It was a project that had Michael J. Perry more than a little nervous. He trusted his employees at HBD Construction Inc. and had a high level of confidence in their abilities. But this was something completely different from anything they had ever done before, and Perry wanted to proceed carefully.
Perry had been introduced to a Charlotte, N.C-based company that had expertise in blast- and ballistic-resistant technology, but lacked the building skills that HBD had as a general contractor in the construction industry.
“They had worked on barriers and things like that on military bases,” Perry says. “And while they had done some work on nuclear facilities, they had not done anything that was a structure.”
The two parties discussed the project and decided to put their respective skills to use to build a structure for a nuclear facility that needed it.
“It certainly took analysis and thought because we didn’t just say, ‘Oh sure, it’s a project. Let’s go for it,’” Perry says. “But we quickly adjusted. We have a great staff here, both in the field as well as in our office. We turned them loose to use their abilities and to tackle this new market, and we did it successfully.”
In an industry that had been hit hard by the recession, the project was a great opportunity for the 130-employee company. But it also reinforced for Perry the importance of doing your homework before you take on a project, no matter how much you may need the work.
“The real issue is if you’re going look at other sectors, do it in a slow, methodical way,” Perry says. “It can hurt you if you just decide, ‘I’m going to go over there,’ and you don’t know all the peculiarities of working in a certain environment. The knee-jerk reaction, particularly in a downturn, is the wrong move.”
Here’s how Perry has found ways to make decisions that both fit his team’s talents and make sense for HBD’s growth plans.
Look for a match
Perry and his team put in a lot of time talking about what’s happening in the construction industry. It’s work that takes time, but pays off when opportunities present themselves and decisions need to be made.
“We get input from all our project managers and field their opinion on where they see the market going,” Perry says. “Certainly, multiple heads are better than one.”
The idea of the constant dialogue is to measure what’s happening in the industry against their own capabilities and talent and look for matches.
“You just can’t pursue every opportunity that is out there so you try to make strategic decisions on what is the best fit for your company,” Perry says. “What is profitable work and who are good customers to work for? Our whole philosophy is customer service that ultimately yields repeat customers.”
When you can find customers who you have a good rapport with and you can build on that relationship, it can only mean good things for your business.
“We look for solid customers who are connoisseurs of construction that don’t just consider it a commodity and something to get the cheapest, bottom-of-the-barrel and quickest way to get it done,” Perry says.
“Those types of relationships usually end up in adversity and struggle and do not end pleasantly. We like to work with owners who understand construction or at least want to enjoy the process and want to have a contractor who is going to be looking out for them and build the best product for them of the highest quality within their financial needs.”
The work that HBD did on the nuclear facilities is a great example of the fruit that can be gained from a strong and committed relationship.
“We had to learn and educate ourselves, but we’re good at that,” Perry says. “We’re nimble because of our size, and we were able to provide a service that the larger companies these nuclear facilities were dealing with could not provide.
“We analyzed what it would take in terms of our resources and our abilities. Is this something within our ability to do? We just decided that it was, and in fact it worked out. We have six or eight successful projects under our belt now.”
One of the underlying keys that you should never lose sight of in your pursuit of work is your ethics and your values.
“It is very easy in this recession to see people bidding out of desperation,” Perry says. “It’s very easy to take shortcuts and do things that ethically you wouldn’t have done in a better market when you’re very busy and flush with work. Those will all come back to haunt you. That’s what the leaders of our company prior to me, that was their philosophy, and that’s what we’re continuing on today.”
Perry says it’s just as important during a recession, even one as tough as the one in 2008, as it is during the good times.
“We’re not going to compromise the way we do business, and we’re not going to compromise our product,” Perry says. “If that means we might miss a project or two and possibly our volume might decrease a little bit, then so be it. We’d rather have that and be in a strong position when the market comes back.”
Know who you need
It would be easy if Perry could hire a specialist to handle each aspect of running his company. Unfortunately, he doesn’t have enough room on his payroll for that many employees, so he needs people who can handle multiple tasks.
“Our project managers have to have the ability to go out on a sales call with me, they have to be able to estimate, schedule, run the project and close out the project and have interface,” Perry says.
“We can’t have a one-dimensional employee. So other companies, bigger companies than us, are more departmentalized and so they can have a person who is just good at scheduling, just good at estimating or just good at project management. That’s not the way we’re set up here.”
So to ensure that he has as many well-rounded people on staff as he can, Perry emphasizes opportunities for employees to learn new skills and grow their talent level.
“We tend to make sure all our project managers and superintendents in the field try to get as much experience in various types of work so that they are not one-dimensional,” Perry says.
“If you take a superintendent who has always done new work out of the ground and has never done a renovation project, he is somewhat limited and unavailable for renovation work. So while we do have folks who have more experience, and we will strategically place a guy in his best position, that doesn’t mean he can’t be trained.”
Encourage your people to continue their training and give them the time to learn new skills that can help them be better employees for your business. When you’re looking for new employees, look at their desire to learn and go after the ones who have the energy to broaden their abilities.
When you do that, you end up with people you can count on.
“My guys that I have here — I feel confident I could put them on almost any type of project,” Perry says.
Set employees up for success
If you have a project on the table that you feel your employees would have trouble completing, you’ve either got to find a way to train them or turn down the project. Otherwise, you’re going to have a very frustrated group of workers.
“You don’t want to set up an employee for failure,” Perry says. “As a leader, if you know an employee is weak on a certain thing, you try to shore up his weaknesses and show off his strengths. You don’t want to send a person into a task that you don’t believe they are up to.”
If you choose to train people, you’ve got to take a firm, yet patient approach to get good results. Perry says this has been particularly necessary when it comes to the influx of technology into the construction industry.
Instead of presenting changes as a burden or something else that a person has to do, present it as an opportunity to make their jobs easier to perform.
“The dawn of the tablets is a pretty good example,” Perry says. “We’re integrating the tablets out into the field now. Our guys, probably our biggest hurdle was getting field people used to computers period. That was a big learning curve and was met with some frustration. But to a man, everybody that gets over the fear of doing it can’t believe how they could ever do without it.”
The frustration that comes about when learning a new task or a new piece of equipment is natural. If you try to force someone to get up to speed quickly or make a sudden change in the way they do their jobs, that frustration is only going to grow.
“We have some new technologies that we are utilizing and admittedly, the young guys tend to take to it faster than the older guys,” Perry says. “That’s great because we have a good mixture in our office or young and experienced guys.
“The younger guys are helping us older guys with some of the new tools and so forth that are out there. Not forcing everybody on something immediately gives a little more time and somebody that maybe would be more anti-whatever, they’ll look over and see someone else doing it successfully and it makes it easier to implement.”
It really comes down to working with your team rather than fighting with them. You’re the boss and there are things that they need to do that aren’t optional. But if you proceed with that attitude, you’re just going to turn your people against you.
“It’s a communication business,” Perry says. “When you’re running a business and you have employees, the key with your employees is to communicate with them. Hear what’s on their mind, what’s worrying them, how they are doing personally and in their business environment, how they view you and how you view them.”
One of the ways business has changed over the years is the tilt toward more acceptance of work-life balance in the workplace. Perry says it’s something he accepts and has integrated into the way he runs HBD.
But he makes it clear that whatever culture you want to have in your business, there is no substitute for hard work.
“In the construction business, there is not an easy short cut to hard work,” Perry says. “It takes long hours, it takes a lot of time and a lot of patience. There’s not a way to hit the one big home run. It’s not like picking a lucky stock and you win big. It’s a lot of projects, a lot of time and that, I don’t see changing. So if you’re looking to click your mouse, do your thing and go home in a short work day, there are jobs that can answer that. But that’s not the construction business.”
How to reach: HBD Construction Inc., (314) 781-8000 or www.hbdgc.com
The Perry File
Born: St. Louis
Education: Bachelor’s degree in civil engineering, University of Missouri-Rolla in Rolla, Mo.
What was your very first job?
I had a little grass-cutting business that evolved into construction. That’s really what I did all the way through college, just about any kind of handyman work that you could think of. Building out basements, porches, fences. I always enjoyed building things with my hands. I do kind of miss that because I don’t have much chance to do that anymore.
What project stands out that you helped build?
When I was at the tender age of 14, my uncle had a very large house in a wealthy area of St. Louis. He turned me loose on his entire basement to design and build it out. I brought in one of my buddies and we single-handedly over the summer and into the winter did that. That was the first soup-to-nuts turnkey project that I did and that evolved to doing other things around his house.
Perry on having pride in your work: I can remember working on that basement and toiling for hours and hours wondering what it’s going to look like. It’s the same thing today when we cut the ribbon on a project that we just completed. It’s the thrill of having a happy customer and being the one who put the whole project together.
Who has been the biggest influence on you?
Without a doubt, my father. What he was able to instill was being fair with people that you deal with, both from the subcontractors beneath us to the owners above us. He always did that and always had a great reputation in St. Louis and I’m hoping to have the same.
Look for the right opportunities.
Don’t compromise your ethics.
Build relationships with your customers.
Social media gives people a much closer connection to your business, which can be very good. But when customers use the forum to criticize, you may find it hard to resist the urge to fire back with an emotional response. And that can be very bad.
“People are constantly getting in trouble for tweeting something they shouldn’t have and then somebody responds with a more emotional tweet,” says Kevin McCarney, founder of the $15 million Poquito Más restaurant chain. “Digital communication is great for information, but not really good for communication.”
McCarney has written a book based on the interactions he has each day in his restaurants. “The Secrets of Successful Communication” offers insight on how to avoid saying things you’ll later regret.
What is the difference between the big brain and the little brain?
I’ve been in the people business all my life, literally since I was about 14. I have been studying people’s reactions and their overreactions as well through all different kinds of circumstances.
I distilled a lot of the things that are happening inside the head into two simple concepts. The big brain gives you that smart, diplomatic, positive, thoughtful response you’re going to get in any situation. The little brain, which I put right next to your mouth, is going to spit out the impulsive, overreacting, sarcastic comment that gets us in trouble once in a while. We all have a big brain and we all have a little brain.
How can the little brain get me in trouble as a leader?
My responses to things will be mimicked by my employees. If you’re in a leadership position or in a management position, your words are far more powerful than a front-line worker. And they’ll have an impact on the front-line worker and the people working underneath and around them.
If I as the owner of a company get upset and angry every time something goes wrong, people aren’t going to tell me anything that is going wrong. They’re going to hide everything from me. So it’s important that my responses are measured, that I’m under control and that employees feel like they can talk to me about anything. Otherwise, I’ll lose control of what’s really going on.
How do I keep my cool during tough situations with my employees?
The key that we describe in the book is there are several different traps you can fall in to. If you identify the traps in your life and the things that may push you into little brain, then you can work to not overreact to it.
More importantly, you can teach others. If you’ve got other people in little brain mode, you can know how to handle them. You don’t follow them. If somebody is uptoning in the conversation, they are getting more angry and their tone is going up and escalating, you don’t follow them as a leader.
You realize if their tone is going up, there is something else going on here. Let me just bring that tone back to where it should be, and they will eventually come back.
Is it ever too late to apologize for losing your cool?
There’s no expiration date on an apology. You can go back and if you said something to a co-worker or about a co-worker and they found out, you can just go, ‘I don’t know what I was thinking. I apologize and I didn’t mean to say that.’ And you kind of reset after you apologize.
When working toward my private pilot’s license, I had to learn about the aviation language of time zones. Now, for those of us with our feet on the ground, Coordinated Universal Time (UTC) governs our day’s schedules. But up in the air, all pilots, airlines and air traffic controllers coordinate time around the world using UTC and the closely related Greenwich Mean Time (GMT) — the time in Greenwich, England, that is based on a 24-hour clock.
Also referred to as Zulu time, aviation time is calculated as either ahead (+) or behind (-) GMT. For example, if it is 18:30 (6:30 p.m.) in Greenwich, it is -6 GMT (12:30 p.m.) here in Chicago.
Coordinating flights and creating flight plans based on UTC or GMT ensures clear communication, safety and successful transit. Similarly, when creating “flight plans” for your growing, complex organization, leadership must have a systematic vision to ensure you reach organizational goals safely and successfully. Think of it as coordinating around the time zones of planning.
Board of Directors Time Zone: +20 years UTC
If your company is governed by a board, their focus should be on the next 20 years. Discussions and plans should include topics such as succession, compensation and broad strategic business policies. This extremely long-term vision lays the course for your company and helps ensure its viability, relevance and effectiveness for years to come.
CEO Time Zone: +7 to +10 years UTC
As CEOs, we fly in the most critical time zone. We must provide the 7- to 10-year vision for our organizations. Our visionary responsibilities in this time zone are to define reality, fight denial, see patterns, predict the future, select and prune businesses, bring the outside world developments into the organization and harvest the energy from the positive and negative events that occur during any 7- to 10-year time period. We must imagine, plan and then, just as importantly, communicate the 7- to 10-year initiatives our organizations will pursue.
Executive Time Zone: +1 to +3 years UTC
This is your corporation’s most important time zone for the creation of an optimized strategy. Your executives need to deliver detailed plans through at least three years beyond today. They are responsible for developing flight plans that ensure you’ll have the right people, finances and go-to-market execution to achieve company wins.
Management Time Zone: +0 to +2 years UTC
This essential time zone focuses on the here and now. Management’s execution of your company’s strategic plan looks at this day, this week, this month, this quarter, this year. As you know, this narrow scope is crucial to your success. You can have the grandest plans to fly your company around the world, but without people working daily in this time zone, those plans will eventually flop. You need people with the ability to zero in on the present and execute plans with excellence.
Are your people flying in their appropriate time zones? Do you have time zones where there is no one in the cockpit to focus on that area’s responsibilities? A successful company needs skilled pilots in all time zones for a balanced flight. Get on the radio and direct them into their designated time zone where their efforts and abilities bring the greatest value to the organization.
And how about you? As you read this, did you realize you sometimes fly out of your time zone? Remember, as CEOs, we are the visionaries. We are the pilots of the entire organization — the captains. If we are flying in the wrong time zone, we are congesting company air space by micromanaging. This creates confusion, slows progress, diverts flights and can swing your entire organization off the careful course you plotted to reach your goals.
Pull your control yoke back and climb up to +7-+10 years UTC where you belong. Set your sights on the horizon and I wish you a smooth flight.
Joseph James Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world. For more information about FONA, visit www.fona.com.
Dan Neyer entered the period of the past three years the same as anyone else running a business: uncertain what to expect moving forward. As president and CEO of Neyer Properties Inc., a commercial real estate company, he saw that his industry was greatly affected due to the economic downturn. While he didn’t have any secret weapons or information others didn’t, he did have something that kept his company pushing onward — a positive approach to a bad situation.
Rather than hunker down or look elsewhere for business, Neyer gathered his employees to explain the situation the economy had created and how the company needed to operate. If they could stick to the plan, the company would come out the other side ahead.
“One of the most important things is you have to look every employee in the eye and be very clear and don’t sugarcoat the facts,” Neyer says. “Just tell them the way it is. Tell them the challenges that will lie ahead and tell them what you’re planning to do.”
Neyer took a strategic approach to business during the recession buying key properties at attractive values and keeping his employees informed.
“I said, ‘Our existing legacy properties are going to go down in value. I know that, the market knows that, and that’s just reality. We’re going to position ourselves to buy undervalued assets, and that’s what we’re going to do to offset the decline in existing values of our existing portfolio,’” Neyer says. “That’s the mantra we have, aggressively pursuing real estate assets.”
Here’s how Neyer used to a dire business environment to create opportunities for growth.
When the downturn hit home for Neyer Properties no one tried to pretend as if the economy wasn’t going to have an effect on business. Neyer told his employees what they could expect to see and what the plan was for moving forward. Doing that proved to be very helpful.
“So many companies like to hide bad things or hide struggles and not inform the employees, and the employees know; they feel it and people are thinking what’s going to happen to me and what are we going to do,” Neyer says. “Just be honest and straight forward. It’s tough in our industry when everyone says, ‘Everything is bad, everything is miserable and the banks are going down.’ It’s hard to stay positive when you’re surrounded.”
Getting through a tough business environment relies heavily on being able to trust your employees and use small victories to build a positive outlook.
“We have a great nucleus of people who believe in what we’re doing, and seeing the results breeds the optimism so you can fight the negativity that may be around,” he says. “It starts with the people. I can’t do this alone, nor do I want to do this alone.”
To overcome uncertain times and difficult business obstacles, you have to have strong employees who believe in the direction you’re taking the company.
“It’s always best to surround yourself with the people who will help get you to that next level,” he says. “If that means changing people, you need to change people and don’t be afraid to do that because what’s best for the organization is always best for the organization. You have to invest in existing people, but if existing people are not functioning properly then you have to change.”
In both good times and bad, the key to remaining successful is being able to anticipate change to keep your business moving in the right direction.
“People say, ‘We embrace change,’” Neyer says. “Well, yeah, you’ve got to embrace change, but you’ve got to pursue change. Embrace means you’re accepting what is happening to you. Pursuing is much stronger. You’ve got to change before you have to change. You have to see around the corners before you come up to the corners and not react. If you’re waiting to react, you’re too late.”
Develop a plan
Instead of waiting for the economy to tell him where to steer his business, Neyer developed a strategy to take advantage of the business environment and real estate market. He focused on keeping things simple.
“I wanted to preserve, protect and position,” Neyer says. “‘Preserving’ was preserving our cash, preserving our existing tenants and the loans that we had. We had to protect our existing assets from too much decline. We’re going to invest in our assets so it doesn’t look like the properties are declining, and we’re going to protect our cash amount and hopefully have that grow with proper cash management.
“Then positioning, it’s really positioning with lenders, sellers, borrowers, banks and other organizations that take the properties back. So we’re going to position ourselves to work with those organizations to be able to acquire the properties. Was it a real long and complex plan? No, but when difficulties arise, you need to focus more and keep it simple.”
To form a plan for the business, Neyer first had to think about what he would want to accomplish if there were no hindering circumstances and then factor in any obstacles.
“You have to step back from your own situation and say to yourself and your team, ‘If there were no limitations, what would we be doing? If finances and personnel were not limited, what would you be doing?’” Neyer says.
“In our case we would be buying as many high-quality assets as we possibly could get our arms on. So step back and initially don’t burden yourself with the current restrictions or hurdles that the organization has. Come up with an approach that is in the best interest without the limitations.
“Then figure out how to pursue the desired results while you work on the restrictions. Don’t start with the restrictions because if you start with the obstacles and the hurdles and the difficulties, you’ll never get to the shining light that’s out there.”
In Neyer’s case the company had a premise that it needed to acquire $40 million to $50 million a year in real estate assets. The company had a plan, and it refused to waiver from it.
“Our MO for our equity is pretty clear: we’re going to pursue and purchase properties in the $1 million to $12 million range within a 100-mile radius at good locations, good accessibility and average about 50 percent of replacement value,” he says. “We stuck with that focus. We had opportunities to look at things outside that geographic range, but we stuck to our homegrown, homespun approach and maximized the potential within.”
In order for a plan to have the best results possible, communication is vitally important to remain aligned with goals.
“We went through our three main areas of focus: preserve, protect and position,” he says. “Then on a monthly basis we would bring everybody in and it would be like a report card — this is what we said, this is what we did, this is what we’re doing, this is what is working or not working, this is how we’re adjusting, and this is how we’re moving forward.
“You have to bring all those elements and people are generally empowered if they know they’re making a difference. It wasn’t easy at times because you always have difficulties, but if you align everybody’s interests you can move mountains.”
Stick to what you know
In difficult times, it’s very easy to stray from your intended plans and pursue different options. The key to success is to find the one path you want to go down and pursue only that path.
“There’s always more opportunities out there than one can ever accomplish,” Neyer says. “When we’re in uncertain times, sticking to your past success and narrowing your focus so you’re pinpoint laser-on is even more important. A lot of times companies that are suffering, whether it’s big or small, they say, ‘If this isn’t working, let’s try something else.’
“Whether that’s a different geographic market or a different product line or whatever the case is, they forget what got them to where they were in the first place and they try something else. I’ve seen too many companies try to do everything for all people and it just never works.”
Because Neyer Properties sticks to its strengths and is prepared to function in any business environment, it has seen its fastest growth periods during recessions.
“You have to be poised and positioned to excel when times are tough,” Neyer says. “You have to be careful when times are prolific that your tools are not sharpened and volume just comes and you don’t have to keep to your principles. You have to be consistent in the good times and the bad times. You have to hopefully excel in the tough times and when things are robust, you put the governor on and you’re careful not to grow too quick.”
Any tough times equals great opportunities and great results. When you make a decision you’ve got to go for it. You can’t be indecisive.
“We are one of the few Ohio commercial real estate companies that have been able to capitalize during the recession,” he says. “Our employment has been constant, but we have grown, and our real estate portfolio is now more than double the size that it was as of the end of 2008.
“Most real estate development companies cannot say that they’ve doubled the size of their business in the last three years. A lot of that is attributed to our conservative, strategic and long-term planning and also being strong stewards of proper financial measures and taking advantage of the opportunities that are out there.”
Over the past few years, Neyer made sure his company never waited for opportunities to arise. His team went out and found properties that best fit the company’s objectives.
“If you buy key properties at attractive values and are able to obtain financing with providing the right mix of equity, there is no better time to purchase real estate,” he says.
“I’ve looked at investing in other asset allocations other than real estate since I’m so heavily invested in real estate. I just have not found any other asset allocation that has the upside that real estate does.”
Since 2008 Neyer Properties real estate has doubled in portfolio size and its ROI has more than doubled in the last three years giving the company 2011 revenue of $55 million. This success is due to both increasing the occupancy level on existing legacy properties and purchasing assets in an aggressive mode.
“Fortunately, we’ve been able to acquire where most people are falling back because they have no choice,” he says. “They are too highly leveraged, they don’t have cash and they’re stuck. Our usual approach is buying things for 50 percent of replacement value and buying properties highly accessible and highly visible. If you have key properties at key locations and your base is much lower than your competition, even though the vacancy might be higher than you want, you win.”
How to Reach: Neyer Properties, (513) 563-7555 or www.neyer1.com
- Be honest with your employees.
- Develop a strategic plan to achieve your goals.
- Once you know your direction, stick to it.
The Neyer File
President and CEO
Neyer Properties Inc.
Education: Attended Miami University and received a degree in finance and accounting
What was your first job and what did you learn from that experience?
I worked as a bus boy at Perkins Restaurant in the early mornings, which made me realize I had to get up early and as soon as I arrived, I had to work hard. At times I had to work at breakneck speed because back in the ’70s. Perkins was the place to go.
What is the best business advice you have received?
Follow your passion and realize that if you work hard, good things will happen. People always say, ‘You’ve been really lucky.’ Well, I’ve been really fortunate, and I’ve had some good luck, but good planning almost always gives good results. You can call that whatever you want, but planning equals results, equals opportunities, equals luck. Stick with what you believe. Don’t deny your gut feeling.
Whom do you admire in business?
One is my father, who taught me the importance of detail. I also appreciate the creativity of somebody like a Steve Jobs. He created history by following what he believed was necessary even though he may have been the only one on earth that believed it. He made people believe the impossible.
What was the toughest thing about the recession for your company?
It was the uncertainty from the lending community. They were in a state of total chaos, and what were they going to do? They could have just pulled the plug (and some did) and found reasons to basically cause the total demise of commercial real estate because if you eliminate credit, you eliminate all value. Fortunately, for the most part, they kept their head on. They could have effectively wiped out the economy of the U.S.
What are you looking forward to in the future of real estate?
What I see on the horizon is great, valuable, long-term enduring real estate assets growing over the future. With the boom of natural gas in this country, I think you’re going to see a tremendous influx of investment in the U.S. because this place is still the biggest buying power. The cost to manufacture now is the same as it is in China because of their increasing inflation and cost to ship goods. So I see a tremendous upswing in the future of the U.S. in the next number of decades.
In business, growth equals success, but growth also usually comes wrapped in challenges, sometimes extremely difficult ones. Liaison Technologies CEO Bob Renner has seen this firsthand over the last few years. The main complication Renner has encounted is keeping his data management company stocked with enough talented workers to keep its growing customer base happy and satisfied.
“The market we participate in is an active one; it’s consolidating and there’s a lot of competition,” Renner says. “And over the last five years we’ve grown at a 50 percent compounded annual rate. So attracting and retaining top talent at the velocity we’re growing is a challenge that has been top of mind for us, especially in the last 12 to 18 months.
“Finding people that have the right skill set and fit into your company’s culture is tougher when you’re growing,” he says. “Some days it seems like there’s zero percent unemployment in the space we’re in. So when I think about business challenges, that’s the key one for us.”
The problem became apparent about two years ago, as Liaison’s leaders started noticing several factors impinging on the company’s ability to attract and retain talented knowledge workers: a sudden salary inflation trend; competitors’ direct attempts to lure Liaison employees away; and a shortage of suitable talent coming from colleges, notably Georgia Tech, the technology-education giant sitting in Liaison’s backyard.
“Over the last 18 months or so, in the local market here in Atlanta, we saw salary inflation that was accelerating more quickly than our standard practices were to raise salary and compensation,” Renner says. “This was counterintuitive, because at the same time you’re hearing a lot of economic news talking about high unemployment rates, which, depending on who you’re listening to, ranged anywhere from 8 percent to 15 percent in our local market. That was the first indicator.
“A second factor that has led to this being a focus issue for our executive team is that as Liaison has grown rapidly, we’ve become more visible to the larger competitors in our space,” he says. “So we’ve seen some very active recruiting efforts from competitors into our organization. Some of those were successful, some were not so successful, but they became quite visible. We saw a lot of pressure being put on by competitors looking at Liaison. Before this, we had been under the radar screen, but once you reach a certain size and visibility, you end up with a more competitive recruiting environment.
“Lastly, we faced a shortage of talent coming out of the colleges. We recruit heavily from Georgia Tech, and you’ve got a lot of other firms like Google, Facebook and Microsoft also fishing in that same pond. So bringing in new recruits from the Atlanta area, even once you recognize and resolve the other two challenges, continues to be a challenge for us.”
Liaison has taken a number of steps to help make it easier to attract and retain talent. Among those initiatives, the company has:
- Hired a full-time recruiter.
“We decided to bring on a full-time permanent employee as a recruiter at Liaison,” Renner says. “This company has been around for 12 years, and this is the first time we’ve staffed that position with a permanent employee.”
- Communicated to employees its vision and the importance of retaining employees and attracting new ones through networking.
“The most rudimentary thing we did, which is something a fast-moving company can overlook, is we began to communicate a message to the employee base focused on retention and on networking to attract new talent,” Renner says. “We began to get much more active in our internal communications about the culture and the mission of the company. We used lot of the methodologies from the Jim Collins ‘Good to Great’ model, which we think fits our culture very well. We ramped up the communication so people understood the vision of the business, how important top talent is to us, and how serious the executive management team takes that. We did this through a series of road shows to all of our facilities. This took a lot of investment by the executive team, by our HR team, a consistent level of communication.
“This galvanized the team in understanding our mission, understanding what we’re looking for, reinforcing how important our people are to our success and to us getting to where we want to be.”
- Created more flexible work schedules for employees.
“We made some adjustments along the way in terms of work flexibility,” Renner says. “We have a lot of people that telecommute now, quite a few more than a couple years ago. We’re probably up to about 25 percent of our workers that telecommute. Some people work two days from home; some work from home all the time. And our Dallas office is 100 percent virtual at this point. That was by their preference. All of our people in the Dallas area are now virtual workers only. So that has ramped up a lot.”
The transition toward having more workers telecommute has been smoother than some of Liaison’s leaders expected it would be.
“I was probably the biggest skeptic of that,” Renner says. “I’m pretty old-fashioned in terms of coming in to the office. But now, seeing this at work, we haven’t seen anything in the way of downside, so I’ve gotten over my apprehension about it. The company has adapted very well to it. We’ve embraced it more than a lot of other companies I talk to on a regular basis. Having people telecommute is one of those things that you wish you would’ve done sooner, once you’ve seen it at work.”
- Consolidated its Atlanta operations into a single headquarters facility.
“In Atlanta, we were spread across multiple offices, but in the last 12 to 18 months we consolidated into one facility,” Renner says. “This created more unity and more visibility across the company. I think it has really helped with the culture, and with retention and motivation. It represents a big financial investment by the company. We took a pretty big hit in doing this, just so we could have a bigger facility everyone could fit into. I think that helped a lot.”
The employee attraction and retention initiatives set in motion by Renner and his team have started to bear fruit for Liaison.
“To give you a perspective on that, we hired 45 people in the last 120 days,” Renner says. “When you’re a 300-person company, that’s pretty serious growth. And we’re really looking for specialized talent; some of it is coming out of college directly, and some of it is experienced knowledge workers.
“In the previous environment we were operating in, in terms of finding talent, that would have been a yearlong process, at least,” he says. “We had been having a lot of open head count go unfilled. The way that manifested itself, in terms of our numbers, is our profitability was far higher than we had experienced in previous years, and that was simply because we had open head count we couldn’t fill. Sometimes it’s not a good thing to have profitability above what you’re expecting. It doesn’t necessarily set you in a good place for the future.”
Liaison’s employee turnover has decreased noticeably.
“We have a human resources executive that sits in on our weekly senior team meetings, and the report from HR has been very good in terms of retention and turnover, especially since we started with the road shows and some of the other things we’ve been doing,” he says. “Anecdotally, that has improved quite a lot.”
Liaison has begun to see the labor market loosen up, so employee referrals are rising, and the company has been able to reduce its reliance on employee recruitment firms.
“In terms of finding qualified candidates, if you go back a couple years or more, we always did most of our recruiting through networking,” Renner says. “We basically had employee referrals, which our employees are incented to do, and we really didn’t use contract recruiters for anything. Then we went through a period of time 12 to 18 months ago where we had to pay an outside recruiter to help us fill almost every open position. We just could not find qualified candidates through the standard means of recruiting that we had used internally. But now we’re back to a place where, to fill these positions, we use recruiters for less than half of them. So that’s a positive sign in terms of good talent being available within the Atlanta market for us.”
Put the word out
Asked what advice he would offer other business executives facing the challenge of recruiting and retaining scarce talent while growing rapidly, Renner says getting the word out to your staff is crucial.
“If I were to give one key piece of advice, it’s communicate, communicate, communicate,” he says. “Create an environment where the staff has a lot of transparency to what it is you’re doing, and they understand the mission, and they’ve bought in to it. Doing this greatly helps with retention, because then when they get a call from a competitor, they tend not to listen as much.
“I think we undercommunicated for a period of time, and when we were a smaller company, communicating was easier. But as you scale the business, more effort needs to go into communicating your message. I know it’s a cliché, but as you grow, it’s easy to lose sight of the exponential communication requirement. It’s not linear. If you’re growing 50 percent a year, the communications requirement to keep everybody on the same page, to keep the culture intact, and to keep the employees engaged and motivated, is an exponential growth in terms of the effort that you have to put into it. I underestimated that at times, and I certainly won’t do that again.”
Liaison has also been challenged because it operates in a fast-changing market sector and finds itself facing larger, more sophisticated competitors than it has dealt with in the past.
“When the landscape you’re working in is dynamic and your competitors are changing, it’s important to spend a lot of time to determine where the white-space opportunity is — that is, where there’s a unique place you can position your company — and not try to compete head to head with the new competitors that you’re being stacked up against. Because the reality is, if you compete on the same basis as the new competitors, due to scale-based economics, etc., you’re just not going to be able to be effective. We’ve continually tried to determine what are the things we can do, based on our expertise and our assets, that will set us apart from the larger competitors.
“That’s a key piece of advice: Don’t try to do the same things they’re doing, because you won’t win. Within our company, we sometimes have senior people slip into the trap of ‘So-and-so’s doing this, so we should go do some of that.’ So you quickly come back with, ‘Can we do it better than them?’ The answer is usually no. So we dust ourself off and say, ‘Yep, we’re not going to go down that path.’ It’s important to leverage your capabilities and assets to do something different to achieve the same objective.”
HOW TO REACH: Liaison Technologies Inc., (770) 442-4900 or www.liaison.com
THE RENNER FILE
Name: Bob Renner
Title: President and CEO
Company: Liaison Technologies Inc.
Born: Streator, Ill.
Education: MBA, Emory University; B.S., Electrical Engineering, California State University, Fullerton
What was your first job, and what important lessons did you take from it?
The first meaningful job I had was I worked in a gold mine in Northern California. And what I learned from that is that I needed to go to college, because it was hard, physical work, and you can do that up to a certain point, but not much beyond that.
Do you have an overriding business philosophy that you use to guide you?
I’m driven and impressed by people that really put their discretionary effort into the business. In some cases, it’s not necessarily the smartest person in the room or the cleverest person in the room. I believe in people committing themselves to the business, in terms of interest. I like to surround myself with people that are engaged and love what they’re doing, so they’re thinking about the business not because they have to but because they want to. And I’ve been fortunate in this job to surround myself with some people that fit that mold to a T.
What trait do you think is the most important for a CEO to have in order to be a successful leader?
You need to be humble. A lot of people that get into executive positions quickly lose touch with how they got there. Most people get to this position through a lot of hard work, and with a lot of luck along the way. So staying approachable, staying humble, understanding that you’re fortunate to be doing the job that you’re doing — I think this is a very important attribute.
How do you define success in business?
Delivering something that’s valuable to the market. That’s not always easy to find, but you have to find it because it anchors everything else that you do.
Jane Saale isn’t happy with the way communication flows at Cope Plastics Inc. It results in wasted time, missed opportunities and a shortfall in productivity — and that bothers her.
“One time it’s like this and the other time it’s like that,” says Saale, president and CEO at the plastics fabricator and distributor. “We don’t have a clear process and place to say, ‘Every time we do this particular thing, we’re going to communicate it like this.’ I would say from a communication standpoint, we have lots of room for improvement.”
Saale is hardly alone, however, in bemoaning her 380-employee company’s communication difficulties. It’s pretty safe to say if you’re reading this story or if you’ve ever been part of any kind of organized activity, you’ve experienced problems communicating. It’s all part of the human struggle to interact with each other.
“Does anybody ever get up in the morning and go, ‘How am I going to communicate today’?” Saale says. “Nobody says that. But it’s a challenge. You have so many different dynamics of people and personalities and different backgrounds and knowledge and expertise. You have different ways of how people interact with each other. It’s a big challenge.”
Despite the ongoing challenge of improving communication, Cope Plastics has weathered the storm of the 2008 economic crash and is back on track toward hitting the $100 million mark in revenue. Revenue in 2011 totaled $86 million, up from just under $70 million in 2009. Saale says the key to success is being yourself, accepting that you’re not perfect and making sure your team members understand that and are ready and willing to do their part to fill in the gaps.
“You have to earn their respect by being genuine,” Saale says. “They’ll trust you if you are genuine and if you talk on their level. Be yourself, know your audience and know where you need to be and what kind of conversation you should be having with the people you’re talking to.”
Here are some of Saale’s thoughts on becoming a better leader and striving for better lines of communication in her organization.
Focus on yourself
Saale’s efforts at becoming a better communicator begin with herself. She’s the leader, after all. If she does a poor job of sharing information, the company has no hope of becoming a more cohesive and more informed group.
“You have to have clear and concise directions and you have to make sure your folks know where you’re headed,” Saale says. “You have to be a good listener. You have to understand and know your audience. You have to set expectations, and they have to be clear.”
She says growth in her confidence as a communicator has been achieved through plenty of practice.
“It’s come from experience,” Saale says. “We have trade associations and I’m on several boards in the area. I’ve also gone through some leadership roles and done some speaking. The folks in my community and on the boards that I serve on, they have helped me grow as a communicator and as a leader.”
If you feel like you’re not as effective as you could be talking to your people and delivering information, find ways to practice. Learn what works and doesn’t work, and it will help you improve.
“I have topics that I need to speak about and those topics are written down, usually on a piece of paper,” Saale says. “But I don’t write it out. I used to write it out and I used to read from the paper, but I’ve come a long way. Now I just kind of go with the flow. “I try to talk to them on an even keel, and I don’t try to be this person who is the president and is trying to make this big statement. I’m much more personable. I engage my people. I giggle or sometimes I tear up, depending on what I’m talking about. I just try to be very personable.”
Another important component is the fact that Saale doesn’t shy away when she makes mistakes, either through action or something she said.
“You’ve got to lead by example and if somebody has a critique about something I did or didn’t do, I listen,” Saale says. “It’s a consistency thing that you always have to be aware of. “It’s about talking to them on their level and getting them to understand why some of the things that we do, why we do it that way. They need to know the whys behind things and I think that gets them to buy in.
“They may not all agree about certain things, but it is what it is. It’s all about engaging them as a team and helping them understand that we’re all in this together.”
When you get feedback in those situations and people pose questions back to you, the same rules apply as to any other situation: Don’t be afraid to admit that you don’t know the answer.
“I don’t have a problem saying, ‘You know what, I have no idea,’” Saale says. “If you try to come up with a half answer, that’s not good enough. I usually just say, ‘Good question. Let’s get so and so in here who is more of an expert. I’ll learn from it, too, as we go through it.’”
You can’t worry about what your people think or about cynics who believe as the CEO, you should know everything about every last detail of the company.
“If people want to think that, they are going to think it, and there is nothing I can do about it,” Saale says. “But I’m surely not going to be one to say I know something when I don’t know it. I think I’m versed in all the different divisions in my company, but there are things I don’t know how to do. I understand the process. I’m versed in as much as I need to know.
“If there is an issue that comes up, I can get the background to understand what the problem is so we can try to get to the root cause to try to fix it.”
Bring people together
One area that has been a particular concern for Saale at Cope Plastics is interdepartmental communication.
“Most of our groups are pretty cohesive,” Saale says. “The challenge is when you start talking about inventory management to salespeople or to the branch managers and that dynamic of getting them to understand what the inventory manager’s role is or the material manager’s role is or what the salesperson’s role is. Everybody has their own directives and goals and objectives. It’s trying to get them to mesh.”
As part of the effort to fix this and bring more common purpose to everyone’s work life, Saale is working to instill shadowing opportunities for people to experience what happens outside their department.
“I need to get them to understand the whole piece — salespeople shadowing people in corporate and corporate going out and shadowing salespeople just to see what their challenges are on a daily basis,” she says. “That’s the kind of stuff we’re looking at to meld these departments together and communicate better and understand both sides of the equation.
“I just think it’s a huge value to have people who understand and are better-rounded and understand not just what they are doing, but how all the other departments need to work together.”
When you have meetings with department heads, make sure people are getting an opportunity to get familiar with what others are doing. You don’t want to overload them with things they don’t need to know or that don’t concern them. But a basic level of knowledge can go a long way.
“I’ve grown a lot with my plant manager and my director of manufacturing and understanding their challenges and the whole process of manufacturing and all that goes into that,” Saale says. “I feel with the background I have, I can be very empathetic and sympathetic when I need to, but I also understand these are the things we need to do to make it better.”
When Saale addresses her employees, she doesn’t go in expecting a ton of questions at the end of her remarks.
“Usually there are one or two people that you know are going to ask a question,” Saale says. “For the most part, people don’t raise their hands in those meetings. You just have to say, ‘OK, I have an open-door policy. But do me the courtesy of making sure your supervisor knows that you are coming to me.’ I don’t like people to do end runs.”
If you want to be collaborative, you’ve got to make yourself available. But you also need to take care that you’re not cutting out leaders who you’re paying to serve in a supervisory role and deal with certain situations on their own.
“That puts their supervisors in a bad way, and I don’t like that,” Saale says. “As long as their supervisors are aware of it and for whatever reason, they can’t get the answers they are looking for or they are frustrated, that’s fine. I just try to encourage them to go through the proper channels first. It is somewhat of a reflection on them if they don’t and it makes them look bad.”
As much effort as you make to hear the concerns of your people, you’ve also got to be careful that you don’t let them rely on you or on their supervisors so much that they become unwilling or unable to make decisions on their own.
“There are times I want to go, ‘Guys, you’re the experts. I’m not in your field, so guess what? You make that decision. If you fail, that’s fine. Try something else. I’m not perfect. We go one way and that doesn’t work, we’ll admit it didn’t work and go in a different direction,’” Saale says.
Saale takes the same approach of instilling self-reliance when she asks others to deliver information to the rest of the company. She doesn’t go overboard imposing her will on their thoughts and she doesn’t ask them to recite everything they are going to say to her before they talk to the team.
“You just have to ask questions, things like, ‘OK, what are you saying? Does that make sense?’” Saale says. “You have to give communication back to them. I try to be collaborative, almost to the point where people think I’m too collaborative or too soft.
“I don’t say, ‘OK, now read that back to me. Or tell me what I just said.’ I guess it’s a matter of how you present it back to them. But my approach is to give the people the opportunity to decide and make their own decisions. It’s always about, ‘How can I make you better.’ It’s all in the approach.”
How to reach: Cope Plastics Inc., (800) 851-5510 or www.copeplastics.com
Don’t think you’ve arrived as a great communicator.
Make sure your departments are coordinating.
Don’t let people shy away from decisions that can make.
The Saale File
Born: Alton, Ill.
Education: Eastern Illinois University, Charleston, Ill. Business administration degree with a concentration in accounting. I love numbers, but I’m also an extrovert. Most of the time, your numbers people are kind of black and white. I’m not black and white. I’m definitely gray. I have a mixture of accounting and marketing in my blood.
What was your first job? I worked at Ken’s Pizza as a waitress. I learned about dealing with people and being a servant. It somewhat humbles you to serve other people and want to do the right thing and make them happy so they enjoy their experience.
Who would you like to sit down and talk to? Because I was too young and too inexperienced and naive to think about it before he passed away, it would be my grandpa. He’s the one who started this business. He passed away in 1995. I was 30 at the time and I didn’t have the experience and knowledge and know-how I have today. So I never sat down with him on a business level. He was always just Grandpa. And I would love to do that. Boy, would I like to pick his brain about things at work.
Most organizations have elaborate systems for monitoring product inventory and product backlog. Small, medium and large companies alike rely on highly disciplined processes for forecasting and sales management to ensure that they do not create a backlog of excess inventory. Even the most junior business major knows that too much product inventory is a bad thing.
The “white collar” or executive version of “product inventory,” however, goes unmeasured, unmanaged, and even worse, unconsciously ignored. It creeps into an organization without any awareness that it is even happening or of the unintended impact it has.
The white collar version of product inventory — unmade decisions that rest at the feet of people in management positions — cost organizations far more than the worst overage of product inventory. They dominate thinking and conversations exponentially across an organization.
“What are we doing about X? Why aren’t we doing Y? When will we know which way we are going? What do I do until we know?” They soak up time and energy and they delay progress. They cause people to take intermittent actions that act as false starts, consume more resources than decisive actions would and keep people from moving important company matters forward.
People lower in the organization are forced to hedge by resourcing many options. Employees have learned they will be expected to move quickly when the decision is made, so to cover all possibilities, they do things, buy things and allocate resources to ensure they can cover all possible outcomes. Deferring an important decision has a costly impact that fails to ever appear on any budget line item.
At a time when speed, precision, prioritization, and informed choices should rise to the top of the list of management priorities so that limited capital can be best directed and leveraged, executives are becoming less decisive in their quest to keep all options open. They are forgetting one simple fact: doing nothing is doing something.
The failure to make a decision is in fact, making a decision. It’s making a decision not to act; not to boldly proceed in a particular direction. It conveys a lack of confidence, assurance, conviction and willpower. It’s making the decision that it’s OK to fake it, guess or wing it. It’s broadcasting to the entire organization that management is unsure which way to go.
Failure to act bold has led to the demise of more than one organization; think Kodak, Commodore or Swiss Air.
Don’t let that happen under your watch. Gather enough data, wisdom and insights in order to make informed decisions — even if it requires extra data analysis, time or resources. Involve people closest to the work/customer to help shed light on the situation. Do the necessary things to gain the clarity and confidence to decide and take action. Next, take the time to understand the pros and cons of various options and key steps to executing the strategy successfully.
It is well known that most failed strategies fail not because they were bad ideas, but because they were plans poorly executed. Effective strategy execution goes hand in hand with clarity of decision, communication, engagement and understanding the liabilities and what is critical to achieving success.
Lastly, make a schedule and set a deadline for when the decision must be made and stick to it. Nothing frustrates an organization like endlessly tabling an issue.
Don’t contribute to your organization’s management inventory. Take the extra steps needed so you can model timely and effective decision-making. The people lower in your organization want to do the right thing every day in every way. But they can’t do that without clarity of direction from their leaders and managers.
Leslie W. Braksick is co-founder of CLG Inc. (www.clg.com), co-author of Preparing CEOs for Success: What I Wish I Knew (2010), and author of Unlock Behavior, Unleash Profits (2000, 2007). Braksick and her CLG colleagues help executives and their teams make timely decisions that matter to the success of their business. You can reach Leslie Braksick at 412-269-7240 or email@example.com.
Michele Fabrizi has always had a philosophical difference with the way most advertising firms approach business and client relationships. Having worked on both the client and business side of the industry, she has become tired of continually seeing firms focus strictly on creating a strong ad with no regard for what the customer really wants and ignoring ideas because they came from a non-senior person, male or a female.
Fabrizi, who is president and CEO of MARC USA, a 280-employee, $300 million full-service advertising firm, was attracted to Marketing Advertising Research Consultants because the company did business the way she thought all firms should operate — with the client at the center of the business model.
In her first two years at the helm of MARC she oversaw 200 percent growth, much of it the result of her ability to get the firm to focus on the client’s needs.
“I am very much about building a business model that is centered on the clients and getting results for our clients,” Fabrizi says. “That DNA and some of the other philosophies such as it doesn’t matter who has a big idea whether they’re junior or senior, male or female, that idea is wrapped up, and we work to get it up and going. Those were very different from the experiences I had at larger shops and on the client side.”
With this philosophy driving the business and Fabrizi reinforcing it, MARC USA has been able to break barriers and foster innovation within the company, creating growth and client relationships that help transform brands.
“It’s been really exciting to build a company that is based on what’s right for the clients,” Fabrizi says. “It’s about breaking things and being innovative. We can do so much more for our clients and be more innovative and invest in the business which you couldn’t do in a public company.”
Here’s how Fabrizi keeps MARC USA client-focused while building relationships that foster growth and innovation.
Build a client relationship
Good business runs on developing and cultivating strong relationships. Simply having a good product or service no long assures repeat business or a place at the top of your industry. Look to make a lasting impression by playing to client needs.
“It sounds simple, but first of all you have to really have to want to hear and listen and get to know people,” Fabrizi says. “If you ultimately think either that’s not important, you’re not interested and it’s a waste of time, or you know more, then you can’t do it. If you think you know more about their business and you want to spend all the time talking, you can’t do it. It’s really about truly wanting to get to know someone on all levels, business and personal.”
Part of developing a deeper relationship lies in how you conduct your meetings, getting off site, and not just across the conference room table.
“Through those kinds of conversations, you can really get more insight, not just into the person but what’s really critical in their business that they feel is important that might not come up in the conference room,” she says.
“There’s a whole basic relationship management that really is critical in your client’s business at all levels. It’s really doing a relationship plan at all levels for all the key people you have to come in contact with. Making sure everybody has their ownership and accountability on that is the only way you’re going to be able to get the information and insight beyond what you can garner on your own to figure out how to help the client be ready for this big idea or the challenge that they’re facing.”
The best relationship people are the ones who really are very thoughtful and plan and study the business. Particularly in this day and age, everything is so fast. Everything is so 24/7 that it becomes very important for the high-touch part.
“Frankly, in our business, that’s very important to touch the consumer across all channels, online, in-store, word-of-mouth,” she says. “Having that kind of ability is important to us in our business in order to be effective communicators and it has to be integrated.”
To integrate better communication and high-touch capability, MARC focused on a team environment and training.
“Team is about behavioral modification, trust, and how to get people to talk,” Fabrizi says. “As part of our culture and our people and talent, we continue with team dynamic high-performance training at all levels, with my senior leaders all the way down. There’s nobody in the company that doesn’t get that training.
“If you’re training people how to work effectively among themselves, that transfers to their clients and relationships.”
To aid the culture of teamwork and a client relationship focus, MARC decided to move to one P&L statement. Instead of having each client listed under separate P&L statements, they combined them to make the overall environment more collaborative and team- oriented. The company wanted the best solutions for its clients and didn’t want people fighting over P&L.
“With the one P&L what we did was created a mindset shift in our employees, because you just can’t say, ‘Work together,’” Fabrizi says. “It won’t work. With that being freed up and the other training and tools that we give them, literally an integrated team gets together and will talk about the issues of a client and come up with ideas. It’s about breaking convention and being innovative.”
Get results through innovation
MARC USA has a heritage of doing things differently and bringing innovation to the industry. The company even created an off-the-wall word to describe its unique capabilities.
“We’re using breakthrough research techniques and new technologies to drive innovation every day,” Fabrizi says. “That’s what I’m about, what’s next? At MARC we say what we do is a word we made up because there is no word for what we do. It’s called ‘wezog’ and it’s how we think. It’s what we expect from our people. It’s a critical component of our long-term client relationships. It means doing things the way they haven’t been done before — thinking outside the box.”
The firm builds successful brands and drives sales through its creativity, insights and technology and the results are changing the game for clients.
“It’s a key reason why we have such strong, long-lasting client relationships,” she says. “It’s really about not doing things the way they’ve been done before, being highly collaborative with clients and finding ideas to break assumptions and challenge conventions. This is the kind of thinking that really helps brands strive in good times and in bad times.”
There are three words that clients use to describe MARC: passion, vision and collaboration. If you’re going to deliver on those three, you have to have the people power that’s going to do that.
“That’s how I’ve taken the company into the future, and it’s such a right thing for the business now,” she says. “It’s not about what’s nice and what the competitors are doing. People come in with ideas that are not founded.
“We do a lot of innovative techniques and strategic alliances on deep-seated emotions. Good enough is not good enough, particularly when you look at the business challenges that everyone’s facing.”
These days, consumers are more in charge than ever. They have more choices, they have more information and they have more ways to shop. It is up to firms to deliver something that is not a one-size-fits-all solution for clients.
“Sometimes our ideas are rethinking how they do business,” Fabrizi says. “Our initial ideas may not even be advertising ideas, but ideas that would protect their ROI and more along the lines of business solutions, but eventually could become advertising and marketing solutions.
“We have a very deep practice in behavioral science and behavioral economics so that we can really understand at a very deep, deep level. What we do is almost like brand therapy where we get the consumer to qualitatively express their conscious and subconscious thoughts so that we can really empower them to explore their thinking beyond the literal.”
To get those results you need to evolve and create tools and systems that help to provide new ways to connect with the consumer. In order to do this, you have to be up close and personal in your clients’ business.
“In any business today, whoever your clients are, if you’re not intimately involved, I don’t know how you’re going to survive,” she says. “You have to have trust so they’ll share data and the pain points, or you just can’t get the kind of revolutionary ideas that are going to get the kind of sea change results that are needed.”
Look for opportunities
In a business that constantly strives for new and innovative ideas, you have to reinforce what it is you’re trying to do within your company — and it’s the CEOs job to lead the charge.
“The secret is you have to get the senior leaders to buy in to it to make radical change,” Fabrizi says. “If you can’t do that, you will not be successful. If you want that type of environment then you need to keep saying it in every which way and reinforcing it and so do the leaders or it won’t happen.
“To me this is about transformation and how do you adjust your company in this day and age when you’ve got so many pressures. It’s really looking at your business and saying, ‘Why are we doing it this way? How do we do it differently?’”
In the world of advertising it’s all about being unique and having the ability to take advantage of opportunities when they arise. You have to plan for this in order to bring opportunity to fruition.
“Again, it’s thinking out of the box,” she says. “It’s not doing things normally. It takes time to do that, and it’s not a quick fix. What are the fundamental core things about the business that if nullified or changed or innovated, within a period of a year or two, could dramatically catapult the company forward so it’s not just parity?
“That’s what you’re seeing out there is a lot of parity, and you see a lot of tactics. You see very little really strong core business strategies. It’s very tactical and that’s short-term, so that means you’ll always be running, running to catch up because those things are very easy for competitors to emulate.”
Those strategies and plans are the responsibilities of the senior leadership. Those tactics have to be driven forward as the day-to-day business continues to function.
“That falls squarely with the CEO and the senior leadership and even the management level,” she says. “If they don’t think it’s important, they’re not adding those insights, they’re not worried about it, they’re not planning it and they’re not getting together to collaborate on it, you’re going to lose your way.”
The other key part is collaboration among your leadership in these processes.
“You have to have people who can help you make that idea happen,” she says. “If somebody within the organization has an amazing idea and I get hold of it, it’s like, ‘Oh my gosh — we’ve got to do it.’ I don’t care where it comes from. In this day and age we all have egos, but at the top you have to have less ego and more ability to know when you have to follow and listen, as opposed to constantly being the brilliant, fearless leader.”
How to reach: MARC USA, (412) 562-2000 or www.marcusa.com
- Get to know your clients on a business and personal level.
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The Fabrizi File
President and CEO
Born: Pittsburgh, Pa.
Education: Received a bachelor of arts degree from Carlow University
What was your very first job and what did you take away from that experience?
My first job was helping out in my father’s music store. I saw how he took the time to listen to people and treat each student or customer as an individual. It was a very powerful lesson in many ways — how to develop people, how to deliver excellence in service, and how much you can learn about a customer’s needs if you pay attention to what they say and also what’s not said. He understood that emotions drive choices long before neuroscientists proved this.
Who is someone you admire in business?
Tena Clark — writer, musician, entrepreneur and head of DMI Music. She was one of the first people to understand that brands have a sound DNA and built a very successful company to deliver this vision. We’re very like-minded and that’s why MARC USA partners with DMI to use music to help brands forge strong emotional connections with their customers.
What are you most excited about for the future of your industry? Why?
Developments in brain science and technology are taking us in amazing new directions. While some people claim technology separates people, we’re using it to make stronger connections than ever and to deliver highly customized, personalized one-to-one experiences with brands.
If you could have a conversation with any one person from the past or present, to whom would you speak with and why?
Leonardo DaVinci — truly a visionary who also got things done. He combined left-brain and right-brain thinking to envision and then create things not even imagined by anyone else around at his time or for many years after.
The big challenge for so many executives is that they have been reared in “boss mode” rather than in the culture of leadership.
Bosses too often believe that they have to come up with all the innovative answers. Consequently, their people will sit and wait for the boss’s next epiphany. It’s old-school thinking!
Most entrepreneurial ventures are born because someone on a lower level within a company had a good idea, but the boss didn’t listen. When companies instead have leaders of the ilk defined by Thomas L. Friedman in his June 2011 The New York Times column, they continue to flourish and evolve toward the next level as opposed to becoming stifled and destined to “expire.”
Friedman says, “The role of leaders today is to inspire, empower, enable and then edit and meld all that innovation coming from the bottom up.”
Why? Because even bosses eventually run out of creative ideas. With that in mind, you have to ask yourself if you are an extreme or a reluctant boss.
With some bosses, in extreme cases, there’s not much that can be done. They build a cadre of yes-men around them and everyone waits for their command or their next crazy idea to execute. But at least the yes-men have jobs — although sometimes at pay beyond their true value because of blind obedience and loyalty.
In these challenging economic times, there are also many enterprises stagnating because their people wait for their boss to paint the picture of what the company will look like going forward. These reluctant bosses don’t know any better. They have just grown up in different organizational cultures.
On the other hand, good leaders build up the confidence and talents of people around them and nurture their creative ideas. That’s call new-school thinking.
Here are three behaviors that will transform reluctant bosses to effective leaders:
- Education and learning: Good leaders have a great appetite for learning, especially in regard to cultivating more effective ways of motivating people and building positive and innovative environments. Good leaders focus on thought leadership and create a learning environment for all. Bosses, on the other hand, participate in little of the education and learning aspects because they believe they know it all already. Sound familiar to anyone?
When executives stop learning, their leadership prowess begins to wane.
- Focus on your people, not yourself: Traditional bosses are generally described as people with big egos. In other words, they’re more focused on themselves and their own prowess and generally have scant regard for the capabilities of their people.
On the other hand, smart leaders focus on building and encouraging their people. They invariably have associates around them that they respect and appreciate. Humility trumps ego every time.
- Let people take risks and make mistakes: Once you take a leadership posture toward people, you will be open to letting them learn from their mistakes. Remember, creating an atmosphere of risk-taking is very healthy. By doing so, they will discover and innovate. Who knows — one out of every five interesting ideas may bear real potential.
As their leader, your job is to assemble resources and talents, as well as create a vision for the company, focused on innovation. Whenever setbacks occur, and they will, you must encourage the innovator to hang in there — your support and patience will be required.
Again, remember that innovation comes from all those talented people operating within your organization. Your people probably have many unrecognized talents, which, when harnessed properly, could put your enterprise on an exciting new track.
So give up on being an atypical boss and try leadership instead — the results will speak for themselves.
G.A. Taylor Fernley is president and CEO of Fernley & Fernley, an association management company founded in 1886. Reach him at firstname.lastname@example.org, or for more information, visit www.fernley.com.
When Michael Hilton looks at a soda bottle, he isn’t thinking about whether it tastes good or if it will quench his thirst. He is thinking about all the ways his company can incorporate better applications to make the bottle.
Historically, bottle labels were applied by rolling the bottle in a pot of glue, which would result in the adhesive dripping and covering areas of the bottle that didn’t need to be. The application Nordson Corp. developed was a pattern spray on the bottle. The leading edge of the label is placed on the bottle, it is wrapped around and receives a coating on the trailing edge, which saves 20 to 30 percent in adhesives.
“It’s a big seller for our customers,” Hilton says. “That’s one way to drive growth — create applications with technology.”
Driving growth is what his objective has been since being named president and CEO at the beginning of 2010. Nordson Corp., a more than 4,000-employee manufacturer of products and systems used for dispensing adhesives, coatings, sealants and biomaterials for several end markets, has been a strong company, even during the recession years. When Hilton arrived, he saw the company as an $800 million organization that could become a $2 billion or $3 billion business.
“If you step back, [Nordson] was surrounding the customer [with a] globally well-positioned [team], a talented team, and a team that executed,” he says. “That’s a very good foundation to build on.”
Globally, Nordson has a presence in more than 30 countries and has been well-established in locations such as China, India, Brazil, Europe and Japan for a long time.
“For a company our size, that’s a great global footprint to have to take advantage of opportunities for growth,” Hilton says.
To benefit from those opportunities he had to evaluate the business and understand the key areas that needed attention and resources.
Here is how Hilton is improving the operations and processes of a good company to make it a great one.
Cover all the bases
Coming into a company as its new president and CEO usually carries a lot of weight. Hilton didn’t want to just come in and make random changes. He had developed a relationship with his predecessor Ed Campbell, and he used that relationship to listen to any advice Campbell provided to understand the business.
“Initially, I spent the first couple of weeks largely with Ed getting a download on everything you would expect from the business to the customers to the investors to the organization, and he was pretty helpful in terms of his long history at Nordson,” Hilton says.
Hilton’s time with Campbell was short-lived, but impactful. The keys to the company soon belonged to Hilton and he had to now get out of the headquarters facility and visit the business around the world.
“As soon as I could I really looked to take the opportunity to travel and meet some customers, see our facilities globally and get a better handle on what we do day-to-day,” he says. “There is only so much research you can do from afar and only so many reports you can read, and until you have an opportunity to touch it and feel it, you don’t really have the same perspective.”
It was obvious to Hilton that Nordson was a very good company and performed very well in a difficult time. The company was fairly solid and there were strengths in its business model.
“If I step back and look at what were the key strengths that I found, one was how we surround and support the customer,” he says. “If you think about the underlying technology, the direct sales approach and really a service organization that is incredibly responsive to its customers, that’s as good as I have seen.”
Hilton has previously operated in a number of different businesses all with one major company, but six different business models.
“I think I have a pretty good operating field of different approaches in everything from commodity businesses to specialty businesses and high-performance businesses, and this is very high-performance, so it was a great foundation to inherit,” he says.
The biggest key for a new incoming CEO to understand what a business is about and how it operates is to listen.
“I didn’t rush to form any particular opinions,” Hilton says. “It’s a complicated business so you need some time to get to a level of understanding before you can sort through and think about what has to happen next and take the company forward.
“As somebody who’s been in the industry 30-plus years before I came here, you can have a tendency to feel like you know what needs to be done. You have to wait a little bit and make sure you have enough input. It’s a bit of drinking from the fire hose, but it does give you a good perspective of the day-to-day.”
While listening is crucial to a CEO’s understanding of the business, visiting different locations in person is also important.
“You have to get out to facilities so that you better understand what you do and how you win in the marketplace and there’s no substitute for that,” he says. “Also, you have to take time in the nonbusiness environment with folks, whether that’s on the weekends or at dinners just getting to know people in the organization.”
Those same things go for getting to know your leadership team. Demonstrating that you’re a regular guy is a crucial step to cementing relationships.
“It is really trying to put the leadership team at ease when you come in,” he says. “Particularly in the time when I was coming in we were just starting to come out of the recession and the best thing for the business was to figure out how we could win in the recovery phase and to win more than our fair share of the business.
“You need the team motivated to do that. I’m here to learn and I think I have some experience and value to offer, but I don’t want to come in with a preset agenda that said we have to do A, B and C, because I didn’t know enough.”
Take the next steps
Once Hilton had become comfortable and did his due diligence within the organization, it was time to take the things the company was good at and find ways to make them even better.
“If you look at what we’re really good at — the surround the customer piece, the global position and the execution — what else do we really need?” Hilton says. “I came down to focusing on three areas. No. 1 was, ‘What can we do from a strategic standpoint to take us to the next level?’ No. 2 was, ‘How can we create more leverage across the enterprise?’ No. 3 was talent development.”
The first thing that Hilton and Nordson performed was a rigorous review of the business.
“We have these businesses, what can they deliver over the next five years from a growth and performance standpoint?” he says. “Historically, the company grew organically at about 6 percent and historically added about 1 percentage point from M&A. We concluded that we ought to be able to take that 6 percent and make it 8 percent.
“If we continued to improve our bottom line performance, we’d have more cash to reinvest, so we should at least set a goal to add from an M&A perspective, not 1 percent, but at least 2 percent and maybe more. So how do we go from something that looks like 7 percent growth to 10 percent growth on a sustained basis?”
First, Nordson looked at ways to exploit emerging markets by improving technology and applications.
“If you think back from a strategy standpoint of how do we get more organic growth, emerging markets is a big play, using technology to create new applications, and using new technology to help our customers recapitalize are all very important,” he says. “So when I looked at what we’re spending on technology, I said, ‘Even though we’re the leader and absolutely have the best technology out there, we’re not spending enough on technology. We’re spending too much on supporting our existing products.’
“So we’re increasing the absolute amount we spend on technology and we are shifting more of our technology spend from supporting existing products to developing new.”
Another step Hilton took to drive growth was changing the strategy of how the company went about mergers and acquisitions.
“We had to add a couple of points organically,” he says. “How do we move from an opportunistic and episodic acquirer … to being a more consistent acquirer? We identified four areas of interest to us — medical devices, flexible packaging, cold materials and extending our test and inspection business. You have to use strategy to drive organic growth with technology. Use strategy to drive M&A activity in areas that make sense. We’ve made three acquisitions this year which added 4.5 to 5 percent to revenue.”
The next thing the organization focused on was what it could do across the company that would benefit each business.
“One of the assessments that I made when I traveled all around is we had done a really nice job of adopting lean technology, but it plateaued in terms of our performance results,” he says.
“Much of the company’s margin improvements from 2002 to 2007 came from the Lean initiative. We went from 12 to 13 percent operating margin to 17 percent. Last year we did 26 percent, so we’ve moved the bar quite a bit and we have more to go. We have kind of stalled out on the Lean activity.”
To drive the next wave of continuous improvement Hilton appointed a senior experienced operations employee to build a small team and give him direct reports on improvement.
“As part of that we’ve identified two things; one we’re in the middle of executing now is optimizing our global supply chain,” Hilton says. “That’s really to allow us to distribute things where the demand is and do that in the most efficient way. The second big area is around segmentation, which is understanding from a product and customer standpoint what we provide, what are our offerings, where are we making money and do we have too many products?”
The third piece of the puzzle for Hilton regarded the company’s talent. He was pleased when he traveled around the globe to see the quality of the talent Nordson had in the organization, particularly at the leader roles.
“The challenge for us, like many companies, is if you really want to grow substantially, you need to add resources and you need to do that across the globe,” he says. “To do that, we need to build up our management capability in all areas. We have good people, but just not enough to support our growth ambition.
“One of the key areas of focus is how do we enhance our overall talent development and management approach.”
When Hilton did the first review of succession planning in the organization, his direct reports went a couple of levels down and he noticed there were a lot of gaps. The company focused initially on how address that.
“We made a number of rotational moves to broaden people’s skill sets and capabilities,” he says. “Then we took a step back and said, ‘OK, for the folks that run the businesses and the functions that report to me, what kind of skill sets do we want those folks to have, both from a content or expertise standpoint and a leadership standpoint?
“Given those skill sets, what kind of positions below them would be good feeder positions that would help them develop those skill sets and capabilities and where is the key talent in the organization who could move into higher levels of leadership and management?’ We got more thoughtful in development moves and giving folks different experiences.”
Add to your strategy
Now that Hilton had spent the time understanding the business and identifying the areas where the company had the best opportunities to improve, he had to make those changes part of the company strategy.
“If you step back, these are the things that I think we need to do to help us move from that $800 million to a $2 or $3 billion company to give us 10-plus percent revenue growth and some additional leverage that gets us into teens earning growth and be a top-quartile performer,” he says.
“We had a Lean organization and one that hadn’t gone through a rigorous strategic planning approach in the past so some of the concepts were new. I brought some help in from the outside to help put some structure and discipline in and to add some resources that we didn’t really have.”
Those changes resulted in 2011 revenue of $1.2 billion. One of the keys to more organic growth was Hilton’s strong belief in leading the merger and acquisition activity in the market.
“If you can be the one out there driving the activity, you’re going to end up with a better set of deals to add to the portfolio,” he says. “If you’re driving it, you’re probably out there establishing relationships early on. It might be two, three, or four years until somebody decides they want to sell, but if you have a relationship it enhances your own knowledge of their business and therefore reduces the risk.
“It also gives you a first shot at business. The more knowledge you have, the more you understand what you’re going to do with it once you acquire it.”
For Nordson, the company looked at logical extensions of what it does today and what would fit its business model.
“We put a set of criteria together,” Hilton says. “For example, 40 to 45 percent of our business is recurring revenue through parts, services or consumables. We like that because it gives us a steady nature to our business. So when we look at things to buy, whether it has a recurring revenue component is an important area to check the box on.
“We look at whether the company is a technology leader. Is it a performance sale so that I can take advantage of my technical sales force? Is it regional, but I could take it global and use my infrastructure? We look at all those things and use a set of criteria that says this is a good deal for us.”
In June Nordson acquired two more companies, Entrusion Dies Industries and Xaloy, bringing the the total to five acquisitions in 2012. Hilton made certain these two companies fit the Nordson strategy.
Another thing Nordson is changing strategically about its M&A activity is how it manages the companies it acquires.
“Historically, we tried to buy good companies and leave them alone so we didn’t screw them up,” he says. “We like to still buy good companies but now we’re looking at what we can do to make them better, how we integrate them into the business that we have, and if it’s a new area, what else can we add to it down the road. You need to do that to deliver the performance, but also sustain the business.”
A key ingredient to sustaining the business is having top-level talent capable of keeping pace with the growth you want to see. That talent has to be intertwined with the strategy for everything to operate smoothly.
“There is no substitute for going out and spending time with your organization and making your own observations,” he says. “Talk, listen and see your folks in action. See them with a customer and then you’ll get an initial reaction, but then you have to test that with folks.”
By doing this analysis you are able to get a sense of the gaps in the organization and moving forward, it is easier to see where talent development and your strategy line up.
“If you’re doing the initial round of visits, you get a sense of what you have in the organization,” he says. “You get a sense of the skill sets and capability at a high level of one or two levels down from the folks that work directly for you so you get a sense of depth in the organization and breadth in capability. Then you weigh that up against what you’d like to do.”
The other thing Hilton did was seek out a few trusted advisors to help him while going through the talent process.
“Find one or two people that you feel pretty confident with who could be trusted advisors without any particular point of view and be objective to bounce ideas off of,” he says. “If you have that kind of open relationship, it ties into some of the other things in terms of how you gauge your own leadership.”
Most importantly, as you go through an evaluation process of your business, you have to be willing to put resources behind the things that need improvement if you truly want to create measurable results.
“Get help from outside your organization and put resources on it,” Hilton says. “It doesn’t happen without some resources on it to develop, and it doesn’t happen overnight.
“This is a really, really good company that I inherited. We’re making some positive changes. I think we can make it considerably larger and just as good in terms of the performance, if not better. I’m pretty pleased about where we’re at and about our prospects. The folks have risen to the occasion, but I don’t want to exhaust them because we have a long way to go.”
How to reach: Nordson Corp., (440) 892-1580 or www.nordson.com