Ultimately, it was Andrew A. Fimiano’s discomfort that led to a transformational decision. The president and CEO of Southland Industries was squirming after enduring 45 minutes of relentless questioning from business consultant and “Good to Great” author Jim Collins.
Fimiano went to Collins in 2002 for advice on improving his mechanical engineering, construction and service firm. Although he’d grown revenue from about $10 million when he came on board in 1982 to $323 million in fiscal 2001, the company was starting to lose financial traction.
Collins’ interrogation revealed that Southland was splitting its focus across two business models. It lost 22 percent of its profit doing traditional “plan and spec” work, which involves bidding to build another firm’s design and charging customers for adjustments to those designs during construction. The company relied on “design-build” projects — designing and constructing its own plans at a set price — to make up for the loss.
Collins’ final question led to Fimiano’s revelation: Why would you keep offering a service that eats up nearly a quarter of your profit, causes the bulk of your legal problems, fosters customer dissatisfaction and burns out your employees?
Fimiano didn’t have an answer, so he knew change was crucial. He vowed to make the company 100 percent design-build in the next three years.
“Until you really look at the metrics, until you really look at it the way Jim Collins looked at it and the way we started to look at it, you think you’re doing OK. The overall company’s making money. One component of it isn’t, but it’s OK,” Fimiano says. “It caused us to really focus on what we did best rather than just being OK.”
This new direction wasn’t just a change for the 1,750 Southland employees but for the entire marketplace, as well. Fimiano knew it would take relentless effort to convince employees and customers alike that OK wasn’t good enough.
“We were always good,” he says. “But how do we get to the next level? How do we become really great?”Help employees visualize change
Fimiano knew he had to drive the change throughout the company and beyond. But first, he had to topple the initial domino by getting his employees on board.
“Before they can go out and explain it to a customer, they’ve got to believe it,” he says.
He started by communicating why the change was an improvement. This was easy to explain to the handful of executives who sat in on the Collins consultations; they had already examined the data and debated over the options with Fimiano. But when the message came down to the employees who would be most impacted by the change, he had to pump up his powers of persuasion.
“There’s got to be a lot of frequency and a lot of metrics and a lot of telling the story over every chance you get,” Fimiano says. “Every time I get a group of employees today, I tell them why we want to do design-build and the benefits of it. It is the best thing for the customer, it is the best thing for our employees and it is the best thing for our stockholders. You weigh all three of those things.”
To prove that the change was the best thing for each group, Fimiano looked at data from the company and beyond. Using both internal and national statistics, he compared the time and money demanded by both types of projects as well as the results in terms of price, quality and satisfaction.
But a change this big is overwhelming enough without a deluge of statistics. Condense the data to make it digestible for employees. The more you can convey through a quick glance — as opposed to wading through pages of numbers — the better.
“We try to look at big items in bar graphs so it’s not so much statistics,” Fimiano says. “We try to keep it simple. Honestly, a lot of numbers and statistics get crunched to make the bar graphs, but what they ultimately see is usually pretty simple.”
But repetition and statistics alone might not be enough to propel employees into execution mode. To motivate them to internalize the change, you need to make it seem tangible by painting a picture of what it will be like to reach your goal.
“When you get to utopia, what’s it going to feel like?” Fimiano asks. “We sat down with our crystal ball, if you will, and said, ‘What’s it going to be like when we get there?’”
That prediction comes partly from hopeful aspiration but mostly from data. Fimiano, for example, looked at satisfaction ratings from the two types of work to create his visualization that a design-build firm would sustain happier customers and happier employees.
“That’s helped a lot, just saying, ‘OK, here’s what we want to do and here’s our goal, but here’s what it’s going to feel like when we get there. Here’s why we want to get there,’” he says.Zoom in on resistance
Driving change isn’t just about securing buy-in but also recognizing who’s on board and who needs a more intimate nudge.
For Fimiano, it’s an easy distinction to make.
“The key to getting on the same page is a lot of rigorous debate,” he says. “If there isn’t somebody challenging and asking questions and being the devil’s advocate, then you’re not going to get there.”
“The people that are on board will ask the toughest questions,” he says. “They want to make sure that they understand it. ‘What about this? Did you think about this? How are we going to do this?’ They’re trying to figure out how they’re going to execute this plan.”
The employees who aren’t buying in to the change usually stay quiet during meetings. Those are the ones Fimiano approaches one-on-one.
“It’s not going to be as bad as you think,” Fimiano told them. “Let’s just take this one step at a time. You don’t try to eat this three-year goal in one gulp. Every three months, let’s try to improve.”
The employees who had the biggest changes to make were generally the most reluctant. The division leader of Southland’s Southern California region — a location that relied on plan-and-spec work for about 85 percent of its business — was one of the most noticeably upset. He feared the change would put him out of the job completely.
That’s where you need to step in. Get involved to make the change a team effort rather than survival of the fittest.
“It’s into frequency and into details and into time spent face to face with a lot of the people that have concerns,” Fimiano says. “Show them with actual circumstances and actual statistics that they can make this change and that you’ll help them make it. [Tell them], ‘You’re not going to do it alone. We’re not just going to say do it. We’ll get you help to make this change.’”
To bring them aboard, you have to make the goal achievable. Help them break the endpoint into more tangible steps.
“You don’t try to climb the mountain in one day,” Fimiano says. “You have base camps. We actually use the term base camp, where you set out small goals along the way. If we ’re 15 percent design-build today, in three months we would like to be 22 percent. If you see that progress, it stimulates more progress.”Drive change beyond your office
If getting employee buy-in is the first domino, then your next task is to keep that momentum rolling outside of your office. Equip employees to get customers on board, as well.
“Most of it is spending time with people one on one, spending time showing them how to do it,” Fimiano says. “I would take on the customer that had the most resistance and show them how to do it.”
Fimiano had plenty of opportunities, because the change faced significant resistance in the marketplace. Many hospital builders, specifically, shied away from the idea of design-build. So Fimiano went straight to the CEO of one of the largest builders and asked for only 30 seconds of his time.
It’s important to keep your message simple and succinct with your customers. Instead of diluting your presentation with pages of background and reasoning, jump straight to how the change affects them.
Fimiano laid down two floor plans — one design-build and one plan-and-spec — and let the difference speak for itself. Instead of just telling, he showed the customer how the change would improve the quality and lower the price of a project. That short-and-sweet approach has already manifested into several projects with that builder.
“If you can just show them the difference, there’s lots of data that will demonstrate that what we’re doing is superior to the old way,” says Fimiano, who equipped employees with statistics to support the case with customers.
“The point we’re making is (the change) is much better for the customer, ultimately,” he says. “The final product is going to be less expensive, it’s going to be faster and it’s going to be better quality. So we keep track of all those metrics so that our people, when they talk to a customer, can say, ‘We’re not just doing it because it’s good for us. It’s good for you, and here’s why,’ and we back that up with a lot of statistics.”
If you just handed employees stacks of statistics and set them free, you’d be giving them bullets but no gun. You must also train them how to use the data. For Fimiano, this included role-playing and prepping for the worst-case scenario.
“Typically, you know what a customer’s going to say: ‘I’ve always done it this way. Why would I want to change?’” he says. “Ask yourself, ‘What are the worst questions that they could ever ask me?’ and be ready for them. And then usually the other ones are easier.”
Fimiano asked employees to list the queries that would freeze them. When you talk through the best answers for those, you build their confidence. If employees are prepared for curve balls, their responses to basic questions will become second nature.Don’t stop
Change has to start at the top. But Fimiano says the biggest mistake would be assuming that you could just set the change in motion and walk away, expecting it to transpire unassisted.
Executive involvement is key throughout the entire process. You have to stay persistent and committed until your employees reach the goal.
“You can’t take a step back,” Fimiano says. “A lot of people tried me along the way: ‘Do we have to do it in three years? Can we do it in three and a half years? Can we do it this way?’
“You’ve got to be really steadfast. You’ve got to be black and white. And you’ve got to say, ‘No, this is what we’re doing. We’re going to help you get there, but this is what we’re doing. We’re not going to change the goal.’”
Fimiano set the pace by cracking down on the company’s project selection. He gave employees time to phase out of plan-and-spec projects in progress, but then took a disciplined approach to future plans. Working against the goal simply wasn’t allowed because the company stopped accepting plan-and-spec projects.
Even after the company stopped doing plan-and-spec work in 2005, Fimiano continued watching metrics to illustrate the progress.
“The best [monitoring tool] for a lot of people is metrics,” he says. “When they start to see the metrics, it’s hard for them to fight that we’re doing the right things.”
From 2003 to 2008, for example, Southland’s net income rocketed from just more than $600,000 to $44.6 million, and its gross profit margin grew from $27.6 million to nearly $98 million. In the same time frame, return on equity increased from 3 percent to 67 percent. And last September, Southland ended fiscal 2008 with $471.6 million in revenue.
“Because we pushed so hard,” Fimiano says, “we were able to actually change the market and change the way they looked at things.”
How to reach: Southland Industries, (949) 440-5000 or www.southlandind.com