The way to build an online strategy is to forget about your online strategy for a second.
Carmen DeLeo, the general manager of CDM Electronics Inc., made that his first step when he and his team were trying to formulate the best way to build a presence on the Internet for the $20 million logistics and software company, headquartered in Turnersville, N.J.
“We put ourselves in the position of engineers and technical buyers — our main customers,” DeLeo says. “They’re the ones who are going to fit the profile for us. We thought about the things they would come to us for — specification of part numbers, drawings and so forth. So we started to decide what our customers needed, and let’s try to get as much information on the site as we can, and we can make it a 24/7 part of our customer service.”
Once you have identified what your customers need, you have to develop your site to meet those needs. DeLeo and his team partnered with outside firms, including business IT support company ThomasNet, to start the development process.
“They educated us on things like (search engine optimization) and other terms we weren’t familiar with. In addition to that, we spent a lot of time online, just playing around and experimenting,” DeLeo says. “We spent a lot of time just reading and stumbling upon different websites, seeing what some other companies were doing. We looked outside our industry, because there weren’t a whole lot of people in our industry doing this yet.”
Above all else, DeLeo says the quality of your site content should rule your decisions about how you market your business online. It’s great to have an eye-catching sight with attractive graphics and sound, but if the substance isn’t there to back up the style, you’ll never be able to leverage your site to help grow your business.
“If you supply the site with as much content as possible, it is only going to help serve your customers,” DeLeo says. “We’re still very early in this era. The computers that are doing the rankings of your website’s value to customers are still very rudimentary. At sites like Google, it is obvious humans don’t review the results. But they still do a remarkable job of returning what is relevant. Even having an ugly site with content is still better than a website without an adequate amount of content. If all you have is an address and a little bit about the company, it’s not going to do you much good.”
Regardless of whether you use internal resources to build your online presence or acquire outside help, you need to partner with people who will engage you in a dialogue. You need to bring different perspectives to the table to get the right look and the right content onto your site.
“You need development people who understand the real goal,” DeLeo says. “Sometimes, we don’t ask for what we want all the time, or there might be a better solution out there. That type of communication has to be the key, so when you’re selecting vendors for this service, you want people who you know you can communicate with. Experience is the number one thing with regard to that.”
How to reach: CDM Electronics Inc., (856) 740-1200 or www.cdmtech.com
Take sales online
By Brooke Bates
You already know how to make your website more effective, if you ask Linda Rigano. You’re already doing it offline.
“A good Web strategy starts with … creating a Web experience that replicates the company’s sales process,” says the executive director of strategic services at Thomas Industrial Network, which connects buyers and sellers through offerings like the sourcing site
ThomasNet.com and a Web solutions group that improves website performance.
ThomasNet’s VSET strategy breaks that down:
• Verify. “The first step in the process is that a buyer wants to verify that you make what they (want),” Rigano says. “(If) I’m looking for a container and I see a big picture of the facility, I see a mission statement, but I don’t see a lot about containers, am I going to spend time there? No.”
• Search and evaluate. “That might be questions they’re asking that customer service person on the phone; it’ll be questions that customer service person is asking back: How many, what’s the material, what’s the size, what’s the quantity?”
• Take action. “This is what you want to do when you get off of the phone with somebody. Is customer service preparing a quotation? Are they sending more information? Are they taking an order? … It’s all about making it easier for that buyer to do business with you.”
How to reach: Thomas Industrial Network, (866) 585-1191 or www.thomasnet.com
A lot of CEOs try to keep two feet planted on the ground. Bob Fishman tries to keep about 240.
It’s part of his philosophy on organizational management. The founder and CEO of Resources for Human Development believes large organizations are at their best when the people in the field, at the customer interface point, are enabled to spend money and make decisions.
Armed with that philosophy, Fishman has dozens of representatives pounding the pavement in 14 states, gathering information that will help Fishman’s organization better serve its customers.
Resources for Human Development is a nonprofit entity that provides services to people with developmental disabilities, substance addictions and mental illness. The nonprofit, which employs 4,500, also operates various for-profit business ventures in the human services field.
With operations in multiple states, a large work force, governmental partnerships and a large range of services offered, the challenges facing Fishman are far closer to those of a Fortune 500 CEO than the director of a neighborhood social services program, which is why he makes delegation of power a guiding principle.
“The biggest challenge is the continually maintaining of constant diversification of the corporation, while holding to central values of interpersonal behavior in the managers and the supervisory staff,” Fishman says. “The values of the organization being the central part, while focusing on and achieving continued diversification in terms of the markets we reach, the services we deliver and the opening of new service areas.
“The diversification is achieved by having over 120 people at any one point in time out there looking to satisfy the customer base. The same thing is true for nonprofits and for profits — there is a customer base, and for us, they are all state and local governments. So you need many people out there constantly satisfying the customer, the governmental people and their various bureaucracies, and looking for new things we can do for them.”
It’s why Fishman needs a ground-level view on the needs that exist in each of his markets and why he entrusts his people in each market to keep corporate leadership informed.
Trust your people
To build a decentralized organization, you need people to whom you can delegate power and responsibility. You also need to develop a willingness to hand over that responsibility to the people you have deemed worthy and capable.
In other words, you have to be willing to trust people.
Leaders sometimes equate trust with blind loyalty and gullibility. Allowing yourself to become too trusting is supposed to be bad business. You’re supposed to be a chronic skeptic and force others to earn your trust.
Fishman sees it a little differently. To him, there is a not-so-fine line between trust and gullibility. As a leader, you owe it to your people to trust them until you have a reason not to.
“You start out with an assumption that most people are good and can be trusted,” Fishman says. “Very few people that we hire, less than 1 percent, will actually abuse the trust. It happens, but it is such a small percentage that you can start to set up a very different system of empowerment of people to make decisions to run local budgets, to hire people locally, purchase locally.”
It doesn’t mean that you give your people carte blanche to do whatever they want with no regard for consistency or standards. But it does mean that you need to properly train your people, educate them in your standards and culture, and give them the freedom to prove that they can live up to those standards.
“For example, we have $14 million in contracts being managed by our head of operations in New Orleans,” Fishman says. “So she and a series of people are continually reviewing how we’re doing in terms of budgets being negotiated. Is it working out, do we have to look at anything being renegotiated?
“She has local people assisting her, the financial oversight people. Then we have a financial and programmatic oversight in the corporate office here in Philadelphia. There are different levels of oversight, but she is the one who makes the decisions with her staff in New Orleans.”
To drive decision-making power downward while still promoting uniform standards across all of your departments and geographies, you need to be able to set the example from your perch. Fishman consistently models the behavior he wants his leadership in all of his organization’s markets to emulate.
Fishman has branded Resources for Human Development as a “common good corporation.” Anyone who works for Fishman must embrace the concept of working for the greater good. You might be in business for personal gain, but in order to run a completely healthy company, you and your team have to work toward something larger than personal goals.
“We have a bill of rights and responsibilities,” Fishman says. “We have values that need to be valued and learned by all employees, in terms of knowing the budgets of all the units, all the salaries being open, all data being open. I have a management team of 10 people around me, and sometimes, occasionally, we have made an adjustment to the management team’s salary. But we also work in a head office with 290 people, and our pattern is we don’t take bonuses unless everyone gets the same bonus. If my secretary can’t get the bonus, I can’t get the bonus. That is what is called leveling economically.
“What I’m touching on is both in terms of behavior and monetary rewards, we’re following as much as we can, we know what we’re doing and it’s very successful. While other corporations say, ‘How do we survive?’ we’re saying, ‘Step back and look at your culture, look at who is making the decisions, who is being empowered for success.’ Do you basically trust, or do you basically distrust?”
Make your decision
Because of the philosophical differences, it’s difficult to convert from a centralized to a decentralized organizational structure. If you’ve made up your mind to delegate decisions downward, you have to write it onto your company’s DNA. It’s something that everyone has to believe. You have to produce rules by which everyone in the company can play.
Fishman says you need to answer two overarching questions: First, what are your personal values and attitudes about people? And second, are you willing to admit that you can’t have all the answers needed to run a successful enterprise?
“The first thing is you have to face a number of value questions,” he says. “The central one is, do they believe that people are basically trustworthy? If you can’t say that, you can’t do what we’ve done. Not that everyone is totally trustworthy, but basically trustworthy, so that most people will be able to operate within a financial and ethical system.”
You need to remember that that people in the field sometimes need the least watching. Often, if dishonesty or a failure to meet standards becomes evident, the scene of the cultural crime could be right under your nose.
“Most corporations are undermined not by people in the field, but by people in the central office,” Fishman says. “The biggest theft in terms of theft or destruction of reputation has been proven to exist with the people who make the rules and represent the corporation at the center. It was true with Enron and it is true of every other corporation. You reverse that and say, ‘Let’s set up standards for how to use money and decentralize within budgets and agreements;’ you start out assuming that you have good people and they want to do a decent job.”
Your willingness to let others answer the big questions is a lesson you need to learn in two parts. First, can you let someone else be the authority on a matter? And second, can you accept that your team might find multiple ways to arrive at a satisfactory answer to a question or problem?
“Can you accept the idea as an administrator that you don’t have to know everything?” Fishman says. “People are not founders of organizations, because they know the answers to the future. They’re not gods or goddesses. People tend to look toward the center of the organization for the answers to complex questions that can only be worked out by many people in a complex system. There needs to be somebody at whom the buck stops, but to be in that role is different than saying you know all the answers.
“Within that is another assumption that you can arrive at many possible answers, that they don’t have to be arrived at by someone in charge of the services in the corporate office. That allows you, as the corporate head, to say, ‘You decide how to spend the money within the budget, and within the local legislation and agreements that you understand the best.’”
Hire for your culture
How do you hire for a decentralized culture? Fishman says it can be frustrating. You can go through rounds of interviews, review references and resumes, and ultimately, your research will lead you to the right hire the vast majority of the time. But you can’t know for sure until you’ve seen a person at work.
“You can’t know who you’re hiring in advance,” Fishman says. “You can tell people what their job is, what your culture is, what they’re going to be trusted with, and how we expect them to behave and not to behave with money, power and status.”
Though you might want to allow decision-making power to trickle down, you have to give new hires a well-defined set of guidelines and values that will govern them from the first day on the job. If you put those standards in place from the beginning, you stand a much better chance of developing trustworthy people who make decisions that are in the best interest of your company and customers.
“For example, in our system, we decided that no one employed in our corporation can have a private office,” Fishman says. “We might have someone who figures they are now the head of a big division, so I’d like a private space of my own. So we tell them all the things we do and don’t want to see, and correct them as rapidly as we hear about it.”
Ultimately, if you’ve involved enough people in the hiring process, you can usually gain the perspective necessary to make the right hire with the raw materials needed to become the type of employee you can trust with the decisions that will impact your company’s future.
“We make a group decision,” Fishman says. “That person needs to be hired by a group of people, and the people they’re going to supervise. We do appoint people, but often they’re hired from a group interview setting. There needs to be a group buy-in on the process that leads to the decision.”
How to reach: Resources for Human Development, (215) 951-0300 or www.rhd.org
Bob Fishman, CEO, Resources for Human Development
Born: Brooklyn, New York
Education: Bachelor’s degree in philosophy and psychology, Brooklyn College; master’s degree in clinical social work, Columbia University
First job: As a kid during (World War II), I’d go around to houses in Brooklyn to buy the fat renderings collected in kitchens. I’d pay a few cents for a can of fat, then take it to the butcher’s store, where they collected it to use in an armament function of some kind. I was a retail buyer and wholesale seller of fat renderings as a kid.
What is the best business lesson you’ve learned?
People are basically good, but people have separated that from an economic model. My business lesson is that is can be combined with a viable business model and flourish.
What traits or skills are essential for a business leader?
One of the hardest things for me is to find out something I don’t have to know. It’s a hard skill, that you don’t have to know and you don’t have to have answers. You have answers for yourself personally, but others have different answers. You have to know what you don’t know.
What is your definition of success?
In a leader of any corporate entity, there is the economic answer that you need to bring in more money than you expend. That is the countable part of success. But the other part for me has been to develop and operate an organization that builds on the strengths of human beings and adds to a culture’s health, rather than taking out of it. I feel I’ve been able to do that within the model I have been able to develop. It’s that duality that allows me to consider my life’s work a success.
Stephen Polk senses a slow return to normal for the automotive industry as the coming months and years progress.
It’s just that “normal” is going to come with a new definition.
Polk is the chairman, president and CEO of 1,400-employee R.L. Polk and Co., a provider of information and marketing solutions to the automotive industry. He has had a front row seat as General Motors and Chrysler declared bankruptcy and were forced to undergo massive internal restructuring. He’s watched as countless auto suppliers have gone bankrupt or been sold to interests outside Michigan.
But it won’t always be this way. And when things do begin to rebound, businesses all across southeast Michigan will need to function in a new, post-recession environment.
“With the energy we’ve seen so far this year, we’re starting to see a return to normal,” Polk says. “Not to the normal of five years ago but to a new kind of normal. I’m optimistic about the future. Our forecast for 2011 is 12.9 million vehicle sales in the U.S., and I’m confident we can achieve that.”
What will the new normal be? Polk says it will center heavily on every company’s ability to develop and maintain close relationships with customers. Businesses will need to give the employees at the customer interface points the tools and the sense of purpose that will allow them to build those relationships. Corporate leaders will need, more than ever, to stay in touch with customer wants and needs and the ongoing changes in the marketplace.
The coming years won’t be a time to assume. It will be a time to listen and react and to remember that the success of your company’s relationships will determine your long-term success.
“It’s about the success we’ve had in staying close to customers, understanding what their needs are as the world has changed,” Polk says. “While the OEMs, the manufacturers, represent a piece of our business, there are a number of other customer sets we’re dealing with, [such as] the agencies trying to promote products, the dealers trying to sell products. We need to align ourselves with where they are in the world today.”
Commit to your people
In any economy, if your customers are consumers, you have to keep them buying. If your customers are other businesses, you have to keep them selling.
Polk’s company falls into the latter category, so the job that he and his team will have moving forward is to support clients in the auto industry so they can keep producing products that find their way into new car models and, in turn, into consumers’ garages.
Your role as supporter is critical when your customers are going through hard times. It’s something Polk recognized early on, and as the industry emerges from the deepest part of the recession, he anticipates being able to reap the benefits of the support and loyalty his business showed.
“Our commitment was to serve those immediate customers so they could continue to do day-to-day work as they went through the whole bankruptcy phase and came out of it,” Polk says. “Some of it was on our own nickel, as we realized that during the bankruptcy proceedings, we weren’t going to get paid for some things right away. But we were able to maintain a continuity of service, and that helped our customer to continue to sell throughout the recession. There was some recognition that we were there when they needed us.”
In order to commit to your customers to that extent, you need to commit to your employees. Your employees need to be supported by your leadership if they are ever going to be able to support your customers through trying times.
And the key element of that support system is a soapbox — many of them, actually. You need to give your employees a means of being heard by you and your leadership team. If your employees on the front lines feel empowered to relay what they’re hearing from customers, if they feel like management is actually going to listen to them and use their information to make decisions, you’re going to have a staff on the front lines that will engage customers, ask questions and remain aware of their changing needs.
“A lot of it is just listening and training your staff to make sure they’re listening to what the customers’ needs are,” Polk says. “You communicate what you want, really try to build it into your meetings and various avenues of communication. Then you listen back, make sure everyone knows what is important, everything from performance evaluations to planning for the year, it all has to revolve around some kind of customer metrics.”
Use what you hear
If you’ve put your front-line people in a position where they can reach upward in the organization with ideas and information, you need to be able to take what they’re telling you and use it to better the company. Otherwise, you’re sending a negative message to your employees about the effect their work is having on the company’s overall mission.
Polk uses the engagement of his customer-level employees as an opportunity to gain a realistic picture of where his company’s customers are headed and what their needs will be in the foreseeable future, which allows he and his leadership team to begin sketching a strategic plan for the coming years.
“The first part is starting with that very open and realistic assessment of what the current reality is,” Polk says. “What your strengths, weaknesses, opportunities and threats are. You take an environmental scan of where your customers are growing and where they see the most value in the products that you deliver.
“We want to know where we can create efficiencies to help our customers and ourselves, then try to project that into the future. The real challenge is creating a living plan out of it, something that isn’t going to sit on the shelf.”
A living plan has to have some degree of flexibility. If you are going to place an emphasis on listening to customers and reacting to their needs, you can’t formulate a market strategy that is so cumbersome or rigid, you can’t react to an unexpected change.
It’s a delicate balance to stay on your core competencies but remain willing and able to pounce on an opportunity that allows you to employ those competencies in a new way. Polk says you can’t deviate from your mission as a company, but your products, services and areas of focus have to exist in a fluid environment.
“You have to start with a recognition that what you are putting out there in the market is really about how you want to conduct the business,” he says. “There are focus areas that are going to have to change, but it’s understanding the types of services you want to be at, the types of products you want to be building around in each environment. You have to communicate the fact that those areas are flexible, create an understanding with everybody in the company. That is probably the most important thing.”
To understand when you need to take advantage of an opportunity or forge a new direction, you need to be able to measure your progress against your goals. That means you need process checkpoints and a willingness to allow your team to assess where you are in relation to your goals.
“You really need to be able to understand what your checkpoints are along the way in any process or product or in any initiative that you are outlining,” Polk says. “It really needs to be a candid self-assessment of what is the reality that your customers are dealing with, the reality of how you’re delivering on expectations, then making adjustments to it.
“Sometimes you need more effort, and sometimes conditions dictate that you stop doing what you’re doing — even if it’s something that you had been committed to. The right answer is ultimately to be open and honest about the reality you’re facing.”
Make it cultural
You can engage your employees by builing avenues through which they can communicate and make sure that their input and ideas have a bearing on the decisions that will affect the future of the company. It’s all great in theory and better in practice. But over time, as the economy improves and the business environment becomes more stable, it will become easier to let some slack into the organization philosophy to which you once rigidly adhered.
The only cure for that is to make customer focus and employee empowerment a part of your company’s culture. You make that happen, in large part, by rewarding the behavior you want to see and promoting your best and most experienced employees to more influential positions.
“It all starts with building a culture that employees can appreciate and thrive in,” Polk says. “A big part of that is the importance of having a great leadership team in place. Our senior leadership team includes a variety of experience in all aspects of the automotive business. You have to fit the culture to you business, to where you want to take the business in the future. For that, you need to instill a common values system that is shared by all employees and reinforce those values by ensuring that your people are well compensated and are going to have avenues for career growth within your company.”
Ultimately, employees want a fair salary, but more than that, they want to feel like they’re working with upper management, not working for upper management.
If you build strong relationships within your organization, your team will be better able to build strong relationships with the people you serve. The often-referenced cliché about happy employees leading to happy customers — it’s a cliché for a reason. Because it’s tried-and-true.
“If employees understand your business goals and objectives and what their role is within the organization, they can effectively contribute and provide valuable insights in their areas of expertise,” Polk says. “That is why we host regular communication meetings with our staff and also communicate important business announcements in a timely manner. It helps continually engage our employees in an open, honest dialogue with management, which helps solidify our overall communication structure within the team.”
How to reach: R.L. Polk & Co., www.polk.com or (800) 464-7655
The Polk file
Education: Bachelor of science degree, Denison University, Granville, Ohio
History: Great-grandson of R.L. Polk & Co. founder Ralph Lane Polk; employed by company since 1981; president since 1990; chairman and CEO since 1994
Polk on the CEO’s role in setting the stage for the future: My role is to lead the organization and prove a foundational direction for the business. The senior leadership team we have in place at Polk is effective and dynamic, and all of them are accomplished leaders. I work very closely with them, both individually and as a team, to help further develop our business goals and objectives, develop strategic ways we can be supporting customers and representing Polk in the marketplace.
Polk on achieving success in the current business climate: It may sound cliché, but it’s the reality of things — if our customers succeed, we succeed. In our business, it truly is about the relationships and strategic partnerships we have with our customers, to help them achieve their business goals and to help them succeed in the marketplace.
In his time as president and CEO of Syniverse Technologies Inc., Tony Holcombe has seen many different opportunities for growth and expansion come across his desk. From new products to new markets to old competitors exiting the space, there is frequently a chance for Holcombe to expend company resources securing a new entity that might allow Syniverse to operate in a new space.
But the road to growth can be lined with potholes before you encounter even a streak of golden pavement.
That’s why Holcombe places an emphasis on due diligence that goes beyond the bottom-line revenue numbers. Just because a growth opportunity will make you more money in the short term doesn’t mean you’ll be able to sustain the revenue. The success of your expansion will hinge on your strategy and your people.
In short, Holcombe says you need a plan, and then you need your people to buy in to your plan. If you lag strategically or on the teamwork front, you probably made a wrong turn somewhere, and the new venture is ripe for a downfall.
“We have a very clear strategy,” Holcombe says. “Our strategy is that we need to be able to integrate the acquisition immediately. That means we have to have a plan laid out, and we have to think through how we get the people integrated, how do the customers get integrated, how do the systems get integrated. The good thing is, that forces you to get a lot of questions answered throughout the process — questions that you might otherwise put off.”
Armed with a policy of thorough due diligence, Holcombe has been able to carefully select the acquisitions his $483 million company has pursued, and Syniverse has weathered the recession well.
Develop a plan of attack
To decide which growth opportunities to move on, you need to first define your field of play. You need to know what it is your company does well, the skills and talents your people bring to the table, what type of resources you are willing to invest in a growth opportunity, and then measure the opportunity against those criteria.
If your company doesn’t measure up, you either need to move on or add the competencies and assets that will allow you to make the new addition to your business a success.
But it all comes back to defining what you do well as a business. It’s the first question you should ask of yourself and your leadership team.
“When we look at new markets or services, whether it’s something we want to build or something we want to buy, we always challenge ourselves by asking, ‘What do we know how to do?’” Holcombe says. “If it’s something we don’t know how to do, generally speaking, we’re not going to get involved in it. You want to be really focused on your strengths, and build and buy based on those strengths.”
You need to match your competencies not just to the product or service you are considering adding to your arsenal but to the entire process of developing, marketing, selling and supporting it.
“You don’t get involved in things you don’t know how to do, and that mentality has to run from the actual product or service, how it is priced, how it is sold, what is the business model for it, what is the sales channel for it, what is the value-added service you’re providing to the customer,” Holcombe says. “When we do that, we kind of check it off against an internal matrix to see if it fits with what we do.”
But the most important question you can ask when deciding whether to move on a growth opportunity is a question of culture. The acquisition, service, process, any new people you might add — does it all fit with the values and mission of your company?
A bad cultural match could have long-term effects for your business, especially if you’re considering a large-scale addition that will significantly alter your company.
“If you’re considering an acquisition, culture is what I would consider the most important thing,” Holcombe says. “Are the two cultures going to work together? If we try to put a culture into our culture and it’s completely disparate, what happens is we lose all the people. So that has to be part of the due-diligence process. You’re trying to find out if these people in the company to be acquired have the same type of approach to customers that you have, do they have the same business model, do they have the same kind of service mentality? If those things fit, that is kind of the key issues for us.”
And you have to be willing to walk away if the pieces don’t fit.
“We’ll walk away from a lot of deals where the business model doesn’t fit, but we’ll also walk away from deals where we could tell the culture just wasn’t going to fit well,” he says. “That is really critical for us as a global company with 1,400 employees and 600 of them outside the U.S. We have to knit not only our culture but also a global culture.”
When considering an acquisition, Holcombe wants managing members of all departments at Syniverse to come to the conclusion that it’s a good move.
The “conclusion” factor is an important element in the vetting process. Holcombe doesn’t want a bunch of ministers preaching to a like-minded choir. He wants debate, opposing viewpoints and some amount of disagreement. If those differences among the leadership team can be ironed out over time, it’s probably the right move. If the differences can’t be resolved, it’s time to step back and figure out why.
“Everybody needs to have that ownership,” Holcombe says. “From the sales leaders to technology leaders, office leaders, finance, human resources, legal, everybody has to own their piece of that integration. We all have to come to an agreement that this is a good deal, we all have to agree that we can make it work.”
To ensure that the various departments within Syniverse communicate with one another, Holcombe’s merger and acquisition team work as part of the leadership team, not as a separate field unit that beats the bushes for purchase opportunities, then hands them over to upper management.
“We don’t do what I’ve seen a lot of companies do,” he says. “We don’t have an M&A team that just goes out and buys things, kind of throws them over the wall and says, ‘OK, we think this is a good idea; now you guys figure it out.’ My M&A team is part of the executive team, and we all figure it out together. The ownership is established, everyone has bought in to it, and if some members of the executive team think this isn’t going to work, we hash that out before we buy the acquisition. That is the key to making sure we get it right.”
Holcombe wants the initial discussions between members of upper management to create a hypothesis of how the acquisition will be integrated into the company. With that basic assumption in place, he and his leadership team set about challenging the assumption throughout the due diligence process. As questions arise and new information is gathered by the due diligence research team, the assumption is refined and, in most cases, dissenters have their concerns satisfied.
However, discussion and research must lead to an ultimate decision. As the leader, that responsibility falls on your shoulders.
“We’ll talk through why someone doesn’t agree with a certain area, we’ll bring our due diligence team back together for more information,” Holcombe says. “We may adjust the thought process about how we’re going to pull it all together. But it’s also my responsibility as CEO to say, ‘OK, we’ve debated it; I need to make the call.’”
In the end, if debate and discussion lead nowhere constructive, you’re probably not headed down the right growth path for your company.
“If you don’t have that high degree of buy-in from your team, chances are you’re not doing the type of deal you need to do, and you might think about trying other things with your time and effort,” he says. “But you do want to get everyone involved. You want everyone on the leadership team to have the same information. You want to give everyone a chance to vocalize their issues or concerns. You want the team to own the decision, not just one individual.”
Blend, don’t stitch
When you have decided to add a new unit, acquisition, product or service, you want to make the addition as seamless as possible. You want the acquired entity to blend with your company. You don’t want to stitch it on so the seams show.
Solving that problem comes back to combining cultures. There are different ways to accomplish that, based on the size and nature of the acquisition.
At Syniverse, Holcombe’s team has completed one acquisition on average of every 12 to 18 months during his tenure. They’ve ranged from a 2007 acquisition that added more than 100 employees in Germany to a smaller acquisition of a Boca Raton-based company.
The Boca Raton acquisition was a product-based addition. The European acquisition, which also added personnel in England, was much more focused on the people involved and took more resources on Syniverse’s part.
“The key was getting our teams in Tampa and Germany to work together,” Holcombe says. “We tried to cross-pollinate the teams; we had them travel back and forth and spend a lot of time talking about the project plan. When you do an acquisition on a global basis, there are just differences on a cultural basis on how people communicate, what people say to each other, do they interpret things differently. Those are all things that make the process more complicated. Geography and time zone differences make it very difficult to pull that kind of information together.”
That’s why Holcombe stays involved in the merger and acquisition process at all times. Though you don’t want to micromanage your people, when it comes to moves that could radically shift your culture, you need to be hands on. You need to be the voice that is reinforcing the common themes you want all areas of your organization — both older and newer — to live by.
“First, I want to go back to how the new part of the organization treats customers,” Holcombe says. “Are they service-oriented, do they put customers first, do they make sure they do all the right things for customers? That is our big key, because if you’re working on a problem together and they’re putting customers first and you’re putting customers first, you’re all working toward the same goal. Then you know you’re living by the same cultural principles, which is good for the entire organization.”
How to reach: Syniverse Technologies Inc., (813) 637-5000 or www.syniverse.com
The Holcombe file
president and CEO
Syniverse Technologies Inc.
Born: Carrollton, Ga.
Education: History degree from Georgia State University
First job: I started stringing barbed wire on my grandparents’ farm when I was 14 or 15 years old. Being out there stringing barbed wire in the hot Georgia sun convinced me at a pretty early age that I wanted to go to college.
What is the best business lesson you’ve learned?
The purpose of business is to create a customer. There is nothing more important than that for a business.
What traits or skills are essential for a business leader?
Think strategically and understand the markets of your customers. Your job is to lead the organization to different levels, which means you have to love the organization and meet the needs of your customers and shareholders.
What universal truth have you learned about leadership?
You need to get focused on the ethics and integrity of the people you hire, and you need to set that example yourself. Be honest and forthcoming, and let people know well in advance if something is going to happen. And if you mess something up, work to satisfy any customers that were affected.
What is your definition of success?
Do we retain employees, and keep our shareholders and customers happy? If you do that, you’ve satisfied everyone involved in your business.
Emerging from the darkest days of the great recession, Richard Bolte Jr. came to one undeniable conclusion: Predictability was gone. It left with the economic downfall in 2008, and it wasn’t coming back.
Change was the new constant for his company, BDP International Inc., and he needed to adapt BDP to deal with the new reality.
“The financial crisis left us with unpredictability and market volatility,” says Bolte, BDP’s president and CEO. “So as a result, it’s a new environment that is volatile and unpredictable, and you have to transform and change, as well. You can no longer serve your market with that business model. Your customer requirements have changed. They’re moving their supply chains around. They’re making different decisions. They’re looking to outsource things they used to do themselves.”
To react to the new volatility, Bolte had to transition his company from a controlled, structured environment to a company that nurtured new ideas, promoted innovation and valued entrepreneurship. It was a dramatic shift for the global logistics solutions provider, which generates $1.65 billion in annual revenue and employs 3,000. It meant not just new processes and policies, but a complete reconfiguration of the way the company collectively thinks.
And to make it all happen, Bolte had to start at the individual level and work his way up.
“The challenge I gave to our guys was, rather than looking at global operations as something that needs to be controlled, you need to ask one question: ‘How can I help you grow?’ he says. “That would underscore and focus the team on transformation, because from a support perspective, it is quite a journey to go from controlling to nurturing.”
Build the case
As Bolte and his leadership team surveyed the damage from the recession, he came to the conclusion that the companies that could adapt on the fly would be the companies that survived. Knowing that, he realized one of his first duties as the head of the organization was to create a sense of urgency around the need for change. He needed a management team that wanted to embrace change now, not a year from now.
“It’s one of the things you need to do as a leader,” Bolte says. “The message needs to keep coming out that we’re not kidding, we believe we need to migrate to these things. We need to change and why. You’d better have a good answer as to why you believe things need to change and why they need to change now. Because even if you get buy-in on change, you might find those who want to change in a year or so. So you need to create that sense of urgency. You need to create a tremendous sense of clarity around why you think things need to change and why they have to happen now.”
Bolte built the case for change by collecting and presenting data to his managers, and then cascading that data throughout the organization. Bolte and his leadership team built a three-year strategic plan that identified where BDP currently stood and where it needed to be in 36 months to maintain profitability. The basic points of the plan were then rolled out to every corner of the organization.
“We came out with a three-year plan that says, ‘As a result of going through this crisis, things need to change, and here are the things we’ve identified that need to change now,’” Bolte says. “Then we communicate that through town-hall meetings, through webcasts, through our management team and senior team. We embedded those exact same messages into their communications. We then developed a strategic plan and published progress as to how we were performing against those changes we had identified.”
The change areas that Bolte and his team identified centered on what he calls “centers of excellence.” Bolte wanted employees in each area of the company — IT, finance, global administration, sales and marketing, and transportation services — to identify ways in which their department could evolve into a more entrepreneurial, innovative team. It was easier for some areas than for others, and in some cases, it took a personnel shift to fulfill the company’s shift.
“Let’s take finance, which is controlling by nature,” Bolte says. “One of the things we looked at is that finance can be a valuable tool to the organization, if employed correctly. It can be a partner to growth instead of a ‘threat to be audited’ kind of mindset. One of the things we had to do was actually look at the people within the organization.
“Some individuals are actually not going to be able to make that leap over to a nurturing environment. We actually had to go out and bring in new and different talent into organizations like finance and IT, who thought in different ways and could accommodate that kind of transformation.”
Even though the organization was shifting away from centralized processes, Bolte was starting to rally BDP around a strong central vision, which required buy-in from people who also embraced the vision, necessitating the need for new blood in certain positions.
“The notion we asked them to embrace is that we need to create an environment that is easy to do business in, where we treat people how you want to be treated, not a highly structured or controlled environment,” he says.
But with that newfound need for entrepreneurship and innovation comes a need for boundary lines. You might not want rules weighing down your people, but you can’t let them innovate themselves into left field, where their ideas do nothing for them or the company.
Bolte harnessed his employees’ brainpower and used it to cement his new culture by turning innovation into a competition of sorts.
“Last year, we actually had a specific program we named BDP Fusion,” he says. “We encouraged employees anywhere in our system to submit ideas for a new business plan. We then held a contest in each region where we picked the top three ideas. At the end, it boiled down to one winner, and we actually implemented that idea as a new business plan. We had contests in three regions and myself and some other senior members went around, and the finalists were able to present to us.
“There was a tremendous amount of energy and excitement around these teams presenting, and in addition to ending up with a great business plan for tank management in Asia, it was very good for morale. A lot of companies say they listen to their employees, but here was visible evidence of a company seeking direction on a new business from its employees. It sends a powerful message that we do listen and we do care about these new ideas.”
Build change agents
You can hire people who will embrace your vision for the future, but until you can fully leverage their ability as leaders, you won’t have much more than passive order takers.
You not only want your best and brightest to get on board with a new organizational direction, you want them to get others on board, too. In some companies, they’re called change agents, but whatever title you want to stamp on them, they’re a critical ingredient in making your vision a reality.
At BDP, Bolte has formalized the process of getting buy-in from his future leaders, partnering with outside resources to train and enable the next generation of change agents.
“We went and aggressively developed what we call a leadership development program involving the top 40 or 50 next-generation-type leaders,” Bolte says. “We did a partnership-type program with [Dale Carnegie Training]. We did a two-week course with instructors from Dale Carnegie, but we also developed a program with senior staff from BDP, where we ran a highly energetic and entertaining two-week session. The energy coming out of that was tremendous.”
The training program goes hand in hand with an internal mentoring program that Bolte and his leadership team initiated. The mentoring program is designed to give potential leaders a wide-angle view of the company by pairing the young protégé with a mentor from a different department.
“It’s very cross-functional in our case,” Bolte says. “We might have the CFO mentoring two people in operations. Or you might have an operations person mentoring someone in the finance department. The mentoring process is a bit better than just identifying top performers. It takes it a bit deeper, because you’re getting direct feedback from senior management members who had these individuals under their wing for the program, which runs six months. So I think you’re developing a deeper understanding of your top performers.”
But sometimes, it comes down to the lessons learned from your years of experience as a manager of people. If your gut is full of experience, it’s OK to trust it sometimes.
“In addition to the processes, don’t be afraid to use your gut feelings,” Bolte says. “Sometimes you’ll get a good sense about somebody, and in business, I think you can trust your sixth sense, so to speak. But other than that, if you do not have a mentoring process or a leadership development program, you should study various forms of those types of programs and consider implementing them.”
Maintain your momentum
Once you have forged a new direction for your company and gotten all of your key players on board, your job isn’t done. You have to keep enforcing the rulebook and reinforcing the behavior you want to see.
In the final months of 2010, Bolte was involved in budgeting and strategic planning meetings for the upcoming year, as many company presidents and CEOs were. But he took the opportunity to reinforce the direction of the company through the budget and planning process.
“These meetings that we’ve been having internally are designed to build complete alignment among the business units and the infrastructure that supports them,” Bolte says. “They all have an agreement that these are the priorities for 2011, this is the order that we hope to accomplish them, here are the critical success factors, and so on. So there are different elements of the plan, and we come together and sign off on it — ‘This is how we’ll move forward as a team.’
“I like the simplistic approach. You don’t need a 51-page strategic plan. You need strategic principles and a two- or three-page paper, and that is really the strategic plan. Because if anything is bigger than that, you start to lose people.”
Bolte says you still need to allow your team to bounce ideas off of each other and off of you. You can’t throw water on innovative brainstorming. It simply goes back to ensuring that you have broadly defined the direction in which you want everyone pointed and nudging people back on track when they stray.
“If it’s something I don’t like, I’m pretty quick to tell them,” he says. “If you think of it like they’re presenting their wish lists, I don’t give much comment unless they’re really in an area where I think it’s not aligned with our vision. So it’s really an opportunity to listen to those plans, see how it’s going to impact the whole group and figure out what they’re going to need to do to support those plans moving forward. That’s how you keep everyone on the same page with regard to a vision.”
How to reach: BDP International Inc., (215) 629-8900 or www.bdpinternational.com
The Bolte file
Richard Bolte Jr.
president and CEO
BDP International Inc.
Education: Business/finance and Spanish degrees, Mount St. Mary’s University
What is the best business lesson you’ve learned?
You can’t do business with people or companies you don’t trust. If you don’t have that element, you can’t have a relationship, and you can’t do business.
What traits or skills are essential for a business leader?
You need to be a great communicator and have really strong public speaking skills. You need to be trustworthy and ethical, be passionate about what you do, and show that passion when you have the opportunity.
What is your definition of success?
Meeting all predefined goals. But you can define it in other ways. Success can be creating a successful culture, and that means not accomplishing a goal but how you accomplish a goal. Did you do it in a moral and ethical way?
Bill Ford Jr. never thought he’d see the day when Chrysler and General Motors would be forced into bankruptcy proceedings, when American automakers were in such peril that they had to look to the government for a bailout or when the entire auto industry was teetering on the brink of disaster.
Yet that’s exactly the depths to which the automotive industry sank over the past two years. As the worldwide economy slumped into a massive recession, the auto industry took one of the worst beatings of any area on the business landscape. Car sales slumped, auto component suppliers went bankrupt, Chrysler partnered with Fiat, and GM underwent a restructuring and downsizing that included the elimination of the Pontiac, Saturn and Hummer brands from its lineup.
As the executive chairman of Ford Motor Co., Ford — the great-grandson of company founder and American business icon Henry Ford — helps lead the one U.S. automaker that didn’t face bankruptcy proceedings or the humiliation of limping to Capitol Hill with its hands out. But that doesn’t mean Ford Motor Co. has emerged in 2011 unchanged or unchallenged by the events of the past two years.
In November, Ford gave a presentation at the Ernst & Young Strategic Growth Forum in Palm Desert, Calif., moderated by veteran journalist Charlie Rose. During the presentation, Ford talked about the recent past of the auto industry, where the industry is headed and what business leaders in other industries can learn from the lessons taught to automotive executives in the past couple of years.
“Every industry says they’re in a time of great change,” Ford says. “I suppose when you’re in it, you really feel like you are. But if you just look back a few years and look forward a few years, you’d be hard-pressed to find any era in any industry that will comprise more change.”
Do the right thing
When the other American automakers went to Washington seeking a federally funded lifeline, Ford figured his company would be at a disadvantage on the consumer sales front.
“We didn’t really know what a bankruptcy meant for us,” he says. “Would a customer buy a car or truck from a bankrupt company? What we didn’t realize at Ford was that it would resonate with the average person on the street that we didn’t take a bailout. We thought the average person would take the opposite stance, as in, ‘I have so much money wrapped up in this company, I’m going to buy their car or truck.’ We were worried that no one would buy from us, because they were now shareholders of sorts in GM and Chrysler.”
Instead, Ford received — and still receives — letters of support from small business owners and operators who admire Ford’s ability to get his company through the recession without the need for taxpayer dollars.
“The letters I got, and continue to get, are incredible,” Ford says. “Things like, ‘I’m a small business owner in Des Moines and no one would ever bail me out, and we’re really glad that you guys did it the right way.’ It really was heartwarming to see the response we got.”
But there was a cost for staying financially self-sufficient. Ford Motor Co. had to borrow against many of its assets to finance the research and development projects that allowed it to stay away from the jaws of bankruptcy and bailouts. The company amassed a large amount of debt, compared with GM and Chrysler, who emerged with clean balance sheets thanks to their sources of external funding.
But Ford believes a commitment to developing your business internally is one of the most reliable methods by which you can weather an economic storm. If you’re developing new products and services and finding other ways to enhance your business from within, you’ll become much more strategically diverse and self-sufficient as a company.
Ford’s emphasis on internal development is reflected in one of the first conversations he had with Alan Mulally, who succeeded Ford as the company’s president and CEO in 2006.
“One of the things I told Alan in our first meeting was, ‘There is no point in going through all of the pain we’re going to have to go through if we don’t keep investing in research and development and product development,’” Ford says. “He agreed completely. Now that we’re through and out the other side, most of our competitors, both domestic and foreign, slashed their spending during that period. Not only didn’t we do that, we actually accelerated some key areas. So when the clouds started to lift, we had the products, technology and features that made our vehicles very desirable.”
Ford and his leadership team set those wheels in motion even before Mulally came on board, working with bankers to get capital to pump back into the company’s development areas. From Mulally’s first day on the job, he began making the rounds to banks, trying to secure the loans necessary to make it all happen.
“It was a pretty dicey period,” Ford says. “You can imagine it was a pretty interesting conversation I had with the extended Ford family.”
To build the case to the other stakeholding members of his family, Ford needed to go back to the basics of good business communication from the executive level: Lay out your plan, be as forthcoming with information as possible, answer questions and seek feedback.
“I was very proud of the fact that, over the course of that discussion and over the next couple of years, when every day they’d pick up a paper that says, ‘Ford, GM and Chrysler aren’t going to make it,’ they all hung in there,” Ford says. “I had to continually sit down with them and say, ‘We do have a plan, you’re not seeing it yet, but it’s going to work.’ To their great credit, they all hung in there. And that really allowed the rest of the management team to not have to worry about the shareholders. They could focus on fixing the problem.”
The patience of the Ford family is being rewarded. Not only did the company emerge from the financial crisis without the need for federal money, but Ford says the company’s debt is being paid off much faster than either the company’s leaders or industry analysts anticipated.
“There was a disadvantage to doing it the way we did. But that disadvantage [of debt] is shrinking almost on a daily basis,” Ford says. “I wouldn’t trade places with anybody. I love where we are. I love our product, our direction and our freedom to operate without interference.”
Face the future
Before you can build something, Ford says you have to value it. You have to value the end product as a company and as a marketplace. The failure to adequately value the domestic manufacturing sector is something Ford believes the American business community will continue to face.
To increase the value of manufacturing businesses, Ford says it will take a combination of new, innovative ideas, intellectual partnerships, capital investment and an appreciation for how other countries handle their manufacturing bases.
“Manufacturing was kind of seen as yesterday’s news, brownfields, and we’re going to become a high-tech and service economy,” Ford says. “The problem is, the multiplier effects of those jobs versus manufacturing jobs is minuscule. To put it another way, every country that Ford does business in around the world will really do everything they can to help their manufacturing base. In our country, it was the opposite. The feeling in Washington, and even on Wall Street, was ‘Who cares? Shut your plants here, because we’re going to be a different kind of economy.’”
It’s taken the economic downfall of the past several years to increase awareness about the importance of maintaining a manufacturing base.
“Manufacturing has to change, and it is changing,” Ford says. “We’re making new things, high-tech things. The auto industry is one of the biggest users of high tech. We should now be building those high-tech components and clean energy components here in America. If anything good has come out of the last three years, it has been a recognition in Washington, and I think on Main Street, that manufacturing matters a lot, and we ought to have a strong manufacturing base. That recognition in and of itself is a great start.”
New avenues to maintaining the manufacturing base won’t be discovered without new ideas. And to that end, Ford sees a great deal of fertile soil in the nation’s universities. Whenever possible, the business sector needs to partner with and leverage the research capabilities of educational institutions.
“In terms of where we go forward, one of the great advantages we have in this country are our universities,” Ford says. “And we have great venture capital activity. We really need to take advantage of those great resources, both the venture capital mentality and the help that the universities can provide to all businesses in terms of R&D, partnering and I’m happy to say those are all vibrant pathways.”
But even with the external financial and intellectual avenues available to businesses, growth still boils down to what is going on under your own roof. You need to have the manpower and the brainpower to take advantage of the opportunities presented to you, which is why Ford promotes an innovative and entrepreneurial spirit among his employees.
“It’s something we struggle with every day,” Ford says. “I believe that now, we have the equation right at Ford. A few years ago, we didn’t. Part of it is you have to look at what the inhibitors are, because people really do want to be innovative. Most people want to try new things. But in our case, one of the things I did was do a deep dive into our product development system. We had a terrific R&D function, built with a couple of Nobel laureates. But somehow these great innovations weren’t making it into our vehicles.”
It demonstrated to Ford how a company’s leaders need to remove internal barriers to innovation — barriers that might exist within your company’s structure that you might not even realize.
“In our case, it was our finance system that created the barrier,” he says. “Whichever program it was — let’s say it was the new Explorer — wanted to adopt the new rear seat belt we just introduced. That program would have to take the cost of that entire innovation. So you wanted to be the second program to take the innovation, not the first.
“That is just one example of how you need to look at what the structural barriers to innovation are. People often blame the culture. People often say, ‘It’s a big company; nobody wants to take a risk.’ That can all be true, but there can also be structural inhibitors like the one that I just mentioned. You have to get those out of the way.”
The other critical component in building your business for the future is a motivated work force. You motivate employees by giving them avenues to pursue their ideas and removing roadblocks. But you also need to encourage the behaviors you want to see.
Ultimately, your internal culture needs to work in tandem with your outside resources. When a motivated work force can draw upon extensive financial and intellectual support, your company can have the tools to weather just about any circumstance that comes your way. There will still be adversity, but you’ll be prepared for it.
“You have to celebrate success,” Ford says. “That is a cultural thing. We do a lot of that, we have awards within the company for innovation. It’s great when you recognize externally. For instance, we’ve been the keynote at the consumer electronics show for the last three years. They never had an auto show up, much less give a keynote. We won the award last year for best in show. That is very reinforcing for our employees, when they’re recognized not just from an auto trade standpoint but something completely different that is seen as really cutting edge. That emboldens people to continually go further.”
How to reach: Ford Motor Co., (800) 392-3673 or www.ford.com
Ford Motor Co. Executive Chairman Bill Ford Jr. touched on a number of topics during his November presentation at the Ernst & Young Strategic Growth Forum. Here are some additional nuggets of information from one of the world’s leading automotive executives:
Ford on where the auto industry is headed: When you think about this industry, for 100 years, we had a changeable line. The Model T had an internal combustion engine and was sold through dealerships. But now we sit on the threshold of some very interesting technology coming into vehicles on the safety side, on the data management side, in terms of real-time road information, where traffic is, where the parking spaces are, all of that will be available very fast.
Ford on the future of electric cars: If you think of electric as we know it today, there are three types. There is the hybrid, there is the plug-in hybrid, and there is the pure electric. To me, the pure electric is great because it is totally clean depending on how the power is derived, which is a whole separate discussion.
If you live in San Francisco and just need to drive around town, that’s OK. But if you all of a sudden want to drive down to Los Angeles, that’s an issue. Plug-in really alleviates that. With the plug-in hybrid, you can drive on the electric motor for the first number of miles, but once the electric runs out, it will then run as a conventional engine. So that gives you a lot more versatility.
Then the current hybrids, which don’t require anything to be plugged in, we keep refining those so the batteries become more fuel-efficient. So really, it will be a three-pronged approach in terms of electric. You’ll have all three of those in the mix.
Ford on international growth: By the year 2020, there are going to be 9 billion people in this world. If you look 10 years beyond that, there are going to be 30 cities of 10 million or more. Most of those will not be in the U.S. or Western Europe, and they don’t have the infrastructure to start shoving cars into those cities. So mobility starts to become a big issue. How are people going to move in big urban areas? The answer is not going to be to put two cars in every garage. So how do we help countries and municipalities solve the urban mobility issue. That will require us to define ourselves not as a car and truck company but as a mobility company.
Ron Roma believes in redundancy.
It’s a commonly used word for engineers, architects and other professionals who need to ensure that fail-safe systems are in place for the buildings, transportation systems and vehicles that we rely on every day.
But it’s an applicable word in the world of business, as well.
At Healthesystems LLC, the pharmacy benefit management company where Roma is the founder, owner and CEO, he has had to build redundancy into his work force. He needs to build a team of people with overlapping skill sets and an ability to step into new roles on short notice.
“When we started the company, I hired and brought a guy on, Daryl Corr, who is currently our president,” Roma says. “He started out as vice president of operations, and I promoted him to COO; now he’s president. Our biggest challenge was finding a successor to Daryl, and subsequently, finding successors for other key employees. When you’re a smaller company, you might attract some very talented people, but often, it’s hard to replicate their skill sets.”
It’s a call that must be answered through recruiting and training of new staff members. Roma and his staff have worked with recruiters in both the Tampa and Phoenix markets to find new blood, also relying heavily on referrals.
“We’re very much in an industry of relationships, so we’re continually reaching out to people we know,” Roma says. “Our HR department once told me that 85 percent of our new hires have come from referrals, either internal or external.”
But to get plugged in like that, Roma has had to focus all executives at Healthesystems on team building and the constant pursuit of the new talent that has allowed the company to grow to nearly 300 employees and $214 million in 2009 revenue.
Recruit for redundancy
The key to attracting good people is maintaining good people. It’s a concept that Roma enforces throughout the management levels at Healthesystems.
You don’t just maintain good people for their potential recruiting connections. You maintain good people because your work force is the most critical element in determining your company’s atmosphere and how your company is perceived by outsiders.
“When you’re doing the interview process, it’s really a two-way street,” Roma says. “It’s not just us interviewing prospective new employees; it’s the employees interviewing us to determine if this is a place they want to work. So the company has to have a very pleasant, attractive look and feel to it. You know what it’s like when you walk into a place and it feels all starchy and stiff. The people aren’t very open. You have a difficult interview and you don’t get a warm feeling from the cohesive group. That’s not how we want to be.”
Start by reaching into your coffers and giving your human resources department the backing it needs to build an ideal staff.
“You have to be willing to spend the money,” Roma says. “Three or four years ago, one of our corporate objectives was to double payroll. It is an expense that if you can afford it, every company would be well served to do it. We’re trying to avoid a situation where one person is so vital to what we do each day, if that person left, it would create a lot of problems in that area of the company. That is what we’re trying to avoid, and that is why a couple of years ago, we decided that this was an investment we were willing to make.”
Of course, not every company is in immediate shape to begin shoveling money into recruiting or payroll. But as your company evolves and changes, you need to invest whatever you can in hiring the people who will help provide you with talent reinforcements down the road. The position for which you hire a person this year might not be the position you need filled in four years. If your company is growing, chances are even better that will be the case.
“The redundancy you put in place is really about succession planning,” Roma says. “In our case, we’re so young as a company, it’s really not a matter of losing somebody. It’s that if a new opportunity comes up, we want to have that extra flexibility with the people on staff.”
If you have multiple locations in your company, you need to make sure you’re recruiting and maintaining adequate talent and skill sets at all locations. It’s particularly true if you serve customers with any type of phone-based or Internet-based help desk. If your help desk on the East Coast is knocked offline, you need to have capable talent and staff numbers at another location.
“When we were looking at people and locations, it’s one thing to say that we have help desk backup in North Carolina, with systems and people trained there,” Roma says. “But if you shut everything down in Florida due to a hurricane, it might impact the Carolinas, as well. With that in mind, we made our redundant help desk site in Scottsdale, Ariz., and even put a backup data center there, as well. It’s redundancy in people, facilities and systems. It all works together. You need all three.”
Find the cultural fit
You need to hire for talent and skills or you won’t create the team that will allow your company to flourish. But if your company is in growth mode, it is imperative that you find employees who can help support and advance your culture.
At Healthesystems, Roma operates a high-growth, entrepreneurial company and looks for people who can flourish in that environment.
“High-growth companies can be difficult for many people to fit in,” he says. “A lot of it depends on their work experience. If they have been out in the workplace with an IBM or a really large company, they’re used to a lot more structure, definition and rigidity day to day. I describe our company as entrepreneurial and opportunistic, and that means we’re always looking for that next entrepreneurial opportunity with whatever happens to fit us. People tend to get concerned if they have that big-company perspective of wanting to know what their job is and what are the 15 things they need to get done today. And 15 years from now, they’ll still be responsible for those 15 things.
“That’s not how we operate in a smaller, entrepreneurial company. You have to be light on your feet, take what you learned on the last project and transfer it to a new project.”
You try to find the right fit through your hiring process, and use your training process as a kind of proofreading system for your hires.
“Basically, you have multiple layers of interviewing,” Roma says. “We bring in and define the selection process for people in significant, key positions. They might interview with five to 10 people in the organization, and it is in all kinds of disciplines. It might be accounting, IT, account management. I even get involved in some of the more significant hires myself.”
From there, Roma and his leadership team use the training classroom to find the people who will grow with the company. In a high-growth environment, not every hire will be a home run. Some might not even get you a base hit. Out of every round of 10 to 15 hires performed by Healthesystems, up to one-third might leave the course, deciding the company isn’t a good personal fit.
“In my mind, failure in the training program is the result of failure in the hiring and recruiting process,” Roma says. “In most companies, the help desk is usually the highest area of turnover. We were told by our HR department that the help desks in most companies have a 100 percent turnover rate in a year. We have been more in the 15 to 20 percent area, which I think is phenomenal. To me, when you bring someone in and they fail in the first six to 12 months, it’s as big of a failure for the company as it is for the individual, because obviously you missed something in the interview process.”
The key to success in an interview and training process boils down to one word: involvement. Management has to be active and engaged in exchanging feedback and ideas with the human resources staff. You don’t want to micromanage your HR department or perform the jobs assigned to your HR professionals, but you do want to concern yourself with the overall process and whether it is delivering the results you want.
“Back in 2001, I had a client that I did some consulting for,” Roma says. “The company was producing enough revenue that the owner had the lifestyle he wanted. But it really wasn’t doing as well as it should be. The biggest problem was lack of sales.
“The owner tells me, ‘Ron, I get so upset when I look at our books and realize that 90 percent of our customers are still the ones I brought on.’ Then I told him ‘Well, you need to get off your butt and go sell some more.’ You get tired and you get a little conceited, thinking, ‘I’m above that now.’ But you don’t want to create a culture of superiority. You want a culture where any task that needs to be done, you or any other person is willing to do it, willing to take a look at what is going on and educate yourself. You never want to be in a position where people are saying, ‘This isn’t worth my time.’”
You stay engaged with your team, your HR department and the process by which you are adding to your team by never taking your eye off the ultimate goal of achieving and maintaining a winning culture and profitable balance sheet, and everything that entails.
“Always keep your eye on the ball,” Roma says. “There is always someone out there trying to divert your attention from running the company, and when those activities happen, the only thing I’ll remind people of is keep your eye on that ball, maintain those customer relationships and employee relationships.
“Ultimately, as a businessman, that is why you are there — to maintain your customers and maintain your employees.”
How to reach: Healthesystems LLC, (800) 921-1880 or www.healthesystems.com
The Roma file
Founder, owner and CEO
History: My dad was in the Air Force, and we moved to Oklahoma when I was a year old. My parents were from Montana.
Education: Chemistry and math degrees from the University of Oklahoma
First job: When I was 14 or 15 in Oklahoma, there were a bunch of old rail beds on land that was going to be recycled, so I had a job clipping the old railroad ties there.
What is the best business lesson you’ve learned?
Don’t quit; don’t stop. It doesn’t matter what happened 10 to 15 years ago. You stick at something.
What is your definition of success?
At 20 years old, success is a paycheck. At 52 years old, I expect that a company has to produce in other ways for its employees. You have to help meet the career objectives of your employees. And you have to meet the needs of your customers and investors.
Singing from the same sheet. Following the same path. Reading from the same page.
No matter what idiom you want to use, Stan Johnson’s message is the same to everyone at Veteran’s Affairs San Diego Healthcare System: He wants everyone aligned on delivering the best possible experience to the system’s customers — its patients.
“That is really leading a culture change in terms of working with all staff, informing the staff of what it means to provide patient-centered care,” says Johnson, the director of the 2,400-employee, La Jolla-based health care provider within the U.S. Department of Veterans Affairs. “A lot of what we do was already patient-centered care. But it was really looking at redesigning our delivery of care so it is geared toward meeting and exceeding the patient’s expectations.”
Johnson says changing a culture can be challenging and exciting at the same time. You are excited to implement a new way of thinking among your team, but at the same time, there will be bumps in the road as you rebuild processes from the ground up and try to uproot habit-entrenched employees and attempt to show them that the new way is a better way. It can be much more easily said than done.
At the VA San Diego system, the leaders put a template in place by becoming an affiliate of the Planetree Alliance — a nonprofit partnership of health care organizations that advocates for care that is centered on an overall positive experience for the patient. The alignment with Planetree gave Johnson a path to follow when he assumed control of the health care system in 2009. But Johnson had to bring the plan to life every day and coach more than 2,000 employees to do the same.
He did it by involving as many people as possible in the decisions that would affect the system’s future. He sought out the opinions and ideas of not just his employees but patients, as well.
“You really need to look at your organization through your customers’ or patients’ eyes,” Johnson says. “What we’ve done with some of our system design groups is involve many of our patients, because you have to know firsthand what the expectations and needs of your customers are.”
Engage your employees
You’ve probably heard it countless times in your career: Your culture isn’t what you say it is; it’s what your employees believe it is. You can preach all you want on your organizational principles, but if you don’t follow those words with like actions, your culture is going to wither, and distrust will seep into the hierarchy of your company.
One of the actions you need to take is opening a dialogue with your employees. If you are preparing to point your company in a new direction or alter your defining principles in any way, your employees will need opportunities to speak with you in person.
Johnson and his leadership team create those opportunities by getting many people together for a few days off-site, free from workday distractions, where employees can feel enabled to speak up, offer feedback and share ideas.
“About 85 percent of our staff has been on a retreat where they begin to understand what patient care is,” Johnson says. “They begin to individually understand what they individually could look at to improve the patient experience. As a leader, you want to listen to their ideas and suggestions and start to implement things that come out of that, so that it starts to be driven by them instead of being driven by upper management.”
Of course, you can’t implement every employee idea in the name of strengthening or changing your culture. But you can offer feedback on all ideas that come your way, and you can implement the ideas that make the most sense for where your organization is at that point in time. If you don’t at least do that much, you can expect the dialogue, and the wellspring of ideas that comes with it, to dry up .
“You can ask and you can listen, but unless you actually implement some of those suggestions and react fairly quickly to their good ideas, that will dissipate or go away fairly quickly,” Johnson says. “People simply will not continue to give you good ideas and suggestions if you’re not listening to them and implementing some of them. So what you really want is a mechanism to allow your people to make some of those suggestions but also to follow through on your end with the action and implementation of providing feedback and recognition.”
Recognition is another key cog in achieving buy-in on any new initiative. If you want your employees to embrace new cultural principles, reward their good behavior and hold your high performers aloft as an example for everyone else.
It’s something that Johnson emphasizes on a regular basis throughout the San Diego VA system.
“Recently, our communications work group had a patient call center that is about 16 staff members who take a lot of calls, schedule appointments, and the wait time for those calls was longer than we what we liked,” he says. “So those individuals worked with our system redesign staff, flow-mapped the process to see if there were steps that didn’t really add any value to the process any longer, and they were able to make significant improvements in about a two-month time frame.
“Myself and our leaders in that area went to that work area and personally recognized them with an in-person thank you as well as a cash bonus. Many times, it’s a combination of the personal recognition and financial reward that really helps keep employees engaged on that level.”
Stay close to customers
As a business leader, it is imperative that you maintain close relationships with your customers. Without customers, you don’t generate revenue, you don’t turn a profit, your employees don’t keep their jobs and, eventually, you go out of business.
With that in mind, you need to develop avenues to build and maintain customer relationships. Johnson takes it a step further, utilizing the vast amount of military technical training that his organization’s patients have absorbed, by encouraging patients to get involved in various initiatives throughout the system.
“One of the system redesign efforts right now is focused on communication, and a subset of that talent is telecommunications,” Johnson says. “We have a couple of individuals who use the VA for their care, and they have an area of expertise in telecommunications. They’re kind enough to volunteer their time to work with our work group.”
If you always keep it front of mind that your customers are your reason for being, you will be much more apt to seek out their opinions and input on how you run your business from a service standpoint.
“That is the key, to have constant feedback from the people you take care of,” Johnson says. “That is what we’re here for. You have to make sure you’re meeting their needs. It’s not just what we think they’re asking us for, it’s finding out what they’re truly challenged by in using your system.”
As with any other aspect of your business, customer interaction needs leadership with an eye toward continuous improvement. No matter how good you think your system is, no matter how well you think you stay in touch with the people you serve, it can always be done better, and you and your leadership team should constantly seek ways to build a better customer service mousetrap.
“It’s like anything else when you’re in a leadership position,” Johnson says. “You continually work at it. You take nothing for granted. Just because you’re doing something well now doesn’t mean that you’re not continually looking for improvements, how you can be more efficient and effective with what you’re doing. Just because it’s working well now doesn’t mean it can’t be done better.”
Johnson takes the reins when it comes to driving that mentality throughout the organization, but ultimately, he wants all of his employees to become self-starters in delivering an exceptional patient experience.
“It is the responsibility of every single person on our staff,” he says. “We’re here to provide a service to veterans who have served our country. Each one of us, each individual who works with the VA San Diego Healthcare System, can make sure that the patient experience exceeds their expectations. That is what we’re trying to instill in our patient-centered care and affiliation with Planetree, to make sure all staff understand that and can individually make a difference. That is why we want everyone to view it as their responsibility, all the way up to me.”
Once you have systems in place to allow for engagement of both employees and customers, you need to keep watering the ground with frequent communication. Johnson views continual communication and cultural reinforcement as one of the biggest challenges before him each day.
The challenge of delivering good communication each day is complicated by the fact that you can’t be in all places at all times. You have to have a network of managers and electronic interface points that allow you to keep your messages in front of both employees and customers when you can’t be there in person.
“Communication is another one of those things that you’re always striving to do better,” Johnson says. “What we try to do is communicate in multiple ways. For instance, we have electronic message boards up in elevator lobbies at clinics. We use them to share updates on what is going on at the facility, new information that we want to share, whether it be patient satisfaction or how we did with a recent survey.
“You’re also getting that information out there through e-mail, social networking sites like Twitter and Facebook, many different ways. Different methods of communication work for different people, and you have to use them all to communicate your strategies and your benchmarks that you have set or that have been set for you.”
But even after you’ve rolled out a new direction for your company, even after the meetings and dialogues with employees and customers, communication remains a two-way street. Feedback from multiple channels is the only way you can ensure that your message is reaching the people you want it to reach and if they are buying in to the message.
“You’re always kind of surveying people, both formally and as you talk with people throughout the day,” Johnson says. “We think we might be doing a good job of communicating, but until you hear it from your customers, patients or staff, you probably haven’t done a good enough job yet.”
How to reach: Veterans Affairs San Diego Healthcare System, (858) 552-8585 or www.sandiego.va.gov
The Johnson file
Veteran’s Affairs San Diego Healthcare System
Born: Bloomfield, Iowa
History: I joined the Navy and came to San Diego in 1972. I did my boot camp here and served here. I was in the Navy for four years, and they were kind enough to support my education and training, so after that, I went back to Iowa and earned a bachelor’s degree in business administration and a master’s degree in health care administration from the University of Iowa.
What is the best business lesson you’ve learned?
Listen to the patient. Involve your staff and your customers in your improvement efforts.
What traits or skills are essential for a business leader?
The key is to develop good working relationships, be transparent and treat people fairly.
What is your definition of success?
For me, it boils down to hearing firsthand from our customers that we’ve done an outstanding job for them.
If you work for Joe Schumacher, introductions are the appetizer at lunch.
When Schumacher gathers his employees together for a lunch meeting at Goddard Systems Inc., he makes sure that accountants sit with operations people, his legal staffers sit with marketers, and so on. It’s one of the most effective ways he encourages communication and prevents silos at the franchisor of The Goddard School for Early Childhood Development, where Schumacher serves as CEO.
“We want people from different departments at the same table,” he says. “One of the great pieces of feedback we’ve gotten is that everyone seems to like that. They had an opportunity to talk to other people that they normally wouldn’t have talked to.”
Schumacher oversees 115 direct employees and must set uniform standards for 368 franchised schools around the country, employing between 20 and 25 people each. Therefore, this means that promoting good communication and reinforcing the organizational direction of Goddard Systems are daily tasks for Schumacher.
He follows through on these tasks by facilitating an ongoing dialogue between levels and locations within the organization. Whether it’s corporate leadership speaking with a franchisee or different franchisees in different states speaking with each other, Schumacher wants the exchange of words and ideas to become an everyday occurrence underneath the Goddard umbrella.
“It’s really the biggest challenge for any franchise company, aligning the franchisees and the corporation as to the direction you’re heading,” Schumacher says. “The economy has certainly made everybody focus more on the core issues facing the company and the values of the company. The way to answer the challenge is to ensure that everyone has a voice in the approach that the company is taking. That includes franchisees and employees and making sure that everyone has a chance to be heard.”
Reach out to your people
From the time they sign the contract to run a Goddard School, franchisees are taught that communication is a major priority within the organization. When possible, Schumacher meets with each new franchisee personally and emphasizes the need for an open dialogue among all areas and levels of the Goddard system.
Schumacher and his staff also employ liaisons to help franchisees with their transition into the system, offering new additions a resource on how the organization does business as well as a sounding board for any issues the new franchisee might encounter.
“We do a lot to ensure that both our franchisees and our employees have methods for communication and understand that we have an overarching philosophy that encourages communication,” Schumacher says. “When a brand-new franchisee comes into our training class, I tell them that we are focused on communicating back and forth. We might not always agree on every issue, but I promise your voice will be heard.
“As part of that, we have a pre-opening process manager, and that person’s job is just to deal with people from the time they sign as franchisees. Then we have a franchisee liaison to act as an independent sounding board, someone who is not related to any department, who reports directly to me and can talk to franchisees about any issue the franchisee feels is important.”
Once new franchisees receive their initial training, they are encouraged to maintain contact with corporate management whenever they have an idea or issue to address.
“Franchisees are encouraged to call or e-mail anyone internal in the organization, up to and including me, on any issue,” Schumacher says. “We don’t want you to have to go through seven layers of management to reach us. So franchisees will regularly call me about both good things that are happening and things they might have some concerns about. Our policy is that calls and e-mails are answered within 24 hours, even if we might not have an exact response. I might not always have the answer of a more complicated problem, but I will connect with you and tell you on the matter.”
Turning a communication strategy into reality takes good execution from the upper levels of management. You need to be able to set the example from the top. But before you get to the blocking and tackling of rolling out a strategy, putting the priority in front of your people with words and messages can go a long way toward setting the ground rules of communication.
“The most important thing is making sure all of the constituencies understand that this is a priority for the company,” Schumacher says. “I regularly tell both franchisees and employees that I need to hear from you. This is my job as CEO, and this communication is the most important part of my job. Overall, whoever your constituencies are, you need to be making sure they understand that communication is important to the company, whatever they say won’t be taken personally by management, and they’ll be able to identify issues without fearing retaliation.”
From there, you need to have people in place who can help maintain your strategy’s momentum. That is the role of Schumacher’s franchisee liaisons. At your company, it might be your human resources department or corporate communications specialist. But someone in your organizational hierarchy needs to be trained on greasing the cogs of communication on a daily basis.
“Those two liaisons give people a specific point of contact,” he says. “If they don’t know who to talk to, they can go to those people and be directed to the right person.”
Make a lateral pass
Corporate management plays a vital role in communicating with your people in the field, ensuring that they stay focused on your organizational objectives and feel empowered to carry them out. But that is only a part of the communication equation.
Your dialogue needs to be lateral. Your salesperson in one part of the country needs to develop a working relationship with salespeople in other parts of the country, allowing them to share ideas and get a better grasp of what is and isn’t working among the company ranks.
At Goddard Systems, Schumacher has taken the step of formalizing peer communication among his franchisees. As part of a systemwide mentoring program, more experienced franchisees are given the opportunity to coach new franchisees on being a part of the Goddard organization.
“It’s somebody else they can call or e-mail to talk about issues,” Schumacher says. “We do the same things for our schools’ education directors, with a mentoring program in which more experienced directors get mentors, as well.”
Franchisees with high-performing Goddard locations are selected as mentors for the program. In recent years, more than 40 new franchisees have been mentored in the program. Schumacher estimates that about 20 franchisees received mentoring in 2010, due to a drop in the establishment of new franchises.
If you operate a business with multiple people in the same market, it is often advantageous if you can connect those people and allow them to find common goals. Even if you have locations or salespeople who might be competing with each other in a given market, if they are finding common areas of motivation, it will serve to strengthen your company overall.
Schumacher has encouraged Goddard franchisees in individual markets to find common ground in the marketing of the Goddard concept to the surrounding community. Some local schools have unified on creative marketing concepts.
“Our Denver market decided they wanted to sponsor the children’s play area at the Colorado Rockies baseball stadium, so they unified on that initiative,” Schumacher says. “They’d have things like ice cream socials and open houses to attract enrollment in their areas, so they tried to do that as a unified force, as well. There are 13 schools in the Denver area, so they tried to do the open house and socials on the same week.”
Schumacher wants his franchisees to take any opportunity to get together and talk shop, whether it be a formalized meeting or a less formal interaction.
“We put on an excellent business and social program, but even if they were just OK, the best part about any meeting is when you have franchisees coming together and talking with other franchisees about common issues,” he says.”
Know your role
As the person in the top spot of your company, your job is one of support and motivation when it comes to your team.
You can speak about having an open-door policy, about the standards you want for your company, how you want your employees to represent the company and the resources you’re willing to provide for them, but as you’ve been taught since grade school, actions speak far louder than words. Which means it is imperative that your actions follow your statements and employees don’t get the sense that you’ll say one thing and do another.
“A lot of your job is to set the tone,” Schumacher says. “It is important that the entire company, whether employees or franchisees, know that communication and adhering to the mission of the organization is key. That’s why living what you say is important. If I bloviate about the importance of communication but don’t tell people things or tell them to come back later, it becomes apparent that what I’m saying is just words, that I don’t take it very seriously.”
You need to realize the difference between leadership and management. You have elements of both in your role. You are a supervisor who manages others and a leader who seeks out new opportunities and charts a course to reach them. But you can’t let your supervisory role cast a shadow over your role as leader. If you try to control too much from a process standpoint, you run the risk of micromanaging, which can be detrimental to the trust factor in an organization.
If an employee has an idea and wants to run with it, accept it or decline it. If you decline it, explain why. If you accept it, give the employee resources and benchmarks, but let him or her take the creative lead.
“It’s often a criticism of upper-management types that they’ll sort of steal people’s ideas,” Schumacher says. “I try to make sure that if somebody gives me or the company an idea about something, they get recognized for it. Whether it’s in a meeting or communication or wherever, I try to make sure our managers understand it’s a better sign if a manager celebrates people and allows them to be recognized for the contributions, as opposed to the manager taking the credit.”
Recognition is one last vital part of the communication process. It stimulates ideas and encourages employees to come forward with new ideas in the future. It helps reinforce a unified, goal-focused company. And there is a difference between putting a bonus plan in place and actively recognizing someone. Both forms have their place, but neither is a catchall.
“Everybody, if not needs, then certainly wants recognition,” Schumacher says. “It’s easy in any company to feel like you’re laboring in the dark and that nobody really knows what you’re doing or how important it is to the company.
“That’s why monetary and nonmonetary recognition serves different roles. I think a simple recognition, intermittent and unexpected, often goes a lot further than money. But the two have to work together. You’re not going to have people happy about a gift card or a pat on the back if they’re not getting paid well enough or they’re not able to make bonus. That’s why it’s probably better if the money stuff is basic and expected, while the nonmonetary stuff is more unexpected and intermittent.”
How to reach: Goddard Systems Inc., (610) 265-8510 or www.goddardschool.com
The Schumacher file
The Goddard School for Early Childhood Development
Born: Queens, New York City
Education: Psychology degree from St. Francis University, Loretto, Pa.; law degree from Widener University School of Law
First job: I was a janitor at some kind of warehouse. I don’t even remember what it was. I think I was about 14 at the time.
What is the best business lesson you’ve learned?
Transparency is the best business lesson I’ve learned. Be straight with people, and when news isn’t good, just deal with it. If you hide or avoid things, it just makes them more difficult to deal with.
What traits or skills are essential for a business leader?
Commitment and dedication. People need to understand that you are committed to the enterprise and committed to what it takes to make it work. You also need to be sensitive to people’s thoughts and ideas.
What is your definition of success?
Setting appropriate goals and then achieving them. It’s also important to have some fun along the way. We aren’t running an amusement park, but overall, your work should be something you enjoy. And, of course, profitability is an important element of success, as well.
It was early 2009 when Gregory Jackson realized he might have a ticking time bomb on his hands.
Jackson is the founder, president and CEO of Jackson Automotive Management. Two years ago, the company owned Ford, Toyota, Mercedes Benz, Scion and Saturn dealerships in Michigan and Florida. The dealerships generated $1 billion in sales in 2008 and employed about 550 people.
But over the span of about six months from late 2008 to early 2009, the dominoes started to fall. A series of violent shockwaves hit the American automotive industry as the economy sank into its worst recession since the 1930s. ? General Motors and Chrysler both filed for Chapter 11 bankruptcy protection and, subsequently, underwent reorganization and streamlining. GM committed to moving forward with the Cadillac, GMC, Buick and Chevrolet brands, leaving the corporation to either find new owners for the Saturn, Pontiac, Hummer and Saab brands or discontinue them.
Jackson owned five Saturn dealerships, comprising half of his work force, which spent half a year on edge waiting for a definite word on Saturn’s future. In the summer of 2009, after a deal between GM and Penske Automotive Group fell through, months of waiting and wondering culminated with the worst fears of Jackson and his staff realized: Saturn was done. All new production was halted in October 2009, and all retail franchises would be closed by the end of October 2010.
“I can’t sugarcoat it. It was stressful, and it was very disheartening,” Jackson says. “There is nothing worse than to know someone’s family, walk in and tell them that they don’t have a job anymore — particularly when these were successful, profitable businesses just yesterday. There was a lot of crying among people. It was very emotional, due to the loss of jobs and the financial hardship you knew people were going to be under, both employees and managers.”
The death of Saturn tested Jackson as a leader and a communicator. He had to pilot his business through a devastating blow to morale and five dealerships’ worth of lost revenue, which dropped his company’s 2009 sales to $600 million.
What the circumstances reinforced to him was the principles of good business leadership: Keep your employees informed and make wise financial decisions.
Keep information flowing
The hardest pill to swallow for the employees at Jackson’s Saturn dealer was the fact that Saturn was a moneymaker for Jackson’s company. The cars were selling and the brand was still popular. When viewed from the store level, there was no reason to believe the dealers should ever be in danger of closing.
But car dealers are caught in the middle, between the purchasing habits of consumers and the top-level decisions of the automakers that supply the product. If one or the other stops supporting the dealer, the business is in jeopardy.
In any business situation, you have to realize what you can and can’t control. You can’t control market fluctuations, but you can control how your business prepares for and reacts to the fluctuations.
At Jackson Automotive Management, Jackson and his leadership team couldn’t control what was happening at GM headquarters, but they could control the flow of information.
“When we were going through all of this with Saturn, what we did was share information on an almost daily basis,” Jackson says. “We were getting information almost daily, when Penske was going to buy Saturn and then all of that blew up after we thought it was a done deal. When GM first announced it was going to close Saturn, there was some question as to whether they were really going to do it.”
With many questions bouncing around the shop and showroom floor and with few answers evident, Jackson kept in contact with the general managers of his Saturn dealers, making sure they had the latest and most comprehensive information available to disseminate to employees.
“Almost daily, the general managers were walking around their stores, fielding questions from employees,” Jackson says. “It was not unusual for the general manager to walk through the service department and a couple of technicians would come up and ask about something they had heard floating around. Before you knew it, five or six technicians would be up there talking to the general manager.
“The general manager would say, ‘I have this e-mail. Here is the latest word I’ve heard; you know as much as I know.’ The employees were appreciative of that. They took all the information in, and then they’d go and tell the rest of the people in that department, so everyone was up to date. There was nothing for us to hide.”
It is difficult to be frank and deliver the unvarnished truth when the news could hurt your collective morale and possibly your bottom line. But if you don’t fill the need for information, your people will. The rumor mill will pick up steam as employees take bits and pieces of news and try to form conclusions. The end result is usually destructive.
“The reality is, we’re human beings, your workers are human beings and we’re emotional,” Jackson says. “They are affected by everything from talking to their neighbor over the back fence, to talking with the lady ahead of them in the grocery line, to talking with their buddy at the bar. All of these people are giving them different stories. So you want to stop the effects of that immediately.
“You might try to create a few distractions to keep people’s minds focused on something besides the bad news. We had an event where we took all employees to see a Red Wings hockey game. We had a big ‘Sex and the City’ movie premiere night. It was just trying to have a few fun things to reduce the outside distractions and keep people loyal to the business.”
An outing at a sporting event or a staff movie night can be beneficial for taking employees’ minds off of the problems that the business is facing. But if the time comes to deliver bad news, such as layoffs or cutbacks, Jackson says you should remember that all good communication is rooted in honesty. The bad news you deliver is still miles better than the bad news you don’t deliver or try to sugarcoat.
“I’d say you have to handle it delicately but directly,” he says. “Again, the worst thing you can do is to not be completely honest with people about what is going on. The news media, the rumor mill, it’s always going to be alive and active, and the worst thing you can do is to be less than honest and allow people to carry rumors with them. You lose a lot of faith and people are emotionally distraught. You don’t want them to do something unhealthy for them or for the business in a highly emotional time.”
Take a conservative approach
The loss of Saturn hurt Jackson Automotive Management with regard to morale, manpower and sales. But in spite of all the negative fallout, the business remained on solid financial footing. Jackson attributes the resilience to a conservative financial game plan in which he emphasized rainy-day planning.
To endure bad financial times, you need to lay the groundwork when times are more prosperous. Jackson lays the groundwork for future success by limiting the amount of debt his business shoulders.
“One of the good things about our business is that we’ve never had a lot of debt,” he says. “As a result, we did have some cash and were able to weather the storm. We didn’t come out unscathed, but we were still healthy. We’ve always run very tight with regard to our expense structure, so when a lot of people started dialing back their operations, we didn’t have to do a lot of dialing back. We were already efficient.”
With some cash available, Jackson was able to open a new Mitsubishi franchise in Florida, and transfer some of his Saturn employees there, helping to cushion the blow for at least some of his people.
To acquire financial flexibility when the economy goes sour, you need to refrain from overly aggressive spending when times are good and you have extra cash in the coffers. Just because you have the cash to spend on a new venture doesn’t mean you always have to do it. You have to know when to pounce on an opportunity that makes sense for your business and matches well with your business plan and when to hold back.
“My philosophy is that if you maintain a level of conservatism, then you never have to have a fire drill,” Jackson says. “A lot of businesses went into a fire-drill mentality, because they were overly aggressive and maybe even greedy. They may be full of what Warren Buffett calls irrational exuberance. But I think if you maintain a level of conservatism, while still being able to jump in and out of an aggressive mode when necessary, that’s a good balance. A certain level of conservatism breeds safety.”
If you are going to take a chance on a new business opportunity, make sure it makes sense for your situation and make sure you have performed detailed research on the market potential of the idea.
“Don’t leverage yourself too much from a debt standpoint,” Jackson says. “Be careful about building it and hoping they will come. Don’t go out and build without an absolute certainty that the market is there. That’s not what a lot of dealers did. A lot went in and overbuilt. They built buildings and leveraged themselves out with extreme debt. Then, as cash flow slowed down, they couldn’t make their payments. That happened to businesses as a whole, not just auto dealers. So you want to have more expense structure than you think you might need. I believe in running things more tightly as opposed to loose.”
The way you maintain that level of control is to measure your goals, your finances and your spending habits on an ongoing basis. At Jackson Automotive Management, each dealer communicates its projected needs for the coming year to Jackson and his corporate leadership team. Jackson wants his general managers to think along the lines of a CEO, taking a wide-angle view to the next year’s projected expenditures, so there are as few surprises as possible.
“If you’re anticipating needing extra personnel, giving them raises or bonuses, you plan that out, put it into your forecast and approval process,” Jackson says. “That’s as opposed to a random manager promising a raise to an employee and then you end up adding that overhead as you go. Or worse, promising a raise and then realizing you don’t have the financial ability to do it, and then you have a morale issue on your hands.
“You have to have good financial controls in place to pilot a business through a recession like this. You need to have those approval processes for capital expenditures and the adding of personnel. A lot of that involves good yearly planning, which ensures that you can maintain proper control over those types of things.”
How to reach: Jackson Automotive Management and Mercedes-Benz of St. Clair Shores, (586) 773-2369 or www.mercedesbenzofstclairshores.com
The Jackson file
founder, president and CEO
Jackson Automotive Management
Education: Bachelor of science degree, accounting, Morris Brown College; MBA, Clark Atlanta University Graduate School of Business
First job: When I was a kid, I used to work in the local stores in my neighborhood taking out garbage. I was the kid out there hauling two-by-fours when the men in the neighborhood were building something. Later on, I had a paper route.
What is the best business lesson you’ve learned?
Cash is king. Without it, you can’t run your business. A lot of businesses are around now because they had cash, and they’re now poised to be major players because the industry has shrunk.
What traits or skills are essential for a business leader?
You need to have a strong understanding of finance. You need to have good people skills and the ability to make hard decisions with the knowledge that people are going to get hurt. You have to understand how your decisions will impact people’s lives, and then work to minimize the hurt.
What is your definition of success?
Success for me is having good, strong children who have grown up to be productive citizens. It starts with family. On the professional side, it is to create jobs and opportunities for people, participate in the world economy and make a difference there.