Interviewed by Matt McClellan
Tim Abell is a survivor. The first nonfamily member tobe named president of Firstrust Bank survived multiple acquisitions and mergers at some of the publicly owned banks he previously managed. Those days were difficult, he says, because just when your team started to get on the right track, someone came in and switched all the uniforms when the organization was sold to distant shareholders and much of what that team worked to build was lost.
He hasn’t missed the constant ups and downs at all since 2004, when he joined Firstrust, where he serves as president and chief operating officer. The bank, which has $2.2 billion in assets and 24 locations, was founded 74 years ago by the grandfather of the current CEO, Richard Green.
Smart Business spoke with Abell about how to create a winning team and how to keep your employees excited about coming to work every day.
Let your team learn from mistakes.Listen to your team. You need to be willing to empower them, you need to be engaged and be engaging.
For me, having come up through the ranks in the organization’s trenches, you earn your team’s respect by working hard and caring about the people you work with. I try to be open to doing different things. In doing that, you need to recognize that some mistakes will be made on the path to progress.
Richard Green, the owner of the bank, his grandfather used to say, ‘If you’re going to fall, fall forward. If you’re going to make a mistake, make a new one.’ So we try to recognize that in empowering people, they are going to make some mistakes, but you need to learn from those and develop other leaders in the company. Keep a focus on a team approach.
They need to feel comfortable that making decisions, if it turns out to be wrong, we’re going to learn from it. They need to know we’re not going to chop their heads off.
It’s important for them to know that we’re going to support them and allow them to learn.
Give your employees the power of responsibility. I know that I always feel least empowered when someone is second-guessing or micromanaging the decisions I’m making. So I want to be there for them if they need it.
I want to make sure we’re moving in the right direction, I want to be guiding it, but it has to be a shared vision. So others have to feel that they have a part in shaping it.
I let them be accountable for their decisions. If they’re successful, they’ll be rewarded; if they aren’t, we’re going to have conversations about it. We let them do their craft, and they appreciate that.
We welcome people who are talented and want to make sure we give them a chance to grow here and have an impact and feel the days they’re spending here are meaningful.
Make work more fun. People want to be on a winning team. Once you start to have some success, you get other people who want to join in.
The way you treat employees is the difference. I’ve worked at banks that have been sold five times. So to come to a family bank was a significant difference. Especially in this marketplace, where there has been so much consolidation. Employees get a little tired from that.
Richard Green has said, ‘If you’re building a house to live in, you’d use different materials than if you’re building a house to sell.’ I think there’s a lot of truth to that.
We’ve been able to attract good people because we recognize their efforts. We pay well for people who perform well. You have to have good compensation programs, but it’s important that we try to make it fun, and the family atmosphere is something that is true and meaningful. We’ve had people leave and come back, and we welcomed them back.
So whether it’s the softball games, the holiday parties or the other things to recognize people’s efforts even though it’s work, we try to keep it something people look forward to coming to every day.
Don’t forget what got you to where you are now. You always have to look at things from a customer’s perspective. Sometimes if you get larger, you forget that. We don’t ever want to get away from the customer.
Spreading yourself too thin so that your quality erodes is a risk. As you’re growing, you want to make sure it’s good, quality, sustained growth but not so much that we have some quality issues. You just have to stay focused there.
As a leader, you have to remember to not take too much credit from all the successes. Realize that really comes from the efforts of your employees. So we spend a lot of time recognizing a wide level of employees.
If you’re in touch with your customers, if you spend time with them, ask them what they like about what we’re doing and what they don’t like about what we’re doing. The president’s breakfast is a good way for me to hear from the employees if there are any issues.
I have spent days in the call center to hear what customers are calling in and asking about. If you’re engaged, you’ll get a pulse of it.
HOW TO REACH: Firstrust Bank, (610) 238-5000 or www.firstrustbank.com
M. Gordon Daniels strives to lead by example at Land Services USA Inc.
“I think you have to set a good example,” the founder and CEO says. “I think it’s not necessarily what you say, it’s what you do that people follow.”
Daniels also works to be open, honest and direct with people.
“If people know what their expectations are, if you are very clear in setting those out, I think that is half the battle,” he says.
Daniels has led the title agency, which has about 30 employees, to 2006 revenue of $10 million.
Smart Business spoke with Daniels about how he sets the example and how being honest helps his company succeed.
Q. How do you make sure you’re setting a good example?
It’s a relatively small business. If they understand and they watch you and practice customer service, then hopefully that sinks in. It’s not just lip service.
You work hard to solve problems instead of passing those problems or issues off onto other people. If they see you actively involved in resolving things, I think that sets a good example. Even the mundane stuff hey, we are busy or crazy, that means I have to be the guy at the copy machine doing things. It’s all the sort of mundane, trite things, but it is the truth.
Like, ‘Oh, yes, I am hands-on,’ but then when the time comes, you are dumping it on other people. No. When it has to get done and you have exhausted your resources, no, I am going to do whatever it takes. Hopefully, those things become contagious in a positive way.
Q. Is being open, honest and direct as easy as it sounds?
No, it is very difficult. It is very difficult. Sometimes I have to reiterate that.
We are all human beings, and that’s one of the most difficult tasks is when you’ve given somebody an opportunity and they aren’t meeting those expectations that hopefully you’ve laid out. When you have to have those conversations, it’s very awkward.
So, no, it is not an easy thing to do. Everybody has feelings. I try not to treat my employees as digits on an Excel spreadsheet. There are probably some folks, after a month or two, that [think], ‘Gosh, this is not going to work. It’s not what I thought it is.’ That is part of the maturation process of being the owner of the company. You really try to give people every opportunity. But, at a certain point, you have to make those decisions.
So, it sounds a lot easier than it is. I joke around, you want to be very careful in your hiring process because, at the end of the day, people have mortgages, people have children, people have health insurance things, and you try to make sure you do it right, but sometimes, unfortunately, you do not.
Q. Do you encourage you employees to be honest with you in return?
Absolutely. We have hired some more senior-level people and some very stressful weeks have (transpired). But I view them as very positive. And, when we sit down, we say, ‘Hey, listen, we aren’t personalizing things.’
Those open, honest discussions again, it is very hard ... not to personalize it. The focus is what is in the best interest of Land Services. If we look at that as the common denominator, we are all sharing the same goal, so let’s not personalize things. Let’s look at what’s in the best interest of Land Services. I think we are getting there. It is always a constant struggle, but you always have to focus on that.
Q. How do you deal with things when they do get personal?
What happens is when you are driving home or laying up in bed at night, you start to think, ‘Wait a minute, this is starting to teeter in a direction.’ My approach is to sort of grab those parties back together.
Now, what happens is, the e-mails go bouncing back and forth. ‘Whoa, whoa, wait guys. Let’s stop it. Let’s all sit down in the conference room together. Let’s all sit down somewhere.’ Maybe it is running down to a coffee shop. Let’s get out of the heat of this thing. Let’s really sit down.
What are we trying to accomplish? I’ve got to tell you, sometimes, and I don’t want to embarrass myself too much, but, the people hiding behind the e-mails and the chain, let’s take 10 minutes and discuss it face to face. I think a lot of times, the voice inflections, the raised eyebrows make such a big difference than the battles going back and forth in cyberspace.
HOW TO REACH: Land Services USA Inc., (215) 563-5468 or www.landservicesusa.com
Are you really prepared to navigate the peaks and valleys of commercial real estate? Current and anticipated changes will likely require adjustments in how both tenants and owners approach the market.
“It depends on the specific geography you’re operating in or the product type that you intend to occupy whether it’s retail, office or industrial,” says John Behm, managing principal at CresaPartners. “But, in general, the statistics are indicating that the markets are peaking.”
Smart Business asked Behm for more insight into what to expect over the next several quarters.
Has the commercial real estate market peaked?
We believe that the market has actually peaked. However, it is not a sharp peak followed by an immediate decline. Rather, we are looking at the future as being a plateau, and it may stay flat for a few years. There are certain markets and specific properties within these markets that experienced a rapid increase in rents, and these have now become difficult to substantiate. A correction here is inevitable, and we see that happening over the next 12 months.
What does this mean for tenants?
That there is opportunity as well as consequences for getting it wrong. Tenants should see rents that don’t reflect the same rapid annual increase that they’ve been experiencing, if they know where to look. It’s not likely that all tenants are going to see a substantial decline in rates, but certain decreases will be significant if you can identify the opportunity. However, there’s a catch. The current reduction in rental rates is good news, but overall economic stagnation is not. The goal is to develop a clear plan to align the company’s forecasted needs with the market conditions, and this requires some careful coordination involving both the business and real estate professionals.
Can tenants prepare for the shift?
Yes. Every tenant can have an effective response to market adjustments. It sounds unusual, but a good real estate transaction is one that includes an exit strategy. This can be the ability to terminate the current obligation, a right to contract or expand, a right to renew, or a right to sublease or assign, as examples.
In addition, regardless of whether the market is peaking or declining, companies with a good understanding of their business needs will make real estate decisions on sound metrics, such as real estate costs as a percent of revenue, revenue generated per square foot, cost per employee, etc.
Planning into the right commitment will result in the real estate supporting the company’s operations and not creating a situation where the business is needing to support the real estate.
What about businesses that own buildings?
These changes are primarily going to affect their ability to obtain capital that will be required for the ordinary operations of those buildings for the fit out of new tenancies, needed capital improvements or unanticipated maintenance items.
What affects these market changes?
There are a number of factors that affect the commercial real estate market. Employment growth, as one example, has been declining since 2006. The number of office jobs has also been declining in the region and nationally since 2006. As of late, the subprime issue with its subsequent credit crunch is really beginning to show itself in the marketplace as companies large and small become increasingly cautious with decisions involving any long-term financial commitments.
What can owners and tenants do to keep up with the changing market?
Scenario planning is important. This is a simple answer that is often hard to execute. Leases are most often longer-term commitments (three to 10 years) and, while forecasting operational needs can be difficult, it is helpful to model a few different scenarios that overlay business needs with the realities of the real estate market. This discipline can help you actually get out in front of markets and provide an opportunity for savings or cost avoidance.
JOHN BEHM is a managing principal with CresaPartners in Philadelphia. Reach him at email@example.com or (610) 825-3939.
History: President and CEO of Yoh Services LLC since 2003. Grandson of Harold Yoh Sr., who founded Yoh Services in 1940.
Education: Bachelor of arts, Duke University; MBA, Wharton School, University of Pennsylvania
Yoh on motivating employees: If people can’t motivate themselves, it’s going to be very difficult for someone else to motivate them. But through the interviewing process and the initial employment phase, you can see how motivated they are. Are they showing up to work early, are they leaving late, are they asking questions, are they open to feedback and criticism? But the flip side of that is people might not have previously worked in a place where spreading the vision and strategy is key. It could be that they’re not accustomed to being in a place where they’re offered the opportunity to participate in that. So there are times when you can draw that out of people, but first and foremost, you have to start with the fire within.
Yoh on understanding the vision: You do want everyone to have that common understanding of the vision. From the first time you talk to them, you want to be very clear on what it’s like to work here, what the expectations are, so there are no surprises. But the second part is that you’re really putting a puzzle together, and everybody has to understand what their piece of the puzzle is. How what they do on a daily basis impacts the whole, whether they are a salesperson, a recruiter, a manager, in an administrative role. Letting people know where they fit in the universe is a very important way to keep them motivated.
Yoh on telling stories: People can identify with stories. From the time you are a young child, you are read stories at home, you’re telling stories around the campfire. Stories have a way of identifying and personalizing ideas, as opposed to a textbook ‘here’s how’ message. It brings it to life and gives it color. Storytelling is a very important way to get your message and vision across.
Health care is expensive. Even with insurance coverage, we are paying more out of our own pocket these days. But as with any other product or service be it home repair, entertainment options or airline tickets health care costs can be lowered. The smart health care consumers keep more money in their pocket.
Smart Business spoke to Eugene Sun, M.D., MBA, vice president of medical affairs for HealthAmerica, about practical ways to save on health care costs.
What are some ways the average consumer can save on health care costs?
The easiest way to save money is on medication. Prescription drugs are expensive, but there are values to be had. I advise people to shop around. Consumer Reports Best Buy Drugs (www.bestbuydrugs.org) is a free public education service from the nonprofit Consumers Union, publisher of Consumer Reports. Its Web site can help you research the effectiveness, safety and cost of many widely used prescription drugs. Discuss what you learn with your doctor or pharmacist.
Can we really save money through preventive services?
Prevention is cheaper than treatment. Common sense tells us that avoiding serious illness, or catching it in its early stages when it is less severe and easier to treat, will cost less. Yet, fewer than half of all Americans are taking advantage of colon cancer screenings, smoking cessation programs, blood pressure screenings, daily aspirin and other preventive measures that can save both lives and health care dollars.
Of course, living right to begin with is vital. An apple a day, and these other basic rules of health, will help keep the doctor bills away:
- Get eight hours of sleep each night.
- Eat breakfast every morning.
- Cut down on snacks between meals.
- Keep within 10 pounds of your recommended weight. If you’re unsure what your weight should be, check with your doctor.
- Exercise aerobically for at least 30 minutes three times per week.
- Don’t smoke.
- Don’t drink more than two alcoholic beverages per day.
- Take recommended dosages of vitamins and supplements.
How can someone work with his or her health plan to save costs?
I recommend reading your plan documentation. What’s covered? How much is covered? How much comes out of your pocket? Take emergency coverage: Do you know what your co-payment or deductible is for emergency room care? Do you need prior authorization? Is there a lower-cost option for urgent care? Learn the answers now, before you need emergency or urgent care.
If you have a medical problem that is not a true emergency, be sure to call your primary care physician or doctor first. Doctors are often on call 24 hours a day to advise you. Your doctor knows you, your medical history and the best place to go for your care.
How about getting something for free? Is there any such thing?
There is free advice out there and smart consumers use it. Does your plan offer a 24 hour hot line for free medical advice? If it doesn’t, the government does. Call the National Health Information Center toll free at (800) 336-4797. Ask about anything, from hearing aids and cancer to Alzheimer’s disease and pregnancy issues.
You can also find many free services. Hospitals, clinics, employers and other organizations often sponsor blood pressure checks, shots for your children, free contraceptives and/or advice, and other preventive health care at little to no cost.
What else can we do to save money on our health care?
Staying safe at home not only makes sense, but it’s also a way to save money. Inexpensive home supplies can prevent falls, fires and other accidents that could send you to the doctor or hospital:
- Make sure the stairways are adequately lit, with nonskid stair surfaces and handrails.
- Bathtubs should have nonslip surfaces or bath mats.
- Area rugs should have nonskid backings, or should be anchored to the floor with double-sided or masking tape. Or do not use them at all.
- Have smoke alarms on every level of your home. Make sure a smoke alarm is inside or near every bedroom.
- Never store gasoline or highly flammable liquids inside your house.
- Keep a fire extinguisher on every floor.
- Install a carbon monoxide detector if you don’t already have one.
- Keep medicines and cleaning supplies out of the reach of children.
For more ways to save money, visit www.healthinsurance.org and click on ‘Reducing Health Care Costs.’
EUGENE SUN, M.D., MBA, is vice president of medical affairs for HealthAmerica. Reach him at firstname.lastname@example.org or (412) 553-7549.
Education: Bachelor of science degree, U.S. Naval Academy; MBA, Wayne State University, Detroit
History: Joined Pulte Homes in July 2004; president of Delaware Valley Division since May 2006
What is the best business lesson you’ve learned?
I think it’s to surround yourself with great, passionate people full of ideas and who are hopefully more talented than I am.
To make an organization successful, you need a strong team of folks like that who will be able to influence the entire organization. The sooner you have those people on board, the sooner you’ll become a high-performance operation.
What skills or traits are essential for a business leader?
Passion for what you do. Jack Welch always talked about being passionate about what you do, and I believe 100 percent in that.
Secondly, communication skills are paramount. Then talent selection, being able to hire good people, understanding what your organization needs and being able to fill those gaps with folks. Then the other one is to be passionate 24-7, having a great attitude.
What are some universal truths you’ve learned about leading a business?
One of them is there will be great times and challenging times. Through them both, you need strong leadership.
Through the good times, there is a tendency to let down your guard and not necessarily reinvest back into the things you need to do just because things are good. At the same time, when things are tough, you need strong leadership to keep the course going.
The other universal truth about leading is that it’s about people regardless of the business. Good leaders can go to different businesses and do well because of their leadership skills.
What is your definition of success?
It’s when our organization has exceeded its goals, our team feels a sense of achievement, and we have developed our team members to allow them to grow in their careers. At the end of the year, if I can say we did those things, it’s been a great year.
They’re called “daily minders.”
On the surface, it might seem like a simple daily ritual to outsiders. Every morning, across all of Crothall Services Group’s installations in hospitals and health care facilities across the country, employees meet with their team leaders, who brief them on the cleaning and maintenance tasks of the day.
The daily minders last only a few minutes, but in those few minutes, says Crothall President and CEO Bobby Kutteh, the goals of the entire company are reinforced.
Crothall a provider of laundry, cleaning and maintenance services to health care facilities is a company with approximately 25,000 employees spread throughout the 1,400 facilities in which the company provides services. Each of those employees not only has to represent the values of Crothall but also of the facility in which he or she works.
Any CEO, regardless of communication aptitude, would have trouble accomplishing that alone. That’s why Kutteh [pronounced ku-TAY] relies heavily on the people below him to make sure messages stay consistent and goals are accurately communicated.
“You have to have people on-site who can properly communicate and motivate,” he says. “Some of it starts with the willingness of our on-site managers to genuinely care about their people so that they take the time to invest in the person’s training and invest in getting to know the person. Our people need to feel like they’re coming to work to do more than just a job, but that they are coming to a place where they can make a difference in serving the clients.”
For Kutteh, building an engaged work force starts at the front lines, and it isn’t about long-range visions and grand statements. It’s about appealing to your people on a personal level and making them realize that their role in the company matters.
Simple and focused
Your front-line managers aren’t going to be able to promote the company values to their employees if you don’t promote the values to them. That means you need to have an active communication culture that is centered on driving messages downward and outward.
Kutteh says that when it comes to communication from the top, you need to remember one word above all others: Simplicity.
“Simplicity matters big time. You can hear it and read it seven times before you internalize it,” he says. “You need to have simplicity of message and then the ability on the manager’s part to roll up his or her sleeves and perform the function or training. It goes a long way.”
To make sure messages reach their intended targets with a minimum of organizational static, Kutteh emphasizes communications mediums that can reach many people in a short period of time.
Some of the more effective means of mass communication at Crothall are Internet-based. Kutteh reaches all of his on-site managers with Web casts and DVD presentations, and the managers are then expected to use Kutteh’s communications as a basis for starting a dialogue with their own workers.
“We expect (on-site managers) to conduct meetings for their people using my update message as a basis for conversation and interchange and updates on the company,” he says. “Web-based communication is one of the most effective ways we have done that.”
The aim is to keep managers and employees interacting every day, particularly over how the national goals Kutteh and his staff set are of importance to employees on the local level.
“We insist that our people, at a minimum, apart from daily meetings and daily training encounters, meet with their leaders on a daily basis to communicate things from our company, but more important, communicate things of local importance,” Kutteh says.
Focusing every level of the company on the same simple, broad messages is a key factor in getting everyone, regardless of their professional motivation, on the same page and working to put out the same product.
Kutteh says it can be difficult to focus a large organization like Crothall which had approximately $629 million in 2006 revenue according to Hoovers.com on a wide-ranging set of client-focused goals, especially when 23,000 of Crothall’s 25,000 employees are hourly wage-earners who might be on board for a paycheck and little else.
Employees who come to a job with a paycheck as their primary motivation need frequent interaction with management to try and make the job about more than just punching a time clock. Despite the fact that much of that responsibility is placed on their direct managers, Kutteh says the responsibility finds its way up the ladder to corporate management, which means Crothall needs to have a system in place for managing employee buy-in by making sure that no one person has too much to oversee.
“The big success for us has been ensuring that our span of control is reasonable and manageable and affords the manager the discretionary time to do all the critical things,” Kutteh says. “So we have ratios of numbers of hourly employees to managers, managers to region managers and on up the levels in terms of the right span of control. It provides a workable oversight and accountability to make sure that the message is communicated or that the function is performed in an adequate manner or whatever the requirement might be.”
No matter how far down you might want to drive the decision-making that directly affects your front-line employees, Kutteh says the ultimate responsibility for getting them to buy in will find its way to you. If you don’t set the proper tone at the top, employees and front-line managers won’t produce the right results for clients and customers.
“It starts at the top of the organization where there is an understanding of the key expectations of our company and that there is a spirit of partnership,” Kutteh says. “You need to have an understanding that even though some people might be viewed as the low man on the totem pole, they’re all individuals that need to be respected, and in turn, included in staff meetings and situations where our services might impact the ultimate outcome desired.”
Growing the right way
Keeping everyone on the same page is critical to growing a successful company culture. It’s also critical to more tangible forms of growth.
Everyone in your company needs to know your strategy for the future and how everyone fits in to the plan for the company moving forward.
If all your employees don’t have a clear picture of where the company is headed and what they can do to help the company arrive there, it can lead to confusion, rumors and, possibly worst of all, unsuccessful growth.
Kutteh says a good communication infrastructure can provide the conduit but you have to monitor the consistency of the messages traveling through the pipeline.
“Communication is No 1. No. 2 is some sort of well-defined and internalized strategy so that people know what your strategy is and that you live it by example, that you adhere to the strategy, and you’re not jumping at every opportunity because it feels good at that moment in time,” he says. “It has to fit in to the overall scheme of things.”
Kutteh says growth that oversteps the boundaries of what your company can successfully provide will cause you to lose customers and lose the confidence of your employees.
If you can’t do it well, don’t do it at all. He’s had an opportunity to practice what he preaches on numerous occasions.
“We’ve had growth opportunities that appeared to be a natural adjunct to what we do, like providing security services,” Kutteh says. “We contemplated it, we did a lot of research, there are companies out there that do security in health care that approached us, but at the end of the day, it just wasn’t something we had the competency to do or the programs, systems and training.
“We felt like the markets and services we were currently in provided us with a good marketing opportunity for many years to come.”
If you don’t have a well-defined set of goals for the company and don’t communicate those goals to your employees, it will become too easy for you to follow any growth opportunity that comes before you and your leadership, which can lead to a false belief that you can pick up skill sets and develop competencies as you go.
“What I say to our salespeople is don’t put something in a proposal if you’re not 100 percent confident that our company can deliver it operationally,” Kutteh says. “Why make up stuff to a potential client just as a short-term retractor when you can’t ethically commit to it on the back end?
“We’re a company that has been growing rapidly and the temptation is there a lot. It requires discipline and a commitment to the agreed-upon strategy to not venture into places where you don’t have the capability. It’s sometimes easier said than done.”
To stay focused, Kutteh involves many different levels of the organization. Not only does it allow him to communicate Crothall’s vision and strategy, it allows managers from across the board to have a say in the company’s growth, and if the managers are having a daily dialogue with their people, it, by extension, allows everyone in the company to have a voice.
Kutteh says it might be an “atypical” strategy for such a large company, but it has worked.
“What we have done in the past is we have hired an outside person to confidentially interview and have open discussions with many of our middle managers and support staff about what is going on,” he says. “We want to know what they see as the future direction of the company, where things are going, where are the hot buttons. Then that (outside person) works with me to formulate that into priorities, into something that can be concisely and succinctly communicated to the organization.”
A consistent culture
Through a time of growth and change, it’s critical that employees feel some sense of stability, or they might begin to lose confidence in the company’s future. For employees to feel stability, Kutteh says they need to feel like the company’s culture is solid.
Again, it comes back to culture and holding people accountable for internalizing the company’s values.
“One of the first questions I ask people when I go to a unit is, ‘Who wants to tell me what the values of the company are?’ and, ‘Who wants to give me an example of what each of our values stand for and maybe share a story of when they think the values might have been breached?’” Kutteh says.
“It’s the constant reinforcement and keeping it on top of their minds that has been critical and powerful for us to successfully maintain our culture.”
In the end, it comes back to the CEO, the president and the senior leadership living the values of the company. If you don’t set the example, no one else will. And you can’t just do it within the confines of corporate headquarters; you have to practice what you preach in front of your people.
“Much of it is through active visitation of your people, through regular and frequent dialogue,” Kutteh says. “Some of it is through training, through employee surveys or even through something spontaneous. But it has to happen. If the people in the field don’t have a respect or 100 percent confidence that I, as a CEO, am living by the values of the company, it could be damaging to the culture and damaging to the ongoing progress of the organization.
“It’s really living the values and living according to the principles of the company, then being good people and good stewards of the company’s most precious asset, and that’s its people.”
HOW TO REACH: Crothall Services Group, www.crothall.com
Whether you are building from the ground up or renovating existing space to suit your business’s needs, new construction is never cheap. From materials to systems expertise to labor, owners need to be prepared to look for savings in every aspect of the project.
This is where project management or process management, as Bob Toryak of CresaPartners likes to call it becomes a vital part of meeting your company’s needs without exceeding your budget.
“A project manager should be a true advocate for the tenant, from the start of design through construction administration, and finally with restoration/close-out of prior space,” he says.
Smart Business spoke to Toryak about some of the hurdles owners will need to overcome during construction and how a project manager can help to identify savings.
What kinds of factors affect construction costs?
Costs can increase as a result of the economy. For example, copper went through a significant price increase last year. This year, costs have settled down. Dry wall is increasing in cost because of the energy costs to manufacture it, which has also affected the costs of other construction material. When Katrina hit, we had a big shortfall with many products. For example, on the electrical side, main panels for office space required a 17- to 20-week lead-time. These lengthy lead times can impact the clients’ move-in schedule.
What can be done?
We listen to our clients to understand their culture and needs. If management is changing to an open landscape plan, the use of wall systems that are premanufactured is a solution. Additionally, they can take the panels with them when moving again. The panels incorporate fabric and glass for aesthetics and, at the same time, provide flexibility for reconfigurations.
They are more costly, but the client can write them off over the term of their lease and realize tax savings.
As far as IT infrastructure, this can be more difficult. There are ways to get the same quality cable, but maybe with a different manufacturer. A lot of the cable has been imported from Europe. Clients have specifications they require, but they can get the same compliant quality without having to pay an extra 25 percent more for brand-name cable.
When should a project manager step in?
One of the most important things we try to do is get involved in the very beginning of a project. A project manager acts as a liaison with the client, the landlord and the contractors through the bidding process. Starting with the design process, a project manager can save clients money on the various tasks, such as architectural and engineering fees, wiring/cable and general contractors, as well as furniture and move coordination. A project manager can save a client anywhere from 27 to 36 percent, on average, in the Philadelphia region. We recommend that even if they do not engage CresaPartners, that they make sure that they have someone who has experience in various disciplines such as voice and data infrastructure, construction work, furniture systems and even financing. With that experience, costs can be driven down and the process far less complex.
How might a project manager help to find other savings?
For most clients, the biggest expense outside of the rent and tenant improvement allowance is furniture. All major contract furniture manufacturers have various lines of product at variable price points. You have to find out what the clients want. Are they design-conscious, just looking for functionality, or is there a tight budget to consider? Furniture can cost anywhere from $20 to $25 a square foot for brand-new, mid-price furniture and significantly more if they want high-end, designer furniture. Each manufacturer can bring the price in line to meet the client’s needs.
In the Philadelphia market, many of our clients are biotech, technology and health care companies that look at sustainability and green building construction for LEED Certification. As the project managers for a client, we encourage the use of products that are sustainable. A sustainably designed interior has many benefits, including energy savings and increased employee productivity.
The bottom line is that you need to listen to your clients for their specific needs and expectations so that the project can meet their goals, schedule and budget.
BOB TORYAK is director of Project Management with CresaPartners. Reach him at email@example.com or (610) 825-9564.
Joseph S. Tempio has a bias toward action, but he says moving too soon in business can be a pitfall.
“Make sure you do your homework, make sure you understand what is going on and what makes the machine work before you start to tinker with the machine,” says the chairman, president and CEO of Tunnell Consulting, a 75-employee, $38 million consulting firm focused in the life sciences industry.
Smart Business spoke with Tempio about how to open the lines of communication with your employees and how to face challenges.
Q: What are the keys to being a good leader?
Confidence. You have to believe in yourself, believe you have the ability to share your vision and passion with other folks, and be able to let them set an agenda for what you are trying to do.
In addition, it’s important you have a plan, work the plan, expect there will be obstacles, try to anticipate them, and remain confident and energetic in terms of engaging those problems as they occur.
Q: How do you face obstacles?
Step back and take a deep breath. One of the things I’ve learned is nothing is really as bad as it seems on first blush. It’s important to look at things in a holistic fashion and look at all the aspects. Hopefully, it’s either something you anticipated, have seen before or had some experience with that was close enough that you can define what the next action is going to be.
Q: How do you show employees you have that confidence?
I walk around and talk to people quite a bit. I try to keep in touch with people, and I have a fairly good reputation for being open, honest and fairly direct.
Being in touch with what is going on, talking to people about what they are doing, having an understanding about what they are doing and what is going on in the industry helps to establish that we have control.
Q: How do you know if employees are getting your message?
We try to keep the lines of communication with our employees open. We are an employee-owned company, so people don’t feel reluctant to send in questions or ask anyone on the management team or CEO what is going on. We are generally an informal company. We try to be attentive to what is going on with our employees.
Q: How do you open the lines of communication?
We ask. We are not reluctant to ask people to ask us questions. We will send our head of HR out to sites to interview folks and solicit feedback. An element we instituted about three years ago is everybody on the management team will be interviewed by a member of the board, and information will be compiled to give the CEO another checkpoint on how we are doing.
We have done some surveys in the past. If you do ask questions and do surveys, you need to be open about what is asked, what you get, and you need to respond to it, even if it is to say you don’t agree. The worst thing you can do is ask people for their opinion and then ignore it.
Q: How do you retain employees?
I read some time ago that one of the things that prompts people to leave their firm is when they have lost confidence in their leadership or lost confidence in the ability of their company to accomplish what they have set out to accomplish. We try to make it clear to people what we are trying to do.
We think that is one thing that keeps people working. We are advantaged by the fact we are an employee-owned company, so people feel that if they do good work for the company, then they are able to share into that.
We are also a company that encourages creativity and encourages people to have empowerment and demonstrate initiative. Our folks are generally experienced and highly educated and smart, so you give them opportunities or put them in positions where they can be successful and exercise their abilities. That autonomy, in and of itself, helps in terms of giving people job satisfaction
Q: How do employees know the company is heading in the right direction?
We let them know what is going on. We are very frank about the things that are going right and the things that aren’t going as well as we would like them to go.
We feel that we have a responsibility, because of the employee ownership, to be forthright about almost everything going on in the company. We are pretty open about what we are doing, within the limits of confidentiality, in terms of the clients.
HOW TO REACH: Tunnell Consulting, (610) 337-0820 or www.tunnellconsulting.com