“The change was really two things,” Branch says. “One was to deliver one Deloitte — how we go to market. The other was to really take advantage of our size. There are a lot of things you can do in the marketplace as the Goliath. ... The change was to get us focused but also to get us acting like we had capabilities that our competitors did not.”
With any major change — even if you’re not part of a $9.85 billion professional services firm like Branch’s — you’ll need to follow certain principles to ensure success. He says leaders have to do three crucial things: Define the reality, paint the vision and provide hope. After doing these things, he already has seen changes in his firm.
“The talk and the thinking that we’re seeing now throughout the firm around delivering one Deloitte to the marketplace is really inspirational,” he says.
Branch is proud at how quickly he’s seen his 1,500 people adopt that mentality and communicate more across functions to better serve clients.
“You can hear it in the break rooms,” he says. “You can hear it as they talk to our partners. You can hear them thinking about it when they’re organizing their plans around serving our customer. ... We’re starting to see the fruits of our labors and the actions in how we’re actually going to market and how we’re serving our clients reflects a one Deloitte way of doing business.”
To successfully lead your own change, here’s how to do those three crucial things.
In any change process, you first have to explain the status quo to the people in your organization.
“The leader has to first define reality,” Branch says. “Defining reality is important to understand what the current situation is and defining a reason for change.”
He says this must be done on two separate levels. “It occurs at the institutional level where you look at the marketplace and the overall factors causing change, but you also have to define a reality for all individuals involved because change is personal,” he says.
In order to clearly see what reality your company is facing, you have to be honest.
“Unbiased objectivity is really important to defining reality,” he says. “Not a slanted view, not a view that is for any other purpose than to paint the facts so that everyone can start on a level playing field.”
Objectivity is best found in facts. “Oftentimes, facts are hard to come by,” Branch says. “Sometimes data is hard to come by ... but having facts and having a fact-based analysis is really important to define reality. That takes some research.”
In defining Deloitte’s reality, he looked at what the company was capable of delivering against the market and competitors and what he considered to be important to achieving success. One change associated with that was to build Deloitte’s international work. He saw that a lot of the work in Atlanta was either coming in from or affecting other countries, and if it was that heavily focused now, he could only imagine what it would look like in five years.
“One of the things about change is, the changes that are most successful are those that are marketplace-driven,” Branch says.” Having a burning platform is really important in order to make sure the change happens and that you get all of the enrollment and buy-in of an employee base.”
While you may have facts and be able to clearly present those facts to people, you also have to make that reality personal.
“One of the things that I’ve learned is that all politics is local,” Branch says. “Well, for an individual, all change is personal. The reality of change and the effects of the current situation on an individual is important also to consider.”
To best do that, he suggests having someone who can easily relate to your employees communicate that reality.
“Defining the reality for the individual has to be done at a level relevant for that person ... in a place that is closest to him or her,” he says. “That is the supervisor or team of individuals comprised at that level to gather the facts around what’s going on, what needs to change and what impact the change will have on the individuals.”
Create the vision
After you’ve defined the reality of the situation for your people, you next have to show them where you’re going.
“The second thing a leader is responsible for doing is delivering a vision around what the future state will be and the benefits and what life will be like or what the situation will be after the change occurs,” Branch says.
Creating the vision, like defining the reality, is grounded in what the market is doing.
“It’s fact-based, and it’s based on the business imperative,” he says.
“There is a data element to it. There’s a factual element and a research element of understanding the facts of things that a reoccurring around you. It’s sensing where the market is going, and it’s putting all the data together to create some assumptions —some hypotheses — of what’s going to be important in three, four, five years.”
Once you have an idea of the future, you have to make it actionable.
“Put that together in terms of ‘What do we have to do at 9 o’clock on Monday morning to build those capabilities and change the organization to be effective in that marketplace,’” Branch says. “That’s the important piece.”
He suggests creating a road map for the change you’re implementing.
“Along that road map, there are different streams of work that relate to different pieces of the organization or processes or technology that have to change,” he says. “You have the requisite milestones of things that are expected to be done at a certain period in time.”
Having a road map with milestones allows everyone to have a common tool to track the progress, and then you have to create subcategories for the road maps.
For example, Branch says if there is a plan related to technology, that will probably have several subcomponents because there may be many systems or applications associated with technology.
“Break down the overall road map of going from current state to future state into actionable work streams with benchmarks or milestones to know that you’re getting there actually,” Branch says. “That’s how change processes are deployed effectively in an organization.”
When setting those benchmarks, you have to take into account your organization’s capabilities to change.
“The philosophy on how you set those as to how aggressive you want to be, how much you claim that you want to have accomplished in a set period of time, all of that is related to the entity’s capability to change — that is how quickly the ability for a company to change but also how aggressive or substantial the change imperative actually is,” Branch says.
While a written vision with benchmarks is important, the vision lies in more than apiece of paper.
“When I say vision, it’s not just describing it in a document,” Branch says. “It’s for the leader to be personally identified with the future state. That is delivering the vision. Most effective leaders are those that can be readily identified with a future state, and we see it all the time in business where senior executives are identified with changes that are effected in their organizations.”
After you’ve defined reality and created the vision, you still have to help your people believe they can get there.
“Third, and probably the most important one, an important thing a leader can do is provide hope and the inspirations for all of the people involved in the change to believe that success will happen and it will be a good thing,” Branch says. “Providing hope is a very important thing for a leader to do, and I assure you you’re not going to find that in any of the textbooks around change management.”
There are two elements crucial to providing hope in your organization.
“The first is showing up,” he says. “A big part of providing hope is to show up personally in a change process.”
He says that being visible and accessible is the single most important thing in the change process from the leadership perspective because it provides inspiration.
“People associate change initiatives —again all change is personal — with the leaders personally,” Branch says. “If Brad doesn’t show up, then it’s considered to be either not important or not supported — a whole variety of negative reactions can occur if the leader doesn’t show up. Being visible is the single most important thing.”
But even if you show up, you have to be there mentally — not just physically.
“Stay connected,” he says. “Talk to people, talk to partners, talk to staff. Listen to everyone, but just be available. You’ll be surprised what you’ll pick up. It’s just amazing the great things you learn from your people.”
Branch will often ask about how the change is going, what they see, what changes have they noticed, and is it easier for them to be effective or do their work. He says to then listen specifically for feedback and opinions about what’s going on.
“The most important part of good listening is not talking,” Branch says. “I don’t mean that flippantly, but listen to what people say in a nonjudgmental fashion so they feel empowered and open to talk.”
This helps them not be nervous about talking to you as a senior person in the organization. Then you have to take that feedback to heart.
“If you’re soliciting opinions, it’s important to really listen to those opinions and use those opinions around what the final judgment is going to be,” he says. “It has to be genuine.”
While you may not be able to incorporate all their feedback, if they’ve been heard, it goes a long way in providing hope and creating buy-in.
“If the opinions are valued, part of the outcome, even though they may not agree with the outcome, as long as they’ve been heard and considered, that tends to work pretty well,” he says.
The other element of providing hope is providing support even when things get rough.
“Not all change happens perfectly,” Branch says. “Change is hard for a reason — it is difficult. Providing hope is providing support in the face of adversity so when things don’t go well or there are setbacks, to continue to have confidence in the team, in the people, in the change process.”
To do that, you have redefine your reality. “You’ll define reality throughout the process,” he says. “Keeping a view of delivering the vision — you do that constantly.”
This will build trust and help people get through the process successfully.
“Change isn’t a destination,” Branch says. “It’s a process. Halfway through the change process, if the destination changes, that’s OK, and you would expect that as you learn more and as you become more competent on the marketplace.”
HOW TO REACH: Deloitte LLP, (404) 220-1500 orwww.deloitte.com
Throughout his career, Bill Donges has grown accustomed to managing change.
“I’ve been a professional change agent,” Donges says. “I’ve moved from company to company. What you find is you have some current culture, some condition of the company ... and it wants to come to some new place. Sometimes, they know exactly where that is, and sometimes, they don’t, but you have to go through this transition.”
The problem with change is that it’s not easy to implement.
“There will be a lot of skeptics,” he says. “They’ll ask a lot of questions, and a lot of change initiatives simply don’t work because the people have resisted those changes and the uncertainty that the changes have caused. My rule of thumb on that is you have to lead your way through a change — you can’t manage it.
“You have to be out in front. It’s change leadership, not change management. You have to be out there making it happen. It’s work to do that. You will get people pushing back. You’ll see the culture not wanting to go to a new place. You have to take it there.”
His latest assignment has been the transformation of Lane Co., an Atlanta-based real estate management and construction firm. Since joining the firm as CEO in the spring of 2005, Donges has moved the company from being just a local player into a $220 million company operating throughout Georgia, North Carolina, Florida, the Mid-Atlantic and Texas. He has also increased the number of new construction units from 352 in 2006 to 1,329 last year. He did it by focusing on communication, setting goals and winning over employees who resisted the changes.
“It has a lot to do with your attitude and how you go into it,” Donges says. “It can look like a very tough battle, but you have to be into it and get a thrill of the battle. You know it can be difficult, but if you know what the end is, you can work through it. Just look for the positive in it. It’s the only way to do it.”
Communicate the changes
When you want to change something in your organization, you first have to let people know what’s going on.
“First and foremost, you have to communicate what you’re planning, what this new change initiative is, and you have to be very straightforward,” he says. “I watch people all the time. You get rhetoric, and the words don’t match up exactly in the people’s minds with what’s going on.
“They just communicate, ‘These are some of the goals and objectives,’ and they do it in a way that doesn’t include data.”
Providing data to your employees helps them understand the reasoning behind the change and helps them buy in.
“The communication isn’t just verbal,” Donges says. “It’s also data and performance information about productivity or customer satisfaction or financial performance. ... It’s not just happy talk. It’s not just having picnics and wearing buttons and having a lot of pep rallies.”
If you don’t provide the reasoning behind the changes, employees will get nervous and start to question their jobs and the company, affecting your ability to ultimately get changes implemented.
“People are wanting to hear the truth,” Donges says. “And they want to know, to the extent that you can share with them, what the problem is — we lost a major client, our quality numbers dropped, our productivity dropped. A lot of times managers or leaders hedge. They don’t really tell them the truth, and you have to face the truth.”
Even if you’re honest with people, they still may not understand or see the benefit of the change, so you also have to show them why they should change.
“They’re very skeptical when you start proposing these changes because most of them have been through change initiatives and might or might not feel positive about where you’re going,” Donges says. “If you feel you have got to go to this new place, you have to present it as an opportunity or you have to present it as a crisis.”
Lastly, explain big changes in person. Rolling out major company initiatives over the Web isn’t going to cut it. For example, when one of Donges’ leaders sent out a scathing e-mail to 20 people in the company saying that the sales department wasn’t doing its job, Donges had to address that person and explain that communicating via e-mail wasn’t effective.
“I’m just amazed that we’ve evolved to a new level of communication,” Donges says. “Talk to [employees.] People get fired and change initiatives are announced and get rolled out over e-mail overnight, and nobody’s communicated anything to the people.”
When you’re leading a change initiative, you need to recognize that people will start to lose their momentum, so you have to keep them engaged in the process.
“When you’re trying to move people from one state to another, you have to create a sense of urgency,” Donges says. “You’re trying to move the company to a new place. Over time, people get fatigued, and they lose that passion.”
You have to create methodologies to keep the sense of urgency in place to keep people moving forward.
“Create precise, short-term goals, so that if they hit those goals, they see that we’re moving to this new place.”
For instance, when Donges arrived at Lane, the company had more than 100 accidents the first year he was there. He wanted to lower that number, so every board, department head and location meeting started by addressing safety.
“You have to get people’s attention,” he says. “Every single orientation, that’s the first thing that I talk about — safety.”
But establishing goals isn’t enough. You have to break that goal down and understand the smaller components.
“You can sit down and say, ‘I’m supposed to be in construction; I’m supposed to hit the goals of quality and cost and time,’ so that on the surface is very simple to do,” Donges says. “How you get the data and how accurate it is and how relevant it is to those three goals is important.”
For example, if Donges says he wants to be the highest quality builder in the country, he has to look at how that’s measured. Is it by the number of client complaints? The number of violations he receives from inspectors? Or his own quality-assurance process?
“It’s not easy to get there,” he says. “Sometimes, your initial understanding of what those goals are like doesn’t translate into an immediate data point. You have to understand what it means, and sometimes, you have to try some, measure them and see if they’re relevant.”
When testing your metrics, look for employee feedback. “That comes out when you start having your meetings with people and they say, ‘Why are we measuring how many nails we used last week? It doesn’t make sense,’” Donges says.
After you get feedback, then you can better hone what you’re measuring.
“You find yourself refining these to a place where you really get it,” he says. “You get the metrics right over time because it actually bares itself out because it shows that what you did is relevant to that word — quality.”
By tracking the data and promoting safety, Donges was able to reduce the number of annual accidents from around 100 to 30, and even the severity of the accidents has lowered. Beyond numbers, now when he talks to employees, they’re talking about safety, too, because they’ve seen how much he’s reinforced it.
“You could see now that safety was now a state of mind,” he says. “It wasn’t a rule or requirement. It was something they believed in, and you can look at the data and see how the metrics are working out for you.”
Deal with resistance
With any change, there’s going to be resistance, and Donges welcomes it.
“Not everybody on your team is going to support you,” he says. “The easy ones to pick off are the ones that are absolutely overt about it, and they tell you they don’t think it’s the right thing. I celebrate those people. I absolutely see it as a positive when I see people resisting. I encourage them to openly talk about it, and I encourage them to state their reasons. That leads to some good communications.”
The biggest challenge is dealing with those who aren’t so vocal because you won’t necessarily know who they are.
“The ones that are difficult are the ones that are going covert on you,” Donges says.
Sometimes, you won’t know they’re resisting until someone flat out tells you.
“You just have to know you’re going to have that,” he says. “Don’t try to subvert it. Just move forward. I encourage as much of the openness about the negativity because it forces more communication, which ultimately leads to people coming over to your side.”
When you’re trying to get someone on your side, present it as a chance for them to make a difference.
“You can look at the change as a crisis ... or you can look at it and say, ‘This is a tremendous opportunity — let’s roll up our sleeves and get control of what we can take advantage of here and find the opportunity for the company or division,’” Donges says. “You have to get a mindset that that’s what you’re doing and become passionate about it.”
Donges also warns that you have to accept the fact that not everyone will come to your side; however, if that resister leads a division or department, then you have to replace him or her.
“Put a new leader in — a change agent who’s going to affect that — otherwise, you’ll never make any progress if the leadership doesn’t believe it,” he says.
If you’re unsure of whether someone is buying in or not, then look around and really observe.
“You get feedback,” Donges says. “You get feedback from the performance of the division of the company. You get feedback from people who are leaving. You get turnover issues starting to develop. You get feedback from either their sales or their customer satisfaction numbers.
“Usually, it’s the data that exposes them, but what kills them is you see that people are not participating or being part of the change initiative. It stands out like a sore thumb, but you have to see that. The data already validates what you probably already know and what you’re hearing back from people.”
This is particularly important for certain initiatives. For instance, one change Donges made was to Lane’s technology system.
“If you look at the big scope of what you’re trying to achieve, you have to have certain people on board,” he says. “If you’re going to change your technology platform, you better have your CIO on board. If he’s not, your initiative is going to fail. You better understand — is he one of those who’s resisting this?”
If he is, you have to determine if it’s because he disagrees or if it’s because he doesn’t understand it.
“If there’s just resistance because he doesn’t understand, then that goes back to adding clarity everywhere you can in the communications process about why you’re doing this, what are the goals, what are the costs associated with the change, what’s going to happen to people, to computers, what are the issues that have to be dealt with, and just bring them out.”
HOW TO REACH: Lane Co., (404) 459-6100 or www.lanecompany.com
When A. Malachi “Mal” Mixon III started with Invacare Corp. in 1980, the company had about $19 million in sales the previous year. He used to ask his 300 employees what kind of company they were, and they used to say a wheel-chair company. Slowly, though, Invacare redefined itself into a home medical equipment company, which allowed it to get into even more products. This led Invacare from being simply a U.S. company to expanding internationally. Last year, the company, now with 6,000 associates, hit $1.6 billion in net sales throughout 80 countries. Mixon accredits it all to one thing: innovation.
“These are conscious decisions that we’ve made that have made us totally different and innovative relative to our competitors,” the chairman and CEO says.
Innovation has also helped the company take its product development time from two years down to about 13 months. It also used to deliver custom products in four weeks, and now it takes five days.
“Some people think innovation is only something you apply to a product,” Mixon says. “Without exception, no matter what the functional area is, there are innovative possibilities, so you really need everyone in your company to think about how to do things better.”
One of the keys to getting your people thinking of innovation is to get rid of the sacred cows and allow people to challenge the way things are done. He says that how you handle yourself in meetings and the body language you give off are critical in this endeavor.
“It’s a matter of your culture and whether, if you challenge the boss, if you get your head cut off or are encouraged to speak up,” Mixon says. “There’s a difference in insulting someone or being rude or saying, ‘You’re stupid,’ versus a legitimate challenge to the way of doing it.”
Another key to driving innovation in your business is to focus on your customer.
“If you really focus around the customer and what they want and what they want to achieve rather than the product you want to sell them, you’ll find that you’ll be more innovative because you’re trying to help that customer be more successful, and if they’re more successful because of you, then they’ll reward you with a purchase,” he says.
For example, Invacare has been a leader in lobbying in Washington for change to reimbursement for home medical products. Recently, it was successful in getting legislation passed by Congress to change the way reimbursements occur, and Invacare’s customers have poured in the e-mails and letters thanking the company because many of them are small customers that don’t have the size, power or money to carry out a lobbying program.
Lastly, you have to look for ideas and changes that are really going to move the needle. At Invacare, Mixon and his team look at ideas and classify them in three categories — maintenance, innovative or disruptive. Maintenance ideas are just that — smaller things that need to be done to make basic improvements. Then there are innovative ideas that make things better, but the biggest ideas are the disruptive ones.
“Beyond innovative is disruptive,” Mixon says. “It changes the whole way something is done in an industry.”
He notes that examples of disruptive ideas are cell phones, jet aircraft, color TV and computers because they have completely changed the way people live, work, travel and do business. At Invacare, the team came up with a way to make oxygen in your home instead of having it delivered in tanks, which was a disruptive idea for the industry. So instead of trying to just push innovation, look for those disruptive ideas that can propel your company into new territory as a leader.
“If I change something and make it a lot better, that’s innovative, but that’s not a breakthrough, and it’s not a change agent that really causes you to change the way you’re doing things,” Mixon says. “You have limited engineering dollars, so who gets the money? You look at what impact it will have on your business, your sales, your margins, and there’s always a risk.”
While innovation also leads to change in an organization, it’s important to not get caught up in the fear associated with change.
“The inevitability is organizations either go forward or backward,” Mixon says. “There’s no treading water, so you have to look at yourself over a period of time and say, ‘Am I growing and succeeding and making good returns for my investors?’ Sometimes, a lot of little innovations add up to big success.”
HOW TO REACH: Invacare Corp., (440) 329-6000 or www.invacare.com
If you want to work for John C. Miller, then you’d best be prepared to embrace the “Bueno way.”
As president and CEO of Taco Bueno Restaurants LP, Miller knows how he wants things to be run and the experience his customers should have, so he refuses to settle for less than the highest standards, which he is constantly looking to improve upon.
“We celebrate the little victories, but then we set new goals that have some stretch in them every year,” he says. “No one should ever rest or be content in their latest achievement because the competition isn’t going to rest.”
To stay ahead of the competition at the $183 million restaurant chain, which has more than 180 locations, he continuously measures progress and gets feedback from his customers so he knows what he’s doing right and what he needs to change.
Smart Business spoke with Miller about how he knows what to do next.Establish good metrics. If you don’t have ways to measure, you don’t know how to assess what to do next in the business. You’d have to be lucky, or you’d be on your way to a short life.
What adds value to the organization? There’s all sorts of things you measure, but the measures have to be anchored in why any of those matter. Quite simply, what you value is what the customer values.
Nothing is sacred except that the guest returns. They have a lot of competitive choices. Those measures are against what customers say matter, then what our shareholders say matter, and then what our employees say matter. If you think of those as a wheel that rolls nicely down the street when they’re balanced, it works pretty well, but if they’re out of balance, the company doesn’t work well.Talk to customers. Sam Walton said it best if you don’t know what to do next, if there’s not real clarity around where you’re doing well and where your performance is slight, then go ask your customer.
Know your customers. You can get it with surveys, from employee opinion, but there’s nothing as valuable as face time with real customers that you can synthesize.
Listen to those consumers on what they’d like to see. You have to constantly ask. Sometimes, the consumer doesn’t know how to tell you you have to twist their arms. If you ask a straight-up question like, ‘What can I add to the menu?’ sometimes they can’t answer. If you probe a little deeper, you find out.
I interview a lot of guests and employees. If there’s an enthusiastic response and endorsement, I’ll probe more, trying to get to the bottom of why they were delighted.
If they weren’t delighted, ‘What would have made you happy? What kept you from being excited about the business?’ You get to the heart of what the consumer is looking for.Listen better, then assess. If you’re listening and then feel like, ‘Well, that’s not how we do it. I wish more people liked it the way we did it,’ then you’re not really listening. If you’re really listening, you’re listening for what you can take action on to improve your business.
Consumers are not static. They’re constantly changing based on what’s available to them, but it takes a commitment to be engaged with your consumers.
Assess where you’re at against what customers say matter, and give yourself an honest assessment with your team every year.
What are your strengths against what consumers say? Protect those. What are your weaknesses? Improve those. What are your opportunities things you aren’t doing that customers would like to see you do? Add those.Hire the right people. You don’t get to try people out for a year. How you staff is a critical part of putting together a successful organization that has continuity and can work together as a team.
We’re not in a hurry to fill every spot. We’d rather do it right.
In our reference checking, we ask some pointed questions about accountability, teamwork, customer focus, other people focus, employee focus. There are ways we ask that, interestingly enough, even people who mean to endorse their candidate, they sometimes pause over those questions, and that can be telling at times.
What most people do is assign that to a junior HR person who goes through a list would you rehire them, can you recommend them, would you say this person has integrity? The problem with those questions is, it’s too easy to say, ‘Yes, no, yes, they’re fine, they’re great,’ and you don’t get into it.
So the questions are more open-ended and designed to have conversation not yes-no answers.Strengthen your hiring process. If you’re not careful with the selection process, it’s difficult to maintain the environment you want. We have a verification process that requires some redundancy, so the store manager would not add a staff manager without an assistant manager or district manager’s involvement.
When you add a second layer of verification, it adds another layer of strength and credibility to the process. That causes people to slow down. If the system is really strong, it makes it easier for a manager to make a strong decision.
By having a set of high standards that people have to go by, the system becomes self-policing and self-fulfilling.
HOW TO REACH: Taco Bueno Restaurants LP, (972) 919-4800 or www.tacobueno.com
When Clinton Howard founded RBC Life Sciences Inc. in 1991,he was the entire company and did everything himself.
Today, as chairman and CEO of the $27 million nutritional supplement and wellness company, he knows that to move forward in business, you have to hire with the skills to get you there.
“I can’t come to work in the morning and open the door and do all the work,” he says.
“I can’t be very productive, and if we want to grow, we have to have people who I can delegate the jobs [to], who have skills greater than mine in specific areas.”
Smart Business spoke with Howard about how Henry Ford’s words on hiring guide him today and why conducting multiple interviews with a potential employee is critical.
Q. How do you identify which qualities you’re looking for in potential employees?
You bring in people who have skills. Henry Ford said it’s easy to run a big company all you have to do is hire people who are smarter than you are in each area and get out of the way. If you’re going to grow, you got to have good people. It’s very important.
Honesty has always been No. 1. A person has to have good moral fiber to be able to work with them year after year. You look for honesty, and you look for people who have a positive attitude toward their work and a positive attitude toward their relations with their fellow employees.
Q. How do you gauge these characteristics during an interview?
You can’t just by a conversation because some people who aren’t honest are very skilled at appearing to be very honest. It’s important to know what kind of record a person has in their past employment or school if they’re coming out of college or graduate school.
It’s really important to check their references. A lot of times people don’t bother to check references, but that’s very important because I’m not a psychologist or an expert in sitting across the desk and evaluating a person in my interviewing them.
That would be No. 1, to see how they’ve worked out in their previous activities.
Q. What else do you do to make sure you get the right people?
Besides checking their references, we have multiple interviews. A person doesn’t come with our company and just be interviewed by their future supervisor. They’re interviewed by several executives in the company, and we get together and get everybody’s opinion. That’s important.
Secondly, everybody who comes with us, they’re on a probationary status for a while because it is difficult to really accurately evaluate a person just in an interview. An interview is like a honeymoon everyone is nice to each other and smiling and positive, but it’s important to know as much as you can possibly know about a person before you actually bring them in to a company.
The better job you do in screening and evaluating, the better success you’re going to have in their productivity. None of us are skilled psychiatrists. None of us are that perceptive of a person’s character and what they will be like when they get on the job, how they’ll relate to the person at the desk next to them, how they’ll work out on the job.
Multiple interviews are good because it gives you the benefit of different viewpoints.
Maybe everybody agrees with the evaluation of the person. That’s great if they do, but I just can’t trust my judgment of a future employee on the basis of an interview. If we are interested in possibly hiring somebody, it will not likely be on the first meeting. It would be after the second or third interview.
I have a lot of respect for the viewpoints of the other supervisors in the company.
Q. How do you work through differing viewpoints about a candidate?
You probably don’t. You probably end up rejecting a potential employee if somebody that you worked with for years sees a real negative that I didn’t see or somebody else didn’t see.
I trust their judgment and their insight. Maybe they asked just the right question that I didn’t ask that revealed some flaw in that person that I didn’t pick up on, or someone else didn’t pick up on. It would need to be pretty much unanimous to bring a person in.
If you bring the wrong person into a company, it can be very destructive even if it’s only temporary until you straighten out the problem. Good morale is important.
A person who shows undesirable traits can hurt the morale of other fellow employees if they don’t get along with the other fellow employees or they gossip or criticize.
You can’t get in a hurry and just bring in bodies. Hire the very best people you can, and then educate and train them properly.
HOW TO REACH: RBC Life Sciences Inc., (972) 893-4000 or www.rbclifesciences.com
Think back to when you were 16 years old and envision the most important thing you wanted to buy at that point in your life. Maybe it was a car, or perhaps it was just your favorite record or cassette tape. Chances are that you weren’t thinking of a lifetime investment, but that’s why Herman J. Russell is a little different and undeniably successful.
As a 16-year-old growing up in Atlanta during the 1950s, Russell had already been working for eight years and had saved a hefty chunk of money. Instead of blowing his money, he invested it by buying a vacant lot for $125 a lot he says would cost $50,000 today.
“My daddy taught me the art of saving at a very young age,” Russell says.
He then built a duplex on that lot during his senior year of high school, and when he returned from his freshman year of college, he painted it.
“That was just the beginning of my real estate development,” Russell says.
Now, more than a half a century later, what started as a duplex built on a vacant lot has turned into H.J. Russell & Co., a $300 million construction and real estate development company.
It’s not always easy to build an organization from scratch, let alone to sustain it for as long as Russell has, but as he gets older, his one desire is to ensure that the company he founded and still serves as chairman for, lives on long after he does. So just as he builds solid foundations for all of his clients, he has done the same for his business by doing three things to ensure his company’s foundation is strong enough to stand the test of time. Over the years, he’s focused on hiring the best people, creating a great atmosphere for them and moving them up in the organization, and that even included moving someone into his own position.
“I always have in mind that I’m building an institution something that will live when I’m not here and continue to live,” he says. “That’s what you want.”
Hire the right people
Russell has seen his share of talented young people come into the company, but he’s also seen a handful of that talent pool leave because of their own dishonesty. The key is to minimize that handful and get as many of those honest, talented people as possible. When you do this, you’re building your business with solid people, which will help ensure its success and sustainability.
“The key to finding good people is looking at the education of the people and looking at the reputation of that individual,” he says.
One’s education is easier to detect because you can simply look at the resume, but honesty is another issue.
“You can’t really tell until you put the people in the game, but people who have been trained can sometimes detect honesty much easier than people who have not been trained for that,” Russell says.
He has potential hires spend a day with a psychologist for psychological exams so that he can get an expert opinion from someone who can better read a person than himself.
“I have interviewed and hired enough people to have my own gut feeling, and I do follow my gut feeling, but I want the scientific evaluation,” Russell says. “I get that to go with my gut feeling.”
In addition to the psychological testing, he also does background checks and drug testing on top of the standard interviews.
“You take all of that and put it in the hopper, and you come back 99 times right in your decision-making,” he says.
Beyond the time it takes to do the various tests, it also costs some money. Russell estimates that his company spends at least $300 to $500 for every hire, depending on the position, but despite the cost, he says it’s worth it in the long run.
“It’s better to spend the money and time upfront,” he says. “It’s 100 times cheaper upfront than on the tail end it costs more. It’s like saving a child you can save a child and keep that kid from going to prison with a good education. A good education is much cheaper than paying to keep someone in jail.”
Beyond the simple costs associated with turnover, having the right people will also help you build your company for long-term success.
“You want to have the very best,” Russell says. “You want to be the very best. You want to serve your customer with impeccable service. It pays off for you. It’ll be better if you have the right people on board.”
Create a great atmosphere
When Russell ran into one of his employees, he was thrilled to learn of her recent successes. The employee was a young woman originally from Africa who was initially hired at a time when she didn’t even have a college degree, but on this day that Russell spoke to her, he learned that through the company’s education program, she had earned not only her bachelor’s degree but also her master’s degree.
“Talk about something that made me feel good,” he says. “She gave me a hug like I’ve never had before.”
With more than 3,000 employees, Russell doesn’t see everyone on a regular basis, but he still wants all of his people to know he cares about them and wants to see them succeed, so it’s important to have a great work environment that fosters that sentiment. When employees know you care, it will keep them with your business longer and help you better create long-term success.
“Have a good atmosphere and you have an organization they can grow in and continue to learn,” he says. “You make sure that if they work hard and do a good job, they’re going to be paid well, they’re going to have fringe benefits and have an education program.”
That education program that helped the young woman earn both of her degrees is just one example of one of the benefits that the company offers. If an employee earns all A’s, then the company
will pay for all of his or her books and tuition. If employees don’t earn all A’s, they still receive a percentage from the company, which decreases as the grades do. Employees can major in any subject they feel will enrich their job, and they’re not required to stay with the business after they graduate. That may seem like a recipe for turnover, but Russell says other incentives keep them there after they’re done with the education program.
For example, the company offers family events about six times a year, such as a Thanksgiving devotional service, a Christmas party or picnics.
“If you got a family situation, nine times out of 10, you’ll have a better employee,” Russell says. “When you see people happy, they’re going to be more productive and they’re going to be a better influence to have around you.”
The company also takes time twice a year to recognize employees for their accomplishments and give out awards, which come accompanied with prizes such as televisions, checks or an overseas vacation. All of it is designed to motivate employees, and Russell says that while it can be hard to know what will motivate each of your own employees, it’s the motive, not the prize itself, that will win them over.
“I’ve never missed the boat on recognizing people and giving people something that they didn’t realize they were going to receive,” he says. “Even if you give someone a trip somewhere, if they don’t want to use it, they can give it to their mom or father. When you make a good genuine effort, you don’t miss the boat when you’re trying to motivate people.”
Move people up
The last key to creating long-term viability for your company is to promote people into higher positions, and sometimes, that even means replacing yourself. A few years ago, Russell started to realize it was time for him to pass the torch to someone else.
“I knew I wanted some faster legs, a good solid mind, lots of good youth and all,” he says.
In 2004, he was eager to turn the CEO reins over to his son, who he had moved up through the organization in recent years.
“I’m fortunate enough to have three kids, but someone in your organization, you should bring up, even if it’s not a family member, that you know has it,” Russell says. “You should treat that person or individual like your own family member and bring them along, and you just need to let go.”
Whether you’re hiring your replacement or someone else’s, it’s important to move your employees up in your organization, and to do that, you have to identify talent.
“It’s the same thing I look for when I hire,” Russell says. “You look for the very best. You look for the best-equipped person you have educationwise, experiencewise, with the right attitude, with the right mindset, someone who loves humanity. ... You can’t hardly be a leader if you don’t love humanity.”
It’s hard to be on the lookout for these types of people with just one set of eyes, so Russell has always relied on his management team to increase the likelihood of choosing the truly best people for promotions.
“All of our senior people detect the younger people, and they mention in the senior meeting, ‘This is someone we need to watch and make sure that they’re on the right track,’” Russell says. “It’s brought to the attention of senior management people because somebody who this person is working under can see this potential.”
Once you’ve identified someone for a particular position, it’s important to talk to that person about his or her future.
“The first thing I always ask ‘What area do you think you need some improvement in?’” Russell says. “We all I don’t care who--have some improvement we need to make. I don’t know the area but some area. You found out, and you make sure that you open those doors for that person to improve themselves.”
You may run into a situation where a person can’t see his or her weaknesses, and if it’s something you can see, then you should make the recommendation for that person. This initial communication session can be very telling.
“When I recommend something to the right people, they take it very well, and they appreciate it ...” Russell says. “If they get out of shape about it, that’s the test, that’s the wrong person.”
As you and your young protégé work collaboratively to improve his or her skill set and get that person ready to take the next position, it also helps strengthen your business.
“We’re not going to be here forever, and if you want your organization to live forever, you always got to have depth in your organization and put people in the position, so when that time comes, they’re ready,” Russell says. “We never like to pigeonhole people in the organization. We like them to see the big picture.”
HOW TO REACH: H.J. Russell & Co., (877) 787-7351 or www.hjrussell.com
An employee at Hisaw & Associates drops his wrinkled dollar bill into the pot and then timidly steps on to the scale to see if he’s lost any weight in the last week. He sees that he’s lost another 2 pounds since the last weigh-in, smiles and steps off.
It’s not some company policy requires employees to be a certain weight; rather, it’s a corporate challenge, based on the hit TV show “The Biggest Loser,” to encourage employees to be active and healthy. At the end of the challenge, whoever has lost the most weight gets all the money.
It’s just one initiative that President Kathryn Rehm Hisaw says has made a difference at the general contracting company. By encouraging and rewarding employees, she strives to make all 40 of them feel like family at Hisaw, which posted 2007 revenue of $120 million.
Smart Business spoke with Rehm Hisaw about how providing employee incentives, such as a trip to Las Vegas, makes people feel appreciated.Get buy-in. It’s important to listen to people and hear what people have to say and be open. A lot of times, companies are not open to change and not open to listening to people in their own organizations.
Let’s say it’s [an idea] in the accounting department. We discuss it in the accounting department at our weekly meeting, and we get the pros and cons, and I or [CEO] Richard Hisaw will ultimately make that decision. We don’t come out and say, ‘This is a new policy for Hisaw.’ We say, ‘Debbie has made this suggestion, and we think it’s a good policy, and we’ll try it.’
That gives people a self-worth of being part of the company and part of the team. People hate change. [But] if people feel they’re going to derive a better life, or something will make their work life better, that they’re going to become an intricate part of a company they’re proud of, they’ll change.
That’s part of just being a team. If they’re not going to do that upon knowing that, then they’re never going to change and never be part of the team.Give people authority. One of the toughest things for people to do is delegate that power away from them. People are frightened to do that.
If they start working with someone that’s going to be their protégé, and you take them as if they are your protégé, and you give them bits and pieces, and you test them, what also happens is you’re empowering them and giving them ability to make their own decisions. You’re giving them the ability, and they know that you trust them enough to make those decisions. Without that trust, they’re not going to be happy.
It almost allows them to feel they’re in a laissez faire leadership themselves because they feel they can be a leader for other people.
I don’t care how small the job may seem to a person from the outside looking in, every job we have is an intricate part, and nobody is insignificant. Everybody is a pertinent part of the machine that keeps us working.Make people feel they matter. If it’s a birthday, we have a special cake for that person, and the office goes out to lunch together. In our best years, we match the 401(k) dollar for dollar and give profit-sharing and bonuses.
They become part of the company, and they know the profitability they create will equal bonuses. At Christmas, they all come to a party, and we do reverse gifts. Maybe you’ll get an ornament or a professional waffle iron. It could be anything, but the final name that is drawn out gets a trip, and, usually, it’s to Vegas for two nights, three days, airfare and $500.
It’s not just for department heads it’s for Hisaw team employees, and they know everyone has an equal chance.
Those are the things that give people great satisfaction that they’re really appreciated. People are quick to call you and tell you how bad that is or how bad that is, and there’s a problem here, but the simple words of, ‘I really appreciate you thank you so much,’ go a long, long way. We have some longevity here. Longevity is everything because longevity is also loyalty. That’s what gives you optimal growth and exceeds your break-even points and gives you your maximum profit.Constantly communicate. Seventy percent of all the mistakes are due to communication or lack thereof 70 percent.
Communication is everything. Once you have a structure, communication is so vitally important. Listen to your client. Hear what he has to say. Don’t prejudge it and think what he wants. Know what he wants and do it.
When we talk to our people, we are talking with our people because when we communicate, we often ask for feedback and we ask their opinion. Sometimes people are shy, and they don’t want to tell you, but as they work with you longer and longer, they will tell you, and that builds strength within a company.
That communication is really, really important. Some people have a breakdown, and that breakdown in communication breaks down the trust. Once it breaks down the trust, then it erodes wherever you’re at.
HOW TO REACH: Hisaw & Associates, (972) 380-4448 or www.hisaw.com
When Philip Verges started NewMarket Technology Inc. in 1997, he traipsed around the country to bring in new clients, but when his office called him one day to tell him it’d be a squeaker to make payroll that month, he was blindsided.
While he’d been doing a good job of attracting new clients, he realized that he had done a poor job of collecting on his receivables. He didn’t understand the balance sheet, and he decided it was time to seek advice from others who did.
Recognizing his weaknesses and finding people who are strong in those areas has helped the chairman and CEO take his company, which delivers systems integration and emerging technology solutions, to $93.1 million in revenue last year.
Smart Business spoke with Verges about how recognizing your weaknesses can help you grow your business.
Q. How does recognizing your weaknesses help your company?
The business’ strengths and weaknesses reflect the entrepreneurial leader’s strengths and weaknesses, so as the entrepreneur overcomes weaknesses, that’s reflected in the organization.
We all have our weaknesses. In North America, we’ve had this culture (develop) where we don’t admit our weaknesses. We hide them. I have a fun game that I play in social settings. In conversations, just for fun, I’ll admit a past problem or issue I had ran into whether it’s parenting, business, management of my own credit card and as soon as one person goes, then the room opens up, and everybody starts rolling out their mistakes and their problems and issues that they have.
Q. What weakness do you have right now?
I have never grown a company from $100 million to $1 billion. While I have some ideas, I need to get other people involved that have that experience from the $100 million stage to $1 billion.
It’s not difficult to identify people that have those experiences. What’s difficult is to identify those people that have those experiences and have the aptitude to be comfortable inside the company that’s just grown to that size.
I’ve been through a couple of great (chief operating officers) very capable, great people, way better resumes than me, but ultimately, they’ve been personally uncomfortable inside of the organization.
Q. How do you know if someone will fit in your organization?
You have a number of different perspectives who are interviewing the individual, but there will be a certain percentage that might get through. There are some people who interview very well but are not good at their jobs.
Even when you find that right person, you need to have a grace period where both the organization and the individual, over that first six months to a year, are still getting to know each other and make sure it’s a great fit and trying to identify any issues early and resolve them and move on quickly.
Q. What helps you have a better chance of bringing in the right person?
When you’re looking for personality fits, one of the practices is to engage the whole person. We like to take our time. We like to meet the person’s family and see them in a social setting with their family.
While someone may be able to put a good face on in the interview process with the board of directors, there are very few people who can maintain the same composure when they’re put in front of their spouse and children. We like to, whether it’s a BBQ or dinner, get to know the person and the environment they live in, and it’s usually very telling on the corporate mask they may put on in the interview process or even in their daily work. We get to meet the person behind the mask when we see them in a more casual environment that brings with them the environment they live in on a daily basis.
Q. Why is that personality match so important to growth?
Key-man businesses often reflect the strengths and weaknesses of the key man. Early-stage businesses frequently pay competitively but are not at the top of the pay scale by industry, so the people are there because they believe in the company.
They believe in the key man, so there has to be a personality fit with who that key man is and with the overall management team that the key man has developed around him.
As it starts to grow, there has to be a recognition of where the company is today and growing from that base forward, as opposed to, ‘Let’s crumple it up and throw it away.’ If you have a management personality conflict and you’re getting the skills that you need but they’re counter to, personalitywise, the existing management team, you run too much of a risk of running a counter impact to what you’re otherwise trying to achieve, which is that next stage growth.
HOW TO REACH: NewMarket Technology Inc., (214) 722-3065, (972) 386-3372 or www.newmarkettechnology.com
“You have no idea how much I appreciate being heard.”
Robert Habeeb read this line from a note he received from an employee in Ohio, and it touched him. As president and chief operating officer of the $165 million hotel management company First Hospitality Group Inc., he could easily spend all of his time in fancy boardrooms in important meetings, but instead, he relishes being out among his 3,000 employees, all of whom he says have stories worth listening to.
He recognizes that when leaders take the time to learn where people are from, ask about their families and find out what their aspirations are, it creates loyalty and trust. And relationships that are built on these casual interactions create stock no leader can buy.
Smart Business spoke with Habeeb about how focusing on employees strengthens your company.
Talk to people. The closer you stay to the front lines, the better informed you’ll be as to what’s really go on in your business. If you get out on the front line where the interaction between the company and the customer takes place and you listen to those folks, you’ll get a great picture of what’s happening in your business.
If you stay in the office and go from meeting to meeting, dealing with executives and expect you’re going to get the full picture of what’s happening in your company, you’re probably mistaken.
If you don’t discipline yourself to put a big black line on the calendar and say, ‘I’m not in the office on this day or during these hours,’ and get out, it’ll never happen because your time will always be hijacked by some other priority.
You get to chat with people and learn a lot about your product and customer. The more that you’re close to your product and the people on the front line, the more that the keeping it real comes naturally rather than it’s a mission.
Find a way to help your employees.We started an employee Web site. When we first rolled it out, we had an all-staff meeting and talked about the site.
At the end of the meeting, the first question was, ‘I don’t have a computer do you know where I could get one?’ A lot of the people that work for us at entry level didn’t have the resources to buy a computer, so we came back and found a company that would co-op with us on helping people buy their first computer.
Anything we can do to help them navigate, people cheer for. It creates loyalty. We want people to be cheerful and friendly, and it certainly contributes to them going to work and making it easy to be cheerful and friendly.
It’s probably the difference in where you have your heart in what you do versus just going through the functions.
Think big. We’d rather get out of bed every day and try something different and have it flop and then pick ourselves up and try something else, as opposed to being an organization where ideas end up on the bulletin board, and the bulletin board committee gathers them and puts them in the log book, and that’s where they die.
We do a car giveaway every year. There came a time when we realized that management by whip and chair was extinct, and to retain people and inspire them to do good things, you have to develop a system that rewards.
Every time you have perfect attendance for a quarter, you get into the lottery. At the end of the year, we draw from the names of all the people who have perfect attendance, and that person has their choice of, this year, a Cadillac Escalade for a year, a Harley Davidson motorcycle to keep, or we paid your living expenses for the year.
That spurned from a lunch conversation we had one day. What’s the cost, and what’s the potential if it improves people’s performance just 10 percent?
Incentive programs should always drive you to some result. The reward should be exciting, and you should have a celebration of the accomplishment. The bigger deal you make of any incentive, the more effective it will be.
Call-offs reduced by 75 percent over the first four quarters where we had it introduced. It’s a long shot that you’re going to win the car, but it’s creating a positive when you get up in the morning and you’re not really sick but you’re making that decision of whether to call off sick or not. It really does change people’s behavior for the better.
Prioritize people. It’s all about where your head is at. What happened at Enron is that management stopped going to work every day thinking about their customers and employees and starting going to work thinking about ‘me’ it’s all about ‘me’ this is what ‘me’ has to do.
Many leaders can accomplish great things while being full of themselves self-confidence and a little bit of arrogance are positive traits but when you break that connection and you’re not genuine anymore, then you’re in the soup.
There’s a barrier that goes up when someone is seen as unapproachable as opposed to someone who walks around chatting with everyone they see. It keeps it real. It keeps you in tune with what’s happening in your company and what’s happening with your customers.
HOW TO REACH: First Hospitality Group Inc., (847) 299-9040 or www.fhginc.com
As chairman and CEO of the $203 million publisher of printed and online magazines for the real estate market, McCarthy has to make sure that all of his 45,000 monthly advertisers are getting the right amount of traffic from the ads they place and that it’s high-quality traffic. It’s a lot to manage, especially when he also has to ensure that his sales force is happy and can effectively continue bringing in advertising customers. Despite the challenges of this balancing act, McCarthy knows it’s his job to create alignment and direction and to ensure everyone is moving steadily forward.
Smart Business spoke with McCarthy about how he creates alignment and about the business lesson he learned from packing his kids’ lunches.
Follow through. When I’m making lunch in the morning for my kids to take to school, and I put it in their lunchbox and hand it to them to put it in their school-bag, they trust the sandwich is in there. They don’t open it up.
If I give them the lunchbox once without the sandwich, they may laugh at me and then ask me for a couple days, ‘Hey Dad, is the sandwich in there?’ but they’re going to trust me when I say, ‘Yeah, I did it this time.’
But if they get a lunchbox three or four days in the space of two weeks where there’s no sandwich, they’re going to start opening that lunchbox, and they won’t trust me.
That’s why delivering on a product-promise is absolutely critical. You can make one mistake, and as long as you correct and acknowledge it, the people you’re delivering the service to will trust you, but if you make a handful, they’re going to doubt you.
Business is no different than any part of life it’s structure with a set of rules, but at the core of (those) rules are accountability, trust, credibility and consistency.
Trust your salespeople. If your salespeople aren’t doing anything, then more often than not it’s because you’ve put the wrong incentive in front of them.
The sales organization is a lot like water. When you pour water, it seeks the easiest path it doesn’t try to go through a rock it goes around a rock. A sales organization will do the same thing. They want it to be as simple and as quick to make money off of it.
Engage the sales organization in conversations constantly because you can’t let the sales organization feel they don’t have accountability. If the organization says, ‘Oh, management will trust us no matter what,’ and they want to find the easiest way to make money, and if they know all they have to do is push in one direction and their compensation will get changed, so it’s easier to make money at the expense of the company, that’s a mistake.
But if you’re saying, ‘My promise to you is I’m going to give you something to sell, and I’m going to come out to the market to see if it works or not, and if it doesn’t work and I see you doing the things you need to, I’m going to trust you,’ then you have a powerful sales organization.
Create alignment. It starts at the core and at the perimeter simultaneously.
At the perimeter, the customers are outside, and the first thing you have to determine is, do we have a clear understanding of who our customers are and what we’re trying to do for them and whether we are effective in doing that?
At the core, look internally and say, ‘What are our processes, and what processes do we have that are consistent and work and can be replicated and can help us be effective in producing what we want to produce and that can be profitable?’
Then trace those toward each other and make sure the two things meet. A lot of times, companies don’t meet halfway. They have a good understanding of who the customers are and the processes they use, but in the long trip that occurs between business processes and the experience the customer has, sometimes it just never gets linked up.
Communicate with customers. The relationship between the customer and the person they do business with in the company should be the single most honest and consistent relationship.
It’s asking each of the people out in the business who are talking to customers to be responsive when the customer is giving them feedback, and it’s also measuring. We do that by tracking the phone calls we generate, the e-mails we generate, the people who print a map off a Web site so they can go visit an establishment, and then we engage the customers in a conversation about that business activity.
Customers have to make money first, salespeople have to make money second, and then the company will make money third. If that gets out of sequence, then we’re not going to have a good long-term business.
If customers aren’t making money, they’re not going to have more money to give us later, and if my salesperson doesn’t see they’re making money, they’re not going to be motivated to go out and talk to the customer to get more money, and those two processes have to happen before the company can make money.
HOW TO REACH: Network Communications Inc., (770) 962-7220 or www.nci.com