Keith Gerson discovered a thing or two about leading a company while rocking on stage in a cover band.
“I’ve learned so much about the performer’s uncanny ability to connect with an audience,” says Gerson, a rocker by night and the president and chief operating officer of PuroClean by day. “A good leader definitely has that ability.”
Gerson’s performance-honed charisma has helped him unite 1,050 employees in 236 franchises under a single vision. He led the company, which provides emergency property damage restoration, through an assessment to define its brand.
But he didn’t stop there. Gerson continues to measure whether the PuroClean brand is living up to its promise.
“If I’m right that your brand is people’s perception of who you are, then basically a living brand is a pattern of behavior,” he says. “It’s not a stylistic veneer.”
As a result of the ongoing branding, PuroClean keeps growing. After reaching 2007 revenue of $51.2 million, the company grew 34 percent in 2008.
Smart Business spoke with Gerson about how to brand your company with a vision.
Gauge employees’ conceptions. One of the first things that I did when I came into the company was to take the organization through the complete assessment and definition of the brand and come out with an articulation of what that meant and then ensure that everybody gets on same page.
I started by going out with five questions to all of my employees. The five questions were basically:
- What is it about the culture that you think we should preserve and why?
- What is it about the culture that you think we should change and why?
- What do you hope I will do as your president?
- What are you afraid I’m going to do as the president?
- What advice do you have for me?
If you did nothing else, the answers to those questions could be the basis for the development of your strategic plan. But I took it a step further, and I shared the answers that I got from our entire system with my network leadership council. I had 10 franchisees, five of my executive team members and some outside experts that had industry experience or marketing experience.
Assemble a branding team. I identified people that I knew were influential within the network. We publish who our top performers are on a monthly basis on our intranet site ... but that’s only part of it. You’re going to have people within your organization that are not necessarily your best performers but certainly have a lot to say.
This is just learned and observed by asking the questions, ‘Who do you respect? Who do you listen to within the organization?’
The other way is just watching where and how people interact. You can really see who people tend to gravitate toward.
Define and differentiate your business. You have to define your business scope: What’s our area of business? What’s our mission? What’s our basis for making decisions? ... What’s the environment we’re going to create? What are the principles behind our actions? And ultimately, what do we want to be known for?
This brand exercise helped us do a better job of articulating who we are and what we stand for in a way that is no longer what everybody else is talking about.
Your brand is not your logo. It’s not your products. It’s not your services. Ultimately, your brand is being able to communicate these things in a meaningful way that differentiates us from our competition and that really reflects who we are.
Share the vision. The second thing was to communicate that vision often. I started blogging on our intranet site, sharing the vision of who we are and where we’re going, [giving] frequent updates in terms of where and how we were living by the strategic plan and sharing the constant progress and the successes and the challenges.
In addition to that, I started to publish a newsletter. The newsletter is sent out to our franchisees. [It creates] a sense of inclusion by having franchisees participate in the development of stories, sharing new happenings.
You have to inspect what you expect. To that end, we set up a number of tracking systems. We have, for example, a bulletin board on our intranet system. We encourage franchisees to weigh in on where and how these various initiatives are going for them, challenges that they’re having, being able to ask questions and get honest answers.
It’s important to have key performance indicators and to track them on a regular basis.
Measure customer response. Oftentimes in [customer] surveys, you’re asking the wrong questions and the answers aren’t going to the right people.
There’s only one question that matters, and that question basically is, ‘Would you recommend us to a friend or associate?’ (Our survey) asks two questions. First, on a scale of 1 to 10, how likely are you to recommend PuroClean to a friend or associate?
If somebody answers with a 9 to 10, we ask the follow-up question, ‘What did we do well? If somebody answers 7 to 8, we ask, ‘What could have we done better?’ And if somebody answers from 0 to 6, the question is, ‘How did we let you down?’
Break down the survey response and attribute it back to ... the person that actually performs the work. [We can] track the performance of each employee on the basis of how they interfaced with the customer.
HOW TO REACH: PuroClean, (800) 775-7876 or www.puroclean.com
Chip Babst realizes that being on a first-name basis with all of your employees probably becomes impossible once a company reaches a certain size.
But Babst, Calland, Clements and Zomnir PC isn’t too big yet for him to know all 119 employees.
“It’s important to maintain that personal tie, recognizing that in larger businesses, that has to be done in a different way and is not going to be accomplished by one person at the top,” says Babst, the law firm’s managing shareholder.
He uses both formal and casual interactions to customize his approach to each employee to generate buy-in, set goals and check on progress.
Smart Business spoke with Babst about how to drive your vision with communication.
Q. How do you communicate your vision throughout the company?
The communication can be either direct or indirect. There are two ways to do that. One is through opportunities that you have to talk to significant numbers of people, whether it be at a meeting or a retreat.
The other way is making sure that you get around and talk to people on a one-on-one basis. During the course of a year, you should be in touch with many, if not all, of the people in the organization.
But in addition to that, if the people who are involved in management with you are coordinated in what you’re trying to do, then the message gets directed to everybody indirectly, which is, in many cases, more effective.
Q. How do you get others on the same page with your vision?
It’s a very personal approach, and I don’t know if there’s a formula that you would apply that’s one size fits all. You deal with individuals as they are. There are certain types of arguments that would be persuasive with some people and would not be persuasive with others.
I try to take the time to talk to people to find out not just what they think about the business but what they’re like as people. Just by getting to know people, you have a better feel for the best way to approach them.
Q. How do you set goals that reflect that vision?
Our goal process starts with you submitting to me what you think your goals should be for the following year. Then the management group will look at that and massage that as we think is needed. Sometimes it’s really not necessary to change it at all. Other times it is, and then go back to that individual and make sure that there’s buy-in on the goals.
We also at that time sit down and evaluate how they have done in terms of achieving their goals from the prior year. Those individual goals are coordinated with our business sector goals. That’s the way we try to implement the strategic plan, so it’s both at a group level and then at an individual level.
As you’re establishing your goals, you’re not doing that as the Wizard of Oz. You’re trying to do it through communication and taking the input from those people who best understand that particular part of your business and then making sure it’s coordinated with the other sectors of your business.
If you’re in a leadership position, one of your best traits should be the ability to listen and the ability to appreciate others’ input. In those cases where there may be conflicting views, try to make the best decision and then try to build consensus both among the advocates and the opponents.
Q. How do you check the process of those goals throughout the year?
Some of those goals will have a requirement to submit some update in writing during the course of the year. The other thing that I do try to do during the course of the year is get around to talk to individuals, particularly on goals that I think are important to what we’re trying to achieve and also goals that are important for what other people are trying to accomplish.
I just try to get around and talk to people during the course of the year on a less formal basis.
[If their goal isn’t being met], try to find out why. Try to engage them in conversation in terms of what can be done to make up the lost ground and achieve it by the end of the year. If something isn’t met, then
that’s something that has to be discussed and hopefully rectified during the next year.
Sometimes, frankly, you’ll set a goal in December, and by May, it’s clear that it doesn’t necessarily make sense anymore. We will change goals during the course of the year, as well. We don’t just rigidly stick with something if, given time and circumstance, it no longer makes good business sense.
They would come back to me and suggest that it be changed, and we would talk through it. Ultimately, we would try to make that decision together.
It’s not something that people have the unilateral flexibility during the year to say, ‘Well, I’m not going to achieve this goal, therefore, I no longer recognize it.’
HOW TO REACH: Babst, Calland, Clements and Zomnir PC, (800) 829-5695 or www.bccz.com
Mike Pruitt has translated his success as a Cleveland Browns running back to success as the owner, president and CEO of Mike Pruitt Honda.
Pruitt says he learned the basics of business — and how to interact with employees — by watching former Browns coach
Sam Rutigliano interact with his players on the sidelines.
“He had a personal relationship with just about all the players on the team,” he says. “Players could come to him if they had a personal problem.”
Pruitt now emulates his former coach as he interacts with his staff of 75 at his dealership, encouraging open communication by making himself visible and approachable.
Football also taught Pruitt how to set the table for the team’s success.
“You also have to have a game plan at work, what you’re going to do for the month and how you’re going to get there,” Pruitt says.
To do that, he invites strategic ideas from employees and measures progress by meeting frequently with managers at the dealership, which posted 2007 revenue of $42 million.
Smart Business spoke with Pruitt about how to gather input from your employees.
Set a game plan with managers. One of the keys to being a good leader is to make sure that you’re on top of everything that’s going on in all the departments. Every month, we take forecasts of where we
need to be for that month.
I get a weekly report on how we’re trending [during] managers’ meetings. Managers tell me what’s going on in their department, what’s going on with their employees and some of the things they’re
doing to increase sales.
Managers should have meetings with their people at least once a week to let (employees) know where we’re tracking so they can be a part of that, as well.
During our managers’ meeting, I’ll ask them if there’s anything that came out of those meetings that we should go over. Most of them will say, ‘Yes, so-and-so had a good idea. We’re going to try this.’ We’ll try
their idea, and they’ll get recognition for that (on our) Good Idea board. The Good Idea of the Month will be one of the employees’ [ideas], like we have an Employee of the Month.
Check the progress. The CEO always has to inspect what he expects of his managers to make sure that they have the best interest of the company at heart. You give them opportunities to make decisions or to implement ideas, but you always follow up to make sure that those ideas are working or you’re getting the kind of result that you had anticipated.
If they’re not, then you’ve got to go back to the drawing board and make some new decisions. We monitor where we are on a weekly basis, if we’re trending toward the forecast that we were supposed to hit.
Make yourself accessible to employees. We take a person from each department to sit on a committee. That committee gets to (say) what’s going on in their departments. They get to go over it with me and not with their manager, so we can put down anything that they feel is a hindrance to their department, including the manager.
It gives them the opportunity to open up, whereas before they wouldn’t have opened up because they don’t want to offend anybody.
It all boils down to communication. You’ve got to have communication with your managers and the people in the different departments. You have to have an open-door policy. The process is to, if there’s a real concern, go to your manager first and see if he’s handled it. If not, they can go to the general manager. If that’s not (enough), then they can come to me.
Make yourself visible. You have to manage by walking around. We have 75 people, and I know everybody by name and a little bit about them. You have to know your people. They have to see you.
You can’t just be in an office behind a desk. They’ve got to know that you’re there. They’ve got to know that you’re accessible, even if they just see you to say hi.
By walking around, people get a chance to see you, they get to talk to you. And once people feel that you’re an everyday human being, not just the guy running the company, they’ll feel a heck of a lot
People should know that, whether they can write you or they can call you, they can get a message to you some kind of way. It may not get taken care of by you, but at least they know it got there and it got
You should get back to that individual and let them know that that suggestion was heard, it was taken into consideration and whether anything was done with it.
Take it outside of the office. We have these little get-togethers twice a year. We have our annual year-end party, then we take a bus trip somewhere, like last year we went to Whiskey Island.
Those kinds of things create camaraderie. When you do that stuff on a personal basis, you take it outside of the business realm. You get to know people better when it’s not in a business setting all the time.
Now you know something about that person. If that person is starting to slip, you can talk to that person and give them a warning, whereas if you don’t know that person, you may just release them. People do have personal problems. Sometimes personal problems do come to work.
If a person feels that you have their interest at heart, they’ll do a better job for you.
HOW TO REACH: Mike Pruitt Honda, (800) 323-2945 or www.mphonda.com
For Bryan Putt, growth is not a goal but the result of action. And his company, American International
Relocation Solutions, is anything but stagnant.
“Growth is absolutely vital, but it’s a result of doing the right things as opposed to being the goal in and of itself,” says Putt, president and CEO of AIReS, a provider of relocation services for corporate clients.
And the right thing for him is focusing on clients’ needs.
“Everything else will follow behind that,” he says.
So Putt attacks the hiring process with intensity to make sure his employees will be committed to serving. Then he drills the company goals into his 190 employees with repetition and consistency.
But he realizes that his words aren’t worth much if he doesn’t act to back them up. So from an employee’s first day through his or her retirement, and with all the client interactions in between, Putt maintains a consistent message at AIReS, which increased revenue from $50.6 million in 2004 to $82.5 million in 2007.
Smart Business spoke with Putt about how to live the message you’re giving employees.
Interview extensively. The first thing we look for is a can-do, customer-centric attitude. You can have the greatest skills in the world, but if you don’t have the right mentality, you won’t succeed.
The standard interview questions don’t get you there. It becomes a function of digging, asking people how they would deal with specific situations. Don’t accept that first level of answer. It goes to, ‘Oh, really? Tell me more about that.’
An interview process is a two-way street. As much as we’re looking at the candidate, the candidate is also looking at us. If people know what they’re stepping into, they’re much more likely to engage than if
they come in with illusions.
They’ll talk to three or four of our staff. For front-line people, have them do shadowing, spend an hour or two on the floor seeing what the staff is doing and how they do it. For the mid- to high-end staff, we’ll do dinners. Try to get them in a social environment, because people interact differently in that social environment than when you have them sitting in an office.
Bring people back around; don’t hire with a battery of three or four interviews in a day, and bang, you’re done. We’ll have them in here at least twice.
Keep delivering the vision. We will bring them to Pittsburgh from any of our offices for a two-week orientation after they’ve been in their job for three to six weeks. We talk about the culture of the company. They’re introduced to the departments of the organization, and everybody learns a little bit
about all the various jobs and aspects of the business.
Part of that orientation is a presentation I do called, ‘The AIReS Way.’ We’ve boiled down key traits that make an organization hum, [such as] recognizing it takes a great team to be a great company. We start to drill that language into people through the orientation, and then it never goes away. It’s a consistent message.
One of the most gratifying things I hear is when that verbiage is being used by other folks on the team. There’s key phraseology in that presentation, and people make fun of me for it. One of the things I tell people is: ‘You have to have a passion about what you do.’ They always give me a hard time: ‘Oh, are
you passionate about this?’ They give you a hard time, but in doing that, they’re acknowledging that they get it. There’s none of that, ‘This guy’s too important to be able to joke with.’
People don’t buy in to a vision having heard it once. It has to become part of the day-to-day communication. It becomes part of the vocabulary to the point where you don’t even want to hear it yourself.
When you get to the point where you can’t stand to hear yourself say it again, you’re probably just getting to the point where it’s registering and sinking in and becoming part of that day-to-day vocabulary for
everybody else. Taking that message from the day people are hired through their entire lifetime as part of the organization. It’s consistency in the message, it’s repeating that message, it’s living the message.
At all levels of the organization, create that mentality: We’re all in this together. If we can create that common language and get everybody saying it, it’s a heck of a lot more effective than me saying it.
Practice what you preach. We tell our people, ‘Don’t send an e-mail and just assume you’ve communicated. You pick up that phone, talk to those people, hear what their needs are.’
Once you have the phone conversation, follow up with the e-mail. Document what you’ve discussed.’
When you build that from the front line all the way up through the organization, that’s part of creating that mentality.
A good example: We’re changing our organizational structure to accommodate [recent growth]. We’ve communicated all the way through this process. ‘We’re looking at the organization. We’ve polled our midlevel management and heard from them.’
Part of reorganizing was listening to the staff, taking their input. Then we’re going take this out to the field and do that face-to-face explanation. That will all be followed up with the documentation to help people understand exactly what that verbal communication means. They can look at it, see it, touch it.
You can tell people all the time, ‘Pick up the phone. Talk to people.’ But if we then sent out a memo and didn’t get out in front of people, you’ve got that disconnect of what you say versus what you do.
HOW TO REACH: AIReS, (800) 245-1176 or www.aires.com
To Arnie Burchianti, culture and success are as intertwined as a Celtic knot.
“There’s a direct [link] between the health of your organization’s values and culture to your growth and to your long-term viability,” says the founder and CEO of Celtic Healthcare Inc., which takes its name from the intricate symbol.
Burchianti builds that culture by measuring his 600 employees against core values, such as accountability, teamwork and mutual respect. Doing this has allowed the home health care provider to grow to 2007 revenue of $31.4 million from $5 million in 2005.
Smart Business spoke with Burchianti about how to hold your employees accountable by setting clear expectations and offering simple rewards.
Q. How do you hold employees accountable?
It starts at the hiring process. We only hire people who are self-motivated and hold themselves accountable.
Anyone who’s coming in is asked to do an online personality profile. It helps you get through the b.s. of the interview and understand what motivates the person. You can see whether the person has the
behavioral styles to be accountable to the responsibilities.
We ask open-ended questions like, ‘If you were in this situation and here were the terms, what would you do?’ We’re trying to reproduce what we know this job is going to require. You’re asking questions that will put them in a work environment and seeing how they’re going to respond.
Q. How do you hold employees accountable without micromanaging them?
Managers micromanage because the roles and responsibilities are not clear enough for the employee. If we bring the right people in understanding the roles, then we don’t need to micromanage them.
When you hire employees, you have to have well-documented, clearly defined roles and responsibilities. You’ll hear people say, ‘Here’s your job description, but you’ll be doing more than that.’ That’s like saying, ‘You’re going to join the football team, but you’re going to use a golf club, too.’
Revise your job descriptions as frequently as you [change] the responsibilities. Once the description is clear, then you don’t need to micromanage. You say, ‘This is due on every Tuesday of every week. If
there’s a disaster, let us know. Otherwise, you’re going to be held accountable to do this weekly.’
If you give them a crappy job description, then say, ‘You’re not doing your job,’ they’re going to look at you like you’re nuts. People will lose trust in you if you’re holding them accountable to things that you’re not telling them about.
Q. How do you measure their performance?
We put a lot of time in performance appraisals throughout the year to judge whether the person’s getting it. If not, let’s not wait till the end of the year to nail them in the review. ...
We do 90-day reviews with new employees then [another after] 30 more days if there are any areas that aren’t being exceeded. [If there are,] they go through our whole process: We give them verbal notice, written notice, performance plan with realistic measures and goals, and termination.
Q. On the flip side, how do you reward employees for good performance?
You’ve got to recognize your people for adherence to things that are important to you.
You’ve got to create a system that you can actually implement. Technology allows for these things to occur. The Web is a powerful tool to keep people connected in real time.
We have a program called G.R.O.W. It’s an acronym for Great Reward Opportunities With Celtic. That program is a Web-based, real-time program, which recognizes and rewards people.
We put about $100,000 into the G.R.O.W. program each year. People can take their pay out quarterly either in cash or time off. It’s recognizing people for adherence to our core values.
All our managers are able to recognize employees by just logging in to our Web-based application. It sends an e-mail notification to the employee that [they] received X points, and then those points go into a bank. They’re weighted, so a person with 10 points versus a person with two points is going to have more of that pool of money for that quarter.
Recognizing people in the act of doing good is probably more important than bonuses and money. Yeah, they need a paycheck, but they want to know if they’re doing something worthwhile for the organization.
If I see somebody being accountable to a project, I’ll log in to our system and give them two or three points and a little message saying, ‘I’m happy you were able to hit that project. You did a nice job on it.’
If you put together a rewards program that takes five steps and mailing letters, are you going to take the time to do that? No, but log on and type in someone’s name, and instantly they get an e-mail. You really
just get people to buy in to your core values because you’re constantly recognizing them.
HOW TO REACH: Celtic Healthcare Inc., (800) 355-8894 or www.celtichealthcare.com
For two years now, we have opened this piece startled by the shake-up of this list.
Last year, we were flabbergasted by the amount of movement up and down the list and the fact that 10 10! new people made the list.
What fools we have been. This year has been a volatile one in many industries, and the list has not only seen power players rise and fall, but 14 new people have earned their way on to the list.
The end result excited and frustrated us, as some new blood jumped way up the list and a few old favorites had to move down. The highlights include some newbies who earned instant high billing Steve Allen of Nationwide Children’s Hospital broke in at 21 while others earned their rightful place near the top The Ohio State University’s E. Gordon Gee jumped from 19 to 4. And a few, like top-ranked Les Wexner, were able to fight off a rough economy and hold their spot.
Overall, dozens of people moved up and down the list to go along with the 14 fresh faces sparkling across these pages. Here is the 2009 Power 100 list of the most influential business, civic and political leaders in Central Ohio as ranked by our editors.
Numbers in parentheses are 2008 rankings.
Inside the door at EBO Group Inc., you’ll find what President Keith Nichols calls a Wall of Owners.
And it’s not a row of old oil paintings of the company’s forefathers. It’s a gallery of 60 caricatures representing employees who participate in EBO’s employee stock ownership plan.
The portraits are one way Nichols makes the ownership structure visible at EBO, an umbrella organization over companies that develop everything from vehicle components to medical equipment. He wants the structure to be very clear to everyone, starting with employees.
“The biggest mistake is that you don’t educate your employees,” he says. “You can be [more] successful the better you educate.”
When implementing an ESOP, Nichols says your goal should be to make sure employees know about the plan and how it benefits them. And it benefits you and your company, as well, by helping you attract and retain top talent and getting employee buy-in.
“Yeah, you may give up some ownership, financial benefits,” Nichols says. “But after you’re 100 percent ESOP-owned, that stock value will grow faster.”
Under an ESOP, a company contributes money or stock to a trust, and those are divvied up into accounts for eligible employees. But the details of each plan will differ, so it takes clear communication to get
everyone on the same page. At EBO, for example, eligibility is determined by years of service, and only 60 of the 72 employees have worked at the company long enough to qualify.
“It takes constant effort and endless involvement of the employees in what the business is doing and what it is trying to achieve,” Nichols says.
As a result, the plan can sculpt your company’s culture. With a stake in the outcome, your employees bond together under your company’s goals.
“It becomes not the ESOP itself but the culture that you build around it that makes management a lot simpler because you don’t have to constantly get people to buy in to what the company’s doing,” Nichols says.
Before you set the plan in action, seek advice at ESOP conferences and select a third-party trustee to handle administration. Your ongoing task will be passing the big picture on to employees.
“You have much more invested in building the culture and educating employees than you do in just running the system,” Nichols says.
EBO adopted its plan in 1990 as a way to secure the long-term succession plan of the company, which reported revenue of $22 million for fiscal 2008. But Nichols realized that the culture he could build around the ESOP was the real selling point.
The culture starts when you create an in-house ESOP crew. At EBO — which stands for Excellence by Owners — Nichols formed a committee with one nonmanagerial employee from each department. Every year, one member rotates out and his or her department elects a replacement.
Nichols says you need to equip the committee to clearly communicate with the rest of your staff. To do that, he brought in ESOP administrators to train committee members to translate the plan to other
employees and to provide updates about legislative ESOP changes and explain account statements.
For employees to fully understand their accounts, you also need to communicate to them the company’s goals and performance. For example, providing financial statistics allows employees to see how the company’s growth trickles down to benefit them.
And while employees are reaping the benefits of the plan, remind yourself that you are benefiting, as well.
“It all boils down to what you want the ownership to look like in 10, 15, 20 years. [If] you have that drive to see your business flourish even when you’re gone, then you’ll get a different culture than the person that ... just wants out.”
HOW TO REACH: EBO Group Inc., (330) 590-8105 or www.ebogroupinc.com
The communication link
You didn’t step into your position and immediately understand ownership.
So when you adopt an employee stock ownership plan, you can’t expect your employees to either, says Davin Gustafson, a principal at Apple Growth Partners and a longtime ESOP consultant.
“Ownership is not something that’s trained,” he says. “Plan on spending time and effort educating folks.”
You’re probably not an ESOP pro, so bring in outside advisers to help you. Letting your ESOP accountant, valuator or lawyer talk directly to your employees will put a face on the plan.
You should also create an internal source for ESOP communication — whether it’s you, your chief financial officer or a committee — so employees can get the facts from a familiar source.
“Talk about the company’s cash flow in front of employees, what that means for the value of the company and what they can expect their value to do based on what we do,” Gustafson says.
And don’t leave that communication to newsletters or e-mails. To make it as personal as possible, gather five to 10 employees a week for intimate ESOP lunches, working through everyone in a year. If your company is too large or spread out, create a video to send to all of your locations so the entire staff can see you talk about the ESOP.
If Bill Fink’s company tried online dating, it still might not find a suitable mate.
Area Wide Protective Inc. hits a niche that not many companies share: providing temporary traffic control services, like roadblocks and traffic flaggers, for public utility companies. So finding a similar company for a strategic acquisition would be tough. Not only would it have to match business interests, but it would also have to match management philosophies, staffs and cultures.
“Think of the two most finicky people that have ever used eHarmony.com,” says Fink, founder, president and CEO of AWP.
But Fink realized that his company, which posted 2007 revenue of $27.1 million, couldn’t stay single, either. He told his 650 employees: “We’ve all invested a lot in growing this company. It should not hinge on one man’s health or one man’s wallet. It’s important that we build a foundation that will sustain the company after Bill Fink is gone.”
With a strategic acquisition out of the question, Fink instead sought a partnership with a private equity firm. That way, he could unload some financial stress without relinquishing his post.
And even though retirement is not on the 57-year-old’s short-term agenda, the partnership is also helping him secure the company’s future.
“Nothing has changed in terms of dayto-day,” Fink says, after finalizing the deal last August with Blue Point Capital Partners. “What has changed is our vista; our horizons have just grown immeasurably. We can think about growing this company in ways that probably weren’t possible before.”
Here’s how Fink secured AWP’s long-term success by bringing financial partners on board without changing his course.
Narrow the search
Compared to a strategic acquisition, a private equity firm is much easier to find because it’s only concerned with rate of return. It’s still not simple, but if your potential and plans for growth are obvious, you probably won’t have to look too far for a willing investor.
“If you have not reached maximum market penetration and if your business is fairly scalable — meaning it can be replicated beyond the domain that you’ve already taken up — then [you] would be open to interest from a private equity firm,” Fink says.
Still, you have to research each firm relentlessly.
“Aside from getting married, this is one of the most important decisions in your life — even more than buying the right house or the right car,” he says.
Begin your search on the Internet. Each firm’s Web site should answer most of your questions. If the Web sites don’t, the missing information should speak louder than what is there.
Be wary, for example, if the principals don’t post their resumes. You should be able to track their expertise to separate business-savvy investors from merely wealthy ones. After all, your new partners will put more than money into your business; they will become consultants, as well.
Small details about the company are just as important as obvious red flags like lawsuits. Examine the company’s holding pattern. The difference between keeping a company two years and 10 years may mean it either wants to “fatten the calf ... and sell it again or ... really polish the diamond,” Fink says.
Look outside of the firm, too, for the full picture.
“Interview some of their portfolio companies,” he says. “Any private equity company that won’t allow you to talk to some of their clients — run.”
Ask the CEOs of those companies how they think they’ve benefited as well as what their customers think. Find out how many employees have remained since the acquisition.
“Do the principals feel that they’re better off? Did [the firm] really add value or did they only add money and micromanage it to death?” Fink says, emulating the line of questioning that lead him to Blue Point Capital Partners.
Because you won’t be the only one interacting with the new partners, set up social events so your managers can see who they may be working with. Before the sale, Fink organized dinners and other casual meetings and even arranged for the principals to have one-on-one interviews with his senior staff members.
“I want them to feel comfortable conversing with these folks just as much as I do,” says Fink, who set the communication in motion before the contracts were even signed.
Find benefit for everyone
Fink, who describes himself as a consensus leader, took the idea beyond C-level executives before he started the search. Many leaders make the mistake of waiting until they’ve found a firm to ask everyone’s approval, but Fink says that conversation should come before the process begins.
He told his employees that the acquisition he was considering would not bump him out of the picture and that he would still run the company on a day-to-day basis. The only change would be more growth opportunities.
Even then, some employees hesitated. “The fear is that you’re simply trying to get them to go along and not telling them the whole story,” Fink says. “That isn’t necessarily based on me; it’s based on what people have seen in the business world.”
To satisfy those employees reluctant to buy in, you should offer an exit in return for their willingness to try. Fink asked his employees to commit to a 30-day trial after the sale. If they were unsatisfied, a severance package was on the table.
After that month, only two employees opted for the alternative. Fink is still working to keep the remaining employees satisfied.
“You have to act with brimming confidence just as you did before the sale,” Fink says. “If you say nothing’s changed, but when someone comes to you, you say, ‘That’s not my problem,’ or, ‘I’ll have to check with the new owners and get back to you,’ then something did change. You’re no longer as engaged.”
Your employees will be watching your actions and measuring them against the promises you made upfront, so be consistent. Don’t start taking longer vacations or even longer lunch breaks. They’ll notice your diligence slipping if you pass responsibility to the new partners.
Constant communication will keep them enthusiastic about the acquisition. Most employees will not have contact with the new partners, so you must act as the medium. In staff meetings and e-mails, share anecdotes you learn about the partners or provide details about decisions they helped you make.
Employees have to see the benefits directly, as well. Part of Fink’s deal with the firm was that employees would receive pay increases as the company’s revenue grew.
“You’ve got to keep showing them the benefits,” Fink says. “People will accept change if they can really intellectually believe that it’s going to not only make the organization better but, at the end of the day, help them.”
Prepare employees to perpetuate success
While you’re evaluating what your company could gain from a partnership, you also need to pinpoint what you’re not willing to give up. Fink identified AWP’s core competencies of safety, flawless execution and on-time performance as nonnegotiable items.
“If a new partner came in and said, ‘You’re spending a lot of money on training. Do we really need all this training?’ Yes, we do; that’s made us who we are,” Fink says. “A lot changes if we’re not dedicated to flawless execution through first-rate training.”
Firmly establish those core issues upfront. Fink says you shouldn’t be timid about it — obviously the firm approves of how you’re already running the business because it agreed to get involved.
“In terms of setting the stage with your new partners, you have to let them know right from beginning the soul of the organization is not negotiable,” he says. “You set the ground rules and communication pattern right from the beginning, which says, No. 1, I don’t compromise on core issues and No. 2, if you want me to run the business, then let me continue to make the dayto-day decisions.”
After you’ve established those ground rules, stick to them. Measure every idea that comes through your new partners against your original core issues, and don’t let the measuring stick slacken because you’re excited about a new prospect.
Fink and his managers meet formally with the partners once a month. To continue to build that relationship, you need to be open with them about the company’s performance and whether you’re on track to meet goals. If you’re struggling, ask for their help.
“You have to be committed to take their advice,” he says.
For example, Blue Point recommended associations and personal acquaintances to help AWP find a professional recruiter within three weeks, after Fink had “floundered around” trying to find one for six months on his own. Now, only two months after the sale was finalized, AWP is looking at about a dozen potential acquisitions thanks to its new partners.
Monthly meetings are a good way to revisit those big-picture goals, but they shouldn’t be the only communication. Fink e-mails his partners regularly to inform them of an achieved goal or a brewing problem, especially if it needs to be addressed before the next scheduled meeting.
“They may have some insight as to how I might approach that problem or look at it in different way,” he says. “What any entrepreneur who sells a business to a private equity firm has to understand is: They now own the car, but I’m still driving. Having the authority to drive the car doesn’t mean you drive it wherever you want and however you want without some measure of consultation.”
Fink’s goal is to equip employees to run the business without his constant oversight. To do that, he encourages his senior staff members to use their direct access to Blue Point. He wants them to solicit opinions and broaden their perspectives so their decisions are not always centered on him.
“What the wise leader has to say is, in terms of perpetuating the business well into the future, that perpetuation doesn’t come strictly through the infusion of money or adding more business,” he says. “It comes through the top management of the company being able to better run the company. My top managers need to be equipped with as broad of a perspective, as much knowledge, as much information as they possibly can, and the only way they can do that is to seek out other opinions.”
Giving managers that liberty to seek advice elsewhere can be a struggle. Fink focuses on three points to keep his attitude in check during the transition of power.
“No. 1, you didn’t retire,” he says, reminding himself of the message he gave employees before the acquisition. “Now is not the time to take it easy. You need to be more engaged in your business than ever before. Even if your motivation in selling was to eventually retire, in near term, you can’t retire.”
Second, leaders need to realize that their position is no longer one of dictatorship. Phrases like, “Because I said so,” or, “Because I’m the owner,” need to be deleted from your vocabulary. Instead, you need to cooperate with new partners and old employees alike to make decisions based on all the perspective you can gather.
Thirdly, Fink looks at partnering with a private equity firm as an opportunity to develop his versatility as a leader. The experience requires you to adapt, motivate employees in a new situation and expand your vision to include the company’s well-being, not just your own.
“A marriage between a private equity firm and an entrepreneur, if done right, is a wonderful business succession strategy because it marries two very vital concerns,” Fink says. “It marries the continuity issue with the succession issue. Yes, I’m still in charge, but now there’s at least a template that if something were to happen to me, this business is secure going forward.”
HOW TO REACH: Area Wide Protective Inc., (800) 343-2650 or www.awptrafficsafety.com
In the midst of major change, Gary Graves has provided stability at American Laser Centers.
Last year, Graves was appointed CEO of the company when two private equity firms became majority owners. During the personnel changes that accompanied the transition, Graves developed his employees’ trust by proving himself a consistent, approachable leader.
“People that trust their leaders will tend to push hard, take risks and put their all into the job,” says Graves, whose company posted 2007 revenue of about $150 million. “If they don’t trust, they’ll be watching the clock and wondering what they’re going to be doing that weekend.”
As the 1,600 employees of the laser hair removal company began trusting him enough to give him their input, Graves brought both new and inherited talent together to strengthen the company.
Smart Business spoke with Graves about how to establish trust with your employees.
Establish your stability. People are fundamentally the same across businesses in terms of their dreams and aspirations, how people want to be treated. I’ve found certain things that work for me, and I continue to bring them along in whatever setting I’m in.
You have to be predictable and consistent. People don’t want to sit around wondering, ‘How’s this guy going to react to this or that?’ They like to know, if this happens, this is how people will react. Anybody
that’s ever worked for somebody that’s unpredictable or inconsistent [can tell you] that’s not a great situation.
It will take a little time. There’s no speech or big town-hall meeting you have and say, ‘Well, I’m going to be consistent.’ You just have to demonstrate it through your actions as events unfold. People see how you react to success, people see how you react to failures, when things are down, when things are up.
What’s worked for me is being also emotionally balanced. If, in the downtimes, you’re running around yelling and panicking, the organization is probably going to panic, as well, and not focus on the things they need to do to improve it. They’re just going to focus on self-preservation.
As time unfolds, people will see you in a variety of situations and see that you’ve been consistent in how you deal with the good news and the bad news.
Build trust through reliable hires. Surround yourself with good people — which might mean that you have to bring in people that you’ve worked with before that you know and trust.
They not only need to be deep in their functional area. That’s kind of a given; the CFO is going to be good at finance. What I’m also expecting is that they’re broad businesspeople, willing and able to contribute to ideas that aren’t necessarily in their functional group.
You probably are going to step on some toes. Sit down with people and explain to them why you’re doing it. I involved the people that I kept in part of the interview process. I brought on some field people that I had worked with before. But I just didn’t parachute them in and say, ‘We’re going to accept that.’ I had my team be part of the interview process. I don’t want them to feel like I’m making that decision for them.
The first time you bring somebody in and everyone sees that that was a great hire, they then trust your judgment. The next time they hear Gary’s bringing in somebody he’s worked with before, people don’t worry about it.
Encourage input. You would set the expectation or make it known that you’re really interested in their point of view on things. Some people have not grown up in a culture where they were asked to step outside the box. They can do it but don’t feel comfortable doing it. If you just let them know that it’s expected and it’s OK, many of those people might be able to do that.
In terms of how you make somebody feel comfortable doing that, it’s really just sitting down with them. A lot of times, what happens is you’re sitting around the table, you’ve had lunch brought in and you’re just shooting around some ideas about the business. It doesn’t feel like a formal business meeting because it’s just lunch. People get caught up in the conversation. People ... have a point of view on a lot of things.
Really, it’s not hard to get that going. It goes back to being the consistent, predictable and approachable
leader. If they work with you a little while, they’re going to understand it’s OK to have an idea about a different area. You tell them it’s OK and that you actually would like their feedback. Usually, there are one or two brave people who believe you right off the bat, take you at your face value and come in.
Then the word filters out that, ‘Hey, he is approachable.’ People are pretty smart reading people. If you walk around and you look approachable, you’ve got a smile on your face, people will read you before you have any kind of meeting or say anything. It’s how you carry yourself as a leader and if you’re visible, if you’re out and about.
If you’re in your office behind closed doors all the time and people never see you, they’re probably not going to feel you’re approachable.
How to reach: American Laser Centers, (877) 252-8922 or www.americanlaser.com
Rob Kornahrens is in the roofing business, but it’s the bricks — his 400 employees — that keep Advanced Roofing Inc. standing strong.
To make sure he hires staff that can uphold his company’s 26-year reputation, Kornahrens approaches the hiring process with keenness and intensity. The founder, president and CEO starts with behavioral profiling, and after people are hired, he keeps them on track through a rigorous annual review process.
After all, how do you grow a company you started with a $15,000 loan from your father in 1983 to the No. 6 roofing contractor in the nation in 2007, according to an industry magazine?
“You do it through people, through processes, through culture,” Kornahrens, whose company posted 2007 revenue of $75 million.
Smart Business spoke with Kornahrens about how to hire employees who will meet and keep the standard you’ve set for your company.
Separate hires from their personal lives. Obviously, you’ve got to start with resume selection. I
generally look for stability in a person’s life. I know some people get into bad situations, but if I’ve got a resume with five jobs in seven years, it doesn’t go to the top of the pile. I look at resumes for stability.
I appreciate honesty. I’ve had people be honest with me, ‘Hey, I was going through a divorce and this is what happened.’ Something happened in their personal life, something bad, and they had to move on, and they get it straightened out. Things happen to people, and you’ve got to be open-minded and fair with people.
Don’t have a direct manager make the hire. I rely heavily on the interview process, bringing in a couple people to interview. We generally use the manager-once-removed philosophy, which is, if you need to hire somebody for a position, it should be the manager that’s one up. If you allow the manager to do the hiring, in some cases, they’ll overlook somebody that’s better than them.
If we’re hiring a person to be a business development person, I’ll get involved in that rather than just having my head business development guy do the interview himself. Not that I don’t trust the guy, but you want somebody that’s over the person doing the hiring so you’ll get a better hire.
Sometimes they feel threatened if somebody really good comes across in front of them. People have a tendency to fear for their jobs a little bit.
Hire a variety of types. We do personality profiling and behavior profiling. My belief is 90 percent of people repeat their behavior from previous jobs. You’re interviewing and you have had them already take some profiling, and you’re able to figure out what the behavior’s going to be after you hire them.
You look for things and then you drill down on specific cases of experience and not just theoretical questions.
We use an outsource service that’s online. There are questions that steer you to stability. The one profile is called DISC [dominance, influence, steadiness, conscientiousness]. So if we’re looking for somebody
that’s detail-oriented and steady, their personality will come in as a high C high S. If you’re looking for a salesperson, we’re looking for somebody that’s a little more I. I’s are people persons. A D is a ‘get it done, don’t get in my way’ type of person. You need those. Not that any one personality profile is right,
because there are strengths in all of them and weaknesses.
These profiles give you do’s and don’ts for communicating. If they need to talk to Joe Smith, and Joe Smith’s a high D and this other person’s an S, you know you’ve got to deal in facts and talk to them in a certain way — great communication tools once you hire them on.
Keep good hires on track. We use an annual review — the 360 tool. The idea is if I’m evaluating somebody, I get somewhere between six and 10 people that work with this person, not just the person’s boss.
That’s the old conventional way, doing a review and filling a form out. That’s one person’s opinion on how that person’s doing. A 360 is anonymous so people can pretty much say what they really feel.
We sit down with everybody once a year and do that. You’ve got to explain that if one person says something, it might have been a bad day. It’s not that important.
If two say something, they’ve got my attention. And three, there’s something either to build on, because we look at strengths, and then we also look at opportunities for improvement. What are you going to change after this review? Do you want to go to a leadership course?
You’ve got to tell the person, ‘Five people say you’re condescending when you’re talking to people. What are you going to do to make yourself more aware that you’re doing that?’ You do a lot of questions on
what they are going to do about it, not how I’m going to fix it for them. They need to fix it.
Say someone doesn’t have good listening skills. So you’ve got to say, ‘OK, how can you improve your listening skills? Why don’t you make believe you’re Columbo? And rather than not letting the person finish and you not listening, ask questions.’
Listening has to improve when you ask someone a question and they’re responding.
How to reach: Advanced Roofing Inc., (800) 638-6869 or www.advancedroofing.com