Paul Touw has a saying at XOJET Inc.: “It’s not the spin that kills you; it’s the lack of recovery.”
The saying refers to the moment an airplane begins an uncontrolled spin toward the ground one of the most dangerous situations a pilot can face. The executive chairman of the fast-growing private jet company uses the saying to prove to his 150 employees that mistakes can be forgiven if you can fix them before it’s too late.
“If something’s not working, even if you were the cause, let us know, and we’ll help you fix it,” Touw says. “That’s more important than getting into the mess in the first place.”
Smart Business spoke with Touw about the challenges of delegation and how creating a “do not do” list can help you delegate.
Q. What are the keys to delegation?
The biggest problem with delegation is (CEOs) having a problem letting go. They often think they can do it better than someone else, and that is generally one of the biggest fallacies of people who lead companies.
You tend to think you’re in a leadership position because you’re better at something than someone else is. That’s not the case. You’re in a leadership position because you’re the best person to lead the company not because you’re the best person who can do every job in the company.
No. 2 is hire great people who can do the specific functional things better than you can. So if you are in a position where you find you’re not delegating, it’s probably because either you think you can do it better than anyone else, or you haven’t hired the right people. It’s one of those two things.
If you think you can do it better than the people you’re delegating to, you haven’t hired the right people. If you have people who can’t accomplish what you’re trying to do, you haven’t hired right in the first place.
Q. How do you decide what to delegate?
Figure out your ‘do not do’ list. Sometimes that’s more important than your ‘do’ list. You have to prioritize your time, and to do that, you have to figure out what things are the most important and what things are the least important.
My role in the company is to set the vision, set the direction and make sure the team is all marching down the same street. To do that, I have to make sure I’m not doing a bunch of things that would distract from that.
Q. How do you decide what things go on the ‘do not do’ list?
You have to force yourself to say, ‘I can’t do everything.’ So the things you cannot do, you have to off-load onto someone else and trust that they can do it. They’re not always going to do it as well as you think you can do it, but you have to let that process work itself out.
You might get an 85 percent product, but that’s better than me spending a small amount of time on it when I don’t have enough time to do that particular thing and getting a 50 percent product.
Q. How do you attract the right employees?
People aren’t just looking for a good job. They’re looking for a variety of things. The traditional military environment is very good for military applications it’s not so good in corporations. But a lot of companies still run their company command and control down.
That doesn’t bode well for attracting a high-performance individual, because they don’t want that kind of environment. They’re looking for a safe environment where they might make a few mistakes here and there, but they won’t get battered over the head for it.
Quite frankly, the great corporations are ones where you do make a few mistakes along the way and you learn from them. So in some respects, we encourage people to tell us what’s not working. We’re not going to turn around and tell you, ‘You dummy, you screwed up.’ We’re going to recognize that you took a path that didn’t work. Now tell us how you’re going to fix it.
Q. How do you create that environment?
There is a lot that goes into the mix of how you make that happen, but there are some simple rules, like people support what they help create. So you have to make sure that your people are part of the creation process. Then, they are much more likely to buy in to that and be a strong advocate of it.
In some of the older styles of management, you had a dictatorial CEO saying, ‘This is how we’re going to do it. Now let’s go execute.’
What’s more important from a leadership standpoint is setting a clear objective. Inspire them to climb that mountain. Then ask them, ‘How do we get there?’ They’re part of the process of climbing the mountain, as opposed to saying, ‘We’re going to climb Everest, and this is how we’re going to do it.’
HOW TO REACH: XOJET Inc. (650) 594-6300 or www.xojet.com
Bruce McWilliams is thinking about the future right now.
He’s not ignoring what’s on his plate for today; it’s just that McWilliams constantly remembers advice given to him by a mentor.
“He would tell me a business is either growing or dying; there’s no such thing as steady state,” he says. “You always have to be thinking about growing your business, how it needs to change over time.”
If those are the only two options for a business, you can guess which one McWilliams, chairman and chief strategy officer of Tessera Technologies Inc., is striving for. So he is forever challenging the 400 employees of Tessera which provides manufacturers with transformational technologies for next-generation electronics, optics and imaging solutions to make a bigger splash in the marketplace. In turn, they have helped grow the company from 2003 revenue of $37.3 million to 2007 revenue of $195.7 million.
Smart Business spoke with McWilliams about how you can set growth goals for tomorrow while working on today’s business and why a customer who hates your new idea is a good thing.
Create a team specifically for growth. Four years ago, we set up a group that is focused on nothing but how do we grow into new businesses and think far out in time. And then, when we acquire those things, how do we protect them so they don’t get squashed by the organization, even though they will seem at the time to be in their infant stage.
You start by saying you have to grow at a certain rate, and you have to find a certain market to do that. I often had ideas of where to go, but when I would come to a particular executive in the organization, they would say to me, ‘Do you want me to work on the current quarter or year, or do you want me to go look at this new thing?’ And I’d always say, ‘Well, you’ve got to focus on the current quarter; if we don’t make that, we’ll get hammered.’
So how I overcame the problem is I set up a separate group that’s job is the vision, and I hired a guy who was very talented in marketing, I put my chief technical officer in there, an engineer who can run the numbers and two lawyers ... and I told them, ‘By 2010, we need an additional $100 million in revenue, come back with ideas,’ and we set up a strategic committee with the board.
You can’t just overnight create a big business, so this is a key strategic plan, and we have to isolate this group. And there are people working on nothing but this.
Explain your vision for now and later. A leader needs to have a vision both near-term and long-term of where the organization is going and the value it delivers to its customers. So you need to be able to explain that to anybody almost in an elevator speech.
In terms of the near term, have two or three, or four at most, goals that you can say, ‘These are the things that we need to accomplish,’ and it needs to be at a level that everybody down to the receptionist can understand.
Have a compelling vision for why your company is going to grow and be an exciting contributor in the marketplace. (For Tessera,) it might be why people like pictures and video and why we’re going to see more and more of that, and that will be something people can understand.
Bounce ideas off the marketplace. To understand the marketplace, your people and the leader really need to get in touch with your customers and your customers’ customers. We sell to the people who buy the components that make the things like mobile phones, PCs and games. But for us to really understand the marketplace, we need to go to the level of HP and Apple and understand what type of products they want to get to the market and how what we do is working or doesn’t work.
One way is to come in with specific concepts and then ask them to critique it so you almost can’t lose. If they like it, they’re going to tell you why they like it. If they don’t like it, they’re going to tell you why they don’t like it, and that’s going to tell you where to go.
Divide the power; then check in. A leader has to really empower people. If they get a sense they’re going to be micro-managed, there’s no way really talented people are going to work like that.
The way our process works is those top-level things we do become the corporate (management by objectives). They are made more quantitative, and on each of those, you decide which of your executives contribute to making that happen. Then they become owners of that goal and expand on down to a bunch of things they need to accomplish to achieve that.
So, basically, if they are on track for hitting their goals, then they don’t see much of me. The other thing is having a weekly staff meeting where you listen to what the problems are, and the problems between groups, and take a stance on how we’re going to address that. Generally, if you truly listen to them, even if you don’t agree and do something else, they’re fine they realize there’s not necessarily a right or wrong answer, they just need to make sure their input is heard.
HOW TO REACH: Tessera Technologies Inc., (408) 894-0700 or www.tessera.com
When Peter Nelson was applying for the president and CEO job at California Water Service Group back in 1996, he wanted to learn a little bit about his potential employer. He decided to drop in for an unannounced visit at one of the local offices.
“I received a call from a headhunter about the opportunity here at Cal Water, but I really didn’t know much about them,” Nelson says. “So I walked into the local office and said to the service representative, ‘Hey, I’m applying for a job with this company. What’s it like to work here?’
Over the next 45 minutes, the representative gave him a copy of the annual report, and three other people in the office came out to speak with him about the company. He also asked what the rep would change about the company, and the man replied that he’d like to have more tools to service customers. The board of Cal Water was searching for a CEO who could grow the company through acquisitions, and for Nelson, the local office visit cemented the deal, because it validated his ideas on how the company could grow. The only way for Cal Water to expand would be through improving its service image. In order to acquire municipal or independently operated water districts, Nelson would need a compelling value proposition for the local customers, and that value is most often created by one thing — improved service.
In order to do this, Nelson had to create a plan, involve his employees and then work to improve.
Create a plan
To validate his initial assumptions and establish his action plan, Nelson spent his first two months on the job talking with staff members.
“I spent time in one-on-one meetings with my direct reports, visited with the staff in all our locations and went out into the field with meter readers,” Nelson says. “I heard a lot of good ideas about how to improve service, but what was needed was a vehicle to get those ideas into place, because they weren’t being acted on.”
Nelson says that installing a continuous improvement process starts with a return to the basics, and that includes listening to the voice of the customer.
“In order to get more structure around creating a customer service ethic and to get that ingrained as part of your corporate culture, you have to start by measuring your results because you need data to track how you’re progressing,” he says.
Nelson began by reviewing water industry data, which produced a list of 69 customer needs. He prioritized the needs according to customer importance and then surveyed customers for performance feedback, establishing a performance baseline for the organization.
For Nelson, establishing customer service excellence as a part of the company culture was vital to achieving his growth plan because Cal Water’s union environment didn’t offer him the variable compensation options that many CEOs rely on to help drive key business initiatives. The organization’s growth would have to be supported by employee pride and a desire to service customers above and beyond their expectations.
“The next step is to train your employees on the continuous improvement process,” he says.
Nelson used trainers and conducted the training in-house. Employees went through these sessions every day.
“It’s vital that they understand how to interpret the voice of the customer as part of a continuous improvement process,” he says.
The vice president of human resources and the vice president of operations over-saw much of the training because those leaders are key to getting the training accomplished.
“Those VPs must work on getting rapid pull-through on any concepts that you’re teaching because it can take up to seven years to get a continuous improvement process fully implemented,” Nelson says.
Once the staff completed initial training and reviewed Cal Water’s first set of customer feedback scores, the staff was divided into teams of up to 14 employees by service location. Each team was led by a manager, who also acted as the team’s coach and a water quality expert. Because the customer survey results are measured by each service locale, the continuous improvement teams are charged with developing solutions that raise customer perception within their assigned geographic service area.
Teams met weekly, and they designed and presented a business plan around a suggested quality improvement to an officer review panel every 90 days.
“The plan must include step-by-step details outlining the problem, the analysis of the problem and the suggested improvement,” Nelson says.
Every member of the team must present to the panel, which is composed of other employees and three or four officers of the company.
“This step is vital because not only are we bringing forward ideas, but we’re teaching employees about the continuous improvement process and we’re building their confidence and presentation skills,” he says.
The presentation doesn’t always have to be a brand-new idea; they can also present an update on how a previous business plan is progressing. Under this system, he had 870 employees presenting in an open forum every 90 days.
“What you’ll find by installing this kind of process is that the employees build skills and talents they didn’t have before, or in some cases, it brings those talents to the surface and that helps you develop people as well as improve customer service,” Nelson says.
He says nearly every employee has stepped up through this process.
“It helps that they are part of a team because they can rely on each other and the team environment also helps in interpreting the voice of the customer, because they can discuss what the data really means,” he says.
In addition to requiring employees to articulate the prospective value of their ideas to customers, Nelson requires the teams to estimate the cost and the return to shareholders as part of their business plan. For example, if the customer service improvement plan calls for increased capital investment, the team must present a recommendation about how to finance the improvement, how many additional customers can be serviced through the proposed investment and when the company can expect to recapture the costs.
One of the best suggestions to come out of this process was improving customer satisfaction in Bakersfield.
“The customers were reporting a problem with water pressure and with water quality, and after the team conducted their analysis, they recommended that we build a new treatment plant,” Nelson says.
Although that idea would result in a major capital expenditure, the team moved forward with that recommendation and investment. In another service location, the customers complained about a strong chlorine taste in the water in the mornings. The team monitored the water quality and recommended a device that regulates the chlorine dispersal.
Work to improve
As a final step toward building an organization entrenched in continuous improvement and customer satisfaction, Nelson includes expectations in performance plans and implements continuous improvement process training for the employees of newly acquired companies immediately.
“This is part of the expectation of working here — it’s not voluntary,” Nelson says. “You always get some push-back from new employees when you acquire a company because it’s a change and so that’s to be expected.”
To get them on board, he spends time talking with the employee groups telling them why they do this and why it’s important. Once they complete the training, it helps them understand the process and overcome some of their fears, so they begin training with new employees right away. While a few opt out, most stay because it’s a better deal for many of these employees to work for Cal Water because the compensation, benefits and security are better and it has a larger footprint, which opens the door to increased career opportunities.
“That value proposition at least gets them to move forward with the training, and once they’re engaged, they generally don’t want to go backward,” Nelson says.
Every six months, he establishes a new set of objectives for his 20 field managers and six headquarters managers that support his corporate goals of providing excellent service, developing employees, delivering shareholder value and communicating well.
“You don’t want to set objectives that are too long-term because things change, and you can’t make corrections,” Nelson says.
He has eight officers on personal performance contracts with him, and he checks in on their progress every Monday. Additionally, they spend the day together once a year to select one major initiative for that year.
“If you just always focus on goals and objectives it gets routine and people can lose their enthusiasm,” he says. “I like to select one annual initiative that will really make a difference and focus on that. The officers are then charged with communicating the initiative and how each employee can contribute.”
By doing these things, Nelson has increased Cal Water’s service connections by more than 100,000 and has grown revenue from $210 million when he started in 1996 to $367.1 million in 2007. The company has made numerous acquisitions under his leadership, and he’s achieving the board’s original charge by delivering growth.
“It’s a great question to ask how customer satisfaction is tied to business performance, and I think it’s one that CEOs should ask themselves all the time,” Nelson says. “Good service is the key to customer retention, and when you have it, everything just seems to work better.”
HOW TO REACH: California Water Service Group., (408) 367-8200 or www.calwater.com
In the quest to stem rising health care costs, more executives are initiating dependent audits with some surprising results. On average, 8 to 12 percent of the plan’s covered dependents don’t meet the eligibility requirements, and one in four is an ineligible spouse, not a child. While audits often produce savings, employers should consider a few best practices to optimize the return and preserve employee good will during the process.
“The savings opportunity will vary depending upon the company’s premium contribution for dependent coverage, the employee base and the scope of the audit; however, in most cases, there are significant savings to be had,” says Greg Mansur, national leader of Administrative Performance Review Services at Watson Wyatt Worldwide. “Companies must look at their demographic profile, cost-sharing structure and potential ROI under different scenarios, and then define an audit scope and timing for the project.”
Smart Business spoke with Mansur about the potential savings and the best practices around dependent eligibility audits.
How have ineligible dependents crept onto group coverage rolls?
Benefit packages are vital in recruiting and retaining employees, so human resource professionals are often reluctant to make employees jump through hoops to prove eligibility. Initial enrollment is often completed online, and there’s no practical way to require or submit eligibility documentation during this process. Employees do a better job of adding dependents to a plan than removing them. It’s just too easy to forget that your son or daughter is now finished with college and is no longer eligible for benefits.
Comprehensive audits, where all of the dependent population is verified for eligibility, are a relatively new phenomenon and haven’t been part of the traditional audit budget for HR. With word spreading about the potential savings, more CEOs and CFOs are requesting dependent audits.
What should CEOs consider when determining the appropriate audit scope?
It’s possible to develop savings scenarios based upon the demographics of the employee population because historical data dictates that certain profiles yield certain returns. While a comprehensive audit costs more, it produces the greatest return and allows the company to work from a clean slate in maintaining savings by initiating enhanced validation procedures. Alternatives include auditing a random sampling of employees or specific employee segments, but can have limitations by being too narrow in scope to realize significant savings or potentially alienating groups of employees.
What are the best practices for launching an audit?
The first step is to establish an effective audit communications plan. It’s important for CEOs to articulate why the audit is necessary and to help employees see how this effort is good for everyone. Communicate the simple message that maintaining an affordable health plan works for the benefit of every employee; I think that message makes more sense in an era of greater cost sharing. Of course, explaining that an audit might occur means giving employees advanced warning about the timing and any documentation they must furnish. This gives them time to ‘self-audit’ the dependents they have enrolled and remove those who are ineligible, saving employees from an uncomfortable situation when the audit does occur. An amnesty period where employees may remove ineligible dependents without repercussions is always a great way to start an audit.
What happens during the subsequent audit phases?
Continue to articulate the audit process and the timeline and spell out the ramifications, such as the date when all unverified dependents will be removed from coverage. Many employers outsource the verification process because they lack the internal resources and the technology, and trained representatives can advise employees about how to obtain documentation, such as duplicate copies of marriage certificates.
Finally, establish an extension/appeals period to allow employees to challenge an audit decision and to allow those who have been nonresponsive extra time to produce supporting documents prior to removing their dependents. These extra measures can help to demonstrate the fairness of the process.
How can employers maintain dependent eligibility and savings?
Initiate a policy requiring employees to present eligibility documentation when new hires sign up for benefits or existing employees add dependents to group coverage. Some employers are requiring employees to sign affidavits or check pop-up boxes online stating that they understand the health plan eligibility rules and the penalties for noncompliance. Randomly audit a few employees each month who have dependent coverage to make certain the dependents are still eligible and request documentation if needed. Be sure to communicate to employees that ongoing audits are now standard operating procedure. With greater rigor and oversight, the corporate culture will change and employees will do a better job of self-policing the eligibility of dependents.
GREG MANSUR is the national leader of Administrative Performance Review Services at Watson Wyatt Worldwide. Reach him at (818) 623-4780 or Greg.Mansur@watsonwyatt.com.
Where were you born?
Providence, R.I., although I never lived in Rhode Island. My parents lived in a small town in northeast Connecticut, and the closest hospital was in Providence. When I was 12, we moved to just north of Philadelphia, and I was around 17 when we moved to a small town in Ohio.
Education: Bachelor of science degree, business administration, with a major in marketing, The Ohio State University
What’s the best business lesson you’ve learned?
There are two groups of individuals that you should always put first. First are your customers, and either tied or just behind your customers are your employees. If you take care of those two groups, you should find business success.
What’s your favorite board game and why?
I probably would say chess. The strongest chess players are the ones that have the ability to think the most moves ahead. I think there’s some analogy from chess to life as well as to business. Training your brain to think as many moves ahead as possible is one of the keys to success. That’s not to say I’m going to win any chess competitions anytime soon.
What was your first job, and what did you learn from it that stays with you today?
Shining my dad’s shoes. I was probably six or seven years old. I got a nickel a shoe, and I used to take all his dress shoes down to the basement with his shoeshine box and shine all his shoes. I learned that ex-military guys are real sticklers for shoeshine. You don’t get paid unless it’s a top-quality spit-shine. To this day, I like a good spit-shine on my shoes, too. All kidding aside, what I learned is if you work hard [and] produce a good result, the financial rewards will follow.
As a kid, what did you want to be when you grew up?
Really deep down, I wanted to be a professional baseball player. What better job could there possibly be? You get to play a sport you love every day, be around teammates, exciting atmosphere and get paid big bucks for that. I just couldn’t have thought of a better job. It got to a certain level where I realized I better work hard in school because it’s probably not in the cards for me.
Is your company’s annual bonus expense in line with its recent financial performance? Do top performers receive a larger bonus than their lower-performing peers? The current economic climate is the perfect reason to review your company’s bonus and incentive plans.
During prosperous times, employees come to expect bonuses, and the company has less trouble justifying the expense. So bonuses lose their meaning and become automatic or entitlements. If there’s little to no growth in your company’s 2009 forecast, now’s the time to revisit those incentive plan fundamentals and make the necessary adjustments.
“Now that executive compensation is subject to new SEC disclosure rules, CEOs are realizing that the same philosophies around executive bonus and incentives must cascade down through the organization,” says Ann Costelloe, San Francisco office practice leader of executive compensation for Watson Wyatt Worldwide. “They’re wondering how they can justify paying employees profit sharing or incentives if the company’s financial results are lower than the prior year, yet still incent employees to achieve stretch goals.”
Smart Business spoke with Costelloe about how executives can calibrate employee bonuses and incentives to mesh with 2009 forecasts and still maintain motivation.
What’s the first step to calibrate annual bonus and incentive plans with results?
Executives should start at the macro level by revisiting the philosophy behind the plan to make certain it’s still appropriate. Next, make certain the plan is motivating employees toward the main business drivers. At all times, a plan should be self-funding in that the incremental gain to the company should more than pay for the bonuses to employees. If it’s a profit-sharing plan, where all employees share in the overall company results, should you pay employees the same percentage if the company doesn’t achieve a profit increase? Or is the percent of profit shared appropriate and affordable given the financial performance of the company?
The questions are: What results should we be rewarding? Are there specific business drivers and return (e.g. return to shareholders) that we must achieve and exceed before we can afford to pay a bonus? Should employees still have an opportunity to earn the same bonus if they meet individual goals, but the company misses its broader target?
What’s the next step?
Establish companywide financial goals that include the appropriate amount of growth that is both achievable and affordable but by no means a given. This is the first step to assuring that the employees’ collective performance will fund the bonus expense. Then cascade the goals down through management to each division, group and individual. Understanding the extent to which company performance versus individual performance will impact an employee’s personal reward is critical. I advocate giving employees no more than three goals, so that an individual isn’t juggling too many targets. A goal that impacts only a small fraction of an employee’s ultimate reward (e.g. 10 to 15 percent) will likely receive no attention versus goals that impact a significant portion of the reward. Bonuses and incentives should be earned for achieving results, not completing activities, and if it’s a true incentive plan, those who achieve at higher levels should earn larger bonuses than their lower-performing counterparts.
When determining the bonus amount that will motivate employees, there’s no one-size-fits-all number. Instead, the percentage must coincide with the company’s philosophy, the industry, the maturity level of the company and the targeted return to shareholders.
How should plan changes be communicated?
Initially, the CEO should communicate the plan change, including the reasons behind it, because employees are much more likely to embrace change if they understand why it’s necessary. Employees need to understand how bonuses payments are calibrated to company-expected results and to what extent the bar for performance measurement has changed. CEOs should then provide periodic updates, detailing how the company is tracking toward those goals. This strategy creates line of sight between the employees and the company’s mission, and it also keeps the employees focused and motivated, especially if they’re working toward stretch goals.
Which plan structures are the most effective?
I don’t favor all-or-nothing plans because they can be a little scary, and they often fail to motivate employees. A scaled system, which financially rewards employees at a level that’s commensurate with their performance, is fair and the expense is calibrated to the achievement. The key here is to ensure that employees at all levels know what performance, outcomes and results are expected and how they will be measured so that rewards line up with results delivered.
I also encourage employers to set aside a pool of funds to reward and retain top performers. It’s best if the opportunity is embedded within the plan structure because you don’t always want to be managing by exception. If your company is hitting or exceeding its bonus plan targets every year, there’s a good chance the plan isn’t working properly because the bar is set too low. When a plan is structured correctly, you won’t hit the goal every year, nor will you consistently miss or overachieve.
ANN COSTELLOE is the San Francisco office practice leader of executive compensation for Watson Wyatt Worldwide. Reach her at (415) 733-4244 or firstname.lastname@example.org.
Every company has goals. Your job, as CEO, is to make sure that your employees’ goals match up with your company’s goals.
Steve Tirado, president and CEO of Silicon Image Inc., says that process of getting alignment is the difference between good companies and great companies.
“In Silicon Valley, everybody is smart,” Tirado says. “Just like graduate school, you walk into the classroom and say, ‘With enough time, everybody can get an A.’ What differentiates the class is you get a limited amount of time. So the people who can organize fastest under pressure and learn the material better than the others, they kind of float to the top.
“For me, business is no different. If you give your competitors enough time, they’ve got a lot of smart people, so they’ll eventually figure out what you’re doing and do it just as well.
“Our advantage is to keep our team very focused on what we have to do and stay very highly aligned as a company. That allows you to execute just a bit better, and that’s all it takes to have an edge.”
Once Tirado found that edge, he kept it. When he joined Silicon Image, it was a $20 million operation with 40 employees and a great idea. Silicon Image invented the high-definition multimedia interface (HDMI) and creates the semiconductor architecture for digital content distribution through HDMI, DVI and SATA interfaces. If you’ve ever hooked up any digital device to your high-definition TV or personal computer, you’ve probably used their products. Tirado realized that while having a great product was a good start, companies don’t rise to prominence solely on the strength of their product.
Today, Tirado’s HDMI giant has more than 640 employees and earned 2007 revenue of $321 million. Here are his keys to taking a growing company to the next level.
Get the message out
Tirado says the challenges of running a business change dramatically as you scale your company upward. If you want to be successful, you need to change your management style accordingly.
“You’ve got to spend a lot of time making sure you’re not the only one pulling the wagon,” he says.
When a company is smaller, you can rely on what Tirado calls the “team of superstars.” Everyone in the company knows how to get things done and decisions are made quickly, without relying on other team members for input.
“When you’re smaller, you can get everybody in a single room and work on things together,” Tirado says. “It doesn’t really force you to have a lot of process in place. In fact, in a lot of smaller companies, it can be argued that process gets in the way of creativity.”
However, as the company grows and diversifies, the skill sets needed to manage effectively change. You begin to need the processes to scale your business, and you start realizing the importance of communication.
Each new employee you hire needs to know the company’s goals and objectives. So to make sure that all of the employees are aligned with the vision, you need to be able to communicate to them how each element of your overarching strategy relates to their everyday job. Tirado says explaining the company’s mission can get repetitious, but you have to remind yourself that as the face of the company, you set the tone for the entire organization.
“You have to get yourself comfortable with the idea that you have to repeat your vision and mission again and again and again,” Tirado says. “You can’t get bored with it. Every time you talk about it, you have to have a lot of enthusiasm.
“People look to your body language, your tone, the words you use to describe what you do on a daily basis, and they want to see a lot of passion and conviction. If you talk to the people in my company, they’ll say, ‘Yeah, he does that.’
“You’ve got to be willing to say it again and again, because it takes a long while for messages from the top to get across to everybody in the organization.”
Always be ready for questions, because you never know when you’ll be stopped in an elevator with an employee. Tirado keeps the most recently implemented 10 initiatives firmly in his mind and makes sure he is able to relate the current goals back to the vision and mission of the company.
Don’t forget to tie today’s objectives to the big picture. Many employees can get bogged down in the day-to-day operations, and you shouldn’t miss a chance to remind them how their work fits into the company’s overarching strategy.
“If you don’t continuously reinforce and talk about what you’re doing and where you’re going, you tend to get a loosening of that alignment or you get wandering off in that direction,” Tirado says. “It’s a constant and consistent amount of communication that has to go on related to that to keep the alignment where it needs to be.”
Make it a priority
One of the biggest pitfalls growing companies face is trying to do more than is really possible. Tirado avoids this pitfall by keeping his goals realistic. He works with his staff to carefully calibrate how much growth can occur with a given amount of investment.
“I’m all for stretching my organization, but you have to listen carefully to your managers reporting to you, and maybe even one level below,” he says.
You have to gather this information from your employees because that is your key to finding out which tasks employees are struggling to accomplish. If an employee has too much work on his or her plate, you can simplify the situation by creating a priority list.
If the company’s priorities are clear, your employees will know how to make the trade-offs when not everything can get done.
“As a technology company, we tend to have a larger appetite than
we can go off and execute,” Tirado says. “If you’re very clear that there’s a prioritization of the things that need to get done, then people can go look at that and say, ‘I’ve got to make a trade-off of my time, and according to this prioritization scheme, this is what I should be working on.’”
Tirado has a set process for determining the priority level of tasks for his employees. There are several factors involved in the process. For instance, if the pure monetary return of one product is higher than another product, that will be factored into the priority list.
Also, Tirado takes the strategic value of a product into consideration when determining priority. If a product or process would open a new market in a place where the company was not firmly established or if it would create a new set of customers for the company, those factors would be taken into consideration, as well.
It’s not all so cut and dry, however. Sometimes, you have to consider options that have no short-term monetary return but will pay off two or three years down the line.
“You’ve got to be careful in your prioritization process,” Tirado says. “Because if you only look at the quickest return on dollars, for a technology company that could spell trouble because you’ve got to constantly be looking for the breakout or the novel way of attacking a problem that is going to be enough to get people to be interested in buying not just the current generation but future generations.”
Tirado solves that problem by keeping a healthy mix of products and ideas that are going to result in a shorter- to mid-term revenue or profit, while also investing in some longer-term risky ideas.
Tirado says experience has shown him that if you make all of your longer-term plans low priority, you won’t have enough new ideas to sustain the company’s growth.
There’s always some disagreement among the management team as to whether the order of the list is exactly right. But Tirado says you need to listen to every point and counterpoint because if a department is overcommitted or if there is a contention for resources somewhere in your organization, your employees will look to your prioritization scheme to dictate what gets done first.
Be honest with yourself
One of the most overlooked keys to successfully growing a company is creating a good manager-employee relationship. If you check the HR surveys, the No. 1 reason employees leave a company or stay with a company is their relationship with their boss.
“Companies live and die by how well relationships are managed inside the company,” he says.
“Yes, you have to have a smart idea and a good product, and you have to support it well and price it well. All of those things have to happen, but it’s also true that a lot of what prevents companies from executing really well is all these people relationships.”
So, you want to make sure you have enlightened managers who are not only self-aware but who really understand that part of their job is making sure employees understand what they need to be doing on a dayto-day basis, helping them solve issues they are confronting, and then helping them manage their career going forward.
“As my organization has grown, that has become more and more important to pay attention to,” Tirado says. “You want people in the leadership/management positions with really good people skills — who themselves are personally evolved.
“They know who they are, they know how they come across, and they know what kind of impact they have on people. The larger and more complex the company, the more people you have, the more organization that’s required, the more it requires you to really understand who you are, what your strengths and weaknesses are, and really be able to form open and solid relationships with the people with whom you need to count on to get things done.”
Good managers can be hard to find, especially ones who don’t mind taking a good hard look in the mirror from time to time. To determine whether a manager has the skills to handle the delicate manager-employee relationship, Tirado created the 360-degree feedback program.
The idea behind the 360-degree program is to present a 360-degree view of the subject. Tirado solicits feedback from the subject’s peers, subordinates and manager(s), sends the results to an outside firm, which summarizes them confidentially and sends them back. The information contained in a 360-degree report gives an unbiased view of what the subject’s colleagues think of him or her.
“If you’re a fairly together and enlightened person, typically your own self-perception is consistent with other people’s perception,” he says. “When I see that other people’s perception is highly different, that’s usually problematic. It shows that you’re not aware of how you’re coming across to people.”
Tirado’s work has paid off, and Silicon Image’s vision of “Digital Content Everywhere” is becoming clearer and clearer.
“That is what I point our employees to,” he says. “Every day you work, you should be doing something to fulfill that vision. And if you’re not — go talk to your manager about how what you do every day is contributing to that.”
HOW TO REACH: Silicon Image Inc., (408) 616-4000 or www.siliconimage.com
Employers who seek to regulate or monitor their workers’ electronic communications could be stepping into a legal quagmire. Lest they get their shoes muddy (and mess up their legal standings, too), employers should be up to date on court rulings on employee communications. The latest ruling comes from the 9th Circuit Court of Appeals in California.
Smart Business asked Michael A. McCabe, a shareholder at the Dallas law firm of Munck Carter, P.C. with expertise in e-discovery and labor and employment law, to help sort out the situation.
Let’s cut to the chase; can I legally monitor workers’ e-mail accounts?
Yes, in most states. But, you have to go about it in the right way. The key is to defeat the employee’s expectation of privacy in his or her workplace communications.
Employers can do this by distributing a policy that clearly and unambiguously states that any communication made over the company’s e-mail system is not private and will be monitored by the employer. Having established no expectation of privacy to workplace communications, the employer is on solid ground to legally monitor the communications.
Does that mean I can monitor personal communications on company computers?
This is a relatively new and dynamic area of the law that is constantly being fine-tuned. However, most courts have consistently ruled that so long as an employer’s policy dispels any expectation of privacy, it is fair game for the employer to review communications made over the employer’s e-mail system.
Some courts have gone so far as to hold that communications between employees and their lawyers cannot be privileged if the employer retains the right to review communications sent or received over the company’s e-mail system. In the words of one court, a properly drafted policy is equivalent to notifying employees that ‘the employer [is] looking over your shoulder each time you send an e-mail.’
How about monitoring other technology like cell phones, voice mail, BlackBerrys?
Written communications, in whatever form, that are transmitted over the employer’s computer system can be monitored if the employer’s policy eliminates any expectation of privacy. This same rule should apply to voice-mail communications that are transmitted over an employer’s e-mail system.
Monitoring cell phone conversations is a different story altogether. The law of most states and the federal government is that telephone conversations can be monitored if proper notice is given and consent received. In some states, only one person to the conversation needs to consent to being monitored, while in other states, all parties to the conversation must consent. That’s why you’re informed that your telephone conversation is being recorded when you call a customer service hot line.
To monitor employee’s cell phone calls, you would have to receive consent from both the employee and whomever he or she calls because you don’t know if he or she is calling one of the more restrictive states.
For all practical purposes, it would be very difficult to implement such a policy with cell phones.
But didn’t the 9th Court’s June decision draw some lines?
Not as much as you might think. The 9th Circuit ruled that Arch Wireless, a text message provider, violated the federal Stored Communications Act (SCA) by disclosing a police officer’s sexually explicit text messages to his employer, the City of Ontario Police Department, even though the city was the subscriber on the service contract. In the court’s view, Arch Wireless violated the SCA because it disclosed stored text messages to a third party without the consent of either party to the communications.
This does not, however, stop employers from monitoring e-mails that are sent entirely over their own e-mail and computer systems. The easiest way for employers to avoid the 9th Circuit’s ruling is to limit business communications to those devices that can be monitored by the employer, such as BlackBerrys and traditional e-mail.
Can I take disciplinary action against an employee for a post to an industry blog?
Probably, but it can differ from one state to the next and between public and private employers. There are several cases in which employees were fired or disciplined for material they posted on an industry or personal blog that was critical of their employer. Other employees have been disciplined for making statements online that appear to be the employer’s official position on a topic.
To avoid these problems, all employers should have a policy that prohibits employees from blogging about their employer without making their employment status known and without stating that the espoused views are personal to the employee and not the views of the employer. Furthermore, the policy should remind employees that they can be disciplined if they paint the company in a bad light.
MICHAEL A. McCABE is a shareholder at Munck Carter, P.C. and a member of the firm's labor and employment and litigation sections. He can be reached at (972) 628-3609 or email@example.com.
Scott Driggers is a master at finding different roads that lead to the same destination, something he’s had to do as he’s opened offices in other countries.
In 2001, the co-founder and CEO of Gemini Mobile Technologies Inc. established his company in Silicon Valley and Japan, and the wireless software company has since added a third office in China. His greatest challenge with those locations is getting 150 employees across three cultures to achieve a common vision to move the company forward, and he frequently meets with the company’s leaders in each region to discuss the specific challenges they face.
“You have to be frank and honest and create an environment where the senior management team feels comfortable talking about that,” he says.
Smart Business spoke with Driggers about how to use different methods to achieve the same goal and how to know which method to use when.
Q. How do you plan a strategy that works across different cultures?
One of the key points would be, ‘Where’s the starting point?’ If you start with collaborative management soliciting ideas from the other senior managers you need to start at a point that is relevant to them and the context of their environment.
In the U.S., we might come up with a list of draft ideas. The CEO might come to his team and say, ‘Here are five goals we’re thinking about for this year. Let’s brainstorm around that.’
In Japan, you would collaborate from the bottom up. You would let the managers know, ‘Get together with your team. Bring to me what you think the top challenges or goals are for the upcoming year.’ So the managers there would go to their junior team members, who would solicit ideas. And when it comes back down in Japan, people have all felt they have participated.
In the U.S., it would be OK for the senior managers to come up with some specific ideas, then explain that to the team members and allow them to have their buy-in.
Q. How do you execute the strategy in each culture?
We may have a goal in Japan, which would be very similar to the goal in the U.S. The way we might approach that in the U.S. is ask a junior person to write up a strategy on paper, some targets, get together at a meeting, logically go through A, B, C, D, then call the meeting closed and everybody goes out and executes.
In Japan, we would spend a lot more time upfront. There would be a larger meeting; there might be 20 to 25 people involved depending on the size of the project. You might bring a vendor or a partner or a customer to the meeting. You might have to go through a number of these meetings. It’s not a linear process to reach consensus; it’s a very circular process.
It would seem very frustrating, but the value system in Japan is, we spend more time upfront, but then the execution is a lot faster on the back end because there are fewer unknowns to resolve along the way.
But as an American, you just say, ‘Hey, let’s just get the idea; we’ll solve things as we go along.’
Both approaches are OK; you just need to recognize what’s going to work in that environment. You would create a lot of stress if you tried to fit one of those processes into the other location.
Q. How do you tailor the vision to each group?
It’s not so much a tailoring of the vision; it’s a tailoring of the delivery, acknowledging what’s important to an engineer in Silicon Valley may not be as important to an engineer in Japan. In Japan, something else may be emphasized that would be de-emphasized or a nonissue in the U.S.
For example, in the U.S., people are very interested in how our technology differs from the competition. What are we doing that’s different than the company two miles down the road? We talk enough about the product that they have an understanding.
In Japan, the team members are aware of the competitors. But at the same time, it’s more focused how we are going to do this internally. It’s more focused on the process and less on exactly what this product is going to do.
Q. What’s your advice to a business that is expanding to China or Japan?
The first thing is, the senior person you hire in those markets is very critical. No. 1, make the choice of, ‘Will we open an office, or will we work through a local agent or partner in some way?’
Then if you decided to open your own office, see if you can work with someone who has had a bicultural experience. There is a certain threshold you step over once you’ve worked overseas. Rather than intellectually, it becomes a more intuitive or emotive response to understand what it’s like when you’re in another country.
That allows you to open up and be able to work across these cultural boundaries.
HOW TO REACH: Gemini Mobile Technologies Inc., (650) 227-2380 or www.geminimobile.com
Andrew Housser and Brad Stroh have created a business to make a profit but also to help tens of thousands of customers.
One of the biggest issues facing Americans is their rising debt. Housser and Stroh recognized two unmet needs in this market: for consumers to easily learn about personal finance and for debtors to have their own representatives in the collections process. They also realized that creditor funding was the norm for debt relief and a huge conflict of interest for the consumer.
The two co-founded and serve as co-CEOs of Bills.com. The company serves as a howto resource for customers to learn about and actually reduce their debt. It aims to help consumers prevent financial chaos and offers alternatives to bankruptcy, credit counseling and debt consolidation for those already in trouble. Bills.com is the online portal for Freedom Financial Network, the country’s largest pure debt resolution company.
While it hasn’t been an easy trip for them, the two have worked hard to distinguish their debt resolution services from the credit counseling industry, which has been under intense legal scrutiny. To do that, they developed a clear brand and are now sought-after experts in the personal finance field.
Housser and Stroh manage $1 billion in consumer debt for more than 40,000 consumers, and as they look toward the future, they plan to grow organically by adding new products. Additionally, this year they expect to grow revenue by 83 percent.
HOW TO REACH: Bills.com, (800) 544-7211 or www.bills.com