Frederick Van Etten believes every word of the old saying, “A rising tide floats all boats.”
“Anyone can manage in a good time,” he says. “We saw that in the 1980s [with] the dotcoms, before the bubble went through. You could buy a stock, and it would just go up. It didn’t have to be a good company, it didn’t have to be a company with any revenue or any net income; [it was] just because the market was going up, and so everybody looked like geniuses.”
Van Etten believes it takes a crisis to determine whether a manager can lead in good times and bad. Van Etten faced that test when he became the president of Popular Equipment Finance Inc., the equipment leasing arm of Banco Popular North America, at a time when the company just couldn’t win. So he cleaned house and started over, helping to increase sales volume from $140 million in 2006 to $178 million in 2007.
Smart Business spoke with Van Etten about how to make it through the crucible and how to find employees who are winners to help you succeed.
Bring in winners. As a leader, the first thing when I took over this company two-and-a-half years ago was to replace all the direct reports that came into me and bring in people who I felt truly shared the vision of where we wanted to take it.
I played high school and college sports. Sometimes you’re on a team that just can’t win. For years, this company didn’t win. It just could not win. It had management problems, it had credit problems, it had vision problems, and it didn’t have the right products. Ultimately, it came down to lack of management knowledge and vision.
When I replaced all those people, each person I brought in was brought in from a winning organization, and they were used to winning.
When we brought in the new management team, initially, the people they managed were questioning whether or not this was just more of the same. But when we began to win and we began to change the policies and procedures — even the way we treated our customers — then all of a sudden the results started to go up.
You can take a bunch of people who have never won before, and once they start winning, you can just see the encouragement and the attitude change in the company.
All of a sudden we have the most engaged number of people I’ve ever worked with. We have 100 people here who would run through walls for us. For years, they were all afraid they’d get terminated. They were afraid this subsidiary might get shut down, and then, all of a sudden, when we started to win, then they feel like they’re really part of the reason for the success.
Place a premium on ambition. In bad times, you will start to see some people panic. You’ll start to see people get to a point where they don’t know how to manage downward; they can only manage when sales are going up. They can’t manage when sales are going down, because it affects them personally and it changes their personalities.
What you find out is that the people you put in place around you — you find their limitations and strengths come to the fore-front. You find that you’re only as good as the people you surround yourself with.
The people I surround myself with are people who are consistent, who don’t change their management styles quarter to quarter or year to year — people who look long term and make sure the vision is still in place. In a bad time, they recognize that things will get better.
If you put 10 people in a room in a successful company, and those 10 people don’t have any drive or ambition or any leadership skills, if you put those people in a room and tell them they are going to run a new company, [and] if you give it capital, it will fail.
But if you put 10 people in a room who are driven and you give them no capital, they will figure out a way to succeed. It’s amazing. So it really comes down to the quality of the people you hire.
Empower your employees. The hardest part was taking out parts of the senior management. Of the previous group that was here, we took out a significant number — and they were well entrenched.
We had to really cleanse out their legacies. People were not allowed to make decisions on their own. It was very top-down-driven. It was not management by objective; it was management by dictatorship.
We unleashed the power of the people and allowed them to make decisions. How do you think your workplace should be? How should we do these things? How could we improve our customer service?
You have to get people who want to learn, who want to be more than just accepting a piece of paper in an ‘in’ basket and processing it and putting it in their ‘out’ basket. You have to find people who are willing to say, ‘I wonder how this company does business? How do they do things in the credit area or the sales area or the funding area?’
For example, our people knew their department but didn’t know the other positions. To take those silos away, have people work more together as teams and not as departments.
Expose people to those departments. We started to rotate people around in the departments to start to understand how the other departments did business. Once we did that, we got a whole bunch of suggestions on how to change things. That allowed the process to improve.
HOW TO REACH: Popular Equipment Finance Inc., (636) 779-8206 or www.popfinance.com