Jim O’Neil learned an important lesson some years ago when he was a 23-year-old engineer who sometimes found himself under the gun to make million-dollar decisions.
In one instance, he had a client impatiently cooling his heels, waiting for a resolution.
O’Neil knew he was on the hot seat ? and there was no one available to call for help.
“When you are on the line like that, you need to make decisions, and you made them,” he says. “They didn’t have cell phones then, the boss might be gone, and you had to make a decision. There was nobody else around. It might have made you uncomfortable, but you did it. You made it.
The firsthand experience of being in control left a lasting impression.
“It’s amazing how much you learn versus letting somebody else make the decisions all the time. And today, everybody is so accessible, if you are in an organization where people don’t want to make decisions, then you’re not empowering your organization,” says O’Neil, CEO of Quanta Services Inc., a company that supplies infrastructure solutions for the electric power, natural gas and pipeline and telecommunication industries.
He knew that empowering people to make decisions was the direction to go.
“I don’t need 1,000 cell calls a day asking me if they can make decisions that are well within their authority and responsibility. In the technological world that we live in today, it’s easy for people to not be accountable and to not want to be empowered.”
Once O’Neil became CEO, he drew up the boundaries employees needed and then encouraged them to adopt an entrepreneurial mind-set to drive business and customer relationships.
“If I could bottle that up and train that to others, you know ? and just move it up through an organization; I think that’s one of the biggest challenges ? to give people the latitude to make decisions.”
Here’s how O’Neil brews up the kind of empowerment at Quanta Services he wants to bottle and serve to employees.
Use collective approaches
When O’Neil arrived on the Quanta Services scene, he had been employed 20 years outside the specialized industry of infrastructure. His employment at Halliburton in oil and gas service had impressed senior management at Quanta Services, as did his record of holding several positions after joining Quanta in 1999. He was named CEO in 2008. Most of the people who had moved up the ladder in the organization were either former owners of companies that were acquired or people who the management put in place to succeed former owners when they decided to retire or leave.
But that only encouraged O’Neil to instill the collective approaches to solving complex problems he desired. He realized it was his role to discourage complacency, to push the organization, be flexible and change with the customers and markets, to be creative and to seize new and/or different opportunities.
In short, he was back in the situation he was earlier ? there was nobody else around to drive employee empowerment, and he had to decide how to formulate and institute a spirit that would persuade employees to feel sovereignty over their jobs.
To O’Neil, empowerment meant a lot of things.
“It’s not only decision-making; it’s go out and develop that relationship, go out and sell services and don’t be afraid to go sell services or sell the company’s total capabilities,” he says.
“You have to empower your employees to make decisions,” O’Neil says. “You set policies and procedures and clearly define a broad range of operating boundaries, and let the employees work within these boundaries. Employees who are properly trained for that position know when and where they need to seek approval authority.
“Employee empowerment is one of the most important aspects of being a successful service company. Once you clearly state the employees’ boundaries to operate, they then are empowered to make decisions to take risks.”
Even though it sounds like a potential Camp Runamuck, part of an effective empowerment plan needs to include the structure that says where decision hand-offs are to be made.
“I think structure within some organizations is good when you set policies and procedures and somebody needs to make a decision,” O’Neil says. “Empowerment is that the people who report to the CEO clearly understand what their roles and responsibilities are and what decisions they can make.
“Through the relationship that you have with them, the working relationship, they know when to come to you and when not to come to you ? even if they have the authority to make certain decisions, they know when to at least bounce an idea off you if they’re not comfortable.”
Direct reports should feel the same way and have that same relationship. The empowerment should probably go down to one or two levels below that.
Another important goal is collaboration, and when you collaborate, everyone is on the same level.
“There is no intimidation by position, you all roll up your sleeves and make the decision,” O’Neil says. “If I need to be involved, I’ll roll up my sleeves and work with the presidents of our operating units out in the field or with some of the leadership in the corporate office.
“It depends upon what the situation is if you want to make sure everybody understands that you are all in this together. We are out for a common goal. There is no stupid question; let’s just work through it together.”
Look at it fairly
While employee-empowerment programs can be elaborate or simple, O’Neil found that simple is best, and he made it easy to commit to memory by using an acronym.
“I call it the FAIR model,” he says, with each letter of the word denoting an action that in effect serves as a type of empowerment mission statement.
“F stands for focusing everyone in the organization on the overall vision and strategy of the company,” O’Neil says.
This takes into account that you have company vision and mission statements already in place. If you don’t have them, it’s time to write them.
“No matter what job position you are in with an organization, you work as hard as you can to make a difference,” he says. “You listen and you learn from those around you. “You contribute where you can contribute thoughtfully to a discussion or a situation and good things will happen to you in the way of advancement and more responsibility.”
“A” stands for holding employees Accountable for their performance.
“You have to hold people accountable and watch for complacency,” O’Neil says. “How do you know whether people are complacent or not? One of the main ways is to set financial targets.
“Also set employee development targets for them to develop talent within their organization. Your customers are a good source to find out complacency issues within your organization. And certainly if you have open dialogue throughout your employee rank, you can get feedback from that way as well.”
“I” is for involving every employee in the mission of the company
“A CEO must always remember that employees are his internal customers,” he says.
“You have to be a good listener. More than 95 percent of all problems brought to my attention deal with the need for better communication. People often require a sounding board to talk it out. Some problems are complex and require a collective approach to a solution.”
If you have employees involved in establishing the vision, it will bring a sense of ownership and stewardship.
“Employee input is valuable, and they must feel like they have a meaningful role in the future of the company,” O’Neil says.
While longevity may bring different levels of comfort, learning doesn’t stop once an employee gains seniority in a company.
“That 40-year-old guy can learn something too,” he says. “Times change, markets change, customers change. The 40-year-old guy has a lot of experience to bring to a discussion, and we typically listen to that person.
“He’s probably the one you can listen to the most when you are trying to do the job or build a project but that person’s ability to listen to input from others, too, is critical because he can learn from others as well. So it’s a team effort.”
R stands for recognizing people for their results.
“It means understanding what each person brings to the table in the way of value, knowing that you may have people at the table who are new, and they are there just to learn,” O’Neil says. “But just the experience of sitting through that type of exercise is invaluable to anyone. I learn every day. It’s a continual process.”
Employees who are involved are more likely to generate ideas in the suggestion box.
“They’ll pretty much tell you if you empower them that, ‘Look, I know I am responsible for this right now, but if I was given the latitude to go out and do this over here … I’m responsible for A, if you let me go pursue B, I think I could improve value to both our organization and the customer,’” O’Neil says.
Quanta has a Chairman’s Challenge program that forms teams of rising stars from across the company to address a variety of opportunities, market dynamics and challenges. It seeks to harvest the best and brightest ideas for implementation.
“It’s really a servant leadership-type of mentality,” O’Neil says. “You’ve got to empower the employees, and they have to give you their input. It’s collaboration. I do that with my direct reports, and my direct reports do that with their direct reports.
“Every employee is your customer. You want them all to be properly trained for the roles that they are in and to understand that your job is to make sure they have those tools and that they are well-equipped to perform those services to your customers.”
Empowering employees to make decisions may be a break from the traditional management plan of some years ago, but a break from the usual is often what is needed to reach new levels of success.
“You may make decisions that might have not brought optimum results,” O’Neil says. “Somebody told me a long time ago that failure is the launching pad for success. You’re going to make mistakes, and you learn from them and you move on. That’s why you invest in people.”
Those who have an entrepreneurial mindset know how to take risks, they have to make decisions, they own their own companies and they grew them from nothing in many cases.
“I think that is a very important aspect of differentiating yourself from people who have an organization that’s matrix reporting ? where nobody wants to make a decision, it’s slow, and typically when you get into that situation, people are running a lot of things and they don’t make the right decisions.
“You want to be in an organization where people are empowered, they learn from their mistakes, and they become a valuable part of your organization when you need to make decisions in a very rapid format for your customers.”
A company that empowers its employees has to think bigger than just responding to calls for bids.
“But bidding is a very important part of what you do,” O’Neil says. “You are never going to get away from that. The more you can move ahead of that process, and partner with your customers to provide solutions ? that’s where you can really differentiate.”
Even if that project would go to bid and you have had discussions with your customer, the customers don’t have to take the lowest price.
“They want the best solution,” he says. “They look at value as well. I think you need to understand where your customers are going as an organization. You need to try to stay one step ahead of them. You can’t live in a rear-view mirror. You need to look at future trends and not only in the direction the market is going, the economy’s going, but the route that your customers are taking.”
Many customers are being forced to reduce costs and improve reliability and many of them aren’t looking for low-cost answers. They are looking for solutions for their problem.
“Because you have that relationship, and you have a reputation for providing services safely, execute projects on time and on budget, customers will continue to share more information with you as you build relationships to try to figure out how to get better,” O’Neal says.
“You want to be part of that solution. And that’s what I call partnering with your customer in order to provide them with a better outcome, and at the end of the day, it will provide you with a better outcome as well.”
With its 17,325 employees and $4 billion in annual revenue, Quanta Services is a Fortune 500 company ? and has many of its projects are now larger in magnitude than the total value of the company when it went public in 1998. Its growth includes 120 acquisitions since its founding. Some 2,500 employees were hired in one quarter in 2011 alone.
O’Neil points to employee empowerment as a key factor in this success.
“The ideas and innovations of the minds in your company are an invaluable resource, and when you tap into it, employees truly feel ? and are ? empowered.”
How to reach: Quanta Services Inc., (713) 629-7600 or www.quantaservices.com
The O’Neil File
Birthplace: New Orleans, La.
Education: Bachelor of Science in civil engineering, Tulane University, 1980
What was your very first job?
I turned 18; I worked as a laborer during the summer in a chemical refinery outside of New Orleans between college semesters. It was a great experience for me and taught me the value of hard work ? actually digging ditches and eventually running a survey group as I moved up between my junior and senior year. It was outside with 90-degree heat with 100 percent humidity. I really didn’t want to do that for the rest of my life. So it was a great motivator to stay in school. We had to dig ditches by hand. I’m about 6’7” and that wasn’t easy.
What was the best business advice you ever received?
No matter what your job position is within an organization, work as hard as you can to make a difference; you need to enjoy what you are doing, listen and learn from those around you, and good things will happen for you in the way of advancement and more responsibility. I think I’m a good listener. I think that’s probably one of the most important traits that have helped me be successful.
Whom do you admire in business?
Well, I have a lot of respect for CEOs, thought leaders, and the like, but really those I admire the most in business are those I work with and for. I really admire Quanta’s employees who are on making critical operating decisions and interfacing with our customers and our communities because that’s really the face of our organization. Every one of those 17,000 employees represents our company. Without them, we don’t have a company. I myself don’t bring in a dollar of revenue for this company. Our people on the front line do.
What is your definition of business success?
Success is happy shareholders, customers who see the value in our services and employees and potential employees who believe Quanta is the preferred employer in the industries we serve, and world class safety performance is very, very important to me.
That’s my No. 1 objective.
Nick Fortine had to face a 40 percent drop in business as the retail sector put on its capital expenditure brakes in 2009.
Fortine, the president of CSC Worldwide’s Retail Specialty Group, which makes fixtures such as fitting rooms, display walls and cash register stands, was startled, but he knew he had to act soon.
“I was particularly surprised by the level at which capital expenditures stopped in the specialty retail sector,” Fortine says. “We had to create a strategy rather quickly based upon our new reality.”
Once Fortine examined the landscape, he made a bold decision to downsize personnel but to invest ? by adding people ? to the sales team. The company hired a handful of sales associates at the time it was laying off an equal number on the operations side.
“At the beginning of ’09, we knew the future was far from certain,” he says.
“We also knew that if we took our foot off the gas on our selling efforts, our pipeline would quickly dry up.”
Fortine knew that in many businesses, including fixture manufacturing, relationships with prospects and opportunities to sell usually take from several quarters to years to develop.
“So when spending picks back up, you need to have new opportunities queued up,” Fortine says.
In the meantime, when the dust is settling, it’s time to get started with your new strategy.
“As a leader during periods like these, first of all, your team needs to know you have a plan,” Fortine says. “Then they need to understand the plan, believe in the plan and buy in to the plan. They need to know that you are a part of a plan. You are there to support and assist them and to successfully execute that plan.
“A natural result of adversarial times in a workforce is tension, fear, doubt and uncertainty about the future,” he says. “During periods like those, open and frequent communication about the state of the business, the strategy, the goals and measurements against those goals is really critical. In fact, it’s always critical in a business, in good times or bad.”
A key factor is to make sure that everyone understands the steps you are taking to move the business forward given the environment.
“People are much more effective at doing their jobs when they know that they are aligned with the overall goals of the company,” Fortine says. “People perform much more effectively when they are not running scared but rather when they feel like they are empowered to go make a difference in the business. That is the biggest challenge and how you overcome it is by making sure that the people left truly understand what their role is in turning this situation around.”
You need to be positioned to find and win new opportunities all the time.
“While the economic environment is still unpredictable, you have to keep selling throughout,” he says. “You need to be positioned to find and win new opportunities all the time. When the market experiences the inevitable upswing that will come in the future, and those levels of spending return, you will be very confident in your position to take advantage of that.”
While the new sales representatives were getting their feet wet, Fortine was coaching the remaining employees on the new strategy to keep selling and to do more with less. It was critical for them to understand their new roles.
“We needed to explain that if we wanted to sustain our business long term, you don’t do that by laying off sales people,” he says. “You’ve got to always be selling.”
While this wasn’t a company culture makeover, Fortine felt it added a new dimension to the culture.
“I really believe it changed us culturally,” he says. “Your associates should really learn to think creatively about new approaches to managing the business. You have to continually ask yourselves and challenge each other, ‘What can we do to make this better?’ and ‘What can we do to make this easier, more economical, take less time?’”
How to reach: CSC Worldwide, (614) 850-1460 or www.cscww.com
Recreating positive sales and service experiences is an effective way to add to your bottom line ? once you know your strengths and weaknesses.
“You grow by continuously finding ways to do what you do more effectively,” says Nick Fortine, president of CSC Worldwide’s Retail Specialty Group. “You become more honed in doing what you do best.”
The best way for you to hone your business performance is to review the customer satisfaction level.
“Your clients will be very clear about how they believe you are doing,” Fortine says. “Continually ask them. If you are growing, if you’re profitable, and if your clients are happy, you know you are doing the right things.”
You should also believe also that your strength is your domain knowledge in the market.
“Knowing what it takes to pull off a world-class product rollout and translating that knowledge into exceptional service and program results ? that’s your differentiation in market,” Fortine says. “Believe that you do that as well as anyone in market.
“Spend all your time trying to recreate those success patterns by finding opportunities and serving more of them. Become really focused at what it is you do well and knowing what it is you don’t do well. Spend your time concentrating on just getting better and better at what you do really well.”
Ira Sharfin had thought Indianapolis would be a great market for his company, Continental Office Environments, an office interior and furniture business. The company already had offices in Columbus, Toledo and Pittsburgh, and it made sense regionally to be in Indiana.
But after some years of trying to operate the branch location, including through the weak economy, the numbers just weren’t there. There also was a problem in that Continental Office Environments and a competitor were both selling the same high-end furniture brand. Continental wanted the exclusive right to sell the furniture.
The decision was about to be made to exit the Indianapolis market and find another way to grow profitably.
“We suffered from not being able to drive enough volume,” Sharfin says. “From the Indianapolis standpoint, we just couldn’t get enough scale.”
Contrary to conventional wisdom, the plan was to grow the company ? by closing the store, which was sold at the end of 2010.
“It turned out that in order for us to grow in other areas, we just couldn’t be all things to everybody,” Sharfin says. “The effort that it would require to get the business to the size and scale that we wanted wouldn’t allow us to invest and grow other areas.”
By closing the store and growing the company in other areas (Continental’s flooring business grew about 400 percent in a year and a half, with 30 new employees hired), the numbers were much better overall. The revenue loss from the Indianapolis market has been replaced by the growth in other areas.
“We are still growing, not for growth’s sake but because there is demand out there, because we’ve got some pretty strong capabilities,” he says.
Sharfin, who had a 17-year business consulting career before becoming CEO of Continental, knew that his task was to look at the overall revenue targets and at the bottom line to see what the best route was.
Here’s how Sharfin found the solution to his predicament, made it happen and how the $120 million company is realizing the rewards.
Make the decision
Closing an office so that a company may focus its energy elsewhere is not as simple as it sounds. Leaving a market means a CEO must check his or her ego and pride at the door. As much as you want something to work, especially with all the time and effort you put into it, sometimes it’s just not the right fit. Every so often you have to prune to grow.
Once Sharfin decided this was the right direction for the long term, he had to rein in any lamentations for leaving, and start the communication process.
“I have no regrets of being in Indianapolis, because I think you learn from those experiences, and I met a lot of great people, but it just didn’t fit for us,” he says.
“You will never want to impact people’s lives like when you close a store. It’s tough when you are sitting at the top ? and you really are trying to make something work ? to look in the mirror and say, ‘This just isn’t the best fit for us. We are really taking time and effort away and focus from other things that would drive profitable growth, which would help us further our strategic goals.’
“As a business leader, you constantly have to ask yourself the questions: Are these the right markets for me? Are these the right products? The right services? Should I be investing more in other areas?
The more the situation was analyzed, the more the challenges arose.
“It’s very difficult sometimes to pare down,” he says. “I think it’s easier to expand, grow and add, but it’s much harder to realize, ‘Hey this just isn’t working for us.’”
As far as options, Sharfin started with the obvious ones that would allow the company to grow profitably.
“You want to grow financially stable,” Sharfin says. “It allows you to invest and do things in the community and do things for your associates. It’s the bottom line that you want to track ? monthly, quarterly ? your top line and what your order entry numbers look like.”
When you consider scale, you need to make a concerted effort to judge how long it would take to drive the volume needed in a market to put you on solid footing.
“It may take you too long to become large enough to really drive adequate volume, and you may think you are either going to invest for the next few years and make a commitment or you could exit now and focus on other areas that you thought would have a greater return,” Sharfin says.
There are few, if any, instances when closing a store or location can be decided and carried out overnight. Rather, it may involve discussions and planning sessions taking up to a year or more.
“About a year before we got out of the market in Indianapolis, we had the sense among my executive team that we really should look at options for exiting, because the store was consuming resources and attention, and we probably weren’t going to get the same return as if we focused on the other three markets,” Sharfin says.
“The first approach is to vet your decision quite a bit,” he says. “Don’t use only your executive team; use your managers as well. Ask for their input and engage them ? which I think certainly helps. When you engage people, and the more that you can share without getting into all the details, it’s all the better.”
Sweat the fine points
Communication is very critical at this point. Spending any time on the “if onlys” doesn’t gain support from employees who may fear for their jobs. You should realize that at this difficult point, your decision may not make new friends with anybody.
“You know some employees wouldn’t be offered a job if another dealer acquired your business,” Sharfin says. “I always believe you should be as open as you can with employees whether it’s good news or bad news.
“You tell your company that you are going to invest in areas where you can grow and be profitable and, occasionally, you are going to have to make decisions that may be less popular but they are for the good of the company,” he says.
People need to have a clear sense of the direction in which the company is going. Think externally as well as internally.
“Some manufacturers may ask questions, but you may not have any clients concerned about the strategy where you are going,” he says. “However, you will get questions from your people, and without sharing details or confidential information, tell them that part of your plan was to grow where you were strong and to continue to expand in areas you were very good at.”
Once employees understand the decision, questions should die down pretty quickly. If you explain your reasoning for the change, it will help keep open the lines of communication as well as trust in your leadership.
“Do it through face-to-face meetings saying that this is isolated to this market,” Sharfin says. “Tell them that you are doing fine in spite of the economy. You are meeting your overall company objectives and your financial targets, but you will be able to exceed those going forward by refocusing your efforts and closing the location.”
You have to cascade communication throughout the company and make sure people are grounded in the company’s vision and strategy.
Tell them this is actually going to help you focus on areas that all employees are involved in, and depending on the size of the company, you will have more attention to focus on those groups of people and of those businesses if you’re not distracted trying to grow or fix another part of your business.
“Obviously, you see it in Fortune 500 companies all the time where the CEOs communicate that they are exiting businesses because it’s no longer strategic or that they can realize a financial gain by reinvesting,” he says. “People still need to hear from you that everything is fine and that reiterates your strategy.”
What may speak loudest is your decision to hire people at your other locations ? in order to grow.
“Any fears that employees had will lessen as employees see new people coming in to bring in new business,” he says. “They will be seeing the physical results of the things that they had been told.
“As you grow your business, you may add more sales and business development people and others,” Sharfin says. “That is the way that people will really get it ? ‘Oh, now I understand. They are really serious about growing our business in expanding the areas where we are already strong.’”
After Sharfin decided that keeping the status quo wasn’t the most viable solution, he realized he was learning two lessons.
“One lesson is to know your strengths, and if your gut is telling you that something may not be good in the long term, it probably isn’t,” he says. “But the biggest lesson is, don’t ever rule out any potential business partners. You might never think that a competitor would strike a deal with you for your business.
“We spent about a year talking back and forth with our competitors, and I really grew to like them,” he says. “We were able to work a deal, they absorbed a bunch of our folks and I think it was a win-win. I still talk to those guys today.”
Start to see the rewards
If you know where your company is strong, a large part of your strategy should be to grow in existing geography and go deeper with the clients that you already serve. Grow some different services and capabilities in the markets that you are in.
“Try to leverage existing relationships and what additional services and products you can deliver to the current client base,” Sharfin says. “I learned early in my career the best future customer is the customer you already have. You always want to be as relevant as you can and not pitch everything.
“There are a lot of different areas that you can kick around with their management team or your leadership team ? things that you could be doing for clients that you are not even doing yet.”
By investing in your new and existing employees so they are trained in the new areas of business, it will give you the best chance to achieve profitable growth. It’s also time to re-emphasize that an attitude of grace goes far.
“Tell your salespeople, and believe this even when you lose a sale, you want to win graciously and lose graciously,” Sharfin says. “If a client decides not to select you, say, ‘We respect your decision; we are disappointed. Keep us in mind. Is it OK if we continue to call on you from time to time, or if we have some cool ideas for cool new products, can we share those with you?’ Always take the high road because you never know what could happen.”
If you communicate well with employees and customers, it can’t help but see you across the finish line where employee buy-in is the prize.
“I think buy-in is critical,” he says. “I’m not a big believer in consensus. I think you vet issues, you get people’s opinions and ideas, you get general agreement, you make a decision, and you move on. If you try to get consensus, it takes you forever. You may not have everybody agree, but if you explain why we’re doing it, why you made a specific decision, I think you do get that buy-in.
“It’s hard to grow and really be successful long-term if you don’t have buy-in. I think you can fake it, and you can get through a year or two, but at the end of the day, especially when you have a challenging economy, if you don’t have buy-in, you’ve really got your work cut out for you.”
And with that commitment and a plan to expand, you are in line to focus the company’s energy on its strengths and grow.
“It actually pays off,” Sharfin says. “It’s great when a plan comes together.”
How to reach: Continental Office Environments, (614) 262-5010 or www.continentaloffice.com
The Sharfin file
Born: I grew up in Columbus, but I was born in Brooklyn, N.Y. I only lived there a few months, but I always joke with people if they give me a hard time, I say, ‘Listen. Don’t mess with me. I’m from Brooklyn.’ The people who know me say, ‘Yeah, but you were in diapers when you left.’
Education: The University of Michigan, so I am very popular in Columbus. I have an industrial engineering degree from there.
What was your first job?
My first job was working for my dad’s construction company when I was 14. I was a construction laborer, really a go-fer. They didn’t cut me any slack. They worked me, and in looking back, I appreciated it because it was hard work. You know, hot summer days in August working on the roof of a new building. You would bake, and these guys had me running for tools and parts, lunch, and I learned a lot about working hard. It was a good place to start, and I made a lot of mistakes. They would send me for 10-penny nails, and I would come back with 12-penny. I definitely got a workout.
What was the best business advice ever given you?
Don’t argue over nickels. I learned this early in my career. Be fair when you are doing deals, don’t try to take advantage of people because it always catches up with you. I’ve always tried to live by that. It was from two people: my father, and Frank Kass, who is a business partner of mine. Frank always uses that statement as well. Frank over the years has been a mentor, and he’s reminded me of that.
Who do you admire in business?
I would probably say Howard Schultz. I have never met him; he’s the CEO of Starbucks. What he did was he created an unbelievable brand name and a brand where people have an emotional attachment. I really admire that. I am not a coffee drinker, but people tend to feel good when they think about Starbucks, or see the logo. One of the reasons I admire him is that a few years back, he shut down all the Starbucks stores saying, “We’ve gotten away from our quality and our roots, and we need to retrain our people on making the perfect espresso.” He had a lot of critics. He shut down stores. And I think they benefited from that.
What’s your definition of business success?
I really learned a lot over the years from learning through mistakes and having a company where people truly buy into the vision. I think when you are viewed by your customers as a valuable partner, that’s the definition of success, being able to solve their complex problems, and I think also giving back to the community. I would be remiss in saying driving profitable growth. Not being profitable, but continuing to drive profitable growth, whether it’s for shareholders, whether it’s being able to provide a home for a lot of associates. Also, that you can also give back to the community the more profitable you are. If it’s first and foremost about making money, then you lose sight of your people, of your customers and community. I think making money should be the lesser concern.
Steve Orander had started a company called Indy Office Solutions, it was just over a year and a half old, and he wanted to establish some principles to guide the employees on how to do what they do. So he took some time off and went on a mini-retreat to compose them.
“I was just trying to look at the major questions that would come up in a typical business day,” Orander says. “So I was able to combine some business and Biblical knowledge to come up with six things that I think are simple to understand, simple to apply and simple to measure.”
In 2007, Sharp Electronics Corp. bought Orander’s company as well as some others and formed Sharp Business Systems of Indiana with him as president.
The organic growth continued. Revenue was about $8.5 million in 2007, has almost doubled since then and the guiding principles have been carried over.
“I feel our culture has been a huge driver of our success,” he says. “The guiding principles are kind of the engine of the organization; they have made a tremendous impact not only on our business growth but truly how we look at what our mission is every day.”
Once Orander knew that his objective was to draw up some principles, he went down a list of key questions that had to be answered daily.
The first and most obvious one was to decide on the core motivation. Orander crafted the most straightforward statement he could devise: We seek first to serve.
“That’s the way we have run our business,” he says.
As for the second principle, Orander reasoned that if a person followed the first principle, it probably was due in a large part to parental influence. The second principle took that into account: We operate our business in a manner that would make our parents proud.
“Would your parents be proud if you took a shortcut with something?” Orander asks. “Would they be proud if you really went above and beyond? If you took the extra five minutes to talk to somebody and truly care about that person, they probably would be proud of that.”
For the third principle, he analyzed that a lot of business growth could come from client relationships that had been lost ? and regained through consistent contact and development. The third principle focuses on commitment: If we commit to something, we follow through.
“They’ve given us the opportunity the second or third time around, and we've been able to follow through on that,” he says.
For the fourth principle, Orander wanted empowerment to be a key factor in satisfying clients: Each employee is empowered to make a decision that benefits the client.
“What that truly means that anybody from the truck driver who delivers the product to me, we can all make the same level of decisions,” he says.
In an industry where the client retention rate is 30-35 percent, Sharp Business Systems has more than a 98 percent rate. Orander felt strongly that making a commitment to serve a customer is not just to get them to purchase from his company, but to build a lasting relationship.
The fifth principle echoes this feeling: We gladly forfeit any short-term gain that would not be in the best interest of our client for a long-term relationship.
The last principle involves helping your fellow man: We give back to the community generously because it’s the right thing to do.
The company has about 100 employees. Once a quarter, 12 Sharp employees get a day off to volunteer at a community organization.
“We will pay their salaries, and they will go out and give back in that practical way,” Orander says. “I think what we see is that our staff truly gets into a mindset of service.”
Using principles as a guide
Guiding principles aren’t just a list that hangs on a company wall. If used optimally, they can assist in not only running a company, but in the hiring and management of employees.
“They are truly both how to execute internally with each other as well as externally with clients,” says Steve Orander, president of Sharp Business Systems of Indiana.
The six guiding principles at the company each make a statement on how important it is to serve. The first time a prospective employee is exposed to them is during the job interview.
“I always ask them straight up, do you think you can commit to these things because I'd rather have you understand that this is really an important part of being on our team,” Orander says.
Besides being part of the basic operation, the principles also are used when there may be a performance problem.
“I'll sit down with the person, and I would basically saying let's look at our guiding principles here,” he says. “Based on what you did, how did that fit or not fit these guiding principles? Then they become the topic, not me telling them what to do.
“This has been really helpful as a culture because the culture maintains itself to a degree when you have that kind of checks and balances,” Orander says.
How to reach: Sharp Business Systems of Indiana, (317) 844-0033 or http://in.sharp-sbs.com/
A few years ago, John B. Swisher and his team at JBS United Inc. were putting together his first joint venture with a Chinese company and language and culture differences were creating significant obstacles for both sides.
Swisher, founder, chairman and CEO, was used to establishing lasting relationships built on communication and trust. One relationship with a feed and grain company has continued ever since he founded his now $480 million animal nutrition company 55 years ago.
But the Chinese joint venture was suffering from miscommunications. Swisher, meanwhile, was very concerned about his exploration into the burgeoning swine, poultry and livestock feed markets in the Asian giant.
“What they wanted was our research, our experience, and they want us to train that sales force to be a capital partner there,” Swisher says. “That market is just growing so rapidly.”
Already producing six times more hogs than the United States, the swine industry in China showed unparalleled growth.
“An American name means a big thing over there, so we were trying to capitalize on our name and the skills we have,” Swisher says.
He just wasn’t going to give up, and he set out to find a solution, even if it meant asking everyone who would listen. And soon, the right person was listening.
“I was at a 4-H Foundation committee meeting, and I was sitting next to this young lady,” he says. “She was an attorney with a law firm, and we were just talking about the difficulties in China ? and she said, ‘Do you know that we have attorneys in China? And that they’re Chinese?’”
Taken aback, Swisher said, no, but he sure would like to talk to one. And he did. What evolved was a solution built after dogged determination ? and that chance meeting.
“Within a month we had that thing completed,” Swisher says. “The attorney understood the language, he understood the people, and he had a law degree from China and the University of Indiana. He was just able to put that together so quickly once he could understand both sides. We are still using him. To be able to understand the language, I think, is crucial.”
International joint ventures can be lucrative undertakings. Teaming up with another company distributes the rewards ? as well as the risks, but the pairing may be the major factor in a successful endeavor, which might have not been a success by either of the companies alone. Both sides have opportunities for growth and a return stream for years.
“With the joint ventures, you have a strategy to grow and primarily to attract that skill that you do not have in-house and for all practical reasons could not afford to have in-house,” Swisher says.
For JBS United, its first Chinese joint venture was the United-Liuhe Co. Ltd., which manufactured and marketed nutritional products to poultry and livestock producers in China.
JBS United recently sold its interest in United-Liuhe for an excellent return ? nearly tripling its initial investment. It is now undertaking a second venture with the principal investor in that first partnership.
Here’s how Swisher helped blaze the trail for joint ventures on an international scale.
Find a good partner
In any joint business venture, it’s important to find a partner who is not just knowledgeable and has deep pockets. But what are some other key factors in a partnership?
“It’s people that you can work with, that are honest and reasonable, because no matter what contract you write, there are going to be exceptions and there are going to be other things that happen,” Swisher says. “Out of 13 domestic and international joint ventures, we’ve been really successful with 11. We had two absolute failures. I think we misjudged the partners in those two failures.”
The partner-judging process is not unlike that used in seeking a new employee. Proposals have to be examined, research has to be conducted into past history and risks have to be weighed to minimize possible mistakes.
“No matter how good that résumé looks, and how good the interviews go, you’re going to miss something,” Swisher says. “You cannot spend enough effort to avoid making some mistakes.
“I’ve read stories on American businesses going to China, and all they did was send money over to lose,” he says. “It’s like anything else. Ultimately, it boils down to the person that you are partnering with and the skills and character of those people.”
While you may find a different language and culture may make reference checking and other research a little challenging, it is an important part of the decision-making process.
“It is critical that you know the people who you are doing business with, that you trust them, they are aboveboard and they are doing things right.”
Once Swisher and his team realized that networking efforts might be fruitful, their search began to bear fruit.
“The partners here had gone to graduate school with a Chinese national, and he came to us and said this was a really good company; these are really good people,” Swisher says. You will find, however, that a good reference just opens the door, and you will need a comprehensive vetting process and face time. Likewise, a Chinese business has to approve of your company.
“We met with them and our conclusion was the same,” Swisher says. “We’ve really had a great relationship for 10 years. We have been really pleased with the outcomes.”
“You have to become trusted and be brought in ? sort of as a brother,” says Don Orr, JBS United president, who spent four years to find the right partner for the company. “Somebody’s got to vouch for you in China. Then you’ve got to spend the time over there to gain their trust, and then it will work. You can get through these differences or rough edges that you need to smooth out.”
Once JBS United made its decision, Swisher made it a point to keep the two-way communication alive through final negotiations and continuing on through the business enterprise.
“You’ve got to do your part,” he says. “You’ve got to hold up your end. They’ve got to be sure of you, too. I think it’s like any other relationship. You work with somebody for a period of time and you get to know what they do, what they can do and if what they tell you is right, and so forth.”
After his experience in the first venture opened his eyes a bit, Swisher put to work some of the lessons he learned for his second venture.
“No. 1 is you want to be a financial part of the company,” he says. “Although we had money over there in the first venture, what we had was just a small part of it and separate from the company. This time we are going to have ownership in the company.”
Another point applies to clearly defined roles for each party. Each should assess how they will go about completing their purpose and deciding with whom they need to interact.
“I think this time, there is an understanding with them and an understanding with us far more on what our roles are,” Swisher says.
Get the right people
It’s almost a given that your management for a joint venture overseas should include qualified, native-born talent. There is no shortcut to finding a suitable person; it takes determination and patience.
Swisher felt so strongly that the company needed this type of individual to deal with the Chinese partners that it took years of searching.
“We hired a Chinese man, born, raised and educated in China, who came to the United States and got master’s and doctorate degrees,” he says. “Our president, Don Orr, went searching and found him up in Canada. He is now literally the one responsible for the Chinese venture. Of course, he can read and write the language and is trained and educated in nutrition. No question, he has been unbelievably valuable.”
Some of the keys to a successful search?
“You really have to be agile and rally your resources and start communicating,” Orr says. “Use all your resources here, everyone you know here in the United States and the universities. Go to those people who are allied in your industry and say, ‘What’s your connection to those institutions or industries in Canada, the U.S. and China?’”
Once Orr learned that Chinese culture favors conversation between the top officers ? not vice presidents ? of both companies, it cemented his goal to find a native manager. Another advantage of such an employee is that he or she, once on board, is probably more likely to test the waters of business expansion than your employee who doesn’t have any local background.
“Don’t think too narrowly when you consider what is this person going to do because he or she may open up many, many doors for you, which you didn’t know you would be going through,” he says.
You may be talking and interacting with companies that you didn’t even know existed, and it may help to pave the way for future business relationships.
Also of value is the fact that once you have located and hired one highly skilled individual, he or she may lead you to another. The contacts that they developed during their school years or early employment years can be invaluable.
“They can pick up the telephone, call the schools and say, ‘Do you have any students up there that are going to graduate?’” Swisher says. “All these guys know each other and the good news is they can help advise the student.”
In effect, you will have an in-house recruiter ? and a marketing agent. Word-of-mouth is one of the most convincing tools, as most companies know.
“They will know your company and they will sort of know who’s going to fit, who’s not going to fit, and why,” Swisher says. “They can describe your company and your activities to the students. So it helps both sides.”
“If you have a good reputation with those people, you’ll likely get some recommendations.”
Deal with the lows
Sometimes the best-laid plans can go awry, as the poet Robert Burns once said. You’ve lined up someone to do business with, he or she is bilingual and everything looks like it will work. Then something happens and the project never gets off the ground.
While not technically a joint venture, Swisher’s company attempted to set up a distributorship in Ukraine, working with a local businessman who spoke English and Russian ? and it died on the vine.
“It blew up,” Swisher says. “There was no question part of the problem was language and part was culture. We offended them somehow, obviously not intentional, but all of a sudden it became an issue we couldn’t overcome.”
What Swisher took away from that experience was that American business practices may differ from those in Ukraine.
“There was another company in Ukraine that contacted us and basically in that conversation we agreed to meet with them,” Swisher says. “This really offended our prospective distributor. We thought we were being up front, and he basically said if you go around my back once, you’re going to do it again. We could not get over that hurdle.”
In a case like that, it is best for you to dissolve the relationship. Chalk it up to the differences in culture and as a learning experience.
“Do not violate the original opportunity, even if you think a third party is only remotely connected,” Orr says. “Inform your partner first.”
When it comes to going your separate ways, make a concerted effort to have an amiable parting.
“We left as friends; that’s the best way, with mutual respect, realizing that the arrangement just wasn’t the best fit at the time,” he says. “That’s why you never burn any bridges behind you ? you may do business with them down the road.”
Luckily, losses were minimized on the Ukraine project. But two joint ventures JBS United had in the United States with Indiana companies went sour also, and while not causing heavy losses, they were failures attributable to incorrect conclusions. As with the international joint ventures, you need to evaluate the domestic joint ventures with the same scrutiny.
“First of all, we misjudged their talent,” Swisher says. “They were not as skilled as we thought they were, and they were not as reasonable as we anticipated. Those two things just killed those partnerships.”
But if you take a philosophical outlook, it will help put it in perspective.
“But, you know, to some degree, if you say two out of 15 is not bad, it’s sort of like hiring people,” Swisher says. “If you could hire 13 really great people out of 15 hires, you’re damn good.”
The Swisher file
John B. Swisher
Chairman and CEO
JBS United Inc.
Born: Danville, Ill.
Education: University of Illinois, bachelor of science in animal science. Honorary doctorate from Purdue University in agriculture. That was a real treat for me to get an honorary from a university. Well, I did attend Purdue for one graduate course, but never got a diploma from Purdue. They felt that what I had done for them for agriculture was worthy. It sure as hell wasn’t the money that I had given them.
What was your first job?
Sacking a pancake mix in 5-pound bags. I was 14 years old. I was even driving trucks at 14. You have to understand, in the World War II years, manpower was hard to come by.
What was the best advice you ever received?
Whatever you promise, be sure that you fulfill it, no matter how hard, how badly it hurts you. You’ve got to be good for your word. That’s from a guy named Paul Kefauver. It was early in his business. He was a customer, a really large farm in Indiana named Fuller Farms. Mr. Fuller had a lumber business down south, a big lumber business. He owned a farm, I guess his wife inherited the farm, and it was like 1,000 acres; it had all kinds of cattle and pigs. Paul was a professional farm manager and was just sort of one of those wise old men that you are lucky enough to come in contact with.
Whom do you admire in business?
John Stadler has to be at the top of that list. His family had a packing business in Columbus, Ind. His adopted father hired him to save that company, and he did. Then he built a packing plant for an integrator down in Missouri. Then he had a series of things, which includes starting one of the largest hog farms in the United States, plus a packing plant, plus a sausage plant. He has a knack of taking desperate situations and turning them around. He does it so easily that it makes me envious. To do something that is so difficult and to do it with such ease is my definition of a pro.
What’s your definition of business success?
To be able to manage a company through the bad times successfully. There’s an old adage about anybody can be a captain in a calm sea. Not many people can be a captain, a good captain, in a rough sea. In these last three years, so many people in business have had it unbelievably tough. I think you’ve got to be able to manage through the changes and adapt successfully to change. I think that as much as anything else I see is a hallmark.
Swisher on what a joint venture means: What the joint ventures have done is for is to be able to take a medium-size company and expand particularly the technical intelligence, and in our joint ventures we have microbiologists, for example ? it would’ve been really difficult for us to be able to attract and employ that type of intelligence and experience. So with the joint ventures, we have a strategy in effect to grow and primarily to attract that skill that we do not have in-house and for all practical reasons, could not afford to have in-house.
How to reach: JBS United Inc., (317) 758-4495 or www.jbsunited.com
The first, George McCloy, told the audience of 530 about the various jobs he has held. However, his message wasn’t to brag about his experience. It was to make a point that for each job, there were ways to earn tips from customers, be it for delivering newspapers to earning a bonus if he sold a “prime merchandise” article of clothing.
“What I really learned when I was a young person was that if you worked ethically and were set at what you were told to do, you would have a good year,” he says.
Inductees this year included Sue A. Doody, president and founder of Lindey’s Restaurant and Bar; Robert C. White Sr., chairman and co-founder of The Daimler Group, a real estate developer and construction management company, and McCloy, president and founder of McCloy Financial Services. The event was co-sponsored by Smart Business, and was JA’s 25th such event.
Even Angela Pace, Columbus television community affairs director and emcee of the event, joked that Avalon Elementary School student Sascha Smoot was so adept at the podium welcoming the guests that Sascha might replace her.
Sascha was one of 16 classmates at the Columbus gifted and talented school who attended the event that not only lauded the three inductees into the hall of fame but showcased how Junior Achievement was giving young entrepreneurs a taste of the business world.
Doody took the stage and warmed the audience with her comments about starting her own restaurant business and nurturing it to success while raising four children.
“Junior Achievement teaches students work readiness and financial literacy,” she says. “If I had known all those things when I started a business, I probably would have started out much better.”
White wrapped up with his praise for the organization.
“Junior Achievement is needed more today than at any time in the history of this country,” he says. “The demands on our youth today are huge, the decisions they have to make earlier and earlier in life are increasing. Junior Achievement recognizes this and helps establish the means to make those good decisions. I am especially proud to be associated with Junior Achievement.”
Gender diversity in corporate leadership
If a woman wants to pursue a corporate leadership role, it might be to her advantage to be a fast walker. That’s the candid advice of Rob Falkenberg, CEO of UnitedHealthcare of Ohio.
“I look for fast walkers,” he says. “I find that fast walkers are fast thinkers; they’re fast doers. I want people who are really driven, energetic and passionate about their work.”
Falkenberg was one of three CEO panelists at the Healthcare Businesswomen’s Association Ohio Chapter discussion in October. The panelists were from leading Ohio health care organizations where women are clearly succeeding in corporate leadership roles. The panelists fielded several questions from moderator Shari Tordoff, and here is the top advice from the CEOs on how women can give it their best shot:
“First of all, I would say be assertive about your goals, and also be understanding that things don’t always happen on your timetable. Be very clear about your expectations, your objectives and career, work hard for it and be patient and very flexible.” - Rob Falkenberg, CEO, UnitedHealthcare of Ohio
“Do purposeful networking ? make a list of five people you want to meet or have lunch with. And consciously do it once every two months. It can be intimidating ? let them get to know you, and don’t make them all women.” - Pete Geier, CEO, Ohio State University Health System
“Women have to ask. Women will tend to wait to be asked to get to a leader position. Be a little more aggressive. Secondly, have a willingness to be coached. View feedback as a gift given to get better than a criticism.” - Mike Kaufmann, CEO, Pharmaceutical Segment, Cardinal Health
Summary: Be assertive while being patient. Network with a purpose. Show willingness to be coached.
Steve Pittman had some definite ideas that he wanted to launch as the new managing partner of accounting firm, Bruner-Cox LLP. In fact, he had been working on them for quite a few months before he became managing partner last year, and he felt they would differentiate the firm from the competition by using a simple catchphrase ? “We.”
“That’s the collaborative culture within our organization, and part of that collaborative dynamic is the relationship we have with our clients. We are working together, and we are extremely effective,” Pittman says.
The feedback, in a word, has been positive.
“The response from our associates has been outstanding,” he says. “The response from our clients has been outstanding.”
Smart Business talked with Pittman about incorporating the message of “We” to a firm’s mission.
How do you decide if your brand needs polishing?
This was something I had been working on with the partners. I think it’s one of those things where you look and say, ‘OK, we’ve got a great organization. We have great people. We’ve been able to be really effective even during the tumultuous economic environment we’ve been in. So what are we doing that we can do better?’ We felt like it was finding a message ? the brand, if you will ? that we could all recognize, all feel good about and talk to our clients about.
It’s not that just the leader can drive the vision; the whole organization has to drive it.
Think of the late Steve Jobs as an example. If you talk about visionaries, he had a vision. He drove that vision. He wasn’t actually building the products, he wasn’t building the retail stores, but he had visions of what Apple was going to be. He constantly reminded people, ‘This is what we are. This is what we what we do. Nothing less than that.’
How do you get your organization to buy into your approach?
Over time, you build up your reputation as an organization, as having quality people who are excellent, who have high integrity, who have this concept of collaboration. Be sure that every person in your organization never deviates from that. If you do have people who aren’t consistent with your culture, they should not be with your firm.
You want clients to always feel like that whoever they are working with from your organization, they will get to know him or her because that person is most interested in them. First of all, they’re highly intelligent, they’re well-trained, they’re focused and they have all the professional attributes that you want in a service provider but also they get the relationship concept. They get the collaborative dynamic concept.
A culture has a life of its own. If you feed it well, if you nurture it, then it takes care of deviations because as a group, you are making sure that you all stay focused, you all stay disciplined. You don’t let variability occur.
How do you control variability?
If you hire interns, that’s an excellent opportunity to evaluate people. Whether or not you are recruiting somebody young into the profession, or someone who’s lateral, spend a lot of time making sure that they understand your culture, making sure they are going to fit in and constantly monitor that and make sure they understand that the culture is the most important thing you have.
But you don’t want to discourage independent thinking because a key value should be innovation ? innovation within the culture. Here’s an excellent example: 90 percent of the competition may look at an issue one way and one of your people looks at it a different way, which is a tremendous value-added feature for the client. So that’s the idea; you always have to be thinking. You always can’t just fix up something on its face value. You have to say, ‘OK, how can we look at this in a way that it can add value to our client?’
Size: About 105 employees
Pittman on maintaining a culture: Culture is self-managing … if it is working the way it should. The key is having people who get it and understand it, and they feel good about being in that environment. That’s what you need to do best.
How to reach: Bruner-Cox LLP, (877) 339-1040 or www.brunercox.com
Scott Wise admits it’s difficult to find and keep good employees for the seven restaurants he operates. But despite that, he knows he’s doing something right ? Scotty’s Brewhouse grew from $11.6 million in annual revenue to $18 million between 2008 and 2010, a 55 percent increase.
“It’s important to keep growing our company so everybody’s fire continues to burn, so everybody feels they have another place for them to move forward,” says Wise, founder, president and CEO of the 1,000-employee company.
“Your employee is No. 1, not your customer,” he says. “If your employee is not happy, your customer is going to know that and is probably not going to come back.”
Smart Business spoke with Wise about how Scotty’s finds workers and stokes the fire within them.
What does it take to find a good employee?
Gosh, it’s hard. It’s tough. It starts all the way from the beginning. From the minute you hire them, you’ve got to hold hope that your manager has done his job. We try to put a lot of effort into the manager who’s doing the hiring so that he or she can find the right person. You absolutely have to recognize the right person, see through the bullshit and make sure that someone is not just saying things you can say to get hired. So it starts with that.
But from watching over my entire company, I would say just the generation we are dealing with right now, I don’t want to blame anybody or blame a generation, but it’s just, I hate to say weaker, but I think every generation gets a little weaker in some respects. Maybe they have been a little more overprotected or they need to know a little bit more about why ? “Why do I have to be there at 10 o’clock instead of 10:30?”
They ask a lot more questions. They want to know why they are doing this, or what’s in it for them if they sell these different food items or these different drink items.
I think that the toughest challenge is to always keep all your staff motivated, content, happy and, obviously, as the end result ? pleasing your guests.
What solutions are you taking to address the challenges of Gen Y workers and others?
It takes proper training. If you don’t train them correctly, they won’t want to stay with a company that doesn’t train them properly. The employees won’t feel like they know what they are doing, and they feel uncomfortable where they are, and they are not going to want to stay there.
To follow up, the chief executive needs to personally send an e-mail to every new trainee that comes into the company and tell them, ‘Hey, here’s my e-mail address. This is really me typing this e-mail. If you ever have a question or you feel like someone is saying something rude to you or anything, you need to e-mail me here.’
It all takes good training. We actually have two directors of training in our company so we try to put a lot of emphasis on them and making sure that they have proper training manuals and everything in place.
What are the responsibilities of the two directors?
One travels to the restaurants and actually goes to each store and talks to staff and the training manager.
The other one, who is the main director of training, manages the entire database and stays back to make sure everything is put together. Then she gives out information to him to transfer to the restaurants. They work together in the training.
What types of perks are successful with employees?
Try to just take a little bit extra effort to show support to all employees: Christmas parties, summer baseball games, anniversary cards and gym workout memberships are a few.
You don’t want them to be giving 80 hours a week at work and just killing themselves with that.
You want people to have a good work/life balance. That’s kind of my philosophy. I really think that helps.
How to reach: Scotty’s Brewhouse, (317) 759-6336 or www.scottysbrewhouse.com
Bill McCarthy thinks the construction industry still has some difficult days ahead.
The recent recession really belted the segment on the chin, and in some locations, half of the area’s construction workers were unemployed. Depending on the region, there have been some sparks of activity, but a return to previous levels is still in the distance.
“When people ask, we really don’t see the construction economy returning to some sort of normal until 2014 or 2015,” says McCarthy, president of Pepper Construction Co. of Indiana. “There are still tough times for the industry.”
During a downturn, it’s a chance to learn some things about your company, develop some new strategies, build better relationships with your customers ? and even reinvent yourself.
“What we’ve tried to do is use this opportunity to go back and reinvest in the company so that we are a better company coming out of this economy than we were going into it and positioning ourselves for long-term growth,” he says. “That’s really been our kind of mantra and what we’ve done.”
To start looking at matters from a strategic planning standpoint, McCarthy had a SWOT analysis done at the senior level of the company that involved a significant portion of the employee population, questioning what were the company’s strengths, weaknesses, opportunities and threats and posing what should be done about those findings.
“We developed from that a kind of a reinforcement to continue working on some ongoing strategic initiatives and develop some new ones, some of which I’d say are more tactical and short-term things that really look at the challenges that we have right now with the economy and being able to address those in the more immediate term,” he says. “Most of what we do, however, is really focused on the long term.”
Here are some of the major initiatives McCarthy is using to engage employees, weather the tough times and give Pepper Indiana a larger share of the market.
Reinvest in employees
With 150 employees and 2010 revenue of $227 million, McCarthy was feeling the need to groom future leaders from the existing work force. But at the same time, he needed to build up the existing management team if the company was going to grow its market share.
“I was trying to come up with a plan to strengthen and invest in developing emerging leaders,” McCarthy says. “One of our good clients and friends ? Bob and Doug Bowen of Bowen Engineering ? recommended a program.”
McCarthy instituted a leadership development series with their advice. At Bowen, the program had been done three times already and had resulted in phenomenal success.
The heart of the 18-month effort at Pepper was the book and program, “The Leadership Challenge,” created by Jim Kouzes and Barry Posner. The program takes the approach that when leaders are at their best, they follow five practices: model the way, inspire a shared vision, challenge the process, enable others to act and encourage the heart.
One of the most effective methods to optimize the benefits of “The Leadership Challenge” was to involve senior management in the teaching efforts.
“We asked pairs of our senior leaders to teach a session, and it was really engaging, very successful,” McCarthy says. “That old idea that you really don’t learn something until you have to teach somebody about it is very powerful.”
In addition, exercises which expand the comfort zone of the participants were beneficial.
“We paired up one of the senior leaders in a better protégé relationship with one of our emerging leaders, so you couldn’t have a direct reporting relationship with that person,” he says. “It was only people who didn’t work directly with each other. The protégés chose the mentors and again ? a highly successful and kind of career development and coaching resulted ? and I think it was really good for our senior managers as well because it indirectly created some accountability for them.”
You might consider driving the program to levels lower that those at the leadership level.
“Also, develop a program as sort of a companion to this for your project assistants, the old word would be secretaries, who are vital communication elements for your projects between your client and all the other superintendants ? they are like the critical hub in all of that and could really benefit from this,” McCarthy says.
Another effort to get employees involved included obtaining a volunteer leadership position. McCarthy adapted this idea from one the Bowens developed. You need a certain size of management if you really want to let everyone do their job and also teach, but with some tinkering, you can find a way that works for your size of company.
“Ask each of the participants to find something they are passionate about in the community and take a volunteer leadership position,” McCarthy says. “It gave people the extra nudge to take that extra step to lead the baseball league.
“You can imagine it’s enriching for the person, it’s great for our company to get our people out in the community, and it was really a nice add-on to that program. You get to put into practice some things that maybe you don’t get an opportunity to do every day in your work life or your personal life.”
Do 360-degree feedback reviews of each participant and map those on the leadership challenge traits to measure those against the key leadership traits that authors Kouzes and Posner developed through their research.
“As we got to the end of the program, we redid the 360 and saw in a composite as we looked at each participant really significant improvements in all the measured areas,” McCarthy says. “For some of the individuals, some outstanding improvements occurred.
“In a competitive work environment, as we come out of this recession, I also think we’ve got people more engaged here than they have been. I’ve got lots of little stories that I’ve seen happen, but for me, it has really helped me in my leadership to go through the program. I think it has really been transformational to our company and will continue to be.”
Use peer teaching
While McCarthy was pleased with the leadership development progress, he needed to find a way to engage more employees to help grow market share. Using the peer-to-peer teaching method again, he put into effect a type of mentoring that would teach junior employees some of the knowledge senior employees have learned.
When some employees suggested a quarterly education session at job sites, McCarthy liked the sound of the idea and furthered reasoned that if a good suggestion such as this was put into play, that very act would help with engagement and buy-in.
This involves the junior employee who is at a job site who would give a mini-seminar to fellow junior employees about a special aspect of the job, or there might be a subcontractor come in and describe a procedure. The education session ? an opportunity to network with fellow younger employees ? is followed by a mixer or other event at the end where some of the more senior employees are invited to join in.
“I love it that these guys had the moxie to come and propose this thing and then go run it,” he says. “We’ve now handed it off because the two guys who thought of it are moving up a little bit, so they recruited two new young guys to do it. It is something that I think has been pretty neat for our company.”
This mentoring type program uses two effective tools to increase knowledge and build better teamwork: the peer method of teaching and the advantages of networking.
The peer method uses employee who are on the same skills levels to help create bridges to span gaps in learning. Since the peer teacher is on the same level, he or she can relate to other peers on a different level than would a manager, using examples that have a relationship with the job at hand.
For the peer teacher, he or she has to have the correct information to teach, and thus benefits are seen from the extra preparation. Formal lines are not likely to exist between peers as they do between a teacher and a student, and with less inhibition, information is more likely to be shared.
The benefits of networking are well-known: making yourself known and learning what others have to offer through a relationship you build and deepen over time.
One example of a mentoring opportunity involves using a tablet computer, such as an iPad, on the job site to check off quality completion points. Instead of sheaves of paper blueprints, builders work with computer files ? and up-and-coming employees as well as any employees can learn the latest methods from a peer tutor.
“Some of our young guys are using a lot of new technology; they have iPads, they have Internet-based programs that they are using to track what’s going on, and it’s just a great opportunity to explain to the other guys what are we doing on this project that could have application to our other jobs,” McCarthy said.
Reward the ideas
In an industry such as construction, there are many opportunities where an operation can be improved or a process can be altered to save time and money. McCarthy wanted to encourage innovations and reward the best ones while also making use of others that were proposed. If the ideas were coming from the frontlines, market share would increase as innovations cut costs and improved efficiency.
A quality group led by two journeyman project managers holds an annual quality concept of the year competition that recognizes the best innovative ideas. Winners are chosen by secret ballot among the employees.
“It says: that’s what happens when you innovate,” McCarthy says.
The competition is open to all employees. This year’s winner was a 25-year-old engineer who designed a device that could be put in windows being replaced from the time the current window is taken out to the time the new window went in to keep the area weather-tight.
While not only recognizing the idea, the process of innovation may open doors to other possibilities.
“Another interesting thing that happened over the course of this, the engineer came to my partner and said, ‘Hey, I would really like to switch career tracks into more of a field supervision career track,’ and I think part of it came from his experience on that project,” McCarthy says. “So we’ve switched him over to working with one of our senior guys on a large project where he’s developing his skills there.”
The winner for the previous year also moved up the ladder. He re-engineered the entire concrete process used at a hospital construction site.
“I remember when he won this thing, he stood up and said, ‘Boy, I think I’m winning an award for messing with something,’” McCarthy says. “So, it was great to see how that went. That guy is now one of our quality leaders. It’s impressive how that develops.”
As for the ideas that don’t win, their value is recognized, and they are distributed throughout the company as alternative valuable concepts. About 50 entries were received this year.
“Even though they didn’t win, they’re good ideas,” he says. “It’s amazing. Many of them were inspired after we had a challenge, after something didn’t work right or what did we do in the face of some adversity or difficult challenges. People are stepping back and saying, ‘OK, what can we learn from this so that we do get better?’”
How to reach: Pepper Construction of Indiana, (317) 681-1000 or www.pepperconstruction.com
The McCarthy File
Pepper Construction Co. of Indiana.
Born: Chicago, Ill. I worked for 15 years for Pepper Construction there. We had started a large hospital project and wanted to really to expand our presence in Indiana, so the CEO of the company at the time, Stan Pepper, asked if I would move here with my family to have a more full-service presence. So I moved here in 1995, and I absolutely love it. We had three boys at the time; we now have four. This is home to us. We absolutely love it. I visit Chicago probably once a month because that’s where our corporate headquarters is, my wife’s family lives there and so forth. But we just love Indiana, and it’s been a wonderful move for us.
Education: University of Illinois, degree in architecture. I also have a master’s in business from Northwestern University, from the Kellogg School of Management.
First job: I was a paperboy at age 11, and I loved it. My first professional job was with Pepper. I started with the company right out of college.
Who do you admire in business?
David Pepper. He is the CEO of our company. He’s a very different kind of leader than I am. I really admire that. To use a ‘Good to Great’ term, he is probably a Level 5 leader. He’s very authentic. He is a humble man, a very humble guy; down to earth. He doesn’t look like he’s a CEO out of central casting, but he’s a terrific leader. I think he does that by empowering others to lead. He always has an opinion on things, but he lets other people say their piece and gets some consensus out there before he puts his foot down on things. I think he does that extremely well. I think he has been a great leader.
What is the best business advice that you ever received?
Probably one of my more admired leaders is Richard Pepper. He has been involved in the company for probably the last 60 years, so he started with the company right out of college. He always says if you focus on the customer and serving the customer, that will lead to repeat business, and repeat business will make sure that you are profitable. It’s such a simple concept, but it’s one that really just says it all. So I would say in tough times that what I think is even more meaningful is to continue that level of commitment to client service.
What is your definition of business success?
Doing the right thing and meeting and exceeding the expectation of our clients. A job well done, win or lose, is what counts. We try to make sure that regardless of our challenges in meeting their expectations or meeting our own financial requirements that we first deliver the best job we can for them, because I think that’s what we owe everybody. Sometimes, even on a job that is a very successful job for us, there are other jobs I can think of that financially weren’t very successful but the client viewed them as successful.