Although he has built the company he created from scratch to annual revenue of $225 million, Floyd A. Schlossberg has never had a problem maintaining his modesty. Schlossberg — or Floyd, as he insists he be known to each of his 4,000 employees — founded The ALDEN Network in 1971 when he was unable to find a suitable assisted living facility for his wife’s grandfather. The Chicago-based health care organization has since expanded to 35 sites, including six residential communities, while remaining focused on providing seniors a full range of care services. Smart Business spoke with Schlossberg, the company’s president, about the importance of staying humble, caring for employees and planning for the future.
Get involved. In leadership, one of the most important things is to learn humility. You have to be a part of this world in which humility becomes a part of your life.
You have to recognize that everything wasn’t given to you but the facts are, you have to work your hardest to secure success in the things that you’re working with. You have to deal with other people, and you can’t be so haughty that you put yourself above everybody else.
You have to get down with those people and you have to be on their level and think on their level. You have to try to deal with that and not become so arrogant that you think you’re the best that there ever was, because once you do that, you stop striving to be the very best.
I find myself personally involved with as many people within the company as I possibly can. It’s like developing what one could call a commune of some nature. It’s where one takes care of the other no matter what happens, and in doing so, what I can guarantee and what I try to develop within the leadership of our company is the fact that these people are very important to us, and it’s important that we take care of their needs as well as taking care of our own needs.
When they need assistance, it becomes a part of our responsibility to try to help them out, because when you have happy employees and they know there’s a place for them to turn to get advice or a place they can get help, they know for a fact they can go to work and they can perform their work without any other distractions on their mind, and they can do the very best that they can.
Develop future leaders. What happens as you grow the company is volume increases. And with volume increasing, it becomes an ever-so-important thing that you create people behind you that are capable of doing the same things that you are doing with the same basic core values of philosophy and where the company should be going.
I find the biggest thing in growing the company is creating the people who are going to be the future leaders of the company, as well as future leaders of departments within the company. We look for people that have the same basic philosophy and core values that the company has, and they’re people that do not have to be tightly managed.
We sometimes find people who talk a good game and tell us how good they can do, but when push comes to shove and we really need them to deliver, they don’t deliver. You need to be able to try to develop that within people and you need to recognize when it’s not happening.
They also need to deliver on their commitments to what they’re doing without blaming other people for the inadequacies of what they have achieved and take that responsibility upon themselves. Those are basic values that we look for in people, and we try to take those values and equate them to all the people we’re interviewing and putting in place. And we try to grow those people in their various divisions so that they can become leaders of the company in the future.
Visualize the future. As long as one can think creatively, it’s infinitesimal what you can create as long as you have a vision for it, and you just have to keep thinking of things that are going to be beneficial.
Here in Illinois, some guy wants to create a tower that looks like a spiral, and you know something, he might actually create that, and it might be one of the tallest buildings in the United States. That’s his vision for what he sees. The only thing that stops you from creating these things and from doing all these things is the inability to have a vision to move forward.
One thing leaders have to deal with all the time is what the future looks like, and without having an understanding of the past, it’s very difficult to understand where the future’s going to go or even create something that’s going to be futuristic. When we started out in the health care profession, we started out with one nursing home with the idea that maybe someday we would grow the one nursing home. Quite frankly, if I took a look at the old days when we started out back in 1971, we’re a whole different company now. But if I didn’t know what was happening in the period of time that we were originally starting that one building and seeing the problems and seeing what families wanted and seeing how people needed to be taken care of, I would never be able to lead the company in the direction it’s going.
Without sounding like a bragger in any shape or form, which I don’t want to do, I just find as I drive along a street, as I walk, as I work out every morning, I have these feelings of how we can be better than we are today. I keep thinking that way.
In my mind I create visions which some people would think are just pie-in-the-sky kinds of things. Yet, because of what my background is and because of the things that I have available to me, and because of what we have created within the leaders of our company, I think we can create things that are far superior and different than most other people can do.
HOW TO REACH: The Alden Network, (773) 286-3883 or www.thealdennetwork.com
Extreme growth calls for extreme measures, says David Gilbert.
“Any time you’re in hypergrowth, people are usually asked to go above and beyond the call of duty,” says Gilbert, CEO of Five Point Capital, which provides equipment financing to small businesses. “Flexibility is crucial.”
And Gilbert understands growth. Since co-founding Five Point with president Dave Feder in 1999, the company’s revenue has grown to $12 million in 2005, a three-year growth rate of nearly 1,000 percent.
Smart Business spoke with Gilbert about learning from mistakes and why constantly improving can be as simple as knowing what needs to improve.
How do you communicate your vision to your staff?
We communicate monthly what the goals are for the next month. We communicate quarterly what the goals are for the next quarter. We have goal-setting at the beginning of the year as to what the goals are for the next year.
There’s constant measuring of goals throughout the organization. It could be simple stuff on the intranet to larger communications such as a quarterly meeting, and within the individual meetings, there’s a lot of communication as to what’s going on in terms of the vision of the organization.
We have an employee survey, and we found one of the top rankings at the organization was that the company felt that they understood the vision. That’s the result of constant reinforcement.
How did the employee survey benefit your company?
Our goal when we came up with the survey was to learn the good and the bad of the organization, and we wanted to make adjustments. The survey found a few shortcomings and couple of the key ones were benefits and training. It’s a fast-growing company.
When we started the company, we didn’t understand the value of benefits to the point that we should have. As our company became more dynamic, we needed to address those needs. With our hypergrowth, we didn’t support it with enough training. So we brought in a director of training to help support that.
Implementing training into this organization was our biggest growing pain. Because we’re growing so rapidly, we lacked the training that was needed to bring somebody to an all-star level. We didn’t focus on that enough.
We stretched too many people too thin. Training at all companies is really undervalued. People expect training to be done on a one-onone basis. People need to be better trained to do their job, and it needs to be continuous training. A lot of times, you do initial training and forget about the importance of continuous training.
How would you describe your leadership style?
We don’t want to micromanage here. We want people to feel that they should make and are capable of making a decision. If the decision turns out to be a bad one, justify why that decision was made.
If it all made logical sense and it was just a poor decision, that’s fine, but if there’s no basis and no rationale to make your decision, that’s another situation. Employees in general don’t like to be micromanaged.
They want to feel a sense of empowerment, entitlement and a sense that their opinion and what they do in their day-to-day activity matters, and it does matter and it’s reinforced all the time.
How do you learn from mistakes?
Usually if mistakes have occurred or we’re upset about a situation, we do a write-up as to what occurred. Why did we make the decision? What was the rationale behind the decision? Why did the performance not work? Was it a good or bad decision at the end of the day?
We reflect quite a bit to figure out what we could have done better. A lot of people don’t benchmark why they made that decision and what really occurred to get better in their decision-making. People learn from their experiences.
They learn from the good and the bad of what they do in their job on the leadership side and they constantly improve. That’s one of our core values.
How would you describe your company culture?
It’s a young, face-paced, innovative company, and when I say young, I mean young-hearted. The mindset is to constantly work on improving the organization. We have a really dedicated staff that understands part of our vision is to grow extremely rapidly.
In order to do that, it’s not your average person that’s going to work here. Certain people want stability and certain people want high-growth and that’s what they thrive on, so balancing the two is a tough challenge.
My partner and I started this company when we were 23 and 24, and we have an enormous vision to grow the company and we want our people to have that type of mindset. And without the leadership, it couldn’t occur. If you want a great company, it needs to start at the top.
HOW TO REACH: Five Point Capital, (800) 317-3404 or www.fivepointcapital.com
When Jonathan Carson and Eric Kurtzman founded Kurtzman Carson Consultants LLC in 2001, the former restructuring attorneys welcomed the opportunity to leave what Carson calls the “suits-and-ties world” of corporate law.
“Let’s just say we’re not business casual,” Carson says of the Los Angeles-based restructuring consultancy firm.
Though the office attire at KCC reflects a laid-back mindset, the company’s performance does not. Employing a “work hard, play hard” philosophy, the firm posted 2005 revenue of $17.4 million, a three-year growth rate of more than 1,300 percent.
Smart Business spoke with Carson, president of KCC, about the importance of collaboration and the benefits of planning ahead.
Q: How would you describe your culture?
We have created a collaborative environment that allows people to create opportunities, and it’s been a very telling piece of our growth and our success in the last few years. We created a young culture that was focused on togetherness and collaboration, and we really didn’t allow for any hints of competition to enter the realm.
We work very much in team environments, and also we have a very flat management structure. We obviously have a few people who lead the efforts in various high-level departments, but in terms of how the machine works on a daily basis, it’s flat, and people respect that, and it’s done a good job of minimizing competition and corporate politics.
If you foster a system of competition or true straight-up-and-down hierarchy, you tend to lose the team concept. We believe those groups are teams that work together carrying forward the mission of KCC, not their individual agendas.
Q: How do you plan for growth?
You have to expect the growth. You have to believe in what you’re doing and know that if you really do believe in it, you’re going to grow as a business, and you have to stay ahead of that from every perspective.
We hired a COO before we needed a COO. It was a great talent fit for what we did and we brought him in at a very senior level and he grew into that position. We’re moving into 42,000 square feet but we’re really only going to be able to utilize maybe 30,000 of that, but we know as six or nine months go on, that will quickly eclipse.
If you expect it, you can execute it more effectively.
Q: How can you benefit from past experiences?
You learn from every experience as you go through every process of life, whether you’re going through school or you’re running the company or you’re on the board of directors of a nonprofit.
Every experience you live through, you learn something, take it with you to the next level and repeat.
As you get further down the road you look back and say, ‘Wow, I’ve picked up a lot of cool things along the way.’ You have this larger arsenal of ammunition that you can pull from to attack whatever issues that you’re facing in your business or your personal world.
It’s crucial that when you learn something that’s part of your business, when you learn something in one of your core competencies, everyone learns that same thing.
You want them to live it with you rather than just hear about it after the fact. As a management team, as you make mistakes and gain new insight, you have to make sure everyone understands the implications of that.
Q: How do you motivate your employees to work toward your vision?
You have to make them really invest in the vision. We did a rebranding campaign earlier this year where we were a 4-year-old company with a Web site that looked 4 years old. We brought a whole resource in, people as well as tools, and we now have a phenomenal-looking corporate identity.
When we did that, we brought everybody into the process. People got to look at logos and help choose them and see what they thought looked best. They got mugs with logos on them and bags and notepads, and you make them invest into it and they understand the reasons behind what you’re doing, and they really become cheerleaders, and that’s one of the best things you can have.
I can count on one hand the number of full-timers we’ve lost in the last five years. It’s a very small number because you treat people well, you provide for them and you let them know you respect them, and that comes back 10 times over.
HOW TO REACH: Kurtzman Carson Consultants LLC, www.kccllc.com
As president of Classic Residence by Hyatt, Randal J. Richardson leads 3,600 people nationwide, so being a people person comes with the territory. With the belief that happy employees lead to happy residents, Richardson has guided the Chicago-based luxury senior-living provider to the top of its industry, posting $260 million in annual revenue and serving more than 6,000 retirees in 18 communities nationwide. Smart Business spoke with Richardson about how collaboration leads to satisfaction for employees and, in turn, for customers.
Develop a collaborative environment. Communication is up to me to begin with, but you have to have a lot of people who have high interface and high contact with the broader employee base in your company.
They need to understand those cultural values and goals that are important to the organization so that they can communicate effectively with all the people they interview with. As important, it’s up to all of us in those positions to be role models.
People watch what you do, and you need to make sure to understand that your actions will be evaluated and interpreted by a larger audience of employees within an organization, and they’ll take those actions and their interpretations of those as direction as to how they might act in a similar situation.
It’s extremely important that people, to the extent we can, involve people at all levels of the organization in understanding what our goals and objectives are. If we can do that, we’re going to have a better chance of delivering that at the end of the day.
Develop your employees. We’re doing a lot of development today, and it’s a lot of fun to talk about a growing organization in that fashion, but I also talk about our organization growing in terms of capability. (As) important to us as expanding, in terms of numbers, is our capability of continuing to improve.
Most of the answers are out there. It’s a matter of developing an environment that allows people to contribute, and if they know what the goals and objectives are, they’re going to have a much better opportunity to bring solutions to the table around different problems.
Communicate change, and then do it again. The most important thing that you can do in a changing environment is to communicate. Do it often and do it much more than you think you need to.
People want to feel connected to where the changes are going or where the company is going, and if you give them an opportunity to do that, not only does it reduce the anxiety around the unknown, it again engages them actively in helping the company to change as it might need to.
Work together to make decisions. I involve people in decision-making, yet I won’t spend a lot of time overanalyzing things.
I find if you want commitment around strategy and a particular action, then involving people that are going to be responsible for ultimately executing is very important so you get their buy-in and commitment and you get the desired outcome. It also helps you come to better solutions.
It’s a style issue, so first of all, you have to model it and you need to coach people in leadership positions within the organization to approach their business and their particular challenges in a similar way. If you’re involved in a meeting with somebody and you can witness or evaluate their particular style and how they’re approaching a situation, there’s opportunity then to perhaps give them coaching lessons.
Hire the right people. That’s one of the things I try to get at in the hiring process. If I find they have a style that allows them to approach their business in that way, they’re going to be much more successful in this organization and have a better opportunity to succeed than somebody who doesn’t.
I don’t know that there’s one thing you have to look for when hiring. It’s a lot of things that you put together, and it’s about trying to understand an individual’s character, discussing how they make decisions, how they work with people, talking about some experience they have had that might illustrate the processes they use. It’s information you collect from a lot of different places.
In the interview process, in particular, it’s good to have many people involved because you’ll get many different points of view and a much more balanced perspective on an individual at the end of the day, and amongst the interview group, you’ll be able to find those values you’re looking for or not.
Bring new hires up to speed. Any time you have an expanding organization, a couple of things happen. First of all, you bring people from outside the organization into your company, so in a growing environment like that, it’s a challenge to keep your culture intact and developing.
You need to take special care to not only hire the right people but then to make sure that they’re indoctrinated appropriately so that they know what kind of organization they’re working for and they, too, can step up to the values of the organization. Our values in our company are pretty simple.
Our core values of integrity, compassion and excellence are what we use to talk about the things that are important to our organization.
That’s a big part of our vernacular and a big part of the language we use to communicate with people and develop that culture.
There have been jobs I’ve had where I’ve started, and you kind of show up and start working. I like to give people exposure in a more formal way. You can call it training or orientation, if you will, but more formal exposure to the values of the company — what we’re all about as an organization, the company history — so that they have an opportunity to connect with the organization in a deeper way much quicker.
If you involve people in a rich enough way in what you’re trying to accomplish and why, they’ll have an opportunity to embrace that then and contribute much more quickly.
Although CEOs tend to overuse the phrase “building a team” to explain their stance on collaboration, Bill Shreffler takes the analogy to a new level as president and CEO of Broadstripe. In an effort to foster healthy competition and keep Broadstripe’s vision and culture alive and visible, Shreffler has organized a sort of organizationwide customer satisfaction fantasy football league. The system, which uses football terminology and is based on key performance indicators, has been successful for Shreffler in other organizations, and he says the results have been no less positive at Broadstripe, which posted 2006 revenue of about $100 million.
Smart Business spoke with Shreffler about concentrating on the basics and why a good coach supports every member of the team.
Maintain a positive culture. People in this company know that they have a right to fail. We have a phrase that we call ‘bias for action.’ We would rather have somebody do something than not do something.
We are also aware that we’re going to make some mistakes, and the people that I work with know this. If you are truly trying to stretch and do something good for the company and you fall a little short, that’s fine.
We’ll meet, talk about it and figure out how to do it better the next time. The overall goal is that we grow the company.
As I was coming up through my career, I always thought, ‘If I ever get the chance someday to lead an organization, I want to make it a place where people love to come to work.’ They have not only just an enjoyment of their job but an enjoyment of the enriching experience in their career.
It’s extremely important to maintain that. A culture is a living, breathing thing. You can actually touch culture. Culture is sustainable, but it takes a large amount of ownership and care and feeding from the leader of an organization to maintain. As the CEO of this company, if I start to veer off course, the implication to the culture is significant.
Build a team ... literally. We created a fictional football team. Each of our regions created their own subteam, and we’ve created what we call key performance indicators, the key things in our business that move the needle in customer growth.
We use those key performance indicators to scrimmage the regions, and whoever has the best KPI wins the scrimmage for the month. When we built the KPI, we built them as a customer advocate. We looked at it from the eyes of the customer. It’s so easy in business to measure things that you think are important, but at the end of the day, we need to measure things that are important to the customer.
We use football analogies about scoring points, getting in the red zone and scoring touch-downs, making passes and completions. We talk about where we are, what our field position looks like, how we scored, how the team’s holding up, how special teams is doing. ...
There are many times during the quarter that we will send out updates using the football theme, talking about how we are on field position, how we’re moving the ball, what are some great plays we just ran. These are the ways we continue to keep the vision and culture in front of folks.
You can use this concept anywhere, anyhow, and it works. It takes an engaged senior management team that believes in the concept and is willing to takes some risks. We wear jerseys at our corporate, off-site meetings. We wear jerseys at our board meetings. We’re not afraid to walk through lobbies of hotels in our jerseys, with our names on the back and ‘Champions’ on the front.
When we first did this, there was this hokey factor that people worried about, but forget the hokey. People love it. People embrace it. They think it’s great because who doesn’t want to belong to a team?
Master the fundamentals. When you boil it all down, it comes down to blocking and tackling. Using the football example, you can run the trick plays all day long, but no matter how fancy you are, it’s how you’re blocking at the line that really matters whether you’re going to move the ball.
A lot of companies get lost in the details. You’ve got to block and tackle. You’ve got to do the very simple things right every single time. Once you get that blocking and tackling down, then you can go on and build those trick plays and do the fun things, but without blocking and tackling, you’ve built a house on sand.
Support your team members. I like to flip the organizational chart upside-down, and I put myself at the very bottom. My job is to support everybody in my organization all the way up to the very top, which is the customer. I have got to walk that talk every single day and not vary from that at all.
I like to think of myself as someone who lifts people up or helps people become the best they can possibly be. I enjoy seeing people reach far above what they think they can achieve, and then watch them achieve those great efforts.
Everybody wears a badge, and that badge says, ‘Make me feel important.’ If you take the time to not just make the employees important for the sake of doing it but truly take the time to get to know people and help them become the best they can and make them feel like they’re an important part of the organization, it moves the needle in a big way, helps your organization and helps everybody.
HOW TO REACH: Broadstripe, (636) 534-7400 or www.broadstripe.com
“For the last three years, we’ve put a tremendous amount of effort and energy and resources into trying to change the culture here to be more akin to having the values that we thought would be important for our employees, the company owners and our customers,” Rappeport says. “We made a determination specifically to try to address employee satisfaction and try to have a variety of initiatives here that would create an improved work environment and work experience.”
Rappeport is a firm believer that in service companies such as Donlen, the fastest-growing fleet management company on the continent, there is a direct correlation between employee retention and customer retention. As the company began to grow, Rappeport says concerns arose that employee turnover would negatively affect customer satisfaction and, in turn, Donlen’s overall success. As such, Rappeport set out to make Donlen as attractive as possible to both current and potential employees.
While the costs of overhauling an organization’s culture, both monetary and otherwise, are great and the results are not always evident, Rappeport says the alternative can be even more costly.
“Employee satisfaction is, at times, a bit of an intangible,” Rappeport says. “I don’t know if there’s a science to looking at whether there is return on investment, but one of the ways we’ve justified that investment is that we look at employee turnover as being very costly.”
Creating and sustaining a positive workplace atmosphere is a task often overlooked, but Rappeport says it would be a mistake to make it anything less than a top priority.
“Some people think of it in a negative way, like a distraction,” Rappeport says. “We don’t think of it as a distraction. We think of it as one of the essential elements of having a successful and healthy organizational development initiative.”
Building a foundation
Despite your best intentions, employees won’t necessarily react as favorably to new culture-building efforts as you might hope. In Donlen’s case, Rappeport says because the company had made prior attempts to improve the work environment that were perhaps halfhearted, the staff wasn’t quick to jump on board with the initiative he introduced three years ago.
“To be honest with you, there was a lot of skepticism at first,” Rappeport says. “There was a bit of a credibility gap because we had pursued other initiatives in the past and didn’t always stay with those and the employees, to an extent, were justified in being a little skeptical and maybe even cynical.”
Evidenced by a failure to properly resource the initiatives, Rappeport says Donlen’s previous attempts to change the culture fell flat, due, at least partly, to a lack of commitment on the part of the company.
“Sometimes organizations get distracted with business requirements and these initiatives can end up sometimes getting reprioritized,” Rappeport says. “To be honest, we were a bit guilty of that.”
When Donlen embarked on its renewed mission to improve the work environment, the first step was finding out just how much work needed to be done. Adopting an analogy from Marcus Buckingham’s and Curt Coffman’s 1999 book, “First, Break All the Rules,” Rappeport compares the journey of developing a positive corporate culture to climbing a mountain. To ascertain where on the proverbial mountain Donlen stood, a confidential, company-wide survey was executed to gauge the current level of employee satisfaction. Rappeport says though he held certain expectations of what the assessment would tell him, he was surprised and disappointed to learn just how little effect the company’s prior efforts had — Donlen was at base camp.
“Having a very safe, secure, confidential survey performed by a third party on a regular basis is a very, very important start,” Rappeport says. “It was a benchmarking opportunity for us, but it was also an opportunity to send a message that getting employee input in a more formal way was something we were not only committed to going forward but was also something that was important for us to better understand how to improve the work environment.”
To reinforce management’s commitment to improving the work experience for employees, Rappeport says it is important that a company be forthcoming by sharing the feedback it received. Though they were certainly disappointing, by posting the survey results on the wall of the cafeteria, Rappeport says a message was sent to employees that the company had acknowledged any shortcomings and was dedicated to correcting them. Furthermore, by showing its commitment to the initiative, Donlen helped restore its credibility in the eyes of its employees.
Without first creating a solid base of trust and credibility with employees, any culture-building strategy is doomed. Therefore, though the results of the initial survey were a letdown, Rappeport says the knowledge gained through the process was invaluable.
“If we had started on this initiative without knowing [where we stood], we would have skipped over a lot of the very, very important foundations,” Rappeport says. “If you start to move up a mountain and you don’t have strong footing and you haven’t done the things early on, it’s going to be pretty hard for you to really get near the top.”
When deciding how to best tackle the task of improving employee satisfaction levels, Rappeport says Donlen created two pillars on which to base its initiative. The first is what Rappeport refers to as being physical-workplace- or benefits-related. For example, the company constructed a new on-site exercise center, created companywide fitness programs, brought on a part-time masseuse and built an outdoor dining area. And while those things are helpful in creating an enjoyable workplace atmosphere, he says that as a company works to improve its culture, they are not the most critical element you must consider.
“In some ways, that’s the easy stuff because you throw money at it, and [it] just sort of happens to work, and people appreciate it, and it’s very visible in the work environment,” Rappeport says. “The second pillar, which is much more complex and much more difficult, is creating an improved experience for the employee.”
Keeping in mind Donlen’s mission of reducing employee turnover as a means of reducing customer turnover, Rappeport applied another major theme of “First, Break All the Rules”: Employees don’t leave companies, they leave managers.
“In buying off on that concept, what we needed to do was to find a way to improve the managers’ ability to provide guidance, direction and support for their employees,” Rappeport says.
In an effort to do just that, Donlen began a management development program whereby a random sampling of company managers are selected on a quarterly basis to participate in a 360-degree review process during which their strengths and weaknesses are evaluated by their employees, peers and other managers. With the resulting data, a targeted training program is then created for each manager focusing on areas that had been identified as those with room for improvement.
Rappeport says addressing the specific needs of each manager has been far more successful in improving the overall employee-manager relationship than Donlen’s previous attempts at manager development.
“We had tried some manager shotgun training over the years, and two years ago, we put all of our managers through a certification program for what we thought were certain things that everybody should need to know,” Rappeport says. “Although clearly it was helpful, we were finding it wasn’t addressing some of the weaknesses or growth areas that some of the managers had that had been identified through other processes.”
By treating each manager as an individual rather than a head in the crowd, Rappeport says a customized training program results in both employees and managers who appreciate the investment their company is making in their well-being. As importantly, at Donlen, it has helped reinforce the company’s dedication to its overall mission.
“It sends a very, very strong message to the employee about the commitment level that both we and the manager have to create a better experience for them as the staff,” Rappeport says. “No matter what we did on the physical work environment, if people didn’t like their bosses or felt like their bosses weren’t fair or the company wasn’t fair, we were going to continue to experience turnover that we thought, for us, would be unacceptable.”
As Rappeport has learned, the challenge of creating or improving a culture is not one that can be overcome quickly. Regardless, he says it is critical that you not be discouraged.
“When you embark on some things and they apparently aren’t working, you can’t throw the towel in,” Rappeport says. “While it’s very easy to say, ‘Oh my goodness, I just spent X million dollars and my employees are ingrates and nobody appreciates anything we’re doing,’ you can’t fall into that trap because many of these things do take awhile.”
In fact, Rappeport says it was two years before Donlen’s work environment initiative produced any meaningful improvement in its employees’ satisfaction level — and he has the data to prove it. Buying in to the process that Donlen used three years ago to determine where on the metaphorical corporate culture mountain the company was, Rappeport has monitored the ascent with annual and mid-year surveys. By doing so, and by sharing the results with the organization, Rappeport is able to illustrate for his employees the improvements that have been made — and areas where opportunity for development remain — on an ongoing basis.
“The great thing is you sort of get to look at movement,” Rappeport says. “‘Look how well your satisfaction and these things that are important to you have progressed. And, by the way, these are the things that haven’t progressed, and here are the things that we’re going to focus on.’ That benchmarking process is important to be able to compare year to year.”
Though the core principles and goals of Donlen’s initiative have not changed, Rappeport says the methods by which they are achieved necessarily must change. By gathering detailed information through a well-supported, periodic survey, management has the ability to monitor the effectiveness of certain programs or strategies.
“Clearly, we have a number of organizational development goals as a company,” Rappeport says. “So if those are our goals or where we’re trying to get to, we’re measuring those things along the way, and we’re continuing to modify and tweak the formulas.”
Rappeport says the company’s shift away from a one-size-fits-all management training program is just one example of the evolving nature of Donlen’s organizational development initiative.
“There have been a lot of other elements that have been similar, even on the benefits side, where we thought there were some things employees would value and they didn’t necessarily value those things,” Rappeport says. “Clearly when you try something, you implement, you learn and you adapt. Subject to what the feedback you get is, you say, ‘That worked really well, let’s do more of that,’ or you say, ‘That really didn’t work very well, let’s try something different.’”
In a company such as Donlen that lacks a large human resources department, Rappeport says the entire organization, including the CEO, must take an active role in addressing and supporting a healthy workplace environment, a fact that can be both a curse and a blessing.
“It’s a good thing because it allows us all to have a role in something as important as this,” Rappeport says. “The bad thing is it’s a time commitment, and it’s a big commitment from all the managers, but it’s one we think is ultimately worth it.”
HOW TO REACH: Donlen Corp., (847) 714-1400 or www.donlen.com
It was 1988, and George Katakalidis had been playing soccer professionally in the United States since he was 18. As a member of the San Diego Sockers, sidelined indefinitely with a broken toe, Katakalidis born in Greece and raised in Canada was thinking about life after soccer when he had an epiphany.
“When I got injured, I started thinking through what I could do, and it sort of came to me,” Katakalidis says. “I love people. I’m Greek. I should be in the restaurant business.”
Though Katakalidis’ career as a restaurateur began humbly with two quick-service, food-court Greek eateries, today Daphne’s Greek Cafe is the nation’s largest chain of Greek quick-casual restaurants, with 75 locations throughout California, Arizona and Colorado and an annual revenue of $70 million.
Smart Business spoke with Daphne’s founder and CEO about leadership, the dangers of rapid growth and the importance of introspection.
Q: How would you describe your leadership style?
Leadership, per se, is not something that is easily defined with one specific style. I truly believe that it’s a combination of many different styles and experiences.
A good leader understands the situation and understands the problem and takes into consideration the entire environment as opposed to singularly, the problem and then knows what style of arrow, if you will, to pull from his quiver.
Q: How have you shaped your company’s culture?
We are a meritocracy. There are a lot of sub-bullets and subvalues associated with that, but there are no sacred cows. Nobody is untouchable. Everybody has to earn it. We try to make sure people are responsible, and in a meritocracy, you see a ton of responsibility. They’re responsible for their actions, responsible for their results, and so on and so forth.
Developing a culture starts with recruiting. You’ve got to try to get the right people in the system, and if the right people are very responsible, it translates to the rest of the organization.
What you’re doing is adding positive ions to the bigger atom. At the unit level, you want this responsibility from the unit manager, the general manager, and that, in itself, permeates down to the rest of the people. There’s no excuse why something didn’t get done. There’s no excuse why there’s a dissatisfied customer.
There’s an understanding why there’s a dissatisfied customer, but the responsibility is to follow up with that customer to make sure that we can take care of their needs.
Q: How can you recruit for those traits?
In the recruiting process, it’s very difficult. You’ve got some professional interviewers out there, so we’ve been very cognizant that we don’t hire off a resume. We need to make sure we spend time with the individual. We make sure that we let them know this is a special company where people get rewarded for doing great work.
It’s really tough to do. You just have to make sure you have a lot of touches with these individuals, meaning that you have to see them in different formats, spend a little time with them and get to know them.
Q: Is it possible, as you’re adding people, to grow too fast?
I heard a phrase at one of the conferences I went to, which I thought was brilliant ‘Do not outrun your headlights.’ In reality, that’s the danger that a lot of people face.
Growing too fast is relative, meaning how high are your high beams? How far out can you see as a leader? If you can see pretty far out, you can go a little bit faster. If you can’t see too far out, don’t go that fast. So growing too fast is relative, and it’s relative to the individual that’s leading.
Leaders need to be totally honest with themselves. What are their strengths and their weaknesses? What are they really good at? They’ve got to put ego aside. Once they really assess what they’re good at, they need to do that with the management team. Once they understand what kind of team they have and what kind of leader they are, then they can assess how fast they need to go.
Q: What advice would you offer a brand-new CEO working to grow his or her business?
The best advice I can give is to really, really introspect. Take stock of yourself. Really spend some time and get to know yourself. What are your strengths, and what are your weaknesses? What do you love to do, and what do you hate to do?
The next thing is to do the exact same thing of your company and your management. Once you derive all of that information and you sort of plot it out and figure it out and mull it over, then you take a look at where are the real opportunities.
HOW TO REACH: Daphne’s Greek Cafe, (858) 784-0811 or www.daphnes.biz
Gerry Proehl is a big believer in his organization’s core values. As president, CEO and director of Santarus Inc., however, Proehl says core values are meaningless if not practiced and passed on by the company’s leadership.
“The most important thing is not that you put these core values on a plaque or hang them on the wall, but that the senior management team actually believes in them and models them,” Proehl says. “If they’re not doing it and they’re just saying it, it’s not going to mean anything.”
When Proehl, who joined the San Diego-based pharmaceutical firm as a vice president in 1999, sat down with his management team in the early stages of the company’s growth, he helped develop and define a set of beliefs that is now incorporated into everything the company does. And while the leadership team at Santarus walks the talk, the fact that annual revenue nearly doubled from $26.5 million in 2005 to $49 million in 2006 has done its part in encouraging employees to buy in.
Proehl spoke with Smart Business about building collaboration and the importance of making good hires.
Q: How would you describe your leadership style?
I’ve hired some very experienced folks at the senior level, and I’ve tried to set up a team environment where we get good interaction and input, and we have open discussion, and then we make decisions. It isn’t a situation where there’s a unilateral decision-maker. People have to be able to openly share ideas, whether they’re similar ideas or whether they’re ideas in disagreement with what we’re talking about and feel comfortable that there’s no retribution if they disagree with the boss or other folks in management. We try to set up a situation where there is an open discussion among the senior team so they can raise issues, we address them and come to a decision that everybody then is supportive of.
Q: What are the dangers of being a unilateral leader?
It’s one of those things you might be able to get away with when you’re a small company because you’re knowledgeable about everything going on. The problem is that type of leadership style is very limiting if you want to really grow the company. There’s just no way to be knowledgeable enough in all areas that we’re involved with that you can make all the decisions yourself. That’s where your senior team can really play a major role.
Q: What is the danger of growing too fast?
The most important thing is being able to maintain the culture as you bring a lot of people in. We went through that at one point in 2004 when we scaled up our commercial organization. We brought in 250 people over a six-month period, and at the time, the company was only about 50 people.
You can very quickly lose control of your culture if you’re not careful. You have to make sure when you’re growing rapidly to continue to focus on really bringing in high-quality people who match the values system you’re looking for.It’s easy to get caught in a situation where you’re trying to hire so many people that you might ignore that and you bring people in because they’re warm bodies.
Trying to make sure we’re really staying true to our culture and true to our values is part of the reason we go through a rigorous process of interviewing candidates.
Q: How would you describe your interviewing process?
We’ve established five core values that really define our organization: team-work, ownership, productivity, integrity and quality. When we’re interviewing, it’s something that we always try to find in new hires.
You can train people and develop skills they don’t have, but core values that people bring to an organization are hard to change. If their values system is not the same as the values system of the company, the likelihood is that they’re not going to fit long term. We spend a lot of time in the interview process not only looking at the skills, experience and knowledge people have, but really trying to figure out their core values and how they fit with our organization.
Q: How can a values system be identified during an interview?
We put people through a cross-functional interview process, where we’ll have people from all different departments interview somebody. If a candidate is a district sales manager, they might interview with somebody from finance, somebody from commercial and somebody from human resources.
In those interviews, each of those folks is going to be asking questions to really try to identify the candidate’s core values. The commercial interviewers are going to focus all about the skills and the experience. The people in finance or HR or manufacturing are more focused on, ‘How’s this person going to fit within the organization?’
By doing that, we get a good overview of whether everybody feels comfortable that the fit is going to be right with the organization.
HOW TO REACH: Santarus Inc., www.santarus.com or (858) 314-5700
With a history dating to the late 19th century, The Will-Burt Co. has been around longer2 than a handful of the United States. That’s not to say, however, that the Orville-based manufacturer of telescoping masts and mast accessories is caught in some kind of perpetual stagnation. On the contrary, Will-Burt Chairman and CEO Jeffrey O. Evans says these are among the company’s most exciting times ever.
“We’re moving from being a big small company to becoming a small big company.” Evans says. “It’s a big difference. In a small company, if you want to manage, you stand up and look around. If it’s a little bigger, you stand on a chair. We’re at the point now where we have to rely on systems and processes, and being able to do that and change a culture to accept that while at the same time working hard not to become bureaucratic has been quite a challenge.”
Over the past five years, Will-Burt has more than doubled annual revenue from $26.8 million to $54.2 million, quadrupled its stock price and now employs a work force of more than 300. Helping guide Will-Burt through growth rapid enough to give any company fits, as Evans says, has been an experienced management staff dedicated to doing whatever it takes to drive success.
“What we’ve been able to staff the company with in terms of the management team is a very talented group of folks that could work elsewhere,” Evans says. “They could make more money; they could live in big cities. They choose to live and work in Northeast Ohio, yet they still want to be part of an exciting company.”
Evans adds that Will-Burt’s employee stock ownership program, in which no single owner holds more than 1 percent of the company, has helped keep his company on task and motivated.
“We’re 100 percent employee-owned,” Evans says. “So while most companies try to make their employees think like owners, ours do think like owners because they are owners, and that has been an important part of our growth, as well.”
While Will-Burt’s masts, used in both the commercial and military sectors, are well-established in the global market, the company itself recently expanded into Europe and the Far East, a venture Evans says is a sign of things to come.
“We’ve got new products, new markets, new geography, and we’re really very excited about what’s going to happen over the next few years.”
HOW TO REACH: The Will-Burt Co., (330) 682-7015 or www.willburt.com
Since becoming president of TTX Co. in 2000 and being named CEO in 2001, Reardon says his leadership of the $1.2 billion railroad equipment provider has shifted from an autocracy to a much more collaborative approach, emphasizing delegation and based on a strong foundation of trust, respect and a desire to push leadership and decision-making to all levels of his organization.
“I came into this position wanting to achieve certain things but subconsciously did so with a style that has clearly evolved since then,” Reardon says. “The style with which I came in wasn’t nearly as good as the style with which I manage now. Admittedly, I came in somewhat autocratically, as I think a lot of new CEOs do, and it’s out of fear of failure. That fear causes you to be, as fear typically does, rather myopic. You begin to live under the illusion that you’ve got all the right answers, and you can’t accept a diversion from that.”
Since unleashing the power of his employees’ experience and talent, Reardon says the new and innovative ideas that have resulted have been truly remarkable. And while the potential benefits of collaboration are probably obvious to most, Reardon says what keeps many business leaders from cashing in is their general reluctance to surrender some amount of control over their organization. After all, it is the CEO who is responsible for a company’s overall performance, and it is he or she who ultimately will be held accountable.
“I think a lot of CEOs want to do it, but they’re afraid of letting go,” Reardon says. “Letting go can make you insecure because you’ve got somebody telling you, ‘I want to spend $10 million here, and here’s what I believe this company can derive from it.’ It’s a case of how much you trust that individual. You’re making some big judgments here. They’re going to have long-term impacts on the company. At the same time, you can’t bring this talent in the door that has everything you want, that would be a find in anybody’s top management, stifle it and think you’re going to keep them there. Not for very long. Not with the kind of people I want.
“You get far more vision and creativity when you unleash the minds that you’ve hired and let them explore and let them make a few mistakes. You really begin to unleash the power of their experience, their talent, their passion and their work ethic. Before you know it, incredible, new ideas that never were yours tend to bubble up to the surface that make you say, ‘Wow.’”
Under Reardon’s leadership, TTX has increased its fleet capacity by 33 percent and made more than $3 billion in capital improvements. And though he says his leadership style is still a work in progress, one thing he has undoubtedly improved upon by leaps and bounds is his tendency to grant his team the authority to make their own decisions.
“As you become more mature and grow, you say, ‘Wait a minute, this isn’t the way things should be — I’ve hired a lot of talent and I’m telling them how to do their job?’” Reardon says. “That’s backwards.”
Building the team
Because much of a leader’s ability to delegate stems from his ability to trust those to whom he is granting authority, Reardon says the first step in creating a truly collaborative environment is hiring and retaining people who can handle that responsibility.
“My immediate predecessor, Ray Burton, used to say, ‘A good CEO should work hard to put himself out of a job,’” Reardon says. “When you reflect on that, it’s actually correct. Now, it’s kind of like seeking perfection. You’ll never get there, but you keep working at it and working at it, and when you have the mindset that you can rely upon, then you can begin to let them go.”
But what is the “right” kind of employee around which to build a collaborative environment? Reardon has had the good fortune to have hired every one of his direct reports. Though the members of his executive team might represent a diverse set of backgrounds and skill sets, what they share is an attribute that Reardon describes as “judgmental experience,” a quality critical to an individual’s aptitude for handling responsibility.
“In each of their fields, I look for what kind of experience they have, and coupled with that experience, what their sense of judgment is like and how they have exercised it over the years,” Reardon says. “It’s one thing to suggest that you want people with a certain amount of technical expertise — that goes without saying. But equally as important is their sense of judgment in that expertise and how much of an opportunity have they had and how much responsibility have they had with which to exercise that judgment experience. That is critical because as all of us grow older and hopefully wiser, you want to develop a bank of wisdom, and you get there by exercising judgment.”
For example, one area in which Reardon believes many leaders struggle to make decisions is information technology. Whether they pass on a golden opportunity because they don’t fully understand its potential benefits or they make a blind decision that comes back to burn them, Reardon says an overall lack of understanding on the part of leaders complicates the decision-making process. As such, he considers himself lucky to have an experienced and knowledgeable head of IT who is trusted to make the appropriate decisions.
“I certainly don’t know what he knows about IT, and I never will,” Reardon says. “But I trust him, and I understand him well enough that I will bet on his judgmental experience, and when you can trust somebody’s judgmental experience, it’s huge.”
Of course, having the right team members in place is only half the battle. Reardon says the key to keeping them there is using communication as a means of understanding the desires and motivations of each individual. As part of TTX’s manager evaluation process, each manager has an annual meeting with every one of his of her subordinates that focuses exclusively on discussing what that person’s desires and aspirations are.
“There’s no way you’re going to find out what motivates somebody and how you’re going to retain them unless you at least talk to them and find out,” Reardon says. “You really have to figure out not only what you want out of somebody, but you also have to figure out what makes this person tick. How do they derive their satisfaction in life? What really turns them on? Professionally? Culturally? Valuewise?”
Creating the atmosphere
Creating an atmosphere conducive to collaboration starts at the top, and Reardon says an environment such as the one he’s helped to create at TTX is based on a mutual respect in which a leader’s respect for his subordinates is perhaps even more important than theirs for him.
“We’ve all seen the boss that says, ‘That’s the dumbest thing I’ve ever heard, you idiot,’” Reardon says. “That won’t get you very much traction. The fear of disrespect, if you will, can close off an awful lot of constructive thought. Conversely, creating the atmosphere where all ideas are welcome, when you apply that notion to the fact that you’ve recruited some top-notch talent, that atmosphere is critical. When people see that, you really begin to get a free flow of creative thinking, and that is the single biggest atmospheric catalyst.”
Making an organization of individuals comfortable with contributing its ideas and thoughts is sometimes a monumental task. Reardon says at TTX, by making sure to keep plenty of white space on his calendar, utilizing an open-door policy and routinely sitting in and offering his thoughts at department meetings, he has, over time, created an informality of communication that he says has helped encourage constructive dialogue among several layers of the organization. Additionally, each quarter Reardon hosts a lunch in the executive conference room attended by 12 members of the company, who are not his direct reports, during which the employees are encouraged to discuss the pros and cons of working at TTX. Reardon says the lunch is just one means he uses to connect with the whole of the organization.
“It kind of helps me keep my finger on a pulse that I otherwise would not be able to reach,” Reardon says. “The only way you can do that is to spend face time with people, whether it’s our hourly associates or whether you’re out on the docks in Portland or Seattle or whether you’re here at headquarters, walking around, poking your head in people’s offices, asking them about a project that you might already know all the answers to, but it’s a forum to initiate dialogue, to simply spend face time. People begin to open up more to you.
“You have to let people know that you want their ideas, and that you’re not going to disrespect them by dismissing an idea out of hand, even though it may not be the right idea. What they need to understand is that you respect their experience and their judgment and you may adopt it or you may not. If you decide not to, they know you will provide them a thorough understanding of why not. Similarly, if you do adopt it, you will do so with the idea that you understand the wisdom of it.”
While collaboration certainly entails allowing members of a team to contribute to an organization’s overall direction, in the case of TTX, it also involves a leader who is prepared to delegate. In doing so, Reardon draws a distinction between granting responsibility and granting actual authority. Managers are responsible for their respective departments, but they also need to have the authority to make the necessary decisions within their jurisdictions.
“You really need to let that department head know they’re the captain of their own ship and not only are they entitled to make those decisions, but they must make them,” Reardon says. “It’s critical that CEOs let go. Otherwise you stifle the very creativity you sought, unwittingly in most cases.”
While fostering collaboration at the top of an organizational chart is one thing, Reardon adds that to truly tap the intellectual capital of an entire organization, decision-making must be pushed down to all levels.
“One of my pet peeves about organizations is there is a culture that develops after a fashion that says, ‘Only at a certain level are you capable of making decisions,’” Reardon says. “I think all of us know there’s a certain level of fallacy in that. You’ve got enthusiastic, properly ambitious minds, and they thirst for responsibility.”
The obstacles to creating a collaborative organization are far overshadowed by the potential rewards of doing so. Reardon says the responsibility of a leader is to do his part by formulating a mission and trusting, with some oversight, that it will be carried out.
“The role of a CEO is, with a lot of input, to set the course, delegate responsibly and stay abreast of the developments but disappear from the details,” Reardon says. “Let your best minds do their jobs.”
HOW TO REACH: TTX Co., (312) 853-3223 or www.ttx.com