SBN Staff

Friday, 26 October 2007 20:00

Stan Levenson

A potential client asked Stan Levenson to make his company look so good that it would have a waiting list of people who wanted to work at it. But when Levenson talked to current and former employees, he found the business ran like a sweatshop. The potential client told Levenson that it was only his job to make the man look good, but instead of simply following through on the man’s demands, Levenson told that potential client to clean up the company internally before Levenson could promote it externally. Levenson is CEO of Levenson & Brinker Public Relations, one of three marketing services companies comprising The Levenson Group of Cos., which he co-founded with his wife, Barbara, and it is his dedication to doing things the right way that has helped the couple grow the group to $100 million in billings last year. Smart Business spoke with Levenson about following your instincts and the importance of a positive attitude.

Trust your instincts when hiring. Your instincts are important. When you meet someone, you either are turned off and they don’t have to get into their philosophy — it’s an emotionalism that you feel good about somebody — or you keep them at a distance because you’re not sure of where they’re coming from.

It’s important to listen and hear their attitudes and reflect certain character, personality — not unlike a shrink who does a diagnosis before giving a remedy or a doctor conducting an examination before prescribing a medication.

Focus on benefits, not attributes. When a new employee interviews, rather than telling him how fortunate he’ll be to join us because we’re this, this and this, I’d much rather share with him what some of our folks have accomplished for themselves professionally and personally by being in our family.

The same with products that our clients might have. No longer do we focus on the attributes of the product as it relates to the ingredients. We talk about the benefits that those products and services will instill in the users and consumers.

You see that so often in cosmetics and soap — you don’t care about the ingredients in a bar of soap, but you hear how good it will make you feel and the lovely lifestyle you will have and how confidence-building it will be, so we like to focus on benefits.

Hire prepared people. I love to hear someone with a real positive attitude, enthusiastic and also one that does their homework.

To give you an example, for individuals looking for their first entry-level position, if one comes in and says, ‘I want this job so bad. I’ve heard of you all, and I’m wanting to liberate myself from my folks, have my own apartment, have my own car,’ I understand where they’re coming from because we all relate to that, but that person is one scenario.

Another person comes in and says, ‘Mr. Levenson, you’re the kind of company where I think I can really contribute to your success. I read where you worked on this account and how you did this and how come you didn’t do this when their competitor is doing this? I think I can attract new business and strengthen your services.’

Again, benefits selling. I look for that attitude, enthusiasm and preparation. It’s easy to get enthusiastic and just throw out ideas, but today, you have to be very well-informed.

If someone hasn’t done their homework about who we are and who we serve, then it’s incomplete. Every company has its criteria. Some do testing, and that’s all important, but overall attitude and enthusiasm and a caring attitude is so important.

See other points of view. There is more than one way to view a situation. The more informed you are, the sharper your focus becomes. We all wear different lenses in our glasses, and one person may perceive a situation to be one thing and another person another thing.

It’s not so much trusting your folks, but it’s having the confidence in them that they command. They may make a decision that you don’t agree with, but if you can understand their rationale for making it, you can respect it unless that rationale is flawed.

Create balance. When you’re consumed in your work, you can be more productive and successful with balance than just keep grinding, so you need to call time out and on a daily basis have some interest in being with family and not getting into your work.

It really too depends on your work and the type of work you do. We do a lot of retail work for clients, like Zale Corp., so if we’re out on a weekend going to a movie at the mall, and if we see a jewelry store, we’ll always check it out, even if it’s a weekend and leisure.

Your passion for work can be healthy, but certainly, wherever possible, it should be managed.

Understand your clients. It’s important to understand the needs and interests of your clients and what they want to accomplish.

We do a lot of role playing. We anticipate needs and interests of our clients. We dramatize and demonstrate leadership, so if they say, ‘Here’s what we want you to do,’ we want to go way beyond faithfully executing their requests. We want to say, ‘What about this, or let’s think about this.’

Say thanks. The interest in nurturing your folks and being a coach as well as a cheerleader is something we believe in.

Recognition and incentives are an important element to a successful culture. I also think encouragement and extending appreciation for good work — we always appreciate someone saying, ‘Nice job,’ or sending a note and saying, ‘We’re really proud of you for what you’ve accomplished.’

We like to do that, and it gives us great pride to applaud the success of our people because it’s the company’s success, but it’s also a stimulant for their own growth and fulfillment.

HOW TO REACH: The Levenson Group of Cos., (214) 932-6000 or www.levensonandhill.com

Friday, 26 October 2007 20:00

Inner strength

When Tom Crawford took over as president and CEO of Crawford & Co. in 2004, he was the fourth CEO in six years.

“That in itself is very destructive to the stability and the communications and visions of a company,” Crawford says. “You cannot change leadership at the top that many times in that short period of time and expect a company to move forward.”

Crawford & Co., which provides claims management solutions to insurance companies and self-insured entities, had previously excelled at investing in people but that focus had dissipated, and its training institute had been disbanded. Without the proper training, quality levels had slipped, so where it once was a quality leader, it now lagged behind.

Seeing the state of the company, Crawford could read the thoughts rolling through every employee’s mind.

“Realizing there had been such a turnover at the top of the organization, no matter what my background had been or successes had been, I’ve got a group of people looking at me wondering, ‘Well, how long is this person going to be here, and why should we pay attention to him?’” says Crawford, who is not related to the Crawford & Co. founding family.

He realized if he wanted to get the company moving forward again, he needed to refocus on its people, but he couldn’t just make changes and expect the employees to blindly follow him. So he committed to improving one of the most basic business fundamentals out there — communication.

“The value of communication as you make change is far more important than any one thing you’re doing,” Crawford says. “Certainly, visions and objectives are important, but for them to be effective, you have to communicate them, and you have to explain them, and you have to get, to the best degree you can, buy-in. It’s that important, and I think it’s fundamental for a successful CEO.”

Crawford says it’s fundamental because management and employees can’t work together if they don’t know what the other is thinking.

“Over a period of time, I think you will fail,” Crawford says. “In today’s world, where there is a distance that has been built over the years, I think on average in businesses in our country, there is a disconnect between leadership and the associate. The companies that have (communication) are winning. The companies that don’t have it may win for a short period of time, but I do not think that sustainability of bringing your vision and your objectives to life in a company will ever materialize long term.”

Communicating goals

Crawford began his career as a clerk in a hardware store. It was there that he first observed that people in the lower ranks were a lot smarter than management gave them credit for.

“They have vast amounts of knowledge of what’s wrong, and when things are wrong, they have a good knowledge of what it is,” he says. “They touch our clients and customers every day. Leadership does not.”

Crawford wanted to tap into that knowledge base so he instituted Friday morning breakfasts every other week with 10 associates from the field who weren’t managers. He flew them into headquarters and met with them to ask if the company was doing what it said, what they saw changing, how they thought communication was and other topics.

Following the breakfasts, the employees would have their picture taken and be sent back to their respective locations with an additional title — ambassador of the company.

“What the people say carries incredible weight of how this company or any other company is viewed on the street,” Crawford says. “My voice gets to a few, but their voices get to hundreds of thousands of people, so the more they believe in their company, the better off we are.”

He also conducted town-hall meetings every quarter and gave employees the opportunity to ask about 10 to 12 questions from the floor at each one. Those questions aren’t pre-screened — they come just as people think them up at the meeting.

“That builds credibility over a period of time because there are some really tough questions that come out when you open it up to the floor,” Crawford says.

He also visited offices, and whenever he did, he’d have a short meeting with all the employees to give them yet more chances to ask questions.

“That pays great dividends in strengthening our communications and letting people get things off their chest that they drive home wondering about,” Crawford says. “They get the CEO standing in front of them, and all I ever ask is, ‘Ask the question in a professional manner, and you’re going to get a professional answer.’ If I don’t have the answer, we’ll get it for you as long as it’s something I can communicate within the SEC [Securities and Exchange Commission] bounds.”

Additionally, he started monthly management control meetings with all of his direct reports. It’s an 8 a.m. to 5 p.m. meeting, and each report gets 45 minutes to update him. Each person can bring a guest too, so this allows employees to see the inner workings of management. At the conclusion of these meetings, the managers take that information back to their people and communicate it down the ranks.

The breakfasts with his employees then let him know just how effective these communication efforts are.

“It’s interesting when you call 10 people into the room every other Friday that are below the management level, and if you listen, you’re going to know if that message is getting out in the field,” Crawford says.

Lastly, he started holding managers accountable for their communication with employees via performance evaluations. When he started, between 600 and 700 employee performance reviews were late, and now that number is just 16. If employees don’t know where they stand, they can’t improve and move to the next level, so the business can’t move to the next level.

“Those things are just fundamentals in my eyes, but when you walk into a company where they don’t have things like that, it becomes not just a business fundamental, it becomes crucial to turning something around,” Crawford says.

Surveying the staff

Throughout his career, Crawford has seen how helpful employee surveys can be to gauging the company’s progress and promoting open communication.

“You’ve got to establish benchmarks when you get into a company, and that’s one of the biggest benchmarks I’ve been working from is our own employees’ evaluation,” he says.

He instituted a 25-question survey where employees ranked each question on a scale of one to five. The back was blank for them to write any comments or concerns on, as well.

“There are two things people say on a survey,” Crawford says. “They say, ‘If I say what I really think, they’ll get me,’ or No. 2, ‘We’ll say what we think, but they won’t do anything about it.’

“Those are the two things that you have to convince people of — that it’s anonymous and you never allow it to be anything other than that. If you do, it’s worthless to do. It’s death to your program.”

To prove these things to people, he took their responses and went back to them as a group.

“You must respond with their results, as they state them, and what you’re doing about them,” Crawford says. “If you don’t do those things, don’t do the survey.”

It’s also important to share not just the areas that scored well, but also those that aren’t doing well. Honesty will help people buy in to what you’re trying to do, and continuously tracking and showing people the feedback helps others understand the state of the company.

“We measure everything in graphical form,” Crawford says. “I’m convinced, as a person that’s come up through the ranks, that when they showed me graphs, if the line was going up or down, I knew we had a problem. I think people can identify with measurements when you paint that picture of the key measurements of the company.”

Since that first survey, the company has done three more, and Crawford is listening to what people say. When people said that one personal day wasn’t enough, they increased it to two, and now employees have three.

“You don’t change it all at one time, but it’s touchable,” Crawford says.

While some things are implemented and transitioned to gradually, surveys also help reveal more serious problems that require more immediate action. When several people from one department wrote in that their supervisor had treated them dis-respectfully, Crawford and his team looked into it. They found that this person had indeed been mistreating the employees, so he removed the person from the job.

“That’s dramatic,” Crawford says. “That doesn’t happen often, but you have to react if someone takes the time. If you have a 50-person unit and 30 of them write comments very negative about who’s leading them, then you have got a problem.

“It also lets the management know that we’re very serious about doing what we say — don’t be out there operating in the culture you established, which is outside the culture that we have.”

While the thought of figuring out a survey system may seem overwhelming, Crawford says it’s quite easy to do, but instead of talking about it, you have to just plunge forward and do it.

“Put it in place,” he says. “There are a lot of companies you can hire that will do the survey for you electronically. It’s not hard to do it, but be serious about it. Don’t say it, and then not give them the feedback.”

Only half of Crawford’s employees responded to the first survey, and one question that asked if they would recommend someone else to work at the company scored below a three. Now 82 percent of employees complete the survey and every score has improved. That same question now scores above a four, on average.

These survey results tell Crawford that he’s on the right track, but he cautions that it’s also important that once you choose what to measure, that you stick to it and not change those measurements or how you define the measurements, otherwise you’ll not be able to accurately gauge how the company is performing.

While the surveys have revealed that communication and employee satisfaction are up, the numbers also say Crawford & Co. is moving in the right direction. Since 2004, total revenue has increased nearly 11 percent to $900.4 million last year.

As Crawford & Co. continues to rebuild its employee initiatives, Crawford will continue striving to bridge the communication gap between employees and managers, and in doing so, he knows the business as a whole will improve.

“I do what I think has to be done, and I thought clearly the culture of communications and building connectivity between associates and the leadership was vitally important to this company,” Crawford says. “That’s a judgment you make as a leader. We started acting upon it, and we were right. You have to know when you’re doing a right thing. When you believe you are doing the right thing, you have to go for it. Communication to every level of the company is the right thing to do.”

HOW TO REACH: Crawford & Co., (800) 241-2541 or www.crawfordandcompany.com

Tuesday, 25 September 2007 20:00

Jerry Crawford

When the 2002 Olympic committee approached Jani-King International Inc. and asked it to bid on the cleaning job for the games, President Jerry Crawford knew that it was a job meant for his firm. The cleaning franchise company — with 700 corporate employees and tens of thousands who work for his franchisees — won the bid for the Salt Lake City games and produced outstanding results. Crawford has hired passionate people who take pride in their work, and the Olympic committee was so impressed with the results that it sent him a letter saying it had never had any company clean as well as Jani-King. Smart Business spoke with Crawford about how he hires and why hiring someone with a little bit of an ego can be a good thing.

Take your time hiring. There’s good people out there; we just have to not be lax in finding them.

We have to do our due diligence and take the steps internally to recruit and train better people. Some people get busy, so they’re just anxious to get someone hired and fill the void, but we can’t do that. We have to make sure we find the right person that we feel the best about, that will take on this position and be accountable for it.

Don’t get in a hurry. Be aggressive and find the right person for the position. I think we take the easy way out sometimes and just hire someone that maybe isn’t the right person for that position. Then you have to go through it again and again.

Hire good attitudes. That’s really key, and they’re able to be responsible, accountable and make a commitment to your program, your concept.

Some people will do some research about your company before they ever come to the interview, and that’s an indicator that they at least took some time to study about your company. Secondly, I like to hear from somebody sitting across from me that they believe they’re the best person for the job, and if you don’t hire them, you’re going to miss out hiring the best person for the job.

Generally, we don’t mind a little bit of ego or cockiness as long as it fits in to our team atmosphere and is constructive rather than destructive. It’s a leader who can generate more from those around them and can help others grow. We’re looking for people that have coaching and leadership abilities.

We have to check their references and get background checks and all those things, but you’re looking for someone who can walk the talk and has a proven track record and [can] be accountable.

Set expectations upfront. Before they’re employed, we have a pre-employment checklist that tells them what we expect on a day-to-day basis, what the important priorities are, and we can go back in when it’s not happening and say, ‘Remember when you came here and interviewed, and we said, “These are the most important things for you to do,” and the numbers aren’t there. What have you been doing with your time all day?’

Monitor performance. When you get someone and put them in position, you can tell quickly if they lead by example or if they’re all talk and no walk. It’s just a lack of performance.

You’ll hear someone say, ‘I’ve done this, and I’ve done that,’ and they talk a big track record, but when we put them in — our business isn’t rocket science. We know our numbers. We know how many proposals should be delivered by a regional director or salesperson every month.

If you see that’s just not happening, why? It’s because someone has said, ‘I will get out and do these things,’ but then they’re not doing it.

Let nonperformers go. Keeping nonperformers on board can hurt a company. The hardest thing in the world is to take someone, you’ve met their family and you employed them, and they’re just not getting it done, and you leave them in place, and other people, they see that management is keeping someone who doesn’t perform.

It creates this lackadaisical attitude in your office. It spreads. If you let one person sit and read a magazine, why can’t they all sit and read a magazine?

Review goals regularly. If you don’t have goals, shame on us. If you do have goals, and you’re not serious every day about knowing where you are at, and you’re not passionate about meeting or exceeding the goals, shame on us as business owners and leaders.

Look at the industry you’re in, and know your competition and what they do. Then you have to perform and recruit better people to meet or exceed your goals, and you don’t look at them monthly or annually — you look at them every day.

There’s an old saying that, ‘Inch by inch, it’s a cinch. Yard by yard, it’s hard.’ There’s a lot of truth to that. You have to look at your goals every day to see if you’re on pace to meet or exceed your goals.

Communicate. It’s the key in any company. The more you can communicate with your people and make your people a part of any innovative or new updates, the better they can accept it and want to be a part of it.

If you help plan something, you understand it and want it to be a lot more successful than if somebody says, ‘Here it is, just do it.’

You have to be honest and passionate. You earn the integrity and respect in the system — you can’t demand it.

Celebrate people’s success. It’s very important in recognizing and congratulating people as they meet and exceed goals. Everybody sees, and likes to see, people becoming part of success. That’s how [Founder] Jim Cavanaugh built this company.

He congratulated them, both financially and by putting them up in front of other people, speaking positively and congratulating them openly in front of their peers as to their accomplishments. Surround yourself by great people who perform well, and then congratulate them in front of others. Hopefully, everybody wants to have that feeling. We say, ‘If you haven’t tasted the honey yet, you ought to ’cause it sure is sweet.’

HOW TO REACH: Jani-King International Inc., (972) 991-0900, (800) JANIKING or www.janiking.com

Sunday, 26 August 2007 20:00

The salvage king

It happens one day, every week at every facility in the company. Copart Inc. employees gather together, each one wearing the company’s color — blue — in some part of his or her wardrobe, to start the company’s “Blue Day” with a song and cheer.

“Old McCopart had a car, ee-aye-ee-aye-oh!” one department sings.

“Row, row, row your car, gently down the stream. Merrily, merrily, merrily, merrily, Copart’s but a dream!” another department answers.

Each department sings the cheer it has come up with for the week, and while the cheering and singing lasts just a few minutes, the effects last well into the day and build bonds between employees.

“It’s amazing how it takes sadness out of people’s lives in the morning,” says Willis Johnson, Copart’s founder, chairman and CEO. “They come in, and they might be having a bad day or a bad yesterday or a bad morning, and they have to sing a song with everybody clapping, and they realize the world has not come to an end. There’s still some cheer in the world. Then they walk away, and they may not be happy all day, but their attitude’s a little bit better.”

It’s this kind of focus on the employees that has helped Johnson post impressive growth numbers at Copart, which sells salvaged vehicles for insurance companies. Copart ended fiscal 2006 at $528.6 million in revenue, which was a 57.6 percent increase from fiscal 2003.

“Whatever kind of CEO you are, you should always have in your mind what’s best for your employee, not always what’s best for the shareholder,” Johnson says. “The shareholder comes and leaves. The employee is always there. If you have a happy employee, and the company is doing good, then by osmosis, the shareholder wins.”

Johnson’s keys to creating a winning organization are well-defined values, caring for people and building relationships with his 2,500 employees.

“You might spend a lot of time with your family, but you’re eight or nine hours with the other people in that company, and you like and you care about them,” Johnson says. “People who work together for a long time, they start caring about the company family, and if it benefits one, it’s going to benefit them all. I think if you get that culture going, they all want to move forward and do good.”

Creating values

When Johnson and his team set out to create the values for the company, they held a brainstorming session to generate ideas. But then they dug deeper to see what was truly important and what they were unnecessarily getting hung up on. He says evaluating what’s good for the company is just like evaluating a person.

“When you look at somebody, you always go to the right side and put all their good points on the right side and all the bad ones on the left,” Johnson says. “When your good ones outweigh your bad ones 75 to 25, you’re looking at a pretty good person there because people have some bad problems, but they have a lot of good stuff too.

“Don’t let a few little bad things outweigh the good side. Is this really peanuts we’re talking about, or are we talking about something big? Sometimes people let peanuts ruin an entire relationship because they have a hang-up here.”

Leaders could spend their time nitpicking every detail about the business, but when those peanuts fill you up, you don’t have room for the filet mignon.

For example, Johnson says he has some employees who don’t dress well, but he points out that it doesn’t affect their work, so he lets them do their job well and doesn’t pay attention to how poorly they dress.

“If you let the small things bother you with employees or the people you work with or the customer you do business with, you’re never going to get anywhere in life, so you just have to say, ‘This is how they are,’ and you have to live with it,” Johnson says.

Once the values were agreed on, Copart did what many companies do and included the new decrees in employees’ paychecks and had plaques made for all its locations, but the company also took a different approach. Copart had fun with it.

“We had contests and said, ‘We’ll meet you in the hallway. Can you tell us the values of the company?’” Johnson says.

Johnson and his team made the values simple by giving each letter of the company name a value that started with that letter, so people could easily remember them — commitment, ownership, profitability, adaptable, relationships and trust.

Employees didn’t get prizes or incentives for knowing the values but just the break from the day helps build excitement, and the desire to be verbally recognized helps employees learn about what’s important to the company.

“It was just awareness that you’re a part of the company,” Johnson says. “You don’t always have to give people stuff. You just have to give them attention.”

Caring for your people

Many of Copart’s values deal with how the company interacts with and treats employees, and Johnson says caring for his people is one of his top priorities.

One of the basic strategies is providing salaries that are above industry averages.

“I’m a real employee person,” he says. “I hate for employees to quit and leave because they got a better-paying job.”

But salary and benefits are just the starting point. Copart employees also have the opportunity twice a year to purchase company stock at a 15 percent discount. If the stock price stays the same, they make a 15 percent return, but more often than not, they earn a higher return, and they can sell it or keep it as they see fit.

Johnson also helps pay for employees to go back to school. He also started a foundation that provides scholarships to the children of any Copart employee who has been with the company for at least two years. If an employee’s child earned at least a 3.0 grade point average, he or she could apply for $4,500 in scholarship money, and as long as he or she maintained that average, the child could reapply every year.

“It’s helping their kids, and when you help people’s kids, it’s like helping them,” he says.

He also has a system to look at internal candidates first for open positions.

“We’ll look at them before we would ever hire someone from the outside,” Johnson says. “We would look within the company first to make sure they have that opportunity before anybody else because they have a love affair with the company.”

To facilitate this process, employees fill out a form that allows them to express which positions they would be interested in, should any openings arise. When an opening does arise, Johnson can go to that database and see who has an expressed interest.

“They may just want to go from a forklift driver to a dispatcher,” Johnson says. “You don’t have to jump way to the top because some people don’t want to move, or they don’t want to take on responsibility, but they want a little bit better-paying job, so they’ll put their name in.”

Many people change jobs because their company was unaware that they wanted another opportunity. This system helps make management aware of who is interested in what opportunities so the managers can keep their people, which creates consistency and grows the business.

“One day, I will retire, and I’ll keep a lot of my stock in this company,” Johnson says. “I’ll probably never sell it off, and the employees I bring up the ranks and the employees that work in the field, they’re the people who are going to keep my family and the long-term investors in the company in a good position because they were trained right, and they understand how the leadership of this company was started and founded and wants to go forward.”

Johnson says the key to creating better programs for employees lies in talking to other leaders. He regularly meets with the CEOs of companies that he doesn’t compete with to brainstorm and just talk to them about how they do things, and several of the programs he has at Copart came from hearing what these other leaders did within their businesses.

“You need to meet with other peers in your industry not to make money, just to brainstorm what’s good for them and what’s good for you because you never know what somebody’s going to dream up,” he says.

Building relationships

One of Johnson’s executives leaves a meeting in Chicago and now has to get to a 2 p.m. meeting at another facility. He calls human resources and discovers that tomorrow is one employee’s birthday, another recently got married and one’s mother is sick in the hospital. He makes special note of these three people so he can talk to them personally when he arrives.

When he gets there, he shakes hands with every employee, and specifically engages the three people he noted and talks to them about their lives.

Johnson calls these visits “executive drop-ins” and requires them of all his management team members whenever they’re near one of the 124 Copart facilities. The individual attention shows employees that leaders care about them, and it makes them feel valued.

During drop-ins, executives also give a short speech to update the employees on how the company is doing, so they feel informed and know how their jobs affect the business.

“Give them an insight into what the company is doing and where it’s going,” Johnson says.

Even employees at the lowest levels are interested in how a company is performing. They are depending on the company for their livelihood, and they want to know if the company is healthy.

“When an executive tells him, ‘Hey, we just bought seven (salvage) yards in England, and we got this going and this going,’” Johnson says. “They become part of the company, and that’s what you have to do — make them part of the company.”

Johnson says employees don’t want to have to worry about where the money is going to come from for their house or college tuition, so that information helps ease their minds and make them feel connected.

“They have to know they’re secure in a company that thinks and knows that we survive because of the employees who run the company,” he says. “They have to know that. You can’t just assume that people know that.”

HOW TO REACH: Copart Inc., www.copart.com

Sunday, 26 August 2007 20:00

Luis Spinola

Luis Spinola hates credit cards, and he hates how people rack up debt using them, but he gets more frustrated when he sees people dip into their company’s money to settle their personal financial crises. When leaders do that, they rob their companies of resources to reinvest with, says Spinola, founder, president and CEO of Azteca-Omega Group. By following his own advice, he’s grown his construction company into a nearly $170 million business and survived all the ups and downs throughout almost two decades in the industry. Smart Business spoke with Spinola about developing criteria and how it helps him make important decisions.

Embrace change. You need to listen and be open to change. If not, you’ll stop growing, and you’ll have problems because the economy, market and technology changes every day. Be open to adjustment in your processes and your guidelines.

Years ago, I was invited to a seminar. The theme was ‘Open to Change.’ This person talked about the Swiss watchmakers. They had dominated all the watch industries in the world. At one of their conventions they have every year, they had an engineer come and talk to them about the Pulsar system.

They thought he was crazy. ‘Why are we going to change? We dominate the market. We don’t need to change.’ The Japanese got hold of this engineer, and that’s how the Pulsar watch business went to Japan, and that’s how (the Swiss) lost their leadership in the watch industry. They ignored a potential idea for change or improvement.

Take smart chances. Sometimes there are good temptations and there are good business opportunities that get away from what you do, and you fall in that trap, but it’s a learning experience. You say, ‘I shouldn’t have done that,’ but you learn that over the years.

But if you’re too rigid, then that limits your growth. Some of the biggest investors, some of the most successful entrepreneurs,they have taken chances, and they have been very successful, but it all depends on how you do it.

You have to be smart, but also, you have to be lucky.

Use criteria to make decisions. The first thing you learn is the theory — the knowledge — and that’s what you learn when you go to school. The second that you learn is the practice and practical knowledge. The third thing that is very hard to apply is criteria. That’s what helps you make decisions.

Some people don’t get to that point. They never develop the criteria. They have the knowledge, but they don’t have the practice, or they have the practice, but they don’t have the theory part. Criteria is a combination of both, but not everybody gets to the point where they have the proper criteria to make decisions.

Be careful that you’re not putting people in the wrong position where they can’t make the proper decisions — they can’t do their best. We all have our limitations, and we need to know where to put ourselves where everybody gives their best.

Hire open people. Make sure they have a positive attitude and they’re open to learning — they don’t have that attitude that they know everything. There’s no such thing as knowing everything. Even with the years I have of experience with this business, I know you learn something every day. People who act like they know everything, they are not the kind of people you want around your company.

Foster communication. Be involved with your operation. We need to be able to talk to our people so they don’t feel there are barriers to come talk to us if they have a problem, issue or an idea on how to improve. Don’t make them feel like there is a separation or distance between you and them or between the managers and the people.

Make them feel that they are important to your process and your system — that they are being taken into consideration and not just being criticized or blackmailed because they come talk to you. I don’t want them to be reprimanded if they bring up issues.

Be very honest and always do what you say you’re going to do. Be open with your people. Always tell them the truth, good or bad, so they also tell you the truth, good or bad.

Empower employees. Give people responsibility, and you have to give them a good list of their responsibilities so they know what they need to do. Give them the authority to make decisions, but you have to be careful in knowing and realizing how much power to give them.

There are some people that need time to be able to get to that point. You have to sense people, and that’s why it’s important that you talk to them.

Have a good reporting system. You have to have meetings with people and know and ask how people are doing because as you grow, you can’t talk to everybody, but you can talk to your division managers. They are the ones that are going to tell you how people are doing, and you need to ask.

Remember, it’s important that they feel they are important to the system. That makes them do better when they feel they’re work is being recognized.

Understand how personal issues affect professional work. Ask [employees] about their families. Sometimes they have family problems, and that affects their production and the way they do business.

If they’re under a lot of pressure at home for whatever reason, don’t make them have to make an important decision because they’re probably going to make a mistake. That’s when you have to help them.

Coach people. Recognize when they do something good. When they make mistakes, instead of pointing fingers and trying to blame people, help solve the issues and work as a team to resolve the issues. They all have my mobile phone [number], and if there’s an issue, they can call me anytime, day or night, and I’ll help them, but we also need to sit down afterward and see why we had this issue and how we can avoid having the same problem.

That’s how they will learn to respect you and work more as a team. We all have problems, but it’s how you resolve problems that makes you different. When you use a positive attitude toward obstacles and problems, that helps resolve the issues more smoothly.

HOW TO REACH: Azteca-Omega Group, (214) 905-0612 or www.azteca-omega.com

Sunday, 26 August 2007 20:00

Selling the plan

James J. “Jim” O’Brien has led many changes at Ashland Inc. As chairman and CEO of the $7.2 billion diversified, global chemical company that serves customers in more than 100 countries, he has learned how crucial it is to get buy-in from both his management team and employees.

“You have to create awareness around what it is you’re trying to do,” O’Brien says. “It’s not just describing the strategy or talking about the size of the company you want to become or even, in some detail, some of the tactics you want to take. It’s more around, ‘What is it that the people have to do?’ That awareness piece is difficult to get people to truly understand and seek to understand and ask questions and get into.”

He says you first have to create awareness and unity among your management team.

“If they’re not aligned, that’s what the organization looks for is those gaps,” O’Brien says. “If they see me saying one thing and maybe the CFO says something contrary to what I say, they say, ‘Ah-ha! These guys aren’t on the same page, so we don’t have to be on the same page either.’ So they take that as an excuse not to engage.”

If you want to get an alignment, you first need a team of senior leaders who also know how to follow.

“A lot of people have discussion around leadership, but it’s just as important to have good followership,” O’Brien says. “If people can’t follow well as a senior team member, they’re not useful to the team. If you have a team of seven or eight senior leaders, if they’re all leading and not following, then you’ve got chaos because they may not all lead in the same direction. You need to have good strong leaders, but they have to have the ability to follow, as well. That even goes for the chairman and CEO.”

When you have people who can lead and follow, it helps create a group who will collectively discuss changes and come to a consensus. When they reach that consensus, it’s important to dig deeper into the details about that decision. O’Brien says with today’s PowerPoint age, people tend to gloss over the fine details.

“That’s where teams break apart and you get divergence,” he says. “If you understand how things can go wrong and what you would do about it when it goes wrong and already have a point of view around it and acknowledge that that risk is there, then Murphy’s Law will tell you that it will go wrong. When the team has to face that, then you don’t have a situation where people go off the reservation on you.”

Once the management team is on the same page and aligned and knows how to handle the problems that may arise, it’s important to communicate it to employees and get their buy-in. He says to just choose one to three key things to focus on and don’t try to do anything else. This keeps everyone focused and helps people understand what the priorities are.

“In the past when we’ve tried to do initiatives, especially large initiatives, it’s hard to create the desire inside the company to take on big things because the information is a program de jour, and they’re going to wait it out,” O’Brien says. “The bulk of the corporation will sit on the sidelines to see if it gains any traction or momentum, and then they’ll kick in. After five or six months, management usually loses their enthusiasm or desire, and it goes away.”

O’Brien says you have to maintain enthusiasm about it, so people know you’re serious and that it really is important. He also says you have to lead major changes yourself and can’t delegate them to someone else.

“You better believe it yourself, and I think that’s where most things fall apart,” he says. “They’ll read something in a magazine or go to a seminar and say, ‘That sounds neat. Let’s try it,’ and they delegate it to someone in that organization. That will never work. If you’re going to do big change, it has to be led by the CEO every hour, every minute of every day, and you can’t waiver because the organization is looking for that moment of opportunity to say, ‘Let’s not do this — that’s hard.’ There are thousands of people trying to convince you not to do it, so if you don’t believe it in your total heart and soul, don’t even try.”

HOW TO REACH: Ashland Inc., www.ashland.com or (859) 815-3333

Thursday, 26 July 2007 20:00

Measured response

An employee in San Francisco needs to meet with a co-worker in Israel, but instead of hopping on a plane and spending a day flying halfway around the world, she grabs an empty conference room, signs out video-conferencing pieces and calls her colleague. He answers using the same technology, and the two converse, face to face, to discuss the issues they needed to work out for a major project.

This happens every day at Polycom Inc., a video and audio collaboration solutions company, and Bob Hagerty, chairman, president and CEO, relies on these technologies just as much as his customers do, so he constantly pushes his organization to be the best in the market.

This push for excellence has fueled the company’s growth in the last decade. Since he joined the business in 1997, Hagerty has grown Polycom through a combination of organic growth and acquisitions from about $50.4 million in revenue to $682.4 million in revenue last year. Whether growing organically or through acquisitions, Hagerty believes wholeheartedly that to grow a company, you have to have a plan, measure that plan, communicate with customers and stimulate innovation in your organization.

“Growth is hard,” Hagerty says. “It’s hard work. It requires real attention. It requires risk-taking. You have to really understand. You can’t just follow, and you have to have an organizational structure where it takes moderate risks and occasionally will fail.”

Creating a plan

You can’t book a flight for a business trip or vacation if you don’t know where you’re going. In the same sense, leaders can’t grow their company if they don’t know where to lead them.

“Each individual market has a different strategy,” he says. “You start with a strategy. What’s your value proposition to the customer, and how do you deliver that value proposition? Communicate that value proposition, and then build your plan top to bottom and measure, measure, measure, and keep an environment where you allow people to participate.”

After an off-site meeting where the strategic plan is created, Hagerty and his team start working on getting buy-in from the rest of the employees. He starts with a meeting at the beginning of the year, with all the managers, where the issues are explained and broken down into their basic elements. At this meeting, Hagerty and senior management explained the strategy for the year.

He then broke everyone up by natural work groups and had them evaluate the issues involved and the ways they can achieve the strategy. Each group presented its thoughts to the room, and others asked questions and challenged the group to create further thinking.

“The idea is then they go out and do the same thing with their groups and get everybody to buy in with the goals,” Hagerty says.

He follows up on the overall strategy with a quarterly business review, which allows everyone to bring up any concerns or problems along the way, and that’s where he makes adjustments if needed.

“The plan always stays because whatever adjustment you make, whether you’re going to spend more money in an area or less money in an area, it still needs to show the return, so we use the plan as our baseline,” Hagerty says.

Managers again facilitate their own communication with the people below them to keep a pulse on their areas, and so they know exactly what to report at the next quarterly meeting.

“The idea is that everybody has weekly staff meetings and regular one-on-ones with their people and is setting goals as this whole process continues to churn,” Hagerty says. “The issues we have with the senior executive staff are just a culmination of what they’re seeing at their level, and the staff they have reporting to them have challenges.”

As Polycom grows, Hagerty depends on measurements to ensure that these processes are still carried out and effective. He measures customer satisfaction, failure rates in the factories, marketing metrics, sales metrics and other leading indicators.

“Measurement is a cornerstone of how we drive the company forward and track where we are against our plan,” Hagerty says. “If you can’t measure it, it isn’t worth doing it. You are what you measure. People will resonate to what they’re measured on. If you don’t measure them, they don’t think you care, or nobody thinks it matters.”

While creating metrics for salespeople is often straightforward, management also needs to create metrics for other departments, so everyone has specific performances to work toward.

“Find things to proximate goodness,” Hagerty says. “If it’s marketing, you’re trying to track leads or impressions. If you’re in engineering, you’ve got milestones you’re trying to get through to get a product developed. There’s always something. It’s just setting a target, setting a plan and measuring your progress toward achieving those plans.”

Without having clear metrics and goals, a company remains stagnant.

“If you don’t have goals, I don’t know how you can go from Point A to Point B.”

Customer focus

A couple decades ago when Hagerty worked for another company, he met a major customer for lunch and excitedly explained to him what technology shift his company was going toward, but the customer just gave him a funny look.

“You don’t think that’s the way to go?” Hagerty asked.

“It’s technically the way to go, but it’s not going to happen,” the customer responded. “There’s not enough capital in the system to change over the equipment and make the shift to this different standard.”

This rocked Hagerty’s world, leaving him in shock as he pondered the customer’s perspective on a very long, thoughtful plane ride home.

That experience, while 22 years ago, has shaped Hagerty’s attitude toward customers. He realizes now how important it is to speak with them and know their concerns, challenges and thoughts on products, and he drives that every day at Polycom.

“Understand your customers,” Hagerty says. “Talk to your customers. Love your customers. Our first value is put customers first and profit will follow.”

Senior leaders have to get out into the field to talk to them. Hagerty spends 50 to 80 percent of his time with customers. He asks a lot of questions about what they think Polycom is doing well and what it struggles in. He also asks them what they need and what their problems are. Additionally, he runs new technologies by them to see how they like them, and he asks what kinds of additional technologies they would need.

He then takes the suggestions and ideas they give him back to his people for them to solve and implement in their technologies.

Hagerty’s commitment to putting customers first shines through when a customer calls with a problem. It may not be Polycom’s technology that’s the issue, but his people understand how the equipment is supposed to work more than the customer does, so they work with the network provider to fix the problem.

“We are one part of a big network environment,” Hagerty says. “Sometimes it’s not us, but it’s our brand on the product, and that’s what they’re trying to use, so we go fix it even if it’s beyond our scope.”

To ensure that employees stay focused on customers, he both hires and rewards people based on it. During interviews, he flat out asks them how they view customers.

“You challenge them on that,” Hagerty says. “Where does the customer fit in your process and your thinking? If they’re not saying the customer is first, then that’s a problem.”

When those people come into the business, they see the different tools used to gauge customer satisfaction. Hagerty uses customer statistic measurements, has weekly sales meetings to discuss customers, and hosts quality sessions and customer response meetings. Polycom also has review meetings where Hagerty and his people review data about what the customer is feeling. From there, they make distinct decisions and follow up on them. Hagerty then financially rewards employees based on how well the company does.

“Bonuses are based on performance, and performance is based on how well you treat and deal with customers, because you don’t get there without customers,” Hagerty says. “They’re the only one who pays our bills.”

Innovation

Companies don’t grow, and they certainly don’t lead their markets, if they don’t have the newest and most innovative products out there. Because of this, Hagerty strives to be what he calls the “best in breed,” and as a result, Polycom has more than 550 patents issued and pending. But this innovation can’t be forced on people.

“You don’t drive it,” Hagerty says. “You set a goal, stimulate people, give them time to think it through, challenge them and have the right people who really want to innovate. It’s not about just get in line and follow. It’s about let’s do something different. Let’s make a difference.”

Employees understand the difference they make in customers’ lives because they use the technologies every day to meet with people all over the world. They know the amount of time saved and how much more productive people are by having eight video conferences a day versus traveling and having maybe two. They know how much more effective a phone call is when they can see the other person.

Employees use their own experiences and customers’ problems to create the best solutions.

“Sometimes people offer solutions, and they’re great solutions,” Hagerty says. “Sometimes they’ll just be able to describe the problem, and what we need to do is come back and use our expertise to formulate where we should be going.”

He relies on his people to take those problems and voices — as vague as they may be at times — and research them to see how they can be solved and implemented.

“You have to decide from where the technology is going, what is achievable,” Hagerty says.

He has a full-time product management team to solve those problems and answer those questions. He also invests 14 percent of the company’s revenue in research and development and another 8 percent in marketing, but the outcome is worth the investment because it allows Polycom to remain at the front of the pack, and the longer it stays at the front, the more it will continue to grow.

“In our area, it makes sense because the dynamic of the market is fairly rapid, and the technology continues to improve,” Hagerty says. “Our strategy is to be best of breed. We have to be the leadership. We want to be. We are. We measure it, and we expect to be the leader in each space we’re in.”

HOW TO REACH: Polycom Inc., www.polycom.com or (800) 765-9266.

Thursday, 26 July 2007 20:00

People matters

Randy Hardin often jokes that he started a business so he could wear shorts to work. But while there’s some truth to that, he mainly wanted to make Universal Power Group Inc., a supply chain management company, a place where people feel comfortable working and where they would want to stay. When people enjoy their work, they’re more productive, an approach that has yielded UPG 37 percent revenue growth over the last two years, ending 2006 with $92.6 million in annual revenue.

Smart Business spoke with this relaxed president and CEO about how flexibility helps retain people and grow companies.

Q: How do you find good people?

One way we’ve done it is through our existing people. Some people feel it’s not a good idea to mix friends and family and business, and we feel exactly the opposite.

If you’ve got good people, and they’ve got integrity, and they’re hardworking, then why wouldn’t you want to look at someone they’re related to if they have the same qualities?

Q: What qualities do you look for?

Honesty. People just throw that word around, but we want people to be honest even if it hurts. We have to be very honest with our customers, and even if that means we lose an order, that’s just how we need to be.

The other thing is we hope to treat people the way we’d want to be treated. That’s a key thing of employees, that you’ve got people around you who treat the business as if it were their own business.

Q: How do you gauge those characteristics?

It’s not the easiest thing in a short period of time. There’s lots of things that are an indicator about people’s character.

You can pick up on the way a person feels about his or her job or their future. Ask people, ‘Where do you see yourself in not only the job you’re in now, but where do you see yourself if we were to hire you?’ Ask questions about their ability to get along with other people, how they deal with adverse situations, how you deal with a situation where someone has said some things about you that were untrue.

Q: How can you tell if someone will fit with your team?

Look at where they came from. Were they there very long? What’s the reason for them leaving? It’s one thing for a person to leave because they want to better themselves either financially or position-wise, and it’s another that they’re leaving because they couldn’t get along with the people they were working with.

Do your homework, and find out why they’re leaving the company they’re with. Find out how well they worked with the team they were with.

Q: How do you retain and empower people?

The obvious one is through money. Everyone gets motivated by money. I also wanted a place where we weren’t so black and white. We have some single moms. Do they have X amount of personal and vacation time? Yes. But should we be flexible as managers and directors and as fathers and parents? Yeah.

Be a little understanding when that mother needs to get off because the day care says, ‘Come pick your kid up,’ and they have no family to help them. Or that single dad, or his wife works, too, say, ‘OK, the kid’s got a soccer game at 4 o’clock, and he’d like to go see him play because he’s always on the road.’

It’s little things like that where we don’t just want to be the people that talk about it. We want to say, ‘You know what? You don’t need to write that down as time off — just go watch your kid play soccer.’

Q: How do you get the right people in the right positions?

You find that out by trial and error. Sometimes when you’re a young company and you’re growing, you reward people who helped you grow. In rewarding them, you’re actually not doing them a favor, and you’re not doing the company a favor. You put someone in a position of authority because they paid their dues, and then you find out they don’t have the skills for that job, so it hurts them, and it hurts you.

Q: How do you know when people aren’t working out?

You find out when things aren’t getting done, or you don’t see the performance in a certain area. Analyze it and say, ‘Why is this happening?’ Ninety percent of the time, it comes back to people.

If you’re seeing one particular person who never seems to hit their time line, bring that to their attention. Ask them, ‘What can help you meet these time lines? Do you not have enough resources? What is it that we’re doing or not doing that could help you meet these time lines, or is this something you feel we need to give to someone else?’

A lot of times, someone will say, ‘You know what? This is just over my head.’

HOW TO REACH: Universal Power Group Inc., (866) 892-1122 or www.upgi.com

Thursday, 26 July 2007 20:00

Home cookin’

Back in 1998, Greg Flynn was doing business in Washington state when he had the opportunity to buy a group of eight Applebee’s locations. While he didn’t know anything about running the restaurants, he thought Applebee’s had good long-term viability, so he made the purchase on blind faith that he could trust the guys who were already running the restaurants.

Nearly a decade later, that culture of trusting employees and not trying to control every decision himself fuels growth in his Applebee’s franchise group, Apple American Group LLC.

“You can’t be an effective leader in a large and diverse organization if you’re too controlling,” says Flynn, Apple American’s chairman and CEO. “You also can’t succeed if you punish people for taking risks that you encourage them to take.”

Flynn believes in having a flat organization that breeds the kind of culture where employees can make decisions and grow as leaders. He employs a state and federal approach to his organization, with corporate acting as the federal government and each region in his portfolio acting as a state.

“They operate with great autonomy, except they are subjected to federal standards — rules that apply throughout the whole portfolio,” Flynn says. “While we don’t tell them how they need to achieve these results in every instance, we do demand that they achieve the results we’re looking for.”

While many companies try to complicate visions, values and strategies, which leave employees utterly clueless about how to succeed, the key to Apple American’s success is maintaining that flat, simple organization to preserve the cultural values and propel growth. With 130 stores across eight states, Flynn has successfully done that, and group sales reached $375 million last year, a 114 percent increase since 2001.

“First and foremost, keep the entire business as simple as possible,” Flynn says. “From the long-term vision all the way down to the day-to-day execution, the simpler it is, the better you can communicate it, the better everyone in the organization will understand it, the more measurable it will be.”

Creating vision and values

Employees aren’t sure what they need to do if leaders don’t tell them what to strive toward and how to get there.

“Have a vision, which is where you want to be in the future, and a good plan for getting there,” Flynn says. “Have that clearly communicated so everyone’s pulling toward that vision in every action, every day.

“Our vision is very simple. It’s to be the premiere franchise group in the Applebee’s system. We have a dozen things we must execute well to do that, but it’s a simple vision. We don’t need to concern ourselves overly with global strategy in the restaurant industry or major marketing campaigns or menu development. We build and operate restaurants, and we just have to kill that.”

While it’s crucial to keep the vision simple, it also has to be something that you can measure, otherwise you won’t know how close you are to achieving it. For Flynn, he knows what other franchise groups look like compared to his because he can benchmark their performances against those of Apple American Group.

He also notes how crucial it is to stay focused and not get sidetracked with other ventures that can steer you away from achieving your vision. He sticks to Applebee’s and doesn’t get lost in other restaurant concepts, even if they seem to provide an alluring short-term gain. It’s more important to stay focused on the concept that has the best long-term gain for him and his people.

“By having a very narrow focus, it’s easier for me to communicate where we wish to be, and then lay out the plan for getting there and measuring our progress along the way,” Flynn says. “Define your vision as narrowly as possible because it will make it much clearer to your people and, ultimately, easier to get there if you really maintain a laser focus.”

Any organization can have an overall vision and put it up on the wall by the main doors in gold letters for everyone to read, but the employees also have to know how to act and what kinds of behaviors will help achieve that vision. For this reason, Flynn has a set of values, called the “Gold card,” for Apple American Group employees to know what the company values and expects.

“The central principle there is that we will feel comfortable seeing our actions and our motives for them published in the newspaper,” Flynn says. “I think about that one all the time. We will never do anything that I can’t look someone in the eye, who’s intimately affected by it, and justify it as an ethical, moral and rational action.”

Flynn adopted his values from one of the group’s predecessors, and while the values weren’t Apple American’s at first, Flynn has modified them to make sure they reflect the group.

“We’ve adopted it and changed and refined it over the years,” Flynn says. “It has a longer history than me and them and anyone at this point. ... As I understand more and more about what really matters in our business, we just make changes. It’s like the constitution — it evolves over the years through amendments.”

For example, Apple American’s vision looks at where it wants to be, how it will get there and the impact it has on three different groups: customers, employees and shareholders. Flynn saw how important community plays into his restaurants, so this year, he decided to add community as a fourth group in that list.

Values ensure that everyone is pulling in the same direction, but just like the vision, they have to be understandable and actionable.

“Keep it very simple when you can,” Flynn says. “Don’t say, ‘I demand excellent restaurants.’ Have clearly articulated expectations. Our whole system is not telling them how to get from A to B, but telling them we expect them to be at B, and they can take different routes to get there, but you have to tell them very clearly what B is. The overriding advice is trust your people.”

Employee empowerment

While headquarters are in Cleveland, Flynn works out of San Francisco, so he is conscientious that his structure requires him to trust people.

“Our system relies entirely on trust,” Flynn says. “We must be able to trust the individuals in our restaurants and in our markets to do the right thing because we’re not micromanaging them, and we’re not supervising them to an excessive degree.”

Trusting people means letting go and allowing your employees to do things.

“It takes a long time to earn people’s trust, so when we say we trust in you, and we believe in your potential, and we’re going to allow you to enjoy latitude in how you do things and develop yourself and your people, we actually do that,” Flynn says. “Ultimately, that’s the main way you get people on board with the system.”

Building trust requires realizing other people are capable of success.

“People, in general, are smart, hardworking, experienced, want to do the right thing and more capable than most companies give them credit for,” Flynn says. “The best way to develop people is to give them responsibility, and they will sort of develop themselves.”

Giving people responsibility increases trust between management and employees and increases buy-in of the vision and values, but you have to give people leeway in how they accomplish those responsibilities, too.

“If you don’t give them any latitude — here’s exactly how you have to do everything — then there’s no innovation,” Flynn says. “But if you say, ‘All I care is you end up in B,’ it really encourages creative thinking, and we get tremendous creativity from our people as they seek out new and creative ways to get from A to B. People are smart, and they have great ideas all the time, but the certain structure of those companies doesn’t allow for those to percolate up.”

Flynn also emphasizes that leaders have to actually do these things and not just say them or talk about them in meetings.

“You live it,” Flynn says. “You say to people, ‘I believe in pushing authority down the line and empowering you and giving you the resources to do it yourself, and I don’t really want to hear about it unless there’s a big problem or opportunity,’ and then you actually do that.

“There’s no better way to develop a person than to just give them responsibility and figure it out for themselves. You know, they’ll stub their toe a few times, but the benefit they’ll get is someone who has really learned how to do it and didn’t just follow instruction.”

And while employees work to improve themselves and drive the company to succeed, they need reassurance that they’re on track. Flynn has a profit-sharing program for his managers, where each gets a percentage of his or her divisional earnings, with no strings attached.

“Keep it simple, without adjustments,” Flynn says. “I’m delighted to pay them that way because it’s all the results of growth.”

He says it’s also important to give the managers equity ownership in the business. He gave them a five-year plan in 2001, and when they recapitalized in 2004, they were exactly on target for meeting those numbers and got rewarded in cash.

“They’re side by side in their ownership with me,” Flynn says, “So it’s good for me; it’s good for them.”

While Flynn has formal recognition programs through conferences, awards dinners and monthly staff rankings, he says informal recognition is more important, especially at the lower levels.

“Recognition is mostly a day-to-day thing,” he says. “The culture of your organization — is it appreciative? Can we — and do we — say, ‘thank you,’ often and out loud to each other?”

Getting buy-in

To maintain his state and federal model for the organization, he has to have an inclusive decision-making style.

“A critical component of being a flat organization is having a very inclusive decision-making process, which can be inefficient at times, but when you reach a decision, you’ve typically gotten a better decision because of all the input you’ve gotten from the people in charge of carrying it out,” Flynn says. “Because you’ve gotten better buy-in, you do roll out decisions more effectively.”

People feel like they had a say in the decision and that it wasn’t just mandated down from the powers that be.

“They need to feel like their opinion was sought and listened to and considered, and even if it was ultimately overridden, they were treated with respect,” he says. “They have to trust that the leader has lots of different opinions he’s considering, and a vision of his own, and trust that your decision is going to be right at the end of the day, but if you don’t listen to someone, it’s almost impossible to get them on board with that decision that’s contrary to what they already believe.”

While not everyone may agree with a decision, people will at least respect the decision if they were included in making it.

“Typically, it happens very well because they will have been part of the process, understand the logic behind the decision, and they’ll respect it in the process,” Flynn says. “Even if they disagree with it, they will have been heard.”

While Flynn encourages and facilitates discussion and conversation when making a decision, he also notes that, when necessary, the leader has to be prepared to wrap things up and move on.

“Rarely does it happen where I need to just shut down the debate and make a decision that we haven’t arrived at collectively as a group,” Flynn says. “But it does happen. In our state and federal model, there is a president.”

When decisions are made, you can’t overlook how crucial communicating those decisions are, but it’s equally important to explain the process and reasons behind decisions.

“It shows respect for them as people,” Flynn says. “They’re not just automatons doing what they’re told to do. That’s antithetical to our culture. More importantly, if they understand why we’re doing what we’re doing, what impact it has, they’ll do it better, and they may come up with better ways to do things if they understand where they’re trying to go.

“If this is about getting from A to B, most of our ideas of coming up with a better way to get from A to B comes from the field, but they have to know what B is to suggest a better way.”

When communicating those processes, reasons and decisions, you also need to be brutally honest with your people, otherwise employees see right through it and wonder what’s being hidden or what they’re not being told.

“Say exactly what you think all the time and don’t hold back, and people respect that,” Flynn says. “I’d like to think we don’t sugarcoat anything in our business, and as a result, we are much more effective, and our people have much more actionable information, and therefore, are more successful.”

While Flynn and his management team are happy to make decisions and communicate those to the rest of the group, they are also keenly aware that some decisions are best left to people below them. With such a wide geographic spread, he knows he’s not equipped to make a decision about a restaurant in Pennsylvania by sitting in his office in California.

“They are identifying problems and opportunities themselves and acting on them in real time, with much greater sensitivity to the actual local context of the issue, as opposed to me, centrally sitting there with much less information and much less understanding of the context of a given issue, trying to decide,” Flynn says.

He even works to develop his employees’ decision and problem-solving skills by asking them tough questions to make them think differently as new situations arise.

“I’m always saying, ‘What problems do you have, and what opportunities have you had, and what are you doing about them?’” Flynn says. “I expect both sides of that question answered, so it’s not, ‘We have a problem; what are we going to do about it?’ It’s, ‘We have a problem, and here’s what I’ve already done about it.’”

Flynn’s commitment to keeping his business simple has cooked up one successful and growing organization. In 2005, Apple American Group was ranked fourth on Nation’s Restaurant News’ “Top 100 Growth Companies” list, finishing one spot ahead of Starbucks Corp. But Flynn attributes Apple American’s growth to the culture he’s created and maintained.

“It’s fuel for growth,” Flynn says. “Growth is fuel for people development. The two are complementary. We attract and retain better people because we’re growing; because of the opportunities for upward mobility within Apple American that we can afford.

“Likewise, our people are driving growth. We have better people. They stay with us longer, and they enable us to open more restaurants and open them better, and when we acquire new markets, we have wonderful procedures for integrating the new people, so it’s really a synergistic and complementary dynamic.”

HOW TO REACH: Apple American Group LLC, www.appleamerican.com

Thursday, 26 July 2007 20:00

René M. Diaz

After just three weeks on the job, while at the company’s Christmas party, one of RenĂ© M. Diaz’s employees decided to tell him everything that was wrong with Diaz Foods. Diaz, chairman and CEO of the company, encouraged the employee to meet with the human resources manager, but before the meeting, Diaz gave the manager instructions — if the situation wasn’t salvageable, fire the employee. So when the man came in, he refused to talk and complained that he was supposed to meet with the man in charge, so the HR manager simply replied, “Well, the man in charge told this woman in charge that you’re fired.” Diaz doesn’t want bad apples in his $130 million food wholesale company, so he deals with them quickly if they aren’t a good fit with his company. Smart Business spoke with Diaz about how he identifies people with “chispa,” the Spanish word for “spark,” and why it’s so important to his company.

Get the right people. You can have all the capital in the world, but if you don’t have the right people, you’re not going to succeed. If you have the right people, you can get dog food and sell it as caviar. If you have the wrong people, you could have Louis Vuitton bags, and you couldn’t sell them.

In Spanish, it’s called chispa — spark. They have to have it in their eye. They have to have it when they speak, but it has to be a true chispa.

You interview people, and they’re like, ‘I want to come work for you, and I’ll work eight days a week, 30 hours a day, and I’ll live, breathe your company, and I can raise your sales 50 percent.’ That is false chispa. He’s creating a spark because he’s doing an interview.

The spark is more in the want. You can see it when they speak because they’re not trying to prove themselves to you in a 10-minute interview. You can see it in the way they dress, the way they look, the way they handle themselves. You can come in a hand-me-down suit, but you tied your tie properly, you sat up straight in the chair. You at least cleaned your shoes.

If someone gets here late and got stuck in traffic, folks say, ‘Oh, he doesn’t care.’ You have kids at home, you get delayed, your car breaks down. Those things can happen.

It’s more personality. How they look at you, how they speak, their mannerisms. Are they polite? Do they say thank you? That all matters.

Don’t be fooled by resumes. Resumes do not impress me. I’ve seen people — master’s here and 10 different colleges, and you interview them, and they have no social skills. They don’t look you straight in the eye when they talk to you. They don’t sit up upright.

They’re not proud of who they are. They’re not self-confident, and you can see that when you talk to people. Then I hire some kid who had to leave high school to support his family, and he impresses the hell out of me, and he gives me a wow.

That’s what I look at. Do you demand more of yourself? Do you demand more of what you are able to contribute from your abilities? A kid who didn’t finish high school has limitations to a certain amount, but those limitations to them don’t exist, and they exceed those limitations, and that’s the spirit I’m looking for — that nothing holds them back.

Do things yourself. If something’s small, like faxes or return this person’s call, it is who can do it the fastest. If it’s going to take me longer to tell my assistant to call Kristy and tell her I can’t make the conference call, and she’s like ‘Who’s Kristy?’ ‘Kristy works for Smart Business. She’s an associate editor — here’s her number.’ It’s faster for me to pick up the phone and call you.

Whoever’s going to do that for me, they have work to do as well. If it’s going to take me five minutes to explain, and I’m going to take that five minutes of their time, and they still have to make the call, it would have been more efficient for the company if I had just done it myself.

Delegate. If I get calls from folks who want to buy my company, I say nicely, ‘You need to speak with my CFO,’ and they say, ‘Well, we only talk to owners.’ I go, ‘No. My CFO has access to everything. If you want to talk financial stuff, you talk to my CFO,’ and that’s how I delegate.

If it’s not my responsibility, it’s delegated to a manager. Period. I keep a list of the tasks by managers in a public folder. They have access to that folder — they can read it, they can copy it, but they cannot amend or delete it.

I’ll add the task, I’ll e-mail her the task so she knows that that’s an expectation of mine, and I put a start date and a due date. Then they get back to me and tell me whether that’s reasonable or not. I know everyone’s busy, but I don’t know what you’re working on. I’m flexible on that stuff.

Reorganize periodically. Let’s assume we’re starting from scratch. Forget people. Forget budgets. Create an organizational chart for me that would meet your needs today. Then forecast your needs for the next 12 months, then a soft scenario for 24 months.

In the reorg, we’ve created a list of requirements before we look at who’s going to fill that box. Then we say, ‘(She) had that job before — that was her title. Look at the job now. Does she fit that job? If she does, is she willing to do it?’

One of my buyers, when I analyzed what she was doing, she was creating reports for sales. She was analyzing data, so I moved her into my team, and she’s our business analyst. It’s not different. It’s just sometimes the title, over the years, has remained the same, but your duties have changed, so you’re really doing something different than what your title calls for.

It makes us refocus on our business at a micro level rather than a macro level. It’s not a lot of changes, but one or two little boxes you move around makes a huge impact. When you’re growing 30 percent a year, you have to redefine yourself every 12 months. If not, you’re fooling yourself.

HOW TO REACH: Diaz Foods, (800) 394-4639 or www.diazfoods.com