When Mike Hislop’s famous guitarist friend wanted to celebrate one night, Hislop offered to make him a reservation at the restaurant where he was working. The guitarist said that was fine as long as Hislop got him seated in a certain server’s section. He said that the server was teaching him about cabernets, and he didn’t want to upset the man by sitting in another section. The multimillionaire’s loyalty to a restaurant server made an impression on Hislop, and today, as CEO of Corner Bakery Cafe a $200 million fast-casual restaurant chain he seeks to earn that same kind of loyalty.
Smart Business spoke with Hislop about how he finds the right personalities for the job and how to get employees to embrace change.
Hire great people. The way you grow is people. Have the right people. We have the economic model. We have the concept. Now we can be choosy about who we’re going to bring in, in the future.
When you end up losing managers, you usually end up losing employees.
So how do we hire the right managers? When you’re going through the interview and looking at the kind of experience that they’ve had, do they enjoy working with people? It’s real easy to get at the core of an individual in an interview.
You ask them certain questions. Do they have fun? When you’re asking them to describe their personality and style, you can find out real quick. Are they going to come in dressed and ready to go? Are they smiling? They go through three of those interviews. They start with the assistant manager, move to the manager and then get to the general manager. By then you have a real good idea, and you can tell them a lot about what the expectations are.
Empower managers to hire good people. We have the best manuals and training programs, but you really need to have that personality, starting with management to make sure they’re going to hire the right people. Once you get a person who can smile and really does honestly care about people, it’s real easy to train them.
When you get the right personality it really meshes together. You will see the sales grow.
We’re training our managers exactly what to look for not just questionnaires. We’re looking for personalities. When they come in, do they naturally smile? Do they naturally have that caring attitude that we have? We talk to them about building relationships how are you going to be able to build those relationships?
If someone is coming back every day, how do they like their coffee? Trying to remember their names. People love to be recognized when they come in. When they build the relationships, they’re going to come back more often, and that’s what drives the economic model and allows everyone to make money and grow together within the culture.
Embrace change. It’s making sure you have a culture around and that senior management realizes that, ‘Hey, part of our culture is we’re going to evolve this brand and make sure that we’re going to be on top of research to make that happen every year.’
Go out and talk to your people. If you have a culture that’s been doing it the same way forever, and maybe it’s been good and maybe it’s been OK, you’ve got to go out and just meet with them. Start with your senior management and get buy-in that, ‘Hey, this is how we’ve been doing it, and I think these are some changes.’
You have to be a good listener. As a leader, go out and ask the tough questions, and then really listen to the answers. Some of the people, you’d think they would be afraid to talk to the CEO they’re not afraid to talk to you at all.
Encourage new ideas. Create a culture where people aren’t afraid to speak up respectively and then leave that meeting and all be on the same page. Create an atmosphere where people aren’t afraid to ask questions.
Say, ‘That is a great question, and I don’t know why we do it that way. Maybe we can do it a little bit better.’ There’s nothing worse than being ‘yes’-ed in a middle of a meeting. Some leaders might like that, but I definitely do not. I don’t think you can be successful unless you can create an environment where people aren’t afraid to speak up and let you know some of their ideas.
Be ready to try a few things. You can’t say, ‘This is it.’ You have to go out there and test out some new ideas. You want your leaders, whether it’s general managers or corporate support, to be thinking of ways to make this brand better and knowing if they get a good idea that it’ll be something that we go out and try.
When I was at Il Fornaio [which acquired Corner Bakery in 2005], we had a couple of guys who thought the bar needed some change. The older people said no, but we ended up putting in a whole new bar, and the bar’s doing about 40 percent sales versus about 25. We go back to that guy and said, ‘You nailed it on this one. It was a brilliant idea.’
HOW TO REACH: Corner Bakery Cafe, (800) 309-4642 or www.cornerbakerycafe.com
In the early part of the decade, the senior leaders at Novelis Corp. weren’t occupied with brainstorming creative approaches to manufacturing in their aluminum rolled products and aluminum can recycling business. Instead, they were focused on environmental, health and safety initiatives, and continuous improvement based on lean Six Sigma. Despite this focus on other initiatives, one of their other focal points — value-based management — gave them a reason to spend more time brainstorming creativity in their manufacturing processes.
Without any best practices in place, Novelis had the opportunity to address and correct the problems that prevented innovation. Among the issues was not knowing who was responsible for innovation beyond the research and development and marketing departments. It also lacked structure for collecting ideas and a reward system for the ideas it did find. Novelis also didn’t have a review process for ideas or any resources to go to.
To tackle these issues, the company developed an innovation council. The council, which meets quarterly, consisted of the president/chief operating officer, business group presidents and designees, and leaders in corporate marketing, research and technology, and business planning.
Michael Thomas, director of global technology and R&D, and Roy Stever, vice president, global strategic marketing, then became the architects of an innovative management and execution system that could input data, capture information, update action plans, communicate and measure progress on projects, and review ideas. This new system, which was implemented by Novelis North America President Kevin Greenawalt, has helped keep everyone internally engaged and up to date. Additionally, a year ago, it launched a center designed to specifically promote creativity throughout the organization.
On top of these new programs, Novelis has clearly defined that each of its nearly 13,000 employees is responsible for innovation. Leadership has created a formal recognition process for creativity by adding an innovation category to its annual awards program.
With formal programs and processes now in place, Novelis continues to strive for more innovative approaches to operating. With ongoing communication and a constant focus, this $9.8 billion company is sure to reach even higher heights in the years to come.
HOW TO REACH: Novelis Corp., www.novelis.com or (440) 423-6600
When Greg Boyd’s ERGEnterprise Resource Group merged with MIS Group in 2006, he became president of the rapidly growing combined group, going from 55 employees to 163. With that kind of growth, it’s easy to become overwhelmed and frustrated, but Boyd has successfully managed the growth at the $17 million software and information technology services provider.
Smart Business spoke with Boyd about how he uses communication to eliminate surprises and how he gets buyin at a company in flux.
Q: How do you successfully lead changes in an organization?
Change really revolves around people, process and technology. It’s setting the right expectations. Set the communication in place so everybody is on the same page to understand that. As long as they know what’s coming without surprises, I think you can manage change a lot better. It’s the surprises that people don’t like.
Some things happen that are unexpected, and obviously, you can’t control everything, but try to set those expectations as far ahead of time as you can, and prepare people that these things are happening. In our case, we did four acquisitions last year, so it’s a matter of communicating with the organization, ‘Look, these things are happening.
These things are going to happen in the future. It’s part of who we are as a company. It’s part of our growth strategy that there will be acquisitions, so that means there will be new people coming and there will be processes that are changing as a result of that.’
There’s always some chaos involved with change, so setting that expectation upfront is critical so that people aren’t just blind-sided by what’s going on. If you weren’t sharing those things ahead of time, then all of a sudden, out of the blue, you come in and say, ‘We just picked up 100 more people, and this is what’s going to happen to your job tomorrow.’ That catches people more off guard than being able to say, ‘This is coming; this is what’s happening.’ You can kind of be prepared for it, attitudewise, to deal with it.
Q: You mentioned that processes change, as well. How do you deal with those changes?
Each year, it’s like you’re a new company. That can frustrate people that aren’t expecting that, but when you’re an organization of 10 versus an organization of 50 versus an organization of 200, there’s just different systems and different processes that have to be in place to accommodate scaling an organization to the next level.
Sometimes, those things are almost harder because people are like, ‘This is how I do my job; this is how the system works,’ but when you have system changes going on continually to support the efforts and methodologies of the companies, those are hard things. All these changes are happening, and it’s affecting everyone, and trying to keep the airplane flying with the wings on fire. You’re trying to change the wings but keep the plane in the air so it doesn’t crash.
Q: How do you get buy-in for those changes and make sure people really understand them?
Communicate calmly and often. Communication and expectations are two big things to be focused on. It’s just setting the expectations so they know what’s coming, and if you’re going to miss deadlines or dates, make sure you communicate those so people at least have an idea what’s going on.
One of the things we started working on is, what are the top three things we should be working on? That starts at the top and works all the way through the organization, so everyone can stay focused on those things. Sometimes those priorities change depending on the direction we’re going. Sometimes crises do come up, and you have to change those priorities in the process.
There has to be communication all the way down to the employee level on a regular basis. Coaching is a big part of that and having metrics for everybody and objectives so they know what to expect How am I being measured on my performance, and how am I performing? And being able to talk about those things on a regular basis.
That’s the time when you’re having those discussions and you’re talking about the vision, and how does what I’m doing as an employee really impact the vision overall and this is what my contribution is to the organization. Once they make that tie-in, it goes from just being ‘in one ear, out the other’ to, ‘I’m really making a difference in the company.’
Ultimately, it gets down to communicating those things and having that collaboration and dialogue all the way down to the team level so people know their expectations and, ‘Have I met those expectations, what are my future expectations going to be, and how am I making a difference in the company?’
HOW TO REACH: MIS Group, www.misgroupusa.com (800) 454-0993
Even with 330,000 customers, Christopher Faulkner doesn’t rely on an assistant to answer his e-mails he still answers them himself. With the rapid growth of C I Host revenue grew from nearly $78 million in 2005 to $92.5 million in 2006 the founder, chairman, president and CEO of C I Host focuses on changing his business to keep up with his customers’ needs.
Smart Business spoke with Faulkner about how to keep the roller coaster that is your business from nose-diving straight to the bottom of the hill.
Q: How do you know when it’s time to make changes at a growing company?
Look for any flattened sales or any growth percentage that slows down or plateaus. It’s the roller-coaster effect you get to the top of the hill and the car starts going down; that’s too late to start change. That’s already going straight to the bottom. Be able to forecast while you’re going up the hill, before you get to the top, what is that time frame looking like, and what else can we do.
Figure out in your plan where that hill continues to increase and where you think it’s going to plateau, so always be looking for complementary services that you can bring to your portfolio that make sense for your particular segment of customer.
Drill down into your base and find out what else they need and what else drives them. Most customers, if you have a provider already selling you goods or services, nine times out of 10, they would love to buy more from you because they already have an ongoing relationship.
Q: How do you embrace change?
Realize that what you did last year or five years ago isn’t necessarily what you’re going to do today or tomorrow. Every good business model has to change multiple times along the way if you’re going to be in business any length of time.
Some have a great idea and launch a product, and it takes people by storm for the first five years, but at some point that’s going to age and come to end of life. I would be hard-pressed to find any industry where a company has been successful for five to 10 years and hasn’t changed their model at all.
Q: How do you connect with customers?
My customers are the ones paying my salary and keeping the doors open. If we didn’t have them, we wouldn’t be in business, so they’re it. They’re the ones I have to bow down to.
Every week, we have two things going on. One is my CEO chat. I log into a chat room and customers, press people, prospects can chat with me. The other is every day; every employee is required to make 10 calls to customers. Every day 2,500 [customers] get a call out of the blue to say, ‘Are you happy? We’re just calling to say thanks, and if you have feedback, we’d like to hear it,’ and they’re floored. That is the holy grail of the business.
As CEOs, there shouldn’t be an ivory tower behind a closed door. If customers call, take their call and speak with them. It’s the most frustrating thing a person can do to have an issue with your company and call, and you say, ‘Take a message’ and not return their call or e-mail. It’s a slap in the face.
That’s the biggest factor that a customer will leave a company over, if the executives are too busy to take care of them. It leaves you with such a bad taste in your mouth, and for months, that person is going to be mad and tell 100 people how bad you are versus telling one or two how great you are.
Q: How do you best serve customers?
Everything you do in the business, every idea that you’ve got and every decision that you make you have to apply that thought pattern to, ‘Would the customer want this, and is this in the best interest of the customer?’ A lot of times you find yourself saying no.
A lot of times CEOs say, ‘Well, whatever,’ or, Too bad I’ve got to cut costs,’ and you lose sight of what the customer wants. The customer either gets what he wants, or he goes down the road to someone else. You serve the customer, or someone else will.
For example, should I buy the $200,000 router or the $50,000 router that’s going to cause outages? Most would say the $50,000, but is the cheaper one in the best interest for the customer? No. That’s the litmus test that I use.
It’s a very easy application but not the easy decision to make. You might see short-term profit because you cut costs, but, at the end of the day, if service starts sliding and customers start leaving, that profit quickly turns into a loss. It’s big-picture mentality.
HOW TO REACH: C I Host, (817) 868-9931 or www.cihost.com
Mark Tuchmann measures success by the happiness of his customers, his team and their spouses. As founder and CEO of BeavEx Inc., a $110 million courier service operating in 30 states and Washington, D.C., Tuchmann knows that success depends on his team getting everything perfect every time, and because customers rely on his team getting things to them quickly and safely, Tuchmann ensures that happens by hiring the best people and keeping them around. Smart Business spoke with Tuchmann about how to be a shepherd.
Be a shepherd. It’s all about the people. If you treat people with respect and let them build themselves and everything out, you get a lot more out of them instead of coming down with the hard stick and whacking them to get them to do things.
One person said to me, ‘You can be a shepherd or a sheepherder.’ The shepherd holds out his stick and people follow. The sheepherder goes and whacks them and pushes them along.
I’ve always tried to be the leader and have people look at me and really want to do it, not that they have to do it. They see the energy that I try to portray or do, and it’s really easy for them to get on board to that.
Trust people. You can’t do it all yourself. Most entrepreneurs start their own business, and they strangle it and never give it a chance to grow because they feel like they can’t trust anyone else. Let go. Trust.
You definitely have to surround yourself with some really good people that have that same vision, but it’s hard. I don’t think I have enough hands to count how many times I’ve been burned, but the opposite of that is our company has grown from $100,000 in sales in 1989, and we’ll probably do $135 [million] or $140 million in sales this year, so obviously, there’s a lot more positives that came out of that than negatives.
You have to trust your people and give them the authority and the leeway, and before that, you have to find the right people. And you’ll never know that until they’re either producing or they’re not.
Hire good people. It really comes down to intuition. I’m looking for someone who can multitask, and they don’t take themselves too seriously. They have a good sense of humor, and you can tell that they have a good common sense.
You look at the degrees and at all the other things they may look at in HR, and I kind of discount that. I would take a guy who went to a community college who has common sense, a good heart and a fun-loving attitude over a Dartmouth or Yale grad.
We give them a personality test, and it’s uncanny how many times that it’s right on. Tools like that really steer us in the right direction.
It’s really just, how’s that person going to operate in the real environment? My gut can, maybe seven out of 10, get it right. I don’t think anyone out there can get 10 out of 10, but it’s like a batting average if you can hit .300, you’re doing good, and that’s only hitting three out of 10.
Retain employees with positive reinforcement. People need to feel good about themselves and their place in the company. If they feel like they’re part of it and the growth and success of the company, that’s more important than money. That’s probably the No. 1 thing.
They need to look at the senior management and align with that whole process. If they don’t respect and think that the senior people are doing things right, then they’re more apt to get disgruntled, and then you have a bad situation on your hands. It all flows from the top down. The top has got to mirror the bottom, and that’s not always the case.
Give them the opportunity to succeed. It’s really hard, as the company grows, to keep everybody happy about where they’re going in the company and what they’re doing. They need the positive reinforcement, and in that fast-paced environment, managers aren’t given that. When they’re not given that, then people don’t think they’re appreciated, and when people don’t feel appreciated, then all the rest of the things start happening.
Just keep bringing it to the front of their mind this is important that you’re on time, you did this, you did that, but don’t forget the people that made that all happen.
Don’t be afraid to fire people. If someone hasn’t worked out, you owe it to them and to yourself to cut the cord. That’s the hard part, so if I have to fire somebody it’s really bad.
I usually give everybody the benefit of the doubt, and if they’re not making it in that position, I’m looking for something else for them to do. The last resort is letting somebody go.
Sometimes I use the analogy of a boyfriend and a girlfriend you know it’s not going to work, but you feel bad, and you don’t want to hurt someone’s feelings, and sometimes you drag it on too long. Every situation has a different time length. You really have to look at it, and look at that person’s abilities, what they can do, their personality and all the rest.
It’s like the three-strike rule, where you can coach and teach them, but if they’re at two strikes and they haven’t got it, they’re probably not going to get it. Give people the two chances, and if they can’t get it, then you want to cut the cord.
That’s a lot easier said than done. You try to rationalize it, and you look at it and go, ‘Well, we were going through this and this, and this person wouldn’t have done this if they knew enough,’ and you go around and around about that. People have to make decisions and act right then. It’s hard because people like to think about things and they want to analyze it. In our business, that analysis equals paralysis. You’ve got to look at the situation and make a decision. Good, bad, indifferent make the decision.
HOW TO REACH: BeavEx Inc., (800) 403-7738 or www.beavex.com
When Iain MacKenzie started at SMART Modular Technologies in 1997, he didn’t exactly get warm, fuzzy vibes from many of his colleagues. The company, which manufactures computer memory and liquid crystal display solutions, was successful, but its leadership regularly threw words at each other, swearing and yelling for all to hear.
“You did that wrong!”
These outbursts happened inside and outside the boardroom, and nobody cared who heard.
“It was ruthless, and as much as that feedback would happen immediately and openly, no matter whom was hearing, it would happen in front of my direct reports, so it was undermining the authority, and it’s a little bit belittling,” MacKenzie says.
As a Scotsman, MacKenzie came from an old-school background of respect and courtesy, so when he got the reins as president in 2002 and then also CEO in 2005, he knew he needed to change the culture and eliminate the dictatorship strategy if SMART Modular was going to succeed as it expanded globally.
“In a start-up environment when there’s no culture, no standard and there’s one person as the old hub in the middle of the spokes of wheels, you can be very successful in directing the traffic,” MacKenzie says. “When that runs out of steam, a global operation and a global business with multiple connections needs to live and sleep and breathe on its own.”
If MacKenzie was going to dismantle the company’s ruthless, centralized command structure and create an independent structure that would be more efficient in today’s market, then he was going to need a new team, a new vision and a new culture.
Creating a team
MacKenzie needed to get himself out of the hub of the operations, getting people to focus their attention outward rather than inward. He didn’t want everyone coming to him for answers, so he needed to push decision-making down through the organization, but that requires a team you can trust.
“The first thing is to find the people and set the guidelines,” he says.
He started by looking for people who can brainstorm, problem solve, communicate, and are trusted and respected. He also looks at how someone performs in a bad situation and if they solicit multiple inputs instead of relying on one person’s opinions.
“It’s a lot of questioning of how do you do that? How do you behave?” MacKenzie says. “It’s not asking what have you done and why were you successful. It’s more saying what would you do in these circumstances and how do you deal with these situations.”
He says the key is taking your time and not hiring too fast. Once you have the right people in place, then you can start setting guidelines and expectations for how they should perform.
MacKenzie emphasizes their decision-making authority to make sure his reports are clear on what they need to be doing.
“You have the ability to make any decision you like, but you just need to stand by that decision upon measurement,” he says. “Typically, because of time differences [SMART has 11 locations across the globe], you cannot ask me on a daily basis. The worst thing to do is to not make the decision, so you have to make the local decision.
“You know your rules, and you have the lead. You have the A-plus. You have the job. You have my trust and respect it’s yours to lose. That puts a huge ownership and responsibility and accountability onto the person on the other side.”
Setting and selling a vision
MacKenzie needed a new vision for the company that would serve as the guiding principles for all the managers. The key to creating a vision that everyone can get excited about is getting everyone involved.
He shows his team the goals they should hit based on growth expectations and asks them to brainstorm ways to achieve those numbers. They then research those ideas and ultimately choose the top 10 ways to get there, including how everyone will be rewarded.
“It’s almost like an acquisition you think about the amount of work people put into acquisitions and diligence and what’s the direction and the market, what’s the IP, what’s the differentiator, why would you be successful, and what price point could you sell that at,” MacKenzie says.
The goals are reviewed and tweaked each quarter, but the larger goals guide daily decisions.
“It’s pushing and jiving on a daily basis,” MacKenzie says. “In any one week, I’ll say, ‘This is the goal; does that help us get there, or is it inconsequential?’ It’s just constant focus, and every manager making that decision on, ‘Is this helping us get to our goal, or is this noise, or do I need that?’ That assessment just keeps it driven.”
It’s also important to welcome feedback from employees about decisions and progress.
“You want to be clear and clinically clean on your goals, but you want to keep listening and be careful because a dictatorship does-n’t welcome input,” MacKenzie says. “When the style is all trust, respect, soft empowerment, open door ... that sets it open to get the feedback ‘I thought you said this, but it doesn’t look like we’re going that direction,’ so there are tentacles out there to get the communication to come back.
“If someone can get on board and believe that where you’re painting the picture of where you want to go is a good thing, and we believe that’s success, then watch everyone get aligned. You don’t have to define the road to within 2 inches. You define, ‘We’ll go northeast. It’s on the hill over there. Let’s go.’ You don’t have to control the exact how you do something. You don’t have to say, ‘Don’t make that step to the side; make that step forward.’ If you don’t focus on the little pieces, the people know that they can do the little pieces on their own.”
Despite your best efforts, some will still resist, and MacKenzie says you have to set parameters for changes and address people who aren’t working within them.
“If there are real negative influences, you draw it to their attention, you ask for repair,” he says. “If that can’t fix it, then you need to agree to part.”
MacKenzie says you can’t wait forever for people to get on board. Someone may have a ton of great attributes, but if they can’t improve the things that are holding them and the team back, and it’s been more than a year, then you have to remove them.
“If the goal is for 10 people to run a 400-yard relay, and the team who wins is the team that gets all 10 across the line, what happens if one person dawdles and says, ‘I don’t care if we win or not.’” MacKenzie says. “The other nine can work as hard as they like, but if that one person doesn’t run, they lose the game.
“It’s so disappointing for the nine who ran that whole race in 10 seconds, and one person is wandering along eating a banana and says, ‘I don’t care.’ How would you get the nine people to run the next race without taking the one person out and saying, ‘Look, you’re not part of the race; I’m going to replace you.’ So for the good of the nine, you have to move forward.”
Building a new culture
MacKenzie wanted to get rid of the old oppressive environment and create a culture where people were excited to come to work every day.
“We must be successful, we must meet the business goals that’s the business piece,” MacKenzie says. “We must communicate and be open and have a style ... and get everyone on board, but there must be a reason not to wake up in the morning and go, ‘Ugh, I just don’t want to go to work.”
MacKenzie put in pool tables, ping pong tables and dart boards for people to use, and one day he bought 60 pizzas and let employees challenge him in table tennis. Having an environment that promotes fun helps people feel excited to achieve goals.
“You don’t have to pay as much attention to the smaller items,” MacKenzie says. “It makes people more motivated to succeed and less sidetracked to whine and moan to each other in the corridor. More of the engagement will be about what we need to do and what we need to fix as opposed to misery loves company and isn’t this terrible ... It focuses people better toward the goals and keeps them on track.”
As part of fixing the overall cultural tone, MacKenzie also evaluates people not just on completing their tasks but also their attitude.
“It has to be measured,” MacKenzie says. “It’s a very strange thing to give a goal to say, ‘OK, your goal is you must have fun,’ and it’s difficult to say, ‘You must smile today,’ but it cannot be HR’s responsibility. It has to be something that you want to create and is enjoyable.”
You must reward people based on those expectations in order for them to be effective.
“The management team first of all has to agree that they’re going to concentrate on it, and it’s going to be part of the measurement system,” MacKenzie says. “Where all of it fails is if you pay 100 percent of your reward for meeting the goal. ‘The goal was 10; you made 10. You get 100 percent, but, by the way, I didn’t like how you did this.’ That will fail.
“You met the job. You got a 10. That was excellent. You now have a score of seven because you messed up those people because you’ve given them no respect, no regard and you were a grump. That’s more important, so you’ve got to set it, as a management system, something that’s meaningful, and it has to be rewarded upon.”
You also need to take the time to show employees that you really care about them. You can take all the time hiring, creating a plan and getting buy-in, but if you don’t build relationships with employees, it’s hard to succeed.
“The relationship is deep, and relationships and motivation and the fun and the engagement and knowledge of people is important,” MacKenzie says. “I’m interested in people. It’s getting all the aspects of being a friend, a confidant, a decision-maker it’s that fairness measure that really gives us a base of trust and respect that they can do a good job.”
MacKenzie requires his managers to report to him what’s going on with people.
“My managers are programmed I must know about births, deaths, marriages, affairs, new houses, new cars ... It’s important,” MacKenzie says. “I get irked if someone has had an illness or something major in their life, and I don’t know about it. It’s not a pretend management style, I physically feel irked, and I reach out to that person.”
When one employee was battling tongue cancer, MacKenzie’s team continuously phoned him and checked on his family. He recently received a letter from the man thanking him for his support.
It’s all part of the new culture that will help the company become a more efficient global organization.
MacKenzie says if he hadn’t created a better culture at SMART, not only would his managers probably have had heart attacks, but he would not have been able to grow SMART’s net sales to $707.4 million in fiscal 2006, a 16 percent increase from fiscal 2005, and the company is projecting at least $823 million for fiscal 2007.
“It was fairly aggressive, fairly dictatorial, fairly centralized decision-making management when I took over, and I think now it would be measured as each person has to pull their own weight,” MacKenzie says. “They have the responsibility to do the job. They know they have an ear. We can change direction, and it is trusted and respected.”
HOW TO REACH: SMART Modular Technologies, (510) 623-1231 or www.smartmodular.com
A potential client asked Stan Levenson to make his company look so good that it would have a waiting list of people who wanted to work at it. But when Levenson talked to current and former employees, he found the business ran like a sweatshop. The potential client told Levenson that it was only his job to make the man look good, but instead of simply following through on the man’s demands, Levenson told that potential client to clean up the company internally before Levenson could promote it externally. Levenson is CEO of Levenson & Brinker Public Relations, one of three marketing services companies comprising The Levenson Group of Cos., which he co-founded with his wife, Barbara, and it is his dedication to doing things the right way that has helped the couple grow the group to $100 million in billings last year. Smart Business spoke with Levenson about following your instincts and the importance of a positive attitude.
Trust your instincts when hiring. Your instincts are important. When you meet someone, you either are turned off and they don’t have to get into their philosophy it’s an emotionalism that you feel good about somebody or you keep them at a distance because you’re not sure of where they’re coming from.
It’s important to listen and hear their attitudes and reflect certain character, personality not unlike a shrink who does a diagnosis before giving a remedy or a doctor conducting an examination before prescribing a medication.
Focus on benefits, not attributes. When a new employee interviews, rather than telling him how fortunate he’ll be to join us because we’re this, this and this, I’d much rather share with him what some of our folks have accomplished for themselves professionally and personally by being in our family.
The same with products that our clients might have. No longer do we focus on the attributes of the product as it relates to the ingredients. We talk about the benefits that those products and services will instill in the users and consumers.
You see that so often in cosmetics and soap you don’t care about the ingredients in a bar of soap, but you hear how good it will make you feel and the lovely lifestyle you will have and how confidence-building it will be, so we like to focus on benefits.
Hire prepared people. I love to hear someone with a real positive attitude, enthusiastic and also one that does their homework.
To give you an example, for individuals looking for their first entry-level position, if one comes in and says, ‘I want this job so bad. I’ve heard of you all, and I’m wanting to liberate myself from my folks, have my own apartment, have my own car,’ I understand where they’re coming from because we all relate to that, but that person is one scenario.
Another person comes in and says, ‘Mr. Levenson, you’re the kind of company where I think I can really contribute to your success. I read where you worked on this account and how you did this and how come you didn’t do this when their competitor is doing this? I think I can attract new business and strengthen your services.’
Again, benefits selling. I look for that attitude, enthusiasm and preparation. It’s easy to get enthusiastic and just throw out ideas, but today, you have to be very well-informed.
If someone hasn’t done their homework about who we are and who we serve, then it’s incomplete. Every company has its criteria. Some do testing, and that’s all important, but overall attitude and enthusiasm and a caring attitude is so important.
See other points of view. There is more than one way to view a situation. The more informed you are, the sharper your focus becomes. We all wear different lenses in our glasses, and one person may perceive a situation to be one thing and another person another thing.
It’s not so much trusting your folks, but it’s having the confidence in them that they command. They may make a decision that you don’t agree with, but if you can understand their rationale for making it, you can respect it unless that rationale is flawed.
Create balance. When you’re consumed in your work, you can be more productive and successful with balance than just keep grinding, so you need to call time out and on a daily basis have some interest in being with family and not getting into your work.
It really too depends on your work and the type of work you do. We do a lot of retail work for clients, like Zale Corp., so if we’re out on a weekend going to a movie at the mall, and if we see a jewelry store, we’ll always check it out, even if it’s a weekend and leisure.
Your passion for work can be healthy, but certainly, wherever possible, it should be managed.
Understand your clients. It’s important to understand the needs and interests of your clients and what they want to accomplish.
We do a lot of role playing. We anticipate needs and interests of our clients. We dramatize and demonstrate leadership, so if they say, ‘Here’s what we want you to do,’ we want to go way beyond faithfully executing their requests. We want to say, ‘What about this, or let’s think about this.’
Say thanks. The interest in nurturing your folks and being a coach as well as a cheerleader is something we believe in.
Recognition and incentives are an important element to a successful culture. I also think encouragement and extending appreciation for good work we always appreciate someone saying, ‘Nice job,’ or sending a note and saying, ‘We’re really proud of you for what you’ve accomplished.’
We like to do that, and it gives us great pride to applaud the success of our people because it’s the company’s success, but it’s also a stimulant for their own growth and fulfillment.
HOW TO REACH: The Levenson Group of Cos., (214) 932-6000 or www.levensonandhill.com
When Tom Crawford took over as president and CEO of Crawford & Co. in 2004, he was the fourth CEO in six years.
“That in itself is very destructive to the stability and the communications and visions of a company,” Crawford says. “You cannot change leadership at the top that many times in that short period of time and expect a company to move forward.”
Crawford & Co., which provides claims management solutions to insurance companies and self-insured entities, had previously excelled at investing in people but that focus had dissipated, and its training institute had been disbanded. Without the proper training, quality levels had slipped, so where it once was a quality leader, it now lagged behind.
Seeing the state of the company, Crawford could read the thoughts rolling through every employee’s mind.
“Realizing there had been such a turnover at the top of the organization, no matter what my background had been or successes had been, I’ve got a group of people looking at me wondering, ‘Well, how long is this person going to be here, and why should we pay attention to him?’” says Crawford, who is not related to the Crawford & Co. founding family.
He realized if he wanted to get the company moving forward again, he needed to refocus on its people, but he couldn’t just make changes and expect the employees to blindly follow him. So he committed to improving one of the most basic business fundamentals out there communication.
“The value of communication as you make change is far more important than any one thing you’re doing,” Crawford says. “Certainly, visions and objectives are important, but for them to be effective, you have to communicate them, and you have to explain them, and you have to get, to the best degree you can, buy-in. It’s that important, and I think it’s fundamental for a successful CEO.”
Crawford says it’s fundamental because management and employees can’t work together if they don’t know what the other is thinking.
“Over a period of time, I think you will fail,” Crawford says. “In today’s world, where there is a distance that has been built over the years, I think on average in businesses in our country, there is a disconnect between leadership and the associate. The companies that have (communication) are winning. The companies that don’t have it may win for a short period of time, but I do not think that sustainability of bringing your vision and your objectives to life in a company will ever materialize long term.”
Crawford began his career as a clerk in a hardware store. It was there that he first observed that people in the lower ranks were a lot smarter than management gave them credit for.
“They have vast amounts of knowledge of what’s wrong, and when things are wrong, they have a good knowledge of what it is,” he says. “They touch our clients and customers every day. Leadership does not.”
Crawford wanted to tap into that knowledge base so he instituted Friday morning breakfasts every other week with 10 associates from the field who weren’t managers. He flew them into headquarters and met with them to ask if the company was doing what it said, what they saw changing, how they thought communication was and other topics.
Following the breakfasts, the employees would have their picture taken and be sent back to their respective locations with an additional title ambassador of the company.
“What the people say carries incredible weight of how this company or any other company is viewed on the street,” Crawford says. “My voice gets to a few, but their voices get to hundreds of thousands of people, so the more they believe in their company, the better off we are.”
He also conducted town-hall meetings every quarter and gave employees the opportunity to ask about 10 to 12 questions from the floor at each one. Those questions aren’t pre-screened they come just as people think them up at the meeting.
“That builds credibility over a period of time because there are some really tough questions that come out when you open it up to the floor,” Crawford says.
He also visited offices, and whenever he did, he’d have a short meeting with all the employees to give them yet more chances to ask questions.
“That pays great dividends in strengthening our communications and letting people get things off their chest that they drive home wondering about,” Crawford says. “They get the CEO standing in front of them, and all I ever ask is, ‘Ask the question in a professional manner, and you’re going to get a professional answer.’ If I don’t have the answer, we’ll get it for you as long as it’s something I can communicate within the SEC [Securities and Exchange Commission] bounds.”
Additionally, he started monthly management control meetings with all of his direct reports. It’s an 8 a.m. to 5 p.m. meeting, and each report gets 45 minutes to update him. Each person can bring a guest too, so this allows employees to see the inner workings of management. At the conclusion of these meetings, the managers take that information back to their people and communicate it down the ranks.
The breakfasts with his employees then let him know just how effective these communication efforts are.
“It’s interesting when you call 10 people into the room every other Friday that are below the management level, and if you listen, you’re going to know if that message is getting out in the field,” Crawford says.
Lastly, he started holding managers accountable for their communication with employees via performance evaluations. When he started, between 600 and 700 employee performance reviews were late, and now that number is just 16. If employees don’t know where they stand, they can’t improve and move to the next level, so the business can’t move to the next level.
“Those things are just fundamentals in my eyes, but when you walk into a company where they don’t have things like that, it becomes not just a business fundamental, it becomes crucial to turning something around,” Crawford says.
Surveying the staff
Throughout his career, Crawford has seen how helpful employee surveys can be to gauging the company’s progress and promoting open communication.
“You’ve got to establish benchmarks when you get into a company, and that’s one of the biggest benchmarks I’ve been working from is our own employees’ evaluation,” he says.
He instituted a 25-question survey where employees ranked each question on a scale of one to five. The back was blank for them to write any comments or concerns on, as well.
“There are two things people say on a survey,” Crawford says. “They say, ‘If I say what I really think, they’ll get me,’ or No. 2, ‘We’ll say what we think, but they won’t do anything about it.’
“Those are the two things that you have to convince people of that it’s anonymous and you never allow it to be anything other than that. If you do, it’s worthless to do. It’s death to your program.”
To prove these things to people, he took their responses and went back to them as a group.
“You must respond with their results, as they state them, and what you’re doing about them,” Crawford says. “If you don’t do those things, don’t do the survey.”
It’s also important to share not just the areas that scored well, but also those that aren’t doing well. Honesty will help people buy in to what you’re trying to do, and continuously tracking and showing people the feedback helps others understand the state of the company.
“We measure everything in graphical form,” Crawford says. “I’m convinced, as a person that’s come up through the ranks, that when they showed me graphs, if the line was going up or down, I knew we had a problem. I think people can identify with measurements when you paint that picture of the key measurements of the company.”
Since that first survey, the company has done three more, and Crawford is listening to what people say. When people said that one personal day wasn’t enough, they increased it to two, and now employees have three.
“You don’t change it all at one time, but it’s touchable,” Crawford says.
While some things are implemented and transitioned to gradually, surveys also help reveal more serious problems that require more immediate action. When several people from one department wrote in that their supervisor had treated them dis-respectfully, Crawford and his team looked into it. They found that this person had indeed been mistreating the employees, so he removed the person from the job.
“That’s dramatic,” Crawford says. “That doesn’t happen often, but you have to react if someone takes the time. If you have a 50-person unit and 30 of them write comments very negative about who’s leading them, then you have got a problem.
“It also lets the management know that we’re very serious about doing what we say don’t be out there operating in the culture you established, which is outside the culture that we have.”
While the thought of figuring out a survey system may seem overwhelming, Crawford says it’s quite easy to do, but instead of talking about it, you have to just plunge forward and do it.
“Put it in place,” he says. “There are a lot of companies you can hire that will do the survey for you electronically. It’s not hard to do it, but be serious about it. Don’t say it, and then not give them the feedback.”
Only half of Crawford’s employees responded to the first survey, and one question that asked if they would recommend someone else to work at the company scored below a three. Now 82 percent of employees complete the survey and every score has improved. That same question now scores above a four, on average.
These survey results tell Crawford that he’s on the right track, but he cautions that it’s also important that once you choose what to measure, that you stick to it and not change those measurements or how you define the measurements, otherwise you’ll not be able to accurately gauge how the company is performing.
While the surveys have revealed that communication and employee satisfaction are up, the numbers also say Crawford & Co. is moving in the right direction. Since 2004, total revenue has increased nearly 11 percent to $900.4 million last year.
As Crawford & Co. continues to rebuild its employee initiatives, Crawford will continue striving to bridge the communication gap between employees and managers, and in doing so, he knows the business as a whole will improve.
“I do what I think has to be done, and I thought clearly the culture of communications and building connectivity between associates and the leadership was vitally important to this company,” Crawford says. “That’s a judgment you make as a leader. We started acting upon it, and we were right. You have to know when you’re doing a right thing. When you believe you are doing the right thing, you have to go for it. Communication to every level of the company is the right thing to do.”
HOW TO REACH: Crawford & Co., (800) 241-2541 or www.crawfordandcompany.com
When the 2002 Olympic committee approached Jani-King International Inc. and asked it to bid on the cleaning job for the games, President Jerry Crawford knew that it was a job meant for his firm. The cleaning franchise company with 700 corporate employees and tens of thousands who work for his franchisees won the bid for the Salt Lake City games and produced outstanding results. Crawford has hired passionate people who take pride in their work, and the Olympic committee was so impressed with the results that it sent him a letter saying it had never had any company clean as well as Jani-King. Smart Business spoke with Crawford about how he hires and why hiring someone with a little bit of an ego can be a good thing.
Take your time hiring. There’s good people out there; we just have to not be lax in finding them.
We have to do our due diligence and take the steps internally to recruit and train better people. Some people get busy, so they’re just anxious to get someone hired and fill the void, but we can’t do that. We have to make sure we find the right person that we feel the best about, that will take on this position and be accountable for it.
Don’t get in a hurry. Be aggressive and find the right person for the position. I think we take the easy way out sometimes and just hire someone that maybe isn’t the right person for that position. Then you have to go through it again and again.
Hire good attitudes. That’s really key, and they’re able to be responsible, accountable and make a commitment to your program, your concept.
Some people will do some research about your company before they ever come to the interview, and that’s an indicator that they at least took some time to study about your company. Secondly, I like to hear from somebody sitting across from me that they believe they’re the best person for the job, and if you don’t hire them, you’re going to miss out hiring the best person for the job.
Generally, we don’t mind a little bit of ego or cockiness as long as it fits in to our team atmosphere and is constructive rather than destructive. It’s a leader who can generate more from those around them and can help others grow. We’re looking for people that have coaching and leadership abilities.
We have to check their references and get background checks and all those things, but you’re looking for someone who can walk the talk and has a proven track record and [can] be accountable.
Set expectations upfront. Before they’re employed, we have a pre-employment checklist that tells them what we expect on a day-to-day basis, what the important priorities are, and we can go back in when it’s not happening and say, ‘Remember when you came here and interviewed, and we said, “These are the most important things for you to do,” and the numbers aren’t there. What have you been doing with your time all day?’
Monitor performance. When you get someone and put them in position, you can tell quickly if they lead by example or if they’re all talk and no walk. It’s just a lack of performance.
You’ll hear someone say, ‘I’ve done this, and I’ve done that,’ and they talk a big track record, but when we put them in our business isn’t rocket science. We know our numbers. We know how many proposals should be delivered by a regional director or salesperson every month.
If you see that’s just not happening, why? It’s because someone has said, ‘I will get out and do these things,’ but then they’re not doing it.
Let nonperformers go. Keeping nonperformers on board can hurt a company. The hardest thing in the world is to take someone, you’ve met their family and you employed them, and they’re just not getting it done, and you leave them in place, and other people, they see that management is keeping someone who doesn’t perform.
It creates this lackadaisical attitude in your office. It spreads. If you let one person sit and read a magazine, why can’t they all sit and read a magazine?
Review goals regularly. If you don’t have goals, shame on us. If you do have goals, and you’re not serious every day about knowing where you are at, and you’re not passionate about meeting or exceeding the goals, shame on us as business owners and leaders.
Look at the industry you’re in, and know your competition and what they do. Then you have to perform and recruit better people to meet or exceed your goals, and you don’t look at them monthly or annually you look at them every day.
There’s an old saying that, ‘Inch by inch, it’s a cinch. Yard by yard, it’s hard.’ There’s a lot of truth to that. You have to look at your goals every day to see if you’re on pace to meet or exceed your goals.
Communicate. It’s the key in any company. The more you can communicate with your people and make your people a part of any innovative or new updates, the better they can accept it and want to be a part of it.
If you help plan something, you understand it and want it to be a lot more successful than if somebody says, ‘Here it is, just do it.’
You have to be honest and passionate. You earn the integrity and respect in the system you can’t demand it.
Celebrate people’s success. It’s very important in recognizing and congratulating people as they meet and exceed goals. Everybody sees, and likes to see, people becoming part of success. That’s how [Founder] Jim Cavanaugh built this company.
He congratulated them, both financially and by putting them up in front of other people, speaking positively and congratulating them openly in front of their peers as to their accomplishments. Surround yourself by great people who perform well, and then congratulate them in front of others. Hopefully, everybody wants to have that feeling. We say, ‘If you haven’t tasted the honey yet, you ought to ’cause it sure is sweet.’
HOW TO REACH: Jani-King International Inc., (972) 991-0900, (800) JANIKING or www.janiking.com
It happens one day, every week at every facility in the company. Copart Inc. employees gather together, each one wearing the company’s color blue in some part of his or her wardrobe, to start the company’s “Blue Day” with a song and cheer.
“Old McCopart had a car, ee-aye-ee-aye-oh!” one department sings.
“Row, row, row your car, gently down the stream. Merrily, merrily, merrily, merrily, Copart’s but a dream!” another department answers.
Each department sings the cheer it has come up with for the week, and while the cheering and singing lasts just a few minutes, the effects last well into the day and build bonds between employees.
“It’s amazing how it takes sadness out of people’s lives in the morning,” says Willis Johnson, Copart’s founder, chairman and CEO. “They come in, and they might be having a bad day or a bad yesterday or a bad morning, and they have to sing a song with everybody clapping, and they realize the world has not come to an end. There’s still some cheer in the world. Then they walk away, and they may not be happy all day, but their attitude’s a little bit better.”
It’s this kind of focus on the employees that has helped Johnson post impressive growth numbers at Copart, which sells salvaged vehicles for insurance companies. Copart ended fiscal 2006 at $528.6 million in revenue, which was a 57.6 percent increase from fiscal 2003.
“Whatever kind of CEO you are, you should always have in your mind what’s best for your employee, not always what’s best for the shareholder,” Johnson says. “The shareholder comes and leaves. The employee is always there. If you have a happy employee, and the company is doing good, then by osmosis, the shareholder wins.”
Johnson’s keys to creating a winning organization are well-defined values, caring for people and building relationships with his 2,500 employees.
“You might spend a lot of time with your family, but you’re eight or nine hours with the other people in that company, and you like and you care about them,” Johnson says. “People who work together for a long time, they start caring about the company family, and if it benefits one, it’s going to benefit them all. I think if you get that culture going, they all want to move forward and do good.”
When Johnson and his team set out to create the values for the company, they held a brainstorming session to generate ideas. But then they dug deeper to see what was truly important and what they were unnecessarily getting hung up on. He says evaluating what’s good for the company is just like evaluating a person.
“When you look at somebody, you always go to the right side and put all their good points on the right side and all the bad ones on the left,” Johnson says. “When your good ones outweigh your bad ones 75 to 25, you’re looking at a pretty good person there because people have some bad problems, but they have a lot of good stuff too.
“Don’t let a few little bad things outweigh the good side. Is this really peanuts we’re talking about, or are we talking about something big? Sometimes people let peanuts ruin an entire relationship because they have a hang-up here.”
Leaders could spend their time nitpicking every detail about the business, but when those peanuts fill you up, you don’t have room for the filet mignon.
For example, Johnson says he has some employees who don’t dress well, but he points out that it doesn’t affect their work, so he lets them do their job well and doesn’t pay attention to how poorly they dress.
“If you let the small things bother you with employees or the people you work with or the customer you do business with, you’re never going to get anywhere in life, so you just have to say, ‘This is how they are,’ and you have to live with it,” Johnson says.
Once the values were agreed on, Copart did what many companies do and included the new decrees in employees’ paychecks and had plaques made for all its locations, but the company also took a different approach. Copart had fun with it.
“We had contests and said, ‘We’ll meet you in the hallway. Can you tell us the values of the company?’” Johnson says.
Johnson and his team made the values simple by giving each letter of the company name a value that started with that letter, so people could easily remember them commitment, ownership, profitability, adaptable, relationships and trust.
Employees didn’t get prizes or incentives for knowing the values but just the break from the day helps build excitement, and the desire to be verbally recognized helps employees learn about what’s important to the company.
“It was just awareness that you’re a part of the company,” Johnson says. “You don’t always have to give people stuff. You just have to give them attention.”
Caring for your people
Many of Copart’s values deal with how the company interacts with and treats employees, and Johnson says caring for his people is one of his top priorities.
One of the basic strategies is providing salaries that are above industry averages.
“I’m a real employee person,” he says. “I hate for employees to quit and leave because they got a better-paying job.”
But salary and benefits are just the starting point. Copart employees also have the opportunity twice a year to purchase company stock at a 15 percent discount. If the stock price stays the same, they make a 15 percent return, but more often than not, they earn a higher return, and they can sell it or keep it as they see fit.
Johnson also helps pay for employees to go back to school. He also started a foundation that provides scholarships to the children of any Copart employee who has been with the company for at least two years. If an employee’s child earned at least a 3.0 grade point average, he or she could apply for $4,500 in scholarship money, and as long as he or she maintained that average, the child could reapply every year.
“It’s helping their kids, and when you help people’s kids, it’s like helping them,” he says.
He also has a system to look at internal candidates first for open positions.
“We’ll look at them before we would ever hire someone from the outside,” Johnson says. “We would look within the company first to make sure they have that opportunity before anybody else because they have a love affair with the company.”
To facilitate this process, employees fill out a form that allows them to express which positions they would be interested in, should any openings arise. When an opening does arise, Johnson can go to that database and see who has an expressed interest.
“They may just want to go from a forklift driver to a dispatcher,” Johnson says. “You don’t have to jump way to the top because some people don’t want to move, or they don’t want to take on responsibility, but they want a little bit better-paying job, so they’ll put their name in.”
Many people change jobs because their company was unaware that they wanted another opportunity. This system helps make management aware of who is interested in what opportunities so the managers can keep their people, which creates consistency and grows the business.
“One day, I will retire, and I’ll keep a lot of my stock in this company,” Johnson says. “I’ll probably never sell it off, and the employees I bring up the ranks and the employees that work in the field, they’re the people who are going to keep my family and the long-term investors in the company in a good position because they were trained right, and they understand how the leadership of this company was started and founded and wants to go forward.”
Johnson says the key to creating better programs for employees lies in talking to other leaders. He regularly meets with the CEOs of companies that he doesn’t compete with to brainstorm and just talk to them about how they do things, and several of the programs he has at Copart came from hearing what these other leaders did within their businesses.
“You need to meet with other peers in your industry not to make money, just to brainstorm what’s good for them and what’s good for you because you never know what somebody’s going to dream up,” he says.
One of Johnson’s executives leaves a meeting in Chicago and now has to get to a 2 p.m. meeting at another facility. He calls human resources and discovers that tomorrow is one employee’s birthday, another recently got married and one’s mother is sick in the hospital. He makes special note of these three people so he can talk to them personally when he arrives.
When he gets there, he shakes hands with every employee, and specifically engages the three people he noted and talks to them about their lives.
Johnson calls these visits “executive drop-ins” and requires them of all his management team members whenever they’re near one of the 124 Copart facilities. The individual attention shows employees that leaders care about them, and it makes them feel valued.
During drop-ins, executives also give a short speech to update the employees on how the company is doing, so they feel informed and know how their jobs affect the business.
“Give them an insight into what the company is doing and where it’s going,” Johnson says.
Even employees at the lowest levels are interested in how a company is performing. They are depending on the company for their livelihood, and they want to know if the company is healthy.
“When an executive tells him, ‘Hey, we just bought seven (salvage) yards in England, and we got this going and this going,’” Johnson says. “They become part of the company, and that’s what you have to do make them part of the company.”
Johnson says employees don’t want to have to worry about where the money is going to come from for their house or college tuition, so that information helps ease their minds and make them feel connected.
“They have to know they’re secure in a company that thinks and knows that we survive because of the employees who run the company,” he says. “They have to know that. You can’t just assume that people know that.”
HOW TO REACH: Copart Inc., www.copart.com