We’ve all had days where we would rather not open the newspaper, turn on the TV or pick up the phone for the fear of learning about more bad news.
Unfortunately, there have been a lot more of those days for all of us lately.
The stock market is going through extreme ups and downs, capital has dried up, and key customers are cutting back. You start to wonder where the sales are going to come from to enable you to make this quarter’s budget. If things don’t turn around soon, you’ll have to consider drastic cutbacks yourself.
In times like these, what’s a CEO to do? The answer: Get back to basics. Focus on the things you do best and do them as efficiently as you can. Use your strengths to exploit your competitors’ weaknesses and outhustle them.
It’s often the simple things that made you a success in the first place, and it will be the simple things that keep you afloat during the economic storm.
With that in mind, we’ve assembled the best pieces of advice garnered from some of Houston’s top leaders from throughout the year. We think you’ll find some great ideas to help you improve your business within these pages, and we encourage you to keep this issue as an ongoing reference to help you find your way through the trying times that lie ahead.
Shape the future
CEO, Houston Astros
Leaders are teachers. Without an ability to teach, Houston Astros Chairman and CEO Drayton McLane Jr. says you will never get your people to see eye to eye with you, understand your vision for the company and feel the passion you feel for the business.
For McLane, teaching starts with getting his employees involved in shaping the company’s future by posing problems and letting them come up with their own solutions.
“You have to give them free rein,” he says. “This is what enterprise and entrepreneurship is all about — people with new, fresh ideas. Let them feel a part of that, but also let them feel a pride in not just creating it but achieving it.”
But McLane says involvement in shaping the company’s future should also come with a sense of responsibility and accountability. Growth on a personal and companywide level doesn’t generally occur when you arbitrarily throw stuff against a wall to see what sticks, so employees given the opportunity to create must be given parameters and then held accountable for staying within those parameters.
The parameters should fall in line with what you want to accomplish as a business.
“In a large business where you have a number of people working for you, you have to identify what your objective is and what you want to accomplish,” he says. “Is it products; is it services? You have to identify the objective, what it is you want to do and what it is you want to produce. Then you have to sell people on the goal, what it is you want to achieve. Then the last part is the toughest word in the English language, and that’s ‘accountability.’”
Grow the right way
CEO, Energy Alloys LLC
You never want to put your business in a position where it can’t deliver on the promises you make. Dave Warren says that is the essential reason why the people within a business need to know the company’s capabilities and how management wants them to employ those capabilities to serve customers.
At Energy Alloys LLC, Warren, president and CEO, uses the interaction his employees have with customers to paint a picture of how the market is changing. Warren takes note of the services his customers want from their customers and develops a strategy based on that chain of demand.
“Our service company customers are under more and more pressure from their customers to deliver enhanced technology or service capabilities,” he says. “So we want to continue to develop and grow the business, and the only way to do that is to listen to our customers and react and respond to the things we hear from them that fit our core competencies or skill sets.”
For instance, Warren says that as his customers have grown internationally, they have needed faster supply service for materials and more responsive service. Based on what his eyes and ears in the field were telling him, he decided to take what Energy Alloys was already providing and build on it.
“Especially internationally, we developed additional internal competencies that let us be more responsive, let us control capacities service to the customer and meet his needs with faster turnaround times, faster delivery,” he says. “So we took something we were already doing and kind of built on that experience.”
Coach your company
president, Ranger Steel Services LP
To Ron Whitley, president of Ranger Steel Services LP, a company is kind of like a football team. During the season, the captains of the offense and defense might not go to the movies or to restaurants together, but when the time comes to strap on their helmets and play, they all have to realize they’re part of a team. Each has a job to do if the team is to find the win column.
Though your office might seem light years away from the gridiron, Whitley says the basic principles of teamwork and communication remain the same — and that includes you in the role of head coach.
Whitley says a good coach doesn’t just bark orders. He enables his team to learn by figuring things out for themselves. You need to be able to communicate, and perhaps the most important part of communicating is listening before you speak.
“Sometimes, I don’t have all the answers,” he says. “I don’t pretend to be the brightest leader here, but I think I do quite a respectable job of it. If I don’t know about something, I ask people what they think we should do and listen to what they have to say.
“Listening is a very important part of being a leader. You have to lead by example, and if you say you’re going to do something, again, you’d better follow through and do it.”
A coach has to keep dozens of players and assistant coaches on the same page, in much the same way you have to keep employees in different departments and locations focused on the company’s overarching goals. That means your communication must be frequent and consistent.
“Any information that needs to go lower down than management, such as market information, customer information or anything that would affect sales is immediately passed down through the company, whether it be in formal meetings or e-mails,” Whitley says. “Everybody here is well informed, because the days of telling people things on a need-to-know basis are long gone.”
Keeping employees who might not regularly interact with each other focused on common goals is one of your biggest challenges as a leader. But it can also be one of your greatest accomplishments when you see your people achieve their goals.
“[The people at a company] have to work together and jell together,” he says. “They might not all go out to dinner or lunch with each other, but at work, they need to develop into a true team.”
Theodore Carpenter Jr.
CEO, SelectCare of Texas LLC
When it comes to communication, you are only going to get out of your employees what you give them. If you want to build a culture that empowers employees to communicate with you, the first thing you must give them is a good example.
Theodore Carpenter Jr., president and CEO of SelectCare of Texas LLC, says it takes a willingness to look at yourself as a communicator, your own strengths and weaknesses, and ways you can improve.
“It starts at the top,” he says. “It starts with how I act with my management team and how I embrace both good news and bad news. My focus is on improvement, and then that sets the standard, and that’s replicated throughout the organization.”
From your office, communication will generally cascade downward, meaning your senior managers’ ability to fine-tune their communication skills is every bit as important as your ability to fine-tune yours.
Much can get lost in translation if you and your managers aren’t communicating the same things, so Carpenter says it’s important to stay in frequent contact with the people who head your departments — not just on the business matters of the day but on how those matters are being relayed to those lower in the organization.
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When your business needs temporary staffing help, you may look in the phone book or online for a staffing company or call a business colleague for a recommendation or two. But once you get the staffing provider on the phone, how do you know if the agency is right for your business? Before you pick a staffing provider, remember that filling positions fast is not a magic pill to solving your staffing problems.
“The reality is that all staffing companies draw from the same pool of talent; no one has the monopoly on recruiting,” says Ray Culver, Regional Vice President for the Southeast region for Talent Tree, Inc. of Houston. “Better to base a decision on what the staffing company does to ensure a quality fit for your organization than one that promises to fill every job with a warm body.”
Smart Business spoke with Culver about what you should look for when selecting a temporary staffing agency and some red flags to avoid.
What can happen when a business picks a temporary staffing agency that is not a right fit?
A business simply won’t get what it needs in terms of staffing. Jobs won’t get done, and turnover will increase or remain the same. A staffing provider that only cares about filling slots but not necessarily filling it with the right candidate for a particular business culture is not a provider that is listening to its clients.
How can business owners know if a staffing company is more interested in placing the right person rather than just a ‘warm body’?
You will know if this is the provider’s goal because you will not only talk to the outside salespeople at the staffing firm, but you will talk to or even meet the inside team the people who do the actual recruiting. A member of this team should actually come into your office space to get to know your business, even if just for one meeting. These are the people who need to get a feel for the culture of your company so they can send you the right talent.
Another conversation that needs to happen between the staffing provider and client is identifying the client’s ‘pain’ surrounding staffing issues. It could be, for example, that turnover is high and that is why there is a need for temporary help. The staffing company ought to ask the business why that is happening, and if it doesn’t know, then lead the discussion in discovering why; it could be internal management, pay rate or a host of other reasons. A truly consultative staffing provider helps to dig in to what is hurting the company and works to help ease that pain.
What are some red flags to look out for when selecting a staffing provider?
- If the provider is not honest. There
will always be problems and times when
a provider can’t find good candidates.
But a good staffing provider should always keep you in the loop about what is happening. This honesty needs to go both ways.
- If the provider fails to offer solutions to deeper staffing problems. Don’t pick a staffing company that throws people at a client to see who sticks. This wastes time and money. The provider needs to take the time upfront to get to know your needs and the company’s culture.
- If the provider is not reachable. The level of customer service needs to be extremely high for temporary service personnel, because, frankly, if one does-n’t work out, there are 15 other ones waiting in the wings. If you are not being treated like you’re the only client, even if you are a small client, if the provider is not returning phone calls, not responsive to needs and not taking an active approach to sending the best people, that is a huge red flag; it’s time to look for a new staffing provider that is a better fit.
What are the benefits of having the right fit?
If you have the right fit, it will make your job easier. That staffing provider acts as an extension of your HR department. If you have the right staffing provider, the ‘pain’ your business feels, in terms of staffing issues, should subside and your business should run smoother. Whatever your ultimate goal is to increase production, phase out departments or any other goal using a temporary staffing provider should mean your business ought to be moving in that direction.
Born: Birmingham, Ala.
Education: Business degree, Southwest Texas State University (now Texas State University San Marcos)
History: Ranger Steel Services LP was founded in 1958 by Whitley’s father, Roy. Whitley worked at his father’s company during the summers while still in school, and his first full-time job at Ranger was as a warehouse worker beginning in 1971. He was named president of the company in 1984.
What is the best business lesson you’ve learned?
Don’t be afraid to make a decision. I could relate several instances throughout the years where I hesitated, and it ended up costing me money. Age and time has taught me that lesson. I tell my top management people to make a decision, and when you make a decision, make the best decision you can make. Make sure the decision won’t put us out of business or do detrimental harm to the business, but if it’s still a wrong decision, we’ll move on from there and make others. Nobody will be chastised because they made a bad decision. I’ve made a lot of bad decisions in my role, too.
What traits or skills are essential for a business leader?
Stay plugged in to your industry. You have to have people skills; you have to listen. Don’t distance yourself as a lot of top people do. Stay plugged in to the industry. We’re a midsize company, so I find I’m better off if I learn a lot of this stuff directly from customers instead of reading it in reports. I like unfiltered information.
What universal truths have you learned about leadership?
Have integrity, be fair and be honest.
What is your definition of success?
To have a successful company with a successful group of people. I was the architect here, but this company has been successful because you had a lot of people who built the place. There are a lot of people who have made this company successful, and you can’t forget about those people. So success to me is to have a successful company you can be proud of, to be proud when you mention to other people that you work there.
In today’s cloudy economic climate business owners still need the opportunity to borrow money to either start their company, expand their current business or make those necessary improvements. However, as the job market continues to shrink and companies across the country continue to tighten their belts, are banks still willing to lend money to business owners in need?
“Houston is a bit of an anomaly compared to the rest of the country in terms of having a stable economy,” says Cecil Arnim, senior vice president and business banking market manager for Wells Fargo in Houston. “Commercial banks are certainly doing more in-depth analysis than before and more stress testing of repayment scenarios.”
Smart Business talked to Arnim to better understand commercial lending from the bank’s perspective.
What does a bank look at when considering whether to provide a commercial loan?
When we look at a commercial client one of the overriding business factors is the equity investment the client is making. That customer looks at a rate of return anywhere from 15 to 20 percent at a minimum in order to invest. In order to achieve that return, the customer will have to be patient as it may take from one to two years for the investment to bear that kind of fruit.
In commercial lending, on my best day, I may have a spread of 3 percent, and that, by definition, makes me risk averse. If the relationship requires extra work or analysis, if you start looking at allocating salary and man hours, a 3 percent spread may drop to 1 percent very quickly. So I may not be making as much on that deal over the long term.
What we are trying to get across to our customers is that because our commercial lending spreads are so razor thin, typically that’s why we require a lot of financial information so that we can fully analyze that company and its ability to repay the loan. By the same token, because we are fully informed, debt always tends to be cheaper than equity. If I want equity investors I’ve got to pay them over time between 15 and 20 percent or more. On the amount I borrowed from my bank I may be paying prime plus one, which could be 6 or 7 percent. The debt costs less but I have a very definitive repayment schedule and I have to continue to deliver updated financial information to the lending institution.
A second point every client needs to understand is that banks can only provide service as well as the client allows it to provide. If a client provides me with updated financial information when it is expected to do so by virtue of the loan documents then we have a good idea of where that company stands. So when it has that emergency expense and comes to us for help we can move that much quicker because we have the updated information.
With such a thin spread, what is the incentive for a bank to provide a commercial loan?
A banking relationship is more than just lending money. It’s the deposit side, the treasury and cash management; it’s all of the other products and services we provide. Typically the client will have the greatest need on the lending side, whether it’s short-term working capital needs or maybe a client that’s been renting warehouse space and is considering taking the plunge and buying a building. Individuals with a strong capital structure and the ability to repay benefit by being able to borrow from a commercial bank at much cheaper rates than those who have to go out and find investors or pay the full price themselves. Is a company better off financing 70 to 80 percent of a building at 6 percent when for that same investment it could have invested in an alternative business that paid greater than 6 percent?
What red flags do banks look for?
A client with a fair amount of debt on the books that is greater than the amount of equity is one red flag. Small-to medium-sized businesses are usually leveraged from one to two times but once you start getting more than three times the equity we start having greater concerns.
Another red flag is when a company takes a long time to provide financial information or keeps making excuses for the delays. Finally, companies that are always changing CPAs is a great concern. Is it a matter of them firing the CPAs or do the CPAs fire them? Either way is not good.
CECIL ARNIM is senior vice president and business banking market manager for Wells Fargo in Houston. Reach him at (832) 251-5505 or Cecil.H.Arnim@wellsfargo.com.
Janet Caylor wants to see Merrill Lynch & Co. Inc. out in the community. She wants to see the company’s name, its people and its services in front of thousands and thousands of potential customers in the Houston area each day.
That’s a big reason why Caylor, the regional managing director for Merrill Lynch in Houston, has helped spur a number of initiatives aimed at connecting her wing of the company to the community it serves.
Since arriving in Houston about three years ago, Caylor — a 30-year employee of Merrill Lynch, which was recently acquired by Bank of America — has created a company culture that values volunteerism, acknowledges racial and ethnic diversity, and encourages feedback from all groups within the community.
In part, it’s a branding strategy. But under Caylor, the stated goal of raising the profile of the Merrill Lynch name in the Houston community isn’t solely to drum up business. It’s to become a key player in improving the community and creating relationships that will benefit both Merrill Lynch and the surrounding community. Through those relationships, Caylor and her leadership team have built the presence of Merrill Lynch in the community and developed loyal customers.
“First and foremost, I felt it would be a branding strategy to give back to the community,” she says. “Rather than looking at it from the standpoint of how do we gain business and market share, it was really from the standpoint of how do we add value and quality to this community.”
Philanthropy and community causes are noble endeavors for any business in any situation. However, Caylor says you are missing out on opportunity if you don’t take the relationship seeds planted by community involvement and use them to build long-term relationships that can ultimately help strengthen both your business and the area your business calls home.
This is how Caylor has strengthened Merrill Lynch by making it a positive force in the Houston area, where the company earned approximately $446 million in revenue in 2007.
Identify touch points
After Caylor became the leader of the Houston office, she and her senior leadership team prepared a questionnaire and distributed it to all the Merrill Lynch employees in the area.
Through the questionnaire, Caylor and her team sought answers to the question, “How can we better connect Merrill Lynch to the communities we serve?”
Employees were asked where they volunteered their time, on which boards they served and where they wanted to see the company move in terms of staying connected to Greater Houston.
“The answers came back around children, education, helping the disadvantaged and reaching out to all of the ethnic groups in the area,” Caylor says. “We kind of gathered this information, and then in our 11 offices in the Houston area, people were nominated to step up and make some connections with these groups in the area. We created a process for new opportunities to get involved, so that every employee got to do that on a regular basis.”
Through the questionnaire and feedback, Merrill Lynch began developing what Caylor calls “touch points” within the community — organizations through which Merrill Lynch could strengthen its connection to its community and potential customers. In 2008, the company had 35 such touch points throughout the Houston area, including business, civic, philanthropic and arts organizations.
After identifying the ways in which to best connect to the community, Caylor and her leadership team began formulating ways to make it happen. She says she wanted to bring together representatives from the various departments within Merrill Lynch as part of a community involvement group, which was charged with developing a single, uniform way of integrating the company into the Houston community. She calls it “delivering one firm.”
“There is a weaving together that needs to take place, and we’re doing it by bringing all of our business units together on our community involvement group,” she says. “We have a lot of services offered here in Houston. The trust company is here, private banking our investment bankers, and what we have done is create a council to deliver one firm. We are one of the early marketplaces to have done this, and we have senior leadership representatives from each of those business groups who meet and talk about how we effectively [connect with and serve the community], how we bring our intellectual capital to bear in the Houston area.”
The community involvement group now meets monthly and helps organize events attended by Merrill Lynch employees, clients and community leaders, including a distinguished speaker series and a campaign to assist philanthropic organizations.
Caylor has also tried to take her community-oriented mindset to the Merrill Lynch organization at large through her communications with peers and superiors around the country.
“We have gotten together with a lot of collaboration and have done it at the divisional level and have had dialogue across all the touch points of Merrill Lynch,” Caylor says. “I just returned from a leadership meeting for women sponsored by our general counsel. We had representatives from our chief financial office, from human resources, regional directors around the country, national sales managers, talking about a number of issues, including this concept of delivering everything we can bring to bear to the cities that we live and work in.”
Inspiring other managers is a major key to spreading the idea nationwide. A philosophy of community involvement and community connection won’t survive in a business unless the leader sets the example from the front.
“Lead from the front, but do it with heart and passion,” she says. “Engage your people. You can do it broadly, as we did through questionnaires, but organize people who really care and do it from a giving back standpoint, not a getting more business standpoint. I have been confident from the day we began that business will flow. That’s not what this is about. This is about truly adding value to your community, to all of the citizens.”
As with any other process in a business, you need a way to measure how community involvement is affecting your company, then you need a means by which to adjust and refine your strategy.
Caylor says it’s nothing you haven’t heard before. “You set up a process, as you would run a business,” she says. “You set up your goals, your tactical game plan, you’re going to review your commitments and make sure that you have regular touch points. Longer term, you want to review business results.”
Caylor says some business leaders make the mistake of immediately evaluating every strategy in terms of its bottom-line impact on their companies. But when developing relationships with the many potential customers in your community, you must have a longer-term view of the results.
“This is a key point: Because we didn’t approach this from a standpoint of return on equity — and I think some leaders might do that — we had a longer-term time on the horizon and weren’t expecting business or employees to come in one month or six months or even a year,” she says. “We were expecting that there would be benefits down the line. We are now two and half years into this and are now starting to be able to quantify the results.”
Caylor and her senior managers have set up semiannual meetings to review the action taken in the previous six months. The initiatives undertaken are analyzed to gauge their impact on both Merrill Lynch employees and the community.
Caylor also holds bimonthly meetings with the community involvement group, and those include members of the company’s diversity marketing team.
“They participate, and we’ve just built a system around it,” she says. “We’re evaluating, we’re measuring, we’re changing course, and we push out information and create venues for all employees to give us feedback. Through that, we’re really able to modify, change and improve on what we set out to do.”
Stay on the message
Caylor has to keep her message of community involvement in front of about 1,000 employees and 11 offices in the Houston area. The most effective way to do that is by getting out among your employees and engaging them in person. But when dealing with the mathematical realities of 1,000 employees, 24 hours in a day and seven days in a week, face-to-face reinforcement becomes more than a little problematic.
While the message needs to start with you, Caylor says you can’t be the only force driving a wide-ranging community-centered philosophy throughout your company. You need help to drive the message, and sometimes, the most powerful teaching tools are your employees’ own peers.
“I find that the more we’re able to surround our employees with examples of things their peers have done, with opportunities for them to replicate that, there are some pretty important success stories that come out of that,” Caylor says.
Caylor uses Merrill Lynch’s worldwide communication network to broadcast community involvement success stories throughout and beyond the Houston area. By quickly disseminating stories about their peers, Caylor tries to create a conversation-starter, whether it be in meetings or banter around the watercooler. The most effective way to make the message of building relationships and community involvement relevant is to get people talking about it.
“We have a broad distribution list, we can touch everyone in a matter of seconds via internal communications, and we have regularly scheduled meetings throughout all of our offices,” she says. “We have multiple touch points, and I’ve found it to be very effective. Every partner at Merrill Lynch, every employee, can now talk about the vision of being an essential partner, the vision of being a responsible citizen and vision of being one seamless firm.”
Your company’s vision for the future has to come from the top, and you have to communicate that tirelessly. But the energy that will turn that vision into reality will come from your employees. Caylor says inspiring your employees to follow you — and making sure that inspiration does not wane — is one of your most important jobs as long as you occupy your company’s top perch.
“There is a quote, and it’s also a book title, ‘From success to significance,’” Caylor says. “I know so many people feel that way. You have to organize your vision with a smaller group of people, engage your people, follow up and follow through again. Do not treat this as a flyby. Make the commitment to be there again and again, year after year.
“It takes a lot of energy, a lot of time and a lot of commitment, and you just have to know that going in upfront. The benefits to your organization will come down the line — and they will come. But you first have to be willing to put your heart and soul into it.”
HOW TO REACH: Merrill Lynch & Co. Inc., www.merrilllynch.com
As the Latino demographics in the United States continue to change, so does the concentration of Latino-owned businesses. Houston is a global market and this is also true of the international Latino population. We have a large concentration of Mexican origin, but the landscape for Latinos is broad here in Houston; Latinos here have come from all over Latin America and South America.
“You have Latino owners and then you have some businesses that have diversified ownership,” says Herman Rodriguez, vice president and senior business relationship manager at Wells Fargo Bank in Houston. “It can really be diversified and there’s a lot of assimilation that has come through in the past decade.”
Smart Business talked to Rodriguez about how the landscape of Latino-owned businesses has changed in the last 10 years.
With an increase in the Hispanic population in the U.S., how has Latino ownership changed?
I do know that the Hispanic population in Harris County became a majority in 2007 and I believe that Latino ownership has grown because of those numbers. However, I think that the way it’s changed is that there are a lot of businesses now that are partnered or intermingled with other nationalities. With assimilation has also come an understanding of the business systems in the United States. We have major players that understand how banking, marketing and management contribute to growth and profit.
Growing up in the majority Latino town of Robstown, Texas, a city outside of Corpus Christi, I learned and observed the way business was done. I feel there has been a lot of adaptation by Latino owners to the ways the U.S. market.
What are some of the similarities and differences between working with Latino owners and non-Latino owners?
Similarly, its nice to have a common ground. Whether you’re both Aggies, or you’re both Latinos, either way you have a brethren and a common ground. However, when working with Latinos, you have to take culture, including the language barrier and the level of assimilation, into account because you have some owners who have been in the country for a couple of years and you have others that have been here for generations. The biggest misconception is that all Latinos are recent immigrants. I speak fluent Spanish because it was my first language. My parents not only made me take it in college for reinforcement, but we spent time in Monterrey with my family in the summer to keep my grasp.
Is it easier when you gain that knowledge firsthand?
I think having the exposure to my Mexican culture and Spanish language is a definite advantage. The language by far has exposed me to so many stories in my nine years here in Houston. I know a number of situations due to my ability to communicate in Spanish. This exposure gives me an understanding and a way to not only relate, but to help our clients. Most often, I find common ground with similar experiences and struggles. Latinos who speak fluent Spanish usually prefer to speak in their native tongue, especially when doing business. Formal Spanish is different than Spanish spoken in Mexico or by Mexican-Americans in the United States. And in Houston we are communicating with Salvadorians, Nicaraguans, Puerto Ricans, Cubans, Dominican Republicans; all of those nations are represented and all of the dialects may be similar and different at the same time. If I speak Spanish, they don’t need a translator and they are hearing their questions answered in their own language so they are able to understand it better. Clients form bonds with their bankers regardless of language, and that is completely encouraged. If you do not have a bond or sense of trust with your banker, I encourage you to find it.
What effect does NAFTA have on relations with Latino clients?
I think NAFTA had a large impact on doing business in the US, period. It has positive and negative aspects, which I do not have the expertise to define. I will say though that in my personal opinion, it has put a welcome mat on America’s front door that says ‘We want to do business with you,’ to Latin American countries. NAFTA opened a new chapter in getting closer to a free enterprise system.
What kind of future do you see for Latino business owners?
Latino-owned businesses, especially those that deal regionally in Texas, are at an advantage because they understand their consumer. Texas has seen a big influx of Latinos, as has California, and to do business in Texas without consideration or a level of understanding would not be beneficial.
HERMAN RODRIGUEZ is a vice president and senior business relationship manager at Wells Fargo Bank. Reach him at (281) 587-3021 or Herman.Rodriguez@wellsfargo.com.
In Bruce Vincent’s business, finding oil and gas beneath the Earth’s surface can be hard. But finding the next wave of talented employees flying beneath the radar can be even harder.
The president of the $650 million Swift Energy Co. says human capital is the most important resource in his business today, but it’s a resource with notoriously cyclical availability, as difficult as crude oil to discover, refine and maintain.
“The industry has age gaps in it, and some of that relates to the cycles the industry has gone through,” Vincent says. “If you go back to the ’60s, the industry wasn’t doing particularly well, and we didn’t have a lot of people going to engineering and geology schools to come into the oil and gas industry. But 1973 is when the embargo came and you had a significant influx of people.
“But when you moved into the mid-’80s and into the ’90s, the industry went through a long down cycle, you saw school attendance decline, and some schools even shut down. So the industry has an age gap particularly from the mid-30s to mid-40s. But we’re now getting an influx of young people in the business again.”
With large age gaps in the oil and gas business, it can be difficult to build and sustain a successful company culture. In order to rally everyone around a single set of objectives and core values, Vincent needs to not only overcome the natural gaps that exist between different locations, disciplines and departments but overcome age gaps, as well.
Vincent says getting the right talent in the door and in the right positions is a critical first step. But if you can’t get those talented employees aimed in the same direction and following the same set of values, it will make the task of moving your company ahead much more difficult.
Start with a vision
The first step toward a unified team is having a clear vision. The leaders at Swift have seven core values around which they try to focus the entire company: stewardship, continuous improvement, high performance, integrity, passion, trust and teamwork.
Those qualities are valued by just about every company, but you can’t assume that your employees are going to reflexively embrace those values — or any values you emphasize — from the first day they set foot in the office.
Vincent says you have to treat your vision for your company’s future as the foundation, then build on top of it.
“You really start with your vision,” he says. “You have to create a vision that people can see and understand. It has to be kind of short, sweet and to the point, but allows them to envision what the future is going to be like at the company. Then, you have to establish a mission statement that articulates where you are going, how you are going to get there, what are the key components of the mission. Beyond that, you have to establish a culture within the organization that really cements a set of values within the culture and how people work together.”
Defining the vision, mission and values begins as a top-down process that requires consistent communication from management. However, at Swift Energy, Vincent says his method isn’t to simply give orders from the top, it’s to involve employees in shaping the future of the company.
“As you establish the mission and the vision, you don’t just dictate it, you involve people in the process so that they understand what the values are, they believe in the values, but more importantly, they are part of identifying the behaviors we want to have practiced in that environment.”
In an effort to get employees interested and involved in shaping and refining the vision and mission, Vincent and other leaders at Swift Energy communicate with them in multiple ways. Casting the widest possible communication net allows you to appeal to the widest possible audience.
“Management has to take the first cut at it, but ultimately, you need to involve everybody, and you do that through large company meetings, smaller group workshops, digital communication, e-mail and the like as you get feedback from people,” Vincent says.
But the communication doesn’t stop at the conference table or computer terminal. Once the mission, vision and core values are out there, they need constant maintenance from management.
Create an emotional bond
Vincent frequently says he wants his employees to “live and breathe” the Swift Energy culture, and they won’t do that if management doesn’t set the example.
Every time you interact with peers and subordinates, it’s an opportunity to build up or break down your culture.
“Living and breathing a culture really means that in all your interactions with your peers you’re practicing these values,” he says. “Leadership can establish values in a company, but you can’t enforce that. How you make that work is not through an enforcement mechanism, but it’s living and breathing it.
“For example, if trust is important to you as a core value, you’re always telling the truth and making sure that your behavior reflects your words. The thing I always tell people is to go with the behavior, not the words, because people can say lots of things but their behavior tells you what they’re really thinking. You want to promote transparency.
“Another part of it is calling each other out when we’re not practicing those values. I’ve made it clear to people that if I’m not practicing our core values, you tell me and let me know. If I’m not practicing the values and they didn’t call me out, I’d quite frankly be disappointed in them.”
Enabling employees to take charge of their part of the company is an element in creating what Vincent calls “emotional ownership.” He says it’s a form of ownership that is entirely separate from monetary ownership and, in some ways, more important to the long-term health of your company.
“Ownership is a hard thing to do, but if you have ownership from the heart and not from the wallet, you’re going to have a higher-performing company,” Vincent says. “Every single one of our employees is a shareholder, so we think that’s important. But creating emotional ownership is the greater challenge, and you have to do that through the culture of the company.
“It would be easy to start a company, hire the people and give them all equity so that they’re all shareholders. But they wouldn’t, at least in the beginning, feel like they’re real owners of the company. It takes time to cement that (emotional ownership) in place so that people are living it and breathing it. But you need constant reinforcement. It has to be clearly practiced from the top down, and you have to communicate it all the time so that people believe it’s real.”
Measure your progress
Swift Energy performs an annual cultural survey aimed at measuring how effectively employees are internalizing and passing along the company culture. Over time, trends develop, and Vincent is able to see both areas of success and areas in which improvement is needed with regard to bringing employees on board with the vision, mission and core values.
“The survey is designed to get feedback from our employees on what kind of an organization we are,” he says. “Over time, you see trends develop. One of the things I’ve always been particularly proud of is that one of the things that gets rated at or near the top every year is the values of the company. The other thing that gets rated at or near the top is safety. So two of the things we talk about, that we believe are important, you are seeing evidenced in feedback from employees.”
But feedback can’t stop with an annual survey, no matter how enlightening it is. Vincent also emphasizes taking the pulse of the culture through day-to-day interaction with employees.
“Day to day, there is not a formal process, and I don’t think you want a formal process,” he says. “The process is more informal in the sense that we rely on each other to hold each other accountable for our values.”
Setting the standard for accountability starts with senior management. Vincent says you and your direct reports need to show the rest of the company that you are willing to work as a team to promote the values of the company.
“We expect people to perform as a team every day,” he says. “We have to constantly make that an important issue for us — something we practice at the top. You can’t have divisiveness in the highest ranks of the company without expecting that divisiveness to be rampant throughout the organization. If your senior-level leadership is working as a team, if they’re transparent and open to each other, if they’re not building silos or fiefdoms, that is going to ripple through the organization.”
Focus on the big picture
Vincent says every business leader should have one overarching goal when it comes to building a culture and core values: If you left your company tomorrow, it would stay on the course you set.
Human nature is often slanted toward small-picture thinking. People are concerned with the job on the desk in front of them, how their direct bosses are treating them and how their direct reports are performing. But in order to have a big-picture company, you need to have people who realize that a company and its culture are greater than the sum of their parts.
“None of us are so important that the company couldn’t go on without us if we left one day,” Vincent says. “That’s why you have to cement it in everybody’s minds and hearts, this idea of a company being greater than the sum of the parts. Once that is solidified, then whoever is at the top could leave tomorrow for whatever reason, and the people in the company are going to continue to live those values because it became a part of them.”
You must eradicate small-picture arguments before they can escalate. Vincent says disagreements largely develop within a company because someone isn’t practicing the company’s values. When that happens, there are usually only two potential solutions.
“That’s one of the challenges leadership has in any organization, you have personality conflicts or legitimate different points of view,” he says. “We see that played out every day in politics. Ultimately, it comes down to living the values that you’re talking about, because when you get into those disputes, it often results from someone not practicing those values. You have to get in the middle of it and get them to work together, or sometimes, someone has to go.
“Our attitude at Swift is, we’re not going to tell you that you have to live these values. But we’re going to tell you that if you don’t want to live these values, you should probably find another place to work. That doesn’t mean that you go fire somebody, but you make it clear that if you’re going to work here, we expect you to live these values.
“You want people to know that if we all share this vision, this mission and we all live these values, we will be a much higher-performing company, and that’s what we’re trying to accomplish.”
HOW TO REACH: Swift Energy, www.swiftenergy.com
Businesses in the Midwest didn’t expect the floods. Others didn’t know a tornado was going to hit them. Companies don’t know when hackers are going to get into their database. The company in Florida didn’t expect its former employee would wipe its hard drives clean before she left (and it didn’t have a backup).
“It is not a matter of if, but when,” says Bill Douglas, a Certified Business Continuity Planner (CBCP) and Program Director for Houston-based DYONYX. “Two out of five businesses without a continuity plan never come back from a disaster. One in five go away within five years. Those that have a plan have the tools to survive. The first place to start with a continuity plan is with a Business Impact Analysis (BIA).”
Smart Business asked Douglas for his input on the need for and development of a BIA.
What is a BIA, and why is it important?
The BIA is the first step in any recovery plan. You need to know the critical processes and what it is going take to keep them going. The BIA is a procedure that helps you prioritize the importance of every one of your business processes in each of your business units. Unless you analyze each process and its importance to the company, you may be spinning your wheels on things that are not cost-effective.
You need to divide all of the processes into one of three categories: mission critical, business sensitive and business tolerant. Mission critical are those processes that your business can’t operate without. Answering the phone or access to customer records may be two examples. Business sensitive are those processes that are needed but may be able to be delayed for a short time until the critical things are handled. Business tolerant are those processes that make someone’s job easier. That might be certain spreadsheets that are used from time to time and can be recreated once everything else is up and running.
What is the process in developing a BIA?
Start with each department and find out what its critical processes are. You know your applications; build questionnaires to identify which of the three they are. Drill down to how necessary they are. Talk with business managers and IT managers to determine what would happen to the business if each of the applications went away.A full BIA takes time and money. Is there a way to shorten the process?
Typically, a full BIA takes a minimum of two to three weeks to analyze business work-flow practices, depending on the size of the business. It is important to involve both business managers and IT managers. The business units know what would happen if each application was not available. IT knows what resources are available and what would have to be replicated at alternate locations. If you work with both IT and business at the same time, you can more quickly get the whole picture. Time is money. You may find that some of your applications are not needed. It is possible that you could save upfront by eliminating applications or processes that bring no value.
If all my systems are designed to be fault tolerant, why do I even need a recovery plan?
Fault tolerant means that the system is always available. If some portion of your system becomes contaminated, you need to find, isolate and recover. You need a plan in place to be able to keep part of the system going while the source of the problem is handled. Things may be going very well, but what are you going to do if the whole building or data center disappears or is inaccessible for a period of time? Since Sept. 11, it is easier to recognize that ‘the smoking hole’ can happen to anyone.
How do I know if I am paying too much or too little for recovery?
Business recovery is insurance. Like everything else there is some price you are willing to pay. Looking at impacts over time you have to determine what is essential. Can you get by for a day, a week, or a month? Looking at cost over time you can view different solutions and the internal impact. You have to consider the return on the investment. You hope you never have a disaster, but what if you do? What is critical? Maintaining customer contact may be most critical. If customers can contact you and receive assurance that you’re going to be back online and within a reasonable time frame, there is a much higher likelihood they will wait.
BILL DOUGLAS, CBCP, is Program Director at DYONYX. Reach him at (713) 293-6314 or email@example.com.
A picture may be worth a thousand words, but Chris Hudson would much rather hear the thousand words.
“If you have a story that illustrates the point, they’ll remember the story far longer than they will remember the picture of a nice building you showed them,” Hudson says.
And Hudson, president and CEO of Morris Architects, doesn’t want any of his employees to be at a loss for words when they are asked a question about the firm.
“I explain to everyone the damage that, that kind of response would do is immeasurable,” Hudson says. “Shame on us if we haven’t explained it to them well enough for them to understand.”
By committing his 215 employees to becoming good listeners and, as a result, always having good answers, Morris Architects achieved 2007 revenue of $48.8 million.
Smart Business spoke with Hudson about how to listen and the role stories play in the growth of a business.
Q. What is the key to being a good listener?
There is a difference between what someone tells you and what they are really telling you. I try to look for an understanding of what is the person saying.
Where are they coming from? Why are they saying it? That gives me the ability to not only see through things but help understand what people are really trying to communicate to me.
I don’t immediately jump to a conclusion. I don’t just immediately assume that someone is telling me the whole story.
I usually assume they are just telling me the side of the story that they want me to hear, and then I probe a little bit more and try to help them. ‘If you were in the other person’s shoes, would that make sense to you?’ Try to interact in the conversation.
I try to take the same technique that I’m speaking of and say, ‘Well, Joe, if you were in Susan’s shoes, do you see why she might be challenging you on this?’ Literally walk someone through. Ask a lot of questions.
I try not to approach a discussion by just immediately saying, ‘Nope, you’re wrong. This is what you need to do. Let’s move on.’ If I think it’s a situation that requires some thoughtful discussion, I use a lot of questions.
Q.Why is listening so important?
Many times, people come to the leader of a company and they are talking about one issue, but they are not revealing the underlying source of a concern. When someone is nearing the end of a project and has anxiety about, ‘What am I going to work on next; what am I going to do?’ it will manifest itself in odd ways.
Someone will start talking about how the copier isn’t good enough or they need a different computer.
It will come up in some way that they are pointing out an issue or problem in the firm when the real issue is they are nervous about what their next assignment is going to be. An important trait of any leader is to be able to see through the real issue, and not ignore the superficial issue, but understand what is causing that.
Q. How can you unearth underlying concerns?
We have a monthly meeting with all of our staff to get everyone on a videoconference from all the offices. We ask people who are involved in our different market sectors to talk about the new work they are pursuing or work that we have been awarded.
That level of communication addresses a fundamental issue, which is, ‘Do we have work coming in and what is it, and does it sound like something I want to do?’
What we do is I turn the mic to people in each one of our offices; I say, ‘Jim, give us an update on what your studio is doing in Orlando. Dan in California, what are you guys working on?’
It’s effective when it’s not just the president of a firm but many voices are communicating. That’s really important for companies to have multiple voices communicating single messages of what’s going on.
Q. How do you get buy-in?
The buy-in starts by the asking. Every time we do a new strategic plan or update our strategic plan, we conduct internal surveys.
We invite people at many different levels to participate. We try to get a number of voices that contributed to the effort so that they are not feeling left out and not part of the process.
You build a plan that’s communicated well by first asking people what’s on their mind, what’s their pulse, what’s their sense of the market? What’s going on in their part of the business or part of your organization?
As it emerges, it may not be exactly what everyone wants to do because it can’t meet all needs, but at least they felt like their voice has been heard and that they’ve had an opportunity to help shape it.
HOW TO REACH: Morris Architects, (713) 622-1180 or www.morrisarchitects.com