Patrick Mayock

Friday, 25 April 2008 20:00

Moment of focus

At your grandchild’s soccer game, another spectator spends more time checking his PDA than cheering for his own daughter. At a local bistro, the couple next to you spends more time on their cell phones chatting with their direct reports than they do talking to each other.

Ask Laurie Keenan about such behavior, and she’ll tell you that none of these people are living in the moment. And it’s a subject she knows something about.

As president of Prudential Real Estate Affiliates Inc., Keenan has often straddled that line between personal and professional life. While pushing the company’s 2007 revenue to more than $100 million and managing the franchise’s network of more than 2,100 residential real estate brokerages across North America, she admits to occasionally falling prey to the distractions of her BlackBerry outside of the office.

To combat those urges and find balance, Keenan has adopted a here-and-now philosophy that has her living in the moment, whether with her family at home or her 140 employees at work.

Smart Business spoke with Keenan about how to live in the moment at work by setting and focusing on a clear agenda.

Evolve as you go. [If outside opportunities spring up,] they can become part of the agenda. If it’s a good course, a good decision, let’s go.

Every step you take is enlightening. Of all the things you put forth in the year that you’re going to accomplish, some will have more value than others. If new things come across that make more sense, prioritize and change course.

Look to your consumers to analyze your market. Our market is consumer-driven. From our standpoint in our business, we need to understand how the consumer is thinking, how the consumer is acting and where the consumer is going so that we can be there to engage.

There are lots of places to learn about that. You can read about it in newspapers, you can go online, you can talk to them. Who else knows better what they need? Who else knows better what’s happening? Keep tight with them and understand what their needs and wants and desires are and how it can better serve them.

Obviously, there are lots of sources to figure out what the consumer is doing. There are also all kinds of studies that many of the Internet companies do that give you information on how the consumers are behaving.

Understanding that and trying to interface with where they are is an advantage.

Ask questions. The outcome coming through a collaborative process is a better process and a better product. (If questions) are thought-provoking enough, you’d be surprised at the creativity that results from the other side of the table.

‘Have you thought about this? Have you thought about that? What do you think would be the right choice? What do you think would be a good decision?’

I don’t allow them to dump problems on me. They need to come up with a solution. Often-times in conversation, asking the right questions helps people to think those solutions through.

Listen — then speak. Someone once told me that our Creator gave us two ears and one mouth with the expectation that one would listen twice as much as one would talk.

If you want to grow as a leader, you have to spend time hearing from your constituents. You can’t do that if you’re a talker. You can’t hear that way. (Listening) is a characteristic of a good leader. In order to be collaborative, in order to bring people along, in order to get buy-in, in order to really understand, you have to listen, so button it up.

Implement a stated culture. Culture is extraordinarily important. Have clarity around what’s important; demand it of your organization and live it every day. You can’t have a stated culture and not practice culture.

I’ll give you an example. It’s called ‘Don’t talk stink.’ That is a core piece of our culture. We do not talk behind others’ backs. We don’t put others down. We don’t talk in a negative way about our people.

When somebody does, they get called on it.

By having it out there, by having it be a part of the stated culture, everyone works to reinforce it. It’s not just me. You don’t have to be a leader to do that. It’s ingrained in the interactions of all the people of the organization.

We went at it quite purposefully. We brought our leadership team together, and we talked about what it was we believed in and what our culture needed to be. We put it in words, we communicated it and subsequently lived by it, demonstrated it and practiced it. When you do that, it gets ingrained.

Think creatively and devote resources to growth. Get extraordinarily creative about (growth) in terms of how to get there.

If your team is great at implementation but has not tapped into what’s happening in the marketplace, for example, and doesn’t have the savvy to really think about the world in 3.0 terms in opposed to 2.0 or 1.0, then you seek counseling. Find the experts, and realize that you don’t have to be knowledgeable about everything. Surround yourself with the right people who can fill in those gaps for you.

Then, focus your resources to do that. Push your budget. You have to take opportunity where opportunity is. If I’m in a position where I can’t push on the budget, I’ll find something to take out to make it happen. <<

HOW TO REACH: Prudential Real Estate Affiliates Inc., (949) 794-7900

Friday, 25 April 2008 20:00

Pacesetter

Ask Gary Chodes about the dangers of speed, and he’ll tell you the only danger is not going fast enough. As founder and CEO of Oasis Legal Finance LLC, he operates at a breakneck pace to drive the 85-person legal financing firm to the head of the industry with 2007 revenue of $20 million.

But Chodes is careful not to blur the line between rapidity and risk in the process. He’s implemented speed as a cultural tenet that’s founded based on careful and cautious study.

“First, you have to believe that speed is going to help,” he says. “We’ve studied that, and we continuously study that.”

Smart Business spoke with Chodes about how to put the pedal to the metal while avoiding some of the obstacles along the way.

Q. What are the keys to maintaining speed in business?

Consumers often will have lots of options that they can get to through the Internet and the television. One of the things you have to do is get their attention quickly, and then you have to move quickly before they move on to something else.

Be responsive to the consumer right away. Take the call right away as opposed to going into messaging. Have an efficient call center with reasonable wait times.

Having a rapid cycle time in terms of completing a transaction with the consumer is critical. You have to be able to move quickly, or they will disappear.

Q. How do you develop that rapid cycle time?

It would be a function of how sophisticated the call center technology is, how well the reps are trained, how good the scripting is to get as quickly as possible to, ‘Is this a candidate that we can help or is this a customer that we won’t be able to help?’

You want to make sure that the application is simple, one that you can do quickly and one that you can really tell on the phone within just a few minutes whether or not it’s somebody you’re likely able to help. If you’re likely able to help, you get them to the next stage. If you’re not likely, you (weed) them out of the process.

Q. How do you communicate that need for speed in the workplace?

The first thing that you have to do at the executive level is have some data about your own business to prove that it helps.

We took a sample of transactions of about 4,500 customers in a recent time period. Then we looked at the likelihood that we would be able to help them.

When we were taking a month to deal with a consumer, we were 20 times more efficient if we instead cycled them in one day, and we were 10 times as efficient if we instead cycled them in the first week.

Once the executive team, who presumably is helping you manage the operation and is responsible for the employees, once they buy in to it, then you can get into the mode of communicating that down to the employees who are actually going to do the process.

Q. How do you get buy-in from lower-level employees?

We would share the data about how efficient we are when we’re fast, and then how slow we are when we’re taking a long time.

The vast majority of it is informal face-to-face team meetings with team leaders and team members. Frequent communication of the results — typically, how we did every day and certainly at the end of each week.

Q. Do incentives help in this process?

We reward them for the absolute number of transactions they close in a given month. There’s some scoring for quality, but the primary attributes are how many you convert out of a base number.

We’re measuring that frequently, (so employees are) going to see their results every day and every week.

We provide a financial incentive for hitting stretch goals at two levels. The employees involved in the process know very specifically to the week within the month how they’re doing relative to the things we’re measuring. They can see that they have a direct impact on achieving those levels. They see that there’s a direct financial incentive at the end of the month.

Q. What advice do you have for others regarding speed?

You’ve got to get the measurement tools in place to measure your business process in terms of the cycle, and then obviously breaking it down into the component parts. You can’t just measure speed. You actually have to spend time to study your process to understand how long it’s taking. Conduct an analysis of how well you do when you’re process moves faster or slower.

The last step is to remove the steps that are barriers or are unnecessary or only come up some of the time that lead to (a longer) cycle time. It’s not just saying, ‘I have to be fast for the sake of speed.’

HOW TO REACH: Oasis Legal Finance LLC, (877) 333-6675 or www.oasislegal.com

Wednesday, 26 March 2008 20:00

Laying the foundation

A dream without plans is

mere hallucination.

Such is the advice that

Andrew K. Benton relied on

after becoming president and

CEO at Pepperdine University in

2000. After studying the institution’s then 63-year history, the

leader set his sight toward

future goals, but not without

first laying a strong foundation

in the present.

You can’t just make bold

proclamations, Benton says.

You also have to invest the time

and planning to make those

goals a reality. To guide such

thinking, the president enlisted

the help of his constituents to

develop a mission statement

that was both profound and

concise.

Eight years later, these efforts

have given Benton solid footing while overseeing a fiscal

2007 budget of $267 million

and current enrollment of

7,600 students.

Smart Business spoke with

Benton about the importance of

soliciting feedback and setting

goals and how to find balance

in the process.

Look back at history before moving

forward. [Before creating a mission statement], you really have

to know how your organization

can perform, how it will respond

to stress and how it will respond

to success.

I spent some wonderful hours

reading some early radio messages that George Pepperdine

delivered back in the 1920s. Also,

I’ve spent a lot of time trying to

understand the six preceding

presidents.

The perfection of 20/20 hindsight is a remarkable thing. Every

institution, even the most venerable institutions in America, has

had points of crisis. It’s good to

go back and understand what

caused changes in direction,

what they changed and what

they kept the same.

That’s a lot of what a president

has to decide — what should be

continued and then what needs

to be changed going forward.

To understand the institution

and where it’s been is very indicative and very informative as to

where the institution can and

should go.

Keep your mission statement brief.

It’s important to set a vision that

is sympathetic with the end goal

and then to keep it simple and

to keep it easily applicable.

We live in a time when many

institutions have not only mission statements but also vision

statements. One of the things

that I’ve learned [from] being

asked to work on both vision

statements and mission statements is the importance of producing statements that all of

your colleagues and all of your

constituents can readily grasp.

I now look with some disdain

at overlong mission/vision statements. The simplicity and the

profound quality of a very few

number of words can make a big difference on an organization.

Solicit feedback. Put (your mission statement) out for public

comment.

The Internet and Web sites are

wonderful things. You can actually go to every member of your

family and you can say, ‘This is

the strategic plan for the direction of the university. What do

you think?’

It’s not like the old days when

hard copy was flying around. Today, with very few keystrokes,

you can ask every member of

your community to comment on

the direction to make sure that it

is a shared journey. That’s very,

very helpful to get the word out

and then get feedback.

Share your expectations with employees. Your goal-setting strengthens the longer you are in that

position and really have a sense

for the opportunities and the

challenges in a particular area.

There’s no substitute for being

present in the workplace and

being present as much as you

can in the decision-making

processes and the people who

make those decisions. As you

gain greater insight into what

they do and the people with

whom they do it, the better you

are at helping them shape meaningful goals for the coming year.

[When you set goals], employees are more likely to be emotionally well in their position.

They know whether they’re

doing a good job or not. They

know areas where they need

to strengthen their service.

If we know what’s expected of us, and we are objectively meeting those expectations, we are

going to feel better about ourselves, and we are going to be

better employees.

If it’s loose and very amorphous, it’s very hard to thrive in

that environment. It’s very hard

to look forward to a new year

and new opportunities because

you really don’t know how

you’ve been doing and how you

stand within the organization.

Goal-setting and frank appraisal on a regular basis is absolutely

critical.

Find balance. Leaders aren’t of

one type, but leaders tend to be

pretty driven.

As leaders, we need to periodically examine how we’re using

our time and to whom we’re

apologizing to for not being able to give more time. ... I get so

busy in the works that I do, but I

hope I never get to a point where

I don’t have time to be a good

friend, also. Family shouldn’t

pay a price for our striving.

The single most important thing

to do is spend the first two hours

of every day by yourself.

I get up very early, I pray, I think,

and I get a handle on what I hope

to do that day. It is the most centering, invigorating thing.

If you get up and you immediately get on the treadmill ... and

you don’t get off that treadmill

until 9:30 that night, that’s not a

life. That may be a career, but

that’s not a life.

Finding time for oneself and

daily engaging in a re-centering,

reflective effort is terribly

important.

HOW TO REACH: Pepperdine University, (310) 506-4000 or www.pepperdine.edu

Wednesday, 26 March 2008 20:00

Great expectations

Every entrepreneur has a thirst for growth. Such is the ambition that drives each of them. But while that underlying thread may define entrepreneurs within the realm of business enterprise, it is how they quench their respective thirsts that divides them.

“Growing just for the sake of growth can be dangerous,” says Joseph M. Carroll.

As founder and chairman of Hudson & Keyse LLC, he has become something of an expert on responsible expansion. After founding his debt collection agency in 1985 as a humble, two-person operation, Carroll has since grown the company into a major player within the industry.

This process wasn’t as gradual as that frank description would have you believe, though. On the contrary, Hudson & Keyse experienced relatively little swell in its first 15 years in operation. It wasn’t until 2001, when Carroll saw some opportunities that were unique to the debt resolution industry, that he engaged in a comprehensive evaluation and planning process before scaling his company.

From 2003 to 2006, he saw revenue skyrocket by 1,414 percent — from $1.4 million to $21.9 million — and payroll jump from 15 to 131 employees. For some, this success would have been daunting. For Carroll, it was all part of the plan.

Here’s how Carroll used a combination of discipline and restraint to take Hudson & Keyse to new levels of success.

Create models for growth

When Carroll first began to see those unique industry opportunities, he didn’t dive in head first. He first tested the possibilities by devising diligent revenue models.

“The first place I started was devising revenue models, which predicted for us the revenue that we’re going to achieve based on the purchase of additional accounts,” he says.

What’s important here is actually working out the details. Don’t simply develop a vague scenario analysis of how new ventures might affect your company. Instead, draw from your current practices to gauge the dollar amount of additional revenue that an extra account, client or customer will bring.

Carroll says to be realistic in the process. If it currently takes you three months to draw revenue from one new account, don’t assume it will only take three weeks in your hypothetical growth window.

“Those revenue models gave me a pretty solid foundation of understanding the growth in revenue and when it would occur,” he says.

Once you’ve completed this initial planning phase, Carroll says you should then evaluate how much infrastructure you’ll need to accommodate the revenue growth you’ve laid out in the models.

“The time to address controls and processes and systems is before you undertake any type of dramatic growth,” he says.

In late 2004, for example, when Carroll and his management team decided to double the company within three years, they first engaged in an exhaustive evaluation of Hudson & Keyse’s capabilities before moving ahead with their plan.

“We actually analyzed all of our systems, IT, infrastructure, HR, our training programs, our recruiting systems,” Carroll says. “We looked at everything and shook it and turned it upside-down.”

Again, such an analysis should be precise. Eschew vague predictions for definitive assessment. If you typically assign five employees to a given account or process, for example, then look back to your revenue model to determine how many more employees you’ll need to hire to accommodate the additional accounts or processes you’re planning to take on. If each of those employees needs a computer, then determine how many more computers, servers and backup servers you’ll need, and so forth.

“We spent a good six to nine months shoring up areas that we felt would break down if we just simply doubled the size of the business,” he says. “All the planning and moves that went into that growth had already been made before we hired the first person.”

Keep a consistent culture

When you inflate a balloon, its color becomes less vibrant as it continues to expand. In a similar vein, your company culture can become diluted as you increase payroll to accommodate growth.

“When you have 12 or 15 people, everybody knows each other, and there are personal relationships across the board,” Carroll says. “Trying to maintain those relationships as you grow and get more and more people is difficult.”

One of the best ways to do so is by integrating new hires into existing divisions within the company.

After completing your infrastructure analysis, you should have a good idea of how many employees you’ll need to hire within your growth period. When placed within the context of your revenue model, you should also be able to track how many of those employees you’ll need for each stage of expansion.

The trick, then, is to develop an employee career progression that complements the addition of new hires.

Carroll accomplished this by promoting top-performing employees with one to two years of experience to oversee small units of their co-workers, both new and old. The process not only provides for a talented employee to guide the work of his or her less-experienced peers, but it also serves as reinforcement to perpetuate the established culture.

“Instead of just creating new units of people, we actually merged new people onto existing units and promoted a lot of people from within,” he says. “That’s how we grew our operation, not by bringing in 100 people on day one but by scaling the business up very slowly and cautiously.”

Despite the benefits of such processes, culture maintenance is something that still needs to be approached through a variety of other channels. Carroll says you should scale your human resources department accordingly and make an extra effort to organize team-building events and activities.

“We sponsor a lot of activities and get-togethers, and we also try to rally people to understand that we’re all part of a team,” he says.

Learn to let go

One of the main reasons Carroll wanted to scale his company was so he wouldn’t have to be intimately involved in its every operation.

“I understood that in order for me to ever achieve any kind of independence timewise, I would have to have a much bigger operation and be able to trust other very capable people to run it,” he says.

At the same time, one of the greatest challenges he faced when scaling his company was not being intimately involved in its every operation.

“I was always able to have a direct role in literally everything that happened with the business,” Carroll says. “Letting go of that control was the largest single change I had to make.”

This paradox is not uncommon among entrepreneurs. Personal freedom and total control are often incongruous.

What’s important to remember is that letting go doesn’t mean foregoing responsibility. By delegating to capable managers, you can still maintain oversight while finding balance between your personal and professional lives.

Carroll says that some mechanical functions, such as payroll, are easier to hand over than others. Though crucial to the business’s operations, these tasks can be passed on to employees with little additional training.

For tasks unique to your specific company, Carroll says to work very closely with your managers until you are completely confident in their abilities. Doing so will quell any nagging doubts that might arise should you delegate prematurely.

“When we hired our first vice president of collection management, I worked very closely with that person on an almost daily basis for almost nine months before I handed that area of the business off to them,” he says. “It’s a lot of hand-holding, looking over people’s shoulders, and making sure that they’re adequately and properly trained.”

From that point on, it’s also important to meet regularly with your managers to check progress and keep them accountable.

“A good CEO has to trust but verify,” Carroll says. “It’s one thing to simply delegate a task to someone, but ultimately, the responsibility to make sure that things get done is still up to you. For my own satisfaction, I continued to maintain a very close eye on what was going on.”

Hire smart people

Delegation is a lot like teaching a child how to ride a bike. You can offer guidance by holding on to the handlebar while running beside her for a while, but when it comes to letting her steer on her own, you’ll feel more confident letting go if she has some experience and a better sense of balance than your own.

The same is true for direct reports. While intensive training can certainly prepare them for responsibility, you can delegate more confidently to experienced managers who are smarter than you in the first place.

“When I realized that I really needed to hire people that were more knowledgeable, had more experience and were more capable than me in distinct areas, the company really started to take off,” Carroll says.

As you conduct business with thriving companies, identify the senior executives who were integral in their success. If you operate in a relatively new field, look to similar industries to meet your needs.

Carroll says you must then show potential candidates the sizzle of entrepreneurship. “There are a lot of people that grow up in large corporate environments that reach a certain point in their career and maybe they can’t advance anymore, or perhaps they just want to have a greater impact on an organization than they can in a large company.

“I’ve never been able to attract people with more money, but I have been able to attract people by offering them a greater impact on the operation and the ability to be more entrepreneurial.”

When doing so, don’t be afraid to shoot high. Carroll queried executives at Fortune 100 companies who had experience running 5,000-person operations.

“You don’t know if you don’t ask,” he says.

Just make sure you’re wooing someone that’s in it for the long haul. Look for a candidate who has a track record of staying with an organization for 10 to 20 years. Then, articulate your company’s future plans and where you see that candidate fitting in.

“We’ve laid down our commitment and have said, ‘We want to build this company for the next 20, 25 years, and we want you to be a part of it,’” Carroll says. “We want people to be focused on the long term and not just meeting the next quarter’s numbers.”

Get better at what you do

As you scale your company, you’ll likely encounter a number of chances to deviate from your model of disciplined success.

Just remember: Responsible growth is an outlet for solid performance. It’s not a crutch to accommodate sloppy business practices.

“As a company gets bigger, the perception is that expense controls become less and less important,” Carroll says. “It’s just the opposite. The larger you get, the more important it is to make sure the expense controls are in place and that you maintain the discipline that you’ve had as a smaller business.”

To maintain such restraint and ward off the “growth for the sake of growth” demons, Carroll says to continually ask yourself one simple question: Is your company getting better at what it does?

“Sometimes, in order to achieve that, you have to gain additional size,” he says. “That’s going to feed your bottom line and allow you to become a more successful company. At the same time, there might be occasions where it makes sense to slow down or actually cut back because you need to improve in a given area.

“It’s really an individual, CEO-specific situation, but everyone that runs a company intuitively understands whether or not you’re better now today than you were six months ago.”

HOW TO REACH: Hudson & Keyse LLC, (800) 654-5391 or www.hkinc.com

Sunday, 24 February 2008 19:00

The benefits of failing

When making a first impression, it’s crucial to lead with your best foot forward, says George L. Pry, president of The Art Institute of Pittsburgh.

He learned that lesson the hard way more than two decades ago at the system’s Seattle location. The Art Institute had just acquired the city’s Burnley School for Professional Art, and Pry was charged with leading the transition. However, instead of establishing a favorable reputation by touting student work and accomplishments, the president championed a full-out marketing blitz that lacked substance and subsequently hurt initial enrollment.

He didn’t make the same mistake in Pittsburgh. Pry has nearly doubled the student body in two years at the 1,300-employee Pittsburgh location by showcasing his students’ passion through public art openings, workshops and an award-winning Web site for the institute, whose 2007-2008 budget is $182 million.

Smart Business spoke with Pry about failure, creativity and how to make a great first impression on the Web.

Don’t be afraid to let people fail.

Make them learn from their mistakes so that they can learn to succeed.

In order for people to be able to fail, they have to first be able to trust you.

If there’s not trust, then people are going to say, ‘Hey, if I fail, I’m going to be canned tomorrow.’

I don’t care what vision or what plan you have. Unless you’re perfect, there are going to be pitfalls on the way. You’re not going to have all the answers. In order for somebody to get answers, some of them are going to have to fail to find what those right answers are.

It’s a matter of building trust and being patient with people. People see that quickly, [they see] whether you’re patient or not.

I don’t think any good leader doesn’t have a fair amount of impatience about getting results. At the end of the day, the only way you can get results is you have to have enough patience to let people do their thing.

The benefit is, you get way more out of people that have trust and understand your vision than you can get out of quickly rushing to judgment. What that does is shut down creativity, and it shuts down the ability to succeed.

The real benefit of allowing people to fail is saying, ‘There are all kinds of different ways to make this happen. Take the risk, and take the commitment to make it happen.’

Teach creativity. There are many people who have the misperception that either you have creativity or you don’t. Just like any talent, creativity can be learned.

It’s the ability to get solutions from a variety of different inputs. You have to teach it. We bring people in, and we start from the basics, and then we teach them to look for different types of solutions.

Sometimes, you need a model. Sometimes, you need to be put in with people who do [think creatively]. People learn from each other.

There are many times I’ve taken a particular employee who’s either obstinate or sort of has a mind block on various ways to accomplish something. Team them up, get them responsible for the solution so that the team doesn’t fail, and you make sure that there are a (few people) on the team who may think a little bit too much out of the box.

Develop your Web presence. If you’re going to be successful, you better have a solid Web presence.

You can reach thousands and thousands of people, and you can either leave a good impression or not leave a good impression.

It’s just like when you meet someone in person — that first impression really sticks. You’d better lead with your best foot forward.

The first thing is, you’ve got to know what you want out of the Web site. You’ve better have a plan of what you want to gain from it. What are you trying to accomplish with the Web site?

The second issue would be, how creative do you want it to be? How interactive do you want it to be?

It’s not like the Yellow Pages, where you open it up and just try to find where this college is at. You want them to sort of get engrossed in it.

The third, obviously, is setting up a course of action to accomplish all of the various details of it.

We look at the Web results on a month-to-month basis, so we’re always keenly aware of what number of hits we have and which of those hits lead to action.

That’s really the effort and the mainstream behind a good Web page. It’s how you get people to take the next step. It’s a matter of sitting down and trying to put that in a visual presentation that leads people from step A to step B and, hopefully, to step D — ultimately, wherever we need it to go.

We knew we wanted it to be interactive, to lead people to other questions and have those questions be available to them either by jumping on a different link or by working it in right there on the Web page itself or picking up the phone and making that call to say, ‘I saw this, but what about X, Y and Z?’

It’s sort of just methodically walking someone through that process and not getting them lost in the process.

HOW TO REACH: The Art Institute of Pittsburgh, www.artinstitutes.edu/pittsburgh or (800) 275-2470

Sunday, 24 February 2008 19:00

Three thumbs up

Kim I. Megonigal knows of three kinds of people: Those who don’t know what’s going on, those who know what’s going on but don’t do anything about it, and those who know what’s going on and actively try to affect the outcomes. At Kimco Staffing Services Inc., an Irvine-based staffing firm, the founder, chairman and CEO uses a diligent hiring philosophy to get buy-in from existing employees while seeking out the best candidates from that third group.

Too many companies skimp in this regard to get a position filled as quickly as possible, he says. And when people are what ultimately make or break a company, a savvy executive would be wise to invest a fair amount of time in the hiring process. Megonigal took his time when assembling his current staff of 165 employees, and the effort has paid off, as Kimco’s annual revenue has risen from $93 million in 2003 to $109 million in 2006.

Smart Business spoke with Megonigal about how to get buy-in from your employees when hiring someone new by applying a simple rule of thumb.

Follow the rule of thumb. Hiring is something that takes time. Most people don’t spend enough time in the hiring process.

I have a rule within my company that no one gets hired without having three senior managers interview the person and give the thumbs up. If any one of those three gives a thumbs down, the person doesn’t get hired.

They’re all three looking for different things in most cases. The person that this person’s going to work for is looking to get their job filled. Two other supervisors who are not in the exact same area can look at different things: character, values and the way they present themselves. Those things are equally important as job skills.

When those other managers in other departments say, ‘This is the person we should hire,’ not only are they giving their stamp of approval, but they’re also putting their own recommendation on the line. I find a much greater commitment from those individuals to try to help that new employee succeed within the organization.

Bring management together. When I was a $15 million company, the company operated significantly different than it does today at $100 million. I said, ‘We’re doing this,’ and man, we went fast. We made quick decisions.

As you get bigger, it becomes tougher to make those decisions. It involves more people.

To foster teamwork, I had to be inclusive with all of our management. I had to share more information on a more regular basis. I had to bring people into the decision-making process.

As we got bigger, a problem experienced by one department was coming from another department, and the two never even spoke about it. They didn’t realize that it was happening, or they didn’t realize, in many cases, that if they only knew about it, they could fix that situation very, very easily.

Our corporate management comes in once a month, and we go around a table and talk about what each one’s doing and challenges and opportunities — just general, open-flowing conversation. Anybody can bring up whatever they want.

As you get bigger and you involve all of these people, you are never going to get 100 percent agreement on everything. There’s a new rule that comes into play: ‘We have to make a decision. You may not agree with it 100 percent, but we need 100 percent of your effort behind that decision.’

Having different managers involved just helps you to create a more supportive organization.

Don’t hide your numbers. We’re a privately held company, but we run the company like we’re public.

We give a report as to what our business results are every month. Are we growing? What are our margins like? How’s our profitability?

When we tell them we have to cut expenses, they understand why. If we’re feeling margin pressures, they understand where the margin pressures are coming from. When we tell them we’ve got to get more efficient, we’ve got to figure out ways to increase productivity, they understand it.

It’s much easier to manage a company when they see the numbers.

Shut the revolving door. As you add more departments and more employees, there are more and more issues.

I had a revolving door, and it was one problem walking in the door after the next, looking for me to solve the problems. It got to the point where I had to say to my executive team, ‘Guys, I can’t do this anymore. You guys are overwhelming me. I need you guys to solve your own problems.’

Don’t provide the answers. The worst thing you can do is provide the answers. The problem is, you become a crutch for you employees.

To get bigger, you have to have a management team that can identify and solve problems.

The biggest mistake that I made as an executive was thinking that I was helping my organization by giving them all the answers. What I’m better at doing today is not giving them the answers. What I am better at doing is telling them when they haven’t gotten far enough to the right solution and sending them back and saying, ‘You need to work on that some more.’

It makes them accept ownership. What you want as a CEO is your employees to feel like they’re owners of the business. You want them to manage the company like they’re owners of the business. The more you can make them think like an owner, the better they’re going to be.

HOW TO REACH: Kimco Staffing Services Inc, (949) 752-6996 or www.kimco.com

Sunday, 24 February 2008 19:00

Cross-cultural perspective

Brian Baird developed his global perspective on a basketball court under the Guatemalan sun.

“I was there with a group called Sports Ambassadors,” he says. “I had that experience of living in a cross-cultural situation and learning another language, [so] I understand a little bit about what those struggles can be like.”

Today, as president and CEO of MagnetStreet, a manufacturer of promotional magnets, Baird uses that understanding to reduce turnover among a diverse staff of approximately 160 employees from around the world.

Smart Business spoke with Baird about how to accommodate diversity while developing a fiercely loyal work force.

Q. Why is diversity in the workplace so important?

It becomes more about why handling diversity well is important.

Employees who feel like they are valued and respected are going to be more likely to stay longer, with less turnover. People who are happier and content in the work that they’re doing, they’re going to be more productive, as well.

Q. How do you bring people of diverse backgrounds together?

You need to be able to be sensitive or have someone who’s going to be managing who’s going to be able to be sensitive to some of the different things that they might be dealing with that are totally foreign to us.

When our plant really began to grow and the responsibilities were becoming more than what our current staff was able to handle, we went out and hired a new plant manager. ... We weren’t just looking for someone who could run an efficient operation and get the most out of our space, our equipment and our people. It was important to us that he would want to treat people well.

Q. How do you determine whether a manager will be a good fit in this regard?

It’s asking the questions, ‘Tell us how you would handle coming into a workplace where people are from many different ethnic backgrounds and languages. How do you feel about working with all of these different people?’

It’s sitting and talking with someone and hearing them talk about what they think about people from different backgrounds all working together and how they see that work.

Q. How do you work through language barriers?

We certainly encourage them to work on their English because that is often such a big barrier for them.

Be willing to take a little longer to train someone at the beginning. Spend a little more time checking in with how they’re progressing and encourage them to take on new responsibilities as things come up.

Q. Is it important to create outlets to celebrate cultural differences?

That’s been a really positive thing. We’ve done things for this diverse group like potluck luncheons where people have brought in their own ethnic foods and have shared them with everyone and have told us a little bit more about where they’re from and what this is that we’re eating. ...

Just getting together and hanging out at a picnic and playing soccer together. Those kinds of things can really help in everyone getting to know each other and just being in each other’s company. It helps when it comes to working next to the same person.

Q. What should all CEOs keep in mind as they strive toward diversity?

The biggest thing is trying to be sensitive to the different cultures that are represented by the work force.

Whether it’s books coming out or movies, (try) to learn a little bit more about (their culture.)

I’m there regularly, and I try to talk to each of them and get to know a little bit about them and their background, rather than just knowing their name and what they do at the plant.

Get to know where they’re from, a little bit about their family and the things that they had to live through.

Know what holidays are important to them. Ask them, ‘So what’s that mean? What would you be doing?’ on whatever the holiday is.

If you’re willing to show a little interest in who they are and in where they’ve come from, it goes a long way.

Q. How does having a diverse work force benefit your company?

If they feel like they’re valued and this is a place where they’re respected, it makes for a much better atmosphere and a much better work environment.

This is not about charity. It’s a two-way street. We’re providing a good environment for people and give them an opportunity to get some work experience and to grow and get more responsibilities as time goes by. In turn, we end up with employees who are loyal and care about the company and want to work hard for the company.

It costs a lot less to have an employee that’s going to work for you for five years than it does to have to replace that employee every four or five months.

HOW TO REACH: MagnetStreet, (800) 788-8633 or www.magnetstreet.com

Tuesday, 29 January 2008 19:00

Passion works

Jimi Hendrix often sang of cosmic coincidence, but even he would have been surprised to find that a concert he played in 1969 would ultimately change the strategic direction of Napster. It was at that concert that Chris Gorog, now chairman and CEO of the 139-employee company, saw a performance that defied convention. Hendrix was unique, empowering and made an unforgettable mark by taking enormous risk, Gorog says. More than 35 years later, the CEO has fostered unprecedented growth — from 2004 revenue of $11 million to more than $111 million in 2007 — at the digital music provider by evangelizing some of those same characteristics.

Smart Business spoke with Gorog about how to convey excitement to your employees and how to predict the unique behaviors of customers by examining the market from 30,000 feet.

Share your excitement. I try not to get involved in anything that I’m not almost zealot about. Therefore, it’s not difficult to become very excited and passionate and want to evangelize things.

It’s really being comfortable with sharing your enthusiasm and not trying to be too rigid or formal. It is only effective if it’s coming from a genuine place. If you’re just sort of buoyantly bouncing around through the halls with a ridiculous smile on your face, that’s not going to get you anywhere because that’s not going to be real.

When there are obstacles, when there are challenges, it’s deeply important to really be frank about those. Then you can, over time, establish credibility, so if you’re showing great excitement, people will have the tendency to believe that you may be on to something.

Everyone wants to work in a situation where they feel that they’re doing something special. What they connect with is that they are involved in something special, and they want to excel in their role and really make a contribution to that special goal.

Evaluate the market from 30,000 feet. People entertain themselves on airplanes now with their own personal gadgets. It really is a leading indicator of where consumer behavior is going with technology.

You can take any hardware or software or service, and the first time you’re going to become aware of it, oftentimes, it’s probably gong to be in an airplane.

Airplanes are filled with early adopters, so really pay attention to what they’re doing.

Connect with the customer. It’s being very focused and always thinking about what consumers want to do or what they will want to do and what they will respond to emotionally.

I always start first and foremost as a music fan looking at my own product saying, ‘How do I want this to be better? What is it lacking? How can I make it easier to use?’ Everything flows from that.

It’s being obsessively respectful about the consumer in the first place. A company can become very insular. We’re constantly trying to put ourselves in the position of that first-time user or even that long-time user. How will they react to the product? It’s just really trying to stay in touch with the customer and then just being heroic, obsessing over the product to try to make it better.

Find your superstars. It’s really important to not insulate yourself just with your very senior team. Try to find and understand who the superstars are in the middle level and just spend time with them and get to know them.

One way to do that is, if there are presentations from your senior team, to get those second and third lieutenants in the meetings. Often, they’re deeply involved in the preparation materials and so forth, and you can very quickly form your own opinion. It’s really giving yourself the opportunity to see people in action.

Create an atmosphere of access. Try to do a good amount of one-on-one communication — just sort of the occasional e-mail if there’s something significant that’s happening. Do it in a congenial and somewhat informal way, but at the same time, again, in the electronic age, you have to recognize that everything you send out is there for posterity, so you also have to have some caution about that, as well.

You want to create an atmosphere where people feel that they have access. Otherwise, they feel closed off, and they feel not really part of the engine that’s driving the business.

Filter decisions through the mission.First, I start from a foundation and a belief system about what we’re trying to do, to be extremely clear with myself, with my board and with my employees what the mission and goals are of our product and of our company.

If you’re diligent and disciplined, every decision goes through that filter. If we decide affirmatively to pursue something, is it specifically in line with those goals or are we getting a little off strategy? That’s a very critical filter to start with.

I kind of think about Wilbur and Orville Wright when they’re trying to create the first airplane. If they had too much diversion off of that path, it wouldn’t have happened. You have to be pretty obsessive about that. You have to really believe that man can fly, and you have to pretty much close your ears to everything else.

HOW TO REACH: Napster LLC, (310) 281-5000 or www.napster.com

Tuesday, 29 January 2008 19:00

Talent scout

Half the game is won when you choose your team, says Mark McGough. When he came on as president and CEO of Pentadyne Power Corp. in May 2006, the struggling power systems manufacturer was in desperate need of a few star players.

To find them, McGough first looked for underused talent within the company. He then let his staff vet external prospects through a series of interviews.

“If the candidate is confident enough in their abilities, they’ll welcome the chance to meet those people,” he says. “In the process, I also got the buy-in of the people that were interviewing the new candidate, even though some of them would have liked to have that job.”

Pentadyne now features an all-star lineup of 70 high-energy employees who have led the company from 2006 revenue of $4.2 million to 2007 revenue of $9.8 million.

Smart Business spoke with McGough about how to pick the best players when choosing your team.

Q. How do you find a great team?

I can remember back in the ’80s, you got leaders (who) come in and essentially devastate a management organization in favor of their own insiders.

In a turnaround situation, there’re always (members) of the existing staff that are kind of diamonds in the rough. Maybe they’re in the wrong position. Maybe they just need the right coaching.

When you choose your team, it’s very important that you find people within the existing organization and provide leadership opportunities for those folks.

That sends out an important message to the rest of the staff that this isn’t going to be a private circle of the old colleagues that the new CEO brings in to run the business.

Q. How do you find those diamonds in the rough?

Do this just the same way as if they were external people. Interview them. Look at the resume talent. It’s truly no different than recruiting externally because they’re new to you, and they’ve got talent to offer.

I don’t pay attention to exactly where they are on the organizational chart. It’s not something that you need to look just one layer down. Sometimes, you need to look two and three layers down in the organization to find that underutilized talent that can be a key part of your business going forward.

When you do that, and you’re successful, every person gets the message that if they perform, no matter where they’re at in the organization, there’s a great career opportunity for them through your leadership.

Q. Did you actually interview existing employees to see how and where they will fit within the company?

You have to screen to some extent with your gut because there’s not enough time in a day to go through a highly methodical process to figure out who you want to take a closer look at.

There’s a lot you can learn by talking to the staff. There’s no substitute for one-on-one lunches, private conversations and just getting a sense of who the leaders are within the organization.

You can be in a group setting and find that the folks who contribute the most are the leaders in the organization. You might be startled at what their management role is in the organization.

Sometimes, the best leaders are two or three layers down the organization. Those are kind of the rising stars that I look to identify. They’ve got the high energy; they’re decisive. He or she’s got a commanding presence with the rest of the organization or parts of the organization.

When it seems like those things are true, that’s when I take a closer look. I usually come up with 10 or 12 people that I want to take a closer look at within the organization and pull from that the next generation of leaders for the business.

Q. How do you gauge chemistry with your rising stars?

Look inside yourself. When you’re finished with an interaction with that person, whether it’s a one-on-one meeting or you went to lunch together or you just had a hallway conversation, ask yourself after that’s over, did you enjoy that? Are you looking forward to the next time you’re interacting with that person?

I don’t believe in elaborate testing and personality profiles. I’ve gone though the MMPI [Minnesota Multiphasic Personality Inventory] thing and done the personality tests, but I don’t think you can map out a personality so precisely.

You really have to go with that sense that you get after a few interactions with those people. Is that someone you’re going to enjoy working with? If you’ve got strong reservations, that’s probably a yellow flag.

Q. What is the benefit of focusing on this chemistry?

It’s all measured in results. You get that established, you get a great team in place, and if you’ve chosen them with the right skill sets, they’re going to do a great job producing results for the shareholders and board members that we’re all working for.

HOW TO REACH: Pentadyne Power Corp., (818) 350-0370 or www.pentadyne.com

Tuesday, 29 January 2008 19:00

Sacrificial offering

You can’t cut costs without sacrificing something. For many companies, that something is often quality. Buckling under the pressure of overseas competition, they forego long-standing traditions and standards of excellence just to keep pace.

At Design Molded Plastics Inc., President Jay Honsaker has kept his stride while maintaining the quality of his product by sacrificing something else entirely: inefficiency.

By reducing cost through operational efficiencies, the company has demonstrated resilience to foreign competition while establishing itself as a proactive player in the molding industry.

The process hasn’t been easy though. Honsaker and his team at the family-owned plastic injection molding company have invested heavily in automotive robotics to reduce labor costs, reduce scrap and offer precision repeatability.

Such efforts have certainly paid off, as the company routinely yields results worthy of the investment.

Take the following case study: One of DMP’s customers is a major sports equipment supplier to the NFL, collegiate and high school football teams. In order to gain that business, the injection molder’s challenge was to provide the highest level of quality at the lowest possible cost.

To do so, Honsaker turned to automation. To meet the customer’s demand and produce enough helmet “shells” — the plastic exterior of a football helmet — DMP originally used a conventional production process comprising considerable manual labor that required 12 workers per day and left room for variation and error.

Since that time, Honsaker has purchased two new molding machines that have cleared up floor space while producing a more consistent end product with less waste in a third less overall time with half the labor cost.

Though the above is just one case study, it doesn’t represent a revolutionary departure from DMP’s long-term strategy. The company has actually been investing in automation in its relentless pursuit toward efficiency for approximately 12 years. It’s all part of Honsaker’s global perspective.

The president recognizes the effects that globalization has had in his industry and the world economy in general. To stay competitive, he recommends automation to foster operational efficiency.

If you’re going to sacrifice anything, it may as well be inefficiency.

HOW TO REACH: Design Molded Plastics Inc., (330) 963-4400 or www.designmolded.com