SBN Staff

Saturday, 26 July 2008 20:00

The Bueno way

If you want to work for John C. Miller, then you’d best be prepared to embrace the “Bueno way.”

As president and CEO of Taco Bueno Restaurants LP, Miller knows how he wants things to be run and the experience his customers should have, so he refuses to settle for less than the highest standards, which he is constantly looking to improve upon.

“We celebrate the little victories, but then we set new goals that have some stretch in them every year,” he says. “No one should ever rest or be content in their latest achievement because the competition isn’t going to rest.”

To stay ahead of the competition at the $183 million restaurant chain, which has more than 180 locations, he continuously measures progress and gets feedback from his customers so he knows what he’s doing right and what he needs to change.

Smart Business spoke with Miller about how he knows what to do next.

Establish good metrics. If you don’t have ways to measure, you don’t know how to assess what to do next in the business. You’d have to be lucky, or you’d be on your way to a short life.

What adds value to the organization? There’s all sorts of things you measure, but the measures have to be anchored in why any of those matter. Quite simply, what you value is what the customer values.

Nothing is sacred except that the guest returns. They have a lot of competitive choices. Those measures are against what customers say matter, then what our shareholders say matter, and then what our employees say matter. If you think of those as a wheel that rolls nicely down the street when they’re balanced, it works pretty well, but if they’re out of balance, the company doesn’t work well.

Talk to customers. Sam Walton said it best — if you don’t know what to do next, if there’s not real clarity around where you’re doing well and where your performance is slight, then go ask your customer.

Know your customers. You can get it with surveys, from employee opinion, but there’s nothing as valuable as face time with real customers that you can synthesize.

Listen to those consumers on what they’d like to see. You have to constantly ask. Sometimes, the consumer doesn’t know how to tell you — you have to twist their arms. If you ask a straight-up question like, ‘What can I add to the menu?’ sometimes they can’t answer. If you probe a little deeper, you find out.

I interview a lot of guests and employees. If there’s an enthusiastic response and endorsement, I’ll probe more, trying to get to the bottom of why they were delighted.

If they weren’t delighted, ‘What would have made you happy? What kept you from being excited about the business?’ You get to the heart of what the consumer is looking for.

Listen better, then assess. If you’re listening and then feel like, ‘Well, that’s not how we do it. I wish more people liked it the way we did it,’ then you’re not really listening. If you’re really listening, you’re listening for what you can take action on to improve your business.

Consumers are not static. They’re constantly changing based on what’s available to them, but it takes a commitment to be engaged with your consumers.

Assess where you’re at against what customers say matter, and give yourself an honest assessment with your team every year.

What are your strengths against what consumers say? Protect those. What are your weaknesses? Improve those. What are your opportunities — things you aren’t doing that customers would like to see you do? Add those.

Hire the right people. You don’t get to try people out for a year. How you staff is a critical part of putting together a successful organization that has continuity and can work together as a team.

We’re not in a hurry to fill every spot. We’d rather do it right.

In our reference checking, we ask some pointed questions about accountability, teamwork, customer focus, other people focus, employee focus. There are ways we ask that, interestingly enough, even people who mean to endorse their candidate, they sometimes pause over those questions, and that can be telling at times.

What most people do is assign that to a junior HR person who goes through a list — would you rehire them, can you recommend them, would you say this person has integrity? The problem with those questions is, it’s too easy to say, ‘Yes, no, yes, they’re fine, they’re great,’ and you don’t get into it.

So the questions are more open-ended and designed to have conversation — not yes-no answers.

Strengthen your hiring process. If you’re not careful with the selection process, it’s difficult to maintain the environment you want. We have a verification process that requires some redundancy, so the store manager would not add a staff manager without an assistant manager or district manager’s involvement.

When you add a second layer of verification, it adds another layer of strength and credibility to the process. That causes people to slow down. If the system is really strong, it makes it easier for a manager to make a strong decision.

By having a set of high standards that people have to go by, the system becomes self-policing and self-fulfilling.

HOW TO REACH: Taco Bueno Restaurants LP, (972) 919-4800 or www.tacobueno.com

Saturday, 26 July 2008 20:00

People parts

When Clinton Howard founded RBC Life Sciences Inc. in 1991,he was the entire company and did everything himself.

Today, as chairman and CEO of the $27 million nutritional supplement and wellness company, he knows that to move forward in business, you have to hire with the skills to get you there.

“I can’t come to work in the morning and open the door and do all the work,” he says.

“I can’t be very productive, and if we want to grow, we have to have people who I can delegate the jobs [to], who have skills greater than mine in specific areas.”

Smart Business spoke with Howard about how Henry Ford’s words on hiring guide him today and why conducting multiple interviews with a potential employee is critical.

Q. How do you identify which qualities you’re looking for in potential employees?

You bring in people who have skills. Henry Ford said it’s easy to run a big company — all you have to do is hire people who are smarter than you are in each area and get out of the way. If you’re going to grow, you got to have good people. It’s very important.

Honesty has always been No. 1. A person has to have good moral fiber to be able to work with them year after year. You look for honesty, and you look for people who have a positive attitude toward their work and a positive attitude toward their relations with their fellow employees.

Q. How do you gauge these characteristics during an interview?

You can’t just by a conversation because some people who aren’t honest are very skilled at appearing to be very honest. It’s important to know what kind of record a person has in their past employment or school if they’re coming out of college or graduate school.

It’s really important to check their references. A lot of times people don’t bother to check references, but that’s very important because I’m not a psychologist or an expert in sitting across the desk and evaluating a person in my interviewing them.

That would be No. 1, to see how they’ve worked out in their previous activities.

Q. What else do you do to make sure you get the right people?

Besides checking their references, we have multiple interviews. A person doesn’t come with our company and just be interviewed by their future supervisor. They’re interviewed by several executives in the company, and we get together and get everybody’s opinion. That’s important.

Secondly, everybody who comes with us, they’re on a probationary status for a while because it is difficult to really accurately evaluate a person just in an interview. An interview is like a honeymoon — everyone is nice to each other and smiling and positive, but it’s important to know as much as you can possibly know about a person before you actually bring them in to a company.

The better job you do in screening and evaluating, the better success you’re going to have in their productivity. None of us are skilled psychiatrists. None of us are that perceptive of a person’s character and what they will be like when they get on the job, how they’ll relate to the person at the desk next to them, how they’ll work out on the job.

Multiple interviews are good because it gives you the benefit of different viewpoints.

Maybe everybody agrees with the evaluation of the person. That’s great if they do, but I just can’t trust my judgment of a future employee on the basis of an interview. If we are interested in possibly hiring somebody, it will not likely be on the first meeting. It would be after the second or third interview.

I have a lot of respect for the viewpoints of the other supervisors in the company.

Q. How do you work through differing viewpoints about a candidate?

You probably don’t. You probably end up rejecting a potential employee if somebody that you worked with for years sees a real negative that I didn’t see or somebody else didn’t see.

I trust their judgment and their insight. Maybe they asked just the right question that I didn’t ask that revealed some flaw in that person that I didn’t pick up on, or someone else didn’t pick up on. It would need to be pretty much unanimous to bring a person in.

If you bring the wrong person into a company, it can be very destructive — even if it’s only temporary until you straighten out the problem. Good morale is important.

A person who shows undesirable traits can hurt the morale of other fellow employees if they don’t get along with the other fellow employees or they gossip or criticize.

You can’t get in a hurry and just bring in bodies. Hire the very best people you can, and then educate and train them properly.

HOW TO REACH: RBC Life Sciences Inc., (972) 893-4000 or www.rbclifesciences.com

Saturday, 26 July 2008 20:00

Building a future

Think back to when you were 16 years old and envision the most important thing you wanted to buy at that point in your life. Maybe it was a car, or perhaps it was just your favorite record or cassette tape. Chances are that you weren’t thinking of a lifetime investment, but that’s why Herman J. Russell is a little different — and undeniably successful.

As a 16-year-old growing up in Atlanta during the 1950s, Russell had already been working for eight years and had saved a hefty chunk of money. Instead of blowing his money, he invested it by buying a vacant lot for $125 — a lot he says would cost $50,000 today.

“My daddy taught me the art of saving at a very young age,” Russell says.

He then built a duplex on that lot during his senior year of high school, and when he returned from his freshman year of college, he painted it.

“That was just the beginning of my real estate development,” Russell says.

Now, more than a half a century later, what started as a duplex built on a vacant lot has turned into H.J. Russell & Co., a $300 million construction and real estate development company.

It’s not always easy to build an organization from scratch, let alone to sustain it for as long as Russell has, but as he gets older, his one desire is to ensure that the company he founded and still serves as chairman for, lives on long after he does. So just as he builds solid foundations for all of his clients, he has done the same for his business by doing three things to ensure his company’s foundation is strong enough to stand the test of time. Over the years, he’s focused on hiring the best people, creating a great atmosphere for them and moving them up in the organization, and that even included moving someone into his own position.

“I always have in mind that I’m building an institution — something that will live when I’m not here and continue to live,” he says. “That’s what you want.”

Hire the right people

Russell has seen his share of talented young people come into the company, but he’s also seen a handful of that talent pool leave because of their own dishonesty. The key is to minimize that handful and get as many of those honest, talented people as possible. When you do this, you’re building your business with solid people, which will help ensure its success and sustainability.

“The key to finding good people is looking at the education of the people and looking at the reputation of that individual,” he says.

One’s education is easier to detect because you can simply look at the resume, but honesty is another issue.

“You can’t really tell until you put the people in the game, but people who have been trained can sometimes detect honesty much easier than people who have not been trained for that,” Russell says.

He has potential hires spend a day with a psychologist for psychological exams so that he can get an expert opinion from someone who can better read a person than himself.

“I have interviewed and hired enough people to have my own gut feeling, and I do follow my gut feeling, but I want the scientific evaluation,” Russell says. “I get that to go with my gut feeling.”

In addition to the psychological testing, he also does background checks and drug testing on top of the standard interviews.

“You take all of that and put it in the hopper, and you come back 99 times right in your decision-making,” he says.

Beyond the time it takes to do the various tests, it also costs some money. Russell estimates that his company spends at least $300 to $500 for every hire, depending on the position, but despite the cost, he says it’s worth it in the long run.

“It’s better to spend the money and time upfront,” he says. “It’s 100 times cheaper upfront than on the tail end — it costs more. It’s like saving a child — you can save a child and keep that kid from going to prison with a good education. A good education is much cheaper than paying to keep someone in jail.”

Beyond the simple costs associated with turnover, having the right people will also help you build your company for long-term success.

“You want to have the very best,” Russell says. “You want to be the very best. You want to serve your customer with impeccable service. It pays off for you. It’ll be better if you have the right people on board.”

Create a great atmosphere

When Russell ran into one of his employees, he was thrilled to learn of her recent successes. The employee was a young woman originally from Africa who was initially hired at a time when she didn’t even have a college degree, but on this day that Russell spoke to her, he learned that through the company’s education program, she had earned not only her bachelor’s degree but also her master’s degree.

“Talk about something that made me feel good,” he says. “She gave me a hug like I’ve never had before.”

With more than 3,000 employees, Russell doesn’t see everyone on a regular basis, but he still wants all of his people to know he cares about them and wants to see them succeed, so it’s important to have a great work environment that fosters that sentiment. When employees know you care, it will keep them with your business longer and help you better create long-term success.

“Have a good atmosphere and you have an organization they can grow in and continue to learn,” he says. “You make sure that if they work hard and do a good job, they’re going to be paid well, they’re going to have fringe benefits and have an education program.”

That education program that helped the young woman earn both of her degrees is just one example of one of the benefits that the company offers. If an employee earns all A’s, then the company

will pay for all of his or her books and tuition. If employees don’t earn all A’s, they still receive a percentage from the company, which decreases as the grades do. Employees can major in any subject they feel will enrich their job, and they’re not required to stay with the business after they graduate. That may seem like a recipe for turnover, but Russell says other incentives keep them there after they’re done with the education program.

For example, the company offers family events about six times a year, such as a Thanksgiving devotional service, a Christmas party or picnics.

“If you got a family situation, nine times out of 10, you’ll have a better employee,” Russell says. “When you see people happy, they’re going to be more productive and they’re going to be a better influence to have around you.”

The company also takes time twice a year to recognize employees for their accomplishments and give out awards, which come accompanied with prizes such as televisions, checks or an overseas vacation. All of it is designed to motivate employees, and Russell says that while it can be hard to know what will motivate each of your own employees, it’s the motive, not the prize itself, that will win them over.

“I’ve never missed the boat on recognizing people and giving people something that they didn’t realize they were going to receive,” he says. “Even if you give someone a trip somewhere, if they don’t want to use it, they can give it to their mom or father. When you make a good genuine effort, you don’t miss the boat when you’re trying to motivate people.”

Move people up

The last key to creating long-term viability for your company is to promote people into higher positions, and sometimes, that even means replacing yourself. A few years ago, Russell started to realize it was time for him to pass the torch to someone else.

“I knew I wanted some faster legs, a good solid mind, lots of good youth and all,” he says.

In 2004, he was eager to turn the CEO reins over to his son, who he had moved up through the organization in recent years.

“I’m fortunate enough to have three kids, but someone in your organization, you should bring up, even if it’s not a family member, that you know has it,” Russell says. “You should treat that person or individual like your own family member and bring them along, and you just need to let go.”

Whether you’re hiring your replacement or someone else’s, it’s important to move your employees up in your organization, and to do that, you have to identify talent.

“It’s the same thing I look for when I hire,” Russell says. “You look for the very best. You look for the best-equipped person you have educationwise, experiencewise, with the right attitude, with the right mindset, someone who loves humanity. ... You can’t hardly be a leader if you don’t love humanity.”

It’s hard to be on the lookout for these types of people with just one set of eyes, so Russell has always relied on his management team to increase the likelihood of choosing the truly best people for promotions.

“All of our senior people detect the younger people, and they mention in the senior meeting, ‘This is someone we need to watch and make sure that they’re on the right track,’” Russell says. “It’s brought to the attention of senior management people because somebody who this person is working under can see this potential.”

Once you’ve identified someone for a particular position, it’s important to talk to that person about his or her future.

“The first thing I always ask — ‘What area do you think you need some improvement in?’” Russell says. “We all — I don’t care who--have some improvement we need to make. I don’t know the area but some area. You found out, and you make sure that you open those doors for that person to improve themselves.”

You may run into a situation where a person can’t see his or her weaknesses, and if it’s something you can see, then you should make the recommendation for that person. This initial communication session can be very telling.

“When I recommend something to the right people, they take it very well, and they appreciate it ...” Russell says. “If they get out of shape about it, that’s the test, that’s the wrong person.”

As you and your young protégé work collaboratively to improve his or her skill set and get that person ready to take the next position, it also helps strengthen your business.

“We’re not going to be here forever, and if you want your organization to live forever, you always got to have depth in your organization and put people in the position, so when that time comes, they’re ready,” Russell says. “We never like to pigeonhole people in the organization. We like them to see the big picture.”

HOW TO REACH: H.J. Russell & Co., (877) 787-7351 or www.hjrussell.com

Wednesday, 25 June 2008 20:00

Building people

An employee at Hisaw & Associates drops his wrinkled dollar bill into the pot and then timidly steps on to the scale to see if he’s lost any weight in the last week. He sees that he’s lost another 2 pounds since the last weigh-in, smiles and steps off.

It’s not some company policy requires employees to be a certain weight; rather, it’s a corporate challenge, based on the hit TV show “The Biggest Loser,” to encourage employees to be active and healthy. At the end of the challenge, whoever has lost the most weight gets all the money.

It’s just one initiative that President Kathryn Rehm Hisaw says has made a difference at the general contracting company. By encouraging and rewarding employees, she strives to make all 40 of them feel like family at Hisaw, which posted 2007 revenue of $120 million.

Smart Business spoke with Rehm Hisaw about how providing employee incentives, such as a trip to Las Vegas, makes people feel appreciated.

Get buy-in. It’s important to listen to people and hear what people have to say and be open. A lot of times, companies are not open to change and not open to listening to people in their own organizations. 

Let’s say it’s [an idea] in the accounting department. We discuss it in the accounting department at our weekly meeting, and we get the pros and cons, and I or [CEO] Richard Hisaw will ultimately make that decision. We don’t come out and say, ‘This is a new policy for Hisaw.’ We say, ‘Debbie has made this suggestion, and we think it’s a good policy, and we’ll try it.’

That gives people a self-worth of being part of the company and part of the team. People hate change. [But] if people feel they’re going to derive a better life, or something will make their work life better, that they’re going to become an intricate part of a company they’re proud of, they’ll change.

That’s part of just being a team. If they’re not going to do that upon knowing that, then they’re never going to change and never be part of the team.

Give people authority. One of the toughest things for people to do is delegate that power away from them. People are frightened to do that. 

If they start working with someone that’s going to be their protégé, and you take them as if they are your protégé, and you give them bits and pieces, and you test them, what also happens is you’re empowering them and giving them ability to make their own decisions. You’re giving them the ability, and they know that you trust them enough to make those decisions. Without that trust, they’re not going to be happy.

It almost allows them to feel they’re in a laissez faire leadership themselves because they feel they can be a leader for other people.

I don’t care how small the job may seem to a person from the outside looking in, every job we have is an intricate part, and nobody is insignificant. Everybody is a pertinent part of the machine that keeps us working.

Make people feel they matter. If it’s a birthday, we have a special cake for that person, and the office goes out to lunch together. In our best years, we match the 401(k) dollar for dollar and give profit-sharing and bonuses.

They become part of the company, and they know the profitability they create will equal bonuses. At Christmas, they all come to a party, and we do reverse gifts. Maybe you’ll get an ornament or a professional waffle iron. It could be anything, but the final name that is drawn out gets a trip, and, usually, it’s to Vegas for two nights, three days, airfare and $500.

It’s not just for department heads — it’s for Hisaw team employees, and they know everyone has an equal chance.

Those are the things that give people great satisfaction that they’re really appreciated. People are quick to call you and tell you how bad that is or how bad that is, and there’s a problem here, but the simple words of, ‘I really appreciate you — thank you so much,’ go a long, long way. We have some longevity here. Longevity is everything because longevity is also loyalty. That’s what gives you optimal growth and exceeds your break-even points and gives you your maximum profit.

Constantly communicate. Seventy percent of all the mistakes are due to communication or lack thereof — 70 percent.

Communication is everything. Once you have a structure, communication is so vitally important. Listen to your client. Hear what he has to say. Don’t prejudge it and think what he wants. Know what he wants and do it.

When we talk to our people, we are talking with our people because when we communicate, we often ask for feedback and we ask their opinion. Sometimes people are shy, and they don’t want to tell you, but as they work with you longer and longer, they will tell you, and that builds strength within a company.

That communication is really, really important. Some people have a breakdown, and that breakdown in communication breaks down the trust. Once it breaks down the trust, then it erodes wherever you’re at.

HOW TO REACH: Hisaw & Associates, (972) 380-4448 or www.hisaw.com

Wednesday, 25 June 2008 20:00

Step by step

When Philip Verges started NewMarket Technology Inc. in 1997, he traipsed around the country to bring in new clients, but when his office called him one day to tell him it’d be a squeaker to make payroll that month, he was blindsided.

While he’d been doing a good job of attracting new clients, he realized that he had done a poor job of collecting on his receivables. He didn’t understand the balance sheet, and he decided it was time to seek advice from others who did.

Recognizing his weaknesses and finding people who are strong in those areas has helped the chairman and CEO take his company, which delivers systems integration and emerging technology solutions, to $93.1 million in revenue last year.

Smart Business spoke with Verges about how recognizing your weaknesses can help you grow your business.

Q. How does recognizing your weaknesses help your company?

The business’ strengths and weaknesses reflect the entrepreneurial leader’s strengths and weaknesses, so as the entrepreneur overcomes weaknesses, that’s reflected in the organization.

We all have our weaknesses. In North America, we’ve had this culture (develop) where we don’t admit our weaknesses. We hide them. I have a fun game that I play in social settings. In conversations, just for fun, I’ll admit a past problem or issue I had ran into — whether it’s parenting, business, management of my own credit card — and as soon as one person goes, then the room opens up, and everybody starts rolling out their mistakes and their problems and issues that they have.

Q. What weakness do you have right now?

I have never grown a company from $100 million to $1 billion. While I have some ideas, I need to get other people involved that have that experience from the $100 million stage to $1 billion.

It’s not difficult to identify people that have those experiences. What’s difficult is to identify those people that have those experiences and have the aptitude to be comfortable inside the company that’s just grown to that size.

I’ve been through a couple of great (chief operating officers) — very capable, great people, way better resumes than me, but ultimately, they’ve been personally uncomfortable inside of the organization.

Q. How do you know if someone will fit in your organization?

You have a number of different perspectives who are interviewing the individual, but there will be a certain percentage that might get through. There are some people who interview very well but are not good at their jobs.

Even when you find that right person, you need to have a grace period where both the organization and the individual, over that first six months to a year, are still getting to know each other and make sure it’s a great fit and trying to identify any issues early and resolve them and move on quickly.

Q. What helps you have a better chance of bringing in the right person?

When you’re looking for personality fits, one of the practices is to engage the whole person. We like to take our time. We like to meet the person’s family and see them in a social setting with their family.

While someone may be able to put a good face on in the interview process with the board of directors, there are very few people who can maintain the same composure when they’re put in front of their spouse and children. We like to, whether it’s a BBQ or dinner, get to know the person and the environment they live in, and it’s usually very telling on the corporate mask they may put on in the interview process or even in their daily work. We get to meet the person behind the mask when we see them in a more casual environment that brings with them the environment they live in on a daily basis.

Q. Why is that personality match so important to growth?

Key-man businesses often reflect the strengths and weaknesses of the key man. Early-stage businesses frequently pay competitively but are not at the top of the pay scale by industry, so the people are there because they believe in the company.

They believe in the key man, so there has to be a personality fit with who that key man is and with the overall management team that the key man has developed around him.

As it starts to grow, there has to be a recognition of where the company is today and growing from that base forward, as opposed to, ‘Let’s crumple it up and throw it away.’ If you have a management personality conflict and you’re getting the skills that you need but they’re counter to, personalitywise, the existing management team, you run too much of a risk of running a counter impact to what you’re otherwise trying to achieve, which is that next stage growth.

HOW TO REACH: NewMarket Technology Inc., (214) 722-3065, (972) 386-3372 or www.newmarkettechnology.com

Wednesday, 25 June 2008 20:00

People first

“You have no idea how much I appreciate being heard.”

Robert Habeeb read this line from a note he received from an employee in Ohio, and it touched him. As president and chief operating officer of the $165 million hotel management company First Hospitality Group Inc., he could easily spend all of his time in fancy boardrooms in important meetings, but instead, he relishes being out among his 3,000 employees, all of whom he says have stories worth listening to.

He recognizes that when leaders take the time to learn where people are from, ask about their families and find out what their aspirations are, it creates loyalty and trust. And relationships that are built on these casual interactions create stock no leader can buy.

Smart Business spoke with Habeeb about how focusing on employees strengthens your company.

Talk to people. The closer you stay to the front lines, the better informed you’ll be as to what’s really go on in your business. If you get out on the front line where the interaction between the company and the customer takes place and you listen to those folks, you’ll get a great picture of what’s happening in your business.

If you stay in the office and go from meeting to meeting, dealing with executives and expect you’re going to get the full picture of what’s happening in your company, you’re probably mistaken.

If you don’t discipline yourself to put a big black line on the calendar and say, ‘I’m not in the office on this day or during these hours,’ and get out, it’ll never happen because your time will always be hijacked by some other priority.

You get to chat with people and learn a lot about your product and customer. The more that you’re close to your product and the people on the front line, the more that the keeping it real comes naturally rather than it’s a mission.

Find a way to help your employees.We started an employee Web site. When we first rolled it out, we had an all-staff meeting and talked about the site.

At the end of the meeting, the first question was, ‘I don’t have a computer — do you know where I could get one?’ A lot of the people that work for us at entry level didn’t have the resources to buy a computer, so we came back and found a company that would co-op with us on helping people buy their first computer.

Anything we can do to help them navigate, people cheer for. It creates loyalty. We want people to be cheerful and friendly, and it certainly contributes to them going to work and making it easy to be cheerful and friendly.

It’s probably the difference in where you have your heart in what you do versus just going through the functions.

Think big. We’d rather get out of bed every day and try something different and have it flop and then pick ourselves up and try something else, as opposed to being an organization where ideas end up on the bulletin board, and the bulletin board committee gathers them and puts them in the log book, and that’s where they die.

We do a car giveaway every year. There came a time when we realized that management by whip and chair was extinct, and to retain people and inspire them to do good things, you have to develop a system that rewards.

Every time you have perfect attendance for a quarter, you get into the lottery. At the end of the year, we draw from the names of all the people who have perfect attendance, and that person has their choice of, this year, a Cadillac Escalade for a year, a Harley Davidson motorcycle to keep, or we paid your living expenses for the year.

That spurned from a lunch conversation we had one day. What’s the cost, and what’s the potential if it improves people’s performance just 10 percent?

Incentive programs should always drive you to some result. The reward should be exciting, and you should have a celebration of the accomplishment. The bigger deal you make of any incentive, the more effective it will be.

Call-offs reduced by 75 percent over the first four quarters where we had it introduced. It’s a long shot that you’re going to win the car, but it’s creating a positive when you get up in the morning and you’re not really sick but you’re making that decision of whether to call off sick or not. It really does change people’s behavior for the better.

Prioritize people. It’s all about where your head is at. What happened at Enron is that management stopped going to work every day thinking about their customers and employees and starting going to work thinking about ‘me’ — it’s all about ‘me’ — this is what ‘me’ has to do.

Many leaders can accomplish great things while being full of themselves — self-confidence and a little bit of arrogance are positive traits — but when you break that connection and you’re not genuine anymore, then you’re in the soup.

There’s a barrier that goes up when someone is seen as unapproachable as opposed to someone who walks around chatting with everyone they see. It keeps it real. It keeps you in tune with what’s happening in your company and what’s happening with your customers.

HOW TO REACH: First Hospitality Group Inc., (847) 299-9040 or www.fhginc.com

Wednesday, 25 June 2008 20:00

Making money

Quantity, quality and frequency are critical factors at Network Communications Inc., says Daniel R. McCarthy.

As chairman and CEO of the $203 million publisher of printed and online magazines for the real estate market, McCarthy has to make sure that all of his 45,000 monthly advertisers are getting the right amount of traffic from the ads they place and that it’s high-quality traffic. It’s a lot to manage, especially when he also has to ensure that his sales force is happy and can effectively continue bringing in advertising customers. Despite the challenges of this balancing act, McCarthy knows it’s his job to create alignment and direction and to ensure everyone is moving steadily forward.

Smart Business spoke with McCarthy about how he creates alignment and about the business lesson he learned from packing his kids’ lunches.

Follow through. When I’m making lunch in the morning for my kids to take to school, and I put it in their lunchbox and hand it to them to put it in their school-bag, they trust the sandwich is in there. They don’t open it up.

If I give them the lunchbox once without the sandwich, they may laugh at me and then ask me for a couple days, ‘Hey Dad, is the sandwich in there?’ but they’re going to trust me when I say, ‘Yeah, I did it this time.’

But if they get a lunchbox three or four days in the space of two weeks where there’s no sandwich, they’re going to start opening that lunchbox, and they won’t trust me.

That’s why delivering on a product-promise is absolutely critical. You can make one mistake, and as long as you correct and acknowledge it, the people you’re delivering the service to will trust you, but if you make a handful, they’re going to doubt you.

Business is no different than any part of life — it’s structure with a set of rules, but at the core of (those) rules are accountability, trust, credibility and consistency.

Trust your salespeople. If your salespeople aren’t doing anything, then more often than not it’s because you’ve put the wrong incentive in front of them.

The sales organization is a lot like water. When you pour water, it seeks the easiest path — it doesn’t try to go through a rock — it goes around a rock. A sales organization will do the same thing. They want it to be as simple and as quick to make money off of it.

Engage the sales organization in conversations constantly because you can’t let the sales organization feel they don’t have accountability. If the organization says, ‘Oh, management will trust us no matter what,’ and they want to find the easiest way to make money, and if they know all they have to do is push in one direction and their compensation will get changed, so it’s easier to make money at the expense of the company, that’s a mistake.

But if you’re saying, ‘My promise to you is I’m going to give you something to sell, and I’m going to come out to the market to see if it works or not, and if it doesn’t work and I see you doing the things you need to, I’m going to trust you,’ then you have a powerful sales organization.

Create alignment. It starts at the core and at the perimeter — simultaneously.

At the perimeter, the customers are outside, and the first thing you have to determine is, do we have a clear understanding of who our customers are and what we’re trying to do for them and whether we are effective in doing that?

At the core, look internally and say, ‘What are our processes, and what processes do we have that are consistent and work and can be replicated and can help us be effective in producing what we want to produce and that can be profitable?’

Then trace those toward each other and make sure the two things meet. A lot of times, companies don’t meet halfway. They have a good understanding of who the customers are and the processes they use, but in the long trip that occurs between business processes and the experience the customer has, sometimes it just never gets linked up.

Communicate with customers. The relationship between the customer and the person they do business with in the company should be the single most honest and consistent relationship.

It’s asking each of the people out in the business who are talking to customers to be responsive when the customer is giving them feedback, and it’s also measuring. We do that by tracking the phone calls we generate, the e-mails we generate, the people who print a map off a Web site so they can go visit an establishment, and then we engage the customers in a conversation about that business activity.

Customers have to make money first, salespeople have to make money second, and then the company will make money third. If that gets out of sequence, then we’re not going to have a good long-term business.

If customers aren’t making money, they’re not going to have more money to give us later, and if my salesperson doesn’t see they’re making money, they’re not going to be motivated to go out and talk to the customer to get more money, and those two processes have to happen before the company can make money.


HOW TO REACH: Network Communications Inc., (770) 962-7220 or www.nci.com

Monday, 26 May 2008 20:00

Reversing polarity

Dave Dutton walked into a nightmare when he took over as Mattson Technology Inc.’s CEO in December 2001.

“The company had just completed a merger, and then, right after the dot-com bubble burst, went into one of the worst downturns,” Dutton says. “The founder quit and essentially retired. This all happened three days before an analyst’s conference call, which I had never been experienced in.”

Adding fuel to the fire, Dutton said the merger hadn’t been fully integrated, so his business was behaving more like three separate companies.

“The company had an optimism that the companies would just fold into each other and grow,” Dutton says. “The reality was the merger was not a structured business focus, so the company was losing money. On top of that, the worst downturn in our industry hit, so that took a weak operating structure and sent it down further.”

Being hit from all angles, Mattson was already on its knees and still getting hit as it closed out 2001 with a $336.7 million net loss and only $230.1 million in net sales.

It was now Dutton’s job to heal the wounds, but with those numbers, he couldn’t simply slap on a bandage.

Instead, he needed to completely overhaul the semiconductor manufacturing equipment provider, so he took to rebuilding Mattson’s infrastructure by cutting costs and creating a new vision.

“It’s just like anything else in business,” he says. “When you’re in a difficult situation, a turnaround or whatever, call a crisis a crisis, get people in the room, start mapping where you are today, make decisions, and speed of execution is still critical.”

Make tough choices

In a financial crisis situation, most leaders would just start wildly slashing costs everywhere, but Dutton realized he couldn’t just cut without reason.

“Really quantify clearly what you need for success,” he says. “What does a company need to get to as far as the size and level because, certainly, when you make these cuts, you don’t want to be doing them over and over.”

To move forward, he decided to examine all the products and business segments and evaluate their current strength and long-term viability.

“We had to make decisions around what products and what areas of the company were adding value near term and had the capability in place to continue to drive toward a leadership position, and those areas that weren’t having an impact and weren’t positioned to have an impact in the future,” Dutton says. “We were making cost-cutting decisions left and right.”

Dutton and his team developed a set of product principles to help them make these decisions. A product had to first have a clear path to leadership — meaning it could be No. 1 or No. 2 in the market with what it already had or with what they were anticipating developing. The second test addressed whether the product had differentiating capabilities and technology from competitors.

Dutton then applied those principles to each product and business segment to see if it was delivering now or if it was positioned to do so in the next two years.

“It was decisions around, ‘Is this business strong enough today? If it is, can it continue to have that strength?’” he says. “In other words, is it positioned well in the market, and is it generating value for us? That first set became keepers.”

The next step was looking at the areas that weren’t positioned well.

“Do we have the funds and resources to bring it to position, and if so, will it be a contributing factor in the next two years?” Dutton says.

If the answer was yes, it stayed, but if it was no, it went. “It sounds pretty mechanistic, but we’re making decisions, and in some cases, we’re shutting down some very new and novel technologies that could have been market winners ... but the reality was, at the state the company was in, we felt we wouldn’t have the resources to deliver those to success.”

Be honest

When you’re cutting products and areas, you’re also cutting people, so Dutton had to communicate to his 2,300 employees the company’s state and that many would lose their jobs as he made decisions. With bad news, it would be easy for them to slack off until they know if their job is safe, but Dutton showed them how their work output would affect not just themselves but their peers.

“A lot of it was being clear to our employees and divisions,” he says. “There were cases I’d walk in and show people our revenue stream, our cash flow and essentially give them a number — ‘If we reach this point in cash flow, the company will cease to exist and nobody has a job, or you can adjust to this level, and then some people will have a job. It’s your choice.’”

People worked to reach the levels he set out, and Dutton continued making decisions. Because these decisions affected so many people, if something had to go, he first looked to divest it so fewer people lost jobs. About 900 people left as a result of the divestitures. What didn’t get sold was discontinued, along with the necessary layoffs of about 800 people. Although it’s never easy to reduce a work force that much, focus on the silver lining.

“The thing is, instead of 1,800 people having to lose their job, it could have been 2,300, so you have to do the right thing through the enterprise,” he says. “Whatever that end solution is, the enterprise now is successful in moving forward. That’s what you’re signed up to do — that’s the ownership you take in that role.”

His advice for others is to get your leadership team on board, and then move quickly.

“Once a decision is made, move as quickly as you can,” Dutton says. “Get it done, get it over with, so that the people that are departing can be helped to the next stage, and the people that have to move the company forward can now be focused on what are the next steps to move the company forward.

“It’s making pretty tough calls and getting down to a point then that the businesses you have moving forward are generating value, and you can translate that value back into a profit. Once you get to that stage, now you can start building that little strategy going forward.”

Create a new vision

Once Dutton had the people and products in place, it was time to start moving everyone back toward profitability, and to do that, Mattson needed a new vision.

“It’s not only an execution in the now, but also an eye on the future because without building that future, that company dies,” he says.

He hired outside consultants to help him and his team focus on overall corporate wellness and not get caught up in only keeping the patient alive.

“Their task was to make sure they were pulling us out on regular intervals so we could then go through a revisioning process,” Dutton says. “That process was basically centered around mapping the situation today, understanding the dynamics of our competitors and our market analysis — looking at where we thought the market would be 20 years from now, building in white space of where the opportunities were, and from there, building in a set of strategies and principles that mapped into the mission.”

During this vision process, collaboration was key. “When you’re dealing with a collaborative style and a collaborative environment, you work hard to get most of that discussion out so people get it out on the table and understand the objectives,” Dutton says. “Then you drive toward a decision.”

Let the team work through the process, and often in the process, you’ll see the direction slowly appear, so you try to align the team toward that direction, but sometimes, you have to make an executive decision.

“If it gets circular or starts to move away from the problem, it’s time for a decision, and you either bring the team to the decision or you say, ‘Look, this is the decision. Are we OK with it? OK, good, let’s go,’” he says.

Even after you make that decision, you need to make sure everyone has said what’s on his or her mind.

“You make those decisions, you say, ‘OK, this is the decision. Are there any emotions on the table about this?’” he says. “If you bring up that emotion now, you’ll talk about it more. It may not change it, but at least that person really has clarity about where they are and how to operate in the team.”

By asking these questions and opening up discussion, you’re more likely to succeed.

“The more inclusion you have, the more alignment there naturally is,” Dutton says. “You have to have a set of leaders that understand that decisions are made for the enterprise, and they have to execute them.”

Communicate the plan

Once he and his team had created their vision for Mattson’s future, they also had to communicate that to the employees, but stating the vision is just the beginning.

“Visioning is a constant communication, so you never stop communicating,” Dutton says. “You say it multiple times. The old adage, and you hear school teachers say, ‘You have to hear it three times before you get it.’ I think in rolling out a vision, people have to hear it 20 times in 20 different ways, so you’re constantly trying to tie regular communication to the employees.”

One of the key ways to communicate a vision is to get people to discuss it so it’s more inclusive and less lecturing.

“A lot of times, even things that sound simple, like setting the next year’s revenue goals ... if you put 15 people in a room and start talking about it, that number of fears and uncertainties inside every person are all different, so try to get those out,” Dutton says. “Once they’re out, you can talk them through, and then procrastination to moving toward that new goal goes away, and people start to move forward.”

Even when people resisted, Dutton tried to talk things through with them.

“Over time, when people constantly don’t align to where a company is going, a lot of times they make their own decisions that they don’t fit,” he says. “We don’t use, necessarily, authority over dissension. It’s still collaboration through dissension that moves the company forward.”

As he made progress toward the future, Dutton was also mindful to share those victories with people.

“For example, if we win an account because our tool has the highest throughput for a customer, we can tie that back to one of our product principles, which is toward low-cost ownership,” he says. “It’s a constant communication of the mission, and then taking the successes and tying them back into the mission so that people are constantly internalizing it and moving forward.”

Dutton’s strategies have proven successful. With $267.3 million in net sales and $27.6 million in income last year, the company is now solidly positioned and earning money instead of bleeding it. While successful, Dutton thinks back to a conversation from 2003 and how much has changed since then.

“My wife, Donna, and I were talking, and I said, ‘So far, my claim to fame or mark on this role is we’ve taken a company from 2,300 people to 600 people — not a great thing, not a thing you want to be known for,’” Dutton says. “But, at the end of the day, those 600 people have now built the company forward, where it’s continued to gain share, it’s become a leader in two areas, and it’s now implementing two other growth segments, and we’re expecting to double our revenue as we go forward over the next year and move into a whole other realm of the company.”

HOW TO REACH: Mattson Technology Inc., www.mattson.com

Wednesday, 26 March 2008 20:00

Outfitting growth

Seven years ago, Rick Davis needed to hire a new chief operating officer for DAVACO Inc.

While most leaders look for people with five pages of management experience or multiple graduate degrees from Ivy League schools, this founder and CEO took a different approach. Because his company specializes in retail services including retrofitting stores and high-volume rollouts, retail experience was at the top of Davis’ list.

This was all the more important because Davis himself lacked this experience, so to better relate to his clientele and balance his shortcoming, he needed someone who understood the inner workings of the retail industry. He found just what he was looking for, and today, the majority of his management team at the $115 million company also has retail experience.

Smart Business spoke with Davis about why hiring presents the biggest roadblock to growth.

Hire great people. The biggest challenge we have day in and day out is just finding great people. The biggest inhibitor to growth is hiring. It can be damaging to hire the wrong people. Our widget is our people, so the quality of the people that we have out representing DAVACO is all we have. If we compromise that, we compromise the entire company.

Most of our work is done in an open-store environment. When you have an open store, our customers are not only the managers of that retail chain, it’s also their customers. If we don’t give great customer service, we may not have that customer.

We are only as good as our last job or project for a client. If we are not careful, one employee who is careless can erase years of superior service. If you have employees that are misrepresenting your brand and not meeting the quality standards that you have set for the company, then your business will suffer.

Strength of character is the most important qualification. Skills can be taught, but integrity, ethics, loyalty and high standards are inherent qualities. Hire quality people with good values and integrity that will do what they say they’ll do because I can’t train that. It starts with evaluating the person’s personality, and then we go to great lengths to test for everything from drugs to driving and all the things that you want to make sure that someone has the proper abilities to do.

We go through 20 to 30 candidates to find one. It’s important because of the time and what you have to go through to train them once you put them on board. Hire great people, and go to great lengths to do it.

If you have to rehire them, it’ll cost you, so we spend a lot of money upfront trying to make sure that we hire great people.

Promote from within. Part of the growth process has been that we made an effort to promote from within. We have several employees in our management team that have been with the company since the beginning.

With a business that is growing quickly, you get the opportunity to grow the employees with it.

That really helps you on the growth part. If you’re growing a company at 35 percent a year, year over year, it helps that people can deal with change, and the people that have been within the company and moved up with the company understand that change because they’ve been a part of the company. They understand where we began and how far we’ve come.

Communicate. You can’t drive growth and year-over-year success without change. Successful companies are not static. They are constantly challenging themselves and their employees to evolve. We have encouraged and built a culture within our company to embrace change.

The best way to foster the idea of embracing change is to make sure that you communicate with your employees. There’s so many mediums today to communicate with your people, whether it’s through a Web site, or we have as many as 500 BlackBerry devices throughout our work force that we communicate through daily.

We have quarterly meetings, a quarterly newsletter, and we go, semiannually, off-site. It’s simply to communicate the vision of the company, where we’re headed, where we’ve been and what changes we’re going to make.

We even have a Web site that we use to communicate benefits. We have a DAVACO University for training sessions, and we bring in people to train and communicate through that medium.

The more communication that you can give them, the better. All of that is important because it assures that everyone in the company understands our annual goals and is motivated to be a part of reaching those goals.

Recognize achievements. We’re about people, so we go to great lengths to recognize the superstars in our business.

On a monthly and quarterly basis, we have a companywide meeting within the office, and we have a program where any employee can recognize another employee for going above and beyond. We go through all of those and have a quarterly superstar. At the end of the year, we have an annual super-star — you get to spend a week in Hawaii, and you don’t even have to use your own vacation time to get there.

Recognizing achievements within the company are just as important, if not more important, than monetary rewards. People like to feel as though they’re really appreciated. It’s a good thing.

HOW TO REACH: DAVACO Inc., (877) 732-8226 or www.davacoinc.com

Wednesday, 26 March 2008 20:00

Engineering success

Mansoor Ahsan takes pride in the fact that he’ll do anything to get the job done — even if it’s grunt work.

“The key is passion, and the passion is in the grunt work,” he says.

This CEO of Bridgefarmer & Associates Inc. says that taking pride in doing grunt work sets an example for his 50 employees that they should do whatever is necessary to get the job done, even if they feel it’s beneath them. It also shows clients that he’s fully committed to meeting their needs.

The example he sets is one way he builds both relationships and his civil engineering firm, which grew 33 percent in two years to reach 2007 revenue of $13.6 million.

Smart Business spoke with Ahsan about how to build customer relationships as if you’re hunting prey.

Q. How do you build client relationships?

Knowing the client, knowing the needs of the project and knowing what clients are looking for and why. That’s what starts the engine. Then everything comes once you have a client.

Providing solutions helps the relationship, and not selling what you want to sell but actually giving them the service that they are looking for.

Study the job. If I can take a metaphor, it’s you hunt the job, then you fix the job — you hunt the prey, then you skin it and you eat it. Go and study the job, and you win the job from your competition, and when you’re doing the job, you do an excellent job, where the client feels like you were worth every penny. Intense studying of the job will always be rewarding, whether it’s on that very project or the next project, but you will be remembered.

That’s where the relationship starts. That’s what any business counts on — relationships with clients and relationships with your employees and relationships with your peers and your colleague firms.

Q. How do you build employee relationships?

Cater to people’s needs. [For] people you want to retain, you want to make sure that whatever their issues are, you address them. If it’s just money, nobody makes enough money, and we understand that, but there are a lot of other things that go with it.

I’m a firm believer that when people change companies, they don’t really change companies, they just change managers. Company A is no different than Company B. If they had one set of issues at one company, they’ll have another set of issues at another company. If you understand that psyche, you can address those issues.

We don’t have a one-shoe-fits-all model. Address it on an individual basis. For instance, people can be paid overtime, or they can take time off. If there is a married woman who wants to spend time with her kids, she may prefer to take time off and go spend time with her kids.

Whereas, if there is a young guy, but he needs more money, he may be paid time-and-a-half on his overtime, so addressing the needs of the employees helps develop that relationship.

Q. How do you help employees build better relationships with clients and peers?

If someone wants to pass their initial exams, then we promote them to a project-engineer level, where they can see various disciplines of the project, how they’re put together and how well things are coming together.

From that point on, they move to the next phase, where they’re supervising other people, and that is the opportunity that they can develop relationships with their peers and their clients.

They would be given that next opportunity when the client starts to ask for them, and they want to be in the leadership role. When a client calls me and says, ‘I want to have Person X on this project,’ that tells me that Person X has reached the next level, and that’s the time when that person automatically is grown to that next level. If a client starts to ask for that person, that is a good clue-in that client maintenance is being taken care of by this individual, and this person is ready to be a project manager and be in that role.

That is the highest level he can get because, technically and financially, that individual is responsible for a project delivery system.

Q. How does promoting people from within help both clients and employees?

It sets a good example, and it gives a good insight to the staff that there is an opportunity within the company to grow, and it also helps the organization that it’s a home-grown person. They understand all the quirks.

Clients like that if somebody is promoted from inside because then it’s not a sales job. The thing that matters to us and has worked for us is we don’t do a quick sales job. A sale to us is when a client hires us because we found a solution to a problem for them.

HOW TO REACH: Bridgefarmer & Associates Inc., (972) 231-8800 or www.bridgefarmer.com