For Arnold Burchianti II, business in the past 10 years has been good. Burchianti, founder, president and CEO of Celtic Healthcare, a home health care and hospice provider, has been focused on growing his business through strategic planning and keeping his 450 employees engaged.
That engagement and strategic planning have helped the company reach 2010 revenue of $45 million and has allowed Celtic Healthcare to stay nimble and adaptable in an industry that is always changing.
“When cuts and changes have occurred, which they do quite frequently in the world of Medicare and home health care, you operationalize and try and maximize your efficiencies as best you can,” Burchianti says. “Along that journey it’s been a lot of engaging the work force in alignment with the type of strategy and tactics that we had.”
The company has continued to thrive because everyone at Celtic works for the betterment of the business.
Smart Business spoke to Burchianti about how he keeps his work force engaged and strategically aligned.
Be honest and open. We’re pretty transparent with our employees. Short of issuing a P&L and balance sheet to a nurse who won’t understand it, we give them everything we can. We try and paint that picture and get them to really understand how and why as leaders we’re doing the things that we’re doing.
We go in and show them our overhead costs, the leadership’s wages and costs according to benchmarking data that we get from cost reports and we put it out there. By really engaging the work force as to what’s going on in the industry through benchmarking data, comparing us to them and showing them where we need to improve and why we need to improve for sustainability, it makes it a little easier when you walk in and show them the facts.
Are they always happy with our decisions? Hell no, but as a leader you have to engage them and you have to be transparent. You have to let them know why you’re doing stuff so they can trust you. That’s the fundamentals of great leadership. You’ve got to get people to be engaged, to trust you and be transparent.
Understand your culture. I believe you need to come up with strategies to engage your employees and one of the best ways to do that is to take a look at the cultural health of your organization. We do these cultural tests and we pay a lot of money for it, but its well worth it. I could tell you twice a year exactly what my top three things are for corporate health and culture.
It’s easy to get baselines on your financials, on your marks, on many legislative things, on your turnover rate, but getting an objective read on culture, you can’t just go into a room and ask somebody, because they’re not always going to tell you the truth. As a leader or CEO, you can’t listen to your VPs and people around you all the time, because sometimes those people are micro-managers and they just hear what they want to hear. You as a leader need to go transcend beyond that and most of us don’t have the ability to do it ourselves. You need to bring someone in at least every few years to run these types of exercises. I’m not saying bring someone in to train and make things better; you’ve got to understand what the issue is first.
Once you’ve heard and gained the information, then you tell them that you heard them and tell them what you’re going to do. Let them know where the progress is. It’s really an art of engaging your employees and making sure you understand the health of your culture. If your people aren’t engaged and you’ve got to make a change because of a market or legislative issue, good luck, because a company like Celtic is going to beat you there 500 times faster, because we can move quicker. The small and the fast always eat the big guys’ lunch.
Form a plan. The No. 1 thing is proper strategic planning. That means making sure you understand your values and that you understand what is the single most important priority that your organization has to accomplish for your vision and mission. You have to make sure you understand what your values are, because that lays out what your strategy is going to be and what’s important to you and keeps you from chasing 9 million different facets.
Once you understand what that vision or mission statement is then … you’ve got to get your work force engaged or at least your leadership engaged and you need to be meeting with them in some cases daily or weekly. You’ve got to make sure when they wake up in the morning they are thinking about that. That’s where people fail; they’re chasing a lot of different ideas, they’re putting out fires and everyone thinks within their own division what they’re working on is their priority. Everyone needs to be aligned with that single most important corporate goal.
HOW TO REACH: Celtic Healthcare, (800) 355-8894 or www.celtichealthcare.com
G. Michael Campbell and his company MCA International LLC specialize in business transformation projects from launching or developing new products to changing organizational structure. Campbell, who is president of MCA, has seen countless project undertakings that have both ended well or turned out to be project management nightmares.
From planning and tracking to specifications, budgets and timelines, strong project management can be a very big differentiator in your company. To aid companies in project management and how to develop the best techniques, Campbell wrote his latest book, “The Idiots Guide to Project Management, Fifth Edition.”
While Campbell says that you don’t have to be a genius to run a project, you do need to understand that doing a project by following some best practices will make a world of difference.
Who would get the most out of this book?
The book is really targeted for a more experienced manager who has suddenly been handed an important business project for them to manage. They understand the importance of it and they recognize the business need, but they really don’t understand how to manage a project beyond sitting down and preparing a checklist. They’re really looking for some practical guides and some practical tips that they can apply right away to increase their chance of success on this.
What do leaders often overlook in project management?
Leaders should keep the project focused more on the business goals and objectives. You need to stop at certain points and do a recheck and say, ‘Is this project still on track to deliver the business goal that I was looking for?’ Project managers want to deliver on budget and on time and that’s good. From a leader’s perspective you want to be focusing on the business value that you were looking for. The business leader is the one that has to focus on that. Business leaders can read this book and begin to make the connection for keeping that business focus on any of their projects or initiatives.
What are common mistakes that this book addresses?
The first one is keeping the project aligned to the business objectives that where the reason the project was sanctioned in the first place. Some projects, particularly the business transformation projects, can often take two or three years to complete. The business landscape can change pretty dramatically over a two- or three-year period and one of the problems is that the project team over that period of time really didn’t adapt to the new business landscape. If they had kept abreast of changes and built those into their project, they would have been much better aligned with the business and the business goals when they finally delivered on the project.
Another one is the scope of the project. What I’m going to deliver and how it’s going to be judged is really not well-defined. When you don’t have a project with a well-defined scope, you’re really not certain what exactly you’re going to deliver and what kind of requirements it’s trying to achieve and you begin to wander around and you waste a lot of time and money bumping into walls.
The last one is just keeping your stakeholders aligned and informed with what you’re doing. Particularly in these larger projects, you have a lot of people that get impacted by the projects and making sure they’re all informed and understand and ready for it is really critical.
What is the role of senior management during a project?
The problem with senior managers in these things is typically when they’ve decided to do a project they’ve been thinking about it for a while, considering it against other options and alternatives, and once they make a decision, they’re ready to dust off their hands and move on. The fact is as a project manager, occasionally I’m going to need their help for certain kinds of business issues. Senior managers need to understand they still have a role in this when the project starts. They’re not going to be in the day-to-day operation of it, but I’ve got to be able to have them ready when I need them.
HOW TO REACH: MCA International LLC, (281) 768-8014 or www.mcaintl.com
Nick Vehr, founder and president of Vehr Communications LLC, a public relations firm, doesn’t mind uncertainty.
Everyone has been enduring it for the past few years, and for Vehr and its 18 employees, that uncertainty has brought out the best in the business.
“Our company is young and I started it at the front end of the worst recession in many lifetimes,” Vehr says. “It’s an extremely scary time to be out there with a business and even more to be investing in that business and growing that business.”
While it’s a scary business environment, it will be those who work hardest and deliver the best results that will survive.
Smart Business spoke to Vehr about how he is growing his company despite tough times.
How do you deal with uncertainty?
You put your head down and work harder because you can’t control it. You can’t spend all of your time worrying about it; you have to spend time with every client you have and fight aggressively for every client you can get. That’s the only way I know how to deal with the uncertainty that’s out there. Fortunately for us, we’ve been able to grow with cash flow and we didn’t have a huge overhead to feed when the economy went bad and companies started pulling back.
What have been some of the key factors of the company’s success?
Somehow you have to strike a balance between keeping your eye on the big picture and sweating every little detail of the way you run your business, and I think that’s especially true with small businesses. You just have to be very careful in your hiring. You have to be selective in your clients and you have to work harder than the next guy. That’s the key, because there is a direct-line correlation between working hard and winning. You’ve got to be smart. You’ve got to be transparent, honest and open with clients when you give them advice, even if it’s advice they don’t want to hear. All of those things in our business are a given. The variable that spells the difference between winning and losing is, ‘How much are you willing to put into it?’
How do you plan your hiring?
This is a great time to be hiring. There is a whole lot of talent that’s out there and the trick is not trying to pick up good talent dirt cheap because in the long run you’ll lose that talent, because they’ll know you weren’t truly committed to them. We try to be very deliberate, intentionally slow and careful, and on my side when I make the decision to make the hire, I try to calibrate the best I can on a couple of different points. A disaster for us is somebody who we invest all that time and energy in, we pay them a salary for a year, they start developing a relationship with clients, and then they leave. That’s a significant lose of investment on the business side of things.
The scary thing and the challenging thing is you have to hire out in front of the work. People with whom we work, they want to know who they are going to talk to and work with on a daily basis. I can’t as CEO make the sale and then hand it off to a person who’s completely unknown to who I made the sale to. Our people are our product. It’s their brains and their skills and their experience that people are buying. For anybody who’s hiring, the hardest thing to calibrate is, ‘How do I hire out in front?’ You’ve just got to get great people, work hard and the business will come and they will end up adding value to the bottom line of your company.
How have you attracted clients in such a tough economic time?
I hope we don’t do anything differently in good economic times than we do in challenging economic times. For a successful relationship with a client, we have to commit ourselves to that relationship. That means open communication. That means thinking out ahead of the client and what their needs are and being proactive in suggesting strategic approaches and ideas. The best way to make sure a relationship works is to commit yourself to being an active partner in the relationship. It’s a lot of touch and communication. We want to become a strategic partner with our clients. We want to be at the table for the great opportunities and the tough challenges and be able to advise our clients appropriately.
HOW TO REACH: Vehr Communications LLC, (513) 381-8347 or www.vehrcommunications.com
Gary Conley is never satisfied with a process being good; it can be better and he will find ways to make it so. Conley is president and CEO of TechSolve Inc., a 55-employee consulting company that specializes in industries such as health care, manufacturing, and aerospace.
Conley and his team at TechSolve help businesses find ways to improve operations and become more efficient in any way possible. While he focuses on helping other companies, Conley has to also make sure he is keeping an eye on his own company’s processes.
“We have the same issues as our customers, although our people are trained to look for continuous improvement opportunities,” Conley says. “We need to be careful that we don’t fall into the rut of taking some of our processes for granted and not continuing to find ways to improve them.”
TechSolve utilizes concepts from Toyota’s production system of total quality management.
Smart Business spoke to Conley about how companies can focus on taking waste out of practices.
What are some common mistakes in business processes?
A common mistake is that the top management is not sufficiently engaged in the process and committed to seeing the process through. While you can often go into an organization and identify some immediate cost savings and other measures that might improve productivity or improve profitability, management needs to harvest those types of opportunities, but they also have to keep their eye on the long-term opportunity, which is to develop an environment within your company where everyone in the company is continuously looking for ways to improve.
Another mistake that’s often made is trying to do too much too quickly. This usually results in a lot of multitasking, which tends to delay improvements from actually being realized. It’s much better to focus on a smaller set of improvement initiatives and see them through than to try to take on a very large number.
How can management focus on improving processes and avoid common mistakes?
They need to learn as much as they can about the improvement methodologies that can be applied. Then they need to actually be personally engaged in the process and involved in working with their workers in the actual implementation of these methodologies. These are things that ultimately you can’t learn in the classroom. You can’t learn them by reading books. You can’t learn them just by watching. You have to actually become engaged and do them because it’s very much a high touch, contact sport. They need to establish clear goals and clear measures so that they can monitor the progress that’s being made and also so the workers and other managers who are engaged in the process can continuously evaluate where they are against the goals that have been set forth.
How do you develop a continuously improving environment?
What needs to occur is for all the managers to be aligned around the improvement initiatives and fully understand the purpose and the goals and the methods and the cultural transformation that is being pursued. Then, they, in turn, need to be trained in the methods and be personally hands-on involved in the actual implementation of the improvement.
How do you identify what processes need to be updated or changed?
In the beginning, it’s simply a matter of prioritization. What you’re looking for are improvements that will be meaningful to the organization that can be performed within a relatively short period of time so that they become a model for other divisions or work units within the organization to attempt to duplicate. You want some early successes and visible successes, meaningful successes that other people within the organization can observe and realize that benefits are being realized from the activity. That reinforces the belief within people that they can in fact make these changes and that these changes will make the organization more successful and their workplace a more secure place and a more productive place.
Another approach is if you have dissatisfaction from your customers, either as to quality or meeting delivery promise, then that might give you an indication of what would be the more meaningful project you might take on. Even if you didn’t have dissatisfaction, your sales people and people that are closest to the customers might be able to give you information about the aspects of your products or your service that would have the most meaningful impact.
What are the keys to recognizing what changes give you the best results?
You start with the basics. You want to look at the quality of your product. How much product is being returned? You could also look for areas where you have excessive scrap rates, for example. You look for bottleneck operations which might reveal themselves by very high work-in-process inventory levels. You look at how effective you are at achieving your delivery promise.
Although many of the techniques and methodologies originated within the manufacturing sector, they have universal applicability to any type of enterprise.
HOW TO REACH: TechSolve Inc., (800) 345-4482 or www.techsolve.org
Auburn Hills is known to the nation as the home of The Palace of Auburn Hills, the arena where the Detroit Pistons have won three NBA titles dating to 1989. The Palace is certainly important to the city — it counts as Auburn Hills’ third-largest corporate employer.
But if you only think basketball when you think Auburn Hills, you’re selling the city short. Located in eastern Oakland County, Auburn Hills is a business hub with resources including five colleges and universities, and access to major transportation routes and facilities.
“We have a great location,” says Laurie Johnson, the city’s economic development coordinator. “We have access to M-59, I-75 and two major airports, and that’s one of the big reasons why the city is 80 percent business. Usually, a city like ours will be close to a half-and-half mix of business and residential, or lower on business, but business is what we are built on. We know business here.”
Business also thrives in Auburn Hills because of the educational support structure provided by the quintet of higher-learning institutions that operate in the city: Oakland University, Oakland Community College, and satellite campuses of Central Michigan University, Baker College and Thomas M. Cooley Law School, which have helped construct training programs used by area corporations.
The city’s government has also taken proactive steps to make it easier for businesses to start or relocate. Auburn Hills Advantage is a program that helps streamline the process of providing businesses new to the city with the resources they need. The city’s leaders also implement state tax abatement acts to drive growth.
“With Auburn Hills Advantage, what we do is bring everybody together in a meeting,
Johnson says. “We find out what exactly the business’ needs are and what needs to be done, so that when they walk away to submit their building application or site plan, it’s going to be so streamlined, they’re not going to have to come back and do things a couple of times. We’re going to walk you through it.”
The tax incentives include Michigan’s Public Act 198 and Public Act 328. Act 198 is a 50 percent abatement on property tax for a new structure or addition to an existing structure, and a 50 percent abatement on personal property taxes. Act 328, usually reserved for larger projects, is a 100 percent abatement on personal property tax.
Of course, to build, you need space, which Auburn Hills has in the form of 22 business and technology parks.
“One site was just recently purchased, and we have had two new buildings built,” Johnson says. “They broke ground in May 2010, and were up and running by that October. That gives you an idea of how fast we are, and how well we work with our businesses.”
Population: 21,400 (2010)
City manager: Peter Auger
Area: 16.6 sq. mi.
Notable businesses: Chrysler, Volkswagen/Audi, Delphi, BorgWarner, Great Lakes Crossing Outlets, The Palace of Auburn Hills
Phone: (248) 370-9400
Jochen Meyer has built a company from the ground up before. He was essential in helping Flabeg U.S. Solar Corp. grow from two employees to nearly 200 in less than two years. His latest venture is PMJ Service Parts Management LLC, a management consulting company that specializes in optimizing spare parts logistics.
Meyer, CEO is leading the company forward by laying out a focused and driven plan of attack for how the business operates. By staying focused and sticking to the expertise of the company, Meyer expects the company to grow globally.
“Spare parts are really an important part of business and it’s often neglected because most of the management attention is given to developing, producing and selling the original product that a company makes,” Meyer says. “The after-sales service is kind of an afterthought, although, that’s very important to customer loyalty and to the bottom line of the company.”
The company is building trust in the service parts arena by delivering what it says it will.
Smart Business spoke to Meyer about what it takes to grow a young company.
What is the biggest challenge of building a business?
The challenge is in creating your own pace and keeping everything driving. It’s actually very similar to how we started Flabeg with only two people. Now it’s kind of going back to that start-up mode that we have successfully mastered and going back to a leadership situation where you have to be very careful not to do everything, but you have to rely on yourself a lot more.
We have set our goals or sights to small to medium size companies. Those are customers that really benefit the most from what we can do. You have to believe and you have to have trust in your unique selling proposition. You have to test that a little bit before you go out there. Once you see that a lot of the people that you talk to say this is a good idea, this is something that is missing. If it’s important then you have to go with it.
Why is it helpful to have a focused business plan?
It’s important that you stay focused and do not stray and think about doing a little bit of business here and a little bit of business there, but that you stay with your goal and that you stay with what you want to do. Otherwise, you take away from getting over that initial hurdle by kind of running around it. You have to get over that hurdle to be known and to have a name out there. That is something that you cannot cut short. Focus is really what gets you there.
How do you gain customer attention?
You have to understand your customers and try to create that trust in your customers and that interest in the services you provide. We have to build a very reliable partner network. Our approach is not to do everything ourselves. Our approach is to identify what needs to get done and then have the right partners in place that we engage with to execute that part of the supply chain. Those partnerships are very vital and they have to be built on experience.
That’s an important factor where you can show to the customer that you understand what the need is and you have the exact right person to execute that and you have the management experience to manage that whole process for them and be accountable for reaching the goals that you agree upon.
It’s important to have a way how you can create that reference between what you have done in the past with these people and what you’re going to do in the future. That’s the credibility that you have to build. You have to know what you’re talking about. The people that you’re talking to are experts, so you shouldn’t promise more than you can deliver and you’ve got to listen to what their real needs are.
How do you differentiate from the competition?
I would segregate the competition in two separate areas. The one is in the peer consulting world. There are people that are focused on supply chain and logistics and there are people that as part of that also work on service parts. For them it’s a small part of their portfolio. While for us it’s the focus of what we do. That’s the difference there.
You’ve got to define your market space in a way that it’s not the same where there’s already five, six, seven, eight other people. If I would walk up to Ford Motor Company tomorrow and try to pitch against UPS, it’s probably not going to work so well. You have to understand which players are approaching what customers and where that spot is where I can fit in. Once you establish that nucleus obviously you have to grow in a number of different directions.
HOW TO REACH: PMJ Service Parts Management LLC, (412) 213-5300 or www.pmj-spm.com
Private equity firms owned more than 6,100 portfolio companies when 2011 reached its halfway point, according to a report by Pitchbook and Grant Thornton. One-third of those 6,100 companies have been held for more than five years. The result of this oversupply of tenured portfolio companies is a large exit strategy from private equity groups. With strategic buyers’ enormous cash holdings, low earnings on interest and acquisitive behavior in 2011, private equity groups are seeing an opportunity to sell. PE firms also need to appease limited partners by deploying capital and increasing returns, which will ensue through an exit strategy.
Private equity firms still have ample capability to perform acquisitions with an overhang of capital close to $400 million. However, the current market appears more situated for private equity groups to exit rather than acquire. So far in 2011, private equity acquisitions made up just more than 10 percent of total deal value, as compared to 2006 and 2007 where private equity acquisitions accounted for approximately one-third of total deal value. It has been difficult for private equity groups to compete for companies as strategic buyers continue to offer aggressive cash bids and continue to maintain lower borrowing costs.
The overall merger and acquisition market has remained rather flat the last few months due to uncertainty in the global market. However, in Northeast Ohio, private equity groups have become very active in November with The Riverside Co. doing multiple acquisitions and exits, and Blue Point Capital Partners making multiple acquisitions. Expect to see a lot more activity from local private equity groups as exiting portfolio companies becomes more advantageous and capital overhang continues to linger.
Albert D. Melchiorre is the president of MelCap Partners LLC, a middle-market investment banking firm. He is also a director on the ACG Cleveland board. For more information on MelCap Partners, please visit www.melcap.co. For more information about the Association for Corporate Growth, please visit www.acg.org/cleveland.
Deal of the Month
The deal of the month is awarded to Blue Point Capital Partners for the company’s two acquisitions in November. On Nov. 1, Blue Point announced that its portfolio company, Quality Synthetic Rubber Inc. would acquire Wisconsin-based Quadra Inc., a manufacturer of custom-molded silicone products. Blue Point’s portfolio company QSR, locally based in Twinsburg, is a manufacturer of highly engineered, molded rubber components. QSR’s acquisition will expand the company’s medical business and diversify the current customer base.
On Nov. 16, Blue Point completed its second acquisition of Selmet Inc., based in Albany, Ore. Selmit is a manufacturer of complex titanium castings for the aerospace and defense industries. Blue Point acquired Selmet because of the company’s growth prospects as the aerospace industry moves more towards lighter weight products. Selmet produces many lightweight titanium products, including engine, airframe and other aircraft components.
Much has been written on peak oil theory and the depletion of our oil reserves. From the apocalyptic views at one end of the spectrum (Olduvai theory) to radical denial at the other end (Cornucopian theory), an abundant number of references and theories are readily available on the subject.
Experts argue that traditional oil production has peaked although large reserves remain. Peaking means that the rate of world oil production can no longer increase. From there the rate of production will decrease with time, while oil demand continuously increases with a world population nearing 7 billion.
Obviously, there are profound disagreements between the two sides. If you’ve read Jared Diamond’s book “Collapse: How Societies Choose to Fail or Succeed,” you could conclude that our petro-civilization resembles many aspects of failed civilizations, especially in the area of resource drain and the lack of a collective response to the key issues. Our civilization is driven by an economic system that expects continued and limitless growth. However, during the summer of 2008 when the price of a barrel of oil reached $147, we reached a tipping point for our global economy. The impact on the transportation system and on micro economies and the collapse of global financial systems created a worldwide wakeup call.
We, as a civilization, are totally dependent on oil and fossil fuels. During the summer of 2008, I personally heard the wakeup call and asked my top leaders to gather in our executive conference room. I had a simple question for them. What would happen to our business when the price of a barrel of oil reaches $250? What do we look like in terms of raw materials costs, supply and profitability? Our analysis and relevant contingency planning showed that the business would collapse and most likely disappear if we adopted a wait-and-see strategy. As a team, we then decided to shift some R&D and strategic resources and to embark on a 10-year plan to become less reliant on oil and its derivatives. Today we see the first outcomes of these actions, with products being sold in recyclable boxes instead of plastic buckets as well as with the launch of products containing up to 50 percent natural components.
If you run a business today or sit at the executive decision-making table, have you run this analysis? Do you know how reliant on oil and fossil fuels your business is across the board (transportation, packaging, formulation, etc.)? Have you projected your costs and profitability for when oil does reach $250?
At the macro level, the mitigation discussion (replacing oil with something else) is an important one to have. Current models show that initiating a mitigation crash program would take 20 years and would have potentially severe consequences on population levels, poverty rates and the sustainability of our economic system. Depending on whether you think oil peak theory is fraud or not, the clock has already begun ticking. In a 2006 edition of Money Week, Dr. Ali Morteza Samsam Bakhtiari, a well-known oil expert, proposed four phases of transition away from oil. Each transition phase covers an average of three to four years. At that time, he forecast that oil prices would reach $150 per barrel in the “not too distant future.” He wrote: “preparation should be carried out on individual, familial, societal and national levels as soon as possible. Every preparative step taken today will prove far cheaper than any step taken tomorrow.” In the end, he was right. Oil did reach $150, and it is only a matter of time before it reaches that level again and even higher.
Don’t wait any longer to run this analysis and to lead your business in this long and tenuous process of transformation. You might not be able to fully mitigate the need for expensive chemicals or fuels, but you can make the necessary investments now to render your business sustainable for the next century.
Stephan Liozu is president and CEO of Ardex America Inc. (www.ardex.com), an innovative and high-performance building materials company located in Pittsburgh. He is also a Ph.D. candidate in management at Case Western Reserve University and can be reached at firstname.lastname@example.org.
Gregory Ebel has operated in a business environment of uncertainty and constant change for too long. He has worked hard to be at the forefront of his industry, helping people understand the important factors and circumstances in his business.
Ebel, president and CEO of Spectra Energy Corp., a Fortune 500 natural gas infrastructure company, operates in a regulated industry where things might not always go his way. Ebel makes numerous trips to Washington D.C. to be face to face with the legislators who set regulations and helps them understand how Spectra and other energy companies do business to allow for regulations that are fair and sensible for all involved.
“In a regulated business, obviously, what’s going on in Washington D.C. and in lots of states from regulatory overreach is our biggest challenge as a business and the uncertainty that that creates for our ability to invest,” Ebel says. “The pipeline business is a business that invests for 15, 20, 25, 30 years at a time. When you’ve got regulatory uncertainty and you’re trying to determine how good of an investment it’s going to be over time, that makes it very difficult.”
Spectra Energy employs 5,500 people, had operating revenue of $4.94 billion in 2010 and has $26.7 billion in assets, so it is critical that Ebel and the other Spectra executives fight the regulations that unnecessarily harm the business.
Here’s how Ebel communicates and educates his employees, legislators and others in the industry to help improve the uncertain environment.
Engage people in your business
Spectra is currently building a pipeline into New Jersey and New York that is critical to reduce the cost of energy for the people in that region and bring in new gas sources.
“It is only 15 miles long, and it will, from the time we sign the contract with the customers to the time we put it into service, take four years and cost $1 billion,” Ebel says. “If it was allowed to start and we’re two years into this, it could produce more than 5,000 jobs today without government support. Yet it is very difficult. In a country that needs a lot of jobs, in a country that needs cheap energy, in a country that is looking for clean energy, it’s amazing to me and I think a lot of people in different industries, how long it takes to get approvals.”
While there is no desire to get away from following good procedures and good regulation, the issue is the cost of regulation is far outstripping the benefit.
“That’s the big concern and the fight we have to have with the regulators and try to do it in as positive a manner as possible,” he says. “The natural gas industry in North America is undergoing extraordinary growth thanks to technological developments that have given the country a 100-year supply of natural gas at a time that it needs domestic energy, at a time that it needs domestic jobs, at a time that it needs cleaner energy, and that is a huge, huge game changer for the industry. Being able to manage within that is what it’s all about right now.”
In order to overcome the challenges of regulations facing certain industries, companies and CEOs need to be willing to speak to people about their businesses and talk about the issues they are facing and ways to make things better.
“I would say we do three things: engage, engage, engage,” Ebel says. “There are three elements to that. We engage with our employees. We’ve spent a lot more time in Washington D.C. making sure that legislators understand our business and the third area of engagement is our industry groups. We belong to things like the Interstate Natural Gas Association or the American Gas Association. We make sure that either I directly or other executives in the company are trying to muster the forces within our industry groups to make sure we are delivering a consistent message from the industry to government to prevent this regulatory overreach.”
It is that constant education of what’s going on inside Spectra, around the country, and in the energy industry that helps how government handles regulation and how an entire industry can work more efficiently.
“That’s been really critical,” Ebel says. “Generally, CEOs do not like spending time in Washington or state capitals, but it’s critical now. You have to engage with politicians who frankly, don’t seem to have a lot of foresight when it comes to creating regulation or understanding what’s truly going on in the economy.”
Spectra has been spending a lot of time educating not only politicians but its own employees, as well.
“We have what we call an ambassador program so that we can ensure that our employees have the best facts and the best information about the natural gas business and the really exciting changes and the jobs that we produce in the country, and we run a lot of employees through that,” he says. “So whether they’re at a cocktail party or rotary club or women’s auxiliary, they can speak about the company and the industry.”
No matter how you educate your employees or politicians about your industry, one thing has to remain the same: your message.
“You have to be consistent with your message to employees and be consistent with your message to government,” he says. “You need to constantly repeat that message and you have to engage. CEOs don’t like spending a lot of time dealing with government because it doesn’t generate revenue, but it really can generate speed to market. Speed to market for us means building projects faster, on time and on budget to serve our customers and that can be grossly restricted by regulations. So there is value in it, although it’s hard to see. More and more CEOs and C-suite executives need to spend time with our politicians to tell their story. We all like to stay below the radar and deal with our businesses, but when government is so much in your face and has so much regulation, it becomes a real necessity to be successful.”
You don’t have to fight regulations on your own. It is a huge advantage to join industry associations that have similar goals.
“Other than a few companies like GE, Ford, Dow, Microsoft or Berkshire Hathaway, if those companies say something, it might get picked up, but most companies, of which there are thousands and thousands, need the bulk of similar type companies coming together,” Ebel says. “For us, the biggest one we’re involved with is the Interstate Natural Gas Association, which is a group of companies with similar interests in a similar industry that come together. Because of that heft and the number of employees you represent, the amount of gas pipelines you represent, and the energy sources that you represent, you can have a bigger impact by speaking with one voice and one consistent message.”
Ebel became chairman of the INGAA this past October. It’s these types of connections that can make a big difference when you need it.
“We need more and more CEOs to be involved in those industry associations if they’re going to be effective in Washington. If you show your 80 percent of the industry a position on a policy or regulation, that has real resonance whether it’s with the White House or Congress; that’s why those associations are important. That’s why we put time into them and money and I think more CEO’s need to use their industry groups to mobilize an entire industry to get positive change.”
When it comes to getting people and, most importantly, employees to understand anything that is going on in your business, it is critical that you communicate and communicate often.
“The biggest thing is our ambassador program, which is educating our employees on what our business does,” Ebel says. “It’s amazing when you have thousands of employees, how many, through no fault of their own, don’t know exactly what you do. Everybody’s got a job inside the company and it’s good that they stay focused on that, but giving them a whole picture of what you do, they can become very valuable and powerful advocates for you.”
To get your employees more involved in your company you can’t make things complicated or they will lose interest. You have to make things simple and straightforward.
“We have a phrase here called the KISS method — keep it simple, stupid,” Ebel says. “We say, ‘Keep it simple, Spectra.’ We try to communicate very short and specific goals and messages for the employees. Most employees would know that we are trying to lead in three areas: safety and reliability, customer responsiveness, and profitability. By the end of 2012, we want to be leading our industry. That has been incredible in terms of focusing employees both in the field and in office positions. I think most CEOs know this, but we sometimes forget. Keep things very simple and have three to five messages and goals that the employees across the entire company can pursue and connect with. That’s a pretty valuable tool.”
Getting your message out to your employees is critical, but that message has to also go out to legislators who regulate your industry in order to create change.
“Most CEOs, no matter what industry you’re in, there is some form of federal government regulation,” Ebel says. “If you’re a public company, it’s the SEC. If you’re a company like Spectra, it’s the Federal Energy Regulatory Commission, which determines how quick your projects get approved, which determines how quick you build them, which determines how quick you take capital and turn it into revenue and serve customers. That’s a huge issue for us.
“Safety is our key license to operate. Particularly in this environment post-BP and oil pipeline spills, all of those often lead to knee-jerk reactions by government. So make sure that you are telling government your story and your safety standard is critical in terms of avoiding unnecessary regulation and there again meeting those goals of safety reliability, customer responsiveness, and profitability.”
Spectra doesn’t just express opinions every so often to legislators, the company has people full-time in Washington D.C. to really make its presence felt.
“We have an office in Washington,” Ebel says. “We have various consultants in Washington and many of us spend time in Washington, not just with politicians, but regulatory bodies too making sure they’re informed about what we do and being an adviser of choice to the government so when they’re thinking about issues they pick up the phone and ask Spectra, ‘What do you think about this?’ And they know they’re going to get relatively unbiased opinions, that they’re going to get constructive views and they’re going to get information that will be helpful for them to make policies. The worst thing is when government makes policies without having all the facts.”
It’s not enough to make a phone call to a politician or write a letter. You have to meet with legislators face to face and treat them like they are another customer.
“You have to go see them,” Ebel says. “You have to spend time with them. You’ve got to try and understand where they are coming from. What political pressures are they under? What public pressures are they under? Regulators are just another form of customer. What are their needs? What are they trying to achieve? How do you help them achieve their goal while at the same time making sure you achieve your goal? Treat the regulators like you treat your customers and try to get win-win solutions. That doesn’t mean you don’t have disagreements, because you have disagreements with customers every once in a while, but making sure you understand what their view point is gets you a lot further down the trail.”
HOW TO REACH: Spectra Energy Corp., (713) 627-5400 or www.spectraenergy.com
- Engage people in your business
- Join associations and groups that have similar interests
- Communicate your company’s message in order to create change
The Ebel File
President and CEO
Spectra Energy Corp.
Born: Ottawa, Canada
Education: He received a BA from York University in Toronto, Canada, and is a graduate of the Advanced Management Program at the Harvard Business School.
What was your very first job, and what did that experience teach you?
My first job as a kid was a paper route. It taught me how to market and how to expand and how to make sure you bring in more revenue. That marketing to customers was a huge part of it.
Who is somebody you admire in business?
I’m fortunate to have an entire board of former CEOs. They have consistently over years provided great advice and between them, they have launched at least 20 CEOs.
What is your definition of success?
From a professional perspective, it’s seeing the families that work for Spectra continue to grow as individuals and be able to achieve their dreams for their families. If we can do that at Spectra safely, consistently and profitably, that’s success.
What is your favorite thing about the energy industry?
It’s constantly changing. I like that and the fact that it serves people quietly and consistently year in and year out.
What’s something that you are excited about for the future of energy?
I’m excited by the fact that North America has an opportunity now to achieve energy independence with a clean abundant fuel that just a few years ago we weren’t sure would be around as a foundational fuel.
Imagine you had a secret power that could calm frazzled colleagues, foster teamwork and help you manage conflict. Not only would this power be versatile, it would also be invisible. To ignite this power, you would merely need to do … nothing.
That’s the power of silence.
The best politicians know all about silence; just watch them being interviewed. Notice how they pause after a difficult question, appear to think about it, and then finally give an answer. That pause makes the audience believe that the politician listens to others and thinks very carefully before responding. As a longtime political consultant, I can assure you that seasoned politicians have been briefed on every possible question and have prepared their answers well in advance. They’re using silence to create a specific effect.
Communication pros, such as salespeople, reporters and trial attorneys, all consider silence to be one of their most effective tools, as I explain in my book, “27 Powers of Persuasion.” Here are six ways silence can help you communicate, negotiate, mediate or persuade. And the power of silence works not only with colleagues but also with your friends and family.
Use silence to build consensus for your idea
If you’re presenting a plan to a group, chances are you already know what some of their objections might be. Rather than blurt out an instant response, take a page from the politician’s book. Listen. Pause for a moment. Then say, “That’s a good point. What if we handle it this way …” When others feel heard, they are much more likely to listen to you in return.
Use silence to get a better answer
Reporters never settle for the first answer they get from an interviewee. If you’re interviewing a potential hire, inquiring about a plan of action or otherwise trying to ascertain reliable information, let the person respond to your question, then wait. Don’t say anything. They will fill in the silence with a more complete answer. If you then murmur something vaguely encouraging — for instance, nod and say, “Hmmm” — they will dig even deeper. Many reporters believe that the third answer is the most revealing and valuable.
Use silence to gain advantage in an argument
When you’re having a disagreement, the natural tendency is to respond to an attack. Instead, nod and say nothing. Ninety percent of the time, the other person will moderate his or her own position.
Use silence to negotiate
Car salesmen do it all the time. You make an offer on a car. He frowns and says nothing. The silence builds. Finally, you can’t stand it any longer and say, “Maybe I could go a little higher.” You’ve just increased your own bid. In any negotiation, the first one to speak after an offer loses.
Use silence to regain control of a conversation
If someone else is dominating a discussion, wait until he or she is done, then pause for a few seconds before you say your piece. Silence always feels longer to the person who has just been speaking, so if you wait, a subtle advantage swings your way.
Use silence to buy time while appearing thoughtful
In the midst of a conversation, you may need a few seconds to think. When that happens, gaze down and take the time you need. Our research has shown that when people look downward, they are perceived to be thoughtful and intelligent. When they gaze upward, they look like they’re searching in the air for answers.
The other side of silence is knowing how to interpret it. In general, don’t assume that the silence is a bad sign and don’t take it personally. There could be many reasons why a room is quiet after your presentation. The audience could be confused or bored, but they could also be completely satisfied. When it happens to me, I like to say, “Judging from the silence, I must have covered this topic brilliantly.” The line always gets a laugh, and sometimes it’s even true.
Chris St. Hilaire is the author (with Lynette Padwa) of “27 Powers of Persuasion: Simple Strategies to Seduce Audiences and Win Allies” (Prentice Hall Press). He is an award-winning message strategist who has developed communications programs for some of the nation’s most powerful corporations, legal teams and politicians.