For Doug Bergeron, slowing down has never been part of the plan. He didn’t slow down after leading the buyout of VeriFone Systems Inc. from Hewlett Packard back in 2001. In fact, he spearheaded the turnaround of the struggling San Jose, Calif.-based company to return it to profitability. A decade later, VeriFone’s U.S. business has more than doubled to $500 million in revenue today, an accomplishment that somehow pales in comparison to the company’s global expansion.
“That’s pretty impressive, but what’s more impressive is that we grew our $100 million international business to $1.2 billion, 12 times the size of what it was when we purchased it,” says Bergeron, CEO of the company, which provides electronic payment systems and solutions such as credit card terminals.
Now that VeriFone has run out of time zones for expansion, Bergeron says his next challenge is mapping the road for the company to grow to $3 billion in revenue.
To set the strategy for the company, much of Bergeron’s time goes to finding ways to merge and partner with companies that can further its vision for point-of-sale payment solutions. Last August, he announced that the company may spend up to $1 billion annually on acquisitions in emerging markets and data services. Around the same time, it acquired the electronic payments company Hypercom Corp. for approximately $485 million.
“We’ve realized that we’re an integral part of the payment system but we need partners,” Bergeron says. “We’re not going to do this on our own.”
Bergeron seeks out partnership opportunities that can be meaningfully large in furthering the company’s major goals.
For example, in 2011VeriFone partnered with Google to incorporate Near Field Communication technology into the company’s payment systems and introduce Google Wallet, an Android application that allows consumers to make payments with their phone using virtual versions of their credit cards.
“It’s hard to participate with 25 small companies,” Bergeron says. “It’s better to pick ISIS, which is AT&T and Google, Groupon, partnerships with companies like that, that have staying power and a lot of financial resources. We know that we have confidence that we can get shoulder to shoulder with them and move a market.”
In addition to seeking partners with big shoulders, Bergeron isn’t ashamed to say he always looks for a good deal.
“We will never overpay for anything,” he says. “Remember we paid $50 million for VeriFone in a market that is $4.2 billion today.”
You also want to partner with businesses that complement things that your company is already doing.
“I look for businesses where part of the problem gets fixed by being inside VeriFone,” Bergeron says. “Maybe they lack international distribution. Maybe they lack an R&D capability that we have internally. Maybe they have great products but a lousy sales force. We have a great sales force. So I look for something that not only is a good value, but once we put it inside and take some time tuning it up, that the outcome will be a much better outcome than it would have been before.”
Lastly, try to acquire companies where you could take some of the managers and make them great managers within your business. Bergeron has brought on a number of VeriFone managers, presidents and executive vice presidents through acquisitions.
He makes it clear that once people join VeriFone, there is no combining cultures.
“I’ve seen companies go broke trying to bend over backward trying to merge their culture with your culture,” Bergeron says. “We’re a very successful company. It’s a great culture. It’s fun. It’s fast. It’s feverish. But we’re not going to compromise our culture for a company that we bought.”
To protect your culture, it’s important to treat people as common citizens of the company from day one so they don’t feel like outsiders.
“They are not from the other guys,” Bergeron says. “They are not from the competition. They are VeriFone. We’re a better company for that as a result of it.”
Make strategic investments
To double the size of a billion-dollar business, it’s no longer about deciding which markets to enter. It is about building out existing businesses and services. That begins with casting a wide net to find new and profitable business opportunities.
“We’ve taken the philosophy that we have to invest prudently and not wildly, but we have to have our nose in almost everything,” Bergeron says.
One of the newer markets Bergeron is excited about is taxicabs. While you couldn’t use a credit card in a taxi three years ago, today the company’s electronic payment technologies are universal in taxis throughout New York, Boston and Philadelphia. The key is to look for broad market opportunities, he says. Pick markets with lots of upside, and don’t pick too narrowly.
“A lot of stuff we have our nose in will never ever pay off for us, but that is the price of admission to having the certainty that all of the stuff that does move on from trial to mainstream, VeriFone will be a part of,” Bergeron says.
As a leader, you can’t be overconfident and think you know how to pick all of the winners from all of the losers. You innovate successfully by staying actively involved in many different projects and experiments.
“If you try to be too cute and say I’m going to work on this project, not this one, this one, not this one because I want to optimize my spend … inevitably you probably won’t overspend,” Bergeron says. “That’s for sure. But you are going to miss some of the winners.”
Once you’ve found what seems to be a profitable market, you’ve got to get completely committed.
“Don’t just allocate a little bit,” Bergeron says. “If you are going to pick some projects, get committed and put some wood behind your efforts.”
That may mean taking an initial hit to surface an idea with customers, whether it’s offering the product or service for free initially or on a trial basis. To get retailers get on board with Google Wallet, for example, Google has provided large subsidies for many retailers to be able to upgrade the VeriFone systems with the technology.
“Often in the beginning of new innovations, you have to make it free just to offset the chaos that you’re asking a customer to go through,” Bergeron says.
“We are counting on retailers coast to coast to post these pilots saying, ‘I want to be part of that. I see a lot of consumers wanting to use their phones as a method to pay. I want to get a piece of that.’”
In other cases, such as with putting credit card capabilities in taxis, it may just take some evangelizing until people begin to see the benefit.
“With usage, people find that people spend more on plastic,” Bergeron says. “Governments collect more sales tax. Everybody wins with the electronification of payments. Typically the resistance is fairly short-lived.”
Either way, the goal with any investment of time and resources should be stimulating business.
“Ultimately, beyond the chaos, if customers aren’t willing to pay for something then it’s likely that no incremental value is being delivered,” Bergeron says.
While it takes some patience to evaluate an investment, a CEO needs to have the operating discipline to be able to call a dog a dog. If an investment isn’t profitable, move on and spend your time, money and R&D expenses elsewhere.
“Things do sometimes take longer to progress than one would like, but there comes a day in the evolution of any project where milestones aren’t being met,” Bergeron says. “Customers aren’t adopting. Customers aren’t paying. I think economics can be a great determiner.”
Cast the roles
Bergeron says to scale properly, make sure the right people are in the right positions over time. One of the main ways companies don’t scale properly is by not making sure the right people are the right positions over time.
“They think that it’s the same job, the same skill set,” he says. “It’s not.”
Bergeron gives the example of Asia, which used to be a $50 million division for the company. “When Asia is $250 million, like it is going to be next year, that’s a whole different set of skills,” he says.
“The guy running Latin America is running the company, in a sense, bigger than VeriFone was ten years ago.”
Bergeron says it is his responsibility to ensure all employees in the first two levels of top management are the right people for their jobs every year. In a company that was approximately 30 percent larger in 2011 than it was the previous year, one year can make the difference in someone outgrowing his or her job.
“It might be that there is some terrific employee somewhere in this organization whose skills and whose drive and whose capabilities have tripled in the last 10 years,” Bergeron says. “But guess what? We are six times larger, and that person has fallen behind.”
Today, the company has 700 U.S. and 2,800 international employees. When you’ve reached a certain size, developing the next generation of leaders is no longer a matter or training.
“At a certain level of executive management, there really is no training,” Bergeron says. “We’re not IBM. We’re not going to be sending people to Harvard for a summer workshop.”
Instead, you need to work with people to improve their skill sets in areas that can prepare them for the jobs they will be filling, for instance, by exposing them to different experiences.
“Part of the human development business is identifying areas of growth, and not just saying here is where you need to grow and walk away, but giving them a chance to work on those areas and providing the necessary additional experience,” Bergeron says.
“If there is a guy that I think is going to be running a continent one day, not just a country, and my concern is he doesn’t have multicultural experience, then I make sure that I take him out of his comfort zone and I give him a couple of countries where they don’t speak English. He has to travel there and learn how business is done another way.”
Bergeron believes that the company’s commitment to promotion from within is a cultural strength. It motivates people that if they work hard they can scale with the business.
“I want to give people at least the more-likely-than-not chance that if they continue to improve, there is going to be another bigger job for them if they want it,” Bergeron says.
With rare exceptions, very few of the company’s current executives and managers were outside recruits.
“For the most part, people who are running large countries, large continents today, were sales people that became product managers, that became country managers and just continued to overperform at every level,” Bergeron says.
As for Bergeron, his board is still giving him the thumbs up as the right CEO for the job. With the company six times the size it was when he took the job, it seems like a pattern that won’t break soon.
“I guess I scaled pretty well because the board has kept me,” Bergeron says.
“Time will tell, but it sounds like it’s going to be a very exciting next three or four years here.”
How to reach: VeriFone Systems Inc., www.verifone.com
The Bergeron File
Chairman and CEO
VeriFone Systems Inc.
Born: Windsor, Ontario, Canada
Education: York University in Toronto, Canada — B.A. with honors in computer science; University of Southern California — M.S.
What was your first job?
I had a paper route from age 10 to 16, gave accordion lessons from 16 to 20, and played accordion on Friday and Saturday nights in a wedding band.
What is one part of your daily routine that you wouldn’t change?
I love reading to my kids before bedtime when I'm not out of town.
Who are your heroes in the business world and why?
I admire Larry Ellison for his tenacity and unwillingness to accept no for an answer. I try to live by that motto myself.
What is your favorite part of your job?
I love communicating to employees, customers, and investors. I love taking complex concepts and boiling them down to memorable and relevant simple themes.
Bergeron on the benefits of mobile payment technologies: The early word is that consumers are very anxious to replace a fairly simplistic experience that is the use of a credit card with a more robust experience that the retailer may know more about you based on the fact that your phone is a rich source of data for you. And as long as you permit it, the retailer may like to know who is there, why you are there, where you were before, what you are buying, (offering) some of the benefits that come from online purchasing, (such as) the one-click Amazon experience where they are suggesting other things to buy and knowing where to ship things automatically. There is an opportunity to create a richer customer-to-retailer experience once we start replacing cards with phones.
While some business leaders said the recession officially ended in June 2009, Tom McGraw would hardly agree.
“I think that those folks probably got into the Kool-Aid,” says McGraw, CEO of First National Bank of Northern California since 2002.
In 2009, the organization had a break-even year. And in the last three years, he watched as 345 banks went under.
“I think some of these banks that failed essentially were so paralyzed by the sheer volume of problems that they had that they just didn’t do anything,” McGraw says. “Then there were others who said, ‘Well, this thing is going to pass. It’s going to get better.’ For those people, denial was not just a river in Egypt. It was a way of managing things, and unfortunately, I think it led to their demise.”
Instead of being paralyzed by fear or in denial, McGraw thought that during the recession it was more important than ever for the bank to make the challenges facing customers and employees the top priority.
“By no means are we perfect, but I think we take a much more active approach when we have problems instead of trying to wait for them to resolve themselves,” he says.
Whether it’s with a customer or employee, McGraw wants to learn about people’s problems sooner rather than later so he can take swift action to address them. Personally, he’s found that having an open-door policy with customers and employees, especially in tough times, gives him the advantage of staying highly attuned to people’s needs.
On the bank’s home page, for example, McGraw lists his direct phone number and e-mail address so that customers always have someone to reach with any issue.
“I say, ‘Well, OK, if you’ve lost complete faith in us, then maybe that’s the right thing to do, but if you want to share with me what your challenge or problem or issue is, perhaps there is something I can do to try and turn it around,” he says.
Right away, McGraw also brought in all of the bank’s creditors who were struggling to help them find workarounds moving forward, such as switching to interest only payments.
“There were some where we had to take losses, but when those happened, we took them promptly,” he says. “We got them off the books as soon as we could rather than just holding onto them and hoping and praying that things were going to get better.”
For a CEO, this transparency and willingness to help also goes a long way in earning people’s trust and loyalty. More than 70 of the bank’s 180 employees have been with the bank for 10 years or longer.
“I think the access to management, our visits, our open-door policy — it really keeps a connection with what is happening within the system,” McGraw says.
By staying connected, you also know what people value and what keeps them inspired when times are tough. The company’s bank-funded employee profit-sharing plan has traditionally been a key factor in the company’s uniquely high retention rate. So while McGraw and his executive management team took no raises and bonuses in 2009, they were adamant about keeping the profit-sharing program.
“What we said is, ‘Look we’re in this together,’” he says. “‘If we can salvage a year and make some money, then we are all going to benefit from it. If we don’t, then we’re all going to have to feel the pain a little bit.’”
Through furthering a culture that ensures people are always a priority, McGraw has led FNBNC to survive a recession that many of its peers have not.
“You have to lead by example,” he says. “If you are going to ask people to take a little bit of a hit, I think that you have to, as well.
“Families stick together. They work through their problems. They’re not perfect, but they depend upon one another … and that’s the metaphor we like to use that holds for both our employees and for our retail customers.”
How to reach: First National Bank of Northern California, (650) 875-4865 or www.fnbnorcal.com
When CEO Tom McGraw spots someone in his company who isn’t executing well or isn’t happy, he makes sure he finds out why. To keep complacency at bay, it’s important to recognize people’s motives in their roles so you can figure out which employees may want to do more, which are unhappy and which really are content where they are.
“Sometimes you want to try to promote people,” McGraw says. “You want to push them. You want to see how far they can go. While that’s good in concept, the reality is that if they don’t want to go, you are going to set them up for failure.
“We have some tellers who have been here for 25 years. …That’s a very important job. They have the most contact with our customers, but that’s all they want to do. And then you take them and you put them in an operation supervisor position and they fail miserably. Well, they didn’t want to be there.”
As a leader, you need to be attuned to what people’s expectations are for their career, what their aspirations are, and then try to match those with positions in the company.
“So you’ve got people with various aspirations,” McGraw says. “If you can line up those aspirations and those skills with the position, the chances of success are much greater.”
As he looked around at his executive leadership team, Alain Couder saw no clear disorder or conflict. The reason that his company’s leadership was not effective had nothing to do with a particular leadership style or group dynamic. But then again, the issue wasn’t really what people weren’t doing at all. It was that they didn’t realize what they needed to do.
“They didn’t know what they didn’t know,” says Couder, the chairman and CEO of Oclaro Inc.
Oclaro — the product of two startup companies worth more than $200 million apiece — had quickly emerged as a tier-one company with potential to reach No. 1 in its core optical and high-powered laser markets. After completing three more acquisitions, it had risen to third in its industry and become an employer of thousands of people around the globe. Yet, that meant many of the $393 million company’s employees, who had come from smaller companies, now lacked the skill set required to operate in a larger, global company.
“To get all of those startup people and turn them into a company that can be operating at $500 million in revenue and get to $1 billion was my biggest challenge,” Couder says.
Choose the right people
With a career that included working at both large corporations and small startups, Couder knew from experience that Oclaro was not prepared to scale for the next phase of growth.
“Because of my background working in companies like IBM or HP or others that are really well-structured and well-organized, it was clear to me that Oclaro was not that way,” he says.
So he began the process of putting in place a new leadership structure — one that that made sense for Oclaro’s new size and objectives. He hired an external consultant to go into the company and take stock of its operations, people and processes. By using an outside consultant to evaluate his team, he was able to eliminate partiality and really find out who would be able to help scale the company.
“Specifically what you learn is that they go into the company and see how you operate,” Couder says. “They see what information systems you are doing. They speak to your managers and then they tell you, ‘This guy knows what he is doing and this guy needs to learn or needs to be replaced.’”
After getting this feedback, the first decision Couder made was to replace three of his key executives. While these personnel decisions can be difficult to make, a CEO has to be confident that the leadership team he or she has in place will be able to lead effectively when moving to the next stage.
“I choose an executive team that is appropriate for the size of the company,” he says.
“I make sure that I treat the people who are leaving well, but that I put in place people who are stronger and can help me scale the company to the next level.”
When you are growing a company significantly, you want to bring on executives who have experience and past success in their area of expertise. They also need to have the right personality and values to be a good cultural fit at the company.
“[It’s] are they going to be able to work in a constructive fashion with the rest of the team?” Couder says. “If you bring in someone who has a very different set of values than the ones that you have in place for the company now, then it just doesn’t work well.”
How do you identify the people who can scale successfully?
“It’s talking about what you want to achieve,” Couder says. “You create a dream of what can be achieved and then you explain what it takes to do it.”
When you start doing that, you’ll have some people who are enthusiastic and some people who start to resist change.
“I work with them and coach them and try to help them improve, but at some point in time when the company scales, some people are going to scale with the company and some people are not,” Couder says.
Once you’ve explained the vision, it’s more worthwhile to focus your time and resources on the people who seem energized about the vision for growth rather than on to trying to convince the opposition.
“You need to spend the time with the people who are enthusiastic and forget about the other ones,” Couder says. “Otherwise, you spend all of your time with people who are resisting and then do nothing in the end.”
Eventually anyone who has a “wait and see” attitude will either leave the company or decide to be part of the change and move with the enthusiastic people. The best thing to do is respect people’s motives and then focus on who can help you grow. While two of the executives that Couder replaced remained within the company, the third one left.
“They are able to drive their own lives and their own convictions,” Couder says. “And that’s fine. That’s part of change management. Not everybody is happy in a larger company. Some people are much happier working in startups and they should go work in startups.”
Empower your people
Leading an organization with more than 3,000 employees meant Couder and his executive team needed to start shifting their attention to more of the big-picture goals and high-level decisions of the company.
“You always need to shoot for the No. 1 position,” he says.
That means people lower in your organization need to shift to take over new responsibilities and decisions, as well.
“When you scale a company, you want to be able to move the decisions lower in the organization,” he says. “So this is the notion of empowerment.
“In a startup, the CEO is at the center of everything, is aware of all the decisions being made, in touch with every customer — he is involved in all of that. As you scale the company, if the CEO continues to do that then the CEO becomes a bottleneck.”
When you take a set of people with a startup mentality and ask them to manage in a larger, more structured corporate environment, you need to give them the right tools and support to be successful in that culture.
“It’s then helping the people you choose succeed in what they are doing,” Couder says.
“And as a result of that, the CEO becomes increasingly in charge of setting the right direction.”
To empower his managers as decision-makers, Couder implemented a global management training program for leadership teams all across the company. The three-day training program included approximately 80 managers and included twice daily training on leadership best practices.
“We coached them on leadership, how to make decisions, how to coach your team, how to train them, how to make them go, how to make them passionate about what they do, how you can create a team that is going to win together and all those kinds of things which are so important to success,” Couder says.
You and your people both want to feel comfortable with them making decisions independently. So first, you need to spend time giving them context of how to make those decisions and their impact on company.
“This is a part of the delegation and control,” Couder says. “As the company gets larger, I delegate more and more, but I want to make sure that we still have the proper controls in place and make sure that everything is moving the way that it should.”
By giving managers leadership best practices and skills that they can pass on to their teams, you push those practices out and the organization itself can become more nimble in decision-making for growth. Moving forward, a good measure of your team’s empowerment is how many decisions get pushed up in the organization. If it seems like too many, sometimes giving yourself some distance to think and reevaluate your own decision-making process can help you gain perspective. It also gives management a chance to brainstorm new ideas independently.
“One of the pitfalls is to always be acting and acting,” Couder says. “In fact, if I take a week of vacation, the team always comes back with new ideas and new things to be done.
“As you have a larger company, the best ideas are in the company. The CEO doesn’t need to have any ideas. He just has to listen.”
Dance to the same music
Lastly, when you are talking about scaling a global, multicultural organization such as Oclaro, which has operations in Europe, R&D in North America and manufacturing in China, to more than $1 billion in revenue, everyone in the organization needs to be working toward the same goal if you are to have any chance of success.
“You need to get the whole team and the whole company to be pushing and pulling in the same direction,” Couder says.
“So it’s also to encourage people to talk to each other and to learn from each other.”
That is where internal communication becomes incredibly important.
“There are three dimensions to the flow of information, top down, bottom up and also networking at the company level,” Couder says.
For a company that is growing very quickly, it’s vital to have good communication so that everyone’s expectation is clear and employees can work in harmony across different departments, divisions or operations.
“We need to make sure that we learn the same dance and that this dance fits the music,” Couder says. “Before in the company, you had different music and different sides and different dances, and therefore, the cooperation inside was a lot more difficult.”
To get everyone on the same page, Couder created a cross-functional task force to simplify and streamline some of the company’s key processes such as product life cycle, and train everyone — executive team included — on a set of leadership best practices. Part of that training included learning a standard vocabulary for operations that would be used by everyone in the company worldwide.
“You create a common language and that helps to have everybody dance to the same music across the company,” Couder says.
“When we talk between different geographies between China and the U.K. or California, we have the same terms and the same words,” Couder says. “We know exactly what we are talking about. There is now no ambiguity in what we want to do.”
When it comes to top-down communication, Couder believes that there is no replacement for meeting with your team in person.
“Through the questions, I get a pretty good understanding of what they know, what they don’t know and what kind of progress they are making,” he says. “That is one measure I use, and unfortunately I can’t find any replacement for travel. Video conference is great, but it doesn’t work for that. …You need to feel and communicate your actions with the people.”
Couder schedules a half hour with each of his direct reports three times a month to talk about their progress and maintain alignment on the organization’s goals. Whenever he travels, he also meets with his leadership teams during brown bag lunch sessions to find out what is working, what isn’t and offer his support to meet any challenges.
With a strong, empowered team that has everyone pulling in the same direction, Oclaro is no longer a bunch of pieces, but one united company that can scale successfully for growth.
“If you want to be able to be organized as a company, you can be empowered but within a certain context, within a certain set of processes and methodologies and tools that are common to everybody in such a way that it boosts harmony in the way we work,” Couder says.
“We know that we now have the best practices and the tools, and the means and the people involved to be able to compete in a much more effective way.”
How to reach: Oclaro Inc., (408) 383-1400 or www.oclaro.com
The Couder File
Chairman and CEO
Education: Paris, Ecole Superieure D’Electricite
First job: Teaching in Africa at the Abidjan University
What would your friends be surprised to find out about you?
I have raised six kids and have nine grandchildren.
What do you to regroup on a tough day?
Hiking in the mountains is my favorite getaway.
What is your favorite part of the job?
Do you have an innovation tip?
You always need to invent a better way of doing what you do, a better way of communicating, a better way of writing a memo, a better way of making a presentation. It’s not only about product innovation. It’s about finding ways of doing things better in a smarter way. It’s about working smarter, not only harder.
Couder on choosing the company’s name: Oclaro is the new name that we choose to merge Avanex and Bookham. We are big believers that when you merge two companies of similar size and you have one which is acquired and the other which is the dominant … by adding a new name and a new set of values, that helps in fact create a new company. Oclaro stands for optical and clarity, which is how we created the name.
President Lisa Faller sees client loyalty as a direct reflection of her company’s commitment to going above and beyond for clients. Today, FKQ Advertising + Marketing’s client list includes numerous relationships that span decades.
“That speaks volumes about our focus on generating the client’s desired result,” says Faller, whose family founded the Clearwater-based firm in 1961. “You can do a really good job and you can deliver and please a lot of people, but at the end of the day, if you are not year over year making that happen, then your tenure is probably short lived.”
FKQ’s self-defining philosophy of “whatever it takes” is splashed all over the company’s website, and there’s a reason. On the client side, Faller says the company’s associates are relentless in pursuing and achieving every client’s success goals, which she adds are often fairly aggressive. The continuing challenge is not just recruiting candidates that have this drive, but maintaining a company culture where its 82 employees can pursue ambitious ideas and new ways of thinking.
“For our people, it’s about empowering everyone at FKQ to really control their own destinies by creating an environment where the best ideas always flourish,” she says.
One way is by using both large and small group environments to draw out people’s insights and opinions.
“When you are in a large group setting, some people may not feel as comfortable offering up what are no question great ideas to put into play and have everyone benefit from,” Faller says.
Offering a mix of communication channels for people to discuss ideas gives them the opportunity to share in either setting, encouraging more contributions and collaborations. This, on top of daily positive reinforcement of good work is what gives employees the confidence to deliver their top performance.
“That leads to facilitating the best thinking, because then people are confident and positive in terms of what they are able to do,” Faller says. “That helps them in being able to facilitate greater, bigger thinking on a consistent basis.”
Another way to further a results-oriented culture is by getting people to focus on positive outcomes. So as a mentor and motivator, Faller is always acting as the cheerleader for optimism and enthusiasm.
“You have to keep people feeling very good about not only what they are delivering to the client, but just being happy in general,” she says.
“It’s really a lot about a consistent focus on thinking positive, seeing the glass half full and never dwelling on uncontrollable negative influences.”
While clients provide the inspiration in keeping employees motivated about new opportunities and challenges to think through, Faller says a leader needs to provide the context in the vision to motivate the culture as whole.
“You’re identifying what the overall goals are, and then you have to make sure that you articulate that to all of your respective team members so that you have that unified commitment, and that focus and everybody collectively achieving those desired goals,” she says.
Faller also uses employee motivation efforts such as having FKQ-sponsored events or serving up special food offerings. The more mass appeal it has, the more effective it is.
“You need to be open to be making sure that whatever continues to please the masses is something that we focus on,” Faller says. “That keeps people in a charged up fashion to deliver for our brands.”
By solidifying this strong team spirit and unity, she supports a culture where people believe they can make anything happen. An example is when FKQ completed a billboard for McDonald’s McCafe espresso products in downtown Tampa, which had three-dimensional coffee cups and real steam coming off the board. The groundbreaking advertisement not only drove customers to McDonald’s, but was hailed in the industry as a best practice because of its environmentally friendly construction.
“We’re always about how can we resolve this or make this better,” Faller says.
“You have to have that universal spirit. If everybody understands that and every action is guided by that, it’s incredible what that total unity can make happen on behalf of the clients that we serve.”
How to reach: FKQ Advertising + Marketing, (727) 539-8800 or www.fkq.com
Finding rock stars
For companies with a long track record of exceeding clients’ expectations, the biggest challenge is often just finding more rock star talent to feed the growing machine. Lisa Faller, president of FKQ Advertising + Marketing, continues to use a twofold approach to recruit people who fit with the company’s brand character.
“Growing up in the business, I just saw how we had done it successfully for so long,” Faller says. “We just continued to evolve and grow upon what has worked well for this company and been able to infuse even new, younger viewpoints.”
First, the company uses its longtime referral program as a targeted means of recruiting.
“Who better to advocate our brand than those people who actually embody and live it each and every day?” she says.
“That often leads to greater retention because when birds of a feather flock together, not only do you get better candidates in the door, those are the people who typically have the long-term tenure, which is a trademark of FKQ.”
Secondly, the company works with the best HR professionals that it has come in contact with over the decades. These people specialize in the disciplines FKQ offers for employees, which creates a pipeline of new talent.
“We’re bringing in the best talent that keeps our FKQ fire burning, the juices flowing and that spark that fuels the energy that keeps this agency bursting at the seams throughout our 50-year tenure,” Faller says.
Until the credit and financial crisis struck, Ted Bernstein was primarily focused on the successful niche that his insurance company served in the market.
“We were guilty of not looking at the macro picture of our industry and where change was going to affect us,” says Bernstein, the president and director of Life Insurance Concepts Inc.
As the supply of capital began to shrink and many people stopped spending money on life insurance premiums, demand for the company’s niche ebbed. What do you do when the product that you are selling no longer fits with what your customers need?
You start from scratch.
Through a process of “creative destruction,” Bernstein discovered the opportunity to transition the company online to reengineer its product and service offerings for future growth.
Smart Business spoke with Bernstein about how business leaders can use creative destruction to help them innovate.
What is creative destruction?
A typical example of creative destruction is the PC, because it essentially destroyed the main frame and gave way to an entire new business model that improved upon what was killed off. It is the idea of product progress, and it is a staple theory in support of capitalism, constantly serving the economy in positive ways. From an individual company’s perspective, it represents the idea of looking at established product lines and service offerings with the goal of improving the status quo. I think it is essential for growth in normal business times and essential during a sustained crisis such as the great recession we are now experiencing.
What made this process so difficult and challenging?
It’s easy to destroy for some and for some it’s easy to be creative. Being creatively destructive is a real challenge. In a period like we’re coming out of right now, it may be why some companies just flat out couldn’t make it — they could not recover or evolve through the destructive period — and why so many incredible companies grow up out of these destructive times.
One aspect of creating differentiation around us was that the product certainly had to be better. The other was you had to have a reason that you are going to buy from us, because maybe you’ve been buying from people who have been serving you well until we’ve come along. So we felt that we had to offer value to you that maybe you weren’t getting from others.
It’s really been a two-pronged thing that we had to differentiate ourselves with the product and then our ability to engage them to make them feel that they should use us.
How does destruction lead to innovation?
I don’t think you can go through creative destruction without getting as wide angle of a view as you can of your industry, which is not easy to do when you are an insider and you know your way around. You think you pretty much know how your industry works, and it’s pretty difficult to put yourself back in that position to almost be looking at it as if you know nothing. We did that. I would say everybody should force that view and that type of lens on themselves. They will see their industry and their business in a way they may not have looked at since they came into their business however many years ago.
I reconnected with the leaders from all aspects of our industry. I began having conversations with executives of insurance companies. I began having conversations with the professional associations, the organizations that monitor trends in our industry. We ran focus groups here at the consumer level and also focused on technology to see how technology was changing our industry. I kept pulling back the lens further and further and further so we could get as much of a macro, big-picture view as possible.
How can a successful company use this process to spark new ideas?
If every couple of years management puts itself through some type of crisis management exercise and you just imagine the worst — imagine your biggest supplier cut you off for no reason, or you could no longer acquire bank financing or whatever was most important to you, like capital was to us. If you could imagine that it was lost and lost quickly, how would you react? I think that’s an incredible exercise not just for the CEO or owner — it’s the team. You might find out who in your organization is better in your organization than you ever realized. Or you might find out some things about your organization that you maybe don’t want to find out but it’s important to find out.
How to reach: Life Insurance Concepts Inc., (561) 988-8984 or www.lifeinsuranceconcepts.com
When CEO Lauren John Reid joined PuroSystems Inc. in 2010, the company’s PuroClean brand was already the fastest-growing franchiser in the $210 billion property damage restoration industry. But despite a decades-long track record of restoration industry experience, Reid had no concept of what it meant to run a decentralized franchising operation.
“You are dealing with a group of people that in some cases maybe were at an executive level one day, and then all of a sudden they are out of a job, and the next day they are running their own business,” Reid says.
“This is my first kind of ‘ivory tower’ experience. When you are operating a decentralized business, the branch manager or district manager or franchisee that is out there in the field — they are the brand.”
Because PuroClean had recently gone through a growth spurt of expanding its franchise organization, many new entrepreneurial business owners were now part of its franchisee network. Reid was now leading 320 other CEOs, all of whom were responsible for the brand’s success or failure, and many of which lacked experience in key management areas, whether it was with managing cash flow, marketing the business or generating inquiries.
To immerse himself in the franchisee culture, Reid launched an ambitious “100-100 Tour,” to meet with more than a third of the franchise network in his first 100 days in office. The goal was to give people a chance to put a face with a name but also for him to hear about what kind of support they needed from corporate to successfully deliver services.
Before Reid could continue to scale the $190 million business for growth, the first step was getting everyone in the company’s franchise network on the same page, delivering restoration services in a way that outshined competitors in the eyes of its customers.
“We backed away from focusing on growth of new franchisees because we really needed to take an introspective look at our network and make sure that our current community had all the tools necessary to start to take on additional growth,” Reid says.
Convincing franchisees to fully commit to this focus was a little different than getting buy-in from any employees. To get a diverse group of entrepreneurs thinking like businesspeople and salespeople, Reid needed to sell them on his vision of the company.
“In a lot of my former positions, I was the boss, and as a boss, you can tell people what to do,” Reid says. “With franchisees, I have to appeal to more of the making them understand, and then encouraging them that it’s in their best interest, because they are independently owned and operated businesses.”
During the 100-100 Tour and through 18 regional follow-up meetings, Reid spent time meeting with franchisees to discuss the 10-year vision plan, using his industry expertise to gain support for the company’s long-term goals. When talking about the vision, he sticks to what he calls “the vital few” in terms of the areas he wants the company to focus on.
“When you are out in the field looking back at corporate, you’re thinking, ‘Don’t these knuckleheads see what needs to be done?’” he says. “They want to see results. When you try to do 25 things, you don’t get anything done. You focus on a few things and say ‘These things we are going to get past.’”
Once people see the long-term goals, you then need to show them how changes involved in the big picture connect to and benefit them.
“It’s more about influencing and making them understand what’s in it for them,” Reid says. “So ‘If I go on to this program it means that I’m going to get more business, and that means I can grow my top line.’
“When you get people started thinking about that and they can start to think in a bigger scope, a bigger framework, it makes it a lot easier to get there.”
Once franchisees saw the benefit of bringing consistency into the network with new policies and standards in service delivery, the next step was giving them the tools and guides to make the necessary changes successfully.
“They said we want to be in these national programs,” Reid says. “My response was that if we want to be in those programs, we’re going to have to put a lot more focus on being consistent if we’re going to make that commitment.”
Give people the tools
If you want to have consistency in service across hundreds of offices, you need to give people a common set of service standards and guidelines for everyone to follow. So upon joining the company, Reid began work on installing a new operating system and launching a national Certified Priority Response program for franchisees.
With CPR, Reid says one of the benefits to ensuring consistent protocol is making the program optional. While whoever opts in can gain benefits for their business such as getting referrals from the company’s call center — enticing franchisees to participate — they also then must agree to adhere to a common set of service expectations.
“We have 300-plus offices across the U.S. and Canada,” Reid says. “I have to get all 300 offices delivering a consistent invoice with consistent data, consistent response times.
“So we go out to them and say in order to be a part of this program this is the way that you are going to have to do the work, and we actually make them sign an agreement that, ‘OK. Yes, I signed up to do this.’”
The second part of consistency in service is the human element of selling a brand.
“People do business with people they like,” Reid says. “Making everyone understand that is a very important part of the process.”
While some franchisees had no experience managing a P&L or operating in the restoration industry, they really needed help with selling themselves as the brand. For example, one of the challenges Reid saw numerous franchisees having was getting past gatekeepers, such as the receptionist in the front office or assistant, to the decision-makers with whom they could build relationships.
“They are the ones that are going to have control over whether or not you are going to get past them to in this case, the agent or the broker,” he says. “So it’s treating them nicely and with respect. Just because they aren’t in many cases the decision-maker — they are the decision-maker in whether or not you are going to get past them.”
To address this issue, the company began providing interim sales training for all franchisees. When you are building consistency in a brand, how your sales people handle relationships is extremely important in what kind of reputation you gain with customers. Having good relationship-building skills is critical when you are trying to get in the door or, in a franchisee’s case, on a list.
“You have the loss of your house and you call your insurance agent,” Reid says. “Your agent wants to help you, so he or she will call in a restoration company, and you want to be at the top of that person’s list.
“The innovation and the technology — those are all nice things to build into the value proposition, but as a general rule, if people like you, they have a hard time firing you, which means you are going to get some chances if you stumble. And you are going to stumble because we are in the service business.”
Hold people accountable
Today, approximately 60 percent of PuroClean’s franchisee network has enrolled in the CPR program. But to keep people operating within a new set of guidelines, Reid has had to institute methods to hold them accountable to the higher standards.
“We are at such a size right now that there’s a 90-plus percent chance that if somebody calls to do business with us, they are going to be doing business with the franchisees,” Reid says.
“We can’t afford to lose a vendor program or a national account because of the actions of a few franchisees that aren’t following the process.”
For one, he put in place a desk audit system to poll a sampling of work from franchisees and ensure people are acting within the guidelines. In addition, a network leadership council, composed of a tribunal of franchisees, now serves as a disciplinary group for franchisees who deviate from the standards of the brand. If there is a deviation, management goes and works with that particular franchisee to help him or her improve.
For a decentralized business, giving people support in the field is vital in keeping franchisees accountable as well as motivated. With offices throughout the U.S. and Canada, the company’s ability to maintain alignment relies heavily on having strong, effective communication from management.
“The most difficult thing for a decentralized business is communication,” Reid says.
In addition to using training programs and regional meetings to maintain operational consistency, Reid uses field support specialists who can go out in the field and work with franchisees, talk to them about the vision and mission and answer their questions. These are people who have significant restoration industry experience and who Reid brought into the organization to lend another level of support.
“We’ve got to support our franchise community with the best trained folks,” he says.
“They want to know that you know that they are out there every day trying to make it happen on behalf of themselves. They are looking for whatever support they can, and they want to know that you are there to help them.”
That is also why Reid travels at least once a month to meet with franchisees throughout the network. Rather than being a removed CEO, he enjoys this time out in the field, connecting with franchisees and renewing focus on the brand’s mission and vision. He even encourages franchisees to come up with their own mission statements, which helps people stay focused on their part of the brand’s success.
“When you are in a decentralized business, the brand is you,” Reid says. “You are the only one who can look yourself in the mirror at the end of the day and say, ‘Did I do something today that advanced the mission?’”
With the goal of growing to a $1 billion company with 1,500 locations by 2020, Reid knows that having this group of people who can deliver the brand’s products and services consistently will be vital to future expansion.
“If we are going to be a player in the industry, we have to be able to deliver this consistency of our services if we are going to be successful,” Reid says.
“Everybody’s got the same equipment. Everybody has the same dehumidifiers, the same air movers, the technical equipment we use at the actual job site. There might be slight variations or differences, but it’s the way that you handle their client that differentiates you.”
How to reach: PuroSystems Inc., www.puroclean.com or (800) 775-7876
The Reid File
Lauren John Reid
Education: MBA, Northwestern University, Kellogg School of Business
Born: Toledo, Ohio
What was your first job?
Short-order cook at a pizza place
What is one part of your daily routine that you wouldn’t change?
I speak to everyone daily in the office and let them know I recognize their contributions.
What would your friends be surprised to find out about you?
I didn’t go to undergraduate school but earned my MBA.
If you could have dinner with one person you’ve never met, who would it be?
George W. Bush — The challenges he dealt with and decisions that had to be made every day and his reliance on his team were some of the most challenging in this time.
Reid on learning the franchising business: In my former life, I reported to the CEO. Now I have 320 CEOs. They all want a piece of you, and you have to recognize what is the core issue, what is the main issue. Nine times out of 10, a lot of the issues come back to communication and maybe lack of follow through or follow up. It’s really no different than any other business. The challenge is just recognizing that and making people understand that ‘I understand this is a big concern of yours, however, in the grander scheme of things, we have this issue that is affecting a third of the network, and we’re really focusing on that first, and your issue we’re going to put on the list. We’re going to get at it, but it’s not going to be today.’ Or trying to figure out some sort of a workaround. … I think the good news about entrepreneurs is that if they believe that you are trying, first of all that you are listening, you’re documenting and you are doing something about it, that’s a big part of it.
President Doug Kovatch knew the timing was right to lead the multimillion-dollar plant expansion for Kovatch Castings Inc. After the company secured a $1 million grant in 2010 from the State of Ohio’s American Recover and Reinvestment Act, he now had the capital to combine the company’s own $2 million to expand its Green, Ohio facilities by 16,000 square feet, add 45 new employees and invest in new equipment.
“It was a $3 million risk to do this expansion and reinvestment into the business, but at the same time, I was very confident that it was the right thing to do at the right time,” Kovatch says.
Financing aside, there were a lot of other aspects of growth to think about. Facing the logistical challenges with moving equipment, altering processes, and making sure production continued to move efficiently, he also had to keep customers satisfied and employees engaged throughout the transition. What made it all possible was the company’s culture of teamwork and enthusiasm, which has been a key part of its success so far.
“We really felt that we were able to overcome that just with really excellent communication and leadership and the support that I have for my people,” Kovatch says.
While the new facility will enable the company to go from its current $16 million in sales to more than $25 million next year, there is still much unforeseen with the current economy. By keeping a focus on collaboration, Kovatch prepares his team to meet any setbacks or challenges ahead with positivity and creativity.
“That helps them feel that they are part of what we are doing and engaged,” Kovatch says.
Including people in the decision-making process during a growth period also encourages employees to accept the new level of flexibility it takes to adapt in an ever changing business environment. It means operational and structural changes, but also handling the ups and downs that come with an ebb and flow of new business.
“Some business will be lost and that’s just sort of how that goes,” he says. “We all have to come to accept that. But it challenges us to grow in automation, to constantly be focused on cost reduction, servicing customers, shortening lead times, doing these things that maybe the low cost providers don’t do as well.”
One way the company encourages teamwork is fostering a work environment that is committed to serving others, not just its own bottom line.
“We try to be a light and set a good example to other businesses around us,” Kovatch says.
“I think that really inspires people to do their best.”
Kovatch says it’s important to remember that just because you are growing successfully as a business, you shouldn’t start thinking you don’t need the input, help or advice of others, or stop giving yours.
“We don’t want to ever get too large that we don’t forget the people who are most important,” he says.
“We understand the importance of giving back, of understanding that we as a group are much bigger and have a bigger impact on the world around us than any one person alone.”
The company gives a percentage of its quarterly profits to both local Akron organizations and others all around the world, such as Samaritan’s Purse, which runs a project that takes shoeboxes and fills them with gifts for the kids during Christmas time. This year, the company’s 195 employees aim to send out 1,000 shoeboxes with clothing, toys and school supplies.
“With our employees, we had to remain adaptable to a changing environment, which means lots of problem solving along the way and keeping people positive and focused on the goal,” Kovatch says.
“There’s real power in group dynamics and in working together as an organization to impact the world around us.”
How to reach: Kovatch Castings Inc., (330) 896-9944 or www.kovatchcastings.com
As Kovatch Castings Inc. celebrates its 35th year doing business in Akron, President Doug Kovatch continues to be an advocate for the region’s manufacturing industry.
“Akron is a great location for manufacturing,” he says. “We have a terrific labor market here. We have materials. We have a supplier base. We have a reasonable cost structure. It’s been a very good place for us to do business.”
For Kovatch, Akron is also an attractive location because its low labor costs allow the company to do finishing operations such as machining and plating much more cost effectively than somewhere on the east or west coast, where labor rates are much higher. While the company has secured a significant amount of new business this year, it’s not just from promoting its own offerings.
“What we do is utilize trade shows and marketing promotions to promote this area,” Kovatch says. “We’re growing because we are actively pursuing new business all the time.”
He also participates in the local Akron Chamber group that brings together leadership from different industries to support a dialogue on regional growth. This organization is extremely valuable he says, because of the resulting wisdom that comes from many joining together to help on another.
“Those kinds of dialogues where CEOs can come together and help and support and feed off of each other’s ideas are very positive and very beneficial,” he says. “I’ve grown and I think improved as a result of hearing others perspectives.”
A significant amount of John Treace’s career has been focused on returning failing businesses to profitability by retooling their sales and marketing areas. So time and again, he’s come into a company where the sales organization was the needlepoint for other problems.
“Of course, the sales operation of a company really is the heart and soul of the company,” says Treace, who is the founder and CEO of JR Treace & Associates LLC. “The performance of everyone else in the business is weighed and justified on the performance of the sales team. … It all shows up in sales.”
Smart Business spoke with Treace about his book, “Nuts & Bolts of Sales Management: How to Build a High-Velocity Sales Organization,” in which he explains how business leaders can create a high-powered sales organization, starting with the company culture.
Why is culture the first section of the book?
Every company that I’ve ever been in that was failing or stumbling was failing because of top management up at the CEO level and at the VP levels. They fail because they don’t have a culture of success. To create the culture you have to identify your core values.
Core values should be written. They are like the 10 commandments. They are simple. They are action statements. As an example, one of the core values that we used in our business is ‘Don’t run out of cash no matter what.’ It sounds simple, but every company that I’ve ever gone into in my business career had run out of cash.
How can you effectively communicate core values to your team?
When you are presenting them, you have to make an emotional connection with each core value. As an example, the core value ‘Don’t run out of cash no matter what’ — when you tell that to a group of people, it really doesn’t sink in because they can’t imagine their company ever going bankrupt. However, if you ask a question to the audience and you say, ‘Have you ever known somebody who didn’t get a paycheck?’ — You’ll see hands pop up all through the audience. You talk to those people and say, ‘See, those people were working for a company that didn’t have this as a core value.’ Then they can make the emotional connection.
So you create your core values. You publish them. You create the emotional connection with your employees. And from that, you can write your mission statements.
Can you explain the relationship between morale and execution in managing your sales team?
In every failed company I’ve been to, the morale was just terrible, with sniping from the corporate officers at the sales team. One company I went into, and I interviewed the CEO and the CFO to begin with, I asked them what they thought the problem was, and they answered, ‘Well, we have a terrible sales force.’
I’ve never seen a terrible sales force in my entire life. I’ve seen sales forces of low morale and sales forces that were not effectively deployed, but I’ve never seen a terrible sales force. In that situation, with the CEO passing down word throughout the company that the sales force wasn’t very good, it totally demoralized the sales force.
The sales force wants predictability. They want to be able to answer these three questions of corporate management: Do you care about me? Can I trust you? Are you committed to excellence? I actually learned these in a talk with Lou Holtz, the football coach.
So when the corporate officers do things that don’t allow the sales team to answer yes to one of those questions, then it’s going to hurt the morale.
How to reach: JR Treace & Associates LLC, (904) 314-1442 or www.treaceconsulting.com
Thom Stork was walking through The Florida Aquarium one day when he passed by the shark exhibits. As he watched the divers swimming in the tanks, his curiosity led him to begin posing questions to a nearby employee: ‘How many people go in the tank? How often? Has anyone ever been bitten?’ And before long, he asked the kicker: ‘Can we put our guest in there?’
“He looked at me like I was crazy, ran away and came back a few days later,” says Stork, who became president and CEO of The Florida Aquarium Inc. in 2002. “Then he said, ‘OK. Listen, we can do this.’”
Before heading up Tampa’s not-for profit aquarium, Stork worked as a marketing executive for Busch Entertainment Corp. for nearly three decades. When he retired, he was approached by the aquarium’s chairman with a proposal to bring his marketing expertise to running the organization.
“I said, ‘I’m not a scientist. I’m not a biologist. I’m not an oceanographer. I’m a marketing, business guy,’” Stork says. “And he said, ‘That’s what we need.’”
Since the aquarium implemented its “Dive with the sharks” program, the exhibit has been extremely profitable and remains sold out. It’s these kinds of unique and memorable experiences that connect people to the organization Stork aims to create every day. To accomplish that, he encourages his people to run with their ideas, even when they seem a bit nuts.
“They come to my office,” Stork says. “They grab me in the hallway or they grab me over in the restaurant and say, ‘Have you ever thought about doing this?’ Every time you hear that you go ‘Yeah! Let’s think about that.’”
In addition to offering encouragement, when you ask people to be proactive in trying new things you’ve also got to be able to demonstrate follow through and constructive feedback once they do. Otherwise, people may get discouraged.
“They have got to understand that it failed,” Stork says. “It failed. This did not work, and here is the reason why. Or ask them, ‘Why did it fail?’ Just have that dialogue.
“They know they are not going to be criticized for wacky-ass ideas.”
When a dive master presented his idea for a “Biologist for the day” program to the senior management team, Stork gave him kudos but also asked him to think bigger picture than the proposed $300 annual profit. The employee was able to rework the program, which today brings the organization thousands in revenue.
“I went, ‘Michael, you did an incredible piece of work here, but here is my challenge for you,’” he says. “‘I want you to go back and I want you to figure out how we can make $30,000.’ He was thinking in a not-for-profit mindset.”
Whether it’s creating new education programs or adding unique events and exhibits — the aquarium recently developed a one-of-a-kind penguin attraction — Stork challenges his 159 employees to explore the boundless possibilities for growth while staying committed to the mission of the organization.
“I believe strongly in the adage that there is not an original idea,” he says. “So I constantly look at what other facilities of our type are doing. I read extensively about new products that are out there for zoos and aquariums and theme parks, trying to determine what works in terms of bringing people through the front door. But then I also do put on my mission hat and say is it good for our business, does it further our mission, does it further our culture?
“So today I say, when I do retire, my legacy will be that I was able to take a bunch of scientists, biologists, teachers and environmentalists and turn them into entrepreneurs, to think about how to make the business work.”
How to reach: The Florida Aquarium Inc., (813) 273-4000 or www.flaquarium.org
Thom Stork, president and CEO of The Florida Aquarium Inc., is always asking guests what they want to see at the aquarium, whether it’s dolphins, sea lions or what he and his team affectionately call “big-ass sharks.” Yet now that the organization is in a position to look comfortably into its financial future, prioritizing what people want versus what the business needs has become more important.
“In the analysis of everything, you have to look at the things you need to do to further round out this facility and this business,” Stork says. “So we’ve spent a lot of time over the last 18 months looking at what we need to do.”
This year, Stork spearheaded a $15 million capital campaign to address the needs of the organization’s 700,000 annual visitors and 100,000 school kids who visit for its education programs. The project, which broke ground in September, will incorporate lobby renovations, expand classrooms — there are currently two — and add much-needed event and exhibit space, including a ballroom to seat 500 people.
“The priority is ‘What do we need?’” Stork says. “All of those things have a return on investment. They will produce revenues for the aquarium which will further grow the aquarium.”
Amar Panchal didn’t plan to start “waffle day.” It came about after he and a group of employees arranged an impromptu breakfast one Friday at the office. But it didn’t take long before waffle day became a company tradition.
“People really enjoyed it, so then they volunteered to make this a monthly event,” says Panchal, the co-founder and CEO of the Akraya Inc., an IT consulting and staffing business in Sunnyvale, Calif. “Every second Friday of every month, there’s a team of employees who volunteer to arrange for breakfast. It’s amazing how excited people are about it, because every month we’ve had a completely different menu for breakfast. That’s how much people enjoy it. And since they are working in a team, there’s a sense of achieving something together as a team. Everybody is enthusiastically part of participating.”
Providing breakfast for employees is just one of the ways Panchal leads his company to celebrate and reward employees for their contributions.
“All of us have achievements on a regular basis and it’s important to recognize and celebrate the achievements and milestones that we have,” he says.
At the company level, key achievers are recognized on a monthly basis at an all-hands meeting. Also, to celebrate success on a daily basis, employees come together to ring a bell in the center of the office whenever a person or group has a significant achievement.
“Everybody actually gathers around and high fives, and that’s a constant recognition of people hitting milestones during their everyday tasks,” Panchal says.
One of the company’s most obvious forms of employee appreciation is its unique perks for personnel. Panchal says each of these is the result of listening to people and identifying ways to reward them for their hard work. A good example is the company’s biweekly cleaning service for employees, which came about several years ago when the company was much smaller but gained it attention on Inc.’s Top 10 Perks We Love list in 2010.
“One day a few of the employees were discussing in the break room that they had to spend a long time over the weekend cleaning up their homes because they had visitors coming in,” Panchal says. “So I said, ‘OK. What can we do to help in this situation?’ We identified a cleaning service that every two weeks goes and cleans people’s homes.
“We listen to employees needs. Small things make a big difference to people.”
Yet although the ideas for a cleaning service and a monthly breakfast took off, there have been other ideas that did not work out financially or culturally long term. Implementing perks for employees comes down to trial and error.
“Some of them will work; some of them will not,” Panchal says. “We recognize that and continue to evolve.
“We’re constantly experimenting with ways to recognize or celebrate within the company, which is why people enjoy working here.”
In recent years, another challenge of having employee perks has been managing expectations when people begin to take certain cultural benefits for granted. Over time, a perk can become something that employees feel entitled to, and you may need to remind them of its value.
“Part of the solution is refreshing, especially the older employees, that these were things that although you have had for several years and think that everybody has it, that is not the case,” Panchal says. “It is still a fairly unique benefit or culture that we have in place.”
Although the costs of certain recognition programs and perks have increased as the company has grown — it grew to $32.5 million in revenue in 2010 — Panchal says he sees culture as an ongoing investment.
“Each of these has a significant cost in terms of not just hard dollars but time that it takes,” he says. “It’s something that is part of the prohibitive cost of doing business.
“When we were smaller, the costs were lower but as we’ve continued to grow, the costs have added up. But the value of that small perk is immense, because it benefits not just the employee. It benefits the entire family, and they appreciate it.”
How to reach: Akraya Inc., (408) 907-6400 www.akraya.com
Cultural success at Akraya Inc. is the result of not just building a great culture for employees but working hard at maintaining it, says the company’s co-founder and CEO Amar Panchal.
“We consciously work on not just creating the culture, but we work on maintaining it and continuing to evolve it,” Panchal says. “It takes effort. All of us are busy with meeting our customers’ needs. It’s a competitive industry and people have a lot of tasks on their plates, but I venture that we take time out and do things that we value as a company, whether it is celebrating or it is giving back to the community.”
Though the company has been recognized for its culture in the past, Panchal continues to look for ways to improve its recognition program. That is why he invited an outside consultant to meet with employees one on one to gain more employee feedback about how they view the company’s culture.
“We’re actually going through that process right now, where we have compiled information and we are actually working on more of a companywide recognition program,” he says.
This has helped the company create a recognition program that takes into account the various contributions of different roles within the company.
“In most companies, it’s very easy to recognize the achievement of sales people because that is very measurable, but there are operations teams, there are customer support teams, there are marketing teams, there are finance teams. How do you have a recognition program that recognizes their achievements too?”