A score of 99 percent is about as close to perfection as you can get. It’s a solid A in school, a nearly unblemished fielding percentage in baseball and a terrific response rate for a survey.
But the way Steve O’Hara looks at it, you’re either perfect or you’re not. Thus, it’s not a near miss when a customer of Angelica Corp., a provider of textile rental and linen management services to the U.S. health care market, asks for 1,000 pieces of linen and receives 990 of them.
“We didn’t ship the last 10 pieces,” says O’Hara, the company’s president and CEO. “That counts as a zero in terms of an order fill rate. If we ship an entire order, but we don’t ship the doctor’s 10 lab coats, that customer is very upset, even though we shipped the other 990 pieces.”
O’Hara felt this acceptance of small mistakes or material imperfections was threatening the trust between the 6,000-employee company and its clients. Providing top-quality service was becoming secondary so long as financial goals were being met.
“Ultimately, the quality hospitals would have gotten fed up with that and brought laundry back in house to do it themselves,” O’Hara says. “It would have been a waste of their talents and energies because it’s not a core competency for them. It would have been a low, value-added industry with cost being the dominant criteria.”
Angelica needed to change the way it did business if it was to maintain relationships with its customers and continue growing.
“The fact of the matter is, our customers are experiencing reduced patient counts, greater bad debts in their endowments and their charitable giving is down,” O’Hara says. “From that aspect, we’d be naive to think now is the time to go out and seek dramatically higher pricing. We have to focus on items that provide value to our customers.”
When you fail to think of your customers, you are asking for trouble.
“If you do not satisfy the customer long-term against their wants and needs, you’ll see, over time, erosion of customer retention rates, lower pricing increases and less acceptance of new products. If you have a delighted customer, then they are much more receptive to renewing to you at fair pricing and buying more products from you.”
O’Hara sought to turn things around by implementing a policy in which the goal would be to fill orders 100 percent complete every time. Each order would need to include everything the customer ordered and each item would be shipped in pristine condition.
“You have to ask yourself, ‘How much of a shock do you want it to be to the system?’” O’Hara says. “In the case of our 2005 change, we did want it to be a reasonable, measurable and meaningful shock to the system because we thought the system had to change.”
O’Hara needed to develop a vision that would better serve his customers, sell that plan to both the company and the customers, and then track his success at implementing the plan.
Seek out input
When it came to forming a plan for change, O’Hara started by seeking out ideas. Some of the best feedback you can get doesn’t come from the people in the corporate office but rather those out in the field with the closest ties to your customers.
“The lower and midlevel employees are closest to the customers,” O’Hara says. “From that perspective, they may see something with the customer, and if the organization is flawed, by the time it gets up to us, it’s been managed, and we’ve hit our numbers. It’s not that they don’t care about the profitability of the company. Their rewards are tied to the customer. Their emotional gratification is from satisfying the customer.
“Speaking to those employees who are not handcuffed by the day-to-day Wall Street expectations of profitability or bank requirements, or what have you, gives you a purer feel for what’s happening around the base of the business.”
When talking to employees, visit them in a setting where they can be relaxed. Reinforce the idea that you really want their input and need it in order to make your plan work.
In the boardroom setting, your best bet is often to just listen.
“We have the field report on their operations first,” O’Hara says.
“They are reporting on the major issues going on in their local environment. There is an exchange of questions and answers and understanding. Is it a sourcing issue? Is it a product procurement issue? Is there a customer delivery issue going on? What are customers asking for and asking about?”
Either way, you’re creating dialogue.
“By having it start from the lower levels of the field first, we open up the dialogue to getting a better source of information instead of just listening to ourselves talk,” O’Hara says.
When you talk to people about making a big change, don’t frame it as a change that you want to make. Make it clear that their participation and abilities will be needed to make the change a success.
“It’s never my plan; it’s our plan,” O’Hara says. “If it’s our plan to begin with, we all have a vested interest in its success or an understanding why it’s not successful. There are no recriminations because it was our plan.”
When people do speak up, give them recognition and openly thank them for doing so.
“Make sure you reward people that speak up and take chances versus people that sit back and don’t contribute,” O’Hara says. “In our organization, people will find if they sit back and wait for people to take all the risks, those are the people that wind up getting promoted. Not the people sitting back, the people who took the risks.”
You need to take advantage of the people who really like to talk and contribute and engage them often. The hope is that when others see your interest in hearing feedback, they will begin to open up, as well.
“So if there is one individual on the team that is not pulling their weight in terms of that openness, and one of our values is open, honest and always, then hopefully there are enough team members surrounding that person to flush it out,” O’Hara says.
When you feel you’ve collected enough feedback, it’s time to see who is with you.
“We had a draft day,” O’Hara says. “We said, ‘Who fits in this new organization and where do they fit?’ At the end of the draft day, we had hopefully most of the people in the right positions at the right time and some people who no longer fit in the organization.”
Sell the plan
O’Hara needed to demonstrate that he believed in Angelica’s commitment to excellence, because employees need to believe that you feel strongly about a change if they are going to commit to it.
“The question of how much watercooler talk goes on is directly a function of the vision and commitment of the organization to what they are trying to achieve,” O’Hara says. “If there is clearly a vision and a commitment to doing that, the watercooler talk is more around the successes and challenges of the business versus individual fears.”
O’Hara incorporated the company’s motto, ‘Delightful service through innovation,’ in every possible way.
“It’s incorporated in all presentations, and it’s plastered around the organization on posters and billboards,” O’Hara says. “Simply communicate the vision, mission, strategies and values constantly. Beyond that, it’s just internal marketing of that through employee communication.”
In order to truly get your employees to buy in, you need to back up your words with action.
“It’s making sure that when we see an issue with quality or delivery or a fill rate or something the customer cares about that we act on it quickly,” O’Hara says. “We act at the value of the customer and not at our own. Even if it costs us some money, we do what’s right for the customer.”
When the zero-defect policy was launched in late 2005, company leaders went out to Angelica locations to enforce the change.
“The easiest way to do it was we went to product about to be shipped and started pulling out product and inspecting it,” O’Hara says. “By the time we got to the sixth or seventh sheet, there was a small stain. ... But we asked the head of operations, ‘What’s this?’ He said, ‘It’s a really minor stain.’ And we said, politely but firmly, ‘Is the strategy really small stains or is the strategy zero defects?’ You reinforce the behavior that way.”
The key is to not spring sudden change on your people when you arrive at a new destination but rather tell them where you’re going and let them help you get there.
“You want them to be more evolutionary than revolutionary,” O’Hara says of changes. “In that case, it’s obviously involving a number of the thought leaders in the decision-making process so that they can be your advocates around the field. It’s obviously communication and bringing along people as early in the process as you reasonably can.”
It can be a challenge to track a program’s success or failure when it’s stretched across 6,000 employees at a variety of locations. Once again, communication becomes key to assessing what’s happening out in the field.
You need to set the tone by talking about what’s happening in your company, asking questions and encouraging your direct reports to do the same.
“It’s not just the single individual at the top,” O’Hara says. “It’s the entire management team.”
By constantly talking about the business and your expectations, you drive home the importance of success to your people. The more people you have on your side, the better the chance those who haven’t bought in will come around.
“There’s obviously historical cultural bias to accepting any change,” O’Hara says. “There’s defensiveness to change, and there are some people who just put themselves in front of the team.
“What I hope they see is that we’re doing something that reinforces our values and our mission and their jobs. Since they are on the front line with the customers, I hope that what they see out of any organizational or structural change is that we are supporting them in those efforts.”
By working with his employees to implement his major change, O’Hara led Angelica to $425 million in 2007 revenue and $430 million for 2008.
“It’s the leader-servant concept,” O’Hara says. “But at the end of the day, the people getting the product out to the customers and serving the customers are our customers, too. I want to make sure that they feel what we are doing is helping them do their jobs.”
HOW TO REACH: Angelica Corp., (314) 854-3800 or www.angelica.com