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Russ Gertmenian had just taken over as managing partner of Vorys, Sater, Seymour and Pease LLP when his first leadership challenge arose — the financial downturn of 2008-09. He realized that not only did he have an immediate problem of how to keep the company’s legal nose above water, but that there was a larger problem looming on the horizon.

“I’m not smart enough to know where the future is going, but what I know is that business is not going back to where it was,” he says. “I’ve been trying to remodel us in a collegial way so the next generation will have the most flexibility and be able to act in a very agile way fitting within our culture, to be able to adapt to whatever direction the marketplace goes.”

Gertmenian had to deal with changing the mindset that had developed over years of traditional experience and traditional thinking.

“The law profession was in an envious position over the period of time that I have been in practice; I got out of law school in 1972,” he says. “The law profession, and for large law firms in particular, was a growth profession. Firms were staffed with the idea that there would be additional growth year after year.

“We had an ability to price-power, meaning we could raise our rates as our expenses went up with relatively little pushback from our clientele because everybody was doing it. That all started to change, and 2008-09 really brought that into focus.”

Gertmenian had to look at his business model, which was geared to “we are going to be 10 percent bigger every year,” the company’s hiring expectations and morale among people who weren’t seeing the same kind of growth opportunities that they once had — “and managing people who never had to struggle to find work because there was always more than enough work to do.”

“That all has been a tremendous challenge in terms of what the law firms including mine needed to do. We needed to change our approaches so we had a mutually beneficial relationship in which our clients got what they needed and we were able to provide the services in a way where it made economic sense for us.”

Here are some of the tools Gertmenian used to develop a mindset to the new normal so the firm would survive for posterity.

Figure out your model

When the economy went into recession in 2008, it caused a lot of unrest in the business world, to put it mildly. Companies cut back their expenses, hoping that economizing would see them through. The thought was that in time, the economic climate would get back to where it had been; the decline was just cyclical.

“We never worried much into 2007 and 2008 about a downturn,” Gertmenian says. “We just assumed that bigger is coming. More, more and more. But I don’t think that is a valid assumption today.”

Once Gertmenian realized that point, he knew he had to figure out how to model the law firm, to modify it within the purview of what it was. This was so the next generation of lawyers there and the next generation of leadership would have the most flexibility to deal with the direction of the marketplace.

Rather than feeling adrift alone in an ocean of uncertainties, he searched for other professions having similar experiences in order for him to gain insights.

“Something similar was happening in the medical profession,” Gertmenian says. “People who were my age, in their 60s, entered a profession that operated in a certain way. Medicine has been transformed much more dramatically than law, in terms of how they operate. That just creates great anxiety and uncertainty among some of the older doctors, causing them to retire or to be unhappy — whereas the kids coming out of medical school today understand the gig.”

What he could see was that things evolve, and he had to view his job as getting his staff comfortable with evolution and change.

“I don’t believe you do that in most instances by simply decreeing from the top, ‘This is the way it is going to be,’” Gertmenian says. “So we don’t move as quickly as some of my partners would like us to move and perhaps as some other law firms move, but as we morph into what we are doing that’s different, we do it over a reasonable period of time when people are buying in to it.

“That has been good for us, and we have not jumped at all the newest fads. On the other hand, when we make some changes, over a period of time, there is real buy-in to it, and I think that gives us culturally tremendous strength.”

Talk about the situation

One of the first steps to take to change mindsets is probably no surprise to management or staff. It’s to communicate.

“You just talk a lot; I mean you really do,” Gertmenian says. “You talk about the realities of what is going on.”

If that takes rearranging the company structure to make it easier for dialogue, take that step.

“Reorganize the structure so that the people who are in charge of your substantive work groups are more than caretakers; they are really responsible for trying to operate their groups in a way that makes sense for the marketplaces they are in,” he says.

Those people, called group heads, are empowered to be stewards of their areas, having significant input to the requirements and direction of the group.

“For instance, they need to decide how many people they need,” Gertmenian says. “What are their future hiring needs? Where do they see the opportunities? Where should our people be most active in terms of trying to develop skill sets and where should they be most active in terms of trying to penetrate the market for new work? Where is the market going to be in five years?”

Gertmenian charged the group heads with making those determinations.

Be patient, however. He says it took two to three years to get the concept sold and in place so that today it is absolutely accepted.

“They are responsible in a very real sense for the direction, size and emphasis within the group,” he says. “Also, they are responsible for getting their people to understand how to best provide the services in those areas and the particular clients that can be done in an economical way yet that satisfies the needs of our clients,” he says.

The “group heads” structure broadens the management responsibility.

“I think we are getting really good communication with our lawyers at those levels,” Gertmenian says. “You just simply can’t talk to 350 or 400 people on a regular basis about what’s going on in their practice.”

Recast the mold of your customer

Another necessary step in making over mindsets is to relook at what your customer wants. If you’ve always had a picture that your customer liked A, B and C, in the new normal today, that customer might prefer D, E and F instead.

“Today, I don’t think clients are willing to pay for overkill,” Gertmenian says. “And we have a generation of lawyers that wasn’t schooled that way, that wasn’t trained that way. We’ve got to get them to accept the new workplace reality in a way that is constructive and a way that, frankly, allows them to train younger people to accept that.

“It is difficult for them to train people that way because that is not their gut instinct.”

If you have been delivering overkill to a client who may be satisfied with less, those procedures might well need to be revised.

“You have to understand that there are things the client really cares about and things that are just part of the cost of doing business,” Gertmenian says. “You have to provide excellent services that meet your client’s needs or you will lose your clients.”

In two words, it’s about “working smarter” — putting in the time efficiently to fill the customer’s order so that he or she is satisfied.

How do you decide if you are so efficient in trimming down costs that it may affect your customer service?

“It is certainly a possibility, but frankly, I think our lawyers will tell us that,” Gertmenian says. “Our clients will tell us that too. The biggest obstacle to some of the changes that we’ve put in that way has been our lawyers who have been concerned. We’ve looked at it, and we have massaged it, then we put it in and when we are not getting that negative feedback saying, ‘I told you so,’ I have a pretty good feeling we are not losing clients and we are not losing market share. I’ve got a pretty good feeling it is working.

“In fact, we have been able to attract some additional business because of the basic health of our law firm and the changes that we have been instituting in terms of being becoming more efficient for them.” ?

How to reach: Vorys, Sater, Seymour and Pease LLP, (614) 464-6400 or www.vorys.com

The Gertmenian File

Russ Gertmenian

Managing partner

Vorys, Sater, Seymour and Pease LLP

Born: New York. I was raised primarily in New Jersey. My family spent six years in Minneapolis, but my wife and I are both from the East Coast.

Education: I went to college at Rutgers University and Columbia Law School.

What was your first job and what did you learn from it?

I used to caddy when I was real young, and I think I got paid $2.50 a golf bag. The first real job I had as far as punching a time clock was when I was a bagger at a grocery store at eighth grade or ninth grade. I learned that you needed to pack the bags carefully because otherwise if you put eggs at the bottom, they broke and you had customers coming back to complain. It made me go to work on time. I felt pretty lucky to have the job.

Whom do you admire in business?

I was trained primarily by the late Art Vorys, senior partner here. He had more impact on me than anybody in our law firm in terms of my approach to the practice. He was a ‘can-do’ guy. He had a kind of a Marine mentality: listen to your clients and help them get to where they want to get to. And don’t tell them why they can’t get there. Your job is to figure out how to get there. John Elam, who was a managing partner in this firm, really influenced me in terms of culture of the firm, how to look to the law firm in terms of promoting our roles within the community, how to give back to the community and how to try to meld lots of people into one unit.

 What is the best business advice you have ever received?

With Art, it was, ‘Work hard and help your client get to where they want to get to.’ With John it was, ‘The institution’s the most important thing we’ve got going here. It’s the reputation of this institution which we cannot allow to erode in any way or it will have an impact on the law firm long term.’ From my parents, it was, ‘Look in the mirror, and if you can say, “I am trying to do the right thing and I am working as hard as I can work at it,” that is all you can do. Be happy with yourself.’

What is your definition of business success?

In my view, sitting in the law firm, I would say it is maintaining and increasing the reputation, the integrity and the continued vitality of my firm. If I can posture it in a way to develop the next generation of management, and model it in a way that gives the law firm and its future lawyers the greatest ability to deal with the marketplace successfully, I will consider what I have done to be successful.

Published in Columbus

Larry Dorfman, APCO’s chairman and CEO, learned a cold fact of life the hard way: If your business is heavily dependent on another market sector and that sector takes a hit, you’re going to take a hit too.

And, boy, did that other sector take a hit. New car sales in the U.S. fell by almost exactly half in a little more than a year, says Dorfman, whose company sells extended warranties at 1,800 franchise auto dealers around the U.S. and commonly goes by the name of its extended-warranty brand, EasyCare.

“New vehicle sales dropped from 16.9 million to 8.7 million, basically in a 15-month period,” he says. “Used car sales suffered significantly too, but the hardest hit were clearly the franchise dealers.”

Dorfman didn’t have to go looking for danger signs. They came rolling at him like a tidal wave.

“You could literally see the volumes starting to slide, and we were attached directly to the number of cars that get sold at any given store [dealership],” he says. “If a store sells 100 cars, then you know they’re going to sell a certain number of extended service contracts. And if that 100-car store suddenly starts selling 50, then both of us have a problem. That’s just the way it is.”

It didn’t take long for Dorfman and his leadership team to figure out what they needed to change. APCO’s business was too dependent on car sales. The company had to find a way to broaden its base.

“Our benefits at the time totally focused on how many cars got delivered to a customer at a franchise dealership,” Dorfman says. “We started to recognize that we were on what we call a two-legged stool. Whichever way the car business went, that’s the way we would go too. Now, our company was founded in 1984, so we had been through a couple of recessions. We’d been up and down on a couple of these rides. Of course, nobody knew what this one was going to be like. But you sure could feel it coming.”

Set the table

APCO’s leaders quickly concluded that the stool on which their company’s fortunes were perched needed a sturdier base. Dorfman and his team knew that building that third stool leg would be absolutely critical to APCO’s long-term health, so they attacked the project meticulously and deliberately and from several angles at once.

In fact, APCO’s leadership team had set the table for these base-broadening measures before the downturn really started to seriously kick in — just as they began to sense it coming. Ford Motor Co. had bought APCO back in 1999 and had been operating as a subsidiary for about seven years.

For the first few years, that arrangement had gone swimmingly. But as Dorfman saw vehicle sales leveling off and creeping downward in late 2006 and early 2007 and with Ford increasingly sinking into debilitating debt and cash-flow problems in mid-2007 after more than a year of deliberation, APCO’s employees and equity partners purchased the company back from Ford.

“We bought it back, and then, from that point, the market continued to dribble down a little bit,” Dorfman says. “And, fortunately, we were able to start making some decisions — some investments — that we could not have made under Ford. This was one of the critical reasons that we wanted to buy the company back. We could see that they weren’t going to invest in our company.”

Then the stock market crash hit in 2008, and business went into free fall virtually across the board in the U.S., including automobile sales and, consequently, APCO’s business.

“One of our key financial measures is trailing 12-month EBITDA,” Dorfman says. “We watch that very carefully. And we went from $28.7 million at our peak — that would’ve been about ’06 — to $12.5 million after the crash, in ’09. So what do you do?

“Well, you know, the first thing you do is you take the gun out of your mouth. No, I’m kidding. Obviously, this didn’t all happen in one week. But it did happen pretty darn quick.”

As they saw the nose-dive gathering steam, APCO team members started looking for ways to get their company off of its two-legged stool and build a firm third leg for balance.

“The first thing we did is we looked at how we approach the business,” Dorfman says. “What we saw was that our business was totally affected by whether the dealer sold a car today or not. We knew that had to change. So we asked ourselves, ‘How else can we do what we do and stay who we are but, at the same time, move away from being so dependent on car sales?’”

APCO decided to focus on what it saw as an underappreciated and neglected area of its dealerships: the service department. It developed a software program called EasyCare SOS — Special Owner Services — to help its dealers better manage their customer relationships.

“It’s literally a CRM [customer relationship management] program,” Dorfman says. “It helps dealers manage their customer relationships throughout the ownership life cycle of the vehicle. We built this software to make sure consumers are approached the right way — that they’re notified properly but not overnotified when their vehicle is due for service, what specials are available, etc.”

The program has worked so well that APCO guarantees dealers a 500 percent return on their investment.

“We started that piece, EasyCare SOS, from scratch in late ’07 with two people,” Dorfman says. “Today, it has 36 people in it, and it contributed 8 percent of our profit this year.”

Invest in technology

In addition to forming EasyCare SOS, APCO made other investments. The company formed a retail division, it created a certified used car program in partnership with Motor Trend magazine, and it bought a company called CoVideo that had developed a sophisticated video email technology.

“The CoVideo technology allows you to create and send a video email as quick and easily as you could type and send a text email,” Dorfman says. “It’s very personal and immediate. You’re looking right at the person’s face: ‘We want to let you know it’s time for your vehicle to come in for service. Click here for an appointment.’ Or: ‘Hello. Thanks for the time on the phone. I enjoyed it. I look forward to seeing you when I come in next week. We appreciate your business.’”

APCO invested $900,000 in the CoVideo technology to build the infrastructure and create apps to deliver large quantities of video email efficiently to an array of mobile devices: iPhones, iPads, Androids and BlackBerrys. The company plugged the technology into its EasyCare SOS program so its dealers can use it to send video updates to their customers instead of regular emails.

“We did all of this during a down market,” Dorfman says. “In so doing, we turned digital customer interaction into a much more personal process.”

All of the investments have begun to pay off for APCO. The company’s key metric, trailing 12-month EBITDA, is growing again, and the company has paid off a substantial portion of the debt from its buyback from Ford Motor Co.

“Trailing 12-month EBITDA is back up to about $16.7 million from a low of $12.5 million in ’09,” Dorfman says. “So we’re back up 25, 30 percent. And that’s while making these major investments to grow the business.

“Also, we’ve paid our debt down to about $20 million during very tough times. We’ve built a broader base, which has expanded us further into our own business and actually outside the car business with CoVideo. This puts us in a strong position to continue to make more investments to grow the company.”

Choose partners wisely

Asked what advice he would offer business executives whose businesses are facing similar challenges, Dorfman ticks off several suggestions: Choose your business partners carefully, focus on delivering more than is expected of you, keep a finger on the pulse of your business, and stay ahead of the game with regard to expense management.

“You’ve got to have great partners, great clients and great employees,” he says. “You can’t ask more of somebody than the time and effort that you’ve taken to build a relationship with them. You can’t go to the bank and make a $300 deposit and then go back five days later and take $10 grand out. The bank doesn’t do that. And neither do customers, partners, investors.

“Your chances of being able to make a withdrawal are a lot better when you’ve made a substantial deposit. And what we did for a few years before and during this downturn is we continued to make deposits with the people we work with so we had a base to work from. Building that base really helped us.”

Dorfman says the most important thing he has learned while leading APCO through the financial crisis is that executives should never let market conditions dictate the pace of their business.

“If you buy in to everything people say about the market, you’ll be out of business in no time,” he says. ?

How to reach: Automobile Protection Corp., (678) 225-1000 or www.easycare.com

 

The Dorfman File

 

Larry Dorfman

Chairman and CEO

Automobile Protection Corp.

Born: Brooklyn, N.Y.

Education: University of Georgia

What was your first job, and what business leadership lessons did you learn from it?

I grew up working in our family’s office equipment business. I was in sales. I was given a car at age 16, and I had to pay for the gas and insurance with the money I made selling. My dad was my mentor — actually somewhere between my mentor and tormentor — and in both cases, he did a good job. He exposed me to a lot of opportunities, like learning how to go out and make cold-call presentations to businesspeople. And, you know, at 16 or 17, that’s a pretty interesting game plan. You learn quickly. And my dad was always there to go back to and talk about what worked and what didn’t.

Do you have a main business philosophy that you use to guide you?

One of the key things we learned as we went through the recession is we changed our philosophy from the hard sell to building a relationship with customers. I grew up in a hard-sell environment. But I think people have changed. They don’t like to be hard-sold anymore. Salespeople have to understand that you can’t ask more from a customer than what you’re willing to give them — your time, your effort, your knowledge.

What trait do you think is most important for an executive to have in order to be a successful leader?

Don’t be afraid to make a decision.

What’s the best advice anyone ever gave you?

You can’t take more out of a relationship than you put into it. I learned that from an instructor at a communications course I took in 1985 that was geared toward getting people to understand and learn to communicate better. It was a personal and business growth course.

Published in Atlanta

When the recession rocked the auto industry in 2008 and 2009, Automobile Protection Corp., which sells extended service contracts to car buyers, got rocked just as hard.

Larry Dorfman, APCO’s chairman and CEO, learned a cold fact of life the hard way: If your business is heavily dependent on another market sector and that sector takes a hit, you’re going to take a hit too.

And, boy, did that other sector take a hit. New car sales in the U.S. fell by almost exactly half in a little more than a year, says Dorfman, whose company sells extended warranties at 1,800 franchise auto dealers around the U.S. and commonly goes by the name of its extended-warranty brand, EasyCare.

“New vehicle sales dropped from 16.9 million to 8.7 million, basically in a 15-month period,” he says. “Used car sales suffered significantly too, but the hardest hit were clearly the franchise dealers.”

Dorfman didn’t have to go looking for danger signs. They came rolling at him like a tidal wave.

“You could literally see the volumes starting to slide, and we were attached directly to the number of cars that get sold at any given store [dealership],” he says. “If a store sells 100 cars, then you know they’re going to sell a certain number of extended service contracts. And if that 100-car store suddenly starts selling 50, then both of us have a problem. That’s just the way it is.”

It didn’t take long for Dorfman and his leadership team to figure out what they needed to change. APCO’s business was too dependent on car sales. The company had to find a way to broaden its base.

“Our benefits at the time totally focused on how many cars got delivered to a customer at a franchise dealership,” Dorfman says. “We started to recognize that we were on what we call a two-legged stool. Whichever way the car business went, that’s the way we would go too. Now, our company was founded in 1984, so we had been through a couple of recessions. We’d been up and down on a couple of these rides. Of course, nobody knew what this one was going to be like. But you sure could feel it coming.”

Set the table

APCO’s leaders quickly concluded that the stool on which their company’s fortunes were perched needed a sturdier base. Dorfman and his team knew that building that third stool leg would be absolutely critical to APCO’s long-term health, so they attacked the project meticulously and deliberately and from several angles at once.

In fact, APCO’s leadership team had set the table for these base-broadening measures before the downturn really started to seriously kick in — just as they began to sense it coming. Ford Motor Co. had bought APCO back in 1999 and had been operating as a subsidiary for about seven years.

For the first few years, that arrangement had gone swimmingly. But as Dorfman saw vehicle sales leveling off and creeping downward in late 2006 and early 2007 and with Ford increasingly sinking into debilitating debt and cash-flow problems in mid-2007 after more than a year of deliberation, APCO’s employees and equity partners purchased the company back from Ford.

“We bought it back, and then, from that point, the market continued to dribble down a little bit,” Dorfman says. “And, fortunately, we were able to start making some decisions — some investments — that we could not have made under Ford. This was one of the critical reasons that we wanted to buy the company back. We could see that they weren’t going to invest in our company.”

Then the stock market crash hit in 2008, and business went into free fall virtually across the board in the U.S., including automobile sales and, consequently, APCO’s business.

“One of our key financial measures is trailing 12-month EBITDA,” Dorfman says. “We watch that very carefully. And we went from $28.7 million at our peak — that would’ve been about ’06 — to $12.5 million after the crash, in ’09. So what do you do?

“Well, you know, the first thing you do is you take the gun out of your mouth. No, I’m kidding. Obviously, this didn’t all happen in one week. But it did happen pretty darn quick.”

As they saw the nose-dive gathering steam, APCO team members started looking for ways to get their company off of its two-legged stool and build a firm third leg for balance.

“The first thing we did is we looked at how we approach the business,” Dorfman says. “What we saw was that our business was totally affected by whether the dealer sold a car today or not. We knew that had to change. So we asked ourselves, ‘How else can we do what we do and stay who we are but, at the same time, move away from being so dependent on car sales?’”

APCO decided to focus on what it saw as an underappreciated and neglected area of its dealerships: the service department. It developed a software program called EasyCare SOS — Special Owner Services — to help its dealers better manage their customer relationships.

“It’s literally a CRM [customer relationship management] program,” Dorfman says. “It helps dealers manage their customer relationships throughout the ownership life cycle of the vehicle. We built this software to make sure consumers are approached the right way — that they’re notified properly but not overnotified when their vehicle is due for service, what specials are available, etc.”

The program has worked so well that APCO guarantees dealers a 500 percent return on their investment.

“We started that piece, EasyCare SOS, from scratch in late ’07 with two people,” Dorfman says. “Today, it has 36 people in it, and it contributed 8 percent of our profit this year.”

Invest in technology

In addition to forming EasyCare SOS, APCO made other investments. The company formed a retail division, it created a certified used car program in partnership with Motor Trend magazine, and it bought a company called CoVideo that had developed a sophisticated video email technology.

“The CoVideo technology allows you to create and send a video email as quick and easily as you could type and send a text email,” Dorfman says. “It’s very personal and immediate. You’re looking right at the person’s face: ‘We want to let you know it’s time for your vehicle to come in for service. Click here for an appointment.’ Or: ‘Hello. Thanks for the time on the phone. I enjoyed it. I look forward to seeing you when I come in next week. We appreciate your business.’”

APCO invested $900,000 in the CoVideo technology to build the infrastructure and create apps to deliver large quantities of video email efficiently to an array of mobile devices: iPhones, iPads, Androids and BlackBerrys. The company plugged the technology into its EasyCare SOS program so its dealers can use it to send video updates to their customers instead of regular emails.

“We did all of this during a down market,” Dorfman says. “In so doing, we turned digital customer interaction into a much more personal process.”

All of the investments have begun to pay off for APCO. The company’s key metric, trailing 12-month EBITDA, is growing again, and the company has paid off a substantial portion of the debt from its buyback from Ford Motor Co.

“Trailing 12-month EBITDA is back up to about $16.7 million from a low of $12.5 million in ’09,” Dorfman says. “So we’re back up 25, 30 percent. And that’s while making these major investments to grow the business.

“Also, we’ve paid our debt down to about $20 million during very tough times. We’ve built a broader base, which has expanded us further into our own business and actually outside the car business with CoVideo. This puts us in a strong position to continue to make more investments to grow the company.”

Choose partners wisely

Asked what advice he would offer business executives whose businesses are facing similar challenges, Dorfman ticks off several suggestions: Choose your business partners carefully, focus on delivering more than is expected of you, keep a finger on the pulse of your business, and stay ahead of the game with regard to expense management.

“You’ve got to have great partners, great clients and great employees,” he says. “You can’t ask more of somebody than the time and effort that you’ve taken to build a relationship with them. You can’t go to the bank and make a $300 deposit and then go back five days later and take $10 grand out. The bank doesn’t do that. And neither do customers, partners, investors.

“Your chances of being able to make a withdrawal are a lot better when you’ve made a substantial deposit. And what we did for a few years before and during this downturn is we continued to make deposits with the people we work with so we had a base to work from. Building that base really helped us.”

Dorfman says the most important thing he has learned while leading APCO through the financial crisis is that executives should never let market conditions dictate the pace of their business.

“If you buy in to everything people say about the market, you’ll be out of business in no time,” he says. ?

How to reach: Automobile Protection Corp., (678) 225-1000 or www.easycare.com

The Dorfman File

Larry Dorfman

Chairman and CEO

Automobile Protection Corp.

Born: Brooklyn, N.Y.

Education: University of Georgia

What was your first job, and what business leadership lessons did you learn from it?

I grew up working in our family’s office equipment business. I was in sales. I was given a car at age 16, and I had to pay for the gas and insurance with the money I made selling. My dad was my mentor — actually somewhere between my mentor and tormentor — and in both cases, he did a good job. He exposed me to a lot of opportunities, like learning how to go out and make cold-call presentations to businesspeople. And, you know, at 16 or 17, that’s a pretty interesting game plan. You learn quickly. And my dad was always there to go back to and talk about what worked and what didn’t.

Do you have a main business philosophy that you use to guide you?

One of the key things we learned as we went through the recession is we changed our philosophy from the hard sell to building a relationship with customers. I grew up in a hard-sell environment. But I think people have changed. They don’t like to be hard-sold anymore. Salespeople have to understand that you can’t ask more from a customer than what you’re willing to give them — your time, your effort, your knowledge.

What trait do you think is most important for an executive to have in order to be a successful leader?

Don’t be afraid to make a decision.

What’s the best advice anyone ever gave you?

You can’t take more out of a relationship than you put into it. I learned that from an instructor at a communications course I took in 1985 that was geared toward getting people to understand and learn to communicate better. It was a personal and business growth course.

Published in Atlanta

I recently had the opportunity to go undercover in my restaurants for the reality TV show “Undercover Boss.” Typically when I visit our restaurants, the team is prepared for my arrival. The show gave me an unfiltered view of what’s going on in Moe’s Southwest Grill restaurants on the front line and provided me a fresh perspective on what our customers see and experience.  

What do you do to regularly take a pulse on your company? How do you learn about what’s happening on the front line? Do you know the issues your front-line workers are facing on a daily basis?

Work the front line

Although I trained in a restaurant when I joined the company, I’ll admit it was a bit intimidating working the cash register alongside a general manager on “Undercover Boss.” Our new employees work on the line in our restaurants for several days as part of their new employee orientation.

Whatever the position — coordinator, analyst or vice president — all employees participate and should understand what those associates do and what their guests or customers experience. It provides a new perspective on how the business operates and offers valuable lessons that you can apply in the office.

For example, when I went undercover, I learned that the process of labeling our produce is cumbersome, and I needed to fast-track our plans to automate that task. Additionally, I was able to get a good read on how projects we roll out from the corporate office are being understood in the field. Things change over time, so consider implementing a program where employees work the front line once a year.

Encourage engagement

I was constantly concerned about being recognized by the management team who I see at minimum on an annual basis. Moe’s holds annual regional meetings for our general managers, but everyone from the corporate team is also required to attend at least one, helping them to stay connected to the issues that GMs face in the restaurant every day. The team hears ideas on how to better operate their restaurants and how to improve service, and it also helps foster relationships between the managers and support teams.

What types of forums do you hold to encourage engagement among all levels of your company?

Market tours

Working on the front line helps you see what’s going on from different viewpoints within a location, but there are many other factors that impact stores based on their specific region. It’s important for senior leadership and key team members to get out into the field and do market tours.

Don’t wait for a crisis to happen; that shouldn’t be the reason you visit a market. Find a system that works — whether it’s a different city each month or an entire market once a quarter — and then bring back what you learned and share with the team.

The experience was exhausting, but I wouldn’t trade it for the world. Among other things, I’ve learned the importance of connecting one-on-one with the people who run the business and the value of listening without my president hat on. Getting to see the company from a different lens is something that will continue to be a priority for me for years to come. ?

Paul Damico is president of Atlanta based Moe’s Southwest Grill, a fast-casual restaurant franchise with more than 480 locations nationwide. Damico has been a leader in the foodservice industry for more than 20 years with companies such as SSP America, FoodBrand, LLC; and Host Marriott. He can be reached at pdamico@moes.com.

 

 

 

Published in Atlanta

As a third-generation CEO of The Ruhlin Co., Jim Ruhlin has the construction business in his blood, sweat and tears. After nearly a century, the pressure remains to keep the family business running, passing the leadership from son to brother to son since 1915.

“It’s always tough having your name be the name of the company,” says Ruhlin, who became president and CEO of the construction services firm in 1996. “There’s a different set and level of expectations for you. I have a son in the business, and I think he understands that too. Because your name is Ruhlin, you’re watched a lot more closely.”

The Ruhlin Co.’s family culture is also one of the reasons Jim Ruhlin feels such a strong personal responsibility to the health, safety and well-being of his 350 employees — a sentiment that was demonstrated when an accident shook the company to its core in 2006.

“We had a death, a very unfortunate death,” he says. “You start to look to yourself, what you have done as a leader and what the company is doing. You felt like you had a good plan, but with something like that, when you take a hard look at it, you learn that your plan isn’t really very effective. That was the impetus to starting the safety program in terms of that’s a very hard lesson to learn.”

The incident didn’t just change Ruhlin’s attitude toward safety. He took it as a call to action to renew the company’s commitment to safety from its Sharon Center, Ohio-based facility to its general contracting, construction management and design-build teams across the country.

Smart Business spoke with Ruhlin about how The Ruhlin Co. has redeveloped its safety culture and the importance of holding employees accountable to safe work practices.

SB: Tell me about the genesis of The Ruhlin Co.’s safety best practices.

JR: My grandfather, my uncle and my father who preceded me were very concerned about people’s safety. The company was one of the first construction companies in the country to hire a full-time safety person, back in the early ’70s. So it has always been a part of our culture. As with everything, you have to grow it. You have to continue to move it forward with changing government regulations. But primarily you want people to go home safely at the end of day, every day. Injury-free is the key.

What we’ve done to grow the culture is we continue to raise its level of importance with all our employees, with our subcontractors and our suppliers. It’s a lengthy process. It’s not something that you can do overnight, and we understood that when we embarked in a different direction in 2006. It’s got to be a combination of things.

SB: What steps do you take to get people refocused on safety?

JR: The value of safety is individual to each different person. What we try to communicate is that we want people to be safe. We don’t want them to have any excuse not to be safe.

First off, you have to have a strong plan in place for how you’re going to execute the safety culture that you have. You have to have accountability. Without accountability, all the rules and regulations and pieces of safety equipment that you have out there aren’t going to make any difference. It doesn’t need to be draconian, but there has to be accountability.

And finally, the third piece of it, which really is the most difficult piece for any company, is you have to have the personal involvement of the people. It has to be behaviorally based. It can’t just be rules, regulations and days off or fired. You have to get into people’s heads to change their behavior.

SB: What are the keys to developing an effective safety plan?

JR: The most important thing is involving the people that you work with. It’s not a one-person thing. In 2007, we started an internal safety committee. It involved not only the management team in the company but our hourly field force. We as a group also work together to fashion the plan and to modify the plan.

Some of the best ideas sitting around a table, when you actually try to take them out and put them in place in the field, are terrible ideas. So it’s a collective effort of the team in how to keep people safe, how to keep them focused on hazards and the correction of hazards.

SB: How do you incorporate feedback from your team to make sure that your safety plan is relevant and effective?

JR: In terms of other hard knocks down the road, things change. You learn that ideas that you have aren’t practical in the field or are practical if you modify them slightly so that the people in the field can physically do what you’re asking them to do.

We actually have a program that if you send in a safety suggestion, you get put in a pool where we have a drawing every month. We give away $200 and $100 cash prizes and we have a quarterly drawing for a trip.

But you have to submit safety ideas or have a safe act to get into the plan. So it’s proactive. You don’t participate just by being here at the company. You have to involve yourself. And it’s worked very well. It’s given us a lot of excellent safety solutions and safety ideas over the past several years.

SB: How do you measure your progress?

JR: There are several safety measurements out there. The one we use primarily is the RIR, which is the recordable incident rate. It’s based on your number of incidents per 200,000 man-hours. We use that to judge our progress on how we’re doing. It’s also an industry standard. There are several companies that want you to have a certain RIR or lower before they will even let you work for them.

SB: What qualifies as an incident?

JR: For a RIR, it’s almost anything. It’s not a first aid. So if you get a cut and you can walk in and put on a Band-Aid, that doesn’t qualify. But a RIR is anything that had an injury where someone went to the doctor, received a prescription, had time off, had to have duties reassigned. So it’s those kinds of things that make it recordable.

SB: How do you keep people accountable to the safety culture?

JR: One thing that’s really new and excellent is what we call a ‘safety timeout.’ Our management team on the projects throughout the day, once a day, has to go and stop someone and talk to them about their safety concerns, about any safety suggestions that they might have.

It’s not a punitive thing; it’s simply, ‘Let’s spend a few minutes talking about safety.’ They approach not only our workers; they can approach the owners, representatives, subcontractors, truckers. Then that information every day is reviewed by the management team on the job.

It does a couple of things. It raises safety awareness, and also it’s brought some good safety suggestions in or things that need to be corrected on the job. That’s done on a daily basis and an almost instantaneous basis.

SB: How have you set expectations for the safety culture as CEO?

JR: I was talking to a group of workers not too long ago when we did what’s called a ‘safety blitz.’ We got the entire management team to spend a week going to all our projects, which covers a couple of states. It’s a lot of traveling, but we go out and talk to the workers. I said, ‘I hope you guys understand we pay you to be safe. We’re paying you a wage, and we want you to work safe, and so we’re willing to pay you your hourly wage to be safe.’

I think if people understand what that really means, they’ll start to get it. It’s not an expectation of production, production, production. Don’t get me wrong, if we don’t produce well, we don’t stay in business. But that production with safety is what we expect. We do [the safety blitz] twice a year, in the late summer and at the end of April.

SB: How does safety benefit your company in addition to creating a safer, healthier workforce?

JR: It raises our capital in the eyes of the workforce and the owners. That’s very important. It makes me sleep better at night. Obviously, it lowers our costs and has an effect on our insurance rates and our workers’ compensation rates, and the people that work here respect this company more because it does place safety at such a high level. The benefits, while you may not be able to measure them all, are many. ?

How to reach: The Ruhlin Co., (330) 239-2800 or www.ruhlin.com

The Ruhlin File

Jim Ruhlin

President and CEO

The Ruhlin Co.

Born: Akron, Ohio

Education: University of Colorado

Coming full circle: We started in 1915 and we built our first building as a schoolhouse out in Creston. That job was built by my grandfather and his brothers, and we have started demolishing that building. So it’s been in service for 98 years and we had the honor of rebuilding the school system, the Norwayne School District. They’ve moved out of that building, and so we’re going to tear it down 98 years later. It’s a very unique thing that not many companies get to experience.

Biggest market opportunities: heavy civil construction, larger projects, health care and education building, hydroelectric power

 

Ruhlin’s commitment to sustainability: To me it’s almost a logical extension of where we’ve been going as an industry and a world: Things need to last longer, work better, use less energy, and be less harmful to the environment. It’s been brought together under the collective name of sustainability, but in my opinion we’ve been moving there for a long time.

Best piece of business advice: Treat everybody the way that you’d like to be treated. I don’t think that there’s a better mantra out there. If you think about how you’re treating someone and you think would I like it if they were treating me this way, that’s about the best litmus test you’re ever going to get.

Where would you like to go that you’ve never been?

Being involved in this industry, I have had ample opportunity to travel. There has never been a dull moment, which is one of the things I really like about what I do. While I can’t name a specific place I would like to go I haven’t already seen, I can say my favorite place is being home with my wife, Susie.

What’s next for Ruhlin? My grandfather and my father and uncle handed me a company with an excellent reputation, and my job’s not to screw it up … I think we’re positioned to grow. We’ve grown some in the down construction economy. We’re adding onto our building. I’d like to continue to grow the company and move into some of the marketplaces that we haven’t been in that we’re getting a toehold in today. We’ve got an exciting five or 10 years ahead of us. 

 

 

Published in Akron/Canton

Five dollars a share.

That was the new reality when Michael Barry became chairman, president and CEO of Quaker Chemical Corp. in 2008. The manufacturer of specialty industrial chemicals, which trades on the New York Stock Exchange, had a stock worth $30 a share just several months before.

Then the economy’s bubble burst, and almost as quickly as a lightning strike can fell a tree, Barry was left staring at the shattered remnants of his company’s once-healthy stock.

Five dollars a share. And the end of the free fall was nowhere in sight.

“We went from making money to losing money, almost immediately,” Barry says. “And nobody knew how bad this would get. Nobody had perfect visibility about how long this was going to last.”

With less than a year on the job, Barry was immediately thrust into the crisis of a career.

“We had to take some really dramatic action,” he says. “We pulled together our senior management team, trying to get everyone involved at the senior-management level, helping us to make some of the important decisions we would need to make.”

Barry and his leadership team made the decisions that many leaders made in that time frame: They slashed the global workforce of Quaker Chemical, eliminating between 10 and 20 percent, depending on the region.

They cut the company’s 401(k) program, eliminated all bonuses and tried to spread an even coating of adversity throughout the entire organization.

Along the way, Barry acted as a guiding hand for his reeling team, keeping them as informed as possible, every step of the way.

“We communicated all the steps we had to take and did it continuously,” he says. “Maybe people weren’t happy with the news, but they felt we treated them fairly. They felt we did a good job of keeping them informed.”

Don’t clam up

In a time of crisis, your instinctual reaction might be to perform damage control on your company’s reputation. While you should take steps to salvage your company’s good name, if your methods of reinforcing your company’s reputation extend to sugarcoating, half-truths and other opaque messages, you’ll end up creating more harm than good —particularly if that’s your communication strategy with your own employees.

It’s difficult to swallow your pride and tell your people that you don’t have all the answers, to admit that the future is uncertain, but it’s a necessary step in maintaining long-term trust with your people.

Barry realized that early on and made it a point to maintain a frank, honest and ongoing dialogue with his team. It’s something that has continued throughout Barry’s tenure.

“Making communication a dialogue is, admittedly, something we have struggled with,” Barry says. “What we have done is, during our meetings, myself or my direct reports are talking, and we try to get people engaged and involved with the conversations. We turn it into a town-hall type of meeting. That concept evolved, and then we started bringing together smaller groups of people, including the people who report to my direct reports — so a couple of layers down in the organization.”

The people on that level then bring the messages from those meetings to their own teams, and facilitate dialogue within their area of the company.

“In a smaller group with their manager, your people might feel more comfortable asking questions,” he says. “So we try to give all those managers talking points and answers to frequently asked questions.

“With those kinds of sessions happening all around the globe, we’ll gather the questions people have been asking to see if there are any underlying themes — something everybody is asking, but we’re not doing a good enough job of telling them. But you need to keep that dialogue going, make those meetings a two-way street.”

When enduring hardship, particularly on a global level, culture becomes an increasingly important topic to address as the storm clouds gather. When your business is in survival mode, you might find yourself focused on the financial steps you need to take in order to guarantee your company is still operating at the end of the month or end of the year.

But neglecting to focus on your core values, mission and vision for the future — even if that vision is years away from realization — can have damaging effects to morale, employee confidence and, by extension, your company’s ability to keep its talent pool intact.

“We have spent a lot of time on culture,” Barry says. “We communicate it frequently because it is such a critical aspect of how we operate, how we feel, how we collaborate. You have to consistently reinforce what you are as a company, and we’re a very collaborative company. It’s a key to our business model.

“So during that time period when we were going through the worst of the recession, we talked about it a lot. We even put it on our computer screensavers, highlighting messages that reinforced the core values of the company.”

But messaging on your values and culture is like a booster shot. The real dosage of medicine comes from your actions.

“If you don’t live the culture, people will figure that out pretty quickly,” Barry says. “If you have people in the organization who don’t live the culture and you don’t take steps to correct that, it becomes a problem. A large piece of this is the ability of you and your leadership team to walk the talk.”

Add to the momentum

Though some of them were unpleasant to endure, the initial steps that Barry and his leadership team took in late 2008 and early 2009 helped Quaker Chemical to not only weather the worst of the recession but to quickly emerge from its down cycle in an aggressive growth mode.

Within six months, the company had started to grow again. After employing a workforce of about 1,300 in mid-2008 and dropping below 1,200 after the rounds of cutbacks, Quaker Chemical now employs about 1,600. Net sales for 2011 topped $683 million, an increase of more than $139 million from 2010.

Whether your recovery takes six months or six years, you need to show your people the progress that the company is making. Victories and milestones, however small, can help increase employee confidence. During the recession, you played not to lose. The victories your company gets on the rebound can change that mentality. You want to play to win.

“I think people saw our progress mainly through our performance,” Barry says. “We’re a public company, so they saw right away that we went from losing money to breaking even and that we did it in the span of a quarter.

“Then after breaking even, we started making money, and in each subsequent quarter, we started making more money. That was the biggest encouragement we could have given them, because it gave everyone in the company evidence that we were doing the right things and taking the right steps. People started to feel more secure in their positions.”

As you begin to see daylight, you can use opportunity to take stock of where your company is and what your growth strategy should be as you move forward. Throughout 2010, as Quaker Chemical began to add momentum to its rebound, Barry and his team continually analyzed the company’s strategic position and where it needed to be in order to continue to prosper in the future.

“We used it as a period of time to step back and look at our whole business strategically,” Barry says. “We did a very large strategic planning exercise. We evaluated the markets we are in, as well as adjacent markets we should think about entering, all with an eye toward taking our business to a different level.

“It was a process that involved a number of our associates, certainly on our senior management team but also a good number of people from our middle management. It allowed them to have an impact on how we were going to move the company forward.”

It comes back to the atmosphere of collaboration that Barry tries to perpetuate. Collaboration is a major component of engagement, which is a major component in companywide momentum and long-term success. It’s also an effective way to spread best practices throughout your company’s footprint.

“That is a key aspect of our company that we used to help us as we moved forward,” Barry says. “We have people all over the world, in every industrialized country, and we are working very collaboratively to help each other out. That is critical for your success.

“If we have a person in China who is having an issue with one of our steel customers, that person can rely on others within the company. They can tell another person through various company avenues that they’ve been having an issue with a customer.

“You want to develop a nonpolitical culture, where you are focused on doing the right thing and doing the ethical thing, where you’re not consumed with who gets the credit and who gets the blame.”

How to reach: Quaker Chemical Corp.,

(610) 832-4000 or www.quakerchem.com

 

The Barry File

Name: Michael Barry

Title: Chairman, president and CEO

Company: Quaker Chemical Corp.

Education: B.S. in chemical engineering, Drexel University; M.B.A., Wharton School of the University of Pennsylvania

What is the best business lesson you’ve learned?

You need to get buy-in whenever you are making a significant change in a company — whether in strategy, direction or anything else. You need to get buy-in from senior management and any other key people who are influential in the organization. There are two reasons for that. One, you need to get your best thinkers involved in any major change. Two, you need to get buy-in from the people who will make the change happen and instill the change in the organization.

What traits or skills are essential for a leader?

You need to be able to listen. You need to be able to make a decision and stick with it. You need to create a vision and a strategic direction for the organization. Part of that is establishing appropriate goals and holding people accountable to that, and creating the right culture for what you’re trying to achieve. You also need to be able to get the right people in the right places, and let them do their jobs, because it’s not about you, it’s about the people in the organization.

What is your definition of success?

It’s achieving your goals, be they business or life goals. Establishing a goal, and then achieving it, is success to me.

 

Takeaways

Communicate during a crisis.

Create a dialogue with employees.

Use your wins to generate momentum.

Published in Philadelphia

Every company has its baby photos. Monoprice Inc. is no exception.

A decade ago, the Internet electronics retailer was a small start-up. The company’s owners wore many hats, dictating almost every aspect of the company’s culture, strategy, systems and processes.

That was then. The “now” for Monoprice is the company that CEO Ajay Kumar has fronted for the last two years. It’s a $121 million player in its space, growing at a rate of 25 to 30 percent every year. With rapid growth and a workforce of 250, Kumar can’t possibly dictate every angle and nuance of the company’s day-to-day operations.

“When you start a small company and grow it, you can manage every aspect of it,” Kumar says. “You can be hands-on, making every decision, involving yourself in every detail.

“But now, we have to have all the appropriate controls in place to manage the company. We have to have the right organization, accountability, reports, metrics, all that stuff, so that it’s not just the top person running the whole thing. You need the structure and controls in place to make it all work.”

By the time Kumar took over, the CEO’s role had evolved into a global-view position. Instead of laboring in the trenches, Monoprice needed its CEO to define a vision, work with his leadership team to put goals and processes in place to achieve the vision, create metrics to measure progress against the goals, and build a team that could achieve and exceed the goals.

“My leadership style is that I am hands-on but not a micromanager,” Kumar says. “I want people who are capable of executing what I need done in each functional area. In addition to the goals and metrics, we need the right people in the right places throughout the organization.”

At its heart, Kumar’s biggest challenge has been to harness the ability to look ahead and anticipate what his company will need in the coming years.

Create a vision

Vision equals direction. Without a well-defined vision, a company is operating without a compass or a rudder. That’s a recipe for turning growth into stagnation and eventually into mere survival.

That’s why Kumar’s first job upon taking the CEO’s role was to define a vision and ensure that the vision and the reasoning behind it could be adequately explained to the Monoprice team.

“I was able to have a vision for the company coming in, since I had a lot of experience in this industry,” Kumar says. “I had a lot of experience in terms of sourcing products from Asia, getting products made rapidly. The consumer electronics business is something I’ve been in for a long time, so I had a good idea of what the vision needed to be for the type of company we are.”

Kumar’s vision was to produce products equal to or better than big-name brands in terms of quality and compete on price.

“We didn’t want to get into selling any product line if we didn’t feel we could generate at least a 30 to 70 percent advantage over the retail selling price,” he says. “That creates a certain amount of discipline as far as launching products. We don’t want to be randomly launching products.

“We want to launch products where we have a price advantage. The way we do that is we don’t sell other brands. A lot of Internet retailers are selling other brands. We don’t do that, so we are eliminating a whole layer of markup.”

By not carrying outside brands, Kumar and his team also attempted to make a statement about their belief in the quality of their products — a move made, in part, to bolster consumer confidence in the product lines.

“If we sell other brands, we’re, in effect, saying their brands are as good as ours, but they are much pricier, so why are we selling them?” Kumar says. “It’s like saying their products are a step up from ours. That is a key part of our vision: The products we make need to be as good as the famous brands. If the quality is the same but the price is lower, people aren’t going to go anywhere else.”

Related to that, Kumar incorporated a sense of focus into the vision. Monoprice would compete on price and quality but would also compete by becoming an expert retailer in a focused space, as opposed to carrying a broad spectrum of seemingly unrelated offerings.

“A lot of Internet retailers carry tons and tons of products that all seem kind of random,” he says. “It doesn’t feel like a portfolio.

“Our goal is to pick product lines that we want to be in. If we want to be in the Apple accessory area, we need to come up with the right mix of products in the portfolio. Not too many, not too few, because our goal is to become a destination for each product line that we want to be in.”

With the vision focused on those three factors, Kumar then had to roll it out to the company at large — complete with a compelling set of processes and incentives aimed at motivating people throughout the company.

Make them follow

To drive the entire company toward realization of the vision, Kumar had to give all 250 people a reason to get on board. He had to show everyone in the company how their performance related to the company’s ability to achieve its overarching goals and turn the vision into something concrete.

Kumar and his leadership team started by rolling out the vision with a companywide presentation, with an opportunity for dialogue and feedback. That planted the seed, but Kumar says the seed sprouted thanks, in large part, to the company’s bonus plan.

With a bonus plan anchored in corporate-level metrics, Kumar steered every person in the organization, regardless of department, toward the goals that would help Monoprice realize his vision.

“I think a bonus program is always tricky,” Kumar says. “Do you measure people based on department results or overall company results? Some companies go down one path and some go down the other.

“Early on, I decided our path should be aligned along one set of metrics at the corporate level. We decided to focus everyone on three metrics that drive our bonus program: sales, profit and cash flow. Some people in some functions might not be able to directly impact all three of those, but we wanted everyone thinking about all three.

“The thing I like about having the metrics at the corporate level is that everyone in the company is focused on the same thing. It’s the same bonus program whether you are a warehouse worker, customer service person, IT or even myself. It keeps everyone working in the same direction.”

The disadvantage to developing a bonus plan driven by corporate-level metrics is that some people in certain areas of the company might not feel a high level of urgency to meet the company’s goals.

To avoid coasting, Kumar and his team have devised department-level metrics. Since those metrics don’t directly impact the bonus program, Kumar relies on a culture of accountability to enforce them.

“They’re producing against those department-level metrics, they’re showing plan versus actual against those metrics, so there is a little bit of accountability and professionalism at stake when you’re executing on that plan in front of your peers,” Kumar says. “That, in and of itself, will drive a certain level of motivation.”

Find the talent

You can have a well-defined vision, and you can develop metrics and incentives that ensure people are working toward realizing that vision. But your people provide the momentum that will really power your company toward the goals you have set. Without competent employees, nothing gets done.

Kumar believes in attracting top-notch talent but not without first understanding the roles that he needs to fill. He wants talent, but he doesn’t want to simply stockpile talent for talent’s sake, without a plan for utilizing it.

“One of the key things before you go recruit people is making sure you have an understanding of what, exactly, you want from a particular role,” Kumar says. “Some folks may go out there and hire a generic person for a generic role. What I try to do is figure out exactly what I want to get from a particular role.”

Then, when you bring a candidate to the office for an interview, make sure your line of questioning aims to ascertain whether the candidate is a match for the criteria you have established.

“One of the things I like to do is get into the details of what they did at their past job and how they did it,” Kumar says. “When you look at resumes, sometimes it will say a person saved 30 percent or grew sales by $50 million, but you start digging, and they didn’t do it all themselves. They didn’t drive it. I’m looking for people who generated benefits at their previous jobs, and I want to know if they can do the same thing at this company.”

How to reach: Monoprice Inc., (877) 271-2592 or www.monoprice.com

 

The Kumar file

Name: Ajay Kumar

Title: CEO

Company: Monoprice Inc.

What is the best business lesson you’ve learned?

I am a big believer that what you don’t work on is as important as what you do work on. It’s important to know when you should pass on an opportunity. In most companies, it is too easy to get bogged down on doing too many things. It is the nature of a high-performance person. You want to get things done, but you can’t do everything.

What traits or skills are essential for a business leader?

Having a vision that makes sense, creating a sense of buy-in, recruiting the right people, drive, performance, being a good two-way communicator, facilitating teamwork, and providing a coaching and mentoring approach to growth. One of the primary things people want to get out of a job is what they learn from their boss.

What is your definition of success?

For me, it is setting goals and then achieving them. That might seem very metrics-oriented, but if you don’t achieve goals, it won’t be a fun place to work. People won’t feel like the company is successful. If you set goals and don’t make them happen, you don’t get that sense of accomplishment. People start to feel like you’re wishy-washy.

Takeaways

Develop a strong vision.

Create buy-in on the vision.

Hire the right people.

Published in Orange County

It’s a fairly common approach when taking on a new job to talk to those people who have been there for a while to learn what the company is all about. Harold Edwards tried this approach at Limoneira Co., and he didn’t like what he was learning.

“To be pretty direct, a lot of complacency and apathy had crept their way into the organization,” says Edwards, president and CEO at the Santa Paula, Calif.-based grower and provider of lemons. “We literally had situations where the people who had worked for the company for the longest period of time were probably doing the least amount of work.”

As Edwards looked at the financial numbers, he could see that the company wasn’t really on the upswing. But it was the attitude of senior leaders at Limoneira that concerned him even more.

“Most evident when I showed up was just a lot of senior-level managers and people who had been with the organization for a long time were not only not aligned with the objectives of the organization but also were very clearly and very evidently complacent about their day-to-day duties and responsibilities,” Edwards says.

The work culture and environment had become a big problem. Edwards needed to act swiftly to get things turned around at the company, which employs 226 people and has been producing lemons since 1893.

“The area where a lot of companies go wrong is they don’t stay current with their dynamic environment and they don’t consistently go through and define those objectives and focus on the alignment or realignment of those objectives every year as the environment continues to change,” Edwards says. “That’s where many companies fall down.”

Edwards hoped his plan would keep that from happening at Limoneira.

Laying out a new course

The changes on the leadership team were first up for Edwards. They were not easy moves to make.

“There were some pretty strong and big power struggles that had bred themselves within the organization,” Edwards says.

“One of my first orders of business as I was building my senior management team was to attempt to eliminate those power struggles. I wanted to get everybody’s full commitment to the vision of the organization and the new, very decentralized structure that we were putting in place to foster better teamwork.”

Edwards made it clear that he wanted to identify new growth opportunities and assess what was working and what wasn’t working to help Limoneira function to its full potential.

“We never had the vision that maybe the way to manage the company in a better way would be to really focus in on the growth of the business,” Edwards says. “And by growth, I mean really make it our business to transition from our focus from just being a producer into becoming a supplier of lemons.

“Surround ourselves and our assets not only with our own fruit but eventually with the fruit of other growers that would allow us to take advantage of our strong brand reputation in the marketplace.”

Those who weren’t committed to pursuing this new path didn’t stick around long, which turned out to be a good thing.

“In a way, it was very emancipating and helpful for the overall organization because as some of those people who were hanging onto their turf exited, you could almost hear the overall organization breathe a big sigh of relief,” Edwards says. “It was viewed as very empowering for many of the other people who were in essence held down or oppressed by some of these former managers.”

To those who feared they might be ousted by this new leader, Edwards worked hard to get them to see that he wasn’t there to conquer Limoneira. He was there to give people the freedom to help the company grow.

“My style is not to micromanage anybody on my team,” Edwards says. “It’s really just to position myself as an enabler and a supporter and to try to see that each one of these individuals is able to have success with the objectives that they’ve laid down for themselves and their teams.”

Building communication channels

The next step for Edwards at Limoneira was not a painful one, but it was a big challenge. His goal was to have his managerial team identify the top five objectives for the entire organization.

“They weren’t financial goals,” Edwards says. “They were more specific strategic objectives. Once they were created, we methodically went through each person in the senior management team, down through the management team, down through every salaried employee and then down through the rank-and-file employees.

“When the exercise was complete, the goal was everybody in the company had their own top five objectives that if they were successful accomplishing, the organization would have the best chance of achieving its top five objectives.”

It’s obviously a lot more challenging in practice than it is on paper. You have to accept that while there may be some hiccups along the way in developing all these objectives, they will lead you to a better outcome if you stay disciplined with the process.

“It really takes a commitment,” Edwards says. “Not all organizations are able to embrace that. There is a downside to innovation. There’s a downside to being really entrepreneurial and, in this case, intrepreneurial. It can be very disruptive. But if you’re willing to embrace some choppiness and disruption to do things better, it will work.”

With everyone committed to pursuing new growth opportunities, Edwards says the past five years have provided a consistent flow of new ideas from employees who previously weren’t involved in such talks.

“We have laid down very specific and very measurable growth targets that have really helped us smooth out the cyclicality and volatility of our business,” Edwards says.

“It’s also gotten all the employees who are involved in this part of our business very specifically focused on what their role and responsibility is. We can determine if we were successful or not. That is a specific objective that really has helped us transition the company and helped us grow.”

Edwards says it’s a message he repeats over and over again that great ideas at Limoneira do not have to begin in his office.

“Encourage people to think outside the box and come up with ideas about how to streamline efficiencies and how to get things done in a more efficient way,” he says. “Don’t just assume or accept that there is only one way to do things.”

Stick to it

When you think you’ve finally driven home the idea that you want employees to feel empowered to share their ideas, you need to resist the urge to stop talking about it.

“Part of the performance management program has a quarterly evaluation process that makes each employee better connected with a greater sense of consistent purpose with his or her manager,” Edwards says. “That allows them to do a better job of determining when an employee is getting it done and when they aren’t.”

Most employees want to make their supervisors and managers proud and want to do their part to help the business. But you have to maintain the dialogue and keep talking about it to make it work.

“The skill of the manager is to make sure that the things that aren’t going to be good objectives and goals, that those aren’t implemented,” Edwards says. “The ones that will really drive the organization forward are used.”

The discipline is not just a means to keep employees on task. It’s to help keep you and your management team on task as well.

“It’s very easy to see if we didn’t stay vigilant and diligent on quarterly evaluation and the communication of those evaluations, that it could very easily become just another thing that the organization was doing and the whole purpose would really be lost,” Edwards says.

One of the final pieces of the transformation at Limoneira has been to make sure the board of directors and company leaders understand the difference between management and governance.

“Part of the board’s responsibility in good governance is to help define and lay out good strategy for the organization as it moves forward,” Edwards says. “What had happened was the board had begun to get involved in personnel decisions. It had actually started micromanaging certain managerial posts sort of at the expense of the authority of the CEO of the company.”

Edwards shared his thoughts that the board needed to focus on strategy and let leaders like himself deal with day-to-day operations.

“By getting the board back to being a part of the governance structure and the management team really focusing in on the management of the company and keeping those roles and responsibilities separate and distinct and very disciplined, we’ve allowed both to operate at excellent levels that have really pushed the company forward,” Edwards says.

The result is a business that has grown consistently, with revenue leaping from $52.5 million in 2011 to $65.8 million in 2012.

“It’s much clearer the level of collaboration and teamwork that is necessary in order for all the employees to be successful,” Edwards says. “It’s forced people to play their roles and responsibilities more in concert as a team rather than as individuals. It’s that new alignment and fostering of teamwork that really set the company in motion.”

How to reach: Limoneira Co., (805) 525-5541 or www.limoneira.com

 

The Edwards File

Name: Harold Edwards

Title: President and CEO

Company: Limoneira Co.

Born: San Francisco

Education: Undergraduate degree in international affairs, Lewis and Clark College, Portland, Ore.; MBA in global management, Thunderbird School of Global Management, Glendale, Ariz.

What was your very first job?

Working on a ranch in Santa Paula. It was physical labor. I was hewing weeds, chopping suckers off trees or laying down mulch and fertilizer. I’m five generations deep in one of six families that represent the largest shareholders of this company. I grew up on one of the ranches that is one of different 15 ranches that the company manages.

What do you enjoy about the work?

I’ve sort of committed myself to making the world my canvas and taking opportunities to be living in a global world that produces and distributes product all over the world. The part of my job that gives me the greatest level of satisfaction is to, in a very small way, play a part in feeding the hungry world.

Why do Europeans consume so many more lemons than the United States?

You correlate it with obesity and the quality of our diets here versus the diets in other parts of the world. Then you look at life expectancy and health and you start to see some trends that are very compelling. If we were just to reach parity with Europe in terms of their lemon consumption, we don’t grow enough lemons here in the United States to accomplish that today. So we spend a lot of time trying to convince people to use lemons in their everyday lives here in the United States. So far we’re starting to see the results of a lot of these efforts take place.

 

Takeaways:

Be clear about your intentions.

Build channels to communicate.

Stay disciplined with your plan.

Published in Los Angeles

It wasn’t your typical corporate relocation when Cartridge World Inc. moved its North American headquarters from California to Illinois in 2011.

For starters, most of the employees who had worked at the Emeryville, Calif., headquarters were not making the trip to the new offices in Spring Grove, Ill.

“Institutional knowledge disappeared if it wasn’t retained in the system,” says William D. Swanson, CFO of the global ink and toner printer cartridge retailer and CEO of North American operations.

“Even then, it might be in the system, but it’s not in the minds, hearts and thoughts of the people coming on board. So that was interesting. It was one of the most difficult challenges to overcome when we came here.”

It was difficult, but it was a challenge that Swanson and the leadership team at Cartridge World felt needed to be tackled. The company had slumped during the recession and found itself struggling to get back on its game.

“We ended up in a situation where as a company, we had significantly more expenses than were sustainable based upon our revenue stream,” Swanson says. “So it was really taking a company that was stuck and creating negative cash flow and then creating positive cash flow and, more importantly, value for its constituents.”

Making the situation even more interesting for Swanson was the fact that he, too, was new to Cartridge World, which is owned by Wolseley Private Equity in Australia. He joined the company in May 2011 as global CFO and didn’t become North American CEO until July 2012.

So the task was rather daunting.

Swanson needed to get himself up to speed with what the company was all about while at the same time, he worked to integrate new employees into a new culture in its new home that would enable the company to generate better financial results. He also had to engage franchisees at the company’s 650 stores across North America. The company has about 2,275 store employees in North America and 50 corporate employees.

Fortunately, Swanson brought a lot of confidence to this seemingly difficult mission.

“If you have good, compelling arguments and a good, solid vision that people can buy in to and understand, you get people to move forward in that direction,” Swanson says.

Build your team

The move to Illinois wasn’t just about rejuvenating the business. It would put Cartridge World in a more central location with which to work with its franchisees since two-thirds of its U.S. locations were east of the Mississippi River. It would also provide closer proximity to the company’s technology partner.

But those are physical details. The act of building a new culture from the ground up that would help the company start growing again wasn’t going to be as easy.

“You don’t know what you don’t know,” Swanson says. “That can be a very difficult place if you’re going down fat, drunk and stupid and you don’t know where you’re going. Any road will take you there. You better get clarity and you better help the new team understand that clarity.”

Swanson looks for three things to help determine if someone can be a strong member of his team.

“First of all, I make sure everybody has a consistent view of what success looks like,” he says. “Where are we trying to go? What does success look like both tangibly and intangibly? Paint that picture. Create specific numbers and reinforce that. Ask them to repeat it so that I can gauge their understanding.”

The next is one-on-one time with the person talking about his or her place in the company.

“I have a formal one-on-one session with my direct reports on a weekly basis, but informally, we meet and chat in the morning or sometimes we’ll be here late,” Swanson says. “It really is making sure I can gauge how they view their responsibilities, the tasks they are working on and the judgment they are exercising as they make decisions and take action.”

Finally, Swanson wants to know what kind of initiative they have to get things done and make things happen.

“Some people might see opportunities and others wait for those opportunities to be pointed out to them,” Swanson says. “Some take action and some wait for action to be assigned. When we have a company where staff has been reduced by 50 percent, I need people who can take an initiative and exercise good judgment moving in the direction that we need to move in.”

The goal is exactly the opposite of creating drones who will follow his every word. He wants people who see success the way he does and have the desire and energy to achieve it. But he has no problem if they have a different way of making it happen.

“They are more likely to achieve success when they get to choose the path that they are going to go down, as long as it’s consistent with the vision, and I know they can exercise good judgment,” Swanson says. “If they try to go down my path, they are not going to completely understand it, and they’re probably never going to do it exactly like me, so I’m not going to be thrilled by it.”

Show respect

As important as it was to get his leadership team on board with his plan, Swanson very much needed to have a good relationship with his franchisees if Cartridge World was to succeed.

The key to a good relationship with any group of people is to be respected.

“When you’re dealing with franchisees, what you have to know is a lot of them put up their life savings to be in this, and they’ve committed their financial resources to the success of the business,” Swanson says. “That has to be understood. They have to know that you respect them and what they’re doing and how they are going about it.”

You owe it to them to listen to what they have to say when they have opinions about how the business should be run.

“It doesn’t mean I’m going to agree with them,” Swanson says. “I may, I may not. If I disagree, I’ll present it in a way that maintains their esteem and doesn’t put them down but rather presents another issue. I like to think of it as though we’re all businesspeople around the table. The issue is on the table; it’s not with any of us around the table.”

When you establish that foundation of respect, you can then move more easily into addressing some of the things that may be holding your business back.

“If you see things that are happening in the business that aren’t consistent with what it is you as a business are trying to accomplish, then you have to say, ‘Why are we doing these things?’” Swanson says. “What might seem like a good idea in the short term because maybe you had some high-priced consultants or you had something that convinced you as a company that this is the direction you want to go in, maybe it just wasn’t a well-thought-out idea. Those things happen. They happen everywhere.”

When you jump right into a decision without gaining the understanding of what your people are seeing and experiencing and any other pertinent variables, you run the risk of making a big mistake.

“Stephen Covey said it in one of his seven habits,” Swanson says. “‘Seek first to understand before being understood.’ I’m not sure all leaders do that. It can be a struggle to not jump in and say, ‘No, do it this way.’ Now certainly, if you’re going off a cliff, you’re going to stop that from happening.”

Cartridge World was struggling, but it wasn’t going off any cliffs. So Swanson took the patient approach.

“It’s constantly learning and taking a look at what you did yesterday,” Swanson says. “What went well and what didn’t go well? What did we learn from it? How do we take yesterday’s or today’s experiences and use that to shape what we’re going to do tomorrow?”

One thing Swanson does not do as he is guiding the company is step on the toes of people who hold leadership positions at Cartridge World.

“I have an open door, and if anyone ever wants to talk to me, they’re always welcome to talk to me,” Swanson says. “But I’m not going to go around my leadership team if I don’t need to. I respect them and what they’re doing.”

The results of recent changes have begun to pay off. With a redefined sense of roles and responsibilities, the company is back on a growth trajectory. In 2012, it launched Cartridge World Express, a mobile business that offers more than 400 ink and toner products for every major brand of printer, copier, fax and postage machine. It also expands the company’s mission of recycling to keep printer cartridges out of landfills.

“You have to be firmly committed to the direction you’re going and why you’re going in this direction and you can’t be short on communicating the vision and direction and the reasons why decisions were made,” Swanson says. “That has served us well.” ?

How to reach: Cartridge World Inc., (815) 321-4400 or www.cartridgeworld.com

 

The Swanson File

Name: Bill Swanson,

Title: CEO, North America

Company: Cartridge World Inc.

Born: Chicago

Education: Bachelor’s degree, accounting and business administration; CPA, Augustana College, Rock Island, Ill. I’m also certified in cash management.

What was your very first job as a kid?

My first job was caddying. I went to the golf course and the caddy master said, ‘Well you’re a little too small. Why don’t you come back next year?’ I came back the next week. He said, ‘Weren’t you here before?’ I said, ‘Yeah, I was. You told me I was too short. But I think I can do it, and I’d like the opportunity to show you.’ So I did and I was able to caddy for a couple years before I turned 16 and could get a real job.

Who has been your biggest influence?

I was in public accounting and then I left and worked in private industry for three brothers for around 20 years. One of the brothers, Arnold Miller, was just fantastic. That’s where I developed the way I think about business, running a business and the values that I have that are very important to me.

Who would like to meet and why?

Warren Buffett or Sam Walton; both of them for their purity in running a business and saying, ‘What is it we’re trying to accomplish? Keep all the self-serving stuff out of the way.’ Both of them are very successful in understanding what it is they are trying to accomplish and then to be able to do it by focusing on the fundamentals that it takes to get done. Not on wishes, not chasing rainbows, but truly understanding the fundamentals of what it is you’re trying to do. Work utilizing those fundamentals. If you do that, good things will happen.

 

Takeaways:

Know what you’ve got.

Always show respect.

Never stop learning.

Published in Chicago

It would have been easy to hold off on salary raises just a little longer and wait for a clearer sign that the economy had turned a corner.

But Joe McKee and Keith Wolkoff were unwilling to wait. They believed that their employees had worked hard to help Paric Corp. through the recession, and they deserved to be recognized for it.

“The questions do get asked,” says Wolkoff, president at the 234-employee design-build firm. “Is it prudent? Or should we continue to invest in the business? We asked a lot of our people during the very difficult times. It’s just as important to reward those people when you’re starting to see a little more fluidity in the marketplace. It’s the right thing to do.”

The decision was based on the leadership team’s commitment over the past two years to a long-term view and a belief that you can’t let fear guide your decisions, says McKee, Paric’s CEO.

“When you have a crisis, you can circle the wagons or you can choose to move forward,” McKee says. “Most of the times I know when people have circled the wagons; it hasn’t really worked out well for them. Our attitude was to keep moving and be nimble and quick.”

Both leaders wanted to focus on the core things that Paric did well, believing that those skills would be desired by customers even in a tough economy. As they developed a strategy to maximize those qualities and began to see the potential become reality, it became an easy decision to reward the team.

“It was a very painful period in the industry,” Wolkoff says. “But as odd as it is to say, we’re a lot stronger for having gone through it.”

The numbers reflect that assessment. Paric’s revenue grew from $200 million in 2010 to $240 million in 2012. Here’s a look at how the company bounced back so strongly from the recession.

 

Recalibrate your position

The path to Paric’s better future began with a blunt assessment of what the recession had done to the economy.

“What many people try to do in that environment is to get up and ignore the reality of what’s happening around them, and they don’t speak frankly,” McKee says. “It’s a little bit like what happens when a dog senses your fear. You lose all credibility and bad things happen. So it starts by being brutally honest and by making tough decisions.”

McKee and Wolkoff didn’t hold back in talking about the difficulties the company was facing. They also talked about those opportunities that they believed they could take advantage of. The key is they talked and kept talking to their teams whether the news was good or bad.

“In the absence of us communicating what actions we were taking and how we were addressing the economy, people were going to come to their own conclusions,” Wolkoff says. “We just refused to allow that. We were meeting if not every six weeks, then every eight weeks to give everybody a debrief on, ‘Here’s where we’re headed, here’s what we see and here’s what we’re doing about it.’

“Maybe all the information wasn’t pleasant. But at least everybody knew what was going on. There wasn’t all that chatter that can just be counterproductive.”

The crux of the new plan was to focus on the strengths and stop doing the things that weren’t making the company any money.

“When you have limited resources, there are some things you’ve always done because that’s the way you did it,” McKee says. “You need to figure out what those things are and quit doing them. What do we need to work on to move the organization forward?”

Preconstruction services were going to be a big part of Paric’s offerings to customers. Another was going to be the core markets that the company worked in, such as historic renovation, urban development, senior living and interior construction.

“We don’t service everybody,” Wolkoff says. “We go where we can bring value to our customers. Even in bad times, that’s going to prevail.

“It took a little bit of reinforcing from leadership to say, ‘Let’s hunker down, let’s pick our spots, let’s be smart, and let’s continue to invest, and we’ll be fine when we come out the other end.’ Are you going to cover 10 opportunities with your limited resources or are you going to cover three opportunities and increase your hit rate?”

McKee says you go with the three.

“You get two out of those three versus focusing on 10 and you only get two,” McKee says.

Know who you are

In working through the plan and defining what set Paric apart from the competition, Wolkoff says the company’s leadership unearthed a problem that they felt needed to be addressed.

“We started to ask ourselves, how do we define our business as it looked at that point in time,” Wolkoff says. “While we all had great things to say about ourselves, none of us were telling the story exactly the same way. And it really caused us to question, ‘Well, if we’re having that much trouble defining who we are, what are our customers saying?’”

It was with that thought in mind that Paric’s leadership team set out to interview customers, vendors and employees. The goal was to hit on a theme that would accurately and clearly define what the company is all about.

“In everything we do, every opportunity we have to touch each other, at a meeting, even if it’s an outside social event, there needs to be a consistent theme in how we talk to each other,” Wolkoff says. “Every company meeting we have, it has to be the central talking point over and over again.”

After talking to people at all these levels, the theme they arrived at was “Experience Excellence.”

“It doesn’t mean we’re perfect, but we strive for perfection, and that’s the piece we hit on,” Wolkoff says. “At every station we touch, whether it’s a client, vendor or internal employee, we have to strive for that perfection and that excellence.”

When money is tight with customers, the key to making a sale can be the perceived extra value that the customers believe they are getting with your business.

“You could say on the one hand that a building project is a very daunting task,” Wolkoff says. “But it shouldn’t be. If you have the right partner, it should be something that is exciting. It’s changing your organization. So we have to make sure that everybody who touches it from our end makes it the most satisfying experience it can be.”

The goal was to take these words that could easily become a cliché or something that is forgotten soon after it is brought up and embed it into the company’s culture.

McKee compares it to a quote he remembers from retired Denver Broncos quarterback and NFL Hall of Famer John Elway.

“He said on a Super Bowl winning team, they hold each other accountable,” McKee says. “If the guy next to you wasn’t doing his job, the guy to the right of him would say, ‘You better get with it and do your job.’ The coaches weren’t telling him. The players were doing that. We work really hard to try to create that kind of culture with people to where it’s a real team environment.”

When you’re just trying to get a motto or slogan like that to sink in, you can just ask the question.

“With a younger person, you might say, ‘What have you done today to create experience excellence?’” McKee says. “They’ll look at you the first couple of times like you have two heads. But after a while, they’ll begin to understand what you’re getting at. It’s about that discipline to do it right every day.”

 

Keep talking

One of the things that Paric began during its battle through the recession and has continued to this day is a weekly senior leadership team meeting. It consists of five people: Wolkoff, McKee, the company’s CFO and the senior vice presidents of sales and operations.

“That’s the one meeting that doesn’t get moved off people’s calendars,” Wolkoff says. “It’s the most important meeting we have in a given week.”

The challenging of opinions and belief is not only accepted, it’s encouraged, says Wolkoff.

“There are five people sitting in that room and if one of the five is not voicing an opinion and challenging something, you need to consider, ‘Do they need to be in the room?’” he says. “We’ve been fortunate that there are five very strong leaders in the room.”

The idea isn’t to create tension but to make sure every angle is being explored so the company can make an informed decision. Once the meeting is over, the conflict, if there is any left, must stay in the room.

“Once we leave the room, we’re unified,” Wolkoff says.

McKee says the elimination of secrets and unspoken concerns is one of the keys to success in any business.

“If you’re going to lose, lose doing the things you think you need to do rather than getting to the end and thinking, ‘I wish I would have done that,’” McKee says. ?

How to reach: Paric Corp., (800) 500-4320 or www.paric.com

 

 

The McKee and Wolkoff Files

 

Joe McKee, CEO, Paric Corp.

 

Born: St. Louis

Education: Bachelor of science degree, civil and environmental engineering from Vanderbilt University; MBA, Washington University, St. Louis.

 

Did you think about becoming a CEO some day?

I always knew I wanted to build, so that much I knew. But I’ve succeeded well beyond my wildest dreams. I was the kid who designed the clubhouse and treehouse and built go-carts. That’s what I love doing, besides hunting.

 

Who has been your biggest influence?

It starts with good parents. My parents were absolutely amazing. After that, Rick Jordan helped me a great deal and the current chair of our board, Larry Young. They are both on our board and have been good mentors to me through the years.

 

Keith Wolkoff, president, Paric Corp.

 

Born: St. Charles, Mo.

 

Education: Bachelor’s degree in architecture, Washington University, St. Louis.

 

Did you think about becoming a company president some day?

No way; it was the furthest thing from my thoughts. I thought more in the now and whatever I was doing, I wanted to do it to the best of my ability. When I saw an opportunity, I had the mindset that I’d rather try and fail than not try at all. By some good luck and some hard work, I find myself where I am today.

 

Who has been your biggest influence?

Very early on I had an English teacher. Maybe my spelling wasn’t always the best, maybe my attention wasn’t always the best, but I was always a good writer, and I enjoyed it. That particular teacher focused on what I was good at and that empowered me to excel in other areas.

 

Takeaways:

Don’t sugarcoat your problems.

Know what you stand for.

Keep looking to do it better.

Published in St. Louis