Stephen Hightower hasn’t had to stress over challenges faced by many during the recession, but that’s not to say he doesn’t have business challenges. He is just facing challenges of a better kind — growing pains.
In the past three years, Hightowers Petroleum Co. has grown by more than 25 percent a year — and it’s still growing. As president and CEO of the $227 million petroleum distribution company, Hightower has had to decide how best to ensure the longevity of the organization.
“We’ve had exponential growth over the past four to five years where we’ve grown anywhere from $50 million to $60 million a year over the last three years and we’re anticipating that kind of growth again this year,” Hightower says. “That has obviously offered management challenges as well as organizational challenges to maintain the integrity and the quality of the day-to-day performance while absorbing the new additional business on a daily basis.”
What makes this growth and the decisions that come with it more challenging than usual is the fact that Hightowers Petroleum is a family-owned business. Decisions as to where to steer the company are not always easy to make.
“We started as and still are 100 percent family-owned,” Hightower says. “As a family-owned, three-generation company, that has its own set of unique issues as it relates to culture, keeping that family feel while growing into a corporate atmosphere is always thoroughly challenging.”
While the family certainly has a say in how the company grows, it is ultimately up to Hightower to make the final decision as the 100 percent stockowner and CEO. Here’s how he has positioned the company to reach the next level.
Keep up with growth
Gasoline is a fuel that has to be available to its users. It is crucial for Hightowers Petroleum to be able to keep up with customer demand. To do so, the company stays focused on its core business.
“Never take your focus off of the current business,” Hightower says. “Make sure as you grow and you do alternative activities that your core is well taken care of and not distracted. Add to your organizational support as you bring on new business without sacrificing the core because if you lose business as you gain business then you’re not going to grow.”
One key to the company’s ability to keep pace with its growth has been its decision to be ISO certified.
“When you first put a quality system in place, it literally is no more than a manual that someone has written,” he says. “It takes two or three years of being tested and actually being forced to utilize those processes or you’re not able to get recertified.
“If you utilize those processes then it becomes a part of your culture and once it becomes part of your culture, then your operations begin to change. It’s not automatic just because you have a quality system that you’re going to operate in a quality manner. It’s a gradual adaptation of your everyday natural life.”
Having those processes and systems in place allows you to bring on new employees without having to recreate anything.
“It’s all written, it’s all documented and it’s all practiced such that when you bring new people with new ideas and ways that they’ve done business at other organizations, it’s a lot easier for them to adapt to the new processes that we already have in place,” Hightower says.
With the pace at which Hightowers Petroleum has grown, the company’s success has relied on good employees.
“You have to measure when your people are at 110 percent to add that additional person in that particular department to support the accounting side of that growth as well as the execution of that business on the other side,” he says. “So it’s making sure that you continue to have quality individuals that know their job right up front. They may be trained to your system, but they are quality people walking in the door to be able to adapt to your business and your system and be able to become part of the team very, very quickly.”
Quick adaptation is key in maintaining fast-paced growth. Hightower makes sure he sets the pace of his organization.
“When you set the pace as a leader in terms of working hard, working long, working accurately and not having or accepting mediocrity in your organization, then the culture of your people falls into that same rhythm,” he says. “Once you’ve established the rhythm of your organization, it becomes pretty easy to identify individuals that cannot keep up with that pace. Either they stick out and they perform or the fellow employees support them and correct them or they are the ones who weed their own peers out of the system.”
Get in position
When growth is the primary focus of your business, it is important to plan how your company can best benefit from that growth.
“Succession planning has been a very key part of our future planning process,” Hightower says. “We elected an outside board of directors about a year ago. In doing that, part of the reasoning was from a succession-planning standpoint; those that would take over the business in the future would have to have an outside board. We felt that it was proper to begin to exercise and practice with a quality outside board so that if something were to happen to myself or if we were ready for a change, that process is already in place.”
To fill the board, Hightower brought in senior people from Shell, Marathon, Eli Lilly and other businesses of a similar size and nature to his own in order to take the company to new heights.
“If you’re a privately owned company, there’s typically a lot of fear of outside boards because there’s fear about giving up control,” he says. “There was a decision that we had to make whether or not we wanted an advisory board, or whether we wanted an actual board of directors.”
The decision to go with an outside board of directors proved to be the right one in the long-term.
“We’ve got some quality people and some expertise that will hopefully balance our growth as I go into water that I’ve not necessarily been into from a size standpoint,” he says. “When you’re trying to get to a billion dollars, you’re in territory you’ve never been before. Having that type of advice and support from an outside board that’s committed to the success of the organization has been a good experience for our company.”
Most privately held companies have family and friends as board members so they can remain in control of the organization. Hightower says it’s been advantageous having an outside viewpoint.
“Don’t be afraid to have people know more than you know, people who are smarter than you and people who can contribute to growth and not just be a yes man to you as a CEO,” he says. “The fear of someone being better, taking over, or learning something that you may think is proprietary is narrow-minded as it relates to long-term growth. If you don’t want to grow and you want to maintain a lifestyle business and just do enough to get by, that’s one thing.
“If you’re really committed to growth in your organization, then you need people better than you on top of you and people better than you below you and that may or may not be someone in your family. If it’s not someone in your family, get the best person for the job.”
Often, just giving up control in aspects of the business is the hardest thing for a family-owned company to come to grips with.
“Many people remind you of the horror stories of CEOs being fired by their board and being locked out by their board after they’ve ran a business and built a business and then their door locks are changed one day when they come in,” Hightower says. “That’s the worst case scenario, but yet one that was presented over and over again from a fear factor. As a CEO who is the leader of the organization, I had to overcome those fears not just myself, but for family members and others in the organization who do not have the same level of no fear.”
For the betterment of the business there has to be someone willing to take the chance and take the risk to push forward.
“As a leader you’ve got to be the one who pushes the organization in a way that’s good for the organization and overcome those fears in the process,” he says. “Having done that, one year later, all of those that were nervous and not necessarily for having a strong outside board have now come around to say, ‘It’s not that bad after all.’ They’ve begun to see the value in the selection that was made.”
Take advantage of opportunities
While bringing in an outside board to help the company reach higher levels was crucial, it has also been important that the company keep looking for opportunities. Hightower started with technology.
“In our distribution model early on we adapted technology and we also adapted procurement methods of managing the entire enterprise versus just managing a site,” Hightower says. “We developed a national strategy very early to be able to adapt to corporations when they began to have a single supplier supply the entire commodity versus having 10 suppliers managing that one commodity. By adapting to that procurement process a long time ago, we were able to move as corporations were changing how they purchased to be able to be the single supply chain manager for those corporations for the fuels area.”
Being privy to the changes in supplier thinking and the new opportunities those changes could create has contributed to the company’s success. Finding new areas for your business to expand into is crucial for exponential growth.
“There’s a concept similar to football were you say, ‘You go wide or you go deep,’” he says. “If I was going to go wide from fuel I think if I got into electrical and got into HVAC or started doing fasteners, that’s going wide. I suggest that you go deep. If you’re selling gasoline and diesel, you add monitoring and equipment in the gasoline and diesel area and you add lubricants and oils and then you do things that are complimentary to your industry so that you get deeper into your industry versus going wide and trying to get into other products that are not complimentary to your industry.”
When the company adapted technology it got into technology relative to fuels. When the business began to look at expanding the supply chain into freight and transportation, it was in the fuel-related area.
“Going deep versus going wide is one of the key focus areas that an entrepreneur should look at when expanding what they do next,” he says. “Make sure that what you do next deepens your position in that industry versus trying to start all over into a new industry sector. There’s very little benefit in going wide because you have to now become familiar and an expert in a whole new area and a whole new set of people and suppliers and buyers. You want to stay within your industry and add components that will deepen that industry.”
To take full advantage of the opportunities that can be presented to your business, you have to set goals for what you want your company to become.
“We want to become a billion dollar company,” Hightower says. “We said that when we were only doing $50 million and now we are doing a quarter of a billion dollars. You’ve got to want to grow your business. You’ve got to have a deliberate effort in growing your business to scale and size because it won’t happen by itself. If you’re not talking about it and not trying to get there, then you probably have no chance of succeeding.”
HOW TO REACH: Hightowers Petroleum Co., (513) 423-4272 or www.hightowerspetroleum.com
- Make sure your company is doing the right things to keep up with the pace of growth.
- Plan and position your company to best benefit from what growth can provide your business.
- As you continue to grow be on the lookout for areas of opportunity.
The Hightower File
President and CEO
Hightowers Petroleum Co.
Born: Middletown, OH
Education: Attended Wright State University and majored in management and communications.
What is the best business advice you have ever received?
Never stop pursuing your dream. There are many days and many times that it seems like tomorrow, but there is no tomorrow. You go to bed and you wake up and there is another day. Problems always get solved by waking up and meeting those challenges head on, regardless of how bad they are. Face your issues and never stop, because when you stop it’s over with.
Who is someone that you look up to in business?
The most important person in my business career has been my father. When I was a teenager I got to actually sit down in sales meetings and do sales calls with my father. That was probably the most impressionable. As I began to grow there were people like Bill Mays with Mays Chemical and Vernon Stansbury with SCSC and these were companies doing $300 and $400 million worth of business. I would see their boats and their 10-story office buildings and that’s what let me know it was possible for me to go out and have the same thing. If you don’t see that it’s possible for a young African American to have that size and scale of business, then you don’t know that it’s possible. It was seeing other African American CEOs that were young, aggressive and accomplished that I knew I could do the same thing.
What are you most looking forward to in your company and industry?
I’m looking forward to an event that will either take part of my company public allowing us to maintain majority ownership, but put me in a position where I can semi-retire from the organization and/or an event where I could sell the entire company.
The Cleveland Clinic recently named Gordon Snow, a former FBI assistant director, as its new chief of protective services.
Snow, who has experience in national security, law enforcement and cyber security, began in his new position May 14. As chief of protective services, he will oversee five key functions reaching across the entire Cleveland Clinic enterprise: police and global security, transportation, parking, fleet management, and emergency preparedness.
He was a member of the FBI for 20 years, where he served in numerous leadership roles, including assistant director of the cyber division, director of the National Cyber Investigative Joint Task Force, FBI’s on-scene commander in the Afghanistan theater of operations, and chief of the weapons of mass destruction and acquisition of U.S. Nuclear & Missile Technology Unit.
Medical Mutual has announced Heather Thiltgen as vice president, direct to consumer strategy.
Thiltgen will be responsible for developing and implementing a direct-to-consumer strategy to attract and retain individual policyholders. She will focus on meeting the needs of consumers who are in the market for individual health insurance products.
Before joining Medical Mutual, Thiltgen served as vice president of consumer marketing for the CUNA Mutual Group. She also held a variety of positions throughout her 10 years in member acquisition, marketing and product management at USAA.
On June 13, the National Multiple Sclerosis Society honored Dr. Luis Proenza and Theresa Proenza during The 6th Annual Akron Dinner of Champions. The Proenzas received the Norman Cohn Hope Award, the National Multiple Sclerosis Society’s most prestigious award. They were honored for their dedicated commitment to community leadership and service.
Dr. Proenza has served as the president of The University of Akron since 1999. Under his leadership, the university has become a powerful engine for regional economic development, a catalyst for collaborative initiatives and the preeminent public research university in Northeast Ohio. He spearheaded the physical transformation of the campus to enhance the college through the addition of 20 new facilities, 18 major renovations and 34 acres of new green space.
Dr. Proenza also led community efforts to create two key enterprises: a University Park Alliance that is revitalizing a 50-block area surrounding its campus and the $200 million Austen BioInnovation Institute in Akron, a partnership with three area hospitals and a medical school to establish Akron as a center for biomaterials and biomedicine.
Glenmede, a privately held and independent investment and wealth management firm, has announced the promotion of three key leaders within its Cleveland office. Linda Olejko, Tracy Jemison and Robert Siewert were all promoted to managing director.
These individuals provide investment and wealth management service for Glenmede’s clients in the Cleveland area, including ultra- and high-net-worth individuals and families, as well as foundations and endowments.
Combined, these three have been at Glenmede 23 years and have more than 65 years of industry experience. The company’s Cleveland office opened in 1997 and today serves more than 184 relationships.
Western Reserve Partners LLC announced that Daniel P. Callanan has joined Western Reserve Valuation Services LLC as a director and shareholder. WRVS is an affiliate of WRP that provides valuation services and financial opinions relating to corporate finance transactions, corporate tax planning and compliance, succession planning and wealth preservation, employee stock ownership plans, financial reporting and portfolio/fund valuations.
Callanan is a seasoned valuation professional having advised privately held and publicly traded companies on valuation and other financial matters for nearly 20 years. Prior to joining WRVS, he served in a variety of valuation-related capacities at ComStock Advisors, JP Morgan/Chase, Willamette Management Associates and Arthur Andersen and Co.
Oswald Cos. — one of the largest independently owned insurance brokerages in the U.S. — has announced Steven J. Baltas as its new vice president and the acquisition of Union Insurance Group Inc.
The acquisition is in direct response to Oswald’s continued strategic growth expansion in the areas of employee benefits.
Baltas, who was the president and founder of Union Insurance Group, brings with him more than 20 years of benefits experience, specializing in financial and technical aspects of employee benefits plan design and application.
Paul Fox is a man who dreams big and has aspirations for his firm to achieve great things. The president and CEO of Skylight Financial Group, a 120-employee financial planning firm, plans to expand across Ohio and be a household name in the state within 20 years.
Fox takes a step-by-step approach to achieve those goals and has been driving steady growth for the last five years.
“I don’t look at challenges from the outside, I look at challenges from the inside,” Fox says. “I knew in the first five years I wanted to double the size of the organization in terms of people and revenue and we’ve done that. Starting off these next five years, we’re going to double it again.”
Smart Business spoke to Fox about how he sets his vision and accomplishes goals one step at a time.
What are the first things you need to do when developing a vision?
You have to start with something very vague that’s way far out. It has to be far enough out where you can’t create detail. You just create a picture that says, ‘This is what we want to look like way down the road.’ Since you have no idea how to get there today, you have to break it down into five-year increments. If you accomplish what you need to accomplish in each of those five year increments, you’ll get to where you need to be in 20 years. That’s very idealistic, but it’s something you have a passion for, you believe in it and you have commitment behind it.
How do you make a five-year plan work?
From the five year plan of attack it’s easy to break it down year by year. By the end of this year where do I want to be? In one year I want to be here toward the five year goal. In two years I should be here, three years here, four years here, and by the fifth year, you’ve hit the five-year objective.
Now you’re there in five years and you have to build another five-year plan and then within it, one-year increments, so that after 10 years, you’re halfway up the stairs to get to the long-term objective of the vision. You do that very systematically so you know that you’re working on the right things to get to where you need to get to.
What are common mistakes you see others make when creating a vision?
Most people in businesses today work on their next-year plan of attack in October, November or December. I’ve found that doesn’t really work, because by the time I had my plan ready to go for the following year, it was already the following year. By the time I implemented and got started on my plan for the following year, it was halfway through the year. Now what I do is from January through June, I write down ideas when things pop into my head. In June, I start planning out specifically what we’re going to do the following year and I do that June through August. In September, I start building out next year and by mid-October or early-November I start implementing the follow year’s initiatives so that by January everything is up and running.
What are the keys to making every step of a vision successful?
The leader of the firm has to have a very clear vision and an absolute passion about getting there no matter what. They have to be fully committed to it and take responsibility to get there and believe that outside influences don’t impact that. The second part is can the leader impart that same feeling and same awareness of the vision to the upper management team and build an upper management team that believes it. That has to be passed down through management to all the people in sales and throughout the organization. If everyone has that same feeling and same drive then you know you’ll get there.
You’re always going to make mistakes, but that’s OK because mistakes are good. Most people think mistakes are bad because it’s failure, but mistakes are a good thing because that means you’ve learned something and therefore you’re going to grow. Embrace the failure. Don’t keep failing the same way, have different levels of failure and you’ll continue to grow once you fix it.
HOW TO REACH: Skylight Financial Group, (216) 621-5680 or www.skylightfinancialgroup.com
Asked to take the managing partner position of Ernst & Young’s Cincinnati office in November 2008 with the recession looming was both good and bad timing for Julia Poston. On one hand, she quickly realized the amount of challenges and drastic changes that the firm would need to cope with, but on the other hand, she could utilize personal strengths and take the firm to levels of business it hadn’t been before.
It didn’t take long for the effects of the recession to cause clients of the accounting firm’s 300-employee Cincinnati office to begin to pull back and shelve projects. Poston had to look for alternative ways to keep clients and customers satisfied while also making sure the employees of the firm understood what was needed of them moving forward.
“We were pressed to figure out how to manage our business a little differently with our revenue dropping as clients shelved things. Trying to manage the business with a smaller revenue base just meant that you had to be more frugal,” Poston says. “We really looked closely at where we could drive some of the costs out of our business without impacting the services to our clients. There were people challenges too, because people were just really worried about the recession and what it was going to mean and they felt vulnerable.”
Luckily for Poston and the firm, those were things that played to her strengths as a leader. She had to drive transparency and openness with her employees as the firm dealt with the changes of a recession.
“It caused us to have to ask them to do more with less and we had a chance to really see who the leaders were during those tougher times,” she says.
Here is how Poston took the negatives of doing business in a recession and turned them into game-changing initiatives for Ernst & Young.
Communicate in tough times
As the recession began to take effect and some of the early signs of change crept into the firm, Poston had to be upfront and clear about what this meant for employees.
“We really looked to people to come to us with ideas about how we could do things differently and challenge things that we once did,” Poston says. “What we tried to do was say to our people, ‘Hey guys, we’re in the midst of a recession and we need you guys to act like you own this firm too. Tell us how we’re going to manage through this. Rather than feeling that things aren’t as great as they once were, tell us what you would do if you were running this business.’”
In order for this approach to work, everyone in the firm had to understand that changes were inevitable and they had to embrace that fact.
“Change happens in every business,” she says. “You can either try to manage around it or you can take it and say, ‘All right, how do we need to continue to transform what we do, how we serve our clients, how we behave internally as an office given this change and react to it?’”
To get people to step up with ideas and have the urge to be engaged in helping the firm forward, Poston was open and transparent.
“If you want everybody to own the goals of your business or your practice and not just have their own personal individual goals … you have to be very transparent with them,” she says. “You have to co-develop the goals with them and then build in the accountability with all levels. The only way to do that is with transparency. Just kind of barking that out and setting those goals and telling everybody that everyone has to own those goals doesn’t work if people don’t feel that they’ve got all the right information and transparency into the process.”
Poston and her other partners took the recession as an opportunity to engage all of the firm’s employees in new ways to run the practice.
“We need to approach our work and our client services differently coming out of this recession,” she says. “We need to have far greater diversity of thought. We need to make sure that we bring, not just our partners to the table to help make decisions as it relates to our client’s business issues, but we need to invite our younger people to the table to think about how we come up with solutions and creative ways to help our clients deal with their business issues. We really have had a big emphasis on connecting everyone from partners to staff both in horizontal and vertical teamwork. We’ve really changed the culture to challenge people to speak up and share their ideas no matter what level they are in the firm.”
Through the process of communicating what it would take to get through the recession and getting employees engaged, it became evident who the leaders in the firm were.
“The people who stepped up and said, ‘We can manage through this change,’ are the ones who are most vital to our business and largely have been the ones who have been most successful coming out of the recession,” Poston says. “The ones who were kind of paralyzed by the recession and didn’t show an ability to adapt to change and doing things differently, they didn’t show great strength. They showed a resistance to change and wanted to harken back to the old days, which the old days aren’t back again.”
Discover new leadership styles
Poston wanted everyone to challenge the old ways of thinking and doing business at Ernst & Young.
“One of the things that’s been a game changer for us was we took our partner group and did something different in terms of challenging leadership styles and creating an environment of teamwork in a really different way than we had ever done before,” Poston says. “One of the things that we did was we had an off-site, three-day, two-evening event out at Camp Joy, which is a camp that has a lot of those outdoor activities like ropes courses and those physically challenging things. We called it the partner leadership challenge and it was a combination of those activities outdoors along with facilitated classroom on leadership challenge. Everyone had to attend and it was a huge game changer for us because there became an element of trust and partnership that we thought we had before, but we didn’t have any idea just how far we could take that.”
The leadership challenge and classroom part of it was started with a 360-feedback process that all the partners needed to do with at least 10 people — people above them, at their same level and below them.
“We really openly dived into all of the feedback that each of us had gotten and set goals for ourselves and buddied up to help drive that accountability,” she says. “We all got a lot of lift from one another by doing this, and that’s the kind of culture we want here — a culture of LIFT. LIFT stands for leveraging insights from teamwork with the idea being that if we team and trust in it in an extraordinary manner, we will be able to leverage each other’s insights and do an even better job serving our clients and taking care of our people here.”
The partners took it upon themselves to make sure they were acting as the best leaders they could and made sure they didn’t just talk about it, but demonstrated it.
“We identified what we thought were the five key practices of good leaders and really honed in on those,” she says. “Do we model the way? Do we actually walk the talk? Do we inspire a vision for our people and communicate that? Do we challenge processes? Do we enable others to act? Lastly, do we encourage the heart? Do we really let people get into what they’re doing? We took those five practices of leadership and we discuss those in each of our partner meetings and remind each other that we have to model the way.”
Keep your clients close
Poston understood that it wasn’t just her firm and the accounting industry struggling to get through the recession. The firm took advantage of the situation by getting closer to clients and helping them achieve better ways of doing business as well.
“When times are good and companies are growing and earnings are growing, sometimes there’s not really a burning platform for them to be interested in hearing our observations of how other businesses are tackling different issues,” Poston says. “When you’re in a recession and everybody is really struggling, we found our clients were far more interested in hearing our ideas on how they could approach the recession. They welcomed other thoughts and ideas and observations from others and they might not have as much previously. When things are good, you’re not concerned about best practices.”
It’s easy to relax and allow business relationships to just carry on when things are running smoothly. However, it’s when times are tough and those relationships are put to the test that you have to really deliver on the promises of service and support.
“If we had this come again, we would do the same thing in terms of investing more and more with our clients and spending more time with them and building those relationships so that you can help them and be a partner with them,” she says. “When the economy starts to turn, you’ve positioned yourself far better as a trusted business adviser to them. Spend more time with your clients when they are struggling and have bigger business issues, not less.”
Competition in the accounting industry is fierce, so it is crucial that Ernst & Young find ways to differentiate itself to clients.
“We’re in a really competitive business,” Poston says. “We’ve really coached our people to not take any client interaction for granted and always be at our best. A differentiator between Ernst & Young and our competitors is over the course of the last year and a half, we have really globalized our firm. We have the same methodology for client service and delivery, the same metrics, the same type of communications across the entire globe. The reason that that’s important is that it’s a pretty big benefit to our clients that have a global footprint. Our project teams, our integrated solutions are very consistent across the globe. That consistency that we have in our firm across every location is a huge plus. That’s not necessarily the structure for other firms.”
While the changes in thinking, communication and leadership have been a huge help to getting the Cincinnati office through the recession, the top priority and most helpful aspect of those changes were the clients.
“Make client service the No. 1 thing you do,” Poston says. “If you approach your business from what would be best for your clients, chances are you’ll probably be doing the right thing. And then, just really invest in your people. Take care of them and give them challenging things to do and let them be a part of the decision-making and treat them like the great young professionals that they are and they’ll deliver. You’ll have great retention and have really satisfied clients.”
HOW TO REACH: Ernst & Young Cincinnati office, (513) 612-1400 or www.ey.com
- Communicate your challenges and changes to get employees engaged.
- Challenge the old ways of doing things.
- When times are tough make the best of client and customer relationships.
The Poston File
Ernst & Young Cincinnati
Born: Boston, Mass.
Education: Attended Miami University and received a B.S. in accounting
What was your first job and what did you learn from that experience?
I worked in a restaurant when I was 16 years old, and it was a really great job because you work really hard, but you learn all kinds of valuable things: how to operate with equipment, how to deal with customers and handle money. That’s when I started liking accounting because I enjoyed interacting with customers and the financial end of it as well. It was a great starting place to learn some valuable skills.
What is the best business advice that someone has given you?
My dad used to tell me that business was so unethical. I didn’t agree with him, but I’ll never forget that because, as a business leader, we have a responsibility to be good corporate citizens.
What is one of the most stressful things about tax season?
Right now, given the political environment, there is an awful lot of chatter and proposals of how our tax system might change. One of the things that we try hard to do is understand what these proposals are and talk to our clients about them so that if any of these come to be, we will be able to help our clients think about them and respond to them.
If you could speak with anyone either from the past or present, who would you speak with?
From a business standpoint, there are some incredible business leaders that I admire. A.G. Lafley was an incredible CEO at P&G, and I find those kinds of people inspiring.
Libra Industries announced that Phil Jones has been named as director of manufacturing. His main duties will include overall responsibility for contract manufacturing and assemblies operations in Libra Industries’ two plants located in Mentor, Ohio. Jones will maintain a strong focus on strategic leadership and continuous implementation of lean manufacturing techniques. He has more than 25 years of experience in manufacturing management in a variety of industries including industrial regulators and fittings.
Medical Mutual recently announced Dan Polk has been appointed vice president of small group sales and broker distribution. Polk will be responsible for 1-99 group sales and retention in Ohio, which the company just brought in-house for the first time in 13 years. Joining Medical Mutual in 1990, Polk has held a variety of positions within the sales and customer relations division, including service representative, small group sales, senior sales representative for large groups, 51-99 group business unit leader, and, most recently, director of sales and broker relations.
Medical Mutual also announced that Mark Hren has been appointed vice president and general auditor. Hren will be responsible for leading a team focused on financial, operational and information technology auditing, as well as enterprise risk management. Before joining Medical Mutual, Hren served in the audit practice at Ernst & Young specializing in insurance industry clients. At Medical Mutual, Hren has served in various positions including market leader of individual products in the sales division, manager of financial analysis and most recently as the director of financial reporting, a position he held for six years.
Kaiser Permanente has announced the hiring of Maria Dawe, account executive; Michael Willis, manager, account management; Tim Krenn, senior sales executive and Dick Schoeler, manager, broker relations, small group and individual sales. All of these new employees will be working from Kaiser Permanente’s administrative offices in the North Point Tower in Cleveland.
Spectrum Surgical Instruments Corp. has announced the appointment of Jim Rygiel to director of endoscopy division. Originally trained by Olympus in the areas of rigid and flexible endoscopes, Rygiel has more than 19
years of endoscope repair experience. As a certified master repair technician, Rygiel has extensive knowledge relating to procedures, endoscope processing, storage, care and handling, and refurbishments.
CNA National Warranty Corp. has promoted Jay Sharpnack to the newly created position of national sales manager. Sharpnack joined CNA National in April 2010 after establishing a successful career including corporate, managerial and sales positions in the automotive industry. In this new position, Sharpnack will continue to be based in Cleveland and will be responsible for managing CNA National’s sales production at auto dealerships across the country through the company’s six regional vice presidents.
Madison Electric Products has announced Rob Fisher as vice president of marketing. In his previous role as director of marketing, Fisher played an integral role in helping Madison break ground in the electrical industry by crowdsourcing product development through the Sparks Innovation Center and leveraging social media to connect with a broader audience.
Fisher joined Madison Electric Products in 2009. Drawing on 13 years of diverse, cross-industry experiences, Fisher spearheaded the development and implementation of the company’s visual identity, public relations, social media and marketing strategy. Under Fisher's direction, Madison Electric Products has received numerous marketing and social media awards.
Great Lakes Science Center, home of the NASA Glenn Visitor Center, announced the promotion of Jamie Finley Simoneau to COO. Simoneau will be heavily involved in strategic planning for the organization and responsible for all operations, marketing, guest services, contract partners, special events and the OMNIMAX Theater. Simoneau joined Great Lakes Science Center in 2006 and most recently, served as vice president of marketing and guest services, with responsibility for the majority of earned-revenue areas.
Eric Lofquist and Magnus International Group Inc., go about business in a rather nontraditional manner. The 50-employee manufacturer of organic components for eco-friendly products does business through a very collaborative process where customers often agree to buy products before they are even made.
Magnus, which has annual revenue just shy of $100 million, is primarily a company that takes materials that are traditionally made out of petroleum and designs a replacement product based on renewable, sustainable materials.
“What it was in the beginning was we had an idea and you’d have to take it to the customers,” says Lofquist, co-founder, president and CEO. “Now it’s to a point where the companies we do this for think about it and they call us and ask, ‘Can you make this or make that, or have you ever thought about this?’ So now the information is traveling both directions.”
Smart Business spoke to Lofquist about how he has grown Magnus International through trust, collaboration, and planning.
Collaborate. It takes a little bit longer to grow when you’re developing new products and you’re looking to get those products approved and into production. One way we have found to reduce the time to get those out to market is to already have them presold. If we can make this for you, if it’s going to be around this price point, if it’s going to have these characteristics, are you a buyer?
What you end up doing there is you end up having a partnership. You’re an extension of theirs because you’re getting an agreement ahead of time and you’re telling them all your secrets, so you need to have someone you can trust and they need to be able to trust you too. They’re saying, ‘If you make that, yeah I’ll buy it.’ It’s really collaboration between two companies without there being a formal joint venture. It can be a little tricky at first, but once you get established and you do it a couple of times, then you build that reputation and that ability to move pretty quickly through the supply chain.
Have a plan. We have a good platform in place right now and 2012 is going to be all about new products and new brands all setting the stage for the next big growth spurt for us. Our current brands are going great, so it’s how do we leverage that and how do we do more of what we’re doing and how do we do more of that with the people in Northeast Ohio?
Anyone out there that’s been successful has to start with understanding what their customers want long-term. The deeper you get into their long-term plan, then the deeper you can get into your long-term plan. If your long-term plan doesn’t match up with what your customer’s long-term plans are, then you’re not going to meet your final objectives. We spend a lot of time understanding what the long-term objectives are and they change, so you need to be on top of them. At least on a quarterly basis you have to check if you’re still on the same path. It’s a constant check and balance on what they’re doing and what you’re doing and making sure that there’s no gaps and you’re working on what they’re working on.
We have a plan and we share that with them and they have a plan and they share that with us. That goes back to trust because the information that we are passing back and forth is very confidential information and it takes years to build that report up. Once you have it and you show that it can be trusted and sustain the deeper you can get into what they’re plans are and how you fit into them.
Trust your employees. We do things differently than the way most people do them when it comes to our business. We have to have people that are willing to look at the business not in the traditional way that new brands are developed and taken to market. Your employees have to believe and have that same trust. The door swings both ways on the trust because we’re asking for information and we’re provided information and it has to flow evenly both ways.
Over the years the key employees have really understood that and have looked at things differently than a traditional development market and it takes time. You can tell them all you want, but they have to see it and they have to feel it and they have to be part of it in order to buy-in and understand it. Then they can move it forward because you can’t do it all on your own. You have to have people that believe and have the same focus on the strategy.
HOW TO REACH: Magnus International Group Inc., (216) 592-8355 or www.magnusig.com
If you ask Travis Mlakar what the problem is with being in the paper industry today, he would joke that it’s people asking him if he is Dunder Mifflin from the TV show, “The Office.” While Mlakar hopes his company wasn’t the model for the show, he does want to strive to do something the show has accomplished, which is to make paper more appealing.
Mlakar will be the first to admit that he is in charge of a product that is both boring and bland. However, that boring product is a necessary one and although it lacks the rock star product status, paper has been the lifeblood of Mlakar’s family business, The Millcraft Paper Co., for 92 years.
“It’s white paper,” says Mlakar, president. “It’s about as boring and bland as you could possibly get, so we’ve had to find other ways of differentiating the product.”
That product differentiation, among other initiatives, would come in handy when the recession hit home for Millcraft Paper, a $150 million independent distributor and converter of commercial printing paper. The company went from experiencing record performances one month to a 15 percent drop in revenue the next. The business of paper was no longer boring or bland.
“In October 2008, we had the single largest month in company history, and in November 2008, we literally lost about 15 percent of our business overnight,” Mlakar says. “The world just came to a screeching halt. We’ve had to redefine who we are and the value that we bring and how we run our businesses after 2008 and 2009. Coming out of that, we realized internally we had to find a way as a business to take corporate responsibility and corporate sustainability to the next level.”
Millcraft’s footprint of operation is the Midwest in cities like Cleveland, Detroit, Buffalo, Pittsburgh and Indianapolis. The company realized it had to find way to become more efficient and stronger while also finding ways of giving back to the communities it works in to help those economies grow.
“It’s not the booming metropolises of the world,” Mlakar says. “We have spent a lot of time over the last few years really focusing on the communities in which we work. What we are trying to do is make better decisions ourselves as well as educate our customers about the impact their buying decisions have beyond price, because there is a lot more to it.”
Evaluate the business
When your business experiences a change from month to month as Millcraft did, it wakes you up. Mlakar and his team had to begin to identify ways to deal with the new economic and business environments.
“We obviously have had to drive efficiencies through our organizations,” Mlakar says. “Unfortunately, we went through massive headcount reductions, which are never fun. We also looked at how our organizations can do a better job of supporting each other. While we have 13 locations, the real question was what were we doing that was redundant in those 13 locations and how could we do a better job of all collaborating with each other to better support each other and do more with less?”
While the recession caused businesses a great deal of pain, it did provide a window of opportunity to those willing to put in the effort to truly improve their companies.
“The benefit of 2008 and 2009 was it blew everything up and you finally had a backdrop to question everything and you could get people to understand why you were attacking some of the sacred cows in your industry or in your business,” he says. “Necessity is the mother of all invention and I think that the necessity of changing your business and finding a way to be more efficient after the Great Recession really afforded people the opportunity to look at things differently.”
For Millcraft, one of the areas of business that had always been done one way was inventory management. There were old paradigms and it was time the company took a second look at those operations.
“When the downturn happened, we brought a new group of people together who were able to bring a fresh perspective to how we managed inventory and we were able to take our turns on our inventory from six times a year to 10 to 12 times a year,” Mlakar says. “They’ve done a fantastic job of just breaking the old paradigms that were there and really asking questions, ‘Why do we do this? Why do we do it this way? Why can’t we do it this way?”
Millcraft asked those same kinds of questions in customer service across its 13 locations. That effort has had a monumental impact and has allowed those locations to act as one rather than 13.
“We have competitors who have chosen to drive efficiencies by centralizing things and literally going to a centralized customer service department that they may have moved out of the area to another location,” Mlakar says. “What we’ve done is we’ve used technology to bring our organization closer together so that we are coordinating everything versus centralizing it. Right now our customers can pick up the phone in Cincinnati and if all of our customer service reps are on the phone, instead of going on hold, somebody in Columbus will answer the call or somebody in Cleveland or somebody in Detroit, to make sure that we’re not dropping the ball. That’s what we have focused on and we really looked at every aspect of our business to say, ‘How can we do a better job of utilizing what we have more effectively and efficiently?’”
Taking a step back and evaluating your entire business, seeing things differently and also questioning old processes and procedures is a great way to find better ways of doing things. However, the solutions don’t have to be up to you alone.
“You don’t have to have all the answers,” he says. “We have a wonderful group of people and what we’ve found to be most effective is to sit people down and ask them to describe their day and walk through all the different roles and responsibilities that they have. What do they feel is efficient or inefficient? If you can do it in a venue where you’re listening to what they’re saying, you’re bringing people together so that they can hear what they’re doing versus somebody else versus somebody else and then they start to draw parallels and say, ‘Wait a minute, I can do that and this person can do that, or what happens if we were all able to work together this way or that way?’ I find that some of the best business ideas that we’ve had certainly weren’t mine, they came from the people within our organization. I think if you can listen and facilitate you can get a lot further along than if you try and craft the answer.”
Communicate the changes
When you are asking employees for their feedback and input to identify areas of the business that can be improved, you have to make sure you communicate your decisions and actions based on that input.
“You have to be honest with people and say, ‘Here’s what you said, here’s what I heard, here’s what we took away from it or here are the decisions that we’ve made as a result,’” Mlakar says. “Sometimes you have to be honest with people and say, ‘Listen, I heard you say this, but I don’t agree and here are my reasons why.’ I think the key is you’ve got to educate people about the decisions that you’re making and more importantly, why are you making them. People may not like the decision, they may not agree with it, but the key is do they understand why we’re making it.”
During times of uncertainty and change, communication is the No. 1 tool for a business leader. When the recession first hit in 2008, it was unclear why business was declining and Mlakar had to communicate to understand why changes were happening.
“In November when we first saw the fall off in business, we didn’t understand why,” he says. “November was bad, December was bad and it wasn’t until January that other people in our industry began talking about the fall-off that had happened. So for 60 to 90 days, we were feeling a little lonely and it wasn’t until everyone started coming out saying, ‘Oh yeah, we’ve seen the same decline. We’ve seen this and we’ve seen that.’ Misery loves company and that certainly helped to understand that it wasn’t something that we were doing independently of the industry, and it wasn’t necessarily the decisions that we were making, but that it was a broader systemic issue.”
Once it was understood that it was a systemic issue it was quickly realized that everything that the company had been doing before had to be thrown out the window. You had to play by all different rules because no one had ever seen anything like this before.
“It just comes down to the fact that you’ve got to be honest,” he says. “You’ve got to be able to look people in the whites of the eyes and say, ‘Listen, it might be my job to be president, but that doesn’t mean I have all the answers. The reality is here’s what’s happening, here’s what we’re going to do or try to do to solve it.’ With respect to the people in our business and the people in this industry and a lot of industries, 2008 and 2009 was unprecedented. Nobody had any experience. Anytime there is a radical change in a business, often times it is uncharted waters and I don’t think there is anything wrong with telling people, ‘We’re in uncharted waters and we’re going to do our best, but we don’t have all the answers.’ You’ve just got to be honest and humble. If you come across like you have all the answers sooner or later people are going to see right through that.”
When the environment changes as drastically as it did, you can’t look for answers by staying within your company or even your industry. You have to get ideas and help from other industries where things can translate over.
“Everybody during that time was talking with friends on the side and asking, ‘What’s going on with your business and your industry?’” Mlakar says. “Whether it was casual conversations or talking with friends or just being open to ideas and things that were happening somewhere else, the benefit of a catastrophe like we went through is that you become much more open to ideas and potential solutions. I found myself listening to friends that are in the medical industry about what are they doing and trying to find a way of how could I apply that to our business.”
Whether you’re in tough times or not, it’s very important to develop a network of people that you regularly talk to that are outside of your industry.
“Too often people in business and in leadership positions inhale their own exhaust and they either sit in a room full of people that tell them what they want to hear, or they sit in a room full of people in their industry, in which case the only ideas you have are the ones that are going to perpetuate what’s currently happening,” he says. “You have to go outside and find things that are totally new and different to your particular industry. Find somebody that is in a totally different industry and look for those creative ideas.”
Millcraft focused on two parts of the business: assets/working capital employed in the business, and expenses.
“With both assets and working capital it really comes down to efficiency and analytics and how do you run your business more efficiently and where is there waste you can do without,” he says. “We’ve continued to do that and as our business is now growing again and we are in much better times, we’re finding that the work that we did two or three years ago is beginning to help us exponentially now. It’s the same thing on the expense side. That’s resulted in lower expenses, but more importantly, it’s also opened up the ability for us to grow more cost effectively.”
Once Millcraft had hit its low and was starting to grow again, the company found ways to continue that growth through a focus on its local communities.
“Lots of companies looked outside of their current territory or geographic area to open up new opportunities,” he says. “While we have diversified the products that we sell and the things that we can offer to our customers, we really focused more and more on the cities and the markets that we were already in. When other people said Cleveland doesn’t have the growth potential and we’re going to look elsewhere for revenues, we really said, ‘This is home. We’ve got to make this work and we’ve got to find a way to improve what we’re doing here in Cleveland and Buffalo and Pittsburgh and everywhere else.’”
Mlakar and Millcraft turned toward buying locally and supporting other companies in those same locations.
“We align ourselves with organizations that call home the same place that we call home,” he says. “We all have to realize that the decisions that we make every day go far beyond what we pay for a product. The only way that we’re going to support our communities is to make sure that the dollars that we have to invest on a daily basis as businesses stay in our local communities. Go the extra mile to find a local supplier. Go the extra mile to find out how you can do something that’s going to support somebody that’s going to keep the money here. The reality is that there is a huge downstream effect from your business decisions. When our customers, who tend to be local businesses, do business with Millcraft, those dollars, in turn, are going back into the community once again.”
Along with remaining loyal to local companies, Millcraft asked its customers and clients how it could add value to its products and services.
“We listened and we went to our customers and said, ‘Here’s the situation, we’d like to grow, and we’re not going to grow in other areas of the country, we need to grow with you. What is it that you buy? What is it that we can offer you as products or services? How else could we be of value?’” he says. “We listened to our customers and they said, ‘Well, we currently are buying this and we’re buying that and we’re doing this and it would really help us if you were doing that.’ So we really reengineered our business from our customers backwards. Once again, we didn’t try or attempt to think that we had the answers. Don’t focus on the products, focus on the customers. What you’ve got to do is redefine your organization’s strategy away from ‘Here’s what I have to sell,’ to more of ‘What is it that you need?’”
In conjunction with the company’s philosophy of remaining local and supporting the community, Millcraft started the “Buy and Give” program.
We have developed programs that are designed to give back to the community,” Mlakar says. “The thought behind it is pretty simple. We’re paper, it’s a commodity item, it’s something that nobody thinks about and it’s a supply item that every business has to buy. What we’ve done is we’ve taken that and we have teamed up with two organizations; the Cleveland Clinic Children’s Hospital being one and the United Way of Greater Cleveland being the other. We’ve developed a program to say for every carton of paper that we sell, we are donating back a dollar to the Cleveland Clinic or the United Way of Greater Cleveland to help support those organizations. What we want to do is find a way where we can turn a business decision into a much more efficient business decision by helping organizations and helping our communities and that’s what it is about.”
HOW TO REACH: The Millcraft Paper Co., (216) 441-5500 or www.millcraft.com
- Make the effort to evaluate where you can improve your business.
- Be honest and communicate every chance you get with employees.
- Look outside your industry for solutions to problems within your business.
Pittsburgh’s health care landscape has been anything but boring, and for Robert Rogalski, that statement holds very true. The health care lawyer turned health system CEO has been surrounded by industry change and talk of mergers and acquisitions ever since returning to the area in 2009.
Rogalski’s entrance into the CEO role at Excela Health was rather nontraditional. The former counsel for University of Pittsburgh Medical Center and West Penn Allegheny Health System was asked to join the board of directors at Excela, a 4,800-employee, $500 million health system. Just a few months later, he stepped in as interim CEO and took the job permanently in 2010.
Five years earlier, Excela had undergone a merger of four hospitals — Latrobe, Westmoreland, Fricke, and Mercy Jeanette. Mercy Jeanette has since closed, but the other three remain open, and it has been up to Rogalski to continue the long process of unifying those cultures into one.
“We had difficulty fitting together the cultures of Latrobe Hospital and Westmoreland Hospital and I think the biggest challenge is trying to find common ground to build upon to develop a common culture for the new entity,” Rogalski says. “Like any merger there tends to be a little bit of push and pull in terms of which culture is going to succeed in a merger.”
Unlike many mergers or acquisitions where the incoming company adapts to the culture of the acquiring business, Rogalski and Excela didn’t want to force one particular culture upon the new entity and instead are looking to form a culture made up of best practices.
“What we found here is that there was a sense of lost in terms of the culture and what we’ve attempted to do through a series of planning exercises is we’ve tried to define a new culture for the system rather than adopt one culture or the other,” Rogalski says.
Here is how Rogalski has helped bring together three systems and form a common culture for future success.
Evaluate the culture
With Rogalski at the helm and a new board also in place, the first task at hand was to get together and evaluate the type of culture they wanted to set up for the new entity.
“As a board exercise, we sat down and tried to establish the culture that we would like to see,” Rogalski says. “When we studied it and spent time at the board establishing it, it really came down to a lot of fundamentals that included patient convenience, quality of care, and patient experience. At the center of it was, ‘How do you design systems that are the most patient-friendly?’
“A lot of times what you run into in our industry is systems that have been established for provider convenience, whether that’s physician convenience or nursing convenience or otherwise, sometimes aren’t established on the platforms that they should be.”
Rogalski and his team spent a great deal of time evaluating how patient-friendly Excela was and whether it was maximizing the patient experience and where the gaps were.
“We were trying to lead both cultures to that end and to get a lot of the decision-making focused on our basic pillars,” he says. “We then needed to wire our culture into our hiring decisions, retention issues and awarding of employee promotions based on how well they adhere to those values. Those are the things we are working on now.”
Another focal point that had to be addressed was the fact that these hospitals used to be competitors and now they were on the same team. Excela had to make sure processes didn’t involve competition.
“I think historical competition that existed between these two hospitals had fostered some level of mistrust,” Rogalski says. “When you’ve competed with someone for a while and then all of a sudden you’re put on the same team, unless you eliminate the competition between the two entities, there is always going to be some type of element there that isn’t necessarily constructive.
“We did have to look at where some of our practices were allocated, and we’re doing that analysis now. We had to look at where they wanted certain services to be rendered and that type of decision-making was very good and helpful in terms of being able to eliminate intramural competition in the future.”
The historical competition of the hospitals was another reason that Excela wanted to blend cultures rather than choose one in particular.
“In certain circumstances you can be more prescriptive about the culture,” he says. “But even in those situations I think the blending of cultures is important. One of the things we wanted to hold on to were the valuable attributes of both organizations. Both were hospitals that were very successful in the past, so making one culture subservient to another wasn’t the right prescription for our situation.
“The right prescription for us was trying to define what we wanted to grow into and invite both organizations to matriculate to a new culture.”
When evaluating such an in-depth process with many different things to consider in every decision, it is helpful to form a plan to follow and have people that will help you achieve it.
“You have to have a template with your mission and your vision and your values system that’s listed,” Rogalski says. “I think you have to spend a lot of time in strategic planning in terms of evaluating the value system for your organization. Once you have that definition developed, I think the key is doing the gap analysis. Go through on a unit-by-unit basis and see where you think the shortcomings are.
“You also have to evaluate each of your leaders and that takes a long, long time. You have to attract the type of people to your institution who have some innate attributes to be selfless and attributes designed to put their own convenience to the backburner.”
Communicate your plans
Rogalski’s predecessors made some very good decisions in regard to the merger, but they were difficult decisions that involved rearranging of services. What Rogalski had to do was to take charge of communicating the new plans moving forward.
“With the reshuffling of some of the services, there was some sense of loss,” he says. “Among the things that I had to deal with when I got in the chair was some dissatisfaction among community members and others about those types of decisions. So we had to try to get everyone to agree that those decisions made a lot of sense, and we tried to explain the reasons why they made sense.”
Communication has been Rogalski’s biggest focus in recent months. Meeting with community leaders and explaining why certain decisions are being made has been a key effort.
“What gets people into trouble a lot of times isn’t necessarily the ultimate decision, but the way it’s communicated,” he says. “There needs to be communication before decisions are implemented. We’re certainly not perfect at this even as we sit here today. In the interest of time we have pushed some things through where we could have communicated better.
“When you’re dealing with a merger you have to spend a lot of time matching up your mission, vision and values. Try to evaluate your culture and make sure that if you have gaps between the two entities that you try to close those down from an early time period.”
Communicating to get buy-in for Excela’s new culture was the next step in the process, and it presented some difficulties.
“As a not-for-profit hospital we have some obligation to the community, but ultimately to make the organization operate efficiently, you have to make certain decisions,” Rogalski says. “You hope to, as leaders, get enough consensus built around a decision so that people agree it’s important to do.
“We built some collaborative structures in place for our physician leadership. We’d established a number of leadership committees, so we are involving the physicians in strategic discussions and more importantly, we are getting feedback from the physicians, which help us guide our decision-making process. We also have a very active and engaged board who helps push us on our decision-making as well.”
Even when buy-in for a decision is gained and that new direction is implemented, certain decisions are going to impact people differently.
“Ultimately, once the decision is made, I don’t think you can harbor dissent at that point in time; people either agree and get on board with it, or you just have to get past it,” Rogalski says. “If that means they’re no longer going to be employed by the organization then that’s fine … we’ll just pursue our interests at that point in time. You can’t satisfy everybody.”
In a process that’s as critical to the organization’s overall success as a new culture, you have to make sure your employees have input on how things should operate.
“The communication is important, but even more so, if you have a strong core of physician leaders who take the time to become educated on why it’s important for a health system to run efficiently, how they should run efficiently and who can assist you in telling their colleagues why it’s important to put their individual convenience to the side for the benefit of the system is critical,” he says.
“We have to prove to them and build trust and it takes a little bit of time for us to do that. We’re trying to develop a level of engagement where we get feedback from the employees and try and respond to their concerns and explain why we’re undertaking certain decisions.”
Don’t get discouraged
In a process where every decision has a big impact on the organization, it is easy to become discouraged or for employee morale to drop. You have to stay positive and do what’s necessary to keep morale up.
“The most difficult part is we’ve been required to make decisions that are difficult and politically difficult,” Rogalski says. “When you make those types of decisions, it’s very difficult to get buy-in for what you’re trying to build from a cultural standpoint.
“When you make decisions like that that are difficult for any community and difficult for any workforce, it takes a while for the employees to develop trust in the organization. How’s it going to be different? How’s my daily life going to be? Those sorts of things make it more difficult for us to build morale.”
Getting morale where it needs to be to buy in to a cultural transformation is one of the biggest challenges for a CEO to face; you just have to continue to build trust.
“Employees are smart,” Rogalski says. “They’re not going to listen to what you say; they’re going to watch the actions. I think communication is important, but it’s only as important if you follow through on what you say you’re going to do. They’re going to want to see you live your values and set the example for your values through working hard and trying to be selfless. If they see you doing that, they’ll be more likely to agree that these values are something that you’re serious about and that you think are important for the organization because it’s the right thing to do.”
Boosting morale in a transition such as this is vital and it helps to celebrate the little victories and recognize the employees who get you there. You also have to realize that culture is an on-going process.
“We’ve tried to take all this on with some humility in terms of our understanding that there has got to be a better way to do things,” he says. “We never approach our successes as though we’ve reached the end point, but we do celebrate our successes. You have to celebrate the success of the people who bring you the results.
“Ultimately, I don’t admit patients, I don’t care for patients, and I wouldn’t have the slightest ability to do either thing, so we need the nursing staff, physicians, and the other employees to develop our successes for us and when they do that they’re the ones that deserve the credit for it. The biggest takeaway is knowing that you’re never really finished with a task like that.”
HOW TO REACH: Excela Health, (877) 771-1234 or www.excelahealth.org
- Understand what kind of culture your organization needs.
- Communicate the changes that will make the culture work.
- Don’t let the process discourage you and try to keep morale high.
The Rogalski File
Born: Kittanning, Pa.
Education: Graduated from Saint Vincent College of Latrobe and received a juris doctorate from the University of Pittsburgh School of Law
What was your very first job, and what did you learn from that experience?
One of my first jobs after graduating college was as a newspaper reporter. It taught me that there is enormous power in public perception.
What is the best business advice you’ve ever received?
It came from my mentor Jim Cooper. Jim was the CEO at Medcenter One. He used to say that it’s not necessarily the decisions that you make that will be your doing or undoing; it’s how you communicate them.
If you weren’t the CEO of Excela, what’s a job you’ve always wanted to do?
If I wasn’t the CEO of Excela, I’ve always enjoyed being in health care, so I wouldn’t mind being back practicing health care law.
What are you looking forward to in the health care industry?
I’m excited about the transformation that we’re doing in health care in terms of trying to control costs and create as efficient a system as possible. We’re using a lot of the lean tools and that part is exciting to me.
Who are leaders that you admire?
The biographies of the presidents have always been interesting to me. I have a lot of admiration for Harry Truman. I was impressed with him and the decisions he had to make in some of the darkest hours of World War II and the beginning of the Cold War. I think he was thrust into a very difficult situation and acquitted himself about as well as anybody could be expected to.
Over the past 18 to 24 months, Gary Heiman has had to overcome obstacles and challenges from seemingly every angle of the textile industry. The president and CEO of Standard Textile Co. Inc. has had to face fluctuations in raw materials cost, capacity and quality challenges, and the pressures of operating across the globe. It has taken a resilient leadership and company to maintain the kind of professionalism needed to not let those challenges get the better of the business.
Standard Textile Co. Inc. is a 4,200-employee global provider of total solutions in the industrial textiles and apparel markets that saw 2010 revenue of $750 million. Heiman has moved the company into new areas of business and has built up the company’s reputation.
“There are several areas of strength that we have as an organization,” Heiman says. “No. 1 would be our global supply chain. No. 2 is innovation and creativity, which is something that flows throughout the veins of everybody in our company. We’re trying to improve upon every process as well as product in order to be more efficient and effective both for our customers and for us.”
Heiman, who has been in his current role for 20 years, has prided himself on continuing to build a culture of excellent people, professionalism, trust and values, which has been the main solution to overcoming business challenges.
“If you don’t have the key building blocks of your organization in place and you come upon a period which presents real challenges, is a real crisis and you’re not ready for it – and you don’t have the organization that’s ready for it, it’s pretty tough to get through it,” Heiman says. “It’s tough to get through it as an organization that has all of the attributes and is ready and has worked together as a team in difficult situations in the past. If you don’t have that, it’s a tough situation.”
Here’s how Heiman and Standard Textile have maneuvered through the many obstacles in the textile industry.
Evaluate the challenges
As a manufacturer of linens and apparel, one of the most critical elements of Standard Textile’s business is raw materials such as cotton. The price and availability of raw materials have a ripple effect on business.
“There have been really violent swings in the costs of raw materials over the last 18 months-plus,” Heiman says. “You take those raw materials like cotton and oil, which would affect energy and electricity, freight and transportation, and they also affect all of our synthetic raw materials. We’ve also had to deal with raw material capacities and quality consistency throughout the supply chain. With all of that, we’ve always wanted to maintain, and needed to maintain, financial stability, which many other suppliers either couldn’t or didn’t.”
The price of cotton during this time fluctuated from $0.70 a pound to $2.40 a pound. Heiman and his team were committed to make the raw materials available and not make any change in them so there would be no alteration in quality, consistency, on-time delivery, or service levels.
“As part of that, it’s probably been the toughest period in balancing our work-in-process and finished goods inventory levels and to forecast,” he says. “Our customers expect on-time delivery and product consistency, but they either won’t or can’t give us realistic forecasts. We basically have to guess at that and make sure we have enough product and take into consideration that there will be shortages in markets that we’ve just come through. We need to be the company that can make up for those shortages.”
On top of those challenges, the company also has dealt with political and economic volatility as a global company.
“If you just take the U.S. and China relationship and the politics involved there and having plants in the United States, North America, and China, we’ve had to deal with those political issues which have affected us,” he says. “If you think about the fact that we have 24 manufacturing plants in 13 countries and we sell to over 60 countries today, currency exchange rates have been a real, real challenge for us over that period. We’ve really had to have our finger on the pulse all around the world almost on a daily basis in order to manage all these things.”
To combat the consistent uncertainties and challenges that the industry presents, Heiman and his team have one annual and three quarterly strategic supply chain meetings that they conduct all over the world.
“In our last meeting we actually had 275 initiatives for lowering our cost and dealing with the challenges,” he says. “Of those 275 initiatives, 100 were accepted. We as a company are really committed to a lean continuous improvement process. As part of that, we’re always out there looking at new countries, new nations and new places where our next plant will be and the plant after that because it’s a continuous process. We have an aggressive and vigorous process that we follow in these supply chain meetings. Everything is put on the table. Anybody can bring up anything and there are no silos and that’s the only way that we are going to truly achieve continuous improvement.”
Build a professional culture
Adopting a culture of continuous improvement and building a company that is prepared for the challenges and obstacles that an industry can throw at you is a tough task, but a necessary one.
“There really are no easy answers,” Heiman says. “I’ve been CEO here for 20 years and I’m the third one. Our company is 72 years old and we’ve built up a culture of excellent people, professionalism, trust, and a whole system of values and respect, and it’s very hard to say to another CEO who hasn’t built this up over a period of decades to just do this, this and this. The one thing that we do and we find we can’t do enough of is communicate.”
The company is always communicating what is being done, why things are being done, and the results that are being achieved through those efforts.
“You can’t communicate enough and you can’t get the message across enough,” he says. “We also engage in continuous research so that the messages that we’re communicating to both our customers and our associates are things that have been researched. We show them charts and trends, and our customers have learned to trust what we tell them.”
Standard Textile’s global capabilities and presence allow the company to know what’s occurring in the market worldwide and gives customers a better understanding of their business in return.
“Because we’re diversified around the world, we know what’s happening in China, Europe, the Middle East, and what’s happening in North America and South America,” he says. “We can bring all of that together and they’ve gained a lot of trust over these many decades about what we tell them because they know that we know what we’re talking about.”
That trust is not just built up over a period of time, but due to a history of getting the right information and helping customers make sound decisions.
“You have to build an organization of excellence in every respect,” Heiman says. “You need an organization that has the best professionals in marketing, in sales, in both process and product innovation, in supply chain, in finance, and really every aspect of the organization. Your job as CEO is to find the best people and the best associates for all of those key areas. For the next level down, it’s their job to find the best people under them so that the organization becomes continuously strengthened.”
Building this kind of organization relies heavily on the CEO being able to identify where the company is going and what it needs to become in order to flourish.
“The primary role of the CEO is to No. 1, communicate a clear vision to all associates and to all of the customers that are around the company,” he says. “No. 2 is people and being responsible for interviewing and having the final decision-making on the key people in the organization. A CEO wants people that buy in to the vision, into the strategy, into the values and into the culture.
“In addition, it’s putting together the strategy and the values that you want to have in your organization and the culture. That’s something that takes years to build and it’s something that has to be continuously reinforced and you need to communicate the message about what your values are and about the culture of the organization at every possible opportunity. You have to demonstrate it yourself, you have to speak about it, and you have to live it.”
Be innovative and diverse
Having a clearly defined vision, strategy and culture for employees to operate in allows them to be creative and innovative at a diverse company.
“You have to make a commitment to total organizational innovation, both product and process innovation,” Heiman says. “You’ve got to look at global diversification, both in raw materials and in manufacturing. If you have global customers who want to have global standards, you need to create a company that can service these customers around the world with the exact same standards and specifications in quality wherever they might be.”
To achieve that you need one culture and one set of values and those should be built around your customers and around your associates.
“Whether it’s local or global, every part of the company has to share and compare what their challenges are, what their opportunities are, and what their risk and exposure is in order to come together around best practices which they can then use as part of the company,” he says. “That type of training and continuous training is essential for creating a strong organization.”
One of the biggest success factors for Standard Textile has been its global supply chain which has allowed the company to be diverse and to innovate.
“In today’s world, you almost have to have a globally diversified supply chain,” he says. “The best and safest way to manage that supply chain is if you own your own supply chain. You’ve got to get out and you’ve got to travel the world and meet other suppliers because you’re going to have to use them. If you’re intending to work only through agents and just stay in the United States and not get out, you’re going to miss the bigger picture. It’s really important for a CEO to understand the bigger picture of what’s happening around the world.”
These continuous efforts to build a stronger, better company have led to industry-leading innovations in product development and cost.
“If you take a towel, you understand that 99 percent of people that dry themselves with towels will use the middle 50 or 60 percent of the towel,” Heiman says. “Because they want to improve the product, we’ll put more weight in the 60 percent of the center of the towel and reduce the weight on the 20 percent of the two sides. Or we’ll keep the weight used in that 60 percent in the middle and lower the weight on the 20 percent on each side, so you can actually reduce the weight of your product and therefore reduce the cost of your product.”
The company has also introduced technologies such as Centium Core Technology which is a patented weaving technology in the core of the product.
“The guest or patient or whoever is lying on the bed is effectively lying on cotton, but in the core of the product there is a synthetic product which actually weighs less. The specific gravity of the synthetic fiber weighs less, but the overall fabric will have over 200 percent more durability.
“Because the core weighs less it will dry faster and cut your energy costs and overall laundering costs. We’re developing products that last significantly longer and we’re creating products that process in a less expensive way.”
While Standard Textile has seen numerous challenges during the course of the past two years, the company has been able to roll with the changes and has come out of it as a stronger organization.
“Throughout this period we’ve gotten bigger because of the increase in pricing, but we’ve also gained about 19 percent in unit growth because we have taken market share from others that couldn’t supply or were supplying sub-par product,” Heiman says. “We’re bigger, stronger, and more recognized for having a truly professional team of people.
“We’ve gained the trust of our customers and we’ve come through it in a strong financial situation. We also have the trust and full confidence of our associates because they’ve seen where other companies have gone under or are struggling to survive. We’re flourishing in this environment.”
HOW TO REACH: Standard Textile Co. Inc., www.standardtextile.com
The Heiman File
President and CEO
Standard Textile Co. Inc.
Education: Received degrees in history and engineering from Washington University
What was your very first job and what did you take away from it?
As a teenager I worked at everything from mowing lawns to being a lifeguard to installing window unit air conditioners. The things that I took away from those jobs were being responsible, working hard, and trying to find better ways to do whatever I was doing more efficiently and effectively so my customer would be satisfied.
Whom do you admire in business?
I admire Jack Welch because of the issues that he dealt with regarding innovation, people, marketing, and sales on a global basis. Those were the things that I was dealing with.
What is your favorite thing about the textile industry?
The textile industry has been described as being a traditional industry, but there is nothing about it today that is traditional. All of the machinery that we use, all of the processes that we use are all high-tech, robotic and computerized. So whether you are in this business or another business, you are being challenged in the same ways. You’re being challenged in marketing, sales and manufacturing. So whether I’m producing a chip for a computer or a surgical gown, you still have the same types of challenges and same types of tools that you would use in getting to the best possible product. I really enjoy that part of the business which is built around innovation and creating new product that will better serve the customer in every way possible.
If you weren’t a CEO, what is something you would want to do?
I would like to be involved in innovation and product and process development of some type. Creativity and innovation is something that I really enjoy and really thrive on.
Mary Miller oversees a company that is responsible for cleaning 10 million square feet of office space in the Cincinnati area every night. To get that much business, you have to not only do a great job, but you have to differentiate your business from your competition. That is exactly what the CEO of Jancoa Janitorial Services Inc., a 320-employee commercial cleaning company that services large office buildings, is doing.
“Our business is better today than it was three years ago,” Miller says. “Back in the mid-’90s when employment was really low and we were short 38 full-time people, we knew we had to be more creative and ask different questions. You can’t just look at things and say, ‘This used to work yesterday.’ Nothing stays the same forever.”
It was this kind of thinking that led Miller and her team to create new programs that would differentiate Jancoa from its competitors.
Smart Business spoke to Miller about how to make innovation a part of your business.
Visualize the end in your mind.
Everybody has the ability to think of things they really want and to visualize how to see the future. At the same time, life brings opposition into our lives with walls to negotiate. The difference is taking the time to ponder the issue and devise ways to break through, climb over, go around or dig under — but to work through that opposition is when transformation takes place. It’s having the faith that knowing tomorrow absolutely can be better than today and being willing to do what it takes.
The more people ask the question, ‘What do I know that can create value for a company or for an individual?’ — that’s what really gets that motivation going and success starts happening. Too many people are sitting and waiting for people to give something to them and for things just to happen instead of going after it.
You have to begin with the end in mind. What is it you really want? If we were meeting a year from now or three years from now, what has to happen to be really happy? When you begin with the end in mind, look backward, ask those types of questions and you look at the dangers that you’re dealing with and different obstacles that are getting in your way, you start asking, ‘What would it look like if that wasn’t an obstacle or if we were to overcome that and moved on?’
Triumph over obstacles.
We look at obstacles or complaints that come in from customers or requests or suggestions that customers have to see what we can do to prevent that problem from happening again or what we can do to make it better to increase our productivity. You start breaking them down and looking at the results that you really want to have. What does that look like when you achieve that goal? You have to make a list of all the obstacles that are preventing that from happening and take those obstacles one by one and start putting things into place to overcome them.
Most of my people on my team have better answers on how to prevail over things or how to tweak our systems than I do, but so many employees think the owners or the bosses have all the answers. As management or a leader of a company it’s so important to ask questions and to shut up and listen to what your people have to say and to listen to what concerns they have because when you hear what’s really happening out there, there are a lot of possibilities for making things better and that’s when you change things from your competition.
Have a clear plan.
The challenge that comes is that it’s so easy to be seduced into possibilities that can lead you into areas that can get you into trouble. It’s so important to stop and have a plan. Every quarter we take the time to plan out what we want to have happen over the next 90 days. We also take a look at the previous 90 days and reflect on what we want replicated and what we never want to happen again. That’s a really important piece is to be able to take time to stop and have perspective and plan out what you want to have happen.
You also have to build a team of people that you trust are working within their talents and their skills that really creates an energy source of working together to achieve the results that you want to have.
HOW TO REACH: Jancoa Janitorial Services Inc., (513) 351-7200 or www.jancoa.com