Erik Cassano

Sunday, 24 February 2008 19:00

Tax changes for 2007 returns

It’s that time of year again — April 15 is just around the corner, and for businesses everywhere, that means tax season.

As your financial managers get set to file your company’s 2007 returns, Jim Bowen, a partner with Akron accounting and business advisory firm Bober, Markey, Fedorovich & Co., says there are tax law changes and expanded credits that you might want to keep in mind.

Among the changes is the expansion of the research and experimentation credit, which primarily affects businesses that perform a significant amount of research and development. In previous years, there were two methods for obtaining the credit, but a number of businesses were limited in their ability to use it.

“If your company had very high gross receipts or if you had trouble retracing records back to 1984 to ’88, you might find yourself very limited in your ability to use the R&E credit,” Bowen says. “Beginning in 2007, there is a new approach called the alternative simplified credit, and it basically eliminated those penalties.”

It’s a significant change because the credit is permanent and is a major tax-planning tool for companies that do research, such as automotive companies, chemical manufacturers, aerospace and defense companies, and information technology companies, among others.

“There should be an expansion of companies claiming this research credit because the rules have been eased,” he says.

Also new for ’07 returns are expanded rules for the work opportunity tax credit, which affects businesses that employ minimum-wage workers. The change was made by lawmakers in response to the Small Business Work Opportunity and Tax Act of 2007.

“This credit is another permanent tax benefit, and it’s paid on the first $6,000 of wages as a tax credit on corporate payroll taxes,” Bowen says. “Where it really becomes significant is that a lot of companies that are hiring these types of employees have high turnover. So they claim the credit on one employee, the position rolls over, they claim it on the next employee and so forth.”

To qualify for the credit, businesses must fall into certain targeted groups. For ’07 returns, those groups have been expanded.

“I would strongly suggest to companies to explore this credit because it is a fairly significant benefit,” he says.

A new accounting standard, called FIN-48, also goes into effect beginning in 2008. Although it doesn’t directly affect ’07 returns, Bowen says it will affect tax preparation this year.

FIN-48, the letters of which are an acronym for “financial interpretation,” is an accounting standard that will require businesses to itemize out their tax exposures in order to create transparency in a company’s financial statements.

“Companies are going to be required to itemize out their tax exposures to the extent that they’re taking positions that, on examination, are not going to be fully sustained,” Bowen says. “While I might not specifically have to say I’m taking this specific position in the state of Alabama, it would say that I have these state exposures described in a more general term.”

Bowen says that you need to start thinking now about what tax exposures you have and your historical filing positions as your company prepares to file 2007 taxes, which will be at risk for FIN-48 examination by the IRS.

“FIN-48 exposure must begin in 2008, so this is a fairly valuable item,” he says. “FIN-48 is one of the primary items affecting businesspeople and tax preparation people that doesn’t relate to the tax return itself.”

Tax prep for the rest of the year

You know already know that March and April are a time for tax preparation, but according to Jim Bowen, a partner with Bober, Markey, Fedorovich & Co., there are steps you can take the rest of the year to make sure tax season goes smoothly for your business.

First, recognize that tax laws are changing all the time, so keeping your company’s financial specialists abreast of the new and revised laws is a year-long process.

“In this field, it seems like thousands of new pages of legislation come out every year,” Bowen says. “New court cases also have the potential to change the interpretation of prior law. There really is no easy way to keep track of it all.”

Bowen says the best defense is to find a knowledgeable tax adviser who understands both the tax law and the unique challenges facing your business.

“You need to find yourself an adviser who understands the changing situation. But you also need to stay abreast of the changes, too. Make sure you are well-read from multiple sources. If you get information from the newspaper and other sources, you’ll gain a greater understanding of what you’re facing.”

Bowen says you should also make sure your financial managers are up to speed on any transactions your company is planning. The people who handle your money and taxes need to have a good grasp of any sales, acquisitions or other maneuvers that might have long-reaching financial ramifications.

“The best companies don’t wait when it comes to preparing themselves from a tax perspective,” he says. “Before you even enter a transaction, make sure your internal finance department or your external adviser knows the impending venture or new contract inside and out. It’s better to understand what is going on as it’s happening rather than have to revisit all the tax stuff in the end.”

HOW TO REACH: Bober, Markey, Fedorovich & Co., (330) 762-9785 or www.bobermarkey.com

Tuesday, 29 January 2008 19:00

Brick by brick

There are two ways to attract and retain customers, says George Davis: You can manipulate them, or you can inspire them.

Davis, founder, owner and president of ProBuilt Homes Inc., says that if you are in the business of building customer relationships, manipulation is fool’s gold. You might get customers in the door with slick marketing tricks, discounts and the like, but you won’t develop the long-standing relationships that form the foundation of many businesses.

“You can discount and advertise and run promotions, but my feeling is that manipulation never builds loyalty, and it’s what so many business leaders focus on,” Davis says. “They think you can manipulate customer loyalty, and I would argue that you can’t. I would argue that the only way you can build customer loyalty is through inspiration.”

To Davis, inspiring customers means not just selling them a service or a product but getting them involved in the process of how you do business. He says you don’t just want your customers’ business, you want their ideas, as well.

“I think the biggest thing customers value in a business relationship is a one-word answer: listening,” he says. “A lot of times as business owners, we think we know everything, and we get blinders on, but what we really need to do is step back and listen.”

Listening is something that takes diligence and discipline. Davis says that you have to make up your mind that you are going to value customer input, and then seek out that input through multiple avenues.

“I’m not the greatest listener, so I have to continually remind myself to listen,” he says. “Here, we do it through surveys and feedback. We might have a customer who has a Realtor, and the Realtor or buyer’s agent probably knows them a lot better than we do. So a lot of times, after we get finished building a home, I’ll sit down with their Realtor, and we’ll get more honest feedback than we would have otherwise.”

Davis views his investment of time and effort in building customer relationships as a point of differentiation for his business. At a time when many business relationships have become purely transactional, he views his method of inspiring customers as a way his business — or any smaller, growing business — can stand apart from bigger companies.

“We built a home for an executive, and because we worked with him, he loved the experience,” he says. “Six months later, he waved me down in the subdivision and said, ‘I have an idea for you. There are 500 condominiums here, and every time I go to one of the social events, everyone is talking about how they don’t like the condos and want to go back to single-family houses.’”

That interaction spawned a marketing campaign aimed at drawing condo owners toward purchasing houses.

“We sent out a four-color postcard, and sure enough, we sold two houses off that campaign in 30 days,” he says. “We had inspired that customer to give us an idea we could use.”

Building customer loyalty is how small businesses become big businesses, Davis says. The business world is full of examples to follow.

“You look at companies like Harley-Davidson,” he says. “People love their Harleys. They’ll get tattoos of them. The same thing with Apple. If you’re a Mac user, you’ll go to the ends of the Earth to sell your friends on Mac.

“That’s how you inspire people. I know we’re doing things right when people do what that guy did, going out of his way to tell me an idea he had.”

HOW TO REACH: ProBuilt Homes Inc., (440) 255-6535 or www.probuilt-homes.com

Building a customer-centered work force

Building a company that seeks and values customer input starts with you, but you can’t do it all yourself, especially if your company is growing rapidly.

George Davis says you need to find people who can help spread a customer-focused mindset throughout your company, something that is less of an exact science and more of an art.

“You can’t coach (a person to value customers), you just find people who feel that way,” says the founder, owner and president of ProBuilt Homes Inc. “I look for people who truly love and care about what they do. But you can’t coach that. You have to hire for that.”

Recruiting methods vary from business to business, but regardless of the talent pool from which you are drawing, Davis says you can’t underestimate the power of networking and building a presence within your industry. After you get to know managers and employees in other companies, you’ll begin to see the types of employees you’ll need to advance your own culture and values.

“One guy I’ve had who has worked for me for three years, previously, he’d worked for another builder for 16 years,” Davis says. “I don’t want to say I tried to steal him away, but in that case, I told him that I wanted him to work for me, and if things changed where he worked, to let me know. Things did change, and I was the first one he called.”

Over time, if you put enough effort into networking and human resources, Davis says you’ll develop your own approach to finding the right people.

“You just get a feeling when you meet with people,” he says. “You learn by meeting different kinds of people, and then you go out and try to find the right types of people to work for you.”

Wednesday, 26 December 2007 19:00

Buying in to branding

It takes a village to build a brand. So believe the leaders of Skoda Minotti, so much so that when they set about formulating a new branding strategy last year, they wanted to get everyone at the 140-employee business and financial consulting firm involved.

Greg Skoda, the firm’s co-founder and chairman, says that your employees are the face of your company, and if they can’t project a clear picture of what your company stands for and wants to accomplish, then your customers will be left in the dark — and that can spell trouble.

“If a chain is only as strong as its weakest link, if a customer calls and doesn’t get the service they want, if we fall down on any step, it’s likely we’ll run the risk of either alienating or losing a customer,” Skoda says.

Skoda Minotti started six years ago as what Skoda calls a “small, tightly knit group of professionals with a common history.” And when Skoda and his partners decided to refocus the company’s branding strategy last year, they wanted to recreate the same small-firm atmosphere but across a company that now carries a work force numbering in the triple digits.

There was no magic formula, Skoda says; it was simply a matter of spending many hours soliciting input, not only from employees but from those outside the company, as well.

“When we went through this process, we spent a lot of time talking to every one of our employees, from partners to receptionists,” he says. “Then we spent time talking to customers, ex-customers, prospects, industry experts, people we refer work to, to get their perspectives, as well.”

Skoda Minotti’s leaders sought many different perspectives for one main reason: Your company is not the company you think it is, it’s the company your employees and customers think it is.

“We look in the mirror and see one picture,” Skoda says. “When somebody else wakes up in the morning and looks in the mirror, they see a different picture. We’re trying to provide value-added services and products to (customers), so it gets to what they think is important. If we’re not aware of what they think is important, we may totally miss the mark.”

Skoda divides the people a company must serve into four categories: employees, clients, business contacts and the surrounding community. If your new branding strategy gets lost in translation to any of those groups, it could damage your company.

“If you fall down in any one of those areas, you are not going to succeed and achieve what you want to achieve because you’re not going to be delivering what they’re looking for,” he says.

That’s why Skoda says you must find out what the people you serve want from your company, then construct a branding strategy that reflects your ability to give them what they want and need.

He says a properly aligned branding strategy that involves both internal and external input can attract not just the right kinds of clients and customers but the right kinds of employees, as well. Those employees, in turn, can continue to attract and retain the customers you are looking for.

“A brand, properly built and out there, can really be one of a company’s strongest assets,” Skoda says. “It’s going to allow people to attract the right kinds of employees, the right kinds of business partners, the right kinds of clients and all the things people are looking for.

“If everybody understands what we’re trying to accomplish, we’re going to succeed wildly.”

HOW TO REACH: Skoda Minotti, www.skodaminotti.com or (440) 449-6800

Patience is a virtue

If you are considering a complete facelift of your company’s brand, Michael Minotti has a message for you: Don’t expect an instant reaction.

The president and co-founder of Skoda Minotti says it takes months, possibly years, to plant the seed of a new brand, wait for it to grow, then harvest the benefits.

“One of things you need to have is a lot of patience,” Minotti says. “There are a lot of companies we’ve seen that start the process, then come out with a brand that doesn’t immediately hit the mark. Once you’ve developed the brand, it could take months, or even a few years, before you see any return on your investment.”

Minotti says you have to allow your brand to develop its own momentum in the markets you serve. The most effective way to accomplish that is through your front-line associates and managers, the people who have the most direct contact with your customer base. But the only way they’ll be able to do that is if you and your management team have provided them with a detailed, well-thought-out strategy that they can present to customers.

“Our front-line employees are our ambassadors, and if we don’t give them a good plan, they’re not going to be able to sell and defend our brand. That’s why you really need to be able to differentiate yourself from the competition, with a strategy that is well-thought-out and can be well delivered.”

And never forget, says Greg Skoda, firm chairman and co-founder, that building and maintaining a brand is an omnipresent task.

“It’s a full-time job for everyone in the organization,” Skoda says. “If we’ve done our work right, everyone has participated in building the brand, maintaining, developing and enhancing the brand, and can help deliver on the promises we make to our customers.”

Sunday, 25 November 2007 19:00

Evans Nwankwo

Integrity is more than just a business buzzword to Evans Nwankwo. It is an essential pillar of his business philosophy that has allowed him to grow Megen Construction Co. from a start-up nearly 15 years ago to a growing $41 million company today. Nwankwo, a native of Nigeria who emigrated to the U.S. to attend college, founded Megen in 1993 after more than 10 years in the construction business. His journey from international college student to president and CEO of his own company has shown Nwankwo the importance of integrity and a straightforward approach when leading people. Smart Business spoke with Nwankwo about the importance of integrity, vulnerability, and other traits and skills of effective leaders.

Set a good example. Integrity is something you cannot preach. There is a saying that, ‘What you’re doing speaks so loud I can’t hear what you’re saying.’

It comes down really to demonstrating that type of character. That, to me, means communicating, not just through e-mail but through speaking in person. Most of the time, if people see decisions made with integrity and see it across the company, they’ll see that you stood by your company’s values and think things through before making a decision.

Show that you’re human. Trust is not something that develops overnight. Trust is something that comes with time.

My direct reports see me be the same person year after year. A larger part of a successful business relationship is constantly being who you are and not changing. That’s how you build that trust.

I also am not afraid to show that I don’t have all the answers. I try to be vulnerable with that so somebody sees that I am not invincible and that I don’t have all the answers.

It does more for my direct reports than for me. If a leader puts himself up on a pedestal, it seems like he is way up there and untouchable. But with vulnerability, people start to see that, ‘Hey, this guy is just like me, someone who needs to take a break every now and then, or someone who needs to leave early to take his kids to soccer practice. He’s human.’ Having a level of vulnerability as a leader allows people to realize that I am just like them.

Maintain your culture. Promoting the culture can be very difficult to put into practice all the time. It’s like saying you’re going to be able to go out there and lose 25 to 30 pounds. That’s not really the hard part. The more difficult part is to keep weight off.

This culture is our DNA. With our people, it has to be a constant. So I have to promote the same culture to everyone, and that’s reflected in the way we do things on a daily basis. That’s the most important way to keep a culture long term.

You need to be very careful when it comes to hiring the people that will carry on the culture. You might have heard the saying that, ‘You have to hire slowly and fire quickly.’ I try to take a great deal of time to hire, but that hasn’t always been the case.

A project pops up, and sometimes we picked the first person who came through the door. Usually, we spend a great deal of time over the course of several interviews to really get to know someone and check out references.

Communicate face to face. Building a detailed communication culture is great, but the better way to communicate is through example. The things that you want to see in others, you need to show the same character yourself.

It takes more than words to communicate. Having said that, there are some fundamental ways to communicate. Here, we have what we call ‘Megen University,’ where we teach and communicate the technical aspects of what we do. We communicate our culture and share examples from experiences we’ve had on different projects, how we handled a situation, how we learned by example.

Making time for communication depends on the size of the company. As you grow, it becomes more difficult to touch everyone in the company on a daily basis. Now that our company is a fairly large size, it is difficult for me as a leader to touch everyone.

I try to counteract that by making sure that my executives get in touch with everyone constantly, so that the cultural pipeline stays constant and that is communicated all the way through the company. However, I do still walk around as much as I can. It is very critical, and it’s how you stay close to the ground level.

If you don’t have time, make time. There is no secret to making time for one-to-one communication. Many people make time for what they think is important.

Because I believe it is the best form of communication and of great importance, I place it high on the priority scale. I work with my assistant to schedule meetings many months ahead over the span of a year.

And during the meetings, it’s a very relaxed environment. We try not to make it very formal. I want to make it informal in a sense so I can learn about my employees’ personal lives. If they are comfortable enough that they are able to share with me what is happening outside of work, it helps me to be able to relate to them and better manage them.

Different people have different ways that they respond to communication, but oneto-one is the most effective. That’s why I have one-to-one meetings with every person who reports directly to me. You want a communication situation where you are able to get feedback.

When I am across the table from an individual, face to face, I can get a sense of all aspects of communication, be that the voice tone, the body language, in a sense, feeling the heartbeat of what is going on with my colleagues. To have one-to-one relationships, one-to-one meetings, has been important for us. I’ve seen how good it has been at creating dialogue.

HOW TO REACH: Megen Construction Co., (513) 742-9191 or www.megenconstruction.com

Tuesday, 27 November 2007 19:00

Leadership blueprint

John Johnson is a people person. And that doesn’t just mean he likes to shake hands a lot.

As the CEO of David Weekley Homes, a $1.5 billion multistate homebuilder, Johnson leads with the belief that the company will only go as far as its people will carry it. If the company’s employees aren’t put in the best position to succeed, the company won’t be put in the best position to succeed.

“It’s critical that we find the leaders we need to run the business,” he says. “We develop and grow our own leaders for the most part. Over 80 percent of our leaders have come up through the company rather than from the outside.”

Cultivating leaders that embrace the company’s vision and values is extremely important to long-term success.

With that in mind, Johnson has helped construct programs aimed at identifying and cultivating the best managerial minds in the company. He says the earlier you can find the next generation of star performers, the better your company is going to be in the long run.

As the leader, your job is to make sure the talent pipeline isn’t just full but trained and prepared for the coming challenges that will face your business.

The right match

When forming a company culture, the people you bring in to perpetuate the culture are as important as the culture itself. Without the right people in the right places, particularly in management, the culture will never grow.

“The owner or the CEO creates the culture of a company,” Johnson says. “After that, the management team either reinforces it or destroys it. I believe that leaders must walk the talk, they have to be good role models, they must live it every day, always be diligent and passionate about preserving the culture.”

With that as a guiding principle, Johnson and his staff are meticulous about interviewing potential management candidates, including a series of lengthy interviews, screenings and evaluations.

By the end of the process, Johnson and his staff should have been able to get a real picture of how the candidate thinks and performs in a variety of situations.

“One step in the process is a three-to-five hour interview,” he says. “Usually after three to five hours, people will get tired, and they’ll pretty much tell you how they feel. We invest a lot of time and energy in that since it’s so critical that you hire the right people the first time.”

It’s especially critical in management positions because an employee’s boss is usually the one who sets the tone for the culture.

“To our 1,400-some team members, their boss is the most significant person,” Johnson says. “That’s who they report to and communicate with daily. That person has to be walking the talk, they have to be representing the culture of the company. They are the eyes and ears for me out in the field.”

Johnson says high integrity and a strong will to succeed and well-developed communication skills are three of the most important characteristics any manager should have, and that factors heavily into the interviewing and screening process at David Weekley Homes.

For current employees, even before they develop an interest in pursuing a management-level job, Johnson’s staff is evaluating that person as potential management material.

“We look for folks who exhibit those (management) traits and sometimes give them leadership opportunities while they’re in that job to see if they really want to do it before we put them into a training program,” Johnson says.

Once a managerial candidate has been selected, the next step is to train him or her. To make sure the same values and culture are passed on to the new managers, Johnson has helped set up a mentoring program that allows experienced managers to interact one on one with incoming managers. It’s called a leadership pipeline program, and it exists in each of the 18 cities where David Weekley Homes does business. The program emphasizes training across various disciplines, so the new manager receives lessons not only in the area in which he or she will be working but also in other areas of the company.

“We typically set them up with a mentor to help further their skills,” Johnson says. “Once that is over, we’ll typically take the people we feel have the most potential and put them in cross-training functions. For instance, we might put a builder in the sales office or put a salesperson out building homes, so that gives them a better understanding of our business.”

Johnson says managers need to know as much as possible about the jobs of the people they will be managing, either directly or indirectly. It’s the only way they’ll be able to build any long-term rapport with their subordinates. In a larger company, it is likely impossible to give an incoming manager a slice of every job performed under your company’s umbrella, but the wider the perspective you can give your employees, the better.

“We might not expose them to all areas, but we give them as much exposure as we can because they’re going to be managing all those different functions,” Johnson says. “So you at least have to have some understanding of the skill sets and the challenges that the team members have. We try to make it as well based as possible, so at least they’ll have some understanding of the jobs of the people they’re managing.”

Consistent communication

Having a formalized training process for new managers is important, but it will only work properly if you set the ground rules in the first place.

It goes back to Johnson’s belief that the leader of a company sets the tone for the culture. Your managers can carry the torch, but you have to light it and keep it lit. The way you do that is through good communication.

Johnson places a priority on in-person communication, which requires diligence and a willingness to amass frequent flyer miles if your business has locations in many cities.

“I get out to each of our cities at least once a quarter, visit every one of our divisions every quarter, and when I’m out, I get around to almost all of our sales offices, construction offices and division offices. I spend a lot of time out in the field, face to face with our team members. That is by far the most effective way.”

Johnson is a proponent of face-to-face communication, but he recognizes that it can be a time-consuming method of getting your messages across. If you want to engage your employees in person, there is no magic formula. You must make it a priority, even with all the other tasks, projects and items that beg for your attention on a daily basis.

“Every quarter, my assistant and I set up my travel schedule, and we make it a point to make sure I get around to see every city,” he says. “If we have to give something else up, we give something else up. It’s not difficult to do if you understand and appreciate the importance of doing it.”

Face-to-face communication is important because it gives you a front-row seat as to what is going on in the field. It also allows you to really listen to what your front-line employees and managers are saying.

Johnson says listening is a major key to becoming a good communicator. You develop listening skills through practice and through interacting with your team. After meetings, Johnson asks his managers to grade him and offer advice on his listening and communication skills.

“The only way to determine if you are effectively communicating is to ask questions and listen to the responses,” he says. “A good communicator should properly identify who his audience is and adjust his style to best fit their needs. I usually find that the simpler the communication, the better.

“You should also remember that communication is more than just verbal. You should keep in mind body language when communicating and use all forms of communication.”

Keeping it simple allows your messages to stay consistent. Messages that need to reach a companywide audience can’t get bogged down in jargon or unnecessary wordiness or you run the risk of it getting lost in translation. Johnson uses every opportunity he can get to sand and polish his messages for simplicity’s sake.

“It’s through the training programs and quarterly meetings, so all our management team hears the same messages,” Johnson says. “We pray from the same hymn book, so to speak, and it’s through consistency of training, consistency of measurements and communication. We work very hard at that.”

A leader that delivers messages that are hard to follow or messages that seem ambiguous or noncommittal is a leader that will lose credibility. That is a dangerous area for anyone to tread.

“People can spot a phony from a long way off,” Johnson says. “One of the first things people lose respect for is someone who doesn’t speak the truth. That’s one of the most grievous sins you can make — not walking the talk, not being consistent and being a phony.

“You build credibility by walking the talk over time. I can talk and talk, but until someone sees what this company is about, there are going to be some doubts.”

Motivation matters

Even after you’ve selected, trained and established communication with the future leaders of your company, your job isn’t done. Enabling employees to succeed is a process that requires constant maintenance.

If you have placed authority in someone’s hands, there is a large trust factor involved. You must trust employees to do their jobs on their own unless they prove they can’t.

Johnson says trust is a form of respect a superior shows to his or her subordinates. If you don’t trust the people you have chosen, they won’t feel respected, and your company will suffer the consequences of poor leadership.

“To show respect, there are three ways to do that. One is you show trust to someone. Showing trust to someone is showing you respect them, and part of that trust is the freedom to do their jobs without interference. The second way of showing respect is care. Showing them that you care about them and are going to treat them fairly. The third way is recognition. That’s when you tell them they’re doing a good job, and here, we love to celebrate success.”

At all of the David Weekley Homes offices, there are scoreboards displayed. Employee performance and team performance are measured through many different criteria and the leaders are rewarded.

“Recognizing someone is a reaffirmation for them,” he says. “It shows them that the company or their boss recognizes that they did a great job and really appreciates it. Giving out money or a trip is also nice, but it doesn’t have to be money or a trip or an award. It’s just acknowledging that they did something. It’s something human beings crave — respect and recognition.”

HOW TO REACH: David Weekley Homes, www.dwhomes.com

Friday, 26 October 2007 20:00

Manning the trenches

They’re called “daily minders.”

On the surface, it might seem like a simple daily ritual to outsiders. Every morning, across all of Crothall Services Group’s installations in hospitals and health care facilities across the country, employees meet with their team leaders, who brief them on the cleaning and maintenance tasks of the day.

The daily minders last only a few minutes, but in those few minutes, says Crothall President and CEO Bobby Kutteh, the goals of the entire company are reinforced.

Crothall — a provider of laundry, cleaning and maintenance services to health care facilities — is a company with approximately 25,000 employees spread throughout the 1,400 facilities in which the company provides services. Each of those employees not only has to represent the values of Crothall but also of the facility in which he or she works.

Any CEO, regardless of communication aptitude, would have trouble accomplishing that alone. That’s why Kutteh [pronounced ku-TAY] relies heavily on the people below him to make sure messages stay consistent and goals are accurately communicated.

“You have to have people on-site who can properly communicate and motivate,” he says. “Some of it starts with the willingness of our on-site managers to genuinely care about their people so that they take the time to invest in the person’s training and invest in getting to know the person. Our people need to feel like they’re coming to work to do more than just a job, but that they are coming to a place where they can make a difference in serving the clients.”

For Kutteh, building an engaged work force starts at the front lines, and it isn’t about long-range visions and grand statements. It’s about appealing to your people on a personal level and making them realize that their role in the company matters.

Simple and focused

Your front-line managers aren’t going to be able to promote the company values to their employees if you don’t promote the values to them. That means you need to have an active communication culture that is centered on driving messages downward and outward.

Kutteh says that when it comes to communication from the top, you need to remember one word above all others: Simplicity.

“Simplicity matters big time. You can hear it and read it seven times before you internalize it,” he says. “You need to have simplicity of message and then the ability on the manager’s part to roll up his or her sleeves and perform the function or training. It goes a long way.”

To make sure messages reach their intended targets with a minimum of organizational static, Kutteh emphasizes communications mediums that can reach many people in a short period of time.

Some of the more effective means of mass communication at Crothall are Internet-based. Kutteh reaches all of his on-site managers with Web casts and DVD presentations, and the managers are then expected to use Kutteh’s communications as a basis for starting a dialogue with their own workers.

“We expect (on-site managers) to conduct meetings for their people using my update message as a basis for conversation and interchange and updates on the company,” he says. “Web-based communication is one of the most effective ways we have done that.”

The aim is to keep managers and employees interacting every day, particularly over how the national goals Kutteh and his staff set are of importance to employees on the local level.

“We insist that our people, at a minimum, apart from daily meetings and daily training encounters, meet with their leaders on a daily basis to communicate things from our company, but more important, communicate things of local importance,” Kutteh says.

Focusing every level of the company on the same simple, broad messages is a key factor in getting everyone, regardless of their professional motivation, on the same page and working to put out the same product.

Kutteh says it can be difficult to focus a large organization like Crothall — which had approximately $629 million in 2006 revenue according to Hoovers.com — on a wide-ranging set of client-focused goals, especially when 23,000 of Crothall’s 25,000 employees are hourly wage-earners who might be on board for a paycheck and little else.

Employees who come to a job with a paycheck as their primary motivation need frequent interaction with management to try and make the job about more than just punching a time clock. Despite the fact that much of that responsibility is placed on their direct managers, Kutteh says the responsibility finds its way up the ladder to corporate management, which means Crothall needs to have a system in place for managing employee buy-in by making sure that no one person has too much to oversee.

“The big success for us has been ensuring that our span of control is reasonable and manageable and affords the manager the discretionary time to do all the critical things,” Kutteh says. “So we have ratios of numbers of hourly employees to managers, managers to region managers and on up the levels in terms of the right span of control. It provides a workable oversight and accountability to make sure that the message is communicated or that the function is performed in an adequate manner or whatever the requirement might be.”

No matter how far down you might want to drive the decision-making that directly affects your front-line employees, Kutteh says the ultimate responsibility for getting them to buy in will find its way to you. If you don’t set the proper tone at the top, employees and front-line managers won’t produce the right results for clients and customers.

“It starts at the top of the organization where there is an understanding of the key expectations of our company and that there is a spirit of partnership,” Kutteh says. “You need to have an understanding that even though some people might be viewed as the low man on the totem pole, they’re all individuals that need to be respected, and in turn, included in staff meetings and situations where our services might impact the ultimate outcome desired.”

Growing the right way

Keeping everyone on the same page is critical to growing a successful company culture. It’s also critical to more tangible forms of growth.

Everyone in your company needs to know your strategy for the future and how everyone fits in to the plan for the company moving forward.

If all your employees don’t have a clear picture of where the company is headed and what they can do to help the company arrive there, it can lead to confusion, rumors and, possibly worst of all, unsuccessful growth.

Kutteh says a good communication infrastructure can provide the conduit but you have to monitor the consistency of the messages traveling through the pipeline.

“Communication is No 1. No. 2 is some sort of well-defined and internalized strategy so that people know what your strategy is and that you live it by example, that you adhere to the strategy, and you’re not jumping at every opportunity because it feels good at that moment in time,” he says. “It has to fit in to the overall scheme of things.”

Kutteh says growth that oversteps the boundaries of what your company can successfully provide will cause you to lose customers and lose the confidence of your employees.

If you can’t do it well, don’t do it at all. He’s had an opportunity to practice what he preaches on numerous occasions.

“We’ve had growth opportunities that appeared to be a natural adjunct to what we do, like providing security services,” Kutteh says. “We contemplated it, we did a lot of research, there are companies out there that do security in health care that approached us, but at the end of the day, it just wasn’t something we had the competency to do or the programs, systems and training.

“We felt like the markets and services we were currently in provided us with a good marketing opportunity for many years to come.”

If you don’t have a well-defined set of goals for the company and don’t communicate those goals to your employees, it will become too easy for you to follow any growth opportunity that comes before you and your leadership, which can lead to a false belief that you can pick up skill sets and develop competencies as you go.

“What I say to our salespeople is don’t put something in a proposal if you’re not 100 percent confident that our company can deliver it operationally,” Kutteh says. “Why make up stuff to a potential client just as a short-term retractor when you can’t ethically commit to it on the back end?

“We’re a company that has been growing rapidly and the temptation is there a lot. It requires discipline and a commitment to the agreed-upon strategy to not venture into places where you don’t have the capability. It’s sometimes easier said than done.”

To stay focused, Kutteh involves many different levels of the organization. Not only does it allow him to communicate Crothall’s vision and strategy, it allows managers from across the board to have a say in the company’s growth, and if the managers are having a daily dialogue with their people, it, by extension, allows everyone in the company to have a voice.

Kutteh says it might be an “atypical” strategy for such a large company, but it has worked.

“What we have done in the past is we have hired an outside person to confidentially interview and have open discussions with many of our middle managers and support staff about what is going on,” he says. “We want to know what they see as the future direction of the company, where things are going, where are the hot buttons. Then that (outside person) works with me to formulate that into priorities, into something that can be concisely and succinctly communicated to the organization.”

A consistent culture

Through a time of growth and change, it’s critical that employees feel some sense of stability, or they might begin to lose confidence in the company’s future. For employees to feel stability, Kutteh says they need to feel like the company’s culture is solid.

Again, it comes back to culture and holding people accountable for internalizing the company’s values.

“One of the first questions I ask people when I go to a unit is, ‘Who wants to tell me what the values of the company are?’ and, ‘Who wants to give me an example of what each of our values stand for and maybe share a story of when they think the values might have been breached?’” Kutteh says.

“It’s the constant reinforcement and keeping it on top of their minds that has been critical and powerful for us to successfully maintain our culture.”

In the end, it comes back to the CEO, the president and the senior leadership living the values of the company. If you don’t set the example, no one else will. And you can’t just do it within the confines of corporate headquarters; you have to practice what you preach in front of your people.

“Much of it is through active visitation of your people, through regular and frequent dialogue,” Kutteh says. “Some of it is through training, through employee surveys or even through something spontaneous. But it has to happen. If the people in the field don’t have a respect or 100 percent confidence that I, as a CEO, am living by the values of the company, it could be damaging to the culture and damaging to the ongoing progress of the organization.

“It’s really living the values and living according to the principles of the company, then being good people and good stewards of the company’s most precious asset, and that’s its people.”

HOW TO REACH: Crothall Services Group, www.crothall.com

Friday, 26 October 2007 20:00

David Hodge

The best teachers are the ones who are always learning. It’s a universal truth of leadership that David Hodge says he has seen proven time and time again in his years as an academic administrator. Hodge, who has been president of Miami University in Oxford since summer 2006, says the best leaders are always seeking input — always tapping the potential of others in the organization. And he says the only way you can do that is by reaching them, which means you must have finely tuned and well-polished communication skills — and you must use those skills to challenge your people to think. It can be a difficult task when you’re leading an institution of 4,000 employees and more than 20,000 students, as Hodge does. Smart Business spoke with Hodge about how good communication gets employees involved in setting the course for an organization.

Start building a fire. I’ll give you a quick story about how this works. I was meeting with a group of classified staff in May at a half-day workshop. I gave to them a story — it probably never happened, but it doesn’t really matter. A group of visiting executives were wandering one of Boeing’s plants, and they came to a custodian. They didn’t know the person was a custodian, but they asked him, ‘What do you do here?’ And the custodian responds, ‘I build airplanes.’

I thought, ‘What a great statement, what a great story that demonstrates what you’d like people to think about what they do.’ So I turned to our group and asked, ‘What do we build?’ It was a rhetorical question. I wasn’t looking for an answer, but almost immediately from the left side of the room, someone said, ‘We build students.’ But no more had that person stopped speaking than someone from the other side of the room said, ‘We build the future.’

There are classified staff doing what is usually most of our more routine jobs in the university, and they got it. And others in the room are agreeing. So I don’t know if it’s more to teach or unleash the passion that is in people, but I think that I love that story because it says so much about our staff and how the bigger picture is part of what motivates people.

Communicate in more than one way. You have to have multiple ways of communicating. There is no one absolute way. People will listen to certain kinds of messages, and other people listen to other kinds.

Some like to read things, others like to be told things, some like to be in a meeting and have a conversation back and forth. So for the message to be heard, you have to say the message over and over again in multiple ways, in every way possible.

Know what your core message is, and say it again and again. Use examples to illustrates those core messages every time out. Examples might be praising somebody or drawing attention to somebody else.

A mistake many leaders make is they’re afraid that they’ve already said something once and thinking that people are going to get bored if they say it again, simply to say it again. However, first of all, we’re typically talking to different groups all the time.

Secondly, all good messages need to be repeated over and over and over again to reinforce that notion. Each of us has our own ‘a-ha’ moments where we finally get it. That just takes time and a relentless commitment to communicating the core messages. You can’t be afraid to keep communicating, even if you’ve said the message once before.

The second point is all of us deepen the level of learning and our level of understanding by continuing to grapple with the same core issues. There is a superficial level of what is the mission of your organization and what is your identity if you can give a one- or two-sentence answer in all of that. But for us to feel that in our bones and to understand how each of our actions actually plays a role in that is a continuing process of discovery. That’s why core message plus an evolving set of examples leads to a deeper understanding of who we are, where we’re going and how we each can make a difference.

Make communication a two-way street.

You have to ask good questions to get good feedback. Setting up a complaint box or suggestion box is a pretty ineffective way to do that.

You have to be with groups of people and ask real questions. I come back to that example with the classified staff when I asked, ‘What is our product?’ and I didn’t think about it as a real question but a rhetorical one. But the more we ask questions, the more chances people will have to actively think about something.

Telling people stuff is a very passive process, and we know that it doesn’t lead to very deep learning. But posing questions that we’re trying to solve together, the literature is overwhelming that it is a much deeper level of learning, plus you get commitment and passion and vision.

It’s about active versus passive learning, right there, that dichotomy. You can see this in teaching all the time. You get up there and just lecture to people, their brains are not engaged in a deep learning way. It’s a very superficial learning. Even if they’re not given a chance to answer the question, if you pose it in a way that everyone in the room is wrestling with the question, you’ve gone a long way toward achieving active learning.

HOW TO REACH: Miami University, www.muohio.edu or (513) 529-1809

Tuesday, 25 September 2007 20:00

Richard Daniels

There is a difference between what you think you’re communicating and what other people think you’re communicating. Richard Daniels first read that message years ago, and it has stuck with him to this day. The president and CEO of McCullough-Hyde Memorial Hospital in Oxford, which posted 2006 revenue of $48 million, says that internal communication isn’t a simple matter of verbal pitch-and-catch between a business leader and his or her employees. Instead, it’s a sometimes-complicated process that takes a good deal of maintenance to keep working. Daniels says good communication takes many forms, both written and spoken. And if you want to truly engage your employees, keeping them informed and reinforcing your company’s vision and values, then, he says, communication is something you have to tackle every day. Smart Business spoke with Daniels about how to use communication to empower your work force.

Communicate in many different ways.

Communication is a hard thing to measure. You might think you’re doing a good job, but you don’t realize it until you get feedback.

The big issue is how to have some objectives and evaluation by others as to whether there is good communication. The methods we’ve used have been all sorts of things, everything from direct working with the managers, the managers working with the staff, attending meetings within the departments so you have the direct interaction with your front-line people.

Every employee gets something in writing, so there’s not a possibility of distributing it differently or a possibility that some may read it and some may not. We try to get things directly into people’s hands. So it’s all the traditional stuff, things on bulletin boards that we have throughout the facility. There really is no one way to communicate that is more or less successful than another way.

However, you need to communicate through different means because some people are visual people and some are not. Some people understand communication best verbally. Some understand better if they have a chance to read it and think on it. People have different levels of understanding of the organization or the issues in particular areas.

Particularly in health care, we have everything from on-the-job training to clerical or environmental services to nutrition services. Some might not have Ph.D.s but are people who are very well-educated and very knowledgeable in very specific areas. So people have different levels of capabilities in terms of understanding and appreciating the information.

Take an employee’s perspective. I don’t know who said it first, I read it a long time ago, but someone said, ‘When you are communicating, there is what you want to communicate and what you actually do communicate.’

It’s what the recipient of the communication heard, so there are many factors that go into how things are communicated and how things are understood. To expect that one way or method, even if it’s repetitive, will be successful, that might not necessarily be the case.

You can never be totally sure that people are hearing what you are saying. You try to get feedback by directly asking people or through asking the front-line managers, ‘How are the people in your area reacting to the information? Are you getting questions from people?’ But it’s still subjective and iffy at best.

Get your best players on the field. The biggest thing with communicating your vision would be to set the base, which would be the values that go with mission and vision of the organization.

That tends to happen when you get the core group that has been a part of the organization for 10, 20 and 30 years involved. They are kind of the base around which a lot of other people come and go over time. The longer-term people have kind of internalized in a general sense the direction of the organization, the philosophy.

A certain amount of that rubs off on the other people. That occurs, and the other part of that is, periodically, you try to reinforce that with more formal education or training programs or other ways to get the point across differently.

Recognize your employees. You try to recognize people on a personal basis, by saying, ‘thank you,’ face-to-face. One of the advantages of e-mail is that you can hit a whole bunch of people very quickly when there is a particular success.

One of the things we started doing several years ago is budget $50 for each employee in a department, so the department manager has money set aside for however they want to use it. They can buy a $10 gift card to give to a person as a measure of thanks for extra effort.

The point is to give the recognition. Even though it’s not a big deal in terms of dollars and cents, it’s a big deal to the recipient, no matter how large or small it is. It’s the process of the recognition, not necessarily the value of the reward itself.

Keep it real. You try to be straightforward with whatever is going on, so that there isn’t any hidden information or hidden agendas. People trust what you are doing, and you try to be fair and consistent and reasonable with how you go about change. Things are always bound to change, and there will always be new challenges you have to face, which means you need to have a philosophy about how you do it.

HOW TO REACH: McCullough-Hyde Memorial Hospital, www.mhmh.org or (513) 523-2111

Thursday, 26 July 2007 20:00

Daring to be great

“Dare to be great.”

Those four words might sound like a slogan from a break room motivational poster, but to Bill Whitmore, they are four words with which he has done more than just tack to the wall.

He has placed those words in the hands of every employee at AlliedBarton Security Services in a very real way.

Upon being hired and entering training at the $1.2 billion private security provider, each employee receives a “Dare to be Great” booklet. It outlines the company’s core values pertaining to leadership, vision and teamwork, it includes some of Whitmore’s personal beliefs on management, and it gives new hires something of a path to follow to become a working cog in the AlliedBarton machine, which has about 50,000 employees nationwide.

For Whitmore, chairman, president and CEO of AlliedBarton Security Services, “Dare to be Great” is about keeping his work force on the same page and giving it the tools to be successful.

“We describe the core purpose of the organization, the core values,” he says. “We actually list what our ideal culture is. Then we have leadership nonnegotiables, we have operational nonnegotiables and security officer nonnegotiables, and we have to live by those.”

Whitmore says you can leave nothing to chance when it comes to building and communicating your culture. Employees must know what is expected of them and know that the company will support them as they do their jobs.

If you have well-coached, enabled employees, chances are you will have satisfied customers who keep coming back to your company. But it all starts with the words and actions that cascade from the CEO’s office.

A singular vision

Driving a finely tuned culture through an organization involves far more than just standing on your proverbial soapbox and preaching team unity. Whitmore says it’s as much about feedback from employees as it is about what you tell them.

If you don’t give employees a voice in the direction of the company, your chances of getting them to buy in to what you are saying go down, and that factor increases exponentially when you’re dealing with a company of 50,000 people.

In order to give everyone at AlliedBarton — including the security guards who provide the company’s end product — a chance to have a say in the company’s vision and values, Whitmore employed a third-party research firm to gather data in advance of producing the “Dare to be Great” booklet.

“We hired a third-party firm to go out and do online and in-person focus groups,” he says. “We didn’t do all 50,000 people, but we did do thousands of employees, enough to validate the results.”

The data were evaluated and processed with the help of a strategic planning specialist, who helped compile the “Dare to be Great” booklet.

“Dare to be Great” is a starting point for Whitmore, but it’s intended to be more of a companion guide and quick-reference tool. The most important opportunities to communicate your vision and culture are the face-to-face meetings with your managers and employees. It might not be practical to make face-to-face meetings your primary means of communication, but Whitmore says it’s the most effective means of getting your message across.

Periodically, Whitmore runs a series of leadership “boot camps,” designed to get the company’s various levels of management together and talking.

During those camps, Whitmore makes personal interaction a top priority.

“We were running a leadership boot camp (in May), and every evening I’d go out and do the Jack Welch thing, have a fireside chat with our managers,” he says. “When we do camps in Philadelphia, my wife and I have whoever attends come to our house for dinner.

“Frankly, it drives my wife a little crazy because we have a lot of them, but for a class of 60, we’ll have a buffet at my house and get people to speak and build teamwork. For a class of eight, we’ll sit around the dining room table and have dinner. But at every step, we’re trying to foster a sense of teamwork and let people know they’re empowered to act on behalf of the company.”

Whitmore says that after gaining a certain level of experience, business leaders form a kind of intuition about their company and their people. He calls it developing a “gut feeling,” and it factors heavily in how he manages his employees.

Among other factors, Whitmore places a high emphasis on getting to know his managers personally so he can properly direct them when they come to him with a question or a concern.

“Someone posed a question to me one time about a client, that our employees might be exposed to personal risk,” he says. “Employees and managers spoke to me; they said, ‘I’m really debating this. It’s a big client, a lot of money, but in my gut, I’m a little worried.’”

After listening to their concerns, Whitmore directed them back to the “Dare to be Great” booklet.

“I told them the answer is in there, and we ended up not taking the piece of business. Because if you do feel your employees are your most valuable asset, and you do care about them, you’re not going to expect them to do something you feel isn’t right. That’s how people recognize that they are valued.”

Recognition and engagement

Whitmore says there are two levels of employee recognition. And contrary to popular belief, he says money falls in the lesser of the two.

The first level is the tangible rewards, such as financial compensation and gifts. While the vast majority of employees would never scoff at a cash bonus or a gift certificate, Whitmore says you are missing the point if you think your employees are working hard because they want more material compensation.

The best employees aren’t driven by that first and foremost, he says, and he tries to set his own example.

“What I believe as the chairman and CEO, I don’t come to work thinking about what my paycheck is. I get engaged in our company, and I get excited to come to work to build the company and build a future for our employees and shareholders.”

That’s why the second level of employee recognition — the intangibles — is more important to Whitmore.

By intangibles, Whitmore isn’t referring to simple pats on the back or applauding someone at the quarterly all-company meeting. When Whitmore talks about intangible recognition, he is referring to reward by engagement.

The more an employee shows a willingness to work toward your company’s goals and objectives, the more that person should be involved in steering the company.

Whitmore says that type of involvement, in and of itself, is a reward to a truly driven worker.

“Don’t think of it in terms of the surface, in terms of somebody getting a pat on the back,” he says. “I’m going deeper than that. Here is an example: We have standing committees in the company. They could be on anything, be it risk, sales and marketing, technology. We rotate membership and invite managers to participate.

“If you’re working at a company and believe the company really values your input, you feel like you’re really creating value here. Not necessarily monetary value but a good customer relationship, a good employee touch.”

Whitmore goes a step further and gauges his employees’ level of engagement. As he did when AlliedBarton was compiling information for the “Dare to be Great” booklet, Whitmore has his staff send out periodic engagement surveys to field offices in various markets.

The object of the surveys is to give management a sense for how connected AlliedBarton’s employees feel. Low scores in a given market means that market gets more attention from headquarters. High scores will also make management sit up and take notice.

“If we come back in a market where employees feel extremely engaged, we want to take that manager and have that person help mentor others,” he says. “It’s a combination of hiring people, giving them the tools, programs and practices to keep people engaged, and the last thing we do is monitor their engagement.”

Leading yourself

As the company leader, chances are you are always asking yourself how your company can be more efficient, how your employees can do their jobs better, and how you can draw up policies and procedures that are streamlined and effective.

But even with all the evaluating that you must do on a day-to-day basis, Whitmore says you can’t forget to look in the mirror.

That businessperson staring back at you needs occasional maintenance, too.

One of the traits Whitmore says he most admires in a president or CEO is curiosity. Good leaders are curious about themselves as much as — or even more so — than they are about the companies they run.

“If you’re not curious about yourself, about others, about how to improve, about how things work, I find that does not make for a good attitude,” he says.

Whitmore says a good leader wants frequent feedback on how he or she can perform better. When he recently attended a leadership conference, Whitmore picked up a stack of 360-degree personal evaluation forms. When he returned, he had just about everyone who knows him personally — family, friends, peers, employees — complete an evaluation of him.

“I felt I knew how I performed, how people perceived me, but I wanted to know, in an anonymous way, was I the person I thought I was?” he says. “That’s curiosity about your leadership skills.”

Whitmore wanted to know where he stood as a leader in the eyes of other people. He believes that if you aren’t a good leader in the eyes of those who follow you, then you aren’t a good leader, period.

That is why Whitmore believes in taking a people-first approach to leadership. Above all else, he says, it’s motivated, enabled, engaged people who will make your company successful, not necessarily the efficiency with which you do things.

Whitmore’s fundamental business leadership belief is this: Efficiency, prosperity and satisfied customers come when you have great people doing great jobs for your company.

“It’s not just about efficiency,” he says. “I think there are a lot of statistics that will show you that engaged employees perform better than disengaged employees.

“What I’m looking for is, are the employees really engaged, are they delivering great service to our customers? If you do that, efficiency is a byproduct. You can be very efficient and lose every customer you have. It isn’t the be-all, end-all. But if my employees are engaged, my fundamental belief is that they’ll deliver great customer service, and we’ll have good financial results.”

HOW TO REACH: AlliedBarton Security Services, www.alliedbarton.com

Saturday, 26 May 2007 20:00

Redrawing boundaries

Several years ago, Heinrich Kolem’s business had reached its limit.

Growth at the Siemens Medical Solutions Customer Solutions Group had stalled. Avenues of growth were rapidly being exhausted and the company’s progress was grinding to a halt. The company was, to borrow a city-planning term, approaching build-out.

With the company approaching the boundaries of what it could realistically accomplish, Kolem, the company’s president, realized changes needed to be made, or it would stagnate and begin to backslide.

The Customer Solutions Group, which accounts for about half of Siemens Medical Solutions’ approximately $11.2 billion in annual sales, needed to find new ways to grow, and for that, needed a number of changes in how it approached growth, innovation and communication.

“We had to change things to allow the organization to grow again,” Kolem says. “This is part of the changes you have to apply, and changes always cause a lot of disturbances, which is something I have had to overcome.”

Kolem says the best way to change, and to smooth over the wrinkles that accompany change, is for management to listen. He wanted a company of engineers and marketers that excelled at gathering and refining ideas from customers and from each other.

With that in mind, the senior managers started listening to ideas from various parts of the company about how improvements could be made and what was possible to achieve.

Finding a new path

Kolem says the organizational change followed one underlying theme: More decentralization. Kolem wanted his field workers and managers to have more latitude in dealing with customers, and in order to do that, they needed to be enabled to make their own decisions more often.

That, he says, is why frequent meetings early in the process were so important.

“You involve some other teams in preparing the changes, discussing in an open way what needs to be changed and what could be done,” he says. “By involving more and more people, you get a feeling of what could be done.”

However, if you want to get different perspectives, you have to be careful how many perspectives you are getting. Brain-storming is good, but when dealing with issues of steering the company, know when to say when.

“Of course, you can’t involve 5,000 people, but maybe at least pick 25,” he says. “After you talk to 25 different people, you can get a real feeling of what the needs are and then you can start in on it.”

Kolem began a program last August in which he brought together a cross section of the company’s various departments, creating a kind of think tank of decision-makers. Over the span of about 10 meetings between August and December, Kolem and his senior leadership began to form a long-term picture of where the company needed to go.

Through the input received from those meetings, Kolem began to see where the Customer Solutions Group would be in three to five years if new and expanded growth avenues were not found.

“I basically let them ask the questions themselves,” he says. “What is the situation we are in? Why do you think we need to grow significantly? We had meetings where we listed the strengths and weaknesses of the organization as is.

“From there, we looked at the projections of the business volume and intended growth from our side, and then at what would be the challenges in 2010 and 2012. From there, it was clear the current organization structure would not be able to handle that. I asked them to just think about that, and I got a lot of ideas.”

Kolem says that organizations tend to either centralize or decentralize a little more or less than what they should. By empowering the people under him to take more of an active role in generating ideas and steering the company, he says he aimed to take some of the decision-making burden off of central management and put it in the hands of the people who are most familiar with the customers.

Kolem uses customer response times to gauge how centralized his company is.

“If you find out it takes too long, it probably means you have too strongly centralized an organization,” he says. “If the customers always have to go to a certain central office, or your main headquarters, it probably means it’s too strongly centralized. Then it becomes very clear what you have to do.”

By enabling the people who deal with your customers, Kolem says you can make your business more maneuverable and able to react to changes.

Innovate to grow

On matters of innovation, you need to not only be working for your customers, you need to be working with them, taking their ideas and concerns, and splicing them into your innovation process.

An innovation that does not address a customer need is an innovation that was created in a vacuum and will probably have no real growth effect on your business.

“An innovation is only a successful innovation if it is successful in the market,” he says. “For us, that was a key ingredient, to make sure everyone understood that.”

Kolem says it has been important for his employees to view customer relationships as partnerships, as opposed to being merely transactional. Engineers at the Customer Solutions Group meet with customers regularly, exchanging ideas and feedback and above all, listening, which contrasts with some of the traditional models of customer interaction, centered on “We talk, you listen.”

“The very simple thing is just that: Listen,” Kolem says. “Very often, people go out to the customer and tell them, ‘This is what you need to do and this is how we’re going to do it,’” he says. “We first go out, listen to them, what is their environment, how they see their challenges, and ask them to describe the situation they are in. Often, they come up with a lot of ideas of what they think should be done, along with little things that are small side remarks.”

Kolem says to keep your ears open when a meeting turns to casual banter. The side remarks in a meeting can also be harvested for small innovations at times.

“Often, if you listen to those small side remarks, they are ways we can easily improve and help (the customers),” he says. “So we go through, at the beginning, these certain small steps, which help establish our relationship with customers for further future projects. A lot of things are about developing long-term relationships and starting to be successful in smaller steps.”

With an eye toward fostering long-term relationships with customers, Kolem’s staff discusses with customers the landscape of the medical solutions industry as it might appear five or 10 years from now. Through that, they begin to paint a picture of where Siemens Medical Solutions sees itself in the coming decade versus where the customer’s company sees itself, and begin to form a plan as to how they can best fit customer needs.

Kolem’s philosophy is to consider every idea, no matter where it came from, so the Customer Solutions Group interfaces with customers on three different levels, each designed to refine a project based on who came up with the original idea.

The first level deals with innovations that were directly inspired by a customer need. The engineers work with customers to make sure the project has a hand-in-glove fit with what the customer is seeking.

The second level deals with innovations that were sparked by internal brainstorming sessions. For those ideas, Kolem’s staff assembles focus groups comprised of representatives from customer companies. The focus groups are asked in a structured fashion for their feedback on the idea, and whether it would adequately address their issues.

The third level requires employees in the field to develop and maintain close working relationships with customers, then feed what they learn up the organizational ladder to the decision-makers so the company can react quickly to an emerging need in the marketplace.

Kolem says experience has taught him that a company’s fact-finders always need to dig deeper and learn a little bit more than what they already know. You do that by going beyond the business-speak at the conference table and really getting to know your customers and their day-to-day business lives.

“If you just do this in a structured way and people are only getting specification requirements instead of talking directly to the customers, there are still a lot of details that are open for engineers to solve,” he says. “Once that relationship with customers is established, it is very helpful for an engineer to just be able to ask and refine the product to the optimum. Once we had done that several times, we just started to make it a part of our regular process.”

Getting on the same page

A big part of spurring growth is to get your idea-makers to start thinking outside the box, but in order to do that, you need to get them to think together.

As with customer interaction, Kolem says listening is the most important thing a business leader can do, and the most important example he or she can set for the rest of the company.

At the Customer Solutions Group, it’s as simple as pizza pie. “What you can do is from time to time have one-on-one conversations with different levels in the company,” he says. “What we have had are pizza meetings where you just invite people for a pizza lunch and say ‘Let’s just talk.’ You let them talk and listen to what they have to say, and thereby, also have a chance to correct some of the misunderstandings that always happen when you communicate over several lines of hierarchy.”

When Kolem needs to communicate something throughout the company, he says he relies on keeping the message somewhat simple so that it can reach the largest possible audience, and reach them quickly.

But there is such a thing as making a message too simple. “It’s very helpful if you can keep a message simple, but you don’t want to keep it too simple because certain parts of the organization will dismiss it as the same old marketing-speak that they don’t want to hear,” he says. “It has to be the right level.”

Kolem walks the line between simple and not too simple by keeping his messages broad and basic to begin with, and then delving into more narrowly focused and complicated matters as employees become more familiar with the issue.

“You come out with some leading simple words like, ‘What do we want to achieve?’ and words that describe the goal like, ‘We want to achieve more customer intimacy,’” he says. “These are the things you should repeat, things your people should know. Then on the second level, you fill it out with certain content and you try it out. Then, you find out, as we do through our pizza meetings, is this too simple or too complex? Then you have to adjust the communication as to what the feedback is.”

Kolem describes the effort to refocus the Customer Solutions Group as a work in progress, but says the company is far better at listening and communicating than when the process started, and is continuing to grow.

When it comes to communicating with employees, Kolem says he has learned never to underestimate what your employees are capable of. As the head of your business, you might like smooth sailing, but don’t forget that should you encounter choppy waters, many of your employees might like a challenge.

“It shouldn’t be too easy because then they’ll say, ‘If it’s so easy, why are we here?’ It wouldn’t be a good company if we didn’t have complicated problems to solve.”

HOW TO REACH: Siemens Medical Solutions Customer Solutions Group,