spent the time

vetting candidates and hiring creative people

in her company, so that should be enough to

move the Edelman engine, right? Well, even

in the most creative industries, many of your

people are saying the same thing.

“I try to be creative every day, but I’m so

busy, and I’ve got these tasks to accomplish, and we’re all going so fast, we don’t

pause to celebrate creativity and really

think about it,” Ruscheinski says.

So at Edelman she really began to think

about how to get employees to be more

creative. The first step was giving them the

time and power to think about what would

help them — remember, telling them what

will make them more creative won’t make

them more creative.

“Half the secret is just realizing that some

of the best ideas aren’t your own,” she says.

“We encourage people to innovate here

and come up with new ideas and what can

we do to make this a better place, not just

to come up with new ideas on behalf of

their clients but for Edelman.”

Part of that was the time. Sure, it costs

money, but employees sometimes need to

be away from the daily monotony —

phones, computers, cubicles — to free up

their minds. So Edelman closes down for

creativity days a few times a year, taking

employees on field trips to places of their

choosing, like The Art Institute of Chicago.

That doesn’t take much effort, really. You

can ask employees for a list of places they’d

like to visit and then vet which ones are realistic from a time and budget standpoint.

And, before you start adding up the costs

of a field trip and a closed office, consider

that the main idea is to stretch people’s

thinking to create new ideas and keep

them fresh. At Edelman, Ruscheinski

helped push the company to be the first to

embrace the Web as a medium, and in 2007,

she helped spearhead Edelman Studios, a

virtual film studio that connects brands

with emerging filmmakers. She’ll be the

first to say that those ideas didn’t come from meetings in boardrooms.

If you don’t want to shut down operations

to let people get creative, you can go with the

old standby: a little competition and cash.

Edelman has given out small money grants to

the person with the best idea for redesigning

his or her cube. The firm also recently created a cash award for creative excellence that

is given for the company’s most creative idea

that’s used — whether it’s something that

runs in a campaign or an internal idea.

“We put a big spotlight on them and celebrate those, so things like that help keep

the concept of creative very fresh and

dynamic here,” Ruscheinski says.

Those little freedoms — a cube wall that

someone turns into a Hawaiian theme or

an award given in front of the company for

creativity — can be more than enough to

start people’s innovation machine and

keep them happy with their job.

Edelman also did a contest where people

could submit ideas for redesigning office

space to become a creative space. The

reward was given based on the top design

that mixed both a sharp, relaxing setting and

a meeting room where work could be done.

By letting employees enter the contest, creativity and energy instantly began brewing.

And while those spaces are relaxing, they

are also functional: They are filled with white-boards, markers and other tools to start a

brainstorming session. The idea is if you’re

not comfortable giving people entire free

days for creativity, then find ways to put a

hint of the office into things that help people

feel relaxed and in touch with the world.

“People spend a good chunk of their lives

here in the office, it’s not a 9-to-5 environment at all, so we’ve brought the outside

world in,” she says. “We’ve done wine tastings with a little education thrown in —

teaching people how to be knowledgeable

about wine when they take clients out to

dinner. We’ve done panel discussions on

politics and the elections, trying to stimulate intellectual curiosity to get people to

stretch their thinking. They are little, easy

things, but it makes a world of difference.”

Push employees toward an outside life

OK, this next part might hurt a little. If you are really trying to

push your people to do something your competitors haven’t

thought of, Ruscheinski says you might want to send them home

for a while.

“We encourage people to be curious about and active participants in the world outside of their cube, the world outside our

offices,” Ruscheinski says. “So we like people to be active in the

arts and the community and politics, to really sort of stoke those

interests. We try to give people the ability to pursue those interests

outside the office, and that is directly related to motivating staff

and creating a creative culture.”

When Ruscheinski says the company encourages participation

outside of the office, she really means employees are given a good

shove in the direction of having a life. She recently helped create a

program called Edelman Escapes, which gives employees an extra

week of vacation and $1,000 — with the only caveat being that they

must first fill out and have approved a form detailing why they will

use this time for a vested personal interest.

“We’ve given out dozens of these over the last few years,” she

says. “We’ve sent people to cooking school, we’ve given people the

opportunity to finish a novel, to visit an exotic location, to record

a CD, and in a lot of cases, it’s to support a cause. So it’s highly

motivating, and that’s gone a long way toward keeping people

refreshed and energized and motivated.”

Before you think Ruscheinski and Edelman are being a bit too

kind, remember that they wouldn’t keep doing these things if they

didn’t find some value in it. Every leader has had a good employee

quit or retire early to pursue a personal passion, but when you can

find affordable outlets to let them tackle a passion and keep their

job, you create a bond with your company.

“We’ve reaped the rewards,” she says. “It’s a great retention strategy, so again there’s self-interest here, too. It’s an incredibly nice thing

to do for employees, but it keeps people feeling very good about the


How great of a retention strategy has it been? Edelman tracked

its most recent turnover rate at about 15 percent. The industry

average is 24 percent.

So that brings us to the sabbaticals, the most outrageous contrast

to the old axiom that the best employee is eternally at his or her desk

working quietly. If you want the outline for how a plan works, here it

is: Employees at Edelman are eligible for a sabbatical for the first

time after they’ve been with the agency 10 years. At that point, they

get three weeks. Every five years thereafter, they are eligible again

and get another week added on — and, yes, this is on top of vacation

time. The limit is six weeks, and the time must be taken all at once.

First, Ruscheinski wants you to know this formula wasn’t just

pulled out of midair. If you want to give employees extra time off,

start with accountability. Making 10 years the minimum amount of

time before someone can take a sabbatical ensures that the person is

probably a pretty valued employee who can balance his or her work

with this break. And, even with 3,000 employees, she says you’d be

surprised by how little overlap there is with the time rules.

“Obviously, I will say we did all the metrics before,” Ruscheinski

says. “We figured out the cost associated with it and the metrics and

how many people hit the 10-year mark every year and how many

people in the same group would be out at the same time, but it is

extremely manageable if you do your homework in advance — it

ends up actually being kind of naturally staggered.”

Beyond keeping turnover numbers low, the break tends to give

experienced employees a new lease on their career.

“It’s incredibly hard to quantify, but anecdotally, I’ve seen it, I’ve

heard it, you can talk to any of the people that have come back

from sabbatical, and it’s like they come back as refreshed and energized as a new employee, and they’re just going, ‘Bring it on,’” she


And perhaps there is one way to quantify it: Edelman has continued

to grow through its creative ideas. In fact, the company did more than

$400 million in fees in 2007, roughly doubling its size in the last four


Not every leader is going to be able to succumb to the idea of

sending people away for weeks at a time or paying for them to take

cooking classes, but the thing that Ruscheinski has seen and

helped create at Edelman is that fresh, energized employees motivate a company’s innovation and growth. She knows that if you

can create even one or two programs to do that, your competition

will have a hard time keeping up.

“I’ve been told this by several employees who have come here

from public companies, it’s much easier to invent things here, try

new things and scrap things when they don’t go well,” she says.

HOW TO REACH: Edelman U.S.,

Tuesday, 25 November 2008 19:00

Quality control

Tom Moore may not be the mother of invention at his company, but he is the father of quality.

Moore, CEO of Cord Blood Registry, founded the company with his daughter in 1995 with the idea of creating a company that collects and stores the stem-cell-rich blood from a newborn’s umbilical cord. That concept put them on the map, and there was one business lesson Moore immediately applied at CBR: Quality comes first in everything.

“If you don’t have quality, you end up being a commodity; you can’t differentiate,” Moore says. “I learned a long time ago that a very high-quality company is less expensive than a company that continues to make mistakes.”

So as CBR has grown to more than $100 million in annual revenue, Moore has built the company’s employee base carefully, getting to 300 employees one quality person at a time.

Smart Business spoke with Moore about how to hold people accountable for quality and why building a business is like opening a paint tin.

Don’t add people until you’re good and ready. I’ve always likened starting a business to taking the top off a paint tin. To take that top off, you can kind of wrench it off in one fell swoop, and you end up with paint all over the place, or you go around that tin lid two or three times with incremental movement.

You need to add people, but if you try to do it in one fell swoop, you’ll end up failing and creating a problem that you’ll then have to clean up. So our progress is incremental, and as you do that, you are developing people who understand the business inside of the business.

So you really have to want to add a slot, you have to justify it. As you add people, if you add them too fast, it’s back to the paint tin analogy; you can lose process because you have new people reporting to new people reporting to new people, and all of the sudden, you’ve lost culture. So that’s something you always have to keep a vigilant eye on, and the best way to manage that is head-count control.

As we look at adding new positions, we say, ‘Why are we really doing this, what value is that going to add, and is it really required?’ because if you’re just bringing in another body, so to speak, it doesn’t really add value, it adds more complexity. Whenever you bring in a lot of people all at the same time, you risk losing your culture, losing your processes and losing what you’re all about.

And it’s not that those people don’t try to do the best job possible, they do, but they’re all from different backgrounds and companies, so they make up their own processes.

Hire someone who is passionate about quality. I think what the prime characteristic or thing that I look for is, can the guy taste it, does he have the desire to really contribute? So it’s not, does he have the desire to earn money? Obviously, everybody needs a paycheck, but it’s more than that. He has to have the desire and the fire in his belly to do great things — and whether that’s a person who is on our processing floor or that’s an executive, it doesn’t make any difference.

You have to get in their head and find out what it’s all about for them. If somebody is coming in the door and they’re looking to make millions, that’s the wrong predicate because going after the money is not where to build something.

There are not set questions (to ask). It’s really like, ‘What motivates you, what turns you on, where do you want to go, what do you want to do?’

I was talking to one of the people who came to work for us here, and he said, ‘You know, I walked into the building and talked to a few people, and I want to work for this company.’

And he’s done a phenomenal job; he just wanted to work for CBR.

Create a process for quality accountability. We push empowerment down to lower levels of the company and make sure our people are empowered but also that they’re accountable and responsible.

Our customers give us a report card — we get about 100 report cards a day from our clients, and they fill them out online, and they tell us what they think of our service. We have what we call ‘in the reds,’ and an ‘in the red’ is somebody who is not satisfied. And if there is a ‘not satisfied,’ I get a copy of it, my COO gets a copy, the department manager does as well as the person who handled that call.

And that department manager has to contact that client within 48 hours and report back and find out what we could have done to make that interaction outstanding. Everybody knows what ‘in the red’ is, but an ‘in the red’ is an opportunity for us to improve.

It’s not a scolding at all. In fact, we ... take the whole customer improvement process as an opportunity for us to never have that happen again. And if that never happens again, you never have to fix it again, and that says you have a lower cost of product because you start to run it very efficiently.

What your quality process helps you do is become the leader in the market — and that’s why I said quality is cheap, because you have lower cost.

HOW TO REACH: Cord Blood Registry, (888) 932-6568 or