Lisa Huntsman knows that the key to success in today’s economic climate isn’t just finding ways to do more with less but, in many cases, just doing more with the same.
“Those that can respond quicker with good information are the ones more than likely that will get awarded the business,” says Huntsman, the president of the New Philadelphia, Ohio-based manufacturer Lauren Manufacturing.
Huntsman has been focused on this task since the recession first impacted the manufacturing industry and Lauren’s 250 employees back in 2008.
“There is a whole crunch of everything has to be the same quality but just continue to push it on the lead-time standpoint,” says Huntsman. “I think we’re doing a good job of delivering on that.”
To keep up with increasingly shorter lead times, get the highest return for shareholders and meet the needs of new and potential customers, the company had to reevaluate its systems and staffing to make efficiency the top priority.
“If we just keep doing what we do then we’ll always get what we get,” Huntsman says.
“There’s a lot of revenue invested from the company’s standpoint to get new projects launched, and we’re really working closer with our sales teams and with our customers to make it quicker when possible and make sure we’re not dropping the ball anymore.”
The first step was looking for inefficiencies in staffing, including duplicate personnel or areas of waste in the administrative process.
“It’s not just saying, ‘OK, it’s just getting too busy over here,” Huntsman says. “It’s do we look at the job content? Are there some things our folks are doing that seem unnecessary?”
The organization has also been more conscious about adding new people, ensuring it builds its team with talented people, who have targeted roles and are capable of making informed decisions to drive results.
“We all make mistakes, but there are some people who are very conservative and are never willing to put themselves out there,” she says. “We’re looking for the people that are willing to take a very educated set of information and say, ‘Let’s go with this.’”
Empowering employees to make decisions enables a faster speed to market for products and services by elimination bottlenecks in decision-making that slow progress.
“We believe in driving the decision-making process to the front line as much as possible from customer service and engineering, giving them the tools so they can make those decisions and feel empowered to do that,” Huntsman says.
Part of that empowerment is also the result of coaching. Huntsman says she takes time to talk to employees regularly on an informal basis or after the big meetings in order to learn their challenges and figure out how the company can facilitate and empower their decision-making.
“I think knowing that they have our support that it’s OK,” she says.
Huntsman says the other key to increasing operational efficiency is setting clear priorities so that people don’t get distracted from the most important goals, for example, speed of service. By making sure that your company continues to partner with the right customers, work on the right projects and keep people focused in the right areas, you can continue to deliver at a competitive level.
“No. 1 is making sure that we don’t get distracted trying to be everything to everyone, and then nothing gets accomplished,” Huntsman says.
By being able to do more with its people, operations and systems, the company was able to achieve 12 percent sales growth in 2010.
“We have made positive strides,” Huntsman says. “Our business has continued to increase in sales, and I think everybody, not just Lauren, has to work harder with less people than we did prior to the recession. I don’t see that changing.”
How to reach: Lauren Manufacturing, (330) 339-3373 or www.lauren.com
Divide and conquer
One of the reasons Lauren Manufacturing has accomplished growth despite operating in a challenging industry is by continuing to be diversified in the business sectors that it serves.
“We have a couple targets that we’re always going after,” says President Lisa Huntsman. “It’s just trying to keep a balanced portfolio of customers in the industries that we’re in that has been the key to our success. That’s how it started and that’s how we continue to move forward.”
This diversity gives the company the advantage of increasing penetration in a range of industries, including transportation, solar and lighting. While many of these sectors haven’t grown on their own, the company has taken more of the market share from its competitors by targeting business opportunities and focusing its efforts where they are most needed.
“I always go back to say making sure that we don’t put all of our eggs in one basket keeps the company healthy,” Huntsman says. “We really try to make sure that no one customer has more than 10 percent of our business to make sure that we’re serving multiple sectors.”
Again, this is only achieved by having team of people who can effectively make good decisions based on their knowledge of customers and the business.
“In our business, from the time you quote to the time when you can turn it into production can be six to 12 months,” Huntsman says. “So you’ve got to make sure you’re making the right decisions upfront, because that’s going to have an impact down the road.”
Carl Camden’s company finds jobs for people. That in and of itself could have served as a buffer against most recessions.
As the economic crisis caused untold numbers of positions to vanish at companies all across the country over the past four years, you might have thought that Kelly Services Inc., which Camden leads as president and CEO, would have had an increased demand for its services as people looked for employment and companies living hand-to-mouth looked for short-term staffing solutions.
But this wasn’t just any recession. This recession’s impact was so severe and hit so many companies across virtually every industry; it took a big bite out of Kelly Services as well. People needed jobs, but companies weren’t looking to hire, even for temp positions.
The company had to cut 1,900 positions as it lost money for the first time in its history.
“Our sales went down by a third during the recession,” Camden says. “The demand for our services was actually sinking with the recession. The whole definition of what we were as an industry changed. In coping with the recession, we had to open new product lines, new services, new types of relationships with customers.”
Camden and his leadership team had to fundamentally restructure Kelly Services as a more centralized organization, renew his employees’ focus on customer service and ensure that multiple lines of communication were accessible to everyone in the company, so that everyone was able to speak with upper management and stay informed on the progress of the changes the company was implementing.
At the same time, Camden had to react to the recession’s fallout, while maintaining a proactive approach regarding what Kelly Services would look like, and operate like, after the recession.
Form a plan
First responders in an emergency, such as a natural disaster, say their training takes over in a crisis situation. They immediately know what steps need to be taken first and what gets moved to the top of the priority list.
CEOs aren’t completely unlike first responders when dealing with a financial crisis that threatens their business.
As the recession deepened in late 2008 and early 2009, Camden and his team surveyed the situation and immediately recognized that the company needed to reduce expenses and get more efficient — with an eye toward maintaining those efficiencies after the recession.
“You first have to reduce your expense space, obviously,” Camden says. “But one of the things we tried to do in that time when we were reducing our expense space was to do it in a way that yielded structural advantages to the company, advantages that could remain as something permanent as we came out of recession.”
The solution that Camden’s team formulated was to shut down several branch locations and transfer those capabilities to a central location.
“We could then serve more customers and do it anywhere they happened to be,” he says. “They’re not reliant on a branch within the network. It was an opportunity to reduce costs and an opportunity to increase our services while we did that.”
Camden likens it to how banks have evolved. Several decades ago, banks were entirely based on a brick-and-mortar infrastructure. Now, banks offer more services to consumers, but with fewer branches.
“Growing up when I did, you had banks every two or three blocks,” he says. “Today, you can drive for quite a while without seeing a bank branch, because we do more banking with ATMs and call centers. We were able to centralize a significant part of our business in much the same way, decreasing the number of our branches while increasing the number of services we provide to our temporary employees and customers by using automated systems, online service centers and call service centers.”
In a time of head-count reductions and major change, morale can trend downward in a company. However, those who survive the cutbacks and are willing to adapt to the organizational changes can actually become more productive in the short term. Camden relied on that uptick in production to help expedite the transition for Kelly Services.
“People get very focused very quickly on what it is going to take to survive and do well and keep the customers happy,” Camden says. “I think a time of extreme economic turbulence is a better time to make the changes we made because people put aside petty territoriality or the belief that we’ve always done it this way so we should always do it this way and get a lot more focused on what needs to be done right now.”
But you can only ride that wave for so long. Those who survive the cutbacks will initially exhibit relief that they’re still employed and a willingness to do whatever it takes to keep their jobs. In any time of upheaval, there will still be an element within the company that is resistant to change, and if those who were initially on board with the change don’t see a long-term point to what is going on, over time more and more of them will become skeptics, and then outright cynics. Some can’t stay with the company.
“Of course, there is going to be some resistance,” Camden says. “There always is. Any time you are asking someone to change the nature of their job, there is always resistance because people like things to stay the same. Every time you go through a big change, you’ll have, within the normal array of responses, some people who have to leave the company because they don’t want to do what is going to be required.
“Eventually, some of those people might come back because they figured it out and understand it,” he says. “But the notion that you can make everybody wholeheartedly embrace the change is not an effective notion because they don’t, they won’t and you waste a lot of time trying to convince the ones who don’t want to believe in what you are doing. You’re better off letting them leave, and maybe they’ll come back.”
Make change interactive
If your employees are going to see a long-term benefit to the changes you are making, you need to get them involved with the change. You need a culture in which their opinions are valued and mechanisms within the company that allow your employees to share their ideas and concerns.
Camden, as a general principle, doesn’t like business meetings. But as the recession tightened its grip, he held more meetings to begin facilitating discussions that helped improve the flow of information throughout the company. Out of those meetings, Camden and his leadership team developed and emphasized a policy to solicit input from throughout the organization, on all topics.
In any time of change, employees are going to be primarily concerned with the future of their jobs, and if they retain their positions, how their job description might be altered. But employees will also be concerned with what type of company they’re going to be working for in the future.
“That is why we really opened up the company and asked people to start sending us their ideas, big and small,” Camden says. “We received lots of great ideas, many perhaps not sweeping in nature, but all contributing to an ability to simultaneously reduce our expense ratio and build more capability.
“They were as small as ways to change the time that cleaning crews are working and as big as the types of travel we engage in, and how we might be able to hold meetings across different geographies in a manner other than face to face, using more electronic types of communication. Even as the economy starts to recover, I still see a strong desire for people to have more contact with each other, but while having fewer face-to-face meetings.”
One of the ways Camden has bridged the communication gap without herding all key members of the company into the same room is by using social media platforms. Kelly Services utilizes both external, public platforms, such as LinkedIn and Facebook, and custom-made internal platforms specific to the company’s needs. Camden says social media has not only increased his ability to get messages out to the entire company, it has also improved the ability of individuals to directly address another individual within the company, making communication more of a personal matter.
“The social media platforms really promote themselves,” Camden says. “I find that the over-50 and under-30 people are the two groups that are most quickly growing in the use of social media. They’re the ones who let all of their fellow employees know what is going on. With no promotion, it’s on a nice, rapid adoption curve inside the company. Personally, I find myself able to communicate with thousands of Kelly employees via social media platforms, whereas if I had engaged them via traditional hierarchical methods, I’d be communicating to a much smaller number of people, and probably using typical, boring speeches.”
Set the stage
If you are going to increase your accessibility via different communications platforms, you also have to remember that you are being watched, all the time. As the leader of the company, everyone else is going to take reaction cues from you in a time of uncertainty. If you are panicky, other will panic. If you are calm, others will remain calm. If you dodge questions, others will fill in the blanks, often with inaccurate information.
“Your tone matters,” Camden says. “People are listening to your tone as much as, if not more so, to what you are saying. Staying calm is not incongruent with having a sense of urgency. People are looking for whether you remain calm and have a perspective on how we’re going to find our way out of the situation.”
Along with that, as you pilot your company through the change, your people are going to be looking for indications that your words follow your actions. If you don’t adhere to the mission and core values of the company in your behavior and the decisions you make, you will add to the feeling of instability and damage your ability to achieve buy-in with your employees.
“They will be looking to see that you are not changing who you are just because of the financial contingencies of the moment,” Camden says. “You have to maintain a sense of real transparency, because people don’t want to be surprised. If they read about it in a magazine before you tell them what is going on, the result is going to really suck for you as a leader. You need to step up and be as transparent and quick in your communication as you can.”
The organizational change and communication strategies implemented by Camden and his leadership team have helped aid in Kelly Service’s recovery. The company posted $4.95 billion in 2010 revenue, up from $4.31 billion in 2009.
“In a crisis, one part of my job is to assure the investment community and the banking community, along with the customer community, that all was going to be fine, and not only that, it was going to get even better,” Camden says. “But the second part of my job has been internal. To send an internal message, a culture message, to make clear what it is we are migrating to so that the response to a crisis is seen not just as a reaction but rather a proactive opportunity to take steps toward a set of improvements. You want to focus everyone not just on where you are, but what you are evolving into, what you are in the process of becoming.”
How to reach: Kelly Services Inc., (248) 362-4444 or www.kellyservices.com
The Camden file
Born: Dover, Del.
Education: Bachelor’s degrees in psychology and communication, Southwest Baptist University, Bolivar, Mo.; master’s degrees in communication and clinical psychology, Central Missouri State University (now University of Central Missouri), Warrensburg, Mo.; doctorate degree in communication, The Ohio State University
Camden on soliciting critical feedback:
You keep around yourself unpleasant people who tell you that you are messing up. Actually, I'm kind of serious about that. I often tell HR that I am not going to promote somebody because they never disagree with me. You don't want to have people high up in the company who haven’t found at least one thing you're doing that is stupid. You have to have a group of people around you who are willing to challenge you.
Camden on tuning out negative news during the recession:
You can’t disassociate the two. What you have to make clear is how does what is happening in the outside-of-the-walls part of the world influence or link to what you do. To try and separate the two and say, "Don’t worry about the man behind the curtain." Not many people are that great in compartmentalization.
You have to say, "This is how what we are doing affects us." I would say there are a whole lot of people out there who are desperate for jobs, and are looking to us to enable them to live the way they want to live. We have to step up our game to help those people find the ability to make a living. So I would disassociate myself from the realities of the economy, I would create a sense of urgency around it, in the sense of the good we can do in people's lives.
Britt Massing realized that his company needed to get creative if it was going to weather the turbulent economy in 2009.
“We could see that a lot of clients, instead of having four or five or maybe 10 orders a month, were going to one, two or three orders a month and constantly saying, ‘We might be having layoffs,’ or, ‘We’re trying to maintain our costs and cut costs etc. at this point in time,’” says Massing, president of The Staffing Resource Group Inc., which employs 93 contractors and a staff of 11. “That’s what we had to deal with.”
Today, the staffing company is one of the fastest-growing businesses in the Tampa Bay area. Smart Business spoke with Massing about how to use economic uncertainty as an opportunity to grow your business by better serving your clients’ needs.
What is the first step when you realize that your clients are struggling?
I think that a lot of companies didn’t react quickly enough to making changes. They thought maybe that renegotiating might not be the best thing for them. A lot of them also didn’t think about going back to as grassroots as taking a look at the income and the profit and loss report and thinking look at all the vendors and going back and talking with them.
The first thing we knew was that a lot of our competitors were going to be going out of business, and for us, it was if we make it through this, we’re going to be good. So what we did was we renegotiated with a lot of our clients our terms, and we also then renegotiated with almost all of our vendors.
We did one-year contracts where we’ve reduced our rates some. We were flexible when other companies were not flexible. We’ve listened to what our clients needed and if it worked for us from a business standpoint, we renegotiated until the turnaround started to happen for us. That was a big part of how we survived when a lot of other companies did not.
How do you stay aware of how to meet your clients’ needs?
We were asking our clients what they needed. Some clients, because of the technical aspect of our business, weren’t hurt as much as other clients, but the ones that were having some difficulties and asked us about flexibility, we decided what made good business sense and we ran with it.
Outside of that kind of strategic aspect, instead of not calling clients when they didn’t have needs at that time, we’ve maintained our relationships with everyone throughout that period. People would be like ‘You know you don’t need to stop by and say hello to us right now. We don’t have anything for you.’ Our response always was, ‘Well, we know you will in the future and when you do, we want you to remember us.’ We wanted them to know that we treat all of our clients like it’s a relationship and it’s a partnership. So we spent a lot of time staying in front of them. We’re in direct contact either via phone, e-mail, in person, breakfast, lunch, dinner etc., with our clients every week. We have a very grassroots effort to make sure that we’re constantly in touch and in front of all of our clients.
As the contracts had ended and then needed to be renegotiated, depending on how the companies were doing, we had opportunities to renegotiate our prices back to where they were or above where they were before; we’ve been able to do that as each contract has come up. A lot of them were experiencing the same thing that they had to do for their businesses as well. Many of the people that understood and partnered with us were going through it themselves, and for the most part, were very appreciative of what we did to help people get through those times.
What advice would have in employing this kind of strategy?
Don’t be afraid to ask for help. … We [the owners] are always constantly in communication and talking and bouncing ideas off of each other and taking that to the team. When the team is involved in any policy changes or any changes with the company, it gives them ownership of it and they take pride in seeing it through and making it happen.
We knew that we had to maintain the relationships because we work with what we feel is a great book of business and when we got with our team, we told them, ‘Every customer that we have will continue to get the same amount of service as they’ve gotten before and that’s what will happen in 2010 and beyond after we get through 2009.’
How to reach: The Staffing Resource Group Inc., www.srg-us.com or (877) 774-7742
Bob Din didn’t want to overhaul his sales approach at En Pointe Technologies Inc. But the recession and resulting drop in company revenue was forcing his hand.
“The recession was tough on the IT business,” says Din, founder, chairman and CEO at the 1,200-employee technology solutions provider. “People really did not have the kind of money or budgets or allocation to spend on IT. Everybody was looking to cut expenses.”
En Pointe helps business and organizations in a variety of sectors find IT solutions that make it easier to get work done. Din’s problem was that a growing number of customers could no longer afford his services and as a result, business volume was dropping off significantly.
“Let’s say they are going to buy $1 million of equipment,” Din says. “The recession hits, business slows down and they say, ‘OK, this $1 million? We don’t have $1 million to spend anymore. Maybe we buy $100,000 worth of equipment.’”
That’s a pretty big chunk of revenue to lose and Din needed to find a way to stop the bleeding. In order to do that, he had to show customers that he both understood what they were going through and was willing to shake things up to retain their business.
“If you just sit in your store and hope like hell somebody is going to call you, it just doesn’t work,” Din says.
While many of his customers couldn’t afford the same large-scale purchases they had been making to that point, it wasn’t as if they wanted to stop doing business with him entirely. But it was up to Din to get creative and find a scenario where they could get what they needed and he could still make money.
He decided to allow customers to make monthly payments for products and services that they needed. It was certainly not a revolutionary idea. But Din wasn’t looking to remake the sales industry. He just needed a way to keep his customers and he felt he had an idea that would work.
“The benefit for the customer was he didn’t have to come up with all the money,” Din says. “We ended up getting more business because most of our competitors were not thinking like that. The advice is simply don’t just sit and wait.”
It’s this willingness to adapt that has helped Din grow En Pointe from the company he founded in 1993 to a leader today in the providing of IT services. The success of the customer solution allowed him to spend more time developing the company’s evolving cloud technology.
Here’s how Din keeps his wits about him during difficult times and works with those around him to find solutions to key problems at En Pointe.
Don’t give up
If there is a problem threatening your business, such as the sharp drop in sales volume Din was witnessing at En Pointe, you’ve got to believe that the solution to that problem is right around the next corner. And if you don’t believe that, you’ve got to at least convince your employees that you believe a solution is within reach.
“You as a leader cannot come to your office with your face down, depressed and thinking the sky is falling,” Din says. “You have to look at positive things and not negative things. Setbacks are always there in business. Sometimes you lose a big customer. Sometimes this happens or that happens. You’ve got to be strong.”
When you leave your office, find a way to blow off some steam. But when you return or if you find yourself in a situation where you can’t leave the office, you’ve got to find a way to keep your cool and stay upbeat for your team.
“Your employees and your associates, they look to you as their leader,” Din says. “If you go down and get depressed, the morale of the whole company is going to go down. You cannot afford to be down. You’ve got to put a brave foot forward. ‘Yes, we’re going to overcome that. These are the challenges and it’s going to take us a little longer, but we’ll get there. You as the leader have to have that leadership quality to take everybody with you and keep everybody motivated.”
Of course, putting on a happy face is only part of the answer.
Din still had to solve the problem of losing customers. But the key to finding an effective solution was that he launched into the effort with a positive mindset. It kept him feeling good and gave his employees a better outlook on the future as well.
Din recalled the challenges he faced when he launched his first business in the early 1980s.
“Back when I started my computer store, everybody said, ‘You’re crazy,’” Din says. “People are going out of business. Why are you buying that? It doesn’t make any sense. I believed I would go in there and I could turn it around and I could go out and start selling. I went outside and looked at how many customers are coming into a typical store and I believed I could do better. Whatever your idea is, really believe in it. You have to believe in whatever you are doing. Don’t let people bring you down and be persistent about it.”
Flashing forward to En Pointe, Din was confident that if his team sat down and put their heads together, they could come up with a way to make a financing option work for his customers.
“The bottom line is, when you run into challenges, sitting back and strategizing is something that is very important,” Din says. “What you cannot do as an entrepreneur is say, ‘We’re working really hard,’ but you never take the time to sit down and think out the strategy. This is where the market is going. Sit down and think about it. Debate it a little bit and see where you want to go. Think about how you are going to solve the customer’s problem.”
There may even be times when you find it helpful to break away from the team for a bit to gather your own thoughts. Don’t be afraid to do that, and then return to the team and continue moving forward with whatever new ideas you have come up with.
“Obviously, your objective is how do I make more money and more business?” Din says. “That’s very challenging in a day-to-day environment because you get into your office and there are so many people after you that you just don’t have the time to think and strategize.”
Whatever you need to do to get your mind around the solution, and then engage your team in the plan to make it happen, you need to do it. The key is approaching the process with an attitude that success can be achieved.
Back up your plan
When Din reached out to banks and lenders who could potentially handle the financing end of his monthly payment plan option for customers, he made sure he had all his facts straight about what he wanted to do.
“You line yourself up with some finance company who would actually do the financing for you, as long as you can get them to back you up,” Din says. “If I’m sitting in their shoes, the first thing I’m thinking is, I want to understand whoever is applying for the loan and their ability to pay me back. Is he really capable? Your personal integrity — that’s so important to the bankers. You’ve got to go and tell them how credible you are. Tell them a story that shows your integrity. You want to establish credibility because lenders want to lend to forthright people.”
In addition to your ethical standing, you want to convince lenders that you have a plan for what you’re going to do with the funding you are seeking.
“When you are seeking money, you have to have your own projections, you have to have your balance sheet and your income statement,” Din says. “You really have to understand it yourself. You can’t, as an entrepreneur, say, ‘Oh, here’s my CFO. I don’t understand finance. Why don’t you talk to him?’ The minute you say that to somebody, especially if you have a business which does not have any hard assets, most lenders tend to shy away. Understand your numbers inside and out and understand your projections inside and out.”
Tell them about what you want to do and don’t worry about sticking to only the financial details. That can only help reinforce your commitment to the project in their eyes and increase the likelihood that they will decide to help you.
“This is what we’re doing,” Din says. “These are the customers we are targeting. This is what our products and services are and this is how much money we expect to make. This is how long it’s going to take. That is the message you have to convey -- why your products and services are better than your potential competitors. That’s what it takes.”
Even if you meet with a lender and get turned down, if you’re paying attention to what they are saying, it doesn’t have to be a waste of your time.
“The people who turn you down, the best thing you can do is ask them, ‘Hey, what is missing?” Din says. “What was wrong? What if I had certain things, would you lend me money? It’s a learning process. Then you understand the objections you’re going to get from the next person so you’re better prepared to address them or put it in your business plan and cover it upfront when you go to see them.”
Appraise your customers
The worst thing that can happen when you enter into a financing arrangement with your customers is obviously that they fail to follow through on making their payments.
“You don’t want to be in a situation where after two months, they tell you, ‘I don’t have the money to pay you,’” Din says. “You want to make sure their finances warrant that they can turn around and pay you and that they are going to be around.”
Find a credit service bureau and run a report on the business you’re talking to.
“Just like consumers, I can run your credit report any day, any time,” Din says. “Similarly for businesses, there are a lot of services available where you can run a credit report on the business and figure out how strong their balance sheets are and how strong their income statements are. Then check a couple of their references.”
Din prefers to focus on who a company’s major suppliers are and who that company’s biggest customers are. He also likes to get out and meet with the finance person from the company he’s considering doing business with.
“You’re going to give them something on rent, you want to make sure they have the ability to continue paying you,” Din says. “Go and see the customer and look them in the eye. Ninety percent of the entrepreneurs are smart enough to figure it out sitting in front of them if the person is lying or where they stand.”
In the end, it may come down to a gut decision. And Din suggest you err on the side of caution.
“If you have a deal that is skinny to start with and the company is marginal, it’s better to pass on that sale than to have a sale and then not be able to collect,” Din says. “One, you’re not making enough money to start with and then if they don’t pay you, it really hurts you.”
How to reach: En Pointe Technologies Inc., (310) 337-5200 or www.enpointe.com
The Din File
Born: Lahore, Pakistan
Education: Undergraduate degree, engineering, Northrop Institute of Technology, Los Angeles; MBA, University of West Los Angeles
Who has been the biggest influence on you?
I have been very fortunate in a lot of ways. I wish I had mentors, but I really didn’t. What I had was a lot of customers who were very kind and gracious and certainly helped me in a lot of areas in business and finance and so forth. My mother’s family, a lot of them are in business. They always inspired me by how well they were doing, which inspired me to go into my own business.
What is the best advice anyone ever gave you?
Believe in yourself. If you believe in something, believe in that. I always believed in myself that I could accomplish it.
What was it about going into business that intrigued you?
I always wanted to have my own business. I did finish my degree, but the rewards of owning your own business are tremendous. People say there are a lot of good things. You can set up your own times, you don’t have to report to anybody, but you end up working way more than a normal person. We work twice as hard.
Robert J. Habeeb had no intention of taking the easy path to lead First Hospitality Group Inc. through the recession. He wasn’t about to slash jobs and close hotels and then sit in his office and wait for the economic storm to pass. In fact, Habeeb was even leery about cutting bonuses.
“We took a contrarian approach,” says Habeeb, president and COO at the 2,000-employee hotel management company. “Everyone would have understood if we had cut benefits or did away with reward programs or things like that. We did none of that. All of our benefit programs and our sophisticated network of reward programs are what we use to motivate the team. Our approach was to tell the team that their jobs were secure and we didn’t intend on laying anyone off.”
This was, of course, good news for employees at First Hospitality. But could Habeeb really pull it off? Could he manage through what was going to be viewed as the worst economic slowdown since the Great Depression without laying anyone off?
It was going to be a challenge because the hotel business was one of many industries getting slammed by the recession.
“We found ourselves, after a wonderful year in 2008, falling right off the edge businesswise in terms of consumer spending in 2009,” Habeeb says. “We didn’t know where the bottom was and there was a long period of time where the best news you could hear was that it didn’t get worse and that news didn’t come. We expected our strategy, which was to hold firm and keep the team together as best as we could, we knew that would be in jeopardy if things diminished to the point where we had no choice but to go to some of those measures.”
Habeeb made no promises. But make no mistake; he was putting himself out there with his people. By being public about his belief that First Hospitality could manage through the recession without draconian cuts, he was offering hope that could easily have been dashed. And that would have made the bad news and ensuing cutbacks that much more painful to take if it came to that.
“It would be untruthful to say that it’s not difficult,” Habeeb says. “The picture just looks so frustratingly bleak. But there’s nothing to be gained by not having yourself in forward motion and dealing with it.”
Steady the ship
Habeeb needed to speak to his people. The stock market was crashing seemingly every day, keeping people away from his hotels in droves. But perhaps just as bad, the news was only fanning the flames of fear in his employees.
“It’s the fear of the unknown that’s really wreaking havoc on the markets and creating a lack of confidence,” Habeeb says. “We tried to overcompensate for that. We communicated regularly with our team. We told them where we were at. We told them what our strategy is and how it’s working. Our employees really like that Steve Schwartz, who is our chairman, and myself, we went to great lengths to interpret what’s happening in the economy and what impact it’s going to have on our company, our business and their job.”
That last part is crucial to any kind of pep talk you might try to give your people when times are tough. As much as they may appreciate your financial analysis, they really have only one concern.
“Their first concern is how does this impact me?” Habeeb says. “While all of us in the business world are very quick to talk about our companies, translating that down to, ‘and here’s the impact this will have on you,’ is really critical.”
If you’ve hired good people, they care about your business. But when they see people losing their jobs every day on the news, your employees may quite understandably become very selfish. You’ve got to give them a reason to believe in you and a genuine indication that you’re thinking about their futures, along with the future of your business.
“You need to take time to rehearse in your head what you’re going to say and what questions you’re likely to hear from the audience when you open it up to questions, while at the same time avoiding sounding rehearsed at all costs,” Habeeb says. “My armchair analysis of what people are becoming really frustrated with today is everyone knows we’re dealing with a tough economy. Mr. and Mrs. Front Porch are getting tired of the demagoguery and the rehearsed speeches with punch lines. What we found is that people really respond when they know you’re talking from the heart and when you’re speaking with honesty and humility.”
Habeeb laid out his plan to not lay people off and not cut employee pay. He quickly added that despite this plan, it wasn’t going to be business as usual at First Hospitality.
“We’d all be going a year without a raise, but no one was going to be asked to take a pay cut,” Habeeb says. “A key on the employee side is fairness. What we find is everyone is willing to do their part so long as they perceive that everybody else is doing their part. The strategy I suggested can come back to bite you if you’re not equally asking everybody to shoulder the burden. We made it clear from the beginning that everyone in the company is going to do their part.”
So what did Habeeb have in mind to manage through the recession without layoffs and without pay cuts? Well, he started by getting laser focused on the costs he could contain.
“We’re in the service sector, so labor is important,” Habeeb says. “Since we made the conscious decision not to have cutbacks and layoffs, managing the schedule and scheduling people properly became critical. It was making sure that we have enough people to service our guests when we were busy and when we’re not busy, we sent people home early. Those are the day-to-day things, the business of doing business.”
This strategy can easily lead to hard feelings if you’re not careful.
“The easiest way to deal with a situation like this is to begin to cheat everybody,” Habeeb says. “You can cheat your guests and cheat your employees. The proverbial take the beef off the bun in a hamburger restaurant. But our belief is that is a very short-sighted strategy and it’s going to come back to negatively impact your business very quickly.”
The obvious answer, which isn’t always easy in practice, is to maintain the same level of customer service with fewer people and make sure you’re not shorting or favoring one group of employees over the other in terms of how work and responsibility is distributed.
But in addition to trying to be fair, you’ve again got to show employees that you truly value their presence at your company. You don’t need any money to do that.
“You’ve seen all the studies that talk about how people in job satisfaction, they look to monetary reward,” Habeeb says. “But they also look for recognition. They also look for feeling appreciated. They look for a sense of belonging. We really play heavily on those things and on making sure everyone feels part of the team and helped make the decisions on what we were going to do to keep our company healthy during this tough time.”
Habeeb’s ability to manage costs would ultimately determine whether he could get through the recession without having to lay people off. So why not get the people whose future is at stake involved in the effort?
“You have to ask yourself, ‘Am I truly fostering an environment where people feel comfortable giving feedback?’” Habeeb says. “The biggest wall that you have to knock down in getting honest feedback from your team members is that everyone is afraid of communicating upstream to the boss and that there might be consequences if they are critical.”
Talk to your people about the personal challenges that they face in making ends meet. Make that connection that will enable them to feel better about offering you their suggestions. And try to remove that image of you being the person who is looking to catch employees doing something wrong.
“We try to go out of our way to catch them doing something right and then compliment them for it,” Habeeb says. “People identify with a leader who brings themselves into a room as someone who speaks with humility and a little bit of humor and talks to people shoulder to shoulder and on their level. My experience over the years is that people really embrace that.”
It’s got to be genuine, however. If you really want to build those bonds and earn their loyalty, it’s got to be more than small talk.
“Focus on the human side,” Habeeb says. “If you can’t relate to those folks and empathize with them and learn from them, it won’t work. I’ve learned a lot.”
Make some money
The other piece of Habeeb’s plan to successfully navigate the recession without cutbacks was to find areas where the company could make money.
“When the market softens up, you either have to shrink with it or attempt to gain share to get back what you lost from the market circumstances,” Habeeb says. “For some reason, when times get tough, there is this natural tendency to begin making cutbacks in areas like sales. Our view has been that that is crazy. At a time need to grow share, you need to deploy more assets against that problem rather than less. We actually staffed up in our sales area during this last downturn and it helped us.”
Don’t just talk about how tough things are out there and wallow in frustration. Do something to make your situation better.
“We tried to be as forward-looking as we could be,” Habeeb says. “I found that was of great psychological help to the team. We’re all in recession fatigue. I’m so tired of hearing about it. We found that it was of great benefit psychologically to show that the company is still forward-looking and we still have a growth plan.
“We changed offices. We upgraded our computer systems. We spent over $1 million upgrading our IT infrastructure over this time because it was prudent to do so. There are so many vendors out there that are far more negotiable than they were a couple years ago. Because we have a clean balance sheet, we took advantage of that to undertake big projects. People saw that and I think they took comfort in it.”
Your people feed off the confidence or lack of confidence that you convey to them.
“Regardless of what words we use, if the company is seen to be shrinking or running or not continuing to look forward, than they know we might be in trouble and we have an inward focus and we’re becoming battered by the recession,” Habeeb says. “We want to set that example that we’re dealing with it like everybody else, but we’re continuing to look for a better tomorrow.”
The team approach has paid off for Habeeb and First Hospitality.
“We’ve grown our business through this recession,” Habeeb says. “We certainly were faced with the same challenging environment as everybody else. But we doubled our efforts and worked hard at marketing our hotels and maximizing the revenue potential. I’m very proud to say through this recession, and after 9/11, we didn’t lay off a soul and in fact we added jobs back.
“We made it clear we were all going to hang together and that the company wasn’t going to back down from its responsibilities. We hoped everybody would follow our example and people did.”
How to reach: First Hospitality Group Inc., (847) 299-9040 or www.fhginc.com
The Habeeb File
Born: Scranton, Pa.
Education: Undergraduate degree, general business, Lackawanna College, Scranton, Pa.
What was your very first job?
While I was going to college, I took a job in a bar and restaurant. That’s how I got drawn into this industry. I fell in love with it and stayed. It was exciting and very people-oriented. It’s pseudo entertainment. For a young person, it was pretty exciting on a daily basis. You were in the middle of things that were happening. I worked my way up. I have done everything from tending bar and cooking to serving guests and managing. There isn’t much of this industry I haven’t done at some point.
Who has been the biggest influence on you?
Far and away, my dad. I teach a grad class and I ask this question and I’m amazed at the number of people who have that same answer. So much of your character is developed by the time you are 18 years old and I give my dad No. 1 position there. And I’d say Steve Schwartz, who is the [CEO], chairman and founder of this company. I’ve been here since 1997.
What was the most important thing your dad taught you?
Integrity. My dad was very old-fashioned and old-school. Hard work and integrity, those were all lessons he really pounded into our heads.
What is the advice you’ve ever been given?
Protect your name. If everything you do, you remember in the back of your mind that you’re signing your name to it and you only endeavor to do things you’d be proud to sign your name, too, then you never do things you wouldn’t.
Jeremy Rayl has witnessed a lot of industry change since he became the third generation to take leadership of his family’s transportation company in 2007. But he knows that today’s stricter regulations and compliance standards are just the beginning.
“There’s a big fundamental change coming in transportation,” says Rayl, CEO of Akron, Ohio-based J. Rayl Transport Inc., which operates approximately 200 tractors and 600 trailers in the U.S. and Canada.
Yet while other trucking firms have struggled in the past years, Rayl’s company has opened up four new locations, made several acquisitions, grown sales and increased employment by 135 percent to 240 employees in the last five years.
Rayl says the company has stayed competitive in Akron and other areas by being able to identify opportunities, which a CEO needs to be able to do in both a bad recession and a good economy. One of the benefits of doing business in Akron is the access to capital from the area’s large banks.
“With my industry, if you don’t have access to capital you’re not going to have the ability to grow, let alone survive,” he says. “The ability to attract and retain companies here in Akron would center around the availability of capital.”
Because his company has many moving parts and variables that make measuring profitability difficult, Rayl also knows that having a well-defined cost model is absolutely essential in today’s business environment. Ultimately, not understanding your cash flow down to the penny is a critical mistake for a leader, because that’s how you recognize areas that can damage or improve your business.
“If you don’t understand the risks that are out there, then you’re being naïve to the potential things that could possibly bankrupt your company,” Rayl says.
“It’s being able to identify these opportunities and being able to accurately identify our costs, what our revenues need to be and really understanding what drives profitability for our company.”
ROI is the first area Rayl looks at when considering business investments, though the return doesn’t necessarily need to be in dollars. It could also come in the form of improved quality, service level or safety. Either way, the return has to warrant the risk that you are taking on.
“It has to have some sort of measurable ROI and it has to add value to the company whether it is dollars saved or overall quality improvement,” Rayl says.
As the company goes forward in making new acquisitions and adding more U.S. locations, Rayl looks for areas where there is already more demand than the company can support.
“If we open up a new location, we’re already going to have preexisting customers there ready to give us business before we even open the doors,” he says.
By breaking down the risk versus reward and return, Rayl makes calculated investments that meet the changing demands of customers.
“It gives us flexibility and the ability to change as customers needs change, whether it be supply chain solutions, whether it be more efficient delivery options or just reporting for those customers to measure how well they’re satisfying their customers with on-time deliveries,” Rayl says.
That goes for adapting to new industry regulations, as well, such as the now tighter limits on “hours of service” or the number of hours that drivers are allowed to drive in one week.
“Every single hour of that driver’s availability is that much more valuable,” Rayl says. “So it is very important that we are operating that asset and that driver as efficiently as possible to maximize the amount of miles and deliveries in a week that that driver and equipment can do.”
By identifying opportunities ahead of time to invest in new technologies and equipment, he positions the company for future competiveness.
“It represents an opportunity for us,” Rayl says. “If we can be a leading company when it comes to safety standards, equipment standards, driver standards, we’ll be that far ahead of the competition when these new rules are enforced, and they will be coming soon.”
How to reach: J. Rayl Transport Inc., www.jrayl.com or (330) 784-1134
Akron invests in biomedical
Over the past 35 years, Akron has successfully transformed itself from the rubber capital of the world into a diversified business climate that supports more than 600 metalworking, electronics, machining, advanced materials (polymers) and biomedical technology companies. In the past six years specifically, the city has devoted a major economic development effort and significant private capital investment towards attracting companies from this last area.
The most recent investment came in 2011, when a new vehicle was created to further attract and create new biomedical company investment in Akron. Akron Bioinvestments Funds LLC was created by the city’s Akron Development Corp. and was funded by private organizations including Medical Mutual, First Energy, Cascade Capital Corp. and Northeast Ohio Medical University. It is a $1.5 million loan fund aimed at providing financial support for the commercialization of high-potential biomedical early-stage companies that are close to market entry.
There are two components of the fund. First, $1.25 million will be dedicated to the Rapid Commercialization Loan Fund, which will include loans in the $100,000 to $250,000 range that are approved based on the merit of the applicant’s business plan and feature low interest rates and flexible repayment schedules. In addition, $250,000 will be dedicated to the Product Development Fund, where grants of $25,000 are awarded based on proof of product concept, market assessment and business plan development.
A major goal of the initiative is quick turnaround time on all funding requests reviewed. This new availability of funding is expected to draw both national and international interest from companies in the biomedical field to Akron in coming years.
Like many CEOs, Ray Titus got a reality check when the U.S. economy tanked in 2008. With his franchise development services company coming off 20 straight years of year-over-year growth, the idea of not growing was at the very least a foreign concept.
“It was all great and roses and now the last couple of years have been really trying and challenging,” says Titus, CEO of United Franchise Group, which owns and manages approximately 1,400 franchise locations in 50 countries, including well-known brands such as SIGNARAMA, EmbroidMe and Billboard Connection. “We were in a position to grow again as usual, and unfortunately the franchisees got hit, the economy, everything that was going on.”
The company’s customers and employees lacked direction, unsure of how to deal with the financial uncertainty of what would become a global economic recession. As fear of the unknown threatened to paralyze the company, Titus realized that changes were needed to adapt for survival in the new business environment.
“You had a real freezing of decision-making that was being done,” Titus says. “Nobody knew what was going to happen next, so nobody wanted to make a decision.
“We live in a business world today that is changing on a daily basis, a weekly basis, so anybody that is stuck in their ways — it’s my way or the highway.”
Because UFG had focused on growth for two decades, Titus knew that the first step forward would be taking a step back.
After reading a book called “Islands of Profit in a Sea of Red Ink,” Titus discovered an important takeaway about operating as a successful brand and revenue-generating business.
“That book really hit it right between the eyes, because it talked about that there was as much as 40 percent of your business that was not profitable,” Titus says. “You just did this work because you always did it.”
To create a stronger business moving forward, Titus realized that the company needed to start thinking more about profitability when making investment decisions.
“We were really focused more on growth than we were even on profit,” Titus says. “As an organization, when you take a step back, you realize, ‘Wait a second, there are certain things in this organization that we are more profitable on than others.’”
The first change that Titus made was to put a stop to the expansion mode that the company had been in for years. That meant selling fewer new stores and franchises and refocusing on strengthening the brand.
“We had to change the way that we were doing business,” he says. “We had to look at things a little differently, make cuts, look at expenses differently and change the thought process.”
Part of that was revising the company’s strategic planning process to having only one- and three-year strategic plans.
“We always looked at five years and even 10 years as a company,” Titus says. “You’re obsolete in your planning and your strategic plan if you are going beyond three years.”
Titus also now spends much more time doing due diligence to evaluate investments, assessing factors such as profitability and vetting out those that aren’t a good fit with the company’s philosophy and goals.
“We’ve created some really smart steps for us to go forward with,” he says.
“Based on that, it’s meeting the criteria, the budget, looking at everything and does it get us to where we want to go in our one-year and three-year strategic plan.”
Improving profitability short term was a matter of identifying and eliminating expenses that had minimal return for the company. Titus knew that several of the countries the company was running as a direct organization, including a new store in Switzerland, had become money drains but were still mounting in costs.
“What started out as a small investment all of a sudden became a rather large investment into it and we weren’t getting any return on it,” Titus says.
But by selling master licenses in less profitable countries such as Switzerland and Canada, Titus handed over the expense and ownership sides of the businesses so the company could scale back to a support role.
“So we went from something that was costing us a lot of money to something that costs us nothing, and we’ll probably end up in a better spot when it is all said and done,” he says.
At the same time, Titus knows that some investments pay off in ways that aren’t as apparent on a budget line, such as in learning opportunities.
“It’s easy to cut people from going to trade shows or seminars, but looking back on it, each time that we’ve ever done that it’s a mistake,” he says.
Instead, invest smarter. Rather than having four or five employees traveling to a trade show, have one or two people attend and then relay the information to the rest of the company.
Evaluate your talent
Ultimately, restructuring the business to withstand the recession also called for some initial job cuts. While it wasn’t an easy time, making these cuts was necessary to strengthen the company from the inside out.
“There has been a change in mentality that was needed, but it still doesn’t mean it isn’t painful,” he says.
In times of financial uncertainty, it’s important to fully understand how each employee fits into your company’s vision so you can hold your organization accountable for progress and goals.
“I think it’s kind of bizarre that now we go year after year, month after month and everybody thinks they are an A,” he says. “Everybody thinks that they are 15 percent underpaid.”
If you want your people to be the best they can be and add the most value they can to your company, you have to set clear expectations and a high bar.
“Every great teacher and every great coach that I ever had got more out of me than I even thought that I could,” Titus says. “If you do that with your people, they’ll eventually really appreciate that management style — tough love but love.”
Titus evaluates his people through an annual review process that assigns employees with an A, B or C letter grade based on 12 criteria — an idea he got from Jack Welch’s management book. A’s usually get bonuses, raises and more money. B’s are valued employees that do a great job with the company, and C’s get a warning — 30 or 60 days to show improvement. Just like in school, C is the passing grade.
“We don’t hire D’s and F’s, and we don’t keep D’s and F’s,” Titus says.
The evaluation process frequently reveals strengths or weaknesses of a person that weren’t obvious to their boss or co-workers.
“The first year that we did it years ago, we went around the table and the manager was saying that this person is B, but by the time we got around the table it was very clear that that person was a C, or an A,” he says.
Knowing people’s strengths can also tell you how they can be utilized more effectively for the success of the company. During the recession, Titus realized some of his managers were actually more valuable reverting to the sales or customer service roles where they started out and really excelled.
“Certain people took roles that they did for ten years, eight years prior and went back to doing what they really, really did well,” Titus says.
Titus even removed himself as brand leader for each of the individual brands and put a separate president in charge of each brand, which freed him up to take the role as director of franchise sales and get more involved in big picture strategic planning.
“It’s focusing your people and yourself on taking a step back, and getting away from the titles and all the other things out there to really go back to what made you successful in the first place,” Titus says.
“We’ve got to sit down with our people and we’ve got to say what we like, what they are supposed to be doing, what they are not doing and correct it, but then we’ve also got to be able to say ‘This is how I’m rating you.’”
Lead a new mindset
Titus knew that the lessons learned from the down economy — getting more pricing for products, being more efficient with resources and so on — were things the company needed to keep doing moving forward.
“All of us have had to evolve a little bit more and be more conscious of how we spend our money, what we are investing in, and even the projects that we bring on. It’s not throwing bodies at problems,” he says. “It’s throwing solutions at problems.”
The challenge was explaining to employees and franchisees that there would be no getting back to normal.
“I have ten direct reports and they average 20 years with the company,” Titus says. “So they go back so far that they’re used to different mentalities in business.
“As we’ve turned and been in a really good spot now for about nine or ten months as an organization, we’ve learned that we can’t go back out and say everything is fine and now it’s back to the way that it was. We don’t want people doing what they did before.”
When you’re asking people to accept a new way of doing things, it’s critical to manage expectations by clearly communicating what that vision involves, especially for long-term employees who may be eager to revert to old ways. Clear communication from the top down is the key to making sure people understand what is expected of them as well as keeping morale high moving forward.
“Any time you do cuts of any kind it is painful and it’s hard to keep morale in a good spot and keep things positive, especially when people all around are getting budgets cut or somebody is getting laid off,” Titus says.
“The challenge there is to keep a good positive attitude and convey that we are doing well, but in the same breath, we still have to be careful. We have to watch what we are doing and keep moving forward as an organization to improve how we do business.”
To make sure the message doesn’t get skewed, Titus prefers to deliver it person, whether it’s participating in superregional meetings, traveling nationally to different offices for Q&A’s or spending time with franchisees locally. There is nothing like face-to-face communication to really get to know people and make sure that you are all on the same page.
“You don’t run a business from a desk,” Titus says. “You run a business with people, so you’ve got to get out from behind your desk and get face to face with customers and prospects.
“Some of those meetings are tough meetings. Some of them will appreciate it and some of them don’t, and it doesn’t matter. The bottom line is we’ve got to be involved in the different aspects of our business that we can make a difference in.”
The company’s ability to execute these changes has made all the difference. By late 2010, UFG was seeing dramatic improvement from the start of the recession, and just one year later, annual revenue had grown from approximately $450 million to $500 million.
“We have consistently moved forward as an organization,” Titus says. “I don’t want to say that it is back to normal because what is normal? We’re in a new normal. So things are improving. Store volumes are up. Franchise sales are up. We’re in good place now.”
How to reach: United Franchise Group, www.unitedfranchisegroup.com or (561) 640-5570
The Titus File
United Franchise Group
Who are your business mentors?
My first mentor was my dad. My eighth-grade school paper was how to start a franchise company. I would not be anywhere near where I am today if it hadn’t been for him. So he was the first one, and he introduced me to my second one, which was Gary Rockwell, who worked for my dad for 40 years. From my standpoint, the next one would be J.J. Prendamano. He is my father-in-law who has worked for me for 20 years. For me to have him as a mentor, as a helper and employee has just been incredible.
What is the greatest piece of business advice that you’ve ever received?
My dad telling me that there are always two sides to every story. There are always two sides. Sometimes you can really get emotional or caught up when you hear one thing, but there is a really good reason. There are always two sides and the truth is usually somewhere in the middle, a little bit of one and a little bit of another.
About JJ’s Entrepreneurs mentoring program:
Founded in 2011, J.J.’s Entrepreneur was developed by UFG to encourage and teach students about the benefits of entrepreneurship and owning their own business. The program was also created to honor J.J. Prendamano, a long-term employee who was diagnosed with brain cancer, by recognizing his commitment to mentoring and helping new business owners become successful. Through a five-year minimum $75,000 commitment by UFG, students participating in the competition are mentored by Titus and Prendamano as they create their own innovative business plans. Two winning students are selected to launch their business concepts, with one student awarded $10,000 and one receiving $5,000.
Curt Moody was finding it tough in a down economy to find construction projects for his architectural firm to design. And the competition was like none he had ever seen before.
“One of the difficulties in this market is the small firms are doing everything they can just to survive ? and the large firms are doing the same,” says Moody, president and CEO of Moody-Nolan Inc. “The large firms are coming after the smaller work. A lot of times, clients are looking to say, well, they would prefer the personal touch of a small firm on a certain project type.”
So to address this challenge, you need to set up your firm to respond to both ends of the spectrum.
“We build our practice around being able to service and give the personal touch by having our project teams small enough to be able to respond in that way,” he says.
“But there’s the understanding that, let’s say, when a schedule gets pinched, you need to be able to add personnel quickly, so you need an approach that allows you to augment your core teams with other staff members when necessary.”
It was even more of a challenge since he built his company over the last 30 years, and to his credit, it is now the largest African-American owned and operated architecture firm in the country ? 162 employees work at the $26 million organization.
You’ll find that restructuring is not magic in itself, and it will still take you some solid selling efforts to overcome what might be assumptions about a larger company.
“When you reach over 100 employees, clients just look at you as a very large company and impersonal,” Moody says. “So work very hard to show that with your past clients, what you committed to them you fulfilled.”
You will need to explain to prospective clients that you will do that for them as well. Make sure you focus on how well past clients of similar size were satisfied.
“You will have good client references if the new clients want to dig into that,” Moody says.
The composition of the project team is important. To maintain the small company feel, you should have the team that presents the initial sales pitch be the same one that carries out the project. If your company is divided into specialty areas, you can make the head of the particular division the point person to serve as the project’s executive. He or she would name a project manager who would choose a team of very experienced people in that project type.
“They are all going to have the skills that any of your competitors will also propose ? but you’ll have them,” Moody says. “The team is built around those skills but the responsibility is to service the client. Therefore, they have the responsibility of getting to know the client more than just as a project, so you can address their overall needs, not just the specific needs of a one-time project opportunity.”
When you discuss the client’s needs and budget during the sales pitch, again use a small business approach.
“What you should try to say is that you can fulfill those base needs, making sure you give them the full program, that you meet their budget, meet their schedule, and by the way, you are going to be as innovative as they desire,” Moody says. “So it’s basically the client’s determination how far you go, not your own, because you can go from one extreme to another.”
In other words, you should show a client what the client has asked you to do, and then show what you can do that expands on what they asked for.
“Try to show them that you can meet their basic criteria ? here it is ? but they have an opportunity to go beyond that and here’s how you can still meet their criteria and go beyond what they might have been thinking,” he says. “And by doing that, you are giving your clients more choices than some of your competitors. That gives you an edge. You have to have a strategy that is going to work to help you be successful no matter whom the competition is.”
How to reach: Moody-Nolan Inc., (877) 530-4984 or www.moodynolan.com
Getting that next project
When Moody Nolan Inc. opened a new office in Dallas, Curt Moody knew one of the first orders of business would be to impress upon his staff the challenge of getting the next project.
“You can be very solid for the present,” says Moody, president and CEO. “But when you finish that work, what is next?”
If you don’t have something following quickly, you’re either going to have a large payroll expense during a time when you are not generating sufficient revenue for it or you are going to have to reduce expenses.
“A lot of firms are going to cut positions,” he says. “The problem is that you have gained some experience on that project and now you are letting it step away because you are waiting on another opportunity.”
You need to try to stay away from that and be in environments where you don’t vary your staff levels. Build upon the skills that you retained, keep the skills of that environment, and you can do better by maintaining a healthy workflow.
“You have to know when somebody has a dream,” Moody says. “You have to know when somebody says, ‘We are growing, we have a need. Should we consider building or expanding?’ You’ve got to hear about those things; follow it wherever you can find it, then follow up: ‘You know you are thinking about this ? can we help you? Can we do an analysis or some planning to see what might be in your best interests?”‘
How to reach: Moody-Nolan Inc., (877) 530-4984 or www.moodynolan.com
Jeff Heintz isn’t bragging when he says the legal firm where he is managing partner, Brouse McDowell LPA, made it through the recent recession without missing a beat ? it’s a matter of fact that the firm only had a few scratches.
“We did OK because we stuck to what we did best; I think our reputation served us well,” he says.
Once Heintz realized that the 92-year-old company’s brand was the best weapon in his arsenal to fight the recession, he instilled a way of thinking to bolster that premise for the 120 employees.
“We adopted the philosophy that we are going to control the kinds of things we can control,” he says.
The first premise pertains to the quality of work, an obvious aspect that can be controlled.
“If you work hard, and you have high character, and you behave in a manner that is befitting of things like ‘A Lawyer’s Creed’ and ‘A Lawyer’s Aspirational Ideals,’ good things are going to happen to you,” Heintz says.
“If you develop skills that enable you to help your client as a technician and develop the feelings that enable you to discern how best to direct your client, whether or not a particular strategy has short-term or long-term benefit, then you can become a trusted adviser,” he says.
“There’s no better feeling in the world than being a trusted adviser, somebody who works hard, develops a business and builds it into something grand, and it is the centerpiece of that person’s life and perhaps that person’s family,” he says.
Place a high premium on community involvement, and feel an obligation to give back to the extent you can by participating and furthering the efforts of nonprofits and volunteering because it is the right thing to do.
“It also gives your people an outlet other than just coming in and putting on their miner’s helmet and cracking away at work. It keeps them fresh, focused and gives them some perspective.”
Dedication to clients can also be controlled.
“We’ve had relationships with clients that go back decades,” he says. “We’ve been through tough times with clients and we’ve been there for them. This time it was tough times for everybody.”
With a relationship that has developed trust and understanding over the years, there are often mutual benefits.
“You and your clients benefit from the strength and depth of your relationships because businesses across the board were facing issues that they never faced before, having to consider choices that they never considered before, and I think it is a considerable comfort to them to know that when they would pick up the phone to call their advisers, it’s a number that they have been calling for 30 or 40 years.”
One of the tools that may serve you in being open with clients is what Heintz calls the “sneaky direct approach.”
“You just sit down with them, and you tell them the truth,” he says. “You let them know even if you can’t lay out for them chapter and verse what will happen, you lay down for them as best you can your belief about what will happen and what steps you are taking to control what can happen. I think people tend to react well to that.”
Another factor to control is the seriousness with which responsibilities are taken.
“Take that commitment of trust very, very seriously,” Heintz says. “One of your first thoughts should be how is this going to benefit your client ? not how much money can you make, not how quickly can you get this job done, not how much personal goodwill can you get from this.”
As a final matter, protect yourself as best as you can against the things you can’t control.
“Ignore a lot of the chatter for things that happen at the federal level ? the preoccupation with the recent Washington gridlock, for example ? as difficult as it is,” Heintz says.
How to reach: Brouse McDowell LPA, (330) 535-5711 or www.brouse.com
Availability is king
It’s been said that no matter recession or economic growth, your ability to succeed in business is only limited by your availability to your customers.
Jeff Heintz, managing partner of Brouse McDowell LPA, believes in that. In fact, he has his home phone number on his business card.
“If you make your clients know that you are available to them pretty much 24/7, they appreciate the commitment and are very conscientious how they use it,” he says.
Likewise, cascade that premise of availability throughout your staff, from top to bottom.
“If you are accessible, that’s a talisman of your commitment to your clients,” Heintz says.
“Don’t tell them, ‘You need to get a hold of me between 9 a.m. and 5 p.m. on Monday through Friday because I’m not going to look at my mail over the weekend, and I’m not going to answer my phone.’
“Not everything’s an emergency, and there are people out there that live their lives at general quarters ? and everything’s an emergency ?but there are emergencies out there, particularly as we increasingly get to a global economy where it may be 7 p.m. on Friday night in Akron, Ohio, but 9 a.m. elsewhere on the globe where people are at work when you are at play. But most people use their best judgment, and they have the ability to discern between what’s an emergency and what’s not.”
Phil Derrow had been kicking around the idea of investing in the future of his company, Ohio Transmission Corp., for some time. One way or another, he was going to do it, but the question was this: Should he spend the cash when business was so bad during the bottom of the recession or wait?
With several locations outside of the state, it was simple to see that it was time to drop the “Ohio” tag from Ohio Transmission and Pump Co., a division of the corporation, because it was becoming more of an issue as the company grew.
“It wasn’t that much of an issue; we were able to deal with it, but when you’re down in Kentucky, they want to work with Kentucky people, not Ohio people,” says Derrow, president and CEO. The situation was the same in West Virginia. “You know, people have a sense of place; they have a sense of their own community, and being an outsider is never a positive thing.”
Not only that but the types of products offered and the focus of the business had changed since 1963 when it was founded by Derrow’s father, David Derrow. Also, the website needed a major makeover.
The second division, Air Technologies, also needed some investments along the lines of staff and production facilities.
Deciding if the projects, which would include rebranding and capital improvements, were worth the money during a recession hinged on a feeling that the recession had bottomed out ? and a belief in the future. The moves put the company back on the growth track.
Five years ago, the corporation had 290 employees and annual revenue of $100 million. Now, it has 360 employees across seven states, and 2010 revenue was $116.5 million.
The new website brought results almost immediately. More traffic was seen on the first day than what was seen in the previous six months. The switch to the name OTP Industrial Solutions brought all positive reactions.
Here’s how Derrow used belief in a better future to take action and grow the company.
Have confidence and believe
Change is said to be the only constant thing in life. When business is going really well, it’s easy to forget the fundamentals, such as that the economy will change at some point. Derrow believed that rather than pull back, he would opt for change.
Derrow was considering ideas for both divisions. Ohio Transmission and Pump Co. needed to be rebranded; Air Technologies needed to expand to fill the growing demand for industrial air compressors. The only question was, “Why spend money now when things are so challenging?”
The recession was tightening its grip on the company. With nearly 15 years under his belt as CEO, Derrow had been following good business practices. They put the part employee-owned company in a position to hopefully weather the storm. The company was not overleveraged and it didn’t get too far out on a credit limb with customers. In addition, it had employment practices that had some self-adjusting mechanisms, for instance, a compensation structure that was somewhat self-correcting, linking company financial health to wages.
“Business was down quite a bit, and our sales teams and managers were trying to figure out how to maximize business as much as we could,” Derrow says. “We decided not to conduct layoffs, we had plenty of people, and it was a decision to go ahead and do this now because we believe in the future, we know recessions end, we have the fat, let’s go ahead and make this investment.”
He saw some indications that the recession had bottomed out, and while he doesn’t quite call it a hunch, he felt it was time to take action.
“If you believe and know recessions always end, then there is frankly no better time to invest in the end of the recession than during the recession,” Derrow says.
Prices for labor and material are likely to be bargains, and through investment, you may be able to increase your market share even though the market is contracting.
“Continuously invest in yourselves and your company,” he says. “I make a big deal about the fact that investment is a continuous and ongoing process, and it is an essential statement of a belief in the future. If you believe based on knowledge that recessions always end, then you continue to invest. It’s no more complicated than that.”
You have to have the confidence to know that recessions end and act accordingly. If you don’t believe things are going to get better, and you aren’t prepared to act accordingly ? act in ways that they will get better ? then it is difficult to take advantage of the opportunity.
The reality is the United States economy follows a cycle, although expansions and recessions cannot be pinpointed ahead of time. Recessions happen about every five to seven years ? the National Bureau of Economic Research notes recent recessions happened in 2007, 2001, 1990, 1980, 1973, 1970, 1960, 1957, 1953, 1949 and 1945.
“There will be another recession,” Derrow says. “There will be another recovery. And so on and so forth. Even as each one is different, there are enough similarities in actions to take before, during and after that it isn’t impossible to make a plan.”
Darrow’s strategy was to rebrand Ohio Transmission and Pump Co. into OTP Industrial Solutions, with a new logo and website, and to invest in employees and a new factory for Air Technologies. With those as objectives, he set out to energize the troops.
“Actually, I would say if there were any concerns, it was over not doing it,” he says. “In most of our markets outside of Ohio, we were downplaying the Ohio element of it anyway. We were going to market as OTP rather than Ohio Transmission and Pump. So there wasn’t much of any resistance. But to the extent that there was any, it was, ‘Well, gee, this isn’t free. Why should we spend money now when things are so challenging?’
“That is where leadership is so important to demonstrate to people by action that your core values actually mean something,” Derrow says.
He found it more important than ever to reinforce the company’s core values of integrity, achievement, balance and, especially, investment. By showing that a core value (investment) was being shored up with the decision to spend during a recession, it elicits trust and confidence from employees.
Derrow took advantage of the culture of collaboration that had been built at Ohio Transmission Corp. to get the employees engaged in the investment “fever.”
“We talk about everything,” he says. “Involve your management, executive management, local management, sales people and staff people. We talked about the entire process, what the name was going to be, what the logo was going to look like, we talked about all of it.”
Cultural collaboration eliminates a sole deciding figure. Accordingly, decisions are those of a team.
“There isn’t one person who gets to say, ‘We’re doing this,’” Derrow says. “Even in my position as chief executive, one would think that I can, and maybe even should, simply say, ‘We’re doing this and everybody has to follow along.’
“I may have a good idea, and I certainly do have responsibility to set primary strategic goals, but even that is a process of talking to your folks, listening to your folks, listening to what your customers say and in making decisions that are collaborative no matter what your role is.”
If you don’t have a culture of collaboration, bring in outside resources that have the talent or skills you need.
“It is still then a matter of what you want to do as a company, where are you trying to go, and what is your objective,” Derrow says. “Ultimately, you end up collaborating. You have a culture of collaboration of some sort whether you like it or not, even if you are bringing in outsiders. It’s a collaborative process for you to tell the outside entity, the consultant, what it is you are trying to accomplish and you work together to get the outcome.”
You have talented people who built your success and are best positioned to make decisions about where you’re going next, and you can bring in outsiders to help you go where you want to go rather than tell you where that ought to be.
“An interesting part of this is I was not involved much at all in the details of the rebranding process and the website design,” Derrow says. “That was something mostly our team did. My role was to say yes to the investment, and I do care about the design looked like, so I had input what the logo was and color scheme and such for the website, but other than that, our team and our service providers ? they made all the decisions.”
A new logo was designed for OTP Industrial Solutions, along with a new, interactive website.
Meanwhile, Air Technologies received a large investment in not only a new factory, but in a decision to keep all employees on the payroll and even add some sales representatives.
“We were not sure that we would be able to regain profitability during the recession, because it was a deep one,” Derrow says. “Yet we believed that our people are the ones who are responsible for our success and that when times get tough, it’s not our way to just toss people overboard.”
The decision to invest in production facilities was made before business had fully recovered. The company’s Direct Air product, which is compressed air as a utility much like natural gas, has been a fast-growing business for Air Technologies. The new factory went online last year.
“Those (the staff and the factory) were significant investment decisions when business was still pretty bad,” he says.
Don’t forget the human factor
Even though the strategies were accepted and the rebranding and expansion projects were going ahead, Derrow still had to contend with managing during a recession.
“Our sales volume dropped very rapidly and that’s always one of those things that comes as a surprise, and is not a particularly positive surprise,” he says. “So I guess for us, and this really gets back to the notion that each company is unique, each company’s culture is unique, the attitudes and objectives of the owners and leaders of each company are unique, so there isn’t one right answer on how to manage through a recession.”
For Derrow’s company, it was a matter of collaborating with the people and talking openly with the teams.
“We have 360 people now, and you can’t manage through such a challenging period without engaging the people in the organization,” he says. “We believe in being open and honest with our people and telling them what’s going on, telling them the company’s position, telling them our strategy and making them part of the process from start to finish.”
Within a small group of options, communication methods are fairly standard. What Derrow found important was that the more effective you want your message to be received, the more methods you should use.
“Have meetings, send out e-mails to folks, to all of your associates, share what’s going on and what you are doing on an ongoing basis through multiple means,” he says. “Have corporate-level meetings and all-associates type e-mails, local meetings and one-on-one conversations with people. People get nervous. People have families to take care of. They have their own mortgages to pay.
“There are individuals who work for you who have their own lives and so during a tense period, you have to be receptive to the fact that there are real individual human beings involved,” he says. “So you could have global e-mails and meetings, but at the end of the day, you have to be one-on-one with people and listen to their fears and concerns and show them the way forward.”
The good thing is that your managers are people, too ? they have their own fears. They carry it out in the same way that the executive team carries it out with them.
“So if you start there, and make it clear that you expect that the kind of conversations you’re having with the executive team the executive leaders are having with their managers, expect their managers to have those very same kinds of conversations with the people on their teams all the way to the line-level people that work there.”
How to reach:Ohio Transmission Corp., (614) 342-6123 or www.otpnet.com
The Derrow File
Phil Derrow, President and CEO, Ohio Transmission Corp.
Birthplace: New York City. But I was only there for three days, or for however long they kept my mother and me in the hospital. My family lived in New Jersey at the time, and the hospital was in New York. I’m from Columbus. My family moved there when I was 3.
Education: I am a graduate of The Ohio State University. I was a marketing major. I suppose you could say I minored in engineering, but my degree did not say engineering. I took mechanical engineering classes and then moved to the business school and got a marketing degree.
What was your first job?
My very first job out of college was with a local car dealer, selling cars. That particular profession has a lot of negative things associated with it, and the reality is I worked for a good guy, and I learned how to sell. I learned that the best way to sell is to listen to customers and let them sell themselves. It was a straight commission job, and if I wasn’t any good at it, I didn’t make any money. No draw. I would say there were some valuable lessons and there were also some valuable lessons about how to manage differently, shall we say. I didn’t want to manage others the way I was. I was there six months.
What was the best business advice you ever received?
The best business advice came from watching my father who was the founder of the company along with a partner. So this kind of takes the form of a story. Leadership and management are always about others. It isn’t about you. So that’s how I would phrase the best business advice. And the story is, I think I was about 8, and I wanted something as most 8-year-olds do, and my father said no. I said, ‘How come?’ and he said, ‘Because we can’t afford it.’ I said, ‘Why not? You’re the boss; why don’t you just take more money?’ His response was something along the lines of, ‘There are other people who work for the company, and if I just take more for me, then I’m not treating them with the respect that they deserve. They’re the ones who are helping to build the company along with me.’ So it was one of those lessons that said it isn’t all about you. It’s about others.
What’s your definition of success?
Getting back to the best advice ? it isn't about you, it’s about others ? my definition of success would be defined as creating a workplace where others can be successful together and create a thriving and successful business.