If you happen to be wandering the aisles of one of Dixieline Lumber Co.’s 11 home center stores, don’t be surprised if the person who offers to help you is Joe Lawrence, president of the company.
When Lawrence says that he likes to lead by example, he can point to numerous instances of doing just that. That’s because at one time, he’s held most of the positions in the firm since starting as a lumber handler 23 years ago. “I have personally worked a lot of the positions, so I have a great understanding of the business,” says Lawrence. “Our management team has an open-door policy with our people and our customers. We expect each other to be in the field interacting with our people and exchanging ideas and gathering feedback. I see myself as one of the guys.”
His affinity for people makes him a likeable leader, but it’s Lawrence’s skill in managing employees, his hands-on involvement in their growth and development, and his passion for customer service excellence that have been the underlying reasons for his success in helping to guide the organization even before assuming his current role in March 2005.
Lawrence says that much of the credit for his success lies in his management structure, and his style of management transparency and empowerment that has enabled his team to stay focused and productive, and to grow.
Command and control doesn’t live here
Lawrence involves seven of his key executives in a management committee that authors and executes the business plan for the company. He considers one of the additional benefits of the system to be staff development. “I’m not a micromanager,” says Lawrence. “I prefer an open-forum style of management, so we meet as an executive leadership group formally once a month and then individually on an informal basis throughout the work week.”
The agenda typically includes a review of the financial results and projections, as well as preparing the annual presentation of the business plan to the rest of the management team. The most significant outcome from the committee has been much of the strategy for expansion and diversification of the business model, but it’s Lawrence’s leadership that sets the tone.
“The plus of having an open discussion is that we can reach a general consensus,” says Lawrence. “We have a debate if need be, but there are ground rules. The comments have to be professional, not personal, and I don’t allow generalities for comments; they have to be specific.”
Lawrence also acts as referee, and in the case of an impasse, final arbiter.
“I will let the debate go on, because first of all, I want them to own the result, and second, I want them to come to a consensus,” says Lawrence. “I think that some disagreement is healthy. For example, I don’t expect the sales folks and credit [department] to always agree as to what is an appropriate level of risk. The group has to be trusting and a bit thick-skinned at times and sometimes opinions are expressed that may not be consistent with the thoughts or expectations of others.”
With a major corporate goal of expansion of the firm’s footprint outside of San Diego, the committee reviews the demographics of the expansion, identifies the targeted customer base and sets the sales strategy. That formula resulted in success when Dixieline initially broke into the San Bernardino market by expanding into Colton. Later in 2006, Lawrence took advantage of his weekly one-on-one meetings to provide some staff development related to the expansion. “I like to teach my managers that they have to be adaptable,” says Lawrence. “Many people want things in black and white, but that’s not the way things in leadership usually are. I try to get my managers to play out the ‘what ifs’ in advance. As an example, after our Colton expansion, there was a downturn in the local housing market, and the business slowed. “Some members of the committee wanted to diversify the business model. In one-on-one sessions with them, I asked what message that move might send to our customers or competitors. We have since found other business to bolster that location.”
Success through people
Dixieline has more than 1,100 employees, and historically, most of the talent needed for the firm’s expansion has come through internal promotions and a highly structured employee development system. That strategy is still a large part of the culture, and because it is so important to the human capital plan, it is overseen by Lawrence. “I like to be able to dangle the opportunity for upward mobility in front of new hires and, of course, I use myself as an example,” says Lawrence.
All employees have a formal development plan, and the pipeline of internal candidates is reviewed each month at the management committee meetings. Each location has a separate turnover target based on the line of business and each position.
Turnover for the lumber and home center industry for 2005 was 35.7 percent, while Dixieline had a turnover rate of 23.5 percent. For just the retail side of the business, the industry average in 2005 was 57.2 percent, while Dixieline posted 32.3 percent turnover.
The goal is to achieve less than 30 percent turnover in the business centers and to average no more than 30 to 35 percent turnover on the retail side. By doing so, the company keeps a consistent employee base that is more knowledgeable and spends less money on recruiting and development.
Lawrence says a command-and-control environment hampers people’s growth, and continuing to develop good people means letting them learn and think on their own without overseeing their every move. He says his deliberate choice of management style enables internal promotion and the people development system that has gotten Dixieline to its present status. “I believe people want to be involved in building the business and contribute to the overall success,” says Lawrence. “If we are always told what to do, not only will we not grow the business, but we will stagnate the growth of individuals.”
Shopping for attitude
“Today’s builder wants a one-stop shop,” says Lawrence. “That has necessitated the need to make acquisitions outside of our core competency, so now we are looking at and evaluating building materials distributors, and shops that manufacture doors and trim.”
In addition to looking at the numbers, Lawrence visits every prospective acquisition to assess its philosophy on customer service and quality, because it is here where he finds the true fit. “I look for acquisitions where their business has a synergy with our core business and their executives share our core beliefs about customer service,” says Lawrence. “We want to retain many of their people, and I often find that if they don’t have a strong sense of customer service ingrained as a philosophy, it’s hard to teach.”
Success for Dixieline on the consumer side of the business has come through positioning the firm as an alternative to big-box retailers such as Lowe’s and Home Depot, something Lawrence also credits to strong customer service. “Having roots as a family-run company helped to create our culture of customer service,” says Lawrence. “I believe that consumers like to have choices. We have more people out on the floor so we run a more expensive model, but we also run at a higher margin. I believe in the ‘Moments of truth’ philosophy in customer service because every transaction is important to us.”
Lawrence is referring to the popular customer service mantra that espouses that each interaction between a customer and the company’s frontline personnel creates an opportunity for the customer to leave with either a negative or positive perception of the company’s service, based on his or her experience.
To begin the process of dedication to excellence, all new staff members begin customer-service training on their first day of employment, followed by product-knowledge training accomplished through vendor presentations.
The results speak for themselves.
“Since 1980, there have probably been close to 20 big-box locations that have opened in San Diego,” says Lawrence. “In spite of their growth, we’ve been able to more than triple our business during that same time. I think it’s a misnomer that you can’t run at higher cost and be successful just based on the financials. It’s all about the throughput analysis.” On the retail side, Lawrence measures transactions per labor hour, using a different target for each location, as well as staff turnover, because that affects a customer’s experience. And the firm has achieved a reputation as a preferred employer with dedicated employees who have been promoted through the ranks.
While many firms have gotten out of the retail hardware business, Lawrence has jumped in, adding the consumer market to counterbalance homebuilding, as well as adding solutions for the remodeling, custom homebuilding and repair markets. In 2005, the firm had record sales of just over $400 million, led by the home-building segment.
Lawrence was a visionary and an initiator of a diversified business model long before he became president of the organization. Initially, Dixieline was solely dedicated to supplying lumber and materials to builders. As he moved up in the organization, Lawrence watched the economic cycles take a toll on the company, its customers and employees.
In convincing the owners to diversify, Lawrence established himself as a future leader and set the company on a course of economic stability. His takeaway from those experiences includes lessons in persuasion and persistence. “I was persistent about my beliefs,” says Lawrence. “I found others internally who shared my vision, and together, we created a nucleus of the same vision to diversify and grow outside of San Diego and become a regional player in the entire Southwest area.”
Dixieline’s success attracted attention, and the company was bought in 2003 by Lanoga Corp., which was, in turn, bought last year by Pro-Build Holdings Inc., a subsidiary of Fidelity Capital.
The experience of being acquired twice after so many years as a family-owned company has had its advantages and its learning moments. While there is additional support for the vision of becoming a regional player, Lawrence sees the education process as having benefits for both sides. “What I have learned from this is to be open to listening to new ideas and new ways of doing things,” says Lawrence. “However, what we bring is knowledge of the local marketplace and how to be successful here, and that’s a competitive advantage. I think we will thrive by learning from each other. “Day-to-day, we are still a local company, and the burden is on us to grow our strategic plan. I am always an optimist. There is always a way to make something work; you just have to work harder than the next guy.”
HOW TO REACH: Dixieline Lumber Co., www.dixieline.com
But despite our reliance on technology, it’s important that we not lose the basics of our relationship skills. We need to hold ourselves to a higher standard when it comes to dealing with people.
Here are some things we can do today to make sure that the first impression we make is a good one. 1. Send a letter instead of an e-mail after meeting someone new. This may feel like a hassle, but that person will take notice and know that you went the extra mile to make him or her feel important. 2. Be professional. It is very acceptable in today’s society to dress down or settle for basic etiquette. But first impressions are everything, and we should make the other person feel important. You also send a message about who you are with how you dress and behave. Make sure your appearance and actions send the right message. 3. Drive these ideals across your organization, from the top managers to the receptionist. Anyone in your organization who encounters anyone else represents you. As the leader of your company, you are responsible for the first impression being made on your behalf. Make sure it is the one that you want. 4. Reassure your customers. When dealing with new customers, it is important that they feel they made the right decision to do business with you. It is always helpful to send a thank you letter letting them know that you are aware of them and that you appreciate their business, regardless of the size of your company. I am not talking about a form letter that you stamp a signature onto, but a letter they know that you personally wrote and signed.
When you take the time to do the little things to make sure you and others within your company are making a good first impression, people will see you and your business in a better light. Their perception of your professionalism and level of service will increase, helping you gain new customers and keep old ones.
Be vigilant about these things, because you only get one chance to make a first impression. A blown opportunity to impress a potential new customer won’t come again.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at firstname.lastname@example.org or (800) 988-4726.
Deborah J. Martin has a healthy respect for change. In fact, the COO of PRA Destination Management says not being receptive to change is one of the most common mistakes leaders make.
“Do what you’ve always done, and you will get the same results,” Martin says. “You must remain fluid and change with the times in order to survive.”
Martin has spearheaded plenty of change during the 16 years she’s been at PRA, a franchiser of destination management companies with 18 locations nationwide. She oversees four of PRA’s Southern California offices, with 60 full-time and 200 to 250 part-time employees.
Smart Business spoke with Martin about why communication is key during times of change and why you must empower your employees to succeed.
How do you manage change?
Sharing how the change came to be and the desired result is basic. However, it is amazing how often this step is neglected. As a leader, you must break it down clearly and not assume employees understand the rationale for decisions. Communication is the key, and that includes outlining expectations.
During times of change, employees need a more directive approach. It is important to provide compelling reasons for change and involve others in plans and decisions instead of simply dictating them.
What is your leadership style?
I communicate clearly so there is little room for misinterpretation. I do my best to hold employees accountable. To be a successful change agent, you must empower your employees.
I work hard to balance being hands-off, yet accessible. Part of my job is to bring up the generation behind me. If I keep taking back the power from employees, they will never learn.
I was afforded the opportunity to make mistakes and learn from them, and I give that same benefit to staff. Nobody should fear their livelihood will be in jeopardy if they make an honest mistake.
Although there are always some people who want lots of direction, most of our employees are independent, responsible and self-motivated. With this caliber of employee, a micro-management style would be disastrous.
How do you deal with trends in the industry?
First, you have to be aware of the changing tides. I stay immersed in the latest developments in the industry in a number of ways, including attending trade shows.
However, the most effective method I have found is to stay in close contact with our competition. I have built rapport and a collaborative spirit with many of our competitors over the years.
Three years ago, there was a local industry development which would directly impact the destination management business. I knew our voice would be heard louder if we worked in unison with other destination management companies.
The end result of working together was a healthy respect for one another and a unified approach to issues that affect all of us.
What has been your greatest business challenge?
I was born with a hearing problem, and for many years in my professional life, I did not admit it or ask for help. When the director of the company told me he had concerns about whether I could manage the job, it was a turning point for me.
I got a hearing aid, which was hard, since I saw this as a visible sign of weakness. Everyone has an area they need help in one of mine happens to be physical. I had a talk with myself and concluded that I needed to get a grip and ask for help.
My advice to leaders is to admit these shortcomings rather than pretending they are not noticeable. It’s better to get help before your weakness overshadows your strengths.
What advice would you give new CEOs?
Pay your dues. I have noticed there seems to be more of an aversion to this lately from Gen Y hires.
You cannot perceive anything as too lowly or menial. Performing a wide variety of functions in the business gives you knowledge and empathy for staff when you become a CEO. You can’t be afraid to get into the weeds if you want a leadership role in the future.
HOW TO REACH: PRA Destination Management, (619) 234-9440 or www.pra-san.com
In today’s global economy, American companies are afforded tremendous opportunities to diversify business risks and capture additional market share. However, there are corresponding risks to the rewards that are associated with conducting business internationally.
Highly volatile, any given currency fluctuates 1 percent during a 24-hour period, points out Gary Loe, vice president at Comerica Bank. This volatility translates into the need to manage the risk of rising or falling foreign exchange rates.
“Identify your exposure and establish a floor or worst-rate scenario,” advises Loe. “Protect that rate by using one of your foreign exchange hedging vehicles.”
Smart Business spoke with Loe about the basic principles of foreign currency hedging, what the current environment looks like and how to best strike a balance between risk and return.
How does foreign currency hedging work?
A foreign currency exposure is typically created when a company imports, exports or establishes an offshore physical presence. Due to potential valuation change from one currency to another, the result is currency risk. This risk will require active management or risk transfer. Whichever occurs, a currency hedge program should be investigated. Different companies will have a different hedging profile. Hedging is the tool to address currency risk.
What are the different types of foreign currency hedging vehicles?
There are three basic vehicles, although there are variations upon these three.
The first type is a spot transaction, which is the immediate buying or selling of one currency for another. Using the market price today, settlement usually takes place within two business days. A company that only transacts using spot trades is typically accepting the most risk.
The second vehicle is a forward contract. The price is locked in immediately, but settles on a date in the future. Monies do not change hand until that stipulated future date. Theoretically, the forward price can be the same as the spot price; however, the forward price, based on interest rate differentials, is usually either higher (premium) or lower (discount) than the spot price.
Finally, there are option contracts that provide the company the right, but not the obligation, to purchase or sell a specific amount of foreign currency for a specific date in the future. For this right, the purchaser of the option pays a premium which is payable immediately. This cost is determined by many factors including the option strike price, current spot price, forward adjustment (interest rates), market volatility and forward date.
When creating a hedging plan, what strategies should be considered?
First, it is important to note that there is no one best way to create a hedging plan. Each company may determine to use different tools that apply to its individual situation.
However, one consideration that should be taken into account is how much exposure you have. Are you conducting business in U.S. dollar terms or foreign currency terms? Even if conducting in U.S. dollar terms, your company can still be exposed to exchange rate movements if your foreign party is or feels forced to change those terms due to exchange rate movement. Developing a budget or other financial analysis can help identify foreign exchange exposure. Typically, a company will establish a budget or forecast, then choose the vehicles to use and subsequently validate them against the company’s appetite for risk.
What does the current environment for foreign currency hedging look like?
Most industrialized countries have freely open markets in foreign exchange such as the U.S. dollar, euro, British pound, Japanese yen and Canadian dollar among many others. The foreign exchange market is the largest market in the world with more than $1.5 trillion (U.S.) traded daily. This is bigger than all the stock and bond markets in the world put together. Therefore, the market is very liquid.
There are, however, countries where it is very difficult to impossible to physically deliver currency. China is one such place that curbs its money flows. This is due to Chinese central bank restrictions. Regulations in some countries can change constantly so it can be important to stay in touch with your bank’s foreign currency adviser.
How can a business best strike a balance between risk and return when hedging in foreign currencies?
Probably the term with more weight is risk. Your company is probably not in the game of foreign exchange speculating. It is most likely buying or producing a product for sale or providing a service for sale. Therefore, it should concentrate on what it does best.
Most companies would be better served by eliminating as much foreign currency risk as possible. However, some business situations cannot completely eliminate risk. In this situation you can try to set a downside floor with the use of such vehicles as options. Setting a floor with an option or leaving an order to buy or sell on a stop-loss basis can also leave potential upside returns on a hedging strategy.
GARY LOE is vice president at Comerica Bank. Reach him at (800) 318-9062 or email@example.com.
Just count the number of well-known and formerly well-respected CEOs who have fallen on their swords after revelations that they were involved in the practice of backdating stock options.
The benefactors of their ignominious actions have been co-inhabitants of the executive wing. Misguided corporate titans have seduced the best and brightest to join their companies with the lure of a guaranteed fortune from “opportunistically” dated options. And in too many cases, they have been driven by egregious personal greed.
When the first few incidents of backdating options surfaced, some thought they were isolated cases, perhaps attributable to a CEO using a malfunctioning PDA that randomly transposed dates or dropped a digit or two. Initially, apologists for corporate America donned their rose-colored glasses and said, “No big deal, this too shall pass.”
But it didn’t pass. Instead, it became painfully obvious that the practitioners of this new calendar math seemed to multiply exponentially to epidemic proportions.
How could this be? Aren’t CEOs supposed to be captains of our free enterprise system, who not only inspire and innovate but also lead by example, disseminating their advice to subordinates while holding themselves to an even higher standard?
It may have started with a few executives justifying that they were simply trying to find an economical way to hire or keep top performers. With the equivalent of getting a sneak peak at tomorrow’s stock prices today, they picked an option grant date that guaranteed new riches to the recipients.
At first, a misguided CEO thinks, “I’m doing this for the good of the company. So what if it is a little on the gray side? What counts are the end results.”
Dozens of similar scenarios have no doubt been played out in the run-amok executive’s mind. However, none would pass my “Mother Rule.” Forget Sarbanes-Oxley; if you wouldn’t want your mother to know you did something, then it’s gotta be wrong.
The crack-cocaine addiction in Corporate America doesn’t always involve a white powder sometimes, it’s just the stroke of a pen. How could reasonably intelligent executives get themselves into so much trouble? It has to do with their super-sized sense of self, incessantly fueled by the yes-men whose full-time jobs are to pave the way for the boss. The CEO starts to think he’s omnipotent because he has the power to make things happen.
There are antidotes to stem these illusions and keep managers on the straight and narrow. The most effective is a simple reality check that keeps you grounded and curbs rash impulses to take the first bite of forbidden fruit. Don’t isolate yourself and only hang out with people who are suck-ups.
You must regularly talk one-on-one with employees on the lowest rung. Get off your derriere, go to the cafeteria and break bread with the troops. These sessions will be an eye-opener. You’ll quickly realize that your employee’s problems are strikingly similar to your own. They just want to do their job right and take care of their families.
Most important, you’ll learn that they hold you and your abilities at a very lofty level. Although it’s a frequent favorite American pastime to criticize the boss, in truth, most employees think their bosses, particularly the CEO, are much better leaders than they really are.
Your reality check will kick in when you realize that bad actions trickle down and can have devastating effects on every employee. If you make a bonehead decision, or are ever tempted to cross the line between right and not-so-right, think twice about the consequences, not just for you but for your people.
It’s your duty as the boss to ensure that your employees and investors are first in line before you. If you follow this path, you’ll often wind up with a bigger payoff for yourself, be it economically or in personal gratification or the increased esteem of your associates.
The Wall Street saying describing the greedy is, “There are bears, bulls and pigs.” For those with questionable motives, I would propose, “There are bears, bulls and crooks.”
CEOs who backdate stock options and commit other acts of malfeasance prove that so few can do so much damage to affect the perception of so many who always try to do it right. The good news is that most executives follow their own words by doing themselves what they ask others to do, without ever taking a PDA out of their pocket.
MICHAEL FEUER is co-founder of OfficeMax, which he started in 1988 with one store and $20,000 of his own money, along with a then-partner and group of private investors. During 16 years as CEO, he grew the company to almost 1,000 stores with sales approximating $5 billion before selling it for almost $1.5 billion in 2003 to Boise Cascade Corp. In 2004, Feuer launched another start-up, Max-Ventures, a venture capital operating firm that focuses on buying control and/or making substantial investments in retail-oriented businesses and businesses that serve retail. Reach Feuer with comments at firstname.lastname@example.org.
When Mike Dendo meets with clients, he wants to meet everyone at that company who is pertinent to the success of Mad Dog Multimedia, regardless of their title. For example, he once invited a woman who replenished Mad Dog’s products to a meeting, even though her position was lower than that of the person Dendo was supposed to meet with. Although the woman wasn’t a big shot at the company, Dendo felt she was crucial to the success of Mad Dog, and he wanted her input. That kind of respect for everyone involved in getting out Mad Dog’s computer-related peripheral products has helped Dendo grow the business, which he expects to hit $40 million in revenue this year. Smart Business spoke with the CEO of Mad Dog about how he puts customers first and why he hires team players.
Engage customers. We listen to our customers closely. We get them engaged in our strategy. We let them poke holes in our strategy. If customers are part of a strategy, they buy in and support you more.
We’ll sit down with them and show them a product launch strategy and what it consists of; engage them to see what they believe they could sell. Through that process, they’ll talk and they’ll get engaged because you were smart enough to come to them not with the answer but, ‘Here’s the situation. What’s your honest thoughts?’
There’s a creative side to everybody. If you try to engage that with the customer, then they’ll talk to you.
Understand customers. The head of the company needs to understand the customer, needs to communicate to the customer.
If you decide to build widget C, and in two years they don’t think they’re going to be in the widget C business, that’s probably a bad strategy. Until you talk to them and understand what their directions are, you could make a lot of mistakes.
Check your attitude. The Sonys of the world don’t always have the best product, and Mad Dog Multimedia isn’t always the best product out there every single day of the week. What makes retailers want to sell your product or what makes consumers want to buy your product is your attitude. It’s how you do business.
Don’t constantly change. Be honest with yourself in running a company or starting a company. Don’t change yourself unless you have a lot of shortcomings that could affect the business.
Have the business be what you want it to be. Don’t try to be a chameleon. Be honest with yourself, be honest with your customers and be honest with your employees.
Don’t make the same mistake twice. I’m an old-school guy. I still cherish all the foundations that my father taught me in my personal life, and that’s if you make a mistake, great. Why’d you make it? Why aren’t you going to make it again?
Don’t make it again. If you make it a second time, then we have some problems.
Have high standards. I’ve not made any bones about who I am, what my goals are, what type of person I am. Everybody in the company knows what I am.
I’m impatient. I’m exacting. I want excellence. Mediocrity is just not something I deal with too well. Mediocrity is what companies with lots of money can afford. Companies that start with $85,000 and have never had any capitalization can’t afford mediocrity.
Hire team players. They have to cover for, help and support. There isn’t any part of this business that stands alone. One of the things that you see in business that slows them down and makes them unprofitable are silos.
These stupid little business silos inside a company where, ‘Oh, this is my area. You don’t come in, and I only have to do my area.’ That doesn’t work. You have your job to do, but you’re a team player because everything you do supports somebody else.
At the end of the day, ain’t no bones about it everything we do supports sales, and if you’re not selling, or you’re causing sales not to grow, you got a problem.
Enjoy your business. The thing I always ask is, ‘Do you enjoy your company?’ That sounds silly, but there have been times when I haven’t. There have been many times when people running companies our size, larger or smaller, they come to work and flat out don’t enjoy it. That’s the No. 1 barometer.
I picked that up from a successful guy in Texas. I was sitting with him in Arizona at a show, and he says, ‘Mike, I just don’t like it.’ I said, ‘Why don’t you like it? You’re running a very successful business.’
He said, ‘I don’t like it. I don’t like how this is happening, and boom, boom, boom.’ I said, ‘You ought to sit down with your partners.’
I never imagined that happening, but it happened to me not too far along after that. I sat down with some of the key people in the company and just told them how I felt. One of the things is, ‘Are you happy with your company and what it is?’ I didn’t say, ‘Are you happy with your stock price?’ I didn’t say, ‘Are you happy with the equity in the company?’ I didn’t say profitability. I said, ‘Are you happy coming to work every day?’ That’s the No. 1 thing that is a great test in terms of looking at your company.
Get into the details. Get into the minutia. There are many places where there’s money to be made. I look at people that are turnaround experts, and they come into companies and start cutting this, slashing that and getting rid of this person and these jobs. That may be the right thing to do, but did you go to all the other parts of the (profit and loss) before you put someone on the street in the name of cost cutting?
Whatever business you’re running, go to your highest cost points in the business. Typically, you see that your highest cost points are not people. Your highest cost points are other items, from freight to logistics to marketing to all of those things.
Drill down to the smallest numbers. My CFO said, ‘I’ve never seen any person fight for 10 cents like you fight for 10 cents.’ Ten cents in our market might be three margin points.
I fight real hard and look at those details because you add up the pennies, they equal dollars, and dollars equal the profitability.
HOW TO REACH: Mad Dog Multimedia, www.mdmm.com
Complaining clients will tell you where they perceive your business is falling short, giving you the opportunity to improve products and services that might otherwise go unrecognized. In addition, providing a timely resolution to complaints has the effect of increasing client loyalty beyond the level that would have been achieved had the problem never occurred.
Do not think of what it will cost to fix a complaint. Think of what it will cost if you do not fix it.
“Satisfied clients may speak about their experience to a handful of people, but a dissatisfied client will broadcast his concerns to all who will listen,” says Holli Hammarquist, senior executive of client services for International Profit Associates. “With the advent of the Internet, their voice travels farther and spreads faster than ever before. The multiplier effect is prolific. In addition, because large portions of satisfied clients never sing your praises, you are missing important feedback.”
Smart Business asked Hammarquist about how business owners can best deal with complaints.
What steps should businesses follow to handle complaints?
The first and foremost important step in handling complaints is to create a certain mindset within the business itself. The business as a whole should look at complaints as a source of opportunity. Clients whose problems are resolved quickly tend to be more loyal to, and supportive of, the business than those who do not experience any problems. So train your employees to listen to a client complaint with as much attention as they would to an extremely satisfied client.
Second, be prepared for the number of complaints you receive. The worst mistake you can commit at this stage is to cut back on your efforts or start believing that there is a decline in product service or quality. If clients or potential clients do complain, they are doing your business a service and enabling you to improve.
Third, develop a complaint management system by going through past complaints and generate a comprehensive list of the ones that are most likely to come up. Classify the complaints into various categories based on their seriousness and specify a complaint resolution timeline for your employees to follow.
The complaint management system should: (1) be easily accessible and well publicized; (2) be simple to understand and use; (3) allow speedy handling, with established time limits for action, and keep clients informed of the progress of their complaints; (4) respect the client’s desire for confidentiality; (5) provide an effective response; and (6) provide timely information to management so that services or products can be improved.
How should a business respond to a complaint?
Train and then empower client service executives to resolve complaints quickly. Define the escalation path for complex and difficult-to-resolve complaints, and encourage complaint closures by incentivising satisfactory resolution of complaints.
When training client service executives, remember some basic rules to handling a complaint:
Listen. Resist the temptation to argue. Instead, ask questions, listen without interruption and rephrase back to clients what you heard to indicate that you understand the issue. Find out what is making them complain which may not always be the topic of their complaint. Listening is the most effective way to deal with the emotions of complainants and to understand the source of their concern or frustration. To uncover the real problem and determine an appropriate response, ask them what resolution they are expecting.
Do not be defensive. Allow the client the time to be heard. An upset client should not be put on a time clock. Acknowledge the validity of the complaint. If the client becomes angry or frustrated, reassure him emotionally before dealing with the issue logically. Even if the complaint seems bizarre, it probably contains a grain of truth. Try to learn something from it. Any complaint from a client is a 100 percent bona fide, major issue to the client. His or her perception is your reality.
Research the problem and look for lessons before making any decisions. Find out what actually happened from both sides. Does it need to be fixed, or is it a onetime issue? Has the client misunderstood something? For complex problems, give yourself time to figure out a proper resolution. If the situation was caused by something that can be controlled, implement a system to prevent it from happening in the future. Know that if one client complained, others are feeling the same way.
Give the client a choice of possible resolutions. Suggest a way that works for both of you. Sometimes just listening to a grievance and acknowledging it is sufficient. At other times, the client is looking for more. Be creative, find an equitable resolution to the problem and make sure the client agrees that it meets his or her needs. Always, make sure to thank the client for helping make your business better.
HOLLI HAMMARQUIST is a senior executive of client services for International Profit Associates, Buffalo Grove, Ill. IPA's 1,800 employees offer consulting services to businesses throughout the 50 United States and Canada. Reach Hammarquist at (800) 531-7100 or email@example.com or www.ipa-iba.com.
Interest in professional development programs continues to grow. As technologies, new ideas and new laws advance, companies are looking for ways to keep abreast. Individuals also are seeking ways to advance their careers. With more than 4,000 colleges and universities around the U.S., it is important to choose the right program for your needs.
“This is a huge industry and, while most schools do a good job at what they do, some do not,” says Tom Green, Ph.D., associate provost at National University in La Jolla. “The first areas potential students must identify are their own needs and expectations from a professional development program. Then they can determine which schools might fulfill those needs.”
Smart Business talked with Green about how companies and individuals can best choose the right program for their needs.
What options should be considered when looking at professional development programs?
The first area to consider is the importance of a degree. If a degree is important, then you need to find the programs that lead to the degree you wish to attain and then determine which of those programs is best for you. If a degree is not as important as the skills or knowledge desired, then you look for the program that provides you the most information in your area of need for the time and funds expended.
While some people are just looking for extra initials after their name (in that case almost anything will do), most people are returning to school to broaden their knowledge or to gain additional skill sets.
What criteria should be used to find the right program?
If you are looking for a degree, you need to find out if the college or university is regionally accredited. If the degree is a precursor to licensing, then you need to look for specific accreditation. It is then important to look at the specific program for the degree and the individual courses offered. How does it all fit with what you want to do next? How open is faculty for discussion of your needs and how their offerings fit those needs? Are graduates available to provide additional insight? Talk to others in your organization about their experiences.
If a nondegree program will fit your needs, it is important to have a sharp focus on just what those needs are. Is the purpose to refresh skills or gather new knowledge? Will the course make a difference in your organization? Will you be more effective in what you are doing or will this course open new doors?
How do you know if the program is right for you?
Review the courses. Does the delivery method match your particular learning style? Visual learners have different needs than verbal or participative learners.
Do the instructors have real-world experience? The teachers should be academically qualified and can be most helpful if they have experience in the field as well. A good combination of practicality and theory is especially important for adult learners. Some programs are now adding the component of application, which also comes from real-world experience.
Another area to consider is who else is taking this program. The educational content may not differ much among several programs, but the other participants might vary widely. Networking can be a very important component of learning and advancing.
If you are looking for specific knowledge, is the supplier willing to customize a program to fit your needs? Some universities have set their ways and cover broad interests. Some smaller schools may have the ability to tailor their program to fit your specific needs.
Look at the oversight. What are their standards? What are the important elements and how are they met?
Are there any other considerations?
It is so important to be a smart consumer. You have many choices, so you need to be a savvy shopper. It is up to you to analyze and match your needs with what is offered. The more you can learn about the programs that are available, who is teaching them, and how others view them, the better your ability to make the right decisions to move ahead in the competitive environment in which we live and work.
TOM GREEN, Ph.D., is associate provost at National University. Reach him at firstname.lastname@example.org or (858) 642-8493.
Whoever said that business and pleasure don’t mix clearly never met Greg Koch. When Koch and fellow beer aficionado Steve Wagner founded Stone Brewing Co. in San Marcos in 1996, the duo began building a team that, while diverse, shared one defining characteristic.
“Essentially, everyone here is different in every imaginable way, with one single point of convergence, which is a love for what we do,” Koch says. “That passion has been absolutely critical to what we’re all about and to our success.”
Now celebrating its 10th anniversary, Stone has experienced explosive growth in recent years, with revenue of more than $12 million in 2005, a 100 percent increase over 2002 revenue.
Smart Business spoke with Koch, chairman and CEO of Stone Brewing, about how his employees’ enthusiasm for brewing drives his company’s growth.
Q: What is the most important thing the CEO of a growing business must do?
You’ve got to be true to why you started and what you want to accomplish, and if you’ve changed from that, to really understand why. Was it because the original concepts and values were not valid, or because they got lost along the way?
It’s always good to bring a certain level of ignorance into business, the old ‘not knowing you weren’t supposed to do it that way.’ That, of course, is why people do new things and do things [about which] the veterans of a particular industry might have said, ‘Oh no, you’ll never be successful doing that.’
Our culture has stayed very similar. We’ve gotten larger, but again, we’re a passion-driven company, so we’ve been very careful to maintain that ethos.
It has been a challenge to keep focused on that passion from Day One. You get hit from a lot of sides, maybe even more so in the start-up phase. In the early days, we were certainly passionate, but we weren’t so certain we could afford to be passionate.
But we were bold enough to stick to our guns and maintain our philosophy, even though many naysayers were around.
Q: How can other business leaders inspire passion in their own companies?
They should make sure they’re doing something that’s worth being passionate about. In the simplicity of that statement is the beauty of it.
Literally, if you’re in a business that is concentrating on making something that is in the realm of the lowest common denominator the cheap, the inexpensive, the for-the-masses that’s something that’s very difficult to inspire people with. Of course, a lot of companies talk about wanting to be inspirational or to inspire their staffs, but then they intentionally set out to do things that, by their very nature, aren’t very inspirational.
What can you do if you make widgets, which are not necessarily good at inspiring passion? What can you be passionate about? Well, maybe you can be passionate about the ethics of your company, etc.
Q: How important is it to take risks?
It depends on perspective. For example, if we put out a beer that is really different from anything else nobody is asking for a beer of that style, but we think it’s absolutely terrific-tasting and we really enjoy it ourselves is that a risk or is that not a risk?
We already know what it tastes like, and we have great taste and we release it. I think that means we know what we’re doing.
You want that risk-to-reward ratio to be in decent balance. The idea isn’t just to throw stuff against the wall and see what will stick; you want to make educated risks.
Sometimes you have to go with your gut, certainly, especially if you’re in an area where you feel you’re privy to things that maybe not everybody else might be keyed in to yet.
Q: How does a leader’s responsibility change as his or her company grows?
You need to learn new sets of skills to deal with a larger company. And you have to be willing to be flexible and to change yourself as you’re asking others around you to start approaching something from a different perspective from the way you used to do it.
In many cases, you have to work hard to make sure you don’t have to make those kinds of changes. Sometimes you’ve got to bend over backward in one direction or the other so you can maintain that original culture.
My job is to make sure we have the framework in place within which people can be a part and contribute and get excited about what they do here, and to make sure that I steward the path of Stone Brewing so that we can maintain the focus of what we’re all about, which is great beer.
HOW TO REACH: Stone Brewing Co., www.stonebrew.com
Don’t presume you can judge a person’s fitness by eyeballing their obvious handicap, says a Second District Court of Appeal. A higher level of due diligence is needed, noted the jurists one that demonstrates that an employer has engaged in an “interactive process” with an applicant or employee with an actual or perceived disability before deciding whether he can or cannot perform a job.
Significantly, the decision also establishes that an employer has a duty to provide reasonable accommodation to a worker who is merely perceived as disabled, even if he or she is not actually disabled.
The court’s June 2 ruling in Gelfo vs. Lockheed Martin Corp. establishes that an employer cannot rely on outdated medical records, workers’ compensation records, or its perception of an individual’s disabilities to determine whether an employee is able to perform the essential functions of a job.
Relying on the California Fair Employment and Housing Act (FEHA), Gelfo emphasizes that an employer has an affirmative duty to engage in the interactive process with an employee or applicant with a known disability. The court interpreted “known” to include those instances in which an employer is aware or perceives a disability, whether such perception is erroneous or not. The court noted that although it is the employee’s burden to initiate the process, “no magic words are necessary, and the obligation arises once the employer becomes aware of the need to consider an accommodation.” Interestingly, this appears to contradict the plain language of FEHA, which provides that an employer must engage in a “timely, good faith interactive process ... for a reasonable accommodation in response to a request for reasonable accommodation by an employee or applicant ...”
Smart Business spoke with David P. Wolds at Procopio, Cory, Hargreaves & Savitch LLP, about the decision’s impact on California employers and their work force.
How important is this decision?
This decision is extremely important because no published California case before it has ever considered whether an employer has a duty under FEHA to provide a reasonable accommodation to an applicant or employee who is not actually disabled. The Gelfo ruling answers this question in the affirmative. The decision also clarifies that an employer has an affirmative duty to engage in an interactive process to determine whether an applicant or employee needs an accommodation even if the employee does not request it. An employer’s obligation appears to be triggered if it merely suspects that an individual may be disabled.
How does this case expand on the term ‘reasonable accommodation’?
The case does not expand on the term ‘reasonable accommodation’ but rather expands the class of persons who are entitled to it. Now applicants and employees who are merely perceived as disabled but do not actually suffer from a disability are entitled to a reasonable accommodation under FEHA.
How important is this ruling for employees?
As I mentioned, Gelfo expands the class of employees who are entitled to reasonable accommodation. It’s also important because this ruling entitles such employees to a greater level of evaluation regarding their fitness to work. It says that employers need to focus on current information about a candidate’s qualifications, not an obvious evidence of a disability, when deciding to offer or deny employment. In doing so, a firm must engage in a timely, good faith discussion with the person in other words, conduct an individualized analysis of a person’s ability to do a job. Both the applicant and the employer need to discuss potential accommodations the candidate might need to perform the job, and the hiring firm has to provide these if it is needed.
What kind of mindset must an employer possess when reviewing disability issues?
Practically speaking, employers must be careful when evaluating an applicant or an employee returning to a current position or applying for a new one. The bottom line is that employers should not unilaterally refuse an employee work based on an actual or perceived disability. Employers should engage in the interactive process and obtain current medical data and be cautious about relying on old information. Whether the employee can be reasonably accommodated in the new position must be determined on the basis of a current fitness review.
DAVID P. WOLDS is the Labor, Employment and Benefits Practice Group Leader in the San Diego office of Procopio, Cory, Hargreaves & Savitch LLP. Reach him at (619) 525-3875 or at email@example.com.