The opportunities for Mike Mellace to grow his business seem endless. But by the same token, the opportunities to overextend his resources are equally plentiful.
His company, Mama Mellace’s Old World Treats, produces and distributes specialty nuts, and as Mellace often asks, what store in the world doesn’t sell nuts?
“Whether it’s Home Depot, AutoZone, Office Depot or Neiman Marcus, they all sell nuts,” says Mellace, Mama Mellace’s co-founder and CEO. “As entrepreneurs, it’s one of the toughest things to say no, especially when you’re trying to grow your business. When we first started, we had that shotgun approach. We didn’t say no. We found we had spread ourselves so thin that we weren’t specialized at anything, and that really hindered our growth initially.”
Now, after growing Mama Mellace’s annual revenue to $10 million in just four years since its founding, Mellace whose mother emigrated from Italy in 1962 says his company’s success owes much to concentrating on its core market channels and becoming experts in those channels before expanding to others.
Mellace spoke to Smart Business about why empowerment and delegation are essential in a growing company.
Q: How can a growing company maintain service to its customers?
You have to go after the customers you think you can manage. Many entrepreneurs have the approach of, ‘Anybody who will take us will be fantastic,’ and a lot of times, we go for the biggest guys out there.
We purposely stayed away from Wal-Mart because we knew we probably wouldn’t be able to service them. They would take so much of our production that we wouldn’t be able to service any of our other customers, which leaves us counting on one customer to make up our revenue. That’s not a good scenario.
It’s being selective of your customers to the extent that you can be, not biting off more than you can chew and having a realistic expectation of what you can actually do productionwise, what your people can actually accomplish. As entrepreneurs, we get into this mindset of, ‘They can do more; they can work this many hours.’
People aren’t going to work as hard as you are. They don’t have as much invested as you do. They will work hard, but to expect them to work as hard or harder than you will is not realistic.
Q: How would you describe your leadership style?
When I was a little less experienced, I led more by fear and intimidation. Today, I have more of a servant-leader leadership style. A servant leader determines vision and values. Once you determine that, you flip the pyramid upside down and empower your people to actually implement it and to make it happen on a daily basis.
If you were to ask our employees, they would tell you they’re not afraid to fail, and they’re not afraid to make decisions. Things happen where they can’t depend on me to make a gut call. I’ve got to trust that they’re going to make the right decisions, and they know that I stand behind them.
Q: What are the benefits of empowering employees?
It does two things. An empowered employee is able to take care of your customers, which, in turn, creates more loyalty.
Unfortunately, the best example is probably the airline industry. You go to Southwest, and people can make decisions. People can put you on an earlier flight and help you with your situation. You go to one of the ones that are bankrupt, and they can’t make a decision. They sit around and say, ‘Well, I’m sorry, but that’s policy.’ Your customers end up getting frustrated and leaving. Empowered employees will create more satisfied customers at the end of the day.
It also gives them a sense of purpose, a sense of accomplishment and better job satisfaction because they feel like they can make a difference. They’re not an order-taker. They can make decisions that impact people’s lives on a daily basis.
Q: How important is delegation in a growing company?
It’s something you have to do as you grow. We’ve grown from zero to $10 million in four years. There’s a lot of change there.
When you’re small, you can handle a whole bunch of stuff, and you almost feel like you have to. You feel like, ‘Who else is going to do it? Nobody is going to do it better than me.’ You do the sales, the accounting, the production, and you coordinate all those different aspects, but as you grow, there’s just no way. You’re only one person.
You have to figure out a way to delegate and get things done, and as I’ve learned, you’re not going to be able to do it through intimidation and fear. You have to begin to empower and trust that your employees are going to be able to make the right decisions. Otherwise, you’re not going to be able to grow.
HOW TO REACH: Mama Mellace’s Old World Treats, (760) 448-1940 or www.mamamellace.com
Many business leaders believe that growth problems are good problems to have. But for Brian Oken, that doesn’t make the problems any less substantial.
“Businesses go through cycles,” says Oken, president and CEO of Ventura Transfer Co., a bulk handling and transportation company. “We’re having a lot of fun, and we’re doing a lot of things really well, but we have grown considerably over the past couple years, and we’re feeling that.”
Oken says with increased volume, the standards of performance VTC has set for itself especially those regarding customer service are being challenged. With annual revenue of about $18 million and growing, he adds that while maintaining simplicity is important, solving new problems means creating new solutions, and that requires employees who are willing and able to grow along with the company.
Smart Business spoke with Oken about the perks of being a trusting leader and the importance of employee feedback.
Q: How would you describe your leadership style?
Trusting. I like my people to pursue their own agendas while staying in touch with the company’s vision and strategic plan. In order to do that, you’ve got to trust them. Sometimes they hang themselves, and sometimes they become real heroes, but you’ve got to give them that latitude. You can’t constrain them, and I try to push that through the organization. We’re a company that lives by standards of trying to be a great place to work. Talk is cheap, and it’s much harder than it appears, but at the foundation of that is trust and respect.
Q: How do you build trust and what are the benefits?
Integrity and credibility are everything. Right now are challenging times for us. Our business has had very good growth over the past two or three years, and it’s definitely strained our capabilities and our managers’ typical ways of doing things.
At times, that credibility has been challenged. To be able to fall back on, ‘I’ve never lied to you, I’ve never deceived you, I would never manipulate you, you might not like what you hear’; you have to have that credibility, and we try to push that through the organization.
We’re in business for profits. Whether you’re a private company or a public company, you’re looking for a return for your shareholders, and you’re always looking for incremental improvement and to make sure you’re still a healthy, dynamic organization. All these things are done for two reasons: One is because they’re our core values and our beliefs, and they also generate return. Our customers are happier, our team members are happier, and our financial performance reflects that.
Q: How do you communicate your vision to your team?
We’re a private company that has full disclosure among our people, so when we go through the planning process, our financials are keeping score. Are we winning the game, are we losing the game, or are we just treading water? When we have a planning session, everybody is invited, and everybody knows what’s at stake.
After the planning meeting, during which the plan is developed and approved by the board, every month, we have my direct reports sit in front of a room. Imagine a classroom, and they’re all sitting by the chalkboard, and we fire at them the objectives of the plan, and it’s up to them to demonstrate results. This is the one time we’re very firm about, ‘We’re not interested in hearing about effort. What have you given our customers that they didn’t have 30 days ago?’
Q: How much feedback do you get during that process?
To be honest, I wish I got more. In business today, there is a feeling among many employees that they’re afraid to ask questions, afraid to bring up thoughts or observations because they feel like they’re going to come across as being stupid or seem like they’re not in touch. I really respect the people who stand up and say, ‘I have a question,’ and bring forth some insight.
You have one person who is providing the vision, then you have the executive team, and then you have all these other people. All these other people are the guts of the business. Their brains are full of ideas. They have tremendous insights and observations on what’s going on with our business and our customers, and most companies don’t solicit that. We really try to solicit that. We try to bring it to the surface, and I wish that we had more.
We have the traditional suggestion boxes and anonymous e-mails, but more than anything, I’m trying to be around them and trying to get them to give me their insights, whether it’s in traditional meetings or just in general conversation. The questions I get are great. They’re usually far better than anything I can anticipate.
HOW TO REACH: Ventura Transfer Co., (310) 549-1660 or www.venturatransfercompany.com
As Richard L. Keyser will tell you, turning around a company is no easy task — particularly when the company is already successful.
“I attended a seminar a few years ago, and the title of it was ‘Turning Around a Successful Company’; that’s probably one of the hardest business jobs you can undertake,” says Keyser, chairman and CEO of W.W. Grainger Inc. “When a company is in crisis, it’s pretty easy to stimulate change, but when things are going pretty well, it’s much more difficult to get the attention of the organization.”
For its part, it’s not as though Grainger is hurting. Founded in 1927 and publicly traded since 1967, the Lake Forest-based distributor of facility maintenance products hit the $1 billion sales mark in 1984, $5 billion in 2004 and posted record revenue of $5.9 billion in 2006, while expanding operations throughout North America and, recently, into China. That’s not to say, however, that there wasn’t room for improvement.
“We have been nationwide for a long time, but frankly, our positioning in a number of the major markets had gotten stale,” says Keyser, who was elected CEO in 1995 and chairman in 1997. “When you have an organization that’s been enormously successful, it can easily become very inward-looking and lose touch with customer priorities and begin to march to its own drummer.”
In an effort to maintain focus on customer needs and continue to build on its success, during what Keyser describes as “the depths of the post-9/11 recession,” Grainger embarked on an initiative to increase domestic market share by systemically re-examining its positioning in the nation’s top markets.
“We undertook a reassessment, city by city, of our whole presence,” Keyser says. “That includes, ‘Do we have enough branches? Are they in the right places? Are they the right size? Are they well-enough merchandised? Do we have proper sales representation to cover the market?’ We’ve dubbed it ‘market expansion’ because, in almost every case, it results in a fair amount more square footage in the market, it results in some new branches, some relocated branches and, in a few cases, some branch closings.”
The market expansion initiative, just one aspect of an overall growth strategy, has already contributed positively to Grainger’s branch-based sales growth, and by investing in infrastructure, strengthening customer relationships and communicating the strategy throughout the organization, all indications that point to that growth continuing.
Investing in infrastructure
Before any growth strategy can be executed, Keyser says one must first lay the proper groundwork.
“As most people know, you’ve got to build the foundation before you build the house,” Keyser says. “Systemically, it doesn’t work if you don’t.”
Because building the foundation for growth can sometimes be a massive and painful undertaking, the decision to do so can be a difficult one to make. As a facility maintenance products distributor, it is imperative that Grainger’s customers have what they need when they need it. As such, creating the support structure included investing in a Voice-over Internet Protocol phone system, re-engineering its distribution network, expanding an already massive product line, integrating multiple market channels and increasing the size of the sales force.
Today, Grainger is able to provide same-day or next-day delivery of any of more than 350,000 products to virtually the entire country.
“It was a complete re-engineering of our back room with a couple hundred million dollars of investment,” Keyser says. “It’s a bit like changing the tires on your car. You’ve got to do it, and you have to do it because if you don’t, you’re inviting people in and saying, ‘Hey, come on in and try our lousy service.’ That may work for the first quarter, but after that, you may not see them again.”
Because, in many cases, the products Grainger provides are not necessarily central to its customers’ businesses, Keyser says it is all the more important that the company’s 1.6 million customers not be hassled while dealing with something they’re really just trying to get off their desks.
“A service failure is the worst possible thing that can happen in our business,” Keyser says. “We have lots and lots of customers, and many of them actually visit us infrequently, even though they like us a lot. So if we have a service failure, it can take a very long time before that customer realizes that we fixed that problem. Systemically, the strongest thing we can do is to have very high and gradually improving levels of service.”
Moving forward, Keyser says he now considers the market-by-market evaluation an evergreen program that will extend far beyond its original plan, which focused on Grainger’s 25 largest markets. Additionally, in order to better monitor the success of the program in improving service to customers, markets where Grainger’s operations have already been tweaked will be revisited and readjusted where necessary.
“There are many more cities beyond the top 25 where we require the same kind of reassessment, and by the time we get to the end of the list, it will be time to look at the first ones all over again,” Keyser says. “That’s probably where we might not have been as aggressive in the past as we should have been, and we’re going to have to allow that to happen going forward.”
Being there for the customer
Fostering customer relationships must be proactive, not reactive. As such, gone are the days when a sales representative could simply drop off a catalog and wait for a phone call. Rather, Keyser says it is a necessity that employees familiarize themselves with customers’ businesses to the extent that they can anticipate client needs.
“The only way you can really help a customer is to help them grow their sales or lower their costs or expenses and lower their investment,” Keyser says. “Understanding at a given point in time what those customers’ priorities are is essential, and the only way you can do that is to be there.”
Truly being there for customers is impossible with a sales force spread too thin. While it might be intuitive to assume expanding market share would mean more clients for each of Grainger’s salespeople, in fact, the opposite is true. Since 2002, Grainger has increased its number of sales representatives by 70 percent while lowering the average workload from around 250 to 35 clients per representative over the same period. As a result, salespeople spend more time with each customer, allowing them to build multiple relationships within each client organization. Keyser says the results are apparent.
“Especially with our larger customers, there are many people in a facility who may be buying our kind of stuff,” Keyser says. “They might not all go through one purchasing agent or one individual. So we need multiple relationships with a given customer, and the only way we can do that is to empower and enable our salespeople to spend more time with a customer, and that suggests fewer clients. It does work. The more focused we get our people, the better we do.”
While maintaining focus on customers’ needs is crucial at all times, Keyser says doing so during times of growth and change requires paying extra attention to what customers are thinking, how well they are being served and how they can be served better.
“Maintaining continuity of customer relationships as things change is doubly important,” Keyser says. “Because quite often for us, the needs customers might have that we can fulfill can be somewhat infrequent, maintaining top-of-mind awareness in between those occasions is an ongoing challenge. The only way we can do that is to be there.”
Building consensus around strategy
Regardless of the efficiency of your infrastructure or coziness of your customer relations, no plan can get off the ground without employees who are aware of and buy in to the direction that the organization is taking.
“It’s always an important challenge to keep employees aligned with what you’re trying to do as an organization,” Keyser says. “That takes lots of communication and lots of training to make sure that the employees’ needs, as well as the company’s needs, are well taken care of.”
Keyser says communicating a vision and strategy and creating alignment behind it requires a multifaceted approach that, on an ongoing basis, utilizes many different vehicles, such as an employee publication, the company intranet, various employee training programs, etc.
“It’s on multiple fronts,” Keyser says. “It’s using the organization’s structure to communicate. But also, particularly with today’s technology, there is great opportunity to do a lot of direct communication through various types of media and electronics to have people more directly engaged as you go forward.”
A helpful tool for Keyser in building consensus around Grainger’s market expansion strategy has been identifying influential positions in the organization, encouraging those individuals to buy in to the strategy and making them, in effect, cheerleaders for the cause.
“Getting the really key people in the organization to buy in and become zealots goes a long way,” Keyser says.
In doing so, Keyser says it is important that those individuals have a sense of participation in the development of the company’s direction. Because Grainger’s growth strategy is based in large part on adjusting the company’s presence in different markets across the country, its key group of individuals included local management, which was empowered to help develop, along with a core planning group, the repositioning strategy within their own markets. As a result, management at the local level is committed to and accountable for making the plan a successful reality.
“(Each market’s plan) will be consistent with what we’re trying to do, but it will be uniquely tailored to their market,” Keyser says. “It will be a much better solution than we would get if we just tried to dictate it to them. They own it and coupled with that are their commitments to the kind of results it’s going to produce.”
To further familiarize the organization with company strategy, once a year, Grainger holds a field meeting with about 4,000 employees, during which case studies are presented that feature video interviews with actual customers outlining what Grainger did well and what could have been done better. E-learning programs are utilized on an ongoing basis for sales and operations training. A branch auditing system is in place that allows representatives from different branches to critique the operations of other branches, offering suggestions and sharing best practices across the organization.
Regardless of how information is presented, Keyser says the goal of any training program is the same.
“There are all kinds of training,” Keyser says, “but at the end of the day, the soft part of training is, ‘What do we really want the customer to experience and how do we use the tools that we have to make that happen?’”
HOW TO REACH: W.W. Grainger Inc., (888) 361-8649 or www.grainger.com
For John D. Sterling, CEO of Synch-Solutions, being a leader that people want to follow starts with having integrity. Add to that constant and consistent communication, and Sterling has created a formula that he says keeps his employees engaged and eager to continue their careers at Synch-Solutions, a provider of management consulting and tech services.
“Our cultural development is consistent with communication,” Sterling says. “We want to make sure that our employees know that we care about them. We care about the work they do, we care about their quality of life, and we care about their families.”
With Synch-Solutions, posting annual revenue of approximately $24 million, Sterling’s commitment to his staff seems to be paying off.
Smart Business spoke to Sterling about recruiting top talent, organizational DNA and why a leader’s fingerprints should be all over his or her organization.
Q: How would you describe your leadership style?
I would use the term ‘managed entrepreneurialism’ because as a small organization and especially a professional services firm, our assets are our people. We need to get the smartest, most talented people that we can attract, recruit and retain.
In attracting that talent, it’s usually very senior, very experienced talent. My style is to include those individuals in on decisions and make sure that I’m communicating my vision to my executive staff and being very cooperative from a communications perspective.
The benefit to the company is that we’ve created an environment where everyone feels that they are contributing, which they are. They also feel that they have a voice in some of the directional elements of the organization, so we get a lot of inclusion, and we get a lot of innovative ideas because not only do we have a diverse organization, out of that diversity comes very innovative ideas.
Q: How do employees react to that style?
When an employee knows that their idea will be socialized, fully vetted and considered as one of the options for a solution or a strategic initiative, it puts them in a position of power. It also gives them the heads up that they need to be extremely responsible in performing their due diligence on whatever ideas or initiatives that they are going to propose or promote.
It does put the accountability on them, it empowers them, but they also know that because of this culture that they have to do their homework and come well prepared to present their ideas, the business cases for them, as well as the return on investment. Because of those aforementioned items, our team is much more sophisticated in an entrepreneurial manner in terms of promoting their ideas.
Q: How do you recruit the brightest, most talented employees?
Today, highly skilled, highly qualified professionals want to know where an organization is headed, how we’re going to get there and what is going to be their individual contribution to that journey.
It begins with a vision, and then through a strategy down to a connection point with the employee, from the vision and strategy to how do they impact the employee. I’ve been pretty successful in connecting those data points, and it’s extremely important to make that connection.
Q: Has it been difficult to maintain your culture during your growth?
We have put some foundational elements in place to maintain a healthy culture and work environment. That’s everything from our HR director, who keeps tabs on the diversity of our organization, through other HR initiatives to ensure that we do maintain a culture that is conducive to, and built around, teamwork and team-building.
Having said that, as we’ve grown, yes, it has been a little difficult to maintain the exact culture, but I don’t think we want to. Some of the culture needs to be constant, and some of the culture is going to be reflective of the individuals that we bring into leadership roles. It’s a hybrid.
As you grow, a part of your culture does change, but it’s the operational elements of your culture. The DNA of our culture is largely due to my leadership and the characteristics that I possess.
Within any corporation that you look at, from very large organizations to small ones, if the CEO is actively engaged, the organization is going to take on that personality. It is the responsibility of the CEO to set that direction and set that bar so that the rest of the employees know that it’s not business at all costs; there’s an integrity that has to be encouraged on an organization.
Integrity, honesty, hard work and having an entrepreneurial mindset are some of the things that we do. But it doesn’t matter what the company is; if that CEO is worth their weight in gold, they’re going to have their fingerprints on the organization’s DNA and culture, and that can be directly mapped back to the success or failure of that company’s ability to grow.
HOW TO REACH: Synch-Solutions, (312) 252-3700 or www.synch-solutions.com
While many business leaders work tirelessly to inspire passion among the ranks, doing so has never been much of a challenge for Elliot Sainer, president of Aspen Education Group. As a leading provider of educational programs for struggling and troubled youths, the mission of Aspen is clear and simple: helping kids. And as Sainer points out, most Aspen employees came to the company with that very goal in mind. As a result, keeping morale high isn’t an issue, and Sainer believes his organization’s collective enthusiasm has been key in not only allowing it to achieve its goals but also in helping to grow annual revenue to approximately $150 million in 2006.
Sainer spoke with Smart Business about the benefits of consistency and how to keep employees from seeking greener pastures.
Know your team. I have a hands-off style in a sense. I put a lot of trust and confidence in people who work for me and I let them run with things. Obviously, sometimes I have to make decisions, but mine is more a consultative role than it is a top-down style.
Knowing when to step in comes from knowing who your management team is. Sometimes you’ve got to step in earlier than others, depending on who you’re dealing with. You can’t manage all people the same. I will manage some of our senior leadership team quite differently depending on their own personalities and style, rather than trying to put in place one way of managing people and trying to make it fit for everybody.
Reap the benefits of empowering others. Our business is really helping kids and families, and that’s done at the local schools and programs. If school and program directors feel they have the authority and responsibility to get things done and to do things they need to do to help these kids and their families, and they feel a sense of empowerment to do that, they’re going to do whatever it takes to get it done rather than always having to wait for someone ‘upstairs’ to tell them what to do.
If you went around our organization and talked to people who are running our schools and programs, you would find, pretty uniformly, that people really believe they have both the ability and the responsibility to run their school or program and do so that way.
The danger, clearly, is that people have too much rope, and you’ve let the rope out too far. Occasionally, you get in trouble with that, but the benefit of having people feel that empowerment far outweighs the occasional mistakes that you make along the way.
Personify your core values. We spend a fair amount of time in our organization on our guiding principles. Doing so creates a sense of unity around a common goal.
Clearly, some people are really into them, and some people are not, but you can’t communicate it enough. People need to hear it and see it.
In many programs we see, programs we compete with and even programs we’ve acquired, the ones that seem to be successful are the ones with really good communication and people who understand not only what they’re doing, but why they’re doing it.
We try to keep communicating with people, and it may not hit them the first seven times they hear it, but it clicks on the eighth. For some people, it clicks on the first, and I’m sure for some, it never clicks. It’s challenging, but above all, they need to see it at the top, and I don’t necessarily mean just myself. You need to walk the talk.
If that’s not happening at the top level of management, then it just becomes a lot of noise. We, as leaders, first have to demonstrate those principles ourselves.
Strive for consistency. We often talk here about having a successful business in terms of ‘The Four P’s.’ The Four P’s are people, product, potential and predictability.
A lot of organizations end up having good people, they have a good product and they have good potential, but it’s the ability to do it year after year the predictability that sets apart really successful businesses. As I work with and manage our school directors, and as I think in terms of our company overall, we have to have all four legs of that stool to really have a successful business.
As a leader, people know I’m going to be fair and consistent. They might not always like a decision, but they feel they’ve been heard and there is some fairness and consistency to the decision-making process.
When you end up having a yo-yo effect on decision-making, when people can’t figure out why decisions are made, that’s when you start getting in trouble with your people. As I look around at other people I’ve respected and other successful businesses, there’s always consistency.
Recruit and retain. The biggest challenge in a service business is recruitment and retention of good people. That’s sort of cliché, in a way, but it’s so true. It’s a constant challenge that will probably never go away.
It depends for what level of the organization you’re recruiting, but when candidates come out, they need to see a committed work force. If they can feel that, it goes a long way toward making them feel that this is a good place to work. Clearly, the normal things a competitive salary, a competitive compensation package are important, but it’s really about whether candidates believe that people here care about what they’re doing and that they’re making a difference in kids’ lives.
In terms of retention, it again goes beyond financials. That’s part of it, but people really want to feel part of a team. They also want to be able to grow in their positions. It might mean growing in terms of promotions, but it also might be growing just in terms of learning more.
For most of our people, these are not the kinds of jobs people stay with for 35 years. If they can feel and believe they’re getting some personal growth as well as financial growth, people tend to stay. When some of those things break down, people start to say, ‘Why am I here? The grass will be greener somewhere else.’
HOW TO REACH: Aspen Education Group, (562) 467-5500 or www.aspeneducation.com
Problems associated with growth are good problems for a business to have, but for Greg Dubecky and Corporate Screening Services Inc., that doesn’t mean those problems are any less critical. After CSS grew its team by nearly 50 percent from 2004 to 2005 and then again by a third the following year, Dubecky, the company’s general manager, realized that even the more trivial difficulties required attention.
“There were a myriad of problems as simple as, ‘What are we going to do about parking?’ Dubecky says. “These were things you would never think about. ‘Where are we going to put everybody? We’ve got to buy phones? We don’t have any place to park these people.’”
Founded in 1995 as a spin-off of Corporate Investigative Services, a company that specialized in workers’ compensation and insurance fraud investigations, CSS found a niche within the burgeoning corporate screening industry.
“You spend all this time trying to figure out which products you have meet market acceptance,” Dubecky says. “Which one of these things is beneficial? Which one of these things offers value to the end user? We started to look at screening pretty seriously.”
By 2003, after CSS had moved out of what Dubecky describes as survival mode and had outgrown its informal leadership structure, the company’s principals began putting processes into place in anticipation of further growth. Though it was difficult in a rapidly growing industry, they began forecasting where they wanted to be three and five years into the future, and then took steps to build a scalable infrastructure to support the growth they foresaw.
Dubecky says that creating scalability helps a growing company retain some of the agility characteristic of smaller companies.
“Being scalable helps you out because it gives you peace of mind,” Dubecky says. “When you know that you have systems and policies and procedures in place that are scalable, you can make those changes and you know that, that structure that you have in place is going to accommodate that.”
In making the transition into a more formal leadership philosophy, Dubecky and the other principals of CSS placed greater emphasis on forecasting, planning and strategizing to sustain growth rather than on day-to-day operations. Though it is a difficult shift for many leaders, Dubecky says having the ability and wherewithal to delegate is vital to continued growth.
“The most difficult part for us in that shift process was considering the fact that we couldn’t any longer work in the company, we had to work on the company,” Dubecky says. “We always liked the day-to-day operations, but we realized we weren’t going to be able to sustain our growth unless we really concentrated on the company.”
As part of his new responsibilities in the more formal leadership structure, Dubecky found that conveying the company’s mission and values became a much more challenging task given the growth in the CSS staff.
“Everybody is moving at warp speed,” Dubecky says. “All of a sudden you don’t have just 15 or 20 people; you have 70 people that you have to communicate what your mission is. You’ve got to get everybody on the same page, and that becomes an arduous thing to do.”
In successfully managing rapid growth, Dubecky says that a leader should never hesitate to seek guidance, something CSS did to help it cope with growth.
“We hired a human resource professional to come in and help us out,” Dubecky said. We were able to really help to establish a culture, get people on board with the mission and keep people happy and motivated.”
HOW TO REACH: Corporate Screening Services Inc., (440) 816-0500 or www.corporatescreening.com
Customers come first
While Corporate Screening Services Inc. was growing, General Manager Greg Dubecky stressed above all else that customer relationships must be maintained. Here is what Dubecky says about preserving that bond.
“You can’t grow unless you have a sound foundation. You need to figure out what a sound foundation is. A sound foundation for us is, first and foremost, our relationship with our customers. Without existing customers, you can’t build. If you have customer attrition, you’re going to be spinning your wheels.”
“Your customers know when you’re experiencing some pains. They identify immediately whether or not you’re having some problems, and they’ll be the first to tell you. We were not ashamed to tell them, ‘Yeah, we are experiencing some growing problems. These are good problems to have. We hope that you want to align yourself with an organization that’s successful. CSS is successful, but we have some new challenges.’”
“Profits and money come secondary to us. It’s about making the customer happy. Those are the things that help us sleep at night. At our organization, we’re not afraid to put our folks in front of the customer. Our front-line people speak to our customers on a daily basis. We encourage that, and we want to make sure of that, because they’re projecting that same image.”
Encourage the flow of information. As a manager, you want to encourage information flow, and you want people to feel comfortable to reach out to you. You want to be accessible. Not everybody takes advantage of it. Just by having an open door doesn’t mean people use it.
If it’s not happening by itself, you have to go and reach out. In general, this is what they call management by wandering around, or MBWA. You’ve got to be out and about, whether it’s locally in your facilities or going on the road and meeting people.
As a leader, you really have to be everywhere. There is no substitute for seeing what’s going on in the field with customers and with your own people. All the e-mails in the world aren’t going to be able to substitute for talking to people and looking at them in the eye, and having them see you as a person they can work with and relate to.
You have to be careful, when you actually have this open-door policy and you reach out to people at any level in your organization, not to fall into the trap of becoming their micromanager. You have to do a lot of listening but very little action other than communicating whatever you want to communicate, whether it’s values or goals. You can’t really solve problems on the spot; you have to work with the management.
Maintain harmony with your managers. Clearly the only agenda for us is that the company succeeds. We live in a competitive environment.
Every customer problem can be resolved by multiple vendors. No matter how you look at it, nobody has a corner on anything in this world. So when you’re in a competitive environment where things change daily, new products emerge, customer requirements change, you really have to be totally in tune with what’s going on outside the company.
The only way for the company to succeed in a competitive environment where globalization has taken place and you are basically competing with people from all over the universe on a level playing field, is you really have to get the best out of your team. Getting the best out of your team means that you have to work in harmony with your managers and have them work in harmony with each other so that you can really get the best out of everyone.
The most important thing is to touch base, not to let a week go by without speaking with every one of your managers in great detail. That’s critical. You cannot allow any disconnect, and I’m talking about people who are across the Atlantic and wherever. It’s not just locally.
Keep people engaged. When you have people that are basically great people working for you, you want to make sure that they’re totally engaged. The only way to accomplish that is to communicate as much as possible. There are a million ways to communicate, either directly with people when you see them, through management, through what you do every day, through internal newsletters.
You have to try to paint the bigger picture. I really try to help our own people understand where we stand and how we make a difference and how we, as a company, can make a contribution to our customers and maybe to our industry, as well. It is very helpful when you are able to paint that bigger picture, because people can see where the company stands and where it’s heading.
Foster employee/customer interaction. As much as you can, you get your people involved with your customers. You want them out and about and rubbing shoulders with real customers and understanding the issues in the field and not just getting information through sales and marketing people.
We try to encourage that kind of interaction. There’s a lot to be gained on both sides. When we bring our engineers out, our customers really appreciate that because many of our competitors basically hide their engineers. The customer only gets to see support people and salespeople. When we bring our engineers out, it is really very positive and the customer feels like they’re getting value out of the relationship, and our engineers get to understand what’s going on out in the field and what real people need them to design. It’s a very nice motivator for them.
Stay a step ahead. What can cause a company to fail is lack of innovation. Ultimately, you’re only as good as your last product. So you have to constantly renew yourself and make sure you’re constantly evolving with your customers’ needs and keeping one step ahead of the competition.
The important thing is that you have smart people working for you, and you keep them motivated and make sure they see the results of their efforts.
We celebrate wins to the extent that we can. We try to propagate good news. Bad news spreads on its own; you don’t have to do anything. But with good news, you have to really try to celebrate and make people aware of what’s what and how they can emulate that kind of success.
HOW TO REACH: MRV Communications Inc., (818) 773-0900 or www.mrv.com
George L. San Jose has seen a lot of companies that were great at the 100-yard dash. However, he’s not impressed by the flash-in-the-pans of the world and prefers to liken his company, The San Jose Group Co., to a well-conditioned marathoner. Fostering what he describes as a customer-centric culture, San Jose has stressed persistence and consistency since founding the Hispanic-focused marketing agency in 1981. Employing 54 people in Chicago and more than 700 worldwide, The San Jose Group now records more than $130 million in domestic annual billings. Smart Business spoke with San Jose, the company’s president and COO, about leading by example and seeking out fresh ideas.
Personify your vision and build buy-in. If you’re expecting people to follow you and to follow your example, then you have to live your example. You have to be a living testament as to what they can achieve.
In a way, you almost have to be their mirror, so that they can see themselves in you and thus begin to think on their own that, ‘Gee, if he did it, then I can do it.’ It’s like anything else. You have to see the end from the beginning. You have to know where you’re going before you can figure out how to get there, and if you know what it looks like, you at least know when you’ve arrived.
My style is very much leading by example, casting out a vision. There are three major steps to it. First is casting out a vision, specifying the objectives, achieving the buy-in from everyone in the vision and making sure they understand it. It has to be made into a common vision for everyone to feel and touch.
Then you have to support that with incentives. There has to be a reward mechanism in place for those folks who are going to help you.
The last part is pulling the people to help you accomplish it. You lay all that out, and then you just have to pull them along.
Hire for potential. I’ve learned that the vision that I had can be accomplished and that the vision we set out has really made a difference in the type of agency that we have become, the size of our organization and the quality of our work. I’ve also learned that not every person wants to be pulled into a higher professional level than the one that they presently might have achieved.
Studies show that 20 percent of the people in an organization are going to resist change. Not everybody that you hire is going to be one that wants to achieve that higher level of excellence.
A lot of times in the hiring process, we try to evaluate candidates on not what they bring to the table right now, but as best as we can, is this a candidate that can be promoted two or three times higher than the level they’re at right now? At the end of the day, I’m a coach.
It’s kind of like a sports team. You have great players in different positions, and as a mentor to them, I look at people not based on what they can deliver but based on the full potential that they have.
It’s impossible sometimes to know in a 30-minute interview or even if you screen them at two or three levels what the person’s disposition is going to be. There are telltale signs that you can look at and read, but a lot of times it’s just like the stock market. You look at where they’ve come from, and that’s how you can judge where they’re going. It’s not necessarily true 100 percent of the time, but it does provide you a pretty good guide.
Constantly strive for excellence. Most employees would tend to do enough work just to get by. They’ll do good work, but good is just not good enough.
To achieve excellence, it’s something that you have to constantly work on. Excellence is in the details. To get people to see your vision and to capture the fact that if we do work at a higher level of excellence, we don’t have to do as much.
We’ll do less work, run more profitably and with less stress. That’s a hard point to get across sometimes.
I can’t repeat enough how important it is to be constant. It’s constant training, constant evaluation, a constant pursuit of excellence and teaching by example. That’s not only as to how you behave yourself but as to how you would tackle projects or assignments or basically points of view on how to manage a business better.
Seek out new ideas. Leaders tend to sometimes live in a vacuum. They run their own companies and they make statements to themselves that we’re the best at this or we’re the best at that, and a lot of times, those statements and that way of thinking are not founded or grounded in anything that is actual truth. They believe that, but they haven’t exposed themselves to what their competitors are doing or what their colleagues might be thinking.
It’s important for a leader to break away from the office at least two or three times a year and go to conferences where they can see other businesses and how they’re addressing issues and other things that they’re doing. I’ve found that has recharged my battery on a continual basis.
If you always think that the people you’re competing against are smarter than you are, you’re always going to try to be smarter than they are. That, in itself, will make you more competitive, but you have to constantly be on the lookout for what’s hot and what’s a new, innovative way of doing something. There’s something that I constantly teach my folks here, and that is if it was great that way last week, what are we going to do differently to make it better this week?
HOW TO REACH: The San Jose Group Co., (312) 565-7000 or www.thesanjosegroup.com
Make leadership a team effort. We have a strong management team here, and we have built our strategy in this business together.
It isn’t an autocracy where everybody is waiting for me to tell them what to do, by any means. I don’t care for an autocratic leadership style. Everybody becomes dependent on that one person, and it breeds weakness.
Participation is important, and it’s not just a meeting you go to. Part of the job of my management team is to weigh in and help create and continue to modify and nurture our strategy.
It’s not up to me by myself. Everybody has a piece of the action, and they’re constantly coming in and making recommendations. For me, that’s critical.
If you’re doing those things together as a team, it makes it really easy to communicate to the rest of the employee population, as well as to your clients, who you are and what you do and to be very consistent about that. You don’t have to be constantly worried about, ‘I wonder if the people in this location really get what we’re doing.’
You know they do, because your entire management team is on the same page, as opposed to you cooking it up in your office, coming out and telling everybody what you’re doing and then figuring out who doesn’t understand what you’ve told them.
Share information with employees. We’re a publicly traded company, and we typically don’t disclose our detailed revenues and profits outside of the building, but we tell our employees everything. They know it all.
If they leave the company and go to the competitor and tell them, so be it. We tell them about our product development initiatives, we tell them about our strategic deals, we tell them about acquisitions that are pending when we can. It’s so good to keep people on the same page. I would hate to work in a company where I didn’t know anything until I read in the newspaper and saw that we had acquired somebody.
We’re very open here, and we do a lot of communicating about our strategy, our plans and how the boat is floating financially. What happens is that it ultimately keeps people informed, but it also allows your managers, who are responsible for their functional areas and objectives, to have a consistent framework within which to make sure people know how their tasks and their goals and objectives roll up to the grand strategy.
Learn from your mistakes. You can’t punish honest mistakes. I hear stories of people getting fired for having a project not come in on time.
We’re diligent about the things we do. We’re not going to have poor performance continue, but when you have key people working hard on something and just because it doesn’t come in exactly as promised, that doesn’t mean those people are useless.
There are a lot of things we’ve done in the past where I didn’t know how it was going to come out. If it didn’t come out the way I wanted, it didn’t mean the people who were working on it were bad. Maybe it was a bad plan.
To some degree when mistakes are made, that’s learning. If you lose people or fire somebody after that’s gone on, you’ve just gotten rid of a lot of experience. Typically, the people who have been through the toughest assignments and a lot of assignments that didn’t work out all that well were way better the next time, and the next time they were better than that, and after 10 or 15 years, they’re some of the best people I have. Guess what? They don’t make mistakes anymore at all.
People need to be able to know that they can come and give you bad news. Otherwise, they’re going to hide it from you. If you’re punishing mistakes and you’re not being honest with people or you’re treating them inconsistently, the whole thing decays, and there is no way you can have a successful business at all, ever.
Make successful hiring a priority. When you start to get big and you have to fill positions and you’re growing, people tend to take hiring for granted. ‘I need a developer, I need this position, hurry up and get me some resumes.’
It’s easy for me to say because I don’t do much hiring myself, but I hate hearing that, because every single person you hire is absolute gold. They represent you, and they will make or break you over time. We’ve all seen examples where a string of bad hires can kill a company, regardless of where it is in the company. On the other hand, a string of good hires can turn a company from being an average company to being a phenomenal company.
I tell my managers that constantly, and we interview each other’s candidates and talk very critically about how an individual is going to fit in and what they are going to do to help us. What do they know that we don’t know? What can they teach us? What do they bring to the party?
That helps us be very careful about the chemistry and the fit as opposed to just trying to fill a position with a body.
“My license plate says GET2468,” says Dunn, president and CEO of Munchkin Inc. “Two, four, six and eight are even numbers, so it means ‘Get Even.’ If a competitor steals some category or some spots from us, I like going after them.”
In an industry dominated by giants, Dunn has leveraged Munchkin’s relative agility and quickness in breaking into the big box retailers and stealing shelf space from some mainstays of the infant products market. He has also instituted a program that allows employees fork truck drivers included to submit ideas for new products, and pays bonuses for those products that reach the market.
By stressing innovation and quality, Dunn helped grow Munchkin’s revenue to $74 million in 2006. Smart Business spoke to the head munchkin about the benefits of maintaining a start-up mentality.
Q: How would you describe your management style?
I’m very hands-on in certain areas and I’m very hands-off in other areas. I pick my spots to jump in.
Even though we’re a 17-year-old company, I’ve tried to maintain our start-up status. If you think about whom we compete with Gerber, Playtex, Evenflo, 50- to 100-year-old brands even though we’ll do $90 million in revenue next year, I still try to encourage us to look at ourselves like a start-up company.
We’re kind of a David and Goliath underdog against much bigger companies. My style tends to be to pick certain projects, certain goals, certain key opportunities and make sure everybody is aligned at making those goals, making those presentations and choosing which ones can really affect this year’s revenues or next year’s revenues or our relationship with key customers.
Q: What are the benefits of maintaining a start-up mindset?
The benefit is staying lean and not creating too much bureaucracy or too many different levels where it slows down our process or our speed to make decisions when speed is a real benefit.
With respect to the infant industry, there are just much bigger competitors. We like looking at the financials of some of the bigger, public companies we compete with. We like looking at their key business ratios and we like being better than them on every key ratio that makes sense.
It’s knowing your competition. It’s saying to my group, ‘Hey, XYZ company’s inventory turn is 7.2, and ours is 6.4. Why can’t we be ahead of them?’ It’s continuing to challenge my guys and challenge them in a way that they see someone else is doing it and asking why we shouldn’t be the best in every aspect of our business.
Q: How can a leader motivate his or her employees?
In a lot of companies, people come to work and they don’t know how the company is doing, they don’t have a clear strategy, and they get their paycheck and they hope they get a bonus at the end of the year.
Here, everything is very open. We pay fair salaries. We also put 12.5 percent of our pretax profits in a bonus pool. We don’t pay a penny more and we don’t pay a penny less. If we make $800,000 in a month, a little under $100,000 goes in our bonus pool for that month that we all share in, and that goes down to fork truck drivers, warehouse people, everyone in the organization, and nobody has a set bonus. It’s all based on what you contributed.
A significant number of our employees own options in the company or have stock in the company. What that tends to do is get everyone focused on really growing our revenue, reducing our costs and making good key hires.
When we bring a new person in, the real question is, ‘Is that person paying for themselves?’
Q: What is the danger in growing too fast?
Especially if you’re a creative group, sometimes you get sucked in with, ‘Gosh, we’ve invented a great product for the houseware industry,’ but we’re not in the houseware industry. We’re in the infant and toddler and pet industry. It might be a great product, but it involves new buyers, new risk and it’s out of our area.
Part of it is just saying no to brilliant ideas that are brilliant products that aren’t in areas that we’re strong in. It’s important to set up those disciplines but also be flexible when the right opportunity comes along to perhaps move into another category or make an acquisition.
You have to stay focused and choose the opportunities to pursue or to add new products that are really within your strengths. Look at the core strengths of your business. Some of the best decisions you make are saying no to certain opportunities. You have to pick the opportunities that you have the best chance of success with and don’t jeopardize your company.
HOW TO REACH: Munchkin Inc., (800) 344-2229 or www.munchkin.com