Let’s face it, when you’re in a budget crunch you’re looking to slash any line item that doesn’t show an immediate return. In today’s recession, training is becoming that item more and more.
The U.S. corporate training market shrunk from $58.5 billion in 2007 to $56.2 billion in 2008, according to research firm Bersin & Associates. The average training expenditures per employee fell 11 percent from 2007 to 2008, and small and midsize businesses were hit the hardest, averaging 33 percent fewer training hours per employee.
You may think trimming or even axing training is justifiable training takes time and money and doesn’t usually have an immediate return on investment. But educators say now is a prime time to enhance your employees’ skills, whether it’s taking advantage of slower business to cross train employees or supporting your employees in the additional responsibilities that they took on following company layoffs.
“When these major recessions occur, they change the world of business,” says Robert Tanner, instructor for continuing education at California State University, East Bay, and founder, principal consultant and president of Business Consulting Solutions LLC. “If the training budget is cut too severely, then these companies are not really positioned to do well when the economy rebounds. So as a result of that, they can lose their competitive advantage.”
Eliminating your training or education budget can be detrimental. But there are ways to maintain productivity with fewer dollars, and it starts and ends with efficiency.Track your spending and its returns
One place to start is looking at the training or education you’ve done in years past. Did you see results that directly improved your bottom line? If not, look closely at what you’ve spent money on. Maybe you’re paying for employees to get advanced degrees that are useless to your company or maybe you lack the resources needed for your staff members to fully implement what they learned in training.
“When we talk about training, this is a common mistake companies make: They don’t allow sufficient time for the business professionals to observe, to practice and to provide feedback, they just try to get all the material out,” Tanner says. “The training design has to allow enough time for activities, for feedback and all of these things to occur for people really being able to take this back and make meaning of it in the workplace.”
There are multiple ways to track training, the most popular being pretesting and post-testing to grasp the change in employee knowledge. Whether or not you measured your employees’ change in skills, a follow-up assessment to gauge retention and whether more training is needed can provide positive feedback. Questions to think about are: Did they learn something from the training? If they learned something, can they apply it on the job? If they can apply what they learned on the job, did it have a positive financial effect on the company?
If you haven’t seen the results you were hoping for, don’t continue to throw the same training program at the problem and hope for a different outcome. It’s important to remember that training isn’t always the solution and that people learn in different ways. The best thing to do is either sit down with a training provider or internally spend time evaluating the best solutions moving forward.Find solutions now, while planning for the future
Effective training that gets to the core of the problem starts with an analysis of what the issue is and having a sense of what you want to accomplish through training. A common mistake is assembling training for a particular reason but never defining the why and a quantifiable outcome.
An internal training department can outline the company’s objective, but you can always look to the experts at consulting firms, colleges and universities to do a needs assessment and align an educational plan with the results.
External providers can offer objective advice to what your company’s priorities should be when it comes to training and carryout implementation. And while you may be thinking short term in this economy, a long-term plan is essential to be a step ahead of your competition and execute successful training.
The best ways to assure you’re meeting your company’s needs and spending your money wisely are to link training to your strategic plan and your performance management system each job description and employee annual review.
“Every employee, every time their performance is evaluated should also have attached to that evaluation a plan for how they’re going to get better in their job based on their own needs and the needs of the employers,” says Gail Whitaker, associate vice president for academic program development and dean of the College of Extended Learning at San Francisco State University. “Then the training regimen should be planned according to that.”
That guarantees a regular evaluation of your training program and your employees’ skills, and if you’re working with a provider, it keeps them abreast of your company’s future plans, which can lead to identifying problems and solutions earlier and faster.
Determine training that suits you and your budget
There’s a plethora of external sources to partner with, whether it be sending administrators to pursue master’s degrees or training employees on communication techniques. Colleges and universities tend to be the best bang for the buck, offering a one-stop shop with consulting, full implementation and a broad range of courses.
When it comes to training, the costs that add up are flying in topic experts, sending employees to out-of-town conferences or even holding training off-site. If you’re hoping to trim your training budget and it seems many are then think locally. Look at the office training and online services offered by local community colleges and universities.
Tough times call for creativity. Think about internal and external resources that lend themselves to free training. Check professional associations for round tables and seminars. Survey your employees on their areas of expertise and hold brown-bag lunches on those topics. If you’re bringing training in-house, just make sure you’re using a variety of techniques to meet each employee’s learning styles.
“What I would suggest taking a look at in a down economy is the motivation of the employees,” says Whitaker, who proposes splitting the cost of training with employees. “We’re seeing more and more of that, and employees are willing to do that, because they value the training so much. It’s a way for them to continue their upward mobility even in the down economy.”
And look for funding sources federal, state and local organizations offer training grants, whether it’s the U.S. Department of Labor or one of your local economic development corporations.
If you’re thinking about dramatically cutting your budget, first think about why you have training in the first place: to improve your retention, customer satisfaction, corporate culture and the overall growth of the company.
“People think that maybe education is dispensable, but it isn’t any more dispensable in the corporate world or in the nonprofit world than it is at the elementary-school level,” Whitaker says. “Not investing in education and training would be like the state not funding education everybody knows you have to do that.”
Employees have literally laughed in Frank Fiume’s face when he’s admitted mistakes to them.
“They don’t expect it,” he says. “But you become a real person, and they respect you so much more.”
To lay the foundation of your company’s culture, you have to create a connection with employees, and one way to do that is to confess your blunders, says Fiume, founder and CEO of i9 Sports Corp., an amateur sports league franchise. He partially attributes the growth of his company — to $14 million in revenue and 109 franchises in 2008 — to its fanatical culture.
When establishing your culture, communicating with employees obviously is essential, Fiume says. But the process also includes understanding your staff and company, and to do that, you sometimes have to show your staff that you’re part of the team. Other times, you have to be honest with your employees — and yourself — about the decisions you’ve made.
Smart Business spoke with Fiume about how to establish a culture by being honest with your employees and going into the trenches with them.
Roll up your sleeves. To create a fanatical culture — (this goes) back to the CEO — he or she has to roll up their sleeves and be willing to do the same that he would expect from his staff.
When your staff sees that you’re willing to go into the trenches and help them, they feel a closer connection to you. When you have a group of people doing this, the cool part is you’re raising the expectations and the standards so that the person that is maybe the slacker or the person that is not really getting the job done, it becomes abundantly obvious that person is not fitting into the culture, and they’ll self-eliminate themselves out of the company.
You know the old saying that, as a CEO, we need to work on the business, not in the business. I completely agree with that; however, there is a ‘however’ that I think is missed. If the CEO doesn’t understand what ‘in the business’ means, then they’re missing something.
For example, we’re rolling out a national call center for all of our franchises. I had an opportunity while I was developing this strategy for this call center to explore and see exactly what my franchisees go through when those phone calls come in from the parents.
Because I was literally in the process and really in the business seeing it, I had a greater appreciation and understanding for the challenges they face.
When a CEO rolls up his sleeves and is willing to do whatever it takes, you gain the respect from your employees and you get to have your finger closer to the pulse of what ultimately needs changed. The role of a leader is to influence change, and the only way I can influence change is if I know what needs to be changed, which means, from time to time, you need to work in the business.
Be honest with yourself and your employees. When you make a mistake, be very, very transparent and say, ‘Hey, I screwed up.’ Explain what you did.
When people see you have integrity and you’re honest, they see the human side of it, and people are willing to forgive when you make a mistake.
One of the challenges I found in talking to other CEOs is that they are not honest with themselves — I mean truly honest.
Most CEOs just can’t get out of their own way. They think about the business being their business, and [they need to be] honest with themselves that the company is greater than them — you are only as good as the team around you. And when you make a mistake — whether it’s a direction, whether it’s a project — go to that person who may be affected by it. What I’ve found is, when you’re honest about a mistake, people will forgive that.
And when something good happens, they’re even more excited about you because they know you care.
People always question whether the CEO, ‘Does he really care about me, does he really care about the company, or is he looking out for himself?’ As soon as people know that you care, you can feel comfortable in your own skin as a CEO.
Get out of your own way. The first thing about getting out of your own way as a CEO is when you realize that, ‘Hey, this company is far greater than me.’ You stop trying to control everything. A big issue that we have as CEOs is we think that, without us on a daily basis, that the company is not going to be able to live.
I had the pleasure of meeting another CEO, a franchise executive. This man is author of a franchise book and somebody who I dearly respect in franchising. He has this same problem. He barks orders to his staff. He’s successful, yet he feels like he’s caged.
I said to him, ‘Here’s my recommendation. … No longer think of this, your business, as you have to control everything. Think of yourself as a founding father of your company because what that does is you get out of your own way of the business and you start looking at the company long term.’
Some CEOs think this company is about me. ‘I need to make it work. I need to call all the shots.’ Really, in essence, they don’t.
How to reach: i9 Sports Corp., (800) 975-2937 or www.i9sports.com
When Judy Vrendenburgh took over as president and CEO of Big Brothers Big Sisters of America 10 years ago, she knew the organization needed a strategic overhaul to continue to grow.
She wanted to keep the sense of ownership and responsiveness that the nonprofit’s 394 affiliated agencies felt toward their local communities, while also creating a stronger umbrella network for direction and support.
The process worked, as the organization has grown from serving 100,000 children nationwide per year to serving 250,000 each year through its agencies, which collectively posted 2008 revenue of $290 million.
To design an effective strategic plan, you need buy-in from all areas of your organization, which starts with strong representation from every division, says Vrendenburgh. The group developing the plan needs to unite under one vision, which comes from strong communication and a leader who sets the example while developing and executing the plan.
Smart Business spoke with Vrendenburgh about how to put the people and communication in place to form and execute a strategic plan.
Involve employees from a broad spectrum of the organization to solicit advice and get buy-in. What’s really important is that some representative from across the different sub-units of the organization be involved right from the beginning, a cross section of leaders that can look like all of the leaders.
If they created the plan or their surrogates helped create the plan — people that look like them or are in similar roles to the roles that they play — then it becomes their plan. It can’t be Philadelphia’s plan; it has to be the plan of the agency and on behalf of the agencies.
I don’t believe that in our kind of organization a top-down plan could ever work because it has to be executed at the local level. It’s a truism of management that if you really want good execution, you have to own the strategy and participate in it or have somebody in a similar role to you who you really respect participating in creating that plan so, therefore, it’s your plan.
So even if you weren’t particularly involved, you’d say, ‘Oh, that person is representing my interest, and they’ve been engaged with a facilitative process that combines those internal leaders from decentralized units with some outside fresh perspective.’
Then (knit) that all together in a task team with leadership from the top, as well.
Good leaders are good followers, and good followers are good leaders. You integrate that together in a facilitative way so the process becomes very, very important to get the folks and all of us to discover the right strategy and to really own that strategy so that you have really good execution.
Have a good facilitator who can make sure that everybody has a chance to contribute and listen at the same time. Then draw the themes together and get everybody to say, not, ‘Oh yes, that’s right,’ and then you move to the next step.
Unite the group to create a common vision. The most important thing is to tap into the motivation around the mission. We change children’s lives forever, we make a lasting positive difference for children, and so that mission is really deep for those who are committing themselves full time to leadership roles within our system.
Tapping into that mission and the motivation and hope of our leaders is really easy to do. It’s the role of a leader to tap into that motivation and inspire others and engage others, and that’s really done through strong communication. [You need to have] two-way communication — listening and integrating that and inspiring folks for the future and believing in them and in themselves what’s possible and really garnering the will to achieve.
Key leaders tap into their essential motivation, and besides the mission motivation, we select leaders who have strong achievement orientation. They thrive on results and achieving results, and so the combination of the purpose of our work and the drive to achieve results for the children, it really motivates our team.
Use effective communication. We’ve grown through a common strategic direction that everybody has bought in to. It’s not each agency having their own direction — everybody has the same strategic direction — but the execution is very decentralized. So we’ve had to lead through influence and bringing real value to our affiliates with substances and ideas that worked and that came from a team of them that helped us create them.
In a network like ours, the communication links become extremely important.
One thing is to model what you expect others to do. For example, the way we run our Philadelphia organization needs to be transparent and an example of how we expect our local agencies to run their organization. So if we think good fiscal and financial management is really important — which it is for a nonprofit or any organization — then if we don’t do a good job of planning and managing our cash flow and building our balance sheet and having reserves, then how can we expect our local agencies to do that?
One of the key principles is to walk the talk. Lead by example; it’s very, very important.
Another key principle is to have everything that we do come from the purposes of the organization, so you have to make sure that you’re not distorting through unintentional consequences of why you exist.
Mission fidelity is extraordinarily important. One of the key principles we have is, we will not take money if it’s not in support of our strategy or our plan or our direction.
It’s critical, again, that you walk the talk.
How to reach: Big Brothers Big Sisters of America, (215) 567-7000 or www.bbbs.org
You’re looking at your expenses and that health care cost is just glaring at you. If only you could chop that number.
In fact, many employers are. The economic downturn has caused 60 percent of employers to change their health plan or strategy, according to a National Business Group on Health/Watson Wyatt Worldwide study. With the median health care cost per employee estimated to reach $7,400 this year, many employers are transferring costs to their employees.
That may be an idea of your own, or a route you’ve already taken. But insurance providers and health care experts are cautioning you to think twice if you want true savings and you want to hang onto your employee base.
“For a long-term solution, employers need to look beyond shifting costs to their employees or cutting benefits,” says Veronica Martin, president of Humana of Indiana. “Instead, businesses need to encourage their work force to get more engaged. This means helping employees understand the cost of health care, beyond premiums and co-pays; select the best care for a fair price; and make healthy (choices) to lower costs in the years to come.”
More than 75 percent of employers’ health care costs and productivity losses are linked to employee lifestyle choices, according to the Centers for Disease Control and Prevention.
Cutting or renegotiating your health benefits can save money. But until you understand what’s driving your costs — your employees’ bad habits — you’re not going to reach the root of the problem. The bottom line is, the more your employees use their insurance, the more you’re paying.
Understand what you’re paying for
To really control costs, you have to understand what they are.
Sit down with your broker or third-party administrator to discuss your claims. You need to understand the specifics of your employees and how they’re using their insurance, meaning what services they’re seeking, what medications they’re on and perhaps discern the top illnesses they suffer from.
Larger companies dedicate time every week or once a month to go line item by line item and chart trends, but for smaller companies, it may take months to paint a clear picture. The overall goal is to carve out a specific area that your employees are using a lot of and try to find a more efficient way of dealing with the health need. For example, finding out your employees use the emergency room as a physician’s office or pay three times the price of a generic drug for brand-name medication can empower you to seek cost-saving solutions for you and your employees.
“The solution really needs to be one of utilization, one of individual employee engagement, and one of good communication and information flow based on real claims,” says Vicki Perry, president and CEO of ADVANTAGE Health Solutions Inc.
Once you have a better understanding of where you’re spending money, don’t be afraid to look to your broker or health plan provider for advice on the next step. Much of your costs can be deterred by simply educating your employees, and most health insurance providers and local hospitals offer informative tools and programs as aids.
Understand what to educate your employees on
You don’t need to know the specifics, like the annual median cost increase for health care is estimated at 7 percent for 2009, to know costs are rising. And your employees probably notice the difference in their paychecks.
There’s no better time to proposition your employees with ideas that can better their health and save them money. Plus, emphasizing healthy living can quickly boost workplace morale and productivity, which can’t hurt in these uncertain times.
“We’ve basically said laying people off will be the last thing that we can do; however, we need your help in terms of reducing costs,” says Bill Corley, president and CEO of Community Health Network.
In order to provide your employees with pertinent information, you have to understand what risks they face. Many employers are opting to screen their employees, hiring a local clinic or hospital to come to the office and perform body mass index tests. The anonymous results are later given to you as a snapshot of your employees’ health.
Costs for the screenings vary dramatically. But another option is having your employees fill out a health assessment, which may cost nothing and take little time. Most insurance providers offer online health assessments, which may even be an incentive connected to your health plan. If you opt for an assessment, the provider then takes the information and directly contacts your employee with wellness information and advice.
Either route you go, the group you seek out can help you devise techniques that will speak to your employees’ needs and interests.
“One of the things that we are basically selling to companies to help them reduce their health care costs is we are developing on-site clinics,” Corley says. “The employees like the convenience.
“We know that it is decreasing their overall health care costs because, one, they’re not having to take time off of work, and two, the fee is actually paid by the employer and that is much less than going to every one of the physicians that people then would have to frequent.”
Step into action
Now you know the services your employees are using and the health risks that force them to seek care. However, you’re pinching pennies, and investing in a full-blown wellness program, which is estimated at the high end to cost $400 per employee, to support healthy living is the furthest thing on your mind.
But some food for thought: Wellness programs can see a 2-to-1 or even a 3-to-1 return on investment. And results usually can be seen in a year.
But money isn’t necessarily needed to see results.
Employee behaviors can be directly impacted at work with no added cost by changing vending machine options, starting a walking club or banning smoking. Ask your broker or a local health association to hold monthly seminars at your office. Ask your provider what free services it offers.
To really get employees to perform, the need for incentives still holds true. Companies have seen immediate savings in paying for employees’ medication if they buy generic. Another idea is linking an employee’s program participation to his or her health plan. If employees reach lower targets in weight and cholesterol, consider paying for their insurance. Their healthier lifestyle means less risk for chronic diseases and probably fewer medications and visits to doctors.
“One of the strategies we use is our wellness program is very, very low cost,” Perry says. “Where we want to see the employer spend some dollars is creating incentive programs that engage the greatest number of his employee base.”
Research will tell you there’s room for creativity. But whichever route you take, you must see it as an investment in your employees.
“Businesses who invest in the health of their employees see a return on their investments through lower health care costs, lower absenteeism and increased productivity,” Martin says. “The bottom line is that unhealthy lifestyles are the single largest driver of health care costs in our country, and any discussion of long-term impact on employer costs trends must include improving individual health.”
Until you learn to delegate, your company’s growth will be limited, says Shri Thanedar.
“A common misconception is I can do it better than someone else can and I can do it quicker than somebody else can,” Thanedar says. “It may be so, but when you do somebody else’s job, there’s nobody there to do your job.”
It’s a lesson that the CEO and chairman of Chemir Analytical Services Inc. learned firsthand. For years, he relied on his own determination and independence. Growing up poor in India, Thanedar arrived in the U.S. to get his doctorate in chemistry with only $20 in his pocket. In 1990, he bought Chemir for $75,000, running it with two employees. Since then, the pharmaceutical company has grown to 400 employees and posted 2008 revenue of $60 million.
He says that to grow your business, you have to share all aspects of your business with employees, show them that their opinions count and allow them to make decisions.
Smart Business spoke with Thanedar about how to empower employees to make decisions that will help your business succeed.
Share the business background. A lot of times, especially private companies don’t have to disclose their sales and their profitability. We make it a point to let all of our employees — not just the top management, not just the key employees — we let every employee know about our profitability and know about our sales so there are no secrets.
They don’t need to come to me and ask questions because I have this special knowledge or information that they don’t have. One of the first things I do is let them know what I know.
We look at our business as a game, and if you don’t know the rules of the game, it’s very difficult to play. Same way, if you don’t know what the score is, then you don’t know if you’re winning or losing.
We make sure that we educate our employees. We make sure that they all understand how the business is doing, what makes the business successful, why our clients come to us, what our current sales are, what our sales are in the last three months, how many price quotes we have given out to potential clients, what percentage of those price quotes get accepted, when they don’t accept a price quote why do they not buy from us.
All the information I have gets communicated.
Let employees know that their opinions count. Recently, we had a meeting of our team leaders of the company. I said, ‘Imagine today is Jan. 25, 2012. Also, imagine I was gone for three years. I was kidnapped, I was gone, and I just got released from my captors, so I don’t know anything about your company. Now tell me, what did you do, what sales were? How did you come here?’
I took them in the future and got them thinking. They said, ‘Oh, we achieved all of our goals. We were at $120 million in sales.’
I said, ‘Tell me how you did it.’
We had a two-hour brain-storming session, and I wrote it down, everything that they said. It became very obvious for everyone this is really what we need to do.
It’s part of delegating; it’s part of letting people know that their opinion counts. The job isn’t just putting them in a pigeonhole and saying, ‘This is all you do.’ Get them to think like an owner; give them responsibilities.
It’s very tempting to jump in and do it yourself. The key thing here is, give those responsibilities away, give the authority away and communicate that you’re going to accept their decision.
It’s a very open culture. It’s a culture where information is shared. It really doesn’t matter where the idea came from.
Teach employees to make their own decisions. It is very, very important that you let people make mistakes. They have to feel that if they fail, if they make a mistake, that I will understand and I will accept.
I tell them that unless two or three times out of 10 times if they try something and they don’t fail, then they’re not trying hard enough.
It’s trusting people and giving them the authority. Not just giving them the responsibility, but giving them the authority to make decisions to think (things) through.
Often, if they come to me and say, ‘What do you want me to do about this?’ business owners love to be in that situation. It makes them feel good that people come to you and then they have all the answers. It is so much better if we don’t really try to do that because then people stop thinking and they just want to rely on you.
If I approve something or say, ‘This is how it should be done,’ then they’re off the hook because then I become responsible for the success of that idea or that approach. Usually when someone comes to me with a problem, I ask them, if they were in my shoes, what would they do? Almost always they come up with really a good solution to the problem. Once they tell me that, I say, ‘Well, I agree with you … go implement it if you’ve got a good idea.’
(If it’s not a good idea), I keep asking them. ‘How else can we solve it? I don’t really know what exactly can be done here; give me some parts.’ So I work with them until they come up with a position.
How to reach: Chemir Analytical Services Inc., (314) 291-6620 or www.chemir.com
Brian A. Miller takes pride in the fact that the majority of his 29 employees have been with the company for more than a decade, and some have been there more than two.
For Miller, president and co-owner of electrical contracting company West Electric Inc., showing appreciation for employees is everything, and it pays off in achieving that longevity.
“You’re only as successful as your people that support you, so you’ve got to reward them,” says Miller, whose company posted revenue of $6.4 million in 2008.
Smart Business spoke with Miller about how to make employees feel appreciated by building them up, rewarding them and listening to their needs.
Q. What are the keys to making employees feel appreciated?
It’s about human relations. If you treat people well, that goes a long way in them wanting to work harder for you. If you treat them like they’re not important, they’re going to find a way to either make it rough on you or go somewhere else.
As far as making people feel wanted, build them up. Let’s say our purchasing agent works hard and finds materials at a very good market, and we’re able to bring that in at high levels. Then, two months later, we find out that the prices went way up on a material, and since he bought it at a low end, that really gave us an advantage that this was purchased at a lower price.
When you’ve got an employee that’s done things like that, you need to let them know, ‘Hey, great job on that, you’re really thinking ahead and looking for the good of the company.’
You build them up not only with praise, but you also either give them a paid vacation or a couple days off. With the way the economy is right now, these things are going to be tough to do.
Q. How do you reward employees during a tough economy?
You’ve got to communicate. Everybody watches the news and the economy. They know what’s going on out there. It’s tough. The human element is still important.
You’ve got to build them up. You’ve got to say, ‘Hey, it’s tough right now.’ You have to communicate to them, ‘Hey, we need to buckle down even tighter. Let’s just try to make it through this tough time and then hopefully, there will be some things we can do later on.’
Q. How else can you reward employees?
A ‘that a boy’ and a pat on the back goes a long way in the process of when you’re really pushing and shoving and trying to get accomplished what your goal is for a specific project.
We try to communicate with our lead people and tell them when they’re doing a good job out there. And a small monetary bonus is important, but we don’t think that’s the total answer to it.
Just treating people with respect and letting them know they’re doing a real good job out there is a positive thing.
Q. How do you communicate to employees your respect for them?
The main thing is just show-ing them that you do care for them. That you care about them as an individual and that their family is important. Try to make sure that you listen. You listen to what their needs are.
It’s a two-way street out there. You can’t just go out and strong-arm somebody; you have to go out and listen to what their problems are.
When there is a problem, you need to get right in there and correct the problems that they made or mistakes. You have to keep your pulse on your employees.
It’s hard to get around to everybody, so you rely on your lead people out there to keep a pulse. Try to get with them at weekly meetings and say, ‘Where’s the problem?’
It’s the communication. Listen to what’s going on out there. What caused this situation to happen?
You just have to sit down with them and take a little time. Take time, listen, communicate with them, come to an understanding and move forward.
Q. What are the keys to listening to employees?
When you’re listening to them, that means that there’s usually a problem or they’re letting us know of changes or whatnot. It’s very important to document down what they’re saying, and the follow-up is very important.
(There) has to be a follow-up on a concern to make sure you’re answering their question properly.
Q. How do you make time to reach out to employees and listen to their needs?
The schedule is very important. You have to schedule your time.
I’m on the boards of different organizations, and that comes with a price. You can’t be everywhere. I’ll get a call, and they’ll say you have to be at this meeting today at 2 o’clock. Obviously, I had other things scheduled.
You really have to pick your battles; you have to know what’s important for your business. You have to have your business in your mind. You have to take that personality out a little bit. What’s going to be the best for my business?
How to reach: West Electric Inc., (765) 643-6444 or www.westelectricinc.com
Harvey Nelson defines leadership as the energy that creates the future. Finding that energy, though, is the key.
As co-founder and co-CEO of Main Street Gourmet with Steve Marks, Nelson says one of his greatest leadership challenges has been finding the energy to push himself to be a leader. He says that, at times, the responsibilities attached to the job title come naturally for him, while at other times, he needs extra motivation.
People have a propensity to be leaders, but the necessary skills must be analyzed and developed, Nelson says. To be a successful leader, you have to possess self-awareness, know when to push and when to back off, and allow others to lead.
Nelson has used those skills over the last 20 years to grow Main Street Gourmet from a muffin shop to a custom manufacturer of bakery products with 110 employees.
Smart Business spoke with Nelson about how to develop the skills to be a successful leader and how to maintain your drive.
Know yourself and stay flexible.
First of all, you have to know yourself — have self-awareness.
Do a lot of introspection. I try to always put myself in another person’s point of view. I look at what my reaction is, and I think where is that coming from.
Is that something someone told me sometime and I took it as truth? I really think about where is that coming from.
You’ve got to have the ability to adapt and evolve. It gets back to knowing yourself — you’re trying to be aware of if you’re stuck in a pattern of thinking. The other way is trying new things as you push yourself. You typically need to adapt as you push.
You pretty much can ask (employees), ‘Is there a way for me to improve? Is there a way that I can help you? Is there something I need to do to change?’
When you ask them those questions, they’ll give you a lot of information on how to adapt.
Prioritize and focus.
A lot of times when you’re leading someone, the one skill you need is some sense of urgency but with a sense of humanity, so you’re not just pushing to push. You’ve got to be willing to work with people.
You have to do that pushing and backing off and find that timing.
A lot of times, that’s customer-driven. It comes from really prioritizing and focusing.
The timing is if we don’t get it done now, and it’s not going to happen, that’s when we need to push. This is an issue we’re always dealing with, when we push and we don’t really have to [because] the customer doesn’t really need it. We haven’t asked all the right questions, and we’re pushing to get something out when, if you talk to the customer and they say, ‘Well, we don’t need it today; you can give it to us in three weeks.’
You can’t be doing that all the time. When you push and you have that sense of urgency — when there’s really no urgency —- that can hurt. Then it’s like the boy who cried wolf.
Listen to your customers’ needs and be aware of the employees’ needs. That comes back to self-awareness and awareness in general. So you know what’s going on around you so that you can adapt.
Give your employees responsibility.
You’ve got to let people lead.
Sometimes you have to step aside and let it happen. Otherwise, people will never grow.
For example, one of my guys I had teach leadership because if you’re teaching it, you’re going to learn it. So I had him teach it so he would become a better leader.
One of the skills of a successful business leader is finding the right people. How do you do that?
I’ve done it mostly over time. You see what people do and you see the energy that they have and the effort that they put forward.
A lot of people have the talent and ability, but if you find people that you respect, that are very responsible, people that can lead and do it on their own without me, that’s who I look for.
Understand that each employee is
You need to understand people — that people are all unique — and you have to treat people differently.
The more you get to know people, the more that makes them be unique — when you meet with people face to face, when they become a person versus just an employee number.
As we’ve grown, it can get a lot easier to not know everybody. If you don’t know them, then they’re almost like a chess piece. But you can’t treat people like that.
Sometimes you have to make decisions based like people are chess pieces, but then you’ve got to go back and look at the reality and evaluate your situation and deal with people as human beings.
Maintain energy and find a motivational tool.
Keep yourself healthy. To get energy, I’m big into working out. Being physically fit is important.
Sometimes you’ve got to rest to have that energy. I actually took time off last summer to refresh. I heard one guy say he can work 12 months and 11 months, but he can’t work 12 months and 12 months, the same thing of resting and recuperation.
Find something that’s going to push you and motivate you. For me, it’s reading. Finding out what other people are doing, that pushes me.
HOW TO REACH: Main Street Gourmet, (330) 929-0000 or www.mainstreetgourmet.com
Creating an environment where teamwork is a priority leads to the one thing that will make any company successful customer satisfaction, says Deron Millman.
When Millman founded Millman Surveying Inc. in 1995, the CEO made sure that fostering teamwork was a part of the company’s vision.
“I think, overall, we will do a better job for the customer, and the company will be more successful,” Millman says about the importance of everyone working together.
That sense of teamwork has boosted Millman Surveying’s revenue to $9.1 million in 2007, up from $2.4 million in 2004.
Smart Business spoke with Millman about how to create a team atmosphere to help your company succeed.
Q. What are the keys to developing a successful team?
The first thing you need to do is you need to make clear to the employee what is expected of them. You can communicate it to them either verbally or through a job description, but I think they have to know what is expected of them. They each have to know what’s expected out of them their duties and responsibilities.
You need to be encouraging. You need to show interest in their work. A lot of times, I’ll ask for their opinions or suggestions and listen to the suggestions, and then talk those ideas or suggestions through with them.
By talking it through with them, you take the suggestion and you say, ‘OK, well, let’s see how that plays out.’ And then discuss it with them. Look at what the positives and possible negatives are to that suggestion. It gives them a sense of input.
The other thing would be to recognize their hard work and efforts. One way I like to do that, and I think is the best way, is to share positive customer feedback with them. They really seem to respond to that.
When they do a good job, you need to tell them that they did a good job. People need to hear that. Obviously, you can sit down and tell somebody they’re doing a good job, you can give them a bonus. But when they do a good job, you tell them they did a good job, and then you give them more responsibility.
That’s how they really know.
Q. How do you create an atmosphere of teamwork?
People have to feel like they’re a contributor or a main part of the success of the organization. Everyone must share the same vision of the company.
It goes back to leadership, making people aware that they play a significant role in the organization. Everybody wants to be good at what they do. So if they see that if they can see the company grow as the result of their hard work, see the customer list grow, see the customers retain business, the percentage of retained business, the percentage of new customers then that gets them excited.
If they see that the company is growing and becoming successful as a result of their hard work and responsibility they take on, then they share that same vision.
There’s a number of ways. You need to start with the right people, and that’s the tough one because everyone is not a team player.
You, yourself, as a leader, and your managers have to be enthusiastic. Enthusiasm will breed a lot of that.
You need to get people involved. You need to make them feel important by giving them responsibility. By giving employees latitude and responsibility, you’re entrusting them with that, and then they feel important.
They feel like they’re a part of it. They have to feel like they’re a part of it.
Q. How do you make sure you have the right people in place?
You never really know until you have the opportunity to work with them. Credentials, they look good on a resume, but if they’re not accompanied by the right attitude or work ethic, then they’re worthless.
When we’re reviewing resumes, obviously we look at the credentials. Credentials might get them their initial interview. But in order to be 100 percent certain, you don’t really know who you have until you have an opportunity to work with them and [see] how they handle different situations.
Some personality traits that you pick up on in the first meeting, you hope you’re reading them right. I like somebody who is positive and aggressive to a point.
You do the best that you can, but it’s just so hard to tell. You just try to do the best you can, and you can’t beat yourself up because there’s just no foolproof way to know.
Q. What are the benefits of fostering teamwork?
Satisfied customers. Team-work leads to customer satisfaction.
If we work as a team, we do a better job. It’s just like anything. It’s like a football team. ... The team that plays together better usually comes out ahead. I think it’s the same thing with business.
HOW TO REACH: Millman Surveying Inc., (330) 342-0723 or www.millmansurveying.com
When Michael Araten arrived at K’NEX Brands LP in 2006, he was tasked with outlining a vision for growth.
It sounds like your typical process, but as president and chief operating officer, Araten had to find a way to blend the culture and growth of the toy business with that of the company’s manufacturing arm, The Rodon Group. The two companies — one centered on sales, one on manufacturing — had never really outlined a joint vision before.
So to create a strategic plan that could move both companies forward while maintaining their separate agendas, Araten sought input from many of his 200 employees and from outside agencies. The keys to creating a successful plan were to carefully craft objectives and then monitor them to ensure that they really worked, Araten says.
“It’s about identifying what it is you need to grow and figuring out a plan of how to get it, then getting it,” he says.
Smart Business spoke with Araten about how to create and implement a successful strategic plan.
Listen before you act. The key first is to ask a lot of questions about what’s working, what’s not working and what everybody’s opinion is on why that is.
A key part of any CEO’s job is assessing the talent of the people they’ve got and then assess the information you’re getting and people’s opinions. Then you weigh the options based on what you think has the most credibility, so at least you have a sense of where you are.
Then you have to look at the marketplace that you’re playing in and decide what can you do to take more market share? I happen to come from a school of thought that either you grow or you die. You look at that second.
Then what we did was identified our core competencies. We defined a core competency as something we have that either we don’t want anyone else to have or it wouldn’t take a whole lot of time and money and investment for someone else to copy. After you identify your core competencies and say, based on your core competencies and the marketplace, what are the avenues open for growth, then the X factor is who you bring into the room for that process.
I know some people say once you get more than six people in a room, things start to break down. But I happen to believe a little bit more heads are better than one. You need all of your disciplines because if you don’t have that, someone’s not doing the checks and balances of keeping yourself honest in what you’re trying to accomplish.
We got involved people from every major discipline. Then we encouraged them, and they did share our findings with their groups on a departmental level. Then they came back and said, ‘We shared this at our team meetings last week, and we got some other things where they thought, yep, we agree with a lot of this, but here are some things we think you can focus on more or we think you missed.’ Ultimately, we probably got about 80 percent of the company involved in some way.
Ask yourself the right questions. The big three for me are: Do we believe what we’re doing is going to maximize our chances at success, and why? Do we have the resources, whether it’s time, people, capital, to go pursue what we think are the best options? And three, do the people have the skill levels to do what you need them to do?
And if not, how are you going to either train them or supplement them with other talent?
Get buy-in. What you have to do is find some quick successes that you can execute on and then show people. Nothing makes people believers like success.
It’s trying to find some quick wins and then reminding people that we got them. So if we set these goals, we can go get them, and here’s the goals that we’ve already achieved.
It’s constant communication because when you get mired, as people ultimately do in their day-to-day grind of whatever it is they’re focused on, they may feel like they’re not moving the ball forward. I think the CEO’s job is to remind them, ‘Here’s what we’ve done so far. Here’s the period of time we’ve done it in. Here’s where we’re headed. We’re not all the way there yet, but let’s understand that we’ve made progress along the way.’
Gauge whether the plan works. It’s about the bottom line. It’s about meeting the profitability goals. If the strategy is delivering to the bottom line, then it’s working.
Sometimes there’s a balance between delivering to the bottom line and, at least on our toy side, buying market shares. As long as you understand where that is going, then you’ve measured it appropriately.
Not everything pays back the month you invested it. You just have to acknowledge that going in. If you’re beyond that point in time, you need to investigate is it either the right strategy, or [are] the tactics that we used to support it the right ones?
I think that’s sometimes where companies fall astray. They say, ‘Well, I don’t see any returns yet; let’s move on to the next thing.’
I think you have to be disciplined, and say, ‘When did we think this would pay back? When did we think we would see these gains? Are we there yet? If we’re not there yet, let’s understand that.’
HOW TO REACH: K’NEX Brands LP, (215) 997-7722 or www.knex.com
When Edelmiro “Ed” Muñiz had a heart attack in 2004, his employees began to doubt not only the health of their founder, chairman and CEO but the health of the company, as well.
While he was recovering, Muñiz decided he needed to shift the focus of MEI Technologies Inc.’s employees from worries about him to a more positive concern, so he challenged them to double the size of the $30 million company in two years.
Redirecting their attention worked, and in two years, the company’s revenue had tripled. And in 2007, MEI posted revenue of $115 million.
“This problem that I had earlier just kind of went away, and I was very surprised that I was able to survive this from the company standpoint,” Muñiz says.
The next challenge became absorbing the company’s rapid growth. To do that, he relied on his three keys to growth — trustworthiness, listening to your customers and building a relationship with your banker.
Smart Business spoke with Muñiz about how to grow your company.
Assemble a team of trustworthy and honest employees. You’ve got a set of values that you decide you’re going to have as a company, and you start with hiring people with those same values. I’ve always valued integrity, honesty and ethics.
I try to hire people that have those characteristics very, very visible. It’s part of what makes a business grow.
I don’t have a problem with those who don’t know everything when they come here because they will learn what they need to know after they get here most of the time. But you have to be honest.
I read the resume first, and I try to look for inconsistencies. If something doesn’t make sense, I’ll flag that, and that will be the object of questions in the interview. Why do you say this here, and that doesn’t seem to jibe with what you said here?
If it’s a good response, I’ll take it for face value. If I suspect that somebody has kind of stretched it a little bit, I generally just write those people off.
If they’re not honest when they start with us, they can’t become honest later.
When I look at the keys to growth, trustworthiness I think it’s No. 1. If you don’t have trust and you’re not trustworthy as a business — and that means every employee that you have also needs to be trustworthy — then you can’t sustain a business. Your customers don’t trust you, your employees don’t trust you, your competition doesn’t trust you.
This is what allows you to get new customers, but, more important, allows you to keep the ones you’ve already got. You can’t grow without keeping what you’ve already got under your belt.
Listen to your customers’ needs. We’ve got to listen very carefully to the customer. ... We have to listen carefully to what they want and sell them what they want. Not what we think they need.
That’s very important because we have a lot of engineers and scientists, and they like to analyze, and they like to figure out what the customer really needs. If we do that, we’re really selling our arrogance. Listen and give them what they want.
I try to listen. I try to visit them as often as I can but not too often because I can become a nuisance.
We typically have people embedded in the customer’s organization that’s the type of work we do. They listen to their customer every day, whether they’re talking to them specifically or to someone else.
If you expand your ears to include not only your pair of ears but your management and your employees, you can pick up stuff so that you can gauge exactly what that customer wants.
If they don’t have to tell you over and over, ‘No, that’s not what I wanted; this is what I want,’ they will appreciate it, and they will keep asking you to come back.
They certainly don’t want arrogance, i.e., ‘I see the way you work, and I understand what you do, and this is what you need.’
There’s a fine line between arrogance and confidence. You have to be confident with a customer, but you cannot be arrogant. Nine times out of 10, your customer tells you if you listen.
Build a relationship with your banker. The third most important factor in growing your company is having your banker as your best friend. You need to be right in step with them all the way — in good times and in bad times.
Share information with them. Tell them who your customers are. Tell them what they’re doing. Tell them what you’re doing. Tell them who you want your customers to be — your new customers — and why.
Share everything you can with them because when the time comes and you are successful in getting this new business, now you have to pay that upfront money, that seed money.
Secondly, you make a higher profit if you use some of your own money and you use some of someone else’s money. The return on that amount of money is better when you have borrowed some.
It has to be built on trust. You’ve got to communicate with your bank at all times. You’ve got to invite them to your celebrations when you get a new customer. You’ve got to invite them to your Christmas party, to your picnic. They have to know you and your employees.
Then of course, you have to pay what you owe. You have to do what you say.
HOW TO REACH: MEI Technologies Inc., (281) 283-6200 or www.meitechinc.com