Motivating employees is easier said than done, says Steve O’Kane. And while it can be difficult, it’s an issue leaders strive to manage.
Over his career as an executive, the president of trucking company A. Duie Pyle Inc. says his greatest challenge has been empowering staff members. The key, he’s found, is a process that starts with gaining credibility and trust and is then maintained by recognizing employee achievements and, more important, by good communication.
“Employees, I think overall, just love communication,” O’Kane says. “They thirst for communication.”
For A. Duie Pyle, which posted 2007 revenue of $223 million, that has meant tailoring its communication process to the needs of its employees, the majority of whom are constantly crisscrossing the U.S. and Canada. So every six to eight weeks, the company puts out CDs that include information about what’s happening in the company and the industry to keep those on the road connected.
Smart Business spoke with O’Kane about the steps you can take to help motivate your employees.
First off, you need credibility to be able to do it, and you gain credibility over the years with a little bit of a record of success. When you try things and they work and people around you see them, it helps you motivate them to do the things that the company requires for that success.
On the flip side of that is when you make mistakes and I’ve made more than my share in my time you have to own up to them. A, you have to fix them and do it quickly, and B, own up to them publicly and get it behind you and move on.
You have to correct it, and those that are around or involved in the implementation that are part of the execution team of whatever mistake you made then it’s important to revisit with them what was done incorrectly, how it was fixed, how you go forward from here, and you want to admit your role in the error.
If you do those things, you get credibility with the people you work with, and I think that puts you in a position where you can use standard techniques to keep them motivated.
Open the lines of communication
to engage and inform employees.
If you really focus on the employees, keep them engaged, listen to their concerns and, when warranted, adjust a little bit, they stay motivated, they stay engaged.
Keys to employee communication are all consistent with the keys to all communication.
One, talk about what matters most to the employees. Whenever I interact with employees, in a formal or totally informal setting, I invite the employee to ask questions.
I would rather talk about what is on the employee’s mind than what is on my mind.
Now, there is likely an agenda or a motivation for the interaction, so I will deliver the desired message but try never to close without inviting questions.
Two is honesty. Employees appreciate direct answers. Even if the answer to a question or request is no, it is better to give them a direct response than to try to escape with a vague, ‘We’ll consider that,’ or, ‘Maybe,’ and have the issue fester.
If something employees want is simply not going to happen, better to meet the issue head on and try to end the discussion. Of course, when the answer is yes, you must make sure you follow through on what has now become a commitment.
Three, ‘why’ is often as important as the ‘yes’ or ‘no.’ When an answer has to be no, it is worth taking time to explain why a negative answer is necessary. Employees really do understand the business more than some leaders may realize.
Four, small groups work best. If I have a choice and often there isn’t one I prefer to talk to employees in small groups. Several informal discussions on a regular basis are often far more meaningful and controllable than one big meeting. Plus, the employees really appreciate the personal attention they feel from such meetings.
Five is results. At the end of the day, employees have a great sense as to whether or not leadership is making good decisions. They may not agree with every decision, but if they feel that leadership is moving the organization in a good direction for their future, then communication becomes an exchange of viewpoints and explanation of direction.
Without good strategy and leadership, the best communication possible will not be well received by the employee population. Good communication can reinforce a well-thought-out business plan, but without the good plan, even great communication will be viewed as ineffective and insincere.
Recognize and reward.
Essentially, everybody wants to do a good job, I believe. So when they feel that they’ve been given the tools to excel, when they’ve been given the environment where excellence is recognized and then when they’ve been recognized for an excellent performance, they are all motivated.
While it does sound simple, it really does work.
There’s a variety of ways depending on where in the organization they lie. There are some people that respond to praise. Try to do that. Nobody ever does enough of that.
Personally, I send cards to people’s homes. Just little thank-yous or recognitions for specific things where they’ve done well.
Then, on our management group, I think it’s important that there be a financial incentive, an income system that rewards excellence.
HOW TO REACH: A. Duie Pyle Inc., (800) 523-5020 or www.aduiepyle.com
Dr. Joseph J. Capista says there are definite qualities that separate a leader and a manager, and the two positions can’t be confused.
“You have to understand the manager is not the leader, and there can only really be one leader in the company,” says the president, founder and owner of Williamsburg Dental, which employs about 50 people.
Capista says that one main difference is that as the leader, you have to have a vision for the business and you have to display the qualities of a leader to get employees to follow that vision.
Smart Business spoke with Capista about how to communicate a vision and how controlling your thoughts is important to getting buy-in for your vision.
Q. What are the keys to communicating a vision?
That’s where the manager comes in to play and the partners to a degree.
So many times my manager will come in to me and say, ‘We are going to have to say this because of that.’ I say, ‘Well, is that the truth? We’re going to say the truth. This is what we have to do and bear the consequence of it.’
She knows that there is integrity and honesty in what we do. Because of that, she knows where we want to take the practice, and she has the pulse on delivering.
If you said to me, ‘(Does) everyone in the practice have the same vision?’ I don’t think they do. I’m not sure that they could because of the various levels of requirements for the different jobs.
So, the person that is sterilizing instruments still has to have the vision that we are here for quality, we are here for people, we are here to serve.
So, they may have a more basic vision than the vision that the partners may have or I may have or the manager may have. But, on an ongoing basis, we have meetings by us as owners and by the manager to convey what we’re trying to do here.
Our vision of where we want to end up has to be conveyed from the top to the bottom through the way we behave, the way we talk, the way our managers convey the things we are talking about.
Q. How can a leader get buy-in for a vision?
Control of you is the biggest asset. Your thoughts and your feelings and your actions are what really people see. And they can’t see the thought, but they can see the actions, they can see your feelings. If you don’t have the control of your thinking, where you can be in a situation where it can be a semicatastrophe, and you don’t have the ability to not display the emotion or the feeling that is coupled with that, that’s critical.
When I walk in to that office in the morning, I set the tone, and I could set the tone good or bad. If I wake up and my thoughts are in the wrong direction and I go and set the wrong tone, it’s transmitted through all of us. That’s what the leader does. The leader sets the tone.
The other thing I think is critical is that too many times, especially in today’s world, you talk about teams, and your teams have to run the office. So many times I’ve heard this let your teams take control of things. I think that is good, but the team is not the leader. The team has to look to the leader, and the leader has to set the tone, and if you’re not controlling your thinking, you’re going to set the wrong tone. And it may takes months before it goes the wrong direction, but you have to have control. There can only be the one leader, and the team has to follow the leader.
Q. What’s the key to controlling your thoughts so you can get that buy-in?
People will say to me, ‘How do you control your thoughts? Thoughts just kind of happen.’ Well, they don’t just kind of happen. My thoughts are controlled by my goals, which are written down in a long version and a short version
My goals incorporate part of my vision. I read my goals at least three or four times a day. I repeat them to myself. When I wake up in the morning, at lunch, in quiet time and before I go to bed, those goals are repeated. Those goals are what are incorporated into my vision, not just for my business world but for my personal life and for my relationship and for my physical world.
So, I am constantly taking my mind where it should be, as opposed to my mind taking me where it wants to take me because if you don’t take control of your thoughts, your thoughts will take control of you.
HOW TO REACH: Williamsburg Dental, (610) 353-2700 or www.williamsburg-dental.com
Shelley Keller is vice president of strategic initiatives for Exelon, the nation’s largest electric and gas utility. As the architect of Exelon’s environmental sustainability plan, her goal is to assist the company in reducing, off-setting or displacing 15 million metric tons of greenhouse gas emissions by 2020, which is the equivalent of removing 3 million cars from the road. She developed a three-pronged sustainability strategy that includes reducing her company’s carbon footprint, helping customers and the community reduce greenhouse gas emissions and offering more low-carbon electricity in the marketplace.
What benefit does sustainability have for businesses?
Stakeholders, shareholders and regulators expect companies to make these investments and the efforts to be sustainable. They know they run the risk of being behind the curve if they don’t invest today. More than 40 percent of the greenhouse gas emissions are caused by businesses and industries; you cannot create that much waste and not be part of the solution. Those who avoid the issue are denying the inevitable.
Has the recent decrease in fuel costs slowed businesses’ ambition to look into alternative energy sources and sustainability?
That’s temporal. It’s hard to isolate the cost of fuel when there are so many economy issues going on. Time will tell, but that’s pro b-ably had an impact. The fuel cost has changed the economics of the situation. Companies are holding off on big projects that require a lot of capital. However, more and more businesses are putting an emphasis on sustainability as irrefutable scientific evidence shows the need for a change. We haven’t gotten to the point where there’s a national price tag on carbon. This is when to get involved in sustainability when there’s no other choice.
Why do you think more businesses don’t invest in sustainability?
There’s a host of reasons companies don’t participate in sustainability. The way they view the topic the complexity of the problem holds them back. They look at the expense of some sustainability plans and say, ‘That’s more than we want to spend.’ They don’t see that there are many sustainability practices that require no or little capital. Renewable energy sources have issues with intermittency like wind it’s not attractive in all areas because there isn’t a way to support it. However, despite some of the limitations on renewable, they must be incorporated.
When a company sets up a 401(k) plan or pension plan for its employees, the focus is on the benefit that it is providing to its employees. Owners and executives are not always aware of the added liability that they incur. The Employee Retirement Income Security Act of 1974 (ERISA) formalized and increased the potential liabilities of fiduciaries, says Gloria Forbes, executive vice president with ECBM. It doesn’t stop there though as ERISA holds those individuals to the highest degree of care, creating a significant risk for many people.
Smart Business spoke with Forbes about such personal liability risks and what you can do to protect yourself and your future.
Who is exposed to this personal liability?
Any employee who is a trustee of the plan is liable to the plan participants along with the employer or owners of the firm. This is often a financial or human resources officer or director. But it doesn’t stop there. Fiduciaries include any individual who exercises any discretionary control in managing plans or has authority or responsibility for administering plans.
Many people are in tune with some of the risks because they are aware of the fidelity requirements of ERISA. They must show evidence of crime coverage for their IRS filings — their 5500 forms. ERISA includes a provision requiring uninsured plans to have an employee dishonesty policy of 10 percent of the plan assets. While important, the ‘ERISA bond,’ as it is often referred to, does not provide all the protection that is needed.
What other steps can employers take to protect their assets from personal liability risks?
ERISA precludes the use of corporate indemnification. However, a fiduciary liability policy can be purchased. These policies are not expensive and provide the protection that a company and its trustees need. A privately held firm can purchase it as part of a ‘package policy’ along with its directors’ and officers’ and employment practices coverages. This policy can also be sold as a stand-alone form. There are many insurance companies that provide the coverage.
Every firm that has any pension, 401(k) or similar savings plan should purchase a fiduciary policy. The limits purchased should be adjusted to the size of the plans covered. Defense costs are often part of the limit of liability purchased. Employees should make sure that employers have taken that into account with their coverage, as well.
What should fiduciaries do to make sure they have the correct protection?
Employees who have fiduciary responsibilities should question whether a fiduciary liability policy is in place. Fiduciary liability policies are not standard contracts like many of the insurance policies that are purchased. Make sure that the policy language is thoroughly reviewed and that available coverage extensions are included. For example, defense costs can be provided within the limit of liability or in addition to the limit. Since these lawsuits are often very costly to defend, much of the protection you need can be eaten away in defense. Every attempt should be made to have defense outside of the limit.
Are there any steps employers can take to help protect their employees’ investments?
The assets of employees in these plans are invested by the individuals according to their appetite for risk and their current age and retirement age. Because many of these investments involve the purchase of equities and bonds, there is risk involved. The best thing employers can do to help their employees is offer a program with a quality investment firm and provide many options.
Additionally, the employer should audit and require a full report of all compensation that the investment company and broker are charging for the management of the plans. These are often undetected layers of charges that can become quite significant, reducing employees’ earnings in their plan.
A diligent search of the marketplace for qualified providers with many options available to employees for investment reduces risk. Ask your investment firm to provide education or advice to employees about their investment options.
Should risk management plans be put in place for personal liability risk?
As with any risk management plan your goal is to eliminate and reduce the risks that you can, transfer risks in contracts where it is possible and insure the risks you cannot financially absorb. The risk reduction and elimination task is a little more complicated with ERISA liability than with other exposures like workers’ compensation.
Expect the Department of Labor and the IRS to increase their oversight of ERISA compliance. Regulations change frequently and can create new reporting requirements or liabilities of which a company may not be aware. Uncertainty is probably the greatest area of risk for any firm. An annual review with your insurance broker or legal counsel can keep you abreast of current issues.
There is increased focus on making sure that there is no evidence of conflict of interest. Placing your employees’ assets in these plans with a company bank, investment firm or other relationship for leverage can result in civil penalties, fines and liabilities.
GLORIA FORBES is executive vice president at ECBM. Reach her at GForbes@ecbm.com or (888) 313-3226.
Born: New Brunswick, N.J.
Education: B.S., accounting, Biscayne College (now St. Thomas University), Miami Gardens, Fla.
First job: I was a groundskeeper and a weed puller, but I spent many fine years as a dishwasher. I did that all the way through my high school years. Even in college, I did some restaurant work.
What is the best business lesson you’ve learned?
Business isn’t altogether different from life. If there has been a lesson that has been confirmed to me over the years, it’s the simple line of ‘just do the right thing.’ If you do the right thing, you’ll be rewarded, and at least you’ll be able to look back and feel good about yourself.
What traits or skills are essential for a business leader?
No. 1 would have to be honesty and integrity. Whether it’s a political leader, a business leader or another type of leader, that has to be No. 1. The organization has to feel good about and believe in their leader. Someone could be deficient in other areas, but if they’re honest and have a great deal of integrity, I think it’s paramount.
No. 2 in today’s business environment is communication. A good leader has to be able to successfully communicate. Many people have many different styles, but at the end of the day, do your people understand what you are saying and communicating? I have no opinion on what style is better than another, but I have to tell you, successful communication is very important in today’s leader.
A third thing I would point out in a successful leader is compassion and sensitivity. In my travels, people who have been successful are people who are sensitive to others. It sounds like such a silly little thing, but the people I admire and find successful listen more than they talk. And when they listen, they hear what someone is meaning, not just what they’re saying.
Peter Senge is at the forefront of waking people up to the aftershocks of a world gone flat. Through his position as a lecturer at MIT and founding chair of the Society for Organizational Learning, Senge’s work frequently involves the promotion of sustainability. Senge and a team of coauthors wrote “The Necessary Revolution” as a rallying cry to lead organizations out of the era of denial and into a new dawn of environmental consciousness. Here are some recent thoughts from Senge on the subjects affecting companies of all sizes.
Perceptions of globalization
For most of us, (globalization) means global financial markets where capital moves at the speed that electrons move around the world. It means producing and shipping products all around the world.
However, I think there are a couple subtleties of globalization that we tend to feel more (internally) than (externally). The first is that globalization is about multiculturalism. As Americans, we’re especially blind to this because we have this history of the melting pot. It’s a bad metaphor because that’s not what’s happening in the world today. Despite the projection of American culture, the Chinese have every intention of remaining Chinese.
The second aspect is the contradictions between globalization and the larger natural world in which we live. The average pound of food travels more than 2,000 miles before it’s purchased by an American in a grocery store. We think nothing of getting our cantaloupes in the middle of winter from 4,000 miles away.
Unfortunately, one of the costs of this is the increased dependence on fossil fuels to do all this shipping, as well as carbon accumulating in the atmosphere, which is now starting to show up as significant instability in the climate around the world. ... Globalization at the subtlest level means how do we live in harmony with one another and with Mother Earth.
Making transformational changes
We hear the term all the time, and I sometimes think people use it to simply mean big change. I think that misses the point. Transformational change is a process of change that shifts us inside as well as outside. Transformational change is about deep, systemic change, and what’s most systemic is actually most personal.
It makes perfectly good sense for people to think about producing a product on one side of the planet and selling it on another side of the planet, because over the last several decades, we’ve all seen it happen.
But it’s happened in part because nobody has paid much attention to the cost and the byproducts of the energy used to do it.
The side effect of the energy we use in its impact on the climate is definitely something on people’s minds. Insurance companies are starting to pay the cost. Investors are starting to see it as a huge risk. Transformational change is a process where we have to question taken-for-granted assumptions. It is about changing the external systems, the arrangements, the procedures, the processes, maybe even the rules of the game. But all those are a reflection of our mental models, our taken-for-granted assumptions that we stopped questioning a long time ago. So, transformational change is always a process of reflection, of questioning, of challenging ourselves and challenging the way we do things.
to Create a
By Peter Senge, Bryan Smith, Nina Kruschwitz, Joe Laur and Sara Schley
DOUBLEDAY ©2008, 406 pages, $29.95
About the book: “The Necessary Revolution” seeks to upend the prevailing “take, make, waste” philosophy that has driven industry for the past century or more. In its place, a new initiative for sustainability and environmental conscience will drive the future of business.
The authors: Lead author Peter Senge is a senior lecturer at MIT and is the founding chair of the Society for Organizational Learning (SoL). He authored the groundbreaking book “The Fifth Discipline.” Senge’s co-authors include Bryan Smith, a member of the faculty at York University’s Sustainable Enterprise Academy, Nina Kruschwitz, manager of the Fifth Discipline Fieldbook Project, and Joe Laur and Sara Schley, who co-founded the SoL Sustainability Consortium in 1998.
Why you should read it: Politics aside, the U.S. is beginning to hold businesses accountable for the level of resource consumption and pollution created in industry. In a world where even consumers are influenced by the green factor, companies need to quickly get on board. “The Necessary Revolution” helps businesses that are lagging slightly behind the times as well as those at the forefront of the movement. It does an excellent job of demonstrating the need for collaboration and that sustainability affects people at every level of industry.
Why it’s different: When it comes to business books on the green movement, the market is experiencing a flood of global warming proportions. “The Necessary Revolution” sets itself apart from the pack by avoiding farsighted theory and instead offers practical tools and concrete ways of thinking about sustainability. The book also doesn’t seek to shame big business, preferring to focus on the positives of companies such as Nike, GE and BP.
Can’t miss: “Getting People Engaged.”
Senge and company detail a variety of ways to
get people to shake the dust off the resource-wasting school of thought. Being a leader in the
fight for sustainability is tiring, if not lonely, work.
“The Necessary Revolution” offers environmental advocates the needed advice to make sure their efforts are not wasted. The chapter covers everything from opening a dialogue to building a team to get to the next level.
SPECIAL AUDIO CONFERENCE OFFER: Soundview Executive Book Summaries will host a 90-minute interactive audio conference with Peter Senge as part of the Beyond the Books series at 1 p.m. (EDT) on Tuesday, March 17. To sign your company up for a live connection to this conference so your managers can hear Senge’s advice firsthand, call (800) 775-7654; mention Smart Business to earn a special discount or go to www.sbnonline.com/senge.
Carl Greene has worked with the Philadelphia Housing Authority since 1998 and immediately put energy efficiency on his to-do list for improvements. Greene puts federal funding for programs to best use by making sure preventive repair and maintenance is performed on all buildings. He strongly believes in making an investment in energy efficiency for long-term savings and smart use of resources.
Q. What’s the first step a business should take in evaluating its energy-efficiency trouble areas?
If a business isn’t using compact fluorescent bulbs, they’re really losing out. This is a step you don’t need anyone’s help to accomplish. But for the big picture, having an outside company perform an audit is very valuable. Consolidating servers can reduce energy use and an evaluation of other utilities and electronics will help determine where you need to work on energy efficiency and form a strategy.
Q. Why is it important for companies to be more energy-efficient?
Rates are going up. In 2010, Philadelphia’s electric will be deregulated. The rates are expected to rise considerably, and that means you’ll have to use less energy just to pay the same amount you’re paying today. Focusing on lowering consumption now will place you in a good position when the increases hit, and it’s just good habit. Any additions and new construction should be built for efficiency. Existing buildings should be checked for poor windows that leak energy as well as key spots energy is used in high volume.
Q. What is a green practice that overlaps energy efficiency?
Green roofs are invaluable. I really like the idea of flat-roofed buildings having a grass top and flower beds. This helps retain water so it doesn’t run off into the sewer, and it helps maintain the interior temperature of a building. Other green practices, such as using natural light as much as possible through skylights and windows, will save on electricity. Adopting a new way of operating and approaching business will be a must when it comes to energy. The need for energy conservancy is a sign of the times that cannot be ignored.
It’s clear that 2008 was the year of surprises in the business world. The market was ever-changing, many businesses surprised consumers by closing their doors, and some of the country’s biggest businesses required government assistance to stay afloat. If a business owner is able to find a tool at a relatively low cost that can assist in preventing surprises, then it is worth investigating.
Trade credit insurance can be that tool for many companies. This coverage is a risk management tool that helps business owners protect themselves from the exposure to bad debt losses from the companies with which they are doing business, says Charles Bernier, president of ECBM Insurance Brokers and Consultants.
Smart Business spoke with Bernier about trade credit insurance, the protection it can offer a company and why this may be a better time than ever before to seek out such coverage.
What is trade credit insurance?
Trade credit insurance is asset security. It prevents a devastating loss to one of a company’s biggest assets — accounts receivables. It offers cash flow protection against unforeseen nonpayments, slow payment or insolvencies.
Uninsured, you can only absorb a certain level of risk. Trade credit insurance allows you to take more risk. Trade credit insurance allows for increased borrowing power on your line of credit, normally at more favorable rates.
Is this coverage more important in today’s markets?
With many businesses unexpectedly closing their doors each day, this type of coverage can be very beneficial to the protection of your organization. Such coverage may help grow your business in hard times by making suppliers or financial institutions more comfortable to extend lending options to your business.
In many businesses, there are multiple layers of vendors. You may have a manufacturer, wholesaler, regional distributors and others. If one layer takes a hit from an unexpected event, it could affect all members of the chain. With credit insurance, you can protect your business from others’ unexpected misfortune.
Why is trade credit insurance important to the success of a business?
The research involved with trade credit insurance allows you to collect data from the marketplace about the companies to which you are extending credit, making all parties involved safer. It helps to increase sales while mitigating the risk you have in other companies’ financial position.
For smaller businesses, this insurance may increase their borrowing power and ease restrictions on their personal lending options. If nothing else, the credit insurance process will help you increase your understanding of your clients’ and your vendors’ future and how their future may affect yours.
Why are some companies hesitant to invest in trade credit insurance?
In some cases, companies are not aware that such insurance is available. Others may believe that the cost would outweigh the benefit. This product has been available for many years and is used more heavily in Europe where it has historically been harder to obtain financial information on foreign companies. Between the international business development that has been increasing in the U.S and the current economic situation, now is a great time to look at the benefits of this product.
As for cost, it is based on sales and the premiums run pennies on the dollar, but your broker will be able to work with you through the negotiation process. You may be able to defer some of the cost by obtaining lower interest rates on your line of credit, also eliminating LOC requests for international sales, or even adding to the cost of your product or service.
Should every company have trade credit insurance?
Trade credit insurance can benefit most companies. If nothing else, business owners really need to investigate trade credit insurance. Through the application process, they will learn more about not only their own company but also about all of the companies with which they are working.
Most companies who enter the application process see the true benefit of this type of coverage. Even if you decide your company does not need to purchase trade credit insurance, the process provides a new perspective on your clients, what credit is available and what other people are doing with their businesses.
CHARLES BERNIER is president of ECBM. You may contact him at firstname.lastname@example.org or (610) 668-7100 x1223.
Born: Brooklyn, N.Y.
Education: B.A., mathematics, Fordham University; master’s degree, math and secondary education, The City College of New YorkWhat is the best business lesson you’ve learned?
It might sound very cliché, but people do make a difference. You need financial strength. You need a good plan. But, at the end of the day, the execution of the plan and the utilization of the assets really rests with people. So not only do you need to get good people, but people who are passionate, who want to execute and feel valued. Every year that goes by, that lesson is reinforced to me. You hear a good story about an account or that we lost an account, and a lot of it comes back to somebody did a good job or somebody didn’t do a good job. Even though the world is always getting more technologically advanced, people are still the critical element.
What traits or skills are essential for a business leader?
Passion and honesty, which drives the ability to have true respect. People will follow you and will really believe in you if you have passion and honesty. You need to be able to attract talent. You’re not going to be the smartest person in the room all of the time, and you need people who can complement you.
You also need the courage to use the talent you have. When I was a teacher, it probably took me a year to learn that when a student asks you a question, even though you are a smart person, you don’t know every answer. So sometimes you have to say, ‘I’ve got to get back to you.’ The same applies to business when an employee asks a question. You have to have that courage to understand and check your ego and ask others what they think.
What is your definition of success?
From an organizational perspective, it’s that all the stakeholders are winners and that you have an organization that is viable, sustainable and expandable, one that is constantly challenging itself. You never reach a point where I’m here, that’s it, and it’s never going to get any better than this.