Born: DeWitt, Ark.
Education: Masters of accounting degree from Rice University
What was your first job, and what did you learn from it?
My very first job was stacking bottles in a grocery store, back in the old days when you had to return your bottles. I was in charge of that room, keeping it clean and doing inventory of our returned bottles. What I learned from it was that I had a responsibility and they relied on me to do it and so I needed to show up and get my job done.
Whom do you admire most and why?
Probably that would be my father. Two things: He always did the right thing. Whatever he thought the right thing to do was, that was his guiding post. And secondly, he succeeded through lots and lots of hard work. So doing the right thing and working hard were his keys to success.
What’s your definition of success?
Improving the lives of the people that you touch.
What’s the best advice you’ve ever received?
Some of the best advice that I’ve ever got, from a business standpoint, is that it’s hard to talk to somebody who’s frowning.
Your workday is off to a bad start. How do you turn it around?
I shut down for 10 minutes and read the paper and restart.
If you weren’t in your current position, what might you be doing instead?
I would probably be a teacher.
Other positions: Also serves as president, CEO and director of Exterran GP LLC; the managing general partner of Exterran Partners LP; a director of Copano Energy LLC; and a director of Anchor Drilling Fluids Inc.
As a financial adviser, Bob Johnson learned that caring for clients could make the difference between keeping or losing them. Now, as managing director of Merrill Lynch Wealth Management, he sees how the same thing works for employees.
“You have to treat your employees just like your clients. You can’t take them for granted,” says Johnson, who manages 179 employees and $14 billion in assets at Houston’s downtown complex. “There’s a lot of movement within our industry. It’s my goal to minimize that, and the way to do that is to be responsive to employees.”
Even the way you organize meetings can make employees feel valued. Telling them what to expect shows you respect their time.
“It’s all the little things that matter,” Johnson says. “When you tell them how long it’s going to be, who are going to be the speakers, what the topics are and when you’re going to be out, that shows them that you’re thinking about them and not yourself.”
To set the pace of those meetings, Johnson follows the advice of an old boss who told him to start each meeting with recognition.
“What separates average leaders from great leaders is promoting that and publishing it, shining the light on others,” he says. “So much recognition that people want has nothing to do with financial incentives.”
You also may want open communication in the meeting, but you actually have to initiate it, because some people will be intimidated.
“You have to take the lead,” Johnson says. “I think it’s my responsibility, not theirs.”
To get employees accustomed to opening up in meetings, Johnson gathers small groups of four to eight employees in his conference room. He invites a variety, from the highest-producing financial advisers to the newest employees, and makes sure some outspoken ones are in the mix. He introduces the issue and relies on willing ones to get the ball rolling.
“When you’re in a smaller group, that tends to foster people’s willingness to communicate. Once they see one or two people [talk] and that it was OK, then the others feel more comfortable,” Johnson says. “It doesn’t happen overnight, but after four to six months of consistently doing it, they see that you really do care about their opinions.
“You have to make it about other people. You’re in the wrong profession if you make it about yourself. It’s a job requirement, kind of like you need to have good eyesight to be a pilot. You need to be tall to be a center in the NBA. You need to care about other people more than yourself to be a competent leader.”
How to reach: Merrill Lynch Wealth Management, (713) 658-1200 or http://www.ml.com/
Merrill Lynch & Co. Inc. is wholly owned by Bank of America Corp.Barron’s named more financial advisers from Merrill Lynch to its 2010 list of 1,000 Top Advisors than any other firm 317 to be exact. Merrill Lynch also had the most No. 1 advisers in each state. Six advisers from Bob Johnson’s complex made the list.
“Many times we try to bite off more than we can chew,” says the CEO of the mattress retailer, which posted more than $500 million in 2008 revenue.
For instance, when the company has meetings to review its strategy performance, percentages are displayed to show the team how much of a goal it has met. A goal that is close to 100 percent completion would get a green color, while a goal the company isn’t reaching is in the red.
“When you realize you have so many of those percentages at 50 or below, a little more red or yellow than the green, you realize, ‘Why aren’t we doing it?’”
Before Fazio starts to point fingers and reprimand people, he has to think about whether the company is spreading itself too thin.
“When you realize that so-and-so has six or seven of the top 20 priorities, how is she going to get those done? It’s just not fair,” he says. “You really have to be cognizant and understand that we also have other things that we are doing on the day-to-day. To accomplish our goals, some of these priorities are not going to get the attention they need.”
Fazio finds it’s better to be great at a small amount of things than to be average or good across the board.
“You’ll feel better about what you are doing, and frankly, you are going to accomplish more because instead of trying to accomplish 28 (goals) maybe at 75 percent, you are better off trying to do 15 (goals) at 100 percent.”
Either way, Fazio isn’t going to play the blame game if something isn’t at 100 percent.
“Blaming people is really not what it is all about,” he says. “It’s about helping everybody and making sure you are getting it done. But if you are trying to do too much, no one can do it. It’s just not possible.”
Besides limiting the overall number of goals, Fazio has found that being clear and following up are key leadership traits when it comes to getting the job done.
Fazio says he sometimes likes to use a sense of humor to get his point across. He’s able to joke that it might only be his view of a sense of humor, but nonetheless, it adds some levity to a situation.
For example, Fazio will ask an employee if he or she can take care of a task for him. When the employee agrees, he waits a minute for that person to get back to his or her office. When he or she gets back to their chair, the phone rings, and it’s Fazio asking if the person is done with the task yet.
“It’s a sense of humor, but I am also sending a clear (message) that I have a sense of urgency,” he says.
Fazio doesn’t care if his leadership style makes someone uncomfortable. That’s how he leads, and he will be clear about the fact that he wants to see results.
“If someone is going to work with me, we’re going to have a discussion about what that is going to be like,” he says. “It’s an expectation that you have to have. If it’s not what you feel comfortable with, well then, we probably shouldn’t work together.”
Through that clarity, Fazio shows that he is pressing to get results, and those around him should be doing the same.
“You’ve got to set the pace,” he says. “Respond to e-mails faster than anybody else. Answer questions very clearly and quickly and leave no one without clarity on what I think about things. It doesn’t mean I’m always right either, by the way. I just want to make sure I am clear though. If I’m wrong, I try to follow up on that, too.”
Because Fazio is a goal-oriented leader, he has be clear on what the goal is that the team is trying to achieve.
“You really need to make sure that the people that are around you are directly communicated (to) and understanding of the expectations of the company,” he says. “Through that, you really are setting a very high standard. Your personal standards have to be impeccable. It doesn’t mean you are always going to be perfect or right or any of those things.
“But, you realize whatever it is that you are doing is a reflection of the standard that you are willing to accept and people will gravitate to that standard that you set. They rarely go above it. They’re only going to go as high as you set it. So, your expectations have to be clear and you have to set a really high standard.”
Simply saying that you want something done won’t be any help to that person you are directing. Fazio doesn’t leave a room until everyone in there understands what he is thinking.
“There’s no doubt when I leave a room, or they leave a room, that we may not be on the same page, but they know where I stand and I hopefully understand where they stand,” he says.
While he sets clear expectations, Fazio also wants to listen to what people are telling him, so he can understand them, and respond clearly and concisely
“You really give people their due,” he says. “Ask a lot of questions, be very direct and accept absolutely nothing less than what you want and what you expect. It’s when you begin to compromise what it is that your standard is, (that’s) when problems occur because you eventually realize later that you should have not compromised. Then you end up with putting blame and there is all kinds of noise in that.
“So, the advice is that you keep going at it. You just keep asking questions, being very direct and being very open with that person. Direct doesn’t mean you have to be harsh. Direct means you are being very open about what you are feeling and what you are thinking.”
Fazio had a younger manager who didn’t tell him there was problem with a project that the manager was working on. Eventually, Fazio found out and had to step in and help fix it. He had to explain to the manager that the delay in fessing up only created a bigger problem, and now the manager has to give Fazio an update every day.
He said to the manager, “You just have to trust that I’m on your side. I’m not mad, I just want to get it done. I could have helped you because I have broader information than you do. I’ve been around longer. You have a chance here to learn from somebody that knows more than you do.
“I might not know everything or as much as you do on certain subjects within your business, but I probably know more just because I’ve been around longer. I’m not smarter. I’ve just been around longer. So take advantage of that.”
You have to be diligent in keeping track of where managers are on projects, especially with managers you haven’t worked with that much.
“I have found that you can’t have the expectation with a newer manager that they are going to follow up at the speed that you discussed initially,” he says. “So you are going to have to follow up in the interim. If your date is 30 days from now, in 15 days you want to find out where we are at. If it’s a manager that you have been passing that ball back and forth with each other for a long time, you don’t have to check in 15 days. You can wait for the 30 days.”
When the manager didn’t come to Fazio with the problem, it bothered him because he wants managers to trust him.
“Newer people need a different kind of management approach than people you’ve been workin
g with, because you may not be on that same page,” he says. “They may be reluctant to push back on issues and the clarity and communication isn’t there yet. You haven’t, what I call, ‘put deposits in the bank’ with that person and they don’t have that trust in you yet. It’s really up to you to develop that trust. It’s not up to them. It’s up to you. Then, once you get that trust, then you are going to have that real honest exchange, and clarity and communication are going to be crystal clear.”
That trust is built through follow-ups and being able to show that manager that you aren’t going to fire them if they need help with something.
“Trust is going to be built over time when they are coming to you and saying, ‘Hey, I ran into some issues here,’ or, ‘I got this done and here’s where we’re going,’ or, ‘I changed my mind.’ You can tell when there is real, honest communications. When they come back to you is when there is trust.”
Since Fazio is so intent on following up and being involved, he has been accused of being a micromanager, and he’s fine wearing that label.
“I’m very involved,” he says. “I think every leader should be. It depends on the size of the company on how involved you have to be but ... it’s not a matter of micromanaging. “You’re abdicating leadership if you’re not going to roll your sleeves up, as well, and really help somebody. Two people can do things better than one, generally. It doesn’t mean you don’t hand out. It doesn’t mean you don’t delegate. It just means you stay on it.”
Though Fazio does want to be hands-on, he has to remember to move back up to the 30,000-foot level.
“You can only be in one place,” he says. “It’s tough to be in both. I think sometimes I lose a little, because I’m so into the execution issues and pressing an urgency to the matter.”
Fazio says he should spend 10 percent more of his time at the 30,000-foot level. He tries to spend at least one week a year where he travels not on business but to learn. He will go to a conference or visit other retailers outside of his industry to get a broader look at the world.
“You try to broaden yourself a little bit and come out of that foxhole,” he says. “But I would rather take the chance that I wasn’t above it all, but I was in the middle of it, and if I couldn’t get it done, then I can at least fault myself for trying. But I can’t fault myself for not trying.”
How to reach: Mattress Firm Inc., (800) 628-3476 or www.mattressfirm.com
At a previous company, Dennis E. Murphree would sit in the company’s conference room every Wednesday morning. He told everyone below the officer level, such as receptionists and bookkeepers, that he would be there to answer any questions or hear any feedback they may have.
“They would have to voice what they were going to say in front of all the other secretaries and bookkeepers and so forth,” says Murphree, founder and managing general partner of Murphree Venture Partners, a venture capital and growth equity firm that posted $150 million in 2008 revenue.
“It took a little while,” says Murphree, who is also a professor at Rice University. “The first few meetings people were reticent about saying anything in front of other people. But, after awhile, what I would do is start asking them questions. It would force them to talk because I was looking for answers from them.”
Smart Business spoke with Murphree about how to get employees to open up and how to deal with failure.
Show people you are listening. Since the day I got out of graduate school, I’ve always worked for myself. I am your classic entrepreneur. I’ve been the boss from day one in a whole variety of companies.
One of the things I learned very early is employees, in some regards, are judging how things are going by the mood the CEO is in. If the CEO is fearful or in a bad mood, they just naturally assume that things aren’t going well. I’ve also watched in my early years, I’d listen to people say, ‘I wonder if today is a good day to go see so-and-so? I wonder what kind of mood he is in?’
I cultivate a very calm, even-tempered mood. I tell my people, both our portfolio CEOs and the people that work within my own firm, ‘Every day is a good day to come see me. I’m going to be in essentially the same mood every day. You’re not going to know if I am having a good day or a bad day. So, whenever you are ready, come see me.’
Secondly, I have a total open-door policy. My door is never closed. They can just walk in and interrupt me at any point and time. I think that is absolutely important. I think also as a leader, you’ve got to be able to make decisions. You’ve got to walk the walk and people have got to see that you’ll do what you say.
Be willing to listen to people. Especially countervailing opinions. I see too many leaders that they didn’t want to hear anybody contradicting what they think or what they want to do. I find a real good leader is more than happy to listen to all points of view.
Keep going. I’ve seen tremendous failure myself. I went spectacularly broke in the middle-’80s. I went from the front page of the Wall Street Journal and a boy wonder to, one year later, completely flat broke and half of a billion dollars in debt. I know something about failure. I know something about hard times.
One of the things I tell our portfolio CEOs is, I just kind of put my hand on their shoulders and say, ‘Look, there is not a thing you are going to face that I haven’t seen before. If you will tell me what the problems are as soon as you know about them, I will try and help you through it. Where you are going to get into trouble with me is when you try and hide it. Then the problem becomes worse because you tried to hide it from me.’
Be respectful. In this day and age, the day of the volatile CEO or leader that’s yelling and screaming and somebody makes a mistake, they’re chewing them out, I think that day is over with. If it isn’t, it should be.
If someone makes a mistake, my first reaction is not to get mad at them. It’s to say, ‘OK, you’ve made a mistake, and now how are we going to fix it?’
The second question would be, ‘What did we learn from this?’
I’ve had volatile people around here and I’ve sat down with them and had those discussions and said, ‘You can’t be doing that. You’re not going to engender respect nor are you going to get the best out of people if every time they slip up you start yelling at them.’ Who wants to work in that environment? I’ve never met anyone that wanted to make a mistake.
They made a mistake it’s, ‘OK, you goofed up. How are we going to fix it, and how are you going to learn from it so it doesn’t happen again?’ I tell my employees all the time, ‘Look, I want to be constantly making new mistakes. But hopefully, I won’t make a whole lot of the same ones over and over again.’
Things happen. Sometimes people make big mistakes and little mistakes, but things happen. I tell people all the time to be a good leader. You’ve got to be able to deal with ambiguity. You can’t deal with ambiguity by just checking in because the truth is, nothing is certain. Nothing is going to turn out like you thought.
I tell my students this all the time, ‘Whatever you think is going to happen, probably isn’t.’ It’s more likely that it’s probably going to be better than you thought it was going to be or worse than you thought it was going to be. But very unlikely is it going to turn out like you thought. You’ve got to be able to deal with that ambiguity of how things are going to turn out. When mistakes happen, you try to fix them, whether they are big or little.
How to reach: Murphree Venture Partners, (713) 655-8500 or www.murphreeventures.com
Planning how you exit your business is just as important as planning how you start it. When creating an exit strategy, a business owner should start at least two years before retirement, but the more time available to plan the best strategy, the better it will work out for all involved.
The first step is to create a team of experts that is well versed in business succession strategies, finance, estate planning, investment planning and tax laws.
The next step is to determine the company’s fair market value. The best way to do this is usually to hire a valuation expert to analyze the business and assess the value of the business and its assets, including inventory, equipment, accounts receivables and good will. The fair market value of the business is often a multiple of the sales of the business over the past few years.
“With a good team of advisers and a solid valuation in place, the owner can then begin to strategize the best path to move toward his or her exit,” says Kim Milder, a vice president and senior relationship manager with Wells Fargo Bank.
Smart Business spoke with Milder about exit strategies and succession planning options and why succession planning is so important to today’s business owners.
What are some of the different succession planning options?
The owner can sell the business to employees via an Employee Stock Ownership Plan (ESOP), to family members via a family succession plan, to other owners or key employees through a buy-sell agreement, or to a competitor or other third party.
An ESOP allows employees to acquire beneficial ownership in the company as an incentive to remain with the company and a reward for valuable service. For the business owner, an ESOP can provide a guaranteed, in-house market for the business. As an ESOP can be complex, it is best to consult with a team of experienced advisers before proceeding.
Often, a business owner will want to transfer the business to family members. It is critical to have a family succession plan in place to make this transition go smoothly. Among other things, the business owner will want to address how to treat those family members who are active in the business versus those that are not.
If the business owner might want to sell to partners or key employees, it is important to have a good buy-sell agreement in place. The buy-sell agreement can address the various contingencies for an owner’s exit from the business, including a voluntary sale, death and disability. The agreement can define the terms of the sale, including how to determine the sales price and any financing terms.
For some business owners, an outright sale to a competitor or other third party may be the best approach. The owner will want to take appropriate steps to maximize the value of the business before putting it on the market, and will also want professional help to market the business and evaluate offers.
The right option will depend on the nature of the business and the owner’s goals. It is important for the business owner to have a team of experienced advisers to help evaluate the different choices.
How important is it to review the plan and make any necessary changes?
It is extremely important to review the plan as often as there are changes within the business, with owners, within the industry, or with the applicable rules and regulations. Tax law changes may also affect the plan. Change is inevitable so owners must always make sure they are prepared and all plans for the business are current. This should also include the owner’s personal financial, trust, investment and estate plans.
How should a business owner communicate the succession plan to employees and prepare them for the owner’s exit?
The best way to communicate to employees is by delegating responsibility and establishing the go-to people. When you start transitioning, you must relinquish some authority. The employees will see how the transfer influences the key personnel and then the conversation becomes easier. You cannot make everyone happy in the choices you make to replace yourself or the changes in key management, but you can keep their loyalty with constant communication of changes ahead.
How can a business owner maximize the value of the business in preparation of a sale or transfer?
There are several ways to increase the value of a business. Among other things, the business may want to ensure its books and records are in order, lock in key employees who might otherwise leave, reduce expenses and strengthen the management team so that they can run the business without the owner.
How important is it to have a financial adviser involved in the process?
I believe financial advisers play a crucial role in developing and implementing a successful exit strategy. Without the help of experienced advisers, an owner may miss opportunities to maximize the company’s value or run into tax problems or other issues.
Here at Wells Fargo, we have groups that specialize in helping business owners with their financial and business succession planning. They work with the business owner to define goals, evaluate different options and implement the strategy the owner chooses.
What would you say to a business owner who is reluctant to address succession planning?
Now is the time! At the very least, every business owner has the responsibility to address the contingencies of his or her disability or death. However, the right planning can also put more money in the business owner’s pocket if the owner sells while alive. Ultimately, having an exit strategy demonstrates the business owner is in control and focused on an organized and profitable transition.
Kim Milder is a vice president and senior relationship manager with Wells Fargo Bank. Reach her at Kimberly.Milder@wellsfargo.com or (281) 587-3037.
Week after uncomfortable week, Donald Trump leaned across the edge of his famous boardroom table, his hands locked together, his lips curled in a sneer, and stared some poor sucker right out the door. During eight seasons of his reality television show, “The Apprentice,” Trump has mastered the ability to pound out the two words that no employee, not even a contestant eager for fame and fortune, wants to hear.
As has been the case so many times during the last couple of decades, Trump proved to be far ahead of the curve. He mastered the fine art of the fire long prior to the start of our current recession, long prior to millions of workers hearing the same words, more or less, as that unfortunate contestant on the other side of the table. But perhaps Trump and you will not need to utter those words as often this year as you did last year.
The national unemployment rate dropped to 10 percent in November 2009 from 10.2 percent in October, according to the Bureau of Labor Statistics. That figure, however slight, represents enough of a drop to provide some glimmer of hope to human resources and human capital experts across the nation and some hope that the start of a long recovery will soon be under way.
“This is providing an opportunity to step back, re-evaluate and reset the human capital agenda,” says Jan Rose, market business leader for human capital, Mercer LLC. “Everything is up for examination. Many of our clients are reviewing the effectiveness of all their human resources programs and assessing whether the programs are having the effect they want it to have for their investment.”
All of which means that, after a long and frustrating year filled with layoffs, wage freezes, the elimination of bonuses and perks, and the addition of more assignments for employees already under stress, the economy and the human resources industry might start to take a turn for the better at some point this year. Challenges do remain, of course, but there is hope.
Whenever the figures and charts tick upward, the time to move will be as soon as possible. Will you be prepared?Focus on your top employees
The challenges throughout the last year focused on how to maintain the revenue, trim the budget and retain as many employees as possible. Almost every business of every size lost something and, more important, somebody as evidenced by that aforementioned unemployment rate, which has increased during almost every month since April 2008.
You might still need to trim your budget, but you will also need to focus on identifying and retaining your high-performance and high-potential employees. So often, those employees might think the grass is greener on the other side of the proverbial fence. But what about when the grass is brown? What about when there is no grass? Heck, forget the grass, what about when there is no fence? They remain where they are for as long as necessary, as they are doing now because there are so few available positions in the marketplace.
Then they leave.
That is, at least, the consensus among dozens of human resources and human capital experts.
“Everybody recognizes that you need to be careful about expenses in this kind of economy,” says Bruce Barge, market leader and principal, Buck Consultants LLC. “But don’t cut your spending on innovation, don’t cut your spending on the kinds of training that allow people to develop the sort of skills that grow the company, don’t hire people who are just average because that’s about all you think you can afford. People pay attention to that and to the message from leadership.”
The process of retaining those high-performance and high-potential employees has already started, with your top workers likely influenced by how you handled the fallout from the shock of the recession. If you handled layoffs with dignity, communicating why decisions were made and what they meant for the future, that helped so did any revenue investment in those top workers, from compensation and bonuses to training programs and seminars. And if you talked with those top workers and relayed to them where they fit in the vision for your business, that would have been about the best thing you could have done.
“One thing we’re beginning to understand that is really important, perhaps the most important thing, is to have employees feel connected to their sense of purpose in the organization,” Barge says. “There’s more and more research showing that’s the most important motivator. Not that compensation and other more traditional motivators aren’t important, but what really matters, especially for your highest-performing employees, is that sense of purpose. They want to feel like what they do makes a difference.”Develop and share your plan
In addition to identifying and targeting your high-performance and high-potential employees to prepare for a future of healthy economics, you should develop a plan to address possible human resources challenges and plot the path you want your business to follow during the next couple of years.
Chief among your objectives for that plan should be the development of a balance between continued cost reduction and simultaneously positioning for growth. During the last year, many companies have aimed to manage and contain all costs related to human resources and human capital because they have been trying to do little more than survive. Survival is important, but it is also important to not damage the viability of your business in the big picture, well beyond these few years and even beyond this new decade.
Once you develop your plan, share it with your employees, especially your key employees. That advice might sound obvious, but experts say that too many business owners fail to relay information to their managers and their employees. And even in a good environment, employees who only hear about meetings behind closed doors and have no idea what is happening and what is about to happen will often speculate incorrectly, either causing additional stress or inadvertently spreading incorrect information. In short, you can still have those meetings behind closed doors, just be sure to share what is said on the other side of the oak.
“Communication is big, particularly from the senior executives,” says Josh Sorkin, senior vice president of enterprise services, Hudson. “It’s about what they’re doing to invest in not only the people but in the business overall, in making the employee base feel the company is investing in the longer term.”
Communication is a key to developing a successful human resources department, either internally or by bringing in an outside firm. You want your employees aware of what is happening in your business, and you want them to be engaged.
“With all of the changes going on in the economy and all of the uncertainty, it’s important to remain engaged with your employee base, to have them stay focused on the business at hand and not be distracted by news in the marketplace or internal chatter within their own companies,” Sorkin says. “It’s important for them to be focused on the tasks at hand and make sure you keep your business profitable and looking forward.”
Early on in Kay A. Henze’s career, the then president and CEO of Verizon Wireless told her something she still remembers to this day: Good leaders say the same thing over and over and over again. When they get sick and tired of hearing themselves say it, they say it again.
“It really has helped me, especially in that first year when we became Verizon and were bringing all these different cultures together,” the president of the Houston/Gulf Coast region says.
With 1,800 people following her lead, Henze has to work extra hard to guarantee everyone is on the same page, which she does by being visible and staying in touch with employees and customers.
“In large organizations, especially as managers increase their level of responsibility, that becomes more and more of a challenge because the workload continues to grow,” she says. “But you always have to remember that in my business, it’s a very consumer-centric business, and the business really happens where the customers are and where most of your employees are. It doesn’t really happen in your office.”
That type of attitude is contributing to the company’s success.
From a customer loyalty perspective, Verizon Wireless has flourished. The second quarter of 2009 was the 19th consecutive quarter that the company, which serves 87.7 million customers, experienced the industry’s lowest customer turnover rate, and the organization continues to see year-over-year growth.
“I think it’s definitely benefited our organization, because it’s helped the company grow,” she says. “At the end of the day, it does come down to the results. At the end of the day, it does come down to what we produce and what we give back to the corporation. By being engaged and visible and committed, we help each other grow.”
Henze and her team were having trouble articulating the competitive advantages that Verizon Wireless had over its competitors. She and her team talked to some front-line employees at retail stores and found those employees could articulate very crisply and succinctly what they saw as competitive advantages.
She took the ideas, shared them with directors and formed a cross-functional small group of the employees. They drafted in their own words what they saw as the company’s competitive advantages in Houston, and those words were adopted nationally.
Without getting out and talking with employees, Henze and her team might still be looking for the best way to summarize the company’s competitive advantages.
“The more that you are out there, the more comfortable they become,” she says. “So, it’s not a big event, or it’s not a big deal that Kay just walked in my store.”
Making yourself available for employees and customers is key to being a great leader, but unfortunately, it is sometimes easier said than done.
“At the end of the day, you have to remember that you control your own calendar,” Henze says. “For me, that is really the biggest piece of it. I schedule time to be in front of my customers and in front of my employees all the time.”
Henze spends time with business customers and business sales representatives and tries to make announced and unannounced visits in retail stores once a week.
“You have to schedule it,” she says. “Through the years, if you set a goal that you’re just going to do it and don’t have the discipline around it, like any goal, it never really occurs.”
Don’t overdo it, though.
Scheduling visits once a week instead of once a day is much more realistic to achieve, and gives you time to work on problems or ideas you are hearing when you are out and about.
“I can’t think of a time that I haven’t spent time with our employees or our customers that it hasn’t resulted in work that needed to be done,” she says. “You have to allow yourself the time to go do that work. Because, otherwise, the employees lose faith.”
When making the rounds, be aware that you will run into all different types of employees. From the overachieving to the disinterested, you have to gauge the temperature of the room and be ready to interact with everyone you meet.
“Sometimes you’ll find an employee who is disgruntled and just doesn’t want to necessarily share for the betterment of themselves or the company,” she says. “Sometimes you’ll find an employee who feels, for whatever reason, that it’s inappropriate to share directly with a president as opposed to following the chain of command. Sometimes you’ll find, unfortunately, an employee who simply doesn’t care. You hate that, but it’s reality.”
When Henze runs into employees who feel uncomfortable going outside the chain of command, she will ask other people to step in.
“I might ask one of the HR consultants to go to the store and see if they are more willing to open up to HR, which sometimes they are and sometimes they’re not,” she says.
“But it’s always a sign to me, and I always just try to use other resources to get to what exactly is going on.”
A pitfall of being an engaged and available leader is the reality that you may undermine your managers. If you are making the rounds and speaking with your managers’ direct reports and employees, you could create a situation where a manager feels like you are micromanaging him or her or interfering with his or her leadership style.
To avoid that situation, Henze will give a new director some insight into what she does on trips.
“When I have a new director come into my organization, the first time that I go to visit their locations or work with their managers, I do it with that director,” she says. “They can see for themselves what I’m looking for, the questions I am asking and I can give real-time feedback with them right there with me. I can point things out, and then I think you can build from there. The employees also see you together, which is very important.”
You also need to report back what you learned on the visits almost immediately. Henze’s first call she makes after a stop is to the director of the location she just visited.
“Feedback to the next level is always provided,” she says. “It’s always in the spirit of improving the business and making sure that our employees have a good level of morale, that we are putting our customers first and that we are working together across all the layers to improve. So, my managers, my directors, when I leave a store they are usually the first phone call I make and the response that I always get is, ‘Thank you for the feedback.’”
The call will also let your managers know that you aren’t going behind their backs or keeping information you learn on the visit a secret.
“There is no hidden agenda,” she says. “Everybody is on the same page and because of that, (it) filters throughout the entire organization. It’s very transparent.”
Deal with trouble
About five years ago, when Henze was a director, she had a district manager who was uncomfortable with the visits she made. It turns out, the district manager was not guiding the business by the company’s core beliefs. Eventually, the manager resigned but the damage had already been done.
It took about two months from the start of the process to the resignation, which may not seem like much, but to the employees under that manager, it seemed like forever.
201C;It took many months before the employees really felt that they were moving in the right direction, and that they felt supported because they had not felt that way for a long period of time,” she says.
Either you or people whom you trust will have to stick around that location to make sure that everyone gets back on the same page and is buying in to the company’s beliefs.
“That’s what I call hand-holding,” she says. “Not micromanaging, but that’s a period of time that you really have to hand-hold the leadership in that organization as well as the employees in that organization.
“What I mean by that is making sure that if you are not there as the leader that there are other people there representing you that you trust and that are on message. You may infuse some additional leadership for an additional period of time.”
You might also move a more productive manager to the troubled locations to settle things down.
“You might move one store manager to a different store and put the other store manager in the troubled store,” she says. “You really have to strategically ensure that you’ve got the right people there in the long-term permanent positions.”
Don’t put the new leader hired to replace the bad leader in the troubled location. Instead, start them out in a location that is doing well.
“Because then the new leader, if they are in another location and if they are in a store that is really getting it and they want to improve, they will feed off of their employees and they will feed off of that new environment,” she says.
“The other, trusted employee going into the troubled store — the employees will respond very quickly. You’ve got to kind of mix some things up sometimes to make sure people get the support they need.”
If you stay engaged, not only will the employees get that support, but you may be molding a future leader, while, at the same time, keeping the company heading in the right direction.
“We foster a growth and development culture within our organization, which helps us see what the customer sees and helps us hear what our employees are seeing and doing,” she says. “So, we are constantly building the future leaders of the company and we are constantly focused on how we can improve our results. For us, the good news is that it’s worked and that our results continue to be strong. We have the highest customer loyalty in the entire industry. So, I think that’s the benefit. The benefit of it is in the results and in the development of your people to become the next leaders to help carry the company forward.”
How to reach: Verizon Wireless, (800) 922-0204 or www.verizonwireless.com
Ed O’Brien has 35 years of experience in the public accounting industry, much of it in publicly traded businesses. Currently, he serves as the managing partner of Grant Thornton LLP’s Dallas office. In his career, he has worked with many business owners to evaluate wealth creation alternatives related to their investment in their companies, and he has been significantly involved in numerous transactions involving business formations, purchases and combinations.
Q. In a struggling economy, how can a business get the most from its relationship with an accountant?
An open line of communication between the company and the accounting firm is critical in order for us to help in an up or a down economy. The more we know about their business challenges, the more we know about some of the issues that they face as an organization, the more we can be of assistance, providing ideas and opportunities for change.
Q. How might a company be able to save money when it comes to accounting costs?
The more prepared they are, the quicker we can get in and out. I always advise the companies I work with to make sure their books are completely closed before we walk in the door. One area that small- or middle-market companies might consider is having some temporary help come in to really make sure their books and records are clean, because they can employ those people much more cheaply than they can my people when we come in to do the audit work. Our charges are significantly higher than they can get in the marketplace for good accounting talent.
Q. How can an accountant save money for a company?
In a private company, cash flow is the name of the game. Any way we can assist them in identifying ways they can improve their cash flow, whether that’s through renegotiating with their vendors, consolidating vendors, we will do that. In addition, tax minimization and tax credits, especially in today’s environment are critically important. The less they pay, the more they can keep in their business and, in some instances, stay in business. Arizona, for example, provided significant credits for green initiatives. You look for all those additional ways to create cash for the organization.
An impressive list for sure, but it wasn’t a commander in chief that most influenced the chairman and co-CEO of Stewart Information Services Corp.
When Morris was a senior in high school, he was responsible for chauffeuring evangelist Billy Graham to the dedication of Houston Baptist University.
The duo arrived late, but as they were walking toward the university, Graham wanted to take a detour.
About 70 or 80 yards away, the workers were finishing the landscaping, and Graham knelt down and thanked them for building the university.
“I said that is a humble person who recognizes the value of what somebody else is doing,” Morris says. “He told them what they are doing would be attracting the students that would one day be leading America.”
To Morris, that is still more impressive than any president he’s met, and it’s an attitude he tries to drive every day at the company, which provides title insurance and related services to the real estate and mortgage industries. He wants to be a trustworthy leader who puts the organization, which posted $1.5 billion in 2008 revenue, ahead of him and lead a company where the customer and employees come first.
“That’s the most important thing you can do,” he says. “I’ve seen too many organizations where the organization was about serving the leader rather than the leader serving the organization.”
An effective way he drives that point home is through the company’s open-door policy.
“What is interesting is to hear people talk about it in the field,” he says. “I may get one call in three years from a person and that same person is saying to their customers, to their team members etc., ‘You know, I have access and I can call the chairman of the board of the company and he knows me, and he’ll pick up my call anytime I call him.’
“But they don’t abuse that. Yet, it is a sense of pride to them that they do have that openness.”
Here’s how Morris uses an open-door philosophy to lead Stewart Information Services Corp. to new heights.
Set the example
Morris recalls visiting a company where the CEO was smoking cigars all the time. The CEO wasn’t alone.
“Every layer of management of the people trying to get ahead in the organization had a cigar in their mouth,” he says.
Morris isn’t saying that’s bad or good. The point is, your employees are watching you, and if you start doing something, it will spread throughout the organization. The same goes for something that you say you’re going to do, and then you do the opposite.
“People learn from your examples,” he says. “So, if you say one thing and do another, then you basically void your ability to earn that trust.”
Because Morris says he has an open-door policy, he has to live that day in and day out. Otherwise, people will not buy in to it and they will see it as lip service, which will hurt the amount of trust employees have in him.
“The main thing is you’ve got to practice that,” he says. “So, if somebody has got a major issue, you can’t tell them you don’t have time to deal with it. That has to become a priority. Deal with it the same day. Don’t put it off a week.”
Morris received a call from an employee a thousand miles away because her boss took another position and she was lost in the middle.
He took her call, spoke with the parties he needed to and got back to her in a couple of hours. He then followed it up with an e-mail with her and those taking care of it, thanking her for bringing it to his attention.
“It wasn’t anything that was an issue, but if a person gets something in their mind that it’s an issue, then it’s an issue with them,” he says.
That’s important to remember. It might not be a big deal to you, but if someone is taking the time and courage to approach the CEO, it means something to that person.
If you aren’t available when an employee contacts you, your assistant has to be the one to tell him or her that you are unavailable, but you have to realize it is an important matter.
Morris tries to leave some white space on the calendar between meetings so he can look into any issue brought to him while he was away. If it’s something he needs to handle immediately, he can at least start dealing with it in that 15-minute window or prepare for the next meeting.
“If you don’t have an emergency, you have time to write down your thoughts about the meeting you’ve just completed as well as review what you want to review before you are going into your next meeting,” he says. “Then, if you do have an interruption, at least you’ve got some time where you can handle something.”
If you are available and someone is angry or upset, take his or her call, but let that person calm down before speaking.
“You never establish anything while somebody is ranting and raving,” he says. “It’s like throwing rocks back, and you are giving them ammunition. Pretty soon, they’ll run out of gas.
At that point, you can have a reasonable discussion.
“If they’ve got an issue that’s upset them, let them finish, state what you heard and ask them what they would see as the solution,” he says.
Don’t undermine managers
The employees at Stewart are given a very clear message when it comes to the company’s open-door policy.
“We encourage everybody to follow their report in management, but we also encourage our management to say to somebody under them, ‘If you disagree with my decision, I encourage you to appeal above me.’ So, that message gets out.”
Morris and his team obviously want people to come to them if they feel it necessary.
But, be careful. While that kind of an environment is effective and essential, it can create problems.
“That’s the kind of openness you have to have, yet you don’t want to manage around your leadership,” he says.
If an employee leapfrogs a manager and comes to you with an issue, get the manager involved, especially if something is going to be changed. You want to keep the manager in the loop so he or she isn’t blindsided.
“We (get) them involved,” he says. “If you are going to change some decision, then I think it’s important to go through the decision process with that manager and make sure you both are understanding the same facts.
“You go through how you analyze it, get the feedback of that manager on it, and you’re basically looking to get the buy-in of that manager as well as use it as a training opportunity. So if a situation came up again, perhaps that person has a little more insight into the decision process.”
Because the open-door policy is so strongly communicated to all employees, it keeps managers on their toes, which keeps the number of people coming to see Morris down.
“They don’t come in that often,” he says. “I think that is the magic of it in the organization. If people know that is available, I think your management all the way down the line is saying, ‘I really don’t want that call coming, so I am going to
do that job and I am really going to pay attention to what this person is saying.’
“It’s not that you aren’t getting any calls from an area. Getting some calls is good and it helps maybe to do things better in the company or plan some things better. But, if you are always getting bellyaches from an area, you know you’ve got a problem. You’re going to get those anyway. They are going to surface up through the organization.”
Just because you get a call from a disgruntled employee, don’t automatically assume the manager is wrong.
Part of forming a trusting and open-door environment is delegating and getting out of the way. Yes, you want employees to feel free to come to you if something isn’t right in their department. But, if you’ve delegated authority and responsibility to a manager, they may be doing something differently than you would, but that doesn’t mean it can’t be just as effective.
“Remember, what’s important is the end result and not the road to get there,” he says. “I can actually say Dallas is due north of Houston on a compass, but if I take a compass without reading the road signs, I’m going to wind up in a dead end somewhere in a cow pasture because I took the most northerly turn.”
Whether you use the scenic route or the interstate, you wind up in the same place, and that is what’s important.
If the manager is doing something wrong and not reaching the goal, you need to coach him or her instead of just taking the job back.
“If you sign the job out, don’t take it back,” he says. “If you’ve assigned the job out and you want the person to get to the goal, then let’s coach and mentor that person if they are having trouble getting there.
“Either you do that or you waste a lot of time and money and effort and potentially harm the reputation of that employee.”
Don’t just tell the manager what to do. Get him or her to participate in the process.
“In a time-constraint society, it’s a whole lot easier just to tell somebody, ‘Do this,’ especially if you’ve done it 50 times, and you know exactly what to tell them,” he says. “However, just like rearing your own children, if you tell them to do something they’re less likely to do it than if they learn why to do it.”
Those same managers will be able to learn faster if they feel more comfortable coming to you and asking for help, instead of never seeking advice.
It also makes a difference when you bring in new employees.
“We have had people who have come to our company from competitors and they say, ‘We never met the CEO of the company. We never were able to talk to them. They were very elusive. This is incredible.’ It takes very little time.”
How to reach: Stewart Information Services Corp., (800) 783-9278 or www.stewart.com
When Paul J. Sarvadi and his co-founder sat down to talk about what kind of company they wanted to become back in the mid-1980s, they really didn’t have any idea what they were doing.
But, one thing they did know is they wanted the company to be about people, corporate culture and freedom for employees to do their jobs.
“What’s interesting to me is that most people spend an incredible amount of time and effort to develop their financial plan or their sales plan or their operating plan, but very few people spend the amount of time and effort to develop their people plan,” says Sarvadi, co-founder, chairman and CEO of Administaff Inc. “What’s their people strategy? What is the culture they want in their company? What is their organization and leadership philosophy for the company? How do they want to award people? ... These are equally important issues but generally don’t get the attention. The funny part is, it’s the people that implement all those other strategies.”
With 1,900 employees and more than $1.7 billion in 2008 revenue, Sarvadi is far from those days when corporate culture wasn’t even a common term in business circles.
He still believes in leading by example and communicating the type of culture that will continue to help the professional employer organization succeed.
If it’s after 5 p.m. and Sarvadi sees someone still in the office, he doesn’t automatically think what a great worker he has on his hands. He wants to know why that person isn’t home with his or her family and if he or she needs help with whatever it is the person is working on.
“In our world, we want to have a good work-life balance,” he says. “That’s one of the things we value. I want your work life to be a benefit to your home life. I don’t want you to live to work; I want you to work to live. So, I would rather reward you for innovating so effectively that you could figure out how to do the job better from 8 to 5, than I would reward you for being there at 6 in the morning and 10 at night. What are we doing wrong that we can’t get it done within the work hours?”
It’s that type of caring that has helped shaped Administaff’s culture and working environment today.
“(Your culture) becomes how your company reacts to the things that happen to you, good or bad,” he says.
“Your culture … either enables everything you are trying to do or inhibits everything you are trying to do. In our particular case, it’s been a tremendous enabler.”
Lead by example
Sarvadi wants employees to know he cares about them and wants to create a trusting work environment around him. In order for the message of a trusting corporate culture to permeate through your organization, you have to lead the charge by not just words but also actions.
“Leadership is always more communicated through example than it is through just discussion,” he says.
Which is where walking around after 5 p.m. to see who is still working comes into play. If he didn’t care about his employees and wanted them to fend for themselves, he’d walk right past the late-night worker, instead of inquiring if he or she needs help.
Or, he could chastise the worker for not finishing on time and bark orders. Neither would be effective in building a positive corporate culture.
“I just believe you get a lot more out of people when you lead out of authority instead of out of more of a power base liked you’d have in the military,” he says. “To me, the keys to being an effective leader are all about how you care about the people you are leading and how you develop that kind of influence. To me, it’s a set of skills that you learn and how to interact with people that develops that type of relationship.”
Sarvadi’s leadership style revolves around that kind of authority and developing relationships with people where they really want to follow and participate in whatever objectives have been set.
“That means that people are ready to storm the hill with you,” he says. “In order to get people in that kind of mode, what you have to do is develop personal influence with those people. The way you do that is develop a set of skills that involve how you connect to people. It’s really interpersonal skills — caring about people and respect for them as an individual and caring enough to tell them when they are doing things right and when they are doing things wrong. (It’s about) having the type of relationship that is trust-based where they learn over time that you really care about them and their success. When people know that, they participate at a different level.”
Sarvadi recommends thinking back to your past about someone to whom you gave over a significant level of authority.
“Power is something imposed on people, but authority is something people give you as a leader,” he says. “What you are looking for is situations where you said, ‘Hey, I am going to submit myself to that person’s authority.’ Then you answer the question ‘Why? Why was I willing to submit to that authority?’ What you are going to find out is those people in common had skills where they had developed personal influence with you.
“They were honest with you, they demonstrated they listened to you, they cared about you, they communicated with you in a way that was respectful and honest. Those are the things that make somebody really want to follow.”
Think about how those actions affected the level of personal influence that person had in your life and what made you want to follow that person up the mountain. Then, try to emulate those characteristics.
“It’s the little things,” he says. “Usually they are humble, they are kind, always respectful. They held you accountable but forgave you when you messed up. It was more of a learning thing. A lot of times, they were teaching you. They were willing to take the time to teach, not just correct.”
Don’t think about leadership as only getting up in front of people and talking. To build a trusting culture, the example you set is important.
“Although being able to communicate is really important, people are more about what you’re doing than what you’re saying,” he says. “It’s the integrity between what you say up there and what you are doing day-to-day that people pick up on and determine whether they could trust you or not.”
While leading by example will work its way down the organizational chart, so will your actions differing from your words. If you are preaching one thing and doing another, don’t fool yourself into thinking that no one is paying attention to you going through the motions. They are, and it’s hurting your credibility.
“Some of the things are as basic as listening skills,” he says. “But I always say listening is different than caring. A lot of times, people will listen just because that’s the polite thing to do. But, you know an individual can tell the difference between when you really care about what someone is saying and what their end objective is as opposed to just listening just to be polite.”
Administaff is in pretty good financial shape, even during this financial crisis. There is still money in the bank, working capital and no debt.
t the economy still affected the company, and Sarvadi had to make changes.
“Our customers are affected, therefore we’re affected,” he says. “We’ll still make money. We just won’t make as much money. But in this environment, even though we have that type of financial standing and capacity, it still made sense for us to take a conservative view of the next couple of years.”
Sarvadi gathered with his executive team and they walked through what a conservative approach would look like, and then communicated with the next level of management the new approach.
Making cutbacks when a company is doing well can send a wrong message and leave employees disgruntled.
“We made a bunch of decisions that are not popular,” he says. “We froze wages; we decided to not replace folks and allow attrition to take place. We cutback on the 401(k) match. We did a number of things that a lot of companies are doing these days just to be conservative and to make sure the company stays in good financial shape through the downturn.”
Decisions, especially unpopular ones, need to be explained if you want a positive culture where people are empowered. You can’t expect people to hear what you say, be happy and then just go back to work.
Instead of just sending out a memo explaining the changes, Sarvadi and his team took a whole company meeting to explain why they were scaling back.
“A lot of times leaders don’t take the time to explain why,” he says. “When people understand why, then they help figure out how more effectively than they would if they don’t understand the why.”
Not everyone is going to love the decision or even the reasons why, but that doesn’t mean you keep it a secret.
“But at least people say, ‘Hey, you know what. They have the guts to just tell us like it is, and we just have to live with it.’ But that’s better than people wondering what’s going on behind the curtain,” he says.
You shouldn’t wait for bad news to start communicating. Keep the lines of communication open at all times to engage employees and find out what’s on their minds by giving them the opportunity to ask questions.
Every month, Sarvadi has a meeting with the entire staff, and they broadcast it throughout the country. Employees can ask whatever questions they want anonymously. They submit them in advance and Sarvadi reviews them and answers as many questions as he can in the time allotted.
“What happens is many of these questions give an opportunity to answer the question in a way that supports and reinforces our leadership philosophy,” he says.
Aside from unpopular decisions, there may be other topics people want to know about. The more questions you see about a specific topic will give you a better idea of when you need to explain the reasons behind a decision.
“Part of it would be just when you are making a decision that impacts a broad number of people or when it’s a change to the strategy or direction or a change to a major objective,” he says. “Then, beyond that, it would just be things that kind of bubble up. You can have more of the same kind of questions bubbling up from two or three different parts in the organization.”
Using examples will also help in getting your point across. In Sarvadi’s case, when he announced some of the changes, he also told everyone that the off-site training sessions he normally has for his management team would no longer be off-site to save some money. It shows that management was serious about its decision but that it also wants to meet the company’s goals and objectives for the year.
“Really, it was amazing how people were able to apply that thinking in their own part of the business and have tremendous results and control of the expenses,” he says.
It also shows management leading by example. That, coupled with explaining yourself, will go a long way in creating a trusting corporate culture.
“I don’t think you can have a V.P. of corporate culture because everyone has to be the V.P. of corporate culture because anyone of us can create an environment that’s counter to the culture,” he says. “So, it’s a matter of everybody owning it. But, they can’t own it if they don’t know what it’s about. If you’ve never described it fully, if you’ve never explained why it’s important to you and the business, then why would anyone care?”
How to reach: Administaff Inc., (800) 465-3800 or www.administaff.com