A lot of CEOs try to keep two feet planted on the ground. Bob Fishman tries to keep about 240.
It’s part of his philosophy on organizational management. The founder and CEO of Resources for Human Development believes large organizations are at their best when the people in the field, at the customer interface point, are enabled to spend money and make decisions.
Armed with that philosophy, Fishman has dozens of representatives pounding the pavement in 14 states, gathering information that will help Fishman’s organization better serve its customers.
Resources for Human Development is a nonprofit entity that provides services to people with developmental disabilities, substance addictions and mental illness. The nonprofit, which employs 4,500, also operates various for-profit business ventures in the human services field.
With operations in multiple states, a large work force, governmental partnerships and a large range of services offered, the challenges facing Fishman are far closer to those of a Fortune 500 CEO than the director of a neighborhood social services program, which is why he makes delegation of power a guiding principle.
“The biggest challenge is the continually maintaining of constant diversification of the corporation, while holding to central values of interpersonal behavior in the managers and the supervisory staff,” Fishman says. “The values of the organization being the central part, while focusing on and achieving continued diversification in terms of the markets we reach, the services we deliver and the opening of new service areas.
“The diversification is achieved by having over 120 people at any one point in time out there looking to satisfy the customer base. The same thing is true for nonprofits and for profits — there is a customer base, and for us, they are all state and local governments. So you need many people out there constantly satisfying the customer, the governmental people and their various bureaucracies, and looking for new things we can do for them.”
It’s why Fishman needs a ground-level view on the needs that exist in each of his markets and why he entrusts his people in each market to keep corporate leadership informed.
Trust your people
To build a decentralized organization, you need people to whom you can delegate power and responsibility. You also need to develop a willingness to hand over that responsibility to the people you have deemed worthy and capable.
In other words, you have to be willing to trust people.
Leaders sometimes equate trust with blind loyalty and gullibility. Allowing yourself to become too trusting is supposed to be bad business. You’re supposed to be a chronic skeptic and force others to earn your trust.
Fishman sees it a little differently. To him, there is a not-so-fine line between trust and gullibility. As a leader, you owe it to your people to trust them until you have a reason not to.
“You start out with an assumption that most people are good and can be trusted,” Fishman says. “Very few people that we hire, less than 1 percent, will actually abuse the trust. It happens, but it is such a small percentage that you can start to set up a very different system of empowerment of people to make decisions to run local budgets, to hire people locally, purchase locally.”
It doesn’t mean that you give your people carte blanche to do whatever they want with no regard for consistency or standards. But it does mean that you need to properly train your people, educate them in your standards and culture, and give them the freedom to prove that they can live up to those standards.
“For example, we have $14 million in contracts being managed by our head of operations in New Orleans,” Fishman says. “So she and a series of people are continually reviewing how we’re doing in terms of budgets being negotiated. Is it working out, do we have to look at anything being renegotiated?
“She has local people assisting her, the financial oversight people. Then we have a financial and programmatic oversight in the corporate office here in Philadelphia. There are different levels of oversight, but she is the one who makes the decisions with her staff in New Orleans.”
To drive decision-making power downward while still promoting uniform standards across all of your departments and geographies, you need to be able to set the example from your perch. Fishman consistently models the behavior he wants his leadership in all of his organization’s markets to emulate.
Fishman has branded Resources for Human Development as a “common good corporation.” Anyone who works for Fishman must embrace the concept of working for the greater good. You might be in business for personal gain, but in order to run a completely healthy company, you and your team have to work toward something larger than personal goals.
“We have a bill of rights and responsibilities,” Fishman says. “We have values that need to be valued and learned by all employees, in terms of knowing the budgets of all the units, all the salaries being open, all data being open. I have a management team of 10 people around me, and sometimes, occasionally, we have made an adjustment to the management team’s salary. But we also work in a head office with 290 people, and our pattern is we don’t take bonuses unless everyone gets the same bonus. If my secretary can’t get the bonus, I can’t get the bonus. That is what is called leveling economically.
“What I’m touching on is both in terms of behavior and monetary rewards, we’re following as much as we can, we know what we’re doing and it’s very successful. While other corporations say, ‘How do we survive?’ we’re saying, ‘Step back and look at your culture, look at who is making the decisions, who is being empowered for success.’ Do you basically trust, or do you basically distrust?”
Make your decision
Because of the philosophical differences, it’s difficult to convert from a centralized to a decentralized organizational structure. If you’ve made up your mind to delegate decisions downward, you have to write it onto your company’s DNA. It’s something that everyone has to believe. You have to produce rules by which everyone in the company can play.
Fishman says you need to answer two overarching questions: First, what are your personal values and attitudes about people? And second, are you willing to admit that you can’t have all the answers needed to run a successful enterprise?
“The first thing is you have to face a number of value questions,” he says. “The central one is, do they believe that people are basically trustworthy? If you can’t say that, you can’t do what we’ve done. Not that everyone is totally trustworthy, but basically trustworthy, so that most people will be able to operate within a financial and ethical system.”
You need to remember that that people in the field sometimes need the least watching. Often, if dishonesty or a failure to meet standards becomes evident, the scene of the cultural crime could be right under your nose.
“Most corporations are undermined not by people in the field, but by people in the central office,” Fishman says. “The biggest theft in terms of theft or destruction of reputation has been proven to exist with the people who make the rules and represent the corporation at the center. It was true with Enron and it is true of every other corporation. You reverse that and say, ‘Let’s set up standards for how to use money and decentralize within budgets and agreements;’ you start out assuming that you have good people and they want to do a decent job.”
Your willingness to let others answer the big questions is a lesson you need to learn in two parts. First, can you let someone else be the authority on a matter? And second, can you accept that your team might find multiple ways to arrive at a satisfactory answer to a question or problem?
“Can you accept the idea as an administrator that you don’t have to know everything?” Fishman says. “People are not founders of organizations, because they know the answers to the future. They’re not gods or goddesses. People tend to look toward the center of the organization for the answers to complex questions that can only be worked out by many people in a complex system. There needs to be somebody at whom the buck stops, but to be in that role is different than saying you know all the answers.
“Within that is another assumption that you can arrive at many possible answers, that they don’t have to be arrived at by someone in charge of the services in the corporate office. That allows you, as the corporate head, to say, ‘You decide how to spend the money within the budget, and within the local legislation and agreements that you understand the best.’”
Hire for your culture
How do you hire for a decentralized culture? Fishman says it can be frustrating. You can go through rounds of interviews, review references and resumes, and ultimately, your research will lead you to the right hire the vast majority of the time. But you can’t know for sure until you’ve seen a person at work.
“You can’t know who you’re hiring in advance,” Fishman says. “You can tell people what their job is, what your culture is, what they’re going to be trusted with, and how we expect them to behave and not to behave with money, power and status.”
Though you might want to allow decision-making power to trickle down, you have to give new hires a well-defined set of guidelines and values that will govern them from the first day on the job. If you put those standards in place from the beginning, you stand a much better chance of developing trustworthy people who make decisions that are in the best interest of your company and customers.
“For example, in our system, we decided that no one employed in our corporation can have a private office,” Fishman says. “We might have someone who figures they are now the head of a big division, so I’d like a private space of my own. So we tell them all the things we do and don’t want to see, and correct them as rapidly as we hear about it.”
Ultimately, if you’ve involved enough people in the hiring process, you can usually gain the perspective necessary to make the right hire with the raw materials needed to become the type of employee you can trust with the decisions that will impact your company’s future.
“We make a group decision,” Fishman says. “That person needs to be hired by a group of people, and the people they’re going to supervise. We do appoint people, but often they’re hired from a group interview setting. There needs to be a group buy-in on the process that leads to the decision.”
How to reach: Resources for Human Development, (215) 951-0300 or www.rhd.org
Bob Fishman, CEO, Resources for Human Development
Born: Brooklyn, New York
Education: Bachelor’s degree in philosophy and psychology, Brooklyn College; master’s degree in clinical social work, Columbia University
First job: As a kid during (World War II), I’d go around to houses in Brooklyn to buy the fat renderings collected in kitchens. I’d pay a few cents for a can of fat, then take it to the butcher’s store, where they collected it to use in an armament function of some kind. I was a retail buyer and wholesale seller of fat renderings as a kid.
What is the best business lesson you’ve learned?
People are basically good, but people have separated that from an economic model. My business lesson is that is can be combined with a viable business model and flourish.
What traits or skills are essential for a business leader?
One of the hardest things for me is to find out something I don’t have to know. It’s a hard skill, that you don’t have to know and you don’t have to have answers. You have answers for yourself personally, but others have different answers. You have to know what you don’t know.
What is your definition of success?
In a leader of any corporate entity, there is the economic answer that you need to bring in more money than you expend. That is the countable part of success. But the other part for me has been to develop and operate an organization that builds on the strengths of human beings and adds to a culture’s health, rather than taking out of it. I feel I’ve been able to do that within the model I have been able to develop. It’s that duality that allows me to consider my life’s work a success.
As a pilot for 43 years and president of Voyager Jet Center, Rich Ryan knows what it takes to create excellent customer service.
Ryan leads by example and demonstrates the level of effort and commitment it takes to deliver the customer service that Voyager Jet Center, a private aircraft company, is known for.
“I think when the employees see the president pitching in, whether it’s picking up a piece of trash, flying an airplane or cleaning something, I think they know that I’m committed and therefore they should be committed,” Ryan says.
Attention to detail by all 60 of Voyager Jet’s employees allowed for $25 million in sales last year.
Smart Business spoke with Ryan about how he keeps customer service the focal point of his business.
How do you keep your employees motivated?
I’m a walkabout manager. I am in every department every day observing, showing my face and asking people how things are going. That’s a management style that’s worked well for me. Make yourself visible. Make yourself visible to the customer and to the employee. Don’t hunker down in your office, get out and about.
I also have an open-door policy. People aren’t hesitant to speak with me, because I see them every day. If you’ve ever been to a presentation by a senior executive to his staff, at the end invariably the lecturer will say, ‘Any questions?’ and people are reluctant to speak openly. So the follow up is, ‘If you have any questions that you don’t want to say now, I’ll be available in my office for the next half hour and you can talk about it.’ If I address the employees as a whole, I usually end up in that arena. Some people just don’t speak well in front of a group of people, yet they may be perfectly lucid in a one-on-one conversation.
How do you create and evaluate customer service?
Training is one way to keep the quality of service up. Voyager Jet Center spent roughly $650,000 on employee training last year. Most of that training was simulator training for the pilots, but we also train our dispatchers and our line service personnel. As a company, we sell several types of products, so our line service personnel need to be trained in safe and efficient service.
A lot of the customers are my friends or associates so I will call them and ask them or send them an e-mail and ask, ‘How was your trip last night?’ By constantly evaluating what our service is by getting feedback from our clients, we hope to improve our service.
We have evaluation forms … for the pilots to fill out who come in and buy fuel from us or use our facilities.
For employees, we have a standard evaluation process. I’m a big believer in the sandwich technique, the good the bad and the good. So I would say, ‘Mark you’re doing a great job; however, you’ve been tardy three times in the past two months, so once you correct that, overall, you’ve done a good job.’ Evaluating progress is critical. Otherwise the employee would be operating in a vacuum.
How do you improve customer service?
Listen to what the customer says and listen to what the employee says. The employee knows more about his job than you do, so listen to him and then react.
Make sure that you involve employees in the decision-making process. Push decision-making down and make sure that each employee has bought in to the goals of the company. Employees need to understand what the goal of the company is, and they need to buy in to it. By involving them in the decisions, it becomes their decision, not your decision.
How has customer service helped grow your business?
We sit in one airplane every week. We sit in it for several hours, and we open every drawer and open every table and look in every nook and cranny to make sure it’s clean and that some old magazines haven’t gotten in there. That’s very important to us.
People talk about what’s a good restaurant or what’s a good tailor and who’s a good jet provider. Who can you rely on, who’s safe? So if you have a cadre of happy customers, then they’ll tell their friends, and that’s an important manner in which to build the business.
HOW TO REACH: Voyager Jet Center, (412) 267-8000, or www.voyagerjet.com
Vincent Delie Jr., CEO of First National Bank of Pennsylvania, managed to lead his bank through a time when business-as-usual was anything but usual. Not only did Delie and FNB survive the worst of the recession, but he found ways to grow the bank, especially in its biggest region, Pittsburgh.
“There were quite a few obstacles,” Delie says. “It seemed like every line item on our balance sheet was being challenged one way or another. There was quite a bit of concern not just with our institution but across the country in regard to how we would fund ourselves moving forward.”
Growth during a downturn is a rigorous task and one that takes time and persistence. Delie looked to the talents of the bank’s 2,300 employees to tap into opportunities in the marketplace to take the company into unchartered waters. Those initiatives helped the bank see revenue of $369.9 million in 2010.
“In this market, you can see that the companies in western Pennsylvania seemed to have fared better through the recession, because they’ve had a lot of practice over the years,” he says. “We’ve had some very difficult times here where we’ve been hit harder than the rest of the country during more mild cyclical declines.”
The good fortune he has seen was no accident; it took hard work and strategic planning by Delie and his employees to push through. Here’s how Delie took advantage of new opportunities to get FNB through the downturn.
FNB found itself in a pretty strong position during the toughest period of the economy. Superior credit quality metrics, flexibility and a conservative investment policy helped FNB refocus their attention to areas where growth could be possible.
“Because we were a true plain, vanilla commercial bank, we were able to ride through [the recession] with less disruption in our own balance sheet, and ultimately, that resulted in better earnings throughout the period,” Delie says. “We have a fairly conservative investment policy, so we didn’t get caught up in some of the toxic investments that others got tied up with. That gave us a little more flexibility.”
Delie and his management team had the insight to forecast for a declining loan demand and prepared themselves for what would need to happen to change their approach.
“We had the challenge of growing our balance sheet during a period when outright demand was diminishing,” Delie says. “There were challenges on many, many fronts and they weren’t just challenges for FNB, they were challenges for everybody in the marketplace.
“You need to challenge your employees to think about ways to continue to generate revenue even during a very difficult period. You need to be upfront and honest and communicate very well with your employee base. You need to understand what your clients’ needs are as you move through that cycle.”
Sometimes customer needs will change, so be willing to adapt. This requires a collaborative management team.
“You can’t have silos within your company,” Delie says. “Everybody has to be working together to drive shareholder value and to focus on the bottom line. You can’t have one division just focused on what they do exclusively. They have to be communicating with the other areas.”
During a time when companies see their most important lines of business diminish or even disappear completely, they have to quickly respond. Companies must look at alternative ways to stay in business.
“As commercial clients manage their finances through the cycle, I would stress that cash is king, liquidity is very important,” Delie says. “During periods of time when the economy is contracting, good companies reduce inventory levels, they build their cash position, they delay (capital expenditure) spending and they manage their balance sheet appropriately. I think that if a company is struggling, that should be their focus. Their focus should be to drive liquidity.”
When the economy changes the way you have to do business, it is crucial that you act quickly to implement new ways of gaining business. Communication during that process is also critical in making sure plans don’t fall through.
“We have meetings continuously to talk about the challenges that are going on in the environment and within our own organization,” Delie says. “We focus on those items as often as we have to. Communication within the company is critical, particularly during a period when business isn’t normal — it isn’t business as usual.
“You have to have a system where you can elevate issues or ideas and discuss challenges in the marketplace. We’ve institutionalized that within the company and how we interact with each other. I think you become a little quicker and more nimble when you have that.”
It’s always easy to identify what needs to be done, but actually doing those things takes time, work and people who understand the direction the company needs to move in.
“You need to clearly communicate,” Delie says. “You need to correlate what’s required from a production standpoint from the employees to the ultimate financial plan of the company. They have to understand even though they’re a small piece of the total equation that their contribution is needed and is necessary and we are relying on them to get us home. Making sure they understand how their little piece fits into the total picture is probably one of the most important things. You have to also provide the appropriate incentives to make sure that they achieve or exceed those objectives. Recognizing success within the organization and sharing victories pays dividends.”
Delie quickly realized that the customers they currently had were priority No. 1. Repeat business is vital no matter what state the economy is in and attention to customer satisfaction is what keeps them coming back.
“It’s one thing to build your customer base, but you have to maintain what you have,” Delie says. “Going through a very disruptive period like we just went through, keeping in touch with your customer base, making sure that you’re serving their needs, making sure that you’re listening when they’re bringing up issues or they have concerns about the industry or a particular product is critically important.”
Implementing ways to gain feedback from customers is an important way to find out what they like and don’t like about your company and your service. Retention rates will not rise if you don’t know how or where to address problems.
“You have to put in a way to measure the satisfaction of your customer base,” Delie says. “That has to be built into your incentive comp planning. It has to be built into the culture of the company. You have to have a way to measure it.
“We came up with a methodology for measuring satisfaction across a bunch of customer areas so we could benchmark ourselves against a baseline result. You have to be able to measure that and ingrain it into the culture. Making it an important factor is critical to gaining success.”
Having a system in place that can tell you exactly where improvement needs to happen will greatly increase your customer satisfaction. If customers are not satisfied, change needs to occur.
“You have to get to the root of what’s causing that dissatisfaction,” Delie says. “That requires reaching out to customers. You should also sensitize your employees and incent them to bring forward process change that creates a better environment for providing the service. Those are the things you need to do to drive change.”
Take advantage of opportunities
Once Delie addressed the issues that would help stabilize the bank, he started looking for other avenues to grow and expand their reach. During a tough economic time, it’s important to not be one-dimensional.
“We are not in a high-growth market,” Delie says. “For us to grow in a market that isn’t a high-growth market like other areas of the country, we had to focus on niches within the marketplace that we compete in where the growth is growing at a faster clip than the overall market.
“You have to study the market that you’re competing in. If you see a particular niche where you feel there’s going to be more robust activity, where there’s growth that outperforms the overall market, then you can benefit from that if you focus on it. That’s what good companies and good management teams do.”
Relying on what got you growth in the past will not help your company grow to new heights. You have to constantly reinvent yourself and be thinking of ways to refocus and re-engineer.
“I think a lot of companies during a period of economic turmoil or downturn, they tend to become paralyzed,” Delie says. “They just cut expense and cut expense and they really don’t think about how they are going to continue to manage the top line through that process. That is something that needs to be focused on.”
Delie focused on areas where he saw room for growth and revenue and reallocated resources to go after those areas. Companies must commit to their growth strategies completely in order for them to work.
“We beefed up,” Delie says. “We didn’t pull back like other institutions. We actually added people and developed certain departments. The other thing we had done was focused our people on cross selling. We didn’t want to just push products to clients. We coached them to be more holistic in their approach to providing financial solutions. If a company has a particular need or is looking to mitigate a risk, maybe the insurance company can provide a product or service that helps the company accomplish their objective, and we win by getting that business opportunity.”
Along with finding niches that can help you grow during tough times, new markets can also offer unchartered growth opportunities.
“We are always evaluating our plans,” Delie says. “You have to look at the opportunities that exist in the marketplace. We had to focus on new client acquisition going into the downturn. Our incentive compensation, our strategies were all geared toward going after market share during a period when many other banks were hunkering down or evaporating. That’s what’s led to our growth and our success during a period when outright demand diminished.
“If we are looking to open a new branch, there’s two ways to look at it. One is to try to anticipate what the opportunities are within that micro-market and the other is evaluate whether or not it will be supplemental to your overall delivery channel. You have to look at the market itself that you’re looking to move into and whether or not that move provides support to the rest of the infrastructure. You start with where the customers are and who you are trying to reach and why. Those are the questions you ask yourself.”
Once you identify niches and new market opportunities you need to plan and staff accordingly for growth in those areas to be successful.
“We focused on where the best opportunities were in a particular segment and we staffed that area appropriately to go after the opportunities,” Delie says. “We are in a people business. Even during a cyclical decline, particularly one as severe as what we just went through, where other financial institutions were falling by the wayside, there was a lot of disruption in the marketplace. We were able to capitalize on that, because we had staffed up with good commercial bankers from much larger financial institutions. We upgraded our talent during that time; we didn’t just cut bodies. We looked for ways to become more efficient in the company, but we also hired at the same time to continue to drive growth. Bringing those people in and retaining them was key to our success. Everybody needs to pull their weight to make the overall company successful.”
HOW TO REACH: First National Bank of Pennsylvania, (800) 555-5455 or www.fnb-online.com
Vincent Delie Jr, CEO, First National Bank of Pennsylvania
Born: Philadelphia, but grew up in Pittsburgh
Education: Penn State University, degree in business administration and finance
What was the very first job you ever had and what did you take away from that experience?
The first real job I ever had was stocking shelves at a drugstore on the north side of Pittsburgh. It taught me quite a bit about business. I was able to get involved in a variety of tasks.
What is something that you enjoy the most about your job?
I enjoy interacting with people — that’s the most fun. I also enjoy celebrating success and being a part of the celebration.
What is your favorite piece of U.S. currency?
I would say a $100 bill.
If you could have a conversation with one person from the past and one person from the present, who would they be and why?
I would want to talk with George Washington. I would want to know what his thoughts were about the country back then and where we are today and compare and contrast. Today, I think it would be interesting to have a conversation with Hugh McColl from Nations Bank. He had great success and I would like to talk to him about how he constructed what he constructed and what he was thinking along the way.
Oct. 27, 2009, wasn’t the happiest of days for Darron Anderson.
It was the day his company, Express Energy Services, filed for Chapter 11 bankruptcy protection.
But for Anderson and the employees at Express Energy, it was far from the demise of the company; it was a rebirth of sorts. In just nine weeks, the company emerged from the reorganization prepared to do better than before.
“Emerging out of Chapter 11 on Jan. 1, 2010, I would say by the end of Q1, the Chapter 11 process was pretty far in our rearview mirror,” says Anderson, CEO of the $300 million oilfield services company. “I always tell people I have the greatest job in the world. Since taking over as CEO in the end of 2008 in a very, very depressed market and leading a company into a Chapter 11 process and successfully leading a company out of that process and now watching the company grow and flourish. It has been such a wonderful environment.”
A bankruptcy doesn’t create what most people would consider a wonderful work environment, but Anderson and his 1,475 employees survived the process and have gone on to good results.
Here’s what he learned along the way.
Communicate key messages
From 2004 to 2008, the energy, oil and gas industry enjoyed a stretch of very profitable years. In that same year, Express Energy Services was in the process of being acquired by an outside capital group. When the transaction took place, any additional debt was leveraged to complete the deal. That process, combined with the condition of the industry, is what put the company in Chapter 11.
“The business couldn’t support the new balance sheet and the industry had fallen off so drastically, there wasn’t going to be any help from the marketplace,” Anderson says. “It was pretty clear early on, even with the new owners, that Chapter 11 was the process that needed to be taken for the benefit of the organization and the people of the organization.
“From an internal standpoint … I think one of the best things we did was hiring a public relations firm that helped us craft messaging not only from an external standpoint but an internal message.”
While the natural inclination when times are bad may be to withhold information from employees, Anderson didn’t do that.
“We took the exact opposite approach,” he says. “We kept our employees up to speed from day one. We did that with phone communication, conference calls and site visits to let the employees know we were going through Chapter 11. We had to let them know what that meant to them personally, what it meant for their jobs and giving them the security that it was going to be business as usual. That ultimate communication we had with our employee base was one of the things that led for a successful emergence from Chapter 11, because our internal team was involved in the process and really supported the organization. That external communication and … internal communication were the keys for the success.”
When facing a problem as challenging as a reorganization, there will be a number of things calling for your attention. You need to figure out which ones should be dealt with first to give the company the best chance to succeed. For Anderson, one of his top priorities was to develop more of a team atmosphere.
“Express was a very entrepreneurial company,” Anderson says. “With an entrepreneurial company, you have a lot of individual initiative, individual attitudes, and one of the biggest issues was that Express should be about the company, not about the individuals.
“As an organization we had responsibilities to our employees, our vendors, our shareholders and to the public,” says Anderson. “As a result, there were a significant number of changes that occurred early on in the process. Some were painful changes, but we had to say, ‘Although we’re making short-term sacrifices, we know that they will set up the organization for the long run, and we are going to have a solid team that is 100 percent supportive of our organization and materializing our five-year strategic plan.’”
It is critical that executives of companies facing these types of issues communicate each step of the process to create a smoother transition.
“You have to talk to your people,” Anderson says. “You can’t accomplish everything overnight. That is something I personally struggled with, because I’m very driven, very competitive, and there are things that you want to change, things that you want to put in place and things that you know can bring great benefit to your organization. You have to listen to your team around you and as a group decide what are the priorities and remember whatever your horizon is, it’s not all going to be done overnight.
“You cannot overwhelm the organization. You cannot create too much change too fast. What you can do is listen to your organization, listen to your team members and turnaround and act upon what they have said and make sure it’s clearly visible that you have reacted and get their feedback to your reaction. What happens is, the organization realizes that they have a voice and that management is listening to them and management took action and they see a positive behavior. What it breeds is the next initiative or the next decision is that much easier and accepted and before you know it, it becomes an environment, it’s a culture. It’s a culture of getting feedback. It’s a culture of taking that feedback and making the best decision and putting things in action and seeing the success of that.”
Create a plan
Getting the right feedback is critical during a turnaround but making the right decisions and having a plan for action is even more important.
“We sat down as an executive leadership team, and the first thing we did was went out to our operation-level managers who have the most day-to-day interaction with most of our employee base,” Anderson says. “We asked them specific questions regarding what we do well as a company. What we can improve upon as a company? What are the issues you deal with on a day-to-day basis with your employees? What are the things your employees are coming to you with? We did a very detailed survey process, and we took in information and then spent the better part of a week just combing that information and really seeing what our organization had to say about our current condition.
“Then we looked back and said, ‘If this is where we are today as perceived by our organization, where do we want to be in five years?’ That really started to develop the strategy of our five-year plan. We took where we were and asked ourselves, ‘What do we all think the ideal Express looks like in five years?’”
From that process, Anderson and his team developed several key areas of focus, including financial performance, employee retention, safety performance, customers and how customers view the company.
“We asked ourselves, ‘What must we get done in the next 12 months? What must we get done in the next two to three years, and what do we need to get done within five years?’ That is so far from where this organization was two years ago — that was very short-term focused that the only metric was a financial metric. Now we have so many other metrics and we know that if we perform well in all these key elements of the business, the financial performance is going to be there.”
Unify the team
It is critical for companies that are going through change or restructuring to not send different messages to different areas of the business.
“If you’re going to have any change, you have to be unified,” Anderson says. “We spend a lot of time discussing, analyzing and critiquing different issues. We don’t always get immediate buy-in at the first meeting or even the second meeting. After everything has been discussed, it is very important that the leaders of your organization are delivering the same message, because you don’t want your employee base to get confused. You don’t want your employee base to think that they are expected to perform a certain way here, but if they go over there, they are expected to perform a different way. In doing that and delivering a common message and getting all of your employees bought in to it, now you can take out the message to your customer base.”
A turnaround creates a lot of change within a company, and it is imperative that employees are willing to follow new plans in order for a turnaround to be successful. There is no room for resistance.
“It’s very important to give the naysayers an opportunity to get on board and give them a full chance to make sure that they understand the message and direction,” Anderson says. “When you go through things like this and people just haven’t done it before, there’s always a lot of fear, and fear is going to bring on some level of resistance. You have to be patient with individuals and make sure that they have all the knowledge and the correct knowledge. A lot of times, the information they have been told or possibly heard is incorrect. It’s important that they understand what the facts are and what the truth is.”
But once you’ve gone through the education process and they have all the facts and have had an opportunity to ask any questions and are still choosing not to get on board, at that point, you have to make a decision.
“At that point in time you have to ask yourself, ‘Is it better for this person to remain in the organization with potential negativity or with hesitation?’ I would bet most CEOs would say that’s something that they cannot have is a person not fully supportive of the organization. Whatever short-term pain that may create, it’s better for the long term and it definitely pays off.”
Anderson and his team looked for new employees who had experience with companies that were doing the things Express wanted to strive to do following their turnaround. “Entrepreneurial companies tend to have a level of drive, a level of can-do attitude,” Anderson says. “We had to balance that with individuals who came up in larger organizations, more professionally managed organizations and system processing organizations. That was an element we were missing. We rounded out a management team that has different experiences from different types of companies because we want to keep that element of an entrepreneurial attitude but marry it with a more professionally managed company and that has been refreshing and provided success for us.
“Part of the integrating process is that you cannot be afraid to communicate what you think some of the opportunities for improvement are within the organization. It is very difficult to say, ‘We just came out of a Chapter 11, and we are the best company out there, don’t worry about that.’ You have to communicate to [new employees] what you think the issues were that led up to it, what improvement steps you’ve taken and what you could expect they could provide to help the organization meet its long-term goals. You have to tell them that there is going to be change in the company, and we’re bringing you in to help with that change. “
Make sure the individual agrees with your vision and understands that flexibility is key.
“We know where we want to get to, but in getting there, there may be different paths,” Anderson says. “As we bring on people, we want them to come on with their experiences and values that they’ve had previously. You have to have that strategy as a CEO and be able to lay out to a new prospective candidate and be willing to admit that the organization is not 100 percent perfect and be willing to admit that we want and we need your help. Be willing to admit that it’s going to be challenging because it’s change.”
HOW TO REACH: Express Energy Services, (713) 625-7400 or www.eeslp.com
The Anderson File
Darron Anderson, CEO, Express Energy Services
Born: Corpus Christi, Texas
Education: Graduated from the University of Texas with a degree in petroleum engineering. He worked for Chevron right out of college and also started his own business in 1998. Through those experiences and the people he met and learned from, he says that’s how he earned his “homemade” MBA.
What was your first job and what did you learn from it?
My very first job was mowing lawns in my neighborhood at the age of 13. That really taught me the satisfaction and joy of being an entrepreneur. It also taught me to have a good work ethic.
What is the best piece of business advice that you have received?
What doesn’t get measured doesn’t get managed. I’ve taken that adage and used it tangibly to make sure we measure things that we want managed but not just making sure we measure them but making sure we communicate them.
Who do you look up to or respect most in business?
Jim Woods, the former chairman and CEO of Baker Hughes. Mr. Woods was on the board of directors of the first company that I sold, and he has been a great mentor. You look at a company of the caliber and size that he ran and to be able to have him give you advice about how he looked at things was totally invaluable. He is the person I’ve learned the most from and have the highest respect for.”
If you could do something dangerous one time with no risk at all, what would it be and why?
I am not a racecar fan, but I would want to try driving a racecar in an actual race. It requires split-second decisions, you’re moving extremely fast, there’s a side of gut feeling, an amount of technical know-how and that would be an amazing experience.
Joe Burgess saw a company in Insituform Technologies Inc. that was waiting for nation’s maze of aging underground water and sewer pipelines to fail so it could cash in on the recovery. But there’s a big difference between potentially making money and actually growing as a company.
“There has always been a disconnect at Insituform between the long-term potential of its business and the reality of its near-term growth potential,” says Burgess, the 3,000-employee pipeline service company’s president and CEO. “If I looked at how Insituform positioned itself in the past, it focused a lot on that long-term need and that, eventually, it was going to materialize and drift down to the local level and then this business would grow at a much faster pace.”
The problem, at least from Insituform’s point of view, is that pipelines don’t just break down all at once. And if they’re not broken today, most public officials at the local and state level are content to cross their fingers and hope they’ll hold out another year.
“So I could speculate that caused [the company] to take the approach that it would get better over the long term,” Burgess says. “We’ll just stay in this market and maintain our leadership position, and when the dam bursts, it will be a great story.”
When Burgess arrived in April 2008, he decided it was time to stop waiting.
“We’re a U.S. public company,” Burgess says. “We need to operate our business in the here and now. We need to look at the economic conditions and the now of our market and figure out how do we optimize financial performance for our investors now.”
Burgess does not deny that there is value both in planning for the future and trying to fill a niche.
“But if we had kept the company 100 percent wastewater and 100 percent in municipal markets, our company really is just floating along waiting for that dam to burst,” Burgess says. “There are some investors who have that kind of patience. But it’s my view most do not.”
Burgess needed to show people that there was revenue to be generated in areas besides just municipal sewer or wastewater pipeline rehabilitation.
“We needed to make some decisions and develop some workable plans to broaden the strategic direction of the company,” Burgess says. “That’s a challenge when you’re running a business that’s essentially been doing one thing for 40 years.”
Make your case
As the new guy, Burgess expressed respect for all that Insituform had achieved since the company launched in 1971.
“Insituform invented this business and was the leader in 1971 and is the clear leader now,” Burgess says. “If anything, it’s probably strengthened its position in these markets. That’s a great testimony to the technology roots of the business and the people that have poured their life work into what is a crucially important business.”
This proud history, however, was threatening to blind Insituform from other opportunities where its talents and its technology could be of great use.
“You can become so focused and enamored about what you do and your capabilities within it and then the markets change,” Burgess says. “You have this strong position, but it’s just not as valuable as it was 20 years ago. If you stay in that tunnel, you can switch from being a premium return company to a modest return company to a low return company. … You say, ‘Look, this isn’t about the past. It’s about this is where we are and if we want to continue in markets that are very competitive.’”
Burgess called the leaders of his business units together and initiated a review of the past and an assessment of the future.
“We tried to do some forward forecasting based on the improvements we felt we could generate in each of our businesses and modeled that out to see where it got us over time,” Burgess says. “We drew the conclusion that our core business would not get us to the premium return profile that we sought. At that point, you know you’re not going to fix it just inside with what you have.
“And so then we went to, ‘OK, let’s break down what we know how to do. Let’s look at opportunities that fit those skill sets and make sense for us to be able to tackle those confidently and to add value.’ We wanted to diversify into an industrial client base that would give us better balance as the company went through various business cycles.”
As you draw up plans and conduct round tables to figure out what your company could do, it’s critical that you keep your feet on the ground in making such plans.
“Many companies are in a low-return environment, but then they put together models that suggest or forecast that the situation will improve either through cost reduction or a turnaround in the market or a change in economic conditions or other things that they do,” Burgess says.
“Then they embark on that plan and two or three years later, it’s not there because the assumptions they made were overly generous. You have to be very rigorous about that. That was probably easier for me to do because I came from outside of Insituform. I’m not burdened with all the history. History can be a good thing, but it can also be a burden. So you have to be very rigorous about that. Because if you get that wrong, you might not see the situation as it truly is. That’s always a formula for making a bad decision.”
You need to base your decision on the facts as you see them at that moment.
“If there is a gap there, we have to do something different,” Burgess says. “Not blame it on the market or blame it on the capital structure of the company. We have to figure out how we can take the skills and the capabilities of this company and get to different markets.”
Execute the plan
Burgess and his team were ready to move on their plan. The highlight was the purchase of two companies, Corrpro and The Bayou Cos. Inc. The acquisitions would put Insituform in a better position to expand its presence in the industrial sector of pipeline remediation.
When the acquisitions were made, Burgess did not spend a lot of time worrying about aligning the two companies under the Insituform brand.
“You obviously do think there will be synergies and ways that you can cross-sell and the business is starting to do that now,” Burgess says. “But out of the chute, we tried very much to focus on acquiring businesses that could essentially operate on a standalone basis and just drive increased performance at that business-unit level.
“We spent a lot of time with our core business increasing the performance requirements and eliminating cost. But by taking this approach, what we allowed the business-unit leadership to do was focus on their business and drive that to maximize their return without having to worry about this integration and cross-selling. I think that’s a key when you’re trying to dramatically expand a business. … If we tried to say, ‘OK, we’re going to buy these things and then put them all together in a complicated, integrated organization,’ I don’t think it would have done nearly as well. It’s always been key to me to maintain business-unit focus with as little corporate interference as possible.”
That doesn’t mean you just sit in your office and play solitaire and watch the world go by as all this is going on. You actually have a lot to do to make sure everything is staying on track.
You need to work with your board of directors to keep the plan moving. You’re communicating your strategy to investors so that they stay excited about your business. Maybe they even look to strengthen their investment in your company.
“You have an even longer list of potential investors that you have to expose to the business plan and strategy so you can attract additional business,” Burgess says. “You become the face of the community in your local communities and other communities globally. You also have a time commitment with your customer base. You can do all of those things and very quickly run out of hours to stay connected to what’s going on in the business and be active running the business. It’s easy to drift off into CEO land and out of the operating framework of your business.”
Burgess made time to meet with the leaders of his business units to keep in touch with what was happening. He kept an eye on goals that were set to make sure progress was being made toward achieving them.
But he also took time to make sure his employees had reason to be confident in his leadership.
“People want to know that their management team has a competent plan and is focused and hardworking and will do what they can to execute against that plan and improve the company,” Burgess says. “People are smart. If you roll out a plan, most people would figure out pretty quickly if you lack true belief in what it is you propose to do.”
You can’t assume that enthusiasm will wash away any flaws that may exist in your plan.
“Enthusiasm has its place,” Burgess says. “It ranges from the rah-rah you get in a sales meeting to the very focused and rigorous approach of figuring out operating performance and whether it can improve. I tend toward the latter. People can figure out if managers are focused, intense and rigorous on improving the business and making sure it achieves its goals. If they believe that, I think they would be enthusiastic about the company.”
The best formula to demonstrate confidence in your plan is to be direct and factual with your people. Don’t be sneaky. Tell people what you’re trying to do, how they can help and what the outcome should ultimately be.
“Whether you’re giving a message about the current performance, good or bad, the needed performance, the direction, a strategic direction, the need to change or the need to be better, it doesn’t really matter,” Burgess says. “What people really want to know is, what is the situation? … When they lose sight of that, they get disconnected from the purpose of their work. But maybe even more importantly, they lose sight of how their work contributes to the overall goals of the business.”
The numbers say Burgess has Insituform on the right track. Revenue has grown from $495.6 million in 2007 to $726.9 million in 2009. The company is also on its way to meeting its goal of a 15 percent return on invested capital.
In early 2011, the estimated return had grown from around 3 percent when Burgess arrived to 9 percent.
“A 15 percent return on invested capital is the level I believe we need to be at to sustain a strong investment premise for the company,” Burgess says. “We wanted to create a company based on the solid skill sets that were here at Insituform that could sustain performance in a much broader range of economic and market conditions. I think we’ve done that, or at least started to do that.”
How to reach: Insituform Technologies Inc., (800) 234-2992 or www.insituform.com
The Burgess File
Joe Burgess, president and CEO, Insituform Technologies Inc.
Education: accounting and financing degree, University of Florida
What was your very first job, and what did you learn?
I was a stock boy at a local pharmacy close to my house. It was my first exposure to business, whether I even recognized it or not, in terms of taking inventory. The guy that ran the store was the pharmacist.
He was very focused on trying to eliminate waste and maintain the right mix of goods people expected him to carry while not trying to saddle his business with carrying everything. I remember listening to him talk about business issues in terms of what we were going to carry. It just struck me, the wide range of issues that a person trained in pharmacy had to have to run a business.
Who has been the biggest influence on you?
My father, John Burgess. He was a teacher and a football coach by profession. He was an interesting guy and very well-read in matters of religion, history and current events. He got his master’s later in life.
He was a very smart man and always very well-prepared, whether that meant constructing a test, reading essays from students or studying film to determine whether a guy was going to come on a corner blitz. That’s something that has stuck with me for my life. In most business situations, being unprepared is not a good plan. It’s almost never goes the way you think it will if you’re not prepared.
In December 2008, William Toler arrived at Pierre Foods Inc. as its new CEO. A food industry veteran, Toler was hired to help the company get through the immediate crisis of facing Chapter 11 bankruptcy protection and then finding ways to make the company stronger moving forward.
“I was first attracted to the opportunity, because Pierre was a supplier to my last company and I knew that the products the company made were excellent and the team here was, largely, very good,” Toler says. “Obviously, there were some things that had caused them to go into bankruptcy, but they were pretty fixable.”
In a twist of fate, the four members of the new leadership team all ended up living in the same hotel when they moved to the Cincinnati area.
“The four of us were relocated here at the same time and we ended up living at the same hotel for a year,” Toler says. “So we found ourselves working out together in the mornings, working all day together then going to dinner and talking about the business from 6 a.m. to 11 p.m. four or five days a week. It really helped to create core camaraderie among the senior team that still exists today. So the fact that we were all relocating here at the same time and ended up living in the same hotel really gave kind of a dawn-to-dusk platform to discuss the business and get to know each other at the same time.”
And with the company facing several challenges, the extra time was a plus.
Pierre Foods’ struggles, while difficult, were not too severe that the company would never recover, and Toler knew that when he took over as CEO.
“You have to make sure you know that you have a good company under the problem,” Toler says. “Is the company the problem, or is the problem the balance sheet? In this case the problem was the balance sheet. It was a fundamentally good business inside of the problem, and a lot of times, it’s not. Make sure you’re doing the due diligence and the assessment upfront to make sure you’re going into a business that can be fixed. Does it have the fundamentals to be fixed? Is it a business that’s cyclical with the economy? Is it one that has a real competitive advantage that can be leveraged? Or is it a business that’s just a problem? In the case of Pierre, it was a strong business that had some unfortunate things happen to it all at once. I knew that we could get in here and fix it because it was a fundamentally good business underneath.
“The kind of business that you’d want to avoid is one that has parts undifferentiated or where you are in a commodity business where one product can be replaced easily for another that customers don’t value. That would be a problem or scenario that you’d be hard-pressed to go in and fix.”
Unprecedented inflation in the food industry in 2008 left Pierre without the systems, analytics or tools to understand how that inflation affected its products.
Toler’s first priority was to fix the obvious problems.
“They didn’t really know what the profitability of their various items or the profitability of their various business segments were,” Toler says. “They were unable to properly price the business to make sure they stayed up with inflation as that hit in 2008.”
Oftentimes when a new CEO takes over a company, the amount of data needed to successfully right the ship or move in a new direction is unavailable.
“We had quite a bit of limitations on data here,” Toler says. “We didn’t understand our profitability by item. We brought in an outside firm who developed a profitability tool and model for us that we still use today that essentially allowed us to understand the profitability by item. We also didn’t have all the plants on one ERP, so we moved all the plants to one ERP and got common visibility and common information across all the items. That allowed us to understand where we made money and where we didn’t and be able to take appropriate pricing and be able to work constructively to make sure that we knew what businesses to stay in and what businesses to get out of.”
Data is usually available; it just usually isn’t pulled out of the system in an effective way that leaders can use. Companies with data issues need to mine the data and then get a plan in motion to fix the problems they find.
Besides a lack of data, productivity was also an issue.
“The other thing we identified when we first got here was the idea that their plants were very good plants, but they hadn’t been stretched to [maximize] productivity,” Toler says. “We immediately began focusing on improving the productivity of the plants in terms of how they operated and the number of people per line and the efficiencies of the plants and the waste in the plants and all the things that can cost money to businesses. Really, it was about getting visibility on pricing and also driving productivity. Those were the two things we focused on when we first got here.”
Pierre had also made two acquisitions that they were struggling to integrate. That challenge, along with the condition of the industry and the economy, served to be too much for the company to handle all at once. Faced with the challenges of lack of visibility in data, lack of integration of acquisitions, and lack of pricing, Toler had to prioritize each task in order to get Pierre back on its feet.
“It was all about knowing where you made money and where you didn’t,” Toler says. “Once you have those things in place, you are able to act pretty decisively. You prioritize in the places were there is the greatest payback. Where can you get the most return for your efforts? Is it understanding the data, is it in moving the ERP’s together, is it in pricing the business or in driving productivity? You look where you get the greatest payback and you put your efforts into that.”
Communicate your plan
Once you have determined where your problems areas are and what needs to be done to fix them, you have to communicate to all your employees why those changes are being implemented.
“The most important thing is to communicate [your plan] internally so you make sure people understand what you’re doing and why,” Toler says. “We did everything from e-mail communications to town-hall meetings to plant floor meetings to conference calls and various other forms of communications. It wasn’t easy, but it was straightforward. It was something we knew we needed to do and something we had to get at right away. The one thing that happens in challenging situations is that people often don’t communicate enough, and we tried to be very upfront with folks and let them know where we stood.”
The planning process is a calculated, communicative process that requires collaboration with everyone on your team. There is no substitute for communication during planning.
“I think the thing we tried to do was talk to the people that were closest to the business,” Toler says. “You have to talk to people working the lines, the front-line salespeople, talk to the marketing team and understand what they thought were the issues in the business. One of the things I’ve always found is that when you have a problem in a business, you go to the problem. You try and find out how we can help. You put people out in the plants, you put people out in the field and you talk to the team and ask them what things they think need to get changed and what things could get better.
“Assess what you’re good at. Assess where your competitive advantages are and assess where your weaknesses are and then leverage your strengths and try and either strengthen your weaknesses or get out of them. Stop trying to do things that you can’t do and focus on the things you can do really well.”
This strategy also paid off for integrating acquired companies, including two recent ones made last fall.
“When most companies go in and do these type of deals they just take the home-teams approach and wipeout the other guys,” Toler says. “The most important thing to do is to listen and to defer judgment when you’re getting opinion from folks that are new to you. You shouldn’t automatically assume that your approach is the best approach, but you should listen and be open to each others’ ideas. That’s been what we have all tried to do. We believe you can find a better approach by listening to each others’ best practices versus just saying, ‘Because I’m doing it a certain way, that’s the best way.’ It takes a little longer and sometimes it’s harder, but generally you end up with a better outcome if you have the patience and willingness to do it.”
Toler’s solutions led to the company’s best performance in 63 years.
“Coming out of the bankruptcy, the strength of the first year results has enabled us to more than double the size of the company,” Toler says.
Pierre’s merged last September with Advance Foods Company Inc. and Advance Brands LLC, creating Advance Pierre Foods, double the size of the pre-merger organization.
Today, the company has $1.3 billion in sales and more than 4,000 employees, making it the largest privately held company in the tri-state area.
“Fixing the bottom line by productivity and pricing, staying focused on our core products and understanding how to merge two businesses together with us that strengthen us in our product lines and also strengthen us in our core channels have made us successful,” Toler says.
HOW TO REACH: Advance Pierre Foods, (800) 969-2747 or www.advancepierrefoods.com
The Toler File
William Toler, CEO, Advance Pierre Foods
Born: Raleigh, N.C.
Education: Graduated from North Carolina State University with a double major in business management and economics
Previous work experience: Procter & Gamble, Nabisco, Campbell’s, Pinnacle Foods
What was your first job, and what did you learn from that experience?
My very first job was as a swim coach and from that I learned that leadership matters. Trying to lead to inspire others is an important approach in business and in life.
What is the toughest challenge you’ve had to face in business?
The hardest thing is letting go of bad business. Getting out of bad businesses or getting rid of customers that you don’t make money on. That’s always the hardest thing, because people love revenue and sometimes they confuse revenue with good business. Getting out of business is hard and saying no to new ideas is hard. The trick is to not do the things that can distract the business.
What is your favorite thing about working at Advance Pierre?
It’s the quality of the people I get to work with. The way we feed off of each other and the things we do to challenge each other makes it fun every day.
What is your favorite Advance Pierre product?
My favorite product is our Graham Snackers, which are two graham crackers with peanut butter and jelly in between. They’re really good.
Joe Gingo doesn’t remember how he stumbled upon his pattern years ago. What matters is it works.
During his more than 40 years of moving up the ranks of The Goodyear Tire & Rubber Co. and now as chairman, president and CEO of A. Schulman Inc. (Nasdaq: SHLM), the pattern he uses when it comes to tackling the challenge of a new position has withstood time.
“Every one of the moves I made, whether they were in Goodyear or when I came to Schulman, has been different and has represented its own challenge,” Gingo says. “The challenges are different, but I think how you overcome them is relatively the same. What you have to do is you have to develop a vision of the future state that you would like to have, a strategy of how to get there, clearly communicate that vision and strategy to your associates, and then empower them to execute the strategy.
“As I moved up to a bunch of different positions, each one became a little bit bigger, a little bit wider. But I always employed the same technique in how I overcame them.”
When you’re faced with challenges, you need to rely on past experiences — wins and mistakes — and let the information guide you.
When Gingo arrived at A. Schulman at the beginning of 2008, the supplier of high-performance plastic compounds and resins was being sold and it was losing money in the United States, while its overseas operations were doing well.
Here is how Gingo created a strategy that included turning around A. Schulman’s U.S. operations.
Ask and listen
Gingo’s background in manufacturing served him well when he arrived at A. Schulman. He quickly noticed the company’s U.S. focus needed to shift, and the profitable overseas operations could have the answers. His discovery came from asking, listening and observing.
“Any business or staff position I’ve ever gone into, I generally ask from the start for reviews with each of my division heads and their key people,” Gingo says. “I would ask them what their activities were. It would be a presentation on their part, but it was informal in the sense that we would talk about what they were doing, what their goals were, how they had been established.”
When you’re stepping into a new role, you really need to get a handle on how the company is being operated and where the top managers see their division or department headed. You can’t do that from behind a desk.
So when Gingo arrived at A. Schulman, he did what he’s always done. He met with the division heads and their top reports. He started in the United States and repeated the process in Europe, Mexico and Asia.
To get a complete understanding of each division or operation, you can’t rely solely on the information you gather from the team calling the shots.
“Whenever I’m in an office, no matter where it is, I make an effort to go out and introduce myself to people and just talk to them,” Gingo says. “They have a lot of good insight into what’s really going on. As a leader, you sort of get a colored picture of the situation. You really have to check the points that (management) give you with the people that are living the points.”
When you’re striking up a conversation with employees, you don’t need in-depth details. You’re mainly looking for trends in repetitive answers.
“You say hello to them, and then you say, ‘What do you like about this job?’” Gingo says. “The second question is, ‘What don’t you like about this job?’ Some people are hesitant, but some people are quite open and talkative. You begin to hear patterns. Patterns are things like several people say, ‘This is what I like.’ That gives you an overall view of what’s going on in that division or in that office.”
If employees aren’t warming up to your questions, ask them about what they do and what their day is like. Through the conversation, you should get some indication of what about their job or the company is important to them.
Remember, you’re asking, listening and observing venture is to get an overall understanding of the entire company so you can later strategize for the future. You can learn a lot from engaging people like your customers and suppliers. By asking the right questions, you can get a better indication of what your company’s strengths and weaknesses are.
“One of the ways is talking to customers, visiting customers and finding out what the customer likes about the company, what the customer doesn’t like about the company,” Gingo says. “You can talk to suppliers. Suppliers sometimes give you, ‘Well, here’s your company’s reputation. Here’s what we hear about your company.’”
Analyze the information
The ultimate goal of every business is to make a profit and to grow. Clearly, there are other aspirations to strive for, but fundamentally, that’s what every business has in common.
“The strategy has to be developed around what can you do to make yourself more profitable and what can you do to grow,” Gingo says. “Then you come back to core skills. You start out with, ‘Well, what am I good at, what do I do well?”
That question can be answered with the culmination of your information gathering and analyzing.
“You take all of those things and you say, ‘What do we do well? What is our core skill? What can we build on?’” Gingo says. “One of the ways to really do that is to look at your profitable divisions and say, ‘Well, what do they do that makes them profitable?’”
Gingo tends to look for an anomaly in all of his information and data to start his focus.
“Data that sticks out either bad or good,” he says. “You think: Why is that occurring? What’s interesting about that?”
One of Gingo’s objectives was to return A. Schulman’s U.S. operations back to profitability. So he looked at the overseas operations that were doing well and asked a logical step of questions to figure out a new strategy.
“If I can do that well, for example, in Europe and I can do that well in Mexico, why can’t I do that well in the United States?” he says. “You begin to say, ‘Who are my competitors? Are my competitors different in the United States and Mexico?’ If the answer to that question is, ‘No, they’re not,’ that’s a clue to you that, ‘Hey, maybe I can do it.’ Second, ‘Do I make the same product that I’m making in Mexico and Europe in the United States?’ If the answer is no, ‘Well, what do I have to do to make those products? What kind of equipment do I have to bring in? What kind of technical skills? What new product support do I have to get? What kind of new products do I have to introduce?’
“Fundamentally, you look around, you see what you’re doing good and then look where you’re doing bad and try to figure out why am I doing bad there.”
Engage your team
Once Gingo has a better understanding of the bigger picture, he jots down bullet points and takes them to his team for input.
You generally don’t want a large group. That’s why Gingo sits down with only his direct reports.
“If you have somebody, even in a short period of time, that you begin to believe you have some trust with, you might even see them before that meeting and say, ‘Here is what I’m thinking. What do you think about that?’”
Either way, sit down with your direct reports and present your ideas in a written format. Writing your points not only makes them clearer but will provoke more of a response.
“There’s more reaction if I have words on a page than just talking, because your message sometimes doesn’t get across,” Gingo says. “You have your bullet points up, and you say, ‘Here’s the five points. Here is what I’m thinking about.’ Then you get reaction.”
One of Gingo’s mantras, which he learned from a former chairman at Goodyear, comes into play when he’s asking for feedback.
“The first time I came into meet with him he said, ‘Joe, it’s your opinion versus my opinion. We’re going to make a deal. My opinion will usually win,’” Gingo says. “He used the word usually. ‘But your facts versus my opinion, your facts will always win.’”
The facts have to be put on the table. Even though you’ve put in time and research to understand where you think the company should be headed, you need to listen to your direct reports and be willing to admit when your proposed direction might need to be shifted.
“It’s really important when you’re having a conversation about these little bullets, you let them know, ‘Tell me I’m wrong,’” Gingo says. “‘It’s OK. If you tell me I’m wrong and you have the facts that show me I’m wrong, then I’m going to accept the facts.’”
At the same time, you need to be considerate about your employees own ideas and opinions.
“You can’t shoot the messenger,” Gingo says. “Let’s say you’re in this meeting and somebody says something that is totally wrong, you know it’s wrong. Well, if you want to keep the meeting open and communication to go on, don’t shoot them down. You don’t show them how dumb he or she was.
“You try to diffuse it without embarrassing them because everybody around that room is listening. What is very key for me is when I think somebody is just totally off-base, I do not display it at all. Somehow say, ‘Well, that’s a good thought, but have you thought about this?’ You can in essence diffuse their own argument by the questions you ask them.”
When you’re having a serious meeting to strategize about the company’s future, you need to make sure that everyone has the opportunity to speak to the bullet points you presented. And not only that they have the opportunity, but they take advantage of it.
“No matter what the group is, certain people are going to say something,” Gingo says. “What you have to worry about are the ones who don’t say anything. Literally, you don’t leave that room until everybody has had a chance for input. If somebody says, ‘Yeah, everything is OK,’ then you challenge that but not in a negative way. You say, ‘What do you like? Did I miss something? Is that part good?’”
By listening to the reactions, you should be able to gauge whether or not you’re on the right track. If you get push back from a lot of your sources, you probably want to rethink the direction you plan on heading.
The main point is you need to be open and respect other’s ideas.
Gingo knew when he arrived some of his plants were running at less than 50 percent capacity. While A. Schulman was doing decent business, it was taking it at a loss. Someone in manufacturing presented him a program — a program based on facts — that would shut eight plans. It made sense. They shut them.
Two years after Gingo took over, the company’s U.S. operations turned around by nearly $18 million and was breaking even. The company’s revenue for fiscal 2010 was $1.59 billion.
His experience combined with his time spent with employees trying to understand the company contributed to that accomplishment.
“You have to get out,” Gingo says. “You have to have your pulse on your company and what’s going on good and what’s going on bad. That’s awfully hard from a CEO position because, for one thing, you have a lot on your agenda, so you just have to find time to do it. But truthfully, one of the most boring things to me is having to sit all day in my office.”
How to reach: A. Schulman Inc., (330) 666-3751 or www.aschulman.com
The Gingo File
chairman, president and CEO
A. Schulman Inc.
Education: Bachelor’s in chemical engineering, Case Western Reserve University; J.D. University of Akron; master’s in business management, Sloan Fellowship program at Massachusetts Institute of Technology
What is the best business advice you’ve received?
It was a quote that I got in a training course, and it’s my No. 1 principle. It said, ‘The first job of a leader is to define reality. The second job of a leader is to provide guidance and support. The last job of a leader is to say thank you.’
Gingo on empowering employees: I always tell people who work directly with me, ‘Look, if I have to do your job for you, I have a tremendous cost-cutting program in mind and it doesn’t involve me.’ You really send a message. That doesn’t mean you can’t come talk to me, that doesn’t mean you can’t ask advice from me. But in the end, I’m not going to make your decision for you.
I remember some boss saying, ‘Here’s what I want you to do.’ The employee would come back and, fundamentally if you listened real close, what they said to the boss was, ‘Your plan failed, what would you like me to do next?’
They were never accountable; they always just did what the boss said. I won’t allow it.
I’ll tell people, 'In this situation, here are some of the things I’ve done in the past. But, in the end, it’s your decision. I’m not going to make this decision for you.'
If a tree falls in the forest and no one hears it, does it make a sound? Another way to position the general topic of the riddle is: Can something exist without being perceived? For the sake of argument, and this article, let’s just say that the answer to the riddle is no.
If sound is only sound when a person hears it, in order for an organization, company or individual to “exist” in the eyes of others, it has to make a sound. In other words, you need to get the word out about who you are, what you are doing, what your benefit is and where you can be found. Otherwise, no one is going to hear you.
You may have the best deal in town or be an expert in a particular field or offer a superb service, but if you don’t publicize it, then how will others know about it?
The first thing that comes to mind to most is to advertise, but that may not be appropriate for your line of business or may be cost-prohibitive to carry out effectively. So, how do you make a sound? The old-fashioned way: You walk, talk and announce.
Here are a few ways to let people know about your product — be it your organization, company or profession:
- Develop a simple website that provides information about your company, your qualifications and areas of expertise. Write articles that are related to your line of business and submit them for publication or post them on your website or blog.
- Start an e-newsletter and send it to clients and prospects on a regular basis. Provide them with useful tips and updates on your business.
- Create an identifiable logo and/or stationery that represent your business.
- Get involved in various business and civic organizations and get on at least one committee. Get to know the people in the organization. Position yourself as an expert in your area of business by seeking speaking engagements through business/civic/trade associations and organizations that may be interested in what you have to say.
- Network, network, network. Every person you meet — whether it is at a business or social event — is a potential client. Your business can’t grow if you don’t network. Let people know what you do and “talk shop” with anyone willing to listen. Make sure that you always have a business card handy. Also, follow up with the people you network with by e-mail or using a handwritten note.
- Finally, don’t be shy about what you’ve achieved. Publicize your accomplishments, including speaking engagements, appointments, awards and honors, new products and services, and so on.
Unlike traditional advertising, these public relations steps will help you build relationships that will either turn into direct business or referrals. Though each item may seem obvious, it is the synergy and consistency of “walking, talking and announcing” that will help you make a sound. While an ad in the paper can gain you instant recognition, it can’t substitute for third-party verification and it can’t build a reputable reputation. Only you can do that by making a sound and leaving an impression. Do these things on a regular basis and you can ensure a steady flow of business for your company.
Janice B. Gonzalez is the president and CEO of JBG Communications, a full-service marketing advertising and public relations firm that specializes in strategic marketing. In 2010, she honored by the Coral Gables chamber of commerce as a Business Woman of the Year finalist. Reach her at firstname.lastname@example.org.
When partners Steve Goodman and Craig Swill purchased Welcome Wagon International, Inc. in 2009, the business was still the world’s largest welcoming service for new homeowners at 82 years old. They decided to keep the company updated and relevant moving forward by refocusing the company completely on sales and marketing. The problem was, the company’s corporate culture was very negative and communication between the corporate and sales sides of the company was poor.
“You kind of had a sales versus corporate clash going on within the organization,” says Swill, the company’s CEO.
The corporate side cared more about technology and was insensitive to many sales-oriented issues. The sales employees felt cut off from many changes at the corporate level, with some of them working as individuals in remote parts of the country.
“When people do not have communication and are out in the field by themselves, they kind of get this paranoia. … So you have a lot of missed communication when there is lack of any communication,” Swill says.
To get employees re-engaged in the vision for Welcome Wagon, especially on the sales side, Swill and Goodman needed to reopen some lines of communication that hadn’t been open for decades.
Together, they went on a “world tour,” visiting every company region to give presentations for the sales teams and to discuss their vision and goals for the first 12 months of their leadership transition. Most of the people they talked to had never met anyone from the corporate office, much less the heads of the company.
“They were very touched that we felt enough to go out and really learn about their challenges in selling and about their challenges in the economy,” says Goodman, Welcome Wagon’s president.
“We asked them questions to learn what they were looking for within the organization. From the very beginning, we opened lines of communication between the corporate office and our field organization.”
They implemented weekly meetings to provide sales training for corporate employees, so they could better understand the experiences of their sales counterparts. On the sales side, they offered representatives and managers training opportunities to learn new technology and skill sets, giving them the resources needed to be most effective. Now, sales officers communicate weekly and daily with field officers to reinforce and align their goals.
After their one-year anniversary in 2010, Goodman and Swill did another world tour to discuss progress and go over their five-year strategic plan. Their reception this time around was a lot different. They’d grown sales every month, and in less than a year, they made Welcome Wagon a debt-free company.
“We started receiving hugs. Literally, people wanted to come and hug us,” Swill says… “We were able to check off bullet point by bullet point, page after page, all of the things we promised them, and we hit everything that we promised them. We were able to gain their trust, and that is huge.”
Today, Swill and Goodman continue to make themselves very accessible to the organization’s employees by talking on the phone to address sales problems, questions or issues, and always looking for ways to support the sales team with the resources they need to succeed.
“Some of the most negative people that I could give examples of a year ago were so positive this year and saying thank you for taking this organization and totally revamping it, turning it around, giving us products and giving us a company that we can now go out and truly be proud of in the way that we sell it every day,” Goodman says.
How to reach: Welcome Wagon, www.welcomewagon.com
Law of limits
According to Steve Goodman, successful strategic planning isn’t just about winning people over to your vision. That is one part of it, and so is communicating that vision effectively. But another key part of executing a strategic plan is recognizing and understanding other people’s limitations.
“You have to always understand, that just because we can get something done and we see things going from A to Z, that doesn’t mean that all of the people that you lead see things in the same way,” Goodman says. “Some people are really pigeonholed in what they do 100 percent; they don’t understand how to tie things together at different levels within the organization.”
As a business owner, CEO or entrepreneur who is used to fast-paced change and goal-setting, you may be tempted to push hard and move fast in carrying out your plan. However, leading people isn’t about pushing people in the direction you want them to go, it’s about guiding them, showing them you are aware of their capabilities, and giving them the resources needed to get there.
“It’s the ability to get people to see things in a way that makes sense as they move forward and to help them further their careers,” Goodman says.“You have to see people’s strengths and weaknesses to see how to move them.”
Darla King founded King Business Interiors Inc. in 1998 on the principle of delivering customer service that exceeds clients’ expectations.
As a woman-owned commercial furnishings and flooring company serving Greater Central Ohio, King, the company’s president and CEO, is also a big believer in sustainability and developed an entire line of “green” workspace solutions for its clients. She also created an environmentally friendly program called “Connecting the Dots,” which collects reusable furniture from clients and distributes them to nonprofit and charitable organizations in need.
King was named one of 2010 Smart Leader honorees by Smart Business and Blue Technologies. We asked her how she overcomes challenges, innovates and gives back to the community.
Give us an example of a business challenge you and/or your organization faced, as well as how you overcame it.
Our big challenge was … getting rid of used furniture … how to sell it, move it or donate it so it will not take up space in our warehouse/distribution center. This is very common for furniture dealers, I have found, from our industry association friends. Do we start a separate retail operation? It did not fit our daily business model working business to business for our furniture sales.
We were dealing with bulk amounts — 50 used private offices, 100 stack chairs, 90 tables, 450 task chair, etc. … They take up space and don’t all stack well. When trying to sell them through an outlet store, it was time-consuming, personal expense waiting for traffic, and customers just needed one or two — not 50 or 100 units.
After having the opportunity to serve on a local nonprofit board, I realized the less than desirable office environments they were working within and saw a solution to both problems. We have an abundance of furnishings, and they need better furnishings. We started the ‘Connecting the Dots’ Program — we simply connect the needy organizations with the excess furnishings we have and make all parties happy. Our contribution is to understand their needs, design the space, deliver the product and make it happen. We have made so many organizations look more professional, become more productive and feel much better about their surroundings.
In what ways are you an innovative leader, and how does your organization employ innovation to be on the leading edge?
An innovative leader, for me, it is putting myself in our employees’ shoes and think what they would need and what can I offer. Sometimes I feel my role is the hostess or problem solver.
We have several young people starting families as they are a part of our company family, and this is so important to us and to them. Kids grow up fast, and we like to say, ‘Don’t miss a ballgame; … get out of work at whatever time you need to.’ They won’t rewind the tape. Our parents are very active with their kids including coaching their teams. Kids come first around here. … We love to watch them grow and are very family-focused. We are after all, a family business, our son, Chris, and our daughter, Chelsea, work with my husband and I here at King. Several of our kids come to work during breaks or if they are slightly ill and need to stay home. Most of our employees have access from their home computers as if they were sitting at their desk at work … so they can be present if they need to be for the children. Is that innovative? I don’t know — but it is part of our culture here.
The Smart Leaders class of 2010
In August, 2010, Smart Business and Blue Technologies recognized 14 business leaders for their commitment to business excellence and the impact their organizations make on the regional community. Treated to a keynote address by TechColumbus CEO Ted Ford, these 14 leaders comprised the honor roll:
- Michelle Adams, president, Prism Marketing
- Jeff Brock, general manager, Loth Inc.
- Tom Dailey, president, 2Checkout.com
- Jennifer Griffith, president, Commerce National Bank
- Darla King, owner, King Business Interiors
- Elizabeth Lessner, CEO, Betty’s Family of Restaurants
- Rick Milenthal, president, Engauge
- Michelle Mills, CEO, St. Stephen’s Community House
- Janis Mitchell, founder, Precise Resource
- Neil Mortine, president & CEO, Fahlgren Inc.
- Debra Penzone, president, Charles Penzone Family of Salons
- Joel Pizzuti, president, The Pizzuti Companies
- Bea Wolper, partner, Emens & Wolper
- Eric Zimmer, CEO, Tipping Point Renewable Energy
Nominate someone for the 2011 Smart Leaders today by contacting Dustin S. Klein at email@example.com. Honorees will be recognized during the summer 2011.