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A colleague of mine used to live in Russia and was stuck in more than a few traffic jams on those rare occasions when he wasn’t on the subway or a bus. Moscow, a city of more than 10 million people, had a highway system built for fewer cars.

The Russian word for traffic jam is probka — which also refers to a “cork,” which one might encounter in a bottle. When you think about it, that’s an apt description for a traffic jam.

In a similar way, our thinking and the organizations we lead can get “bottled up” too if we don’t have an effective system for reining in our attention and focus.

Thinking can be a bottleneck

One type of bottleneck that can occur is with our thinking. We have all experienced what one psychologist calls a “response selection bottleneck.” This happens when our brains try to react to multiple stimuli at the same time. For example, the “multitasking” CEO allows bottlenecks to occur when he or she believes that it’s possible to effectively tackle two conscious tasks at once.

We know, of course, that most of us can walk and chew gum at the same time. But, as John Medina states in “Brain Rules,” we are “biologically incapable of processing attention-rich inputs simultaneously.” Medina suggests that we really can’t listen effectively to the conference call and respond to email at the same time.

What is actually happening when we think we’re multitasking is that we’re doing what some call “switch tasking” — we’re switching our attention from one task to another. Some of us may do it more quickly than others, but our brain isn’t really processing two tasks at once.

The most common contemporary example of this fight for attention in our everyday lives is — you guessed it — talking on a cell phone while driving. Medina points out that those talking on the phone are a “half-second slower to hit the brakes in emergencies” because our brains have to switch tasks, and this eats up critical time. He adds that “50 percent of the visual cues spotted by attentive drivers are missed by cell-phone talkers.”

Not only are there limits for individuals, but the organizations we lead have similar limits. Are there organizational decisions stuck at a bottleneck because you have too many competing priorities?

Our organizations are often very complex, which makes it hard for employees to focus on what will lead to individual, team and organizational success. We’re all working longer hours, often feeling like we’re moving from treading water to drowning.

How do we distinguish the imperative from the important?

Here are five tips to get started:

?  Identify what you’re best at.

?  Figure out what your key stakeholders value and need most.

?  Identify where your answers to 1 and 2 intersect.

?  Define how you deliver value differently than your competition.

?  Develop a clear and authentic way to communicate your value.

As one psychology professor puts it, “We’re really built to focus.” What are you giving your organization to focus on?

P.S. As a bonus tip, when meeting with your senior team to discuss the tips above, are there at least portions of your meetings when everyone’s smartphone can go into a black box until you’re finished? ?

Andy Kanefield is the founder of Dialect Inc. and co-author of “Uncommon Sense:  One CEO’s Tale of Getting in Sync.” To explore how to promote organizational sync through greater focus, you may reach Kanefield at (314) 863-4400 or andy@dialect.com.

Published in St. Louis

Twenty-five years ago, Fred Potthoff and his partner took out a $300,000 line of credit to start their own company. Potthoff backed his half by putting up his house and his retirement savings, and from that moment, it was a race against time to see if he and his partner could sell enough before running out of money.

Fast forward to today, and the company they started, Kroff Inc., a leading water and wastewater treatment and recycling services company, has more than 80 employees, eight different businesses under the Kroff name and annual revenue of more than $50 million. Potthoff’s entrepreneurial gamble paid off, and today, he isn’t stressed about making enough money to survive but rather about finding the right talent to keep the company at the top of its game.

“We are a bottom-up run organization, and we go by the philosophy of hiring bright, creative, entrepreneurial people and giving them the right tools. Then we get out of their way to let them flourish,” Potthoff says.

Even with the company’s eight different businesses, Potthoff has remained an integral part of its hiring process and ensuring that great talent enters the company.

“Some people are surprised when they talk to me first, second or third in the organization as one of the original owners,” Potthoff says. “I tell them, ‘This is the single most important thing that I do in the course of my workweek or month.’”

Since Kroff’s inception in 1988, the company has experienced an average of 24 percent growth every year. The attention to his company’s hiring process, which he calls motivational fit, is what Potthoff focuses on to make sure Kroff Inc. will continue to grow.

Here is how Potthoff hires the best available talent.

 

Find the best fit

Kroff Inc. has seen some incredible growth over the years and that success is a direct result of the people Potthoff has been able to hire. In fact, each of the organization’s eight businesses started with ideas from sales associates.

“Aside from the original company, my partner and I didn’t come up with any of the other ideas,” Potthoff says. “It was people in our organization coming to us and us listening to them and running with that idea.”

When Potthoff interviews candidates, he is interested in trying to spark that kind of enthusiasm and interest in the company.

“It doesn’t mean that everybody who comes here is going to run their own company, but it’s part of our culture,” he says. “People who fit in well here think that way and look for opportunities. When we interview, the key is looking for that kind of person, so we’ve all been trained in behavioral interviewing and that’s an important component of trying to identify the right person.”

Behavioral interviewing is a key component at Kroff because when the company was first started, Potthoff put a lot of stock into resumes and conventional interviewing. While resumes can provide wonderful statistics about how much somebody sold or how many new accounts they created and a lot of facts and figures, they aren’t as effective at finding the best fit as behavioral interviewing.

“In behavioral interviewing, you get into specific examples and you try to drill down and mine for a number of examples where they’ve shown an attribute in the past,” Potthoff says. “If they say they have an entrepreneurial bent, you say, ‘Give me an example of when you demonstrated this in your past job.’

“Whatever the attribute is, we want specific examples where they’ve done it before and they can tell us a clear story about why they have that talent and where they manifested it.

“It’s a more difficult interview process because often they have to think and dig down to find an example, but that’s what you want. Then you know you’re getting the right person if they can give you a lot of examples where they have demonstrated this capability before.”

While this technique of interviewing has resulted in strong employees for Kroff, it isn’t without its drawbacks.

“Behavioral interviewing is a challenge; you have to sit and wait sometimes for the person to think of examples because you want them to give you very specific, very concrete examples,” he says. “So the interviewing process takes a little patience whenever the candidate is in front of you.”

In Kroff’s case, the company hires a lot of sales engineers, and one of the first challenges is finding an outstanding chemical engineer who wants to have a career in sales.

“Sometimes it’s mixing oil and water, and we’re often looking for personality attributes that aren’t in one person,” he says.

Another challenge is where to find the best talent. The best candidates may be the passive candidates, not the ones shopping their resume around.

“They are the ones who are successful who are doing a great job wherever they are,” Potthoff says. “To try to get their attention sometimes is difficult.”

The third thing Kroff does to find good talent is to check references or see if someone has worked with that person before.

“If you depend on the interview process and the resume, it’s more of a crapshoot,” he says. “If you can find somebody in your organization or get references from reliable people who have worked with the person, then your chance of having success with that person is greater.”

To overcome these challenges and have help in the search process for talented employees, Kroff often utilizes the services of recruiters.

“We’ve picked two or three that we work with and we bring them in to our office and try to educate them to make sure they understand exactly what we’re looking for, because when you’re dealing with recruiters, they’ll often throw resumes at you in hopes you’re going to hire somebody,” he says.

“It is important to invest some time with the recruiter and say, ‘This is exactly what we’re looking for, and don’t send us anybody else.’”

 

Translate talent into success

While a company’s success can benefit greatly from its products or services, Potthoff believes his hiring techniques and the talent he has been able to bring in are the true difference makers.

“You can have the best products in the world and you can have the best computer software and order entry, but it really comes down to quality people,” Potthoff says. “The key component of our success is that we’ve been very fortunate for the most part in hiring great people.”

Another key component of Kroff’s success has been that Potthoff has done a good job of listening to ideas.

“It’s one thing to give lip service to somebody, but if somebody comes to you with a good, creative idea, you can’t summarily dismiss it because maybe you tried it before or it seems a little harebrained,” he says. “You have to be willing to listen and trust the people, and if you think it’s a great idea, be willing to move and invest in it. When you do that, the culture responds to it.”

A lack of listening is one of the biggest mistakes many companies make.

“I don’t think many companies listen well enough to the people in the field who have their fingers on the pulse,” Potthoff says. “If you’ve hired the right people, they’re closer to the action and the opportunities than somebody sitting up in a corporate office somewhere.

“I’ve seen it in the past where some vice president comes up with an idea about what market the company should go after. It may be a brilliant idea, but oftentimes, it’s not. I think you are better served by getting intelligent, creative people and listening to them when they come to you with a market opportunity, because they’re in a better position in a lot of ways to see opportunities.”

To incorporate this kind of thinking into your organization you have to make the behavior part of your company’s culture.

“View company meetings and company culture as a meritocracy, which is the way we look at it,” he says. “In other words, if we are in a manager’s meeting, I set the tone for the meeting. It’s not myself and my business partner pontificating about where the company is headed and what we’re going to do.

“When you present ideas, everybody has to chime in with what they think the best idea is, and we will hash it out here and the best idea will rise to the top.”

This mentality is an easy thing to say, but it’s a hard thing to accept because you have to set your ego aside and listen to comments and criticism.

“That’s where some entrepreneurs and business owners go array because they are so vested in the company,” Potthoff says. “The way they got the company off the ground is the right way to do it, and it’s hard for them sometimes to hear somebody criticize it. It is vital to stay vibrant and alive, so you have to listen to the new people that you bring in.” ?

How to reach: Kroff Inc., (412) 321-9800 or www.kroff.com  

 

Takeaways:

Be involved in the hiring process.

Utilize resources to help you find the best talent.

Once you have the talent use it to grow your business.

 

The Potthoff File

 

Fred Potthoff

Co-founder and co-owner

Kroff Inc.

 

Born: Latrobe, Pa.

Education: He attended Shippensburg University and got a bachelor of science degree in business.

 

What was your very first job?

I was a lifeguard in the town of Latrobe. It was a great summer job.

 

What is some business advice you would give to others?

The bulk of my time in business has been in specialty chemical sales … and if you graphed how much time I spend listening and how much time I spend talking, I probably listen 75 percent of the time and talk 25 percent of the time. For anybody in business, that is a good ratio. You can learn a lot more and get a lot more accomplished if you use that ratio to build your business and career.

 

Who do you admire in business?

Andrew Carnegie.

 

If you could have a conversation with someone from the past or present, who would you want to speak with?

I’m a history buff, so there are a lot of people that I’ve read about over the years that I’m intrigued with. Out of the Founding Fathers, I think the most fascinating person to speak with would be Thomas Jefferson. I think he is one of the most brilliant people that I have ever read about, and how fortunate we were to have him as one of the founding fathers.

 

What are you looking forward to in the future of your business?

What excites me now and what motivates me is watching people underneath me do well personally and professionally.

Published in Pittsburgh

When you stay in a hotel there are so many things that could go wrong. The hotel could lose your reservation, a TV remote control might not work, a light could be burnt out, the air conditioner may be noisy, or in David Kong’s case, the room may not contain an iron and ironing board.

On a trip to Germany to attend a black-tie event, Kong’s attire became wrinkled while traveling. His hotel had no extra irons or ironing boards, but the staff took his clothes and got them ironed. The next day, the staff bought a new iron and ironing board for his room and also sent a fruit basket to apologize for what had happened.

“My impression of the hotel went sky high, because they went out of the way to make it right,” says Kong, president and CEO of Best Western International Inc. “When something goes wrong, it’s an opportunity to build guest loyalty if you take care of the problem correctly.”

The customer experience is exactly what Kong is focusing on to keep the Best Western brand relevant after nearly seven decades. Headquartered in Phoenix, Ariz., Best Western International Inc. is the world’s largest hotel family with more than 4,000 hotels in more than 100 countries and territories. The company has 1,200 corporate employees and annual revenue of more than $6 billion worldwide.

Over the past eight years, Kong has been working diligently to build and capitalize on Best Western’s strengths surrounding the customer experience.

Here is what he and his team at Best Western have done to keep the company’s brand relevant through the years.

 

Unlock potential

When Kong joined Best Western, most of his friends couldn’t understand why he would make the move to Phoenix to work for the midscale hotel.

“I saw tremendous potential at Best Western, and I wanted to be a part of the team to unlock that potential,” Kong says. “When I started as CEO, I wanted to define the key strengths of Best Western but also look at how we can make the brand more relevant and contemporary.”

The Best Western brand is 67 years old, making it the most senior hotel brand. Kong’s objective was to not appear as anything less than relevant and contemporary and to fit with today’s customer tastes.

“In that regard, we had a concerted effort in separating from hotels that detract from the brand, meaning they didn’t provide the cleanliness, upkeep or service that the brand should be known for,” he says.

Best Western split from more than 1,000 hotels during the last eight years and implemented standards that ensured delivery on the brand promise. The hotel family also created partnerships with Harley Davidson, Disney, AAA and others to not only penetrate those customer bases but better position the Best Western brand.

“We’ve done a lot in terms of how we keep the brand relevant and contemporary and deliver on the brand promise,” Kong says. “That was just step one. You have to do the basics.”

Kong also thought that Best Western needed to be known for certain aspects of the hospitality industry, so the company launched the I Care Clean program, which uses UV wands for cleaning and black light for inspecting cleanliness in rooms. It also launched the Descriptor program, which allows travelers to choose the Best Western that meets their needs out of the company’s three different hotels — Best Western, Best Western Plus and Best Western Premier.

“Ultimately, when I talk about unlocking potential and looking at who we are and what we stand for and capitalizing on that, it’s really about what is Best Western,” Kong says. “If you look at how Best Western is different from any other hotel brand, it’s because we have some very caring, sincere, salt-of-the-earth type of owners in our brand who are very passionate about the brand.

“The big opportunity for us was to capitalize on that, because that is something we have at Best Western that nobody else has and we want to turn that into something that’s relevant to the consumer.”

 

Connect with the customer

To drive that desire forward, Best Western crafted its vision statement to lead the industry in superior customer care. Today, everyone talks about customer service, but in this digital world, the human touch is disappearing very quickly.

“Everybody is focused on innovation, efficiency and productivity like using kiosks to check in and ordering food and beverage from a tablet computer, and there is very little chance to interact with the guests,” Kong says.

“Our industry is the hospitality industry, and it’s about hospitality and caring for people. We have made that our vision, and we started to create programs to capitalize on how we care more than anybody else.”

If you’re looking to keep your brand relevant or expand upon it, you have to find what you want to be best at.

“Take a look around you, study the environment and assess what the unmet need is,” Kong says. “I talked about us living in a fast-paced digital world and ‘humanity’ is disappearing because people are so focused on efficiency and productivity. So our unmet need was that ‘humanity’ was disappearing.

“Then you have to define yourself. Look at yourself and see if you have any attributes that can be leveraged to capitalize on that unmet need. The third thing is to begin to develop a plan to meet your end goal. The last thing is you set measurements and you make continuous improvement.”

To make the message of caring and top-notch customer experience stick, you have to ingrain it into your culture.

“That cultural shift is what we are working on now,” Kong says. “To live our vision, we have to make sure that every single employee cares. We have put together a cultural change initiative that involves selecting the right employees and giving them the right training and resources.

“It involves aligning all our business systems and business processes along this caring initiative, so at the end of the day, all our people, systems and processes are all aligned to deliver superior customer care.”

Creating this culture change is so important because a lot of companies simply have a program of the day, which is a one-time event rather than a system for creating a company mentality.

“Employees can see right through that,” he says. “It doesn’t stick. You have to have the right people in place. They have to feel empowered. They have to feel like they have all the tools to do what it is that you want them to do. There needs to be compensation systems and performance management systems aligned with that, and it has to be customer-centric.

“All those things need to be lined up. That’s how you can affect the cultural change.”

In addition, the leadership team has to be involved for the cultural change to take effect and for it to be sustained.

“If the leader doesn’t walk the talk, then employees see right through it,” Kong says. “If the leader is always, every day, every moment, living what he is preaching, then people get invigorated and inspired by that. The leadership is everything.”

Through these brand relevance initiatives, Kong and his team at Best Western want to be the dominant player in the broad midscale market.

“If you take all the industry measures, whether it is revenue per available room, market share in that respect, our relationships with all the major buyers, whether they are travel agencies, big corporations or independent travelers — in all those aspects, we want to have the superior market share,” he says.

“Every company should set goals for themselves, because if you don’t set goals, you don’t know whether you’ve gone there or not, and you can’t stay on that path.” ?

 

How to reach: Best Western International Inc.,

(800) 780-7234 or www.bestwestern.com

Published in National

Decent bosses typically try to lead by example. As a leader, you must model appropriate behavior to promote the greater good and to send a constant message with teeth in it.

The French term “esprit de corps” is used to express a sense of unity, common interest and purpose, as developed among associates in a task, cause or enterprise. Sports teams and the military adopt the sometimes-overused cliché, “One for all and all for one.” “Semper Fi” is the Marine Corps’ motto for “always faithful.” We commonly hear, “We’re only as strong as our weakest link.”

However, the real test of team-building and motivational sayings is that they are good only when they move from an HR/PR catchphrase to a way of doing business — every day.

As soon as you put two or more people in the same room, a whole new set of factors comes into play, including jealousy, illogical pettiness and one-upmanship, all of which can lead to conflicts that obstruct the goals at hand. Certainly, much of this is caused by runaway egos. Perhaps a little bit of it is biological, but most of it is fueled by poor leadership. Everyone has his or her own objective and it’s the boss’s responsibility to know how to funnel diverse personal goals in order to keep everyone on track. This prevents employees from straying from the target and helps avoid major derailments. Essentially, it all gets down to the boss leading by example with a firm hand, understanding people’s motives and a lot of practicing “Do as I say and as I really do myself.”

Communicating by one’s actions can be very powerful. A good method to set the right tone is stepping in and lending a hand, sometimes in unexpected and dramatic ways. This shows the team that you govern yourself as you expect each of them to govern their own behavior. In my enterprises, I constantly tell my colleagues that the title following each person’s name boils down to these three critical words: “Whatever it takes.” Certainly, I bestow prefixes to this one-size-fits-all, three-word title, such as vice president or manager, but I consider these as window dressing only.

After speeches, when I explain this universal job description, I always get questions from the audience about how I communicate this concept. I follow with a real-life experience that played out in the first few months after I started OfficeMax. As a new company, we had precious, little money, never enough time and only so much energy, which we preserved as our most valuable assets in order to be able to continually fight another day.

In those early days, too frequently, I would see what looked like a plumber come into the office, go into the restroom and emerge a few minutes later presenting what I surmised to be a bill to our controller. I knew whatever he was doing was costing us money and probably not building value. The third time he showed up, in as many weeks, I immediately followed him into the restroom (much to his shock and consternation). I asked him what in the world kept bringing him back. He then proceeded to remove the john’s lid and give me a tutorial on how to bend the float ball for it to function properly. That was the last time anyone ever saw this earnest workman on our premises. Instead, after making known my newly acquired skill, whenever the toilet stopped working, I became the go-to guy.

This became an object lesson to my team about how to save money. At that time, 50 bucks a pop was a fortune to us. It got down to people knowing that all of us in this nascent start-up were expected to live up to their real, three-word title. This was our version of how to build esprit de corps. Others began boastfully relaying their own unique “whatever it takes” actions, and it became our way of doing business.

The lesson I learned in those early days was that it wasn’t always what I said that was important but rather what I did that made an indelible impression. A leader’s actions, with emphasis on the occasionally unorthodox to make them memorable, are the ingredients that contribute to molding a company’s culture.

Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at mfeuer@max-wellness.com.

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What does it take to grow rapidly and effectively from mind to market?

This book offers an unconventional philosophy for starting and building a business that exceeds your own expectations.

Beating the competition is never easy. That’s why it requires a benevolent dictator.

Published by John Wiley & Sons. AVAILABLE NOW! Order online now at: www.thebenevolentdictator.biz

Also available wherever books and eBooks are sold, and from Smart Business Magazine and www.SBNOnline.com. Contact Dustin S. Klein of Smart Business at (800) 988-4726 for bulk order special pricing.

Published in Akron/Canton
Thursday, 28 February 2013 19:00

Northeast Ohio Movers & Shakers: March 2013

VeDISCOVERY, a tier-four provider of computer forensic services, data collection and processing, comprehensive document review and hosting of unstructured information recently appointed Wayne Pignolet to chief operating officer, Paul Cervelloni to vice president of sales and Martin Mangan to vice president, product development.

Pignolet is an experienced business leader with small and midsized organizations and joins VeDISCOVERY to manage all aspects of business operations. He has successfully started and also helped turn companies around in China, Europe, Mexico and the U.S. He has worked with Moen Inc., Hanley Wood and has owned his own business.

Cervelloni has held several positions within the information technology industry. He has served as the CIO for Fortune 500 companies and led complex buying processes for global enterprise software and services. He has extensive sales training and experience, which helped him sell enterprise software to corporations that valued stable, scalable, high-performance IT assets.

Mangan is responsible for the vision, implementation and creation of the VeDISCOVERY platform suite and is experienced in all facets of software development, database design, data processing and testing. Mangan leads a team of eight developers, designers and quality assurance professionals who understand the complexities and needs of processing semi-structured and unstructured data.

 

Alliance Solutions Group, a full-service staffing and recruitment agency with offices in Cuyahoga, Summit, Portage, Franklin, Lorain, Lake, Mahning, and Wyoming counties, has appointed Rob Sable as its new CIO.

As part of Alliance Solutions Group's executive team, his responsibilities include overseeing the company's overall information technology operations, support and strategy. He will also manage the implementation of new technology tools across the company's seven branch offices and nine business units, with particular emphasis on creating new tools and systems that improve the staffing process in ways that create competitive advantage for the company.

In his new position, Sable will utilize his 16 years of experience in IT consulting and enterprise software to ensure that the company's clients are matched with the right talent as quickly as possible.

Bruner-Cox LLP recently announced the promotion of Lisa Hilling to assurance services partner.

Hilling joined Bruner-Cox in 2005 with eight years of “Big Four” accounting experience. As partner Hilling provides audit and accounting services for hospitals, colleges, private foundations and governments. She is also responsible for audits in accordance with OMB Circular A-133 and Government Auditing Standards.

 

 

League Park Advisors, a boutique investment bank, has announced the promotion of Wayne Twardokus to director. Since joining League Park in early 2011, Twardokus has led the firm’s Industrial Group closing six deals in the specialty chemicals and gas, specialty distribution, and manufacturing industries.

Prior to joining League Park, Twardokus was employed at Harris Williams & Co. and its predecessor entity, National City Corp., where he originated and executed mergers and acquisitions for publicly traded and privately held middle market companies. During his time at National City he authored various industry research reports with a focus on the specialty distribution and industrial manufacturing industries, in which he remains active today. Prior to Harris Williams, Wayne was a member of the distribution practice at Brown Gibbons Lang & Co.

 

 

Brouse McDowell, a leading regional business law firm, has announced that Clair E. Dickinson, former Ninth District Court of Appeals Judge, has rejoined the firm in the Akron office as a partner in the Appellate and Litigation Practice Groups.

Dickinson previously served as firm counsel and chair of both the firm’s Appellate and Litigation Practice Groups. He also served nearly eight years as a member of Summit County Council and was president of that body for three years.

During his almost 12 years in the court, Dickinson participated in deciding more than 4,000 cases and wrote the lead opinion in approximately a third of those cases. He has both argued cases before the Ohio Supreme Court and sat as a visiting justice on that court. Dickinson’s practice will be focused on appellate advocacy and litigation.

 

Brouse McDowell is also happy to announce that Meagan L. Moore, an attorney in the Cleveland office and Elizabeth G. Yeargin, an attorney in the Akron office, have been named partners in the firm.

Moore is a member of the Environmental Practice Group and focuses in the areas of environmental litigation and counseling. She provides regulatory compliance support to the firm’s industrial and municipal clients in matters relating to water, air, solid waste and hazardous waste and assists clients in reducing their exposure to environmental liabilities in transactions. She is also a part of the firm’s Insurance Recovery Practice Group where she focuses on cost recovery for underlying environmental liabilities.

Yeargin is a member of the firm’s Business, Corporate & Securities and Business Restructuring, Bankruptcy & Commercial Law practice groups. She focuses her practice on transactional work, principally in the areas of mergers and acquisitions, general corporate law, finance, and commercial transactions and agreements.

Published in Cleveland

Nearly four years ago, when Tom Salpietra joined EYE Lighting International of North America Inc. as its president and COO, a woman approached him interested in operational development at the company.

Since Salpietra was a new leader, it was expected that he would make changes within the company to improve EYE Lighting International while keeping the best things about the company intact.

“Everybody is going to have things wrong, but if you preserve what’s right, that’s where the secret is in organizational development and implementing change,” Salpietra says. “If you screw up the things that are right, that’s where you go wrong.”

Salpietra worked with her to develop questions to interview the employees about what they liked at the company. Since this was an appreciative inquiry the study only focused on what the employees thought was sacred about EYE Lighting International, not about what needed to be fixed.

The study found that every employee was extremely engaged in the company and its business.

“This was how we developed the four basic principles around the customer,” Salpietra says. “We made the customer the center of the business and did process improvement to all the things that we do on a day-in and day-out basis.”

EYE Lighting International is a nearly $100 million U.S. division of Iwasaki Electric of Japan. The company designs and manufactures high performance lamps, luminaries and lighting-related products that serve major commercial, retail, industrial, utility and specialty application lighting markets in North and South America.

Since Salpietra’s arrival at EYE Lighting, he has been focusing on efforts to develop new technology and to keep the organization’s sights on the next big thing in the lighting industry all while maintaining employee engagement levels.

 

Progress your company

EYE Lighting International’s unique competitive advantage is how the company doses the arc tube of its lighting products (dosing refers to the mix of metals inside the arc tube). The market is currently producing a lot of high intensity discharge (HID) lighting but soon the market will move to LED lighting. While LED works in certain applications, it is expensive, and there are still kinks to work out in other applications where it’s not ready for prime time.

“We’re trying to shift the company from just making HID lamps to offering broader solutions in our market segment,” Salpietra says. “We’re not going to stray from our core competency, which is dosing the arc tube and making unique types of lamps. The challenge we have is if we don’t move in that direction, our years and decades of existence will start to decline.”

As a management team, EYE Lighting knew that the company didn’t have to change too much to succeed, but if it didn’t start changing and moving in a certain direction, it wouldn’t be in that same kind of comfort zone it has been three, six or 10 years from now.

“We’ve taken it very seriously that what we do today will impact the company years down the road,” Salpietra says.

With the lighting industry making a slow transition into LED, Salpietra and his team had to look for opportunities that better suited EYE Lighting’s general lighting purposes until LED is ready for the applications where the company would primarily use it.

“The merging of the two traditional technologies into ceramic metal halide gave us the ability to continue to do what we do, which is making lamps,” Salpietra says. “If that technology wasn’t there, we’d be lost and everybody would be rushing to do LED more quickly.”

What EYE Lighting has been able to do is make the regular technology much more efficient and deliver white light, which creates good color rendering and color temperatures to be able to see both in the day time and at night.

“It’s been proven that white light versus a yellow light or a blue light make a big difference in being able to see,” he says. “If you can make your light create the spectrum that matches the way the human eye wants to see the spectrum and discern it, you’ve just enhanced the way you do it.”

On top of developing new technology to enhance the company’s core offerings, EYE Lighting has been looking for broader applications to its technology and has its sights on potential partnerships that could benefit the company.

“When we do our strategic planning, we look heavily at our core competencies and what we think we can do with new technologies,” he says. “Part of every good company’s strategy has to be looking at the M&A side of things as well; you want to grow organically, but what should you do to augment that growth with outside skills and services?”

Salpietra and his team are keeping their options open for potential strategic alliances, mergers, joint ventures or buying a company outright.

“In order to grow and thrive and create jobs and create value for our customers, shareholders and employees, we’ve got to look at the overall business and determine what we can be looking at to expand our business beyond what we do day-in and day-out,” he says.

A big move that EYE Lighting made in November 2012 was the acquisition of Aphos Lighting LLC, which expedited EYE Lighting’s move into LED. The products acquired are LED-based luminaires that carry with them 14 different design patents for their optical, mechanical and thermal management performance. EYE Lighting will maintain the Aphos name for this new line that will expand its business by introducing LED luminaires to municipalities, utilities and industrial customers.

“As we’ve looked in the general lighting market space, we ask ourselves what’s our core competence and where do we want to go. We get involved in a lot of unique things that stem from our core technology.”

The other areas in which EYE Lighting participates, in addition to the general lighting market, are institutional, educational and hobby markets.

“Because we dose that arc tube differently than anybody else in the world, we’re able to recreate some spectral distributions of light,” he says. “Not just the color of light, but the intensity and what light rays are being emitted from the lamp.”

Due to this ability, EYE Lighting can make lamps that enhance plant growth, as well as lamps that can simulate solar power for use by companies or universities doing solar tests. The company also makes solar aging equipment for businesses such as Sherwin-Williams, Behr paint, automotive companies that make windshield wipers, roofing companies, and anything that’s outdoor-oriented.

“Those types of companies want to test in a lab whether or not they’re going to get a 30-year warranty, but they don’t want to test for 30 years,” Salpietra says. “The equipment nowadays has you test six to nine months to be able to project a 20- or 30-year lifespan.

“We make a machine which is called a super UV. You can put samples in the machine and within three weeks we can equate 10 to 15 years. We can also put more than just UV rays on it; we can also put water on it and chill it.”

These types of broader offerings are due to the highly engaged employees that EYE Lighting has been able to keep around the business over the years.

 

Keep employees engaged

With a Japanese parent company, EYE Lighting puts a lot of focus on lean manufacturing and kaizen events, and 130 employees are quick to recommend how to better the business.

“What is unique about us is that every employee on the factory floor changes positions at least once a day,” Salpietra says. “Everybody is highly cross-trained and capable of performing at least two different jobs.”

Some employees remain in the same department and move upstream in the process versus downstream. Others will go from one department that transforms the raw material, and then they go to the end of the line to do packaging.

“It allows us a tremendous amount of flexibility,” he says. “The employees love it because they don’t get bored in their daily job. Ergonomically it’s good for them because they’re not doing the same repetitive task day-in and day-out when they come here. It helps keep them alert and safe, especially when they know different jobs and how to behave around different pieces of equipment.”

One thing missing from EYE Lighting that most other manufacturers utilize is a suggestion box. Salpietra says his employees will come forward with ideas on their own, making a suggestion box unnecessary.

“Everything emanates from the floor,” he says. “When the employees change jobs by going upstream or to another department, they see the product of their work or the beginning of what comes to them to pass on to somebody else. So they inherently get together to have a kaizen event over a particular issue.”

To aid in employee’s abilities to help the company further its growth and development, Salpietra and his team implemented four core principles: customer-centric, process improvement, financial focus and talent development.

“We did this rather simplistically to make sure that it was easy for everyone to recite and keep it close to them day-in and day-out,” Salpietra says. “We keep our customer at the center of our business. We deal with process improvement, which is part of our DNA as a Japanese-owned division.

“And everyone in every organization wants to improve and enhance the skill set of employees, so we push our people to get out of their comfort zone.”

 

Develop your talent

To keep EYE Lighting employees on their feet and thinking about different aspects of the business, Salpietra made talent development a big part of the organization’s core principles.

“We added talent development because that captures what we do on the factory side that we want to do throughout the whole organization, which is work out of your comfort zone,” Salpietra says. “You’re going to become more knowledgeable and more valuable for yourself.”

To allow your employees to grow and develop, you have to be willing to give them the tools and resources to do so.

“You need to have an open-door policy,” he says. “The leadership, especially new leadership, has to develop two things primarily — trust as a leader and then respect comes. Then you can develop the feeling of hope. If the employees see that there’s hope in things and they become a part of that, it will help engage them.”

That engagement will also help when your company has to make a tough decision or make a change in direction.

“It’s very important that you get a lot of group interaction so that when you go to make a decision or implement a change, everybody is onboard with that,” he says. “If you engage your people and say, ‘Here’s what we’re going to do. We’re going to move in this direction and we’re going to need your help. We do not know all the answers.’

“They love to hear that because they will have questions and suggestions for the company. As much as you engage your employees, they will become engaged on their own. All of a sudden ideas and suggestions will start surfacing.”

 

How to reach: EYE Lighting International of North America Inc., (440) 350-7000 or www.eyelighting.com

 

Takeaways

Keep yourself in tune with your industry and where it’s going next.

Always think about ways to broaden core offerings.

Develop talent and keep employees engaged in the business.

Published in Cleveland
Thursday, 28 February 2013 19:00

Tony Arnold: The power of empowerment

Corporate entrepreneurship is picking up a few nicknames as it becomes a trending topic in discussions. “Intrapreneurship,” a term used by Steve Jobs in a Newsweek article in 1985, will still drive your autocorrects and spell checks crazy.

But a quick online search of the term will find an increasing number of articles racing to define the buzzword for the current era. Why the refreshing discussion on the topic of entrepreneurship inside the walls of a corporation? When well-run, these efforts can be a virtual lottery of profit for the company who manages it correctly. Let’s take a stab at addressing the concept and what it means today.

Jobs was, of course, referring to the Macintosh team, the virtual garage band of loyal workers who were long on hours and ingenuity and provided the basis of a new line of computer products that began to lead the company in new directions.

The Mac team exemplified a culture of innovation and made a good case for a strong investment in talent, coupled with a healthy budget for research and development. In the view of many, this remains the current model for companies today.

But daydreaming about inventing the next Mac, iPod or iPhone might be mitigated by reminders of failures, such as New Coke, Clear Beer, Crystal Pepsi or Netflix spinning off their DVD business to Qwikster, the most recent major blunder by a corporation.

Here are a few steps to take on your path to becoming more tolerant of risk while never forgetting to keep a close eye on the costs.

 

Empower a team.

Keeping the lines of communications open will inform you of breakthroughs before they happen. Define the goal and how success should be measured. Then establish a funding level and clarify your time horizon to reaffirm the commitment. It will help you monitor progress or regress directly and you’ll be able to spot pitfalls while there’s still time to react.

Consider meeting with different people so that you can gain multiple perspectives. Walk the group’s area and they’ll know they have the interest of top management.

 

Recognize and cultivate top performers.

Support them with complementary people who think like they do but consider fostering an environment of teamwork, not necessarily one of competition with each other.

Resources for the project need to be ample but not extravagant. The team will understand the venture itself should be considered like a start-up, and while they’ll enjoy the same benefits as your other employees, they may relish the opportunity to “rough it” and be considered noncorporate types.

 

Reward extraordinary performance.

An opportunity for the team to be compensated based on viable success must be a part of the equation.

Entrepreneurs will be highly motivated to share in the long-term value and upside they create. This also will aid in retaining the capability and high-quality talent in your organization. It will come back to your bottom line in spades, so don’t forget to share. Reward efficiency and frugality as well.

 

Set the pace.

Set, monitor and share data on progress against agreed upon milestones. Hitting goals will energize the team and provide the necessary information to tweak their overall plan and make adjustments. The allocation of resources can also be measured at this time, and if you’re knocking on the door of a breakthrough, you’ll know it. ?

 

Tony Arnold is founder and principal of Upfront Management, a St. Louis-based management and executive consulting firm. He can be reached at (314) 825-9525 or tony@upfrontmgmt.com.

Published in St. Louis

As Jerry Azarkman watched new stores open in Phoenix and Tucson, Ariz., he felt proud that Curacao, the company he launched at the age of 24 with a mere $20 in his pocket, was beginning to expand beyond its Los Angeles roots.

But he was also concerned about the sales volume at these new stores. They just weren’t doing as well as the stores located closer to Curacao’s Southern California headquarters.

“The L.A. store’s volume is much higher,” says Azarkman, co-founder, co-owner and chief marketing officer for the Latino-oriented retailer that’s corporate name is Adir International.

“The number of credit applications approved at the Phoenix store is much lower than the stores closer to headquarters. Why is it smaller the further you go? All these things gave me a thought about the implementation of direction. The further you go, the communication kind of slows down, and it doesn’t get there.”

Azarkman wanted to turn that around and ensure that wherever he opened a store, whether it was next door to his office or 1,000 miles away, it would offer the same quality of product and service to Curacao customers.

“The biggest challenge is as you grow, your structure grows and there are more layers of management and communication,” Azarkman says. “That communication has to be the same from level to level all the way down to the front lines. The challenge is when the communication doesn’t get to the level you want it to get to.”

It’s a common problem for growing businesses and Azarkman wasn’t casting blame about it. He just knew that his 2,600-employee company needed to adapt and rethink its communication channels to ensure that everybody was on board with what was happening.

“I’m involved in the philosophy of the company, which is keeping employees motivated so they can do their jobs at a top level,” Azarkman says. “They really want to do that. They’re not doing it out of fear. They are doing it because they believe in it.”

That attitude would be the key to helping Curacao achieve continued growth.

Demonstrate your commitment

One of the biggest changes Azarkman made with Curacao was to change the company’s name. It may not sound that meaningful to the internal operations of a company to change the name from “La Curacao” to Curacao and redesign the company logo, but it provided Azarkman with a vehicle to demonstrate the company’s commitment to digging deep and looking for ways to provide even better service to its customers.

To get things rolling with this process, Azarkman brought in an outside consultant to make an honest assessment of what needed to change.

“We hired a company from the outside because you cannot believe in your own judgment,” Azarkman says. “You’ll create an impression that you’re much better than you actually are. It’s better for somebody from the outside to look at you than for you to look at yourself.”

The firm came in and set up focus groups in the communities where Curacao did business.

“They did focus groups with our customers, with customers that left us three years ago, with people who had never been in our stores and in communities that had never heard our name,” Azarkman says. “Out of that, we learned a lot about what the community thinks of us, what changes they are expecting us to do and what changes we have to do.”

The groups provided a great deal of feedback, including the suggestion that ultimately led to a new name and logo. It was a good foundation to begin transforming the business. But the key to providing what your customers are looking for is asking the question with the knowledge that you’ll need to keep asking it again and again.

“Expectations change with time,” Azarkman says. “You create an expectation, a standard, and then the next day, you have to go and create a much higher standard and create a ‘wow’ in the minds of customers that walk in the store. When they leave the store, you want them thinking, ‘Wow, I never thought I was going to get that value or that experience.’ To get to that point is a constant struggle.”

Earn employee support

Azarkman needed his employees to buy in to the pursuit of superior customer service without feeling as though they were being punished or forced into something that didn’t fit their skill sets.

“If they’re not buying in to it and they are going to be forced into doing something that they don’t believe in, it’s not going to happen,” Azarkman says.

There needs to be something out there, a reason to work harder and exceed customer expectation.

“What’s it in it for them?” Azarkman says. “What are they going to gain out of it? A better career path, higher income, more security, better stability for the company? You put all those things together, and you’re going to create a team that is really going to be motivated and dedicated and really cares about the company because they are part of the company. They are working there because they belong there. They are part of it.”

A comprehensive training program at Curacao, known as the University of Curacao, bolsters employee engagement. It helps promote an environment of learning and growing that Azarkman says is one of the keys to achieving growth.

“You need to know how to motivate people and get them to perform better,” Azarkman says. “You have to provide the tools that they need. Managers are tool creators. They create tools for their associates to perform. If they are creating the right tools and then people are using the tools that have been created for them, the success is going to be there.”

Azarkman refers to the sale of a television as an example of the outcome he seeks in training his managers and employees.

“Let’s take a Sony television,” Azarkman says. “You can buy it anywhere in town. You can go on the Internet and find 10,000 places to buy it. The difference is what is coming with that television. What value am I giving to that customer with that TV? What is the additional value?”

If everybody is thinking about ways to please the customer and is able to bring up those ideas without fear of reprisal, the result is a strong culture and a strong company that consistently exceeds expectation.

“It’s not that you create a ‘wow’ in the minds of customers and that stays,” Azarkman says. “Today, you’re meeting expectations. Tomorrow, it might not be enough.”

Don’t lead with fear

The effort to drive home that message to stores near and far away from Los Angeles and ensure that everyone is pushing toward those goals on a consistent basis has to begin with you.

“You have to make sure that all your executives are really buying in to it,” Azarkman says. “If anybody has a doubt or has something they don’t agree with, let’s put it on the table, fix it and make sure we all agree. Get one direction you can all agree on and go from there.”

If you want to learn what needs to be fixed in your business, you’ve got to be willing to accept criticism.

“The minute there is fear, all the communication channels are shut off and they are not going to be willing to open their mouths and discuss issues or concerns that they have,” Azarkman says. “If the leader is creating fear and the people have to work with that fear, it’s not going to last too long.”

Companies that insist on coming up with reasons why a problem doesn’t really exist are only setting themselves up for a bigger failure down the road.

“The communication will determine the success or failure of the company,” Azarkman says. “If there are real problems that need to be addressed and you don’t put them on the table, they will accumulate until there’s an explosion because people were afraid to bring it up.”

One of the solutions to the problem of lower sales volume in the Arizona stores was to enact rotating management teams between the more established stores closer to Los Angeles and the newer, less experienced stores in Arizona.

It’s a step that can help you better assess your team and weed out the people who aren’t going to be a part of your future.

“You need to check performance and evaluate each person,” Azarkman says. “You always have to create a bucket of people that are performing. Unfortunately, some do not perform no matter how much you try to educate and help them. So you have to let them go so you can keep your company healthy.”

Fortunately, Azarkman has more talented people on his team than underperformers who have to be let go. Curacao has more than 2 million credit applications on file and continues to expand. Azarkman says it all comes back to the philosophy of customer service.

“If the customer gets service above expectation, it means you’ve done something to maintain and keep that customer,” Azarkman says. “It’s small advice, but it’s big if you keep it in mind.”

How to reach: Curacao, (866) 410-1611 or

www.icuracao.net

The Azarkman File

Jerry Azarkman, Co-founder and co-owner, Curacao

Born: Tehran, Iran. I moved to Israel at the age of 6 and grew up in Israel. I came to United States at the age of 21. There was a good community of Jewish people living in Iran before the fall of the Shah. There were probably about 1.2 million Jews there. My parents felt that it was going to extreme Islam already in those days. And in 1961, they decided it was not going to be a stable country to stay in, so we moved to Israel.

Education: I did three years of computer language study at Bar-Ilan University, Ramat Gan, Israel. It’s a university. I took some evening courses while I was in the military service.

Who has been the biggest influence on your life?

My father, Oscar. Any time I’m in a problem, I go back to things that he told me. The things I’m passing to other associates in the company, it’s come from the first lessons of motivation that my father passed to me and my brother.

What one person would you like to be able to meet and why?

Albert Einstein. First, I would like to see his philosophy about life, religion, God and how science is connected to religion. What did he really see? Maybe the guy is so extremely smart that he had to bring himself hundreds of levels down to talk our language so we could understand him. I would like to know what level he is.

Takeaways:

Don’t be afraid to seek outside input.

Work with employees on new initiatives.

Don’t lead with fear.

Published in Los Angeles

akr_clm_SueChaseThink of the best leader that you have ever known. What is it about this person that made him or her such a great leader? It is very likely that we are all describing someone who is highly passionate, respected, driven, caring, servant-minded, ambitious, motivating, knowledgeable, confident and who gets things done.

What is it about that person that motivated you to put forth extra effort to perform? Better yet, how can we each be leaders or be that person who others want to follow?

Actually, leadership does require those traits described above or those exhibited by the person you thought of as the best leader. Those traits are often inherent, although they can also be enhanced through experience, mentoring and education.

Let’s understand the important qualities and behaviors that demonstrate successful leadership.

Leading by example. Whether it is working hard, making the difficult choices, taking risks or sacrificing personal time, a successful leader needs to consistently lead by example. It’s the key to authenticity.

Integrity. Leaders are honest and dependable. Others need to count on you to not compromise on your principles. Others need to see that you can and do take the tough road through a situation to “do the right thing.”

Solid goals. Know your goals and what you are seeking to achieve. A leader needs to have a solid objective. A successful leader has direction, and when others know what it is, they know the expectations, catch the vision and seek to work with the leader to achieve it. It is difficult to get others to do what you want if you don’t know what you want.

Knowledge. Know and understand your obstacles, competition and risks. You need to leverage yourself and your group for the best chance of success. This may mean that you need to consult an expert.

Provide for autonomy. Those working with a leader need to understand the defined goals and from there, individuals need to have the ability to be creative and have the ownership to decide how to achieve the goal. Successful leaders encourage people to think, innovate and own the solution.

High standards. Leadership should expect a high level of excellence. People want to be proud of what they are doing. High standards should not be ones where the goal is perfection. The standards should be high but still maintain the allowance and the realistic expectation that people will make mistakes. Good leaders minimize the lessons learned through errors and oversight, although they take optimal advantage of these opportunities to learn.

Humility. Leadership is not about you; it is about others and reaching the goal. As one has more successes, this trait may become more challenging to maintain. Leadership focuses on what was accomplished and acknowledges those who accomplished it. Humility understands that the accomplishment came through those you lead. Humble leaders encourage others and give them credit.

Execution. Execution requires discipline to get things done. Many leaders have the ability to define great strategies but often there is a gap between what is desired and one’s ability to achieve it.

True leadership is a demonstration of all the characteristics listed above. To some extent, they are inherent in each of us and it is our choice to develop them. We each have the opportunity to search ourselves for these characteristics and step up to be the leader for someone in our lives.

Sue Chase is COO of Clinical Research Management Inc., www.clinicalrm.com. She is filling in for quarterly columnist Victoria Tifft.

Published in Akron/Canton

It looked to be another great year for Republic Steel.

Coming off its 2005 acquisition by Industrias CH, S.A de C.V. (ICH) — a fast-growing steel producer and processor based in Mexico City — the company had cleared up all its previous debt, the steel industry was flush with opportunity, and as the new

was laser-focused on building a strong team and investing in best-in-class facilities to position the 125-year-old steelmaker for growth.

And that, of course, is when everything went south.

“After October 2008, the whole world changed for the industry,” says Vigil, who joined the Canton, Ohio-based steel company in 2005. “The recession threw us a curveball that we were not planning. I don’t think we were looking ahead. We had really relied on intelligence based just on market view.”

As the largest maker and supplier of special bar quality (SBQ) steel in North America, Republic produces steel for applications such as automotive and energy. It has been developing its steelmaking practices for more than a century. But even a company with annual sales of more than $1 billion wasn’t immune to the shock of the 2008 financial downturn.

Declining demand and struggling customers, who were urgently looking for ways to cut costs and scale back, hit the company hard. Almost overnight, Republic Steel saw its volume of business nosedive.

Streamline your structure

Not yet knowing the full scope of the downturn, Vigil knew that Republic Steel — like its customers — needed to cut costs to minimize the financial fallout. So the first step was to look for ways the company could streamline plant operations.

“At that point, the volume with the plants that we had had a lot of fixed costs,” Vigil says. “We were forced to shrink our footprint to be able to manage our costs and have a profitable business.”

Increasing efficiency without sacrificing quality can be tricky. You need to examine the profitability of every segment of operations thoroughly. First, identify the areas that have the most efficient costs, and second, identify where costs overlap. This process allows you to consolidate the most efficient operations and shut down equipment and functions that no longer make sense.

By making these changes, Republic Steel was able to shrink its footprint to that of a much smaller company in a short time period.

“That was a very different situation for us from 2005, but it was also a very good experience for us to try to model our business for the future,” Vigil says. “It allowed us to look at things in more detail and understand our business and our cost and the opportunities that we had to be more efficient.”

Taking cost out of operations not only allowed the company to produce SBQ steel more efficiently, but it also freed up resources, which Vigil reallocated to enhance the company’s quality, delivery and range of products in its SBQ steel business to provide more value to customers.

“We have to be right there with them making a product that suits their needs,” Vigil says. “Our No. 1 qualification or differentiation in the market is our ability to work with technicians of our customers to develop the products that fit their needs and then produce them consistently with a low cost and high quality and delivering them on time.”

When you’re not making a commodity, you need to be more focused on quality and continuously improving your products to stay competitive, Vigil says. The key to staying relevant was investing in the company’s strengths, such as its years of experience in the steel industry. The fact that the company’s Canton plant was the first-ever producer of SBQ steel provides it with a strong competitive advantage.

“Our brand has good recognition, and we continue to build on that by making our customers really comfortable in the long run that they have a true partner with Republic Steel, a company that knows what it wants and that can adapt to the changing market as needed,” Vigil says.

“With more than 125 years of know-how, you get a very good result. You can continuously provide the same quality that your customers are used to with more efficiency. It allows you first to be more competitive in the marketplace and maintain and improve your quality in the product.”

Since 2005, Republic Steel has reinvested close to $130 million in new equipment and new processes into its core Northeast Ohio facilities, which include plants in Canton, Lorain and Massillon, Ohio. In 2012, the company also announced that it would invest more than $87 million in a new electric arc furnace and equipment at the company’s Lorain, Ohio, steelmaking facility — a move that is adding approximately 450 employees.

The company chose the Lorain plant for the investment because of its close proximity to the existing customer base and to other Republic Steel facilities. Having a smaller physical footprint allows you to allocate resources to growing areas more easily to develop strong teams, while delivering a consistent experience for customers.

“We see a strengthening automotive industry as well as a lot of growth in the energy sector side through the gas horizontal drilling process,” Vigil says. “We see ourselves in a very good position to serve those markets in the long term.

“It gives us an opportunity to serve our customers with more product and a very solid footprint in the long run. Our customers have a supplier that has no debt and that is investing in its business. So we feel that our customers see us as a long-term partner, and they can stick with us for years to come.”

Look to your core

When your company is facing market volatility, past plans and strategies may get tossed out the window rather quickly. To ensure that Republic Steel didn’t lose sight of its identity in the chaos, Vigil used the company’s core values to guide the strategy — specifically two values passed down from its parent company, ICH.

The first was carrying a debt-free balance sheet.

“When we acquired the company in 2005, we inherited some debt from the previous administration,” Vigil says. “We worked very hard to pay it off with our own resources and some support from the parent company.”

Even when the company was losing volume during the recession, Vigil wasn’t willing to take on debt in favor of gaining more financial flexibility. In fact, he says borrowing money often results in the opposite outcome for companies by stifling their spending. Carrying zero debt allows you to make decisions without dealing with banks or lenders.

“Some companies have different opinions about debt, and in certain cases, it allows companies to be flexible and grow faster when an opportunity comes, but we still have that flexibility because having no debt makes us attractive to banks,” Vigil says.

“The recession has been the best proof of the strategy. We tested it through this downturn, and we were able to manage through the recession a lot better than some other companies who have big debt or a lot of interest to pay.”

As a result, the company has been debt-free since March 2006, operating as a true cash-flow company.

“It makes us a stronger company, and it allows us to keep reinvesting even in the downturn because the money that we generate is really for us and not to cover any debt obligations that we have,” Vigil says.

The second core value that helped guide the company through the recession was having a diversified mix of sales. Carrying a wide range of products makes the company a one-stop shop for many customers. So even in the downturn, Vigil continued to make investments to expand Republic Steel’s capabilities in emerging markets, such as natural gas and energy.

“The volatility in our customers’ industries continues to be something that we’re monitoring very closely,” Vigil says. “The economic situation worldwide, starting with Europe being so volatile, continues to have a big effect on our customers’ ability to project their levels of operations.

“Having a more diversified mix of sales allows us to not have all of our eggs in one basket and participate in different industries, and we’re able to better ride the cycles. We, as a company, believe that if we stick with those two values — remaining debt-free and continuing to have a diverse mix of sales — we can deal with the volatility in different markets.

“We’ve prepared our company to be better geared to react now than we were in 2008. Through these changing circumstances, we’ve created a more flexible company with the investments that we’re making, allowing us to grow our strength faster.” ?

How to reach: Republic Steel, (800) 232-7157 or www.republicsteel.com

Takeaways

1. Find ways to cut cost by shrinking your footprint.

2. Allocate resources to growth areas.

3. Guide your strategies with core values.

The Vigil file

Jaime Vigil

President and CEO

Republic Steel

Born: Mexico City

Education: Universidad Anahuac in Mexico City

What is one part of your daily routine that you wouldn’t change?

I like running every morning before going to work; it really makes a difference helping me start every day with great energy and a clear head ready for business.

Best piece of business advice:

I’ve benefited a lot from the experience that my team brings to my decision-making process. That saying that more heads are better than one — that does apply in practice. It’s particularly important in soft science to surround yourself with good members willing to openly give their take on problems so that together you come up with the best solutions.

What do you do for fun?

There is no better way for me to spend my time when I’m not at work than with my wife and kids. From training for a marathon with my wife, to being attacked with toy swords by my three and four year old boys … it’s the best time of my day!

 

Published in Akron/Canton