"Business Philosophy" By Robert Castles
In business, the customer is always right — true or false? Well, it’s not always that clear cut. Sometimes the customer knows what he wants to achieve, but fails to share that business knowledge with you. This insight gap can prevent you from delivering a relevant product that meets his needs.
This type of situation, unfortunately, happens quite often, especially for software companies like PMG. Often our customers request a certain product that may not be the optimal solution for what they are really trying to accomplish. Our philosophy is putting our customer’s business needs first, rather than leading with our technology solution.
“Business First, Technology Second” has proven to be the winning ticket for both our customers and our business. At first glance, letting non-technical customers define our technology road map may seem counterintuitive, but it has enabled PMG to grow and thrive, even through the recent economic downturn.
Get in step with your customer
Not understanding the business issue behind the product request can lead to long development cycles, changes in direction, delays, and a possible solution that doesn’t quite meet customer expectations — leaving both parties frustrated.
Before embarking on developing the solution, you must first define the problem in business terms. The key is to engage customers to understand the underlying business issue. The information uncovered will help you deliver a more relevant solution and ultimately more value, which results in a satisfied customer. And satisfied customers lead to more business with additional referrals.
Walking the talk
At PMG, we walk the talk. Last year, a major customer was insistent that we offer a native iPhone app for our service catalog solution. The customer wanted the app so that users could request items from the field. This was a major developmental undertaking that was not currently slated on our short-term technology road map.
In time, we discovered the real business issue was the significant delay in the approval process when executives and managers were away from the office, without access to the catalog. So the actual need was not the ability to submit requests from a mobile device, but to approve them.
This information dramatically narrowed the scope of the project, allowing us to almost immediately deliver a more relevant solution. Now executives are able to process approvals on their mobile devices, driving down the request processing time, which was the major issue from the beginning.
Had we proceeded to develop the solution that was originally requested, it would have taken much longer to deliver and cost more. Additionally, the solution would have been much more complex, which would have risked low user adoption altogether.
Crawl before you walk. Then run with it.
Investing the time and energy to form a true partnership with your customer will ensure success for both parties. Too often our customers are in a hurry to get a project completed. As a result, they skip steps and move ahead too quickly, instead of taking the time to have additional conversations to ensure that you fully understand the nature of their business and the scope of the issue at hand.
Taking the time to help your customer assess intended goals is critical to achieving success. But, even more important, is to ensure that the goal is tied to a business outcome. Unless decisions are made in the context of driving a business outcome, you may spend a lot of time deploying a solution that does not provide substantial value.
Robert Castles is principal of PMG, a provider of enterprise service catalog and business process automation software. Reach him with your comments at email@example.com or (770) 837-2301.
Dr. Thomas “Tim” Stover admits it hasn’t been easy paddling upstream, and he’s been doing it for years in the health care industry. Stover has been trying to convince hospital staff, doctors and the public that the solution to the health care crisis isn’t to spend less to treat sick people, but to help them not to get sick in the first place.
Stover, president and CEO of the 5,200-employee Akron General Health System, has spent considerable time, effort and money trying to change its mission to a different side of the health care continuum — the prevention and wellness side.
“When you talk about trying to cut the costs or bending the cost curve in health care or in the sick-care model, the only real way to do that is to change it to a well-care model,” Stover says.
By Stover’s accounting, he and his team have spent about $100 million over the years to basically keep people out of the hospital.
“That’s not what most CEOs and hospitals are supposed to do,” he says. “The way we are paid right now is to fill the place up. We are dealing in a volume-sensitive industry, and we are trying to do everything we can to decrease the volume, but the sick-care model really incentivizes you to get sick or stay sick. I think that is totally upside down. It is the wrong message to send to our community.”
The recently enacted Affordable Care Act (ACA) has been turning the examination light on the health care system more than ever. While the ACA is designed to make health insurance coverage more affordable for Americans and reduce the overall costs of health care, confusion and anxiety have arisen over the interpretations of the law, and many critics are not convinced the measure will save expenses.
Here’s how Stover and Akron General Health System are taking a concept that goes against the grain — and gives the customer what he or she wants and needs.
Find a better way
Keeping expenses in line is a fundamental principle of basic economics. You have to judge whether your expenses are too high in light of your sales.
But Stover’s education and experience were telling him that there had to be a different and better way for the health system, which had revenues of $600 million last year.
As he saw it, the only way to cut costs or to bend the cost curve in the sick-care model was to change it to a well-care model. The next step for Stover was to consider what patients really needed. There will always be a need for the sick-care model, but the well-care model is the wave of the future.
“In this area, the expectation for excellence in Northeast Ohio is a given by people who use our services,” Stover says. “So when people walk into any of our institutions, the first thing they expect is that they are going to get the best care that you can get in the country, and pretty much they do.”
While researching the demand for treatment, the ability to analyze cause and effect brings dividends. Stover saw that the ax was falling on what government was going to pay for. Reimbursement was seemingly dropping on a daily basis.
“This effects how services are delivered because the demand is for you to deliver excellence on a daily basis. You’re getting measured on that and fined if you don’t do it [under the ACA],” Stover says.
Drilling down even deeper into the challenge you face may expose some other realities. Stover saw the dilemma he was in and the frustration it caused.
“At the same time as you are trying to deliver that level of quality which is an expectation in Northeast Ohio, you’ve got to do it for a price that is less than everybody else’s,” he says.
Be creative about the buy-in
If you have decided to go in a direction that may rub people the wrong way, you are going to ruffle some feathers. You may have to convert everyone from the bottom up to follow your new idea.
Stover and his team use a “white coat program,” which involves shadowing a doctor. For instance, one of the local community board members will spend a day with a doctor to see first-hand what it takes to meet the challenges of 24 hours.
The experience was particularly successful with one board member who criticized how expensive it was to deliver health care.
“It seemed to him to be very easy to take cost out because there appeared to be a lot of redundancy with everybody checking everybody else multiple times to make sure everything was right,” Stover says.
The board member spent a day with a cardiovascular surgeon and observed a heart operation.
“He was fascinated by the fact that he said the doctor’s nose was 6 inches from that woman’s heart,” Stover says. “He said, ‘The thing I realized that day was I looked around the room and there were 17 people taking care of that one patient. I also realized that you can’t outsource that business or that cost to China’ — which is what he did when he was operating his company.”
Another high-level holdout was a physician who was the chairman of medicine, who was an infectious disease doctor. It took Stover four years to turn around the doctor’s approach.
“He said, ‘You are crazy,’ and, ‘This will never work,’” Stover says. “I made it a personal endeavor to convert him.”
To bring him around, Stover kept him engaged in the effort and showed him the results it was bringing. A particularly effective method was to add the doctor to a medical advisory board of 12 physicians that the health system had in place.
“I wanted him to hear what we were doing,” Stover says. “We were deciding about the programs we were going to put into our facilities, the equipment we were going to buy, why we were using one type over another type of program.
“Those were decisions he had never given input on before; over time, what we were trying to do sunk in for him.”
Stover says that when the doctor retired he had become one of the biggest cheerleaders for the health system.
“He said the best things that ever happened to Akron General were the health and wellness centers,” he says
Have skin in the game
If people don’t think they have any skin in the game, whether it is tangible or intangible, there is no reason for them not to just do whatever they want to do, suffer the consequences of that and let someone else pay for them getting back in a state of wellness, Stover says.
So he narrowed his focus.
“This is not about the success of the Akron General Health System, but this is about the wellness of our Akron community,” he says. “The entity that should be doing that should be taking care of you when you are sick. It’s just that most health care systems don’t do that.”
By establishing wellness facilities that offer exercise equipment, physical therapists and rehabilitation nurses — and charging a fee to encourage commitment — outpatient services are blended with the lifestyle change service.
“We don’t charge a lot for the memberships,” Stover says. “Our Health & Wellness Center — West (Montrose) facility is full. It has 9,000 members. Of the members, 285 are doctors.”
While Stover has been CEO and president for 1½ years, he has been with Akron General since 1993.
“I just knew years ago that we needed to take health care to the patient — we should not make the patient come to us,” he says. “I think that’s arrogant. So I knew that was right. I had practiced for 30 years, and I was not from this system. I was from the other system so there was an immediate distrust of me for the first five years.”
The old adage that persistence pays off rang true.
“I just kept saying the same thing over and over again: ‘We’ve got to keep doing the right thing. We shouldn’t be afraid of this. We need to embrace this concept.’”
At some point, people will start to listen, Stover says.
Unexpected benefits may be the reward for your persistence. Stover has been getting interest in the well-care program from all over the world.
“We can show them our model, show them the success that all of these facilities basically break even before year three; usage of all the facilities usually more than doubles, sometimes triples in the first six months because people have a choice where to go for therapy — and they choose us because it is convenient,” he says.
A for-profit partnership has been formed between Akron General Health System and a local developer that not only finances but also builds facilities for other parties.
“We have business leads all over the country and actually at some point, we will be going to China because the developer has business leads in China,” he says.
“They are seeing the same thing. Their hospitals are full of sick folks. And they have to figure out how to keep them out.”
How to reach: Akron General Health System, (330) 344-6000 or www.akrongeneral.org
Look for and focus on a better way to do business.
Be creative about the buy-in once you have a plan.
Have skin in the game to ensure involvement.
The Stover File
Thomas “Tim” Stover, M.D.
President and CEO
Akron General Health System
Born: I was born in Wheeling, W. Va. I practiced medicine in Wheeling before moving to Akron in 1981.
Education: Bachelor of science and doctor of medicine degrees from West Virginia University. Stover completed internship and residency in obstetrics and gynecology in 1976 at Akron City Hospital. He completed business courses at The Weatherhead School of Management at Case Western Reserve University and at the Wharton School of Management before completing his MBA at the University of Tennessee in Knoxville.
What was your first job and what did you learn from it?
My first job was actually working for my dad, Harl ‘Ben’ Stover. He was a small-business man in the small town that I grew up in of less than 600 people. He ran a general store, and he worked on cars. What I learned from him was that he took care of the family with that business. If he wasn't working, and doing the right thing by the customer, the people could drive to the big city to get what they wanted. He taught me a lot about working hard. He knew the basics of business, which were first to treat the customer right and then they will come back. That's the way I feel about patients too.
Who do you admire in business?
The system that I admire, because I was a patient there, is the Mayo Clinic. It is an enormous system but when you interact with the system, it actually feels small. The staff pays incredible attention to detail. I had to go there for a very serious illness. The reason that it is successful is not just because of the medical expertise and the research, but it was how the clinic delivers service. The first thing that hit me was that they were nice people first, and then they were really smart. But they didn't try to impress you with the fact that they were really smart first. They try to impress you with the fact that you actually mean something to them and that they were treating you the way that they would want to be treated.
What's the best business advice you have ever received?
I heard a great line the other day: ‘Cash is king and profit is an opinion.’ I love that, so I'm going to remember it. I know exactly where that pertains. I know there is a way we take care of patients clinically, and then there's a way that we get paid, and somehow they don't connect. The chairman of my department when I was a resident told me if you take great care of patients, both clinically and with your personality, people will be able to pick that up and they will come back. If you are bringing your ticked-off personality with you to work, the patient senses it and the customer definitely gets it, and you really just need to leave that at home.
What is your definition of business success?
When I took this job as a doctor I thought I would be paying attention to the finances as much as I would be to the patient. Well, I was wrong about that. I am paying attention to the finances. But I still think that the proof of the fact that you're doing it right is the ability to be sustainable. I think the measurement of success to me is that actually people come back.
When Mark Mizer talks about partnership, he doesn’t have to think hard to find an example of it involving his company, RDP Foodservice LLC.
Last summer, a huge power outage afforded RDP the opportunity to show how an independent food service company partners with its customers.
“We took our tractor-trailers out to restaurants, and we collected their product because we had power and refrigerated the perishables so they wouldn’t lose their product,” says Mizer, president and the oldest grandson of company founder Richie DePaolo, who popularized not only the silver dollar-size slice of pepperoni but also the cardboard box for pizza.
Being an independent supplier right in the area has its pluses, but the premise that his company as an independent is a good fit for independent restaurateurs can’t be overlooked.
“Once you realize that you want to be the champion of independence, and you can go out and tell that story of being an independent yourself, it really helps clarify what your role is and what your job is,” Mizer says. “We decided, ‘OK, that is going to be who we are going to fight for. Those are the ones we want to create partnerships that we can help grow.’”
Here’s how Mizer aligns his company’s role as an independent food supplier to his customers, who are independent restaurants, and how the two grow in success together.
A journey to an identity
Developing your identity, that is, your brand, takes considerable thought. And maintaining it over a period of years is no small feat. RDP’s journey took it from a small business to a large enterprise.
The company originated in the 1930s as a family-run grocery store, and in 1957 added a food service business, primarily catering to pizza houses. From 1985-96, the company was part of Sysco Corp., the largest food service company in the world.
“But Sysco decided to dismantle the company, and our family decided to go back to being independent, and we started the whole process over again,” Mizer says.
RDP had drifted away from its identity while under Sysco, and the years there showed the company that food service is a huge, multibillion-dollar industry where it was a drop in a bucket.
When a company is in the position to assess its identity, it often happens at a crossroads. For RDP, its exit from Sysco was prompted by the family members that they had to stand for something.
“What we felt we needed to stand for was the independent restaurateur, the guy who creates that local flavoring in your community or in your neighborhood,” Mizer says.
Mizer and his team looked back on the company’s history and how it supported the independent restaurateur.
“He is the flavor of this country,” he says. “Someone has to go to bat for those guys. When there are people who move away from town and move back, they don't come back to relive their childhood by going to a corporate restaurant. They really want to find that neighborhood place that represents their childhood.”
Likewise, if you are visiting another city, you don’t want to experience it by going to a corporate restaurant like the same ones in your town.
“So you go to Baltimore, Md.; you want to find that guy who has those crab cakes,” Mizer says. “He has been making them for three generations on the beach, or near the water. That is where you get the flavor of your community.”
Once you realize that you want to be the champion of independence and you can tell the story of being an independent yourself, it really helps clarify what your role is and what your job is.
“So the whole industry became a little bit easier for us,” Mizer says.
Make the effort to hustle
Once your identity has been clarified and your role planned, it’s time to take action — and to hustle.
“I think one of the reasons why we are still here is my grandfather and my uncles just outhustled everyone; it was that dedication where they were manually checking orders to make sure they were correct, working ungodly hours all the time,” Mizer says.
While today’s employees don’t manually check orders off a clipboard, there is a new and better idea.
“I think computer technology today has kind of evened that playing field,” he says. “The technology that is available to me as an independent is the same technology that the big corporate people are using.
With technology as a tool, all players in an industry can work toward perfection — getting your order at the price you negotiated without any errors at the time you want your delivery.
“That's what we are all going to; all the things that my grandfather and uncles had to do in years past are now being done by a computer,” Mizer says. “If we all get to perfection, then how does that customer make his decision?”
This is when differentiation comes in. Call it added value or a bonus. Mizer calls it personality.
“I think for the very first time now, personality becomes a little bit more of a factor,” he says. “We not only have to sell you Heinz ketchup, we have to put a personality behind it — which is how do we help you grow your business? How do we create an experience for you buying from RDP that the other companies can't create?”
Going it alone — as an independent — is actually a strong point, he says. While conventional wisdom may say there is strength in numbers, Mizer can politely disagree; RDP’s annual revenue tops $164 million.
“Independence is a strength; independence isn't a weakness,” he says. “When you open your own restaurant or whatever that might be, you are putting your own personal interests on the line. And when you do that, you may feel like you have to go to a corporate giant because those corporate giants get the best deals with the best products or the biggest selection. That's not necessarily the case in food service. Bigger doesn't necessarily mean better.
“We think we are as competitive as anybody,” Mizer says. “We think that when we are helping the independent restaurateurs, they shouldn't have to sacrifice anything by working with another independent.”
Motivate with mottos
One of the last steps in securing your identity is to get all employees on board with the program. That means engagement in the mission, which when brought to fruition, creates a sense of satisfaction.
“When they get a chance to see that they can actually put their thumbprint on the growth of a company, it is really invigorating to them,” Mizer says.
While everybody at your company plays a role in your success, they need to realize how they fit in with selling a product that may not be unique. It’s the experience that will make it different from the competition.
“Every year we have these little mottos that we use like motivation throughout the year,” he says. “They are all part of it, so one year, it was 'Move the needle' and if there wasn't something in this organization that moved the needle, then we cut it out and didn’t use it anymore. We went with a different approach.”
Mizer and his team use a motivational phrase to help keep the excitement going.
“Last year, we had the motto ‘Create the experience’ and that was everybody in this company realizing that for a customer to be satisfied, we have to create an ultimate experience, whether it is from the receptionist to the salespeople to our drivers, to how we treat them to special events, you really create an experience for that relationship because we don't sell anything that is unique.
“I don't sell iPads. You want an iPad? You have to buy it from Apple. We sell Heinz ketchup, which you can buy from anyone, from a grocery store to any of my competitors, so you have to find a reason to create that experience.”
Mizer’s motto for this year is ‘Pull the rope.”
“We all realize for a restaurant to be successful, every department within this company has to work together; we all have to pull the rope at the same time,” he says.
Mizer passes his enthusiasm weekly with the senior management and three different huddles throughout the company with all the employees.
“Then they are hearing it from the passion of me so they all understand exactly what our goals are,” he says. “If there is something that we need to do a better job of, we will voice it then. But everybody needs to know that every department has to work closely together pulling that rope.
“This is what's on our plate for this week. This is how we can be a better company.”
How to reach: RDP Foodservice LLC, (614) 261-5661 or www.rdpfoodservice.com
Take a journey to an identity.
Make the effort to hustle in your business.
Motivate with mottos to keep the troops engaged.
The Mizer file
RDP Foodservice LLC
Born: Dayton, but I moved to Columbus right afterward.
Education: Upper Arlington High School, then I graduated from Ohio University. I studied business communications, and then I actually studied to be in the fashion world. My first job out of college, I went to work for The Limited, and it really set the tone for that kind of outside-the-box thinking.
What you was your first job and what did you learn from it?
My very first job was dragging clay tennis courts. I think I learned that people depend on you and punctuality. And if you're not there, you’re going to lose your job.
Who do you admire in business?
I admired a guy named Dick Solove. He has passed away. He was known as being a really tough businessman. Yet when he got older, he gave back to Ohio State University. They named the cancer hospital after him. Solove taught me the importance of giving back to the community and how important that is. Also the Les Wexners of the world. I think what I find interesting in business leaders are the ones who are successful, but yet they want to go down in history for more than just that. They are the ones who want to give back to the community.
What is the best business advice you ever received?
Sam Walton said, ‘The true CEOs of our company are our customers. And they can hire and fire us at any time by just buying their products from somebody else.’ That is one I use a lot.
What is your definition of business success?
I think the definition of success really is the ability to change the lives of not only your customer base, but of the lives of your employees. We really are a team over here with my two cousins who are executive vice presidents, Rich and Chris DiPaolo.
For 27 years, Ernst & Young has championed the entrepreneurial spirit of men and women pursuing excellence in their businesses, teams and communities.
Ernst & Young founded the Entrepreneur Of The Year Program to recognize the passion of entrepreneurs and to build an influential and innovative community of peers. We received more than 1,680 national entries for this year’s program, from the country's most deserving entrepreneurs. Their triumphs stand as a testament to the role they play as visionaries and leaders.
Entrepreneurs change the world and make it a better place to work and live. We honor them for their fortitude and resilience, and we celebrate their ability to forge new markets, navigate uncharted territory and fuel economic growth.
We gather here in Northeast Ohio and in 24 other cities across the U.S. to honor all of the finalists and welcome the new class of entrepreneurs into our Hall of Fame.
Congratulations to all of the 2013 Northeast Ohio Entrepreneur Of The Year finalists and winners. We applaud them all for their unyielding pursuit of business excellence and we are honored to share their inspiring stories with you.
Whitt Butler, advisory partner, Ernst & Young; program director, Ernst & Young Entrepreneur Of The Year Northeast Ohio.
Here are the 2013 Northeast Ohio Entrepreneur of the Year winners and finalists:
Distribution and Manufacturing
Education and Non-profit
Health Care and Pharmaceutical Services
Finalist – Scot Lowry, president and CEO, Fathom
Retail and Consumer Products
Winner – Kris Snyder, CEO, Vox Mobile, Inc.
Family Business Award
When Gary Shamis, Bob Littman and Mark Goldfarb created the accounting and business consulting firm SS&G Inc. in 1987, the trio had a vision that defied the traditional accounting world.
Their radical idea: Focus on people.
“It was a real sweatshop kind of mentality for the profession,” Goldfarb says. “You worked 3,000 hours a year [eight hours a day, every day of the year]. We opened it up and created opportunities for people who worked part-time.”
That was the genesis of the partners’ philosophy that today continues to define how SS&G differentiates itself from the competition: growth, client service, and an employee-centric culture.
“All three work together harmoniously,” says Shamis, senior managing director. “If you have them all going, and you focus on it, the results can be very positive.”
You’ll notice that absent among the three is the notion of operating with a generous supply of black ink.
“We always felt that partner profitability and things like that were going to be a byproduct of doing all the other things right, so we didn't focus our business on enhancing the bottom line of the owners,” Shamis says. “We focused our business on cultural aspects that we thought would be good for our people, good for our clients, and in the end, what we thought would be good for us.
“We publish stories about client service going above and beyond in terms of, say, driving through a snowstorm to deliver a tax return,” says Goldfarb, senior managing director. “We really try to make that part of the culture, so that when somebody calls, everyone knows here, you had better call that client back; if not immediately, certainly within the next business day.”
This mentality has helped the partners and their teams spark significant growth over the past few decades. From a small firm with about 10 employees, SS&G has grown to more than 500 employees at 12 offices in eight cities in four states, including new offices in Chicago. With annual revenue of $70 million, SS&G ranks among the top 100 independent accounting firms in the U.S., including being named the 41st largest U.S. accounting firm by Accounting Today.
Here’s how Shamis, Goldfarb and Littman grew the firm by emphasizing its differentiation and is taking steps to ensure SS&G continues long into the future.
Get the talent
Accounting had been a traditionally male-dominated industry until the 1980s, when it reached parity. In recent years, however, women have been rapidly joining the ranks.
So with an eye on whom and where the talent was coming from, SS&G years ago established a plan that fit lifestyle concerns and issues into the firm’s culture.
“Most of our offices are suburban,” Shamis says. “Many other large accounting firms are downtown. Suburban locations make it a lot easier for somebody who is female and raising a family to be more accessible to what she needs access to — and it really became a focus on being able to try to hire these professionals who were women in their family-raising years.
“We have been able to get this incredible, top-notch talent, but we had to create an environment that was slightly different,” he says.
And, Goldfarb says, this has contributed to such a positive work environment at SS&G that it has become genetic.
“We are told all the time from people we hire that this is such a great, warm environment here compared to where they worked in a previous life,” he says. “It's something that is really part of our DNA.”
With a powerful corporate DNA in place, you can then develop a culture that attracts talent by which you can grow a company.
“It’s important that everybody here understands the culture; it's important that we follow it, we preach it,” says Littman, SS&G’s managing director. “Our organization is obviously about people. And to attract key people, you have to grow. If you don't grow, you can't find the talent and you can't keep the talent. Growth has been important, and that is why we have been a Weatherhead 100 company more than 10 times.”
Be creative in your growth
Creativity comes in many forms. SS&G looked at the kind of organic growth it had achieved over the years and took an entrepreneurial path.
First, the partners began to develop specialized divisions.
“We formed a wealth management business almost 20 years ago,” Goldfarb says. “Health care consulting, probably 15 years ago; payroll, 30 years ago; SS&G Parkland, which is our consulting division, was created last year.”
In an effort to strengthen this differentiation, SS&G opted to mold itself as a one-stop shop for clients and their financial service needs.
“These businesses share the same culture of being employee-centric,” Goldfarb says. “All share the same client service culture and growth for the purpose of creating opportunities for employees.”
In addition to creating new divisions, SS&G also played a large part in creating an association of accounting firms. Shamis led the formation of the Leading Edge Alliance, of which SS&G has been a member for 10 years.
Leading Edge firms share best practices. Goldfarb says it has been an invaluable asset — not just to SS&G but to all the organizations and their respective clients.
Develop a succession plan
While your company may have established a name for itself through differentiation, all the years of building that reputation can be lost in a flash if, for example, a new leadership team comes in with different ideas. Thus the need for a succession plan.
SS&G recently completed a reorganization of the firm’s leadership, and then spent more than a year preparing the company for the transition.
The plan signaled to SS&G employees that Littman, Shamis and Goldfarb were focused on the long-term future of the firm and intended to protect it from the confusion and disorder that often happens whenever there is a shakeup of any size.
Doing so also allowed the trio to help boost morale, motivation and satisfaction among employees since more than likely there will be other changes, such as promotions and movement across positions. Also, it helps clients reduce any fears that the team they’re used to working with will still be there for them.
Under SS&G’s succession plan, Littman assumes the managing director role. Shamis and Goldfarb take on lesser roles, but remain very involved with the firm.
“I have been the managing partner for close to 30 years, and I’ve had a great run,” Shamis says. “It is a lot to give up, but I am starting to realize that there is a lot to look forward to in terms of Bob running this organization.”
And that optimism extends to how SS&G will continue to differentiate itself from the competition.
“I am really excited to see what this place is going to look like down the road,” Shamis says. “I think it is even going to exceed where it is today.”
How to reach: SS&G Inc., (440) 248-8787 or www.ssandg.com
Getting the talent is a priority.
Be creative in finding growth options.
Draw up a succession plan and live by it.
Mark Goldfarb, senior managing director
Bob Littman, managing director
Gary Shamis, senior managing director
Born: All in Greater Cleveland/Akron
What was your very first job and what did you learn from it?
Gary: My first job was in a place called Mr. Junior's on Cedar Road in University Heights. I sold boys clothes. I think I learned if you work hard, and make the commitment, then good things will happen.
Mark: A caddy at Fairlawn Country Club. Certainly you learned etiquette and you learned service.
Bob: I was a tennis instructor. What I really learned from that was dealing with people, trying to help people.
What is the best business advice you ever received?
Gary: Try to work on your business instead of in your business. That was a big change for me and for our firm years ago. The firm allowed me to begin working on the business. And in that time frame, I think our firm has grown probably 600 or 700 percent.
Mark: People do business with people they like. Relationships are very important in the business world. That was from my father, Bernard Goldfarb.
Bob: I don't want to copy off Mark, but relationships are really important to me as is taking time to get to know people and build meaningful relationships.
What is your definition of business success?
Mark: If you do a great job for your clients, and you treat your employees well, success will follow.
Bob: I certainly think similar to what Mark has said and that's building relationships, creating an opportunity for other people in this organization so they can do the same and also being able to go to work, personally anyways, and have fun and enjoy it. It's not a job; it's a career.
Gary: I have a really narrow view of this and people know that. For more than 32 years, I have always felt that if you can be a little bit better next year than you were last year then that is going to drive success. I think constant improvement, the ability to continually try to get better, to not be satisfied with the status quo, has really been a huge driver for me.
Mark on the succession plan:
It's just been a tremendous ride for all of us the last 26 years. I will continue to be responsible for managing the firm’s Akron office, serve on the firm’s executive committee, chair the firm’s finance committee, act as the liaison to SS&G Healthcare and SS&G Parkland, develop larger business opportunities and continue as a client service partner
Bob on the succession plan:
Mark and Gary are not retiring. This is part of the succession plan and they still have very, very important roles here with the firm to help execute certain growth strategies and still be involved in the management of the organization. We have viewed the succession as an evolution and not an event from the beginning. Gary will be actively involved in leading the firm’s growth strategy, including geographic and existing office. He will also focus on a restaurant initiative and other large opportunities.
Gary on the succession plan:
I really think Bob has the abilities to drive this firm to even more successful and higher levels than we've operated at in the past. I just think that this firm happens to be incredibly lucky, blessed, or whatever you want to call it, to have Bob Littman take over the practice.
Despite an economy that has been in a modest recovery for more than three years, many businesses continue to struggle. One of the major challenges is that bank loans remain hard to come by, particularly for business owners with few hard assets, less than perfect credit scores, in industries regarded as risky or who just need funds quickly.
Hope springs eternal for a return to the good old days when banks actually competed to loan money to businesses. But this is not likely to happen anytime soon. The banking industry overall is far less interested in small-to-medium business lending than it used to be. This is a long-term trend that the financial crisis, subsequent industry consolidation, and heightened regulatory requirements only exacerbated.
So what are the alternatives for SMEs that cannot qualify for a traditional bank loan? Factoring may be an option for some business-to-business companies. A factor buys a company’s receivables and gives the company a large percentage of the value upfront with an additional amount returned after the invoices are paid off.
Small Business Administration loans and Community Development Financial Institution loans are other options, but only for a small subset of prospective borrowers.
Much of the SME lending gap over the past five or so years has been filled by merchant cash advance lending and a relatively new, related type of lending known as “revenue-based” financing. Mostly backed by private equity or venture capital, these non- traditional lenders have devised new business models that provide financing based primarily on bank statements, credit card volume and cash flow rather than a drawn-out underwriting process.
The result is that a much wider range of small businesses are receiving funds for a wider range of needs. The costs may be higher than traditional bank loans, but the application and approval process is much faster and less arduous, and loan amounts and payment terms are more flexible.
For example, a firm can provide a business owner with as little as $4,000 up to a much as $2 million in as few as five business days.
Two options to repay
Companies can choose from two types of financing. Business cash advances are repaid based on a mutually agreed upon fixed percentage automatically deducted from the merchant’s daily debit/credit card sales. When sales are slower, the business pays less. Small business loan options are also available. They are repaid with automatic daily withdrawals of a fixed amount from the borrower’s bank account.
These non-traditional funding sources aren’t for everyone. Lenders are looking for companies they can help grow. A small business struggling to hang on is not a good candidate. But what about a pizza shop that has a major equipment breakdown? The owner has good cash flow, but doesn’t have the money to pay for new equipment, and he cannot wait for a bank loan — assuming he can get one. A small business loan or merchant cash advance can fund in five to 10 business days and help this pizzeria keep the doors open.
Or how about a dental practice that needs new equipment? Or a spa in a seasonal resort location that needs to finish a remodeling ahead of the coming season? If the small business sector of the economy is to recover and prosper, I believe it will be through these new sources of capital.
Marc Glazer is president and CEO of Business Financial Services Inc., a provider of specialty small business loans and merchant cash advances serving businesses in all 50 states as well as Canada, and the United Kingdom, based Coral Springs, Fla. Visit www.businessfinancialservices.com.
If there is one thing that doesn’t change much in good times or bad times, it’s alcohol consumption. Phil Terry knows that fact pretty well.
“Demographically over the years you can see that it’s pretty consistent,” says Terry, CEO of Monarch Beverage Co. Inc. “The economy affects it some, but it’s not like new car sales or home sales where a slight turn in the economy can have a devastating effect on demand. Our demand is pretty consistent; good times don’t spike and bad times don’t depress it that much.”
So why would Monarch, a beverage seller who does $275 million in business a year, step out of the box where its bread and butter lives and develop a non-alcoholic energy drink? Why bother to spend precious time and resources on something so peripheral?
The answers to those questions lie partially in a venture the company started a few years prior to the energy drink experience. A sales manager who was a real fan of exotic beers and the new trend of microbreweries suggested that the company start to focus on those products.
“He said we ought to pay some attention to these people because it is not like our mainstream brands,” Terry says. “There is not a huge demand for it. Maybe this was a way for us to distinguish ourselves from our competitors.”
That was the reason Monarch committed some resources to this, and launched its World Class Beer division.
“It has grown and worked out very well,” Terry says. “We were a little bit ahead of the wave on that. We created a network of other wholesalers that creates sales divisions focused on microbreweries and new and exciting beers.”
Meanwhile, back to the energy drink story.
“One of us had an idea that maybe we should get into the energy drink business,” Terry says. “We developed a product and spent some time and money formulating and getting it produced and putting graphics on it — and we still have a lot of that in the warehouse! It’s not doing too well.
“And the one of us who came up with that idea was me,” Terry says. “I’ve been reminded a few times that that wasn’t our finest move!”
Here is what could have gone better with the energy drink and how Terry keeps listening for whispers of innovation in an industry in which product demand is about as steady as a rock.
Try your best idea — and learn
There just isn’t a crystal ball that gives a clear picture of what’s ahead for a business. So you use your data, your gut feeling, and you try something new. As one investor is fond of saying, if you start with nothing and you fail, you haven’t lost anything. Even looking at the past doesn’t help a whole lot to explain why some things succeed and others flop.
“When I look back over the years at things that worked right or didn’t work right, many times the successes are due to serendipity rather than smart planning,” Terry says. “You try to plan, you try to have a vision for what is going to be the next thing, but the future is so unknown. It’s just a big challenge figuring out what is next and what you have to do to keep the business viable and committed and customers happy. It’s not easy.”
Focus groups and market tests are often prerequisites when a new product is launched because a great product alone isn’t enough. It has to cause excitement. Terry can attest to that about Etomic, his energy drink.
“It’s good stuff; all the blind taste tests that we did show that everybody loves it,” he says about Etomic. It was another aspect of the launch effort that caused serious problems.
“It was just the marketing,” Terry says. “Marketing means so much on how consumer products do. We just weren’t experienced with that, and we are still learning.”
Once Etomic was launched, it didn’t sell well. Nevertheless, Terry didn’t give up on the energy drink.
“We thought it would shoot off the shelf; it’s a good product,” he says. “But energy drinks are just marketed a whole lot different than alcohol is. “That’s an area, which we weren’t accustomed with. Alcohol has so many rules and regulations around it; the law prescribes what you can and can’t do.
“But with energy drinks, going in and buying shelf space is a common practice. We didn’t budget anything to buy shelf space. There are some barriers to launching a new product that we just weren’t aware of. Bigger companies pay for ideal locations.
“We haven’t given up on that drink; there may be something there, but in terms of innovation, that is one that didn’t work. We are learning, and we may get that right.”
You needn’t break the bank
Capitalizing on an innovative idea needn’t be expensive. The research and testing on the Etomic energy drink, let alone the costs of developing it, weren’t free, but when it comes to using social media, the cost is next to nothing and the benefits immeasurable.
When Monarch Beverage launched its World Class Beer division, it was a natural next step to use Twitter to help it gain a following.
“We have a free World Class Beer Craft Beer Locator iPhone app and Twitter accounts that tweet things like, ‘This account has a keg of a microbrewery’s Gumballhead and they’re going to tap it at 7 o’clock tonight,’ Terry says. “So we spread the word through social media, and people show up!”
Another low-cost idea that is bringing results at Monarch Beverage involves beverages — that’s right, alcoholic beverages.
Terry and his team saw a trend with his 650 employees having some increases in driving under the influence charges. Of course, it was off-the-job incidents, but Terry was committed to do something.
“Our creative department came up with an idea for a campaign that we run every major holiday called Have a Plan,” he says. “The campaign is to remind people that you need to plan your celebrations, you need to do it responsibly and in moderation, and as a result of that, we went from six to nine cases a year to two once we instituted this.
“We have a lot of innovations that we are proud of but that is one in which I think we can see a real impact on our fellow employees.”
Get the best rate of return
While you are looking for other innovative ways to control costs, and you plan on spending some money — to make more money — you naturally evaluate the ideas as to which would provide the highest rate of return.
Terry and his team launched a clinic that he estimates for every dollar spent returns $2.
“Our costs to insure the health of our employees were going double-digit every year,” Terry says. “We tried all the things people do to try to contain that: self-insure, use third-party providers, negotiate fees.”
He wasn’t getting the results he wanted.
“So a senior vice president came up with this idea for a health clinic,” he says. “The idea was to get more involved in the health of our employees. I thought it was the craziest thing that I had ever heard. We’re in the beer business, not the hospital business.”
The clinic started small, being staffed by a part-time physician’s assistant a few days a week. It has grown to the point now where there is a full-time doctor, full-time physician’s assistant, part-time physical therapist and a medical technician. It offers annual physicals for all employees, and an annual health plan for each that is designed by medical professionals.
“The health plan each year focuses on three behaviors: smoking, diet and exercise,” Terry says. “It focuses on those because we know that those are the three behaviors that we can affect. We can improve health and lower claims. And it’s been working.”
Employees rank the clinic as the most important benefit they have working for Monarch Beverage.
“We survey our employees every year,” he says. “We ask of them of their benefits, rank them 1 through 50, and the clinic always comes up No. 1. So it is not just that it is doing good things for our bottom line; it’s doing great things for relationships among all of us who work here.”
Even workers’ compensation claims can decrease, thanks to the efforts such as the clinic.
“Those claims have come down significantly over the years because we manage that in-house,” Terry says. “People are healthier, we are having fewer claims than with traditional health insurance and our workers’ comp costs have gone down.
“We are almost to the point of being an evangelist for the stuff. I do wring my hands about what affordable health care is going to do for us long-term, but whether this model is still going to work, but we are committed to it. The government would have to change the economics of all this pretty drastically for us to move out of this.”
How to reach: Monarch Beverage Co. Inc., www.monarch-beverage.com or (800) 382-9851.
Try your best idea — and learn.
You don’t have to spend aggressively.
Get the best rate of return you can.
The Terry File
Monarch Beverage Co. Inc.
Education: I went to undergraduate at Indiana University. I am a recovering lawyer. … I went to the law school at the IU law school. So I am a Hoosier from start to finish.
What was your first job, and what did you learn from it?
I worked at a gasoline station pumping gas in high school, a discount gasoline station called Payless. I learned the value of an education. It wasn’t physically demanding work, but I could tell it was not something I wanted to do my whole life. And that if I wanted more, I needed to be educated.
Who do you admire most in business?
I would say Steve Jobs, in terms of being an innovator and being able to help people become the most productive, to create an organization that everyone can be proud of.
What was the best business advice you ever received?
I read this in a Jim Collins book, and it was essentially, ‘Don’t bet the farm.’ The way he put it was, ‘Fire bullets before you shoot cannons.’ Don’t bet so much on an innovation or a project that you jeopardize the company. Don’t put yourself in a position where the innovation has to succeed or you create difficulties for you generally. That’s what we’ve been following. We try to be measured on what we do and not get overexuberant about trying to figure out how to find the next big thing.
What is your definition of business success?
Whatever your mission is, serve that mission, and that mission does not include making money. We don’t judge success here by how much money we are making. We believe that if we have correctly identified a valuable social function, and we’ve served that social function well, we will succeed and we will make money. Our definition of success is accomplishing the mission. Monarch Beverage’s reason for being is to sufficiently provide an ever-escalating standard of service to its customers and to responsibly enhance demand for its products. In other words, serve the customer, create demand for your product. That’s why we’re here. And if we do those things well, we will make money. If we don’t do then, well, we won’t.
June Ressler was looking over the financials of her company a few years ago that had grown past $20 million in revenue, and she was more than a little shocked. The workforce solution company that she founded in 1996, Cenergy International, didn’t have enough money to meet its payroll.
The recession hadn’t hit yet, there was no apparent theft under way, and no one had hacked into her accounts. And frankly, it wasn’t the first time the problem had occurred.
“We would absolutely run out of money,” says Ressler, president and CEO. “Our bread and butter is making our payroll and making sure that we make it every week. If any of our consultants ever thought that their paycheck wasn't going to be good, they absolutely would go join our competitor.”
It all came down to her bank’s position on her company’s line of credit. The situation was so tight that Ressler had to personally pay for the wages at times.
“There were some days, I would have to take money out of my personal savings account to be able to make payroll,” she says. “I finally was able to figure out that I needed the ability to have a relationship with a banker who you can call on Friday afternoon and say, ‘Hey, I am going to bump up against my line of credit. I’ll come in Monday, and we’ll negotiate a higher limit. And they’ll say, ‘That's fine, I am going to make sure that we take the cap off and you go for it,’ you know?
“That’s instead of a banker saying, ‘Oh, I'm not going to allow that, and you have to stop growing.’”
Ressler decided that it wasn’t the circumstances that were causing the wrinkles in her bank books but the size of the bank. She was thinking anyway of expanding overseas and that would involve money exchange and other matters. She knew she needed a larger bank — and now.
“I was originally with a regional bank,” she says. “So I found a larger bank. I just happened to find a great team that is really there for me and very supportive.”
Call it a cash flow problem, liquidity drought, temporary problem or whatever, but it has to be reckoned with because it’s just one of many growing pains companies in the energy growth center of Houston may have been experiencing.
“We just continue to grow like crazy and I guess for me, understanding what the next level is when you start to have a little bit of growing pains,” Ressler says.
Incidentally, she paid herself back.
Here’s how Ressler, a self-taught entrepreneur who has law and bachelor of fine arts degrees, handles company growing pains and drives her company beyond $250 million in annual revenue.
Give credit to the credit line
Rapid growth will almost always trigger growing pains. It may well depend on how you look at the bigger picture that influences how much those pains hurt.
Ressler started her staffing company in her own home office in New Orleans with one consultant. Some dramatic growth occurred after a series of circumstances including Hurricane Katrina when she doubled her employees from 50 to 100.
Once Ressler moved to Houston and drilled down into the foundation of standard operating procedures at her company, she understood what was going on.
“The way our business is, we get invoices from our consultants, and we pay them within five days,” she says. “We then invoice our client, and we don't get paid, in the best terms, for 30 days.”
The longer the time frame stretches the more problems it can cause.
“If there are issues with the invoice, or whatever, sometimes it becomes 45 days, sometimes 60 days — so you can see we need our line of credit,” she says.
“Even in 2009 we grew by 5 percent when everybody else was hurting. Things were hot, so we were growing all the time and when we've got these explosive years where we are growing by 30 and 40 percent, we really need that line of credit because we are paying people like crazy.”
Ressler says it is never a cash flow problem as long as your line of credit stays out in front of you. With a satisfactory line of credit from your bank, you can meet your payroll and keep your employees from deserting you.
Cenergy now has grown to 1,400 consultants, and operations are managed by an office staff of 65.
See the forest
Once a new bank starts to plug the hole in the payroll dike, the spotlight will then turn to your staff levels. Do you need more employees? More managers? Where? How many?
“I have to sit back and say, ‘OK, I think I need to hire a manager for this area,’” Ressler says. “It is just kind of sitting back and thinking about what do we need for the next couple of years, you know?”
The scent of midnight oil burning starts you thinking about workforce levels.
“I worry because when I am in my Houston office, and I see some of my staff staying until seven and eight at night, that is not alright with me either. So then I’ll say to myself, ‘OK. We have a lot of people staying late now; I think I need to hire another manager.”
Ressler anticipated a lot of growth for a couple of years and assembled her managers to discuss solutions.
“I said, ‘I need you guys to make sure all of your staff and your teams are all well-oiled machines because, hey, hold on to your hats! I think we are going to have a couple of good years of growth here, and we can't have holes — we can't have balls being dropped,’” she says.
Ressler and her team devised an equation that they use to calculate staff levels.
“We do have kind of a rule of thumb, depending on the different areas — if we have grown by so many consultants, then we know we need to add X amount of new invoice people and additional recruiters — it all depends upon the opportunities that we are getting.”
Hovering overhead, however, is the matter of profit margins. You have to take that into account because it differs from industry to industry. Those industries that operate on volume have other concerns than those that don’t when it comes to adding personnel.
“Because we are a provider of personnel to the oil folks, and there are lots of competitors out there, when we are negotiating our global contracts, our profit margin is based on volume,” Ressler says. “It is not a typical profit margin as it would be in other industries. It is a very small profit margin. So as a result, we have to run lean, very lean.”
That means no padding the payroll. Every staff addition has to be justified, even more so in a lean operation.
“What we kind of do here is, ‘Pile on the work until there is enough to hire three more people and then hire one,’” she says.
Be honest and transparent
Every company has its own take on how to hire the best people. Ressler learned early that she couldn’t be involved in the hiring process because it may be tough to deal with and understand people — and that set the pace for the process.
“I learned early on that I am not a great person to hire people because I am the type of person that ... I just love everybody I meet,” she says. “I find something great about everyone, and then I'll hire the first person.”
Ressler delegated the hiring of her office to a lot of others, specifically the HR team and managers.
“We've got now a great thing where we have different levels of interviewing to make sure that the person who is being interviewed is touched by different managers on our team,” she says. “We get feedback from all sorts of levels before we actually hire. Because you think that a person is good doesn't mean they are good.”
Transparency is of immeasurable value if you think your company differs from the average one. Ressler says candidates are told that they should be ready for something of a maverick.
“It's a very tough thing to get the right people on your team to fit our type of culture,” she says. “Our company culture is very different from a lot of companies because we've got to run lean, and we are more like a renegade company where you might be hired to do a certain job, but you're not going to get a lot of training because nobody really has time to train you.
“You are expected to come in and run with the ball. Also, you might end up having to do things that you didn't early anticipate because somebody else might have left and that portion of their work might be swinging over to be under you. That's just how we are.”
Ressler says, nevertheless, working for a maverick company in growth mode is kind of exciting.
“Our office… I love all people who work here,” she says. “We have a close-knit kind of family atmosphere. Sometimes it is hard to make a decision to let somebody go because it is not that we don't like them as a person but everybody here is so wonderful — but it has got to be business. If they are not performing the job we need them to perform; you can't keep them just because they are really nice. It is a hard lesson for me and my managers to continue to learn. But the short learning curve can give you a quick look if the person is going to work out or not.”
How to reach: Cenergy International, (713) 965-6200 or www.cenergyintl.com
Find a solution to banking woes.
See the forest, not just the trees.
Be honest and transparent when hiring.
The Ressler File
Founder, CEO and president
Education: I went to the Hartford Art School at the University of Hartford so I have a bachelor’s degree in fine arts. Then I went to Pitt law school so I have a JD from the University of Pittsburgh School of Law.
What was your first job and what might you have learned from it?
I came out of art school and was lucky enough at the time to get a job as an art teacher in Pittsburgh. I really learned a lot then. I really didn't know myself at the time. I had no idea that I was a serial entrepreneur. So I started my job as an art teacher and immediately hated it. I would find myself crying on Sunday nights because I was so bad. Then it occurred to me that it was because I was in a box. As a teacher, I knew exactly in five years how much money I was going to make, when I was going to have a lunch, what my schedule is going to be, and that was way too confining for me. But I stuck with it for four years, and learned that I need to be able to do something that allows me to have my freedom and kind of run with it. So after that, I bought a gourmet food store and ran that for a while. That was the beginning of my entrepreneurship, and I realized then that I could never work for somebody again.
What was the best business advice you ever received?
Every bit of business advice that I received has been good. I evaluate it all. I use what I can. It's pretty crazy. I really never had a mentor. It's funny because I really haven't worked for anybody. I never worked in the corporate environment. My father was a dentist. My mother ran his office, and maybe I grew up seeing how they were a well-oiled machine and it worked great for them. Maybe I inherited some of that from my mother but maybe it is being a woman; I am kind of under the radar.
Who do you admire in business?
There are a lot of very good business people out there that I admire but the thing that I get disgusted with is the competitiveness and the cutthroat nature of business. What I really admire are the business people that I run into who are more concerned about their environment and their staff and taking care of their people because I know whenever you take care of your people, the money follows anyway. I enjoy sharing stories about people that are environmentally safe, that encourage staff to be extremely safe and giving perks to staff and treating them the way they want to be treated is essential.
Ressler on what’s ahead for Houston employment:
I think a lot of our clients are getting smart and realizing that there is a lack of expertise. Clients are creating a lot of training grounds now where they are bringing people in that are just graduating and getting them out and training them so that they can learn quicker and become the types of people that they need a job, which is a great thing to see. I know a lot of our clients are just hovering over the engineering schools, waiting for these young engineers to come out and just get them started. To be graduating with an engineering degree right now is an amazing thing to be. You’re in high demand.
When Bobby Harris launched an effort to bring management closer to the employees at his company BlueGrace Logistics LLC, he really wanted it to be effective. He felt the executives were getting a bit out of touch with the rank and file. So he started a “cubicle swap.” For a couple of weeks, executives moved their offices to cubicles and the dispossessed workers took over the executives’ offices.
It worked like a charm. It provided the executive team and employees to learn about each other on a personal level, what they liked and didn’t like, and how efficiently the operations were running.
And in at least in the case of one high-profile executive (Harris) case, it got to be humorous.
“I had the IT maintenance guy take my office,” Harris says. “He loved it! It's kind of funny because he started playing the role, and he started wearing a shirt that said, ‘I am the CEO. Shut up!’ He got into character.”
While there were some funny moments, Harris was serious about the lesson he wanted to teach.
“I had been in a meeting, and I was listening to a lot of our executives talk about the things going on below them. I just thought it was interesting — the executives really didn’t know what was going on below their level. We were making policy about people who are the life of our company. We needed to make sure that someone, like their direct supervisor, knows what they were doing.”
As the cubicle swap was underway, the employees got to interact more with the executives and hear what was going on. Another thing that occurred was that the productivity level went up.
“It's kind of like if you've ever heard of the Hawthorne Effect: the more visible management is, the better the production from employees,” Harris says. “So that was a real positive. There was a lot of serendipity to whole project, and that is why we continue to do it.”
But most of all, it demonstrates how Harris is a big believer in his employees. Here’s how that concern constantly brings dividends to the $100+ million freight and logistics company with 135 employees. BlueGrace has grown by 7,378 percent in revenue from 2009-2011. And to top it off, it’s recognized as the 20th fastest growing company in the United States by Inc. magazine.
Invest at every level of employees
If you want to bat a thousand in terms of hiring and grooming the best talent, invest in your people at every level, Harris says. And there is no better time to start than at the beginning.
“When we hire people, one of the qualities we look for is if they are very sensitive and empathetic because our motto is we don't care how much you know until we know how much you care,” Harris says. “If you take care of your people, they will take care of your customers and they will also take care of people in general.”
To help support those ends, Harris and his team has set up a mentoring program for employees during their first six months with the company.
“It's for every employee, and we believe that if you are going to flatter us enough to choose your career to be here, we are going to invest in you,” he says.
The mentors are hand-picked by Harris and are people who he knows are very social, who understand the policies, are very professional, and are influential people in the company who will act as their proponent.
“It does two things,” he says. “There is serendipity to it for the people coming in. But where I've seen a lot of value is with the mentors. They love it; people like helping people. They are very flattered, they take you very seriously.
“Now I have a lot of people signing up saying, ‘Hey, I want to be a mentor.’”
While the role does not include a bonus, there is a benefit for the mentor.
“The mentors are people who want upward mobility so they see this as a way to the next level,” Harris says. “And their aspirations are well taken care of.”
Social media use reaps rewards
The more you can get inside an employee’s head, the more you can understand what motivates them. While Harris’ cubicle swap may have been a little more beneficial for executives than employees, he also uses another method that benefits both, but in a different vein, and it’s a big tool as a foundation for collaboration.
“The single best thing for us has been social media, specifically Twitter,” he says. “We have an open social media policy. For me, it is really important because again, I keep going back to making sure I offer the most for employees. It's very hard to get a job here. You have to take a lot of tests, you have to be the cream of the crop, but when you get here, I don't ever want to lose you.”
Harris feels that to keep workers motivated — and give that discretionary effort — social media such as Twitter brings big dividends.
“Once you get past 20 employees, you have the ability to know a little bit about your people in a real quick space of time,” he says. “So I can just open my phone, and in three minutes I can find out that Mary's son hit a home run last night in baseball.
“And conversely, they can see me: ‘Old Bob is not in; he's in Chicago.’ I can tell them about that restaurant I went to.”
With the knowledge about some aspects of a fellow worker’s personal life, it builds bridges on likes and dislikes, and improves the playing field for collaboration on business projects. But nevertheless, some people may think that it's unproductive.
“I would challenge them tooth and nail that the culture that we breathe makes us extremely hard-working,” Harris says. “The employees love the freedom aspect of the autonomy and the trust, and further, as far as a recruiting tool for people who have degrees or real good pedigrees, this is what they want. They love that kind of ability to do that. It has created a lot of bonds here.”
Problems with the use of social media can be avoided to a large extent if you first explain to employees how you hope they use it, Harris says.
“What I can do is let them know that we see what you are doing, and I think that for that reason alone, it really mitigates that kind of exposure to begin with. There's just so much positive going on and a lot of times, it has nothing to do with business.
“We don't dictate what they are supposed to tweet, but we do train them; we tell them how it works and how to be effective. Then we endorse and support it.”
Till the fertile ground
Once you support collaboration through a process such as social media, it behooves you to keep the ball rolling — a spinoff could grow in the fertile ground.
That’s what happened at BlueGrace. Its support of social media for employees led to an executive forum, in which employees meet with executives to have an old-fashioned “bull session.” Groups of four employees who have at least six-months’ service meet with executives once a week or every two weeks for 30-45 minutes.
“I have a group of my own and it’s composed of randomly picked employees,” Harris says. “We try to get people who aren't directly involved with the same department so it’s a mix.
“We just talk about anything,” Harris says. “It could be something really important that's going on in their life; it could be something like they had a great idea in the business place, it could be positive or negative, anything they want to talk about.
“They connect because it comes across like a little family. They feel very connected in the place. They also get a voice then. That helps us to get a lot of the best ideas that they have.”
It is a time commitment, however, but not one that can’t be worked into your schedule, Harris says.
“It is one thing for people to say it, yeah, you've got to listen to the employees, but everybody is busy,” he says. “Everybody is so busy; it is not just in my industry. You have to find an effective process and grind it out, find a way to make sure that you are touching those people.
“No matter how fast they're going, no matter how fast people are coming on, there are several ways of doing it. Those practices we found very effective, and it makes for a lot of happy people.”
How to reach: BlueGrace Logistics, (800) 697-4477 or www.bluegracelogistics.com
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The Harris File
Founder and CEO
Born: I came to Florida in 1982 when I was eight years old, so I am more of a native of Florida. I was a military brat. I was born in England at a military base northwest of London. My father was in the Air Force.
Education: I have a bachelor's degree in psychology from the University of South Florida, which I just got two years ago. I went back to school. It was a lot of fun. Industrial psychology was one of those things that kind of intrigued me enough.
What was your first job and what did you learn from it?
My first real job was at Chuck E. Cheese’s. Oh yes. I did various things. I worked the cookline I was like a little waiter, I would do maintenance, whatever they needed me to do. If I learned anything, I guess at any level, professionalism reigns supreme. I don't care if you're an attorney, and I guess it's a little bit of my father raising me, I always made sure that my uniform looked a little bit nicer than everybody's else's, and I think that is one of the reasons why I was able to ... It was Chuck E. Cheese’s, and I was treated well and got more hours than others. That still holds true today, and it just amazes me what a professional image does. And the other thing I would say was I learned to trust people. I've always said that from beginning the quicker you trust people, the easier your job will be and the quicker you will excel at it.
Who do you admire in business?
I admire Richard Branson. His genuineness shows through. His philanthropy matches. I think he's done everything. He has been extremely successful and innovative. He has given back so much and yet he's had so much fun doing it. This guy has a ball. He's very easy to gravitate to.
What is the best business advice you ever received?
My mentor was Keith Huggins. He told me a little knowledge is dangerous. As a CEO, you're not going to understand everything that people do — to make assumptions off a little bit of knowledge is a very, very dangerous thing. If I understand something from soup to nuts and it's like in my expertise, I will have high level of conviction. But knowing something a little bit is far worse than not knowing it at all sometimes. You have to be really careful if you know little bit. I must use that quote every three days. For myself, my personal life, you never have the whole story if you don’t understand it from inside and out.
What is your definition of business success?
My definition would be wanting to come from work every day in a bad way while making sure that all your success is shared with your team, your vendors and your customers. My biggest thing is I don't want to be this really successful person alone on top of a mountain. As I get more successful, the people with me should get more successful too. We have such strong friendships. Those are the people who will go to war with you. I've never lost anybody in my leadership team, and it's a pretty big leadership team, 14 or 15 people, so it's like the Rolling Stones — we never want to break up. We always want to have this crew because it's effective. And it's a heck of a lot of fun. Business success starts with happiness. It really does.
Amy Schultz Clubbs pays her employees hourly wages to volunteer at least 16 hours per year as a way of giving back — and doesn't have to look far to see proof that the volunteering pays big dividends. Actually, positive signs can happen at any time, nearly anywhere.
“We had a couple of individuals who through their volunteering with the Meals on Wheels program recently were able to help save a woman’s life when they went to the home,” she says. “The individual had fallen and couldn’t answer the door; they were able to get help and likely saved her life.”
The victim was afraid help never would arrive as she was lying on the floor after the fall. She later told them she was told she had suffered a mini-stroke. She couldn’t get up, and was frustrated, crying and scared.
Two provider relations representatives with Molina Healthcare who deliver meals in the Zanesville area knew something was wrong when the resident didn’t answer the door and her dog kept barking and tugging at the front window curtains. They called 911.
A firefighter was able to gain entry through a window. The resident was hospitalized but has since recovered. She has expressed her gratitude to the two volunteers and has even invited them into her home regularly, so they all could get to know each other better.
“It’s rewarding because you give back to the community,” one of the Molina employees said.
Clubbs agrees wholeheartedly. In fact, it’s one method that she believes is particularly successful with motivating Molina employees through its rapid growth since it was founded in 2006.
When she signed on with Molina Healthcare in 2007 as its chief financial officer when the corporation was opening an Ohio division, she moved quickly through the ranks to COO and to her current role because of the rapid growth of the provider of managed care services to Ohioans on Medicare and/or Medicaid. Molina Healthcare has become Ohio’s second largest care coordination plan with 240,000 members, and now has 460 employees and more than $1 billion in revenue a year — and expects to hire 225 more next year.
Here’s Clubbs’ prescription to deal with rapid growth and keep employees engaged to the fullest.
Track the life cycle
Many companies were founded by an individual who was passionate about a particular product or service and who wanted reach as many people as possible to tell them about it and make them a customer. Just as it was with founder Dr. C. David Molina and offering affordable, quality medical care for the needy. Once that was established, it was logical step to also offer a health care plan exclusively for government-sponsored health care programs for low-income families and individuals.
So the mission was clear from the beginning for Dr. Molina and it was just as clear to Clubbs when she became CEO a few years ago. Clubbs and her team took an empirical look at the entire process, to see if Molina Healthcare of Ohio was operating true to the corporate mission.
“We kind of started looking at what is the life cycle of the member,” she says. “Where does it start? We followed that through the entire organization — what does the life cycle through our organization look like?”
By following the life cycle, they were able to make sure that the right process and infrastructure was in place every step of the way to navigate the member through the organization.
At every point in the process, it is necessary to keep the focus on the relationship that is being developed.
“Molina doesn’t spend a large amount of money on commercials and billboard advertising because we really rely on the relationships that we develop with our community partners and with their provider partners as well really to educate potential members about what their health care options are,” Clubbs says.
The examination of the life cycle showed the depth of engagement employees will need to demonstrate — and the importance of how critical it is to maintain that engagement.
“The people who work for us are really passionate about what they are doing and the individuals we are providing services to, and so you need to really look to keep that passion in employees throughout the year,” she says.
“It was just getting the right people in the right seats of the organization, and really developing people from what started out as building infrastructure to moving toward more of an operations life cycle of the company, and really keeping people engaged in the organization as you do that,” Clubbs says.
As the Ohio division of a larger corporation, the entity had a template of sorts to follow when it was first started, but there was also a provision to adapt as needed.
“A lot of it we developed from scratch, and a lot of it we were able to leverage,” Clubbs says. “With building relationships, we were definitely able to leverage best practices from our other states — and the Molina story as well. The company has been around for more than 30 years.”
“We still run clinics today in many of our states, and are able to really leverage that history as we are building that relationship here locally as well,” Clubbs says.
Find the differentiator
Examining the role that employee engagement plays is critical in finding out what separates the winners from the also-rans.
“I believe it is our differentiator, and I really think it is how we have been successful in keeping our employees so engaged and keeping morale up while we have been growing so quickly over these last several years,” Clubbs says. “I definitely think it is a key. We really try to model that engagement at all levels of the organization here.”
Among the methods beyond the minimum that are frequently used by businesses to keep employee engagement high is the support of volunteerism. Molina Healthcare has put it in writing.
“Our volunteer time-off policy says we will pay people for a set number of hours every year when they volunteer in the community,” she says. “And once they do that, even though you are only paying for a set amount of time, people get more engaged and are more likely to go out and do it on their own as well.”
The company also has an employee activity committee that helps coordinate the volunteer opportunities for the associates. At least quarterly, the committee will have an employee appreciation event as well where the members show how much the company appreciates employees.
“We encourage people to not only volunteer their time but to give back through personal donations either monetary or things like having a personal care items drive for the food bank,” Clubbs says.
She also encourages her leadership team to contribute by being board members on community organizations as she herself serves on several boards.
“It’s another way that we kind of demonstrate our commitment to the community, that they are serving as well.”
Find a need and focus on it
If your company examines your flow life cycle, and you find a particular need that can be met that with some attention and focus, it can be a win-win for you and customers.
Clubbs and her team capitalized on what was common knowledge about the population it served: It was more vulnerable than others that may be served by a commercial plan. Members may have significant health problems as well as financial concerns.
Accordingly, if Molina could focus on care coordination, it would be a plus. Communicating with some of its members through outreach builds the relationship to a new level.
“We have community health workers who actually go out into the community,” she says. “They will go visit members in their homes to do health care assessments and things of that nature and to bring services to members in their home or other places of service, where they might not be able to get out and get those services as readily on their own.”
The company activity team and management receive sensitivity training that gives some background about common situations they may find, and it can help to solidify relationships. One of the big things they experience is the Beyond the Freeway Tour.
“They will take a group on the bus and take you around the local community, through a homeless shelter, through a food bank, through other places where the individuals that we are serving or are also receiving services, so that you can have that sensitivity to what a day in the life of one of our members is really like out there.”
Such as experience may heighten an associate to listen more closely and visualize what the member is going through as the member talks about concerns.
“I think a lot of times words are not exactly what the problem is or what the issue is, so really being able to listen and decipher between what someone is saying and what the issue really is and to make sure that you are addressing it and resolving it is really key to any success,” Clubbs says.
How to reach: Molina Healthcare of Ohio, (800) 642-4168 or www.molinahealthcare.com
Track the life cycle of the product or service
Find the differentiator from your competition
Look for a need and focus on it
The Clubbs File
Amy Schultz Clubbs
Molina Healthcare of Ohio
Born: Lawrence, Kansas.
Education: I went to Ohio University and received a bachelor of arts in business administration, majoring in finance.
What was your first job, and what did you learn from it?
My first job was serving soft ice cream at a Dairy Shed. I think what I learned from it was a lot of patience and customer focus. It was in Circleville, Ohio.
What was the best business advice you ever received?
The best advice I ever received was to ask for forgiveness, not permission. That honestly has helped me over the years of my career. It basically means, ‘Just do it.’ If you think it is the right thing to do, go ahead and do it. Don’t wait and ask somebody if it is OK to do. If it ends up being wrong afterward, then you can ask for forgiveness. But it is better to just go ahead and do it if you think it’s the right thing to do. That came from my regional vice president who preceded me as plant president, Kathie Mancini.
Who do you admire in business?
I mostly admire people who are really following their passion, their heart and what they do in the business world. There are a lot of women who I work with and for right now. Five of my directors are women, and if you look up verticals for whom I report to, the next three layers above me are all women. Every one of them is so passionate about what we’re doing here at Molina. They are smart and strategic thinkers. They are doers and they make things happen. So I love that. And I think that people who do follow their passion are able to have a bigger impact on an organization and still be able to make things happen. That’s what I admire. I’m just surrounded by them here.
What is your definition of business success?
I think in general, business success is really being able to grow a business profitably while achieving some sense of the greater good of the community. With Molina, our ability to improve health outcomes for the individuals to whom we are providing services to is for the greater good of the community. At Molina it is providing high-quality care to improve health outcomes in a manner that is cost-effective.