Nearly four years ago, when Tom Salpietra joined EYE Lighting International of North America Inc. as its president and COO, a woman approached him interested in operational development at the company.
Since Salpietra was a new leader, it was expected that he would make changes within the company to improve EYE Lighting International while keeping the best things about the company intact.
“Everybody is going to have things wrong, but if you preserve what’s right, that’s where the secret is in organizational development and implementing change,” Salpietra says. “If you screw up the things that are right, that’s where you go wrong.”
Salpietra worked with her to develop questions to interview the employees about what they liked at the company. Since this was an appreciative inquiry the study only focused on what the employees thought was sacred about EYE Lighting International, not about what needed to be fixed.
The study found that every employee was extremely engaged in the company and its business.
“This was how we developed the four basic principles around the customer,” Salpietra says. “We made the customer the center of the business and did process improvement to all the things that we do on a day-in and day-out basis.”
EYE Lighting International is a nearly $100 million U.S. division of Iwasaki Electric of Japan. The company designs and manufactures high performance lamps, luminaries and lighting-related products that serve major commercial, retail, industrial, utility and specialty application lighting markets in North and South America.
Since Salpietra’s arrival at EYE Lighting, he has been focusing on efforts to develop new technology and to keep the organization’s sights on the next big thing in the lighting industry all while maintaining employee engagement levels.
Progress your company
EYE Lighting International’s unique competitive advantage is how the company doses the arc tube of its lighting products (dosing refers to the mix of metals inside the arc tube). The market is currently producing a lot of high intensity discharge (HID) lighting but soon the market will move to LED lighting. While LED works in certain applications, it is expensive, and there are still kinks to work out in other applications where it’s not ready for prime time.
“We’re trying to shift the company from just making HID lamps to offering broader solutions in our market segment,” Salpietra says. “We’re not going to stray from our core competency, which is dosing the arc tube and making unique types of lamps. The challenge we have is if we don’t move in that direction, our years and decades of existence will start to decline.”
As a management team, EYE Lighting knew that the company didn’t have to change too much to succeed, but if it didn’t start changing and moving in a certain direction, it wouldn’t be in that same kind of comfort zone it has been three, six or 10 years from now.
“We’ve taken it very seriously that what we do today will impact the company years down the road,” Salpietra says.
With the lighting industry making a slow transition into LED, Salpietra and his team had to look for opportunities that better suited EYE Lighting’s general lighting purposes until LED is ready for the applications where the company would primarily use it.
“The merging of the two traditional technologies into ceramic metal halide gave us the ability to continue to do what we do, which is making lamps,” Salpietra says. “If that technology wasn’t there, we’d be lost and everybody would be rushing to do LED more quickly.”
What EYE Lighting has been able to do is make the regular technology much more efficient and deliver white light, which creates good color rendering and color temperatures to be able to see both in the day time and at night.
“It’s been proven that white light versus a yellow light or a blue light make a big difference in being able to see,” he says. “If you can make your light create the spectrum that matches the way the human eye wants to see the spectrum and discern it, you’ve just enhanced the way you do it.”
On top of developing new technology to enhance the company’s core offerings, EYE Lighting has been looking for broader applications to its technology and has its sights on potential partnerships that could benefit the company.
“When we do our strategic planning, we look heavily at our core competencies and what we think we can do with new technologies,” he says. “Part of every good company’s strategy has to be looking at the M&A side of things as well; you want to grow organically, but what should you do to augment that growth with outside skills and services?”
Salpietra and his team are keeping their options open for potential strategic alliances, mergers, joint ventures or buying a company outright.
“In order to grow and thrive and create jobs and create value for our customers, shareholders and employees, we’ve got to look at the overall business and determine what we can be looking at to expand our business beyond what we do day-in and day-out,” he says.
A big move that EYE Lighting made in November 2012 was the acquisition of Aphos Lighting LLC, which expedited EYE Lighting’s move into LED. The products acquired are LED-based luminaires that carry with them 14 different design patents for their optical, mechanical and thermal management performance. EYE Lighting will maintain the Aphos name for this new line that will expand its business by introducing LED luminaires to municipalities, utilities and industrial customers.
“As we’ve looked in the general lighting market space, we ask ourselves what’s our core competence and where do we want to go. We get involved in a lot of unique things that stem from our core technology.”
The other areas in which EYE Lighting participates, in addition to the general lighting market, are institutional, educational and hobby markets.
“Because we dose that arc tube differently than anybody else in the world, we’re able to recreate some spectral distributions of light,” he says. “Not just the color of light, but the intensity and what light rays are being emitted from the lamp.”
Due to this ability, EYE Lighting can make lamps that enhance plant growth, as well as lamps that can simulate solar power for use by companies or universities doing solar tests. The company also makes solar aging equipment for businesses such as Sherwin-Williams, Behr paint, automotive companies that make windshield wipers, roofing companies, and anything that’s outdoor-oriented.
“Those types of companies want to test in a lab whether or not they’re going to get a 30-year warranty, but they don’t want to test for 30 years,” Salpietra says. “The equipment nowadays has you test six to nine months to be able to project a 20- or 30-year lifespan.
“We make a machine which is called a super UV. You can put samples in the machine and within three weeks we can equate 10 to 15 years. We can also put more than just UV rays on it; we can also put water on it and chill it.”
These types of broader offerings are due to the highly engaged employees that EYE Lighting has been able to keep around the business over the years.
Keep employees engaged
With a Japanese parent company, EYE Lighting puts a lot of focus on lean manufacturing and kaizen events, and 130 employees are quick to recommend how to better the business.
“What is unique about us is that every employee on the factory floor changes positions at least once a day,” Salpietra says. “Everybody is highly cross-trained and capable of performing at least two different jobs.”
Some employees remain in the same department and move upstream in the process versus downstream. Others will go from one department that transforms the raw material, and then they go to the end of the line to do packaging.
“It allows us a tremendous amount of flexibility,” he says. “The employees love it because they don’t get bored in their daily job. Ergonomically it’s good for them because they’re not doing the same repetitive task day-in and day-out when they come here. It helps keep them alert and safe, especially when they know different jobs and how to behave around different pieces of equipment.”
One thing missing from EYE Lighting that most other manufacturers utilize is a suggestion box. Salpietra says his employees will come forward with ideas on their own, making a suggestion box unnecessary.
“Everything emanates from the floor,” he says. “When the employees change jobs by going upstream or to another department, they see the product of their work or the beginning of what comes to them to pass on to somebody else. So they inherently get together to have a kaizen event over a particular issue.”
To aid in employee’s abilities to help the company further its growth and development, Salpietra and his team implemented four core principles: customer-centric, process improvement, financial focus and talent development.
“We did this rather simplistically to make sure that it was easy for everyone to recite and keep it close to them day-in and day-out,” Salpietra says. “We keep our customer at the center of our business. We deal with process improvement, which is part of our DNA as a Japanese-owned division.
“And everyone in every organization wants to improve and enhance the skill set of employees, so we push our people to get out of their comfort zone.”
Develop your talent
To keep EYE Lighting employees on their feet and thinking about different aspects of the business, Salpietra made talent development a big part of the organization’s core principles.
“We added talent development because that captures what we do on the factory side that we want to do throughout the whole organization, which is work out of your comfort zone,” Salpietra says. “You’re going to become more knowledgeable and more valuable for yourself.”
To allow your employees to grow and develop, you have to be willing to give them the tools and resources to do so.
“You need to have an open-door policy,” he says. “The leadership, especially new leadership, has to develop two things primarily — trust as a leader and then respect comes. Then you can develop the feeling of hope. If the employees see that there’s hope in things and they become a part of that, it will help engage them.”
That engagement will also help when your company has to make a tough decision or make a change in direction.
“It’s very important that you get a lot of group interaction so that when you go to make a decision or implement a change, everybody is onboard with that,” he says. “If you engage your people and say, ‘Here’s what we’re going to do. We’re going to move in this direction and we’re going to need your help. We do not know all the answers.’
“They love to hear that because they will have questions and suggestions for the company. As much as you engage your employees, they will become engaged on their own. All of a sudden ideas and suggestions will start surfacing.”
How to reach: EYE Lighting International of North America Inc., (440) 350-7000 or www.eyelighting.com
Keep yourself in tune with your industry and where it’s going next.
Always think about ways to broaden core offerings.
Develop talent and keep employees engaged in the business.
Steve Phillips doesn’t understand why customers in today’s world wouldn’t want help from a salesperson. But he’s not so stubborn that he refuses to believe it is true.
“My son keeps talking about stranger danger, that customers don’t want to be approached by salespeople anymore,” says Phillips, president and CEO at Phillips Furniture Co. and six Ashley Furniture HomeStores in the greater St. Louis area.
“As a leader in my position, this is where I’m going to have to rely on these young people to make decisions that will put us in a great position for younger customers.”
Phillips Furniture is a family-run business that launched in 1937. Phillips doesn’t see things the way his father did. His son, Michael, the company’s vice president of advertising and merchandising, doesn’t always agree with his father’s point of view.
But it’s their ability to respect each other’s differences and then reach a consensus on how to operate the business in today’s world that allows the company to succeed.
“I’m hearing what they want, and I’m OK with what they want,” Phillips says of the younger generations that are becoming a larger part of both his customer and employee bases. “It’s just foreign to me. But as a leader, I have to be willing to let them try things that I’m not familiar with.”
Phillips says it’s not always easy to move away from behaviors that you’ve grown up with and used to achieve success. And he doesn’t always believe it’s necessary to shift away from something that has become a proven success. But if it is necessary to change, doing so beats the alternative every time.
“It is tough,” Phillips says. “But it’s tougher if you fail. If I keep dictating policy and how we’re going to do things based on how we did it in the past, I know we will die and that’s not good. So I just really trust these young people, and I trust the organization. If we truly have the customers’ best interest at heart, we’re going to do what they want, not what we want.”
It’s that idea of constantly seeking a better way to please customers that drives Phillips and his 330 employees.
Set a foundation
Perhaps one of the reasons Phillips is more agreeable to accepting new ideas is that he has been reluctant to follow the crowd when it comes to furniture salesmanship.
“The furniture business has not had the greatest reputation for integrity,” Phillips says. “A lot of people give false high prices and fake savings, and I didn’t want to do business that way. We have one price on a piece of furniture.”
The problem for Phillips is that many employees who have worked in the industry for a number of years were trained to take the misleading approach.
“There was a very specific way we wanted to do things that was not normal in the furniture business,” Phillips says. “That’s why we don’t necessarily want people who have been in the furniture business because we don’t know what their training background is.”
The solution for Phillips was to create a training program that new employees must go through before they are allowed to speak to a customer.
“So everything that we do structurally and integritywise is ingrained before they talk to their first customer,” Phillips says. “As a matter of fact, we probably don’t spend enough time talking about product. It’s more about how we do things. We have leadership round tables every month also. We have our leaders come in and we just go through what’s important to our customers.”
The goal is to have a sales team that doesn’t just talk a good game when it comes to pleasing the customer, but they can actually show how they’re going to do it.
“They have to role-play to show us, not just tell us, but show us they know how to service customers the way we want them to,” Phillips says.
That’s the end result. The steps for getting to that point where employees have the ability to display those skills must be dutifully followed if training is going to work.
“You can’t train or correct anything until you can measure it,” Phillips says. “We know how many pieces per hour some of our furniture assemblers can do and what the standard is. We know how many pieces per hour one man can unload on a truck. You can’t manage and train until you know what the issue is, which is only done through measurement.”
Once you have that data to work off of, you’ve got to put what you want to do in writing and then make sure you do it.
“If it’s not in writing, it’s not real,” Phillips says. “So everything is in writing, and you just go over it step by step. They can’t be promoted until somebody observes and there is a physical check-off that this is what they can do.”
If you don’t believe you have time to conduct training with an already cramped schedule, you’ve got to find a way to make it work.
“Training has to be a priority,” Phillips says. “If you get caught in the treadmill of doing business all the time, you’ll never get off the treadmill and start training. If you train and make it part of your culture and your business religion, you don’t think about it as being a disruption of your normal process. It is your normal process.”
Take a visible role
Many leaders will talk about how important a training program is, but then they personally move on to other things and leave the team to figure out the best way to make it work.
Phillips says you have to do more than that as CEO.
“Every training class we have for salespeople, I’m the first presenter,” Phillips says. “I take the first hour or so and tell them about the company and what we stand for.”
The company’s COO tackles the next segment and then training responsibility shifts to Phillips’ brother, Matt, who heads up training at Phillips Furniture.
“What we want these people to see is that everybody at the top also believes in everything we do,” Phillips says. “The fact that we spend so much time with them, we certainly hope that’s what they believe.”
As a way to encourage leaders to want to take part in the training process, Phillips suggests rewards for leaders whose direct reports receive promotions.
“A lot of leaders withhold knowledge or training for fear of somebody rising above them,” Phillips says. “Our managers are rewarded for having someone promoted from beneath them. We love store managers who want their assistant managers or their team leaders to be promoted. They don’t feel threatened by it.”
Focus on core values
The other piece of the puzzle for Phillips is core values. While he is open to changing training methods and operational policy, he leaves no wiggle room on his commitment to the company’s core values.
“No matter what processes or changes you make in your business, you can still hold tightly to your core values,” Phillips says. “That’s the one thing I will never negotiate — how does it look with our core values. You have to keep that out there in front.”
Arriving at the three core values that define Phillips Furniture was no easy chore. Phillips and a team of more than a dozen leaders left the company’s headquarters and headed to a remote cabin in the Ozarks. Once they arrived, it took three days to finish their work.
“There were a lot of great ideas,” Phillips says. “I just didn’t want a lot of them. We could have had 10 great core values, but I wanted to be able to sink our teeth into three or four. Once you get past three or four, they start becoming a little redundant. These were three that nobody could ever argue with.”
The three core values they decided on were “integrity above all else, honesty in all we do and service to others first.”
“If you can get your entire organization to buy in to those three things, you have a much easier time finding great leaders because leaders want to buy into something greater than a dollar,” Phillips says.
Some companies consider “making a profit” a core value and Phillips says he understands, even if he doesn’t agree with it.
“We think that’s the result of doing the first three,” Phillips says. “So we wanted the core values to produce the results that we were looking for.”
Phillips says his company wants to make a buck as much as anyone. But by focusing on other things, such as the customer experience, employee readiness and job satisfaction and giving back to the community through charitable efforts, everybody comes out ahead.
“It’s imperative that a company stand for more than a dollar,” Phillips says. ?
How to reach: Phillips Furniture, (314) 966-0047 or www.phillipsfurniture.com or Ashley Furniture HomeStore, (314) 845-3084
The Phillips File
President and CEO
Phillips Furniture Co. and Ashley Furniture HomeStores/St. Louis
Born: Dayton, Ohio
Education: I went to the University of Missouri for three years. I got married when I was 20, and I got tired of being broke, so I quit school and took a job.
What was your very first job?
Raising vegetables and selling them door-to-door. I’m an avid gardener, and I still am to this day. My first full-time job was in the furniture store while I was going to school at Mizzou.
What got you into gardening?
My dad had an extra lot next to the store. I always wanted to be a farmer my whole life, and now I do own two farms. There is something really neat about getting your hands in the soil. He gave me this plot of ground, and I had a wagon. I would load it with vegetables I grew and picked and I would take them door to door to our neighbors. I didn’t have prices. I always said pay me what you think they are worth and I got taken advantage of quite a bit. So I learned not to do that the next year.
Who has been the most influential person in your life?
It would have to be my mother and my father. From a business point of view, it would have to be my father. He was the most patient and kindest man you ever met. I never saw him raise his voice ever. I don’t know that I got those traits from him, but I’ve always admired those traits. My mother had six kids and she’s a phenomenal woman.
Don’t be afraid to change.
Make the time to do training.
Don’t choose too many core values.
As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.
“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”
Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.
Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.
“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.
“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”
Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.
Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.
“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.
So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.
“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.
“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”
Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.
“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”
You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.
“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”
Trim the excess
Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.
Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.
“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”
Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.
“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”
Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.
For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.
Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.
“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”
Enable a responsive culture
Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.
“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”
Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.
“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.
“Our independence is a key part of our competitive advantage and a big part of our culture.”
The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.
“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”
Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.
“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”
As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.
“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.” ?
How to reach: Woodruff-Sawyer & Co.,
(415) 391-2141 or www.wsandco.com
Ask customers where your business provides the most value.
Utilize technology to cut down on time and cost in customer interactions.
Empower employees to help clients by avoiding a top-down culture.
The Rosson File
Woodruff-Sawyer & Co.
Born: San Jose, Calif.
Education: B.A. in history from UCLA
On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.
What is your favorite part of the business?
The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.
What would you be doing if not for your current job?
Teaching English in Argentina
What one part of your daily routine would you never change?
Interacting with our clients and prospective clients
How do you regroup on a tough day?
I try to exercise every day.
What do you for fun?
Cooking, traveling, reading, coaching kids’ sports
It took three tries over the span of five years to make the merger of Radiancy and PhotoMedex a reality. So when the merger was finalized in 2011, Dolev Rafaeli was determined to make all aspects of it a success.
Rafaeli had been the CEO of Radiancy and was assuming the CEO’s position in the combined company — a manufacturer of medical treatments for skin conditions and other skin-related consumer products, which would carry the PhotoMedex Inc. name.
In terms of their history and DNA, the two companies had starkly different backgrounds. Radiancy, the larger of the two companies, was privately held, focused on consumer sales and had developed a presence in the international marketplace.
PhotoMedex was a public company, sold mostly to other businesses and was heavily focused on domestic sales.
From 30,000 feet, the companies were complementary parts, bringing different areas of strength to the table. The merger was a puzzle-piece fit. But at ground level, things were a little more complicated for Rafaeli and his management team.
“The biggest challenge, and the reason it took us five years to make it happen, was what you would call an HR challenge,” Rafaeli says. “Usually, when you look at mergers and acquisitions, everybody can understand the very objective analysis of numbers and the very subjective analysis of how things might look if we merge the two companies. The biggest challenge was, how do you get two teams engaged when at least part of the two teams thinks they don’t have a future in the company?”
Rafaeli had to combine two cultures from two different backgrounds, and once he had everybody on board, he had to set the stage for the company’s continued success or any momentum gained during the merger process would be lost.
In any large-scale change, alignment starts at the top. Nobody in the company will adopt the changes if he or she sees any type of negative or mixed reaction from those in charge. To that end, the management teams at Radiancy and PhotoMedex began the process of finding points of consensus nearly five years before the merger took place.
“We actually had known each other since 2007, so there wasn’t too much change in the transition for the management teams,” Rafaeli says. “We put together a project team that was running the two companies as if we were merged, about eight months before the merger happened. We were making decisions and considering things together, and we built our plan to make changes both before and after the merger.”
As the larger company, Radiancy had the majority of the resources that would be needed during the merger process, but since the combined company would be publicly traded and carry the PhotoMedex name, PhotoMedex served as the basic template by which the new company would be constructed. It was a matter, in many cases, of the combined leadership team creating operational alignment by building more efficiencies into the previously existing PhotoMedex processes.
“A lot of it happened before the merger was even consummated, so for example, we took apart all of the logistics philosophies in the old PhotoMedex but reassembled them based on the old PhotoMedex while using Radiancy’s resources,” Rafaeli says. “Since Radiancy was bigger, we had better costing to do things, resulting in a savings post-merger. We did the same thing with our insurance platforms, payment processing platforms, and with our PR and advertising companies.”
With an aligned leadership team creating aligned strategies, systems and processes, it became much easier for Rafaeli to bring the rest of the company’s workforce on board with the merger. An important first step was letting the company at-large know that no layoffs were planned as part of the merger.
“The scale and geographic diversity really required that nobody leave,” Rafaeli says. “We needed to keep all the finance teams that both companies had pre-merger. Each side had to learn what the other was doing and develop a way to combine the systems. We had to become SOX-compliant and handle a very coherent reporting system.”
In some areas of the company, the best solution was a combined one, implementing practices from both pre-merger companies. But in other areas, Rafaeli and his team decided to take an either/or approach to implementing best practices, aligning the company with one standard or the other.
“The operations team in both previous companies had two complementary sets of knowledge, and we had to merge the two of them in a way that took advantage of all the areas of strength,” Rafaeli says. “What happened was, we had the quality manager of the old PhotoMedex oversee the quality system of the combined company. The supply chain manager of Radiancy took over material supply for the whole company, because Radiancy was doing it more efficiently.”
It is crucial that you paint an accurate and complete picture of your vision for the post-merger company and that you do it early in the process. If you are going to create buy-in and subsequently create complete alignment throughout all levels of your organization, everyone has to know where they fit and what will be asked of them.
“We have very talented and experienced people, and we wanted all of them to stay and be engaged in the process of the merger and remain engaged post-merger,” Rafaeli says. “The important part there is keeping them engaged throughout the process of the merger.”
Announce your arrival
Even if you’re keeping the identity and product lines from both companies, as the relaunched PhotoMedex did, it won’t be business as usual for your customers. They’ll see a new company with a future in flux, which is why you need to connect with your customers and paint the same clear, accurate and candid picture that you did for your employees.
One of the ways Rafaeli and his team sought to announce the arrival of the new PhotoMedex and affirm the company’s identity to outsiders was through its marketing efforts.
“It was a very interesting process,” he says. “We took two companies — one that has the knowledge of how to advertise, and the other with knowledge of the business. One of our main business lines is in the area of psoriasis treatment, and the PhotoMedex people knew a lot about psoriasis and psoriasis treatment. They knew about the view in the market, the conditions of the marketplace, how physicians view it and the market’s view of that.
Through a unified effort leveraging the areas of expertise that now existed in the combined PhotoMedex, the company’s advertising specialists developed an advertising strategy based on the selling points of the company’s products.
“We had work sessions where we drilled down on the information,” Rafaeli says. “Because of what we sell, we deal with a lot of FDA regulations, so we have to be very regulatory-conscious in the way we advertise. Our quality and regulatory affairs manager oversees a lot of that.”
Advertising — especially in a time of change — is a risky proposition. You really don’t know how the market is going to receive the change until you see some reaction. You don’t really know what is going to appeal to customers. If you had a high trust factor between consumers and your product or service, you have no real way of knowing if that trust factor will survive a transformational change like a merger.
It’s a fact of business life that has been in the front of Rafaeli’s mind as he has watched PhotoMedex roll out its new advertising campaigns over the past year-plus. All you can do as a business leader is stick your neck out, observe the results, gather data and make adjustments.
“Because we’re so involved in advertising, we get questions about advertising from other businesspeople on almost a weekly basis,” Rafaeli says. “We tell them that they have to be very careful and diligent, because advertising can be a very, very risky business. You can go out and spend money, get no results and have no idea why you didn’t get results. You don’t know if it’s because you failed to choose the right targets or the right price point or some other factor.”
Early in the process, Rafaeli and his team decided to focus on a straightforward and positive approach to advertising. PhotoMedex ads can vary greatly in how the message is conveyed, depending on media and geography, but the clarity regarding the product and the company behind it are constant themes.
It’s an approach that has helped galvanize PhotoMedex’s marketing strategy and has helped to make the merger an overall success. The company generated $110 million in sales for the first half of 2012, with full-year projections of more than $230 million.
“Consumers can be exposed to hundreds of different types of ads every day, and many of them are either negative or misleading. They can try to tear down what the competition does, or promise results that they can’t deliver.
“But what I think is truly effective in an ad campaign is a straightforward approach that doesn’t create unrealistic expectations. And what an effective ad campaign really means is that when the need arises, you will trust our company. You will pick up the phone or go on the computer, and you will look for us.”
How to reach: PhotoMedex Inc., (215) 619-3600 or www.photomedex.com
The Rafaeli file
Dolev Rafaeli, CEO, PhotoMedex Inc.
Born: Haifa, Israel
Education: Bachelor’s degree in industrial engineering and master’s degree in operations management, the Technion — Israel Institute of Technology; Ph.D. in business management, Century University
More from Rafaeli on the advertising strategy of PhotoMedex: Our advertisements might look a little different, perhaps even awkward, to some people. We have an advertisement in a number of magazines where we show a woman shaving her face with a blade.
The reason we do that is, one of the products we sell is called no!no! hair removal, and we saw that one of the key drives for buying the product was female facial hair. There is not really any other solution to that besides a hair removal product. A woman isn’t going to put a razor blade to her face. And when we were testing this, we knew the reason we had bought and sold over 3 million units. We knew why people needed it, but we didn’t know how to convey the message.
We went about doing this very carefully, having clinical ads and physicians talking about it, and it didn’t work. So we decided to try something that might be perceived as awkward, having a woman shave her face. We put that on, and six months later, in a number of major magazines, you see our ad.
When it came to psoriasis, the key discussion also became, ‘What do we show? Do we show people with psoriasis? Or do we go to the other extreme, like ads for erectile dysfunction medications in the U.S.?’ Obviously, they’re not going to show anything like that in a literal sense. They show couples on the beach having fun and so forth.
We tested it in certain ways, and we ended up not showing the psoriasis treatment at all. People who have psoriasis know what they have. They don’t need to see it. People who don’t have and who will never have psoriasis don’t care to see damaged skin.
Align your management team.
Roll it out to the rest of the company.
Advertise with a direct message.
As Jerry Azarkman watched new stores open in Phoenix and Tucson, Ariz., he felt proud that Curacao, the company he launched at the age of 24 with a mere $20 in his pocket, was beginning to expand beyond its Los Angeles roots.
But he was also concerned about the sales volume at these new stores. They just weren’t doing as well as the stores located closer to Curacao’s Southern California headquarters.
“The L.A. store’s volume is much higher,” says Azarkman, co-founder, co-owner and chief marketing officer for the Latino-oriented retailer that’s corporate name is Adir International.
“The number of credit applications approved at the Phoenix store is much lower than the stores closer to headquarters. Why is it smaller the further you go? All these things gave me a thought about the implementation of direction. The further you go, the communication kind of slows down, and it doesn’t get there.”
Azarkman wanted to turn that around and ensure that wherever he opened a store, whether it was next door to his office or 1,000 miles away, it would offer the same quality of product and service to Curacao customers.
“The biggest challenge is as you grow, your structure grows and there are more layers of management and communication,” Azarkman says. “That communication has to be the same from level to level all the way down to the front lines. The challenge is when the communication doesn’t get to the level you want it to get to.”
It’s a common problem for growing businesses and Azarkman wasn’t casting blame about it. He just knew that his 2,600-employee company needed to adapt and rethink its communication channels to ensure that everybody was on board with what was happening.
“I’m involved in the philosophy of the company, which is keeping employees motivated so they can do their jobs at a top level,” Azarkman says. “They really want to do that. They’re not doing it out of fear. They are doing it because they believe in it.”
That attitude would be the key to helping Curacao achieve continued growth.
Demonstrate your commitment
One of the biggest changes Azarkman made with Curacao was to change the company’s name. It may not sound that meaningful to the internal operations of a company to change the name from “La Curacao” to Curacao and redesign the company logo, but it provided Azarkman with a vehicle to demonstrate the company’s commitment to digging deep and looking for ways to provide even better service to its customers.
To get things rolling with this process, Azarkman brought in an outside consultant to make an honest assessment of what needed to change.
“We hired a company from the outside because you cannot believe in your own judgment,” Azarkman says. “You’ll create an impression that you’re much better than you actually are. It’s better for somebody from the outside to look at you than for you to look at yourself.”
The firm came in and set up focus groups in the communities where Curacao did business.
“They did focus groups with our customers, with customers that left us three years ago, with people who had never been in our stores and in communities that had never heard our name,” Azarkman says. “Out of that, we learned a lot about what the community thinks of us, what changes they are expecting us to do and what changes we have to do.”
The groups provided a great deal of feedback, including the suggestion that ultimately led to a new name and logo. It was a good foundation to begin transforming the business. But the key to providing what your customers are looking for is asking the question with the knowledge that you’ll need to keep asking it again and again.
“Expectations change with time,” Azarkman says. “You create an expectation, a standard, and then the next day, you have to go and create a much higher standard and create a ‘wow’ in the minds of customers that walk in the store. When they leave the store, you want them thinking, ‘Wow, I never thought I was going to get that value or that experience.’ To get to that point is a constant struggle.”
Earn employee support
Azarkman needed his employees to buy in to the pursuit of superior customer service without feeling as though they were being punished or forced into something that didn’t fit their skill sets.
“If they’re not buying in to it and they are going to be forced into doing something that they don’t believe in, it’s not going to happen,” Azarkman says.
There needs to be something out there, a reason to work harder and exceed customer expectation.
“What’s it in it for them?” Azarkman says. “What are they going to gain out of it? A better career path, higher income, more security, better stability for the company? You put all those things together, and you’re going to create a team that is really going to be motivated and dedicated and really cares about the company because they are part of the company. They are working there because they belong there. They are part of it.”
A comprehensive training program at Curacao, known as the University of Curacao, bolsters employee engagement. It helps promote an environment of learning and growing that Azarkman says is one of the keys to achieving growth.
“You need to know how to motivate people and get them to perform better,” Azarkman says. “You have to provide the tools that they need. Managers are tool creators. They create tools for their associates to perform. If they are creating the right tools and then people are using the tools that have been created for them, the success is going to be there.”
Azarkman refers to the sale of a television as an example of the outcome he seeks in training his managers and employees.
“Let’s take a Sony television,” Azarkman says. “You can buy it anywhere in town. You can go on the Internet and find 10,000 places to buy it. The difference is what is coming with that television. What value am I giving to that customer with that TV? What is the additional value?”
If everybody is thinking about ways to please the customer and is able to bring up those ideas without fear of reprisal, the result is a strong culture and a strong company that consistently exceeds expectation.
“It’s not that you create a ‘wow’ in the minds of customers and that stays,” Azarkman says. “Today, you’re meeting expectations. Tomorrow, it might not be enough.”
Don’t lead with fear
The effort to drive home that message to stores near and far away from Los Angeles and ensure that everyone is pushing toward those goals on a consistent basis has to begin with you.
“You have to make sure that all your executives are really buying in to it,” Azarkman says. “If anybody has a doubt or has something they don’t agree with, let’s put it on the table, fix it and make sure we all agree. Get one direction you can all agree on and go from there.”
If you want to learn what needs to be fixed in your business, you’ve got to be willing to accept criticism.
“The minute there is fear, all the communication channels are shut off and they are not going to be willing to open their mouths and discuss issues or concerns that they have,” Azarkman says. “If the leader is creating fear and the people have to work with that fear, it’s not going to last too long.”
Companies that insist on coming up with reasons why a problem doesn’t really exist are only setting themselves up for a bigger failure down the road.
“The communication will determine the success or failure of the company,” Azarkman says. “If there are real problems that need to be addressed and you don’t put them on the table, they will accumulate until there’s an explosion because people were afraid to bring it up.”
One of the solutions to the problem of lower sales volume in the Arizona stores was to enact rotating management teams between the more established stores closer to Los Angeles and the newer, less experienced stores in Arizona.
It’s a step that can help you better assess your team and weed out the people who aren’t going to be a part of your future.
“You need to check performance and evaluate each person,” Azarkman says. “You always have to create a bucket of people that are performing. Unfortunately, some do not perform no matter how much you try to educate and help them. So you have to let them go so you can keep your company healthy.”
Fortunately, Azarkman has more talented people on his team than underperformers who have to be let go. Curacao has more than 2 million credit applications on file and continues to expand. Azarkman says it all comes back to the philosophy of customer service.
“If the customer gets service above expectation, it means you’ve done something to maintain and keep that customer,” Azarkman says. “It’s small advice, but it’s big if you keep it in mind.”
How to reach: Curacao, (866) 410-1611 or
The Azarkman File
Jerry Azarkman, Co-founder and co-owner, Curacao
Born: Tehran, Iran. I moved to Israel at the age of 6 and grew up in Israel. I came to United States at the age of 21. There was a good community of Jewish people living in Iran before the fall of the Shah. There were probably about 1.2 million Jews there. My parents felt that it was going to extreme Islam already in those days. And in 1961, they decided it was not going to be a stable country to stay in, so we moved to Israel.
Education: I did three years of computer language study at Bar-Ilan University, Ramat Gan, Israel. It’s a university. I took some evening courses while I was in the military service.
Who has been the biggest influence on your life?
My father, Oscar. Any time I’m in a problem, I go back to things that he told me. The things I’m passing to other associates in the company, it’s come from the first lessons of motivation that my father passed to me and my brother.
What one person would you like to be able to meet and why?
Albert Einstein. First, I would like to see his philosophy about life, religion, God and how science is connected to religion. What did he really see? Maybe the guy is so extremely smart that he had to bring himself hundreds of levels down to talk our language so we could understand him. I would like to know what level he is.
Don’t be afraid to seek outside input.
Work with employees on new initiatives.
Don’t lead with fear.
Twenty years ago, McKinley Inc. was a company with 450 employees. Ten years ago, the company, which specializes in real estate investment and management, had a single operating platform for all of its businesses.
That was then, this is now.
Today, Ann Arbor-based McKinley has more than 1,400 employees and six different divisions contributing to its $273 million annual revenue figure.
It’s a long way of saying that growth has been a fact of life for CEO Albert M. Berriz. That’s a good problem to have, but it still comes with a series of challenges that must be met and overcome if Berriz is to have a financially and culturally healthy company on his hands for years to come.
“There are a couple of basic disciplines that we are very methodical about,” Berriz says. “One is we maintain a very flat organization. I believe that the distance from where I am sitting to where our customers are sitting is really no more than two heartbeats. I have six divisional CEOs who report to me, and they are flat with the people in the field, who are our customers.
“The second thing is, the six individuals who run each of the businesses have a lot of autonomy. They really get a lot of freedom to run their businesses as their own.”
For Berriz, managing growth is about managing the distance between people. Though he oversees a company with assets in 25 states, he wants as few levels and geographical barriers as possible to exist between management and field employees, between management and customers and between peer-level employees in the field.
But to maintain that type of connectivity, Berriz has needed to constantly work on strengthening his company’s cultural values and refining his communication strategy.
“Anything we do is really not top-down; it’s really integrated throughout the organization and is customer-driven,” Berriz says. “Everything we do needs to be driven by our responsiveness to our customers.”
Promote your core values
Though Berriz gives his division heads a high level of autonomy regarding how they manage, he still requires them to hire, make decisions and lead based on McKinley’s core values and core purpose, which is posted on the company’s website: “To enrich the quality of life in our communities.”
Berriz wants his executives to lead with their own leadership styles, but he has learned that a company will not be able to grow and adapt effectively without every employee’s compass arrow pointing in a common direction. That fact only becomes more critical as your company continues to expand and add people.
“While I’ve basically given them liberty to run their businesses, and I’m not a micromanager, we do still have a commonality regarding what the core values are and what the core purpose is,” Berriz says. “Even though each member of my team might be hiring differently, their standards are the same and the core values that they’re hiring for are the same.
“That is how you continually promote your core values throughout the organization. Even though we’ve grown to 1,400 people, when we do employee surveys, it’s not uncommon for 90 percent of our employees to have a full understanding of what our core values and core purpose are.”
When McKinley’s management talks about those values to the company’s employees, they use individual examples whenever possible. Berriz says if you can put a face on the behavior you want emulated, it has a much better chance of taking root and becoming something that your company embraces as it grows.
“It has to be something that is done throughout the organization, as opposed to top-down,” Berriz says. “If you look at our core values and the things that signify our core values, we helped to reinforce them by talking about individual people in the organization. We didn’t just write it on the wall. We actually took examples of great people in the organization and used those examples to help fashion our values.
“Say we have an employee named Jeff, and we want to have Jeff as our positive example. We ask what makes Jeff a great person in the organization. That is how we got our core values. We didn’t do it backwards, just by coming up with things and writing them on the wall. You take a look at your seasoned people in the field, people who are successful and embody certain positive characteristics, and say ‘That is how we want our people to be.’”
Hire with a purpose
If your culture is both formed and driven by your people, you need to hire managers and employees who embody the traits and principles you want to emphasize. Technical skills can be taught, but values, ethics, adaptability and a willingness to put the customer first are, in most cases, a product of personality before training.
Identifying and hiring the best possible management team members is a crucial first step. If they are on board with your cultural principles, they’ll hire like-minded people as part of their teams, and those people can, in turn, attract more of the same — a factor that can work to your advantage in a big way if you are eyeing a period of aggressive growth.
“Great people attract great people, and that’s huge, because you can’t have an organization like ours with mediocre people,” Berriz says. “And once you have great people, they expect to retain the great people they’ve hired.
“I think one of the biggest reasons people leave or stay with an organization is their boss. The six CEOs I have serving under me all have very high standards, so they serve as the litmus test. They are going to be the ones who expel mediocre people and attract great people.”
Berriz says you should never forget that any given person’s impression of the company, its mission, its values, its growth plans, and his or her relevance to accomplishing it all is predicated largely on the boss-employee relationship. It’s why each person at every level of your organization needs to strive to embody and lead by your company’s values.
“Associates can know the name of a company, they may understand what a company does, they may know their job,” Berriz says. “But at the end of the day, the real relationship is with their boss.
“If it’s a sour one, their view of the company and what the company does will be sour. If it’s a good relationship, their view of the company is a good one. That’s why people stay with or leave a company because of their boss. It’s rarely because of other issues.”
Berriz takes that philosophy a step further, trying to promote a positive relationship between upper management and all McKinley’s employees in the field. He sets the tone himself by setting up multiple channels for communication and dialogue focused on the company’s present and future growth plans.
“There is a difference between autonomy and not having a common culture,” he says. “One of my most important responsibilities is attracting and retaining great people, and I need to do that culturally — not just with my six CEOs, but I have to do it right down through the organization.”
Berriz describes himself as an “old-fashioned guy” when it comes to communication. He prefers in-person interaction whenever possible, but given the number of people McKinley employs and the size of the company’s geographical footprint, it’s impossible to maintain a consistent level of personal contact with every associate in every corner of the company.
Berriz has needed to find other ways to engage his people. One of the primary ways he’s attempted to bridge the gap is by embracing social media as a communication tool.
“For instance, if you go to my Facebook page now, you will see news about what is happening in the company,” Berriz says. “I’m making four or five posts today to Facebook, and my Facebook page is tied to our company website, as is Twitter. So if you are a team member and you want to stay in touch, you can go to my Facebook page. If I didn’t put that effort out there, if I didn’t utilize those social media platforms, I don’t think my communication would be as effective.”
Berriz has recognized that a large percentage of his workforce is composed of those who came of age in the era of the Internet. Younger employees have lived their entire professional lives in an environment that includes high connectivity through electronic media.
If you are going to connect the company’s purpose to younger workers and maintain a dialogue with them, you need to consider the value of Facebook, Twitter, blogs and other electronic media platforms in your communication strategy.
“A big portion of our population at McKinley is in the 18-to-35-year-old category,” he says. “That means social media and how we are communicating in real time can be very powerful in terms of developing and maintaining a common culture. I travel around, but there is no way that I can touch every person in the company through traveling. You have to make other efforts, otherwise you’ll be out of touch.”
How to reach: McKinley Inc., (734) 769-8520 or www.mckinley.com
The Berriz file
Albert M. Berriz, CEO, McKinley Inc.
History: I was born in Havana, Cuba. My family moved to the U.S. in 1959, when I was three years old, as a result of the revolution in Cuba. I grew up in Miami, where I graduated from the University of Miami with a degree in architecture and engineering. I later received an MBA from Northwestern University.
What divisions do your CEOs oversee?
We have five real estate divisions — two commercial and three residential — and one division that covers acquisitions, finance, partnerships and new ventures. Five of them are based out of the Ann Arbor office, but they are never here. They are always out in the field. We have one individual covering the Carolinas, Texas, Nevada and Arizona; we have one individual who does Florida, Michigan, Indiana, Illinois; and another one who has a third overlaid geographically.
For me, nowadays, it doesn't really matter where they live. I have one CEO who works down in Florida and actually keeps an apartment down there, which is great because that person stays closer to our people and closer to our customers.
What are the keys to staying in touch with your direct reports?
It is all personal. I am on the phone with a few of them every day, or talking in person once every couple of weeks. I am very connected with those people. I am not a micromanager, it is not my style, but we have an understanding and expectation of what the results need to be and what the culture needs to be. But after that, it is really up them to lead in their own style.
What are those conversations like?
It is very high-level. We have a very transparent organization, so you are either on or you’re off. We have dashboards here that are always available in real time, so I am always aware of good or bad developments. So the results part is easy, and the culture part is easy too, because I have a good sense of what is happening in the organization.
We have a well-run organization, so I am mostly focused on the future, where we are headed in 12 months, in five years and 10 years, as opposed to the problems of today. If there is an occasional problem today, I will deal with it, but to be candid, the problems are infrequent, so they are seldom an issue.
Define your company’s purpose.
Hire people to fit that purpose.
Utilize multiple avenues of communication.
With St. Patrick’s Day quickly approaching, I started to ponder the idea of luck and if it plays a role in our business lives.
Over the years, I have had so many people tell me how lucky I am after hearing about the ups and downs of 30-plus years as an entrepreneur. At times, I’m not sure how to feel about the comment, so I usually just smile and say, “Thank you, I know that I am a blessed man.”
We’ve all heard the great quote from Thomas Jefferson, who said, “I’m a great believer in luck, and I find the harder I work, the more I have of it.”
My twist on Jefferson’s wise words would read something like this: “The more we plan our future, the more likely our future will look like how we planned it.”
As business leaders, I believe our role is to plan and implement a preferred future for the business and its employees, customers, suppliers, stakeholders, etc. Though planning for the next year, five years and beyond is part of a leader’s strategic process, there have been occasions where luck became an important part of making a connection or a deal possible.
I remember a time when luck seemingly played an important part in Molly Maid’s survival. I was sitting at a picnic table on a sunny Michigan afternoon in 1989 when I “happened” to meet Lynn Drayton, the former president and COO of Compuware. Before that spring Sunday, I had never met or heard of Lynn before nor could I have predicted how important that meeting would be.
It’s been 24 years since Lynn and I met, and he was the right person at exactly the right time to help me restore prosperity to our troubled company. After sharing the story of Molly Maid’s challenges, we formulated a plan to buy back the company, restore standards for providing great service and re-engage the franchise owners’ trust in the system. As my business partner, mentor and best friend, Lynn’s wisdom, counsel and capital investment was integral to Molly Maid stabilizing and rebuilding.
While long hours, hands-on leadership and open communication are critical parts of growing successful companies, great timing and the ability to remain open to new solutions have certainly been a part of my story as well. Looking back at the day at the picnic table, it’s difficult to imagine any solution other than meeting Lynn and arriving at our “planned preferred future.”
Another part of our history involved adding a second brand to our holdings. By researching the need for home services, we knew there was a demand for a professional home repair and maintenance franchise. By searching trademark records, we discovered David LaValle, the founder of Mr. Handyman.
While the plan to find a partner was intentional, the timing of reaching out to David was serendipitous. If we had reached out to him a year earlier, he would not have been ready to grow. If we had waited too long, another company would surely have captured the opportunity. Perhaps David LaValle’s Irish background had something to do with it or our persuasive request to purchase his concept and grow it with a proven method was too attractive to turn down.
Either way, that partnership created a need for a multiconcept franchisor now known as Service Brands International. The foundation of these two companies paved the way for additional jobs, business ownership opportunities and reliable services to consumers to be possible.
I am a lucky and blessed man to have met such people who have been integral parts of my world, and it started at a picnic table, doing nothing more than watching the world go by.
As you work hard and plan your preferred future, I wish the best of luck to you too!
David McKinnon is the co-founder and chairman of Ann Arbor, Mich.-based Service Brands International, an umbrella organization that oversees home services brands, including Molly Maid, Mr. Handyman and ProTect Painters. To contact McKinnon, send him an email at email@example.com.
Shelly Sun was quite confident that BrightStar Care would emerge from the 2008 recession intact and ready to grow. The challenge was convincing employees and franchisees that the health care staffing solutions provider could achieve such a daunting goal.
“Access to financing to start franchisees had dried up and was completely unavailable,” says Sun, the company’s co-founder and CEO. “That meant our ability to grow and add new franchisees to fund improvements in our system had declined.”
As a CPA, Sun decided to put her experience in the financial realm to use and tackle the financing issues. She asked her franchisees and employees to look at what they could do to increase efficiency on their end.
“I really empowered my team to take on those initiatives and work with the franchise advisory council on key sets of goals that were going to move the profitability and top-line elements of the model forward while I focused on capital access,” Sun says.
Through it all, Sun demonstrated her confidence. But it was the steps she took and the action that followed her words that enabled everyone else in the organization to feed off of that confidence and become believers themselves.
“It’s really important to spend time helping every employee understand what makes a business tick and how their role in the greater ecosystem can make a difference every day,” Sun says.
The result of the collaborative effort is a company that has bounced back and is poised to grow from 250 to 300 locations by the end of 2013, including new locations both in the United States and overseas. BrightStar has about 60 corporate employees and 25,000 employees in its overall system.
Sun says a key to BrightStar Care’s continuing success is a culture that has prepared employees to be ready to adapt.
“We’re rarely doing the same thing three months from now that we were doing three months ago,” Sun says. “We’re just not that type of culture. We’re an ever-changing culture. We believe the way to be the leader in this industry is to continually be improving what we do and the outcomes we deliver for the franchisees and consumers we serve.”
Here are some of the ways Sun uses employee engagement to help BrightStar succeed.
Focus on solutions
You’ve got to empower employees and give them opportunities to discover the solution to problems on their own. But that doesn’t mean they have to be completely on their own. Whether it’s you or a supervisor, employees who are developing still need the support.
“I use a 1-3-1 approach with my people,” Sun says. “For every one problem that they have, they need to bring three possible solutions and one recommendation. If someone walks up to me with a problem, I’ll say, ‘OK, great. Go think about that problem a little more. Think of three possible solutions and a recommendation. Then let’s sit down and talk about it.’
“I won’t let you follow through with a poor recommendation. It’s likely one of those solutions or a combination of them is going to get us there. We continue to reinforce that thought process, engagement and ownership at the employee level. We have every manager within our organization do that with their people.”
It’s easy to talk about, but Sun says it’s often much harder to follow through when the pressure is on and it feels like a problem needs to be solved right now.
“What’s hard for most leaders, and I’m no different, is it’s often faster to solve a problem for an employee than it is to let them think it through on their own,” Sun says. “But the outcomes are so much more sustainable for me in following that 1-3-1 approach wherever possible.”
Another thing to keep in mind is that delegation can come with urgency. If something needs to be done more quickly, tell the person that they need a solution tomorrow instead of next Wednesday.
The key is to make sure on an ongoing basis that you’re making time for your people, specifically your direct reports, to help them and to support them in helping their team members.
“I block time on my calendar so that 10 percent of my time is spent with each of my five direct reports,” Sun says. “When I lose sight of that because of other things going on, the ripple effect of that will begin to show up two to four weeks later. ... Make sure you’re dedicating time to your people.”
Keep looking for talent
Sun loves to see people who are already on the team blossom and fulfill or even exceed their potential. But she’s always keeping her eyes open to bring new people in who can join the team and make the company even better.
“I won’t go recruit a specific individual because I likely know their peers or their boss and so that would be inappropriate to do that,” Sun says. “But I might post on my LinkedIn status that we’re seeking a new director of field support for the West region. And within 12 hours, I might have eight people who are in my network reach out to me and say, ‘I’ve been waiting for an opening to work for BrightStar. You guys have such a great reputation.’”
The key to generating those kinds of feelings about your business is to have a strong culture where employees are eager to welcome new people aboard.
“It’s important externally for the leader to be very articulate about the vision and strategy of the organization,” Sun says. “It’s equally important, if not more important, to be able to do that internally so employees understand where they are at is the best company they could possibly work for. That way, they are talking to friends and family about how great it is to work at BrightStar. That’s how you get great future employees.”
Sun says networking isn’t just about talking to people about job openings that you have today or will have tomorrow.
“You never know where an opportunity is going to arise or what a relationship is going to lead to,” Sun says. “We all have a lot to learn from one another, and we need to enjoy that journey along the way.”
Make your company desirable
You’ve got to think beyond what you do each day to crank out your products and services. Who benefits from the things your company makes? What difference do your employees make in the lives of others? Those are things you need to think about if you want to build a strong culture that can withstand challenges like a recession.
“You need something that people are looking to get behind,” Sun says. “If they are a really talented individual, salary usually isn’t the reason people take jobs or keep jobs. They want to respect the company that they work for. They want to be proud to talk about it with their family at the dinner table. They want to understand where and how they are going to grow with the company.”
Don’t be mysterious about your company’s growth plans. Be clear about the plans and clear about what steps employees can take to be part of those plans.
“What’s the future state of the organization?” Sun says. “Is it planning to grow, add new business lines and new brands? If exceptionally talented people come in at a lateral level, do they have the opportunity once they prove themselves to move up because the company is going to be different and growing and expanding in future years?”
While a good culture alone isn’t enough to drive a company to success, a bad culture can easily poison a workplace and make it nearly impossible to succeed.
“You’re not going to keep the best people if you’re telling them from A to Z what to do and you’re not empowering them to make their own impact and their own difference every day,” Sun says. “As the leader, I set the direction and the vision clearly enough where they can tell it’s Swiss cheese. But I’ve empowered them well enough to be able to know that they have a significant role in plugging those holes.”
And when the times turn tough, show faith in your employees that they have what it takes to pull your company through to the other side.
“Our people saw we were in it with them and we weren’t cutting people,” Sun says. “That empowered our people to want to go even further than the extra mile. We would remain loyal to them and they would remain loyal to us and give us the extra effort to help our franchisees succeed and get to the other side, no matter what that took. They knew we were making sacrifices to not cut staff to keep our profits in line with where they had been historically and let profits suffer.”
How to reach: BrightStar Care, (866) 618-7827 or www.brightstarcare.com
The Sun File
Shelly Sun, co-founder and CEO, BrightStar Care
Born: Knoxville, Tenn.
Education: Bachelor’s degree in accounting, University of Tennessee; master’s degree in accounting, University of Colorado
What was your first job?
I worked in a shoe store, Franklin Shoes. I spent every paycheck on shoes. I’ve had a strong work ethic from a very young age, and I’ve always had a shoe fetish, too.
Who has been your biggest influence?
My father was a very strong workaholic and entrepreneur, so I always saw the work ethic and determination. But for me, it’s about trying to balance having both the success that a great business can deliver while also having people like and respect me — respect being more important. That includes my own family.
Who would you like to meet and why?
Marshall Goldsmith. He’s one of my favorite authors and has written some of the most impactful business books for me personally — being able to take some of what he has written for everyone and be able to talk about my specific circumstances as a leader in my organization. It allows me to look at how I could more specifically apply great leadership principles that have been helpful in the abstract, but would be even more helpful in the specific.
Give employees a chance to solve problems.
Articulate your strategy.
Make your company a great place to work.
A healthy and growing organization proactively plans for succession and transition. It’s simply the nature of business. As my company recently celebrated 25 years, we turned our focus to purposeful succession. I wanted to share with you the key steps involved, the importance of planning and a few things I’ve learned along the way.
1) Get the next generation involved.
As your company grows and develops, it will become increasingly important to begin transitioning leadership to the next wave of leaders. This process will look different for each individual company. For me, it means moving away from our entrepreneurial leaders (generation one) to our professional, internationally focused leaders (generation two).
Be sure to constructively build on the strengths of each generation and tap into the energy, passion and vision of your current leaders to fuel the transition and create an even better future for your business.
2) Shift your board’s focus to policy.
When your board members focus on operations, they are participating in the day-to-day management of the organization. As you prepare for purposeful succession, the focus should shift to policy where they enact and enforce policies, which broadly govern the business. This move helps your organizational governance become more formal through the creation of an entity that protects your company’s health and well-being.
3) Select the next president and
his or her successor.
Your policy board has one critical succession responsibility: to choose the next president and his or her successor. It’s important to remember that the board’s succession responsibilities end with choosing the president. It is the new president, not the board, who has succession responsibility for the executive team.
4) If it’s a family business,
address the family estate plan.
This plan is critical to any successful generational transition but admittedly can be uncomfortable and awkward to deal with. Questions that need answers are akin to personal estate planning when the attorneys ask, “Who gets custody of your kids?” In family businesses, the first difficult question is, “Do we have a competent family member successor, and, if not, who gets custody of the business?”
Purposeful succession plans set the groundwork for the unplanned successions, which is important because once you have carefully laid out your plans, you may think, “What could go wrong?” But, the reality is whether due to illness, disability, death or any number of other scenarios, unplanned succession is a part of life.
When these challenging events happen, they create an extremely high level of emotion, distraction and added workload, in addition to leadership style changes. They also tend to cause anxiety in the organization’s employees, vendors and partners. As a result, in this “unplanned” scenario, these anxieties must be addressed directly and immediately by an already overburdened executive team.
With that in mind, let me leave you with this: The only difference between planned succession and unplanned succession is the amount of time you have to deal with the situation.
In the case of an emergency succession, communication with employees, vendors and partners begins immediately and must be completed within a couple of weeks. In a planned succession, the communication time is only slightly extended to a couple of months. The exact same emotions and distractions are present in both scenarios — the only difference is the level of intensity.
Joseph James Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world. For more information, visit www.fona.com.
Most business leaders want to greatly improve customer loyalty, and I am no different.
To drive loyalty to my promotional products business, we have tried all the usual means — low prices, free shipping, membership club benefits, discounts and exclusive product offers.
Once, we even tried sending a vase of fresh flowers after each order. None of these initiatives resulted in the dramatic improvement that we sought. Over the years, we have engaged a series of expert consultants to find even more ideas to try. But in our business, customer loyalty remains a tough nut to crack.
The pharmaceutical giant Eli Lilly & Co. struggled with similar obstacles when it came to problem-solving in their business. Many were scientific, and — even though Eli Lilly’s substantial R&D group is staffed with talented technical experts — some problems resisted a solution for years. However, the company did invent a way to solve some of its problems quickly and cheaply.
Use expert advice — of others
Here is the gist of it: Eli Lilly discovered that it could solve a lot of the most intractable problems by giving them to experts from other fields. Simple? Yes. Counterintuitive? Yes. The surprise is that it seems to work.
The company put together an online network of thousands of scientists from other disciplines and “broadcast” their brain-stumping challenges to these experts from other fields. In many cases, the experts solved the problems by simply drawing on knowledge common in their own areas and applying it to Eli Lilly’s dilemma.
Eli Lilly’s scientists, we may presume, know just about all there is to know in their respective fields of expertise. Likewise, in my company, our experts know just about all there is to know about the industry, our products, our customers, competitors and so on. When the subject-matter experts can’t solve a problem, you need to cast a much wider net. If the specialists are stumped, then a solution, if found at all, will come from people outside the field.
Modify your individual process, if needed
Today, our company is using a version of Eli Lilly’s method in our business, which other organizations might also use to address their toughest problems. I didn’t have the time or means to put together a large team of experts from outside disciplines to work on my company’s challenges. So we use a modified Eli Lilly approach: We deliberately, routinely expose our in-house experts to nontraditional experiences and knowledge.
The idea is to see whether we can find our own answers by investing to acquire experiences outside those we normally encounter. In recent months, this new approach has involved my participation in a variety of eye-opening situations, including a meeting with the Cavalia producers, lots of museum visits, a guided tour of London graffiti and a design school workshop at Stanford University. On a personal level, I’m trying much harder to add new concepts and idea possibilities to my thinking.
I don’t know whether we’ll crack the customer loyalty problem in this way, but I can tell you that the ideas we discuss now are fresher than those we used to generate. That’s why my prescription for increasing the likelihood of solving the toughest problems is this: Live outside the box.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. McLaughlin can be reached at JerryMcLaughlin@branders.com.